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No. LIX of 1949. Appeal from the judgment of the Allahabad High Court (Verma and Yorke JJ.) dated 6th September, 1943 in First Appeal No. 3 of 1940. P.L. Banerjee (B. Banerjee, with him), for the appel lant. 768 S.P. Sinha (N.C. Sen, with him), for the respondents. November 14. The court delivered judgment as follows : MUKHERJEA J. This appeal is directed against an appel late judgment of a Division Bench of the Allahabad High Court dated September 6, 1943, by which the learned Judges reversed a decision of the Civil Judge, Etawah, made in Original Suit No. 28 of 1936. The suit was one commenced by the plaintiff, who is respondent No. 1 in this appeal, for recovery of possession of two items of immovable property one, a residential house and other, a shop both of which are situated in the town of Etawah. The properties admittedly formed part of the estate of one Mangal Sen who died sometime towards the end of the last century, leaving behind him, as his heirs, his two widows, Mst. Mithani and Mst. Mangal Sen had a son named Chhedi Lal and a daughter named Janki Kuar born of his wife Mst. Rani, but both of them died during his lifetime. Chhedi Lal had no issue and he was survived by his widow Mst. Meria,while Janki left a son named Thakur Prasad. Janki 's husband married another wife and by her got a son named Babu Ram. On Mangal Sen 's death, his properties devolved upon his two widows, and Mst. Rani having died subsequently, Mst. Mithani came to hold the entire estate of her husband in the restricted rights of a Hindu widow. On 27th November 1919, Mst. Mithani surrendered the whole estate of her husband by a deed of gift in favour of Thakur Prasad who was the nearest reversioner at that time. Thakur Prasad died in 1921, leaving a minor son named Nand Lal who succeeded to his properties and this Nand Lal is the plain tiff in the suit out of which this appeal arises. On 27th October 1921, there was a transaction entered into between Babu Ram on his own behalf as well as guardian of infant Nand Lal on the One hand and Mst. Meria, the widow of Chhedi Lal, on 769 the other, by which two items of property which are the subject matter of the present litigation were conveyed to Meria by a deed of transfer which has been described as a Tamliknama; and she on her part executed a deed of relin quishment renouncing her claims to every portion of the estate left by Mangal Sen. It is not disputed that Meria took possession of the properties on the basis of the Tam liknama and on 10th April 1923 she executed a will, by which these properties were bequeathed to her three nephews, who are the sons of her brother Sunder Lal. Meria died on 19th June 1924. One Ram Dayal had obtained a money decree against Sunder Lal and his three sons, and in execution of that decree the properties in suit were attached and put up to sale and they were purchased by Ram Dayal himself on 30th January 1934. On 1st June 1936, the present suit was insti tuted by Nand Lal and he prayed for recovery of possession of these two items of property on the allegation that as they were given to Mst. Meria for her maintenance and resi dence, she could enjoy the same only so long as she lived and after her death, they reverted to the plaintiff. Sunder Lal, the brother of Meria, was made the first defendant in the suit, and his three sons figured as defendants Nos. 2 to 4. Defendant No. 5 is a lady named Chimman Kunwar in whose favour Sunder Lal was alleged to have executed a deed of transfer in respect of a portion of the disputed proper ty. Ram Dayal, the decree holder auction purchaser, died in May 1935 and his properties vested in his daughter 's son Ram Gopal under a deed of gift executed by him in favour of the latter. On 1st September 1938, Ram Gopal was added as a party defendant to the suit on the plaintiff 's application and he is defendant No. 6. The two other defendants, namely, defendants 7 and 8, who were also made parties at the same time, are respectively the widow and an alleged adopted son of Ram Dayal. The suit was contested primarily by defendant No. 6, and the substantial contentions raised by him in his written statement were of a two fold character. 770 The first and the main contention was that Mst. Meria got an absolute title to the disputed properties on the strength of the 'Tamliknama ' executed in her favour by the guardian of the plaintiff and after her death, the properties passed on to the three sons of Sunder Lal who were the legatees under her will. Ram Dayal, it was said, having purchased these properties execution of a money decree against Sunder Lal and his three sons acquired a valid title to them. The other contention raised was that the suit was barred by limitation. The trial Judge decided both these points in favour of the contesting defendant and dismissed the plain tiff 's suit. On appeal to the High Court, the judgment of the Civil Judge was set aside and the plaintiff 's suit was decreed. The defendant No. 6 has now come up on appeal to this court and Mr. Peary Lal Banerjee, who appeared in support of the appeal, pressed before us both the points upon which the decision of the High Court has been adverse to his client. The first point raised by Mr. Banerjee turns upon the construction to be placed upon the document executed by Babu Ram on his own behalf as well as on behalf of Nand Lal then an infant, by which the properties in dispute were trans ferred to Mst. Meria by way of a 'Tamliknama '. The question is whether the transferee got, under it, an absolute inter est in the properties, which was heritable and alien able or was it the interest of a life tenant merely. The documentis by no means a complicated one. It begins by a recital of the events under which Nand Lal became the sole owner of the properties left by Mangal Sen and refers in this connection to the obligation on the part of both Babu Ram and Nand Lal to "support, maintain and console" Mst. Meria, the widow of the pre deceased son of Mangal Sen. The document then proceeds to state as follows: "I have therefore, of my own accord and free will without any compulsion or coercion on the part of any one else while in my proper senses made a Tamlik of a double storied pucca built shop . and a house 771 and a kothri in Etawah . . worth Rs. 8,000 for purposes of residence of the Musammat, owned by the minor aforesaid . which at present stands let out on rent to Sunder Lal, brother of Mst. Meria aforesaid . . in favour of Mst. Meria aforesaid, widow of Chhedi Lal and made her the owner (Malik). If any portion or the whole of the property made a Tamlik of for the purpose mentioned above passes out of the possession of the Musammat aforesaid on account of the claim of Nand Lal minor aforesaid, I and my property of every sort shall be responsible and liable for the same. " This document has got to be read along with the deed of relinquishment, which is a contemporaneous document execut ed by Meria renouncing all her claims to the property left by Mangal Sen. The deed of relinquishment like the Tamliknama recites elaborately, with reference to previous events, particularly to the deed of gift executed by Mst. Mithani in favour of Thakur Prasad, the gradual devolution of the entire estate of Mangal Sen upon Nand Lal. It states thereafter that Babu Ram, as the guardian of the minor and also in his own right, "has under a Tamliknama dated this day made a 'Tamlik '. in my favour of a shop alongwith a Balakhana and a kota for my maintenance and a house . . for purpose of my residence which are quite sufficient for my maintenance." "I have therefore, of my own accord ", the document goes on to say, "made a relinquishment of the entire property aforesaid mentioned in the deed of gift . worth Rs. 25,000. I do covenant and do give in writing that I have and shall have no claim to or concern with the property . . belonging to the minor afore said, nor has the property aforesaid remained subject to my maintenance allowance nor shall I bring any claim at any time. " The schedule to the instrument, it may be noted, gives a list of all the properties of Mangal Sen in respect to which Mst. Mithani executed a deed of gift in favour of Thakur Prasad, including the two items of property covered by the 'Tamliknama ' mentioned aforesaid. 772 In construing a document whether in English or in vernacular the fundamental rule is to ascertain the inten tion from the words used; the surrounding circumstances are to be considered, but that is only for the purpose of finding out the intended meaning of the words which have actually been employed(1). In the present case the instru ment of grant has been described as a 'Tamliknama ' which means a document by which ' Maliki ' or ownership rights are transferred and the document expressly says that the grantee has been made a ' Malik ' or owner. There are no express words making the gift heritable and transferable; nor on the other hand, is there any statement that the transferee would enjoy the properties only during her life time and that they would revert to the grantor after her death. It may be taken to be quite settled that there is no warrant for the proposition of law that when a grant of an immovable property is made to a Hindu female, she does not get an absolute or alienable interest in such property, unless such power is expressly conferred upon her. The reasoning adopted by Mr. Justice Mitter of the Calcutta High Court in Kollani Koer vs Luchmee Parsad(2) which was ap proved of and accepted by the Judicial Committee in a number of decisions, seems to me to be unassailable. It was held by the Privy Council as early as in the case of Tagore vs Tagore( '3) that if an estate were given to a man without express words of inheritance, it would, in the absence of a conflicting context, carry, by Hindu Law, an estate of inheritance. This is the general principle of law which is recognised and embodied in section 8 of the Transfer of Property Act and unless it is shown that under Hindu Law a gift to a female means a limited gift or carries with it the restrictions or disabilities similar to those that exist in a 'widow 's estate ', there is no justification for departing from this principle. There is certainly no such provision in Hindu Law and no text could be supplied in support of the same. (1) Vide Rajgndra Prasad vs Gopal Prasad. 57 I.A. 296. (2) (3) L.R.I.A. Supp. 47 at 65. 773 The position, therefore, is that to convey an absolute estate to a Hindu female, no express power of alienation need be given; it is enough if words are used of such ampli tude as would convey full rights of ownership. Mr. Banerjee naturally lays stress upon the description of the document as 'Tamliknama ' and the use of the word ' Malik ' or owner in reference to the interest which it pur ports to convey to the transferee. The word ' Malik ' is of very common use in many parts of India and it cannot cer tainly be regarded as a technical term of conveyancing. In the language of the Privy Council, the term 'Malik ' when used in a will or other document "as descriptive of the position which a devisee or donee is intended to hold, has been held apt to describe an owner possessed of full pro prietory rights, including a full right of alienation, unless there is something in the context or in the surround ing circumstances to indicate that such full proprietory rights were not intended to be conferred(1). ' ' This I think to be a perfectly correct statement of law and I only desire to add that it should be taken with the caution which the Judicial Committee uttered in course of the same observa tion that "the meaning of every word in an Indian document must always depend upon the setting in which it is placed, the subject to which it is related and the locality of the grantor from which it receives its true shade of meaning. " The question before us, therefore, narrows down to this as to whether in the present case there is anything in the context of these two connected instruments or in the sur rounding circumstances to cut down the full proprietory rights that the word 'Malik ' ordinarily imports. The High Court in reaching its decision adverse to the appellant laid great stress on the fact that the grant was expressed to be for maintenance and residence of Mst. Meria. This, it is said, would prima facie indicate that the grant was to enure for the lifetime of the grantee. It is pointed out by the learned (1) Vide Sasiman Chowdhurain vs Shib Narayan, 49 I.A, 25. 99 774 Judges that the language of the document does not show that anybody else besides the lady herself was to be benefited by the grant and the indemnity given by Babu Ram was also given to the lady personally. It is further said that if Meria was given an absolute estate in the properties comprised in the 'Tamliknama ', there was no necessity for including these two properties again in the deed of relinquishment which she executed at the same time. I do not think that the mere fact that the gift of property is made for the support and maintenance of a female relation could be taken to be a prima facie indication of the intention of the donor, that the donee was to enjoy the property only during her life time. The extent of interest, which the donee is to take, depends upon the intention of the donor as expressed by the language use, d, and if the dispositive words employed in the document are clear and unambiguous and import absolute ownership, the purpose of the grant would not, by itself, restrict or cut down the interest. The desire to provide maintenance or residence of the donee would only show the motive which prompted the donor to make the gift, but it could not be read as a meas ure of the extent of the gift. This was laid down in clear terms by the Judicial Committee in a comparatively recent case which is to be found reported in Bishunath Prasad vs Chandrika(1). There a Hindu executed a registered deed of gift of certain properties in favour of his daughter in law for the" support and maintenance" of his daughter in law and declared that the donee should remain absolute owner of the property (malik mustaqil) and pay Government revenue. There were no words in the document expressly making the interest heritable or conferring on the donee the power of making alienation. It was held by the Judicial Committee that the donee took under the document, an absolute estate with powers to make alienation giving title valid after her death. In course of the judgment, Lord Blanesburgh quoted, with approval, an earlier decision of the (1) 60 I.A 56 775 Judicial Committee, where the words "for your maintenance" occurring in a deed of gift were held insufficient to cut down to life interest the estate taken by the donees. These words, it was said, "are quite capable of signifying that the gift was made for the purpose of enabling them to live in comfort and do not necessarily mean that it was to be limited to a bare right of maintenance. " On behalf of the respondent, reliance was placed upon the decision of the Judicial Committee in Raja Ram Buksh vs Arjun(1)in support of the contention that in a maintenance grant it is the prima facie intention of the gift that it should be for life. In my opinion, the decision cited is no authority for the general proposition as is contended for by the learned Counsel for the respondent, and it is to be read in the context of the actual facts of the case which relate to grants of a particular type with special features of its own. It was a case where a Talukdar made a grant of certain villages to a junior member of the joint family for mainte nance of the latter. The family was governed by the law of primegeniture and the estate descended to a single heir. In such cases the usual custom is that the junior members of the family, who can get no share in the property, are enti tled to provisions by way of maintenance for which assign ments of lands are generally made in their favour. The extent of interest taken by the grantee in the assigned lands depends entirely upon the circumstances of the partic ular case, or rather upon the usage that prevails in the particular family. In the case before the Privy Council there was actually no deed of transfer. It was an oral assignment made by the Talukdar, and the nature of the grant had to be determined upon the recitals of a petition for mutation of names made to the Revenue Department by the grantor after the verbal assignment was made and from other facts and circumstances of the case. The case of Woodoya ditta Deb vs Mukoond(2), which was referred to and relied upon in the judgment of the Privy Council, was (1) 28 I.A, 1. (2) 22 w. R. 229. 776 also a case of maintenance or khor phos grant made in favour of a junior member of the family, where theestate was im partible and descended under the rules of primogeniture. It was held in that case that such grants, the object of which was to make suitable provisions for the immediate members of the family, were by their very nature and also under the custom of the land resumable by the zemindar on the death of the grantee, as otherwise the whole zemindary would be swallowed up by continual demands. This principle bas obviously no application to cases of the type which we have before us and it was never so applied by the Privy Council, as would appear from the decision referred to above. The learned Counsel for the plaintiff respondent drew our attention in this connection, to the fact that the properties given by the ,Tamliknama ' were valued at Rs. 8,000, whereas the entire estate left by Mangal Sen was worth Rs. 25,000 only. It is argued that the transfer of nearly one third of the entire estate in absolute right to one who was entitled to maintenance merely, is, on the face of it, against probability and common sense. I do not think that, on the facts of this case, any weight could be at tached to this argument. In the first place, it is to be noted that whatever might have been the actual market value of the properties, what the widow got under the Tamliknama was a residential house and a shop, and the shop was the only property which fetched any income. This shop, it appears, was all along in possession of Sunder Lal, the brother of Meria, and the rent, which he paid or promised to pay in respect of the same, was only Rs. 12 a month. So from the income of this property it was hardly possible for Meria to have even abate maintenance, and this would rather support the inference that the properties were given to her absolutely and not for enjoyment merely, so long as she lived. But what is more important is, that the object of creating these two documents, as the surrounding circumstances show, was not merely to make provision 777 for the maintenance of Mst. Meria; the other and the more important object was to perfect the title of Nand Lal to the estate left by Mangal Sen and to quiet all disputes that freight arise in respect of the same. It may be that Mst. Meria could not, in law, claim any. thing more than a right to be maintained out of the estate of her deceased father in law. But it is clear that whatever her legal rights might have been, Nand Lal 's own position as the sole owner of the properties left by Mangal Sen was not altogeth er undisputed or free from any hostile attack. As has been said already, Sunder Lal, the brother of Meria, was in occupation of the double storied shop from long before the Tamliknama was executed and Meria got any legal title to it. It appears from the record that in 1920 a suit was institut ed on behalf of the infant Nand Lal for evicting Sunder Lal from the shop and the allegation in the plaint was that Sunder Lal was occupying the property as a tenant since the time of Mst. Mithani by taking a settlement from her. Sunder Lal in his written statement filed in that suit expressly repudiated the allegation of tenancy and also the title of Nand Lal and openly asserted that it was Mst. Meria who was the actual owner of Mangal Sen 's estate. The suit ended in a compromise arrived at through the medium of arbitrators and the result was that although Sunder Lal admitted the title of the plaintiff, the latter had to abandon the claims which were made in the plaint for rents, costs and damages. Sunder Lal continued to be in occupation of the shop and executed a rent agreement in respect of the same in favour of Nand Lal promising to pay a rent of Rs. 12 per month. A few months later, the Tamliknama was executed and this shop along with the residential house were given to Meria in maliki right. The recitals in both the Tamliknama and the deed of relin quishment clearly indicate that the supreme anxiety on the part of Babu Ram, who was trying his best to safeguard the interests of the minor, was to put an end to all further disputes that might be raised by or on behalf of Mst. Meria with regard to the rights of Nand Lal to the properties 778 of Mangal Sen and to make his title to the same absolutely impeccable. That seems to be the reason why Meria was given a comparatively large portion of the properties left by Mangal Sen which would enable her to live in comfort and her interest was not limited to a bare right of mainte nance. It is significant to note that the shop room, which was all along in possession of Sunder Lal, was included in this Tamliknama and soon after the grant was made, Sunder Lal executed a rent agreement in respect of the shop in favour of Mst. Meria acknowledging her to be the owner of the property. It is true that the document does not make any reference to the heirs of Meria, but that is not at all necessary, nor is it essential that any express power of alienation should be given. The word "Malik" is too common an expres sion in this part of the country and its meaning and impli cations were fairly well settled by judicial pronouncements long before the document was executed. If really the grantee was intended to have only a life interest in the properties, there was no lack of appropriate words, per fectly well known in the locality, to express such inten tion. The High Court seems to have been influenced to some extent by the fact that in the Tamliknama there was a guarantee given by Babu Ram to Meria herself and to no one else agreeing to compensate her in case she was dispossessed from the properties at the instance of Nand Lal. This covenant in the document was in the nature of a personal guarantee given by Babu Ram to Mst. Meria for the simple reason that the property belonged to an infant and it was as guardian of the minor that Babu Ram was purporting to act. It was too much to expect that Babu Ram would bind himself for all time to come and give a guarantee to the future heirs of Meria as well. Probably no such thing was contem plated by the parties and no such undertaking was insisted upon by the other side. But whatever the reason might be which led to the covenant being expressed in this particu lar form, I do not think that it has even a remote bearing on the 779 question that arises for our consideration in the present case. It is of no assistance to the plaintiff in support of the construction that is sought to be put upon the , docu ment on his behalf. I am also not at all impressed by the other fact re ferred to in the judgment of the High Court that if the properties were given to Meria in absolute right, there was no necessity for including them again in the schedule to the deed of relinquishment which Meria executed. I fail to see how the inclusion of the properties in the deed of relin quishment would go to indicate that Meria 's rights to these properties were of a restricted and not an absolute charac ter. It is after all a pure matter of conveyancing and the two documents have to be read together as parts of one and the same ' transaction. Under the ' Tamliknama ', Meria got two properties in absolute right out of the estate of Mangal Sen. By the deed of relinquishment, she renounced her claim for maintenance in respect of all the properties left by Mangal Sen including the two items which she got under the 'Tamliknama '. After the ' Tamliknama ' was executed in her favour, there Was no further question of her claiming any right of maintenance in respect of these two items of property. She became the absolute owner thereof in exchange of her rights of maintenance over the entire estate and this right of maintenance she gave up by the deed of relinquish ment. On a construction of the entire document, my conclu sion is that there is nothing in the context of the docu ment, or in the surrounding circumstances which would dis place the presumption of full proprietory rights which the use of the word "Malik" is apt ordinarily to convey. The first contention of the appellant, therefore, succeeds and in view of my decision on this point, the second question does not arise for determination at all. The result is that the appeal is allowed, the judgment and decree of the High Court are set aside and those of the trial Judge restored. The defendant No. 6 will have his costs from the plaintiff in all the courts. There will be no order for costs as regards the other parties: 780 FAZL ALI J. I agree with the judgment delivered by my learned brother, Mukherjea J. CHANDRASEKHARA AIYAR J. During the hearing of the appeal I entertained doubts whether the view taken by the High Court was not correct. But on further consideration, I find that it cannot be maintained, having regard to the terms of the ' Tamliknama ' (deed of transfer) in favour of Musammat Meria and the context in which it came into exist ence. The name of the document or deed does not very much matter. Though the word ' malik ' is not a term of art, it has been held in quite a large number of cases, decided mostly by the Judicial Committee of the Privy Council, that the word, as employed in Indian documents, means absolute owner and that unless the context indicated a different meaning, its use would be sufficient to convey a full title even without the addition of the words, ' heirs ', or ' son ', ' grandson ' and ' great grandson '. Of course, if there are other clauses in the document which control the import of the word and restrict the estate to a limited one, we must give the narrower meaning; otherwise the word must receive its full significance. Especially is this so, when the rule of interpretation laid down in Mohammed Shamsul vs Sewak Ram( ') has come to be regarded as unsound. The language employed in the ' Tamliknama ' (exhibit II) is almost similar to the language of the deeds construed in Bhaidas Shivdas vs Bai Gulab & Another( '2) and Bishunath Prasad Singh vs Chandika Prasad Kumari and Others(s) where it was held that an absolute estate was conveyed. I agree that the judgment and decree of the High Court should be set aside and that the decree of the trial Judge should be restored with costs to the appellant in all the Courts. Appeal allowed.

IN-Abs

In construing a document whether in English or in vernacular the fundamental rule is to ascertain the inten tion from the words used; the surrounding circumstances are to be considered but that is only for the purpose of finding out the intended meaning of the words which have actually been employed. To convey an absolute estate to a Hindu female, no express power of alienation need be given; it is enough if words of such amplitude are used as would convey full rights of ownership. The term 'Malik ' when used in a will or other document as descriptive of the position which a devisee or donee is intended to held, has been held apt to describe in owner possessed of full proprietory rights, including a full right of alienation, unless there is something in the context or in the surrounding circumstances to indicate that such full proprietory rights were not intended be conferred to 767 The mere fact that a gift of property is made for the support and maintenance of a female relation could not be taken to be a prima facie indication of the intention of the donor, that the donee was to enjoy the property only during her life time. The extent of interest, which the donee is to take, depends upon the intention of the donor as ex pressed by the language used, and if the dispositive words employed in the document are clear and unambiguous and import absolute ownership, the purpose of the grant would not, by itself, restrict or cut down the interest. The desire to provide maintenance or rcsidence of the donee would only show the motive which prompted the donor to make the gift, but it could not be read as a measure of the extent of the gift. Where a Hindu died leaving two widows, a widowed daugh terin law and a daughter 's son, and a relative of the family acting as guardian of the daughter 's son 's son who was then the nearest reversioner got a relinquishment deed from the daughter in law renouncing all her claims to the estate and in return executed a deed of 'tamlikhama ' to her with re spect to certain properties which ran as follows: "I have therefore, of my own accord and free will, without any compulsion or coercion on the part of any one else while in my proper senses made a Tamlik of a double storied pucca built shop . . and a house and a kothri in Etawah . . worth Rs. 8,000 for purposes of residence of the Musammat (the daughter in law) owned by the minor aforesaid . . which present stands let out on out on rent to Sunder Lal, brother of Mst. Meria aforesaid . . in favour of Mst. Meria aforesaid, widow of Chhedi Lal and made her the owner (Malik) " ' Held, that there was nothing in the context of the document or in the surrounding circumstances which would displace the presumption of full proprietory rights which the use of the words 'Malik ' is apt ordinarily to convey and the daughter in law obtained under the gift deed a full heritable and transferable title to t, he properties con veyed thereby. Rajendra Prasad vs Gopal Prasad (57 I.A. 296), Kollani Koer vs Luchmee Parsad , Tagore vs Tagore (I.A. Supp. Sasiman Chaudhurain vs Shib Narayan (49 I.A. 25), Biswanath Prasad vs Chandrika (60 I.A. 56) relied on. Baja Ram Baksh vs Arjun (60 I.A. 56), Woodayaditta Deb vs W.R. 229) distinguished.

ivil Appeal No. 107 of 1952. Appeal from the Judgment and Order dated 22nd March, 1951, of the High Court of Judicature at Calcutta (Harries C.J. and Banerjee J.) in Reference No. 4 of 1950 .in .Civil Rule No. 1643 Of 1950. M.C. Setalvad, Attorney General for India ' (B. Sen, with him) for the appellant. Atul Chandra Gupta (Jay Gopd Ghose, with him) for respondent NO. 1. 1953. December 17. The following Judgments were delivered. PATANJALI SASTRI C.J. This appeal raises issues great public and private importance regarding the extent of protection. which the . Constitution of India accords to ownerships of private property. The first respondent herein (hereinafter referred to as the respondent) purchased the entire Touzi No. 341 of the 24 Parganas Collectorate at a revenue sale held on ,January 9, 1942. As such purchaser, the respondent acquired under section 37 of the Bengal Revenue Sales Act, 1859 (Central Act No. 11 of 1859) the right "to avoid and annul all under tenures and forthwith to eject all under tenants" with certain exceptions which are not material here. In exercise of that right the respondent gave notices of ejectment and brought a suit in 1946 to evict certain under tenants, including the second respondent herein, and to recover possession 594 of. the lands. The suit was. decreed against the second respondent who preferred an appeal to the District Judge, 24 Parganas, Contending that his undertenure came within one of the exceptions referred to in section 37. When the appeal was pending, the Bill, which was later passed as the West Bengal Revenue Sales (West . Bengal Amendment) Act, 1950, (hereinafter referred to as"the 'amending Act") was introduced in the West Bengal 'Legislative Assembly on March 23, 1950. It would appear, according to the ."statement 0f objects and reasons" annexed to the Bill, that great hardship was being caused to a large section of the people by the. application of section 37 of the Bengal Land Revenue Sales Act, 1859, in the urban areas and particularly in Calcutta and its suburbs where "the present phenomenal increase in land values has supplied the necessary incentive to speculative purchasers in exploiting this provision .(section 37) of the law for unwarranted large scale eviction" and it was,therefore,. considered necessary to enlarge the scope of protection already given by the section to certain categories of tenants with due safeguards for the security Of Government revenue. The Bill was eventually passed as the amending Act and it .came into force on. March 15, 1950. It substituted by section 4 'the 'new section 37 in the place of the original section 37, and ' it provided by section 7 that all pending suits, appeals and other proceedings which had not already resulted in delivery of possession shall ' abate. , Thereupon, the respondent, contending that section 7 was 'void as abriging his fundamental fights under article 19(1) (f) and article 31, moved the High Court 'under article 228 to withdraw the pending appeal and determine the constitutional issue . 'raised by him. The appeal accordingly. withdrawn 'and the case was heard by Trevor Harries C.J. and Banerjee J. who, by separate but, concurring 'judgments, declared section 7 unconstitutional and void '::and. returned the :case: to the District Court 'for: disposal, in conformity 595 with 'their decision. The learned Judges held that the respondent 's right to annul under tenures and evict under tenants being a vested right acquired by him under his purchase before section 37 was amended, the retrospective deprivation of that right by section 7 of the amending Act without any abatement of the price paid by the respondent at the revenue sale was an infringement of his fundamental right under article 19(1) (f) to hold property with all the rights . acquired under his purchase, and as such deprivation was not a reasonable restriction on the respondent 's exercise of his vested right, section 7 was not saved by clause (5) of that article and was void. On behalf of the appellant State the learned Attorney General contended before uS that if, as the respondent claims, his right to annul under tenures and. evict under tenants in occupation other than those protected under the original enactment, was "property '" within the meaning of clause (1) Of article 19, then, it was also "property" within the meaning of clause (1) of article 31, as the expression must have the same 'connotation in both the provisions, and the respondent, ' having been "deprived" of it under the authority of law, namely, section 7 of the amending Act, such deprivation was lawful and could not be challenged. In support of this contention learned counsel strongly relied on the observations of my learned brother Das in Chiranjit Lal Choudhury 's case(1 ) and ' also on the .analogy of the reasoning of the majority 'in ;Gopalan 's case(z). Alternatively, it was urged that if the correct view was that the nullification of the respondent 's right was only the imposition of a "restriction" on the enjoyment of the property purchased by him, as .has been held by the learned Judges. below, then, it was a reasonable restriction imposed in ,the ' interests of the general public under clause (5)of article 19, having regard to the facts and circumstances which led to the enactment of the measure as . disclosed in the Statement of Objects and (1) ; " (2) [1954] Reasons annexed to the Bill which, for this purpose, is admissible. It will be convenient to deal first with the latter contention of the Attorney General. Sub clause (f) 0f clause (1) of article 19 has, in my opinion, no application to the case. That article enumerates certain freedoms under the caption "right to freedom" and deals with those great and basic rights which are recognised and guaranteed as the natural rights inherent in the status of a citizen of a free country. The freedoms declared in sub clauses (a) to (e) and (g) are clearly of that description and in such context sub clause (f) should, I think, also be understood as declaring the freedom appertaining to the citizen of free India in the matter of acquisition, possession and disposal of private property. In other words, it declares the citizen 's right to own property and has no reference to the right to the property owned by him, which is dealt with in article 31. Referring to the "privileges and immunities" mentioned in article 4 and Amendment 14 of the American Federal Constitution, Bradley J. said in Butchers Union etc. Co. vs Crescent City etc. Co.(1): "The phrase has a broader meaning. It includes those fundamental privileges and immunities which belong essentially to the citizens of every free government, among which Washington J. enumerates the ' right of protection; the right to pursue and obtain happiness and safety; the right to pass through and reside in any State 'for the purposes of trade, agriculture, professional pursuits or otherwise; to claim the benefit of the wnt of habeas corpus; to institute and maintain actions of any kind in the courts of the State and to take, hold and dispose of property either real or personal. (Corfield vs Coryell, These rights are different from the concrete fights which a man may have to a specific chattel or a piece of land or to the performance by another of a particular contract, or to damages of a particular wrong, all which may be invaded by individuals; they are the capacity, power or privilege of having and enjoying (1) 111 U. 8. 597 those concrete rights and of maintaining them in the courts, which capacity, power or privilege can only be invaded by the State. These primordial and fundamental rights are the privileges and immunities citizens which are referred to in the 4th article of the Constitution and in the 14th Amendment to it." (Italics mine). We are not here concerned with the meaning and content of the phrase"privileges and immunities" in the context of thoseprovisions which, according to some of the Judges,have a reference only to those privileges and immunities which owe their existence to the Federal Constitution or its laws. What is of importance for the present purpose is that the two learned Judges thought that the "right to take, hold and dispose of property" was one of those "primordial and fundamental rights" of the same class 'as the right to pursue happiness and safety and other such basic freedoms appertaining to free citizens and was different from the concrete rights which a person may have to a specific res or thing owned, being the capacity, power or privilege of having and enjoying those concrete rights. Sub clause (f) of clause (1) of article 19 seems analogous to clause (1) of article 17 of the United Nations Declaration of Human Rights "Everyone has the right to own property alone as well as in association with others" and article 31 to clause (2) of article 17 "No one shall be arbitrarily deprived of his property. " I have no doubt that the framers of our Constitution drew the same distinction and classed the natural right or capacity of a citizen "to acquire, hold and dispose of property" with other natural rights and freedoms inherent in the status of a free citizen and embodied them in article 19(1), while they provided for the protection of concrete rights of property owned by a person in article 31. The meaning of the phrase,"to acquire, hold and dispose of property" as well as the nature of the subject matter to which it has reference in the sense indicated above, is also clear from the terms of sections 111 and 298 of the Government of India Act, 1935, where the same phrase is used 598 in prohibiting imposition of "disability" on grounds of religion, place of birth, .descent, colour or any of them on a British subject domiciled 'in the United Kingdom and on an indian subject of His Majesty determined, in the case of citizens and non citizens not deal with expropriation of specific property belonging to such persons which is dealt with in section 299. There are difficulties in the way of accepting the view of the learned Judges below that article 19 (1) (f) and 19 (5) deal with the concrete rights of property and the restraint to which they are liable to be subjected. In the first place, it will be noticed that sub clause (f) of clause (1) of article 19 deals only with the rights of citizens, whereas article 31 deals with the rights of persons in general. If article 31, which is headed by the caption "right to property", was designed to protect property rights of citizens as well as non citizens, why was it considered necessary to provide for the protection of those rights in sub clause (f) of clause (1) of article 19 also ? I do not think that our Constitution makers could have intended to provide a double barrelled constitutional protection to private property. Moreover, right to "acquire" and "dispose of" property could only refer to the capacity of a citizen. The word "hold", which is inserted between those two words must, in my opinion, be understood to mean "own", and not as having reference to something different, viz., rights to specific things owned by a citizen ? I see no force in the objection that unless sub clause (f) of clause (1) of article 19 read with clause (5) is construed as relating to concrete property rights also, the legislature would have the power to impose even unreasonable restrictions on the enjoyment of private property by citizens. It is difficult to believe that the framers of our Constitution could have intended to differentiate between citizens and non citizens in regard to imposition of restrictions on enjoyment of private property. Such restrictions are imposed in exercise of the power inherent in the State to regulate private rights of property when they 599 are sought to be exercised to 'the injury of others having similar rights, and the ,measure of restriction imposed. in exercise of such regulative power must be determined, in the case of citizens and non citizens alike, by the necessity of protecting the community. On the other hand, differential treatment of citizens and non citizens would be perfectly intelligible if subclause (f) of clause (1) of article 19 and clause (5) are understood as dealing only with the freedom or capacity to acquire, hold and dispose of property in general, for, it would be justifiable to exclude aliens from such freedom, as has been done in several countries for the benefit of their own nationals, particularly in respect of land. Moreover, both by the preamble and the directive principles of State policy in Part IV, our "Constitution has set the goal of a social welfare State and this must involve the exercise of a large measure of social control and regulation of the enjoyment of private property. If concrete rights of property are brought within the purview of article 19(1)(f), the judicial review under clause (5)as to the reasonableness of such control and regulation might have an unduly hampering effect on legislation m that behalf, and the makers of our Constitution may well have intended to leave the Legislatures free to exercise such control and regulation in relation to the enjoyment of rights of property, providing only that if such regulation reaches the point of deprivation of property the owner should be indemnified under clause (2) of article 31 subject to the exceptions specified in para. (ii) of sub clause (b) of clause (5) of article 31. 'Nor am I much impressed with the suggestion that the reference to "exercise" in clause (5) of article 19 of the rights conferred by sub clause (f) of clause (1) indicates that ' the ' latter rights must be fights of property. Clause (5) could as well contemplate restrictions on the excercise of a citizen 's freedom to acquire, hold and dispose of property, as for instance, banning acquisition of land in a givien locality, say a tribal area, or putting a ceiling on the quantum of land that a citizen can hold, or restricting alienation of land to specified classes of persons only (of. Punjab Province vs 600 Daulat Singh and Other (1) and the reasonableness of such restrictions being brought under judicial review. For all these reasons, I am of opinion that under the scheme of the Constitution, all those broad and basic freedoms inherent in the status of a citizen as a free man are embodied and protected from invasion by the State under clause (1)of article 19, the powers of State regulation of those freedoms in public interest being defined in relation to each of those freedoms by clauses (2) to (6) of that article, while rights of private property are separately dealt with and their protection provided for in article 31, the cases where social control and regulation could extend to the deprivation of such rights being indicated in para. (ii)of subclause (b) of clause (5) of article 31 and exempted from liability to pay compensation under clause (2). On this view, no question of correlating article 19 (1) (f) with article 31 could arise and the analogy of Gopalan 's case has no application. On this view, the question whether section 7 0/3 the amending Act is a reasonable restriction on the exercise of the res pondent 's right to the property purchased by him could not also arise, as ' clause (5) of article 19 could then have reference only to disabilities of the kind already mentioned. Turning next to the ' contention based on article 31 (1), it Was put thus in the language of Das J. in Chiranjit Lal Choudhury 's case( ) which the learned Attorney General fully adopted: "Article 31(1) formulates the fundamental right in negative form prohibiting the deprivation of property except by authority of law. It implies that a person may be deprived of his property by authority of law. Article 31(2) prohibits the acquisition or taking possession of property for a public purpose under any law, unless such law provides for payment of compensation. It is suggested that clauses (1) and (2) 0f article 31 deal with the same topic, namely, compulsory acquisition or taking possession 0f property, clause (2) being only an elaboration of clause (1). There appear (1) [1946] F.C .R. 1 CP. C.). (2) ; , 924. , 601 to me to be two objections to this suggestion. If that were the correct view, then clause (1) must be held to be wholly redundant and clause (2), by itself, would have been sufficient. In the next place such a view would exclude deprivation of property otherwise than by acquisition or taking of possession. One can conceive of circumstances where the State may have to deprive a person of his property without acquiring or taking possession of the same. For example, in any emergency, in order to prevent a fire spreading, the authorities may have to demolish an intervening building. This deprivation of property is supported in the United States of America as an exercise of "police power". This deprivation of property is different from 'acquisition or taking of possession of property which goes by the name of "eminent domain" m the American law. The construction suggested implies that our Constitution has dealt with only the law of "eminent domain", but has not provided for deprivation of property in exercise of "police powers". I am not prepared to adopt such construction, for I do not feel pressed to do so by the language used in article 31. On the contrary, the language of clause (1) of article 31 is wider than that of clause (2), for deprivation of property may welt be brought about otherwise than by acquiring or taking possession of it. I think clause (1) enunciates the general principle that no person shall be deprived of his property except by authority of law, which, put in a positive form, implies that a person may be deprived of his property, provided he is so deprived by authority of law. No question of compensation arises under clause (1). The effect of clause (2) is that only certain kinds of deprivation of property, namely those brought about by acquisition or taking possession of it, will not be permissible under any law, unless such law provides for payment of compensation. If the deprivation of property is brought about by means other than acquisition or taking possession of it, no compensation is required, provided that such deprivation is by authority of law. " I have made this lengthy extract in order to avoid possible unfairness in summarising it. These 2 9 S.C.I./59 602 observations were made while rejecting an argument of the petitioner in that case, which, however, the learned Judge decided in his favour on another point, and are thus purely obiter. With all respect to my learned brother I am unable to share the view expressed by him. He reads clauses (1) and (2)as mutually exclusive in scope and content, clause (2) imposing limitations only on two particular kinds of deprivation of private property, namely, those brought about by acquisition or taking possession thereof, and clause (1). authorising all other kinds of deprivation with no limitation except that they should be authorised by law. There are several objections to the acceptance of this view. But the most serious of them all is that it largely nullifies the protection afforded by the Constitution to rights of private property and, indeed, stultifies the very conception of the "right to property" as a fundamental right. For, on this view, the State, acting through its legislative organ, could, for instance, arbitrarily prohibit a person from using his property, or authorise its destruction, or render it useless for him, without any compensation and with out a public purpose to be served thereby, as these two conditions are stipulated only for acquisition and taking possession under clause (2). Now, the whole object of Part Iii of the Constitution is to provide protection for the freedoms and rights mentioned therein against arbitrary invasion by the State, which as defined by article 12 includes the Legislatures of the country. It would be a startling irony if the fundamental rights of property were, in effect, to be turned by ,construction into an arbitrary power of the State to deprive a person of his property without compensation in all ways other than acquisition or taking possession of such property. If the Legislatures were to have such arbitrary power, why should compensation and public purpose be insisted upon in connection with what are termed two particular forms of deprivation ? What could be the rational principle underlying this differentiation ? To say that clause (1) defines the "police power" in relation to rights of property is no satisfactory answer, as the Same power 603 could as well have been extended to these two particular kinds of deprivation. Such extension would at least have avoided the following anomaly:compensation is paid to indemnify the owner for the loss of his property. It could make no difference to him whether such deprivation was authorised under clause (1)or clause (2). In either case his property would be gone and he would suffer loss. It would matter little to him what happened to the property after he was deprived of it whether it was used for a public purpose or was simply destroyed without any public purpose being served. In fact, he could more readily reconcile himself to the loss forced upon him if he found his property being used for the public benefit; for, in that case, he would be participating in that benefit as a member of the public. But that consolation would be denied to him by deprivation under clause (1), which makes his 0loss all the more grievous. But, according to Das J.s. reading of that clause, the Constitution makers have provided for no indemnification of the expropriated owner. Why ? Because,it is said, deprivation under clause (1) is an exercise of "police power. " This, to my mind, is fallacious. You first construe the clause as conferring upon the State acting through its Legislature unfettered power to deprive owners of their property in all other cases except the two mentioned m clause (2), and then seek to justify such sweeping and arbitrary power by calling it "police power." According to Das J. clause (1) was designed to confer "police power" on the State to deprive persons of their property by means other than acquisition or taking possession of such property. He would read the clause in a positive form as implying that a person may be deprived of his property by authority of law. In other words, the framers of our Constitution, who began Part Ill by formulating the fundamental rights of individuals against invasion by the Legislatures in the country, ended by formulating the right of the Legislatures to deprive individuals of their property without compensation. 604 Speaking of police power, as applied to personal liberty, Prof. Willis says( 1 ): There are two main requirements for a proper exercise of the police power (1) there must be a social interest to be protected which is more important than the social interest in personal liberty, and (2) there must be, as a means for the accomplishment of this end, something which bears a substantial relation there to. This statement is equally true of police power as applied to private property. This is recognised and given effect to in clauses (2) to (6) of article 19 which delimit the regulative power of the Legislatures as applied to the freedoms enumerated in clause (1)of that article including the freedom referred to in sub clause (f). But clause (1) of article 31 imposes no such limitations. Why should such absolute power be conferred on the Legislature in relation to private property, whereas the exercise of restrictive power under clauses (2) to (6) of article 19 is carefully limited to specified purposes and to the imposition of only reasonable restrictions in each of those cases ? Could it have been intended that, while restriction imposed on the freedoms mentioned in clause (1) of article 19 should be reasonable and in public interest, deprivation of property, except in the two cases provided for in clause (2) of article 31, need not be reasonable nor for the public benefit ? To say that the requirement of "authorisation by law" was considered sufficient limitation in all other cases of deprivation takes no note of the fact that in the case of restrictions under clauses (2) to (6) of article 19 also, their authorisation could only be by law and yet other limitations have been imposed. In fact, authorisation by law can obviously be no limitation on the Legislature, and "police power", as developed in the American case law, is essentially a legislative power. Now, what is this "police power" and how does the Constitution of India provide for its exercise by the State ? Referring to the doctrine of police power (1) Constitutional Law, p. 728. 605 in America, I said in Gopalan 's case(1): "When that power (legislative power) was threatened with prostration by the excesses of due process, the equally vague and expansive doctrine of "police power", i.e., the power of Government to regulate private rights in public interest, was evolved to counteract such excesses" And Das J. (1), said that the content of due process of law had to be narrowed down by the "enunciation and application of the new doctrine of police power as an antidote or palliative to the former". This court held in the aforesaid case that the framers of our Constitution definitely rejected the doctrine of due process of law. Is it to be supposed that they accepted the "antidote"doctrine of police power and embodied it in clause(1) of article 31 as a specific power conferred on the Legislatures to deprive persons of their property ? The suggestion seems unwarranted and, indeed, contrary to the scheme of our Constitution. That scheme, in marked contrast with the Constitution of America, is to distribute legislative powers among the Union and the State Legislatures according to the Lists of the Seventh Schedule and among such powers was included the power of "acquisition or requisitioning of property" for Union and State purposes in entry No. 33 of List I and No. 36 of List II respectively. Thus, what is called the power of eminent domain, which is assumed to be inherent in the sovereignty of the State according to Continental and American jurists and is accordingly not expressly provided for in the American Constitution, is made the subject of an express grant in our Constitution. Having granted the power in express terms, the Constitution defines in article 31 the limitations on the exercise thereof as constituting the fundamental right to property of the owner, all fundamental rights of the people being restraints on the State [see observations at page 198 in Gopalan 's case(1)]. But the power of social control and regulation of private rights and freedoms for the common good (1) ; , 200. (2) ; , 313. 606 being an essential attribute of a social and political organisation otherwise called a State, and pervading, as it does, the entire legislative field, was not specially provided for under any of the entries in the legislative Lists and was left to be exercised, wherever desired, as part of the appropriate legislative power. Even where such regulative powers are defined and delimited, as for instance in clauses (2) to (6) of article 19 in relation to the rights and freedoms specified in clause (1), the powers themselves are left to be exercised under laws made with respect to those ' matters. For example, the power of social control and regulation as applied to freedom of speech and expression is exercisable under a law made with respect to entry No. 1 of List II (Public Order) or entry No. 39 of List III (Newspapers, books and printing presses) and in relation to a freedom not falling under clause (1) of article 19, like the freedom to drink or to eat what one likes, such freedom can be restrained or even prohibited under a law made with reference to entry No. 8 of List II (Intoxicating liquors, etc.) or entry No. 19 of List III (Drugs and poisons). Thus the American doctrine of police power as a distinct and specific legislative power is not recognised in our Constitution and it is therefore contrary to the scheme of the Constitution to say that clause (1) of article 31 must be read in positive terms and understood as conferring police power on the Legislature in relation to rights of property. I entirely agree with the observations of Mukherjea J. in Chiranjit Lal 's case(1 ), that "In interpreting the provisions of our Constitution we should go by the plain words used by the Constitution makers and the importing of expressions like 'police ' power ', which is a term of variable and indefinite connotation in American law, can only make the task of interpretation more difficult. " The correct approach, in my opinion, to the interpretation of article 31 is to bear in mind the context and setting in which it has 'been placed. As already stated, Part III of the Constitution is designed to afford protection to the freedoms and rights mentioned (1) ; , 907 607 therein against inroads by the State which includes the Legislatures as well as the executive Governments in the country. Though, as pointed out in Gopalan 's case (1) citing Eshukbayi Eleko vs Officer Administering the Government of Nigeria( 2 ), protection against executive action is not really needed under systems of Government based on British jurisprudence according to which no member of the executive can interfere with the liberty or property of a subject except in pursuance of powers given by law, our Constitution makers, who were framing a written Constitution, conferred such protection explicitly by including the executive Governments of the Union and the States in the definition of "the State" in article 12. A fundamental right is thus sought to be protected not only against the legislative organ of the State but also against its executive organ. The purpose of article 31, it is hardly necessary to emphasis, is not to declare the right of the State to deprive a person of his property but, as the heading of the article shows, to protect the "right to property"of every person. But how does the article protect the right to property ? It protects it by defining the limitations on the power of the State to take away private property without the consent of the owner. It is an important limitation on that power that legislative action is a pre requisite for its exercise. As pointed out by Cooley, "The right to appropriate private property to public uses lies dormant in the State, until legislative action is had, pointing out the occasions, the modes, conditions, and agencies for its appropriation. Private property can only be taken pursuant to law"(3). In England the struggle between prerogative and Parliament having ended in favour of the latter, the prerogative right of taking private property became merged in the absolutism of Parliament, and the right to compensation as a fundamental right of the subject does not exist independently of Parliamentary enactment. The result is that Parliament alone could authorise interference with the enjoyment of private property. (1) ; (2) ; (3) Constitutional Limitations, Vol. II, p. 1119. 608 Blackstone also says that it is the Legislature alone that can interpose and compel the individual to part with his property(1). It is this limitation which the framers of our Constitution have embodied in clause (1) of article 31 which is thus designed to protect the rights to property against deprivation by the State acting through its executive organ, the Government. Clause (2) imposes two further limitations on the Legislature itself. It is prohibited from making a law authorising expropriation except for public purposes and on payment of compensation for the injury sustained by the owner. These important limitations on the power of the State, acting through the executive and legislative organs, to take away private property are designed to protect the owner against arbitrary deprivation of his property. Clauses (1) and (2) of article 31 are thus not mutually exclusive in scope and content, but should, in my view, be read together and understood as dealing with the same subject, namely, the protection of the right to property by means of the limitations on the State power referred to above, the deprivation contemplated in clause (1) being no other than the acquisition or taking possession of property referred to in clause (2). Much argument was expended to show that clause (2) dealt only with two specified modes of depriving a person of his property, namely, acquisition and requisitioning and could not, therefore, be considered to be a mere elaboration of clause (1), which referred to deprivation generally. It was submitted that clause (2) should be read with entry No. 33 of List I, No. 36 of List II and No. 42 of List III, each of which refers to acquisition or requisitioning of property and to no other mode of deprivation. It was also pointed out that sub section (2) of section 299 of the Government of India Act, 1935, as well as entry No. 9 of List II of the Seventh Schedule thereof referred only to compulsory acquisition of land for public purposes, and it was not until the Bombay High Court held in Tan Bug Taim and Others vs The Collector of Bombay anal Others (2), that rule 75(a) of the Defence of India Rules (1) Commentaries, Vol. I, p, 110. (2) I.L.R. 609 under which a property situated in Bombay was requisitioned was ultra vires on the ground that entry No. 9 of List II did not confer on the Legislature the power of requisitioning, that such power was conferred on the Central Legislature by the India (Proclamations of Emergency) Act, 1946 (9 and 10 Geo. V, Ch. 23). Attention was drawn to the Regulations and Acts relating to compulsory acquisition of land in this country including the Land Acquisition Act, 1894, all of which provided for the vesting of the property acquired in the Government or in one of its officers, and it was suggested that the framers of our Constitution, who must have been aware of the difficulties arising out of the lacuna in the Government of India Act, 1935, in regard to the power of requisitioning, added the words "taken possession of" in clause (2) and the word "requisitioning" in the entries referred to above. It was, therefore, urged that the words "acquired" or "taken possession of" should not be taken to have reference to all forms of deprivation of private property by the State. I see no sufficient reason to construe the words "acquired or taken possession" used in clause (2) of article 31 in a narrow technical sense. The Constitution marks a definite break with the old order and introduces new concepts in regard to many matters, particularly those relating to fundamental rights, and it cannot be assumed that the ordinary word "acquisition" was used in the Constitution in the same narrow sense in which it may have been used in pre Constitution legislation relating to acquisition of land. These enactments, it should be noted, related to land, whereas article 31(2) refers to movable property as well, as to which no formal transfer or vesting of title is necessary. Nor is there any warrant for the assumption that "taking possession of property" was intended to :mean the same thing as "requisitioning property" referred to in the entries of the Seventh Schedule. If that was the intention, why was the word "requisitioning" not used in clause (2) as well ? It is fallacious to suggest that unless "taking possession" is synonymous with "requisitioning", the power to make a law 610 authorising the taking of possession of property would be lacking because no entry in any of the Lists of the Seventh Schedule confers that power. A specific entry in the legislative Lists is no more necessary for conferring such power than for conferring power to make a jaw authorising deprivation of property which clause (1) of article 31 postulates. [See observations in P.D. Shamdasani vs Central Bank of India(1)]. The word "acquisition" is not a term of art, and it ordinarily means coming into possession of, obtaining, gaining or getting as one 's own. It is in this general sense that the word has been used in articles 9, 11 and 19(1) (f)and not as implying any transfer or vesting of title. In Minister of State Jar the Army vs Dalziel(2 ) a Full Bench of the High Court of Australia had to construe the scope of the legislative power with respect to "acquisition" of property conferred on the Commonwealth Parliament by section 51 (xxxi) of the Austrailan Constitution (63 and 64 Vic., Ch. 12),. and the court decided by a majority that the power included the power to take possession of property for a temporary purpose for an indefinite period. To say that acquisition implies the transfer and vesting of title in the Government is to overlook the real nature of the power of the State as a sovereign acting through its legislative and executive organs to appropriate the property of a subject without his consent. When the State chooses to exercise such power, it creates title in itself rather than acquire it from the owner, the nature and extent of the title thus created depending on the purpose and duration of the use to which the property appropriated is intended to be put as disclosed in the law authorising its acquisition. No formula of vesting is necessary. As already stated, in the case of moveable property no formal transfer or vesting of title apart from seizing it could have been contemplated And, what is more, clause (5) (b) (ii) of article 31, which excepts any law made in future "for the prevention of danger to life or property" from the operation, of clause (2) shows that the latter clause, but for such exception, would entail liability to pay compensation for deprivation by destruction, which must therefore (1) ; ,394. (2) ; 611 be taken to fall within the scope of clause (2), for a law made for the prevention of danger to life or property may often have to provide for destruction of the property appropriate. I am of opinion that the word "acquisition" and its grammatical variations should, in the context of article 31 and the entries in the Lists referred to above, be understood in their ordinary sense, and the additional words "taking possession of" or "requisitioning" are used in article 31(2) and in the entries respectively, not in contradistinction with, but in amplification of the term "acquisition", so as to make it clear that the words taken together cover even those kinds of deprivation which do not involve the continued existence of the property after it is acquired. They would, for instance, include destruction which implies the reducing into possession of the thing sought to be destroyed as a necessary step to that end. The expression "taking possession" can only mean taking such possession as the property is susceptible of and not actual physical possession, as "the interest in, or in any company owing, any commercial or industrial undertaking", which is expressly included in clause (2) of article 31, is not ' susceptible of any actual physical occupancy or seizure. It is, however, unnecessary here to express any concluded opinion on the precise scope and meaning of the expression "shall be taken possession of or acquired" in clause (2) except to say that it does not admit of being construed in the same wide sense as the word "taken" used in the Fifth Amendment of the American Constitution, but implies such an appropriation of the property or abridgement of the incidents of its ownerships as would amount to a deprivation of the owner. Any other interference with enjoyment of private property short of such appropriation or abridgement would not be compensable under article 31(2). It will now be seen that the two objections raised by Das J. to the view expressed above, namely, that 612 clauses (1) and (2) must be read together and understood as dealing with the same topic, are really baseless. The first objection is that clause (1) would then be redundant. It would not be so because it embodies one of the three important limitations on the exercise of the State power of deprivation of private property, namely, the necessity for the legislative action as a condition precedent to the exercise of the power and constitutes a protection against the executive organ of the State. The second objection that the State 's power in an emergency to deprive a person of his property without payment of compensation, as for example, to demolish an intervening building to prevent a conflagration from spreading, would be excluded is equally baseless. Cases of that kind, as we have seen, would fail within the exception in clause (5)(b)(ii), and no compensation would be payable for the loss caused by the destruction of property authorised under that clause. The learned Attorney General suggested that sub clause (b) was inserted ex abundante cautela as even without it no one could have supposed that a law of the kind mentioned in that sub clause would fall under clause (2). There could have been no doubt, for instance, that the power of taxation referred to in paragraph (i) of that sub clause was a distinct power. It is difficult to appreciate this argument. If the exceptions in sub clause (b) were so obvious that they need not have been explicitly provided for, then equally must be second objection of Das J. fall to the ground. To say that sub clause (b)is introduced by way of abundant caution is not to do away with the exceptions but to emphasise their existence aliunde. Whether it was considered necessary to provide expressly that destruction of private property under emergency conditions entails no liability to pay compensation or whether the State 's power to do so was so well established that sub clause (b)(ii)was really unnecessary and must be taken to have been inserted ex abundante cautela, in either view, the second objection must equally fail. The fact is that all the cases referred to in sub clause (b) are different forms 613 of deprivation of property and, as difficulties of construction might arise in a written Constitution if they are not expressly and specifically excepted from the requirement under clause (2) as to payment of compensation, the framers have thought it necessary to insert clause (5) (b). Where was the necessity, it was asked, to provide in clause (1) of article 31 for protection against the executive government in the matter of compulsory acquisition of property by the State, as no such protection is provided for in the case of the regulative powers exercisable under article 19(2) to (6)? The answer is: the same need apparently which dictated the enactment of article 265 providing for similar protection in the matter of taxation. In any case, this would be no more of an objection, if it be an objection, to the view I have indicated above than to the other view which also recognises the necessity for legislative action before a person could be deprived of his property. Attention was called ' to article 38 as showing that one of the goals set by the Constitution was the promotion of social welfare, and it was urged that the attainment of that object as well as the growing complexities of modern conditions of life must call for an expanding power of social control and regulation, particularly in the sphere of the enjoyment of private property and that the exercise of such power without entailing liability to pay compensation ought not to be confined within the narrow limits specified in article 31 (5) (b). This is a misconception. In the first place, social welfare is not inconsistent with the ownership of private property and does not demand arbitrary expropriation of such property by the State without compensation. On the other hand, as pointed out by Blackstone "The public good is in nothing more essentially interested than in the protection of every individual 's private rights as modelled by the municipal law"(1). This is not an antiquated view. So modern a document as the Declaration of Human (1) Commentaries Vol. I, p. 109. 614 Rights in the United Nations has specifically provided for the protection of private property by including the clause "No one shall be arbitrarily deprived of his" in article 17 and the framers of our Constitution have evidently proceeded on that view. Secondly, the argument also overlooks that clause (5) (b) was not intended to define and does not define exhaustively the power of social control and regulation in relation to rights of private property. It only limits the purposes for which the power could be exercised without liability to pay compensation, though its exercise results in deprivation of property in the sense already explained. But where its exercise does not involve deprivation of property, no question of paying compensation would arise, and the Legislatures in the country would, as already indicated, be free to enact laws providing for the exercise of such power within the fields marked out for them in the Legislative Lists. There is, therefore, no room for the apprehension that article 31 (5)(b) would unduly cramp social control and regulation of private property for the public good or would lead to any alarming consequences to the safety of the community. But why all this ado, it was asked, about protection against deprivation of property by legislative action ? There is no such protection provided in the Constitution against deprivation of property by the Legislature exercising the power of taxation. Why then complain if there is no protection against the Legislature authorising deprivation of property without compensation under article 31(1) ? Our Constitution makers, it was said, trusted the Legislature, as the people of Great Britain trust their Parliament which protects the Englishman 's right to property. In ultimate analysis, is not well informed and organised public opinion the true and effective protection against arbitrary action of the Legislature ? The argument has no force. So far as the power of taxation is concerned, the Constitution recognises no fundamental right to immunity from taxation and that is why presumably no constitutional protection is provided against the exercise of that power. But fundamental 615 rights under the Constitution stand on a different footing. Indeed, the argument is a bold challenge to the policy of including a declaration of such rights in Part HI of the Constitution. In Gopalan 's case(1), I said: "Madison (who played a prominent part in framing the First Amendment of the American Constitution) pointing out the distinction, due to historical reasons, between the American and the British ways of securing 'the great and essential rights of the people ', observed Here they are secured not by laws paramount to prerogative but by Constitutions paramount to laws. '" This has been translated into positive law in Part 1I1 ' of the Indian Constitution. There have always been two schools of opinion regarding the efficacy of a declaration of fundamental rights in a Constitution. Britain never believed in a formal declaration of such rights. Referring to the ,demand of the Indian Delegation that the Parliamentary Bill which was later passed as the Government India Act, 1935, should embody certain fundamental rights, the Joint Parliamentary Committee observed(2 ): "The question of so called fundamental rights, which was much discussed at the three Round Table Conferences, was brought to our notice by the British India Delegation, many members of which were anxious that the new Constitution should contain a declaration of rights of different kinds, for reassuring minorities for asserting the equality of all persons before the law, and for other like purposes; and we have examined more than one list of such rights which have been compiled. The Statutory Commission observe with reference to this subject: 'We are aware that such provisions have been inserted in many Constitutions, notably in those of the European States formed after the war Experience, however, has not shown them to be of any great practical value. Abstract declarations are useless unless there exist the will and means to make them effective. 'With these (1)[1950] S.cR. 88, 198. (2) Para. 616 observations we entirely agree; and a cynic might indeed find plausible arguments, in the history during the last ten years of more than one country, for asserting that the most effective method of ensuring the destruction of a fundamental right is to include a declaration of its existence in a constitutional instrument. " But the American view is different. Answering a similar objection to the inclusion of a Bill of Rights in the American Constitution, Jefferson said: "But though it is not absolutely efficacious under all circumstance 's, it is of great 'potency always, and rarely inefficacious. A brace the more will often keep up the building which would have fallen with that brace the less. There is a remarkable difference between the characters of the inconveniences which attend a declaration of rights, and those which attend the want of it. The inconveniences of the declaration are, that it may cram Government in its useful exertions. But the evil of this is short lived, moderate and reparable. The inconveniences of the want of a declaration are permanent, affective, and irreparable. They are in constant progressive from bad to worse. The executive in our Governments is not the sole, it is scarcely the principal, object of my jealousy. The ' tyranny of the Legislatures is the most formidable dread at present, and will be for many years." (Quoted in Cooley 's Constitutional Limitations, 8th Edn. I, p. 535). It is obvious that the .framers of our Constitution shared the American view and included Part III in the Constitution of India. It is, therefore, a wrong ' approach to construe the articles of Part III by pointing to the British way, which is more a traditional than a constitutional way, of protecting the rights and liberties of the individual by making Parliament supreme. On this view of the meaning and effect ' of article 31, the question is whether section 7 read with section 4 of the amending Act infringes the fundamental right of the respondent under that article. These provisions 617 by their retrospective operation undoubtedly abridge the respondent 's rights of property by nullifying one of the incidents of the estate purchased by him at the revenue sale, namely, the right to annul certain kinds of under tenures and evict certain classes of undertenants in occupation of portions of the estate. Does such abridgement amount to deprivation of property within the meaning of article 31 as interpreted above, and, if so, does it fall within the exception in clause (5) (b) (ii) of that article ? Now, the word "property" in the context of article 31 which is designed to protect private property in all its forms, must be understood both in a corporeal sense as having reference to all those specific things that are susceptible of private appropriation and enjoyment as well as in its juridical or legal sense of a bundle of rights which the owner can exercise under the municipal law with respect to the user 'and enjoyment of those things to the exclusion of all others. This wide connotation of the term makes it sometimes difficult to determine whether an impugned law is a deprivation of property within the meaning of article 31 (2), for, any restriction imposed on the use and enjoyment of property can be regarded as a deprivation of one or more of the rights theretofore exercised by the owner. The American courts have experienced similar difficulty in deciding whether a given statutory abridgement of the rights of the owner is an exercise of the police power" for which no compensation can be claimed, or a "taking" of property within the meaning of the Fifth Amendment clause "Nor shall private property be taken for public use without just compensation." "The general rule at least" said Holmes J. in delivering the majority opinion in Pennsylvania Coal Co. vs Mahon(1 ), "is that while property may be regulated to a certain extent, if regulation goes too far, it will be recognised as a taking. " The vague and expansive doctrine of "police power" and the use of the term "taken" in the Fifth Amendment construed m a very wide sense so as to cover any injury or damage to property, coupled with the equally vague (1) ; 3 95 S.G.I./59 618 and expansive concept of "due process", allow a greater freedom of action to the American courts in accommodating and adjusting, on what may seem to them a just basis, the conflicting demands of police power and the constitutional prohibition of the Fifth Amendment. Under the Constitution of India, however, such questions must be determined with reference to the expression "taken possession of or acquired" as interpreted above, namely, that it must be read along with the word "deprived" in ' clause (1)and understood as having reference to such substantial abridgement of the rights of ownership as would amount to deprivation of the owner of his property. No cut and dried test can be formulated as to whether in a given case the owner is "deprived" of his property within the meaning of article 31; each case must be decided as it arises on its own facts. Broadly speaking it may be said that an abridgement would be so substantial as to amount to a deprivation within the meaning of article 31 if, in effect, it withheld the property from the possession and enjoyment of the owner, or seriously impaired its use and enjoyment by him, or materially reduced its value. The learned Judges of the High Court did not consider the case from this point of view. As has been stated, they applied article 19 (1) (f) and (5) and held that section 7 of the amending Act, by its retrospective operation, imposed on the respondent 's enjoyment of the property purchased by him at the revenue sale restrictions which were not reasonable. That view, for reasons already indicated, cannot be accepted and the matter has to be looked at from the point of view of article 31 as interpreted above. A comparison of the scope and effect of the old section 37 which is substituted in its place by section 4 of the amending Act and which section 7 shows to be clearly retrospective, discloses that, although the right of a purchaser to annual under tenures and evict under tenants is curtailed by the new section 37 by enlarging the scope of the exceptions in the old section, it entitles the purchaser, as a countervailing advantage, to enhance the rent payable by the tenure holders and tenants 619 newly brought within the exception. The purchaser is left free in other respects to continue in enjoyment of the property as before. In other words, what the amending Act seeks to do is to enlarge the scope of the protection provided by the exception in the old section, as it was found to be inadequate, while conferring certain compensating benefits on the purchaser. This amendment is in the line with the traditional tenancy legislation in this country affording relief to tenants whenever the tenancy laws were found, due to changing conditions, to operate harshly on the tenantry. I find it difficult to hold that the abridgement sought to. be effected retrospectively of the rights of a purchaser at a revenue sale is so substantial as to amount to a deprivation of his property within the meaning of article 31 (1) and (2). No ' question accordingly arises to the applicability of clause (5) (b) (ii) to the case. In the result, the appeal is allowed and the judgment of the High Court is set aside. The first respondent will pay the costs of this appeal incurred by the appellant here and in the lower Court. MEHR CHAND MAHAJAN J. For reasons given in my judgment in Dwarkadas Shrinivas vs Sholapur Spinning and Weaving Mills Ltd., (C.A. 141 of 1952)(1 ) I agree with my Lord the Chief Justice in his construction of article 31 of the Constitution. I also concur in the conclusions reached by him, and in his decision of the appeal. DAS J. I agree that this appeal must be allowed but I have arrived at this conclusion by a different process of reasoning. As the arguments advanced before us have raised very important constitutional issues it is only right that I should give the reasons for my decision in some detail. The facts and circumstances leading up to the present appeal are as follows: At a revenue sale held on the 9th January, 1942, the respondent Subodh Gopal Bose purchased the entire Touzi No. 341 recorded in the collectorate of the (1) Reported infra. 620 permanently settled district of 24 Parganahs in West Bengal. At the date of that sale the auction purchasers at a revenue sale had, under section 37 of the Bengal Land Revenue Sales Act, 1859, 'as it then stood, certain rights as therein mentioned. That section ran thus: "37. The purchaser of an entire estate ,in the permanently settled districts of Bengal, Bihar and Orissa, sold under this Act for the recovery of arrears due on account of the same shall acquire the estate free from all encumbrances which may have been imposed upon it after the time of settlement; and shall be entitled to avoid and annul all under tenures and forthwith to eject all under tenants, with the following exceptions : First Istimrari or Mukarrari tenures which have been held at a fixed rent from the time of the permanent settlement. Secondly Tenures existing at the time of settlement which have not been held at a fixed rent , ' Provided always that the rents of such tenure shall be liable to enhancement under any law for the time being in force for the enhancement of the rent of such tenures. Thirdly Talukdari and other similar tenure$ created since the time of settlement and held immediately of the proprietors of estates and farms for terms of years so held, when such tenures and farms have been duly registered under the provisions of this Act. Fourthly Leases of lands whereon dwelling houses, manufactories or other permanent buildings have been erected, or whereon gardens, plantations, tanks, wells, canals, places of worship or burning or burying grounds have been made, or wherein mines have been sunk. And such a purchaser as ' is aforesaid shall be entitled to proceed in the manner prescribed by any law for the time being in force for the enhancement of the rent of any land coming within the fourth class of exceptions above made, if he can prove the same to 621 have been held at what was orginally an unfair rent, and if the same shall not have been held at a fixed rent, equal to the rent of good arable land, for a term exceeding twelve years; but not otherwise; Provided always that nothing in this section contained shall be construed to entitle any such purchaser as aforesaid to eject any raiyat having a right of occupancy at a fixed rent or at a rent assessable according to fixed rules under the laws in force, or to enhance the rent of any such raiyat otherwise than in the manner prescribed by such laws, or otherwise than the former proprietor, irrespectively of all engagements made since the time of settlement, may have been entitled to do. " In exercise of his rights under the section set out above, the respondent Subodh Gopal Bose annulled all ' under tenures and tenancies appertaining to the said Touzi and on tile 18th March, 1946, instituted a suit, being Title Suit No. 35 of 1946, in the Fourth Court of the Subordinate Judge at Alipore 24 Parganahs for the ejectment of respondents Nos. 2 to 6, claiming that he was entitled to recover possession of the lands in suit by virtue of the rights conferred on him by section 37. The respondent No. 2, who was the defendant No. 1, alone contested the suit. His defence was, inter alia, that he was a raiyat and as such protected by the proviso to section 37. He ' also claimed protection under the fourth exception to that section. The learned Subordinate Judge who tried the suit delivered his judgment on the 14th February, 1949. By that judgment he overruled the contentions of the contesting defendant and passed a decree for ejectment against him. He dismissed the suit against the other defendants (who are now respondents Nos. 3 to 6), holding that they were not necessary parties to the suit. On the 25th March, 1949, the respondent No. 2 preferred an appeal, being Title Appeal No. 252 of 1949, before the District Judge at Alipore, 24Parganahs. That appeal was transferred to the court of the Additional District Judge for hearing. While 622 that appeal was pending the West Bengal Legislature passed West Bengal Act VII of 1950, called the Bengal Land Revenue Sales (West Bengal Amendment) Act of 1950, which received the assent of the Governor of Bengal on the 15th March, 1950, and was published in the Official Gazette on the day. By section 4 of the amending Act, section 37 of the Bengal Revenue Sales Act, 1859, was replaced by a new section the material part of which runs thus: "37. (1) The purchaser of an entire estate in the permanently settled districts of West Bengal sold under this Act for the recovery of arrears due on account of the same, shall acquire the estate free. from all encumbrances which may have been imposed after the time of settlement and shall be entitled to avoid and annul all tenures, holdings and .leases with the following exceptions: (a) tenures and holdings which have been held from the time of the permanent settlement either free of rent or at a fixed rent or fixed rate of rent,. and (b) (i) tenures and holdings not included in exception (a) above made, and (ii) other leases of land whether or not for purposes connected with agriculture or horticulture, existing at the date of issue of the notification for sale of the estate under this Act: Provided that notwithstanding anything contained in any law for the time being in force or in any lease or contract no person shall be entitled to hold under such a purchaser as is aforesaid any tenure holding or lease coming within exception (b) above made, free Of rent or at a low rent or at a rent or rate of rent fixed in perpetuity or for any specified period unless the right so to hold has been expressly recognised under any law for the time being in force by any competent civil or revenue court; and the purchaser shall be entitled to proceed in the manner prescribed; by any law for the time being in force for the 623 determination of a fair and equitable rent of such tenure, holding or lease. " Section 7 of the amending Act provides as follows : : " 7. (1) (a) Every suit or proceeding for the ejectment of any person from any land in pursuance of section 37 or section 52 of the said Act, and (b) every appeal or application for review or revision arising out of such suit or proceeding, pending at the date of the commencement of this Act shall if the suit, proceeding, appeal or application could not have been validly instituted, preferred or made had this Act been in operation at the date of the institution, the preferring or the making thereof, abate. (2) Every decree passed or order made, before the date of commencement of this Act, for the ejectment of any person from any land in pursuance of section 37 or section 52 of the said Act shall, if the decree or order could not have been validly passed or made had this Act been in operation at the date of the passing or making thereof, be void , ' Provided that nothing in this section shall affect any decree or order in execution whereof the possession of the land in respect of which the decree or order was passed or made, has already been delivered before the date of commencement of this Act. (3) Whenever any suit, proceeding, appeal or application abates under sub section (1) or any decree or order becomes void under sub section (2), all fees paid under the Court fees Act, 1870, shall be refunded to the parties by whom the same were respectively paid. " It is quite clear that under this section 7 the suit of the respondent Subodh Gopal Bose must abate and the decree passed in his favour must become void if that section be valid law and intra vires the Constitution of India. On the 21st July, 1950, the respondent Subodh Gopal Bose applied before the Additional District Judge before whom the ' appeal was pending to make 624 a reference under article 228 of the Constitution of India for a decision of the question whether the provisions of section 7 were void being ultra vires the Constitution. The learned Additional District Judge by his order dated the 16th September, 1950, dismissed that application. On the 24th November, 1950,the respondent Subodh Gopal Bose applied to the High Court under article 228 and eventually on the 18th December, 1950, the High Court directedthe appeal to be transferred to the High Court only for the decision of the constitutional point. The proceedings were numbered as Reference Case No. 4 of 1950. Notice having been given by the Court to the Advocate General of Bengal, the State of West Bengal appeared on the Reference. On the 22nd March, 1951, the High Court held that section 7 imposed an unreasonable restriction on the respondent Subodh Gopal Bose 's right to hold property and violated his fundamental right guaranteed by article 19 (1) (f) read with article 19 (5) and was, therefore void under article 13 (1). With this finding the High Court sent back the records to the lower appellate court for disposal of the appeal in the light of that finding. On the 30th November, 1951, the High Court gave leave to the State of West Bengal to appeal to us. Hence the present appeal. Section 7 of the amending Act, the validity whereof is challenged before us, in terms, affects preexisting rights. Accordnig to that section every suit or proceedings for ejectment under old section 37 and every appeal or application for review or revision arising out of such suit or proceeding pending at the commencement of the amending Act is to abate if the suit, proceeding, appeal or application could not have been validly instituted, referred or made, had the amending Act been in operation at the date of such suit, proceeding, appeal or application. Further, every decree passed or order made before the commencement of the amending Act for the ejectment of any person from land in pursuance of old section 37 is likewise to become void if such decree or order could not 'have been validly passed or made if the 625 amending Act had been in operation at the date of the decree or order. The proviso, however, saves decrees or orders in execution whereof possession had been delivered before the commencement of the amending Act. It is, therefore,clear that section 7 affects pre existing rights bygiving, in effect,retrospective operation to section4 which has sub stituted, inter alia, the new section 37 for the old section 37 of the Act of 1859. A cursory comparison of the language of the old section 37 with that of the new section 37 will at once make it clear that the substantial right given by the old sectionto the purchaser to avoid and annul under tenuresand to eject under tenants is no longer availableto him under the new section 37. Although the opening part of the new section 37 purports to give to the purchaser the right to avoid and annul the tenures etc. , that right, by reason of the wide sweep of exception (b), has, for all practical purposes, ceased to exist. The new section 37 does not deprive the purchaser of the physical property, namely, the estate purchased at the revenue sale and he continuesto be the owner of that property and can exerciseand enforce all the rightes which his ownership giveshim, except that he cannot, by reason of the new section 37, avoid or annul the under tenures etc. or eject the under tenants. In other words, out of the bundle of rights constituting the ownership acquired by him under the old section 37, an item of important right has been taken away, thereby abridging or restrictin.g his ownership. The respondent, Subodh Gopal Bose, contends that his fundamental right, under article 19(1)(f) of the Constitution, namely his right to hold, that is to say, his right to enjoy and exercise the full rights of ownership in relation to the property acquired by him under the old section 37 has been I violated and, therefore, section 7 which operates retrospectively and gives retrospective operation to the new section 37 is ultra vires the Constitution and is void under article 13(1). The learned Attorney General has not seriously contended that the impugned section has not 626 prejudicially affected the right given to the purchaser by the old section 37 but he maintains that the abridgement of the rights of the purchaser at a revenue sale brought 'about by the new section 37. amounts to nothing more than the imposition of a reasonable restriction on the exercise of the right conferred by article 19 (1) (f) in the interests of the general public and is perfectly legitimate and permissible under clause (5) of that article. The High Court repealled the above noted contention and held that the restriction was unreasonable. The High Court based its conclusions on three things, namely, (1) the retrospective operation of the impugned section, (ii) the absence of any provision for the abatement of the purchase price and (iii) the failure of the State to show any reason why the impugned section was introduced into the amending Act. The learned Attorney General submits that the first two elements taken into consideration by the High Court are wholly irrelevant for the purpose of determining whether the restriction imposed was reasonable in the interest of the general public. Ordinarily a statute is construed prospectively unless it is made retrospective by express words or necessary intendment; but, the learned Attorney General submits, the fact that a statute is expressly or by necessary implication made retrospective, does not, by itself, furnish any cogent reason for saying that the statute is prima. facie unfair and, therefore, unreasonable. While I see some force in this argument I am, nevertheless, not convinced that the fact of the statute being given retrospective operation may not be properly taken into consideration in determining the reasonableness of the restriction imposed in the interest of the general public. Nor am I satisfied that the loss occasioned to the purchaser by reducing, without any abatement of the 'purchase price, an estate in possession into one in reversion may not also be taken into account in determining the reasonableness of the restrictions permissible under article 19 (5). As said by my Lord the Chief justice in The State of Madras vs V.G. Row(1) (I) ; at 7.607. 627 "It is important in this context to bear in mind that the test of reasonableness, wherever prescribed, should be applied to each individual statute impugned, and no abstract standard, or general pattern, of reasonableness can be laid ' down as applicable to all cases. The nature of the right alleged to have been infringed, the underlying purpose of the restrictions imposed, the extent and urgency of the evil sought to be. remedied thereby, the disproportion of the imposition, the prevailing conditions at the time, should all enter into the judicial verdict. " As regards ,the third element, the High Court has pointed out that no suggestion had been made before it that the number of pending suits or proceeding for ejectment of tenants was abnormally large or that there was any other cogent reason for introducing the impugned section in the amending Act. Indeed, in the later case of Iswari Prasad vs N.R. Sen(1) a special bench of the same High Court, consisting of three learned Judges including the two who had decided the case under appeal before us, has distinguished the very judgment from the one then under appeal, and in doing so, laid great emphasis on the absence of any such suggestion in this case. The High Court held that those circumstances were present in the later case and accordingly held that the law impugned in the later case was not unconstitutional. It is, indeed, very unfortunate that several important matters which would have assisted the High Court in arriving at a right conclusion as to the reasonableness of the restrictions imposed by the impugned section were not brought to the notice of the High Court. Thus, for example, the statement of objects and reasons appended to the Bill which eventually became the amending Act does not appear to have been placed before the High Court. The statement of the objects and, reasons appended to the Bill quite clearly refers to the great hardship caused by the application of the old section 37 to a large number of people in the urban area and particularly in Calcutta (1) at p. 727. 628 and its suburbs where the then prevailing phenomenal increase in land values had supplied the necessary incentive to speculative purchasers in exploiting that section for unwarranted large scale eviction and maintains, according to the sponsor of the Bill, that such large scale evictions necessitated the enlargement of the scope of protection of that section, with due safeguards for the securing of Government revenue. It is well settled by this court that the statement of objects and reasons is not admissible as an aid to the construction of a statute (see Aswini Kumar Ghose vs Arabinda Bose(1)) and 1 am not, therefore, referring to it for the purpose of construing any part of the Act or of ascertaining the meaning of any word used in the Act but I am referring to it only for the limited purpose of ascertaining the conditions prevailing at the time which actuated the sponsor of the Bill to introduce the same and the extent and urgency of the evil which he sought to remedy. Those are all matters which, as already stated, must enter into the judicial verdict as to the reasonableness of the restrictions which article 19 (5) permits to be imposed on the exercise of the right guaranteed by article 19 (1)(f). Further, there is another significant fact which does not appear to have been pressed on the attention of the High Court. The Bill had been. introduced in the Legislature on the 23rd March, 1949, and was referred to a select committee. On the 25th April, 1949, when the Bengal Legislature was not in session West Bengal Ordinance No. 1 of 1949 was passed, The two preambles to that Ordinance recited as follows: "Whereas it is expedient, pending the enactment of further legislation, to provide for the temporary stay of certain suits, proceedings and appeals in pursuance of the Act: And whereas the West Bengal Legislature is not in session and the Governor is satisfied that circumstances exist which render it necessary for him to take immediate action '" The fact that an Ordinance had to be passed pending the passing of this Bill and the preambles to the (1) ; 629 Ordinance do undoubtedly indicate that, in the opinion of the authorities, the then prevailing conditions disclosed a serious evil which urgently necessitated the taking of immediate action. Further, it appears from the judgment delivered by the High Court on the application subsequently made by the State for leave to appeal to this court that a number of cases were pending before the courts in which the same question was involved. This is also a circumstance which was not brought to the notice of the High Court before the judgment under appeal was pronounced. Finally, in the judgment under appeal I find no reference to the proviso to the new section 37 which enlarges, as it were, by way of compensation for the loss of the right of ejectment, the purchaser 's right to claim enhancement of rent much beyond the very limited right of enhancement of rent which, under the old section, was confined only to the fourth excepted under tenures. Then there is the fact, found by the High Court, that land values had gone up so high that auction purchasers could now be found who, even without the right to eject the under tenants, would willingly pay a sum much in excess of the arrears of Government revenue which remains constant since the permanent settlement. The cumulative effect of the foregoing facts which were not placed before the High Court much outweighs the consideration of the pecuniary loss of the respondent, Subodh Gopal Bose, as the auction purchaser and in the circumstances the infliction of the loss of the right to eject under tenants can only be regarded as a reasonable restriction permitted by article 19(5) to be imposed on the exercise of the right guaranteed under article 19(1) (f). In my judgment the reasons for which the High Court declared section 7 of the amending Act to be ultra vires the Constitution are no longer tenable in view of the circumstances now before us which were not brought to the notice of the High Court and the decision of the High Court cannot, therefore, be sustained. An alternative argument, however, has been raised by learned advocate for the respondent, Subodh Gopal Bose, that the impugned section violates the 630 fundamental right secured to him by article 31(2) of the Constitution and is, therefore, void under article 13(1). The contention, shortly put, is that the right, conferred by the old section 37 to avoid and annul the under tenures and to eject the under tenants is, by itself,"property" anti that as the new section 37 has taken away that property without having made any provision for I compensation there for the impugned section is unconstitutional in that it violates the provisions of article 31 (2). The Bill which eventually became the Bengal Land Revenue Sales (West Bengal Amendment) Act, 1950, was introduced in the West Bengal Legislature on the 23rd March, 1949, and after having been passed by the Legislature it received the assent of the Governor on the 15th March, 1950. The Bill was, therefore, pending in the West Bengal Legislature when the Constitution ,of India came into force and was passed into law after the date of the Constitution. It does not appear, however, that the Bill was reserved for the consideration of the President or received his assent. Therefore, the impugned law cannot claim the protection of article 31 (4) and, what is more, if it is such a law as is referred to in clause (2) of article 31, then, by virtue of clause (3), it cannot have any effect at all. The question, therefore, is as to whether the impugned section is or is not such a law as is referred to in article 31(2). The question requires, for a proper answer, a close scrutiny of the provisions of article 31 and other relevant articles of the Constitution bearing on it. At the outset it is well to bear in mind the decision of this court in A.K. Gopalan 's case(1), explaining the correlation between the provisions of sub clauses (a) to (e) and (g) of clause (1) of article 19 and articles 20, 21 and 22 of the Constitution. Kania C.J., at page 101, my Lord the present Chief Justice at pages 191 192, Mahajan J., at page 229, Mukherjea J., at pages 255256 and I at pages 302 306 expressed the view that the validity of the Preventive Detention Act could not be judged by the provisions of article 19. The majority ; 631 of the Bench took the view that the rights conferred by article 19(1) (a) to (e) and (g) could be enjoyed only so long as the citizen was free and had the liberty of his person but that, the moment he was lawfully deprived of his personal liberty under article 21 he ceased to have the rightsguaranteed by article 19 (I) (a) to (e) and (g). The result of this part of the deci sion in A.K. Gopalan 's case(1) was summarised in the later case of Ram Singh vs The State of Delhi(2), by my Lord the present Chief Justice in the judgment that he delivered on behalf of himself, Kania C. 1,and myself. Said his Lordship at pages 455 456: "Although personal liberty has a content sufficiently comprehensive to includei the freedoms enumerated in article 19 (1), and its deprivation would result in the extinction of those freedoms, the Constitution has treated these civil liberties as distinct fundamental rights and made separate provisions in article 19 and articles 21 and 22 as to the limitations and conditions subject to which alone they could be taken away of abridged. The interpretation of these articles and their correlation were elaborately dealt with by the full court in Gopalan 's case(1). The question arose whether section 3 of the Act was a law imposing restrictions on "the right to move freely throughout the territory of India" guaranteed under article 19 (1) (d) and, as such, was liable to be tested with reference to its reasonableness under clause (5) of that article. It was decided by a majority of 5 to 1 that a law which authorises deprivation of personal liberty did not fall within the purview of article 19 and its 'validity was not be judged by the criteria indicated in that article but depended on its compliance with the requirements of articles 21 and 22, and as section 3 satisfied those requirements, it was constitutional." Mahajan J., who by a separate judgment dissented from the majority on another point, not material for our present purpose, said at page 467: "On the other points argued in the case I agree judgment of Sastri J." (1) ; (9) ; 632 It must, therefore, be regarded as settled that the freedom referred to in article 19 (1) sub clauses (a) to (e) and (g) are guaranteed to a citizen of India while he is a free man. These freedoms, even when they are so available, are, however, not absolute and unbridled licence but are subject to social control in that reasonable restrictions may be imposed on them by law as indicated in clauses (2) to (6) of article 19. But as soon as the citizen is lawfully deprived of his personal liberty as a result of detention, punitive or preventive, he loses his capacity to exercise the several rights enumerated in sub clauses (a) to (e) and (g) of article 19 (1) and cannot complain of the infraction of any of those rights. The validity of the law which deprived a citizen of his personal liberty which inevitably destroys his rights under the sub clauses mentioned above cannot be judged by the test of reasonableness laid down in clauses (2) to (6) of article 19 but falls to be determined according to the provisions of articles 20, 21 and 22 of the Constitution. This, I apprehend, is the result of the two decisions of this court referred to above. Such being the correct correlation between article (1) sub clauses (a) to (e) and (g) on the one hand and article 21 on the other, the question necessarily arises as to the correlation between article 19 (1)(f) and article 31. Article 19 (1)(f) guarantees to a citizen,as one of his freedoms, the right to acquire, hold and dispose of property but reasonable restrictions may be imposed on the exercise of that right to the extent indicated in clause (5). Article 31, as its heading shows guarantees to all persons, citizens and non citizens the "right to property" as a fundamental right to the extent therein mentioned. What, I ask myself, is the correlation between article 19 (1) (f) read with article 19 (5) and article 31 ? If, as held by my Lord in A.K. Gopalan 's case(1) at page 191, sub clauses (a) to (e) and (g) of article 19 (1) read with the relevant clauses (2) to (6) "presuppose that the citizen to whom the possession of these fundamental rights is secured retains the substratum of personal freedom on which alone the enjoyment of these rights necessarily (1) ; 633 rests", it must follow logically that article 19 (1)(f) read with article 19 (5) must likewise presuppose that the person to whom that fundamental right is guaranteed retains his property over or with respect to which alone that right may be exercised. I found myself unable to escape from this logical conclusion and so I said in A.K. Gopalan 's case at pages 304 305: "But suppose a person loses his property by reason of its having been compulsorily acquired under article 31 he loses his right to hold that property and cannot complain that his fundamental right under subclause (f) of clause (1) of article 19 has been infringed. It follows that the rights enumerated in article 19 (1) subsist while the citizen has the legal capacity to exercise them. If his capacity to exercise them is gone, by reason of lawful conviction with respect to the rights in sub clauses (a) to (e) and (g), or by reason of a lawful compulsory acquisition with respect to the right in sub clause (f), he ceases to have those rights while his incapacity lasts. " I reiterated the same opinion in my judgment in ChiranJitlal 's case(1). Nothing that I have heard on the present occasion has shaken the opinion I expressed in those cases as to the correlation of article 19 (1) (f) read with article 19 (5) and article 31 of our Constitution. A suggestion was thrown out by my Lord in course of arguments, that article 19 (1) (f) was concerned only with the abstract right and capacity to acquire, hold and dispose of property and had no reference or relation to any rights in any particular property but that article 31 only was concerned with the right to a concrete property and there was no correlation between the two articles. The matter, however, was not argued by either side and I am not prepared to express any final opinion on it. For the purpose of this appeal I am content to proceed on the footing that article 19 relates to abstract right as well as to right to concrete property. (I) ; at p. 919. 4 95 S.C.I./59 634 I now turn to article 31 which appears under the heading "right to Property". The clauses of that article which are material for the purposes of determining the question in debate run as follows : "(1) No person shall be deprived of his property save by authority of law. (2) No property, movable or immovable, including any interest in, or in any company owing, any commercial or industrial undertaking, shall be taken possession 01: or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the compensation is to be determined and given. * * * * (5) Nothing in clause (2) shall affect (a) the provisions of any existing law other than a law to which the provisions of clause (6) apply, or (b) the provisions of any law which the State may hereafter make (i) for the purpose of imposing or levying any tax or penalty, or (ii) for the promotion of public health or the prevention of danger to life or property, or (iii) in pursuance of any agreement entered into between the Government of the Dominion of India or the Government of India and the Government of any other country, or otherwise, with respect to property declared by law to be evacuee property. " It is suggested that the two clauses are not mutually exclusive but must be read together and that they are only concerned with what has been described as the State 's power of eminent domain which, according to Professor Willis, means the legal capacity of sovereignty, or one of its governmental organs, to take private property for a public use, upon the 635 payment of just compensation. Reference is made to certain passages culled from the works of eminent ancient writers like the Dutch publicist and statesman Hugo Grotius who flourished in the ' 17th century and William Blackstone the celebrated English jurist who wrote his Commentaries round about 1769 and from Judge Cooley 's well known book on Constitutional Limitations to show that from early times jurists have insisted on three things as pre requisites for 'the exercise of this power of eminent domain, namely, (1) the authority of law, (2) the requirement of public use, and (3) the payment of just compensation. These three prerequisites which constitute limitations on the power of eminent domain are said to have been epitomised in 1791 in the last two clauses of the Fifth Amendment to the Constitution of the United States of America. The contention is that article 31 reproduces those three limitations on the power of eminent domain, namely, that clause (1) announces the necessity for legislative sanction as a pre requisite for the exercise of the power, thus protecting all persons against expropriation by the State acting through its executive organ, the Government, and that ' clause (2) reproduces the necessity of a public purpose and payment of compensation. It is concluded that these important limitations on the State 's power of eminent domain are designed to protect a person against arbitrary deprivation of his property and they constitute his fundamental right in relation to his property. The proposition thus formulated is certainly attractive and, indeed, has found favour with my learned colleagues but appears to me to be open to certain objections. I say in all humility that I consider the method of approach and the line of reasoning in support of that proposition entirely fallacious and wrong. The steps in the argument seem to be (i)that the power of eminent domain and the limitations thereon as explained by eminent jurists are incorporated in the Fifth Amendment to the Constitution of the United States, (ii) that clauses (1) and (2) of article 31 are concerned with the same topic of 636 eminent domain and (iii) that, therefore, clauses (1) and (2) of article 31 must be read as having reproduced the same limitations on the power of eminent domain. This line of reasoning amounts, in effect, to likening one thing with another thing and then saying that as that other thing means such and such this thing must, therefore, bear the same meaning a method which has been deprecated by Lord Halsbury in Styles ' case(1). Further, if this line of reasoning were correct or permissible then we might as 'well have said,as indeed we were asked to say, that article 21reproduced the American constitutional limitationsa gainst deprivation of life and personal liberties and that, therefore, the expression "procedure established by law" to be found in article 21 meant exactly what the expression "dueprocess of law" occurring in the Fifth Amendmentdid. This we resolutely and definitely declinedto do in A. K. Gopalan 's case (supra). At page 108 of the report of that case Kania C I expressed the view that that line of reasoning was not proper and was misleading. My Lord the present Chief Justice ' at page '197 repelled that contention. After quoting the words of Madison about the great and essential rights of the people" my Lord concluded at page 199: "This has been translated into positive law in Part III of the Indian Constitution, and I agree that in construing these provisions the high purpose and spirit of the Preamble as well as the constitutional significance of a Declaration of Fundamental Rights should be borne in mind. This, however, is not to say that the languageof the provisions should be stretched to square withthis or that constitutional theory in disregard of the cardinal rule of interpretation of any enactment, constitutional or other, that its spirit, no less than its intendment should be collected primarily from the natural meaning of the words used". After noticing the argument of learned counsel for the petitioner Mukherjea J. at page 266 et scq found (1) ; 637 It impossible to introduce the American doctrine of due process of law into our article 21. If the language of our articlc 21 could not be stretched to square with the American due process clause so as to give effect to the suggested enlargement of the scope of our fundamental right to life and personal liberties but had to be interpreted by giving the words their ordinary natural meaning I cannot see why the language of article 31 should not bc construed in the usual way so as to give effect to the plain intention our Constitution makers. I say with the utmost humility that the proper method of approach is to adopt the golden rule of construction referred to in the judgment of my Lord quoted above and not to start off with any kind of assumption that our Constitution must be regarded as having reproduced this or that doctrine. Apart from the erroneous line of reasoning referred to above, the conclusion arrived at by following that reasoning appears to me to be open to serious objections on merits also. If it were correct to say that the two. clauses, (1) and (2), of article 31 deal with the same topic of the State 's power of eminent domain which is inherent in its sovereignty then, as I pointed out in my judgment in Chiranjitlal 's case(1) at page 925, clause (1). must be held to be wholly redundant and clause (2) by itself would have sufficed, for the necessity of a law is quite clearly implicit in clause (2) itself which alone would have served as a protection against State action through its executive organ, the government. Another and more serious objection against reading both the clauses as dealing only with the same topic of eminent domain is, as pointed out by me in Chiranjitlals case (supra), that such construction will place the deprivation of property otherwise than by the taking of possession or acquisition of it outside the pale of all constitutional protection. As I said there and as I shall also do hereafter in detail, one can conceive of circumstances where the State, in exercise of the State 's police power, may have to deprive a person of his property without taking possession of it or acquiring it within the meaning of (1) ; 638 article 31(2). This police power of the State is also one of the powers inherent in the sovereignty of the State. The suggestion that the first two clauses of article 31 should be read as dealing only with eminent domain will, if accepted, lead us to hold that our Constitution has not dealt with the State 's police power to deprive a person of his property and has not provided for us any protection against the State by imposing any limitation on the exercise of that power. The suggested construction will render the enunciation of our fundamental "Right to property" patently incomplete. It has been urged that the State 's police power is recognised and regulated by article 19 clauses (2) to (6) and article 31 (5) (b). I shall deal with that argument in detail hereafter and show that it is quite untenable. Apart from that argument, the result of reading article 31, clauses (1) and (2) together will be to hold that our Constitution has not provided for us any protection against the exercise of the State 's police power either by the Legislature or by the executive. Such a conclusion I am not prepared to accept. Accordingly I thus explained what I conceived to be the true scope and effect of clauses (1) and (2) of article 31 in Chiranjitlal 's case (supra) at page 925, namely, that clause (1) deals with deprivation of property in exercise of police power and enunciates the restriction which our Constitution makers thought necessary or sufficient to be placed on the exercise of that power, namely, that such power can be exercised only by authority of law and not by a mere executive fiat and that clause (2) deals with the exercise of the power of eminent domain and places limitations on the exercise of that power. It is these limitations which constitute our fundamental right against the State 's power of eminent domain. The language used in article 31(2) clearly indicates beyond doubt that the power of eminent domain as adopted in our Constitution is concerned with only that kind of deprivation of property which is brought about by the taking of possession or acquisition contemplated by that clause. I again adverted to this matter in The State of Bihar vs Maharajadhiraja 639 Kameshwar Singh of Darbhanga(1 ). It is said that such a construction of article 31(1) instead of enunciating any fundamental right of the people at all will, on the contrary, declare the fundamental right of the Legislature to deprive a person of his property by merely. enacting a law. This appears to me to be a very superficial. criticism which completely overlooks that article 31(1), as far as it goes, does lay down a fundamental right by imposing a limitation at least on the executive power. It is this limitation placed on the executive power that constitutes our fundamental right to property under article31(1). I see no compelling or cogent reason for changing the views I expressed on this point in my judgments in those two cases. It is necessary, at this stage, to examine the several other objections that have been taken to the correctness of the interpretation suggested by me. It is said that the State 'section police power in relation to the citizens ' right to freedom is fully recognised in article 19. Clause (1) of that article secures to the citizens of India seven specified rights but clauses (2) to (6) permit the State to make laws imposing reasonable limitations on the exercise of these seven rights as therein mentioned. The argument is that clauses (2) to (6)recognise the police power of the State in that they permit it to make laws imposing restrictions on the seven rights of the citizens and that they at the same time regulate that power by placing limitations upon it by requiring that the restrictions which may be imposed must be reasonable. It is then pointed out that the State 's police power is further saved by article 31(5) (b) and it is concluded that the police power having been recognised and provided for in article 19 and article 31(5) (b) there is no necessity to read article 31(1) as concerned with the State 's police power at all. I see no force or validity in the aforesaid objection. I first deal with the objection in so far as it is founded on the recognition of the State 's police power in (1) at pp. 988 989. article 19. I say that there is no force in this objection for the following reasons: (a) article 19(1) enumerates seven rights to freedom and guarantees them to the citizens of India. Clauses (2) to (6) of that article recognise and regulate the exercise of police power over those rights by the State through its legislative organ, for the State is, by those clauses, permitted to impose reasonable restrictions by law only. Therefore, it follows that article 19 does not give any protection to the citizens against the executive government in respect of even those seven rights. The citizens, however, have protection against the executive as well as the Legislature under article 21 but that protection covers life and personal liberties only. Where, then, is the citizen 's protection against the exercise of police power by the executive over his property? It is nowhere except in article 31(1) as construed by me. (b) Article 19 guarantees the seven rights of the citizens only and recognises and regulates the exercise of police power over those rights by the legislative organ of the State. A non citizen is entirely outside that article and consequently he has none of those seven rights and has no protection against the State under that article. He has, therefore, to fail back upon article 21 and contended that all his personal liberties including the six rights enunciated in article 19(1)(a) to (e) and (g)are protected against the exercise of police power by the State through its executive or legislative limb. But article 21, as already observed, only protects him from deprivation of life and personal liberties. Where, then, is the non citizen 's protection against deprivation of his property by the exercise of police power by the executive government. It is no where unless article 31(1) is read in the way I have suggested. (c) Finally, clauses (2) to (6) of article 19 authorise the State to make laws imposing reasonable "restrictions" on the citizen 's rights under clause (1). It is true that in A. K. Gopalan 's case (supra) Fazl Ali J. in his dissenting judgment took the view that 641 "restrictions" might cover the case of total deprivation, but none of the other members of that Bench accepted that position. Kania C.J. said at page 106: "Therefore, article 19 (5) cannot apply to a substantive law depriving a citizen of personal liberty. I am unable to accept the contention that the word 'deprivation ' includes within its scope "restriction" when interpreting article 21". My Lord the present Chief Justice expressed his views at p. 191 in the words following: "The use of the word 'restrictions ' in the various sub clauses seems to imply, in the context, that the rights guaranteed by the article are still capable of being exercised, and to exclude the idea of incarceration though the words 'restriction ' and 'deprivation ' are sometimes used as interchangeable terms, as restriction may reach a point where it may well amount to deprivation. Read as a whole and viewed in its setting among the group of provisions (articles 19 22) relating to 'Right to Freedom ', article 19 seems to my mind to presuppose that the citizen to whom the possession of these fundamental fights is secured retails the substratum of personal 'freedom on which alone the enjoyment of these rights necessarily rests". The contrary view expressed by a Bench of the Allahabad High Court was rejected by my Lord at the end of page 193 with the following remark: " . . their major premise that deprivation of personal liberty was a 'restriction ' within the mean ing of article 19 is, in my judgment, erroneous '. Mahajan J. expressed the same view in the following passage at page 227 in his judgment in that case: "Preventive detention in substance is a negation the freedom of locomotion guaranteed under article 19(1)(d) but it cannot be said that it merely restricts it". Mukherjea J. said at page 256: . . and the purpose of article 19 is to indicate the limits within which the State could, by legislation, 642 impose restrictions on the exercise of these fights by the individuals. The reasonableness or otherwise of such legislation can indeed be determined by the court to the extent laid down in the several clauses of ' article 19, though no such review is permissible with regard to laws relating to deprivation oflife and personal liberty". His Lordship concluded thus at page 264: "The result is that, in my opinion, the first contention raised by Mr. Nambiar cannot succeed and it must be held that we are not entitled to examine the reasonableness or otherwise of the Preventive Detention Act and see whether it is within the permissible bounds specified in clause (5) of article 19". After discussing the matter at some length at pages 302 305 I concluded on page 306: "In my judgment article 19 has no beating on the question of the validity or otherwise of preventive detention and, that being so, clause (5) which prescribes a test of reasonableness to be defined and applied by the court has no application at all". A suggestion was made that although in A.K. Gopalan 's case (supra) the word "restriction" occurring in clauses (2) to (6) could not, in its application to, sub clauses (a) to (e) and (g) be taken as extending to "deprivation ", there is no compelling reason to hold that the word "restriction" occurring in clause (5) may not in its application to sub clause (f) cover "derivation" There is no substance in this contention. Clause (5) covers sub clauses (d), (e) and (f) and surely one and the same word "restriction" used in one and the same clause (5) cannot have one meaning in its application to sub clauses (d) and (e) and a different meaning and connotation in its application to subclause (f). Further, the reasons why, in A.K. Gopalan 's case (supra), that word was given a narrower meaning in its application to sub clauses (a) to (e) and (g) apply mutatis mutandis in its application to sub clause (f) read ' in correlation to article 31. It is, therefore, clear from the decision of this court in A.K. Gopalan 's case (supra) that article 19 does not give any protection 643 against deprivation of property as distinct from mere restriction imposed on the right 'to property. For protection against deprivation of life and personal liberties including the several rights to freedom enunciated in sub clauses (a) to (e) and (g) of article 19 by the exercise of police power by the legislative or the executive organ of the State the citizen as well as the non citizen will have to look to article 21. For protection against the deprivation of property by legislative or executive State action both the citizen and the non citizen will have to rely on article 31. If, as I shall show presently, clause (5) (b) were inserted in article 31 ex abundanti cautela and not as a substantive provision defining the ambit or scope of the police power or formulating any limitation on that power, then the protection against deprivation of property will have to be derived from only clauses (1) and (2). If, in such circumstances, both those clauses are read in the way suggested by learned counsel for the respondent, Subodh Gopal Bose, namely, as dealing only with the topic of the State 's power of eminent domain then there will remain no escape from the conclusion that in the Republic of India neither a citizen nor a non citizen has any constitutional protection against the exercise of police power either by the legislative or executive organ of the State. On the other hand, if the construction suggested by me be adopted, everybody, citizen or non citizen, will have, under article 31 (2), full protection against the exercise the power of eminent domain by both the executive as well as Legislature and in addition to that will also have protection against the exercise of police power over property by the executive. The preservation of this protection alone, even if some may regard it as very meagre, is, to my mind, a sufficiently cogent reason for adopting the construction suggested by me in preference to the other construction which, if adopted, will not save even this meagre protection. The next objection to the conclusion arrived at by me is that police power of depriving a person of his property is amply provided for in article 31 (5) (b) and it is not necessary to read it into article 31 (1). 644 A perusal of clause (5) of article 31 which 1 have already quoted will at once show that that clause excepts certain laws from the operation of clause (2) only. It will also appear that the exception covers, under sub clause (b), only certain kinds of future laws. Item (i) under sub clause (b) comprises future laws imposing or levying any tax or penalty. Item (ii) under that sub clause saves future laws for the promotion public health or the prevention of danger to life or property. It is said that this clause (5)(b)(ii)saves laws to be made in exercise of the State 's police power. The argument is that the State 's police power of imposing "restriction" on the citizens ' right to acquire, hold and dispose of property is recognised and controlled by clause (5) of article 19 and that when it becomes necessary for the police power to extend beyond "restrictions" and to inflict "deprivation" property it can do so by the kind of law which is, by clause (5)(b) (ii) of article 31, saved from the operation of clause (2). It is pointed out that in the matter of imposition of "restrictions" on the exercise of the right to acquire, hold and dispose of property the only limitation on the police power is that the "restrictions" to be imposed by law must be reasonable as indicated in article 19 (5) but that in the matter of "deprivation" of property by authority of law under article 31 the limitation on the police power is more 'stringent, namely, that such law may be made only for the promotion of public health or the prevention of danger to life or property as mentioned in clause (5) (b) (ii) and for no other purpose. The argument thus formulated is attractive for its simplicity and has the appearance of plausibility but cannot stand the test of close scrutiny. I say so far the following reasons : (i) Every student of Constitutional law is well aware that constitutional lawyers classify the State ' sovereign power into three categories, namely, the power of taxation, the power of eminent domain and the police power. These are distinct categories of sovereign powers with different connotations subserving different needs of the society and the State. If both 645 clauses (1) and (2) of article 31 deal with and impose restrictions only on the State 's 'power of eminent domain, then there was no real necessity for exempting by article 31 (5)(b)the taxation power or the police power from the operation of the power of eminent domain, for, ex hypothesis, the two first mentioned powers, being distinct from the power of eminent domain, did not and could not fail within the last mentioned power and, therefore, needed no exemption. Even a casual student of Constitutional law knows that money is one of the kinds of property which, it is said, cannot be taken in exercise of the State 's power of eminent domain and that being so there could be no necessity for exempting laws imposing taxes from the operation of article 31 (2) which embodies only the doctrine of eminent domain. Further, the police power, like the pOwer of taxation and the power of eminent domain, is an attribute of sovereignty itself. It is, as Professor Willis calls it, "the offspring of political necessity". This coercive legal capacity is inherent in every sovereign and requires no specific reservation. Indeed, in the Constitution of the United States there. is no specific reservation of the police power of the State. There was, therefore, no necessity for expressly saving the police power of our State by a constitutional provision. Why, then, was clause (5) (b) (ii) inserted in article 31 at all ? The answer will become obvious if it is remembered that it is extremely difficult to define precisely the ambit and scope of the State 's police power over or in relation to private property and some of the instances and forms of the exercise of such police power over or in relation to property may superficially resemble the exercise of the power of eminent domain. The conclusion, therefore, becomes irresistible that although clause (5)(b)(ii) was not strictly speaking necessary for saving the police power, nevertheless, our Constitution makers, out of abundant caution and with a view to avoid any possible argument, thought fit to insert sub clause (5) (b) (ii)in article 31. It is impossible to hold that the entire police power of the State to deprive a person of his property is contained in that sub clause. 646 (ii) According to the argument article 31 (5)(b) saves the power of ' the State to make certain laws in exercise of its power of taxation or its police power. It will be noticed that it does not give us any protection against the Legislature by laying down any test for the validity of those laws. The acceptance of the suggested construction will mean that laws thus saved may be as archaic, offensive and unreasonable as the legislature may choose to make them so long as they relate to the subjects referred to in that sub clause. If our sense of the sanctity of private property is not shocked at the prospect of leaving our property at the unfettered mercy of the Legislature in respect of laws of the kind specified in clause (5) (b) (ii), I do not see why the construction suggested by me should be rejected only on the ground that it will give a carte blanche to the Legislature to make any law it pleases for the deprivation of property in exercise of police power. (iii) Article 31 (5) (b) gives us no protection against the executive with respect to the exercise of these powers. Take article 31 (5)(b)(i)first. That it was. not intended to be a protection against the executive in the exercise of the power of taxation cannot for a moment be doubted, for if it were so intended, there was no necessity, then, for inserting into the Constitution article 265 providing that no taxes. shall be levied or collected except by authority of law, which clearly means that the executive cannot, on its own authority, levy or collect any tax. It is, therefore, quite plain that article 31 (5)(b)(i)was not designed to give any protection against the executive in the matter of the exercise of the power of taxation and that our Constitution makers, precisely for that reason, considered that it was necessary that such protection should be given expressly and, therefore, inserted article 265. Likewise, article 31 (5)(b)(ii) saves certain laws and does not in terms give us any protection against the exercise of police power by the executive. Where, then, is our protection against deprivation of property by the exercise of police power by the executive Government? It is nowhere to be 647 found in our Constitution except in article 31(1). This, to my mind, clearly indicates that article 31(1)was designed to formulate a fundamental right against deprivation of property by the exercise ' of police power by the executive arm of the State. The protection against the exercise of the power of eminent domain by the executive government is to be found in the requirement of a law which alone may authorise the taking of possession or the acquisition of the property which, as will be explained later, is implicit in article 31(2) itself and it is, therefore, not necessary to have recourse to article 31(1) to secure that protection. (iv) To say that the entire police power of the State to deprive a person of his property is to be found only in article 31(5)(b)(ii) will be to confine the exercise of that power by the Legislature within a very narrow and inelastic limit, namely, only for the promotion of public health or the prevention of danger to life or property. On the assumption that article 31 (5)(b)(ii) is concerned with saving the police power it may cover the laws authorising the destruction of rotten or adulterated foodstuff or the pulling down of a dangerous dilapidated building or the demolition a building to prevent fire from spreading. But it is quite easy to contemplate laws which do not fall within article 31 (5) (b) (ii) but are, nevertheless, made mistakably in exercise of the State 's police power. Consider the case of a law authorising the seizure and destruction of, say, obscene pictures or blasphemous literature. Such law is clearly necessary for the promotion or protection of public morality. Nobody can for a moment think of contending that such law will be void if it does not provide for compensation and yet that will be the result if we are to accept the suggested construction, for such a law made for protecting public morality is obviously not covered by article 31 (5)(b)(ii) and will, according to such construction, be hit by article 31(2). A construction which leads to the astounding result of compelling the State to buy up obscene pictures and.blasphemous literature if it desires to preserve public morality cannot merit serious consideration and must be discarded at once. Take 648 the case of a law providing for the compulsory contribution by all banks based upon the average daily deposits for the purpose of creating a guarantee fund to secure the full repayment of deposits to all depositors in case any such bank becomes insolvent and i$ ordered to be wound up. This law quite clearly deprives the banks of property in the shape of their respective contributions and it is not covered by clause (5) (b) (i) as it cannot be said to impose a tax or a penalty and does not fail within (5) (b) (ii) either, for it is not a law for the promotion of public health or for the prevention of danger to life or property. This law being thus outside clause (5)(b)cannot, according to the suggested construction be supported as an instance of exercise of police power for, ex hypothesis the entire police power with regard to deprivation of property is contained in clause (5)(b)and consequently the law I have mentioned will not be protected from the operation of article 31(2) and must be void for not providing any compensation. Yet in the United States where so much is made of the sanctity of private property and from where we are prone to draw inspiration in these matters such a law has been upheld as ,constitutional, as an instance of a valid exercise of the State 's police power "which extends to all the great public needs. " [See Noble State Bank vs Haskell(1)]. Again, suppose there is a labour dispute between, say, a tramway company and its workers and the running of the tram cars is stopped. A law which in such circumstances authorises the State to take possession of the tram depot and run the tram cars by the military or other personnel during such emergency for the convenience of the travelling public is not within clause (5)(b)(ii) and on this construction will be void if it does not provide for compensation to the tramway company. On the suggested construction pushed to its logical conclusion it will not be possible in future to impose any social control on the profiteers or blackmarketeers, for a law controlling and fixing prices of essential supplies will always deprive them of property of the value to be measured by the difference between (1) ; 649 the blackmarket price and the controlled price. The suggested construction may even make it difficult to support any future law containing provisions similar to those in the procedure codes or other laws not strictly falling within the clause (5)(b)(ii)but authorising the seizure of books, documents or other property or the appointment of a receiver or sequestrator to take possession of property, for in all such cases there will be a "deprivation" of property. It is unnecessary to multiply instances. The several instances I have just given above appear to me to furnish ample justification for rejecting a construction which may make it impossible for the State to undertake beneficial legislation to promote social interest and may invalidate laws of the kind I have mentioned. (v) Article 31 (5) (b) (ii) saves from the operation of clause (2) laws to be made in future for the promotion of public health or the prevention of danger to life or property. Obviously it was contemplated that the laws thus saved would involve the taking of possession or acquisition of private property, for otherwise there would be no necessity for the exemption at all. Take the case of a law authorising the opening out of a congested part of a town and the acquisition of land for the laying out of a public park for affording fresh air and other health amenities to the public. Consider the case of a law authorising the clearing up of slums and the closing down of putrid and unhealthy surface drains and acquisition of land for broadening the lanes so as to lay underground sewers thereunder. One may also refer to a law authorising the acquisition of land for the erection of a hospital for patients suffering from infectious diseases, e.g., plague, small pox and cholera. All these laws will ,come under the heading of promotion of public health or the prevention of danger to life. According to the suggested construction the acquisition of property authorised by each of these laws will be exempt from payment of compensation to the owner, for these laws are, by clause (5)(b) (ii) exempted from article 31(2). And yet acquisition of land for such public purposes is precisely the kind of acquisition which is always made on payment of 5 95 section C.I.159 650 compensation under the Land Acquisition Act 1894. A construction which takes a law made really and essentially in exercise of the power of eminent domain out of article 31(2) cannot readily be accepted as cogent or correct. (vi) The complexities of modern States constantly give rise to conflicts between opposing social interest and it is easy to visualise circumstances when much wider social control legislation than is envisaged or recognised in the laws referred to in article 31(5)(b) will be imperatively necessary. Indeed, as Professor Willoughby states in his Constitutional Law of the United States, Vol. III, p. 1774, "the police power knows no definite limit. It extends to every possible phase of what the Courts deem to be the public welfare". In the language used by Holmes J. in Noble State Bank vs Haskell (supra), "it may be said in a general way that the police power extends to all the great public needs". In Eubank vs Richmond(1) the Court said of the police power: "It extends not only to regulation which promote the public health, morals, and safety, but to those which promote the public convenience or the general prosperity . It is the most essential of powers, at times most insistent, and always one of the least limitable of the powers of government." And all the more will such wide police powers be required in a State which, ' like our own, aims at being a welfare State governed by the directive principles of State policy such as are to be found in Chapter IV of our Constitution. To so confine the State 's police power as suggested by learned advocate for the respondent will be to bring about social stagnation and thereby to retard the progress of our State. There is nothing in the language of our Constitution which compels us to adopt such a construction. In my judgment a construction which is calculated to produce the undesirable result I have mentioned must, I feel sure, be rejected. (1) ; 651 The last objection to reading article31(1) as the enunciation of the fundamental right against deprivation of property by the exercise of police power and reading article 31(2)as laying down limitations on the State 's power of eminent domain is that so read article 31 will, in reality, afford no effective protection at all, for the State will always exercise its police power under article 31 (1) and deprive a person of his property without any compensation by the simple device of making a law and will never exercise its power of eminent domain under article 31(2). Where, then, it is asked, is our protection against the State with respect to our property ? The objection thus formulated overlooks the difference between the nature and purpose of the two powers which I shall presently discuss and explain and is not otherwise well rounded for the following ' reasons: (1) It is incorrect to say that article 31 (1) as construed by me gives no protection at all. It certainly gives protection against deprivation of property by executive fiat just as did that part of the famous 29th Clause of the Magna Charta which proclaimed that no free person should be dispossessed of any free tenement of his except by the law of the land. As pointed out by Mathews J. in joseph Hurtado vs People of California(1), by the 29th Clause of the Magna Charta the English Barons were not providing for security against their own body or in favour of the commons by limiting the power of Parliament but were protecting themselves against oppression and usurpation of the King 's prerogatives. In other words, that clause of the Magna Charta was not designed as a protection against Parliament at all and indeed did not purport to formulate any limitation on the Sate 's power of eminent domain but was only intended to be a protection against the exercise of police power by the highest executive, the King. There is unmistakably a familiar ring in the language of our article 31(1) echoing the sound of the language of the 29th Clause of that great charter which the English Barons had wrested from their King. The purpose and function (1) (1883) 10 U.g. 516 at p. 531. 652 of our article 31(1), as I apprehend it, are the same as those of the Magna Charta. Our Constitution has given us ample protection against the executive in relation to all the three sovereign powers of the State. Thus the executive cannot, on its own authority, and without the sanction of a law deprive any person of his life or personal liberty by reason of article 21 or of his property because of article 31(1) or take possession of or acquire private property under article 31 (2) or impose any tax under article 265. 'Our Constitution makers evidently considered the protection against deprivation of property in exercise of police power or of the power of eminent domain by the executive to be of greater importance than the protection against deprivation of property brought about by the exercise of the power of taxation by the executive, for they found a place for the first mentioned protection in article 31(1) and (2) set out in Part III dealing with fundamental rights while they placed the last mentioned protection in article 265 to be found in Part XII dealing with finance etc. So with regard to all the three sovereign powers we have complete protection against the executive organ of the State. (2) It is said we have no protection against legislative tyranny in respect of our property. This complaint obviously is not well rounded, for our Constitution has given us some measure of protection against the legislature in respect of our property. Thus if the State exercises its power of eminent domain by taking possession of or acquiring private property of any person it must do so upon the three conditions prescribed by article 31 (2). There is no shorter cut in such a case. Apart from this the citizens of India have further protection against the legislature in respect of their right to acquire, hold and dispose of property. This right is guaranteed to them by article 19(1)(f). The Constitution, however, recognises by clause (5) that the State has police power to restrict the right in the interest of the general public or for the protection of the interests of any Scheduled tribe but prescribes a limitation on this police power by requiring that the restrictions to be imposed by 653 law must be reasonable. This requirement constitutes the citizens ' fundamental right against the exercise of police power by the legislature in respect of his fight under article 19 (1)(f)whilst they are in possession and enjoyment of this right. (3) It is then urged that our Constitution, according to my construction of it, does not give us any protection against the legislature in the matter of deprivation of property in exercise of the State 's police power. This is no ground for rejecting my construction, for, on the construction suggested to the contrary, the position is exactly the same, for article 31 (5) (b) only saves certain laws from article 31(2), that is to say, recognises the police power but does not formulate any test for determining the validity of those laws which may be as unreasonable as the legislature may make them. Apart from this, what, I ask, is our protection against the legislature in the matter of deprivation of property by the exercise of the power of taxation ? None. whatever. By exercising its power of taxation by law the State may deprive uS, citizen or non citizen of almost sixteen annas in the rupee of our income. What, I next ask, is the protection which our Constitution gives to any person against the legislature in the matter of deprivation even of life or personal liberty ? None, except the requirement of article 21, namely, a procedure to be established by the legislature itself and a skeleton procedure prescribed in article 22. In A.K. Gopalan 's case (supra), notwithstanding the reference made to the epigrammatic observation of Bronson J. in Taylor vs Porte(1) to the effect that it sounded very much like the Constitution speaking to the legislature that the latter could not infringe our right unless it chose to do so, the majority of this Court declined to question the wisdom and policy of the Constitution or to stretch the language of article 21 so as to square it with its own notions of what the ambit of the right should be but felt bound to give effect to the plain words of the Constitution. (See Kania C.J. at page 11, Mukherjea J. at page 277 and my judgment at page 321). If, (1) 4 Hill 140. 654 therefore, in the matter of deprivation of property by the exercise of the State 's power of taxation our Constitution has only given us protection by article 265 against the executive but none whatever against the legislature and if, in the matter of deprivation of our life and personal liberty our Constitution has given us no better protection against the legislature than the requirement of a procedure to be established by the legislature itself: and the skeleton procedure prescribed by article 22, and seeking that our Constitution has, by article 31(2), given us protection against the legislature at least with respect to the exercise of the power of eminent domain, what is there to complain of ,if, in the matter 015 deprivation of property by the exercise of the State 's police power, our Constitution has, by article 31 (1), given us protection only against the executive but none against the legislature ? What is abnormal if our Constitution has trusted the legislature, as the people of Great Britain have trusted their Parliament ? Right to life and personal liberty and the right to private property still exist in Great Britain in spite of the supremacy of Parliament. Why should we assume or apprehend that our Parliament or State legislatures should act like mad men and deprive us of our property without any rhyme or reason ? After all our executive government is responsible to the legislature and the legislature is answerable to the people. Even if the legislature indulges in occasional vagaries, we have to put up with it for the time being. That is the price we must pay for democracy. But the apprehension of such vagaries can be no justification for stretching the language of the Constitution to bring it into line with our notion of what an ideal Constitution should be. To do so is not to interpret the Constitution but to make a new Constitution by unmaking the one which the people of India have given to themselves. That, I apprehend, is not the function of the court. If the Constitution, properly construed according to the cardinal rules of interpretation, appears to some to disclose any defect or lacuna the appeal must be to the authority competent to amend the Constitution and not to the court. 655 (4) Further, there may be quite cogent and compelling reason why our Constitution does not provide for any protection against the legislature in the matter of deprivation of property otherwise than by taking of possession or acquisition of it. It is futile to cling to our notions of absolute sanctity of individual liberty or private property and to wishfully think that our Constitution makers have enshrined m our Constitution the notions of individual liberty and private property that prevailed in the 16th century when Hugo Grotius flourished or in the 18th century when Blackstone wrote his Commentaries and when the Federal Constitution of the United States of America was framed. We must reconcile ourselves to the plain truth that emphasis has now unmistakably shifted from the individual to the community. We cannot overlook that the avowed purpose of our Constitution is to set up a welfare State by subordinating the social interest in individual liberty or property to the larger social interest in the rights of the community. As already observed, the police power of the State is "the most essential of powers, at times most insistent, and always one of the least limitable powers of the government". Social interests are ever expanding and are too numerous to enumerate or even to anticipate and, therefore, it is not possible to circumscribe the limits of social control to be exercised by the State or adopt a construction which will confine it within the narrow limits of article 31 (5) (b) (ii). It must be left to the State to decide when and how and to what extent it should exercise this social control. Our Constitution has not thought fit to leave the responsibility of depriving a person of his property, whether it be in exercise of the power of eminent domain or of the police power, to the will or caprice of the executive but has left it to that of the legislature. In the matter of deprivation of property otherwise than by the taking of possession or by the acquisition of it within the meaning of article 31 (2) our Constitution has trusted our legislature and has not thought fit to impose any limitation on the legislature 's exercise of the State 's police power over 656 private property. Our protection against legislative tyranny, if any, lies, in ultimate analysis, in a free and intelligent public opinion which must eventually assert itself. Having dealt with the correlation between clauses (1) and (2) of article 31 as I apprehend it and having considered and rejected the objections to the conclusions I have arrived at, I proceed now to examine and analyse the provisions of clause (2). As I explained in my judgment in the Darbhanga case (supra) at pp. 989 990, article 31 (2) has imposed three conditions on the exercise of the State 's power of eminent domain over private property and those limitations constitute the protection granted tO the owner of the property as his fundamental right. It insists that this sovereign power may be exercised only if it is authorised by a law. It is, therefore, clear that the executive limb of the State cannot ' exercise this power on its own authority and without the sanction of law. The taking of possession or acquisition must be for a public purpose which implies that this power cannot be exercised except for implementing a public purpose. It cannot be exercised for a private purpose. What is a public purpose has been elaborately dealt with in that case and need not be discussed over again here. Finally, the law authorising the taking of possession or acquisition of the property must provide for compensation. Compensation, therefore, is payable only when the State takes possession of or acquires private property. What, then, is the meaning of the words. "taken possession of or acquired", and their grammatical variations as used in article 31 (2) ? It is pointed out that the last clause of the Fifth Amendment which deals with eminent domain uses the word "taken" and it is suggested that as our article 31 (2) deals with the same topic of eminent domain it will be reasonable to hold that our article 31 (2) reproduces the American constitutional limitations and that, therefore, the expression "taken possession of or acquired" used in our article 31 (2) 657 must be read as having the same meaning which has been attributed , by the Judges of the Supreme Court of the United States to the word "taken" occurring in their Fifth Amendment. I am quite unable to accept this construction and the line of reasoning on which it is founded. In the first place, I deprecate the line of reasoning which starts by likening one thing with another and then ends by (imputing the qualities of the other thing to the first mentioned thing. The cardinal rule of interpretation is to ascertain the meaning and effect of an enactment, constitutional or otherwise, from the words used 'therein. If the words used have acquired a technical or special meaning, that meaning must be given to them. To say that the expression "taken possession" of or acquired" must be read as "taken" and given. the same wide meaning as the 'American courts have given to the word "taken" is to ignore the entire historical background of the law relating to compulsory acquisition of private property by the State. Under the English law, on which 'more or less our modern laws are rounded, the term "acquisition" has a special meaning. It connotes the idea of transfer of title, voluntary or involuntary. When the acquisition by the State is effected by agreement after negotiation there is a regular conveyance transferring the title from the vendor to the State. Even when the acquisition by the State is effected by the coercive process of exercising its sovereign power the idea of purchase is nevertheless present, for there is vesting of the property in the State by operation of law. Acquisition of private property by the State under the English law, therefore, connotes the concept of a purchase, voluntary or involuntary, 'and involves a 'transfer of the entire title from the owner to the State or a third party for whom the State acquires 'the property. In India, the compulsory acquisition of private property was first introduced by Bengal Regulation I of 1824. Since then we have had no less 'than seven Acts dealing with the compulsory acquisition of private property by the State, namely, Act I of 1850, Act XLII of 1850, Act XX of 1852, Act I of 658 1854, Act. XXII of 1863, Act X of 1870 and lastly the present Land Acquisition Act, Act I of 1894. Each, of these Acts provides for the vesting of the acquired property in the State. This means that the owner is divested and his title passes, by operation of law to the State. The word "acquisition", therefore, has become, as it were, a word of art having a long accepted legislative meaning implying the transfer of title. It will be quite wrong, according to the correct principles of interpretation, not to give the word "acquisition" and its grammatical variations this technical and special meaning I, therefore, respectfully agree with what Mukherjea J. said in Chiranjit Lal 's case (supra) at page 902, namely: "It cannot be disputed that acquisition means and implies the acquiring of the entire title of the expropriated owner, whatever the nature or extent of that title might be. The entire bundle of rights which were vested in the original holder would pass on acquisition to the acquirer leaving nothing in the former. In taking possession on the other hand, the title to the property admittedly remains in the original holder, though he is excluded from possession or enjoyment of the property. Article 31 (2) of the Constitution itself makes a clear distinction, between acquisition of property and taking possession of it for a public purpose, though it places both of them on the same footing in the sense that a legislation authorising either of these acts must make provision for payment of 'compensation to the displaced or expropriated ' holder 'of the property. In the context in which the, word "acquisition" appears in article 31 (2), it can only mean and refer to acquisition of the entire, interest of the previous holder by transfer of title and. . " It ' follows from what has been stated above that the word "acquired" used in article 31 (2) must be given the special meaning which that word has acquired and cannot be read as synonymous with: "taken" as used in the Fifth Amendment to the Constitution of the United States. 659 It is then suggested that any rate the expression "taken possession of" should be read in the sense in which the word "taken" is understood in the American law. But even in America the word "taken" has not always been interpreted in the same way. The old view was that in order to be a "taken" there must be either an actual taking of physical property or a physical occupancy of some physical property. This view was, however, regarded as too narrow and mechanical. It was said that the ownership of a thing, tangible or intangible, was made up of the rights, powers, privileges and immunities concerning that thing and that the property was not the thing itself but consisted of these rights, powers, privileges and immunities. It was, therefore, concluded that there must be a "taking" whenever there was any injury to property otherwise than by the police power or taxation which, if done by a private individual, would be actionable as a tort; in other words that it must be held that there would be a "taking" whenever any of the rights, powers, privileges or immunities making up the ownership was taken from the owner. Indeed, this wide interpretation of the word "taken" was facilitated by the fact that, in order to avoid the old, narrow view of the meaning of that word, many of the States so amended their Constitutions as to require compensation for property "damaged, injured or destroyed" for a public use. (See Professor Willis ' Constitutional Law, pp. 820 821). Our Constitution makers were well aware of the very wide meaning eventually given to the word "taken" by the American courts. They did not, however, use the word "taken" in article 31 (2) which they would surely have done if they intended to reproduce the wide American concept of "taking". Our Constitution makers, on the contrary, deliberately chose to adopt the narrower view point and accordingly used the words "taken possession of" in order to make it quite clear that they required compensation to be paid only when there was an actual taking of the property out of the possession of the owner or possessor into the possession of the State or its nominee. Of course the manner of 660 taking possession must depend on the nature of the property itself. I repeat with humility that it is not permissible to ignore the historical background and the actual words used in our Constitution. It is finally said that both clauses (1)and (2)of article 31deal with the topic of eminent domain and, therefore,the expression "taken possession of or acquired"occurring in clause (2)has the same meaning which the word "deprived" used in clause (1) has In other words, both the clauses are concerned with deprivation of property and there is no reason to think that the expression "taken possession of or acquired" was usedin clause (2) to indicate any particular kind or shadeof deprivation. The Obvious retort that at once comes to one 's mind is that if it were intended by our Constitution makers to convey the same general idea of deprivation of property by whatever means or mode it was brought about why did they use the word "deprived" in clause (1) and why did they use in clause (2) a different expression which, as commonly used and understood, connotes a much narrower meaning ? It would have been quite easy to frame clause (2) by using the word "deprived" instead of the expression "taken possession of oracquired". As our Constitution makers used different expressions in the two clauses it must be held that they had done so for a very definite purpose and that purpose could be nothing else but to provide for compensation for only a particular kind of deprivation specifically mentioned and not for any and every kind of deprivation. In this connection reference may be made to Entry 33 in List I, Entry 36 in List II and Entry 42 in List III of the Seventh Schedule. The words used in those entries are "acquisition or requisitioning" ortheir grammatical variations. The legislative powerbeing confined only to "acquisition or requisitioning"it will not be unreasonable to hold that "taking of possession" referred to in article 31 (2) is in the nature of "requisitioning". In section 299 (2) of the Government of India Act the words "taking of possession" did not occur nor did they occur in any of the legislative lists in the Seventh Schedule to that Act, but they have 661 been introduced in article 31 (2) and in the three entries mentioned above the word "requisitioning" has been added after the word "acquisition". If "taken possession of or acquired" occurring in article 31 (2) be given a meaning wider than what is meant by "acquired or requisitioned" or their variations used in the entries then it will amount to saying that article 31 (2) even contemplates a law with the respect to matters which are beyond the legislative powers conferred on Parliament and the State Legislatures, for they can only make a law with respect to "acquisition or requisitioning". To counter this reasoning it is pointed out that Parliament under the Union List has the residuary power of legislation and, therefore, there is no difficulty in giving a wider meaning to the expression "taken possession of or acquired". It will then amount to giving one and the same expression different meanings. Thus in its application to a law made by the State Legislature "taken possession of or acquired" must perforce mean "requisitioned" or "acquired" whereas in its application to a law made by Parliament it will have a much wider meaning. This is opposed to the cardinal rules interpretation. Therefore, "taken possession of or acquired" should be read as indicative of the concept of "requisition or acquisition". A further question, however, arises at this stage and it may be now considered. Does every taking of a thing into the custody of the State or its nominee necessarily mean the taking of possession of that thing within the meaning of article 31 (2) so as to call for compensation ? The exercise of police power in relation to property may conceivably result in the extinction or destruction of the property or in the State taking the property in its control. Take the case of the law authorising the municipal bailiff to seize rotten vegetables or adulterated foodstuffs and destroy them or to enter upon the property of a private owner to pull down the dilapidated structure. 'Consider the law authorising the men of the fire brigade to go upon the property of a private owner and demolish it to prevent the fire from spreading to the houses beyond or on the 662 other side of that house. Take the case of the law authorising the seizure and destruction of property for the protection of public morality. Although in none of the above cases there is any acquisition of property involving a transfer of title, there is in each of the above cases a "taking of possession" and destruction of property by the State by authority of law and yet nobody will say that any of the above laws authorise the "taking of possession" of the property within the meaning of article 31 (2) so that if such law does not provide for compensation the law will be unconstitutional and void. Take the case of the Court of Wards Act. It is a law which authorises the State to take possession of the estate of a disqualified proprietor and to manage it for him. The State only manages the estate on behalf and for the benefit of the disqualified proprietor. The disqualified proprietor does not appoint the State or any State official to manage his estate and he cannot dismiss or discharge the manager appointed by the State. The possession of the manager can hardly, in such a situation, be described as the possession of the disqualified proprietor. The disqualified proprietor is, therefore, in a sense, deprived of the possession of his estate and the State takes the estates m its possession. The same thing may be said of the Lunacy Act. There is no transfer of title to the State and, therefore, there is no acquisition of property by the State. This law, however, takes the property out of the possession of the owner who is adjudged a lunatic. ' But nobody will say that the Court of Wards Act or the Lunacy Act calls for compensation. The learned Attorney General has also drawn our attention to statutes, namely, Act XLVII of 1950 (The Insurance (Amendment) Act, 1950) passed on the 20th May, 1950, and which has added several sections to the , Act LI of 1951 (Railway Companies (Emergency Provisions) Act, 1951), passed on the 14th September, 1951, and Act LXV of 1951 (Industries (Development and Regulation) Act, 1951) enacted on the 30th October, 1951, in support of his contention. He points out that each of those laws is :strictly Speaking outside article 31 (5) (b) and that the 663 result of our holding that the taking of possession authorised by those Acts fails within article 31 (2) so as to call for compensation will be to prevent imposition of social control so urgently necessary for the protection of the larger interests of the society. His argument is that the taking of possession authorised by none of these three Acts fails within article 31 (2)and only illustrates the exercise of the State 's police power. As all the three Acts were passed after the Constitution came into force and as they may be challenged in future an argument rounded on them will really be begging the question in debate before us. I, therefore, prefer just to note the Attorney General 's contention and pass on and not to base my decision on consideration of any of those Acts. Confining myself then to the illustrations given by me I think it is fairly clear from the foregoing discussion that none of the laws referred to above by me authorise any "acquisition" of property in the sense explained above and although each of them does authorise a sort of taking of possession of the property yet nobody can contend that the taking of possession so authorised by them fails within article 31 (2). In other words, the taking of possession authorised by those laws does not amount to the exercise of the power of eminent domain but is the result of the exercise of police power. It follows, therefore, that every taking of possession does not fail within article 31 (2). What, then, is the test for determining whether a taking of possession authorised by a particular law is a taking of possession in exercise of the power of eminent domain or is a taking of possession in exercise of the State 's police power. I have already referred to the nature of the State 's police power and quoted from some American decisions showing that the State 's police power extends not only to regulations which promote public health, morals and safety but to those which promote the public convenience or the general prosperity. In its application to private property it, in some measure, resembles the exercise of the power of eminent domain. Thus the police power is exercised in the interest of the community and the power 664 of eminent domain is exercised to implement a public ' purpose and in both cases there is a taking of possession of private property. There is, however, a marked distinction between the exercise of these two sovereign powers. According to Professor Willis at page 717 eminent domain takes property for use by the public or for the benefit of the public, while the police power prevents people from so using their own property as to injure others. The fundamental principle which is held to justify the exercise of police power is that no one shall use his property or exercise any of his legal rights as injuriously to interfere with or affect the property or other legal rights of others. (See Willoughby, Vol. Ill, p. 1775). The primary purpose of police power is protection or prevention that persons may be restrained from so exercising their private rights of property, contract or conduct as to infringe the equal rights of others or to prejudice the interests of the community. (Willoughby, Vol. III, p. 1783). When the State finds that a certain public purpose needs fulfillment and then in order to implement that public purpose the State takes possession of private property on its own account after acquiring it or even without acquiring it and having taken possession of the property the State itself uses or utilises the property or makes it over to a third party to do so for implementing that public purpose which the State has taken upon ' itself to serve and for which the property was taken possession of or acquired the State is said to have exercised its power of eminent domain. This power can only be exercised under a and that law must provide for compensation. The point to note is that in such a case the public purpose is one which the State has set out to fulfil as its own obligation and the State takes possession on its own account to discharge its own obligation. In police power the State destroys or extinguishes or takes possession of property in order to prevent the owner from indulging in anti social activities or otherwise inflicting injury upon the legitimate interests of other members of the community either by using his property in a manner he should not do or by omitting to use it in a manner 665 he should do. In such a case the State steps in and destroys or extinguishes only to prevent an injury to social interest or takes possession and assumes the superintendence of the property not on its own account for implementing its own public purpose but for protecting the interests of the community. It is easy to perceive,though somewhat difficult to express, the distinction between the two kinds of taking of possession which undoubtedly exists. In view of the wide sweep of the State 's police power it is neither desirable nor possible to lay down a fixed general test for determining whether the taking of possession authorised by any particular law fails into one category or the other. Without, therefore, attempting any such general enunciation of any inflexible rule it is possible to say broadly that the aim, purpose and the effect of the two kinds of taking of possession are different and that in each case the provisions of the particular law in question will have to be carefully scrutinised in order to determine in which category falls the taking of possession authorised by such law. A consideration of the ultimate aim, the immediate purpose and the mode and manner of the taking of possession and the duration for which such possession is taken, the effect of it on the rights of the person dispossessed and other such like elements must all determine the judicial verdict. The task is difficult and onerous but the court will have to hold the scale even between the social control and individual rights and determine whether, in the light of the constitutional limitation, the operation of the law is confined to the legitimate sphere of the State 's police power or whether it has overstepped its limits and entered into the field of eminent domain. It is only in this way that the Court serves and upholds the Constitution by reconciling the conflicting social interests. In the light of the foregoing discussions and the conclusions reached by me I now proceed to examine the contention. that the impugned section 7 of the amending Act (VII of 1950) is unconstitutional 'in that it infringes Subodh Gopal Bose 's fundamental right to property guaranteed by article 31. The argument is 6 95 S.C. India/59. 666 that having purchased the entire Touzine at a revenue sale the respondent Subodh Gopal Bose had under the old section 37 of the Act of 1859, acquired the valuable right to annul the under tenures and to eject the under tenants and that he had actually obtained a decree for ejectment but that he had been deprived of those vested rights by the operation of section 7 of the amending Act which, in effect, gave retrospective operation to the new section 37. Assuming that the right to annul under tenures and to eject under tenants and the decree for ejectment come within the term "property", as used in article 31(2) as to which I have considerable doubts the question at once arises whether they have been taken possession of or acquired under the impugned Act. The Touzi still remains the property of the respondent Subodh Gopal Bose. He can realise rents and exercise all acts of ownership except that he cannot exercise the right to annul the under tenures or eject any under tenants or execute the decree he has obtained. But have these last mentioned rights been taken possession of or acquired by the State within the meaning of article 31(2) ? There is no doubt that the State has not "acquired" these rights in the sense I have explained, for there has been no transfer, by agreement or by operation of law, of those rights from the respondent Subodh Gopal Bose to the State or anybody else. The impugned law has not vested those fights in the State or anybody else and does not authorise the State or anybody else to exercise these rights. Referring to the position of the shareholders under the Sholapur Spinning and Weaving Company (Emergency Provision) Act, 1950, Mukherjea J. said in his judgment in Chiranjitlal 's case (supra) at pp. 905 906 : "The State has not usurped the shareholders ' right to vote or vested it in any other authority. The State appoints directors of its own choice but that it does, not in exercise of the shareholders ' right to vote but in exercise of the powers vested in it by the impugned Act. Thus there has been no dispossession 'of the shareholders from their right of voting at all. The same reasoning applies to the other fights of the 667 shareholders spoken of above, namely, their right of passing resolutions and of presenting winding up petitions. These rights have been restricted undoubtedly and may not be capable of being exercised to the fullest extent as long as the management by the State continues. Whether the restrictions are such as would bring the case within the mischief of article 19(1)(f) of the Constitution I will examine presently; but I have no hesitation in holding that they do not amount to dispossession of the shareholders from these rights in the sense that the rights have been usurped by other people who are exercising them in place of the displaced shareholders. " The above reasoning applies mutatis mutandis to the case now before us. The truth is that these rights have not been taken possession of or acquired at all in exercise of the power of eminent domain but have been extinguished or destroyed in exercise of the State 's police power to prevent public mischief and anti social activities referred to in the objects and reasons appended to the bill which eventually became the impugned law. In the premises, the respondent Subodh Gopal Bose has been deprived of his "property", if these rights can be properly so described, by authority of law and the case fails within article 31(1) and not within article 31(2) at all. If the impugned section is regarded as imposing a restriction on the right of Subodh Gopal Bose to hold property then, for reasons I have mentioned, I hold such restrictions, in the circumstances of this case, to be quite reasonable and permissible under article 19 (5). If the impugned section operates as an extinguishment of his right to property, treating the right to annul under tenures and to eject under tenants and to execute the decree for ejectment as property, then, in my judgment, these rights of the respondent Subodh Gopal Bose have not been taken possession of or acquired by the State within the meaning of article 31(2) but he has been deprived of his property by authority of law under article 31(1) which calls for no compensation. In the premises, the plea of unconstitutionality cannot prevail and must be rejected. I 668 would, therefore, allow the appeal with costs both here ' and in the High Court. GHULAM HASAN J. I concur with my Lord the Chief Justice that the view of the High Court, Calcutta, that section 7 of the West Bengal Revenue Sales (West Bengal Amendment) Act, 1950, is void as abridging the fundamental rights of the first respondent under article 19(1)(f)and (5) of the Constitution cannot be sustained and I agree with the order proposed by him. JGANNADHADAS J. l have had the advantage of reading the judgments of my Lord the Chief Justice and of my learned brother Justice S.R. Das. On the assumption that the question raised in this case is one that arises under article 19(1) (f) and (5) of the Constitution that being the footing on which the learned Judges of the High Court dealt with the case I agree with that portion of the judgment of my learned brother Justice S.R. Das which holds that the impugned section 7 of the Bengal Land Revenue Sales (West Bengal Amendment) Act, 1950 (West Bengal Act VII of 1950) is intra vires and for the reasons stated by him. A larger question has, however, been raised as to whether this is a case which falls within the scope of article 19(1) (f) and (5) or article 31 of the Constitution. Since, on either view, we are all agreed as to the final result of this appeal, I have felt rather reluctant to go into this larger question. But out of profound respect for my Lord the Chief Justice and my learned brother Justice S.R. Das who have dealt with the matter fully and out of a sense of duty to the Court, I venture to express my views briefly. My Lord the Chief Justice is inclined to the view that the fundamental right declared in article 19(1) (f) has no reference to concrete property rights but refers only to the natural rights and freedoms inherent in the status 'of a citizen. Even so, with respect, I fail to see how the restrictions on the exercise of those fights referred to in article 19(5) can be otherwise than with reference to concrete property rights. To me, it 669 appears, that article 19(1) (f), while probably meant to relate to the natural rights of the citizen, comprehends within its scope also concrete property rights. That, I believe, is how it has been generally understood with out question in various cases these nearly four years in this Court and in the High Courts. At any rate, the restrictions on the exercise of rights envisaged in 'article 19(5) appear to relate normally, if not invariably to concrete property rights. To construe 'article 19(1) (f) and (5) as not having reference to concrete property rights and restrictions on them would enable the legislature to impose unreasonable restrictions on the enjoyment of concrete property (except where such restrictions can be brought within the scope of article 31(2) by some process of construction). As at present advised, I am unable to give my assent to such a view. Now as regards article 31, I agree that clause (1) cannot be construed as being either a declaration or implied recognition of the American doctrine of " 'police power". The negative language used therein cannot, I think with respect, be turned into the grant, express or implied, of a positive power. I need as my Lord the Chief Justice has pointed out in his judgment, no such grant of police power is necessary having regard to the scheme of the Constitution. That scheme, as I understand it, is this. The respective 'legislatures in the country have plenary powers assigned to them with reference to the various subjects covered by the entries enumerated in the Lists of the Seventh Schedule by virtue of articles 245 to 255. These powers are subject to the limitation under article 13 that the power is not to be so exercised as to infringe the fundamental rights declared in Part III of the Constitution. And, therefore, the legislatures 'can exercise 'every power including the police power, ' if it is necessary to import that concept within these : limits, in so far as it is not provided for in article 19(2) to (6) and article 31 (5) (b) (ii) or other specific provisions in the Constitution, if any. The only problem thus presented to the Courts is not as to what is the extent of the police power, 'but as to what is the scope 670 and limit of the fundamental right which is alleged to have been infringed by legislative action. I agree with my learned brother Justice S.R. Das that the Constitution envisages a large measure of social control a means to achieve the goal set out in the preamble and in the directive principles enumerated in Part IV. I am also of the view that the Courts may not ignore the directive principles, as having no bearing on the interpretation of constitutional problems, since article 31 categorically states that "it shall be the duty of the State (including the legislature by virtue of the definition of 'State ' in Part III made applicable by article 36) to apply these principles in making laws". While, therefore, I agree in thinking that a substantial measure of social control legislation may become necessary in the fullness of time, that to my mind, is no reason for construing article 31(1) as implying some undefined police power, though such a consideration may have relevance in the determination of the ambit of a fundamental right. On the other hand, I am unable to agree with the view that article 31(1) has reference only to the power of Eminent Domain. I do not dispute that it comprehends within its scope the requirement of the authority of law, as distinguished from executive fiat for the exercise of the power of Eminent Domain. But it appears to me that its scope may well be wider. This really depends on what is the exact meaning to be assigned to the word "property" as herein used and on whether "deprivation" contemplated by article 31 (I) is in substance the same as "taking possession" or "acquisition" contemplated in article 31(2). My Lord the Chief Justice is inclined to the view that "taking possession" or "acquisition" is to be construed as having reference to and meaning "deprivation" or vice versa. Undoubtedly "taking Possession" and "acquisition" amount to "deprivation" but the converse may not follow in the particular context in which these words and phrases are used. With great respect, I can see no warrant for the construction adopted except the assumption that article 31(1) and article 31(2) refer to the same and identical topic of 671 eminent domain and that they provide for the different requirements thereof, i.e., the requirement authority of law under article 31(1) and the requirements of public purpose and compensation under article 31(2). But it appears to me that if in article 31 (2) "acquisition" and "taking possession" were meant to be synonymous with "deprivation" already used in article 31 (1) there was no reason to drop the use of the word "deprivation" in article 31(2) and to use other words and phrases therein. For instance, article 31(2) may well have run as follows. "There shall be no deprivation of property, movable or immovable, . . for public purposes under any law 'authorising the same unless the law provides . . " or some other such clause may have been suitably drafted. It appears to me that while the framers of the Constitution laid down the requirement of the authority of law for "deprivation of property" with a larger connotation, they limited the requirement of payment of compensation to what may reasonably be comprehended within the concepts of "acquisition" and "taking possession". With respect, to read these words and phrases in article 31 (2) as meaning the same thing as "deprivation" used in article 31 (1) and to make the test of "substantial abridgement" or "deprivation" as the sine qua non for payment of compensation under article 31 (2) is to open the door for introduction of most, if not all the elements of wide uncertainty which have gathered round the word "taken" used in the corresponding context in the American Constitution, notwithstanding caution to the contrary which my Lord the Chief Justice has indicated in his judgment. I am inclined to think that it is in order to obviate this that the framers of the Constitution deliberately avoided the use of the word "deprived" or "deprivation" in article 31(2). I am conscious of the principle that a Constitution has to be liberally construed so as to advance the content of the right guaranteed by it. But where, as in this case, there is, what appears, a deliberate choice of the language used, and where it is not unlikely that having regard to the goal that the Constitution has 672 set to itself in Part IV, certain degree of caution and restraint may well have been intended as to the limits of the right, the intendment of the language used has, in my opinion, to prevail. On the other hand, I am unable to agree with my learned brother Justice S.R. Das that "acquisition" and "taking possession" in article 31 (2) have to be taken as necessarily involving transfer of title or possession. The words or phrases appear to me to comprehend all cases where the title or possession is taken out of the owner and appropriated without his consent by transfer or extinction or by some other process, which in substance amounts to it, the possession in this context meaning such possession as the nature of the property admits and which the law recognises as possession. This seems to follow from the enumeration of the classes of property in article 31 (2) to which it is applicable and also by reason of the broader consideration that from the point of view of the owner or possessor whose title or possession is appropriated, every such act of appropriation stands on the same footing. That the idea of transference of title or possession is not necessarily to be implied by article 31 (2) appears to me to be also indicated by article 31 (5) (b) (ii), which more often than not, would cover cases of destruction of property. Incidentally, I may mention that I am inclined to the view, in agreement with my LOrd the Chief Justice, that article 31 (5) (b) (ii) is an exception to article 31 (2) and is intended to absolve the need for payment of compensation for "acquisition" or "taking possession" of property for the purposes specified therein. It, therefore, seems to imply payment of compensation, if such "acquisition" or "taking possession" of property is for other purposes. The question then remains as to what is "property" contemplated by article 31 (2), apart from the specified categories included therein by enumeration in" the 'phrase "any interest in, or in any company owning, any commercial or industrial undertaking."" It is no doubt true that in a wide sense, property connotes not 673 only a concrete thing corporeal or incorporeal but all the bundle of rights which constitute the ownership thereof and probably also each individual fight out of that bundle in relation to such ownership. But in the 'context of article 31 (2) as in the cognate context of article 19 (1)(f) the connotation of the word is limited by the accompanying words "acquisition" and "taken possession". Hence out of the general and wide category falling within the connotation of the word "property", only that which can be the subject matter of "acquisition" or "taking possession", is the "property" which is within the scope of 'article 31(2). This to my mind excludes, for instance, a bare individual right, out of the bundle of rights which go to make up property as being itself property for purposes of article 31 (2), unless such individual right is in itself recognised by law as property or as an interest in property an easement, a profits a prendre and the like and as capable of distinctive acquisition or possession. Thus for instance in the case with which we are concerned in the present appeal, the right to annul under tenures cannot in itself be treated as property, for it is not capable of independent acquisition or possession. The deprivation of it can only amount to a restriction on the exercise of the rights as regards the main property itself and hence must fail under article 19 (1) (f) taken with 19 (5), according to my understanding thereof. In my view, however, the word "property" as used in article 31 (1) may have been intended to be understood in a wider sense and deprivation of any individual right out of a bundle of rights constituting concrete property may be deprivation of "property" which would require the authority of law. I am aware of the possible criticism that in two parts of the same article the same word must be intended to have been used in the same sense. While this is a normal rule of construction, it can yield to the requirement of the context arising from the ' juxtaposition of other words or phrases. To my ' mind article 31 (1), though part of an article is in essence1 an independent provision to some extent overlapping with the requirements of the law 674 of Eminent Domain. It is on a par with article 21. It seems to me to serve a distinct purpose over and above that relating to the law of Eminent Domain, viz., that it relates also to deprivation of property other than that which may fall within the scope of article 31 (2). It enjoins that such deprivation shall not be brought about save by authority of law. In view of what I have said above, it follows that the assumption with which I have started, viz., that this is a case falling under article 19 (1) (f) and (5) is, in my opinion, correct. In the result I agree that the appeal should be allowed with costs here and in the High Court. Appeal allowed. Agent for respondent No.1: R.R. Biswas.

IN-Abs

The first respondent B purchased a Touzi in 24 Parganas Collectorate at a revenue sale held on 9th January, 1942. As such purchaser he acquired under section 37 of the Bengal Revenue Sales Act, 1859, the right "to avoid and annul all under tenures and forthwith to eject all under tenants" with certain exceptions which are not material here. In exercise of that right he gave notices of ejectment and brought a suit in 1946 to evict certain under tenants including the second respondent herein and to recover possession of the lands. The suit was decreed against the second respondent who preferred an appeal to the District Judge, 24 Parganas, contending that his under tenure came within one of the exceptions referred to in section 37. When the appeal was pending, the Bill which was later passed as the West Bengal Revenue Sales (West Bengal Amendment) Act, 1950, was introduced in the West Bengal Legislative ASsembly on 23rd March, 1950. It would appear, according to the "statement of objects and reasons" annexed to the Bill, that great hardship was being caused to a large section of the people by the application of section 37 of the Bengal Land Revenue Sales Act, 1859, in the urban areas and particularly in Calcutta and its suburbs where "the present phenomenal increase in land values has supplied the necessary incentive to speculative purchasers in exploiting this provision (section. 37) o/the law for unwarranted large scale eviction" and it was, therefore, considered necessary to enlarge the scope of protection already given by the section to certain categories of ,tenants with due safeguards for the security of Government revenue. The Bill was eventually passed as the amending Act and it came into force on 15th March, 1950. It substituted by section '4 the new section 37in place of the original section 37 and it provided by section 7 that all pending suits, appeals and other proceedings which had not already resulted in delivery of possession, shall abate. Thereupon B contending that section 7 was void 588 as abridging his fundamental rights under article 19(1)(f) and article 31 . moved the High Court under article 228 to withdraw the pending appeal and to determine the constitutional issue raised by him. The appeal was accordingly withdrawn and the case was heard by Trevor Harries C.J and Banerjee J. who, by separate but concurring Judgments, declared section 7 unconstitutional and void. They held that B 's right to annul under tenures and evict undertenants being a vested right acquired by him under his purchase before section 37 was amended, the retrospective deprivation of that right by section 7 of the amending Act without any abatement of the price paid by him at the revenue sale was an infringement of his fundamental right under article 19 (1)(f) to hold property with all the rights acquired under his purchase, and as such deprivation was not a reasonable restriction on the exercise of his vested right, section 7 was not saved by cl. (5) of that article and was void. The State of West Bengal preferred the present appeal to the Supreme Court: Held, per PATANJALl SASTRI C.J. Article 19 (1) (f) has no application to this case. The word "hold" in the article means own. The said sub clause (f) gives the citizen of India the abstract right to acquire, own and dispose of property. This article does not deal with the concrete fights of the citizens of India in respect of the property so acquired and owned by him. These concrete rights are dealt with in article 31 of the Constitution. Under the scheme of the Constitution all those broad and basic freedoms inherent in the status of a citizen as a free man are embodied and protected from invasion by the State under cl. (1)of article 19, the powers of State regulation of those freedoms in public interest being defined in relation to each of those freedoms by cls. (2) to (6) of that article, while rights of private property are separately dealt with and their protection provided for in article 31, the cases where social control and regulation could extend to the deprivation of such rights being indicated in para. (ii) of sub clause (b) of cl. (5) of article 31 and exempted. from liability to pay compensation under cl. Held, per PATANJALI SASTRI C.J. (MEHR CHAND MAHAJAN ' and GHULAM HASAN JJ. concurring) (i) Article 31 protects the right to property by defining the limitations on the power of the State to take away private property without the consent of the owner. Clauses (1) and (2) of article 31 are not mutually exclusive in scope and content, but should be read together and understood as dealing with the same subject, namely the protection of the right to property by means of limitations on the State 's power referred to above, the deprivation contemplated in clause (1) being no other than the acquisition or taking possession of the property referred to in cl. The words "taking of . . possession or . . acquisition" in article 31(2) and ' the words "acquisition or requisitioning" in entry 589 No. 33 of List I and entry No. 36 of List II as also the words "acquired or requisitioned" in entry No. 42 of List III are different expressions connoting the same idea and instances of different kinds of deprivation of property within the meaning of article 31(1) of the Constitution. No cut and dried test can be formulated as to whether in a given case the owner is "deprived" of his property within the meaning of article 31; each case must be decided as it arises on its own facts. Broadly speaking it may be said that an abridgement would be so substantial as to amount to a deprivation with in the meaning of article 31, .if, in effect, it withheld the property from the possession and enjoyment of the owner, or seriously impaired its use and enjoyment by him or materially reduced its value . The expression "taking possession" in art 31(2) of the Constitution can only mean such possession as the property taken possession of is susceptible to and need not be actual physical possession. ' (ii) It is difficult to hold that the abridgement sought to be effected retrospectively of the rights of a purchaser at a revenue sale is so substantial as to amount to a deprivation of his property within the meaning of article 31(1) and (2). No question accordingly arises as to the applicability of el. 5(b)(ii) of article 31 to the Per DAs J. (1) The abridgement of the rights of the purchaser at a revenue sale brought about by the new section 37 amounts to nothing more than the imposition of a reasonable restriction on the exercise of the right conferred by article 19(1)(f)in the interests of the general public and is perfectly legitimate and permissible under cl. (5) of that article. It is well settled that the statement of objects and reasons is not admissible as an aid to the construction of a statute but it can be referred to only for the limited purpose of ascertaining the conditions prevailing at the time which actuated the sponsor of the Bill .to introduce the same and the extent and urgency of the. evil which he. sought to remedy. Those are matters which must enter into the judicial verdict as to the reasonableness of the restrictions which article 19(5) permits to be imposed on the exercise of the right guaranteed by article 19(1)(f). (II) The correlation between article 19(1)(f) and article 31 is that if a person loses his property by reason of its having been compulsorily acquired under article 31 he loses his right to hold that property and Cannot complain that .his fundamental right under article 19(1)(f)has been infringed. The rights enumerated in article 19(1) subsist while the citizen has the legal capacity to exercise them. A.K. Gopalan 's case ; and Chiranjit Lal 's case ; referred to. 590 For the purpose of this appeal the. matter proceeds on the footing that article 19 relates to abstract right as well as to right to concrete property. (III) The true scope and effect of cls. (1) and (2) of article 31 is that cl. (1) deals with deprivation of property in exercise of police power and enunciates the restrictions which our Constitution makers thought necessary or sufficient tO be placed on the exercise of that power, namely, that such power can be exercised only by authority of law and not by a mere executive fiat and that cl. (2)deals with the exercise of the power of eminent domain and places limitations on the exercise of that power. These limitations constitute our fundamental rights ' against the State 's power of eminent domain. (IV) Both these clauses cannot be regarded as concerned only with the State 's power of eminent domain, because then (a) cl (1) would be wholly redundant, for the necessity of a law is quite clearly implicit in cl. (2) itself; (b) deprivation of property otherwise than by taking of possession ' or acquisition of it will be outside. the pale of constitutional protection: (c) there will beno protection against the exercise of police power in respectOf property either by the executive or by the legislature. Chiranjit Lals case ; and The Bihar Zamindari case referred to. (V) The State 's police power is not confined (a) within the ambit of article 19 forto say otherwise ,will mean: (i) that there is no protection for any person, citizen or non citizen, against exercise of police power by the executive over property; (ii) that although in cls. (2) to (6) there is protection against ' (iei) legislature in respect of "restriction" there is no protection against "deprivation"; or (h) within d. (5) (b) of article 31 because to say otherwise will mean :__ (i) that the police power which is inherent in sovereignty and does not require express reservation has been unnecessarily defined and reserved; (ii) that the Constitution does not prescribe any test for the 'validity of the laws which fail within the clause and, therefore, the law failing within the clause may be as archaic, offensive and . unreasonable as the legislature may choose to make it; (iii) that the clause gives no protection against the executive; (iv) that the exercise of the police power by the legislature is confined within ' the very narrow and inelastic limits of the clause and that no beneficial or social legislation involving taking 591 of property can be undertaken by the State if the law falls outside the clause except on terms of payment of compensation; (v) that acqUiSition Of property for which compensation is Usually provided, e.g.; acquisition of land for a public park, hospital Or z 'dearing a slum area will henceforth be permissible without the law providing any compensation; (VI) The argument that if article 31(1) is read as a fundamental right against deprivation of property by the executive and article, 31(2) as laying down the Iimits of State 's power of eminent domain then there will be no real protection. whatever, for the State will deprive a person of his property without compensation by simply making a law is not tenable because (i) there will certainly be protection against the execute just as the 29th clause of the Magna Charts was a protection against the British Crown; (ii)" 'there is protection under article 31(2) against the legislature in the matter of taking of possession Or. acquisition for compensations to be given and under cl. (5) of art, 19 against unreasonable ' restraint: (iii) the absence of protection against the legislature in other cases is not greater than the absence of protection against the legislature in respect of taxation and if the legislature can be trusted in the latter case it may equally he ' trusted in the former case. (VII) Every taking of a thing into the custody of the State or its nominee does not necessarily mean the taking of possession Of that thing within the meaning of art 31(2) so as to call for compensation. The police power is exercised in the interest of the community and the power of eminent domain is exercised to . implement a public purpose and in both cases there is a taking of possession of private, property There is however a marked difference between the exercise of these two sovereign powers. It is easy to perceive, though somewhat difficult to express, the .distinction between the two kinds of taking of possession which undoubtedly exists. In view of the wide sweep of the State 's police power it is neither desirable nor possible to lay down a fixed general test for determining whether the taking of possession authorised by any particular. law falls within one category or the other. Without, therefore, attempting any such 'general enunciation of any inflexible rule it is possible to say broadly that the aim, purpose and the effect of the two kinds of taking of possession are different and that . in each "case the provisions of. the particular law in question" will have to 'be carefully scrutinised in order to determine in which category ' falls the taking of possession authorised by such law. = A consideration of the ultimate aim, the immediate purpose ::and the mode and manner of the taking 'of possession and, the duration". 'for which such possession . is taken, the effect of ' it ' on the rights of 'the person dispossessed and other such like elements must all determine the judicial verdict. 592 (VIII) Treating the right to annul under tenures and to eject under tenants .and decree for ejectment as "property" as used in article 31(2) the State has not acquired those rights for there has been no transfer by agreement or by operation of law of those rights from the respondent B to the State or anybody else. The purchase being at a Revenue sale to. which West Bengal Act VII of 1950 applies, the purchaser of the property has been deprived of this right by authority of law and the case falls within cl. (1) of article 31 and no Within cl. (2) of article 31. If the impugned section is regarded as imposing restrictions on the purchaser, such restrictions in the circumstances of the case are quite reasonable and permissible under article 19(5) and, in the premises, the _plea of unconstitutionality cannot prevail and must be rejected. Pet ' JAGANNADHADAS J. (i) On the assumption that the question raised in this case is one that arisesunder article 19(1)(f)and (5) of the Constitution, the impugned section of the West Bengal Act VII of 1950 is intra vires because the restrictions are reasonable within the meaning of article 19(5) of the Constitution; (ii) that article 19(1)(f) while probably meant to relate tot he natural rights of the citizens comprehends within the scope also concrete property rights. The restrictions on the exercise of rights envisaged in article 19(5) appear to relate normally, if not invariably to concrete property rights; (iii) that cl. (1).of article 31 cannot be construed as being either a declaration or implied recognition of the American doctrine of "police power". It comprehends within its scope the requirement of the authority of law, as distinguished from executive fiat for the exercise of the power of eminent domain, but its scope may well be wider. "Acquisition" and "taking possession" in article 31(2) cannot be taken as necessarily involving transfer of tide or possession. The words or phrases comprehend all cases where the title or possession is taken out of the owner and appropriated without his consent by transfer or extinction or by some other process, which in substance amounts to it, the possession in this context meaning such possession as the nature of the property admits and which the law recognizes as possession. (iv) In the context of article 31(2) as in the cognate context article 19(1)(f) the connotation of the word "property"is limited by the accompanying words "acquisition" and "taking possession". In the present. case the right to annul under tenures cannot in itself be treated as property for it is not capable of independent acquisition or possession. The deprivation of it can only amount to a restriction on the exercise of the fights as regards the main property itself and hence must fall under article 19(1)(f) taken with 19(5). Butchers Union etc. Co. vs Crescent City etc. Co.; , , Punjab Province vs Daulat Singh and Others ([1946] F.C.R. 1), Chiranjit Lal Chauduri vs The Union of India and Others ([1950] S.C.R. 869), A.K. Gopalan vs The State of Madras ([1950] S.C.R. 88), P.D. Shamdasani vs Central Bank of India ([1952] S.C.R. 391), Ministry of State. for the Army vs Dalziel ; , Pennsylvania Coal Co. vs Mahou , Dwarkadas Shrinivas vs Sholapur Spinning and Weaving Mills Ltd. ([1954] S.C.R. 674), ' State of Madras vs V.G. Row ([1952] S.C.R. 597), Ram Singh vs The State of Madras ([1951] S.C.R. 451), State of Bihar vs Maharajadhiraja Kameshwar Singh of Darbhanga ([1952] S.C.R. 889), Noble State Bank vs Haskeli ; , Eubank vs Richmond (226 U.S. 137), Ioseph Hurtado V. People of California (1883) (10 U.S. 516), referred to.

Appeal No. 481 of 1965. Appeal from the judgment and order, dated April 30, 1965, of the Bombay High Court in Special Civil Application No. 447 of 1965. C. B. Agarwala, section N. Prasad, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. section V. Gupte, Solicitor General, and B. R. G. K. Achar, for respondent Nos. 2 to 4. The Judgment of the Court was delivered by Subba Rao J. This appeal by certificate raises the question of the true construction of the provisions of sections 19 and 25 of the Bombay Municipal Borough Act, 1925 (Bom. Act 18 of 1925), hereinafter called the Act, read with section 3 of the Maharashtra Municipalities (Postponement of General Elections Pending Unification of Municipal Laws) Act, 1964, hereinafter called the Maharashtra Act. The facts lie in a small compass. The last general election of the, members of the Bhusaval Borough Municipality was held 697 under the provisions of the Act in the year 1960. The first general meeting thereafter was held on February 18, 1961. Under the provisions of section 25 of the Act. in the normal course the life of the Municipality would have expired on February 17, 1965; but, under section 3 of the Maharashtra Act the term of the Councillors of the Municipality was, by fiction, extended to and inclusive of December 31, 1965. On July 18, 1964, the appellant was elected the President of the Municipality; and on the same day the Municipality passed a resolution to the effect that the term of the office of the President shall be "the residue of the term of office of the Municipality". On the assumption that the term of the President expired on February 17, 1965, the Collector of Jalgaon issued a notice on March 2, 1965, calling for a meeting of the Municipality on March 15, 1965, for electing a new President. Thereafter, the appellant filed an application under articles 226 and 227 of the Constitution in the High Court of Maharashtra for the issue of an appropriate order setting aside the notice issued by the Collector. There the appellant contended that, as the term of office of the Municipality had been extended by the Maharashtra Act up to December 31, 1965, he was entitled to continue in office as President till that date. A Division Bench of the said High Court rejected that contention and dismissed the petition. Hence the appeal. The short question in the appeal is whether the expression "the residue of the Municipality" in the resolution of the Municipality, dated July 18, 1964, means the residue of the Municipality that would have been if the Maharashtra Act had not been passed or whether it should be interpreted in the context of the extended term provided by the Maharashtra Act. Mr. Agarwala, learned counsel for the appellant, contended that the appellant would get the extended term provided in the Maharashtra Act, because in effect it was an "extension" under the Act within the meaning of the second proviso to section 19 of the Act or in any event he got the benefit because the Maharashtra Act in effect amended section 25 of the Act, with the result the "residue" of the "term" was extended to December 31, 1965. The learned Solicitor General, on the other hand, argued that the second proviso to section 19 of the Act had no application, for it dealt only with an extension by notification or otherwise under the provisions of the Act and the statutory extension given by the Maharashtra Act could not possibly be an extension under the Act; that even if the Maharashtra Act had the effect of amending section 25 of the Act with the result that the life of the 698 members of the Municipality was extended by the amendment of the Act itself, it would not help the appellant as the scope of the resolution passed by the Municipality should be construed on the basis of the circumstances existing at the time the resolution was passed, i.e., previous to the election of the President, and at that time the councillors of the Municipality could have only passed the resolution fixing the term of the President during the residue of the life the Municipality had at that time : to put it in other words, the intention of the Councillors, who passed the resolution, could be gathered only from the circumstances, statutory or otherwise, existing at the time the resolution was passed. The problem presented from different angles by the learned counsel can only be solved on a true interpretation of the said provisions. It will, therefore, be convenient at this stage to read the relevant provisions. Section 19 of the Act : (1) Save as otherwise provided in this Act a president or vice president, shall hold his office for such term, not less than one year or not less than the residue of the term of office of the municipality, whichever is less and not exceeding four years, as the municipality shall, previous to the election of the president or vicepresident determine, or until the expiry within the said term of his term of office, as councillor, but shall be eligible for reelection : Provided that. . . Provided further that where the term of office of a municipality :Is extended under this Act to a term not exceeding in the aggregate five years the president and vice president holding offices immediately before the date with effect from which such term is extended shall continue to hold their respective offices until the date on which the term so extended expires. Section 25 of the Act : (1) Councillors nominated or elected at a general election under this Act, shall, save as otherwise provided in this Act, hold office for a term of four years, extensible by order of the State Government to a term not exceeding in the aggregate five years, if on any occasion the State Government shall think fit, for 699 reasons which shall be notified together with the order in the Official Gazette so to extend the same Section 3 of the Maharashtra Act Postponement of municipal elections. Notwith standing anything in any Act by or under which any municipality is constituted or established, (a) (b) the term or extended term of office, of the Councillors or members of a municipality, who were in office on the date of the commencement of the Ordinance (and whose term or extended term will expire before the 31st day of December 1965), shall be deemed to be extended to and inclusive of the 31st day of December 1965. SCHEDULE (See section 2) 2. The Bombay Municipal Boroughs Act, 1925 (Bom. XVIII of 1925). The combined effect of these two Acts may be stated thus Under section 25 of the Act the term of the Councillors of the Municipality is 4 years. It may be extended by the State Government to a term not exceeding in the aggregate five years. If the term is so extended by the Government in the manner prescribed by section 25 of the Act, under the second proviso to section 19 of the Act the term of the President also is automatically extended to the date on which the term so extended expires. The expression " under this Act" in the second proviso to section 19 of the Act certainly attracts the extension of the term of the councillors under section 25, as it is an extension under the Act. The impact of section 3 of the Maharashtra Act on the provisions of the Act is that it not only extends the term prescribed under section 25 of the Act but also the term extended under section 25 or under any other section of the Act. If that be the legal effect of section 3 of the Maharashtra Act, the second proviso is not attracted to the instant case, as there was no order or notification issued under section 25 or any other relevant section of the Act extending the term of the councillors fixed under section 25 of the Act. Therefore for the present purpose we leave out of consideration the second proviso to section 19 and approach the problem on the basis of the fiction that the term of the 700 councillors prescribed under section 25 of the Act was extended up to December 31, 1965. If that be so, the next question is whether on July 18, 1964, when the Municipal councillors passed a resolution to the effect that the term of office of the appellant shall be the residue of the Municipality, their intention was that his term should extend only up to February 17, 1965, i.e., the date when the term of the Municipal councillors would have expired but for the statutory extension given by the Maharashtra Act. The intention of the Municipality can be gathered only from the circumstances, statutory or otherwise existing at the time when the resolution was passed and on the express terms of the said resolution. Under section 19 of the Act, the Municipality can fix the term of office of the President between one and four years, except when the residue of the term of the Municipality is less than one year. But the second proviso to section 19 also contemplates the extension of the term of office of the Municipality under the provisions of the Act. It is, therefore, not possible to predicate that at the time the resolution was passed the Municipality could not have contemplated a situation when the term of the Municipality would be extended under the provisions of the Act. With the knowledge of such a possible extension, when the members used the elastic expression "residue", it is not reasonable to attribute to them the intention that they meant only the residue of the term available to them at that time. If that was their intention they would have prescribed a definite date on which the term of the President would expire. That apart, there is sufficient material on the record which indicates that the councillors designedly used the word "residue" instead of fixing a precise date. It appears that it was in the contemplation of the councillors at the time of the election of the President that there was a possibility of the term of the Municipality being extended. In the Statement of Objects underlying the issuance of the Ordinance which culminated in the Maharashtra Act, it was observed as follows "In July, 1963, Government appointed a Committee for the purpose of considering the question of unification of the four Municipal Acts which are at present in force in the State. As substantial changes are envisaged in the unified municipal law, it is considered expedient that the advantages of the new and uniform pattern of administration should be available to all those municipalities concerned simultaneously with the holding of general election in accordance with the pro visions of the unified law. Consequently, the Munici 701 parties that are elected or may be elected under the existing Acts may be short lived, and the time, energy and expenditure incurred on holding any more general elections would be wasteful. It has, therefore, be on decided to postpone the general elections to such muni cipalities from the promulgation of the Ordinance until the 31st of December, 1965, by which time the new unified municipal law is expected to be enacted. " This indicates that the question of extension of the term of the municipalities was under serious consideration even in July 1963. Indeed, on or about July 18, 1964, when the term of the Presitent of the Municipality was extended, the Municipality passed a resolution recommending that the term of the Municipality be extended beyond 4 years. It is, therefore, clear that on the basis of statutory and other circumstances obtaining at the time the extension was made, the councillors clearly expected that the term of the Municipality would be or could be extended and with that knowledge they passed the resolution fixing the term of the President for the residue of the term of the Municipality; the intention appears to be that the term of the President should synchronize with the life of the Municipality existing or extended, as the case may be. In our view, therefore, the order of the High Court is not Correct and the same is set aside. A writ will issue prohibiting the Collector from holding the election of the President of the Municipality of the Bhusaval Borough till December 31, 1965. The controversy arose because the relevant provisions are not free from ambiguity. We, therefore, think that this is a fit case where the parties may be directed to bear their own costs; throughout. Appeal allowed.

IN-Abs

The appellant was elected President of the Bhusaval Borough Municipality in Bombay State in July 1964. On the same day the Municipality passed a resolution to the effect that the term of office of the President would be "the residue of the term of office of the municipality". The four years ' term of the municipality as provided in section 25 of the Bombay Municipal Boroughs Act 1925 (Bombay Act 18 of 1925) was due to expire on February 17, 1965. However in the meanwhile the Maharashtra Municipalities (Postponement of General Elections Pending Unification of Municipal Laws Act, 1964 was passed, and under section 3 thereof the term of the councillors of the municipality was by fiction extended to December 31, 1965. The Collector of the area on the assumption that the term of the President ending on February 17, 1965, issued notice for a fresh election in March 1965. The appellant filed an application under articles 226 and 227 of the Constitution and contended that as the term of office of the municipality had been extended up to December 31, 1965 he was entitled to be President till that date under the resolution passed by the Municipality. The High Court ,. jetted the contention. The appellant, with a certificate of fitness granted by the High Court, came to this Court. The short question in the appeal was whether the expression "the residue of the municipality" in the resolution of the municipality meant the residue of the municipality that would have been if the Maharashtra Act had not been passed or whether it should be interpreted in the context of the extended term provided by the Maharashtra Act. On behalf of the appellant it was argued that the appellant would get the extended term provided by the Maharashtra Act, because in effect it was an extension under the Act within the meaning of the second proviso to section 19 of the Act or in any event he got the benefit because the Maharashtra Act in effect amended section 25 of the Act with the result that 'residue ' of the 'term ' was extended to December 31, 1965. HELD : (i) The impact of section 3 of the Maharashtra Act on the provisions of the Municipal Boroughs Act is that it not only extends the term prescribed under section 25 of the Act but also the term extended under section 25 or under any other section of the Act. If that was the legal effect of the Maharahtra Act, the second proviso to section 19 was not attracted to the instant case as there was no order or notification issued under section 25 or any other relevant section of the Act extending the term of the Councillors fixed under section 25 of the Act. Therefore for the present purpose the second proviso to section 19 had to be left out of consideration and the problem had 696 to be approached on the basis of the fiction that the term of the Councillors prescribed under section 25 of the Act was extended up to December 31, 1965. [699 G 700 A] (ii) The intention of the municipality could be gathered only from the tances statutory or otherwise existing at the time when the resolution was passed and on the express terms of the said resolution. The second proviso to section 19 contemplates the extension of the term of office of the Municipality under the Act. It was therefore not possible to predicate that at the time the resolution was passed the municipality could not have contemplated a situation when the term of the Municipality would be extended under the provisions of the Act. Moreover from the Statement of objects underlying the issuance of the Ordinance which culminated in the Maharashtra Act it appeared that the question of extension of the term of the municipalities in the State was under serious consideration even in July 1963. Indeed on or about July 18, 1964 when the term of the President was extended, the municipality passed a resolution recommending that the term of the Municipality be extended beyond 4 years. It was therefore clear that on the basis of the statutory and other circumstances obtaining at the time the extension was made, the councillors clearly expected that the term of the municipality would be or could be extended and with that knowledge they passed the resolution fixing the term of the President for the residue of the term of the Municipality; the intention appeared to be that the term of the President should syncbronise with the life of the municipality existing or extended as the case may be. [700 B 701 D] The order of the High Court was therefore not correct and had to be set aside.

minal Appeal No. 107 of 1965. Appeal by special leave from the judgment and order, dated June 22, 1965 of the Bombay High Court in Criminal Applica tion No. 613 of 1965. Niren De, Additional Solicitor General and B. R. G. K. Achar, for the appellant. R. K. Garg, D. P. Singh, M. K. Ramamurthi and section C. Agar wala for respondent No. 1. The Judgment of the Court was delivered by Subba Rao J. Prabbakar Pandurang Sanzgiri, who has been detained by the Government of Maharashtra under section 30(1)(b) of the Defence of India Rules, 1962, in the Bombay District Prison in order to prevent him from acting in a manner pre judicial to the defence of India, public safety and maintenance$ of public order, has written, with the permission of the said Government, a book in Marathi under the title "Anucha Antarangaat" (Inside the Atom). The learned Judges of the High Court, who had gone through the table of contents of the book. expressed their opinion on the book thus : ". . we are satisfied that the manuscript book deals with the theory of elementary particles in in objective way. The manuscript does not purport to be a research work but it purports to be a book written with a view to educate the people and disseminate knowledge regarding quantum theory. " The book is, therefore, purely of scientific interest and it cannot possibly cause any prejudice to the defence of India, public safety or maintenance of public order. In September, 1964, the detenu applied to the Government of Maharashtra seeking permission to send the manuscript out of the jail for publication; but the Government by its letter, dated March 27, 1965, rejected the request. He again applied to the Superintendent, Arthur Road Prison, for permission to send the manuscript out and that too was rejected. Thereafter, he filed a petition under article 226 of the Constitution in the High Court of Maharashtra at Bombay 704 for directing the State of Maharashtra to permit him to send out the manuscript of the book written by him for its eventual publication. The Government of Maharashtra in the counter affidavit did not allege that the publication of the said book would be prejudicial to the objects of the Defence of India Act, but averred that the Government was not required by law to permit the detenu to publish books while in detention. The High Court of Bombay held that the civil rights and liberties of a citizen were in no way curbed by the order of detention and that it was always open to the detenu to carry on his activities within the conditions governing his detention. It further held that there were no rules prohibiting a detenu from sending a book outside the jail with a view to get it published. In that view the High Court directed the Government to allow the manuscript book to be sent by the detenu to his wife for its eventual publication. The State of Maharashtra has preferred the present appeal against the said order of the High Court. The contentions of the learned Additional Solicitor General may be briefly stated thus : When a person is detained he loses his freedom; he is no longer a free man and, therefore, he can exercise only such privileges as are conferred on him by the order of detention. The Bombay Conditions of Detention Order, 1951. which regulates the terms of the first respondent 's detention, does not confer on him any privilege or right to write a book and send it out of the prison for publication. In support of his contention he relies upon the observations of Das, J., as he then was, in A. K. Gopalan vs State of Madras(1) wherein the learned Judge has expressed the view, in the context of fundamental rights, that if a citizen loses the freedom of his person by reason of a lawful detention, he cannot claim the rights under article 19 of the Constitution as the rights enshrined in the said article are only the attributes of a free man. Mr. Garg, learned counsel for the detenu, raised before us the following two points : (1) a restriction of the nature imposed by the Government on the detenu can only be made by an order issued by the appropriate Government under cls. (f) and (h) of sub r. (1) of r. 30 of the Defence of India Rules, 1962, hereinafter called the Rules, and that too in strict compliance with section 44 of the Defence of India Act, 1962, hereinafter called the Act, and that as the impugned restriction was neither made by such an order nor did it comply with section 44 of the Act, it was an illegal restriction on his personal liberty; and (2) neither the detention order nor the (1) ; , 291. 705 conditions of detention which governed the first respondent 's detention enabled the Government to prevent the said respondent from sending his manuscript book out of the prison for publication and, therefore, the order of the Government rejecting the said respondent 's request in that regard was illegal. Article 358 of the Constitution suspends the provisions of article 19 of Part III of the Constitution during the period the proclamation of emergency is in operation; and the order passed by the President under article 3 5 9 suspended the enforcement, inter alia, of article 21 during the period of the said emergency. But the President 's order was a conditional one. In effect it said that the right to move the High Court or the Supreme Court remained suspended if such a person had been deprived of his personal liberty under the Defence of India Act, 1962, or any rule or order made thereunder. If a person was de lived of his personal liberty not under the Act or a rule or order made thereunder but in contravention thereof, his right to move the said Courts in that regard would not be suspended. The question, therefore. in this case is whether the first respondent 's liberty has been restricted in terms of the Defence of India Rules whereunder he was detained. If it was in contravention of the said Rules, he would have the right to approach the High Court under article 226 of the Constitution. In exercise of the Dower conferred on the Central Government by section 3 of the Act, the Central Government made the Defence of India Rules. Under section 30 of the Rules the Central Government or the State Government, if it is satisfied with respect to any person that in order to prevent him from acting in any manner prejudicial to the matters mentioned therein, it is necessary so to do, may make an order directing that he be detained. Under subr. 4 thereof he shall be liable to be detained in such place and under such conditions as to maintenance, discipline and the punishment of the offence and the breaches of discipline as the Central Government or the State Government, as the case may be, may from time to time determine. In exercise of the power con ferred under sub r. (4) of r. 30 of the Rules, the Government of. Maharashtra determined that the conditions as to maintenance, discipline and the punishment of offenses and breaches of discipline governing persons ordered to be detained in any place in the State of Maharashtra, shall be the same as those contained in the Bombay Conditions of Detention Order, 1951. The Bombay Conditions of Detention Order, 1951, does not contain any condition as regards the writing of books by a detenu or sending them out of jail for publication. Briefly stated, the scheme of the said p. C. and I./65 2 706 provisions is that a person can be detained if the appropriate Government is satisfied that in order to prevent him from doing the prejudicial acts mentioned in r. 30 of the Rules it is necessary to detain him in prison subject to the conditions imposed in the manner prescribed in sub r. (4) of r. 30 of the Rules. To put it in a negative form, no restrictions other than those prescribed under sub r. (4) of r. 30 can be imposed on a detenu. If the appropriate authority seeks to impose on a detenu a restriction not so prescribed, the said authority will be interfering with the personal liberty of the detenu in derogation of the law whereunder he is detained. If that happens, the High Court, in terms of Art 226 of the Constitution, can issue an appropriate writ or direction to the authority concerned to act in accordance with law. We have gone through the provisions of the Bombay Conditions of Detention Order, 195 1. There is no provision in that Order dealing with the writing or publication of books by a detenu. There is, therefore, no restriction on the detenu in respect of that activity. Sub rule (iii) of r. 17 of the said Order reads "All letters to and from security prisoners shall be censored by the Commissioner or the Superintendent, a% the case may be. If in the opinion of the Commissioner or the Superintendent, the dispatch or delivery of any letter is likely to be detrimental to the public interest or safety or the discipline of the place of detention, he shall either withhold such letter, or despatch or deliver it after deleting any objectionable portion therefrom. In respect of the censoring of letters of security prisoners, the Commissioner or the Superintendent shall comply with any general or special instructions issued by Government. " The Maharashtra Government has not relied upon this rule. In deed, in the counter affidavit its case was not that it prohibited the sending of the book for publication under the said sub rule, but that it was not required by law to permit the detenu to publish books while in detention; nor was it its case before the High Court that the publication of this book was detrimental to public interest or safety or the discipline of the place of detention. Prima facie the said sub rule applies only to letters to and from security priso ners and does not regulate the sending out of prison books for publication. Indeed, the learned Additional Solicitor General does not rely upon this provision. 707 Let us now consider the validity of the argument of the learned Additional Solicitor General. He relies upon the following observations of Das, J., as he then was, in A. K. Gopalan 's case(1), at p. 29 1. "If a man 's person is free, it is then and then only that he can exercise a variety of other auxiliary rights, that is to say, he can, within certain limits, speak what he likes, assemble where he likes, form any associations or unions, move about freely as his 'own inclination may direct, ' reside and settle anywhere he likes and practise any profession or carry on any occupation, trade or business. These are attributes of the freedom of the per son and are consequently attached to the person." ' Relying upon these observations it is argued that freedom to publish is only a component part of that of speech and expression and that in the light of the said observations, as the detenu ceased ' to be free in view of his detention, he cannot exercise his freedom to publish his book. In other words, as he is no longer a free man, his right to publish his book, which is only an attribute of personal liberty, is lost. The principle accepted by Das, J., as he then was, does not appear to be the basis of the conclusion arrived at by the other learned Judges who agreed with his conclusion. Different reasons are given by the learned Judges fro arriving at the same conclusion. As has been pointed out by this Court in the second Kochunni 's case(2) the views of the learned Judges may be broadly summarized under the following heads : (1) to invoke article 19(1) of the Constitution, a law shall be made directly infringing that right; (2) articles 21 and 22 constitute a self contained code; and (3) the freedoms in article 19 postulate a free man. Therefore, it cannot be said that the said principle was accepted by all the learned Judges who took part in A. K. Gopalan 's case("). The apart, there are five distinct lines of thought in the matter of reconciling article 21 with article 19, namely, (1) if one loses his freedom by detention, he loses all the other attributes of freedom enshrined in article 19; (2) personal liberty in article 21 is the residue of personal liberty after excluding the attributes of that liberty embodied in article 19; (3) the personal liberty included in article 21 is wide enough to include some or all of the freedoms mentioned in article 19, but they are two distinct fundamental rights a law to be valid shall not infringe both the rights; (4) the expression "law" in article 21 means a valid law and, therefore, even if a person 's liberty is deprived by law of detention, the said law (1) ; (2) 708 shall not infringe article 19; and (5) article 21 applies to procedural law, whereas article 19 to substantive law relating to personal liberty. We do not propose to pursue the matter further or to express our opinion one way or other. We have only mentioned the said views to show that the view expressed by Das, J., as he then was, in A. K. Gopalan 's case(1) is not the last word on the subject. In this case, as we have said earlier, we are only concerned with the question whether the restriction imposed on the personal liberty of the first respondent is in terms of the relevant provisions of the Defence of India Rules. Here, the first respondent 's liberty is restricted under the Defence of India Rule 's subject to conditions determined in the manner prescribed in Sub r. (4) of r. 30 thereof. We find it difficult to accept the argument that the Bombay Conditions of Detention Order, 1951, which lays down the conditions regulating the restrictions on the liberty of a detenu, conferred only certain privileges on the detenu. If this argument were to be accepted, it would mean that the detenu could be starved to death, if there was no condition providing for giving food to the detenu. In the matter of liberty of a subject such a construction shall not be given to the said rules and regulations, unless for compelling reasons. We, therefore, hold that the said conditions regulating the restrictions on the personal liberty of a detenu arc not privileges conferred on him, but are the conditions subject to which his liberty can be restricted. As there is no condition in the Bombay Conditions of Detention Order, 1951, prohibiting a detenu from writing a book or sending it for publication, the State of Maharashtra infringed the personal liberty of the first respondent in derogation of the law whereunder he is detained. The appellant, therefore, acted contrary to law in refusing to send the manuscript book of the detenu out of the jail to his wife for eventual publication. In the view we have taken, another argument advanced by Mr. Garg, namely, that the restriction can only be imposed by an order made under section 30 (f) or (h) of the Rules and that too in strict compliance with section 44 of the Act need not be considered. That question may arise if and when an appropriate condition is imposed restricting the liberty of a detenu in the matter of sending his books for publication. We do not express our view on this question one way or other. In the result, the order passed by the High Court is correct. The appeal fails and is dismissed. Appeal dismissed.

IN-Abs

The first respondent was detained by the Government of Maharashtra under r. 30(1) (b) of the Defence of India Rules, 1962. The conditions of detention under sub rule 4 of r. 30 of the said rules were prescribed to be the same as those under the Bombay Conditions of Detention Order, 1951. While so detained the first respondent wrote a book of scientific interest and sought permission from The State Government to send it out of jail for publication. The request having been rejected he filed a writ petition under article 226 of the Constitution praying for a direction to the State Government to permit him to send out the manuscript for Publication. The High Court held that The book was in no way prejudicial to the defence of India etc., and allowed the petition. The State Government by special leave appealed to this Court. It was contended on behalf of the, appellant that the first respondent not being a free person could exercise only such privileges a, , were conferred on him by the order of detention, and the Bombay Conditions of Detention Order, 1951 which regulated the terms of the respondent 's detention did not confer on him any privilege or right to write a book and send it out of the prison for publication. HELD : (i) It cannot be said that the Bombay Conditions of Detention Order, 1951 which lays down the conditions regulating the restrictions on the liberty of a detenu, conferred only certain privileges on the detenu. If this argument were to be accepted it would mean that the detenu could be starved to death, if there was no condition providing for giving food to the detenu. In the matter of liberty of a subject such a construction shall not be given to the said rules and regulations unless for compelling reasons. [7O8 C D] (ii) The said conditions regulating the restriction on the personal liberty of a detenu are not privileges conferred on him, but are the conditions subject to which his liberty can be restricted. As there is no condition in the Bombay Conditions of Detention Order, 1951, prohibiting a detenu from writing a book or sending it for publication, the State of Maharashtra in refusing to allow the same infringed the personal liberty of the first Respondent in derogation of the law whereunder he was detained. [708 E] (iii) The effect of the President 's order under article 359 of the Constitution was that the right to move the High Court or the Supreme Court remained suspended during the period of emergency if a person was deprived of his personal liberty under the Defence of India Act, 1962, or any rule or order made thereunder. If a person was deprived of his personal liberty not under the Act or rule or order made thereunder but in contravention thereof his right to move the said courts in that regard would not be suspended. [705 C D] 703 Since the State Government 's refusal to allow publication of the first respondent 's book was in contravention and derogation of the 'law under which he was detained he had the right to move the High Court under article 226 and the said High Court was empowered to issue an appropriate writ or direction to the said Government to act in accordance with law.

ivil Appeal No. 420 of 1963. Appeal from the judgment and decree dated September 9. 1960 of the Andhra Pradesh High Court in Appeal Suit No. 300 of 1955. M. Suryanarayana Murti and T.V.R. Tatachari, for the appellant. K.R. Chaudhuri, for respondents 1 to 13. The Judgment of Sarkar and Raghubar Dayal, JJ. was delivered by Sarkar J. Ramaswami, J. delivered a separate Opinion. Sarkar, J. In a certain money suit, being Small Cause Suit No. 9 of 1953. a decree had been passed against Narasimhaswamy and his four sons who were members of a Mitakshara Hindu joint family. In execution of that decree the shares of the four sons in the joint family properties, described altogether as 4/5th share, were put up to auction on December 21, 1936 and purchased by one Sivayya whose successors in interest are the appellants. The father Narasimhaswamy 's share had not been put up for sale because= an application fo.r his adjudication as insolvent was then pending. The sale to Sivayya was duly confirmed. Thereafter Sivayya sold the properties purchased by him at the auction to one Prakasalingam. On November 6, 1939, an order was made. under O. 21, rr. 35(2) and 96 of the Code of Civil Procedure for delivery of joint possession of the properties purchased to Prakasalingam along with the members of the joint family in actual ' possession. This order was duly carried out and possession was delivered to Prakasalingam by publishing that fact by beat of drum as prescribed in these rules. Subsequently, Prakasalingam re transferred the properties to Sivayya. On October '16, 1951, Sivayya filed the. suit out of which this appeal arises, against the then members of the joint family whose Sup. /65 12 632 number had by that time increased, and various other persons holding as alienees from them, asking for a partition of the joint family properties into five equal shares and thereafter for possession of four of such shares by removing the defendants from possession. The trial Court decreed the suit but held that Sivayya was not entitled to a 4/5th share but only to a 2/3rd share because before the decree a 5th son had been bom to Narasimliaswamy who had not been made a party to the suit or the execution proceedings and whose share had not consequently passed under the auction sale. Some of the defendants appealed to the High Court of Andhra Pradesh from this judgment. The High Court allowed the appeal on the ground that the suit was barred by limitation under article 144 of Schedule 1 to the Limitation Act. Sivayya had filed a cross objection in the High Court on the round that he should have been held entitled to a 4/5th share of the properties which was dismissed by the High Court without a discussion of its merits in view of its decision on the question of limitation. Sivayya having died pending the appeal in the High Court, the appellants as his successors in interest, have come up to this Court in further appeal under article 133 of the Constitution. Various questions had been raised in the trial Court but only two survive after its decision. They are, whether the suit was barred by limitation and whether Sivayya was entitled to a 4/5th share. On the question of limitation, two articles of the Act were pressed for our consideration as applicable to the ease. They are articles 144 and 120. We consider it unnecessary to decide in this ,case which of the two articles applies for in our view, the suit was not barred under either. As earlier stated the High Court held that article 144 applied. The application of this article seems to us to present great difficulties to some of which we like to refer. That article deals with a suit for possession of immovable property or any interest therein not otherwise specially provided for and prescribes a period of twelve years commencing from the date when the possession of the defendant becomes adverse to the, plaintiff. This article obviously contemplates a suit for possession. of property where the defendant might be in adverse possession of it as against the plaintiff. Now, it is well settled that the purchaser of a copartner 's undivided interest in joint family property is not entitled to possession of what he has purchased. His only right is to sue for partition of the property and ask for allotment to him of that which on partition might be found to fall to the share of the coparcener 63 3 whose share he had purchased. His right to possession "would date from the period when a specific allotment was made in his favour": Sidheshwar Mukherjee vs Bhubneshwar Prasad Narain (1) It would, therefore, appear that Sivayya was not entitled to possession till a partition had been made. That being so, it is arguable that the defendants in the suit could never have been in adverse possession of the properties as against him as possession could be adverse against a person only when he was entitled to possession. Support for this view may be found in some of the observations in the Madras full bench case of Vyapur vs Sonamm Boi Ammani (2). In the case in hand the learned Judges of the High Court thought that the applicability of article 144 to a suit like the present one was supported by the decision of the Judicial Committee in Mahant Sudarsan Das vs Mahan Ram Kirpal Das(3). We feel considerable doubt that the case furnishes any assistance. It held that article 144 extends the conception of adverse possession to include an interest in immovable property as well as the property itself. In that case a purchaser of an undivided share in a property which was not coparcenery property, had obtained possession of that share and he was held to have acquired title to it by adverse possession. That was not a case of a person who was not entitled to possession. We are not now concerned with adverse possession of an interest in property. Having expressed our difficulties on the matter let us proceed on the assumption without deciding it, that article 144 is applicable. Even so, it seems to us that the suit is not barred. It is not in dispute that in order that the suit may be barred under the article the defendant must have been uninterrupted possession for twelve years before the date of the suit. Now, in. the present case that was not so. By the delivery of symbolical possession under the order of November 6, 1939, the adverse possession of the, defendants was interrupted. Time has, therefore, to commence to run from that date and so considered, the suit having been brought within twelve years of that date, it was not barred under that article. That would follow from the case of Sri Radha Krishna Chanderji vs Ram Bahadur (4) where it was held that delivery of formal possession also interrupted the continuity of adverse possession. It was however said that the order for delivery of possession (1) ; ,188. (3) (1949) L.R. 77 I.A. 42. (2) Mad. (4) A.I.R. 1917 P.C. 197. 634 made in the present case was a nullity because Sivayya and his transferee who had purchased an undivided share in coparcenery property were not entitled to any possession at all. We agree that the order cannot be supported in law but we do not see that it was for this reason a nullity. It is not a case where the order was without jurisdiction. It was a case where the learned Judge making the order had, while acting within his jurisdiction, one wrong in law. Such an order has full effect if it is not set aside, as it was not in this case. Yelumalai Chetti vs Srinivasa Chetti(1) to which we were referred, does not support the contention that the order was a nullity There a purchaser of an undivided share in coparcenery property at an execution sale had applied for possession under section 318 of the Code of Civil Procedure of 1882 which corresponds to 0 21, r. 95 of the present Code. That application was dismissed as barred by limitation. Later, the purchaser who had subsequently acquired the interest of the other coparceners in the property under a private sale, filed a suit for possession of the whole. it was contended that the suit was barred under section 244 of the old Code (= section 47 of the present Code) as the purchaser could only proceed by way of execution. In dealing with that contention it was said that though the purchaser of an undivided share in coparcenery property was only entitled to ask for a partition, it was not competent to a court on a mere application for execution by a purchaser of such a share at a court sale, to order a partition and, therefore, the dismissal of the application under section "II 8 of the old Code had no effect by way of yes judicature on the second Suit for Possession. This case said nothing about the legality of an order under 0. 21, rr. 35, 95 or 96. It seems to us that the question of adverse possession is one of fact. If the person against whom adverse possession is set up, should that he had in fact obtained possession, whether lawfully or not, that would interrupt any possession held adversely against him. The question is whether there was in fact an interruption of the adverse possession and not whether that interruption was justifiable in law. Under the order for delivery of symbolical possesSion, whether it was legal or otherwise, Prakasalingam did obtain possession and this was an interruption of the adverse possession by the respondents. In respect of the present suit time under article 144 must, therefore, commence from that interruption. We wish to observe here that this aspect of the matter exposes the anomaly that seems to arise from the application of article 144 to this case. If Prakasalingam 's possession under the order of (1) Mad. 63 5 November 6, 1939 was no possession in law because, as is contended, he was not entitled to possession at all, then it would be difficult to hold that at that time somebody else was holding the property adversely to him. Since Prakasalingam or his successor Sivayya was not entitled to possession till after the decree in a suit for partition brought by him, article 144 would seem to be inapplicable to that suit. Learned counsel for the respondents referred us to Mahadev Sakharam Parkar vs Janu Namji Hatle(1) and Jang Bahadur Singh vs Hanwant Singh(1) to show that the delivery of symbolical possession does not avail the appellants. On behalf of the appellants it was said that these decisions are no longer good law in view of the judgment of the Judicial committee in Sri Radha Krishan Chanderji 's (3) case. Apart however from the merits of this contention which no doubt, deserve consideration, the principle of these cases does rot seem to us to be applicable to the present case. That principle was expressed in the case of Jang Bahadur Singh (2 ) which also is clearly to be implied from the decision in the case of Mahadev Sakharam Parkar(1) in these words, "If possession was delivered in accordance with law that undoubtedly would, as between the parties to the proceedings relating to delivery of possession, give a new start for the computation of limitation and the possession of the defendants would be deemed to be a fresh invasion of the plaintiff 's right and a new trespass on the property. But if possession was not delivered in the mode provided by law, that delivery of possession cannot, in our opinion, give a fresh start to the plaintiff for computing limitation. " By the words "in accordance with law" the learned Judges meant, in accordance with the Code of Civil Procedure and not any other law. These cases dealt with an order for delivery of symbolical possession where an order for actual possession could have been made under the Code. Because of this, it was held that the order for delivery of symbolical possession did not interrupt the adverse possession of the defendant. That is not the case here. The only order for delivery of possession that could possibly be made under the Code in the present case was under 0. 21 rr. 35(2) and 96 because the other members of the family whose share had not been sold were certainly entitled to remain in possession. The fact that ;,I view of the provisions of the Hindu law the order made is illegal, is irrelevant for the present purpose. That would not bring the case within the principle of either the Bombay case or the Allahabad case. (1) Bom. (2) All. (3) A.I.R. 1917 P.C. 197. 636 Learned counsel for the respondents however contended that 0. 21, r. 35(2) only applied where there was a decree for joint possession and it did not apply to the present case because here there was only an order for delivery of joint possession and not a decree. This contention cannot be accepted because under section 36 of the Code the provisions relating to the execution of decrees are applicable to execution of orders. In any case, the order is clearly within the terms of 0. 21, r. 96. The delivery of symboli cal possession made in this case was quite in terms of the Code and so amounted to an interruption of the respondent 's adverse possession and the period of limitation for the purpose of the application of article 144 would start from the date of such delivery. As the suit was brought within twelve years from the date of that delivery of possession, article 144 even if it applies, does not bar it. We then turn to article 120. In Bai Shevantibai vs Janardan R. warick(1) it has been held that to a suit like the present, this is the article that applies. Learned counsel for the respondents himself contended that this was the appropriate article to be applied. This article applies to suits for which no period of limitation is provided elsewhere and prescribes a period of six years commencing from the date when the right to sue accrues. Learned counsel for the respondents relied on the observation in Shevantibai 's(1) case that in a suit like the present one. the period of limitation under article 120 commences to run from the date of the sale. This the case no doubt held, but we think in that respect it did not lay down the law correctly. It has been held by this Court in Mst. Rukhmabai vs Lala Laxminarayan (2 ) and C. Mohammad Yunus vs Syed Unnissa(3) that the right to sue accrues for the purpose of 120 when there is an accrual of the right asserted in the suit and an unequivocal threat by the respondent to infringe it. Now whatever the nature of the plaintiff 's right in the present case, there is nothing to show that right was ever challenged in any way by the respondents. It is impossible, therefore, to hold that his suit was barred under article 120. The result is that the suit was not barred whether article 144 or article 120 applied to it. It remains now to deal with the cross objection. We do not think that it has any merit. Both the courts below have held that what Sivayya purchased at the auction sale was the share of the four sons of Narasimhaswamy in the joint family properties. At the date of the auction sale that share which was originally (1) A.I.R. 1939 Bom. (3) ; (2) ; 637 4/5th had been reduced to 2/3rd by the birth of another son, Venugopal, to Narasinihaswamy who had not been made a party either to the suit or the execution proceedings. It is irrelevant to enquire whether after his birth the fifth son 's share could be proceeded against in the execution of the decree in suit No. 9 of 1933. It is enough to say that was not in fact done. What was purchased at the execution sale was only the shares of Venugopal 's four brothers at the date of the sale and this was 2/3rd. That being so, we think Sivayya was not entitled to get Venugopal 's 1/6th share also allotted to hi in in the partition suit. The crossobjection must fail. We may add that no claim has been made against Narasimhaswamy 's share whose insolvency once ordered, appears subsequently to have been annulled. In the result we would allow the appeal, set aside the judgment and decree of the High Court except as to the dismissal of the cross objection and restore that of the learned trial Judge. The appellants will be entitled to proportionate costs here and in the High Court. Ramaswami, J. The question of law involved in this appeal is what is the period of limitation applicable to a suit filed by an alienee of a coparcener of an undivided share in the joint family property for general partition. The appellants are the legal representatives of the deceased plaintiff Mamidi China Venkata Sivayya. The suit was filed by him on October 16, 1951 for partition and separate possession of the 4/5th share in the joint family properties. It is alleged that he purchased the undivided share of defendants 2 to 5 at a Court auction sale held on December 21, 1936 in execution of a decree of the Court of Small Causes. The sale was confirmed on February 23, 1937. Later on i.e., on March 5, 1939 the purchaser Sivayya sold the right he had purchased to one Prakasalingam who, it is alleged, obtained symbolic delivery of possession of the undivided share of the joint family properties on November 6, 1939. It appears that Sivayya obtained a reconveyable of the right from Prakasalingam on April 11, 1945. Sivayya brought the present suit on October 16, 1951 against the other coparceners and alienees from some of the coparceners. The suit was filed by Sivayya for general partition. The main defence of the contesting defendants was that the suit was barred by limitation. The trial court held that the suit was governed by Article 144 of the Limitation Act and Article 120 did not apply. The trial court also found that there was symbolic delivery of possession in favour of Prakasalingam on November 6, 1939 and there was break up of adverse 638 possession of defendants 1 to 5 and that the suit was, therefore, brought within time. The trial court held that the 1/6th share of the 6th defendant one of the coparceners did not pass to the plaintiff as the 6th defendant was born before the Court sale and he was not implement as a party in the present case. The trial court accordingly gave a decree for partition and separate possession to the plaintiff of 2/3rds share of the properties mentioned in Sch. 'A ' of the plaint. The defendants preferred an appeal before the High Court of Andhra Pradesh against the judgment and decree of the trial court. The plaintiff also filed a Memorandum of Cross Objections claiming the 1/6th share of the 6th defendant also. The High Court held that Article 144 of the Limitation Act applied to the suit and the adverse possession of the defendants commenced from the date of the auction sale and that the suit was barred by limitation as it was filed on October 16, 1951 i.e., more than 12 years after the auction sale. The High Court also held that the symbolic delivery had no legal effect and did not break the adverse possession of the defendants. Accordingly the High Court allowed the appeal and the suit was dismissed with costs throughout. The present appeal is presented on behalf of the legal representatives of the deceased plaintiffs against the judgment and decree of the High Court of Andhra Pradesh. Before dealing with the question as to which Article of the Limitation Act applies to the present case it is necessary to examine the legal position of persons like Sivayya who purchase shares of some of the coparceners of the Hindu Joint Family. It is wellsettled that the purchaser does not acquire any interest in the property sold and he cannot claim to be put in possession of any definite piece of family property. The purchaser acquires only an equity to stand in the alienor 's shoes and work out his rights by means of a partition. The equity depends upon the alienation being one for value and not upon any contractual nexus. The purchaser does not become a tenant in common with the other members of the joint family. He is not entitled to joint possession with them. The alienee 's suit for partition must be one for partition of the entire property and not for the partition of any specific item of, or interest in, the family property. Such a suit, however, will not be technically on a par with a suit for partition filed by a coparcener. Such a suit would not have the necessary effect of breaking up the joint ownership of the members of the family in the remaining property nor the corporate character of the family. (Mayne 's Hindu Law, eleventh edition, page 489). 639 On behalf of the appellants learned Counsel put forward the argument that the right of the alienee to sue for partition is a continuing right and there is no period of limitation for enforcing such right. In my opinion, there is no warrant for this argument. A suit for partition filed by the alienee from a coparcener is not, in a technical sense, a suit for partition and, as already stated, such a suit will not have the necessary effect of breaking up the joint ownership of the members of the family in the joint property nor the corporate character of the family. As observed by Bhashyam Ayyangar, J. in Aiyyangari Venkataramayya vs Aiyyagari Ramayya "The vendee 's suit to enforce the sale by partition is not a suit for 'partition ', in the technical sense in which 'partition ' or 'vibhaga ' is used in the Hindu law. A suit for partition, in the technical sense, can be brought only by an undivided member of the family. The right to such partition is personal to him and not transferable. Such a suit can be brought only in the lifetime of the coparcener and even if so brought, it will abate if he should die before final decree, without leaving male issue. A partition in the technical sense, whether effected amicably or by decree of Court, breaks up not only the joint ownership of property, but also the family union, i.e., the corporate character of the family. Each member thereafter becomes a divided member with a separate line of heirs to himself. An undivided member of a family, though he may alienate either the whole (Gurulingappa vs Nandappa I.L.R. , or any part of his undivided share will continue to be an undivided member of the family with rights of survivorship between himself and the remaining members in respect of all the family property other than what he has transferred. . . The transferee, however, does not step into the shoes of the transferor as a member of the family and there will be no community of property between him and all or any of the members of the family in respect either of the property transferred to him or the rest of the family property". In my opinion, a suit like the present one will fall within Article 144 of the Limitation Act. (1) I.L.R. at p. 717. 64 0 It is true that an alienee of an undivided interest of a Hindu coparcener is not entitled to joint possession with the other coparcener and he is also not entitled to separate possession of any part of the family property. But the alienee is entitled to obtain possession of that part of the family property which might fall to the share of his alienor at a partition. What the alienee acquires by a purchase is not any interest in specific family property but only an equity to enforce his right in a suit of partition and have the property alienated set apart for the alienor 's share, if possible. In the present case the alienee has instituted a suit for general partition with the prayer that he may be put in possession of that part of the family property which may be allotted to his alienor. It is not right to consider such a suit as a suit for more partition. The main relief sought by the plaintiff is the relief for possession of that part of the property which may be allotted to the alienor 's share and a relief for partition is only a machinery for working out his right and ancillary to the main relief for possession of the property allotted to the alienor 's share. What the plaintiff seeks is actual delivery of possession. In my opinion, such a suit falls within the purview of Article 144 of the Limitation Act and the law on this point is correctly stated in Thai vs Dakshinamutthy(1). If Article 144 is the proper article applicable, when does time commence to run ? According to the third column of Article 144, time begins to run from the date when the possession of the defendant becomes adverse to the plaintiff. As I have already pointed out, the possession of the non alienating members of the family cannot be deemed to be possession on behalf of the alienee also, because the purchaser alienee does not acquire any interest in the property sold and does not become tenant in common with the members of the family nor is he entitled to joint possession with them. It is clear that in the absence of a clear acknowledgment of the right of the alienee or participation in the enjoyment of the family property by the alienee, the possession of the nonalienating coparceners would be adverse to the alienee, from the date on which he became entitled to sue for general partition and possession of his alienor 's share. The fact that the alienee has purchased an undivided interest of joint family property is not inconsistent with the conception of adverse possession of that 64 1 interest. As Lord Radcliffe observed in Sudarsan Das vs Ram Kirpal Das(1) : "Now it is the respondents ' case it is in fact their main contention on this issue that the appellant has never at any time had 'adverse ' possession against them because, the disputed property being a fourteen undivided share, his possession has been throughout no more than a joint possession with them. And the joint possession which coparceners enjoy in respect of the undivided property involves that, prima facie, the exclusive possession of any one of them is not adverse to the others. Their Lordships have no doubt of the validity of this general rule : but they are unable to think that it will be in any way departed from if they hold that in respect of the disputed property itself the appellant 's possession has been adverse to the owners of the other shares. In truth there is some confusion involved in the argument. What is in question here is not adverse possession of the block of property in which the various undivided interests subsist but adverse possession of one undivided interest. Article 144 certainly extends the conception of adverse possession to include an interest in immovable property as well as the property itself nor was it disputed in argument by the respondents that there could be adverse possession of an undivided share, given the appropriate circumstances. " In the present case, therefore, adverse possession began to run from the date of purchase of the undivided share i.e., from December 21, 1936 but it was submitted on behalf of the appellants that Prakasalingam obtained symbolic delivery and possession of the undivided share on November 6, 1939 after notice to defendants 2 to 5 and there was a fresh cause of action to Sustains the present suit for possession. It was contended on behalf of the respondents that the symbolic delivery was illegal and the executing court was not competent to make an order of delivery of possession, either symbolic or actual with regard to the sale of an undivided interest of joint family property. In support of this argument reliance was placed on the decision in Yelumalai Chetti vs Srinivasa Chetti (2 ) in which it was held that the purchaser at a Court sale of the share of an undivided member of a joint Hindu family acquires only a right to sue for partition and for delivery of what may be allotted as the share of such undivided member (1) A.I.R 1950 C.44at p. 47. (2) I.L.R. 642 and the Court cannot, on a mere application for execution by such purchaser, enforce his right by an order for partition. It was further held that no such order can be made under section 318 of the Code of Civil Procedure and the dismissal by the Court of an application by the purchaser under section 318 cannot be a bar to a suit by the purchaser for partition. Even assuming that the ,grant of symbolic delivery of possession ought not to have been made and that the executing court acted illegally in making such an order, it cannot be argued that the executing court had no jurisdiction to make the order or that the act of symbolic possession was a nullity in the eye of law. I am, therefore, of the opinion that the rant of symbolic possession by the court in favour of Prakasalingam after notice to the defendants 2 to 5 was tantamount in law to delivery of actual possession and, there fore, sufficient to break up the continuity of adverse possession in favour of the defendants. In Sri Radha Krishna Chanderji vs Ram Bahadur(1) it was held by Lord Sumner that symbolic posses sion was available to dispossess a party sufficiently where he was a party to the 'Proceedings in which it was ordered and given. I am accordingly of the opinion that the suit of the plaintiff is not barred by limitation under Article 144 of the Limitation Act and the view taken by the High Court on this part of the case is not correct and must be overruled. On behalf of the appellants it was also argued that a decree for 5/6th share of the joint family properties and not merely for 2/3rds share should have been granted. The claim of the appellants was rejected by the trial court. It is not disputed by the plaintiff that the 6th defendant was born before the Court sale and it is also not disputed that the execution case was taken out only against defendants 2 to 5. It is manifest that the plaintiff is not entitled to recover the possession of the share of the 6th defendant in execution proceedings and there is no merit in the cross objection filed on behalf of the plaintiff in the High Court. am unable to accept the argument advanced by the appellants ' on this point. For these reasons I hold that the judgment and decree of the High Court should be set aside and the judgment and decree of the trial court should be restored and a preliminary decree of partition of the properties should be ranted as mentioned in the trial court 's decree. The appeal is accordingly allowed with costs, Appeal allowed. (1) A.I.R.1917 P.C. 197.

IN-Abs

A decree was passed in a money suit against N and his four sons who were members of a Mitakshara Hindu joint family. In execution of that decree the shares of the four sons in the joint family properties, described altogether as 4/5 th share, were put up for auction in December, 1936 and purchased by section N 's interest was not put up for sale as it was the subject matter of insolvency proceedings. The sale to S was duty confirmed. S sold the properties to P. On November 6, 1939 an order was made under 0. 21 rr. 33(2) and 96 of the Code of Civil Procedure for delivery of joint possession of the properties purchase to P along with the members of the joint family already in possession. This order was carried out and possession was delivered to P by publishing that fact by beat of drum as prescribed in the rules. Subsequently P retransferred the properties to section On October 16, 1951 S filed a suit against the then members of the joint family and various alienees asking for a partition of the joint family properties into five equal shares and thereafter for possession of four of such shares by removing the defendants from possession. The trial court decreed the suit but held that S was not entitled to a 4/5th share but only to a 2/3rd share because before the decree a 5th son had been born to N who had not been made a party to the suit or the execution proceedings and whose share had consequently not passed under the auction sale. Some of the defendants filed an appeal to the High Court which allowed the appeal holding that the suit was barred by limitation under article 144 of Schedule 1 to the Limitation Act. S had field a coss objection in the High. Court on the ground that he should have been held entitled to a 4/5th share of the properties which was dismissed by the High Court without discussion of the merits in view of its decision on the question of limitation. S having died the appellants as his successors in interest appealed to this Court under article 133 of the Constitution. The two questions that arose for decision were (1) whether the suit was barred by limitation under article 144 or article 120 and (2) whether S was entitled to a 4/5th share. HELD : (Per Sarkar and Raghubar Dayal, JJ.) (i) (a) 'Me view that the suit was barred under article 144 of the suit presented great difficulties. The article obviously contemplates a suit for possession of property where the defendant might be in possession of it as against the plaintiff. However, the purchaser of a copartner 's undivided interest in joint family property is not entitled to possession of what he has purchased. His only right is to sue for partition of the property and ask for allotment to him of that which an partition might be found to fall to the share of the copartner whose share he has purchased. His right to possession would date from the period when a specific allotment is made in his favour.[632 H] 629 S was therefore not entitled to possession till a partition had been made. As possession of the defendants could tie adverse to him only if he was entitled to possession the difficulty in applying article 144 arose. [633 B] Sidheshwar Mukherjee vs Bhubneshwar Prasad Narain, ; , relied on. Vyapuri vs Sonamma Boi Ammani, Mad. 81, referred to. Mahant Sudarsan Das vs Mahan Ram Kirpal Das, (1949) L.R. 77 I.A 42, distinguished. (b) Even on the assumption that article 144 applied the suit was not barred. In the present case the defendants were not in uninterrupted possession for twelve years as required by the Article. By the delivery of symbolical possession under the order of November 6, 1939, the adverse possession of the defendants was interrupted. Time had therefore to commence to run from that date, and the suit having been brought within twelve years of that date, it was not bared under that article. [633 F G] Sri Radha Krishna Chanderji vs Ram Bahadur, A.I.R. (1917) P.C. 197, relied on. It could not be said that the order of delivery of possession was a nullity though S and his transferee who had purchased an undivided share in copartners property were not entitled in law to any possession at all. In making the order the learned Judge had gone wrong in law but he had acted within his jurisdiction. Such an order has full effect if it is not set aside. [634 A B] Yelumalai Chetti vs Srinivasa Chetti, Mad. 294, distinguished. Mahadev Sakharam Parkar vs janu Namji Hatle, (1912) I.L.R. and fang Bahadur Singh vs Hanwant Singh All. 520, held inapplicable. (ii) Article 120 applies to suits for which no period of limitation is provided elsewhere and prescribes a period of six years commencing from the date when the right to sue accrues. [636 D] The right to sue accrues for the purpose of article 120 when there is an accrual of the right asserted in the suit and an unequivocal threat by the respondent to infringe it. In the present case there was nothing to show that the right was ever challenged in any way by the respondents. It was impossible therefore to hold that the suit was barred under article 120. [636 F] Mst. Rukhmabai vs Lala Laxminarayan, ; and C. Mohammad Yunus vs Syed Unnissa, ; , relied on. Bai Shevantibai vs Janardan R. Warick, A.I.R. 1939 Bom. 322 disapproved in so far as it held that the right to sue accrued from the date of sale. (iii) The cross objection had no merit. What S purchased at the auction sale was the share of the sons of S then bom, in the joint family Properties. At the date of the auction sale that share which was originally 4/5th had been reduced to 2/3rd by the birth of another son to N who had not been made a party either to the suit or the execution proceedings. What was purchased at the execution sale was only the shares of the four elder sons of N and their share at the date of sale was 2/3rd. That 630 being so S was not entitled to get the 1/6th share of the fifth son also allotted to him in the partition suit. [637 B C] Per Ramaswami, J. : (i) The purchaser of a share of joint Hindu family property doe , not acquire any interest in the property he cannot claim to be put. in possession of any definite place of Property. A suit for partition filed by the alienee from a is not, in a technical sense, a suit for partition and such a suit have the necessary effect of breaking up the joint ownership of the members of the family in the joint family in the joint property nor the corporate character of the family. Such being the rights of the alienee his right to sue for partition cannot be said to be a continuing right subject to no period of limitation for enforcing it. [638 F H] Aiyyagari Venkataramayya vs Aivyagari Ramayya, I.L.R. 25 referred to. (ii) Though the alienee of an undivided interest of a Hindu is not entitled to joint possession with other copartners or to separate possession of any part of the family property he is entitled to obtain possession of that part of the family property which might full to the share of his alienor at a partition. [640 B] In the present case the alienee instituted a suit for general the prayer that he may be put in possession of that part of the family property which may be allotted to his share. It is not right to such a suit as a suit for mere partition. The main relief sought by the plaintiff is the relief of possession of that part of the property which may be allotted to the alienor 's share and a relief for partition is only a machinery for working out his right and ancillary to the main relief for possession of the property allotted to the alienor 's share. what the plaintiff seeks is actual delivery of possession. Such a suit falls within the of article 144 of the Limitation Act. [640 B D] Thani vs Dakshinamurthy. I.L.R. , appoved (iii) the possession of the non alieniting members of the family cannot be said to be possession on behalf of the alienee also because the purchaser alienee does not acquire in interest in the property sold and does not become tenant in common with the members of the family tier is he entitled to joint possession with them. In the absence of clear acknowledgement of the right of the alienee or participation in the enjoyment of the family property by the alienee the possession of his alienors share. The fact that the alienee has purchased an undivided interest is not inconsistent with the conception of adverse possession, of that interest. [640 E H] Sudarsan Das vs Ram Kirpat Das, A.I.R. 1950 P.C. 44, reliel on. According to the third column of article 144, time begins to run from the date when the possession of the defendant becomes adverse to the plaintiff. In the present case, therefore, adverb possession bengon to run from the date of purchase of the undivided share i.e. front December 21. [640 E; 641 FF] (iv) However the grant of symbolic possession bv the court in favour of P after notice to defendants 2 to 5 was tantamount in law to delivery of actual possession and therefore efficient to break up the continuity of adverse "scion in favour of the defendants. Even assuming that the grant of symbolic possible ought not to have been made and that, 631 the executing court acted illegally in making such an order, it could not be argued that the executing court had no jurisdiction to make the order or that the act of symbolic possession was a nullity in the eye of law. [642 B] Yelumalai Chetti vs Srinivasa Chetti,I.L.R. , referred Sri Radha Krishna ' Chanderii vs Ram Bahadur, A.I.R. 1917 P.C. 197, relied on. According the suit of the plaintiff was no.t barred by limitation under ' article 144 of the Limitation Act and the view taken by the High Court on this part of the case was not correct. [642 D]

Appeal No. 435 to 437 of 1959. Appeals from the judgment and decree dated April 24, 1953 of the Patna High Court in First Appeals Nos. 119, 192 and 189 of 1948 respectively. section T. Desai, U. P. Singh and D. Goburdhan, for the appellants. G. section Pathak, B. Dutta & K. K. Singh, for the respondents Nos. 2, 3 (a), 3 (d), 4 (a) to 4 (c), 5, 6, 7 (a), 8 to 14, 15 (a) to 15 (c), 16, 18 to 20, 21 (a), 21 (b), 22, 23, 25 to 32, 33 (a), 33 (b), 34 to 38, 39(a) to 39(d), 40 to 42, 44, 45, 46(a) to 46(d), 47, 48, 49, 74 to 79 and legal representatives of respondent No. 1 (in C. As. 435 and 436 of 1959) and respondents Nos. 14 759 to 16, 18(a), 18(d), 19(a) to 19(c), 21, 23, 25, 26 and legal representatives of respondent No. 1 (in C.A. No. 437 of 1959). Sarjoo Prasad, Kanhaiyaji and A. G. Ratnaparkhi, for respon dent No. 80 (in C.As. 435 and 436/1959) and respondent No. 1 (in C.A. No. 437 of 1959). D. P. Singh, for respondent No. 81 (in C.As. 435 and 436 of 1959). The Judgment of the Court was delivered by Bachawat J. After stating the facts of the case and discussing the evidence his Lordship proceeded :] On the question of title also, the plaintiffs must fail. In the plaint, the basis of their claim of title was (a) occupation of 426 bighas 18 kathas and 9 dhurs of Dubha Taufir by their ancestor Naurang Thakur as occupancy tenant and the record of his rights in the survey papers of 1892 and (b) the oral arrangement with the Dumraon Raj. The first branch of this claim is obviously incorrect. The survey papers of 1892 do not record occupancy tenancy rights of Naurang Thakur in 426 bighas 18 kathas and 9 dhurs. In the High Court, counsel for the plaintiffs conceded that in the Khasra of 1892 1893 survey the plaintiffs ' branch was recorded as tenant for about 19 bighas only. The oral arrangement is not established, and the second branch of this claim also fails. The Subordinate Judge did not examine the basis of the plaintiffs ' claim of title. His finding in favour of the plaintiffs ' title was based chiefly on (1) oral evidence, (2) depositions of witnesses in previ ous litigations, (3) possession, (4) an admission of the Maharaja. The oral evidence on the point is not convincing. The claim is not supported by the documentary evidence. The survey papers of 1892, 1895, 1904, 1909 and 1937 do not support the plaintiffs ' claim of occupancy rights in the lands in suit. The depositions of witnesses in other litigations do not carry the matter further. The deposition of defendant No. 1 1, Ram Dass Rai, in Suit No. 217 of 1911 is of weak evidentiary value. Though admissible against him as an admission, it is not admissible against the other defendants. The other depositions relied upon do not satisfy the test of section 33 of the Indian Evidence Act, and are not admissible in evidence. We have already found that the plaintiffs and their ancestors were not in possession of the disputed land since 1909. The oral evidence as to their possession before 1909 is not convincing, and we are not inclined to accept it. The documentary evidence does not support the story of their possession before 1909. With 760 regard to the admission of the Maharaja in Suit No. 247/10 of 1913 relating to the plaintiffs ' title to 244 bighas, we find that in his written statement the Maharaja asserted his khas zeraiti rights and denied the alleged guzashta kastha rights of the plaintiffs ' ancestors. It seems that in Bihar 'guzashta kasht ' means a holding on a rent not liable to enhancement. Later, on June 10, 1913, a petition was filed on his behalf stating that the plaintiffs ' ancestors were tenants in occupation of the disputed land having guzashta kasht rights. The Maharaja was interested in the success of the suit, and it was necessary for him in his own interest to make this admission. The admission was made under somewhat suspicious circumstances at the end of the trial of the case when the arguments had begun. Though this petition was filed, the written statement of the Maharaja was never formally amended. In the circumstances, this admission has weak evidentiary value. In this suit, the plaintiffs do not claim tenancy right either by express grant or by adverse possession. Title cannot pass by mere admission. The plaintiffs now claim title under cl. (1) of section 4 of Regulation XI of 1825. The evidence on the record does not establish this claim. The claim of title based upon cl. (1) of section 4 of Regulation XI of 1825 was not clearly made in the pleading. It was clearly put forward for the first time in the High Court. It was contended that the decision in Suits Nos. 22 to 31 and 199 of 1937 conclusively established this claim. The High Court rightly pointed out that those suits did not relate to any portion of the subject matter in the present suit, and the decision in those suits cannot operate as res judicata. The plaintiffs now contend that the judgment is admissible to show that the plaintiffs ' ancestors asserted title to other Taufir lands as an accretion to frontier Dubha Mal plots under the Regulation and their claim was recognised. But the plaintiffs ' ancestors did not consistently assert such a title. In Attestation Dispute Cases Nos. 1 to 253 of village Dubha they claimed title to the lands in suit as an accretion to their 77 bighas, and this claim was negatived. The survey records of 1892, 1895, 1904 and 1909 disclose that the ancestors of the plaintiffs held some of the frontier plots of Dubha Mal. The High Court was, therefore, asked to draw the inference that their ancestors held those plots during 1845 to 1863 when the Taufir lands accreted. The question is whether such an inference should be drawn. Now, if a thing or a state of things is shown to exist, an inference of its continuity within a reasonably proximate time both forwards and backwards may sometimes be drawn. The presumption of future continuance is noticed in Illustration (d) to section 114 of the . In 761 appropriate cases, an inference of the continuity of a thing or state of things backwards may be drawn under this section, though on this point the section does not give a separate illustration. The rule that the presumption of continuance may operate retrospectively has been recognished both in India, see Anangamanjari Chowdhrani vs Tripura Soondari Chowdhrani (1) and England, see Bristow vs Cormican(2), Deo vs Young(1). The broad observation in Manmatha Nath Haldar vs Girish Chandra Roy(4) and Hemendra Nath Roy Chowdhury vs Jnanendra Prasanna Bhaduri(5) that there is no rule of evidence by which one can presume the continuity of things backwards cannot be supported. The presumption of continuity weakens with the passage of time. How far the presumption may be drawn both backwards and forwards depends upon the nature of the thing and the surrounding circumstances. In the present case, the High Court rightly refused to draw the inference from the state of things during 1892 to 1909 that the ancestors of the plaintiffs held frontier plots of Dubha Mal in 1863. The High Court pointed out that even during 1894 to 1905 the ownership of some of the plots had changed, and also that the frontier Mal plots and the corresponding Taufir plots were not always held by the same person. In 1845, part of the Mal lands was under water. The frontier Mal lands reformed between 1845 to 1863 were subject to annual inundation. It is well known that settlements of char lands are seasonal and temporary. There is a considerable gap of time between 1892 and 1845. It is not safe to assume that the state of things during 1894 to 1905 existed during 1845 to 1863. In exhibit L 1 (13), the Khatian of Mauza Dubha published on January 2, 1912, the tenancies of serveral plots held by the ancestors of the plaintiffs are described as Sharah Moaiyan (at fixed rate of rent). The plaintiffs contend that this record read in conjunction with section 50(2) of the Bengal Tenancy Act, 1885 shows that the ancestors of the plaintiffs must have held those plots from the time of the, Permanent Settlement. The contention is based on fallacious reasoning. Section 50(2) of the Bengal Tenancy Act, 1885 raises in a suit or proceeding under the Act a presumption that a raiyat has held at the same rate of rent since the Permanent Settlement, if it is shown that the rate of rent has not been changed during the last 20 years. Fixity of rent may arise not only from this presumption but also from express grant. An entry in the 1. (1887) L.R. 14 I.A. 101, 110. 2. , 669 670. ; , 4. , 770. 5. 5, 117. 762 record of rights showin that the tenancy was at a fixed rate of rent does not necessarily mean that the tenant was holding the land from the time of the Permanent Settlement. The point based on the entries in exhibit L 1(13) was not taken in the Courts below, and the circumstances under which they came to be made and the question whether they relate to the frontier plots of Dubha have not been investigated. We think that this new point ought not to be allowed to be raised at this stage. The suit as framed must fail, even if we presume that the ancestors of the plaintiffs ' branch held some of the frontier plots in Dubba Mal between 1845 and 1863, when the Taufir lands accreted. The ancestors of the defendants third party 's branch also held numerous frontier plots of Dubha Mal between 1892 and 1909, and making the same presumption in their favour, it would appear that they also held numerous frontier plots of Dubha Mal between 1.845 and 1863. The ancestors of the plaintiffs ' branch and defendants 3rd party 's branch separately held and enjoyed the several frontier plots of Dubha Mal, and on the plain tiffs ' own case, the ancestors of the plaintiffs ' branch would be entitled to the alluvial accretions in front of their plots and similarly, the ancestors of the defendants 3rd party 's branch would be entitled to the alluvial accretions in front of their plots. The alluvial accretions of each plot must be apportioned by drawing perpendicular lines from its boundary points to the new course of the Ganges, so that each plot acquires a new river frontage in proportion to its old river frontage. The plaintiffs could claim no more than the alluvial accretions to the plots, held by the ancestors of their branch. In the Courts below, no attempt was made by the plaintiffs to apportion the accretions amongst the several frontier plots. Without further investigation, the alluvial accretions in respect of each plot cannot be ascertained. This is not a fit case for remand at this late stage. The further case of the plaintiffs that the defendants3rd party lost their title to their portion of the Taufir lands is not established. It is neither alleged nor proved that the plaintiffs and the defendants 3rd party jointly owned and possessed the Taufir lands. In the absence of pleading and proof of joint title and possession, the plaintiffs ' claim for recovery of the entire Taufir lands must fail. Realising this difficulty, counsel for the plaintiffs made an entirely new case before us. He submitted that Dihal Thakur. the common ancestor of the plaintiffs and defendants 3rd party owned all the frontier plots of Dubha Mal between 1845 and 76 3 1863 and consequently acquired occupancy rights in all the Taufir lands accreted in front of his plots, those rights have now devolved jointly upon the plaintiffs and defendants 3rd party, and the plaintiffs and defendants 3rd party are jointly entitled to the entire Taufir lands. There is no trace of this case in the pleadings and the judgment of the trial Court. This case was not made even in the High Court. On the contrary, the plaintiffs ' case all along has been that the branches of the plaintiffs and defendants 3rd party separately possessed and enjoyed their respective plots. Moreover, we are not inclined to draw the presumption that Dihal Thakur owned all the frontier plots of Dubha Mal between 1845 and 1863. Even if we assume that the descendants of Dihal Thakur owned the frontier plots in 1892 or even in 1882, we are unable to infer that Dihal Thakur held them between 1845 and 1863. The case is made here for the first time, and was not the subject matter of an enquiry in the Courts below. There is neither pleading nor proof that Dihal Thakur held any of the frontier plots of Dubha Mal at any time, or that the branches of the plaintiffs and defendants 3rd party inherited their respective holding from Dihal Thakur. To establish their claim based upon cl. (1) of section 4 of Regu lation XI of 1825, the plaintiffs must also prove that the Taufir lands were gained by gradual accession from the recess of the river. Having regard to our conclusions on the other points, we do not wish to express any opinion on this question. Even if the Taufir lands were gained by gradual accession, this gain did not accrue for the benefit of the plaintiffs. The plaintiffs have failed to establish that they or their ancestors held any plot or plots to which the accretions were annexed. The plaintiffs have failed to prove their title based upon cl. (1) of section 4 of Regulation XI of 1825. They have also failed to establish their claim of title based upon oral arrangements. Their claim of title based upon occupation of the disputed lands is also not established. They have failed to prove that they were in occupation of the disputed lands. Moreover, mere occupation does not confer tenancy rights. The result is that Civil Appeals Nos. 435 and 436 of 1959 must fail. C. A. Nos. 435 to 437 dismissed.

IN-Abs

The appellants claimed title to the lands in dispute on the basis of section 4(1) of the Bengal Alluvion and Deluvion Regulation XI of 1825. To establish their claim based upon the clause, the appellants had to prove that the lands were gained by gradual accession from the recess of the river and that the lands were accretions to plots in the possession of the appellants or their ancestors. Since the survey records from 1892 to 1909 showed that appellants ' ancestors held some of the frontier plots, the High Court was asked to draw the inference that they held those plots during 1845 to 1863 when the lands in dispute accrcted. The High Court refused to draw the inference. In appeal to this Court, HELD : If a thing or a state of things is shown to exist, an inference of its continuity within a reasonably proximate time both forwards and, in appropriate cases, backwards, may be drawn under section 114, Evidence Act. But it was not safe to assume in the present case that a state of things during 1892 to 1909 existed during 1845 to 1863 since the interval of time was too Inng. [760 H] Anangamanjari Chowdhrani vs Tripura Sundari Chowdhrani, (1887) L.R. 14 I.A. 101, 110, approved. Observation contra in Manmath Nath Haldar, vs Girish Chandra Roy, , 770 and Hemendra Nath Roy Chowdhury vs Jnendra Prasanna Bhaduri, , 117, disapproved.

Appeal Nos. 310/ of 1963 and 121 of 1964. Appeals from the judgments and decrees, dated November 22, 1960 and November 16, 1961 of the Orissa High Court in First Appeals Nos. 53 of 1956 and 78 of 1958 respectively. B. P. Maheshwari, for the appellant (in C. A. No. 310 of 1963). P. K. Chatterjee, for the appellants (in C. A. No. 121 of 1964). 792 section V. Gupte, Solicitor General, and R. N. Sachthey, for respondent No. 1. (in both the appeals). Ramaswami, J. This appeal is brought by a certificate on behalf of the plaintiff against the judgment and decree of the Orissa High Court, dated November 22, 1961. In the suit which is the subject matter of this appeal the plaintiff alleged that his ancestor Dayanidhi Mahapatra con structed a temple out of his own funds and established a family deity and made endowments for the maintenance of Seba Puja of the deity. After the death of Dayanidhi the plaintiff became the Manager and Shebait of the family deity. The case of the plaintiff was that the temple and the endowments were never dedicated to the public nor had the public any kind of right in the temple or the endowed properties, but that respondent No. 1, acting under the provisions of section 49 of the Orissa Hindu Religious Endowment Act (hereinafter referred to as the 'Act ') realised a sum of Rs. 386 as the annual contribution from the plaintiff. Consequently Sri Baman Mahapatra filed an application under section 64(1) of the Act for a declaration that the temple in question was a private one and did not fall within the purview of the Act. On November 1, 1953 respondent No. 1 rejected the contention of the plaintiff and declared the temple as a " 'public excepted temple" within the meaning of section 6(5) of the Act and appointed members of the plaintiff 's family as the hereditary trustees. Thereafter Sri Baman Mahapatra filed a suit in the Court of Subordinate Judge, Puri under section 64(2) of the Act for a declaration that the order passed by respondent No. 1 was illegal and should be set aside. Respondent No. 1 filed a Written Statement in that suit and after hearing the evidence on behalf of both the parties the Subordinate Judge held that the temple was a private temple belonging to the family of the plaintiff and defendants 2 and 3 and not a public excepted temple as erroneously held by respondent No. 1 in his order, dated November 1, 1953. Aggrieved by this judgment, respondent No. 1 filed an appeal before the Orissa High Court which allowed the appeal on the preliminary ground that the suit was not maintainable as the plaintiff had not impleaded the public in accordance with the requirements of 0.1 r. 8 of the Civil Procedure Code. The High Court took the view that the omission to implied the public in a suit under section 64(2) of the Act was fatal and the suit as framed was, 793 therefore, not maintainable and should be dismissed. In taking this view the High Court followed its previous decision in Padma Charan vs Commissioner, Hindu Religious Endowments, Orissa.(1) The question of law involved in this appeal is whether the High Court is right in its view that in a suit brought under section 64 (2) of the Act the public should be impleaded as necessary parties under 0. 1 r. 8 of the Civil Procedure Code. Section 6(13) of the Act defines a "temple" as "a place, by whatever designation known, used as a place of public religious worship and dedicated to, or for the benefit of, or used as of right by, the Hindu community, or any section thereof, as a place of religious worship". Section 6(5) defines an "excepted temple" to mean and include "a temple the right of succession to the office of trustee or the offices of all the trustees (where there are more trustees than one) whereof has been hereditary, or the succession to the trusteeship whereof has been specially provided for by the founder". Section 64 of the Act states "64. (1) If any dispute arises as to whether an institution is a math or temple as defined in this Act or whether a temple is an excepted temple, such dispute shall be decided by the Commissioner. (2) Any person affected by a decision under subsection (1) may, within one year, institute a suit in the Court to modify or set aside such decision; but subject to the result of such suit, the order of the Commissioner shall be final. " The right of instituting a suit conferred by section 64(2) on any person affected by the decision of the Commissioner is a statutory right and there is nothing in that section which makes it incumbent upon the plaintiff to make the public as party defendants to the suit or to take recourse to the procedure prescribed under 0.1 r. 8, Civil Procedure Code. It was conceded by the Solicitor General on behalf of respondent No. 1 that there is also nothing in the rules framed under section 52 of the Act requiring the Commissioner to give public notice and invite objections from the members of the public interested in the temple in a proceeding under section 64(1) of the Act. If the Commissioner is not required to give public notice or to grant a hearing to members of the public before making an order under section 64(1) of the Act, there (1) I.L.R. 1961 Calcutta 183. 794 is no reason why the person affected by the decision of the Commissioner should be compelled to implead members of the public as party defendants in a suit brought under section 64(2) of the Act In our opinion, the suit brought under section 64 (2) is not a suit of the nature contemplated by 0. I r. 8 of the Civil Procedure Code. Having regard to the scheme and object of the Act it is manifest that the Commissioner represents the interest of the public and he is the only person who is entitled to take proceedings on behalf of the religious and charitable trust and individual members of the public have no locus standi in the matter. Reference may be made in this connection to section 54 of the Act which states : "54. (1) The Commissioner or any person having interest and having obtained the consent of the Commissioner may institute a suit in the Court to obtain a decree (a) to recover possession of property comprised in a religious endowment; (b) appointing or removing the trustee of a math or excepted temple or of a specific endowment attached to a math or excepted temple; (c) vesting any property in a trustee; (d) declaring what proportion of the endowed property or of the interest therein shall be allocated to any particular object of the endowment; (e) directing account and enquiries; or (f) granting such further or other relief as the nature of the case may require. (2) Sections 92 and 93 and rule 8 of Order 1 of the First Schedule of the Code of Civil Procedure, 1908, shall have no application to any suit claiming any relief in respect of the administration or management of a religious endowment and no suit in respect of such administration or management shall be instituted, except as provided by this Act. (3) All suits or other legal proceedings by or against the Commissioner under this Act shall be instituted by or against him in his name. " The principle underlying the section is based, to some extent, upon the principle of English law for enforcement of charitable trusts in the interest of general public. In English law the Crown 795 as parens patriae is the constitutional protector of all property, subject to charitable trusts, such trusts being essentially matters of public concern A. G. vs Brown(1); and the Attorney General, who represents the Crown for all legal purposes, is accordingly the proper person to take proceedings on this behalf and to protect charities Eyre vs Countess of Shaftsbury (2). Whenever an action is necessary to enforce the execution of a charitable purpose, to remedy any abuse or misapplication of charitable funds, or to administer a charity, the Attorney General is the proper plaintiff, whether he is acting alone ex officio as the officer of the Crown and as such the protector of charities, or ex relation that is to say at the request of a private individual who thinks that the charity is being or has been abused. The same principle is, to some extent, the basis of different legislative enactments in our country with regard to enforcement of public religious and charitable trusts. We are, therefore, of opinion that the High Court was in error in holding that in the suit brought by the plaintiff under section 64(2) of the Act the members of the public were necessary parties and it was incumbent on the plaintiff to follow the provisions of 0.1 r. 8, Civil Procedure Code and the view of the High Court on this point should be overruled. For the reasons expressed we hold that this appeal should be allowed and the judgment and decree of the High Court of Orissa in First Appeal No. 53 of 1956, dated November 22, 1961 should be set aside and the appeal should be remanded to the High Court for being dealt with and decided in accordance with law. Both the parties will bear their own costs up to this stage Civil Appeal No. 121 of 1964. This appeal is brought by a certificate against the judgment and decree of the High Court of Orissa, dated November 16, 1961 and the question of law involved in this appeal is identical with the one involved in Civil Appeal No. 310 of 1963. For the reasons given in that case we allow this appeal set aside the judgment and decree of the Orissa High Court in First Appeal No. 78 of 1958, dated November 16, 1961 and order that the appeal should go back in remand to the High Court for being dealt with and determined in accordance with law. Both the parties will bear their own costs up to this stage. Appeals allowed. (1) (1818) 1 Swan 265. (2) (1724) 2 P.W. M 103.

IN-Abs

The Commissioner of Hindu Religious Endowments, the respondent herein, acting under section 49 of the Orissa Hindu Religious Endowments Act, realised a sum as annual contribution in respect of a temple of which the appellant 's father was the manager and shebait. The appellant 's father claimed that his ancestor had constructed the temple out of his own funds and established a family deity and made endowments for its maintenance. The appellant 's father filed an application under section 64(1) of the Act for a declaration that the temple in question was a private one and did not fall within the purview of the Act, which was rejected by the respondent the Act and appointed members of the appellant 's family as heredity who declared the temple as a "public excepted temple" under section 6(5) of trustees. Thereafter the appellant 's father filed a suit under section 64(2) of the Act for a declaration that the order passed by the respondent was illegal and should be set aside. The Trial Court decreed the suit. The appeal of the respondent was allowed by the High Court by accepting his preliminary ground that the suit was not maintainable as in the suit, the public were not impleaded in accordance with the requirements of 0. I r. 8 of the Code of Civil Procedure. In appeal by certificate to this Court; HELD : A suit brought under section 64(2) of the Act is not a suit of the nature contemplated by 0.1 r. 8 of the Civil Procedure Code. Having regard to the scheme and object of the Orissa Hindu Religious Endowment Act it is manifest that the Commissioner represents the interest of the public and he is the only person who is entitled to take proceedings on behalf of the religious and charitable trust, and individual members of the public have no locus standi in the matter. [794 B] Case law referred to.

Appeal No. 391 of 1964. Appeal from the judgment and order dated July 1, 1960 of the Calcutta High Court in Civil Rule No. 520 of 1955. C. K. Daphtary, Attorney General, B. Sen, section C. Bose and P. K. Bose, for the appellants. N. C. Chatterjee, Sukumar Ghose for section C. Mazumdar, for the respondent. B. R. L. Iyengar, section K. Mehta and K. L. Mehta, for inter vener No. 1. Arun B. Saharya and Sardar Bahadur, for intervener No. 2. Naunit Lal, for intervener No. 3. section V. Gupte, Solicitor General and B. R. G. K. Achar, for intervener No. 4. N. Krishnaswamy Reddy, Advocate General, Madras and A. V. Rangam, for intervener No. 5. D. Sahu, Advocate General, Orissa, B. P. Jha and R. N. Sachthey for intervener No. 6. R. N. Sachthey, for intervener No. 7. Haradev Singh, for intervener No. 8. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by the State of West Bengal and its Chief Secretary against the judgment of the Calcutta High Court dated July 1, 1960 by which the order dismissing N. N. Bagchi (the respondent) from service was quashed. The High Court certified the case as fit for appeal to this Court under articles 132(1) and 133(1)(c) of the Constitution. N. N. Bagchi was appointed a Munsif on November 10, 1927. After promotions he became an Additional District & Sessions Judge and officiated at several stations as District & Sessions Judge but he was never confirmed as such. He last acted as a District & Sessions Judge at Birbhum in March 1953. In April of the same year he was transferred to Alipore as an Additional District & Sessions Judge. In the ordinary course Bagchi was due to superannuate and retire on July 31, 1953. On April 17, 1953 he applied for leave from April 27, 1953 to July 31, 1953 preparatory to retirement. The leave was held inadmissible. He 774 was, however, granted leave from July 17, 1953 to the end of his service. Bagchi, however, reported on April 27, 1953 that he had gone to Puri on April 25, 1953 because his son was ill and asked for one month 's leave from April 27, 1953. Leave for 3 weeks was granted which, at his request, was extended to June 5, 1953. By an order dated July 14, 1953 Government ordered that Bagchi be retained in service for a period of two months commencing from August 1, 1953. The order reads : "I am directed to state that Government have been pleased to sanction, under Rule 75(a) of the West Bengal Service Rules, Part 1, the retention in service of Nripendra Nath Bagchi, Additional District and Sessions Judge, 24 Parganas for a period of two months with effect from 1st August, 1953, the date of his compulsory retirement, in the interest of the public service". Rule 75(a) which was invoked reads as follows Rule "75(a). Except as otherwise provided in this rule, the date of compulsory retirement of a Government servant other than a member of the clerical staff or a servant in inferior service is the date on which he attains the age of 55 years. He may, however, be retained in service beyond that date with the sanction of Government on public grounds which should be recorded in writing; but he shall not be retained after attaining the age of 60 years except in very special circumstances. " By another order dated July 20, 1953 Bagchi was placed under suspension and on the following day he was served with 11 charges and was asked to file a written reply within 15 days. An enquiry into these charges followed and it was entrusted to Mr. B. Sarkar. I.C.S., Commissioner, (later Member, Board of Revenue) by the Government of West Bengal. The enquiry continued for a long time and Bagchi was retained in service, though kept under suspension, by repeated orders of different durations under rule 75(a). Mr. Sarkar made his report to the Government on December 21, 1953 holding that some of the charges were proved. He did not recommend any punishment as he thought that punishment would depend upon Bagchi 's record of service. On March 18, 1954 Bagchi was asked to show cause why he should not be dismissed from service and after he had 77 5 shown cause he was dismissed on May 27, 1954. The Public Service Commission was consulted but not the High Court. He appealed to the Governor unsuccessfully. On February 15, 1955 he applied to the High Court at Calcutta under articles 226 and 227 of the Constitution against his dismissal and a rule was issued. On the recommendation of Mr. Justice D. N. Sinha, the case was placed before a Full Bench, as important questions of constitutional law were involved. The Full Bench by its judgment dated July 1, 1960 made the rule absolute and quashed the order of dismissal as well as the enquiry. On the application of the Government of West Bengal the High Court certified the case as fit for appeal to this Court and the present appeal was filed. At an earlier hearing this Court ordered that notices be issued to all the Advocates General of the States and to the High Courts, because the questions involved were of considerable general and constitutional importance. In answer to the notices some of the States and the High Courts intervened arguing either in favour of or against the judgment under appeal. While making his recommendation D. N. Sinha J. drew up the points of controversy in the case. They may be set down here : "(1) That the provisions of Rule 75(a) of the West Bengal Service Rules have not been compiled with. (2) That the service of a civil servant cannot be extended merely for the purpose of dismissal. (3) That the control over the District Courts and the Courts subordinate thereto are vested with the High Court under Article 235 of the Constitution, and the authority competent to take disciplinary proceedings and action against the petitioner or to deal with in any way was the High Court and not any other authority. (4) That the provisions of the Civil Service (Control, Classification and Appeal) Rules in so far as they authorise any authority other than the High Court to take disciplinary action against the person holding the post of petitioner are ultra vires and void under Article 235 of the Constitution. (5) That, in any event, the entire departmental enquiry and proceedings have been conducted in violation of the principle of natural justice. 7 76 At the final hearing this appeal was confined to the first three points. The fourth point and the allegations about denial of natural justice were not discussed. The three points may be summarized into two : (1) whether the enquiry ordered by the Government and conducted by an Executive Officer of the Government against a District & Sessions Judge contravened the provisions of article 235 of the Constitution which vests in the High Court the control over the District Court and the courts subordinate thereto; and (2) whether the provisions of rule 75(a) West Bengal Service Rules could be utilized to extend the service of Bagchi beyond the normal age of retirement. On hearing arguments we are satisfied that the answer to both the questions must be against the Government. We shall now proceed to give our reasons. We may begin with Rule 75(a) because that question, although not so important as the other, causes less trouble. The rule, which was earlier set out , may be compared with rules 56(a) and 56(d) of the Fundamental Rules "56(a) Except as otherwise provided in the other Clauses of this Rule the date of Compulsory retirement of a Government servant other than a ministerial servant, is the date on which he attains the age of 55 years. He may be retained in service after the date of compulsory retirement with the sanction of the Local Government on public grounds, which must be recorded in writing but he must not be retained after the age of 60 years except in very special circumstances." "56(d) Notwithstanding anything contained in clauses (a), (b) and (c), a Government servant under suspension on a charge of misconduct shall not be required or permitted to retire on reaching the date of compulsory retirement, but shall be retained in service until the enquiry into the charge is concluded and a final order is passed thereon by competent authority. " It was conceded in the High Court that rule 5 6 (d) of the Fundamental Rules framed under section 96 B of the Government of India Act did not apply to District & Sessions Judges. The West Bengal Service Rules were made by the Governor under section 241 of the Government of India Act, 1935 and they were made applicable to the services of the Government of West Bengal. When the West Bengal Service Rules were made, the Fundamental Rules were available. Rule 75(a) was modelled on Rule 56(a) of the Fundamental Rules but no rule like Rule 56(d), which 7 7 7 we have quoted, was included. Under section 276 of the Govern ment of India Act, 1935, the West Bengal Service Rules would prevail over the Fundamental Rules, and it is conceded that they alone govern this case. Even if Rule 56(d) of Fundamental Rules was available it was not utilized. Repeated orders were passed under rule 75(a), West Bengal Service Rules and these orders said that the retention of Bagchi was in the interest of public service. Rule 75(a) is hardly designed to be used for this purpose. It is intended to be used to keep in employment persons with a meritorious record of service who, although superannuated, can render some more service and whose retention in service is considered necessary on public grounds. This meaning is all the more clear when we come to the end of the rule where it is stated that a government servant is not to be retained after he attains the age of sixty years except in very special circumstances. This language hardly suits retention for purposes of departmental enquiries. Mr. Justice P. B. Mukherji pointed out very appositely the contrast between rule 56(a) and (d) of the Fundamental Rules. Rule 56(a) corresponds to rule 75(a) but rule 56(d) opens with the words "notwithstanding anything contained in clause (a). " (of Rule 56). This shows that they cover different situations and the matters in Rule 56(d) do not cover matters in Rule 56(a). In dealing with the application of the rules the learned Judge observed "No consent of the petitioner for retaining his service was called 'or obtained. The two expressions in the above order (1) "Retention in Service" and (2) "in the interest of public service" do not on the facts of this case mean what they say. Here "retention in service" means suspension from service because from the date when he was "retained" in service he was suspended from service. The other expression "the interest of the public service" does not mean actual service to the public but meant only departmental enquiry against him. His service was extended from time to time with a view to enable the Government to start and conclude the departmental enquiry against him during which the petitioner was allowed to live on a bare subsistence allowance. " We find it sufficient to say that we agree that the retention of Bagchi in service under rule 75(a) for the purpose of enquiry was not proper and the extension of the service was illegal. 778 We now come to the next question whether Government Or the High Court should order, initiate, and hold enquiries into the conduct of District Judges. This problem would not have arisen if there was no special provision for District Judges in the Constitution in Chapter VI entitled "Subordinate Courts" immediately after Chapter V which deals with the High Courts in the States. Chapter VI consists of five articles, Nos. 233 to 237. The last article in this list merely provides for the application of the provisions of this Chapter to Magistrates in the State as they apply in relation to persons appointed to the Judicial Service of the State subject, however, to such exceptions and modifications as may be specified. The expression "judicial service" is defined in the preceding article 236(b) and it means service consisting exclusively of persons intended to fill the post of district Judge and other civil judicial posts inferior to the post of district judge. The word "district judge" is also ' defined in the same article by cl. (a) and it includes, among others, an additional district judge. The other three articles are important and the relevant parts may be set out here : "254. Appointment of district judges. (1) Appointments of persons to be, and the posting and promotion of, district judges in any State shall be made by the Governor of the State in consultation with the High Court exercising jurisdiction in relation to such State. (2) "234. Recruitment of persons other than district judges to the judicial service. Appointments of persons other than district judges to the judicial service of a State shall be made by the Governor of the State in accordance with rules made by him in that behalf after consultation with the State Public Service Commission and with the High Court exercising jurisdiction in relation to such State." "235. Control over subordinate courts. The control over district courts and courts subordinate thereto including the posting and promotion of, and the grant of leave to, persons belonging to the judicial service of a State and holding any post inferior to the post of district judge shall be vested in the High Court, but nothing in this article shall be construed as 77 9 taking away from any such person any right of appeal which he may have under the law regulating the conditions of his service or as authorising the High Court to deal with him otherwise than in accordance with the conditions of his service prescribed under such law. " These articles deal with the appointments of the persons to be, and postings and promotions of district judges and appointment, postings and promotions of judges subordinate to the District Judge and the control over the District Court and the courts subordinate thereto. They also provide for special rules to be made by the Governor of the State after consultation with the State Public Service Commission and the High Court exercising jurisdiction in relation to each State. This group of articles is intended to make special provision for the judicial service of the State. What it intends to do is, of course, the bone of contention between the parties. To understand why this special Chapter was necessary when there is Part XIV dealing with Services under the Union and the States, it is necessary to go into a little history of this constitutional provision. Before we set down briefly how this Chapter came to be enacted outside the Part dealing with Services and also why the articles were worded, as they are, we may set down the corresponding provisions of the Government of India Act, 1935. There too a special provision was made in respect of judicial officers but it was included as a part of Chapter 2 of Part X which dealt with the Civil Services under the Crown in India. The 'cognate sections were sections 254 to 256 and they may be reproduced here : "254. District Judges, & c. (1) Appointments of persons to be, and the posting and promotion of, district judges in any Province shall be made by the Governor of the Province, exercising his individual judgment, and the High Court shall be consulted before a recommendation as to the making of any such appointment is submitted to the Governor. (2) A person not already in the service of His Majesty shall only be eligible to be appointed a district judge if he has been for not less than five years a barrister, a member of the Faculty of Advocates in Scotland, or a pleader and is recommended by the High Court for appointment. 7 80 (3) In this and the next succeeding section the expression "district judge" includes additional district judge, joint district judge, assistant district judge, chief judge of a small cause court, chief presidency magistrate, sessions judge, additional sessions judge, and assistant sessions judge. " 255. Subordinate civil judicial service. (1) The Governor of each Province shall, after consultation with the Provincial Public Service Commission and with the High Court, make rules defining the standard of qualifications to be attained by persons desirous of entering the subordinate civil judicial service of a Province. In this section, the expression "subordinate civil judicial service" means a service consisting exclusively of persons intended to fill civil judicial posts inferior to the post of district judge. (2) The Provincial Public Service Commission for each Province, after holding such examinations, if any, as the Governor may think necessary, shall from time to time out of the candidates for appointment to the subordinate civil judicial service of the Province make a list or lists of the persons whom they consider fit for appointment to that service, and appointments to that service shall be made by the Governor from the persons included in the list or lists in accordance with such regulations as may from time to time be made by him as to the number of persons in the said service who are to belong to the different communities in the Province. (3) The posting and promotion of, and the grant of leave to, persons belonging to the subordinate civil judicial service of a Province and holding any post inferior to the post of district judge, shall be in the hands of the High Court, but nothing in this section shall be construed as taking away from any such person the right of appeal required to be given to him by the foregoing provisions of this chapter, or as authorising the High Court to deal with any such person otherwise than in accordance with the conditions of his service prescribed thereunder. " 7 81 "256. Subordinate criminal magistracy. No recommendation shall be made for the grant of magisterial powers or of enhanced magisterial powers to, or the withdrawal of any magisterial powers from, any person save after consultation with the district magistrate of the district in which he is working, or with the Chief Presidency magistrate, as the case may be. " It way be pointed out at once that in the present Constitution these provisions have been lifted from the Chapter dealing with Services in India and placed separately after the provisions relating to the High Courts of the States. As far back as 1912 the is Commission stated that the witnesses before the Commission demanded two things : (1) recruitment from the Bar to the superior judicial service, namely, the District judgeship; and (2) the separation of the judiciary from the executive. The Commission stated in its report : "Opinion in India is much exercised on the question of the separation of the executive and the judicial functions of the officers" . and observed that "to bring this about legislation would be required". The Commission made its report on August 14, 1915 a few days after the Government of India Act, 1915 (5 & 6 Geo. V, c. 61) was enacted. The Act did not, therefore, contain any special provision about the judicial services in India. The World War I was also going on. In 1919, Part VII A consisting of sections 96 B to 96 E was added in the Government of India Act 1915. Section 96 B provided that every person in the Civil Service of the Crown in India held office during His Majesty 's pleasure but no person in that service might be dismissed by any authority subordinate to that by which he was appointed. The only section that concerns us is section 96 B. Sub section (2) of that section reads as follows "(2) The Secretary of State in Council may make rules for regulating the classification of the civil service in India, the methods of their recruitment, their conditions of service, pay and allowances, and discipline and conduct. Such rules may, to such extent and in respect of such matters as may be prescribed, delegate the power of making rules to the Governor General in Council or to local Governments, or authorise the Indian legislature or local legislatures to make laws regulating the public services : " 7 82 The Fundamental Rules and the Civil Services (Classification, Control and Appeal) Rules were made by the Secretary of State in Council under the above rule making power. These rules governed the judicial services except the High Court. Part IX of the Government of India Act dealt with the Indian High Courts, their constitution and jurisdiction. Section 107 gave to the High Courts superintendence over all courts for the time being subject to its appellate jurisdiction and enumerated the things the High Court could do. They did not include the appointment, promotion, transfer or control of the District Judges. High Courts could only exercise such control as came within their superintendence over the courts subordinate to their appellate jurisdiction. In the Devolution Rules, item 17 in Part II dealing with the Provincial subjects read as follows : "Administration of justice, including constitution, powers, maintenance and Organisation of civil courts and criminal jurisdiction within the Province; subject to legislation by the Indian legislature as regards High Courts, Chief Courts, and Courts of Judicial Commissioners and any Courts of criminal jurisdiction". It would thus appear that the problem about the independence of judicial officers, which was exercising the minds of the people did not receive full attention and to all intents and purposes the Executive Government and Legislatures controlled them. The recommendations of the Islington Commission remained a dead letter. When the Montague Chelmsford enquiry took place the object was to find out how much share in the legislative and executive fields could be given to Indians. The post of the District Judge was previously reserved for Europeans. The disability regarding Indians was removed as a result of the Queen 's Proclamation in 1870 and rules were framed first in 1873. In 1875 Lord Northbrook 's Government framed rules allowing Indians to be appointed and Lord Litton 's Government framed Rules fixing 1/5th quota for the Indians. There was no fixed principle on which Indians were appointed and the report of the Public Service Commission presided over by Sir Charles Atchison in 1886 contains the system followed in different Provinces. This continued down to 1919. The Government of India Act had introduced Dyarchy in India and the question of control of services in the transferred field was closely examined when the Government of India Act, 1935 was enacted. It was apprehended that if transference of power enabled the Ministers to control the services, the flow of Europeans to the civil services 783 would become low. Government appointed several Committees, chief among them the Mac Donnelly Committee considered the position of the Europeans vis a vis the services, There was more concern about Europeans than about the independence of the judiciary. The Indian Statutory Commission did not deal with the sub ject of judicial services but the Joint Committee dealt with it in detail. It is interesting to know that the Secretary of State made a preliminary statement on the subject of subordinate civil judiciary and his suggestion was "to leave to the Provincial Legislatures the general power" but to introduce in the Constitution "a provision which would in one respect override those powers, namely, a provision vesting in the High Courts, as part of their administrative authority, power to select the individuals for appointment to the Civil Judicial Services, to lay down their qualifications, and to exercise over the members of the service the necessary administrative control." He said that "the powers of the local Government should be "to fix the strength and pay of the services to which the High Court would recruit" and to lay down, if they so thought fit, any general requirements. . During the debates Marquis of Salisbury asked a question with regard to the general powers of the High Courts and the control over the subordinate courts. It was : "As I understood the Secretary of State in his statement, the control of the High Court over the Subordinate judges in civil matters has to be as complete as possible and maintained. Is that so ?" The answer was, "Yes". (No. 7937). The recommendations of the Joint Committee also followed the same objective. In the report (paragraph 337 p. 201) the following observations were made : "337. Necessity for securing independence of subordinate judiciary. by the Crown and their independence is secure; but appointments to the Subordinate Judiciary must necessarily be made by authorities in India who will also exercise a certain measure of control over the Judges after appointment, especially in the matter of promotion and posting. We have been greatly impressed by the mischiefs which have resulted elsewhere from a system under which promotion from grade to grade in a judicial hierarchy is in the hands of a Minister exposed 7 84 to pressure from members of a popularly elected Legislature. Nothing is more likely to sap the independence of a magistrate than the knowledge that his career depends upon the favour of a Minister; and recent examples (not in India) have shown very clearly the pressure which may be exerted upon a magistracy thus situated by men who are known, or believed, to have the means of bringing influence to bear upon a Minister. It is the Subordinate Judiciary in India who are brought most closely into contact with the people, and it is no less important, perhaps indeed even more important, that their independence should be placed beyond question than in the case of the superior Judges. As a result, when the Government of India Act 1935 was passed it contained special provisions (sections 254 256 already quoted) with regard to District Judges and the subordinate judiciary. It will be noticed that there was no immediate attempt to put the subordinate criminal magistracy under the High Courts but the posting and promotion and grant of leave of persons belonging to the subordinate judicial service of a Province was put in the hands of High Court though there was right of appeal to any authority named in the rules and the High Courts were asked not to act except in accordance with the conditions of the service prescribed by the Rules. As regards the District Judges the posting and promotions of a District Judge was to be made by the Governor of the Province exercising his individual judgment and the High Court was to be consulted before a recommendation to the making of such an appointment was submitted to the Governor. Since section 240 of the Government of India Act, 1935 provided that a civil servant was not to be dismissed by an authority subordinate to that which appointed him, the Governor was also the dismissing authority. The Government of India Act, 1935 was silent about the control over the District Judge and the subordinate judicial services. The administrative control of the High Court under section 224 over the courts subordinate to it extended only to the enumerated topics and to superintendence over them. The independence of the subordinate judiciary and of the District Judges was thus assured to a certain extent, but not quite. When the Constitution was being drafted the advance made by the 1935 Act was unfortunately lost sight of. The draft Constitution made no mention of the special provisions, not even similar to those made by the Government of India Act, 1935, 785 in respect of the subordinate judiciary. If that had remained, the judicial services would have come under Part XIV dealing with the services in India. An amendment, fortunately, was accepted and led to the inclusion of articles 233 to 237. These articles were not placed in the Chapter on services but immediately after the provisions in regard to the High Courts. The articles went a little further than the corresponding sections of the Government of India Act. They vested the "control" of the district courts and the courts subordinate thereto in the High Courts and the main question is what is meant by the word "control". The High Court has held that the word "control" means not only a general superintendence of the working of the courts but includes disciplinary control of the presiding judges, that is to say, the District Judge and judges subordinate to him. It is this conclusion which is challenged before us on various grounds. Mr. B. Sen appearing for the West Bengal Government contends that the word "control" must be given a restricted meaning He deduces this (a) on a suggested reading of article 235 itself and (b) on a comparison of the provisions of Chapter VI with those of Part XIV of the Constitution. We shall examine these two arguments separately as they admit of separate treatment. The first contention is that "control" means only control of the day to day working of the courts and emphasis is laid on the words of article 235 "district courts" and "courts subordinate thereto". It is pointed out that the expressions "district judge" and "judges subordinate to him are not used. It is submitted that if the incumbents were mentioned control might have meant disciplinary control but not when the word "court" is used. Lastly, it is contended that conditions of service are outside "control" envisaged by article 235 because the conditions of service are to be determined by the Governor in the case of the District Judge and in the case of judges subordinate to the District Judge by the Rules made by the Governor in that behalf after consultation with the State Public Service Commission and with the High Court. We do not accept this construction. The word "control" is not defined in the Constitution at all. In Part XIV which deals with Services under the Union and the States the words "disciplinary control" or "disciplinary jurisdiction" have not at all been used. It is not to be thought that disciplinary jurisdiction of services is not contemplated. In the context the word "control" must, in our judgment, include disciplinary jurisdiction. Indeed. L8Sup. C1/65 7 786 the word may be said to be used as a term of art because the Civil Services (Classification Control and Appeal) Rules used the word "control" and the only rules which can legitimately come under the word "control" are the Disciplinary Rules. Further as we have already shown, the history which lies behin the enactment of these articles indicate that "control" was vested in the High Court to effectuate a purpose, namely, the securing of the independence of the subordinate judiciary and unless it included disciplinary control as well the very object would be frustrated. This aid to construction is admissible because to find out the meaning of a law, recourse may legitimately be had to the prior state of the law, the evil sought to be removed and the process by which the law was evolved. The word "control", as we have seen, was used for the first time in the Constitution and it is accompanied by the word "vest" which is a strong word. It shows that the High Court is made the sole custodian of the control over the judiciary. Control, therefore, is not merely the power to arrange the day to day working of the court but contemplates disciplinary jurisdiction over the presiding Judge. article 227 gives to the High Court superintendence over these court , and enables the High Court to call for returns etc. The word " control" in article 235 must have a different content. It includes something in addition to mere superintendence. It is control over the conduct and discipline of the judges. This conclusion is further strengthened by two other indications pointing clearly in the same direction. The first is that the order of the High Court is made subject to an appeal if so provided in the law regulating the conditions of service and this necessarily indicates an order passed in disciplinary jurisdiction. Secondly, the words are that the High Court shall "deal" with the judge in accordance with his rules of service and the word "deal" also points to disciplinary and not mere administrative jurisdiction. Articles 233 and 235 make a mention of two distinct powers first is power of appointments of persons, their postings and promotion and the other is power of control. In the case of the District Judges, appointments of persons to be and posting and promotion are to be made by the Governor but the control over the District Judge is of the High Court. We are not impressed by the argument that the term used is "district court" because the rest of the article clearly indicates that the word "court" is used compendiously to denote not only the court proper but also the presiding Judge. The latter part of article 235 talks of the man who holds the office. In the case of the judicial service subordinate to the District judge the appointment has to be made 7 87 by the Governor in accordance with the rules to be framed after consultation with the State Public Service Commission and the High Court but the power of posting, promotion and grant of leave and the control of the courts are vested in the High Court. What is vested includes disciplinary jurisdiction. Control is useless if it is not accompanied by disciplinary powers. It is not to be expected that the High Court would run to the Government or the Governor in every case of indiscretion however small and which may not even require the punishment of dismissal or removal. These articles go to show that by vesting "control" in the High Court the independence of the subordinate judiciary was in view. This was partly achieved in the Government of India Act, 1935 but it was given effect to fully by the drafters of the present Constitution. This construction is also in accord with the Directive Principles in article 50 of the Constitution which reads : "50. The State shall take steps to separate the judiciary from the executive in the public services of the State". Mr. Sen next argues that articles 309 to 311 (particularly article 311) gave a clue to the meaning of the word "control". The argument is that the legislation regarding services of the State falls within the jurisdiction of the State Legislature and article 309 gives the power to the State Legislature to regulate the recruitment and conditions of service of persons appointed to public services and posts in connection with the affairs of the State. This is perhaps true. But Mr. Sen seems to make no distinction between lelegislative and executive powers. Under article 162 the power of the Executive of the State is coextensive with that of the Legislature of the State but all that is subject to the other provisions of the Constitution. That the Legislature has the power to make laws relating to the services does not show that the Executive enjoys corresponding executive power if the Constitution indicates otherwise. article 310 does no more than state the tenure of the office of the persons serving the Union or the State. That has no bearing upon the present dispute. article 311 is, therefore, the only article which has relevance. That article reads as follows : "311. Dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State. (1) No person who is a member of a civil service of the Union or an all India service or a civil service of 788 the State or holds a civil post under the Union or a State shall be dismissed or removed by an authority subordinate to that by which he was appointed. (2) No such person as aforesaid shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him Provided that this clause shall not apply (a) where a person is dismissed or removed or reduced in rank on the ground of conduct which has led to his conviction on a criminal charge; (b) where an authority empowered to dismiss or remove a person or to reduce him in rank is satisfied that for some reason, to be recorded by that authority in writing, it is not reasonably practicable to give to that person an opportunity of showing cause; or (c) where the President or Governor, as the case may be, is satisfied that in the interest of the security of the State it is not expedient to give to that person such an opportunity. (3) If any question arises whether it is reasonably practicable to give to any person an opportunity of showing cause under clause (2), the decision thereon of the authority empowered to dismiss or remove such person or to reduce him in rank, as the case may be, shall be final." Mr. Sen argues somewhat syllogistically as follows : Under clause (1) of the Article no person in the service of the Union or the State can be dismissed or removed by an authority subordinate to that by which he is appointed. Under cl. (2) no such person can be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause. Reading the above with articles 233 and 234 he contends, and rightly, that a District Judge or a Judge subordinate to the District Judge cannot be dismissed or removed by any authority other than the Governor. Mr. Sen argues that this power of the Governor determines that the enquiry must be made by or under the directions of the Governor or the Government To lend support to this contention Mr. Sen draws pointed attention to provisos (b) and (c) to cl. He says that by reason of 789 proviso (b), cl. (2) does not apply if the authority empowered to dismiss or remove a person or to reduce him in rank is satisfied that it is not reasonably practicable to give to that person an opportunity of showing cause and under cl. (3) the decision of that authority is made final. Again, by the proviso (c), says he, the Governor may dispense with the enquiry altogether if he is satisfied that in the interest of the security of the State it is not expedient to give to any person an opportunity of showing cause. Mr. Sen contends that as the Governor alone can appoint or dismiss or remove District Judges and as he alone can decide whether, for any of the two reasons mentioned in provisos (b) and (c) an opportunity to a District Judge of showing cause against the charges leveled against him shall be denied, the Governor alone can initiate enquiries and cause them to be held and the High Court cannot claim to hold them. In this way, he contends, the extent of control exercisable by the High Courts under article 235 must be so cut down as to keep disciplinary jurisdiction out. This argument was not presented in the High Court and does credit to the ingenuity of Mr. Sen but it is fallacious. That the Governor appoints District Judges and the Governor alone can dismiss or remove them goes without saying. That does not impinge upon the control of the High Court. It only means that the High Court cannot appoint or dismiss or remove District Judges. In the same way the High Court cannot use the special jurisdiction conferred by the two provisos. The High Court cannot decide that it is not reasonably practicable to give a District Judge an opportunity of showing cause or that in the interest of the security of the State it is not expedient to give such an opportunity. This the Governor alone can decide. That certain powers are to be exercised by the Governor and not by the High Court does not necessarily take away other powers from the High Courts. The provisos can be given their full effect without giving rise to other implications. It is obvious that if a case arose for the exercise of the special powers under the two provisos, the High Court must leave the matter to the Governor. In this connection we may incidentally add that we have no doubt that in exercising these special powers in relation to inquiries against District Judges, the Governor will always have regard to the opinion of the High Court in the matter. This will be so whoever be the inquiring authority in the State. But this does not lead to the further conclusion that the High Court must not hold the enquiry any more than that the Governor should personally hold the enquiry. 790 There is, therefore, nothing in article 311 which compels the A conclusion that the High Court is ousted of the jurisdiction to hold the enquiry if article 235 vested such a power in it. In our judgment, the control which is vested in the High Court is a complete control subject only to the power of the Governor in the matter of appointment (including dismissal and removal) and posting and promotion of District Judges. Within the exercise of the control vested in the High Court, the High Court can hold enquiries, impose punishments other than dismissal or removal, subject however to the conditions of service, to a right of appeal if granted by the conditions of service, and to the giving of an opportunity of showing cause as required by cl. (2) of article 311 unless such opportunity is dispensed with by the Governor acting under the provisos (b) and (c) to that clause. The High Court alone could have held the enquiry in this case. To hold otherwise will be to reverse the policy which has moved determinedly in this direction. The High Court was thus right in its conclusions. The appeal fails and is dismissed. It is clear that the conduct of Bagchi may not now be inquired into but that is a result which we can only regret. In the circumstances we make no order about costs. Appeal dismissed.

IN-Abs

The respondent was appointed a Munsif on November 10, 1927. After promotion he became an Additional District and Sessions Judge and officiated at several stations as District and Sessions Judge but was never confirmed as such. In the ordinary course he was due to superannuate and retire on July 31, 1953. By an order dated July 14, 1953 the Government of West Bengal ordered that the respondent be retained in service for a period of two months commencing from August 1, 1953. The order purported to be under Rule 75(a) of the West Bengal Service Rules, Part 1. By another order dated July 20, 1953, the respondent was placed under suspension and on the following day he wag served with charges and asked to file a written reply within 15 days. An enquiry into the charges was made by an officer appointed for the purpose. During the period of the enquiry the respondent was retained in service, though kept in suspen sion, by repeated orders under rule 75(a). The enquiry officer reported that some of the charges were proved. On March 18, 1954 the respondent was asked to show cause why he should not be dismissed from service and after be had shown cause he was dismissed on May 27, 1954. The Public Service Commission was consulted but not the High Court. The respondent appealed to the Governor unsuccessfully. Thereafter he applied to the High Court at Calcutta under articles 226 and 227 of the Constitution against his dismissal. The High Court quashed the order of dismissal as well as the enquiry. The Government of West Bengal appealed to this Court on a certificate granted by the High Court. The questions that fell for consideration were : (1) Whether the enquiry ordered by the Government and conducted by an Executive Officer of the Government against a District and Sessions Judge contravened the provisions of article 235 of the Constitution which vests in the High Court the control over the District Court and the courts subordinate thereto; and (2) whether the provisions of rule 75(a) West Bengal Service Rules could be utilised to extend the service of the respondent beyond the normal age of retirement. HELD : (i) Rule 75(a) which was modelled on Rule 56(a) of the Fundamental Rules was not designed to be used for the purpose of retaining a person in service for enquiry against him but to keep in employment persons with a meritorious record of service who although superannuated can render some more service and whose retention in service is considered necessary on public grounds. If retention in service for the first reason was considered necessary a rule like Rule 56(d) of the Fundamental Rules was required. [777 E C] 7 72 (ii) There is special provision for District Judges in the Constitution in articles 233 to 237. These articles deal with the appointment of persons to be, and postings and promotions of, District Judges and appointment, postings and promotions of Judges subordinate to the District Court and the courts subordinate thereto. They also provide for special rules to be made by the Governor of the State after consultation with the State Public Service Commission and the High Court exercising jurisdiction in relation to each State. These articles were not placed in the Chapter on services but immediately after the provisions in regard to the High Courts. The articles went a little further than the corresponding sections of the Government of India Act, 1935. They vested the 'control ' of the district courts and the courts subordinate thereto in the High Courts. [779 B E; 785 B] (iii) The word 'control ' as used in article 235 includes disciplinary control or jurisdiction over District Judges. The history which lies behind the enactment of these articles indicates that 'control ' was vested in the High Court to effectuate a purpose, namely, the securing of the independence of the subordinate judiciary and unless it included disciplinary control as well the very object would be frustrated. [786 B] The word 'control ', moreover, is accompanied by the word 'vest ' which is a strong word. It shows that the High Court is made the sole custodian ,of the control over the judiciary. Control therefore is not merely the power to arrange the day to day working of the court but contemplates disciplinary jurisdiction on the presiding Judge. [786 C D] Article 227 gives to the High Court superintendence over these Courts and enables the High Court to call for returns etc. The word 'control ' in article 235 must have a different content. It includes something in addition to mere superintendence. It is control over the conduct and discipline of Judges. The inclusion of a right of appeal against the orders of the High Court in the conditions of service necessarily indicates an order passed in disciplinary jurisdiction, and the word 'deal ' also points to disciplinary and not mere administrative jurisdiction. [786 D F] (iv) Although the term used is "district court" the word 'court ' is used compendiously to denote not only the court proper but also the presiding Judge. [786 G H] (v) That the Legislature has under article 309 the power to make laws relating to the services does not show that the Executive under article 162 enjoys corresponding executive power, when the Constitution indicates otherwise. [787 F G] (vi) There is nothing in article 311 which compels the conclusion that the High Court is ousted of the jurisdiction to hold the inquiry if article 235 vested some power in it. The control which is vested in the High Court is a complete control subject only to the power of the Governor in the matter of appointment (including dismissal and removal) and posting and promotion of District Judges. Within the exercise of the control vested in the High Court, the High Court can bold enquiries, impose punishments other than dismissal or removal subject however to the conditions of service, to a right of appeal if granted by the conditions of service, and to the ,giving of an opportunity of showing cause as required by cl. (2) of article 31 1. unless such an opportunity is dispensed with by the Governor acting under the provisos (b) and (c) to that clause. [790 A C] The High Court alone could have held inquiry in this case. To hold otherwise would be to reverse the trend which has moved determinedly in this direction. [790 C D] 773

Appeals Nos. 341 to 343 of 1961. Appeals from the judgment and decree dated September 2, 1955 of the Andhra Pradesh High Court in Appeals Suits Nos. 342 of 1949, 789 of 1950 and 551 of 1951 respectively. A. V. V. Nair and P. Ram Reddy, for the appellants. A. V. Viswanatha Sastri, Alladi Kuppaswamy and M. section Narasimhan, for the respondents Nos. 1 and 2 (in C.A. No. 341 of 1961) respondents Nos. 1 to 3 (in C.A. No. 342 of 1961) and respondent Nos. 1 to 4 and 6 (in C. A. No. 343 of 1961). The Judgment of the Court was delivered by Shah, J. In these appeals a common question whether a shrotriem grant of lands known as "Challayapalem shrotriem" formed an estate within the meaning of section 3 (2) (d) of the Madras Estates Land Act, 1908 arises. The Court of first instance on a review of the evidence was of the opinion that the grant was of the whole Chellayapalem village within the meaning of section 3 (2) (d) of the Madras Estates Land Act, 1908, in force at the relevant time, and that the tenants held rights of occupancy in the lands held by them. The High Court of Madras disagreed with that view and held that on the evidence it was not proved that the original grant was of a "whole village" or even of a "named village" within the meaning of section 3 (2) (d) of the Madras Estates Land Act, 1908, and the first Explanation thereto, and that the onus to prove that the grant was of a whole or of a named village being upon the tenants in occupation of the lands in dispute, the claim of the shrotriemdars must succeed. With certificates granted by the High Court, these three appeals have been preferred. Suit No. 42 of 1942 was filed by certain tenants of lands in the village Challayapalem, District Nellore, for a declaration that they hold occupancy rights in lands in their occupation and for an injunction restraining the shrotriemdars of the village from "inter 844 fering with their possession". The tenants claimed that "they and their ancestors" were in possession and enjoyment of the lands for many years and had been paying rent to the shrotriemdars, and were dealing with the lands as owners, that all transactions in the Challayapalem shrotriem were being on the footing that the village was an "estate" under the Madras Estates Land Act, 1908, and that in any event the tenants held permanent rights of occupancy in the lands acquired in virtue of the provisions of the Madras Estates Land (Amendment) Act, 1936. This Suit was later numbered 37 of 1947. The shrotriemdars filed suit No. 2 of 1946 against fifteen named defendants for a declaration that the tenants in occupation of the lands in the village did not hold permanent occupancy rights. Later, permission under O. 1 r. 8 Code of Civil Procedure to sue the named defendants as representatives of all the tenants in the lands of the shrotriem grant was obtained. In this suit the shrotriem dars did not claim any relief for possession : they merely sought to reserve liberty to institute separate proceedings in that behalf nd claimed that they were entitled in enforcement of notices served upon ten out of the named defendants to call upon them to deliver possession of lands occupied by them. There was one more suit, No. 93 of 1947, which raised a dis pute as to the right of occupancy in a small area of land admeasuring 1 90 acres. The plaintiff in the suit claimed that he had acquired the right of occupancy by purchase the original tenant of the land. The fourth defendant in the suit whowas the principal contesting party claimed that he was a. granteeoccupancy rights from the shrotriemdar. The three suits were tried together. The tenants claimed in the principal suit No. 2 of 1946 occupancy rights in the lands hold by them, on three grounds : (1)that the tenants of agricultural lands were, by immemorial custom of the locality in the Nellore District, occupancy tenants; (2)that the tenants had acquired by prescription or by the doctrine of lost grant the rights of permanent occupancy; and (3)that the grant was of an estate within the meaning of section 3 (2) (d) of the Madras Estates Land Act, 1908, and the tenants of ,he lands in the estate were by virtue of section 6 of the Act permanent occupancy tenants. 845 The trial Court, relying upon the statement made in Boswell 's Manual of the Nellore District, that the "tenants. . of Chellayapalem like their brothers in other villages of this District had right to occupy the land from generation to generation on payment of rent prescribed by custom", held that the tenants ' plea on the first head must be sustained. The High Court declined to raise such a presumption in favour of the tenants of the District including tenants of the village Challayapalem, and correctness of that view was not challenged in this Court. On the second ground, the trial Court held that on the evidence that the tenants ' rights 'were independent of prescription", and that they had not raised any plea of acquisition of rights of occupancy by contract, express or implied. The High Court observed that on the evidence no "foundation is laid for invoking the presumption of lost grant to give a legal original, or lawful title to long continued possession of the land by a particular tenant or tenants", and that the plea of acquisition of the right of occupancy based on prescription was not made out. This plea was also not reiterated before us, and the appeals were supported only on the last ground. The grant was, it appears, made by a Carnatic Nawab which is recognised on all hands to be a shrotriem grant. There is, however, on the record no evidence to prove the date of the grant, the names of the grantor and the grantee, the extent and terms, of the grant, the purpose and nature of the grant, and whether the grant was of kudiwaram as well as of melwaram or of melwaram alone. The original deed of grant has not been produced and is no other direct evidence of the terms of the grant from which the terms of the grant may be gathered. The trial Court held that the later documents, such as the statement in the Inam Enquiry, the Inam Fair Register and other documents, conduct of the shrotriemdars and the tenants, and recognition accorded to the rights of the tenants viewed in the light of probabilities justified an inference that the grant was of the whole village, but according to the High Court the evidence on the record was inconclusive and the case must be decided against the tenants because the onus to prove that the grant was of an estate lay upon the tenants, and that the tenants had failed to discharge that onus. The problem must be approached in two distinct brancheswhether the evidence justifies an inference that the grant was of a whole village. and if there be no such evidence whether section 3 (2) (d) Explanation (1) of the Madras Estates Land Act gives rise to a presumption in favour of the shrotriemdars or the tenants. Between the years 1640 to 1688 the territory which now forms the 846 District of Nellore was under the sovereignty of the Sultan of Golkonda. In 1688 this territory along with Golkonda passed under the Moghal dominion. After the War between the East India Company and Sultan Hyder Ali, it was arranged between the Government of Madras and the Nawab of Carnatic that the latter should bear the cost of the military defence of the Carnatic region. The Nawab agreed to assign the revenues of the Carnatic region for a period of five years to the East India Company, and in pursuance of this arrangement, the East India Company took over the admi nistration of the Carnatic region in 1790. On August 18, 1790 the Board of Revenue, Madras issued instructions to the Collectors of Revenue appointed by the East India Company, relating to the administration of the Districts. Dighton who was the first Collector of the Nellore District unde r the new dispensation found on enquiry that some villages in the District had been alienated. on shrotriem tenure. He proceeded to investigate the title of the grantees and issued a number of sanads. During the course, of his management Dighton addressed on November 13, 1790 to the "Chellayapalem Shrotriemdar Mutharaju Ramachandrayya Sthala Karnai Varu" the following communication : "You shall pay as per installments varahas 283 (two hundred and eighty three) being the beriz in respect of your shrotriem known as Chellayapalem village in Gandavaram Paraganas, as entered in the circar shrotriem jabitha, into the Nellore Treasury, obtain receipt and happily enjoy the produce realised from that village, you shall enjoy happily by giving shares to the kapus as per mamool. " Administration of the territory by the East India Company came to an end on August 31, 1792. On July 31, 1802 the East India Company assumed sovereignty over the District of Nellore and one Travers was appointed Collector in September 1801. Travers recognised 207 shrotriem villages without disturbing the arrangements which were then in existence, dispensed with the duties of sthalakarnams and collected quit rent on their inams. It appears that the shrotriem of Challayapalem was continued under the arrangement of the year 1790 which we have set out. Soon after the East India Company took over the administra tion of what later came to be known as the Presidency of Madras, Regulation 31 of 1802 setting up machinery for the better ascertainment of titles of persons holding or claiming to hold lands exempt from payment of revenue to Government under grants and for fixing assessment on such lands was promulgated. A register of 847 Inams in Government Taluks was prepared and in Col. 14 of the Inam Register the Inams registered pursuant to the Regulation were set out. In the village Challayapalem are found mentioned in that Register three Inams the Challayapalem shrotriem (which is in dispute in the present case), and two other personal Inams each of an area of 0 93 cents. Apart from the preparation of this Inam Register, nothing substantial was done under the Regulation till 1860. About the acting of the shrotriemdars and the tenants between 1802 and 1860 there is very little evidence. There is no evidence as to when the five minor inams, including those two mentioned in the Inam Register, were created, who paid the revenue, whether tenants were shifted from lands in their occupation, or lands originally not occupied were brought under cultivation. In 1860 the Inam Commission commenced an inquiry in the Nellore District. Exhibit B 195 is a record of the statement made by the shrotriemdors Muthuraju Subbarao and Muthuraju Subbarammanya of Chellayapalem. In Col. 6 it is recorded that the grant was made during the time of the Nawabs for maintenance so as to be enjoyed from son to grandson and so on in succession, and in Col. 7 details of the lands are set out. Out of the total area of the land 21 Gorrus 12/16 are recorded as poramboke, 5 Gorrus and It Visas as minor inams, and 126. 3 1/4 visas as cultivated lands dry, wet and garden. The boundaries and particulars of the inam lands are shown as if the inam grant was of the whole village, the description of the boundaries being of lands of other villages to the East, South, West and on the North of lands of military barracks. Income of the shrotriem is fixed at Rs. 1,449 5 5 per annum and the total jodi at Rs. 1,225 12 2, leaving a balance of Rs. 223 9 3 to the shrotriemdars. This statement is described as written and filed by Muthuraju Subbarao and Subbarammayya shrotriemdars of Challayapalem, and that it was confirmed by the Village Officers. Pursuant to the enquiry made by the Inam Commissioner entries were posted in the Inam Fair Register. In Ext. A 1 which is described as "an extract from the Register of Inams in the village of Chellayapalem shrotriem in the taluk of Nellore" in Col. 21 it was recited that the shrotriem "being more than 50 years old could be confirmed. In the account of Fasli 1221 the income of the shrotriemdars for ten years previous to that Fasli is given. It is shown in the margin that the shrotriem is rented from Fosli 1263 to Fasli 1287, that is for a period of 25 years for the sum of Rs. 244 above the jodi. The cost of the repair to be borne half by the tenant and half by the shrotriemdars. Almost the whole land is now under cultivation and there is scarcely any room for further improvement. I propose to give a deduction of Rs. 20 on 848 account of the cost of repair which the shrotriemdar will have to pay and adopt the remainder as the value of the shrotriem". In Cols. 10 & 11 it is recorded that the inam was hereditary, but by whom it was granted it was not known. It is common ground that Ext. A 1 did not include the area of five minor inams for which separate entries Exts. A 2 to A 6 were posted. The total area of the village as then estimated exceeded 466 acres and Ext. A 1 related to 453 06 acres, the balance being in respect of minor inams. Pursuant to the entries in the Inam Fair Register, con firmatory title deeds were issued. Exhibits A 2 and A 3 relate to devadayam grants : the extent covered by Ext. A 2 is 5 68 acres, and by Ext. A 3 is 2 83 acres. In Cols. 1 1 & 12 headed "By whom granted and written instrument in support of the claim" it is recorded that "the name of the grantor and the written instruments in respect of the claim not known". Three other entries in the Inam Fair Register were Exts. A 4, A 5 & A 6. Exhibit A 4 is in respect of land 3 12 acres, Ext. A 5 is in respect of 0 93 cents and Ext. A 6 also is in respect of 0 93 cents. Here also it was recorded that the "grantor 's name and the date of the grant are not known. " The next public document to which reference may be made is the "Descriptive Memoir of Chellayapalem shrotriem village in the Kovur Taluk of the Nellore District" Ext. It recites that the boundary of the village had remained unchanged by settlement: the area prior to settlement was (omitting fractions) 469 acres, and by the settlement it was found to be 767 acres, showing an increase of 298 acres, but "nothing had been merged in this village by the settlement. " According to the settlement accounts of land, the total cultivable area was 682 acres, minor inams 18 acres and poramboke 67 acres. Under the bead "minor inams included in the village" were Personal Inams 5 08 acres Religious Inams 8 64 acres, Village Officers 2 87 acres and village artisans 1 80 acres. : Under Ext. A 7 the whole village was described is the Challayapalem shrotriem. Apparently the village was identified with the shrotriem. These are all the extracts from public records which have a bearing on the principal question in dispute. The plaintiffs in suit No. 2 of 1946 are purchasers under two deeds Exts. A 101 and A 102 respectively dated January 14, 1889 and August 7, 1889 from the previous holders. They are strangers to the family of the original grantees, and it is not surprising that they are not in possession of the deed of grant, and the earlier record relating to the management of the village. 849 Exhibit B 1 the letter addressed by Dighton to the shrotriemdar may at first blush suggest that the village was accepted and confirmed as one of the shrotriem villages in the Gandavaram Paragana. But Ext. B 1 was not of the nature of a sanad : it did not contain a reference to the terms of the grant, the date of the grant, the names of the grantor and grantee, and was based on information by a "Jabitha (list) relating to Circar 's shrotriems". In Boswell 's Manual it is recited that Dighton had investigated the title of the inamdars in the District and had granted sanads, but Ext. B 1 did not purport to be a confirmatory sanad or a fresh grant, or a deed embodying the result of any investigation regarding the title of the Mutharajus to the village. Exhibit B 1 undoubtedly refers to Mutharaju Ramchandrayya as "Chellayapalem Shrotriemdar" and fixes the revenue at 283 pagodas in respect of "your shrotriem known as Challayapalem village". But Dighton was a Collector of Revenue appointed by the East India Company which was in 1790 not invested with de jure sovereignty over the region. There is also no record of any enquiry made by Dighton is respect of the Challayapalem shrotriem. The object of the letter Ext. B 1 is apparently two fold : to fix the revenue, and to ensure that the tenants were not subjected to unlawful exactions. For the latter purpose it was directed that the shrotriemdar was to enjoy the produce from the village by giving shares to the kapus (tenants) is per mamool. Exihibit B 1 does not refer to any minor inams, and treats the Challayapalem village as the shrotriem of Muthurajus. The statement of Mutharaju Subbarao and SubbarammayyaExt. B 195 suggests that the original grant was in favour of Mutharaju Sithanna their ancestor. The statements in Col. 6 that the grant is from the Nawab whose name is not mentioned, and in Col. 7 about the details of the entire extent of the village, do not furnish any evidence as to the character and extent of the original grant. It is true that the boundaries of the lands granted are described as if the grant was of a whole village, and nothing is mentioned about the origin of the minor inams. Exhibit A 1the Inam Fair Register Extract is in respect of 453 03 acres whereas the total area of the village as then measured exceeded 466 acres. The area of 13 acres was undoubtedly held by minor inamdars in respect of which entries Exts. A 2 to A 6 were posted in the Inam Fair Register. Those entries are of no assistance in tracing the source of the minor inams. In each of those extracts under the head "By whom granted and written instrument in support of the claim" it is recited that the names of the grantor and the written instrument in support of the claim "are not known". Sanads in respect of the minor inams were issued because the inams p.C.I./65 11 850 were found to be more than fifty years old. Inams in respect of which entries Exts. A 5 and A 6 are posted are found mentioned in the Inam Register prepared under Regulation 31 of 1802, but not the inams in respect of which Exts. A 2, A 3 and A 4 are issued. It also appears that in the Inam accounts, the inam relating to Ext. A 2 appeared for the first time in Fasli 121 1, the inam relating to Exts. A 5 & A 6 in Fasli 1216, the inam relating to Ext. A 3 in Fasli 1250 and the inam relating to Ext. A 4 in Fasli 1260. But the accounts maintained under Regulation 3 t of 1802 ware apparently not maintained either regularly or in respect of all the inams. In the absence of reliable evidence from entries in these rough accounts, no inference that the minor inams were granted by the shrotriemars could be made. The name of the grantor is not to be found in Exts. A 2 to A 6. Exhibit A 7 proves the existence of minor inams, but has no bearing on the question whether the whole village Challayapalem was granted in inam. In Exts. A 48, A 49, A 104, A 105 and A 103 the predeces sors in interest of the present inamdar had described the village as "Challayapalem Shortriem"; in Exts. A 102, B 44, B 4 5, B 12 to B 19, B 20 to B 43, the present inamdar 's grandfather was a party and therein also the inamdars were described as "shortriemdars of Chellayapalem". There are documents Exts. B 2, B 3, B 4, B 5, B 6, B 9, B 1 12 & B 1 16 and other documents in which the village is described as "Chellayapalem Shrotriem". But these recitals have no evidentiary value in support of the case that the whole village was granted. The statements in Ext. B 195 related only to a part of the village and that the income realised by the inamdar was Rs. 1,449 5 5 per year, out of which the revenue payable to the Government was Rs. 1,225 12 2 and the balance enjoyed as inam was only Rs. 223 9 3. Exhibit A 1 Extract from the Inam Fair Register does not lead to the inference that the area of the entire village was granted. The recommendation made by the Deputy Collector was confined to the shrotriem. The shrotriem was confirmed merely because it was more than fifty years old, and what was confirmed was not the area of the entire village, but the shrotriem grant admeasuring 453 06 acres out of a total area of 466 acres. Evidence on the record about the actings of the shrotiemdars and the tenants for the period 1790 to 1862 is vague and inconclusive. It appears from the Inam Register that for a period of 25 years the shrotriem was under an Ijara. The Inam Fair Register recites that garden lands were irrigated from the private wells of 851 the shrotriemdars. From the accounts for Fasli 1216 it appears that more than a hundred acres were then lying uncultivated, but for sometime before 1862 the whole village was under cultivation. On the other hand there is the evidence that the tenants ' successors were recognised in place of their predecessors, family partitions were approved, and the shrotriemdars received their proportionate shares from the divided sharers, and the tenants were not disturbed in their possession. Chellayapalem has at all material times been included in the list of villages maintained in the Collector 's office. It was within the boundaries which are not shown to have been altered. A village in the Madras region is a geographical area of arable and waste lands, and contains the establishment of a karnam, village munsiff and watchmen, and Chellayapalem has at all material times been recognised as a village, and has been administered accordingly. Minor inams were always regarded as part of the village, and popularly and even in the public records the village was identified with the shrotriem. The shrotriemdars have failed to produce their books of account relating to their management. It is however admitted by them that they were collecting jodi from the holders of minor inams and paying it into the public exchequer. It was explained by section Rama Rao P.W. 1 that he "collected the cess" as a registered proprietor and paid it over into the treasury, because a demand was made upon him by the Revenue authorities for the whole amount of land cess due. But long possession, fixity of rent, assertion of title in formal deeds may not necessarily justify an inference of permanent occupancy rights. Again the mere fact that the village was treated as one unit for the purpose of revenue administration does not justify any positive inference and the fact that five separate sanads were issued in respect of the minor inams without any evidence to prove the date and the terms of the grant leaves the matter in doubt. Some of these circumstances may prima facie support the inamdars and the other the tenants, but on a careful review of all those circumstances, we are unable to disagree with the opinion of the High Court that the grant was not proved to be of a whole village. The second branch of the argument must then be considered. The High Court expressed its conclusion on this branch of the case as follows : "Whether a tenant raises the plea that the lands were in an estate and therefore ryoti and the civil court has no jurisdiction, or the tenant relies upon the statute in answer to a suit by the landlord either for an injunction, 852 sent case,the burden of proof would undoubtedly be on the tenantto establish the case which he put forward either to exclude the jurisdiction or to negative the right of the plaintiff. The burden will be on him to show that the grant was either a grant of a whole village or a grant of a named village. " In so enunciating the law, the High Court relied upon the judgment of this Court in District Board Tanjore vs M. K. Noor Mohamed Rowther(1) and held that in law the burden of proving that a particular grant was a grant of an estate lay upon the tenants in all cases, and the tenants having failed to discharge that burden their claim must fail. In considering this argument, it is necessary to make a brief review of the history of land tenures and the provisions of the Madras Estates Land Act, 1908 as they were amended from time to time. After the assumption of sovereignty in 1801, the East India Company promulgated the Permanent Settlement Regulation 25 of 1802, which dealt with the tenure of zamindars in their estates. This Regulation was passed on July 13, 1802 and by section 4 thereof inams were exempted from its scope. On the same date, another Regulation 31 of 1802 was enacted. This Regulation dealt with inams and provided for making rules for the better ascertainment of titles of persons holding or claiming to hold, lands exempted from the payment of revenue to Government under grants not being "Badshahi" or Royal and for fixing an assessment on such lands. By section 15 it was enacted that a register of inams shall be kept in each zillah of the lands held exempt from the payment of revenue, and that the register should specify the denomination of each grant or sanad, the names of the original grantors or grantees, and the names of the present possessors, with other particulars. It appears that nothing effective was done to investigate the titles of the claimants to inams till 1859, when the question of examining their title was taken up by the Inam Commission. The Inam Commission made inquiries and issued confirmatory sanads. We have already referred to Title Deed No. 1762 issued in respect of the grant in favour of the shrotriemdars. The traditional rights of occupants of land in the southern region were recorded by the Board of Revenue as early as in 1818 in its proceeding dated January 5, 1818 that : "The universally distinguishing character, as well as the chief privilege of this class of people, is their exclu (1) A.I.R. 1953 S.C. 446 853 sive right to the hereditary possession and usufruct of the soil, so long as they render a certain portion of the produce of the land, in kind or money, as public revenue; and whether rendered in service, in money, or in kind, and whether paid to rajahs, jageerdars, zamindars, polygars, motahdars, shrotriemdars, inamdars or Government Officers, such as tahsildars, amildars, aumeens, or tanadars, the payments which have always been made by the ryot are universally termed and considered the dues of the Government. " The Legislature with a view to define the relations between landlords and tenants in inam villages promulgated Madras Act 1 of 1908. The material part of section 6 (1) as amended by Madras Act 8 of 1934 and 18 of 1936 provided "Subject to the provisions of this Act, every ryot now in possession or who shall hereafter be admitted by a landholder to possession of ryoti land situated in the estate of such landholder shall have a permanent right of occupancy in his holding. Explanation (1). For the purposes of this sub section, the expression 'every ryot now in possession ' shall include every person who, having held land as a ryot continues in possession of such land at the commencement of this Act. Explanation (2). Explanation (3). . . Section 3 sub section (2) defined the expression "estate" within the meaining of the Act and insofar as it is material for this case, it provided as originally enacted "In this Act, unless there is something repugnant in the subject or context "Estate" Means (a) any permanently settled estate or temporarily settled zamindari, (b) any portion of such permanently settled estate or temporarily settled zamindari which is separately registered in the office of the Collector; (c) any unsettled palaiyam or jagir; 854 (d)any village of which the land revenue alone has been granted in inam to a person not owning the kudivaram thereof, provided that the grant has been made, confirmed, or recognised by the British Government, or any separated part of such village; (e)any portion consisting of one or more villages of any of the estates specified above in clauses (a), (b) and (c) which is held on a permanent under tenure." "Kudivaram" is a Tamil word, which signifies the cultivator 's share in the produce of land as distinguished from the landlord 's share received by him as rent, which is called "melvaram". "Kudivaram" has acquired a secondary meaning, it means the cultivator 's interest in the land, and "melvaram" the landlord 's interest in the land. The definition of "estate" in cl. (d) gave rise to considerable litigation which called for determination of two questions : (1) whether there was a grant of the whole village so as to make the area granted an estate; and (2) whether the landlord to whom the land was granted owned the "kudivaram". In cases which came before the Courts it appeared that apart from the grant which was claimed to be a grant of an estate, there were in each village other grants, religious, service and personal, and evidence about the commencement of these minor grants and the terms on which they were granted was not forthcoming. In G. Narayanaswami Nayudu vs N. Subramanyam(1), in a suit filed by the receiver of the Nidadaole estate for possession of certain lands the tenant claimed that he had acquired occupancy rights under section 6 of the Madras Estates Land Act 1 of 1908. There were in the village minor inams of three classes : archaka service inams, village service inams, and dharamdaya inams, and there was no evidence whether the grant to the plaintiff 's estate of the village was made first, or whether the minor inams were granted first. It was contended on behalf of the plaintiff estate that inasmuch as there were minor inams 'in the village, the Venkatapuram agraharam could not be said to be "a village of which the land revenue had been granted as inam within the meaning of section 3(2)(d) of the Act". The Court rejected that contention and observed : "The definition in sub section 2, clause (d) was obviously intended to exclude from the definition of "Estate" what are known as minor inams, namely, (1) I.L.R 855 particular extents of land in a particular village as contrasted with the grant of the whole village by its boundaries. The latter are known as "whole inam villages". The existence of "minor inams" in whole inam villages is very common and if these inam villages do not come within the definition of "Estate" almost all the agraharam, shrotriyam and mokhasa villages will be excluded. This certainly cannot have been the intention of the legislature. These minor inams are generally granted for service to be rendered to the village or to the owner and that seems to be the nature of the minor inams in this case. " The Court therefore held that section 3 (2) (d) of the Madras Estates Land Act excludes from the definition of "estate" minor inams, and a grant which purports to be a grant of a whole inam village is an estate within the meaning of cl. (d) of section 3 (2), even though it may be found that there are lands held by grantees under minor inams. The Legislature in 1936 substituted for cl. (d) of section 3(2) the following clause by the Madras Estates Land (Third Amendment) Act, 18 of 1936: "(d) any inam village of which the grant has been made, confirmed or recognized by the British Government, notwithstanding that subsequent to the grant, the village has been partitioned among the grantees or the successors in title of the grantee or grantees." Then came the judgment of the Madras High Court in Tulabandu Ademma vs Sreemath Satyadhyana Thirtha Swamivaru(1). In that case the original grant was lost. In Col. 6 of the statement prepared by the Inam Commissioner in that case, it was recorded that "the former Zamindars granted the land, comprised within the 'Chekunama ' for the math. There is no sanad as it was destroyed by fire. There was no entry under the heading 'particulars of the inam land mentioned in the sanad ', but under the head 'Gudicut ' (the total area of the village) was the entry 158.23 acres, from which were deducted 25.10 acres described as private lands, and 5.4 acres 'inams of other persons ' leaving 128.6 acres as the area covered by the grant. " In Col. 10 it was stated that there was no 'Chekunama '. The Court held that the grant being of less than the whole village, the tenant could not rely on section 6 of the Act. In that case the boundaries of the agraharam as described in Col. 10 in the Inam Register (1) A.I.R. 1943 Mad. 187. 856 were admittedly the boundaries of the whole village, but in the view of the Court Col. 10 had to be read in conjunction with the other columns. There was no evidence whether the other inams were granted before the grant in favour of the Devasthana or after. This case apparently marked a departure from the rule which was enunciated earlier by the Madras High Court in G. Narayanaswami Nayudu 's case(1). The Legislature immediately reacted against this view and enacted, by Madras Estates Land (Amendment) Act 2 of 1945, added the following Explanation to cl. (d) of section 3(2). Explanation (1) read as follows "Where a grant as an inam is expressed to be of a named village, the area which forms the subject matter of the grant shall be deemed to be an estate notwithstanding that it did not include certain lands in the village of that name which have already been granted on service or other tenure or been reserved for communal purposes. " This Explanation was made operative retrospectively from the date on which Madras Act 18 of 1936 was brought into force. The Explanation was apparently intended by legislative process to restore the interpretation which the Madras High Court had given to the expression "whole village" in G. Narayanaswami 's case(1). But the legislature had used somewhat involved phraseology in enacting the conditions which gave rise to the presumption. If a minor inam was proved to be granted prior to the date of the grant, by virtue of Explanation (1) the grant expressed to be of a named village had to be regarded as a grant of an estate. If it was proved that the grantee after receiving the whole village created minor inams, the grant was of the whole village and therefore grant of an estate. But where evidence about the creation of the major and minor inams was not forthcoming, the question had to be decided on the presumption that the subject matter of the grant shall be deemed to be an estate, notwithstanding that it did not include lands granted on service or other tenures or lands reserved for communal purposes. On the true effect of the Explanation there was a sharp conflict of judicial opinion resulting in three distinct views. In one set of cases it was ruled that the burden of proving that a tenant is entitled to permanent rights of occupancy in his holding by virtue of section 6 of the Madras Estates Land Act always lies upon the tenant, and it is for the (1) I. 857 tenant to establish affirmatively that the minor inams in the village were granted before the date of the grant of the named village, and if he failed to do so his claim is liable to fail : see Rama Rao vs Linga Reddi(1) and Ramadhan Chettiar vs State of Madras(2) In another set of cases it was held that where relief is claimed before the Court on the plea that a grant of land was of an estate, or that it was not of an estate, and the evidence is inconclusive, the person who has approached the Court for relief must fail : see the judgment of Krishna Rao J., in Nelluru Sundararama Reddy vs State of Andhra Pradesh (3) ; Varada Bhavanarayana Rao vs State of Andhra Pradesh ( 4 ) ; and Addanki Thiruvenkata Thata Desikacharyulu Ayyavarlamgaru vs The State of Andhra Pradesh and Ors.(5) In the third set of cases it was held that the Explanation raises a presumption where a grant is expressed to be of a named village, that the area which formed the subjectmatter of the grant shall be deemed to be an estate, and it is for the party contending that the grant in question falls outside the definition of section 3 (2) (d) of the Act to prove that case either by showing that the minor inams not comprised in the grant were created contemporaneously with or subsequent to the grant of the village by the original grantor : see Janakiramaraju vs Appalaswami(6); Nelluru Sundarama Reddy vs State of Andhra Pradesh (7) State of Andhra Pradesh vs Korukonda Bhattam Appalacharyulu(8) and Sri Varadarajaswamivari Temple vs Sri Krishnappa Govinda and others(9). In expressing the first view the non obstante clause in the Explanation was read as prescribing the conditions on proof of which the statutory presumption arises. The Explanation was apparently read as implying that the conditions for the raising of the presumption were that the grant as an inam is expressed to be of a named village, and that the other lands not included in the grant were granted before that date on service, or other tenure or reserved for communal purposes. If this be the true effect, the Explanation had little practical utility. The intention of the legislature apparently was to declare rights of occupancy of tenants in inam villages, and it would be difficult to believe that the legislature intended to place upon the tenants onus of proof which in normal cases would be well nigh impossible to discharge. A large majority of the inams are ancient and the (1) A.I.R. 1957 A.P. 63 (2) A.I.R. 1958 Mad. 104. (3) I.L.R. F.B.(4) ; (5) A.I.R. 1964 S.C. 807. (6) I.L.R. (7) I.L.R. F.D.(8) I.L.R. (9) I.L.R. 858 records bearing on the commencement, extent and nature of the grant would invariably be in the possession of the inamdars. To expect that tenants who are generally illiterate, and who came to occupy the lands not infrequently many years after the original grant, would be able to lead evidence on matters principally within the knowledge of the inamdars, and information whereof the inamdars would be interested in withholding, would be to attribute to the legislature gross ignorance of local conditions. In terms the presumption arises on proof that the grant is an inam expressed to be of a named village, and it arises even if it appears that there have been other minor inams granted for service or other tenure or have been reserved for communal purposes. The non obstante clause in the Explanation, in our judgment, does not prescribe a condition for the raising of the presumption. The presumption arises only when it is proved that the grant is expressed to be of a named village, and the burden of proving that the grant is so expressed must lie upon the party who claims to bring the grant within the exception, but once it is proved that the grant is expressed to be of a named village, raising of the presumption will not depend upon proof that certain lands in the village were granted on service or other tenure, or were reserved for communal purposes before the grant of the village. In expressing in the cases of Rama Rao(1) and Ramadhan Chettiar (2) the view that the burden lay upon the tenants to prove that the grant was of an estate, it was assumed by the Madras High Court that this Court had rendered a considered decision in the District Board of Tanjore 's case(3) that the onus of proving that a grant of land is a grant of an estate lies upon the tenant. But it appears that no such decision was given by the Court in that case. In the District Board of Tanjore 's case(3) the defendant who had taken a lease for three years of a piece of land belonging to the District Board claimed that he had acquired permanent occupancy rights under section 6 of the Madras Estates Land Act, because after the expiry of the period of the lease the Board had not resumed possession. It was the Board 's case that after expiry of the period of the lease, the Board bad taken possession of the land and had brought it under cultivation. The Subordinate Judge held that the land did not constitute an estate within the meaning of section 3(2) (d). The High Court disagreed with that view. In appeal to this Court Mahajan, J., on (1) A.I.R. 1957 A.P. 63. (2) A.I.R. 1958 Mad. 104. (3) A.I.R. 1953 S.C. 446. 859 a review of the evidence opined that the grant was not of a named village, the grant being in terms of areas and not of a named village, and that there were two grants neither of which could be called a grant of a village. Chandrashekhara Aiyar, J., observed that there were two personal grants under one parvangi to two different persons, and it could not be said that there was a grant of a whole village or of a named village. smaller areas having been carved out therefrom prior to the date of the grant on service or other tenure, and the remaining part still being recognised and treated as a revenue unit with a nomenclature of its own. It is abundantly clear that the Court decided the case on evidence and did not place reliance on the onus of proof. It is true that Mahajan, J., in his judgment has recorded that: "It was conceded by . the learned counsel for the respondent that the burden of proving that certain lands constitute an "Estate" is upon the party who sets up the contention", and Chandrasekhara Aiyar, J., observed that "A small area of 5 acres and 40 cents was granted under the same grant in favour of Chinna Appu Moopan. If this conclusion is correct and nothing satisfactory has been urged on the side of the respondents why such an inference is not open on the entries found in the Inam Register, the 1st respondent should fail, as the burden is on him to establish that what was originally granted was an 'estate '. " But these observations are not susceptible of the meaning that when it is proved that an inam is expressed to be of a named village, the presumption under Explanation (1) does not arise. Both the learned Judges were of the view that there was no grant which could be regarded as a grant of a whole village or a named village, and on that view the true effect of the Explanation did not fall to be determined. The concession before the Court by counsel was only that when a person alleged that certain land was an estate, the burden of proving that case lay upon him. The second view minimizes the operation of the statutory presumption which is expressly enacted by the legislature to arise on proof that the grant is of a named village. In terms the Explanation provides that the grant of an area as a named village shall be deemed to be a grant of an estate. If the clause prescribes the condition on which the presumption arises, the onus 860 would be discharged by the presumption on proof that the grant was of a named village. Adoption of the second view is likely to give rise to some anomalous situations of which the present set of cases is a good illustration. For instance, if the inamdar as well as the tenant sue for relief in respect of their respective cases, the application of this rule would require the Court to adopt the somewhat unusual course of dismissing the cross actions, when evidence does not justify a positive inference in favour of either party. In Varada Bhavanarayana Rao vs State of Andhra Pradesh and others(1), this Court expressed its preference for the second view. That was a case in which the appellant held a major part of certain villages covered by five inam grants. The Inam Commissioner had granted fresh inam title deeds in confirmation of the original grants. The Special Officer appointed by the Madras Government under section 2 of the Madras Estates Land (Reduction of Rent) Act, 1947 decided that the inam lands covered by the fresh inams were "Estates" within section 3 (2) (d) of the Madras Estates Land Act, 1908, and recommended fair and equitable rates of rent for the ryoti lands in this estate. Subsequently the Government of Madras by a notification in the Gazette fixed rates of rent in accordance with this recommendation. The inamdar instituted an action in the Civil ,Court for a declaration that the grant was not of an estate within the meaning of section 3 (2) (d) of the Madras Estates Land Act. The Trial Court upheld the contention, but the High Court in appeal reversed that decision. In appeal to the Supreme Court it was contended that there were no materials on the record to prove that the original grant was of a whole village or of a village by name, and as the State had failed to discharge the burden of proving that the land constituted an estate, the action must be decreed. This Court held that the grant which was later confirmed by the title deed was of a named village, but on proof merely that the inam grant was of a named village, a presumption did not arise that it formed an estate, for the legislature had not created any special presumption either way. The question of the onus of proof it was said had to be adjudged in the light of sections 101, 102 and 103 of the Evidence Act, and applying that principle if the plaintiff failed to prove his claim that land was not an estate, the appeal should stand dismissed. The Court in that case regarded the judgment in the District Board of Tanjore 's case(2) as not decisive of the question, and proceeded to hold (1) ; (2) A.I.R. 1953 S.C. 446. 861 on two grounds that the legislature had not provided for raising a presumption either way. First, that the "language used in Explanation (1) indicated that the conclusion that the area was an "estate" can be drawn even where the whole of the village was not included in the grant, only if it appeared that the portion not included had already been gifted and was therefore lost to the tenure," and the other that when adding the Explanation in 1945, the Legislature did not think fit to make any change in section 23 of the Act. But as already observed, the language used by the Legislature in enacting Explanation (1) to section 3(2)(d) expressly directs a presumption to be raised. That presumption arises when it is proved that a grant as an inam is expressed to be of a named village, the area which forms the subject matter of the grant shall, be deemed to be an estate. Raising of the presumption is not subject to any other conditions. The Legislature has by the non obstante clause affirmed that such presumption shall be raised even if it appears that in the grant are not included certain lands in the village which have before the grant of the named village been granted on service or other tenure or have been reserved for communal purposes. The presumption, it is true, is riot a conclusive presumption : it is a presumption of law, and is rebuttable. It may be rebutted by proof of other facts, but not the facts mentioned in the non obstante clause. Section 23 was added by section 5 of the Madras Estates Land (Third Amendment) Act 18 of 1936. It reads : "Where in any suit or proceeding it becomes necessary to determine whether an inam village or a separated part of an inam village was or was not ,in estate within the meaning of this Act as it stood before the commencement of the Madras Estates Land (Third Amendment) Act, 1936, it shall be presumed, until the contrary is shown, that such village or part was an estate. " The presumption under section 23 in terms applies only to cases in which the question whether an inam village was an estate before the commencement of the Madras Estates Land (Third Amendment) Act, 1936. Under the Act, before it was amended in 1936, a grant of a village could be deemed a grant of an estate where only melvaram was granted to the inamdar and not where both the melvaram and the kudivaram were granted. By enact 862 ing section 23 the Legislature intended to declare that in determining whether under a grant of an inam village both. varams were granted or only the melvaram was granted, it shall be presumed, until the contrary was shown, that such village or part thereof was an estate, that is, only the melvaram was granted. Under the Act before its amendment, one of the conditions of the applicability of section 3 (2) (d) was that the grant in favour of the inamdar was only of the melvaram, and that it did not include the kudivaram, and the Legislature by section 23 as amended provided that in dispute arising between the landlord and tenant whether an inam village was or was not an estate, it was to be presumed that it was only of the melvaram. Enactment of this section was apparently found desirable 'because of certain decisions of the Judicial Committee. In Suryanarayana vs Patanna and Upadrashta Venkata Sastrulu vs Divi Seetharamudu and others(2), the Judicial Committee expressed the view that where, there was no evidence of the terms oil an ancient grant, there was no presumption that it was of melvaram alone. The High Court in Mulhu Goudan vs Perumpal lyen(3) held that the ground on which the decisions of the Judicial Committee Proceeded, though it was not necessary for the purpose of those cases to so decide, a presumption that the grant was of both the varams was deducible. The Judicial Committee overruled this decision in Chidambara Sivaprakasa Pandara Sannadhigal vs Veerma Reddi(4), and held that in each case the question was one of fact to be determined on the evidence. The legislature then intervened and enacted the presumption applicable only to cases arising under the un amended Act. Undoubtedly in cases arising under amended Act, the conditions on which the presumption will arise are prescribed in the Explanation (1). The language use by the Legislature in the amended section 23 clearly shows that the section was not intended to deal with cases arising under the Madras Estates Land Act as amended by Act 18 of 1936. Any reference in section 23 to a presumption in respect of cases arising after cl. (d) as recast by Act 18 of 1936 would have been wholly out of place. There were two presumptions which applied to different situations. In cases which arose before the Amending Act of 1936 the presumption under section 23 applied : in cases which arose since the amendment of 1936 the presumption prescribed by the Explanation (1) applied. This is so, because the Explanation though enacted by Act 2 of 1945 has been brought into force since the date on which the amending Act of 1936 became operative. (1) L.R. 45. I.A. 209. (3) I.L.R. (2) L.P. 46 I.A. 123. (4) L.R. 49 I.A. 286. 863 In our view the following passage from the decision of the Madras High Court in Mantravadi Bhavanarayana and another vs Merugu Venkatadu and others(") correctly interprets section 3 (2) (d) "It is now settled law that by reason of the amendment made in 1945, which added an explanation to section 3 (2) (d) of the Madras Estates Land Act and numbered it as explanation 1, a grant constitutes an estate if it is expressed to be a named village irrespective of the fact that some of the lands in the village had already been granted on inam or service grants, or were reserved for communal purposes. " We do not deem it necessary to decide whether the suit for a mere declaration that the tenants were not occupancy tenants at the instance of the shrotriemdars, after determining the tenancy of some of the tenants was maintainable. The High Court has dismissed the suit against defendants 1 to 10 who were served with notices to quit, but against whom the shrotriemdars did not claim a decree for possession. There is no appeal by the shrotriemdars before us against defendants 1 to 10, and in any event on the view taken by us, the suit of the shrotriemdars must fail in its entirety. In Appeal No. 342 of 1961 the decision recorded by us on the principal question does not put an end to the litigation. The dispute arose between two rival claimants to the rights of occupancy of land. The respondent in this appeal claims that he is a transferee of the original tenant, and the appellant claims to have acquired the rights of occupancy from the shrotriemdar. In suit No. 93 of 1947, four substantive issues were raised, and the issues are discussed in paragraphs 106 to 120 of the judgment of the Trial Judge. The High Court did not separately deal with those issues, but decided Appeal No. 789 of 1950 on the view of the law which it declared in the principal appeal. We have disagreed with the High Court for reasons already set out and the other issues which have not been tried by the High Court have now to be tried. On the view taken by us Civil Appeal No. 341 of 1961 will be allowed, and the decree passed by the High Court set aside and the decree passed by the Trial Court restored with costs throughout. In Civil Appeal No. 343 of 1961 also the decree passed by the High Court will be set aside and the suit decreed (1) I.L.R. 864 with costs throughout. There will be one hearing fee in this Court. In Civil Appeal No. 342 of 1961 arising out of Appeal No. 789 of 1950 from suit No. 93 of 1947, tile appeal will be remanded to the High Court with a direction that the questions which remain to be determined will be decided according to law. No order as to costs in Appeal No. 342 of 1961. C.A. Nos. 341 and 343 allowed. C.A. No. 342 remanded.

IN-Abs

In the village of Challayapalam, there were six inams, namely, the Challayapalam Shrotriem and five minor inams but there was no information as to when the inams were created and by whom. In two suits, one filed by the shrotriemdars, against the tenants for a declaration that the tenants did not have occupancy rights in the lands in their occupation, and the other by the tenants for a declaration that they had occupancy rights, the question arose whether the shrotriem was an "estate" within the meaning of section 3 (2) (d) of the Madras Estates Land Act, 1908, as amended by Act 18 of 1936. The trial court held, on a review of the evidence, that the grant was of the whole village within the meaning of the section and that the tenants had occupancy rights. On appeal, the High Court held that the evidence on record was inconclusive, that the onus of proving that the ant was of an estate lay upon the tenants, and that, since the tenants had Failed to discharge the onus, the question should be decided against the tenants. In the appeal to this Court by the tenants, the question was : if there was no evidence justifying an inference that the grant was of a whole village, whether explanation 1 to section 3(2)(d) (added by Act 2 of 1945) gave rise to a presumption in favour either of the shrotriemdars or the tenants. HELD : The suit of the shrotriemdars must fail, because, the Explanation raises a presumption, where a grant is expressed to be of a named village, that the area which formed the subject matter of the grant shall be deemed to be an estate. Raising of the presumption is not subject to any other condition. The legislature has, by the non obstante clause in the Explanation, affirmed that such presumption shall be raised even if it appears that in the grant are not included certain lands in the village, which have, before the grant of the named village been granted on service or other tenure or have been reserved for communal purposes. The party contending that the grant in question falls outside the definition in section 3(2) (d), has to prove that case, either by showing that the minor inams not comprised in the grant were created, contemporaneously with or subsequent to the grant of the village, by the grantor. [857 D E; 861 C E] By enacting the Explanation the intention of the legislature was to declare occupancy rights of tenants in inam villages. It would be attributing to the legislature gross ignorance of local conditions. if it was held that the legislature intended to place upon the tenant the onus of establishing affirmatively that the minor inams were granted before the grant of the named village and that if he fails to do so his claim is liable to fail. It is well nigh impossible to discharge such a burden in normal cases. Nor was it intended that, when the evidence was inconclusive, the person who approached the Court for relief must fail, for, as in the present 842 843 case, if the inamdar as well as the tenant sue for relief, the application of the rule would require the court to adopt the anomalous course of dismissing both the actions. In cases, which arose after the Amending Act of 1936, reference to the presumption in section 23 of the Act would be wholly out of place, the applicable presumption being the one prescribed by Explanation 1. The presumption under section 23, that a grant in favour of an inamdar was of the melvaram only, applied only in cases which arose before the Amending Act of 1936. [857 G; 858 B; 860 B; 862 F G] District Board of Tanjore vs M. K. Noor Mohammad Rowther, A.I.R. 1953 S.C. 446 and Varada Bhavanarayana Rao vs State of Andhra Pradesh, ; , explained.

Appeal No. 525 of 1964. Appeal from the judgment and order dated August 25, 1962 of the Bombay High Court (Nagpur Bench) at Nagpur in Special Civil Application No. 360 of 1961. 76 5 A. section Bobde G. L. Sanghi and Sardar Bahadur, for the appellant. Janardan Sharma for respondent No. 1. H. W. Dhabe and A. G. Ratnaparkhi, for the intervener. The Judgment of the Court was delivered by Hidayatullah, J. In this appeal by certificate against the judgment of the Bombay High Court dated August 25, 1962 the appellant is the Sawatram Ramprasad Mills Co., Ltd., Akola and the respondents two of the workmen of the Mills. The respondents are claiming from the Mills compensation for lay off from March 5, 1960 to October 22, 1960. The proceedings were commenced by an application to the Second Labour Court, Bombay under section 33C(1) of the (Act XIV of 1947). The Mills objected on various grounds including firstly that the Second Labour Court had no jurisdiction to hear the case as the dispute fell to be tried under the C.P. & Berar Industrial Disputes (Settlement) Act, 1947 and, secondly, that the application under section 33C, in any event, was incompetent. The Second Labour Court held against the Mills on both the grounds. The Mills applied to the High Court of Bombay under articles 226 and 227 of the Constitution but by the judgment under appeal their application was dismissed. It may be pointed out here that there were similar applications for com pensation for lay off by the other workmen of the Mills and on this preliminary point they were all heard together. In this Court only these two grounds were urged. The con tention on behalf of the Mills on the first ground was two fold. The Mills attempted to establish that the dispute could not be tried under the Central Act but only under the C.P. & Berar Act and further that even if the Central Act applied the calculation of the amount could not be made under section 33C of the as that required proceedings other than those contemplated by that section. The was passed in 1947 and was brought into force on April 1, 1947. It is not disputed that it applied to the Textile Industry. The C.P. & Berar Industrial Disputes (Settlement) Act (23 of 1947) came into force on June 2, 1947 but only the first section was then brought into force. Later, the remaining sections were brought into force by a notification dated November 20, 1947 in all industries except the Textile Industry. From March 1, 1951, the Act was also, 76 6 made applicable to the Textile industry. In 1953 the was amended by Industrial Disputes (Amendment) Act, 1953. The changes material to our purpose were the addition of two definitions and a new chapter in the Act. Previous to the Act there was an Ordinance which the Act replaced but as nothing turns upon the existence of the Ordinance we need not refer to it. The two definitions introduced in section 2 of the parent Act were : "(kkk) 'lay off ' (with its grammatical variations and cognate expressions) means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the break down of machinery or for any other reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched : Explanation Every workman whose name is home on the muster rolls of the industrial establishment and who presents himself for work at the establishment at the time appointed for the purpose during normal work ing hours on any day and is not given employment by the employer within two hours of his so presenting himself shall be deemed to have been laid off for that day within the meaning of this clause: Provided, and section (oo) 'retrenchment '. The definition of 'retrenchment ' need not be quoted here because no question has been raised about retrenchment in this case. Section 3 of the 1953 Amendment Act inserted Chapter V A headed "Lay Off and Retrenchment". Section 25C gave a right to a workman to ask for compensation if laid off, provided he fulfilled certain conditions. It is not necessary to go into those conditions here. Section 25J then provided as follows : "25J. Effect of laws inconsistent with this Chapter. (1) The provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained in any law including standing orders made under the (XX of 1946) : 76 7 Provided that nothing contained in this Act shall have effect to derogate from any right which a work man has under any award for the time being in operation or any contract with the employer. (2) For the removal of doubts, it is hereby declared that nothing contained in this Chapter shall be deemed to affect the provisions of any other law for the time being in force in any State in so far as that law provides for the settlement of industrial disputes, but the rights and liabilities of employers and workmen in so far as they relate to lay off and retrenchment shall be determined in accordance with the provisions of this Chapter. " In 1956 the was again amended by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956. Section 23 of the Amending Act inserted section 33C which reads as follows : "33 C. Recovery of money due from an employer. (1) Where any money is due to a workman from an employer under a settlement of an award or under the provisions of Chapter V A, the workman may without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrears of land revenue. (2) Where any workman is entitled to receive from the employer any benefit which is capable of being computed in terms of money, the amount at which such benefit should be computed may, subject to any rules that may be made under this Act, be determined by such Labour Court as may be specified in this behalf by the appropriate Government, and the amount so determined may be recovered as provided for in sub section (1). (3) For the purposes of computing the money value of a benefit, the Labour Court may, if it so thinks fit, appoint a commissioner who shall, after taking such evidence as may be necessary, submit a report to 76 8 the Labour Court and the Labour Court shall determine the amount after considering the report of the Commissioner and other circumstances of the case. " The powers of the Government under the above section admittedly have been delegated to the Second Labour Court Bombay. Section 31 of this Amending Act provides as follows "31. Act not to override State laws. (1) If, immediately before the commencement of this Act, there is in force in any State any Provincial Act or State Act relating to the settlement or adjudication of disputes, the operation of such an Act in that State in relation to matters covered by that Act shall not be affected by the , as amended by this Act. (2) From these sections, which we have quoted, certain conclu sions indisputably arise. The first conclusion is that compensation for lay off can only be determined under Chapter V A of the . This follows from section 25J(2) as it is so stated there. The next is that the workmen are entitled under section 33C(1) to go before the Second Labour Court to realise money due from their employers under Chapter V A. This is clearly stated in section 33C. The contention on behalf of the Mills, however, is that the does not apply to the present matter but the C.P. & Berar Industrial Disputes (Settlement) Act does. This argument is put in two ways. By one argument the application of the is sought to be evaded and by the second the C.P. & Berar Industrial Disputes (Settlement) Act is sought to be applied. We shall examine these two arguments in the same order. The attempt to oust the Central Act is based upon section 31 of the 1956 (Amendment) Act and the opening part of section 25J. Section 31 can have no application because section 33C has been included for the purpose, among others, of enabling the workmen to claim any money due from their employers under the provisions of Chapter V A. This is expressly so stated in that section. Chapter V A is the only Chapter in which there is provision regarding lay off or compensation for lay off. The C.P. & Berar Act contains no provision either for the recovery of money or for compensation for lay off. It is thus obvious that 76 9 if a workman has a claim for lay off it can only come up for decision under the and, indeed, section 25J(2) says so in express terms. The attempt to keep out the provisions of the , particularly Chapter V A and section 33C must, therefore, fail. The next attempt, namely, that the C.P. & Berar Act applies is also ineffective. It is pointed out that the preamble of the C.P. & Berar Act shows that it was an Act for the promotion of peaceful and amicable settlement of industrial disputes by conciliation and arbitration, that 'industrial disputes ' means any dispute or difference connected with an industrial matter arising between an employer and an employee or between employers or employees and that 'industrial matter ' means any matter relating to pay, wages, reward, etc. It is submitted, therefore, that the dispute must come under the C.P. & Berar Act because of section 31 of the 1956 (Amendment) Act and section 25J of the 1953 (Amendment) Act already quoted. The argument is the last one in another form. This argument is fallacious at the very start because lay off and compensation for lay off are to be found only in Chapter V A of the . There is no mention of lay off or compensation for lay off as one of the matters over which the C.P. & Berar Act has any jurisdiction. Next, even if sections 31 and 25J save the application of the C.P. & Berar Act they do so subject to the condition that question of lay off must be decided in accordance with Chapter V A and section 33C clearly provides that a dispute for any money due under Chapter V A has to go before the appropriate Government or its delegate. Here the delegate is the Second Labour Court, Bombay. The argument that this controversy is wrongly before the Second Labour Court, Bombay is, therefore, entirely erroneous and must be rejected. The next contention is that the claim for lay off is not a claim for money due because calculations have to be made before the money due can be found. This argument has been considered on more than one occasion and it was rejected recently by this Court in Kays Construction Co. (P) Ltd. vs State of U.P. & Ors(1). It is not essential that the claim which can be brought before the Government or its delegate under section 33C(1) must always be for a predetermined sum. The Government or the Labour Court may satisfy itself about the exact amount and then take action under that section. In the present case the dates of lay off are known and each workmen will show to the Second Labour Court that he is qualified to receive compensation for 1. ; up. C165 6 770 lay off. That will be shown from the muster roll which the employer is required to maintain and it will then be a simple arithmetical calculation which, in our judgment, section 33C permits to be made. If there is any question whether there was lay off or not the Labour Court will decide it. This argument, therefore, has no force. The result is that the appeal must fail and is dismissed with costs. The employers have. by prolonging this litigation on a preliminary point, managed to avoid the trial of the real issue for a number of years and we hope that the Second Labour Court will now deal with this matter as expeditiously as possible. Appeal dismissed.

IN-Abs

The respondents, who were the workmen of the appellant, applied to the Second Labour Court, Bombay, under section 33C(1) of the , claiming compensation for lay off during a certain period. The appellant contended that : (i) the Labour Court had no jurisdiction as the dispute fell to be tried under the C.P. and Berar Industrial Disputes (Settlement) Act, 1947; and (ii) the application under section 33C was incompetent, because, it was not a claim for money due and calculations had to be made for ascertaining the money due. The Labour Court, as well as the High Court under articles 226 and 227 of the Constitution. rejected the contentions. In the appeal to this Court. HELD : (i) The argument that the controversy was wrongly before Labour Court was entirely erroneous. Chapter V A of the , which was inserted by section 3 of the Industrial Disputes (Amendment) Act, 1953, is the only Chapter in which there is provision regarding lay off or compensation for lay off. Though the C.P. and Berar Act applies to the textile industry, it contain* no provision either for recovery of money or for compensation for lay off and they are not matters over which the C.P. and Berar Act has any jurisdiction. Therefore, if a workman has a claim for lay off, it can only come up for decision under the . Even if sections 31 and 25J save the application of the C.P. and Berar Act, they do so, subject to the condition that the question of lay off must be decided in accordance with Chapter V A. Since section 33C provides that a dispute for any money due under Chapter V A has to go before the appropriate Government or its delegate, and since the delegate is the Second Labour Court, the respondents were entitled to go before the Labour Court to realise due from the appellant under Chapter V A. [769 F] (ii) It is not essential that the claim which can be brought before the Government or its delegate under section 33C(1) most always be for a predetermined sum. [769 G H] Kays Construction Co. (P) Ltd. vs State of U P. & Ors. ; , followed.

Appeal No. 879 of 1962 etc. Appeals by special leave from the judgment and decrees dated January 18, 1961, and December 13, 1960 of the Punjab High Court Circuit Bench at Delhi, in Civil Revision No. 13 D of 1958 and Civil Revision Case No. 592 D of 1957. M.S.K. Sastri and M. section Narasimhan, for the appellant (in C.A. No. 121/63) M. C. Setalvad, section Murty and B. P. Maheshwari, for the appellants (in C.A. No. 879 of 1962) and respondents (in C.A. No. 121 of 1962) Raghbir Singh and M. I. Khowaja, for respondent (in C.A. No. 879 of 1962). The Judgment of the Court was delivered by Wanchoo, J. These two appeals by special leave from two judgments of the Punjab High Court raise a common question with respect to the application of the first proviso to section 57 (2) of the Delhi Rent Control Act, No. 59 of 1958, (hereinafter referred to as the present Act). They arise from decisions of two learned Single Judges in revision applications under the Delhi and Ajmer Rent Control Act, No. 38 of 1952 (hereinafter referred to as the 1952 Act.) In one of them (C.A. 879) the learned Judge has held that in view of the first proviso to section 57 (2), a decree for ejectment against the tenant could not be passed. In the other appeal (No. 121), the other learned Judge has held that the tenant is liable to ejectment in spite of the first proviso to section 57 (2) of the present Act. It will thus be seen that the two decisions are contradictory and raise the question as to when the first proviso to section 57 (2) precisely applies to facts similar to the facts in the present two appeals which are more or less the same. Before we consider the question thus raised before us, we may briefly indicate the facts in the two appeals. In appeal No. 707 379 of 1962, the landlord sued for ejectment on the ground that he tenant had erected certain structures in the shape of closing an )pen verandah and erecting a partition therein. On account of this, notices were sent to the landlord as well as to the tenant by the authorities concerned to remove the unauthorised structures. As however the tenant did not do so, suit for ejectment was filed by the landlord under cl. (k) to the proviso to section 13 (1) of the 1952 at, which ran as follows "13 (1). Notwithstanding anything to the contrary contained in any other law or any contract, no decree or order for the recovery of possession of any premises shall be passed by any court in favour of the landlord against any tenant (including a tenant whose tenancy is terminated) : Provided that nothing in this sub section shall apply to any suit or other proceeding for such recovery of possession if the court is satisfied (k) that the tenant has, whether before or after the commencement of this Act, "caused or permitted to be caused substantial damage to the premises, or notwithstanding previous notice has used or dealt with the premises in a manner contrary to any condition imposed on the landlord by the Government or the Delhi Improvement Trust while giving him a lease of the land on which the premises are situated;" The lease in favour of the landlord by the Government provided that "the lessee will not without the previous consent in writing of the Chief Commissioner of Delhi or such officer or body as the lessor or the Chief Commissioner of Delhi may authorise in this behalf erect or suffer to be erected on any part of the said demised premises any buildings other than and except the buildings erected thereon at the date of these presents. " The case of the landlord was that the tenant had made structures without authority which made him liable to ejectment under cl. During the pendency of the suit, however, the tenant had removed the offending structures with the result that there was no longer any breach of the condition of the lease. In C.A. 121 of 1963, also the facts were similar and the suit was filed on the basis of cl. (k) of proviso to section 13 (1) of the 1952 Act. In this case also the tenant had closed the verandah without 70 8 the permission of the authorities concerned and notice was given to the landlord on that count by the authorities and the landlord in his turn asked the tenant to remove the unauthorised structure. When the tenant did not do so, the landlord filed the suit. It appears that during the trial of the suit, the tenant made certain changes in the structure and removed the glazing and instead he closed the verandah with wire gauze net. It was stated by a witness from the office of the Land Development Officer that the fixing of wire gauze net was not against the clause as to unauthorised construction which was the same in the case of this lease as in the case of the lease in the other appeal. It may be added that no further action has been taken by the Land Development Officer after removal of the glazing and after fixing of the wire gauze net. In the circumstances the question that arose for decision in both the cases was whether the tenant could still be ejected after he had removed the unauthorised structure and there was no further danger to the landlord 's lease being forfeited, and in that connection the application of the first proviso to section 57 (2) of the present Act arose. As we have already indicated, one of the learned Judges held that the tenant could be ejected while the other held that he could not. In order to decide the point that has been raised before us it is necessary to set out the corresponding section in the present Act which is section 14. The relevant part of this section is in these terms "14. Notwithstanding anything to the contrary contained in any other law or contract, no order or decree for the recovery of possession of any premises shall be made by any court or Controller in favour of the land lord 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: (k) that the tenant has, notwithstanding previous notice, used or dealt with the premises in a manner contrary to any condition imposed on the landlord by the Government or the Delhi Development Authority or the Municipal Corporation of Delhi while giving him a lease of the land on which the premises are situate;" 709 "14 (11) No order for the recovery of possession of any premises shall be made on the ground specified in clause (k) of the proviso to sub section (1), if the tenant, within such time as may be specified in this behalf by the Controller, complies with the condition imposed on the landlord by any of the authorities referred to in that clause or pays to that authority such amount by way of compensation as the Controller may direct. " Section 57(1) repeals the 1952 Act. Section 57(2) which is material for our purpose reads thus "57(2) Notwithstanding such repeal, all suits and other proceedings under the said Act pending, at the commencement of this Act, before any court or other authority shall be continued and disposed of in accordance with the provisions of the said Act, as if the said Act had continued in force and this Act had not been passed; "Provided that in any such suit or proceeding for the fixation of standard rent or for the eviction of a tenant from any premises to which section 54 does not apply, the court or other authority shall have regard to the pro visions of this Act. It will be seen from a comparison of the 1952 Act and the present Act with respect to ejectment on the ground contained in cl. (k) of the first proviso that there are some differences in the language of the proviso to section 1 3 ( 1) of the 1952 Act and of the proviso to section 14(1) of the present Act. In the first place the proviso to section 13 (1) of the 1952 Act lays down that nothing in sub section (1) shall apply to any suit or other proceeding for such recovery of possession while the proviso to section 14 (1) lays down that the Controller may on an application made to him make an order for the recovery of possession of the premises on one or more of the grounds specified. The first difference is that the forum is changed from the civil court to the Controller; but that is a question of jurisdiction which we need not consider here. The second difference is that while under the 1952 Act the language of the proviso Was imperative and laid down that nothing in the Act applied when the various clauses of the proviso were satisfied, the language of the proviso to section 14 (1) of the present Act is not so imperative. Even so, we are of opinion that there is no difference in substance, 710 for where the requirements of the proviso are satisfied under the present Act the Controller has to pass a decree for ejectment unless there is provision otherwise in section 14 which will be found with reference to various clauses in the proviso as for example section 14(2), 14(10) and 14(11). Another difference for our purposes between section 13 of the 1952 Act and section 14 of the present Act is the introduction of sub section (11) of section 14 in the present Act while there was nothing in the 1952 Act corresponding to it. The main argument on behalf of the landlords in the two cases is based on this difference between the two Acts and it is contended that the introduction of sub section (11) is a radical departure and therefore the language of the first proviso to section 57(2) would not apply to the present situation. Now the first proviso to section 57(2) came up for interpretation before this Court in Karam Singh vs Sri Pratap Chand(1). In that case the majority held that the proviso must be read harmoniously with the substantive provision contained in sub section (2) and the only way of harmonising the two was to read the expression "shall have regard to the provisions of this Act" as merely meaning that where the new Act has slightly modified or clarified the previous provisions, these modifications and clarifications should be applied. It was further held that these words did not take away what was provided by sub section (2) and that ordinarily the old Act would apply to pending proceedings. In substance therefore Karamsingh 's case(1) decided that where in the present Act there is a radical departure from the 1952 Act, the 1952 Act will continue to apply to pending proceedings, but where the present Act had slightly modified or clarified the previous provisions these modifications and clarifications should be applied. The question that falls for consideration in the present appeals therefore is whether the addition of sub section (1 1) in section 14 is a radical departure from what section 13 (1) provided or whether it is a clarification and/or modification of the previous provision. Whether subs. (11) is a clarification and/or modification of the position as existed when the 1952 Act was in force would depend upon whether when that Act was in force it was open to a court to give relief to a tenant where the offending structure had been removed by him during the pendency of the suit. In this connection section 1 14 A of the Transfer of Property Act (No. 4 of 1882) may be referred to. Section 114 A runs as follows C. 1305. 711 "114 A. Relief against forfeiture in certain other cases Where a lease of immovable property has determined by forfeiture for a breach of an express condition which provides that on breach thereof the lessor may reenter, no suit for ejectment shall lie unless and until the lessor has served on the lessee a notice in writing (a) specifying the particular breach complained of; and (b) if the breach is capable of remedy, requiring the lessee to remedy the breach; and the lessee fails, within a reasonable time from the date of the service of the notice, to remedy the breach, if it is capable of remedy. "Nothing in this section shall apply to an express condition against the assigning, under letting, parting with the possession, or disposing, of the property leased, or to an express condition relating to forfeiture in case of nonpayment of rent. " It will be seen that section 114 A gives power to court to give relief to the tenant against forfeiture where it holds that the landlord did not give reasonable time to the tenant to remedy the breach. In such case it can dismiss the suit as not maintainable. It is true that section 114 A would not in specific terms apply to cases like the present; but ejectment on the ground specified in cl. (k) to the proviso to section 13(1) of the 1952 Act was somewhat analogous to forfeiture on breach of an express condition of a lease for it also required previous notice to the tenant before the suit is filed. (see Uma Kuinari vs Jaswant Rai Chopra) (1). We do not think that it can be said that the 1952 Act forbade the, court from granting 'relief where the offending structures were removed by the tenant even during the pendency of the suit for ejectment. What is reasonable time within which the breach should be remedied is always a question of fact and we think it would have been possible for the court in a suit based on cl. (k) of the proviso to section 1 3 ( 1 ) to give relief against forfeiture in a proper case where the tenant had removed the offending structure before the suit was filed or even during the pendency of the suit if reasonable time was not allowed in the notice contemplated by cl. (k) of the proviso to section 13 (1). On the interpretation pressed before is on behalf of the landlords in the two appeals it is argued that once the breach has been com (1) C.A. 246 of 1961, decided on 16 2 1962. 712 mitted by the tenant by making an unauthorised structure he is liable to ejectment even though the landlord may never have given him notice about the breach and may not even have required him to remove it and that his liability to ejectment would continue even if he had removed the offending structure before the filing of the suit. We do not think that such an interpretation can be given to the provisions of an ameliorating statute like the 1952 Act, when it is clear that even under section 114 A of the Transfer of Property Act, the court has power to give relief against forfeiture in the circumstances mentioned above. We are therefore of opinion that even under the 1952 Act it would have been open to a court to give relief to the tenant who had remedied the breach either before the suit was filed or even after the suit had been filed depending upon what the court considered to be reasonable time. Therefore when sub section (11) gave power to the Controller to give relief to the tenant under conditions mentioned therein it was in fact clarifying what the court could do under the 1952 Act on the analogy of section 114 A of the Transfer of Property Act and also modifying it slightly. Incidentally we may add that the addition of sub sections (10) and (1 1) may explain the change in the form of the language of the proviso to section 14 (1) of the present Act to which we have already referred. We are therefore of opinion that the introduction of sub section (1 1.) in section 14 was clarificatory and slightly modificatory of the power of the court under the 1952 Act to relieve against forfeiture where the suit was brought without giving the tenant reasonable time in the notice contemplated in cl. (k) of the proviso to section 13(1). In this view C.A. 879 of 1962 must fail and is hereby dismissed. C.A. 121 of 1963 succeeds and is hereby allowed and the plaintiff respondents ' suit is dismissed. As in both these cases the tenant has succeeded mainly on account of some change in law after the suit had been filed, we order parties to bear their own costs throughout in both the appeals. Appeal No. 879 dismissed and Appeal No. 121 allowed.

IN-Abs

In each of the two appeals before the court, suits had been filed by landlords under the Delhi and Ajmer Rent Control Act, 1952, for ejectment on the ground that the tenants had erected certain structures without the authority of the landlords and in violation of the conditions of ease between the landlord and the concerned authorities. However, in both these cases the tenants had removed the offending structures during be pendency of the suits and the question for decision in both the cases was whether the tenant could still be ejected after he had removed the authorised structures and there was no further danger to the landlords ' leases being forfeited. It was contended on behalf of the landlords that once a breach had been committed by a tenant within the meaning of cl. (k) of the proviso to section 13(1) of the 1952 Act, he was liable to be ejected even though the landlord may never have given him notice about the breach and may not even have required him to remove it; and that his liability to ejectment would continue even if be had removed the offending structure before the filing of the suit or while it was pending. Furthermore, by virtue of the provisions of section 57(2) of the Delhi Rent Control Act, 1958, (which repealed the 1952 Act), these two appeals fell to be governed by cl. (k) of the proviso to section 13(1) of the 1952 Act and not by cl. (k) of proviso to section 14(1) of 1958 Act or by section 14(11) of that Act which made it possible for the Controller not to make an order of eviction if the tenant complied with any requirements specified by the Controller; this was so because the first proviso to section 57(2) of the 1958 Act which required that, in certain circumstances regard shall be had to the 1958 Act, was not applicable to these two cases. HELD : (i) While considering the scope of the first proviso to section 57(2), it was held in Karam Singh vs Sri Pratap Chand, A.I.R. 1964 S.C. 1305 that where, in the 1958 Act, there was a radical departure from the 1952 Act, the latter Act would continue to apply to pending proceedings; but where the 1958 Act had slightly modified or clarified the previous provisions, then these modifications or clarifications would apply Section 14(11) of the 1958 Act did not provide a radical departure from the provisions of the 1952 Act because when the latter Act was in force, it would have been possible for the court in a suit based on cl. (k ) of the proviso to section 13(1) to give relief against forfeiture in a proper case on the analogy of section 114A of the Transfer of Property Act where the tenant has removed the offending structure before the suit was filed; or even where he had done so during the pendency of the suit if reasonable time was not allowed in the notice contemplated by cl. (k) of the provisio to section 13(1). when section 14(11) of the 1958 Act gave power to the Controller to give relief to the tenant under the conditions mentioned therein, it ,was in fact clarifying and slightly modifying what the court could 706 already do under the 1952 Act. Therefore, regard could be had to the provisions of section 14(11) of the 1958 Act and relief granted to the tenants in both appeals. [710 E F; 711 F H; 712 C E] (ii) Under the 1952 Act, the language of the proviso to section 13(1) was imperative and laid down that nothing in the Act applied when various clauses of the proviso were satisfied. Although the language of the proviso to section 14(1) of the 1958 Act is not so imperative, there is no difference in substance. Where the requirements of the proviso under the 1958 Act are satisfied, the Controller has to pass a decree for ejectment unless there is provision otherwise in section 14. L709 G H; 910 A B]

Appeal No. 432 of 1963. Appeal from the Judgment and Decree dated the August 27, 1958 of Andhra Pradesh High Court in Appeal Suit No. 113 of 1954. C. Narasimhacharyya and K. R. Chaudhury, for the appel lant. P. Ram Reddy, for respondents Nos. 4 to 7. P. Ram Reddy and A. V. V. Nair, for respondents Nos. 15, 16, 18 to 20, 22, 23 to 25. The Judgment of the Court was delivered by Shah J. Khader Miran, Muhammad Abdul Kassim and Muhammad Labhai mortgaged on August 21, 1933, certain immovable property in favour of Narsimha Reddy to secure repayment of Rs. 20,000/ . Khader Miran died on November 19, 1937. On July 12, 1940 Narsimha Reddy commenced an action for enforcement of the mortgage against Muhammad Abdul Kasim, Muhammad Labhai, and three widows of Khader Miran Fathima Bi, Amina Bi and Mahaboob Bi, and a daughter Muhammad Mariyam Bi. A preliminary mortgage decree passed in the action on November 25, 1940 was made absolute on October 11, 1941, and in execution of the decree the properties mort 939 gaged were sold at a court auction and were purchased by the mortgagee Narsimha Reddy on October 16, 1942, with leave of the Court. Narsimha Reddy thereafter transferred the properties to P. Chinnamma Reddi and the latter in his turn alienated portions thereof. N. K. Mohammad Sulaiman hereinafter referred to as 'the plaintiff ' claiming that he was the son of Khader Miran instituted suit No. 125 of 1950 in the Court of the Subordinate Judge, Chittoor for a decree for partition of the mortaged properties by metes and bounds" and in the alternative for a declaration that he was entitled "to redeem the mortgage or portion thereof equal to his share in the mortgaged properties" and for an order against Narsimha Reddy and the alienees from him to render a true and correct account of the income of the properties, and for a further declaration that the decree and judgment in suit No. 87 of 1940 and the execution proceedings thereon were null and void, and "if necessary to set aside the same. " To this suit were impleaded Mahammad Ismail who, it was claimed, was also the ;on of Khader Miran, and was not impleaded in the earlier suit, Mahaboob Bi the mother of the plaintiff, Mariyam Bi his step sister, narsimha Reddy and twenty two alienees of the property. The suit was resisted by Narsimha Reddy and the alienees on two principal grounds that the plaintiff was not the son of Khader Miran, and that the decree in suit No. 87 of 1940 was in any event binding upon the plaintiff for the estate of Khadar Miran was fully represented in the suit by those who were in possession of the estate of Khader Miran. On the second plea, it was sub mitted that Narsimha Reddy had made "full and bona fide in quiry" and had come to learn that only the three widows and daughter of Khader Miran were the surviving members of the family of Khader Miran and that they were in possession of his estate, and that it was not brought to the notice of Narsimha Reddy at any time that there were, beside those impleaded, other heirs to the estate of Khader Miran. The Trial Court held that the plaintiff who was the son of Khader Miran was "sufficiently represented" by the three widows and the daughter of Khader Miran in suit No. 87 of 1940, and that the plaintiff and his brother Mohammed Ismail were bound by the decree and the sale in execution thereof, even though they were not impleaded as parties eo nomine. In appeal to the High court of Andhra Pradesh, the decree passed by the Trial Court, dismissing the plaintiff 's suit was confirmed. With certificate 940 granted by the High Court, this appeal is preferred in forma pauperis by the plaintiff. The Trial Court and the High Court have held that Narsimha Reddy had instituted the mortgage suit after making bona fide enquiry and being satisfied that the only heirs of Khader Miran were his three widows and his daughter, and that the entire estate was in their possession, and that there were no other heirs. This finding is not challenged before us, but counsel for the plaintiff argues that when in a suit to enforce a mortgage instituted after the death of a Muslim debtor one or more out of the heirs of the deceased debtor is or are not impleaded in the suit and a decree is obtained, what passes to the auction purchaser at the court sale is only the right, title and interest in the properties of the heirs of the deceased debtor who were impleaded in the suit. On this question, there has been a sharp conflict of opinion amongst the High Courts in India. It is necessary in the first instance to set out certain principles which are accepted as well settled. The estate of a muslim dying intestate devolves under the Islamic law upon his heirs at the moment of his death i.e. the estate vests immediately in each heir in proportion to the shares ordained by the personal law and the interest of each heir is separate and distirct. Each heir is under the personal law liable to satisfy the debts of the deceased only to the extent of the share of the debt proportionate to his share in the estate . A creditor of a muslim dying intestate may sue all the heirs of the deceased, and where the estate of the deceased has not been distributed between the heirs, he may execute the decree against the property as a whole without regard to the extent of the liability of the heirs inter se. The creditor is however not bound to sue all the heirs: the creditor may sue some only of the heirs and obtain a decree against those heirs, and liability for satisfaction of the decree may be enforced against individual heirs in the property held by them proportionate to their share in the estate. It is also settled that where the defendant in an action dies after institution of the suit, he creditor after diligent nd bona fide enquiry impleads some but not all the heirs as legal representatives, the heirs so impleaded represent the estate of the deceased and a decree obtained against them binds not only those heirs who are impleaded in the action but the entire estate including the interest of those not brought on the record: Dava Ram and others vs Shyam Sundari & others(1) : This Court at p. 240 observed (1)[1965] 1 S.C.R. 231 941 .lm15 "The almost universal consensus of opinion of all the High Courts is that where a plaintiff or an appellant after diligent and bona fide enquiry ascertains who the legal representatives of a deceased defendant or respondent are and brings them on record within the time limited by law, there is no abatement of the suit or appeal, that the impleaded legal representatives sufficiently represent the estate of the deceased and that a decision obtained with them on record will bind not merely those impleaded but the entire estate including those not brought on record." This Court has therefore recognised the principle of representation of the estate by some heirs where the defendant dies during the pendency of a suit to enforce a claim against him, and not all the heirs are brought on the record. If after bona fide enquiry, some but not all the heirs of a deceased defendant are 'brought oil the record, the heirs so brought on the record represent the entire state of the deceased, and the decision of the Court in the absence of fraud or collusion binds those who are not brought on the record as well as those who are impleaded eo nomine. Daya Ram 's case, it is true, did not relate to the estate of a deceased Muslim, but the rule enunciated is of the domain of procedural law and applies to all communities irrespective of the religious pursuasion or personal law. Counsel for the plaintiff says that this rule applies only to cases where the defendant dies after institution of the suit, and does not apply where a suit is instituted against the heirs of a deceased debtor. The reason suggested is that by the combined operation of 0. 22 rr. 4 & 5 Code of Civil Procedure there is a decision of the Court that persons impleaded are the heirs of the deceased and are allowed to be brought on the record as his heirs and legal representatives. Reliance is also placed upon the definition of "legal representative" in section 2 (11 ) of the Code of Civil Procedure. It is submitted that where persons are either expressly or by implication directed or permitted by an order of the Court to represent the estate, in the absence oil fraud or collusion the heirs brought on the record will represent the entire estate, and the decree passed against them and proceedINGS taken pursuant thereto will be binding upon the heirs not so impleaded. But where the plaintiff institutes a suit against certain person as legal representatives of the deceased debtor there is no representation to the estate by some only of the heirs of the deceased where the deceased was a muslim. On this point there has been, as already stated, conflict of opinion and in some High Courts from time to time different views have been expressed To seek elucidation of principle from an analysis 942 of the numerous decisions of the cases may turn out a futile pursuit. That is not because we do not hold the opinions expressed by eminent Judges on this question in great respect, but because in our view it would conduce to greater clarity if the grounds on which the decisions have proceeded are examined in the light of the true principles applicable. In seeking its solution the problem whether a decree obtain ed by a creditor in a suit instituted against some of the heirs of a deceased Muslim for payment of debts due by him is binding on the other heirs has been approached from different angles : (i) by the analogy of Hindu law where on devolution of property on death of a Hindu upon members of a joint Hindu family or a widow the estate of the deceased is represented by the manager or the widow, and the creditor in a suit properly instituted against the manager or the widow may obtain a decree which binds all the persons having interest in the estate; (ii) the rule of Mahomedan law as set out in Hamilton 's Hedaya, 2nd Edn., p. 349, Bk. XX, Ch. 4 (relating to the duties of the Kazee): "for any one of the, heirs of a deceased person stands as litigant on behalf of all the others, with respect to anything due to or by the deceased, whether it be debt or substance, since the decree of the Kazi in such case is in reality either in favour of or against the deceased; and any of the heirs may stand as his representative with respect to such decree. . To this it is objected, "If one heir be litigant on behalf of the others, it would follow that each creditor is entitled to have recourse to him for payment of his demand, whereas, according to law, each is only obliged to pay his own share. " Reply : "The creditors are entitled to have recourse to one of several heirs only in a case where all the effects are in the hands of that heir. This is what is stated in the Jama Kabeer; and the reason of it is that although any one of the heirs may act as plaintiff in a cause on behalf of the others, yet he cannot act as defendant on their behalf, unless the whole of the effects be in his possession"; (iii) that a creditor of the deceased may sue one of the heirs who is in possession of the whole or any part of the estate, without joining other heirs as defendants, for administration of the estate and for recovery of the entire debt, and Pet a decree against the entire estate; and (iv) on the strict rules of Islamic law that devolution of inheritance takes place immediately upon the death of the ancestor, and jus representations being foreign to the Islamic law of inheritance, and only those heirs who are sued by the creditor of the deceased ancestor are liable to satisfy the debt proportionate to their interest in the estate. The first view was enunciated by the Calcutta High Court in Mussemut Nuzeerun vs Moulvie Amerooddin(1) and was adopted by the Bombay High Court in Khurshetbibi vs Kesho Vinayak(2; Davalava vs Bhimaji ( 3 ) and Virchand vs Kondu (4 ) . The second view though pressed for acceptance before the Courts has not met with approval. The rules of procedure enunciated by the Muhammadan lawyers have no application under the Indian system of jurisprudence to the trial of actions in our courts and as observed by Mahmood, J., in Jafri Begam vs Amir Muhammad Khan(") at p. 842: " . and if there are any claims against the estate, and they are litigated, the matter passes into the region of procedure, and must be regulated according to the law which governs the action of the Court, The plaintiff must go to the Court having jurisdiction, and institute his suit within limitation, impleading all the heirs against whose shares he seeks to enforce his claim; " The Calcutta High Court in Muttyjan vs Ahmed Ally(") accepted the third view and regarded a suit filed by a creditor to recover a debt due from the estate of a deceased muslim debtor as an administration action. It was further confirmed in Amir Dulhin vs Baijnath Singh(7). On this rule an exception was engrafted in a later judgment in Abbas Naskar vs Chairman, District Board, 24 Parganas(8). It was observed in Abbas Naskar 's case(") that in the case of an estate of a muslim dying intestate if there has been no distribution of the estate, and the suit is instituted for recovery of a debt the creditor may sue any heir in possession of the whole or part of the estate without joining the other heirs as defendants, for realisation of the entire debt passed in such a suit may be enforceable against all the assets that are in his possession. But a decree for administration may only be passed where the heirs who are sued are in possession of the whole or any part of the estate so as to be liable to account for the same to the rest, or in other words, the suits were against some of the heirs, who are in possession of property exceeding their share of the inheritance: where the heirs are in possession of the respective shares of inheritance, the principle can have no (1) (3) I.L.R. (5) I.L.R. 7 All. 822. (7) I.L.R. 1. (2) I.L.R. (4) I.L.R. (6) I.L.R. (8) I.L.R. 944 application. The modified rule accepted by the Calcutta High Court is that where a heir is in possession of the estate of a deceased muslim on behalf of the other heirs, in a suit to recover a debt due from the estate a decree for administration may be passed. The last view has been uniformly expressed by the Allahabad High Court since it was first enunciated by Mahmood J., in Jafri Begam 's case(1). It may be observed that the Bombay High Court in later decisions has accepted this view : Bhagirthibai vs Roshanbi (2 ) : Shahasaheb vs Sadashiv(3): Lala Miya vs Manubibi (4 ) and Veerbhadrappa Shilwant vs Shekabai(5). We may now examine whether the grounds on which the different views were expressed are sustainable in principle. It must be recalled that whether a decree obtained by a creditor against the heirs of a deceased muslim is binding upon the entire estate or only of those who were impleaded eo nomine is not a question to be determined on the personal law either of the deceased or of the defendant in the suit. It is a part of the law of procedure which regulates all matters going to the remedy, and when the matter passes into the domain of procedure, it must be regulated by the law governing the action of the Court. An administration action may undoubtedly lie at the instance of a creditor for and on behalf of all the creditors for an order that the Court do enter upon administration of the estate and do pay to the creditors claiming the amount either the whole or such amount as may be rateably payable to each creditor out of the estate after satisfying the primary liabilities of the estate. A suit by a creditor may in appropriate cases, where the procedure Prescribed in that behalf is followed, be treated as an administration action, but Very action instituted by a creditor of a deceased debtor to recover a debt due out of his estate in the hands of some or all the heirs is not an administration action. A person in possession of the whole or a part of the estate which originally belonged to a debtor dying intestate does not clothe himself with a right to represent other persons who are interested in the estate. Such a person may by intermeddling with the estate be regarded is executor de sontort and may render himself liable accordingly, but thereby he cannot represent those whose estate he has intermeddled with. An administrator appointed by the Court would (1) I.L.R. 7 All.822 (2) I.L.R. (3) I.L.R. (4) I.L.R. (5) I.L.R. 945 resent the estate, and a creditor may sue him for recovery of the debts due out of the estate. In an administration action properly instituted, the Court may take upon itself the duty to administer the estate out of which the debts may be satisfied. But a simple action for recovery of a debt from the estate of a deceased debtor will not be regarded as an action for administration. Ordinarily the Court does not regard a decree binding upon a person who was not impleaded eo nomine in the action. But to that rule there are certain recognised exceptions. Where by the personal law governing the absent heir the heir impleaded represents his interest in the estate of the deceased. There is yet another exception which is evolved in the larger interest of administration of justice. If there be a debt justly due and no prejudice is shown to the absent heir, the decree in an action where the plaintiff has after bona fide enquiry impleaded all the heirs known to him will ordinarily be held binding upon all persons interested in the estate. The Court will undoubtedly investigate, if invited, whether the decree was obtained by fraud, collusion or other means intended to overreach the Court. The Court will also enquire whether there was a real contest in the suit, and may for that purpose ascertain whether there was any special defence which the absent defendant could put forward, but which was not put forward. Where however on account of a bona fide error, the plaintiff seeking relief institutes his suit against a person who is not representing the estate of a deceased person against whom the plaintiff has a claim either at all or even partially, in the absence of fraud or collusion or other ground which taint the decree, a decree passed against the persons impleaded as heirs binds the estate, even though other persons interested in the estate are not brought on the record. This principle applies to all parties irrespective of their religious persuation. A few illustrative cases which support this principle may be noticed. In Chaturbujadoss Kushaldoss and Sons vs Rajamanicka Mudali(1) a debtor died leaving a will bequeathing his estate to his nephew subject to certain dispositions. In ignorance of the will, and bona fide believing that the widow was the proper legal representative, a creditor of the deceased brought a suit against her alone and obtained a decree ex parts for satisfaction of the debt out of the husband 's estate and satisfied his claim by sale of certain items of the estate in her hands. A nephew of the deceased who was a devisee under the will sued to set aside the decree and sale in execution thereof. It was held by the High Court of (1) I.L.R. Sup. CI/65 17 946 Madras that as the creditor bona fide believed the widow was the proper legal representative and as she was then interested in defending the estate and sufficiently represented the estate and as the creditor got his decree without any fraud or collusion with her, it was binding on the nephew who was the residuary legatee under the will. In dealing with this question, Madhavan Nair, J., observed at p. 218 : "Prima facie, a decree will bind only the parties to it or those claiming through them; but there are exceptions to this rule. The Courts have held that in certain circumstances when one who is not the true legal repre sentative of a deceased person is impleaded as his legal representative, then a decree passed against him in his character as the legal representative of the deceased would be binding on the true representative though he is not a party to it. The suit may have been instituted against the wrong legal representative at the very commencement or the wrong legal representative may have been brought on record during the pendency of the suit or after the decree and for purposes of execution. " The principle so stated derives support from the judgment of the Judicial Committee in Khairajmal vs Daim(1). In that case, the material facts out of the many complicated facts which have a bearing on the point under review are these : a suit was instituted for redemption of two mortgages of 1874 in respect of certain immoveable properties. The plea of the mortagee in substance, was that the equity of redemption had been sold in execution of money decrees against the mortgagors in earlier proceedings and was vested in other persons, and therefore the mortgagors had no right to sue. One of such mortgagors was Nabibaksh. It appeared that in suit No. 372 of 1879 instituted for recovery of a debt there was reference to arbitration, and Nabibaksh signed the reference. Nabibaksh died shortly thereafter and his two widows and his son Muhammad Hassan named as legal re presentivs were served with the summons and were willing to accept the award. They were also served with the notice of sale of the property of Nabibaksh. An infant daughter of Nabibaksh was omitted from the list of heirs impleaded, but the entire interest of Nabibaksh was sold in execution of the decree obtained in that suit. The Judicial Committee held that the estate of Nabibaksh as sufficiently represented for the purpose of the suit, although the name of the infant daughter was omitted and (1) L.R. 32 T.A. 23. 947 that the share of Nabibaksh in the equity of redemption in the property sold in execution of the decree in suit No. 372 of 1879 being bound by the sale, was irredeemable. It is true that Nabibaksh died after the suit for recovery of the debt was instituted and his heirs were brought on the record under a procedure similar to O. 22 r. 4 of the Code of the Civil Procedure. But the Judicial Committee did not express the view that the estate was represented because the heirs were brought on record after the death of Nabibaksh in a pending suit, but apparently on the principle on which the Madras High Court in Chaturbujadoss Kushaldoss & Sons ' case(1) proceeded. This view was also expressed by the High Court of Orissa in Sarat Chandra Deb and others vs Bichitrananda Sahu and others(2), where Jagannadhadas, J., observed that where proceedings taken bona fide by the creditor against the person actually in possession by virtue of the assertions of a claim to succeed to or represent the estate of the deceased '; debtor are binding against the real legal heir, whether such proceedings were commenced or continued against the wrong person, and irrespective of any express or implied decision by the Court that the ,person so impleaded was the proper legal representative. The Court in that case recognised that though the title of a persons to property cannot normally be affected by any proceeding to which he is not a party, his interest in the property may still be bound if he may having regard to the circumstances, be said to, have been sufficiently represented in the proceeding. The learned judge observed at p. 445: "I have, therefore, no hesitation in coming to the conclusion that where a mortgagee institutes a suit bona fide against the person in possession of the estate of the deceased mortgagor, who is in such possession in assertion of a claim to succeed to that estate, and where a person purchases the mortgaged property bona fide in execution of that decree, such purchaser gets the full title to the mortgaged property by virtue of such sale and the real heir is bound thereby and that his only remedy, if at all, in a proper case is to get the sale set aside by appropriate proceedings in time." In a recent judgment of the Madras High Court in Shunmughom Chettiar vs K. A. Govindasami Chettiar and others(3) it was held that where after the death of the mortgagor, in a suit on the mortgage, the mortgagee bona fide and "after due care and ' (1) I.L.R. (2) I.L.R. [1950] Cutt. (3) A.I.R. 1961 Mad. 948 caution" impleads a person who is believed by him to be the legal representative of the mortgagor and who is in possession of the mortgaged property and a decree is obtained on that footing without the legal representative so impleaded disclaiming any liability, the decree thus obtained by the mortgagee will bind other legal representatives who may be in existence. It is true that the cases of the Madras & Orissa High Courts did not relate to the estate of a muslim debtor. But the rule, as already stated, is one of procedure and not of personal law, and applies to a muslim debtor 's estate as well as to a Hindu debtor 's estate. It is true that in the case of a debtor who is sued for recovery of the debt, and if he died after the institution of the suit, there is some order of the Court express or implied recognising that the person sought to be brought on record are the heirs and legal representatives of the deceased debtor. The Court records a conclusion, if not expressly, by implication, that they :represent the estate. It was held by this Court, as already stated ,earlier, in a recent judgment in Daya Ram 's case(1) that failure ;to bring the other heirs on record, if there is a bona fide enquiry :as to the existence of the heirs, does not affect the validity of the decree and the proceedings taken thereunder. In a suit instituted against the heirs of a deceased debtor, it is the creditor who takes upon himself the responsibility to bring certain persons as heirs and legal representatives of the deceased on the record. If he has proceeded bona fide and after due enquiry and under a belief that the persons who are brought on the record are the only legal representatives, it would make no difference in principle that in the former case the heirs have been brought on the record during the pendency of the suit, the creditor having died since the institution of the suit, and in the other case at the instance of the plaintiff certain persons are impleaded as legal representatives of the deceased person. In either case, where after due enquiry certain persons are impleaded after diligent and bona fide enquiry in the genuine belief that they are the only persons interested in the estate, the whole estate of the deceased will be duly represented by the persons who are brought on the record or impleaded, and the decree will be binding upon the entire estate. This rule will of course not apply to cases where there has been fraud or collusion between the creditor and the heir impleaded, ,or where there are other circumstances which indicate that there has not been a fair or real trial, or that the absent heir had a special defence which was not and could not be tried in the earlier proceeding. (1) ; 949 The appellant and his brother Mohammad Ismail were both minors when the action for enforcement of the mortgage in favour of Narsimha Reddy was instituted. The mortgaged pro perty was in the possession of the three widows and daughter of Khader Miran, and the other mortgagors. It is also found that Narsimha Reddy had made bona fide enquiry and had not come to learn about the existence of any other heirs. It is also not the case of the appellant that he had any special defence to the suit which if he was impleaded as a party to the suit he could have set up, nor is there any ground for holding that there was no fair or real trial of the action. This appeal therefore fails and is dismissed with costs. The appellant was permitted to appeal in forma pauperism He will pay the court fee payable on the memo of appeal as if he had not been permitted to appeal in forma pauperis Appeal dismissed.

IN-Abs

M, K and L mortgaged certain immovable properties in favour of R in 1933. M died in 1937 and in 1940, R commenced an action for enforcement of the mortgage against K, L and three widows and a daughter of M. In execution of the decree passed in the action, the properties were bold at a court auction in 1942 and purchased by R, who thereafter trans ferred them to others. The appellant plaintiff, claiming that he was the son of M, instituted a suit in 1950 for a decree for partition of the mortgaged properties "by metes and bounds" and in the alternative for a declaration that he was entitled to redeem the mortgage or a portion thereof equal to his share in the mortgaged properties. The plaintiff 's suit was resisted by R and the other alienees of the properties, mainly on the ground that the decree of 1940 was binding on the appellant for the estate of M was fully represented in the suit by those who were in possession at the time; and that R had made full and boan fide inquiry and had learnt that the three widows and the daughter of M were the only surviving members of the latter 's family. The trial court dismissed the appellants 's suit and this decision was confirmed in appeal by the High Court. In appeal to this Court, the only contention pressed on behalf of the appellant was ',hat when in a suit to enforce a mortgage instituted after the death of a muslim debtor, one or more out of the heirs of the deceased is or are not impleaded in the suit and a decree is obtained, what passes to the auction purchaser at the court sale is only the interest of the heirs who were impleaded; that this was so because each heir is under Mohamedan law liable to satisfy the debts of the deceased only to the extent of 'the share of the debt proportionate to his share in the estate. HELD : (i) The appellant was sufficiently represented in the suit filed in 1940 and was bound by the decree passed in that suit, (ii) Whether a decree obtained by a creditor against the heirs of a deceased muslim is binding upon the entire estate or only on those who were impleaded eo nomine is not a question to be determined on the personal law either of the deceased or of the defendant in the suit. It is a part of the law of procedure which regulates all matters going to the remedy, and when the matter passes into the domain of procedure, it must be regulated by the law governing the action of the court; [944 D] 938 (iii) Where certain persons are impleaded after diligent and bona fide enquiry in the genuine belief ',hat they are the only persons interested in the estate, the whole estate of the deceased will be duly represented by the persons who are brought on the record or impleaded, and the decree will be binding on the entire estate. [948 G] Daya Rain and others vs Shyam Sundari & others ; followed. If the creditor has proceeded after such bona fide enquiry, it would make no difference in principle between a case in which a debtor is sued for recovery of a debt and upon his death pendente lite there is an order of the court recognising the persons brought on the record as representing the estate, and a case in which in a suit against the heirs of a deceased debtor, the creditor has taken upon himself the responsibility to bring certain persons on the record as representing the estate. [948 E] This rule will not apply to cases where there has been fraud or collusion between the creditor and the heir impleaded or where there are other circumstances which indicate that there has not been a fair or real trial, or that the absent heir had a special defence which was not and could not be tried in the earlier proceeding. [948 H] Case law reviewed.

O. 324 of 1953 under article 32 of the Constitution. N. section Bindra, (Gurucharan Singh Bakshi, with him) for the petitioners. Porus A. Mehta for respondent No. 1. Amar Nath Arora for respondents Nos. 2 to 14. December 18. The Judgment of the Court was delivered by GHULAM HASAN J. This petition by twenty persons under article 32 of the Constitution prays for the issue of a writ of certiorari, mandamus and prohibition 579 or other suitable order or directions, quashing the orders dated the 1st July, 1952, and the 14th October, 1953, passed by the Deputy Commissioner (Deputy Custodian Evacuee Property) Karnal, in the State of East Punjab, hereinafter referred to as the first respondent, whereby the petitioners are alleged to have been deprived of their fundamental right of property and are unable to hold the same within the meaning of article 19 (1) (f) of the Constitution. The petitioners are displaced persons from Pakistan who migrated to India after the partition of 1947. They owned certain agricultural land in Tehsil Chunian, District Lahore, which, according to them, was mostly canal irrigated land of the first grade, yielding on an average 16 to 20 maunds of wheat per acre. It appears that upon partition the East Punjab Government was confronted with the serious problem of settling agricultural lands abandoned by Muslim evacuees from the areas, now called East Punjab and Pepsu. Accordingly they decided on the 15th September, 1947, to allot evacuee lands for the current Kharif and the Rabi of 1947 48. This decision was obviously taken with a view to prevent famine and fall in agricultural production in the area, as also to provide means of livelihood for the agricultural refugees. In pursuance of this policy the petitioners were settled on land in village Dhakala admittedly a first grade village, Tehsil Thanesar, District Karnal, in the State of East Punjab. Their claims were verified under the provisions of the. East Punjab Refugees (Registration of Land Claims) Act XII of 1948, They were allotted specific areas of land under the statement of conditions, contained in Notifications Nos.489 1/S and 4892 IS, dated the 8th July, 1949, on quasi permanent basis in lieu of the lands left by them in Pakistan. Subsequently the petitioner 's lands left in Pakistan are alleged to have been down graded with the result that the lands allotted to them were re allotted on the 25th April, 1951, to Ishar Singh and others who appear as respondents to oppose the present petition. In July, 1951, the petitioners moved the East Punjab High Court under article 226 for a writ restraining their 76 eviction from the lands but as no allotment had been cancelled by that time they withdrew the petition some time in 1952. The original allotment was, however, cancelled on the 1st July, 1952. This order was challenged by a revision under section 27 of the . The Deputy Custodian General dismissed the revision petition on the 2nd December, 1953, holding that the order of the Deputy Custodian was not illegal or without jurisdiction on the ground that no notice of cancellation of allotment had been issued to them. It was observed in the course of the judgment that the petitioners had conceded before the Assistant Custodian on the 9th May, 1952, that the lands abandoned by them in Pakistan were second grade lands but had claimed that they should, nevertheless, be allotted first grade lands. The order of the 1st July, 1952, is the first order which is challenged before us as being without jurisdiction and infringing the fundamental right of the petitioners. It is alleged in the petition that notwithstanding the cancellation of the allotment, the petitioners remained in actual cultivating possession of the lands allotted to them but an order was passed by the first respondent on the 14th October, 1953, which is to the following effect : " Government have decided that in the case of persons who were able to secure possession of part of land, the order should be deemed to have been implemented. In the case of M/s Ishar Singh. Rakha Singh and others of the village Dhokala ' they were in possession of the part of the land before the 6th May, 1953. As such they should be given possession of the remaining area by ousting Duni Chand and others being II and III grade allottees, but wrongly allotted land in 1st grade village. " The aforesaid order is said to have been passed without the authority of law and deprives the. petitioners of their right to bold the property allotted to them, 581 Before dealing with the validity of the impugned orders it will be necessary to refer to a compilation known as the Land Resettlement Manual for displaced persons in Punjab and, Pepsu upon which great reliance was placed by Mr. Bindra on behalf of the petitioners in the course of his arguments. This book was prepared by Mr. Tirlok Singh, I.C.S., who was Director General of Relief and Rehabilitation in East Punjab and contains the policy decisions of that Government arrived at in respect of the settlement of land upon the refugees soon after partition. It appears from this book that originally there was a temporary settlement but shortly afterwards an elaborate organization was set up to make allotment of lands on a quasi permanent basis. The displaced persons put in their claims in regard to the agricultural land they had abandoned in West Punjab and they were verified with the help of Revenue records which were exchanged with the West Punjab Government. The book has evidently the stamp of authority, as the foreword is written by Mr. P. N. Thapar, I.C.S., Financial Commissioner, Department of Relief and Rehabilitation, and Secretary to the Punjab Government, Relief and Rehabilitation Department. The Manual shows that in the end. of 1947, the displaced persons had been allotted lands on a temporary basis but there was an insistent demand for settlement on permanent basis. In a communique of the 7th February, 1948, a new system of quasipermanent allotment was devised, the object underlying being to allow the displaced persons to remain in quiet and undisturbed enjoyment of the lands allotted to them. They were not to get proprietary rights or rights of permanent occupation and the very fact that the settlement was quasi permanent shows that it was, not intended to be irrevocable. , Paragraph 19 of the Manualsays: "Until issues relating to evacuee property are resolved between India and Pakistan, ownership in each country of property abandoned by evacuees continues to rest with them. This led to the use of the expression quasi permanent as the keyword for the scheme of resettlement introduced in East Punjab and Pepsu. " The various Evacuee Property Ordinances 582 passed by the Central or the State Governments from time to time which were eventually replaced by the Central Act No. XXXI of 1950, further confirm that the policy underlying the legislation was to provide for the administration of evacuee property for the time being and to manage it until such time as a final decision was reached by the Government of India as to its ultimate destination. Paragraph 21 of the Manual contains the statement of conditions which Mr. Bindra characterised as the charter of the petitioners ' rights. This paragraph says that the rights of persons to whom land is given in the scheme of quasi permanent resettlement are defined in East Punjab in two statements of conditions, dated the 8th July, 1949, issued with Notifications Nos.4891/Sand4892/S. This statement is to be found at page 193 of the Manual. Paragraph 3 of the statement says that the allotment shall be in favour of displaced persons and for a period for which the land remained vested in the Custodian subject to the provisions of the Act. Paragraph 8 says: "The allottee paying the rent hereby reserved and observing and performing the several covenants, conditions and stipulations herein on his part contained, shall peace fully hold and enjoy the allotted land during the said term without any interruption by the Custodian or the Rehabilitation Authority. " It is contended by Mr. Bindra on the strength of these provisions that so long as the land remains vested in the Custodian, the petitioners cannot be deprived of these lands which have been granted to them on a quasi permanent basis and that the allotment could not be cancelled without notice to the petitioners. We now proceed to dispose of this contention. It is agreed that the Act in force at the time of the allot. ment was the East Punjab Evacuees ' (Administration of Property) Act, XIV of 1947. It defines "allotment" as the grant by the Custodian or a Rehabilitation Authority or any other person duly authorised by the Custodian in this behalf, of a temporary right of use and occupation of evacuee property to any person otherwise than by way of lease. Section 9 confers powers upon the Custodian in regard to management 583 of property and section 9 (A), sub section (2), empowers the Custodian to cancel any allotment or terminate or amend the conditions of any lease. Section 22, subsection (2) (ff) confers upon the Provincial Government the power to make rules providing for the circumstances under which leases and allotment may be terminated or the terms thereof be varied. This Act was in due course replaced by the Central Act XXXI of 1950 (The ). The definition of allotment in this Act is substantially the same [section 2 (a) ]. Section 12 (1) and section 56 (2) (h) are in substance the counterpart of section 9 (A) and section 22 (ff) of the East Punjab Act of 1947. That the Deputy Custodian had the jurisdiction to cancel the allotment both under the State and the Central Acts referred to above cannot be seriously contested. It was in pursuance of the powers conferred by the rules made by the Provincial Government that the Custodian issued the notification of 8th July, 1949. Rule 14 (2) which is one of the rules framed under section 56, specifies the circumstances under which leases and allotments can be cancelled or varied. Sub rule (3) says that the Custodian may evict a person who has cured an allotment by misrepresentation or by fraud or if he is found to be in possession of more than one evacuee property or in occupation of accommodation in excess of his require ments. Sub rule (4) requires the Custodian before passing any, order of cancellation or variation of the terms of a lease, to serve the person or persons concerned with a notice to show cause against the order proposed to be made and to afford him a reasonable opportunity of being heard. No notice is provided for cancellation of an allotment under the rules. The obvious answer to this differentiation appears to be that a lease is granted for a definite period and it is only fair to give the lessee a notice before his lease is terminated before the expiry of the stipulated period, whereas the allottee of land under the quasi permanent settlement stands on a different footing. Be that as it may, the question seems to be academical in the present case, as the petitioners were given full opportunity to, 584 put forward their case before the allotment was cancelled. The order of the Deputy Custodian General, dated the 2nd December, 1953, rejecting the petitioners ' revision supports this. That order shows that the Assistant Custodian issued a notice to the petitioners to show cause why the allotment of first grade land, while they were all second grade claimants, should not be cancelled. The petitioners appeared before him on the 9th May, 1952. Their 'statements were recorded and they admitted that their land was second grade, whereupon the Assistant Custodian made a report to the Deputy Custodian recommending that the allotment be cancelled. The Deputy Custodian acting upon this, report cancelled the petitioners ' allotment in village, Dhakala, on the 1st July, 1952. This point was raised before the Deputy Custodian General also but he held that section 12 of the Central. Act did not require notice of cancellation to be issued to the petitioners and in any case the order in question was not without jurisdiction, as there had been substantial compliance with the provisions of rule 14. It was contended, however, that the order of cancellation was made by the Deputy Custodian and that order was bad as he did not give the petitioners any notice before passing the order. The Assistant Custodian who was acting under the orders of the Deputy Custodian had already heard ' the petitioners and recorded their statements, and there was no point in hearing the petitioners again when they had already been heard. The Deputy Custodian has filed an affidavit to the effect that a notice was given to the petitioners to explain on the 9th May, ' 1952, as to why their allotment should not be cancelled, that they appeared on the 9th May, 1952, that their statements were recorded and that their allotments were cancelled on the 1st July, 1952. We hold, therefore, that there is no merit in the contention that the order of the Deputy Custodian was without jurisdiction as it was passed in the absence of the petitioners and without hearing them. Even if the order of cancellation was passed during ' the 585 operation of a stay order, the order of cancellation cannot be challenged on that ground. The next contention urged is that the order of cancellation is opposed to the order of the Ministry of Rehabilitation, dated the 14th May, 1953, whereby the authorities were prohibited from cancelling allotments if the orders in respect of them had not been implemented by the 22nd July, 1952. We think this contention is also devoid of merit. It appears that the question of amendment of sub rule (6) of rule 14 of the Central Rules was the subject of correspondence between the Central Government and the East Punjab Government. Reference is made in the letter of the 14th May, 1953, to a notification issued by the Central Government on the 22nd July, 1952, according to which orders cancelling allotments passed after a specified date were to be implemented only if they fall under the category of undeserved and excessive allotments. It is stated that the object of this notification was to stablize quasi permanent allotments, but upon a representation by the State Government the provision restricting the implementation of orders passed before the a specified date was relaxed and the State Government was given powers to implement their orders by the 22nd July, 1952. The Central Government after further consideration decided that all orders passed before the 22nd July, 1952, but not implemented until the 6th May, 1953, shall be kept it abeyance except in the following cases: (a) Undeserved allotment, (b) Excessive allotment, (c). . . . . It was further decided that no other order hereafter be implemented until a decision to the contrary is issued by the Central Government. The letter added that the Ministry of Law was being consulted with a view to making the necessary amendments in the rules. In pursuance of this, decision the East Punjab Government issued instructions to the Deputy Commissioners. There was some dispute about the meaning of the wor "implementation" but before A further 586 reference was made to the Central Government, the Punjab Government decided that among allottees of land the status quo should be maintained and that if as a result of an order of cancellation passed before the 22nd July, 1952, the possession of an allottee had not been given over by the 6th May, to the new allottee, it shall remain with the original allottee. This correspondence merely shows that the Central Government enunciated a certain policy on the subject of amending sub rule (6) of rule 14, pending the advice of the Law Ministry, but apparently the policy was not given effect to and no rule was framed in pursuance of the decision. It is clear, therefore, that the Central Government .merely issued interim instructions pending the amendment of the rule but no rule was framed to give effect to those instructions which in consequence did not acquire any statutory force. Mere stay of implementation of the orders contained in the statement of policy did not wipe out the effect of the cancellation. Sub rule (6) to rule 14 was subsequently added but not as it was intended to be with the result that the old orders of cancellation stood such as orders based on grounds other than underserved or excessive allotments. Once the order of cancellation was passed by the Deputy Custodian, the petitioners lost their right to possession and even if the letter of the 14th May, 1953, is treated as a direction by the Central Government under section 54, it cannot have the effect of restoring what had been lost. We hold, therefore, that the petitioners have not made out a case for breach of any fundamental right. Both the orders passed by respondent No. I are perfectly valid and within jurisdiction. We accordingly ' dismiss the petition with costs to the first respondent. Petition dismissed. Agent for the petitioners: Harbans Singh. Agent for respondent No. 1: G. H. Rajadhyaksha.

IN-Abs

Held, that the Deputy Custodian of Evacuee Property has jurisdiction to cancel the allotment of land both under the East Punjab Evacuees ' (Administration of Property) Act, XIV of 1947 as well as under the Administration of Evacuee Property (Act XXXI of 1950), sections 2(a) 12(1) and 56(2), the latter Act replacing the former Act. That no notice was provided for cancellation of an allotment under the rules framed under section 56. That the petitioners allottees in the present case were given notice and had full opportunity to put forward their case before their allotments were cancelled.

Appeal No. 583 of 1962. Appeal by special leave from the judgment and order, dated November 23, 1959, of the Allahabad High Court in Special Appeal No. 524 of 1958. section V. Gupte, Solicitor General, Guru Dayal Srivastava and T. Satyanarayana, for the, appellant. B. R. L. Iyengar and A. G. Ratnaparkhi, for respondents. Nos. 1, 2, 4, 8 & 12 to 14. C. B. Agarwal and O. P. Rana, for Intervener No. 1. A. V. Rangam, for Intervener No. 2. G. C. Kasliwal, Advocate General, for the State of Rajasthan and R. N. Sachthey, for Intervener No. 3. I. N. Shroff, for Intervener No. 4. The Judgment of GAJENDRAGADKAR, C.J., HIDAYATULLAH, SHAH AND SIKRI, JJ was delivered by HIDAYATULLAH, J. WANCHOO, J.delivered a dissenting Opinion. Hidayatullah J. The Municipal Board, Hapur (shortly the appellant Board) passed a Special Resolution (No. 296) on September 28, 1956 imposing water tax in Hapur from April 1, 1957 and a notification by the Government of Uttar Pradesh was. Published in the Uttar Pradesh Gazette under section 135(2) of the U. P. Municipalities Act (Act 2 of 1916) dated December 11, 1956 notifying the resolution. Fifteen house owners of Hapur who received notices from the appellant Board for the payment of the tax assessed in respect of their houses, petitioned to the High Court at Allahabad under article 226 of the Constitution and asked for a writ or order preventing the appellant Board from realising the tax. Their contention was that the tax was illegal as it was imposed in contravention of the provisions of the Munici palities Act. The main grounds of objection were (a) that the, resolution of the appellant Board framing the proposal was not published in a local paper of Hapur printed in Hindi, and (b) that the rules framed for the imposition of the tax did not accompany the resolution which was affixed on the notice board at the office of the appellant Board in purported compliance with the requirements for publication. The imposition was also challenged on the ground that articles 14 and 19 of the Constitution were violated 954 The petition was heard by Mr. Justice James who decided all the points against the appellant Board. He held that the tax was illegal inasmuch as the mandatory requirements of the Municipalities Act were not complied with by the appellant Board while imposing the tax, and that section 135(3) of the Act (which cures all defects in the imposition of tax by making the notification of Government conclusive evidence of the legality of the imposition) was ultra vires article 14 of the Constitution because it created a bar against proof and left no remedy to the tax payers thereby making a discrimination between them and other litigants. He further held that the sub section, by making Government the sole judge of compliance with the Act conferred judicial power on Government contrary to the intendment of the Constitution. The appellant Board was accordingly ordered not to collect the tax from the petitioners. The appellant Board appealed under the Letters Patent. The Divisional Bench hearing the special appeal agreed with Mr. Justice James. The present appeal has been filed by special leave of this Court. Since it will be necessary to 'consider whether the appellant Board complied with the requirements of the Municipalities Act or not and, if not, to what extent, it is necessary to analyse the provisions in the Municipalities Act for the imposition of a tax and then to follow that up with a nar ration of the steps taken by the appellant Board. Section 128 of the Municipalities Act confers on the Munici palities in Uttar Pradesh the power to levy taxes and enumerates the kinds of taxes. One such tax mentioned in cl. (x) of sub section (1) of the section reads : "a water tax on the annual value of the building or land or both". This was the tax which the Municipality had attempted to impose in Hapur. There can be no question that the appellant Board had the competence to impose this tax and so the first question is whether it went about the business in the wrong way and, if it did, what is the effect. Section 129 specifies certain restrictions on the imposition of water tax. We need not refer to them because no objection was raised that the restrictions there prescribed had not been observed. Sections 131 to 135 lay down the procedure for the imposition of the tax. Section 131 provides that when a Board desires to impose a tax it shall, by special resolution, frame a proposal specifying the tax, the person or class of persons to be made liable and the description of the property or other taxable things or circumstances in respect of which they are to be made liable, the amount or rate leviable from such person or class of persons and any other matter which the State Government may require 955 by rules to be specified. The same section requires the Board to prepare a draft of the rules which it desires the State Government to make and the Board is required to publish the proposal, the draft rules so framed, and a notice in the prescribed form, in the manner laid down by section 94. That section says that every resolution passed by a Board at a meeting, shall, as soon thereafter as may be, be published in a local paper published in Hindi and where there is no such local paper, in such manner as the State Government may, by general or special order, direct. After the notice etc. are published, section 132 enables any inhabitant of the Municipality to, submit to the Board an objection in writing to all or any of the proposals framed by it and the Board is required to consider the objection so submitted and to pass order thereon by special resolution. If the Board decides to modify its proposals or any of them it must publish the modified proposals and (if necessary) the revised draft rules with a fresh notice, for objections. Any new objection so received has to be dealt with in the same way. After the Board has finally settled the proposals, it has to submit the proposals, the objections (if any) and the orders made in connection therewith, to the prescribed authority. The prescribed authority under section 2(17) (ii) means an officer or a body corporate appointed by the State Government in this behalf by notification in the official Gazette, and, if no such officer or body corporate is appointed, the Commissioner. It may be stated that the proposal we are considering was accepted by the Commissioner. Then follows section 133 and it gives power to the State Government or the prescribed authority to reject, sanction or modify any proposal. When the proposals are sought to be modified they have to be referred back to the Board for further consideration. When the proposals are sanctioned by the State Government or the prescribed authority section 134 of the Act requires that the State Government, after taking into consideration the draft rules submitted by the Board, shall proceed to make such rules, under its powers under section 296 of the Act, in respect of the tax, as the Government may consider necessary. After the rules have been made, the order of sanction and a copy of the rules are sent to the Board and thereupon the Board by special resolution directs the imposition of the tax with effect from a date which it specifies in the resolution. This is stated in section 135 which may be reproduced here fully "135. Imposition of tax, (1) A copy of the resolution passed under Section 134 shall be submitted to the State Government, 956 if the tax has been sanctioned by the State Government, and to the Prescribed Authority, in any other case. (2) Upon receipt of the copy of the resolution the State Government, or Prescribed Authority, as the case may be, shall notify in the official Gazette, the imposition of the tax from the appointed date, and the imposi tion of a tax shall in all cases be subject to the condition that it has been so notified. (3) A notification of the imposition of a tax under sub section (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act. " The appellant Board passed a special resolution in terms of section 131 (1) of the Act. The publication of the resolution was made by affixing a copy of the resolution on the notice board as provided by a notification dated July 5, 1916 and by beat of drum in the town of Hapur. The resolution was, however, not published in a local paper published in Hindi as required by section 94(3) of the Act. It is admitted that two Hindi weeklies entitled "Janmat" and "Bharatvarsh" and one Hindi daily entitled "Vyapar" were published at that time at Hapur. The appellant Board did not publish the notice etc. in these journals because, in its opinion, none of these papers was a suitable local paper having wide circulation in the town at the time. Notification of the 5th July, 1916 provides that, where, in a Municilpality, there is no local paper, a copy of every resolution passed by a Board at a meeting shall, within ten days from the date of the meeting, be pasted up and for thirty days be kept pasted up on a notice board to be exhibited for public information at the building in which the meetings of the Board are ordinarily held. Two objections against the tax found favour with the High Court. The first objection arose from the non observance of section 94(3) which, as already noticed, requires that the publication of the proposal etc. should be in a local newspaper published in Hindi. The High Court held that there was no need to take recourse to the notification of the 5th of July 1916, because the first part of section 94(3) could be complied with. The next objection against the tax was that even if the special Resolution under section 131 was properly published, the rules which ought to accompany the Resolution were not exhibited. The appellant Board claimed that the court was precluded from making an enquiry by reason of section 135(3) which made the notification conclusive evidence that 957 the tax was imposed in accordance with the provisions of the Municipalities Act. The respondents met this by challenging the legality of the sub section. They pleaded that it was discriminatory inasmuch as it did not allow one set of litigants to prove their allegations as against the general body of litigants and further that there was a conferral of judicial functions on the legislature which was contrary to the separation of powers under the Constitution. The High Court accepted these contentions also. There can be no doubt that the language of section 135(3) is as wide as it is peremptory. Read literally it can lead to the conclusion that even an illegal tax cannot be questioned. Prima facie, it appears that even if a Municipal Board goes outside the categories of taxes mentioned in section 128 and if the Government is persuaded to notify the imposition, all will be well. 'This cannot be the intent and hence not the meaning. We must, therefore, see if the words are susceptible of another construction obvitating such a patently absurd result. There is at the very start the fundamental fact that the power to tax in a State can only be exercised by the State Legislature, the extent of the power being fixed by the Constitution. The taxes which the State Legislatures are allowed to raise are enumerated in the Seventh Schedule to the Constitution. The State Legislature can impose all these taxes itself but it is usual to authorise the levy of some of them by local authorities for their own purpose. Taxes so raised by it local authority are not imposed by it as a legislature but as a delegate of the legislature. What is done is binding by the authority of the legislature and the tax is valid only if it is one of the, taxes the delegate can raise and the delegate imposes it in accordance with the conditions laid down by the legislature. It is thus that we find an elaborate procedure prescribed by all the Municipal Acts. In the U.P. Municipalities Act also, as we have seen, a Board must first pass a special Resolution framing a proposal and the draft rules, invite objections, consider them, and then get them approved by Government. After this approval there must be a final special resolution imposing the tax from a particular date and the Government then notifies the imposition of the tax. It is the duty of Government to see that the various steps laid down for the imposition of the tax are followed. Before it notifies the resolution Government satisfies itself about the requirements. The notification is made conclusive proof that the tax is imposed in accordance with the provi 958 sions of the Act. The question arises : Is this rule of conclusive evidence such as to shut out all enquiry by courts ? We have no hesitation in answering the question in the negative. There are certain matters which, of course, cannot be established conclusively by a notification under section 135(3). For example, no notification can issue unless there is a special resolution. The special resolution is the sine qua non for the notification. 'The State Government cannot impose, a tax all by itself by notifying the imposition of the tax, without a resolution by the Board. Again, the notification cannot authorise the imposition of a tax not included in section 128 of the Municipalities Act. Neither a Municipal Board nor a State Government can exercise such a power. A tax can only be said to be imposed in accordance with the provisions of the Municipalities Act, if it is contemplated by the Act. There is a difference between the tax and the imposition of the tax. The former is the levy itself and the latter the method by which the levy is imposed and collected. What the sub section does is Lo put beyond question the procedure by which the tax is imposed, that is to say, the various steps taken to impose it. A tax not authorised can never be within the protection afforded to the procedure for imposing taxes. Such a tax may be challenged, not with reference to the manner of the imposition but as an illegal impost. It would thus appear that it the very start the selection of the tax must be with reference to the delegated powers. The Municipal Board of the State Government cannot select a tax which the legislature has not mentioned in section 128 of the Municipalities Act. As the State Government cannot itself impose the tax it must have before it, the special resolution of the Board before notifying the imposition. Between the special resolution selecting a tax for imposition and the special resolution imposing it sundry procedure is gone through and section 135(3) say , that the notification by Government is conclusive proof that the pro cedure was correctly followed. It is argued that sections 131 to 134 use mandatory language and it is the.intention of the Legislature to secure obedience to its wishes and therefore it is for the courts to say whether those provisions were followed by the Municipal Board and the State Government. There can be no doubt that some of the provisions are mandatory. But all provisions are not of the same character. In Raza Bunland Sugar Co. Ltd. vs The Municipal Board, Rampur(1) sections 131 to 134 were considered in the light of the tests (1) ; 959 usually applied to determine whether a provision of law is mandatory directory. It was there pointed out that all the sections in, spite of the language used in them were not mandatory. The majority opinion considered that the first part of section 131(3) requiring publication of proposals was mandatory and thesecond part which required that publication should be in the manner required by section 94(3) was only directory. In one of the minority opinions no such distinction was made but section 94(3) was held to be directory. In the other minority opinion distinction was made between provisions for the protection of tax payers which were stated to be mandatory and provisions for promoting despatch, publicity and efficiency were stated to be directory requiring substantial but not literal compliance. In that case the notice imposing water tax in Rampur was published in Hindi but in a news paper published in Urdu. The majority treating the latter part of section 131 (3) as directory held that there was Substantial compliance. The minority treating section 131(3) to be mandatory upheld the tax treating section 94(3) as directory. One of the minority views relied upon section 135(3) as shutting out enquiry. In Berar Swadeshi Vanaspati vs Municipal Committee Sheogaon & Anr.(1) the Municipality passed a resolution tinder section 67(1) of the C. P. & Berar Municipalities Act, 1922. Sub sections (1) to (7) incorporated provisions similar to sections 131 135 of the U. P. Municipalities Act. An attempt to question the tax on the ground that the procedure prescribed by section 67 was not followed was repelled. It was observed: "This notification therefore 'clearly is one which directs imposition of octroi and falls within sub section (7) of section 67 and having been notified in the Gazette it is conclusive evidence of the tax having been imposed in accordance with the provisions of the Act and it can not be challenged on the ground that all the necessary steps had not been taken. " The defect in the imposition of the tax here being of the same character as in the two cases of this Court above cited, the imposition would have the protection of section 135(3) and the tax must be deemed to be imposed according to the procedure laid down in the Act. As observed already, some of the provisions controlling the imposition of a tax must be fully complied with because they are vital and therefore mandatory, and the others may be complied (1) 960 with substantially but not literally, because, they are directory. In either case the agency for seeing to this compliance is the State Government. It is hardly to be expected that the State Government would not do its duty or that it would allow breaches of the provision to go unrectified. One, can hardly imagine that ,an omission to comply with the fundamental provisions would ever be condoned. The law reports show that even before the ,addition of the provision making the notification conclusive ,evidence of the proper imposition of the tax complaints brought before the courts concerned provisions dealing with publicity or requiring ministerial fulfillment. Even in the two earlier cases 'which reached this Court and also the present case, the complaint is of a breach of one of the provisions which can only be regarded as directory. In cases of minor departures from the letter of the law especially in matters not fundamental, it is for the Govern ment to see whether there has been substantial or reasonable compliance. Once Government condones the departure, the decision of Government is rightly made final by making the notification conclusive evidence of the compliance with the requirements of the Act. It is not necessary to investigate whether a complete lack ,of observance of the provisions would 'be afforded the same protection. It is most unlikely that this would ever happen and before we pronounce our opinion we should like to see such a case. It was, however, contended that there has been excessive ,delegation, inasmuch as the State Government has been given the power to condone breaches of the Act and thus to set at naught the Act itself. This is not a right reading of the relevant 'provisions. We have already pointed out that the power to tax is conferred on the State Legislature but is exercised by the local authority under the control of the State Government. The taxes with which we are concerned are local taxes for local needs and for which local inquiries have to be made. They are rightly left to the representatives of the local population which would bear the tax. Such taxes must vary from town to town, from one Board to another, and from one commodity to another. It is impossible for the Legislature to pass statutes for the imposition of such taxes in local areas. The power must be delegated. Regard being had to the democratic set up of the municipalities which need the proceeds of the taxes for their own administration, it is proper to leave to these municipalities the power to impose and collect these taxes. The taxes are, however, predetermined and a procedure for consulting the wishes of the people is devised. But the 961 matter is not left entirely in the hands of the Municipal Boards. As the State Legislature cannot supervise the due observance of its laws by the Municipal Boards, power is given to the State Government to check their actions. The imposition of the tax is left to the Municipal Boards but the duty to see that the provisions for publicity, and obtaining the views of the persons to be taxed are fully complied with, is laid upon the State Government. The proceedings for the imposition of the tax, however, must come to a conclusion at some stage after which it can be said that the tax has been imposed. That stage is reached, not when the special resolution of the Municipal Board is passed, but when the notification by Government is issued. Now it is impossible to leave the matter open so that complaints about the imposition of the tax or the breach of this rule or that may continue to be raised. The door to objections must at some stage be shut and the Legislature considers that, if the State Government approves of the special resolution, all enquiry must cease. This is not a case of excessive delegation unless one starts with the notion that the State Government may collude with the Municipal Board to disregard deliberately the provisions for the imposition of the tax. There is no warrant for such a supposition. The provision making the notification conclusive evidence of the proper imposition of tax is conceived in the best interest of compliance of the provi sions by the Boards and not to facilitate their breach. It cannot. therefore, be said that there is excessive delegation. The matter may be looked at from another point of view Excessive delegation is most often found when the Legislature does not perform all the essential legislative functions and leaves them to some other agency. The Legislature here performs all essential functions in the imposition of the tax. The selection of tax for imposition in a Municipal area is by the legislative will expressed in section 128. Neither the Municipal Board, nor the Government can go outside the List of taxes therein included. The procedure for the imposition of the tax is also laid down by the Legislature for the Municipal Board to follow and the State Government is there to ensure due observance of that procedure. We have already shown above that it would be impossible for the Legislature to legislate for the numerous Municipal Boards and local authoriteis with a view to raising taxes for them. The provisions, such. as they are, are the best means of achieving consultation of the local population and close scrutiny of the actions of their representatiaves in imposing the tax. The notification which issues is given finality by the voice of the Legislature. It would, there CI/65 18 962 fore, appear that in the selection of the ox and its imposition the Legislature plays a decisive part and also lays down the method by which the tax is to be imposed. The Legislature does not make local enquiries, hear objections and decide them functions which are most inappropriate for the Legislature to perform. This task is delegated to the appellant Board which is the representative body of the local population on whom the tax is levied. In other words, all the essential functions of Legislation are performed by the State Legislature and only the minor functions necessary for the imposition of the tax and the enquiries which must be made to ascertain local opinion are left to the Municipal Boards. An additional check is available as Government can veto the actions of a Board if it does not carry out the mandate of the Legislature. In our judgment, there was no excessive delegation or a conferral of Legislative functions on the appellant Board or the State Government. It remains to consider two other arguments in the case. The first is the question of discrimination which is said to arise from the proviso which makes the notification conclusive in respect of the procedure by which the tax is imposed. There are numerous statutes, including the Evidence Act, in which a fact is taken to be conclusively proved from the existence of some, other fact. The law is full of fictions and irrebuttable presumptions which also involve proof of facts. It has never been suggested before that when the Legislature says that enquiry into the truth or otherwise of a fact shall stop at a given stage and the fact taken to be conclusively proved, a question of discrimination arises. The tax payers in the Municipality are allowed under the Municipalities Act to object to the proposal for the tax and the rules and to have their objections considered. They cannot, of course, be allowed to keep on agitating and a stage must come when it may be said that the provisions of the Act have been duly observed. That stage is reached after Government has scrutinized the proposal. the rules, the objections and the orders and has approved of the proposal, a special resolution is passed by the Municipal Board and a notification is issued. It cannot be said that sub section (3) of s, 135 which leads to the conclusion that the imposition of the tax is according to the Municipalities Act is discriminatory because it only concludes objections against the procedure followed in the imposition of the tax. The next objection that the impugned sub section involves the exercise of judicial functions not open to the Legislature, is wholly erroneous. The sub section only shuts out further enquiry and 963 makes the notification final. There is no exercise of a judicial function. In our country there is no rigid separation of powers and the legislature often frames a rule such as is incorporated in the third sub section of section 135. The Evidence Act is full of such Provisions. In the United States of America where the separation of powers is extremely rigid in some of the constitutions of the States it may be open to objection that the Legislature in shutting out enquiry into the truth of a fact encroaches upon the judicial power of the State. Such disability has never been found to exist in our country although legislation of this type is only too frequent The objection is, therefore without substance. In the result we are "of opinion that the judgment of the High Court under appeal must be set aside. We accordingly set it aside and order the dismissal of the petition under Art, 226 and 227 of the Constitution from which the present appeal has arisen. In the circumstances of the case there shall be no order as to costs. Wanchoo J. I regret I am unable to agree. This appeal by special leave from the judgment of the Allahabad High Court raises the question of vires of section 135(3) of the U.P. Municipalities Act, No. 2 of 1916, (hereinafter referred to as the Act). the facts in the case are not in dispute and may be briefly stated. The appellant, namely, the Municipal Board Hapur, decided to impose water tax from April 1, 1957. In consequence, steps were taken under sections 131 to 135 of the Act to effectuate that purpose. However, proposals and draft rules were never published as required by section 131(3) of the Act. All that was done was that a notice in the form set forth in Sch. III was pasted on the notice board and there was some beat of drum with respect to the notice. Even so, the draft rules were not appended to the notice which was put up on the notice board and in effect there was more or less no compliance with the provisions relating to ;the publication of proposals and draft rules. Eventually a notification was issued under section 135(2) of the Act by the relevant authority about the imposition of the tax from April 1, 1957. Thereafter collection of tax began. The respondents who are residents of Hapur received notices for payment of tax. Thereupon they filed a writ petition in the High Court, and their main grievance was that the provisions of section 131 relating to publication of proposals and draft rules were not complied with and thus they were de. proved of an opportunity to file objections as provided under section 132 of the Act. They contended that the publication as pro 964 vided in section 131 of the Act was mandatory and as a mandatory provision of the Act was not complied with, the imposition of the tax was invalid. The petition was heard by a learned Single Judge who found, as already indicated that the provisions of section 131(3) relating to publication had not been complied with, consequently, the residents of Hapur had no opportunity of making objections to the proposals and draft rules. Reliance however was placed on behalf of the appellant on section 135(3) of the Act, which is in these terms : "A notification of the imposition of a tax under subsection (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act. " In reply to this, the respondents contended that section 135(3) was ultra vires, and this contention was accepted by the learned Single Judge. He therefore allowed the petition and directed the appellant not to collect water tax from the respondents until such time as the tax was imposed in strict compliance with the provisions of the Act. Then there was an appeal by the appellant to a Division Bench. There also reliance was placed on section 135(3) of the Act. 'Me Division Bench upheld the order of the learned Single Judge, though its approach to section 135(3) was different. It held that section 135(3) was not a provision for validating anything done without complying with the provisions of the Act and it could not protect the invalidity of a tax if it was invalid on account of its being imposed without following the legal procedure. Then there was an application by the appellant for a certificate to appeal to this Court, which was refused by the High Court. The appellant thereupon got special leave and that is how the matter has come up before this Court. The main contention on behalf of the appellant before this court is that section 135(3) which lays down that the notification under section 135(2) would be conclusive proof that the tax had been imposed in accordance with the provisions of the Act bars any enquiry into the various procedural steps taken for the imposition of the tax, and the court where such a question is raised must hold that the tax has been imposed in accordance with the provisions of the Act. Once the court comes to that conclusion it would mean that it must assume that the necessary procedural steps for imposing tax had all been properly complied with and 965 therefore there could not be any invalidity of the tax on the ground that all steps necessary for the valid imposition of the tax had not been taken. It is further submitted that section 135(3) bars enquiry as to the procedural steps necessary for imposing the tax which are contained in sections 131 to 133 of the Act, and it is urged that what a court can enquire is whether the special resolution as required by section 134 has been passed by the municipality or not. On the other hand, learned counsel for the respondents con tends that if section 135(3) is to be given the meaning for which the appellant contends it will be ultra vires because then there will be an abdication of its essential legislative functions by the legislatures with respect to imposition of tax and therefore section 135(3) would be bad on the ground of excessive delegation. It is further urged on behalf of the respondents that section 135(3) read literally not only bars enquiry into procedural steps necessary for the imposition of the tax, which, according to learned counsel, are contained in sections 131 to 135(1) but also bar , enquiry as to whether the tax is in accordance with sections 128 to 130, which are substantive provisions with respect to taxes which can be imposed by municipal boards. Learned counsel for the respondents thus urges that section 135(3) would give blanket power for the imposition of any tax whether it is contained in section 128 or not and would also permit violating the restrictions contained in sections 129 and 130; and if that be so, it would be a case of complete abdication of its essential functions by the legislature with respect to imposition of tax and a gross case of excessive delegation. The question that falls for consideration therefore is about the scope of section 135(3) and whether on a true interpretation of that provision it can be said to amount to a case of excessive delegation and therefore liable to be struck down on that count. Before I come to section 135(3) I may indicate the scheme of municipal taxation contained in sections 128 to 135 of the Act. Section 128 mentions the taxes which a board may impose sub ject to any general rules or special orders of the State Government in this behalf. Section 129 lays down certain restrictions on the imposition of water tax and section 130 lays down certain restrictions on the imposition of certain other taxes. Section 130 A specifies the powers of the State Government to require a board to impose taxes. Then comes section 131 to 135 which are obviously procedural provisions with respect to imposition of any tax mentioned in section 128. That these are procedural provisions is clear from section 136 of the Act which lays down that the 966 procedure for abolishing a tax or for altering a tax in respect of certain matters shall, so far as may be, be the procedure prescribed by sections 131 to 135 for the imposition of a tax. The essentials of the procedure contained in sections 131 to 135 may be briefly summarised thus. When a board desires to impose a tax it has to pass a special resolution framing proposals specifying the tax, the persons or class of persons on whom the tax will be imposed, the amount or rate leviable and any other matter referred to in section 153 which the State Government requires by rules to be specified. The board has also to prepare a draft of the rules which it desires the State Government to make in that behalf. After the proposals and draft rules have been prepared the board is required to publish them along, with a notice in the form set forth in Sch. III: (see section 1 3 1). On the publication of the notice along with the proposals and draft rules any inhabitant of the municipality has the right to submit objections in writing and the board has to take such objections into consideration and pass orders thereon by special resolution. If the board decides to modify its proposals, it shall publish the modified proposals and (if necessary) revised draft rules in the same manner as the original proposals and draft rules were published. If any objections are received to the modified proposals they are again dealt with by the board which has to pass orders thereon by special resolution. When the board has finally settled its Proposals, it has to submit them, along with the objections (if any) to the proper authority, section (132). The proper authority may either refuse to sanction the proposals or return them to the board for further consideration or sanction them without modifications or with such modification not involving, an increase of the amount to be imposed, as it deems fit; (section 133). When the proposals have been sanctioned by the proper authority, the State Government after taking into consideration the draft rules submitted by the board has to make such rules in respect of the tax as for the time being it considers necessary. When the rule. , have been made, the order of sanction and a copy of the rules has to be sent to the board and thereupon the board has by special resolution to direct the imposition of the tax with effect from a date to be specified in the resolution : (section 134). Thereafter a copy of the resolution passed under section 134 is submitted to the proper authority. Upon receipt of the copy of the resolution the proper authority has to notify in the official gazette the imposition of the tax from the appointed day and the imposition of a tax shall in all cases be subject to the condition that it has been so notified. 967 It will be seen from the above procedural provisions that the legislature has taken great care to see that the tax is impose, after the inhabitants of a municipality have had a chance to make representations in that behalf and after the tax has been approved at all stages including the disposal of objections by means of special resolutions, which require a special quorum for the meeting in which they are passed. Further the legislature has taken care to provide that the disposal of objections by a board even by special resolution is not sufficient and it has required that the objections shall be sent to the proper authority, presumably for its consideration before it sanctions the tax. These provisions to my mind indicate the safeguards the legislature intended in a case of this kind where the legislature itself has not indicated the rate of tax but has merely indicated the heads of taxation and the fixation of rate of tax and all incidental matters have been delegated to the board subject to the supervision of the State Government. It is after all this elaborate procedure has been gone through that a tax can be validly imposed by the delegate, namely the board. This brings us to section 135(3) which has already been set out. The first question that arises is the interpretation of this provision. As I have already indicated two different submissions have been made in this connection on behalf of the parties. The appellant submits that this section only bars enquiry by the court into the procedural provisions contained in section 131 to section 133. On the other hand, the respondents contend that this provision bars enquiry into all matters contained in section 128 to section 135(1). If the words of this provision were to be literally interpreted they lay down that the notification under section 135(3) shall be conclusive proof that the tax has been imposed in accordance with the provisions of the Act. 'Me last words are very wide and it is contended on behalf of the respondents that they would include all the provisions of the Act and once a notification is issued under section 135(2) the court is barred from inquiring whether the tax is against any of the provisions of the Act. I feel however that even though the words may be capable of such a wide interpretation, as is being, put upon them on behalf of the respondents. it would not be right to read them as if they provide that a notification under section 135(2) bars enquiry even into the question whether the tax is one which could be imposed by the board at all under section 128. It would to my mind be proper to read the section in a restricted sense and to hold that when it speaks of tax being imposed "in accordance with the provisions of this Act" it refers only to 'the procedural provisions relating to the 968 imposition of tax by the board. The legislature by these Words could not have intended that the board could impose any tax which was even not within the legislative competence of the State legislature and enquiry into that aspect would also be barred. Therefore I must reject the extreme argument on behalf of the respondents that these words mean that the court is barred from enquiring even whether the tax imposed is such as can be properly imposed by a board under section 128 of the Act. I must read down these words only to mean that they bar an enquiry as to compliance with the procedural provisions of the Act with respect to the imposition of a tax. This brings me to the next question namely whether the bar created by this provision is only with respect to section 131 to section 133 as urged on behalf of the appellant or goes further. I have already indicated that the procedural provisions for the imposition of a tax by the board are contained in sections 131 to 135(1). It is after these procedural provisions are compeed with that a notification under section 135(2) is issued. I can understand section 135(3) being restricted in its application to procedural provisions only with respect to the imposition of a tax; but I cannot understand how that provision can be read down further so that it bars enquiry only into some procedural provisions i.e. from section 131 to section 133, and not into the other procedural provisions i.e. section 134 and section 135(1). I can see no way of reading section 135(3) in the manner suggested on behalf of the appellant. 1st therefore hold that section 135(3) bars enquiry by courts into all procedural provisions relating to imposition of taxes and therefore it bars enquiry into any matter covered by section 131 to section 135(1) of the Act. This brings me to another question namely, what is the nature of the provision contained in section 135(3) of the Act. Is it merely a rule of evidence as urged on behalf of the appellant or is it more than that and is a substantive provision in itself ? This Court had occasion to consider the question whether a rule of irrebuttable presumption was a rule of evidence or a substantive provision in Ishar Ahmad Khan vs Union of India(1) and observed that "the proper approach to adopt would be to consider whether fact A from the proof of which a presumption is required to be drawn about the existence of fact B is inherently relevant in the matter of proving fact B and has inherently any probative or persuasive value in that behalf or not. If fact A is inherently relevant in proving the existence of fact B and to any rational (1) [1962] Supp. 3 S.C.R. 235. 969 mind it would bear a probative or persuasive value in the matter of proving the existence of fact B, then a rule prescribing either a rebuttable presumption or an irrebuttable presumption in that behalf would be a rule of evidence. On the other hand, if fact A is inherently not relevant in proving the existence of fact B or has no probative value in that behalf and yet a rule is made prescribing for a rebuttable or an irrebuttable presumption in that connection, that rule would be a rule of substantive law and not a rule of evidence. " It is on this principle that I must consider whether section 135(3) is merely a rule of evidence or a substantive provision. To my mind it cannot be said from the mere fact that a notification has been published under section 135(2) that that fact is inherently relevant in showing that all the procedural provisions have been complied with; nor can it be said that that fact has inherent probative or persuasive value. There is in my opinion no inherent connection between the publication of a notification under section 135(2) and the compliance with all the procedural provisions (namely, section 131 to section 135(1) ) of the Act. It will all depend on whether the proper authority has been vigilant or not in seeing that all the provisions contained from section 131 to section 135(1) have been complied with. I would therefore hold that section 135(3) is not a rule of evidence; it is a substantive provision which lays down in effect that once a notification under 135(2) is issued it will be conclusively presumed that the tax is in accordance with all the procedural provisions with respect to the imposition thereof In other words, the effect of the subs tantive provision contained in section 135(3) really comes to this. namely, that all the provisions from section 1 3 1 to section 1 3 5 (1 ) are wiped out and the notification issued under section 135(2) becomes the sole basis of the imposition of tax. It has been said that there is no reason to suppose that the proper authority will not see that the provisions of section 131 to section 135(1) are complied with and that there is no reason to presume that the provision of section 135(3) will be abused. So far as the first aspect is concerned it is obvious in this very case that the proper authority has not seen that the provisions of section 131 to section 133 have been complied with. As to the second I do not say that the proper authority will abuse the provisions of section 135(3); but that does not in my opinion make any difference to the devastating effect of that provision on compliance with the procedural provisions contained in section 131 to section 135(1) of the Act in the matter of imposition of tax. The effect of section 135(3) which in my opinion is a substantive provision is that the procedural provisions are given a complete go by in the matter of imposition of tax and as soon as a notifi 970 cation under section 135(2) is shown to the court, the court is helpless in the matter, even though none of the provisions of section 131 to section 135(1) may have been complied with. This in my opinion is the effect of section 135 (3), as it stands and there is no question of presuming that the proper authority would abuse that provision. Irrespective of the abuse or otherwise of that provision. , the effect thereof in my opinion is to wipe out all the procedural safeguards provided in section 131 to section 135(1) of the Act relating to imposition of tax and to make the tax a completely valid imposition so long as there is a notification under section 135(2). On this interpretation of section 135(3) a serious question arises whether it is a provision which can be said to be intravires. As I have already indicated, this is a case of delegation of power to impose tax in so far as its rate and incidence is concerned. Generally speaking, I am of opinion that it is the duty of a legislature when imposing a tax to specify the rate at which the tax is imposed, for the rate of tax, again speaking generally, is one of the essentials of the taxing power given to the legislature. But I cannot fail to recognise that there may be situations where the legislature may delegate to a subordinate authority the power to fix the rate under proper safeguards. It is not necessary to specify all the situations where this can be done. But there can be no doubt that in the matter of local taxation like taxation by municipal boards, district boards and bodies of that character there is pre eminently a case for delegating the fixation of the rate of tax to the local body, be it a municipal board or a district board or some other board of that kind. The reason for this is that problems of different municipalities or districts may be different and one municipality may require one kind of tax at a particular rate at a particular time while another municipality may need another kind of tax at another rate at some other time. Therefore, the legislature can in the case of taxation by local bodies delegate even the authority to fix the rate to the local body provided it has taken care to specify the safeguards in the form of procedural provisions or such other forms as it considers necessary in the matter of fixing the rate. So far as I know practically all Municipal Acts provide safeguards of the nature contained in sections 131 to 135(1) of the Act or some other provisions which are equally effective in the matter of controlling the fixation of rate of tax by a delegate of the legislature. In such a case where delegation of fixing the rate has been made by the legislature to a subordinate body with proper safeguards, it can ' not be said that the legislature has abdicated its essential functions in the matter of taxing legislation by delegating the rate 971 of taxation to be determined under proper safeguards by the delegate. Nor can such delegation be struck down as a case of excessive delegation which means that the legislature has abdicated its essential legislative functions in the matter of the legislation concerned. But there is ample authority for the view that where the legislature has abdicated its essential legislative functions and has made a delegation which may be called excessive such excessive delegation may be struck down. I may in this. connection refer to two decisions of this Court, namely, In re The Delhi Laws Act, 1912(1) and Rajnarain Singh vs The Chairman, Patna Administration Committee(2). It has been held in these cases that an essential legislative function cannot be delegated ' by the legislature. Exactly what constitutes essential function cannot be enunciated in general terms. But the essential legislative function consists in the determination of the legislative policy and its formulation as a binding rule of conduct. It cannot be said that an unlimited right of delegation is inherent in the legislative power itself. This is not warranted by the provisions of the Constitution and the legitimacy of delegation depends entirely upon its being used as an ancillary measure which the legislature considers to be necessary for the purpose of exercising its legislative powers effectively and completely. The legislature must retain in its own hands the essential legislative functions which consist in declaring the legislative policy and laying down the standard which is to be enacted into a rule of law and what can be delegated is the task of subordinate legislation which by its very nature is ancillary to the statute which delegates the power to make it. Provided the legislative policy is enunciated with sufficient clearness or a standard is laid down, the courts should not interfere with the discretion that undoubtedly rests with the legislature itself in determining the extent of delegation necessary in a particular case. In these two cases the question arose whether certain laws could be applied to certain areas with such modification as the executive authority deemed fit to make. It was held that where three executive authority was permitted, at its discretion, to apply without modification (save incidental change, , such as name and place), the whole of any law already in existence in any part of India, that would be good. Further the executive authority could even be authorised to select future laws in a similar way and to apply them to certain areas. But where the authorisation was to repeal laws already in force in the area and either substitute other laws with or without modification, this was held (1) ; (2) ; 972 to be excessive delegation and ultra vires. Further where the modification in a law to be applied did not affect any essential change in the law and alter its policy it could be modified to that extent and applied by the executive authority under delegated authority. But where a modification affects a radical change in the policy of the law to be applied such an authority could not be delegated and would be ultra vires. it is on the basis of these principles that I have to see whether section 135(3) can be upheld. There is no doubt that the legislature delegated its power of imposing taxes, including the power to fix the rate, to the municipal board by section 128 with respect to taxes specified therein. I have already said that generally speaking the fixation of rate of tax is one of the essential legislative functions but there may be situations where it may not be considered to be an essential legislative function and may be delegated by the legislature to subordinate authorities with proper safeguards. I have also said that in the field of local taxation relating to municipal boards and district boards and similar other bodies there are reasons for delegating fixation of the rate to such bodies subject to proper safeguards. This is exactly what has been done under the Act subject to the safeguards contained in sections 131 to 135(1). if those safeguards are followed, the delegation in my opinion would be a proper delegation and could not be challenged as ultra vires on the ground of excessive delegation. But if the legislature after laying down with great care safeguards as to the imposition of tax including its rate maker, a blanket provision like section 135 (3), which at one stroke does away with all those safeguards and this is what in my opinion section 135(3) has done in the present case the position that results after such provision is that there is delegation of even the essential function of fixing the rate to the subordinate authority with out any safeguard. Such a delegation would in my opinion be excessive delegation and would be ultra vires. The question then is whether in the present case I should save the delegation contained in section 128 read with the safeguards provided in section 131 to section 135(1) for the imposition of various taxes mentioned therein or uphold section 135(3) which in one sweep does away with all the safeguards. In my opinion section 135(3) is severable and the legislature would have provided for various safeguards contained in section 131 to section 135(1) when it delegated the power to impose a tax including the fixation of rate to municipal boards. It would therefore in my opinion be right to hold that sections 128 to 135(2) indicate proper delegation of the authority 973 of the legislature to impose taxes specified in section 128 and that it is sub section (3) of section 135 which should be struck down because it is the only provision which makes the delegation excessive. I would therefore hold that section 135(3) inasmuch as it makes the delegation contained in sections 128 to 135(2) excessive must be severed from the rest of the sections which are otherwise a proper exercise of delegation of legislative authority and should be struck down on the ground of excessive delegation. I would therefore dismiss the appeal with costs and uphold the order of the High Court holding that the tax imposed by the appellant had not been validly imposed, though on a different ground. ORDER BY COURT In accordance with the opinion of the majority the appeal is allowed. No order as to costs.

IN-Abs

The appellant Board passed a special resolution on September 28, 1956, imposing water tax in Hapur and a notification by the Uttar Pradesh Government was published in the Uttar Pradesh Gazette under section 135(2) of the U.P. Municipalities Act (2 of 1916) notifying the resolution. Fifteen house owners of Hapur who received notices from the appellant Board for the payment of the tax petitioned to the High Court under article 226 ,of the Constitution and asked for a writ or order preventing the appellant Board from realising the tax. The main objections were (a) that the resolution of the appellant Board framing the proposal was not pub lished in a local paper of Hapur published in Hindi and (b) that the rules framed for the imposition of the tax did not accompany the resolution which was affixed on the notice board at the office of the appellant Board in purported compliance with the requirements for publication. The imposition was also challenged on the ground that articles 14 and 19 of the Constitution were violated. A single judge of the High Court held that the tax was illegal inasmuch as the mandatory requirements of the Municipalities Act were not complied with by the appellant Board while imposing the tax and that section 135(3) of the Act (which cures all defects in the imposition of the tax by making the notification of Government conclusive evidence of the legality of the imposition) was ultra vires article 14 of the Constitution because it created a bar against proof and left no remedy to the tax payers thereby making a discrimination between them and other litigants. He further held that the sub section by making Government the sole judge of compliance with the Act conferred judicial power on Government contrary to the intendment of the Constitution. The appellant Board appealed under the Letters Patent. The Divisional Bench upheld the order of the single judge. The case was however certified as fit for appeal under article 133 and the Board appealed to this Court. The contentions raised in appeal were: (i) s.135(3) shuts out all ,enquiry into the procedure by which a tax had been imposed and therefore suffered from excessive delegation of legislative function. (ii) The tax had not been validly imposed a there had been non observance of mandatory provisions; (iii) section 135(3) was discriminatory; and (iv) the sub section was also bad because it conferred judicial functions on the State Government. HELD : Per Gajendragadkar, C.J., Hidayatullah, Shah and Sikri. JJ. (i) The rule of conclusive evidence in s.135(3) does not shut out all enquiry by courts. There are certain matters which cannot be established by a notification under s.135(3). For example no notification can issue unless there is a special resolution under section 134. The special resolu 951 tion is a sine qua non for the notification. Again the notification cannot authorise the imposition of a tax not included in section 128 of the Municipalities Act. Neither the Municipal Board nor the State Government can exercise such power. What the section does is to put beyond question the procedure by which the tax is imposed, that is to say the various steps taken to impose it. A tax not authorised, can never be within the protection afforded to the procedure for imposing taxes. Such a tax may be challenged, not with reference to the manner of imposition but as an illegal impost. [958 A D] (ii) There can be no doubt that some of the provisions of sections 131 to 134 of the Act are mandatory. But all of them are not of the same character. In the present case, as in Raza Buland Sugar Co. Ltd. and in Berar Swadeshi Vanaspati, the provisions not observed were of a directory character and therefore the imposition had the protection of section 135(3). [958 H] Raza Buland Sugar Co. Ltd. vs Municipal Board, Rampur. ; and Berar Swadeshi Vanaspati vs Municipal Committe, Committee Sheogaon & Anr. , relied on. (iii) Mandatory provisions must be fully complied with, and directory provisions should be substantially complied with. In either case the agency for seeing to this compliance is the State Government. It is hardly to be expected that the State Government would not do its duty or that it would allow breaches of the provisions to go unrectified. In cases of minor departure from the letter of the law especially in matters not fundamental, it is for the Government to see whether there has been substantial or reasonable compliance. Once Government condones the departure, the decision of the Government is rightly made final by making the notification conclusive evidence of the compliance with the requirements of the Act. [959 H 960 D] (iv) The power to tax belongs to the State Legislature but is exercised by the local authority under the control of the State Government. It is impossible for the State Legislature to impose taxes in local areas because local conditions and needs must very. The power must be delegated. The taxes however are predetermined and a procedure for consulting the wishes of the people is devised. But the matter is not left entirely in the hands of the Municipal Boards. As the State Legislature cannot supervise the due observance of its laws by the municipal Boards power is given to the State Government to check their actions. The proceedings for the imposition of the tax must come to a conclusion at some stage after which it can be said that the tax has been imposed. That stage is reached, not when the special resolution of the Municipal Board is passed but when the notification by Government is issued. After the notification all enquiry must cease. This is not a case of excessive delegation unless one starts with the notion that the State Government may collude with the Municipal Board to disregard deliberately the provisions for The imposition of the tax. There is no warrant for such a supposition. The provision making the notification conclusive evidence of the proper imposition of the tax is conceived in the best interest of compliance of the provisions by the Board and not to facilitate their breach. [960 F 961 E] Excessive delegation is most often found when the legislature does not perform all the essential legislative functions and leaves them to some other agency. The Legislature here performs all essential functions in the imposition of the tax. The selection of the tax for imposition in a municipal area is by the legislative will expressed in section 128. Neither the Municipal Board, nor the Government can go outside the list of taxes therein included. The procedure for the imposition of the tax is also, laid down 952 by the Legislature for the Municipal Board to follow and the State Government is there to ensure due observance of that procedure. in view of all this there was no excessive delegation or conferral or legislative functions on the appellant Board or the State Government. [961 F 962 C] (v) There are numerous statutes including the Evidence Act, in which a fact is taken to be conclusively proved from the existence of some other fact. The law is full of fictions and irrebuttable presumptions which also involve proof of facts. The tax payers in the Municipality are allowed to object to the proposal for the tax and the rules and to, have their objections considered. They cannot be allowed to keep on agitating. Section 135(3) which only concludes objections against the procedure followed in the imposition of the tax cannot be said to be discriminatory and viola tive of article 14. [962 D H] (vi) The objection that the impugned sub section involves the exercise of judicial functions not open to the legislature is wholly erroneous. The subsection only shuts out further enquiry and makes the notification final. [962 H] Per Wanchoo, J. (dissenting) (i) Section 135(3) bars enquiry by courts into all procedural provisions relating to imposition of taxes and therefore it bars enquiry into any matter covered by section 131 to section 135(1) of the Act. It cannot be read down as barring enquiry only into some procedural provisions i.e. from section 131 to section 133 and not into the other procedural provisions i.e. section 134 and section 135(1). [968 D] Section 135(3) is not a rule of evidence; it is a substantive provision which lays down in effect that once a notification under section 135(2) is issued it will be conclusively presumed that the tax is in accordance with all the procedural provisions with respect to the imposition thereof. [969 E] Ishar Ahmad Khan vs Union of India, [1962] Supp. 3 S.C.R. 235, referred to. The effect of section 135(3) is that the procedural provisions are given the go by in the matter of imposition of tax and as soon as a notification under section 135(2) is shown to the court, the court is helpless, in the matter even though none of the provisions of section 131 to section 135(1) may have been complied with. [969 H] (ii) In the field of local taxation relating to municipal boards and district boards and similar other bodies there are reasons for delegating :fixation of rate to such bodies subject to proper safeguards. This is exactly what has been done under the Act subject to the safeguards contained in sections 131 to section 135(1). If those safeguards are followed the delegation would be proper delegation and could not be challenged as ultra vires on the ground of excessive delegation. But if the legislature after laying down with great care safeguards as to the imposition of tax including its rate makes a blanket provision like section 135(3), which at one stroke does away with all those safeguards and this is what section 135(3) has done in the present case the position that results is that there is delegation of even the essential function of fixing the rate to the subordinate authority without any safeguard. Such a delegation would be excessive delegation and would be ultra vires. [972 D F] (iii) Section 135(3) inasmuch as it makes the delegation contained in sections 128 to 135(2) excessive must be severed from the rest of the sections which are otherwise a proper delegation of legislative authority and should be struck down on the ground of excessive delegation. [973 B] 953

Appeal No. 901 of 1963. Appeal by special leave from the judgment and decree dated December 22, 1959, of the Calcutta High Court in Appeal from Appellate Decree No. 1039 of 1954. Niren De, Additional Solicitor General, B. P. Singh and P. K. Chakravarti, for the appellant. D. N. Mukherjee, for respondent Nos. 1 to 4. Sukumar Ghose, for respondent No. 10. The Judgment of the Court was delivered by Wanchoo J. This appeal by special, leave raises a question as to the interpretation of section 37 A of the Bengal Agricultural Debtors Act, No. VII of 1936 (hereinafter referred to as the Act). The respondents brought a suit in the court of the Second Munsif, Burdwan for a declaration that they were entitled to the property in dispute, for confirmation of their possession thereof and for a permanent injunction restraining the appellant from interfering with their possession. In the alternative they prayed for delivery of possession to them of the property in dispute in case it was found that they were not in possession. The case of the respondents was that the property in dispute belonged to one Jatindra Mohan Hajra, who was the father of three of the respondents. He mortgaged the property to Kali Krishna Chandra who was a defendant in the suit. Kali Krishna Chandra obtained a mortgage decree in the Court of the Subordinate Judge Burdwan and in execution of the said decree got the mortgaged property sold, purchased the property in auction sale and thus came into possession thereof in November 1937. This happened before section 37 A was introduced in the Act by the Bengal Agricultural Debtors (Amendment) Act, 1942, (No. 11 of 1942). After the introduction of section 37 A in the Act, the respondents applied thereunder for getting back possession of the property. 931 the meantime it appears that Kali Krishna Chandra sold the property to the present appellant in June 1942. That is how she was made a party to the proceedings under section 37 A of the Act. The respondents succeeded in their application under section 37 A of the Act and obtained possession of the property in suit in November 1947. The respondents case further was that their possession was disturbed by the appellant thereafter and they had to go to the criminal court in that connection. But the criminal case resulted in acquittal and consequently the respondents brought the present suit in order to remove the cloud on their title and to obtain possession in case it was found that they were not in possession. The suit was resisted by the appellant on a number of grounds. In the present appeal, however, learned counsel for the appellant has raised only two rounds before us, namely (i) that the Debt Settlement Board (hereinafter referred to as the Board) had no jurisdiction in the matter as the decree in the mortgage suit was for more than Rs. 5,000, and (ii) that section 37 A of the Act did not apply to a bona fide purchaser for value from the auction purchaser. We shall confine ourselves therefore to these two points only. The Munsif who tried the suit held that section 37 A was available against a bona fide transferee for value also. But the question of jurisdiction of the Board on the ground that the amount involved was more than Rs. 5,000 was not raised before the Munsif and so there is no finding on that aspect of the matter in the Munsif 's judgment. Holding that section 37 A applied to bona fide transferees for value also, the Munsif decreed the suit. Then there was an appeal by the appellant which was decided by the Subordinate Judge. It was in that appeal that it was urged for the first time that the Board had no jurisdiction inasmuch as the amount involved was over Rs. 5,000. That objection was however over ruled by the Subordinate Judge on the ground that the amount involved was only Rs. 4,044/8/ . But the Subordinate Judge seems to have held that a bona fide transferee for value cannot be affected by the provisions of section 37 A. He therefore allowed the appeal and dismissed the suit. Then followed an appeal to the High Court. The High Court considered the two questions, which we have set out above. On the question of jurisdiction the High Court held that the amount of debt involved was only Rs. 4,044/8/ and therefore the Board had jurisdiction. On the question whether bona fide transferees for value were bound, the High Court reversed the 932 view taken by the Subordinate Judge and held that such transferees were also covered by section 37 A. It therefore allowed the appeal and restored the decree of the Munsif but ordered parties to bear their own costs throughout. In the present appeal by special leave, the appellant raises the same two points before us. We shall first consider the question of the jurisdiction of the Board. It is urged in this connection that the very application made by the respondents under section 37 A shows that the amount of decretal dues was Rs. 5,841 and therefore the Board had no jurisdiction. We are of opinion that this point as to jurisdiction should have been raised at the earliest possible stage in the Munsif 's court and as it was not so raised it should not have been permitted to be raised for the first time in the Sub ordinate Judge 's court in appeal. Rule 144, framed under the Act, which relates to jurisdiction of the Board, provides that the maximum amount of the sum total of all debts due from a debtor which can be dealt with under the provisions of Act shall be Rs. 5,000. There is however a proviso to this rule to the effect that with the previous sanction in writing of the Collector, a Board may deal with an application if the sum total of all debts due from the debtors exceeds Rs. 5,000 but does not exceed Rs. 25,000. it is unnecessary for us to decide in the present appeal whether the High Court was right in holding that the debt due was only Rs. 4,044/8/ and not Rs. 5,841, which was shown to be the amount of decretal dues in the application under section 37 A. It is enough to point out that if this point had been raised in the trial court, the respondents would have been able to show that even if the debt was over Rs. 5,000, permission of the Collector as required by the proviso had been taken by the Board before it dealt with the matter. It is not as if the Board has no jurisdiction above Rs. 5,000 at all. Ordinarily the Board has jurisdiction upto Rs. 5,000 but with the sanction of the Collector in writing its jurisdiction can go upto Rs. 25,000. Therefore if any party wishes to urge that the Board had no jurisdiction because the amount of the debt was over Rs. 5,000, it must urge it in the trial court in order to give an opportunity to the other party to show that even if the amount due was over Rs. 5,000 the sanction of the Collector had been obtained by the Board. As the point was not taken in the trial court in this case, we are not prepared to go into the question whether the total debt due in the present case was over Rs. 5,000 or not, for the respondents had no opportunity of showing that even if the debt was over Rs. 5,000 the sanction of the Collector had been obtained. We 933 therefore reject the contention as to jurisdiction on the ground that the point was not taken in the trial court. This brings us to the principal argument urged in this case that section 37 A does not apply to bona fide transferees for value. now the Act was an ameliorative measure for the relief of indebtedness of agricultural debtors and the preamble of the Act shows that it was passed because it was expedient to provide for the relief of indebtedness of agricultural debtors. For that purpose it established Boards and also provided for reduction of the amount due under certain circumstances by sections 18 and 22 thereof. It also made other provisions with respect to recovery of amounts due within a period of 15 to 20 years under sections 19 and 22 by instalments and made consequential provisions where the instalment was not paid. Section 37 A was introduced in the Act in 1942 and provided for certain reliefs to an agricultural debtor where any immovable property of such person had been sold after August 12, 1935 in execution of a decree of a civil court or a certificate under the Bengal Public Demands Recovery Act, 191.3, under certain conditions. It allowed the debtor to apply for relief thereunder to the Board within one year of the coming into force thereof. On receipt of such application, the Board had first to decide whether the application was maintainable and had fulfilled the conditions subject to which such an application could be made. Thereafter the Board had to proceed in accordance with sub sections (4) to (7) and make an award under sub section After the award had been made under sub section (5), we come to s.37 A (8) which may be read in extenso : "The debtor may present a copy of the award made under sub section (5) to the Civil Court or Certificate officer at whose order the property was sold, and such Court or Certificate officer shall thereupon direct that the sale be set aside, that the debtor together with any person who was in possession of the property sold or any part thereof at the time of delivery of possession of such property to the decree holder as an under raiyat of the debtor and who has been ejected therefrom by reason of such sale be restored to possession of the property with effect from the first day of Baisakh next following or the first day of Kartic next following, whichever is earlier, and that any person who is in possession of the property other than a person who was in possession of the property or part thereof as an under raiyat of the debtor at the time of delivery of 934 possession of such property to the decree holder shall be ejected therefrom with effect from that date. " Decree holder is defined in section 37 A(12) as under : "In this section the expression 'decree holder ' includes the certificate holder and any person to whom any interest in the decree or certificate is transferred by assignment in writing or by operation of law. " The contention on behalf of the appellant is that sub section (4) of section 37 A speaks only of the applicant before the Board, the decree holder and the landlord of the applicant in respect of the property sold in the case where the decree holder is not such landlord and therefore a bona fide transferee for value from the auction purchaser cannot be ejected under section 37 A (8) and it is only the decree holder who can be ejected thereunder if he is still in possession of the property. Now if we read the words of section 37 A (8), that provision clearly lays down that any person who is in possession of the property (except an under riyat under certain conditions) shall be ejected therefrom with effect from that date. The words "any person" used in section 37 A(8) are of very wide import and would include even a bona fide transferee for value of the property sold. If the argument for the appellant were to be accepted, the benefit of section 37 A(8) would only be given in a case where the property sold in execution is purchased by the decree holder himself and he remains in possession upto the time the agricultural debtor asks for relief under section 37A(8). We do not think that the legislature could have intended that the relief under section 37 A(8) should be given only in this limited class of cases. In any case if that was the intention, the legislature would not have used the words which we have mentioned above and which clearly imply that any person in possession is liable to be ejected under section 37 A(8). This would also seem to follow from another part of section 37 A(8) which imperatively enjoins on the civil court or the certificate officer to set aside the sale. It follows from this that where a sale is set aside, whoever may have purchased the property in the sale wheather the decree holder himself or somebody else will have to give up possession, for the right of the person who had purchased the property to remain in possession would only exist so long as the sale subsists. Once the sale is set aside, the auctionpurchaser whether he be the decree holder or somebody else cannot remain in possession; and this is enforced by the latter part of section 37 A(8) which lays down that any person in possession would be ejected (except an under riyat tinder certain condi 935 tions).Further on the same reasoning if the auctionpurchaser whether he be the decree holder or somebody else has parted with the property subsequently, that person would be equally liale to ejectment, for his right to remain in possession only flows from the sale which is ordered to be set aside under the first part of section 37 A(8). If the intention had been that a bona fide purchaser for value other than the decree holder auction purchaser would be out of the purview of section 37 A(8), we should have found a specific provision to that effect in that sub section by the addition of a proviso or in some other suitable manner. Further it may be pointed out that the word "decree holder" in sub section (12) has been given an inclusive definition and it cannot therefore be said that when the word "decree holder" is used in s.37 A(8), it is confined only to the decree holder auction pur chaser. There is no doubt that section 37 A(8) is somewhat clumsily drafted but there is equally no doubt that it intends that the sale should be set aside whoever may be the auction purchaser and it also intends that after setting aside the sale the property should be delivered back to the debtor whoever may be in possession thereof at the time of this delivery back (except in the case of an under riyat under certain conditions). We may in this connection refer to sub section (1) (c) of section 37 A, which would show what the intention of the legislature was in spite of the clumsy drafting of section 37 A(8). Clause (c) lays down one of the conditions which has to be satisfied before an application under section 37 A(1) can be made. It reads thus : "(c) if the property sold was in the possession of the decree holder on or after the twentieth day of December 1939 or was alienated by the decree holder before that date in any manner otherwise than by (i) a bona fide gift by a heba whether by registered instrument or not, or (ii) any other bona fide gift by registered instrument, or (iii) a bona fide lease for valuable consideration whether by registered instrument, or not, or (iv) any other bona fide transfer for valuable consideration (excepting a mortgage) by registered instrument. " This provision would suggest that an application under 37 A(1) can be made if the property was in possession of the 936 decree holder on or after December 20, 1939. In this case that condition was fulfilled and therefore the application under section 37 A(1) would lie. Further the latter part of cl. (c) shows that only certain alienations by the decree holder were excepted for the purpose of deciding whether an application under section 37 A(1) could be made. These exceptions require firstly that the alienation by the decree holder should have been made before December 20, 1939. Further even so far as alienations before December 20, 1939 were concerned, exceptions were only of the four kinds mentioned above. These include bona fide transfers for valuable consideration (excepting a mortgage) before December 20, 1939. So an application could be made even where there was an alienation by the decree holder of any kind so long as the alienation was after December 20, 1939. Thus the only exceptions to which section 37 A would not apply would be alienations by the decree holder before December 20, 1939 of the four kinds specified in cl. The present alienation was by the decree holder after December 20, 1939 and therefore the appellant cannot say that she is not covered by section 37 A because she was a bona fide transferee for value. Reading therefore the wide language used in section 37 A(8) with section 37 A (1) (c), it is clear that once the sale is set aside, even alienees from the decree holder would be liable to be ejected and would be covered by the words "any person" used in the latter part of section 37 A(8) unless they were alienees of the four kinds mentioned in section 37 A(1)(c). We are therefore of opinion that the High Court was right in holding that persons like the appellant were covered by section 37 A of the Act. The appeal therefore fails and is hereby dismissed. In the circumstances we order parties to bear their own costs. Appeal dismissed.

IN-Abs

The mortgagee of the property in dispute bad obtained a mortgage decree and in execution purchased it. in 1942, he sold the property to the appellant. After the introduction of section 37 A into the Bengal Agricultural Debtors Act, 1936, by the Amendment Act of 1942, the respondents who were the owners of the property, applied under the section, to the debt Settlement Board, for getting back possession of the property. They succeeded in their application and obtained possession, but their possession was disturbed by the appellant. Therefore, 'the respondents field ,he suit to remove the cloud on their title and to obtain possession in case it was found that they were not in possession. The suit was decreed by the trial court, but the appellate court allowed he appeal. The High Court on further appeal, restored the decree of the trial court. In his appeal to this Court, the appellant contended that, (1) the Board had no jurisdiction in the matter as the decree, in the mortgage suit was for more than Rs. 5,000, and (ii) Section 37 A did not apply to a bona fide purchaser for value from the auction purchaser. HELD : (i) The contention ,is to jurisdiction on the ground of value should be rejected as the point was not taken in the trial court, for, if it had been raised, the respondents would have been able to show that, even if the deal was over Rs. 5,000, the previous sanction of the Collector had been taken by the Board before it dealt with the matter as permitted by the proviso to r. 144 framed under the Act. [932 F] (ii) Reading the wide language used in section 37A.(8) with section 37A,(1)(c), it is clear that once the sale is set aside, even alienees from 'he decreeholder would be liable to be ejected and would be covered by the words "any person" used in the latter part of section 37A(8), unless they were alience, of the four kinds mentioned in section 37A(1) (c). [936 E] When an award in favour of the debtor was made under section 3SA(5) and where a copy of the award was presented to the Civil Court or Certificate officer at those order the property was sold, section 37 A(8) imperatively enjoins on the Civil Court or the Certificate Officer to ,set aside the sale. it follows that where a sale is set aside, whoever may have purchased the property in the sale whether the decree holder him self or somebody else will have to give up possession. for the right of the person who hid purchased the property. to remain In possession, would only exist so long as the sale subsists. On the same reasoning if the auction purchaser, whether he be the decree holder or somebody else, his parted with the property subsequently in favour of any person that person would be equally liable to ejectment, for his right to remain in possession only flows from the sale which is ordered to be set aside. Further, The word 'decree holder" has been given an inclusive definition and so, it cannot be said Sup. C.1.165 16 930 that it is confined only to the decree holder auction purchaser. Also, under section 37 A(1)(c) only four kinds of transfers, including bona fide transfers for valuable consideration (excepting a mortgage) before 20th December 1939, are excepted, and so an application could be made under the section even where there was an alienation of any kind by the decre holder, so long as the alienation was after 20th December 1939. Therefore, there is no doubt that section 37A(8) intends that the sale should be set aside whoever may be auction purchaser, and it also intends that after setting aside the sale the property should be delivered back to the debtor, whoever may be in possession thereof at the time of the delivery back, except in the case of an under riyat under certain conditions. [934 D H; 935 A B, D; 936 A C]

iminal Appeals Nos. 192 of 1961 and 183 of 1962. Appeals from the judgment and orders dated August 11, 1961 of the Calcutta High Court in Criminal Appeals Nos. 360 of 1959 and 345 of 1959 respectively. WITH Criminal Appeals Nos. 41 of 1964 and 42 of 1964. Appeals by special leave from the judgment and orders dated March 25, 1963 of the Bombay High Court in Criminal Appeals Nos. 1640 of 1962 and 1359 of 1962 respectively. Niren De, Additional Solicitor General, D. R. Prem, R. H. Dhebar and B. R. G. K. Achar, for the appellant (in Cr. 192 of 1961 and 183 of 1962). D. R. Prem, B. R. G. K. Achar, Yogeshwar Prasad, for appellant (in Cr. Nos. 123 of 1962 and 41 and 42 of 1964). section C. Mazumdar, for respondent No. 1 (in Cr. A. No. 123 of 1962). P. K. Chatterjee and section P. Varma, for respondent No. 1 (in Cr. A. No., 123 of 1962). B. M. Mistry, P. R, Vakil, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondent (in Cr. A. No. 41 of 1964). B. R. Agarwala and H. K. Puri, for respondent (in Cr. A. No. 42 of 1964). P. R. Vakil, B. M. Mistry, J. B. Dadachanji, for the interveners (in Cr. A. Nos. 41 and 42 of 1964). SUBBA RAO J. delivered a dissenting Opinion. The Judgment of WANCHOO SHAH, SIKRI and PAMASWAMI JJ. was delivered by WANCHOO J. Subba Rao, J. I regret my inability to agree on the construction of section 167 (81) of the , 1 8 7 8. The Acts have been stated by my learned brother, Wanchoo, J., and need not restate them. Clause (81) of section 167 of the reads "If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to 4 evade any prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing, harbouring, keeping or concealing or in any manner dealing with any goods which have been unlawfully removed from a warehouse or which are chargeable with a duty which has not been paid or with respect to the importation or exportation of which 'any prohibition or restriction is for the time being in force as aforesaid";. . . The penalty clause thereof reads : "such person shall on conviction before a Magistrate be liable to imprisonment for any term not exceeding two years or to fine, or to both". This clause introduces a criminal offence. It is triable by a Magistrate. The person con victed is liable to, imprisonment for a term not exceeding two years or to fine or to both. The rule of construction of such a clause creating a criminal offence is well settled. The following passage from the judgment of the Judicial Committee in The Gauntlet(1) may be quoted : "No doubt all penal statutes are to be construed strictly, that is to say, the court must see that the thing charged as an offence is within the plain meaning of the words used, and must not strain the words on any notion that there has been a slip, that there has been a casus omissus that the thing is so clearly within the mischief that it must have been intended to be included, and would have been included if thought of. On the other hand, the person charged has a right to say that the thing charged, although within the words, is not within the spirit of the enactment. But where the thing is brought within the words and within the spirit, there a penal enactment is to be construed, like any other instrument, according to the fair commonsense meaning of the language used, and the court is not to find or make any doubt or ambiguity in the language of a penal statute, where such doubt or ambiguity would clearly not be found or made in the same language in any other instrument." The clause, therefore, must be construed strictly and it is not open to the court to strain the language in order to read a casus omissus. The court cannot fill up a lacuna: that is the province (1) ,191. of the Legislature. The second rule of construction equally well settled is that a court cannot construe a section of a statute with reference to that of another unless the latter is in pari materia with the former. It follows that decisions made on a provision of a different statute in India or elsewhere will be of no relevance unless the two statutes are in pari materia. Any deviation from this rule will destroy the fundamental principle of construction, namely, the duty of a court is to ascertain the expressed intention of the Legislature. I am led to make these general remarks, as an attempt was made by the learned counsel for the appellant to persuade us to interpret the words of the clause in the light of the decisions of the English courts on an analogous provision in an Act intended to prevent smuggling. It is not possible to state that the English and the Indian Acts are in pari materia, though their general purposes are the same and though there is some: resemblance in the terminology used in them. The English decisions, therefore, must be kept aside in construing the relevant provisions of the Indian statute. Now coming to the relevant clause, the following material ' ingredients constitute an offence thereunder : (1) a person must have a knowledge that there is a prohibition or restriction against doing any of the enumerated acts with respect to goods imported or exported contrary to the restriction or prohibition imposed against their import or export; (2) he must have acted with an, intention to evade such a restriction or prohibition; there is no offence unless the said two elements of mens rea, namely, knowledge and intention, are established. It is not enough if a person has only knowledge of such a prohibition or restriction; in addition he shall have the intention to evade such a prohibition or restriction against the import or export of goods, as the case may be. A person who knowingly purchases smuggled goods from an importer cannot have an intention to evade a provision against import, for the prohibited goods have already been imported. A person who receives goods with the knowledge that they are stolen,. goods cannot possibly have an intention to commit theft, for the theft has already been committed, though he may have the intention to receive the stolen goods. Knowledge of an offence cannot be equated with an intention to commit the offence. Such a construction effaces the distinction between the two distinct elements of mens rea, knowledge and intention, laid down in the clause. The only possible way out of the inevitable effect of the plain words used in the said clause is to give a meaning to the expres 6 sion "import" which that word cannot bear. To accept the argument of the learned counsel for the appellant is to hold that the process of import continues through innumerable transactions between different persons without reference to time or place and whether the goods existed or ceased to exist. Ordinarily the process of import commences the moment the goods cross the customs barrier. That is the meaning given to that word by this Court in J. V. Gokal & Co. vs Assistant Collector or Sales Tax(1). But the said clause gives that expression a wider meaning. The enumerated dealings with the goods prohibited or restricted covered a field beyond the point of import normally understood by that expression. But all the said dealings have an intimate nexus with the import of goods under the Act. Goods may be imported through the machinery provided under the Act; yet, a person may evade the restrictions by fraud or otherwise. Goods may also be illegally imported into India outside the machinery so provided. This is done stealthily at different points of the vast sea line of our country. But in either case different persons may take part in carrying, removing, depositing, harbouring, keeping or concealing or in any other manner dealing with any goods so imported. They are the necessary acts to complete the process of import. Such acts may be done by persons between whom there was a prearranged plan before the goods were brought into India. Different persons may also take part in such dealings with the requisite knowledge or intention for the purpose of completing the import vis a vis the importer. Under the said clause, therefore, the process of import does not end immediately the prohibited goods are brought into India, but continues till the goods :are delivered to the importer, physically or constructively. The importer who smuggles the goods is certainly guilty under the clause, because he imports them in derogation of the prohibition or restriction. Any person who deals with the goods in the context of the import as explained above in any one of the connected ways with the requisite knowledge and intention would equally be guilty of the offence. But the subsequent transactions in regard to the said goods are outside the process of the enlarged definition of the expression, "import". It would be incongruous to hold that a purchaser from the importer or a purchaser from the said purchaser, and so on, has an intention to evade the prohibition or restriction, though he may have the intention to receive the smuggled goods. How does such a purchaser evade the prohi bition against import which has already been affected ? The contrary construction will lead to the anomaly of a purchaser, (1) ; , 857, 858. 7 even after 20 years of the import, being attributed the intention to evade the prohibition against import. Suppose before the purchase of the goods by a stranger the prohibition was lifted. In such a situation, does the purchaser commit an offence ? If the contention is sound, he does. This illustrates that the crux ' of the offence is the import of goods with the requisite intent contrary to the prohibition. For the said reasons the intention to contravene the prohibition cannot be imputed to subsequent dealers in the said goods after the importer parts with them. It is said that if the construction suggested by the learned counsel for the appellant be not accepted, many a person who purchases smuggled goods will escape punishment. A fair reading of the Act discloses that the Act makes a distinction between a customs offence and a criminal offence. The smuggled goods in the hands of whomsoever they are found can be confiscated and, therefore, the State can always trace the smuggled goods to their ultimate destination. The smuggler and the persons concerned in the smuggling are guilty of both customs and criminal offences. The Legislature, either intentionally or otherwise, has not made the dealings in such goods by persons other than those mentioned in cl. 81 of section 167 of the a criminal offence. When the clause does not bring them in, the court cannot, by construction, bring such a class of persons within the said clause. It is for the Legislature to do so and we are told that it has recently amended the section. I, therefore, agree with the High Court that it has not been established that the respondents have dealt with the goods with an intention to evade any restriction or prohibition imposed on the import of the said goods. In the result, all the appeals should be dismissed. Wanchoo, J. These two appeals on certificates granted by the Calcutta High Court arise out of the same trial of the two respondents for an offence under section 167 (81) of the ,. No. 8 of 1878, (hereinafter referred to as the Act) and will be dealt with together. The facts are not in dispute and have been found as below. On August 25, 1958, a constable attached to the Detective Department, noticed Sitaram Agarwala respondent and another person at the crossing of Hariram Goenka street and Kalakar street. The constable had certain information with respect to 8 these persons and decided to follow them. These two persons got into a bus and the constable also boarded the same bus. They got down at the unction of B. K. Pal Avenue and J. M. Avenue and so did the constable. They then went to Narendra Dev Square 'Which is a kind of park. The constable kept watch over them from a distance. After a short time these two men came out of the park and stood on the western foot path of J. M. Avenue. Shortly thereafter a small taxi came there from the South and stopped. Respondent Wang Chit Khaw (hereinafter referred to as the Chinese accused) was in that taxi. He came down and shook hands with Sitaram Agarwala and the three got into the taxi. When the taxi was about to start, the constable disclosed his identity to the driver and asked him to stop. He also asked the 'three persons to accompany him to the thana. Thereupon Sitaram Agarwala and the other man who was with him came out of the taxi and tried to run away. The constable caught hold of them and put them in the police wagon which happened to come up just then. The Chinese accused also tried to run away. The constable appealed to the members of the public to help him in securing the Chinese accused and he was secured with the help of two college students and one other youngman. As the Chinese accused was running away he threw away three packets which were picked up. In the meantime Sergeant Mukherjee came there on a motor cycle from the opposite direction and detained the Chinese accused. The three packets thrown away 'by him were also handed over. by the three youngmen to the 'Sergeant. Thereafter all the three persons who were arrested 'were taken to the police station along with the three packets. It was found in the police station that the three packets contained 23 gold bars of about sixteen tolas each with Chinese inscription thereon. On search of the person of Sitaram Agarwala, a sum of Rs. 49,320 in notes of various denomination was found on him. 'The Customs authorities were informed and took charge of the gold bars. Eventually, the gold bars were confiscated under section 167(8) of the Act and thereafter the police after investigation prosecuted the two respondents and the third man in respect of the offence under section 167(81) of the Act. These facts were held to be proved by the Magistrate so far as the Chinese accused and Sitaram were concerned. He therefore convicted them. The case against the third man was held to be doubtful and he was acquitted. Two convicted persons then filed separate appeals in the High Court. The High Court accepted the findings of fact recorded by the learned Magistrate and came to the conclusion that on the facts proved there was 9 no doubt that Sitaram had gone with a large sum of money to meet the Chinese accused in order to purchase the, gold bars which had been recovered from the, packets thrown away by the Chinese accused. The High Court then addressed itself to the question whether on the facts proved the conviction of the two respondents could be sustained in law. The charge against Sitaram Agarwala was that on the date in question and at the time and place which appeared in the evidence he had gone there by previous arrangement to purchase the smuggled gold bars from the Chinese accused and was therefore concerned in dealing with smuggled gold and thereby committed an offence under section 167(81) of the Act. The charge against the Chinese accused was that he had in his possession 23 smuggled gold bars which he wanted to sell to Sitaram Agarwala and another person by previous arrangement and as such he was concerned in dealing with smuggled gold and was guilty under section 167 (81) of the Act. So far as Sitaram Agarwala was concerned, the High Court held that by merely going to the park in order to purchase smuggled gold by previous arrangement, it could not be said that Sitaram Agarwala was in any manner dealing with smuggled gold. The High Court was of the view that there was a mere attempt to purchase smuggled gold on the part of Sitaram Agarwala, but as the purchase was not completed it could not be said that Sitaram Agarwala was concerned in dealing with the smuggled gold. The High Court therefore ordered the acquittal of Sitaram Agarwala, respondent. As to the Chinese accused, the High Court held that though he was found in possession of smuggled gold, which he knew to be such, and had attempted to sell that gold surreptitiously, section 167(81) required knowledge that the article in question was smuggled and intention to defraud the Government of any duty payable thereon or to evade any prohibition or restriction for the time being in force under or by virtue of the Act. In view of the intent necessary, the High Court was of the view that before a person could be convicted under section 167(81) it must be shown that he was either a direct importer or concerned in some way in the import of the smuggled article. In other words, the High Court thought that the section dealt with goods while they were being smuggled; it did not include in its scope a person who subsequently obtained the smuggled goods and then dealt with them, though the smuggled goods themselves might be liable to confiscation when seized. Consequently, the High Court ordered the acquittal of the Chinese accused also. As the inter 10 pretation of section 167(81) was involved, the High Court granted certificates; and that is how the two appeals have come up before us. The facts are not in dispute in this case and have been set out above. Thus the question that arises before us is the interpretation of section 167(81) and two aspects of that section have to be considered. The first aspect is the ambit of the words "in any way concerned in or in any manner dealing with any goods with respect to the importation of which any prohibition or restriction is for the time being in force as aforesaid". The second aspect is with respect to the intent necessary under the section and whether that intent can arise where smuggling is over and smuggled goods are the possession of persons other than those actually concerned in the smuggling and are then dealt with by them in some manner or other. We may briefly indicate the scheme of the Act in order to appreciate the purpose behind section 167(81). The object of the Act is to provide machinery for the collection inter alia of import duties and for the prevention of smuggling. With that object customs frontiers are defined, (Ch. 1); Customs officers are appointed with, certain powers, (Ch. 11); ports, wharves, customhouses, warehouses and boarding and landing stations are provided for, (Ch. III); prohibitions and restrictions of imports and exports are envisaged, (Ch. IV); levy of and exemption from custom duties and the manner in which it has to be done is provided, (Ch. V); drawbacks, i.e., refunds are provided in certain circumstances, (Ch. VI); arrival and departure of vessels is controlled, (Ch. VII and Ch. VIII); provision is made for the discharge of cargo, (Ch. IX), and clearance of goods for home con sumption (Ch. X); provision is also made for warehousing and transshipment, (Chapters XI, XII); provisions are also made for exportation or shipment and re landing (Ch. XIII); special provisions have been made relating to spirit (Ch. XIV) and coasting trade (Ch. XV). Then comes Ch. XVI dealing with offences and penalties. Offences enumerated in Ch. XVI are of two kinds; first there are contravention of the Act and rules thereunder which are dealt with by Customs officers and the penalty for which is imposed by them. These may be compendiously called customs offences. Besides these there are criminal offences which are dealt with by Magistrates and which result in conviction and sentence of imprisonment and/or fine. These two kinds of offences have been created to ensure that no fraud is committed in the matter of payment of duty and also to ensure that there is 11 no smuggling of goods, without payment of duty or in defiance of any prohibition or restriction imposed under Ch. IV of the Act. It is necessary for our purpose to set out two provisions of section 167 which is in Ch. These are section 167 (8) and 167 (81 Section 167 (8) is in these terms : "167. The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively: (1) Offences "(8) If any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from India contrary to such prohibition or restriction: or Etc. (2) Section of this Act to which offence has reference 18 & 19 (3) Penalties such goods shall be liable to confiscation; and any person concerned in any such offence shall be liable to a penalty not exceeding three times the value of the goods, or not exceeding one thousand rupees. " Section 167(81) with which we are particularly concerned reads thus (1) Offences (continue). "(81). If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to evade any, prohibition or restriction for the time being in force under or by virtue of this Act with respect thereto acquires possession of, or is in any way concerned in carrying, removing, depositing, harbouring, keeping or concealing or in any manner dealing with any goods which have been unlaw fully removed from a warehouse or which are ' chargeable with a duty which has not been paid or with respect to the importation or exportation of which any prohibition or restriction is for the time being in force as aforesaid; or (2) Section of this Act to which offence has reference General (3) Penalties such person shall on conviction before a Magistrate be liable to imprisonment for any term not exceeding two years or to fine, or to both; L1sup. C.I/66 2 12 It will be seen that section 167 (8) deals with what we have called customs offences while section 167(81) deals with criminal offences. It is well settled by the decisions of this Court that goods which have been imported against the prohibition or restriction imposed under Ch. IV of the Act are liable to confiscation at any time after import and this liability extends even in the hands of third persons who may not have had anything to do with the actual import. So long as it is proved that the goods had been imported against the restrictions imposed under Ch. IV, the goods remain liable to confiscation whenever found even if this is long after the import is over and even if they are in possession of persons who had nothing to do with the actual import. It is also well settled by the decisions of this Court that the second part of the penalty relating to any person applies only to a person concerned in the importation or exportation of the goods and does not apply to a person found in possession of the smuggled goods who had nothing to do with the importation or exportation thereof: (see Shivanarayan Mahato vs Collector of Central Excise and Land Customs(1). The main contention of the respondents which has found favour with the High Court was that section 167(81) when it deals with persons and subjects them to imprisonment and fine on conviction by a Magistrate is also concerned with persons who are in some way or other actually concerned in the import and has no application to third persons who had nothing to do with the actual import but might have come in possession of smuggled goods even knowingly after they had been smuggled. Before however we consider this contention which has found favour with the High Court we should like to dispose of the other contention which was raised on behalf of Sitaram Agarwala and which also found favour with the High Court. It will be seen that section 1 67 (8 1 ) deals with persons who do certain things with the knowledge and intent therein specified and one such person with whom that pro vision deals is a person who is, in any way concerned in or in any manner dealing with any goods with respect to importation of which any prohibition or restriction is for the time being in force. The High Court has held on the facts in this case that Sitaram Agarwala cannot be said to have been concerned in or in any manner dealing with prohibited goods inasmuch as he was merely negotiating with the Chinese accused for their purpose but the deal had not been concluded. The view which found favour with the High Court thus was that if the deal had been completed, Sitaram Agarwala could be said to have been concerned in dealing with the prohibited goods but as the deal was not completed and he (1) C.A. 288 of 1964, decided on 14 8 65. 13 was merely attempting to purchase the goods it could not be said that he was in any way concerned in or in any manner dealing with them. We are of opinion that the view taken by the High Court is not correct. The words "in any way concerned in or in any manner dealing with prohibited goods" are of very wide import. It is neither desirable nor necessary to define all manner of connection with the prohibited goods which might come within the meaning of the words "in any way concerned in or in any manner dealing with such goods". It will depend on the facts found in each case whether it can be said that any person was concerned in dealing with such goods. We shall therefore confine ourselves to the facts of the present case and gee whether on these facts, it can be said that Sitaram was in any way concerned in or in any manner dealing with the goods. Now the evidence which has been accepted by both the courts is that Sitaram had gone with a large sum of money to purchase the gold which was known to, be smuggled and to have been imported into India against the restrictions imposed on the import of gold. It has also been proved that Sitaram did so after previous arrangement with the Chinese accused. If the constable who was following Sitaram had ' not interfered the deal would have gone through and Sitaram would have paid the money and purchased the smuggled gold. 'This was a case therefore where by means of previous arrangement with a person in possession of a smuggled article, the intending purchaser had gone to purchase it and the deal did not go, through only because the police intervened. In such circumstances where by previous agreement or arrangement a person goes to purchase an article which he knows to be smuggled it would in our opinion be a case where such a person must be held to be concerned in dealing with the prohibited goods. Where a person does any overt act in relation to prohibited goods which he knows to be such and the act is done in consequence of a previous arrangement or agreement it would in our opinion be a case were the person doing the act is concerned in dealing with the, prohibited goods. In other words any transaction relating to pro hibited goods which is done or attempted to be done after some kind of prior arrangement or agreement would in our opinion clearly amount to the person being concerned in dealing with the prohibited goods. Both the words "concerned" and "deal" have a wide connotation. The words "concerned in" mean "interested in,, involved in, mixed up with" while the words "deal with" mean "to have something to do with, to concern one self, to treat, to make arrangement, to negotiate with respect to something". Therefore when a person enters into some kind of transaction or attempts tee 14 enter into some kind of transaction with respect to prohibited goods and it is clear that the act is done with some kind of prior arrangement or agreement, it must be held that such a person is concerned in dealing with prohibited goods. The fact that the act stopped at an attempt to purchase as in the present case when the police intervened does not in any way mean that Sitaram was not concerned in dealing with the smuggled gold. The evidence shows that there must have been a previous arrangement with the Chinese accused to purchase the smuggled gold. Sitaram went to the appointed place and met the Chinese accused surreptitiously and had a large ' sum of money with him to pay for the gold. He had sat down with the Chinese accused in the taxi and there is no doubt that if the taxi had not been stopped, the transaction for the purchase of the smuggled gold would have gone through. In these circumstances even though Sitaram had not come into actual possession of the smuggled gold before the police intervened, there is no doubt that he was concerned in dealing with prohibited goods. We are therefore of opinion that the High Court was in error in holding simply because the purchase was not complete that Sitaram was not concerned in dealing with the smuggled gold which was found with the Chinese accused. The acquittal of Sitaram on this ground must therefore be set aside. This brings us to the main question which arises in the present appeal, namely, what is the intent required in a case coming under section 167(81) and whether such intent can be said to arise at all in a case where the import is complete and the prohibited goods are in the possession of a third person who had nothing; to do with the import. For this purpose we shall refer to that part of section 167(81) which deals with the acquisition of possession of prohibited goods and what we say about that part will equally apply to the other parts of section 167(81). We may add that we are dealing here with the first half of section 167(81) and not with the second half. This part of section 167(81) which we have taken for the purpose of finding out what is the knowledge and intent that section 167(81) requires would run thus : "If any person knowingly, and with intent to defraud the Government of any duty payable thereon, or to evade any prohibition or restriction for the time being in force under or by virtue of the Act with respect thereto acquires possession of any goods with respect to which duty has not been paid or with respect to the importation of which any prohibition or restriction is for the time being in force. " The argument which has found favour with the High Court is that the section, requires knowledge on the part of the accused 15 that the goods were imported against the prohibition or restriction in force. This is undoubtedly so. The section further requires that the person who has this knowledge should also have the intention either to defraud the Government of any duty payable thereon or to evade any prohibition or restriction for the time being in force under or by virtue of the Act. Mere knowledge that the goods are prohibited goods or goods on which duty has not been paid would not be enough; the section further requires that there should be an intent to defraud the Government of the duty payable or to evade any prohibition or restriction. The argument on behalf of the respondents which has been accepted by the High Court is that once the goods have evaded the payment of duty or have evaded the prohibition or restriction. with respect to their import and the smuggling whether of dutiable or prohibited goods is complete, a third person who comes into possession of such goods thereafter and who had nothing to, do with the smuggling itself cannot be said to have the intent to defraud the Government of any duty payable (for such defrauding had already taken place) or to evade any prohibition or restriction (for such prohibition or restriction had already been evaded). In effect, the argument is that this part of section 167(81) corresponds to section 167(8) where a person has to be concerned, in the actual importation before he can be liable to a penalty. Now if the intention of the legislature was that the person guilty under section 167(81) could only be a person who was con cerned in some way or other with the actual importation or exportation it would have been easy for it to use the same words in section 167(81) as were used in the first part of section 167(8). But the legislature has not done so and the question is whether the words used in section 167(81) have a different meaning from those used in section 167(8). What section 167(81) requires is that the person who comes inter alia into possession of prohibited goods must know that there is some prohibition in force with respect thereto. But before he can be guilty under section 167(81) it has further to be shown that he intends to evade the prohibition. Where the case is not of prohibition but of duty, the person accused under section 167(81) must be shown to know that the duty has not been paid and also to have the intention to defraud the Government of the duty payable on the goods. The question that arises is whether the third person who has come into possession knowingly that the goods are prohibited or the goods are dutiable and the duty has not been paid can be said to have the intention of evading the prohibition or to defraud the Government of the duty 16 payable, even though he may not have anything to do with the smuggling of the goods. It seems to us (taking a case of prohibition) that if the prohibition is still in force, the person who acquires possession of prohibited goods knowing them to be prohibited intends to evade the prohibition by the action, even though he may not have been concerned in the actual smuggling of the goods. So long as the prohibition lasts any person who comes into possession of prohibited goods, though he may not be concerned in the actual smuggling would stiff in our opinion have the intent to evade the prohibition when he remains in possession of the goods which are prohibited. The prohibition in our opinion does not come to an end as soon as the Customs frontier is crossed. So long as prohibition is in force and the goods are prohibited goods any person in possession thereof, even though he may not be concerned with the actual smuggling would still be guilty of evading the prohibition by keeping the goods in his possession. If this were not so, it would mean that once the prohibition has been successfully evaded by the actual smuggler the goods would be free from the taint of prohibition and could be dealt with by any person as if there is no prohibition with respect to them. If that were to be the meaning of section 167(81) there would be a serious lacuna in this provision which is meant to prevent smuggling. Smuggling does not only stop at importing the goods in the face of prohibition; it envisages subsequent transactions like sale of the smuggled goods, for no one would take the risk of smuggling unless he can find a market for smuggled goods. Therefore the purchaser of smuggled goods though he may not be concerned in the smuggling would in our opinion be equally guilty of evading the prohibition by making the purchase. The same in our opinion applies to defrauding the Government of the duty. Where goods had been smuggled in without paying duty the smuggler in such a case also intends to sell the goods and make profit thereby. The purchaser of such smuggled goods even though he may have nothing to do with actual smuggling, usually acquires the goods at a lower price because the payment of duty has been evaded. Therefore when such goods reach even third hands there is always the intention to defraud the Government of the duty payable on the goods. This appears to us to be the true interpretation of section 167(81), which as we have said earlier is in different words from the first part of section 167(8), which deals with actual importation or exportation. Section 167(81) does not deal with actual importation or exportation; it deals with defrauding the Government of the duty payable or evading the prohibition or 17 restriction. So long as the duty is payable and has not been paid, or so long as the prohibition or restriction remains in force any person acquiring possession of goods on which duty has not been paid or restriction or prohibition has been evaded would have the intent either to defraud the Government of the duty payable for he acquires goods at a lower price or would have the intention to evade restriction or prohibition. If this were not so, there would be a premium on successful smuggling and once the goods have entered the country without paying 'duty or have entered the country after evading the prohibition or restriction, they can be dealt with as if they were duty paid goods or goods which had not evaded the prohibition or restriction. The purpose of section 167(81) is to punish smuggling and stop it if possible. That purpose in our opinion would be completely defeated if the interpretation which has found favour with the High Court were accepted. We cannot therefore accept that the words used in section 167(81) only apply up to the stage of actual importation and the person who is guilty thereunder must be somehow concerned in the actual importation. It seems to us that they apply in the case of prohibited or restricted goods so long as the prohibition or restriction lasts and whoever is in possession of such goods or comes into possession thereof, even after the smuggling is over must be attributed with the intention of evading the prohibition or restriction provided he knows that the goods were smuggled into the country in spite of the prohibition or restriction. Similarly where the goods are dutiable and the duty has not been paid on them any person acquires them with the knowledge that the duty thereon has not been paid would have the intention to defraud the Government of duty, even though he may not be the person actually concerned in the smuggling. We therefore hold that section 167(81) has a wider sweep than section 167(8) and it does not only apply to a person who may have been actually concerned in some way or other with smuggling but also inter alia to persons who may have come into possession of goods even after the smuggling was over. So long as the prohibition or restriction remains in force or the duty has not been paid even a third person coming into possession of such goods would have the intention either to evade the prohibition or restriction or to defraud the Government of the duty payable thereon. It remains now to refer to a few English cases because our Act of 1878 was modeled on the English Customs Consolidation Act, 1876. Decisions of English courts therefore with respect to corresponding provisions of the English Act would in our opinion be helpful in the matter of the interpretation of section 167(81). 18 Section 186 of the English Act corresponds to many of the provisions contained in section 167 of the Act. In particular, the provision corresponding to section 167(81) is in these terms: "Every person who. . shall be in any way knowingly concerned in carrying, removing, depositing, concealing, or in any manner dealing with any such goods with intent to defraud Her Majesty of any duties due thereon or to evade any prohibition or restriction of or application to such goods. . " Such goods" in the context of the section mean either prohibited or restricted goods or goods on which duty is leviable. The other clauses of section 186. of the English Act do not specifically contain words relating to intent. But in Frailey vs Charlton (1) it was decided that intent to defraud the revenue or to evade a restriction or prohibition would apply to other clauses of section 186 also. Thus the English Act by section 186 also requires that a person who was concerned in carrying, removing etc., or in any manner dealing with any prohibited or restricted goods or dutiable goods must do so knowingly and with intent to defraud His Majesty of any duty due thereon or to evade any restriction or prohibition. The interpretation of this provision in section 186 was considered in Beck vs Binks (2). In that case the facts were that a person was found in possession of uncustomed goods in London and it was urged, as was urged before the High Court in the present case, that the person concerned could not be said to be carrying the uncustomed goods with intent to defraud His Majesty of the duty because such an offence could only be committed by the actual smugglers or importers of goods or persons engaged in carrying the goods from the ship etc. at the port of importation with intent to evade the payment of duty or tax. This contention was nega tived and the court held that "the offence of knowingly carrying or in any manner dealing with uncustomed goods with intent to defraud His Majesty of the duty due thereon contrary to section 186 is not only committed at the port of entry or the place where the goods are actually landed; it is committed anywhere in the realm by a person acting in the manner described by the sub section". Lord Goddard C.J. made the following observations at p. 252 "If a person is knowingly carrying uncustomed goods, he is assisting in the smuggling of the goods; for while goods are no doubt smuggled when they are brought into (1) (2) 19 the country it is no good bringing smuggled goods into, the country unless something can be done with them" Such a person is intending to defraud His Majesty of the customs as much as anybody else. The intent is there : it is all part of one operation. . . Otherwise, a most extraordinary lacuna is left in the Act, for it can then be said that, once a man has got away from the port of entry or from the place where the goods were actually landed, no one dealing with the smuggled goods and carrying them inland will ever be guilty of an offence. I do not think that has ever been held, and I am certainly not prepared to hold it now, I think it clear that this appellant was dealing with that is, carrying uncustomed goods and that he was carrying them with intent to defraud His Majesty of the duties thereon. " The next case to which reference may be made is Rex vs Cohen(1). In that case 352 Swiss watches which were uncustomed were recovered from the accused and he was charged with being in possession of uncustomed goods with intent to defraud His, Majesty of the duties thereon contrary to section 186 of the English Act. Dealing with the question of intent to defraud, it was held ' that if the accused knew that the goods were uncustomed, the intention to defraud the revenue may be inferred. Here also the uncustomed goods were recovered from the house of the accused at Edgware and there was nothing to show that he was in any way concerned with actual smuggling. Even so, the court held that he must be held to be intending to defraud the revenue. The next case to which reference may be, made is Sayce, vs Coupe(2). In that case the accused was in possession of certain American cigarettes on which duty had not been paid. It was held that where a person has in his possession goods which are to. his knowledge uncustomed and which he intends to use or sell,, he is guilty of the offence of keeping uncustomed goods with intent to defraud the revenue of the duties thereon contrary to section 186. In that case there was nothing to show that the accused had anything to do with the importation or smuggling of the goods. Even so, it was held that he had the intent to defraud the revenue. The next case to which reference may be made is Schneider vs Dawson(3). That was a case where a civilian bought from American servicemen cigars and spirits which had been imported free of duty for the use of United States Servicemen under art (1) L.R. [1951]1 K.B. 505. (2) (3) L.R. [1960]2 Q.B. 106. 20 agreement between the British and American Governments and kept them for his own use. He was charged with knowingly and with intent to defraud Her Majesty of the duty payable thereon being concerned in keeping goods which were chargeable with duty on which duty had not been paid. It was held that the person 's conduct clearly amounted to keeping the smuggled goods and there was intent to defraud the revenue. This case was under the English Customs and Excise Act of 1952, but the principle under the English Act of 1876 was followed. These cases clearly indicate that the offence under the corresponding provision of the English Act can be committed long after the actual smuggling is over and even if the person found in possesSion of goods on which duty had not been paid had nothing to do with smuggling. These cases thus clearly support the interpretation we have put on the relevant words of section 167(81). Further the case of Schneider(2) shows that it has always been held in England that if dutiable goods have been brought into the country without paying the duty, the duty attaches to the goods brought into the country and though it may not have been paid at the moment of bringing the goods for some special reasons (as, for example, where it is meant for a foreign ambassador) the duty is leviable later on when the goods pass into the hands of persons other than the privileged person. The same in our view applies equally to goods which are smuggled into the country and the duty has been evaded. The duty always remains payable on goods which have been brought in without payment of duty and whoever deals with them even at a later stage after the operation of smuggling is over would still be liable to pay the duty and if he does not, he must have the intention to defraud the Government of revenue. The same applies to prohibition and restriction and so long as the prohibition or restriction remains in force, the person dealing with the smuggled goods which had evaded the prohibition or restriction must also be held to evade the prohibition or restriction. In the view that we have taken it is therefore unnecessary to consider when the import or smuggling ends, for section 167(81) hits not only persons concerned in smuggling or importing but also all others who come into possession of or deal with smuggled goods after the smuggling is over. Lastly learned counsel for the respondents refers us to section 135 of the Customs Act (No. 52 of 1962). That section provides for what was formerly provided in section 167 (81) of the Act. The argument is that it is in very different terms. That is undoubtedly so. (1) 21 But it does not follow from the fact that the corresponding section ' in the 1962 Act is differently worded that the provision in section 167 (81). cannot have the meaning which is being pressed before us on behalf of the appellant. The interpretation of section 167(81) must depend upon the language of that provision itself and on the language used in section 167(8) we have, no doubt that it applies not only to an actual smuggler or a person concerned in smuggling but also to all others who may be concerned with smuggled goods after the smuggling is over. In the view that we have taken of the meaning of section 167(81) it follows that on facts found Sitaram Agarwala was concerned in dealing with prohibited or restricted goods. It also follows on facts found that he had the necessary knowledge and intent to evade the prohibition or the restriction even though he dealt with the goods after the smuggling was over and was not in any way concerned with actual smuggling. He would therefore be guilty under section 167(81) of the Act. We therefore allow the appeal, set aside the order of acquittal made by the High Court, restore the order of the Presidency Magistrate and confirm the sentence passed on Sitaram Agarwala by the Magistrate. It also follows on facts found that Wang Chit Khaw is guilty under section 167 (81) inasmuch as he was dealing with prohibited or restricted goods and had the necessary knowledge and intent as required under that section. We therefore allow the appeal, set aside the order of the High Court, restore that of the Presidency Magistrate and confirm the sentence passed on him by the Magistrate. ORDER In accordance with the opinion of the majority the appeals are allowed, the orders of the High Court are set aside, the orders of the Presidency Magistrate are restored and the sentences on the respondents are confirmed.

IN-Abs

The 1st respondent had gone to, the 2nd respondent after previous arrangement with him, with a large sum of money to purchase gold which was known to them to be smuggled and to have been imported into India against the restrictions imposed on the import of gold. The police intervened. recovered the gold and arrested them. The gold was confiscated under section 167(8) of the . The respondents were prosecuted for an offence under section 167(81) and they were convicted by the trial court. On appeal the High Court acquitted the 1st respondent because it was of the view that as the 1st respondent merely attempted to purchase the gold it could not be said that he was concerned in dealing with the smuggled gold within the meaning of the section. The High Court also acquitted the 2nd respondent because it held that before a person could be convicted under section 167(81), it must be shown that he was either a direct importer or concerned in some way in the import of the smuggled article,, and that the section did not include in its scope a person who subsequently obtained the smuggled goods and then dealt with them, though the smuggled goods themselves might be liable to confiscation. In appeal to this Court, HELD, (per Wanchoo, Shah, Sikri and Ramaswami, JJ.) : (i) The High Court was in error in holding that simply because the purchase was not complete the 1st respondent was not concerned in dealing with the smuggled gold which was with the 2nd respondent. [14 D] The words "in any way concerned or in any manner dealing with any goods" in the section, are of very wide import. The words "concerned in" mean "interested in, involved in, mixed up with", while the words "deal with" mean "to have something to do with, to concern one self, to treat, to make arrangement, to negotiate with respect to some thing." Therefore, when a person enters, into some kind of transaction or attempts to enter into some kind of transaction with respect to prohibited goods, and it is clear that the act was done with some kind of prior arrangement or agreement, it must be held that such a person is concerned in dealing with prohibited goods. [13 A B; H] (ii) On the language of the section, it applies not only to an actual smuggler or a person concerned in smuggling but also to all others who may be concerned with smuggled goods after the smuggling is over provided they know that the smuggled into the country in spite of a prohibition or restriction, or they knew that the duty thereon had not been paid. It follows that the 1st respondent had the necessary knowledge and intent or evade the prohibition or the restriction even though he dealt 2 with the gold after the smuggling was over and was not in any way concerned with the actual smuggling. He would therefore be guilty under the section. The 2nd respondent wag also guilty under the section inasmuch as he was dealing with prohibited or restricted good sand had the necessary knowledge and intent as required under the section.[21 B, C, E] If the intention of the legislature was that the person guilty under s.167(81) could only be a person who was concerned in some way or other with the actual importation or exportation it would have been easy for it to use the same words as were used in the first part of section 167(8) but it has not done so,. What section 167(81) requires is that the person who comes inter alia into possession of prohibited goods must know that there is some prohibition in force with respect thereto. But before he is found guilty it has further to be shown that he intends to evade the prohibition. Where the case is not of prohibition but of duty, the person accused under the section must be shown to know that the duty has not been paid and also to have the intention to, defraud the government of the duty payable on the goods. long as the duty is payable and has not been paid or so long as the prohibition or restriction remains in force, any person acquiring possession of goods, on which duty has not been paid or with respect to which the restriction or prohibition has been evaded, would have the intent either to defraud the government of the duty payable, for he acquires goods at a lower price, or would have the intention to evade the restriction or prohibition because no one would take the risk of smuggling unless he can find a purchaser for the smuggled 'goods. If this were not so, there would be a premium on successful smuggling and the purpose of the section to punish smuggling and stop it if possible, would be completely defeated, as there would be a serious lacuna in the provision. [15 E G; 17 A D] Cases under the English Act referred to. Per Subba Rao, J. (Dissenting) : it had not been establish ad that the respondents had dealt with the gold with an intention to evade any restriction or prohibition imposed on their import. [7 F] It is not open to the court to strain the language of a statute in order to read a causes omissus and the court cannot fill up a lacuna. Also, the court cannot construe the section with reference to the corresponding English Section and English decisions because, the Indian and English sections are not in pari materia. Under section 167(81) the material ingredients constituting an offence are; (i) a person must have a knowledge that there is a prohibition or restriction against doing any of the enumerated acts with respect to goods imported or exported contrary to the restriction or prohibition imposed against their import or export, and (ii) he must have acted with an intention to evade such a restriction or prohibition. That is, the two elements of mens rea, namely, knowledge and intention must be established, because, knowledge of an offence cannot be equated with an intention to commit the offence. The crux of the offence is the import of goods with the requisite intent contrary to the prohibition. The importer who smuggles the goods is certainly guilty under the section because he imports them in derogation of the prohibition or restriction. Also, any person who deals with the goods in the context of the import in any of the connected ways set out in the section, with the requisite knowledge and intention would equally be guilty of the offence, because, the enumerated dealings with the goods prohibited or restricted may be necessary to complete the import vis a vis the importer, even though they cover a field beyond the point of import as normally understood, that is, when the goods cross the customs barrier. But the intention to contravene the prohibition cannot be imputed to subsequent dealers in 3 the goods after the importer parts with them, though the good.% themselves can be confiscated in the hands of whomsoever they are found. [4H; 5C, E F; 6B C, H]

Appeal No. 649 of 1964. Appeal by special leave from the judgment and order dated March 30, 1963 of the Andhra Pradesh High Court in W.P. No. 1061 of 1962. Arun B. Saharya and Sardar Bahadur, for the appellant. P. Ram Reddy and T. V. R. Tatachari, for respondent No. No. 1. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment of the Andhra Pradesh High Court. The appellant manufactures drugs in Hyderabad and among the drugs manufactured by it is chloral hydrate. In September 1962, the State of Andhra Pradesh issued rules called the Andhra Pradesh (Telangana Area) Chloral Hydrate (Chloral) Rules, 1962 with respect to manufacture, possession, sale, import, export and transport of chloral hyd 12 rate (hereinafter referred to as the Rules). We shall refer to the Rules in detail later; but in brief they provide that the manufacture of chloral hydrate shall take place only in accordance with the conditions of a licence granted by the Excise Commissioner and only on payment of excise duty of Rs. 5001 per annum. The Rules also provide for possession, import, export, sale and transport of chloral hydrate. In consequence of the issue of the Rules, the appellant was called upon to take out a licence and pay the necessary excise duty. The appellant refused to do so and in November 1962 filed a writ petition in the High Court challenging inter alia the validity of the Rules. It may be mentioned that the Rules were issued under the Andhra Pradesh (Telangana Area) Intoxicating Drugs Act, No. IV of 1333 Fasli, (hereinafter referred to as the 1333 F Act) as amended by the Hyderabad Opium and Intoxicating Drugs (Amendment) Act, No. XXII of 1953. The main contention of the appellant in the High Court was that the 1333 F Act had been repealed in toto on the introduction of the Dangerous Drugs. Act, No. 2 of 1930 by the Opium and Revenue Laws (Extension of application) Act, No. 33 of 1950, and of the Drugs Act, No. 23 of 1940 by the Part B States (Laws) Act, No. III of 1951, and therefore there was no power in the Hyderabad legislature to amend it by Act 22 of 1953. In consequence there was no law in force on the basis of which the Rules could be promulgated in 1962. Secondly, it was contended that even if the 1333 F Act did not stand repealed as above, the Rules framed by the State of Andhra Pradesh in 1962 with respect to chloral hydrate were not within the powers conferred by the 1333 F Act as amended in 1953, as chloral hydrate was not a narcotic or narcotic drug and was not covered by item 51 of List II of the Seventh Schedule to the Constitution. The petition was opposed on behalf of the State, and it con tended that there was no repeal of the 1333 F Act by the introduction of the Dangerous Drugs Act 1930 and the Drugs Act, 1940, and consequently the amendment of the 1333 F Act by the Hyderabad Act No. 22 of 1953 was good, and the 1333 F Act as amended was in force in 1962 when the Rules were framed. It was further contended that the Rules were intra vires the 1333 F Act as amended in 1953 as chloral hydrate was a narcotic and an intoxicating drug. The High Court repelled the contentions raised on behalf of the appellant and dismissed the writ petition. The appellant then applied for a certificate for leave to appeal to this Court, which was 113 refused. It then obtained special leave from this Court; and that is how the matter has come before us. Before we consider the points raised in the High Court which have also been raised before us, we should like to refer to certain provisions in the three legislative Lists in the Seventh Schedule to the Constitution dealing with various aspects that arise in this case. The first of these provisions is item 59, List I, which deals with "cultivation, manufacture, and sale for export, of opium". Then there are. two items in List 11, item 8 which deals with "intoxicating liquors, that is to say, the production, manufacture, possession, transport and sale of intoxicating liquors" and item 51 which deals with "duties of excise on the following goods manufactured or produced in the State. : (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics; but not including medicinal and toilet preparations containing alcohol or any substance included in sub paragraph (b) of this entry". Lastly reference may be made to item 19 of List III, which deals with "drugs and poisons, subject to the provisions of entry 59 of List I with respect to opium". It will be seen from a perusal of these entries that a substance may fall in a number of them. For example, opium falls under item 59 of List I for certain purposes mentioned therein but also falls in item 51 of List II for the purpose of duties of excise thereon and for such control as may be required for the purpose of collecting the duties of excise. Thus for the purpose of cultivation and manufacture opium is exclusively a Union subject but for the purpose of duties of excise it is an exclusive State subject. Take another substance like chloral hydrate with which we are concerned in the present appeal. It is undoubtedly a drug and therefore falls under item 19 of List Ill. Drugs being in the Concurrent List both the Union and the States can legislate thereon. There are two Central Acts which deals with drugs, namely, the Dangerous Drugs Act 1930 and the Drugs Act, 1940. Now a substance may fall under the Dangerous Drugs Act if it is so defined there. It may also fall under the Drugs Act and may be subject to its pro visions if so indicated therein. But at the same time a substance which is a drug may also fall under item 51 of List 11 if it is a narcotic or is a narcotic drug. Even intoxicating liquor which falls under entry 8 of List II as well as under entry 51 of List II may fall under entry 19 of List III if it is a drug. This will show that even if a substance is governed by the Dangerous Drugs Act and the Drugs Act it may well be liable to duties of excise under entry 114 51 of List II and of such control as is incidental thereto. It is in this background that we have to consider the points raised on behalf of the appellant. We now come to the first point raised on behalf of the appellant, namely, whether the 1333 F Act survived the introduction of the Dangerous Drugs Act and the Drugs Act in the State of Hyderabad. The 1333 F Act was in force in Hyderabad State as it was before the Constitution from 1924. At that time the, State of Hyderabad was a sovereign State and had full power to deal with all subjects now contained in Lists 1, II and III of the Seventh Schedule to the Constitution subject of course to British paramountly and effect thereof on the sovereignty of the Hyderabad State. The 1333 F Act dealt with opium and intoxicating drugs. Intoxicating drugs were defined in this Act as meaning "ganja, bhang, charas, cocaine and all such things which are prepared therefrom and will also include such intoxicating substances which the Government may, by gazette notification, include in it, (section 2)". This definition shows that besides the four substances mentioned therein, intoxicating drugs could include other substances if a notification was issued by the Government in that behalf. We do not know as a fact whether any notification was issued after 1924 and before the Constitution came into force under this provision. But in any case the 1333 F Act applied not only to the four substances mentioned therein but also to others which might be notified. The 1333 F Act further provided that "save as authorised under this Act or rules thereunder, no person shall possess sell, manufacture, opium or intoxicating drug, (s ' 4)". The Government was also given the power to make rules regarding administration and supervision, grant of licences and collection of duties of excise, (section 5)". The 1333 F Act also provided for punishment for the contravention of the Act and the Rules and for confiscation under certain circumstances, (sections 7 to 11). It gave powers to excise officers for search of houses and arrest of accused persons, (section 16). It also provided for other powers for such officers, (section 17). There were other provisions therein to which it is unnecessary to refer. It will" be seen from this brief analysis of the 1333 F Act that it was in the nature of an excise Act and provided for licences and collection of duties of excise and made provisions incidental thereto. We have already said that this Act applied not only to opium and 'he four intoxicating drugs mentioned therein but also to other substances which might be notified thereunder. It continued in force in the Part B State of Hyderabad after the Constitution came into force in January 1950. 115 In 1950, Parliament applied the Opium Act (No. 13 of 1857), the Opium Act (t of 1878) and the Dangerous Drugs Act (No. 2 of 1930) to the Part B State of Hyderabad by Central Act 33 of 1950. Section 4 of this Act inter alia provided that if immediately before the commencement of this Act there was in force in any Part B State, other than Jammu and Kashmir, any law corresponding to any of the Acts specified therein, that law would upon the commencement of this Act, stand repealed. The Dangerous Drugs Act deals with coca leaf, coca derivative, hemp including bhang, siddhi, ganja, charas, medicinal hemp, opium and opium derivative. It also gave power to Central Government to notify any other narcotic substance as a manufactured drug under certain circumstances. The Dangerous Drugs Act thus deals, among others, with coca leaf, hemp, opium and all manufactured drugs therefrom, though there is power in the Central Gov ernment to notify other substances. The Act further provides for prohibition and control of these drugs. Further section 39(1) lays down that "nothing in this Act or in the rules made thereunder shall affect the validity of any Provincial Act or an Act of any State Legislature for the time being in force, or of any rule made thereunder, which imposes any restriction not imposed by or under this Act, or imposes a restriction greater in degree than a corresponding restriction imposed by or under this Act, on the consumption of or traffic in any dangerous drug within India". It will be seen that the Dangerous Drugs Act provides for prohibition or control, creates offences, provides for penalties and lays down procedure in that behalf. It is not an Act imposing duties of excise. Therefore, when this Act deals with hemp, which includes ganja, bhang and charas, it does not deal with that aspect of hemp which is concerned with the imposition and collection of duties of excise on it and with incidental provisions in that behalf. We have already said that a substance can come both under the Dangerous Drugs Act as well as under the Drugs Act and may also be liable to duties of excise under entry 51 of List II of the Seventh Schedule. The fact that hemp is defined as a dangerous drug under this Act would not therefore in any way affect any law dealing with the imposition and collection of duties of excise on hemp. Consequently when the Dangerous Drugs Act was introduced in the Part B State of Hyderabad in 1950, it could not affect that part of the 1333 F Act which dealt with ganja, bhang and charas, as intoxicating drugs and provided for grant of licences and collection of duties of excise thereon. Similarly, with the introduction of the Dangerous Drugs Act, the operation of the 1333 F Act could not be affected with respect even to opium insofar as that Act dealt with grant of licence and 116 collection of duties of excise thereon, though insofar as it dealt with manufacture of opium which comes under entry 59 of List 1, there was a repeal of the provisions relating to manufacture contained in the 1333 F Act and the Rules. We are therefore of opinion that the introduction of the Dangerous Drugs Act in the Part B State of Hyderabad in 1950 did not result in complete effacement of the, 1333 F Act. It remained alive even so far as opium, charas, bhang and ganja were concerned for the purpose of collection of duties of excise thereon. It also remained alive with respect to other substances which might be notified as intoxicating drugs under the 1333 F Act. If there was any such notifica tion between 1924 and 1950 that notification would remain valid and the 1333 F Act would apply ' to it. If there was no such notification, the 1333 F Act would remain on the statute book as a conditional statute under which a notification in respect of any substance could be issued. The argument that the introduction of the Dangerous Drugs Act in 1950 completely repealed the 1333F Act has no force and must fail. Then we come to the Drugs Act of 1940 which was extended to the Part B State of Hyderabad by the Central Act III of 1951. Section 6 of the 1951 Act provides that "if immediately before the appointed day, there is in force in any Part B State any law corresponding to any of the Acts or Ordinances now extended to that State, that law shall, save as otherwise expressly provided in this Act, stand repealed". It is not in dispute that chloral hydrate was controlled under the Drugs Act, and the argument on behalf of the appellant is that on the coming into force of the Drugs Act, the 1333 F Act so far as it applied to intoxicating drugs which could be notified thereunder, must be deemed to have been repealed. We are of opinion that there is no force in this argument either. The Drugs Act is mainly concerned with standard and quality of drugs manufactured in this country and therefore controls the manufacture, sale and distribution of drugs. It has nothing to do with duties of excise and with their imposition on 'narcotics and narcotic drugs. We have already indicated that narcotics and %,narcotic drugs are to be found in entry 51 of List II, which provides for imposition of duties of excise on such drugs. If a substance is a narcotic drug, it is liable to be controlled under the Drugs Act as a drug. But at the same time it is liable to duties of excise under entry 51 of List 11, and such duties can be imposed only by the State legislature. Further the State legislature will have power to enact necessary provisions for the imposition and collection of duties of excise and for all incidental matters which might be neces 117 sary for such imposition and collection. The fact that the Drugs Act was introduced in the Part B State of Hyderabad in 1951 would not therefore affect in any way that part of the 1333 F Act which dealt with collection of duties of excise and provided for licences in that connection. As we have said before, the 1333 F Act is more in the nature of an excise Act while the Drugs Act has nothing to do with the collection of duties of excise. Further section 2 of the Drugs Act specifically provides that "the provisions of this Act shall be in addition to, and not in derogation of, the Dan gerous Drugs Act, 1930, and any other law for the time being in force. " Therefore even if section 6 of the Central Act III of 1951 cad be said to have repealed any provision of the 1333 F Act which is concerned with matters other than collection of duties of excise thereunder, that will not affect the later amendment made in the 1333 F Act by the Hyderabad Act No. 22 of 1953, for that amendment will be treated in addition to the provisions of the Drugs Act so long as the 1333 F Act was not completely dead before the Hyderabad Act No. 22 of 1953 was passed. We have already said when dealing with the Dangerous Drugs Act that the introduction of that Act could not be said to have completely repealed the 1333F Act which dealt with matters not covered by the Dangerous Drugs Act at all, (namely, collection of duties of excise and matters incidental thereto). The same in our opinion applies to the Drugs Act which did not deal at all with the collection of duties of excise on drugs covered by it. Therefore the 1333 F Act insofar as it deals with the collection of duties of excise on any drugs which are narcotics or narcotic drugs would remain alive to that extent. There can be no doubt therefore that the 1333 F Act continued in existence so far as it dealt with collection of duties of excise on substances covered by it and it could therefore be amended by Hyderabad Act No. 22 of 1953. This brings us to the second point raised in the present appeal, namely, that even if the 1333 F Act had not been completely repealed by the introduction of the Dangerous Drugs Act and the Drugs Act and could be properly amended by the Hyderabad Act of 1953, the Rules were not within the power conferred by the Act. For that purpose we have to look at the 1333 F Act as it stands after the amendment of 1953. The amended Act defines "intoxicating drugs" to mean (i) Indian hemp including all forms known as bhang, sendhi or ganja, (ii) charas, (iii) any mixture of the above or any drink prepared therefrom, and (iv) any other intoxicating and narcotic substance which the Government may by notification declare to be an intoxicating drug, such substance not being opium, 118 coca leaf or a manufactured drug as defined in section 2 of the Dangerous Drugs Act. The amended Act is also clearly an excise Act as will be clear from the definition of "intoxicating drugs revenue" in section 2(2) which means revenue from any duty, fee, tax, fine or confiscation imposed, or ordered under the provisions of this Act. It was therefore open to the State Government to declare by notification any substance as an intoxicating drug within the meaning of the Act provided it was an intoxicating and narcotic substance, If such a declaration is made, the substance will be liable to excise duty under the amended Act and the Rules framed thereunder and will be liable to such incidental control as may be necessary for the collection of duties. Further, drugs being in the Concurrent List, the provisions of the 1953 amendment Act will also be a law under item 19 of List III and will be in addition to the Drugs Act of 1940 by virtue of section 2 thereof. Now, it appears that chloral hydrate has been notified by the Government of Andhra Pradesh as an intoxicating drug within the meaning of the amended Act. It was thereafter that the Rules were framed. The Rules provide for the manufacture of chloral hydrate under a licence and for payment of duties of excise of Rs. 500 per year on such manufacture. They also provide for possession, sale, import, export and transport. If chloral hydrate is a narcotic drug or a narcotic within the meaning of entry 51 of List II of the Seventh Schedule and is an intoxicating drug and narcotic substance within the meaning of section 2(1) (iv) of the Amended Act, it could be notified under the amended Act and on such notification it would be liable to excise duty and to such incidental control as may be necessary for the purpose of collection of excise duty. We are in the present case mainly concerned with the grant of licence and imposition of excise duty of Rs. 5001per annum. If chloral hydrate is an intoxicating and narcotic substance, the Rules could be framed with respect to its control and the appellant could be asked to take out a licence and pay excise duty on the manufacture thereof, even though chloral hydrate may be a drug which is controlled under the Drugs Act. The case of the State Government in this connection is that chloral hydrate is a narcotic drug or a narcotic within the meaning of entry 51 of List II of the Seventh Schedule. Its further case is that it increases intoxication if mixed with liquor and that it is being produced in large quantities in order that it may be mixed with liquor. That is the reason why the State has framed the Rules to control the production of chloral hydrate. The appellant in its writ petition admitted that chloral hydrate was used in small doses as a hypnotic and sedative. Now the dictionary meaning of 119 the word "narcotic" is a substance which relieves pain, produces sleep, and in large doses brings on stupor, coma, and even death, as opium, hemlock, alcohol etc. Obviously, therefore, if chloral hydrate is hypnotic and sedative as admitted by the appellant, it would be a narcotic. The appellant however relies on the statement in the affidavit filed on behalf of the State to show that chloral hydrate is not a narcotic or a narcotic drug within the meaning of entry 5 1 of List II, for if it is not a narcotic or a narcotic drug within that meaning no duty of excise can be imposed by the State legislature thereon. The part of the affidavit on behalf of the State relied upon by the appellant was dealing with a vague allegation of the appellant that chloral hydrate was a medicinal preparation. In that connection it was submitted on behalf of the State that chloral hydrate was not a medicinal or toilet preparation coming within the definition of the Medicinal and. Toilet Preparations (Excise Duties) Act, 16 of 1955 "as this substance in a finished form does not contain either alcohol, opium, Indian hemp or other narcotic drug or narcotics". These last words were taken from the schedule to the Act of 1955 which mentions any medicinal preparation not containing alcohol but containing opium, Indian hemp or other narcotic drug or narcotic. In the 1955 Act narcotic drug or narcotic has been defined as meaning a substance (other than alcohol) which when swallowed or inhaled by, or injected into, a human being induces drowsiness, sleep, stupefaction or insensibility in the human being and which is a dangerous drug within the meaning of the Dangerous Drugs Act, 1930. Obviously, therefore, the words " narcotic drug" and "narcotic" used in the 1955 Act have a special meaning and this was all that was intended when in the affidavit filed by the State these words were used. But all narcotics or narcotic drugs are not covered by the Dangerous Drugs Act and there, can be narcotics and narcotic drugs which are not covered by the Dangerous Drugs Act. There can be no other conclusion on the evidence in the present case than that chloral hydrate is a narcotic or a narcotic drug within the meaning of entry 51 of List 11 of the Seventh Schedule. It also has intoxicating effect when mixed with liquor and so is an intoxicating drug within the meaning of the amended Act. The appellant also relies on the , No. 16 of 1955, in this Court. It is true that the appellant stated in its writ petition that it was holding a licence under the 1955 Act; but there was no clear averment in the petition that chloral hydrate was being manufactured as a medicinal preparation under the 1955 Act. The licence which has been produced shows that chloral hydrate is being manufactured under the 120 Drugs Act and the rules framed thereunder. Further the judgment of the High Court shows that no argument was raised before it to the effect that choral hydrate was a medicinal preparation under the 1955 Act. In the circumstances we are not prepared to allow the appellant to raise this point for the first time before us, even though there was some kind of denial on this point by the State Government in its affidavit to which we have already referred. In the result the appeal fails and is hereby dismissed with costs. Appeal dismissed.

IN-Abs

The appellant was a manufacturer of drugs, (including chloral hydrate) in Hyderabad. In 1962, the State of Andhra Pradesh issued the Andhra Pradesh (Telangana Area). Chloral Hydrate (Chloral) Rules with respect to manufacture, possession, sale import, export and transport of chloral hydrate under the Andhra Pradesh (Telangana Area) Intoxicating Drugs Act of 1333 Fasli, as amended by the Hyderabad Opium and Intoxicating Drugs (Amendment) Act of 1953. The Rules provided that the manufacture of chloral hydrate shall be in accordance with the conditions of a licence granted by the Excise Commissioner on payment of the excise duty of Rs. 500 per annum. The appellant refused to take licence and challenged the validity of the Rules by a writ petition, but the High Court dismissed the petition. In appeal to this Court, the appellant contended that (i) the 1333 F Act had been repealed in toto by the introduction into the State of the Dangerous Drugs Act, 1930 and the Drugs Act 1940, and therefore. , there was no power in the Hyderabad legislature to amend the 1333 F Act by the 1953 Act, and in consequence; there was no law in force on the basis of which the Rules could be promulgated in 1962; and (ii) even if the Act was not repealed, the Rules were not within the powers conferred by the 1333 F Act as amended in 1953, as chloral hydrate was not a narcotic or narcotic drug within the meaning of item 51, List II of the 7th Schedule to the Constitution. HELD: The 1333 F Act continued in existence in so far as it dealt with collection of duties of excise on substances covered by it and it could therefore be amended by the 1953 Act. [117 F] The 1333 F Act was in the nature of an excise Act and provided for licences and collection of duties of excise and made provisions incidental thereto. It applied to the intoxicating drugs mentioned therein and other intoxicating drugs which might be notified by the Government. The Act continued in force in Hyderabad after 26th January 1950. In 1950, the Dangerous Drugs Act was applied by Parliament, to Hyderabad, by Central Act 33 of 1950. This Act however. is not an Act imposing duties of excise. Consequently., it could not affect that part of the 1333 F Act which dealt with the grant of licences, and collection of duties of excise. Further, as a result of section 39(1) of the Dangerous Drugs Act dealing 'With the saving of local and special laws and entry 51 of List II, the introduction of the Act in Hyderabad did not result in complete effacement of the 1333 F, Act. It remained alive with respect to substances which might be notified as intoxicating drugs under the 1333 F Act. If there was any such notification before 1950, that notification would be valid and the Act would apply to it. If there was no such notification, the Act would remain on the statute book as a conditional statute under which a notification could be issued. , [114 G H; 115 E F; 116 A C] 111 The Drugs Act was extended to Hyderabad by Central Act 3 of 1951. This Act is mainly concerned with the standard and quality of drugs manufactured and therefore controls the manufacture, sale and distribution of drugs. It has also nothing to do with duties of excise and with their imposition on narcotics and narcotic drugs. Therefore, the fact that this. Act was introduced into Hyderabad in 1951 would not affect in any way that part of the 1333 F Act which dealt with collection of excise duties and provided for licences in that connection, as such duties can be imposed only by the State legislature under item 51 of List II. Hence, the 1333 F Act in so far as it deals with the collection of duties of excise on any drugs which are narcotics or narcotic drugs would remain alive to that extent. [116 D G; 117 D F] (ii) Narcotic is a substance which in small doses relieves pain and produces sleep and since it was admitted by the appellant that chloral hydrate is hypnotic and sedative, it would be a narcotic within the meaning of entry 51 of List II. The statement in the respondents ' affidavit that it did not contain narcotic or a narcotic drug was only made in reply to the appellants allegation that chloral hydrate was a medicinal preparation. All that was intended by the State by using those words was that chloral hydrate did not contain any narcotic drug or narcotic is defined in the . Chloral hydrate has also an intoxicating effect when mixed with liquor and so is an intoxicating drug within the meaning of the Amendment Act. [119 A F] The 1333 F Act after the amendment of 1953 is also an excise Act and defines intoxicating drugs to mean inter alia any intoxicating and narcotic substance which the Government may by notification declare to be an intoxicating drug. [118 A B] Since chloral hydrate is an intoxicating and narcotic substance it could be notified under the Amendment Act. It would be liable to excise duty and therefore the Rules could be framed with respect to its control, and the appellant could be asked to take out a licence and pay excise duty on the manufacture thereof. [118 D F]

Appeal No. 701 of 1964. Appeal from the judgment and order dated August 10, 1961 of the Calcutta High Court in Civil Rule No. 1428 of 1958. section V. Gupte, Solicitor General, R. Ganapathy Iyer and R. H. Dhebar, for the appellant. G. section Chatterjee and P. K. Chatterjee, for the respondent. directed against the judgment of the High Court accepting a petition under article 226 of the Constitution and quashing adjudication proceedings under the Foreign Exchange Regulation Act, 1947 (VII of 1947) hereinafter referred to as the Act. The relevant facts are as follows: Following the recovery in 1954 of some foreign currency and Travelers Cheques at No. 311, Bow Bazar Street, Calcutta, where the respondent alongwith his, mother and brother, carried on the business of jewellers, the Director of Enforcement issued a notice on April 23, 1958,on the petitioner calling upon him to show cause within 10 days of the receipt of the notice why adjudication proceedings should not be. held against him for contravention of s.23(1)of the Act. On May 10, 1958, the respondent replied to the above memorandum giving his version as to how he came into possession of the foreign currency, but he denied having sold any travellers cheques. He prayed that the proceedings may be dropped and the currency seized returned to him. The Director of Enforcement, after considering the cause shown by the respondent came to the conclusion that the adjudication proceedings should 'be held. He, therefore, requested the respondent to arrange to be present either personally or through, his authorized representative before the Director on May 13, 1958, in the office of the Calcutta Branch of the Directorate. On, this, on May 13, 1959, the respondent filed a petition under art 226 of the Constitution challenging the adjudication proceeding& 36 on various grounds, the principal grounds being that section 23 (1) (a) and section 23D of the Act were ultra vires of article 20(2) of the Constitution, and that the offence having been committed in 1954, the proposed adjudication was illegal and entirely without jurisdiction. Before the High Court, at the time of the final hearing, the petitioner was allowed to raise the point that section 23 ( 1 ) (a) as well as section 23D contravened article 14 of the Constitution. Mitter, J. held that section 23 (1) (a) violated article 14 of the Constitution and was accordingly ultra vires the Constitution, and that the relative provision of section 23D must also be condemned. Regarding the second point, namely, whether section 23 (1) (a), having, been substituted by the Amending Act XXXIX of 1957, would have retrospective operation in respect of the alleged offence, which took place in 1954, the High Court came to the conclusion that the petitioner "had a vested right to be tried by an ordinary court of, the land with such rights of appeal as were open to all", and although section 23 (1) (a) was procedural, where a vested right was affected, prima facie, it was not a question of procedure. Thea, the High Court came to the conclusion that the provision as to adjudication by the Director of Enforcement could not have any retrospective operation. The learned Judge observed that "the impairment of a right by putting a new restriction thereupon is not :a matter of procedure only. It impairs a substantive right and an enactment which does so is not retrospective unless it says so expressly or by necessary intendment." Accordingly, is stated before, the adjudication proceedings were quashed being without jurisdiction. This Court held in Shanti Prasad Jain vs Director of Enforcement(1) that section 23(1) and section 23D of the Foreign Exchange Regulation Act did not violate article 14 of the Constitution. Mr. P. K. Chatterjee, counsel for the respondent, properly concedes that he cannot press this point. The learned Solicitor General, who appeared on behalf of the appellant, contends that the High Court was in error in holding that the accused had a vested right to be tried by an ordinary criminal court. He says that the amendment only changed the venue of trial from a Magistrate to the Director of Enforcement in some cases and no vested right was affected. He refers to the decision of this Court in Rao Shiv Bahadur Singh vs The State of Vindhya Pradesh(2) where Jagannadhadas, J., speaking for the Court, observed at p. 1200 as follows (1) ; (1) ; 37 "In this context it is necessary to notice that what is prohibited under article 20 is only conviction or sentence under an ex post facto law and not the trial thereof. Such trial under a procedure different from what obtained at the time of the commission of the offence or by a court different from that which had competence at the time cannot ipso facto be held to be unconstitutional. A person accused of the commission of an offence has no fundamental right to trial by a particular court or by a particular procedure, except in so far as any constitutional objection by way of discrimination or the violation of any other fundamental right may be involved. " Before its amendment by Act XXXIX of 1957, section 23(1) of the Act read as follows : "23(1) Whoever contravenes any of the provisions of this Act or of any rule, direction or order made thereunder shall be punishable with imprisonment or a term which may extend to two years or with fine or with both, and any Court trying any such contravention may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that any currency, security, gold or silver, or goods or other property in respect of which the contravention has taken place shall be confiscated. . After the amendment by Act XXXIX of 1957, another section 23(1) was substituted and section 23D was added, which read as follows "23(1) If any person contravenes the provisions of section 4, section 5, section 9, section 10, sub section (2) of section 12, section 17, section 18A or section 18B or of any rule, direction or order made thereunder, he shall (a) be liable to such penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement in the manner hereinafter provided, or. . . " "23D. (1) For the purpose of adjudging under clause (a) of sub section (1) of section 23 whether any person has committed a contravention the Director of Enforcement shall hold an inquiry in the prescribed manner 38 after giving that person a reasonable opportunity of being heard and if, on such inquiry, he is satisfied that the person has committed the contravention, he may impose such penalty as he thinks fit in accordance with the provision of the said section 23; Provided that if, at any stage of the inquiry, the Director of Enforcement is of opinion that having regard to the circumstances of the case, the penalty which he is empowered to impose would not be adequate, he shall, instead of imposing any penalty himself, make a complaint in writing to the Court. " The effect of these provisions is that after the amendment of 1957, adjudication proceedings or criminal proceedings could be taken up in respect of a contravention mentioned in section 23(1) while before the amendment only criminal proceedings before a Court could be instituted to punish the offender. The High Court, as already observed, held that the new amendment did not apply to contravention which took place before the Act came into force. Mr. Chatterjee, the learned counsel for the respondent, urges that a substantive vested right to be tried by an ordinary court existed before the amendment, and he relied on Maxwell 11 th Edition, p. 217, where it is stated that "the general principle, however, seems to be that alterations in procedure are retrospective, unless there be some good reason against it." He says that there is a good reason if the principles of article 20 are borne in mind. In our opinion, there is force in the content on of the learned Solicitor General. As observed by this Court in Rao Shiv Bahadur Singh vs The State of Vindhya Pradesh(1) a person accused of the commission of an offence has no vested right to be tried by a particular court or a particular procedure except in so far as there is any Constitutional objection by way of discrimination or the violation of any other fundamental right is involved. It is well recognized that "no person has a vested right in any course of procedure" (vide Maxwell 11th Edition, p. 216), and we see no reason why this ordinary rule should not prevail in the present case. There is no principle underlying article 20 of the Constitution which makes a right to any course of procedure a vested right. Mr. Chatterjee complains that there is no indication in the Amending Act that the new procedure would be retrospective and he further says that this affects his right of appeal under the Criminal Procedure Code. But if this is a matter of Procedure, (1) ; 39 then it is not necessary that there should be a special provision to indicate that the new procedural law is retrospective. No right of appeal under the Criminal Procedure Code is affected because no proceedings had ever been started under the Criminal Procedure Code. Mr. Chatterjee 's next point is that the new section 23(1)(a) con travenes article 20(1) of the Constitution. He says that section 23(1) (a) prescribes a minimum penalty while under the old section 23(1) the Magistrate had an option of fixing a fine less than the minimum prescribed under section 23 ( 1 ) (a). But we are unable to agree with him that the new section prescribes any minimum. What it does prescribe is a maximum. The words "not exceeding" cover not only the expression "three times the value of the foreign exchange" but also the words "five thousand rupees" Therefore, no greater penalty than might have been levied under the old section has been prescribed by the new section 23 (1 ) (a), and consequently there is no breach of article 20(1) of the Constitution. We may add that the offence is alleged to have been commit ted in 1954 and notice of adjudication was sent in 1958 and now we axe in the year 1965. It would be expedient if the adjudication proceedings are disposed of as expeditiously as possible. In the result the appeal is accepted and the petition under article 226 dismissed. The appellant will have his costs here and in the High Court. Appeal allowed.

IN-Abs

In 1954 some foreign currency and Travelers Cheques were recovered from the respondent 's premises. By Act 39 of 1957 the Foreign Exchange Regulation Act was amended, section 23(1} was substituted and section 23D was added. After the amendment either adjudication proceedings or criminal proceedings could be taken up in respect of a contravention mentioned in section 23(1), while, before the amendment only criminal proceedings before a court could be instituted to punish the offender. The Director of Enforcement in 1958 issued a show cause notice to the respondent why adjudication proceedings be not held against him for contravention of section 23(1) of the Foreign Exchange Regulation Act. The respondent showed cause, on consideration of which the Director of Enforcement concluded that adjudication proceedings should be held, and therefore, required the respondent to appear before him. Thereupon, the respondent filed a petition under article 226 of the Constitution challenging the adjudication proceedings on. the grounds : (i) section 23( 1 )(a) as well as section 23D contravened article 14 of the Constitution; (ii) the amendment in 1957 did not apply to contravention which took place before it came into force; and (iii) s 23(1)(a) of the Act was ultra vires of article 20(1) of the Constitution. The High Court upheld the objections and quashed the adjudication proceedings, In appeal to this Court; HELD: The appeal must be accepted. (i) Section 23(1) and section 23D of the Act did not violate article 14 of the Constitution. [36 F] Shanti Prasad fain vs Director of Enforcement, , followed. (ii) A person accused of the commission of an offence had no vested right to be, tried by a particular court or a particular procedure except in so far as there is any constitutional objection by way of discrimination or the violation of any other fundamental right is involved. There is no principle underlying Art 20 of the Constitution which makes a right to any course of procedure a vested right. [38 F H] Rao Shiva Bahadur Singh vs State of Vindhya Pradesh, ; followed. it is not necessary that there should be a special provision to indicate that the new procedural law is retrospective. No right of appeal under the Criminal Procedure Code is affected because no proceedings had even been started under the Criminal Procedure Code. [39 A] 35 (iii) The new section does not prescribe any minimum. What it prescribes is a maximum. No greater penalty than might have been levied under the old section has been prescribed by the new section 23(1)(a), and consequently there is no breach of article 20(1) of the Constitution. [39 C D] The words "not exceeding" in section 23 (1) (a) of the Act cover not only the expression "three times the value of the foreign exchange" but also the words "five thousand rupees." [39 C]

Appeal No. 729 of 1964. Appeal by special leave from the order dated February 1964 of the Rajasthan High Court in D.B. Civil Appeal No. 2 of 1963. O. P. Varma, for the appellants. Mohan Behari Lal, for the respondent. The Judgment of the Court was delivered by Gajendradkar, C.J. This appeal by special leave arises from an application made by the respondent Puniya in the Court of the Senior Civil Judge at Jhalawar under section 25 of the (No. 8 of 1890) (hereinafter called 'the Act '), for the custody of his daughter Mt. Chitra. To this application, the 103 respondent had impleaded the two appellants, Gulab Bai and her, husband Onkar Lal. The respondent is a Kumhar by caste, whereas the appellants are fat. The respondent 's case was that the minor Chitra who was about 11 years of age at the date of the application, had been living with the appellants for the last 4 or 5 years with his consent. Whilst the minor girl was living with the appellants, she used to come to spend some time with the respondent and his wife; but for some time past, the appellants did not allow Chitra to visit her parents. That is why the respondent thought it necessary to move the Court for an order under section 25 of the Act. The claim thus made by the respondent was disputed by the appellants. They alleged that the respondent and his wife had lost some children in their infancy, and so, they decided to leave the minor in the custody of the appellants, in the hope that their custody would save the child. Accordingly, the minor was entrusted to the appellants a few hours after her birth and in fact, she was given away by the respondent and his wife to the appellants to be looked after as if she was their adopted child. During all these years, the appellants have looked after the minor as their own child, have taken fond care of her, and have looked after her education. The appellants. and the respondent and his wife are neighbours, and the appellants denied the allegation made by the respondent that they ever obstructed the minor from visiting her parents. According to the appellants, recently an unfortunate incident had taken place between appellant No. 1 and the wife of the respondent and that was the real cause of the present application. They pleaded that as a result of the ugly incident that took place between the two ladies, the minor was frightened and appeared to be disinclined to visit her parents any longer. On these pleadings, the parties led evidence to support their respective contentions. The learned trial Judge held that the child had been entrusted to the appellants soon after she was born, and that she was looked after by the appellants as if she was their daughter. He felt satisfied that in case the child was removed from the homely atmosphere which she enjoyed in the house of the appellants, that would definitely be detrimental to her welfare and would also affect her health, because she had come to look upon the appellants as her parents. The learned trial Judge examined the child in order to ascertain her own wishes, because he thought that she had attained the age of discretion and could express her wishes intelligently. He was convinced that the child definitely preferred to stay with the appellants. Having come to the conclusion that it would be inconsistent with the interests of the child to allow the application made by the respondent, the learned Judge ordered that 104 appellant No. 2 should be appointed the guardian of the person of the minor under sections 7 and 8 of the Act. He directed that the said Guardian shall give an undertaking to the. Court not to remove the child from the territorial jurisdiction of the Court and not to marry her without the permission of the Court. A direction was also issued that the child shall not, of course, be married outside her caste without the consent of her parents even if she so desires. Against this order, the respondent preferred an appeal before the Rajasthan High Court. This appeal was heard by a learned single Judge of the said High Court who reversed the decision of the trial Judge. He came to the conclusion that it would be in the interests of the minor to deliver her to the custody of the respondent and his wife. He held that under section 6 (a) of the Hindu Minority and Guardianship Act, 1958, the respondent was entitled to be the guardian of his daughter in the absence of any allegation or proof that he was in any way unsuitable to be such a guardian. The learned single Judge also took into account the fact that the appellants and the respondent belonged to different castes. and he held that since the minor was then about 12 years of age, it was in her interest that she went back to be looked after by her own parents. ion this view, the learned single Judge set aside the order passed by the learned trial Judge by which appellant No. 2 was appointed the guardian of the minor and directed him to deliver the minor to the custody of the respondent. The order passed by the learned Judge further provided that if the appellants did not deliver the minor Chitra to her parents on the expiry of three months, the respondent shall apply for execution of the order and that it would be executed as a decree under section 25 (2) of the Act by issue of a warrant under section 100 of the Code of Criminal Procedure. Against this decision, the appellants preferred an appeal under clause 18 of the Rajasthan High Court Ordinance, 1949 (No. 15 of 1949) (hereafter called 'the Ordinance '). This appeal was dismissed by a Division Bench of the High Court on the ground that the appeal was incompetent having regard to the provisions of sections 47 and 48 of the Act. The appellants then moved the High Court for certificate to prefer an appeal to this Court, but the said application was dismissed. That is how the appellants applied for and obtained special leave from this Court, and it is with the said leave that this appeal has come before us. The short question of law which arises for our decision is whether the High Court was right in holding that the appeal under clause 18 (1) of the Ordinance was incompetent and that raises the question about the construction of sections 47 and 48 of the Act. 105 Before dealing with this point, two relevant facts ought to be mentioned. The Act was extended to Rajasthan by the Part B States (Laws) Act, 1951 (Act III of 1951) on the 23rd February; 1951; but before the Act was thus extended to Rajasthan, the Ordinance had already been promulgated. Clause 18(1) of the Ordinance provides, inter alia, that an appeal shall lie to the High Court from the judgment of one Judge of the High Court; it excepts from the purview of this provision certain other judgments with which we are not concerned. It is common ground that the judgment pronounced by the learned single Judge of the High Court on the appeal preferred by the respondent before the High Court, does not fall within the category of the exceptions provided by clause 1 8 ( 1 ) of the ordinance; so that if the question about the competence of the appeal preferred by the appellants before the Division Bench of the High Court had fallen to be considered solely by reference to clause 18(1), the answer to the point raised by the appellants before us would have to be given in their favour. The High Court has, however, held that the result of reading sections 47 and 48 together is to make the present appeal under clause 18(1) of the Ordinance incompetent. The question which arises before us is : is this view of the High Court right ? Section 47 of the Act provides that an appeal shall lie to the High Court from an order made by a Court under sections specified in clauses (a) to (j) thereof. Clause (c) of the said section refers to an appeal against. an order made under section 25, making or refusing to make an order for the return of a ward to the custody of his guardian. It is thus clear that the order passed by the learned trial Judge in the present proceedings was an order under section 25 of the Act, and as such, is appealable under section 47; and when as a result of the rules framed by the Rajasthan High Court the present appeal was placed before a learned single Judge of the said High Court for hearing and was decided by him, his decision became appealable to a Division Bench of the said High Court under cl. 1 8 (1 ) of the Ordinance. Thus far, there is no difficulty or doubt. But the High Court has held that section 48 of the Act, in substance, amounts to a prohibition against an appeal to a Division Bench under cl. 18(1) of the Ordinance; and that makes it necessary to examine the provisions of section 48 carefully. Section 48 reads thus "Save as provided by the last foregoing section and by section 622 of the Code of Civil Procedure, an order made under this Act I shall be final, and shall not be liable to be contested by suit or otherwise. " 106 It is clear that what is made final by section 48 is an order made under this Act; and the context shows that it is an order made by the trial Court under one or the other provision of the Act. This position is made perfectly clear if the first part of section 48 is examined. The finality prescribed for the order made under this Act is subject to the provisions of section 47 and section 622 of the earlier Code which corresponds to section 115 of the present Code. In other words, the saving clause unambiguously means that an order passed by the trial Court shall be final, except in cases where an appeal is taken against the said order under section 47 of the Act, or the propriety, validity, or legality of the said order is challenged by a revision application preferred under section II 5 of the Code. It is, therefore, essential to bear in mind that the scope and purpose of 'section 48 is to make the orders passed by the trial Court under the relevant provisions of the Act final, subject to the result of the appeals which may be preferred against them, or subject to the result of the revision applications which may be filed against them. In other words, an order passed on appeal under section 47 of the Act, or an order passed in revision under section II 5 of the Code, are, strictly speaking, outside the purview of the finality prescribed for the orders passed under the Act, plainly because they would be final by themselves without any such provision, subject, of course, to any appeal provided by law or by a constitutional pro vision, as for instance, article 136. The construction of section 48, therefore, is that it attaches finality to the orders passed by the trial Court subject to the provisions prescribed by section 47 of the Act, and section 115 of the Code. That is one aspect of the matter which is material. The other aspect of the matter which is equally material is that the provisions of section 47 are expressly saved by section 48, and that means that section 47 will work out in an ordinary way without any restriction imposed by, section 48. In considering the question as to whether a judgment pronounced by a single Judge in an appeal preferred before the High Court against one or the other of the orders which are made appealable by section 47 will be subject to an appeal under clause 1 8 (1) of the Ordinance, section 48 will have no restrictive impact. The competence of an appeal before the Division Bench will have to be judged by the provisions of cl. 18 itself. Section 48 saves the provisions of section 47, and as we have already indicated, considered by themselves the provisions of section 47 undoubtedly do not create any bar against the competence of an appeal under cl. 18(1) of the Ordinance where the appeal permitted by section 47 is heard by a learned single Judge of the High Court. Therefore, we are satisfied that the High Court was in error in coming to the conclusion that an appeal before a Division Bench of the said High Court under clause 18 (1) of the Ordinance was incompetent. 107 It is true that in upholding the respondent 's plea that the appeal preferred by the appellants under clause 18(1) of the Ordinance was incompetent, the High Court has no doubt purported to rely upon and apply its earlier decision in the case of Temple of Shri Bankteshwar Balai Through Rampal vs The Collector, Ajmer(1). The said decision, however, was concerned with the effect of the provisions prescribed by section 66(3) of the Ajmer Abolition of Intermediaries and Land Reforms Act (No. III of 1955) in relation to clause 18 of the Ordinance, and since we are not called upon to consider the correctness of the conclusion reached in that behalf, it is unnecessary for us to examine whether the High Court was right in holding that the provisions of the said section 66(3) created a bar against the competence of the appeal under cl. 18(1) of the Ordinance. All that we are concerned to deal with in the present appeal is the effect of section 48 of the Act, and in our opinion, the High Court was in error in holding that section 48 excluded the application of clause 1 8 (1) of the Ordinance to the decision of the learned single Judge in the present proceedings. In this connection, we may incidentally refer to the decision of this Court in Union of India vs Mohindra Supply Company(1). In that case, this Court has held that an appeal against the appellate order of the single Judge was barred under section 39(2) of the Indian , because the expression "second appeal" in section 39(2) means a further appeal from an order passed in appeal under section 39 (1) and not an appeal under section 100 of the Code, and as such, the said expression "second appeal" includes an appeal under the Letters Patent. In substance. the effect of the decision of this Court in the case of Mohindra Supply Co.(2) is that by enacting section 39(2) the has prohibited an appeal under the Letters Patent against an order passed under section 39 (1). This decision again turned upon the specific words used it section 39(1) & (2) of the and is not of any assistance in interpreting the provisions of section 48 of the Act with which. we are concerned in the present proceedings. The question a,, to whether an appeal permitted by the relevant clause of the Letters Patent of a High Court can be taken away by implication, had been considered in relation to the provisions of section 588 of the Codes of Civil Procedure of 1877 and 1882. The first part of the said section had provided for an appeal from the orders specified by clauses (1) to (29) thereof, and the latter part of the said section had laid down that the orders passed in appeals under this section shall be final. Before the enactment of (1) LL.R. (2) ; Sup CI/66 8 108 the present Code, High Courts in India had occasion to consider whether the provision as to the finality of the appellate orders prescribed by section 588 precluded an appeal under the relevant clauses of the Letters Patent of different High Courts. There was a conflict of decisions on this point. When the matter was raised before the Privy Council in Harrish Chunder Chowdhry vs Kali Sundari Debia(1), the Privy Council thus tersely expressed its conclusion: "It only remains to observe that their Lordships do not think that section 588 of Act X of 1877, which has the effect of restricting certain appeals, applies to such a case as this, where the appeal is from one of the Judges of the Court to the Full Court". Basing themselves on these observations, the High Courts of Calcutta, Madras, and Bombay had held that section 588 did not take away the right of appeal given by clause 15 of the Letters Patent, vide Toolsee Money Dassee & Others vs Sudevi Dassee & Others(2), Sabhapathi Chetti & Others vs Narayanasami Chetti(3), and The Secretary of State for India in Council vs Jehangir Maneckji Cursetji (4 ) respectively. On the other hand, the Allahabad High Court took a different view, vide Banno Bibi and others vs Mehdi Husain and Others(5), and Muhammad Naim ul Lah Khan vs Ihsan Ullah Khan(6). Ultimately, when the present Code was enacted, section 104 took the place of section 588 of the earlier Code. Section 104(1) provides that an appeal shall lie from the following orders, and save as otherwise expressly provided in the body of this Code or by any law for the time being in force, from no other orders. It will be noticed that the saving clause which refers to the provisions of the Code, or to the provi sions of an law for the time being in force, gives effect to the view taken by the Calcutta, Madras and Bombay High Courts. In fact, later, the Allahabad High Court itself has accepted the same view in L. Ram Sarup vs Mt. Kaniz Ummehani (7 ). We have referred to these decisions to emphasise the fact that even where the relevant provision of section 5 8 8 of the earlier Code made certain appellate orders final, the consensus of judicial opinion was that the said provision did not preclude an appeal being filed under the relevant clause of the Letters Patent of the High Court. In the present case, as we have already indicated, section 48 in terms saves the provisions of section 47 of the Act as well as those of section 115 of the (1) 10 I.A. 4 at p. 17. (2) (3) (1902))5 Mad. (4) (5) (1889) 11 Alld. (6) (1892) 14 AIId. 226 (F.P.) (7) A.I.R. 1937 Alld. 109 Code, and that gives full scope to an appeal under clause 18 of the Ordinance which would be competent when we deal with the question about appeals under section 47 of the Act considered by itself. The result is, the appeal is allowed, the order passed by the Division Bench of the High Court dismissing the appeal preferred by the appellants under cl. 18(1) of the Ordinance on the ground that it is incompetent, is set aside, and the said appeal is remitted to the High Court for disposal in accordance with law. In view of the unusual circumstances of this case, we direct that parties should bear their own costs incurred so far.

IN-Abs

The respondent 's application under section 25 of the Guardians and Wards Act for the custody of respondent 's daughter was rejected by the Civil Judge. When the decision was reversed in appeal by a single Judge of the Rajasthan High Court, the appellants preferred an appeal to the Division Bench under cl. 18 of the Rajasthan High Court Ordinance. This was dismissed on the ground that the appeal was incompetent having regard to sq. 47 and 48 of the Guardians and Wards Act. In appeal to this Court, HELD:The appeal before the Division Bench of the Rajasthan High Court under cl. 18(1) of the Ordinance was competent. [106 H] The competence of an appeal before the Division Bench will have to be judged by the provisions of cl. 18 of the Ordinance itself and section 48 of the Act has no restrictive impact. Section 48 saves the provisions of section 47 of the Act and section 115 of the Code of Civil Procedure; and considered by themselves the provisions of section 47 do not create any bar against the competence of an appeal under cl. 18(1) of the Ordinance where the appeal permitted by section 47 is heard by a single Judge. [106 G] Section 48 attaches finality to the order passed by the trial Court subject to the provisions prescribed by section 47 of the Act and section 115 of the Code of Civil Procedure. [106 E]

Appeal No. 738 of 1963. Appeal by special leave from the judgment and decree, dated December 16, 1960 of the Madhya Pradesh High Court in First Appeal No. 105 of 1957. 57 B. Sen. M. N. Shroff and I. N. Shroff, for the appellants. G. section Pathak and C. P. Lal, for respondents 1 (a) 1(c). K. L. Hathi and R. N. Sachthey, for respondents No. 2. The Judgment of the Court was delivered by Sarkar, J. This appeal arises out of a suit filed on August 10, 1956 by Shri Lal Saheb Bhargavendra Singh, now deceased and represented by his legal representatives, against the Union of India, the State of Vindhya Pradesh, now merged in the State of Madhya Pradesh, and the Collector of Satna, for a declaration that he was entitled to receive an allowance of Rs. 650 per month from the Union of India. There was another claim but that depended on the declaratory relief claimed and need not, therefore, be referred to further. Shri Lal Saheb was the brother of the Ruler of the former Indian State of Nagod and he contended that the Ruler had by a law passed on March 7, 1948 provided for an allowance for him at the rate of Rs. 650 per month and that law was binding on the defendants who had by an executive order illegally altered the amount of the maintenance. It was on this basis that the claim was made. The suit was dismissed by the trial Court but was decreed by the High Court of Madhya Pradesh on appeal by the plaintiff. Hence this appeal. Certain events that took place after March 7, 1948 when the allowance was fixed have now to be stated. On March 18, 1948, the Ruler of Nagod along with the Rulers of various neighbouring ruling States formed a new State called the United State of Vindhya Pradesh into which the component States were merged thereby losing their sovereign status. Thereafter the United State merged in India by an agreement and pursuant thereto the Government of India took over its administration on January 1, 1950. Its territories then became the Indian province of Vindhya Pradesh The United State ceased to exist. On the promulgation of the Constitution on January 26, 1950 the Province of Vindhya Pradesh became a Part C State of Independent India and later from November 1, 1956 it was merged with the State of Madhya Pradesh. By the agreement constituting the United State all laws in force in the constituent States were continued in force and likewise, the laws of the United State were by a statutory order continued in force when it merged in India. Article 372 of the Constitution continued in force all laws which were in force in the territories of India immediately before the commencement of the Constitution. 58 Each succeeding State could, of course, alter the laws which were so continued in force in spite of the change of sovereignty, by a law duly made by it. Neither the United State nor the Indian Province or States which successively administered the territories of the State of Nagod had made any law concerning any allowance to be paid to Shri Lal Saheb. The Rajpramukh (the head) of the United State and the President of India had passed orders 'from time to time fixing his allowance at amounts lower than that at which it had been fixed by the Ruler of Nagod on March 7, 1948. These were, however, executive orders and not laws. They could not reduce the amount of allowance to Shri Lal Saheb fixed by the Ruler of Nagod on March 7, 1948, if he had done so by a law. All this is not in controversy. The only question in this appeal is whether the order of the Ruler of Nagod of March 7, 1948 was a law. If it was, it is not in dispute that the claim made in the suit must be upheld. The High Court observed that this Court had in various cases ending with the case of Madhaorao Phalka vs State of Madhya Pradesh (1) '.held that the line between the legislative, executive and judicial functions of absolute Rulers like the Ruler of Nagod was not at all clear cut and an attempt to place an order of such a Ruler in one class or the other was of no practical importance. In this view of the judgments of this Court, the High Court said that it was futile to contend that the order of March 7, 1948 was an executive act of the Ruler and had not the force of law. The High Court, therefore, held that the allowance had been fixed by law and decreed the suit. The question whether, an order of a Ruler is law or not arises because an absolute Ruler combined in himself the capacities of the supreme executive, judicial and legislative authorities in the State; any particular action of his might have been in one or other of these capacities. Therefore, it becomes necessary to decide, when the question arises as it has done. in the present case, in what capacity the Ruler acted when he made a particular order. At times, the question has presented some difficulty. This Court had to discuss this question in many cases but, with respect, we think the High Court was under a misconception about the effect of the decisions in those cases. It would be unprofitable to discuss these cases for their result may be quoted from the judgment in the recent case of Narsing Pratap Deo vs State of Orissa (2) : "The true legal position is that whenever a dispute arises as to whether an Orders passed by an absolute monarch represents a legislative (1) ; (2) A. I. R. ,1798. 59 act. . all relevant factors must be considered before the question is answered; the nature of the order, the scope and effect of its provisions, its general setting and context, the method adopted by the Ruler in promulgating legislative as distinguished from executive orders, these and other allied matters win have to be examined before the character of the order is judicially determined. " It is, therefore, not correct to say as the High Court did, that this Court has held that every order of the Ruler is a law made by him. The question whether it is so or not, has to be determined in each case independently. We then proceed to discuss whether the order of the Ruler of Nagod was law. The question arises because, as earlier stated, the covenant constituting the United State, certain statutory orders made from time to time and lastly article 372 of the Constitution said that the existing laws would be so continued. Now, these are instruments dealing with sovereign States and rights. They are instruments based on legal ideas and notions founded on modern jurisprudence. It would, therefore, be legitimate to hold that the word "law" was used in them in a sense acceptable, to modern jurisprudence. The contention that the order of March 7, 1947 being a law could be set aside only by a law duly passed by the succeeding States, emphasises this view. A law made by these succeeding States, the last of which is the Union of India, is fully a law as understood in modem jurisprudence. A law which is to be set aside by such a law must, therefore, have been contemplated as a law of the same kind. This aspect of the matter has to be kept in mind in approaching the question. Many tests may be suggested for determining whether a parti cular thing would be considered law in modem jurisprudence. In the decisions of this Court on the point, several of them have been referred to. It may be that they are not all applicable, to every case. It may also be that it is not possible to give an exhaustive list of all these tests. None the less however the question is capable of decision in each case. The order of the Ruler of Nagod which is said to be a law, is addressed to the Chief Minister of the State and directs him to do certain things. It starts by reciting that Shri Lal Saheb 's financial position was deplorable and the Ruler felt it to be his duty to see that Shri Lal Saheb did not experience difficulties in his advancing years and as no permanent arrangement had been made for him till then, the ruler was making the order. Then follows the operative part of the order which is in these terms SUP. C.I/66 5 60 "Hence, I order that (the Kothi) (in which he is at present residing) be given to Shri Lal Saheb for generation to generation and an allowance of Rs ' 650 (Rupees six hundred and fifty), per month be granted, in addition to the same a tonga and a horse be given, the expenses for which shall be borne by himself and Rs. 5,000 (Rupees five thousand), be granted to him so that he may be able to make improvements in agriculture and satisfy his debts (partly). " We think it quite impossible that this order was a law. First, it is a direction to the Chief Minister. It is an order by which the Ruler required the Chief Minister to do certain things. It has not been shown to us, that a direction to an officer to be carried out by him, has ever been held to be a law or can be such. It cannot be so according to notions of modem jurisprudence. Then we find that a copy of the order was sent under the, direction of the Revenue Minister to Shri Lal Saheb and various parts of it, to the different departments of the Nagod Administration respectively concerned with them, obviously with the object that they might be carried out. This would indicate that even the Administration was not treating it as law for it would be difficult to imagine different parts of a law being communicated to different branches of the Administration. Further, it appears that the Revenue Minister directed the Accounts Officer to make a report regarding the provision to be made for the sum of Rs. 5,000 mentioned in the order. This is not how a law is carried out. The order was also an instrument granting something to Shri Lal Saheb. Under it a kothi (house), a tonga (carriage) and horse and Rs. 5,000 in a lump were to be made available to Shri Lal Saheb. In regard to these the order was only a grant; it gave him these things. A grant is, of course, not a law. That would follow from the decisions of this Court in Narsing Pratap Deo 's case(1) and State of Gujarat vs Vora Fiddali(2). Now if the rest of the order was a grant, it would be strange that one part of it only, namely, the part providing for the monthly allowance only, was a law. Obviously this was also intended to be a grant; the fact that the order provided for future payments cannot make it a law. The context is overwhelmingly against the view that it was a law. Again, the recitals in the order put it beyond doubt that the Ruler was only discharging what he considered his moral obligation. After referring to Shri Lal Saheb 's deplorable financial (1) A.T.R. (2) ; 61 position, he said, "I take it to be my duty to, see that Shri Lal should not experience difficulties in his old days". The Ruler was, therefore, providing for something out of his bounty and in discharge of his moral obligation. A law is never made for these reasons. It was said that the money was to be paid out of the State Exchequer. There is nothing to show, however, that it was so or that in Nagod the private funds of the Ruler were separate from the State Exchequer. But assume that the payment was to come from the State Exchequer. That cannot turn a directive or a grant into a law. Our attention was drawn to the decision of this Court in Promod Chandra Dev vs The State of Orissa(1) where a grant of an allowance was held to be law. That case is clearly distinguishable. There the nature and condition of allowances to be granted to persons entitled to them from the State had been laid down in Order 31 of the Rules, Regulations and Privileges of Khanjadars and Khorposhdars. It was held that "those rules, regulations of Talcher etc. (1937)" were the laws of the State and that the grants made by the Ruler in accordance with those laws became the absolute property of the grantee. What bad happened there was that earlier lands had been granted to a certain Khorposhdar (maintenance holder) under Order 31 aforesaid and Subsequently these were commuted into payments of monthly amounts. It was in those circumstances that it was held that the maintenance was payable under a law. No such circumstances exist in the present case. We should *fore concluding state that the Ruler of Nagod who made the order of March 7, 1948 himself gave evidence stating that lie had passed the order "under his legislative powers". This statement obviously does not conclude the matter. It was not relied upon in any of the Courts below. The internal evidence to which we have earlier referred shows that the order was not a Legislative act. For all these reasons we have come to the conclusion that the order of the Ruler of Nagod of March 7, 1948 was not a law. It was not continued in force after the State of Nagod lost its sovereignty in the circumstances earlier mentioned. The order was an executive act of the Ruler providing for certain allowance to Shri Lal Saheb. It was, therefore, competent to the President (1) (1962] Supp. 1 section C. R. 405 62 acting in his executive capacity to reduce it to a sum of Rs. 530 per month as he did by his order of September 24, 1951 which was challenged in the, suit. In the result, we hold that the appeal must be allowed and we direct accordingly. There will be no 'order as to costs. Appeal allowed.

IN-Abs

On 7th March 1948, the Ruler of a former Indian State, out of his bounty and in discharge of his moral obligation, passed an order providing for an allowance to his brother respondent herein. He directed the Chief Minister of the State to do, certain things, and the various parts of the order were sent to the different departments of the State Administration for carrying them out. The order also granted to the respondent a house, conveyance etc. On 18th March 1948, the State along with other States formed the United State of Vindhya Pradesh, the component States losing their sovereign status. Later, the United State merged in India, and on the promulgation of the Constitution, the State became a Part of the Indian Union. On 24th September, 1951, the President of India, in his executive capacity reduced the amount of allowance. The respondent thereupon filed a suit for a declaration, against 'the State and Central Governments, that the allowance could not be reduced Because it was granted to him by a law passed by the former Ruler, which law was continued in force by the covenant constituting the United State, by certain statutory orders made from time to time and lastly by article 372 of the Constitution. The trial court dismissed the suit, but the High Court, on appeal, decreed it. In the appeal to this Court by the State and Central Governments, the question was whether the order of the former Ruler was a law. HELD : It wag not a law and was not continued in force after the State lost its sovereignty. The order was an executive act of the Ruler and it was competent to the President, in his executive capacity., to reduce the amount. [66 H] The nature of the order shows it cannot be a law according to notions of modern jurisprudence. It was a mere directive or grant, and even if the money was paid out of the State Exchequer, that fact would not turn the order into a law. [60 C; F] Narsing Pratap Deo vs State of Orissa; , , referred to. Promod Chandra Dev vs State of Orissa, [1962] Supp. 1 S.C.R. 405, explained.

iminal Appeal No. 53 of 1964. 143 Appeal by special leave from the judgment and order dated August 9, 1963 of the Bombay High Court (Nagpur Bench) in Criminal Revision Application No. 107 of 1963. B. Sen, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. P. K. Chatterjee and B. R. G. K. Achar, for the respondent. The Judgment of the Court was delivered by Shah, J. Ratan Lal appellant in this appeal is the pro prietor of a business in drugs styled "Anil Medical Stores" at Wani, District Yeotmal in the State of Maharashtra. On September 14, 1960 the Station House Officer, Wani, raided the shop of the appellant and seized 12 bottles of an Ayurvedic preparation called Mahadrakshasva manufactured by the Brahma Aushadhalaya, Nagpur and 88 bottles of Dashmoolarishta manufactured by the Vedic Pharmaceutical Works, Nagpur. At a trial held before the Magistrate, First Class, Kalapur, the appellant was convicted of the offence punishable under section 66(1)(b) of the Bombay Prohibition Act 25 of 1949, and was sentenced to suffer rigorous imprisonment for three months and to pay a fine of Rs. 500/ . The order was confirmed in appeal by the Court of Session, Yeotmal. The High Court of Bombay confirmed the conviction, but modified the sentence. The appellant appeals to this Court, with special leave. The following are the material facts found by the trial Court and confirmed by the Court of Appeal and the High Court. Mahadrakshasava and Dashmoolarishta are Ayurvedic medicinal preparations containing alcohol, manufactured under licences granted under the Medicinal and Toilet Preparations (Excise Duties) Act 16 of 1955. Mahadrakshasava attached from the shop of the appellant contained 52.3% alcohol v/v and Dashmoolarishta contained 54.5% alcohol v/v. These preparations are manufactured by a process of distillation. The appellant had purchased these preparations from a drug store in Nagpur called the Sharda Medical Stores who in their turn were supplied by the manufacturers the Brahma Aushadhalaya, Nagpur and the Vedic Pharmaceutical Works, Nagpur. The Bombay Prohibition Act 25 of 1949 by section 66(1) (b) penalises contravention of the provisions of the Act, or of any rule, regulation, or order made, or of any licence, permit, pass or authorization issued thereunder by any person who consumes, uses, possesses or transports any intoxicant other than opium or hemp. 144 "Intoxicant" is defined by section 2 (22) as meaning "any liquor, into xicating drug, opium or any other substance, which the State Government may, by notification in the Official Gazette declare to be an intoxicant. "Liquor" is defined in section 2(24) as including (a) spirits denatured spirits, wine, beer, toddy and all liquids consisting of or containing alcohol; (b) any other intoxicating substance which the State Government may, by notification in the Official Gazette, declare to be liquor for the purposes of the Act. Section 12 of the Act, insofar as it is material, provides that no person shall import, export, transport or possess liquor. But these prohibitions are subject to certain exceptions. By section 11 not with. Standing anything contained in the provisions contained in Ch. III (which includes sections 11 to 24 A) it is lawful to import, export, transport, manufacture, sell, buy, possess, use or consume any intoxicant to the extent provided by the provisions of the Act or any rules, regulations or orders made or in accordance with the terms and conditions of a licence, permit, pass or authorization granted thereunder. The prohibitions are also inapplicable in respect of certain preparations under section 24A which provides in so far as it is material "Nothing in this Chapter shall be deemed to apply to (1) Any toilet preparation containing alcohol which is unfit for use as intoxicating liquor; "(2) any medicinal preparation containing alcohol which is unfit for use as intoxicating liquor; (3) any antiseptic preparation or solution containg alcohol which is unfit for use as intoxicating liquor; (4) any flavouring extract, essence or syrup containing alcohol which is unfit for use as intoxicating liquor; Provided that such article corresponds with the description and limitations mentioned in section 59A :" Possession of a toilet, medicinal or antiseptic preparation, of flavouring article containing alcohol is therefore not an offence if it is unfit for use as an intoxicating liquor, and it corresponds with the description and limitations mentioned in section 59A. The appellant did at the material time possess preparations which contained a large percentage of alcohol, and it is not the case of the appellant that he was protected by a licence, permit, 145 pass or authorization. His case was that possession of the preparations by him was not in contravention of the Act, because the preparations were medicinal preparations containing alcohol which were unfit for use as intoxicating liquor within the meaning of section 24A of the Act. This contention of the appellant has been uniformly rejected by all the Courts below. The question which falls to be determined in this appeal is whether the preparations containing alcohol in respect of which the appellant is convicted were medicinal preparations which were unfit for use as intoxicating liquor. That the preparations were medicinal according to the Ayurvedic system is not denied, and it is common ground that they contained alcohol. Attention must therefore be directed to ascertain whether the preparations did correspond with the description and limitations mentioned in section 59A. If they did not, exemption under section 24 A will be inoperative, even if they are medi cinal preparations. In so far as it is material, section 59A which was added by Act 26 of 1952 at the relevant time provided : "(1) No manufacturer of any of the articles mentioned in section 24A shall sell, use or dispose of any liquor purchased or possessed for the purposes of such manufacture under the provisions of this Act otherwise than as an ingredient of the articles authorised to be manufactured therefrom. No more alcohol shall be used in the manufacture of any of the articles mentioned in section 24A than the quantity necessary for extraction or solution of the elements contained therein and for the preservation of the articles : Provided that in the case of manufacture of any of the articles mentioned in section 24A in which the alcohol is generated by a process of fermentation the amount of such alcohol shall not exceed 12 per cent by volume. (2) . . . . ." Sub section (1) directs the manufacturer not to use in the manufacture of any article mentioned in section 24A alcohol in excess of the quantity necessary for extraction or solution of the elements and for preservation of the article, and the proviso states that in the manufacture of articles in which alcohol is generated by a process of fermentation it shall not exceed 12 per cent by volume. Therefore the quantity of alcohol in an article in which alcohol is added or produced by distillation is determined by what is necessary for extraction, or solution of the elements, and preservation of the article but in an article containing alcohol generated 146 by a process of fermentation the percentage of alcohol, it is directed, shall not exceed 12 per cent by volume. The trial Court held that the offending articles were Ayurvedic preparations in which alcohol was generated by a process of fermentation and as alcohol exceeded 12 per cent by volume, the preparations did not correspond with the limitations prescribed by section 59A, and therefore the exemption prescribed by section 24A was inoperative. _ The Court of Session and the High Court agreed with that view. But it appears that in so holding, the Courts misconceived the evidence. Articles containing alcohol may be prepared by a process of fermentation which generates alcohol or by a process of distillation or by addition of free alcohol. The manufacturing processes which result in distillation of alcohol and generation of alcohol by fermentation are distinct, and there was on the record clear evidence that the offending preparations were manufactured by a process of distillation and were not preparations in which alcohol was generated by fermentation. Palnitkar, Sub Inspector of Prohibition & Excise, said that Mahadrakshasava and Dashmoolarishta are distilled Ayurvedic products. Apparently it was conceded on behalf of the State before the Court of session that the two preparation were Ayurvedic medicinal preparations which "contained alcohol produced by distillation", and before the High Court also the case was argued on that footing. If the bottles of Mahadrakshasava and Dashmoolarishta attached from the shop of the appellant contained alcohol produced by distillation, the proviso to section 59A will have no application. There is no evidence on the record to prove that the two preparations contained alcohol in excess of the quantity permissible under the first paragraph of section 59A. It must be remembered that these preparation were manufactured within the State of Maharashtra by manufacturers licensed under the Medicinal and Toilet Preparations (Excise Duties) Act 16 of 1955 and were issued from a bonded warehouse. This would justify the inference that they did correspond with the description and limitations mentioned in section 59A. But it was urged for the State that a medicinal preparation which corresponds with the description and limitations under section 59A may still be a preparation which is fit to be used as intoxicating liquor. A medicinal preparation which because of the high percentage of alcohol therein, even if taken in an ordinary or normal dose, may intoxicate a normal person would be a preparation fit to be used as an intoxicating liquor. Where the preparation contains a small percentage of alcohol, but consumption of 147 large quantities may intoxicate, it would also be regarded as a preparation fit for use as intoxicating liquor, if such consumption is not likely to involve any deleterious effect or serious danger to health of the consumer. Whether a preparation is fit to be used as intoxicating liquor would ordinarily depend upon evidence. But the Legislature has by section 6A prescribed special rules of evidence in adjudging whether an article is unfit for use as intoxicating liquor. Section 6A was added by Bombay 'Act 26 of 1952 after this Court declared in, The State of Bombay vs F. N. Balsara(1) amongst others, that cl. (c) of section 12, insofar as it affected possession of medicinal and ' toilet preparations containing alcohol, as invalid. As originally enacted section 6A, insofar as it is material, was in the following. form "(1) For the purpose of determining whether (a) any medicinal or toilet preparation containing alcohol, or (b) any antiseptic preparation or solution containing alcohol, or (c) any flavoring extract, essence or syrup containing alcohol, is or is not an article unfit for use as intoxicating liquor,. the State Government shall constitute a Board of Experts. (2) (3) (4) (5) (6) It shall be the duty of the Board to advise the State Government on the question whether any article mentioned in sub section (1) containing alcohol is unfit for use as intoxicating liquor and on such other matters incidental to the said question as may be referred to it by the State Government. On obtaining such advice the State Government shall determine whether any such article is fit or unfit for use as intoxicating liquor or not and such article shall be presumed accordingly to, (1) ; 148 be fit or unfit for use as intoxicating liquor, until the contrary is proved." This Court held in The State of Bombay (now Gujarat) vs Narandas Mangilal Agarwal & Another(1) that it was not obligatory upon the State to consult the Board of Experts constituted under section 6A before the State could establish in a prosecution for an offence under section 66(1) (b) that a medicinal preparation was unfit for use as intoxicating liquor. Evidence that the preparation was unfit for use as intoxicating liquor can be adduced before the Court, and the prosecution need not rely upon section 6A(6) of the Act : in a prosecution for infringement of the prohibition contained in sections 12 and 13, the State could rely upon the presumption :after resorting to the machinery under section 6A(6), but there was no obligation to consult the Board under section 6A, nor was the consultation a condition 'precedent to the institution of proceeding for breach of the provisions of the Act. In so holding, this Court disagreed with the view expressed by the Bombay High Court in D. K. Merchant, vs The State of Bombay(2) wherein the High Court had held that the prosecution for offence under sections 65 and 66 could not be maintained unless the State Government was satisfied after consulting the Board of Experts under section 6A that the article was fit to be used as intoxicating liquor. The offence in Narandas Mangilal 's case(1) was committed in July 1955 and on the terms of sub section (6) as it then stood it was open to the State in a prosecution for infringement of a prohibition contained in sections 12 and 13 to rely upon the presumption under section 6A or to establish that the medicinal preparation was fit for use as intoxicating liquor aliunde. By Act 22 of 1960, which was brought into force on April 20, 1960, the Bombay Legislature amended, inter alia, sub section (6) of section 6A, and incorporated sub section (7) therein. Sub sections (6) & (7) as amended and incorporated read as follows : "(6) It shall be the duty of the Board to advise the State Government on the question whether any article mentioned in sub section (1) is fit for use as intoxicating liquor and also on any matters incidental to the question, referred to it by the State Government. On obtaining such advice, the State Government shall determine whether any such article is fit for use as intoxicating liquor, and upon determination of the State Government that it is so fit, such article shall, until the (1) [1962] Supp. 1 S.C.R. 15. (2) 149 contrary is proved, be presumed to be fit for use as into xicating liquor. (7) Until the State Government has determined as aforesaid any article mentioned in subsection (1) to be fit for use as intoxicating liquor, every such article shall be deemed to be unfit for such use. " The scheme of section 6A has by the amending Act been completely altered. The Legislature has prescribed by sub section (7) that until the State Government has determined any article mentioned in sub section (1) to be fit for use as intoxicating liquor, every such article, shall be deemed to be unfit for such use. The Legislature has therefore, prescribed a fiction which continues to function till the State Government has determined, on the report of the Board of Experts, that any article mentioned in sub section (1) is fit for use as intoxicating liquor. By sub section (6) as amended it is provided that after the State Government has obtained the advice of the Board of Experts, the State Government shall determine whether such article is fit for use as intoxicating liquor and upon such determination of the State Government that it is so fit, such article shall, until the contrary is proved, be presumed to be unfit for use as intoxicating liquor. Under the amended section 6A there is only one mode of proof by the State that an article is fit for use as intoxicating liquor, and that is by obtaining the advice of the Board of Experts and recording its determination, that the article is fit for use as intoxicating liquor. Until it is otherwise determined by the State, after obtaining the report of the Board of Experts, every article mentioned in sub section (1) is to be deemed unfit for use as intoxicating liquor. After it is determined as fit for use as intoxicating liquor, in a proceeding relating to the article it would under sub section (6) be presumed, that it is fit for use as intoxicating liquor. But the presumption is rebuttable. In the present case the offence is alleged to have been com mitted in September 1960. After consulting the Board of Ex perts the Government of Maharashtra issued a declaration on October 4, 1960, declaring that both the preparations Mahadrakshasava and Dashmoolarishta were medicines fit for use as intoxicating liquor. Thereafter a police report was filed in the Court of the Magistrate, First Class, on June 2, 1962 charging the appellant with the offence under section 66(1)(b) of the Bombay Prohibition Act. But on the date on which the medicinal preparations were attached, the statute had provided that they shall be deemed for the purpose of the Act as articles unfit for use as intoxicating liquor. Possession of the medicinal preparations 150 which were unfit for use as intoxicating liquor was, at the date when they were attached, not an offence. A subsequent declaration by the State that they were fit for use as intoxicating liquor, could not have any retrospective operation, and possession which was innocent could not, by subsequent act of the State, be declared as offending the statute. It is unfortunate that the High Court lost sight of the change in the scheme of section 6A and followed the judgment of this Court in Narandas Mangilal 's case(1). In Narandas Mangilal 's case at all material times when the question fell to be considered, the Court had to decide whether sub section (6) of section 6A, as it then stood. prescribed the only method of proof whether an offending medicinal preparation was unfit for use as intoxicating liquor, and this Court on the phraseology used by the Legislature came to the conclusion that it was not the only method of proof. But the incor poration of sub section (7) by the Legislature has altered the scheme of the Act. Sub section (6) incorporated in its second part both before and after the amendment, a rule of evidence : but the rule in sub section (7), that until a declaration is made to the contrary by the State Government under sub section (6), every article mentioned in sub section (1) shall be deemed unfit for use as intoxicating liquor, is not a rule of evidence. It defines for the purpose of section 24A and related sections what an article unfit for use as intoxicating liquor is. It is plain that in Narandas Mangilal 's case(1) the effect of sub section (7) of section 6A did not fall to be considered. The appellant was therefore wrongly convicted. The appeal is allowed and the order of conviction and sentence are set aside. The fine if paid will be refunded. Appeal allowed. (1) [1962] Supp. 1 S.C.R. 15.

IN-Abs

The appellant was convicted of the offence under section 66(1) (b) of the Bombay Prohibition Act, 1949, for being in possession on September 21, 1960 of bottles of two different Ayurvedic medicinal preparations con training 52.3% and 54.5% alcohol respectively. The appellant 's case that possession of the preparations by him was not in contravention of the Act, because the preparations were medicinal preparations containing alcohol which were unfit for use as intoxicating liquor within the meaning of section 24A of the Act, was rejected. The trial court held that the offending articles were Ayurvedic preparations in which alcohol was generated by a process of fermentation and as alcohol exceeded 12 per cent by volume, the preparations did not correspond with the limitations prescribed by the provision to section 59A, and therefore the exemption prescribed by section 24A was inoperative. The Court of Sessions and the High Court agreed with that view. It was also contended on behalf of the respondents that even if the two medicinal preparations corresponded with the description and limitations under section 59A, they were still preparations fit for use as intoxicating liquor and therefore outside the exemption in section 24A. HELD: The appellant was wrongly convicted and his conviction must he set aside. (i) There was clear evidence on the record that the offending preparations were not preparations in which alcohol was generated by fermentation. The proviso to section 59A Would therefore have no application. [146 E F] (ii) On the date on which the two medicinal preparations were attached in September 1960, by vitrue of sub section (7) of section 6A they were deemed for the purpose of the Act to be unfit for use as intoxicating liquor and their possession was; not an offence. A subsequent declaration by the State under section 6A(6) in October, 1960, that they were fit for use as intoxicating liquor, could not have retrospective operation, and possession which was innocent could not, by subsequent act of the State, be declared as offending the statute. [150 A] The State of Bombay vs F. N. Balsara, ; , referred to. The State of Bombay vs Narandas Mangild Agarwal & Anr. [1962] Sup. 1 S.C.R. 15, distinguished.

Appeal No. 431 of 1963. Appeal from the judgment and decree dated May 21, 1958 of the Punjab High Court in Civil Regular Second Appeal No. 263 P of 1952. Tarachand Brijmohanlal, for the appellants. B.R.L. lyengar, S.K. Mehta and K.L. Mehta, for the respondents. The Judgment of the Court was delivered by Mudholkar, J. The only question for consideration in this appeal by certificate from the High Court of Punjab is whether the suit for possession instituted by the respondents Lal Singh and Pratap Singh is within time. According to the appellants the suit is governed not by article 141 of the Limitation Act, 1908 (9 of 1908) as held by the High Court but either by article 142 or by article 144 and is on that basis barred by time. While it is conceded on behalf of the respondents that the suit is not governed by article 141 it is contended that it is governed by article 144 and not by article 142 and is within time. In order to appreciate the contentions it is necessary to set out the relevant facts which are no longer in dispute. Raj Kaur was in possession of 851 kanals 18 marlas of land situate in village Dhaipai in the former State of Faridkot. Out of this land 481 kanals 7 marlas was in her possession as occupancy tenant, the landlord being the Raja of Faridkot while the remaining land was held by Smt. Raj Kaur as Adna Malik, the Aala malik again being the said Raja of Faridkot. In Samvat 1953 (A.D.1896) Smt. Raj Kaur who had two daughters Prem Kaur and Mahan Kaur, adopted the former 's son Bakshi Singh and put him in possession of the whole of the land. Bakshi Singh transferred part of the land to Pratap Singh, second son of Mahan Kaur, who is respondent No. 2 in the appeal. Mahan Kaur had one more son Lal Singh and he is respondent No. 1 in this appeal. In the year 1915 the Raja of Faridkot filed a suit against Bakshi Singh and Raj Kaur in the court of Sub Judge, Faridkot for a declaration that the adoption of Bakshi Singh was invalid. This suit was decreed on February 9, 1916. Raj Kaur died on August 14, 1930. On February 19, 1934 the Raja filed two suits against Bakshi Singh and Pratap Singh for possession of the aforementioned lands, one pertaining to the land of which Raj Kaur was occupancy tenant and the other for that of the land of which she was Adna malik. These suits were decreed on March 12, 1938 and in execution of the decrees obtained in these suits the Raja 65 took possession of the entire land in October 1938. On April 7, 1948 he sold the entire land along with some other land to one Kehar Singh for Rs. 84,357 5 0. Thereupon Gurbinder Singh and Balbinder Singh. who are the appellants before us, filed a suit for pre emption of the land against Kehar Singh and obtained a decree in their favour. In execution of that decree they got possession of the land on June 22, 1950. On October 20, 1948 Mst. Prem Kaur instituted a suit for possession of the entire land on the ground that she was the legal heir of Raj Kaur against Kehar Singh and the Raja of Faridkot. Later she impleaded the appellants as defendants to that suit and discharged the Raja of Faridkot. On February 17, 1950, Lal Singh, respondent No. 1, filed a suit for possession of the entire land against the Raja of Faridkot and Kehar Singh. To that suit he joined Prem Kaur and Pratap Singh as defendants. Later, however, Pratap Singh was transposed as a plaintiff. Both the suits were consolidated and were tried together. The suit of Prem Kaur was dismissed by the trial court but that of the respondents was decreed to the extent of half share in the property. Prem Kaur and the appellants preferred appeals before the District Court but that court dismissed both the appeals. A second appeal was taken by the appellants as well as by Prem Kaur to the High Court and cross objections were preferred by the respondents. The High Court dismissed these appeals as well as the cross objections. In the absence of any appeal by Prem Kaur against the decision of the High Court confirming the dismissal of her suit we have only to consider the claim of the respondents to half the property left by Raj Kaur. Their claim was resisted by the appellants on several grounds in the courts below. Before us, however, only one ground is pressed and that is, the suit is barred by limitation. As already stated, according to the appellants, the suit is governed either by article 142 or by article 144 of the Limitation Act and not by article 141. Mr. lyengar for the respondents. does not rely upon article 141 at all. He also contends that article 142 has no application and that the suit is governed by article 144 only. Mr. Tarachand Brijmohanlal for the appellants also relied on article 144 in the alternative. In order that article 142 is attracted the plaintiff must initially have been in possession of the property and should have been dispossessed by the defendant or someone through whom the defendants claim or alternatively the plaintiff should have discontinued possession. It is no one 's case that Lal Singh ever was in possession of the property. It is true that Pratap Singh was in possession of part of the property which particular part we do not know by reason of a transfer thereof in his favour by Bakshi Singh. In the present suit both Lal Singh and Pratap Singh assert their claim to property by success on in accordance with the rules contained in the dastur ul amal whereas the possession of Pratap Singh for some 66 time was under a different title altogether. So far as the present suit is concerned it must, therefore, be said that the plaintiffs respondents were never in possession as heirs of Raj Kaur and consequently article 142 would not be attracted to their suit. It is in these circumstances that we have to consider whether under article 144 the suit is barred by time. The starting point of limitation set out in col. 3 of article 144 is as follows: "When the possession of the defendant becomes adverse to the plaintiff". To recapitulate the events. Raj Kaur died on August 14, 1930 whereupon under dastur ul amal her daughters Prem Kaur and Mahan Kaur became entitled to the possession of the land. According to the appellants the daughters succeeding their mother took an absolute estate. Assuming that is so, what would be the position? As already stated, Bakshi Singh and Pratap Singh were in possession of the entire land belonging to Raj Kaur. Ignoring for the time being their relationship with Raj Kaur, what can be said is that they were adversely in possession to the true owners, that is, Prem Kaur and Mahan Kaur, daughters of Raj Kaur as from August 14, 1930. Before, however, they could perfect their title against Prem Kaur and Mahan Kaur the Raja instituted a suit for possession, obtained a decree thereunder and actually entered into possession to the entire land in October, 1938. Though the Raja obtained possession under a decree of the court he was in the eye of law nothing but a trespasser in so far as the heirs of Raj Kaur, her daughters Prem Kaur and Mahan Kaur were concerned. Mahan Kaur had in fact died on July 13, 1938, i.e. before the Raja obtained possession. Therefore, it is more accurate to say that the possession of the Raja became adverse to Prem Kaur and to the respondents Lal Singh and Pratap Singh as from October, 1938. Kehar Singh who was a transferee from the Raja stood in the Raja 's position and got the benefit of the Raja 's adverse possession. Similarly the appellants who had preempted these lands under the decree obtained against Kehar Singh got advantage not only of the Raja 's adverse possession but also of Kehar Singh 'section The sum total of the adverse possession of these three persons at the date of the respondent 's suit would, however, be less than 12 years and so the respondents ' suit could not be said to be barred by article 144 if the starting point of limitation is taken to be some day in October, 1938. Mr. Tarachand Brijmohanlal, however, advanced an interesting argument to the effect that if persons entitled to immediate possession of land are somehow kept out of possession may be by different trespassers for a period of 12 years or over, their suit will be barred by time. He points out that as from the death of Raj Kaur her daughters, through one of whom the respondents claim. were kept out of possession by trespassers and that from the date of Raj Kaur 's death right up to the date of the respondents 67 suit, that is, for a period of nearly 20 years trespassers were in possession of Mahan Kaur 's, and after her death, the respondents share in the land, their suit must therefore be regarded ' as barred by time. In other words the learned counsel wants to tack on the adverse possession of Bakshi Singh and Pratap Singh to the adverse possession of the Raja and those who claim through him. In support of the contention reliance is placed by learned counsel on the decision in Ramayya vs Kotamma(1). In order to appreciate what was decided in that case a brief resume of the facts of that case is necessary. Mallabattudu, the last male holder of the properties to which the suit related, died in the 'year 1889 leaving two daughters Ramamma and Govindamma. The former died in 1914. The latter surrendered her estate to her two sons. The plaintiff who was a transferee from the sons of Govindamma instituted a suit for recovery of possession of Mallabattudu 's property against Punnayya, the son of Ramamma to whom Mallabattudu had made an oral gift of his properties two years before his death. Punnayya was minor at the date of gift and his eider brother Subbarayudu was managing the property on his behalf. Punnayya, however, died in 1894 while still a minor and thereafter his brothers Subbarayudu and two others were in possession of the property. It would seem that the other brothers died and Subbarayudu was the last surviving member of Punnayya 's family. Upon Subbarayudu 's death the properties were sold by his daughters to the third defendant. The plaintiffs appellants suit failed on the ground of limitation. It was argued on his behalf in the second appeal before the High Court that as the gift to Punnayya was oral it was invalid, that consequently Punnayya was in possession as trespasser, that on Punnayya 's death his heir would be his mother, that as Subbarayudu continued in possession Subbarayudu 's possession was also that of a trespasser, that as neither Subbarayudu nor Punnayya completed possession for 12 years they could not tack on one to the other and that the plaintiff claiming through the nearest reversioner is not barred. The contention for the respondents was that there was no break in possession so as to retest the properties in the original owners, that Punnayya and Subbarayudu cannot be treated as successive trespassers and that in any event the real owner having been out of possession for over 12 years the suit was barred by limitation. The High Court following the decision of Mookerjee J. in Mohendra Nath vs Shamsunnessa(3)held that time begins to run against the last full owner if he himself was dispossessed and the operation of the law of limitation would not :be arrested by the fact that on his death he was succeeded by his widow, daughter or mother, as the cause of action cannot be prolonged by the mere transfer of title. It may be mentioned that as Mallabattudu had given up possession to Punnayya under an invalid gift article 142 of the Limitation Act was clearly attracted. The (1) Mad. 370. (2) , 164. 68 sons of Govindamma from whom the appellant had purchased the suit properties claimed through Mallabattudu and since time began to run against him from 1887 when he discontinued possession it did not cease to run by the mere fact of his death. In a suit to which that article applies the plaintiff has to prove his possession within 12 years of his suit. Therefore, so long as the total period of the plaintiff 's exclusion from possession is, at the date of the plaintiff 's suit, for a period of 12 years or over, the fact that this exclusion was by different trespassers will not help the plaintiff provided there was a continuity in the period of exclusion. That decision is not applicable to the facts of the case before us. This is a suit to which article 144 is attracted and the burden is on the defendant to establish that he was in adverse possession for 12 years before the date of suit and for computation of this period he can avail of the adverse possession of any person or persons through whom he claims but not the adverse possession of independent trespassers. In so far as the adverse possession of Bakshi Singh and Pratap Singh is concerned it began upon the death of Raj Kaur and not during her life time. That being so, article 142 cannot possibly be attracted whereas the Madras decision turns upon a case to which article 142 applied. No doubt, there, on behalf of the plaintiff appellant it was argued on the authority of Agency Co. vs Short( ') that in cases of successive trespassers limitation ceases to run against the lawful owner of the land after an intruder has relinquished his possession; that on the death of Punnayya it must be taken that there was an interruption in the possession and that there was an interval between Punnayya 's death and Subbarayudu 's taking possession in his own right however minute the interval may be and that except in the case of succession or revolution all other cases would fall within the principle enunciated in Agency Co 's case(1). The learned Judges did not accept the contention but relying upon the decision in Willis vs Earl Howe(2) and a passage 'in Dart on Vendors and Purchasers, Vol. 17th ed. p. 474 held that the suit was barred by time. It may be pointed out that on Punnayya 's death his mother would be the heir and that it was established in that case that she was living with his brother Subbarayudu and his other brothers. Subbarayudu would therefore, be a presumptive reversioner on the death of his mother and there was evidence to show that she was a consenting party to Subbaryudu 's enjoying the properties after Punnayya 's death. It is under these circumstances that the High Court found it difficult to hold that there was a fresh trespass by Subbarayudu after the death of Punnayya. On the other hand, according to them, there was a continuity of possession because the person who continued to hold possession was the presumptive heir of the deceased. From the facts of the case it will be clear that what was tacked on was not the possession of independent trespassers at all. In the case before us what (1)[1888] 13 A.C. 793. (2) 69 is being sought to be tacked on to the possession of the Raja and those who claim through him is the possession of Bakshi Singh and Pratap Singh. The Raja in his suit against Bakshi Singh challenged the right of Bakshi Singh and Pratap Singh to possession on the ground that they were trespassers. As it has turned out, the possession of the Raja, though obtained under the decree of a civil court, was in itself a trespass on the rights of the persons who were in law entitled to possession of property. Thus this is a case of one trespasser trespassing against another trespasser. There is no connection between the two and, therefore, in law their possession cannot be tacked on to one another. As pointed out by Varadachariar J., in Rajagopala Naidu vs Ramasubramania Ayyar(1). "Further the doctrine of independent trespassers will come in only when the second man trespasses upon the possession of the first or the first man abandons possession. " Where it applies the principle laid down in Agency Co 's(1) case would apply and preclude the tacking of possession of successive trespassers. The following observations of Lord Macnaghten in that case are pertinent and run thus: "They are of opinion that if a person enters upon the land of another and holds possession for a time, and then, without having acquired title under the statute, abandons possession, the rightful owner, on the abandonment, is in the same position in all respects as he was before the intrusion took place. There is no one against whom he can bring an action. He cannot make any entry upon himself. There is no positive enactment, nor is there any principle of law. which requires him to do any act. to issue any notice or to perform ,my 'ceremony in order to rehabilitate himself. No new departure is necessary. The possession of the intruder, ineffectual for the purpose or transferring title, ceases upon its abandonment to be effectual for any purpose. It does not leave behind it any cloud on the title of the rightful owner, or any secret process at work for the possible benefit in time to come of some casual interloper or lucky vagrant. There is not, in their Lord ships ' opinion, any analogy between the case supposed and the case of successive disabilities mentioned in the statute. There the statute 'continues to run ' because there is a person in possession in whose favour it is running. " This view has not been departed from in any case. At any rate none was brought to our notice where it has not been followed. Apart from that what we are concerned with is the language used by the legislature in the third column of article 144. The starting point of limitation there stated is the date when the possession of (1) A.LR. 70 the defendant becomes adverse to the plaintiff. The word "defendant" is defined in section 2(4) of the Limitation Act thus: " 'defendant ' includes any person from or through whom a defendant derives his liability to be used". No doubt, this is an inclusive definition but the gist of it is the existence of a jural relationship between different persons. There can be no jural relationship between two independent trespassers. Therefore, where a defendant in possession of property is sued by a person who has title to it but is out of possession what he has to show in defence is that he or anyone through whom he claims has been in possession for more than the statutory period. An independent trespasser not being such a person the defendant is not entitled to tack on the previous possession of that person to his own possession. In our opinion, therefore, the respondents ' suit is within time and has been rightly decreed by the courts below. We dismiss this appeal with costs. Appeal dismissed.

IN-Abs

One Mst. Raj Kaur was holding certain lands on different tenures under the Raja of Faridkot. She had two daughters. She adopted the son of one of them and put him in possession of all the lands. He transferred a part of the lands to the second respondent who was son of the other daughter of Raj Kaur. After Raj Kaur 's dearth the Raja filed suits for possession of the land, and in execution of the decree he obtained in those suits, took possession of the entire land, in October, 1938. He then transferred the land, but the transferee was dispossessed by the appellants in June 1950, in execution of a decree they obtained, in a suit for preemption filed by them against the transferee. The second respondent 's mother had died in 1938 and her sons the first and second respondents, filed a suit for possession of the entire land in February 1950, as heirs of Raj Kaur, but it was decreed only to the extent of their half share, and the decree was affirmed by the High Court. In the appeal to this Court it was contended that the suit was governed either by article 142 or article 144 of the Indian Limitation Act, 1908, and on either basis, was barred by time. HELD: (i) Article 142 would not be attracted to the suit. In order that the article may be attracted the plaintiff must initially have been in possession of the property and should have been dispossessed by the defendant or some one through whom the defendant claims or alternatively, the plaintiff should have discontinued possession. It was no one 's case that the first respondent was ever in possession of the property. As regards the second respondent 's possession at one time of a part of the property, it was by reason of a transfer by the adopted son. The claim in the instant case, however, was by succession, under a different title altogether, and so it must be held that the plaintiffs respondents, as heirs of Raj Kaur, were never in possession of the land. [65H] (ii) Article 144 was applicable to the suit, but the suit was not barred by time. Adverse possession against the respondents started in October. 1938, when the Raja took possession of the land. To that adverse possession could be added that of his transferee and that of the appellants who had preempted the lands under the decree obtained by them against the transferee. But, the sum total of the adverse possession of all those persons at the date of the respondent 's suit would be less than 12 years. The adverse possession of the adopted son could not be tacked on to the adverse possession of the Raja and those who claim through him, because, in a suit to which Art 144 is attracted, the burden is on the defendant to establish that he was in adverse possession for 12 years before the date of suit, and for computation of that period, he can avail himself of the adverse possession of any person or persons through whom he claims but not the adverse possession of independent tres 64 passers. The starting point of limitation in article 144 is the date when the possession of the defendant becomes adverse to the plaintiff. The gist of the definition of the word "defendant" in section 2(4) of the Act is the existence of a jural relationship between the different persons referred to in the definition, and there can be no jural relationship between two independent trespassers. [66 F H; 68C; 70B]. Ramayya vs Kotamma, Mad. 370, explained.

Appeal No. 558 of 1963. 216 Appeal by special leave from the judgment and order dated January 19, 1961 of the Mysore High Court in Civil Petition No. 654 of 1960. section G. Patwardhan and K. R. Chaudhury, for the appellant. A. G. Ratnaparkhi, for respondent No. 1. The Judgment of the Court was delivered by Bachawat, J. The appellant is the landlord and respondent No. 1 is the tenant of section Nos. 180 and 182 of village Dhanyal, taluk Bijapur. Respondent No. 1 defaulted in payment of rent for the years 1951 52, 1953 54 and 1954 55. On December 8, 1956, the appellant served on respondent No. I three months ' notice in writing under section 14(1)(b) of the Bombay Tenancy and Agricultural Lands Act, 1948 (Bombay Act No. 57 of 1948) hereinafter referred to as the Tenancy Act, terminating the tenancy on the ground of default in payment of rent. On June 24, 1957, the appellant filed an application under section 29(2) read with section 14(1) of the Tenancy Act for possession of the land. The Tahsildar, Bijapur allowed the application, and directed possession of the land to be delivered to the appellant. This order was affirmed on appeal by the Assistant Commissioner, Bijapur. On revision, the Mysore Revenue Appellate Tribunal set aside the order of the first two tribunals and dismissed the application. A petition by the appellant under article 227 of the Constitution was summarily rejected by the Mysore High Court. The appellant now appeals to this Court by special leave. The Tribunals below concurrently found that respondent No. I defaulted in payment of the rent for the years 1951 52, 1953 54 and 1954 55, the last default took place on May 20, 1955 and the tenancy was properly terminated by the appellant. The first two Tribunals also held that the application was filed within the time, allowed by law. The Revenue Appellate Tribunal, however, held that the application being filed more than two years after May 20, 1955 is barred by limitation. The sole question before us is whether the application was filed within the two years ' period of limitation prescribed by section 29(2) of the Tenancy Act. The appellant contends that the application was filed within the prescribed period of limitation because (1) the right of the appellant to obtain possession of the land is deemed to have accrued to him on the termination of the tenancy by the notice given on December 8, 1956, (2) in any event, in computing the two years ' period of limitation, the period of the three months ' notice should be excluded in view of section 15(2) read with section 29(2) of the Indian Limitation Act, 1908. We are of the opinion that the first contention of the appellant 217 should be accepted. In view of this conclusion, we do not think it necessary to express any opinion on the second contention advanced on behalf of the appellant. Sections 14(1) and 29(2) of the Tenancy Act, as they stood at. the relevant time, are as follows : "14. (1) Notwithstanding any law, agreement or usage, or the decree or order of a court, the tenancy of any land shall not be terminated (a) unless the tenant (i) has failed to pay the rent for any revenue years. before the 31st day of March thereof; (ii) has done any act which is destructive or permanently injurious to the land; (iii) has sub divided, sub let or assigned the land in , contravention of section 27; (iv) has failed to cultivate it personally; or (v) has used such land for a purpose other than agriculture or allied pursuits; and (b) unless the landlord has given three months ' notice in writing informing the tenant of his decision to terminate the tenancy and the ground for such termination, and, within that period the tenant has failed to remedy the breach for which the tenancy is liable to be terminated. " 29(2) No landlord shall obtain possession of any land, or dwelling house held by a tenant except under an order of the Mamlatdar. For obtaining such order he shall make an application in the prescribed form and within a period of two years from the date on which the right to obtain possession of the land or dwelling house, as the case may be, is deemed to. have accrued to him. " At first sight, it may appear that the Act gives no indication of the time when the right to obtain possession of the land or dwelling house is deemed to have accrued to the landlord as contemplated by section 29(2). But on a close scrutiny of the Act we are satisfied ' that this right must be deemed to have accrued to him on the date of the termination of the tenancy. It is to be noticed that limitation for the application under section 29 (2) commences to run from the date when the right to obtain 218 possession of the land or dwelling house is deemed to have accrued to the landlord. 'Now, the legislature could not have intended that,, limitation would commence to run before the right to apply accrues. It is reasonable to think that the right to apply also accrues to the ,landlord on the date when limitation for the application begins to run. But the right to apply under section 29(2) read with section 14(1) accrues to the landlord when the tenancy is terminated by the notice under section 14 (1 ) (b). In Raja Ram Mahadev Paranjype vs Aba Maruti Mali(1), this Court observed : "The statute having provided for the termination of the tenancy would by necessary implication create a right in the landlord to recover possession. The statute recognises this right by providing by section 29(2) for its enforcement by an application to the Mamlatdar. " It would follow that limitation for the application under section 29(2) read with section 14(1) begins to run from the date when the tenancy is terminated, by the notice under section 14(1)(b). Consequently, the date of the termination of the tenancy is also the date when the right to obtain possession is deemed to have accrued to the landlord. But it is argued that on the date of the termination of the tenancy, the right to obtain possession of the land actually accrues 'to the landlord, and, therefore, the legislature could not have intended that on that date this right is deemed to accrue to him. This ,argument must be rejected. In spite of the termination of the tenancy, the landlord has no right to obtain possession of the land without an order of the Mamlatdar under section 29(2). Between the date of the termination of the tenancy and the date of the order for possession under section 29(2), the tenant continues to be in lawful possession of the land and is liable to pay rent and not mesne profits, see Ramchandra Avant vs Janardan(2). Thus, on the termination of the tenancy, the right to obtain possession of the land, though in reality not accrued to the landlord, is, by a legal fiction, deemed to have accrued to him so that he may immediately apply under section 29(2) for an order for possession. This conclusion is reinforced if we look at the history of the legislation. The Tenancy Act, as originally passed in 1948, did not provide for a special period of limitation for the application to the Mamlatdar under section 29. But it was thought that section 72 of the Tenancy Act attracted the period of limitation prescribed (1) [1961] 1 Supp. S.C.R.730,747. (2) 637, 641. 219 by sub sections (3) and (4) of section 5 of the Mamlatdars ' Courts Act, 1906 (Bombay Act No. 2 of 1906), which are as follows : "5(3). No suit shall be entertained by a Mamlatdar 's Court unless it is 'brought within six months from the date on which the cause of action arose. 5 (4). The cause of action shall be deemed to have arisen on the date on which the impediment to the natural flow of surface water or the dispossession, deprivation or determination, of tenancy or other right occurred, or on which the impediment, disturbance or obstruction, or the attempted impediment or disturbance or obstruction, first commenced." The Bombay Revenue Tribunal, therefore, ruled that an application under section 29(2) must be made within six months from the date when the cause of action accrues, see A. section Desai 's Bombay Tenancy and Agricultural Lands Act, Second Edn., pp. 137 38, 287 88; and in view of section 5(4) of the Mamlatdars ' Courts Act, 1906, this cause of action was deemed to accrue on the determination of the tenancy. The six months ' period of limitation led to hardship, and the legislature decided to extend the period of limitation and enacted the Bombay Tenancy and Agricultural Lands (Third Amendment) Act, 1951 (Bombay Act No. 45 of 1951), which amended section 29 by providing for two years ' period of limitation and also section 72 by inserting the words "save as provided in section 29". Thus, the Amending Act extended the period of limitation from six months to two years, but both before and after the Amending Act, the date of the termination of the tenancy is the starting point of limita tion; formerly because the right to apply was then deemed to accrue to the landlord and now because the right to obtain possession is then deemed to have accrued to him. The Tenancy Act was amended from time to time. The requirement of a notice for terminating the tenancy under section 14(1) was introduced by Bombay Act No. 33 of 1952, and is repeated in the new section 14 substituted for the original section by Bombay Act No. 13 of 1956. Before the tenancy can be terminated under the new section 14(1), two conditions must be fulfilled. Firstly, the tenant must be guilty of one of the breaches mentioned in section 14(1)(a). Secondly, ' the landlord must give three months ' notice in writing under section 14(1)(b) and within that period the tenant must have failed to remedy the breach. The tenancy is not terminated unless both these conditions are fulfilled. Neither failure to pay rent nor sub letting nor any C.I./66 15 220 other breach is sufficient. The breach must be followed by the requisite notice terminating the tenancy. It is on the termination of the tenancy and not earlier that the right to obtain possession of the land is deemed to accrue to the landlord and limitation for the application under section 29(2) read with section 14(1) begins to run. In Chimanbai Rama vs Ganpat Jagannath(1), a Full Bench of the Bombay High Court held that the period of limitation under section 29(2) for applying to the Mamlatdar for possession of the land on the ground that the tenant had sub let it, began from the date of sub letting, and that though the right to obtain possession actually accrues to the landlord on the date when he terminates the tenancy, under section 29(2) it is fictionally deemed to accrue as from an antecedent point of time, viz., the date of the sub letting. With respect, we are unable to agree with this judgment. On the termination of the tenancy by the notice under section 14 (1) (b) and before the order for possession under section 29(2), the landlord has no right to obtain possession of the land; nevertheless, this right is then deemed to accrue to him, so that he may apply immediately for an order for possession under section 29(2). The sub letting alone does not give him ' this right to apply under section 29(2). He may, if he likes, ignore the breach. But where the breach is followed by a notice terminating the tenancy he acquires the right to apply under section 29(2). It is difficult to impute to the legislature the intention that limitation would begin to run against the landlord immediately on the sub letting, though he is not aware of the breach and takes no steps for terminating the tenancy in consequence of the breach. In our opinion, limitation, for the application under section 29(2) begins to run from the date of the termination of the tenancy and not from the date of the sub letting or the date of default in payment of rent. In the instant case, three months ' notice in writing under section 14(1)(b) terminating the tenancy was given on December 8, 1956. The application under section 29(2) read with section 14(1) being filed on June 24, 1957 within two years of the termination of the tenancy is not barred by limitation. In the result, the appeal is allowed with costs, the order of the Mysore Revenue Appellate Tribunal, Belgaum Branch dated July 27, 1960 is set aside and the orders passed by the Tahsildar, Bijapur and the Assistant Commissioner, Bijapur are restored. Appeal allowed.

IN-Abs

On 8th December 1956, the appellant served on the respondent three months ' notice in writing under section 14(1) (b) of the Bombay Tenancy and Agricultural Lands Act, 1948, terminating the tenancy on the ground of default in payment of rent. On 24th June 1957 the appellant filed an application under section 29(2) for possession. The Tahsildar allowed he application and the order was confirmed on appeal. But in revision, the Revenue Tribunal set aside the order on the ground, that the application was barred by limitation, because, it was filed more than two years, after 20th May 1955, which was the date of default. A petition ay the appellant under article 227, was rejected by the High Court. In the appeal to the Supreme Court, on the question whether the application was filed within the two yea& period of limitation prescribed by section 29 (2). HELD : Limitation for the application began to run from the date of the termination of the tenancy and not from the antecedent date of default in payment of rent and so, the application, filed within two years of the termination of the tenancy was not barred by limitation. 220 G] The legislature could not have intended that limitation would commence to run before the right to apply under section 29(2) accrues. The right to apply accrues to the landlord when the tenancy is terminated by notice under section 14(1)(b). But in spite of the termination of the tenancy the landlord has no right to obtain possession without an order under section 29(2). On the termination of the tenancy, the right to obtain possession, though in reality not accrued to the landlord, is, by a legal fiction, deemed to have accrued to him. Consequently, the date of termination of the tenancy is also the date when the right to obtain possession is deemed to have accrued to the landlord. Since the limitation for, the application under section 29(2) commences to run from the date when the right to obtain possession is deemed to have accrued to the landlord, it would follow that limitation begins to run from the date when the tenancy is terminated by the notice under section 14(1) (b). [218 A B, C D, F G] The history of the legislation also shows that both before and after the Amendment Act, 1951 which provided the two years ' period of limitation the date of the termination of the tenancy is the starting point of limitation. [218 H] Ramachandra Anant vs Janardan, approved. Chimanbai Rama vs Ganpat Jagannath, I.L.R. [1958] Dom. 917 (F.B.) overruled.

326 of 1953. Original Petition under article 32 of the Constitution of India. S.C. Isaacs (section K. Kapur, with him) for the petitioners. H. J. Umrigar for the respondents. January 11. The Judgment of the Court was delivered by MUKHERJEA J. This is an application presented by the petitioners under article 32 of the Constitution, complaining of infraction of their fundamental rights guaranteed under article 14 and clauses (f) and (g) of article 19 (1) of the Constitution and praying for enforcement of the same by issue of writs in the nature of mandamus. To appreciate the contentions that have been raised on behalf of the petitioners, it would be necessary to give a short narrative of the material facts. The petitioners are a firm of traders who had, prior to the cancellation of their licenee, been carrying on the business of retail sellers of coal at a coal depot held by them in the town of Kanpur. It is said that the District Magistrate of Kanpur as well as the District Supply Officer, who figure respectively as respondents Nos. 2 and 3 in the petition, had been for a considerable time past issuing directives from time to time upon the petitioners as well as other coal depot holders of the town, imposing restrictions of various kinds upon the sale of coal, soft coke, etc. It is stated that prior to the 14th of February, 1953, the prices that were fixed by the District Officers left the coal dealers a margin of 20 per cent profit upon the sale of soft coke and 15 per cent profit on the sales of hard coke and steam coal, such profits being allowed on the landed costs of the goods up to the depot. The landed costs 805 comprised several items and besides ex colliery price, the middleman 's commission and the railway freight, there were incidental expenses of various kinds including labour duty, loading and unloading charges, cartage and stacking expenses. After making a total of these cost elements, an allowance was given for shortage of weight at the rate of 5 rods and odd seers per ton in the case of soft coke and 3 rods and odd seers in the case of hard coke and steam coal, and it was on the basis of the net weight thus arrived at that the price was calculated. On the 14th of February, 1953, the District Supply Officer issued a directive reducing the selling prices of coke, coal, etc., much below the existing rates. This reduction was effected in a three fold manner. In the first place, the allowance for shortage of weight was made much less than before; secondly a sum of Rs. 4 12 0 only was allowed for all the incidental expenses, and thirdly, the margin of profit was cut down to 10 per cent. On the 22nd of May, 1953, a representative petition was filed by seven colliery depot holders of Kanpur including the present petitioners challenging the validity of the executive order, dated the 14th of February, 1953, mentioned above inter alia on the ground that it infringed the fundamental rights of the petitioners under articles 14 and 19 of the Constitution. There was an application for ad interim stay in connection with this petition which came up for hearing before the learned Vacation Judge of this court on the Ist of July, 1953. On that day an undertaking was given by the State of Uttar Pradesh to the effect that they would withdraw the order of the 14th February, 1953, and apparently the consideration that weighed with the State in giving this undertaking was that it was a purely executive order without any legislative sanction behind it. The order of the 14th February was in fact withdrawn, but on the 10th of July, 1953, the State of Uttar Pradesh promulgated by a notification an order intituled "The Uttar Pradesh Coal Control Order, 1953" purporting to act in exercise of the powers conferred upon it by_section 3(2) of the Essential Supplies Act, 1946, read with the notified order of the Government of India issued under 806 section 4 of the Act. As the constitutionality of this Coal Control Order is the main object of attack by the petitioners in the present proceeding, it would be convenient to set out the material provisions of the order in respect of which the controversy between the parties primarily centers: "THE UTTAR PRADESH COAL CONTROL ORDER, 1953. In this Order unless there is anything repugnant in the subject or context . (a) "Coal" includes coke but does not include cinder and ashes. (c) "The Licensing Licensing Authority" means the District Magistrate of the District or any other officer authorised by him to perform his functions under this Order and includes the District Supply Officer of the district. (d) "Licensee" means a person holding a licence under the provisions of this Order in Form 'A ' or in Form 'B '. (1) No person shall stock, sell, store for sale or utilise coal for burning bricks or shall otherwise dispose of coal in this State except under a licence in Form 'A ' or 'B ' granted under this Order or in accordance with the provisions of this Order. (2) Nothing contained in sub clause (1) (a) Shall in so far as it relates to taking out a licence for stocking or storing coal for their own consumption, apply to the stocks held by persons or undertakings obtaining coal on permits of the District Magistrate or the State Coal Controller for their own consumption. (b) Shall apply to any person or class of persons ' exempted from any provision of the above sub clause by the State Coal Controller, to the extent of their exemption. (1) Every application for licence under this Order shall be made in the form given in Schedule I appended to this Order. 807 (2) A licence granted under this Order shall be in Form 'A ' or Form 'B ' appended to this Order and the holder of a licence granted under this Order shall comply with any directions that may be issued to him by the Licensing Authority in regard to the purchase, sale, storage or distribution of coal. (3) The Licensing Authority may grant, refuse to grant, renew or refuse to renew a licence and may suspend, cancel, revoke or modify any licence or any terms thereof granted by him under the Order for reasons to be recorded. Provided that every power which is under this Order exercisable by the Licensing Authority shall also be exercisable by the State Coal Controller or any person authorised by him in this behalf. The State Coal Controller may by written order likewise require any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provisions of clause (8). 8. (1) No licensee in Form 'B ' and no person acting on his behalf shall sell, agree to sell or offer for sale, coal at a price exceeding the price to be declared by the Licensing Authority in accordance with the formula given in Schedule III. (2) A licensee in Form 'A ' or any other person holding stock of coal or any other person acting for or on behalf of such licensees or person transferring or disposing of such stocks to any person in accordance with clause 6 or clause 7 shall not charge for the coal a price exceeding the landed cost, plus incidental and handling charges, plus an amount not exceeding 10 per cent of the landed cost as may be determined by the Licensing Authority or the State Coal Controller. Explanations: (1) Landed cost means the excolliery price of the coal plus the L.D.C.C. and Bihar. Sales tax plus middleman 's commission actually paid and railway freight. 808 (2) Incidental and handling charges mean the cost of unloading from wagons, transporting to stacking site, unloading at the stacking site, plus godown rent, plus choukidari charges, if any, not exceeding Rs. 8 8 0 per ton as may be determined by the Licensing Authority or the State Coal Controller according to local conditions. The District Magistrate shall within a week of the commencement of this Order prepare and publish in a local paper a list of persons carrying on the business of sale of coal in his district and upon the publication of the list, the persons included therein will be deemed for purposes of this Order to be licensee until three months next following the publication of the list in Form A or B as may be specified. If any person contravenes any of the provisions of this Order, or the conditions of licenee granted thereunder, he shall be punishable under section 7 of the Essential Supplies (Temporary Powers) Act, 1946, with imprisonment for a term which may extend to three 'years or with fine or with both and without prejudice to any other punishment to which he may be liable . . " ' Schedule III referred to in the Order is as follows: SCHEDULE III. (Formula for declaration of prices of soft coke/hard coke/steam coal). Ex colliery Price Actuals. L.D.C.C. and Bihar Sales tax Actuals. Middleman 's commission Actually Raid subject to the maximum laid down under clause 6 of the Government of India Colliery Order 1945 4. Railway freight Actuals. Incidental and handling chargers including Maximum of Rs. 8 8 0 per per ton as may be determ ined by the licensing (i) Unloading from wagons. Licensing Authority according to local condition (ii) Transport upto premises provided that at places 0of stacking which are extra oridenarily (iii) Unloading and stacking distant form the railway at the premises or depot. way head a higher rate may be allowed by the Licensing Authority. 809 (iv) Godown rent and chaukidari charges, if any (v) Weighing charges, if any. 6. Local taxes Octroi, etc. Actuals. Shortage Not exceeding 31/2 maunds per ton in the case of soft coke and 2 1/2 maunds in the case of hard coke and steam coal as may be determined by the Licensing Authority. Profit At 10 per cent on total items 1 to 6 above except item No.5 It is said that on the 16th of July, 1953, the respondent No. 2 issued a declaration whereby he fixed the retail rates for the sale of soft coke, coal, etc. at precisely the same figures as they stood in the directive issued on the 14th of February, 1953. The result, according to the petitioners, was that the selling prices were reduced so much that it was not possible for the coal traders to carry on their business at all. In accordance with the provision of clause 11 of the Control Order set out above, the petitioners ' name appeared in the list of B licence holders and they did apply for a licence in the proper form as required by clause (4). The licence, it is said, was prepared, though not actually delivered over to the petitioners. By a letter dated the 3rd of October, 1953, the Area Rationing Officer, Kanpur, accused the petitioners of committing a number of irregularities in connection with the carrying on of the coal depot. The charges mainly were that there were two other depots held and financed by the petitioners themselves in the names of different persons and that the petitioners had entered into agreements for sale of coal at more than the fixed rates. The petitioners submitted an explanation which was not considered to be satisfactory and by an order dated the 13th of October, 1953, the District Supply Officer, Kanpur, cancelled the petitioners 'licence. In the present petition the petitioners have challenged the validity of the Coal Control Order of the 10th of July, 1953, the declaration of prices made on the 16th of July following and also the order cancelling the petitioners ' licence on the 13th of October, 1953. 15 95 section C. I./59 The constitutional validity of the Uttar Pradesh Coal Control Order has been assailed before us substantially on the ground that its provisions vest an unfettered and unguided discretion in the licensing authority or the State Coal Controller in the matter of granting or revoking licenses, in fixing prices of coal and imposing conditions upon the traders; and these arbitrary powers cannot only be exercised by the officers themselves but may be delegated at their option to any person they like. It is argued that these provisions imposing as they do unreasonable restrictions upon the right of the petitioners to carry on their ' trade and business conflict with their fundamental rights under article 19 (1)(g) of the Constitution and are hence void. With regard to the order dated the 16th of July, 1953, by which the prices of coke, coal, etc. were fixed, it is pointed out that it was not only made in exercise of the arbitrary power Conferred upon the licensing authority by the Coal Control Order, but the prices, as fixed, are palpably discriminatory as would appear from comparing them with the prices fixed under the very same Control Order in other places within the State of Uttar Pradesh like Allahabad, Lucknow and Aligarh. The order of the 13th OCtober, 1953, cancelling the petitioners ' licenee is challenged on the ground that the charges made against the ,petitioners were vague and indefinite and that the order was made with the ulterior object of driving the petitioners out of the coal business altogether. It is said further that as a result of the cancellation order, the petitioners have been made incapable of disposing of the stocks already in their possession, though at the same time the holding of such,stock after the cancellation of their licence has become an offence under the Coal Control Order. It is not disputed before us that coal is an essential commodity under the Essential Supplies (Temporary ,Powers) Act of 1946, and by virtue of the delegation powers by the Central Government to the Provincial Government under section 4 of the Act, the Uttar Pradesh Government was competent to make provisions, by notified order, for regulating the supply and 811 distribution of coal in such a way as they considered proper with a view to secure the objects as specified in section 3 of the Act. All that is necessary is that these provisions should not infringe the fundamental rights of the citizens guaranteed under Part III of the Constitution and if they impose restrictions upon the carrying on of trade or business, they must be reasonable restrictions imposed in the interests of the general public as laid down in article 19 (6)of the Constitution. Nobody can dispute that for ensuring equitable distribution of commodities considered essential to the community and their availability at fair prices, it is quite a reasonable thing to regulate sale of these commodities through licensed vendors to whom quotas are allotted in specified quantities and who are not permitted to sell them beyond the prices that are fixed by the controlling authorities. The power of granting or withholding licences or of fixing the prices of the goods would necessarily have to be vested in certain public officers or bodies and they would certainly have to be left with some amount of discretion in these matters. So far no exception can be taken; but the mischief arises when the power conferred on such officers is an arbitrary power unregulated by any rule or principle and it is left entirely to the discretion of particular persons to do anything they like without any check or control by any higher authority. A law or order, which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities cannot but be held to be unreasonable. As has been held, by this court in Chintamon vs The State of Madhya Pradesh(1), the phrase "reasonable restriction, ' connotes that the limitation imposed upon a person in enjoyment of a right should not be arbitrary or of an excessive nature beyond what is required in the interest of the public. Legislation, which arbitrarily or excessively invades the right, cannot be said to contain the quality of reasonableness, and unless it strikes a proper balance between the freedom guaranteed under (1) ; article 19 (1) (g) and the social control permitted by clause (6) of article 19, it must be held to be wanting in reasonableness. It is in the light of these principles that we would proceed to examine the provisions of this control Order, the validity of Which has been impugned before us on behalf of the petitioners. The provision contained in clause 3(1) of the Order that "no person shall stock, sell, store for sale or otherwise utilise or dispose of coal except under a licence granted under this Order" is quite unexceptional as a general provision; in fact, that is the primary object which the control Order is intended to serve. There are two exceptions engrafted upon this general rule: the first is laid down in sub clause (2) (a) and to that no objection has been or can be taken. The Second exception, which is embodied in subclause (2)(b)has been objected to by the learned counsel ' appearing for the petitioners. This exception provides that nothing in clause 3 (1) shall apply to any person or class of persons exempted from any provision of the above sub clause by the State Coal Controller, to the extent of such exemption. It will be seen that the Control Order nowhere indicates what the grounds for exemption are, nor have any rules been framed on this point. An unrestricted power has been given to the State Controller to make exemptions, and even if he acts arbitrarily or from improper motives, there is no check over it and no way of obtaining redress. Clause 3 (2) (b) of the Cntrol Order seems to us, therefore, prima facie to be unreasonable. We agree, however, with Mr. Umrigar that this portion of the Control Order, even though bad, is severable from the rest and we are not really concerned with the validity or otherwise of this provision in the present case as no action taken under it is the subject matter of any complaint before us. The more formidable objection has been taken on behalf of the petitioners against clause 4 (3) of the Control Order which relates to the granting and refusing of licences. The licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or 813 modify any licenee under this Order and the only thing he has to do is to record reasons for the action he takes. Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. It seems to us that such provision cannot be held to be reasonable. No rules have been framed and no directions given on these matters to regulate or guide the discretion of the licensing officer. Practically the Order commits to the unrestrained will of a single 'individual the power to grant, withhold or cancel licences in any way he chooses and there is nothing in the Order which could ensure a proper execution of the power or operate as a check upon injustice that might result from improper execution of the same. Mr. Umrigar contends that a sufficient safeguard has been provided against any abuse of power by reason of the fact that the licensing authority has got to record reasons for what he does. This safeguard, in our opinion, is hardly effective; for there is no higher authority prescribed in the Order who could examine the propriety of these reasons and revise or review the decision of the subordinate officer. The reasons, therefore, which are required to be recorded are only for the personal or subjective satisfaction of the licensing authority and not for furnishing any remedy to the aggrieved person. It was pointed out and with perfect propriety by Mr. Justice Matthews in the well known American case of Yick Wo vs Hopkins(1), that the action or non action of officers placed in such position may proceed from emmity or prejudice, from . partisan zeal or animosity, from favouritism and Other improper influences and motives which are easy of concealment and difficult to be detected and exposed and consequently 'the injustice capable of being wrought under 'cover of such unrestricted power becomes apparent to every man, without the necessity of detailed investigation. In our opinion, the provision of clause 4(3) of the Uttar Pradesh Coal control Order must be must be held to void as imposing an unreasonable restriction upon the freedom (1) at 373. 814 of trade and business_guaranteed under article 19(1) (g)of the Constitution and not coming within the protection afforded by clause (6) of the article. As this provision forms an integral part of the entire structure of the Uttar Pradesh Coal Control Order, the order cannot operate properly unless the provision of clause 4 (3) is brought in conformity with the constitutional requirements indicated above. The licenee of the petitioners having been cancelled in pursuance with the above clause of the Control Order, the cancellation itself should be held to be ineffective and is not necessary for us to enquire further whether or not the grounds upon which the licensing authority purported to act were vague or idefinite or could constitute proper grounds for cancellation. The two other clauses of the Control Order to which exception has been taken on behalf of the petitioners are clauses (7) and (8). Clause (7) empowers the State Coal Controller to direct, by written order, any person holding stock of coal to sell the whole or any part of the stock to such person or class of persons and on such terms and prices as may be determined in accordance with the provision of clause (8). Clause 8 (1) provides that no licensee in Form 'B ' shall sell or agree to sell coal at a price exceeding the price to be declared by the licensing authority in accordance with the formula given in Schedule III. With regard to both these clauses, the contention of the petitioners ' counsel, in substance, is that the formula for determining the price, as laid down in Schedule III, is per se unreasonable as it is made dependent on the exercise of an unfettered and uncontrolled discretion by the licensing authority. An unfair determination of the price by the licensing authority, it is argued, would be totally destructive of the business of the coal traders and the grievance of the petitioners is that that is exactly what has been done by the declaration of prices made on the 16th of July, 1953. We have examined the formula given in Schedule Iii to the Control Order with some care and on the materials that have been actually placed before us, we are 815 not in a position to say that the formula is unreasonable. 'The prices, as said already, are calculated on the basis of the landed costs of coke and coal up to the depot, 'to which a profit of 10 per cent is added. The landed costs comprise seven items in all which are enumerated ' in Schedule III. With regard to items 1, 2, 3, 4 and 6 of the Schedule the actual costs are taken into, account and to that no objection can possibly be taken. The entire dispute is with regard to incidental charges specified in item 5 and the allowance or shortage which forms item 7. So far as incidental charges are concerned, the Schedule allows a maximum of Rs. 8 8 0 per ton to be determined by the licensing authority according to local conditions. The rates undoubtedly vary according to local conditions and some amount of discretion must have to be left in such cases to the local authorities. The discretion given to the licensing authority in fixing these rates is, however, not an unlimited discretion, but has got to be exercised with reference to the condition prevalent in the locality with which the local officers, must be presumed to be familiar. The grievance of the petitioners is that in the declaration of 16th of July, 1953, the licensing authority allowed incidental charges only at the rate of Rs. 4 12 0 per ton and that is grossly unfair. It is pointed out that at Lucknow, Aligarh, Allahabad and other places much higher rates were allowed, 'though the local conditions of these places are almost identical; and there has been consequently a discrimination in this respect which makes the declaration void altogether. The statements that have been made by the petitioners in this connection are not supported by any affidavit of any person who is familiar with the local conditions in the other places and on the materials that we have got here we are unable to say that the rates fixed by the licensing authority of Kanpur are really discriminatory. It is certainly not open to us to substitute our own determination in tile matter of fixing the prices for that of the licensing authority and provided we are satisfied that the discretion that has been vested in a public officer is not an uncontrolled discretion and no unfair 816 discrimination has resulted from the exercise of it, we cannot possibly strike down as illegal any order or declaration made by such officer. The same reasons apply, in our opinion, to the seventh item of Schedule III which relates to allowances for shortage of weight. Here also the Control Order specifies a maximum and the determination of the allowance in particular cases has been left to the discretion of the licensing authority. We are not satisfied from the materials placed before us that this provision is unfair or discriminatory. The formula allows a profit of loper cent upon the cost items with the exception of item No. 5 which relates to incidental charges. We do not know why this item has been omitted and Mr. Umrigar, appearing for the respondents, could not suggest any possible reason for it. But even then, the result of this omission would only be to lower the margin of profit a little below 10 per cent and nothing more. If the other traders in the locality are willing to carry on business in coal with that amount of profit, as is stated on the affidavits of the respondents, such fixation of profit would undoubtedly be in the interests of the public and cannot be held to be unreasonable. The counsel for the petitioners is not right in his contention that the Control Order has only fixed the maximum profit at 10 per cent and has left it to the discretion of the licensing authority to reduce it in any way he likes. Schedule III fixes the profit at 10 per cent upon the landed costs with the exception of item No. 5 and as this is not the maximum, it would have to be allowed in all cases and under clause 8 (1), the 'B ' licensees are to sell their stocks of coal according to the prices fixed under Schedule III. Clause 8 (2) indeed is not very clearly worded, but we think that all that it provides is to impose a disability upon all holders of coal stocks to charge prices exceeding the landed costs and a profit upon the same not above 10 per cent as may be determined by the licensing authority. The determination spoken of here must be in accordance with what is laid down in Schedule III and that, as has been said above, does specify a fixed rate and not a maximum and does ' not 817 allow the licensing authority to make any reduction he: likes. On the whole we are of the opinion that clauses (7 is and (8) of the Control Order do not impose unreasonable restrictions upon the freedom of trade enjoyed by the petitioners and consequently the declaration. of the 16th of July, 1953, cannot I;e held to be invalid. The result is that, in our opinion, clause 4 (3) of the Control Order as well as the cancellation of the petitioners licence should be held to be invalid and a writ in the nature of mandamus would issue against the respondents opposite parties preventing them from enforcing the cancellation order. The rest of the prayers of the petitioners are disallowed. We make no order as to costs. Petition partly allowed. Agent for the petitioners: Ganpat Rai.

IN-Abs

A law or order which confers arbitrary and uncontrolled power upon the executive in the matter of regulating trade or business in normally available commodities must be held to be unreasonable. Under cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, the licensing authority has been given absolute power to grant or refuse to grant, renew or refuse to renew, suspend, revoke, cancel or modify any licence under this Order and the only thing he has to do is to record reasons for the action he takes. Not only so, the power could be exercised by any person to whom the State Coal Controller may choose to delegate the same, and the choice can be made in favour of any and every person. Such provisions cannot be held to be reasonable: Held, therefore that the provision of cl. 4(3) of the Uttar Pradesh Coal Control Order, 1953, must be held to be void as 104 804 imposing an unreasonable restriction upon the freedom of trade and business guaranteed under article 19 (1) (g) of the Constitution and not coming within the protection afforded by cl. (6) of the article. Yick Wo vs Hopkins at 373) referred to.

Appeal No. 474 of 1964. Appeal by special leave from the judgment and order dated March 14, 1963 of the Andhra Pradesh High Court in C.R.P. No. 1725 of 1959. 210 M. C. Setalvad, and T. V. R. Tatachari for the appellant. Kirpa Narain and T. Satyanarayana, for respondent Nos. 1 and 9. The Judgment of the Court was delivered by Hidayatullah J. On the application of two creditors the appellant Yenumula Mallu Dora has been adjudged insolvent by the Subordinate Judge, Kakinada and a receiving order has been passed against him. The respondents before us are one of the petitioning creditors and the legal representatives of the other petitioning creditor who died during these proceedings. The first petitioning creditor held a decree for money which he had obtained in O.S. 67 of 1949. He also held another money decree in O.S. 473 of 1948. The second petitioning creditor held a decree which she had obtained in O.S. 17 of 1955. The application was based upon three acts of insolvency which the appellant was stated to have committed and on the general facts that he was indebted to the tune of Rs. two lakhs, and was unable to pay his debts. The three acts of insolvency alleged against him were (a) evasion of arrest in execution of the money decree in O.S. 67 of 1949; (b) sale of some of his properties on September 26, 1956 in execution arising from O.S. 73 of 1952; and (c) sale of some of his properties on September 19, 1956 in execution of money decree in O.S. 9 of 1950. It was also alleged that he was fraudulently transferring properties in the name of his wife and brother in law and had suffered a collusive charge decree for maintenance 'in favour of his wife, to delay and defeat his creditors. The Subordinate Judge, Kakinada did not accept the first two acts of insolvency. The evidence regarding evasion of arrest was not found convincing and the second act of insolvency was rejected because the sale of the property was in execution of a mortgage decree. In respect of the third art of insolvency the Subordinate Judge held that it satisfied section 6(e) of the and an adjudication and a receiving order were justified in the case. An appeal was taken to the District Court at Rajahmundry (C.A. 41 of 1958) which was dismissed on October 15, 1959. A Revision Application filed under section 75 of the was dismissed by the High Court of Andhra Pradesh on March 14, 1963. The appellant, however, obtained special leave of this Court and has filed the present appeal against the order of the High Court. The contention of the appellant was, and still is, that the third act of insolvency was not established as he had deposited, within 211 one month of the sale, the entire decretal amount together with poundage and commission and the sale was set aside on his petition under Or. 21 r. 89 of the Code of Civil Procedure. He contended, therefore, that as none of the acts of insolvency remained, the petition ought to have been dismissed as incompetent or he was. entitled to have the petition dismissed in any event, under section 25 of the which allows a creditor 's petition to be dismissed on sufficient cause. He submitted that as the sale was set aside before the order of adjudication was made the preexisted sufficient cause for the dismissal of the creditors ' petition. The Subordinate Judge relying upon Venkatakrishnayya vs Malakondayya(1) and on decisions of the Lahore and the Calcutta High Courts rejected the submission and made the order against the appellant. The District Judge, Rajahmundry agreed with the, conclusion of the Subordinate Judge and the High Court rejected ' the petition for revision. In this appeal the same points are urged ' again for our acceptance. In our judgment the view of the law taken in this case by the Subordinate Judge and approved by the, District Court is right and does not warrant any interference. The object of the law of insolvency is to seize the property of ' an insolvent before he can squander it and to distribute it amongst his creditors. It is, however, not every debtor, who has borrowed ' beyond his assets or even one whose property is attached in execution of his debts, who can be subjected to such control. The jurisdiction of the court commences when certain acts take place which are known as acts of insolvency and which give a right to, his creditors to apply to the Court for his adjudication as an insolvent. The lays down in section 6 what acts. are to be regarded as acts of insolvency. It is a long list. Some are voluntary acts of the insolvent and some others, are involuntary. The involuntary acts are of a kind by which a creditor is able to, compel a debtor to disclose his insolvent condition even if the insolvent is careful enough not to commit a voluntary act of insolvency. One such act is that the insolvent has been imprisoned in execution of a decree of any court for payment of money, and another is that any of his property has been sold in execution of a decree of any court for payment of money. In this case the property of the appellant was sold on September 19, 1956 in execution of a money decree against him and therefore there is no question that he was guilty of an act of insolvency described in section 6(e); of the . (1) A.I.R, 1942 Mad, 306, 212 Under section 7, a creditor is entitled to present a petition in the Insolvency Court against a debtor if he has committed an act of insolvency provided [as laid down in section 9(i) (c)] the petition is made within three months of the act of insolvency on which the petition is grounded. In this case both these conditions are fulfilled. There is thus no doubt that the petitioning creditors ' application under section 7 complied with section 6 (e) and section 9 ( 1 ) (c) of the . The petitioning creditors alleged that the appellant was indebted to the extent of Rs. two lakhs and this was not denied by the appellant. In the trial of one of the execution petitions filed against him by a decree holder the appellant admitted that he had "no means to pay the decree debt" because "all his properties" were "under attachment and were being brought to sale". He also stated that he was not "in a position to discharge the debts". It is, therefore, clear that the appellant who was in more than embarrassed pecuniary circumstances was unable to pay his debts. It was also clear from the evidence, which the District Court and the Subordinate Judge have concurrently accepted, that he had made some transfers to screen his properties from his creditors and had suffered a decree for maintenance in a suit by his wife. In view of these facts, which the appellant cannot now deny, he is driven to support his case by argument on law. The argument, as we have seen, is two fold. We, are not inclined to accept either leg of the argument. An act of insolvency once, committed cannot be explained or purged by subsequent events. The insolvent cannot claim to wipe it off by paying some of his creditors. This is because the same act of insolvency is available to all his creditors. By satisfying one of the creditors the act of insolvency is not erased unless all creditors are satisfied because till all creditors are paid the debtor must prove his ability to meet his liabilities. In this case the petitioning creditors had their own decrees. It was in the decree of another creditor that the payment was made but only after the act of insolvency was committed. Besides the petitioning creditors there were several other creditors to whom the appellant owed large sum of money and his total debts aggregated to Rs. two lakhs. It is plain that any of the remaining creditors, including the petitioning creditors, could rely upon the act of insolvency even though one or more creditors might have been paid in full. The act of insolvency which the appellant had committed thus remained and was not purged by payment of decretal amount after the sale in execution of the money decree. 21 3 The next question is whether the Subordinate Judge should have exercised his discretion under section 25, to dismiss the petition of the creditors treating the deposit of the money as sufficient cause. Section 25 of the is, in wide terms but it is impossible to give effect to those wide terms so as to confer a jurisdiction to ignore an act of insolvency at least in cases where the debtor continues to be heavily indebted and there is no proof that he is able to pay As debts. The section reads as follows "25. Dismissal of petition. (1) In the case of a petition presented by a creditor, where the Court is not satisfied with the proof of his right to present the petition or of the service on the debtor of notice of the order admitting the petition, or of the alleged act of insolvency, or is satisfied by the debtor that he is able to pay his debts, or that for any other sufficient cause no order ought to be made, the Court shall dismiss the petition, (2). . . . . . " The section expressly mentions three circumstances in which the petition made by a creditor must be dismissed, namely, (i) the absence of the right of the creditor to make the application (ii) failure to serve the debtor with the notice of the admission of the petition; and (iii) the ability of the debtor to pay his debts. In addition, the Court has been given a discretion to dismiss the petition if it is satisfied that there is other sufficient cause for not making the order against the debtor. The last clause of the section need not necessarily be read ejusdm generis with the previous ones but even so there can be no sufficient cause if, after an act of insolvency is established, the debtor is unable to pay his debts. The discretion to dismiss the petition can only be exercised under very different circumstances. What those cases would be, it is neither easy nor necessary to specify, but examples of sufficient cause are to be found when the petition is malicious and has been made for some collateral or inequitable purpose such as putting pressure upon the debtor or for extorting money from him, or where the petitioning creditor having refused tender of money, fraudulently and maliciously files the application. An order is sometimes not made when by the receiving order the only asset of the debtor would be destroyed such as a life interest which would cease on his bankruptcy. Cases have also occurred 214 where a receiving order was not made because there were no assets and it would have been a waste of time and money to make a receiving order against the debtor. These examples merely illustrate the grounds on which orders are generally made in the exercise of the discretion conferred by the last clause of section 25. This case is clearly one which cannot be treated under that clause. There are huge debts and no means to pay even though there are properties which, if realised, may satisfy at least in part the creditors of the appellant. The appellant was clearly guilty of an act of insolvency and an act of insolvency cannot be purged by anything he may have done subsequently. There is no proof of malicious or inequitable dealing on the part of the petitioning creditors. They have proved the necessary facts and have established both the act of insolvency and the inability of the appellant to pay his debts. The appellant has not been able to prove that he is able to pay. In fact, he has admitted that he is unable to pay his debts. The High Courts have taken a similar and uniform view of such cases. These rulings are quite numerous but the following may be seen: Pratapmall Rameshwar vs Chunnilal Jahuri,(1) Lal Chand Chaughuri vs Bogha Ram and others(2) and Venkatakrishnayya vs Malakondayya(3). We do not consider it necessary to examine the facts in those cases because they apply correctly the principles, which we have set out above to the facts in the cases then present. It is, therefore, quite clear that the adjudication of the appellant and the receiving order against him were properly made. In the result the appeal fails and is dismissed. There will be no order as to costs. Appeal dismissed. (1) A.I.R. (1933) Cal. (2) A.I.R. (1938) Lah. 819, (3) A.I.R.(1942) Mad.

IN-Abs

On the application of two creditors (respondents in this appeal) the appellant was adjudged a bankrupt by the Subordinate Judge, Kakinada, and a receiving order was passed against him. This adjudication was based on the one act of insolvency out of three alleged in the application which was accepted by the sub judge, i.e., the sale of some of his properties in execution of a money decree. Appeals against the order to the District Judge, and later to the High Court, were dismissed. It was contended on behalf of the appellant that the alleged act of insolvency was not established as he had deposited, within one month of the sale, the entire decretal amount, and the sale was set aside on a petition by him under Order 21, rule 89 of the Code of Civil Procedure; that in any event he was entitled to have the application dismissed under section 25 of the , which allows a creditor 's application to be dismissed on sufficient cause. HELD: The adjudication of the appellant as an insolvent and the receiving order against him were properly made. [214 E] An act of insolvency once committed cannot be explained or purged by subsequent events. The insolvent cannot claim to wipe it off by paying some of his creditors; the same act of insolvency is available to all his creditors and is not erased unless all creditors are satisfied. The act of insolvency which the appellant had committed had remained and was not purged by payment of the decretal amount after the sale in execution of the money decree; the respondents could therefore rely on it even though one or more creditors might have been paid in full. 1212 F H] (ii) Although section 25 of the is in wide terms, it cannot be given effect to so as to ignore an act of insolvency in cases such as the present one, where the debtor continues to be heavily indebted and there is no proof that he is able to pay his debts. [213 A B] Venkatakrishnayya vs Malakondayya, A.I.R. 1942 Mad. 306; Pratapmall Rameshwar vs Chunnilal Jahuri, A.I.R. 1933 Cal. 417 and Lal Chand Changhuri vs Bogha Ram & Ors., A.I.R. 1938 Lah. 819, referred to.

vil Appeals Nos. 89 93 of 1964. Appeals by special leave from the judgment and orders dated August 30, 1961 and June 13, 1961 in Special Civil Application Nos. 440, 441,509, 510 and 7 of 1961. K.S. Chawla and R.S. Sachthey, for the appellant (in C. As. 89/91 of 1964). 79 C.K. Daphtary, Attorney General, K.S. Chawla and R.N. Sachthey, for the appellant (in C.A. NO. 93/64). N.N. Keshwani, for the respondents in all the appeals. The Judgment of the Court was delivered by Sikri, J. These five appeals by special leave raise a common question of interpretation of r. 19 of the Displaced Persons (Compensation & Rehabilitation) Rules, 1955 (hereinafter referred to as the Rules). It is common ground that nothing turns on any dissimilarity in the facts of each appeal. It will accordingly suffice if facts in Civil Appeal No. 93 of 1964 are set out. The respondent, Lachman Hotchand Kriplani, is a displaced person from West Pakistan. He has three brothers. They owned 731 acres of agricultural land in District Nawabshah, Taluka Nawab Shah, Sind now in Pakistan. The respondent submitted a claim under the Displaced Persons (Claims) Act, 1950 (XLIV of 1950) hereinafter referred to as the Claims Act. The word 'claim ' was defined to mean "assertion of a right to the ownership of, or to any interest in (i) any immovable property in West Pakistan which is situated within an urban area, or (,ii) such class of property in any part of West Pakistan, other than an urban area as may be notified by the Central Government in this behalf in the official gazette". It is common ground that agricultural land in Sind was so notified. The respondent 's claim was that he owned 1/4 share of 731 acres and 14 ghuntas standing in the name, of Fatehehand. The Claim Officer, by order dated October 7, 1952, accepted the claim and assessed his claim as 94 3 standard acres. On July 2, 1955, the respondent applied for compensation under the (XLIV Of 1954) hereinafter referred to as the Compensation Act. In the application he stated that he was not a member of a Joint Hindu Family in Pakistan, but his claim was as a co sharer alongwith three others, who had filed separate claims. The Assistant Settlement Commissioner was, however, not satisfied with this assertion and after holding an enquiry, by order dated March 3, 1960, he held that the four alleged co sharers were members of a Joint Hindu Family, and the whole agricultural land claim was to be treated as joint property. On August 29, 1960, a statement of account was issued to the respondent. This statement showed that his claim was assessed as Rs. 10,701/ gross compensation. This figure was arrived at, as stated in the affidavit of the Assistant Settlement Commissioner, thus: "The claim was assessed for 376 standard acres and 12 units out of which the petitioner had 1/4th share. The compensation on 376 Standard Acres and 12 Units works out to 108 Standard Acres 0 3/10 Units as per 80 scale indicated in Rule 51. This converted in terms of money as per Rule 56 comes to Rs. 42,806/ The petitioner 's 1/4th share would be Rs. 10,701/ ". The respondent then on October 28, 1960, served a notice on the Regional Settlement Commissioner calling upon him to rectify the statement of account, failing which he will be constrained to move the High Court under articles 226 and 227 of the Constitution. In this notice he claimed that r. 20 applied to his case; in the alternative he asserted that at least r. 19 should be applied to him. In reply, the Assistant Settlement Commissioner informed him that the calculation had been done correctly. Thereupon, he filed a petition under articles 226 and 227, in the Bombay High Court. The High Court allowed the petition and set aside the statement of account furnished to the petitioner on August 29, 1960, and directed that the respondent shall give the benefit of r. 19 and determine the amount of compensation payable to him in accordance with the provisions of rr. 19, 51 and 56 and other rules of the Displaced Persons (Compensation and Rehabilitation) Rules, 1955. The appellant having obtained special leave, the appeals are now before us. We may mention at the outset that in the High Court the respondent 's counsel did not challenge the finding of the Assistant Settlement Commissioner that the respondent and his brothers were members of a joint family. The High Court came to the conclusion that r. 19 applied to agricultural land. It found nothing in the scheme of the Rules, or in the language of r. 19, to support the claim of the Department that r. 19 applied only to nonagricultural land. The learned Attorney General, on behalf of the appellant, challenges the conclusion of the High Court. He has taken us through various sections of the Compensation Act of 1954 and various rules to substantiate his contention. Let us then look at the Compensation Act and the Rules. The Compensation Act was enacted to provide for payment of compensation and rehabilitation grant to displaced persons and for matters connected therewith. 'Verified claim" is defined to mean, inter alia, a claim registered under the Displaced Persons (Claims) Act (XLIV of 1950). It is not disputed that the claim of the respondent verified by order dated October 7, 1952, is a verified claim. Section 4 provides for an application for the payment of compensation in the prescribed form to be made by a displaced person having a verified claim within a certain period. Section 5 provides that on receipt of an application under section 4, the Settlement Officer shall determine the amount of public dues, if any, recoverable from the applicant and shall forward the application and the record to the Settlement Commissioner. It will be noticed that a verified claim registered under the Claim Act, 1950, includes claims to urban as well as certain agricultural land. Therefore, both sections 4 and 81 5 apply to such agricultural land as has been made the subjectmatter of claim and verification under the Claims Act of 1950. Section 6 was referred to by the learned Attorney General but we have not been able to appreciate how it advances his case. Section 6 gives relief to certain banking companies in this way. If a banking company held a mortgage of an immovable property belonging to a displaced person in west Pakistan, and that mortgage was subsisting at the date when the claim of the banking company was registered under the Claim Act, 1950, and the displaced person is entitled to receive compensation in respect of any such property, the banking company was entitled to various reliefs, the appropriate relief depending on whether the compensation to the displaced person is payable (1) in cash or (2) in the form of transfer of any property, or (3) in any other form. In this section immovable property would include agricultural land and it cannot be denied that the respondent is entitled to compensation at least in one of the three forms mentioned in sub. section (2). Section 7(1).directs the Settlement Commissioner on receipt of the application trader section 5 to ascertain the amount of compensation having due regard to the nature of the verified claim and other circumstances of the case. Section 7(2) provides for the deduction of certain dues and the Settlement Commissioner then makes an order under section 7(3) ascertaining the net amount of compensation. Section 8 provides the form and manner of payment of compensation of the net compensation determined under section 7(3) as being payable to a displaced person. Subject to any rules that may be made, the net compensation is payable in cash, in government bonds, or by sale to the displaced person of any property from the compensation pool and setting off the purchase money against the compensation payable to him, etc. Section 8(2) enables rules to be made by the Central Government on various matters, inter alia, the scales according to which, the form and the manner in which and the installments by which compensation may be paid to different classes of displaced persons. Section 40 enables rules to be made to carry out by the purposes of the Compensation Act. It is not necessary to refer to other sections of the Compensation Act. Before we deal with the 1955 Rules, it is apparent that sections 4, 5, 6, 7 and 8 do not in any manner distinguish between urban land and agricultural land as long as the agricultural land is the subject matter of a verified claim. If a person holding a verified claim in respect of agricultural land owes.public dues and "public dues" is defined very widely in section 2(d) to include all kind of loans not only from the Central Government but from a State Government also this has to be deducted under section 7(3). It is suggested that the expression "net amount of compensation" in section 7(3) means only cash compensation but we are unable to limit the expression thus in view of the scheme of sections 4 to 8. 82 The Central Government in exercise of the power conferred by section 40 of the Compensation Act made the Displaced Persons (Compensation and Rehabilitation) Rules, 1955. Chapter I contains various definitions; Chapter II deals with procedure for submission of compensation application and determination of public dues. Rule 3 enables a displaced person having a verified claim to make an application for compensation. Rule 4 deals with the form of application and Appendix I is the form prescribed, and Appendix II is the questionnaire which has to be answered. One question is important for our purpose. Under the heading "11. Particulars of claims under Displaced Persons Claims Act, 1950" is mentioned: "(a) agricultural land, index no; Village/Tehsil/District; value assessed in standard acres; cosharers in each property with respective shares; if any property is mortgaged state mortgage money and name of the mortgagees". The rest of the rules, upto r. 9, in this Chapter deal with the scrutiny of the application and the determination of public dues. It is only necessary to notice r. 6(2) which requires a Settlement Officer to send a duplicate copy of the application to the Office of the Chief Settlement Commissioner for verification of the assessed value of the claim in respect of which the application has been made. Under r. 10 the Settlement Officer is required to pass an order and send a copy of the order and the original application along with the records of the case to the Regional Settlement Commissioner. It will be seen that Chapter II does not distinguish between verified claims relating to urban property and rural property. Then we come to Chapter III which contains r. 11. Under this rule the settlement Commissioner deals with the duplicate copy sent to him under r. 6(2). He verities the assessed value of the claim, as stated in the application, with the final order in respect thereof, in the claims record and returns the duplicate copy to the Regional Settlement Commissioner with such remarks as may be relevant for the determination of the amount of compensation. Chapter IV deals with determination of compensation. It will be remembered that section 5 of the Compensation Act requires the Settlement Officer to determine the amount of public dues and forward the application and the record of the case to the Settlement Commissioner, and r. 11, which we have just noticed, requires the Settlement Commissioner (Headquarters) to send the duplicate copy to the Regional Settlement Commissioner. Rule 12 directs the Regional Settlement Commissioner to consolidate all these papers. Rule 12 obviously applies to application in respect of verified claims to agricultural land. As we have already said, section 5 and r. 11 applied to such verified claims. Rule 13 deals with determination of certain dues to banking companies under section 6 and any unsecured debt payable by an applicant in respect of which a communication has been received from any Tribunal under section 52 of the Displaced Persons (Debt Adjustment) Act, 1951 (LXX of 1951). Rule 14 directs that the public dues and the amounts referred to in Rule 13 83 shall be deducted from the amount of compensation in a certain order of priority. Rule 15 reads as follows: "Determination of net compensation; After deducting the amount referred to in rule 14, the Regional Settlement Commissioner or an Assistant Settlement Commissioner or a Settlement Officer, or an Assistant Settlement Officer, having jurisdiction and duly authorised by the Regional Settlement Commissioner, shall pass an order determining the net amount of compensation payable to the applicant in respect of his verified claim and shall prepare a summary in the form specified in Appendix VII (Abstract of particulars). It is significant that Appendix Vii has a column for agricultural land and a column for remarks regarding application of r. 19. Pausing here, it is difficult to hold that rr. 12, 13 and 14 do not apply to applications for compensation in respect of agricultural lands which are the subject matter of a verified claim. There fore, we must reject the contention that Chapter IV, in which r. 19 occurs, does not deal with agricultural lands at all. It may be conceded that r. 16 does not apply to agricultural lands. The scale compensation in respect of agricultural lands which are the subject matter of a verified claim is expressly dealt with else where. Rule 51 which provides that the scale of allotment of land as compensation in respect of a verified claim for agricultural land shall be the same as in quasi permanent land allotment scheme in the State of Punjab and Patiala, and the East Punjab States Union, as set out in Appendix XIV. The explanation further provides that if any public dues are recoverable the allocable area shall be reduced correspondingly. Rule 49 read with r. 56 enables the compensation due on the verified claim for agricultural land to be converted into cash if a person wishes to have his claim satisfied against property other than agricultural land. Rule 18 expressly excludes agricultural land from its purview. What emerges from a consideration of these rules in Chapter IV is that we must consider each rule and see whether it has application to a claim for compensation in respect of agricultural land. Rule 19 reads thus: "Special Provision for payment of compensation to Joint families Where a claim relates to properties left by the members of an undivided Hindu family in West Pakistan thereinafter referred to as the joint family) compensation shall be computed in the manner hereinafter provided in this rule. (2) where on the 26th Sept. 1955 (hereinafter referred to as the relevant date) the joint family consisted of: (a) two or three members entitled to claim partition, 84 the compensation payable to such family shall be computed by dividing the verified claim into two equal shares and calculating the compensation separately on each such share, (b) four or more members entitled to claim partition, the compensation payable to such family shall be computed by dividing the verified claim into three equal shares and calculating the compensation separately on each such share. (3) For the purpose of calculating the number of the member of a joint family under sub rule (2), a person who on the relevant date: (a) was less than 18 years of age, (b) was a lenial descendant in the main line of another living member of joint Hindu family entitled to claim partition shall be excluded: Provided that where a member of a joint family has died during the period commencing on the 14th August 1947 and ending on the relevant date leaving behind on the relevant date all or any of the following heirs namely: (a) a widow or widows, (b) a son or sons (whatever the age of such son or sons) but no lenial ascendant in the main line, then all such heirs shall, notwithstanding anything contained in this rule, be reckoned as one member of the joint Hindu family. Explanation For the purpose of this rule, the question whether a family is joint or separate shall be determined with reference to the status of the family on the 14th day of August, 1947 and every member of a joint family shall be deemed to be joint notwithstanding the fact that he had separated from the family after the date". The heading "Special Provision for payment of compensation to joint families" is general. So is sub rule (1). The word properties ' is general and would include agricultural land. That this is the meaning is also borne out if we consider the word "claim". The word "claim" must have reference to the claim in the application to be made under section 4 read with rr. 3 and 4, and as we have already noticed, the application would include a claim in respect of agricultural land if it is the subject matter of a verified claim. The learned Attorney General has not been able to point to any principle of construction which would enable us to limit the scope of the general words in r. 19(1). His main argument that no rule in Chapter IV applies to claims in respect of agricultural land we have already rejected. 85 The learned Attorney General then urges that the scheme of the Rules is to provide in separate chapters for compensation in respect of various classes of properties, and he says that Chapter VIII provides for compensation in respect of verified claim for agricultural land situated in rural area and the rules contained in the chapter are the only rules that govern the grant of compensation. But none of the rules in this chapter deals with what is t9 happen if the agricultural land was held by a joint family in West Pakistan or if the agricultural land was held by co owners in West Pakistan. Even if a Joint Hindu Family is treated as a unit for some purposes in some laws, co owners are very rarely treated as a unit and it would require express language to treat co owners as a unit an.d award compensation to them as a unit. However, r. 20 recognises the general rule and provides that where a claim relates to property left in West Pakistan, which is owned by more than one claimant as co owners, the unit for the assessment of compensation shall be the share of each co owner and the compensation shall be payable in respect of each such share as if a claim in respect thereof has been filed and verified separately. The learned Attorney General, when asked, said that even r. 20 ' would not apply to a claim in respect of agricultural land, but we are unable to accede to this contention. It would be the height of ' inequity to hold this. In other words, rr. 19 and 20 enable the authorities to determine the unit for assessment of compensation. This subject is not dealt with in Chapter VIII, which deals with how the unit, be it an individual, a member of Joint Hindu Family or a co owner, is to be compensated. There is nothing in Chapter VIII which modifies or overrides rr. 19 and 20. Accordingly, in agreement with the High Court, we hold that r. 19 will apply to the claim of the respondent in respect of agricultural land left by him as a member of the Joint Hindu Family. In the result, the appeal fails and is dismissed with costs. As stated in the beginning, it is common ground that if this appeal fails the other appeals must also fail. They are accordingly dismissed with costs. There will be one hearing fee in them. Appeals dismissed.

IN-Abs

The respondent who had a "verified claim" applied for compensation under the . He alleged that he was a co sharer along with his brothers in agricultural property in West Pakistan and claimed his share of the compensation. The Assistant Settlement Officer held that the alleged co sharers were members of a joint Hindu family and that t.he agricultural property was joint property. He then calculated the compensation on the joint property as per rr. 51 and 56 of the Displaced Persons (Compensation and Rehabilitation) Rules 1955. The respondent thereupon filed a petition in the High Court under articles 226 and 227 of the Constitution contending that on the finding that the respondent and his brothers constituted a joint family, the unit for assessment of compensation should first be determined according to r. 19, which makes special provision for payment of compensation to joint families, before compensation was calculated. The High Court allowed the petition. In the appeal to this Court it was contended that r. 19 was inapplicable as that rule does not apply to agricultural land. HELD: The High Court was right in holding that the rule applied to the claim of the respondent in respect of the agricultural land. Chapter IV of the Rules in which r.19 occurs contains some rules which apply to applications for compensation in respect of agricultural lands also. Therefore it cannot be said that the Chapter does not deal with agricultural lands at all. Each rule must be considered to see whether it has application to a claim for compensation in respect of agricultural land. So considered, there is no principle of construction by which the scope of the general words in r. 19 could be limited, so as not to apply to agricultural land. Chapter VIII of the Rules provides for compensation in respect of verified claims for agricultural lands in rural areas and only deals with how a unit that has been determined is to be compensated. There is nothing in that Chapter which modifies or overrides r.19 which enables the authorities to determine the unit for assessment of compensation in the case of joint families. [83 D E; 85 A F]

Appeal No. 152 of 1965. Appeal from the judgment and order dated November 13, 1964 of the Madhya Pradesh High Court in Misc. Petition No. 373 of 1964. M. section Gupta, for the appellant. 222 B. R. L. Iyengar, for the respondents. The Judgment of the Court was delivered by Ramaswami, J. On August 7, 1963 the Regional Transport Authority, Bilaspur granted to the Punjab Sikh Regular Motor Service, (hereinafter called the appellant), renewal of a stage carriage permit for an inter regional route Saraipalli to Sarangarh in the State of Madhya Pradesh. The permit was valid upto August 5, 1963 and by the order of renewal dated August 7, 1963 the permit was renewed for a period of three years. On September 13, 1963 the appellant applied to the Regional Transport Authority, Raipur for renewal of the grant of countersignature on the renewed permit. Respondent No. 2 objected to the renewal of the grant of counter signature on the ground that the application of the appellant dated September 13, 1963 was barred by time. The Regional Transport Authority, Raipur held that the application for renewal of the grant of countersignature was not made within the time prescribed by rule 62 of the Central Provinces and Berar Motor Vehicles Rules but it took the view that the application for renewal had been filed within six weeks of the date of the passing of the order of renewal of the permit by the Regional Transport Authority, Bilaspur and therefore the application for the renewal of the grant of countersignature could not be rejected on the ground that it was time barred. The Regional Transport Authority, Raipur accordingly granted the renewal of the counter signature on the permit by its order dated February 24, 1964. Respondent No. 2 thereafter applied to the High Court of Madhya Pradesh under article 226 of the Constitution of India for a writ quashing the order dated February 24, 1964 passed by the Regional Transport Authority, Raipur. The High Court took the view that an application for renewal of the grant of counter signature must be made within the period prescribed by section 58 (2) of the and the appellant having failed to apply within that period, the application of the appellant for renewal of the counter signature on the permit was barred and the Regional Transport Authority, Raipur had no jurisdiction to countersign the permit renewed by the Regional Transport Authority, Bilaspur. The High Court accordingly quashed the order dated February 24, 1964 passed by the Regional Transport Authority, Raipur. This appeal is brought by the appellant with a certificate granted by the High Court tinder article 1 33 (1) (c) of the Constitution. It is advisable at this stage to refer to the material provisions of the (Act 4 of 1939) which have a bearing 22 3 on the validity of the order of the Regional Transport Authority, Raipur dated February 24, 1964. Section 45 of the 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. By the proviso to section 45 it is enacted that where 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. Section 47 sets out the procedure of the Regional Transport Authority in considering applications for stage carriage permits and prescribes the matters which may be taken into account by that officer ingraining or rejecting the applications for stage carriage permits. Section 48 provides that subject to the provision of section 47,a Regional Transport Authority may, on an application made to it, grant a stage carriage permit, in accordance with the application or with such modifications as it deems fit, valid for a specified route or routes or a specified area. Section 57 prescribes the procedure in " applying for and granting permits". It is provided by sub section (2) of section 57 that an application for a stage carriage permit or a public carrier 's permit shall be made not less than six weeks before the date on which it is desired that the permit shall take effect, or, if the Regional Transport Authority appoints a date for the receipt of such applications, on such date. Section 58(1) provides that a stage carriage permit or a contract carriage permit other than a temporary permit shall be effective without renewal for such period not less than three years and more than five years, as the Regional Transport Authority may specify in the permit. Sub section (2) enacts that a permit may be renewed on an application made and disposed of as if it were an application for a permit, provided that the application for the renewal of a permit shall be made (a) in the case of a stage carriage permit or a public carrier 's permit, not less than sixty days before the date of its expiry, and (b) in any other case, not less than thirty days before the date of, its expiry. By sub section (3) the Authority is, notwithstanding anything contained in the first proviso to sub section (2), authorised to entertain an application for the renewal of a permit after the last date specified in the said proviso, if the application is made not more than fifteen days after the said last date. Section 63 deals with inter regional and inter state permits. The material parts of that section are "(1) Except as may be otherwise prescribed, a permit granted by the Regional Transport Authority 224 of any one region, shall not be valid in any other region, unless the permit has been countersigned, by the Regional Transport Authority of that other region, and a permit granted in any one State shall not be valid in any other State unless countersigned by the State Transport Authority of that other State or by the Regional Transport Authority concerned : Provided. . . . . (2) A Regional Transport Authority when countersigning the permit may attach to the permit any condition which it might have imposed if it had granted the permit and may likewise vary any condition attached to the permit by the authority, by which the permit was granted. (3) The provisions of this Chapter relating to the grant, revocation and suspension of permits shall apply to the grant, revocation and suspension of countersignatures of permits : Provided. . . . . Section 68(1) confers authority upon the State Government to make rules for the purpose of carying into effect the provisions of Ch. IV of the Act. A stage carriage permit granted by a Regional Transport Authority therefore remains effective without renewal for a period of not less than three years and not more than five years as the authority may specify in the permit. A person desiring to obtain renewal of the permit must, in the case of a stage carriage permit, make an application not less than sixty days before the date of its expiry, and the Authority has to deal with the application for the renewal as if it were an application for a permit. The procedure for obtaining renewal is assimilated to the procedure prescribed for an application for a first permit, but in order that there is no interruption in the transport service the Legislature has provided that the application for renewal shall be made not less than sixty days before the date of its expiry, it being assumed that the authority would be able, in the interval, to publish the application, and to hear objections to the grant of renewal. Except as may be otherwise prescribed, an interregional permit by a Regional Transport Authority in any region. is not valid unless the permit is countersigned by the Regional Transport Authority of that other region. The provisions of Ch. IV relating to the grant, revocation and suspension of permits 225 apply to the grant, revocation and suspension of countersignatures of permits. The High Court has held, in the present case, that an appli cation for renewal of counter signature has also to be made not less than sixty days before the date of its expiry and if no such application is made, the Regional Transport Authority has no power to countersign the permit, and upon that ground the High Court has quashed the order of the Regional Transport Authority, Raipur dated February 24, 1964 granting countersignature of the permit. It was argued on behalf of the appellant that the period of limitation prescribed by section 58 of the Motor Vehicle, , Act cannot be applied to an application for countersignature of a renewed permit. It was submitted that the question of counter signature cannot arise unless and until the permit was first renewed and therefore it was erroneous to say that an application for countersignature should be made even before the permit was renewed and within the time prescribed by section 58. The contrary view was put forward on behalf of respondent No. 2. It was contended that in the case of an inter regional route, the countersignature of the Regional Transport Authority concerned was essential for the validity and confirmation of the grant made by the Regional Transport Authority having jurisdiction to grant a permit for the inter regional route. It was pointed out that under section 63 (3) of the the provisions of Ch. IV relating to grant, revocation and suspension of permits apply to the grant, revocation and suspension of countersignatures of permits and therefore the provisions of sections 57 and 58 about the making of an application for the grant of a permit, the time within which it must be made and the procedure that must be followed, apply equally in the matter of the grant of countersignatures and that as section 58 laid down that an application for renewal of a permit must be made, in the case of a stage carriage permit, not less than sixty days before the date of its expiry, it necessarily followed that an application for countersignature of the renewed permit for inter regional route had to be made to the Regional Transport Authority concerned within sixty days before the date of the expiry of the permit. We do not think it is necessary to express any opinion on the contentions advanced by the parties on this aspect of the case, for we are of the view that on a proper construction of the rules made by the State Government in regard to the grant of permits and countersignatures of inter regional permits the Regional Transport Authority, Raipur was not competent to renew 226 the countersignature on the permit for tile interregional route granted by the Regional Transport Authority, Bilaspur in the present case. Under the the Central Provinces and Berar Motor Vehicles Rules, 1940 were made by the appropriate authority and it is the admitted position that these rules were at the material time in operation in the two regions Bilaspur and Raipur in the State of Madhya Pradesh with which we are concerned. By r. 61 it is provided : "(a) Application for the renewal of a permit shall be made, in writing to the Regional Transport Authority by which the permit was issued not less than two months, in the case of a stage carriage permit or a public carrier 's permit, and not less than one month in other cases, before the expiry of the permit, and shall be accompanied by Part A of the permit. The application shall state the period for which the renewal is desired and shall be accompanied by the fee prescribed in rule 55. (b) The Regional Transport Authority renewing a permit shall call upon the holder to produce part B or Parts A, B thereof, as the case may be, and shall endorse Parts A and B accordingly and shall return them to the holder. " By r. 62 cl. (a) it is provided "Subject to the provisions of r. 63, application for the renewal of a countersignature on a permit shall be made to the Regional Transport Authority concerned and within the appropriate periods prescribed by Rule 61 and shall, subject to the provisions of sub rule (b), be accompanied by Part A of the permit. The application shall set forth the period for which the renewal of the countersignature is required". By r. 63 cl. (a) it is provided : "The authority by which a permit is renewed may, unless any authority by which the permit has been countersigned (with effect not terminating before the date of expiry of the permit) has by general or special order otherwise directed, likewise renew any countersignature of the permit (by endorsement of the permit in the manner set forth in the appropriate form) and shall, in such case, intimate the renewal to such authority". 227 Rule 61 substantially incorporates the provisions of sub section (2) of section 58 of the and the proviso thereto, and makes certain incidental provisions. Clause (a) of r. 62 provides that the application for renewal of countersignature of a permit shall be made to the Regional Transport Authority concerned and within the appropriate period prescribed by r. 61 but the provisions of r. 62(a) are subject to the provisions of r. 63(a) which confers power upon the Authority which grants renewal of inter regional permit under the first proviso to section 45 to countersign the permit so as to make it valid for the other region covered by the route. Therefore, even though by section 63 the power to countersign the pen nit is entrusted to the Regional Transport Authority of the region in which the remaining part of the route is situate, the effect of r. 63 is that the power to countersign the permit is vested in the Authority which grants the renewal of the permit. The Legislature has by providing in the opening part of sub section (1) of section 63 "except as may be otherwise prescribed" made the provision subject to the rules framed by the State Government under section 68 of the . The provisions of r. 63, therefore, must supersede the direction contained in section 63(1) of the statute and the Regional Transport Authority, Bilaspur was competent in the present case to grant countersignature of the pen nit even in so far as it related to the Raipur region. On behalf of the appellant attention was drawn to the expression "may" in r. 63. But in the context and the language of the rule the word "may" though permissive in form, must be held to be obligatory. Under r. 63 the power to grant renewal of the countersignature on the permit in the present case is conferred on the Regional Transport Authority, Bilaspur. The exercise of such power of renewal depends not upon the discretion of the authority but upon the proof of the particular case out of which such power arises. "Enabling words are construed as compulsory whenever the object of the, power is to effectuate a legal right" (See Julius vs Bishop of Oxford) (1). If the Regional Transport Authority, Bilaspur had power to renew the countersignature on the permit under r. 63, it must be held that the Regional Transport Authority, Raipur had no such power under r. 62 because the latter rule is expressly made subject to the provisions of rule 63, and the power granted to the Regional Transport Authority under section 62 is taken away by the provisions of r. 63. It follows, therefore, that the Regional Transport Authority, Raipur was not competent to renew the countersignature on the permit in the present case and the Regional Transport Autho (1) 5 A.C. 214, 244. 228 rity, Bilaspur was alone competent to renew the countersignature of the permit. We accordingly hold that the order of the Regional Transport Authority, Raipur dated February 24, 1964 granting countersignature of the permit was illegal and ultra vires and was rightly quashed by the High Court by its order dated November 13, 1964. We, therefore, confirm the order of the High Court, but for different reasons. We, however, desire to make it clear that our order does not affect the validity of the permit granted to the appellant by the Regional Transport Authority, Bilaspur in so far as it relates to the route within the limits of Bilaspur region. That is the ratio of the decision of this Court in M/s. Bundelkhand Motor Transport Company, Nowgaon vs Behari Lal Chaurasia and anr.(1) in which it was pointed out that inter regional permit when granted is valid for the region over which the authority granting the permit has jurisdiction even though it is not countersigned by the proper Regional Transport Authority with regard to the portion of the route outside that region. We accordingly dismiss this appeal. There will be no order as to costs. We desire to express our thanks to Mr. Iyengar who acted as amicus curiae in this case. Appeal dismissed.

IN-Abs

The Regional Transport Authority, Bilaspur, granted the appellant renewal of the stage carriage permit for an inter regional route, The appellant, thereafter, applied to the Regional Transport Authority, Raipur, for renewal of the grant of counter signature on the renewed permit, and it was granted. In an application under article 226 by the 2nd respondent, the High Court quashed the order of the Regional Transport Authority, Raipur, on the ground that the appellant 's application for renewel of the counter signature was barred by time. In appeal to this Court, HELD : On a proper construction of the Central Provinces and Berar Motor Vehicles Rules made by the State Government in regard to the grant of permits and counter signatures of inter regional permits, the Regional Transport Authority, Raipur, was not competent to renew the counter signature on the permit for the inter regional route granted by the Regional Transport Authority, Bilaspur, and the permit was valid only so far as it related to the route within the limits of Bilaspur region, (225 H] Even though by section 63 of the , the power to counter sign the permit is entrusted to the Regional Transport Authority of the region in which the remaining part of the route is situate, the effect of r. 63 is that the power to counter sign the permit is vested in the Authority which grants the renewal of the permit. In the context and the language of the rule the word "may" in the rule, though permissive in form, is obligatory. If the Regional Transport Authority, Bilaspur, had power to renew the counter signature on the permit under the rule,, it must be held that the Regional Transport Authority, Raipur, had no such power under r. 62, because, the latter rule As expressly made subject to the provisions of r. 63, and the power granted to the Regional Transport Authority under r. 62 is taken away by the provisions of r. 63. [227 C G] M/s. Bundelkhand Motors Transport Company vs Beharilal, ; , referred to.

Appeals Nos. 46 49 of 1964. Appeals by special leave from the judgment and order dated July 4, 1961 of the Andhra Pradesh High Court in Case Referred No. 35 of 1959. A. V. Viswanatha Sastri, N. D. Karkhanis, R. H. Dhebar and R. N. Sachthey, for the appellants. I. N. A. Palkhivala, Anwarula Pasha, J. B. Dadachanji,O. C. Mathur and Ravinder Narain, for the respondent. The Judgment of the Court was delivered by Subba Rao, J. These four appeals by special leave granted this Court are preferred against the judgment of a Division Bench ,of the Andhra Pradesh High Court at Hyderabad in a case referred to it by the Income tax Appellate Tribunal, Hyderabad Bench, under section 66(1) of the Indian Income tax Act, 1922, hereinafter ,called the Act, in respect of assessments made on H.E.H. the Nizam of Hyderabad for the assessment years 1950 51 and 195152. The Income tax Officer, B. Ward, Hyderabad Deccan, by his ,orders dated February 15, 1955, and March 31, 1956, rejected the ,objections raised by the assessee and assessed him to income tax for the said two years. Against the said orders the assessee filed two appeals before the Appellate Assistant Commissioner, Hyderabad, who, by his orders gave some relief in respect of the said assessments. On further appeals by the assessee, the Income tax Appellate Tribunal, Hyderabad Branch, allowed the appeals of the assessee in part and ordered the assessments to be revised accordingly. At the instance of the assessee, the Income tax Appellate Tribunal drew up a statement of case and referred four questions to the High Court of Andhra Pradesh for its decision. On July 4, 1961, the High Court answered some of the questions in favour of the assesses and others against him. The Commis 299 sioner of Income tax filed two appeals to this Court, being Civil Appeals Nos. 46 and 47 of 1964, insofar as the High Court 's judgment went against the Revenue; and the assessee filed two appeals, being Civil Appeals Nos. 48 and 49 of 1964 against that part of the High Court 's judgment which rejected his contentions. To avoid prolixity and repetition we shall state the relevant facts in considering each of the questions referred, to the High Court. Questions 1 and 3 may be considered together. The said questions read Question 1. "Whether in the circumstances of the case and having regard to International Law and construction of Municipal Laws and/or the covenant dated 25 1 1950 between the Assessee and the Government of India, the Assessee was liable to tax under the Indian Income tax Act, 1922, in respect of any part of his income." Question 3. "Whether, in any event, the Assessee enjoyed immunity from taxation under the Indian Income tax Act, 1922, in respect of income which accrued or arose to him or was received by him up to 26th January 1950. " These two questions raise the following points : (1) Whether under International Law the assessee is immune from taxation in respect of the assessment year 1950 51; and (2) whether, having regard to the said Covenant dated January 25, 1950, he was not liable to, tax under the Indian Income tax Act, 1922. The High Court held that under the International Law, the assessee being a sovereign up to January 25, 1950, his income up to that date was immune from taxation and that, the Indian Income tax Act not having expressly amended the International Law in its application, to India, his income till that date was not liable to tax under the, Income tax Act. As a corollary from the said conclusion, the High Court held that as the assessee ceased to be a sovereign from January 26, 1950, the income accrued to him thereafter was liable to tax. The High Court rejected the contention of the assessee that he was exempted from the liability to pay income tax under the Covenant entered into by him with the Government of India at the time of merger. The argument based upon the Covenant may easily be disposed of. The relevant articles of the Covenant read as follows Article 3. His Exalted Highness the Nizam of Hyderabad and the members of his family shall be en 300 titled to all the personal privileges, dignities and titles enjoyed by them whether within or outside the territories of the Dominion before the 15th August 1947. Article 4. The Government of India guarantees the succession according to the laws and customs of the Gaddi of the State and the personal rights, privileges, dignities and titles of His Exalted Highness the Nizam of Hyderabad. The argument was that the assessee 's immunity from taxation as a sovereign was a privilege guaranteed to him under the said articles of the covenant. This question need not detain us, as it was answered by this Court in Sri Sudhansu Shekhar Singh Deo vs The State of Orissa(1) in the context of the claim of exemption from agricultural income tax by an Ex Ruler of an Indian State based upon articles in a merger agreement, similar to the one now in question. This Court held that the privileges guaranteed by the relevant articles of merger agreement were only personal privileges of the appellant as an Ex Ruler and that those privileges did not justify his claim to immunity from taxation. Following this decision we reject the contention of the assessee based upon the said articles of the Covenant. Now, we shall take the first question, excluding that part of it which refers to the said Covenant, and question 3. Mr. A. V. Viswanatha Sastri, learned counsel for the Revenue, contended that under the International Law a foreign sovereign ,was not immune from taxation in respect of his private properties :situated in the taxing State; even if there was such an immunity under the International Law, the assessee, being under the suzerainty or the paramountcy of the British Crown, had never enjoyed the status of a sovereign as understood in the International Law and, therefore, not governed by that law; and that, in any event, as on January 26, 1950, the date when he became liable to tax, he was no longer a sovereign and therefore he could not claim exemption under the International Law. Mr. Palkhiwala, learned counsel appearing for the assessee, while conceding that the assessee could not claim exemption under International Law in respect of the assessment for the year 195152, argued that he was not liable to income tax for the assessment year 1950 51 on the ground that under the Indian Income tax Act, income tax was charged on the assessee 's income received ,during the accounting year and that as during the accounting year (1) ; 30 1 the assessee was a ruling chief, he was exempt from taxation under the International Law. He argued that under the International Law, as understood by English Courts, a foreign sovereign was exempt from taxation, that the said interpretation of the law had become the common law of England and that the said common law was the law of India before the Constitution and it continued to have force thereafter by reason of article 372. The validity of Mr. Palkhivala 's contention depends upon our acceptance of four premises, namely (i) the English Courts have finally accepted the view that under International Law a sovereign is immune from taxation in respect of his private property; (ii) that it had become a part of the common law of England; (iii) that before the Indian Constitution came into force, the said common law was accepted and applied by the Indian Courts; and (iv) that the said common law so accepted as the common law of this country continued to be in force by reason of article 372 of the Constitution. International Law vis a vis the liability of a sovereign to taxation in respect of his private property is in a process of evolution. It has not yet become crystallized. It is true that some of the textbooks on the subject and some of the decisions support the view that sovereign rulers are exempt from taxation : see Halsbury 's Laws of England, 3rd Edn., Vol. 20, p. 589; Oppenheim 's International Law, 8th Edn., Vol. 1, D. 759. But, even in England the House of Lords in Sultan of Johore vs Abubakar Tunku Bendahar(1) observed : "Their Lordships do not consider that there has been finally established in England. . . . any absolute rule that a foreign independent sovereign cannot be impleaded in our courts in any circumstances. " Interesting and instructive discussion on the question of a foreign sovereign 's immunity from taxation in respect of his private properties is found in the American Journal of International Law, Vol. 46, at p. 239, under the heading "Immunity from Taxation of Foreign State owned property". After an elaborate consideration of the relevant material on the subject, the learned author concludes thus, at p. 258 : "Immunity from taxation should be the rule when the activities concerned are those normally and traditionally regarded as governmental in character; but when a foreign state engages in trading operations of a (1) ,343. 302 type generally open to private persons there seems no need to better its competitive position or to shift tax burdens to others through giving it exemption from taxes." In dealing with taxation of property, the learned author says, at p. 256, thus "The use of these agreements, combined with the practice discussed above, appears to be bringing about a situation in which it will become generally recognized that International Law provides for the tax exemption of foreign state owned property used for functions generally accepted as public." "It is by no means clear, however, that the same result is either probable or desirable when we are dealing with property used for purposes which seem more commercial than governmental. " It may also be noticed that in India there is no absolute prohibition against a ruler of a foreign state being sued in India: see sections 86 and 87 of the Code of Civil Procedure. He can be sued with the consent of the Central Government. It is not necessary in this case to decide this question, as we are satisfied that H.E.H. the Nizam had never acquired international personality under International Law. We have noticed the aforesaid facts only to indicate that the question is not free from difficulty and that it requires serious consideration when it directly arises for decision. We shall, therefore, assume for the purpose of these appeals that a foreign sovereign who has acquired an international personality has such an immunity from taxation. We shall now proceed to consider the question why in our view H.E.H. the Nizam had never acquired international per sonality. As a learned author puts it. "Every civilised State which is a member of the family of nations is an International person. Recognition of a State as a, member of the family of nations involves recognition of such State 's (1) equality, (2) dignity, (3) independence, and (4) territorial and personal supremacy." According to Oppenheim, all the said qualities constitute, as a body, the international personality of a State. Unless the State of Hyderabad had the said qualities, its ruler could not claim any of the immunities sanctioned by International Law. A brief his 3 0 3 tory of the status of the Hyderabad State vis a vis the British Crown would help us to ascertain its status in International Law. In 1858 the British Crown took over from the East India Com pany the administration of the entire territory of India. Thereafter, while the British India was under the direct rule of the Crown, the Indian States remained under the personal rule of their Chiefs under the suzerainty of the Crown. In the Pronouncement of Lord Canning he clearly stated The Crown in England stands forth the unquestioned ruler and paramount power in all India." This concept of suzerainty by the Crown was also described a& "Paramountcy". The relationship between the paramount power and the Indian States was described in the "White Paper on Indian States", at p. 32, thus "As already stated the paramountcy of the British Crown was not co extensive with the rights of the Crown flowing from the Treaties. It was based on Treaties, Engagements, Sanads as supplemented by usage and sufferance and by decisions of the Government of India and the Secretary of State embodied in political practice. " The said White Paper further discloses that while the States were responsible for their own internal administration, the Crown accepted responsibility for their external relations and defence. The Indian States had no international status, and for external purposes, they were practically in the same position as British India. The Government of India Act, 1935, gave the Indian States an option to join the federation subject to certain conditions; but that part of the said Act was abandoned in 1939. The Indian Independence Act of 1947 introduced a change in the relationship between the Crown and the said States. Section 7 (1) (b) of the Indian Independence Act of 1 947, reads : "As from the appointed day the suzerainty of His Majesty over the Indian States lapses, and with it, all treaties and agreements in force at the date of the passing of this Act between His Majesty and the rulers of Indian States, all functions exercisable by His Majasty at that date with respect to Indian States, all obligations of His Majesty existing at that date towards Indian States or the rulers thereof, and all powers, rights, authority, or jurisdiction exercisable by His Majesty at up CI/65 6 304 that date in or in relation to Indian States by treaty, grant, usage, sufferance or otherwise; and Provided that notwithstanding anything in paragraph (b). . of this sub section, effect shall, as nearly as may be, continue to be given to the provisions of any such agreement as is therein referred to which relate to customs, transit and communications, posts and telegraphs, or other like matters, until the provisions in question are denounced by the Ruler of the Indian States. . on the one hand, or by the Dominion or Province or other part thereof concerned on the other hand, or are superseded by subsequent agreements. Though under this Act the paramountcy of the Crown lapsed in regard to Hyderabad and other States, the preexisting agree ments with those States continued in respect of specified matters. The lapse of suzerainty or the breaking of ties with the British Crown did not ipso facto raise their status to that of international personality. It created a void and the position of the States was in a fluid state. No de facto or de jure recognition was given to the Hyderabad State or to any other State by the family of nations. But, after protracted negotiations, the Nizam issued a proclamation on November 23, 1949, accepting the Constitution of India, shortly to be adopted, subject to ratification by the constituent assembly of the Hyderabad State. The said constituent assembly ratified it and thereafter the Hyderabad State was included in Part B of the First Schedule to the Constitution : see Appendix LIV, White Paper on Indian States (N.S. 6), p. 369, and Basu 's Commentary on the Constitution of India, 4th Edn., Vol. 4, pp. 32 34. It will be seen from the said history that Hyderabad was under the suzerainty of the British Crown till the ,Indian Independence Act of 1947 was passed and that thereafter, after negotiations with the Indian Dominion, it finally acceded to it. It was never recognized as an international personality by the family of nations. It was all through a vassal of the British Crown. Oppenheim says in his book on International Law, Vol. 1, 5th Edn., at pp., 165 166, that "the position of the Indian 'States to Great Britain is like that of vassal of States which have no international relations whatever either between themselves or with foreign States". In Hall 's International Law, 8th Edn., the learned author says that the States of the Indian Empire of Great Britain were protected States and that they were not subject to international law. The, decision in Sayce vs Ameer Ruler Sadiz 30 5 Mohammad Abbasi Bahawalpur State(1) holding that the Ameer of Bahawalpur State was a foreign sovereign immune from the jurisdiction of the English Courts was solely based upon the certificate of the Commonwealth Relations Office and it does not help us in deciding the present case. It is, therefore, clear that Hyderabad State did not acquire international personality under the International law and so its ruler could not rely upon international law for claiming immunity from taxation of his personal properties. The problem may be looked at from a different perspective, i.e., on the basis of the provisions of the Indian Income tax Act. The Indian Income tax Act, 1922, hereinafter called the Act. admittedly applied to Hyderabad State from January 26, 1950 Under section 3 of the Act, where any Central Act enacts that income tax shall be charged in any area at any rate or rates, tax at that rate or those rates shall be charged for that area in accordance with and subject to the provisions of the Act in respect of the total income of the previous year of every individual etc. Under section 2 of the Finance Act of 1950 (Act 25 of 1950), subject to the provisions of sub sections (3), (4) and (5) for the year beginning on 1st day of April 1950, income tax shall be charged at the rates specified in Part 1 of the First Schedule; under section 13 thereof. if immediately before the 1st day of April 1950, there was in force in any Part B States, other than the States mentioned therein, any law relating to, income tax or super tax or profits of business etc., that law shall cease to have effect for the purposes of assessment under the Indian Income tax Act, 1922, for the year ending March 31, 1951, or any subsequent year. Under section 2(14A), "taxable territories" shall be deemed to include the merged territories as respects any period after the 31st day of March, 1949, for any of the purposes of the Act and as respects any period included in the previous year, for the purpose of making any assessment for the year ending on the 31st day of March, 1950, or for any subsequent year. The effect of these provisions is that every individual was liable to income tax from April 1, 1950, at the rates mentioned in the Finance Act in respect of his total income of the previous year in the merged territories. It is not, and it cannot be, disputed that on April 1, 1950, the assessee was not a ruling chief but an ordinary citizen of Indian, residing, within the meaning of section 4 of the Act, in that part of India which was a part of Hyderabad State and so he would be liable to income tax on April 1, 1950, in respect of the (1) 306 total income he received in the previous year in the merged territory. It cannot also be disputed that the, said taxable total income would be computed after giving the necessary allowances and deductions in the manner Drescribed by Ch. III of the Act. But it is said that as the assessee was exempted under International Law from taxation of his income of the previous year, the Act could not reach that income. That conclusion, according to the learned counsel for the assessee, flows from the nature of the tax, namely, that though the year of assessment is 1950 51, the charge is not on the income of the year of assessment, but on the income of the previous year. Decided cases no doubt support the contention of the assessee that what is charged in the assessment year or the tax year is the income earned during the accounting year or the earning year. The Act of 1918 which followed the English Acts levied tax on the income of the year of assessment, taking the income of the previous years as a standard or as a measure. But by the Act of 1922 this principle was changed. Now under the Act, tax is assessed in the assessment year on the income of the previous year. 'The Judicial Committee in Maharaja of Pithapuram vs Commissioner of Income tax, Madras(1) has brought out this distinction when it said : "In the first place, it is clear to their Lordships that under the express terms of Section 3 of the Indian Income tax Act, 1922, the subject of charge is not the income of the year of assessment, but the income of the previous year. This is in direct contrast to the English Income tax Acts, under which the subject of assessment is the income of the year of assessment, though the amount is measured by a yardstick based on previous years. " This Court in Commissioner of Income tax, Bombay City vs A marchand N. Shroff (2) restated that principle with approval. Even so, the income of the assessee during the accounting Year has to be computed only in the manner prescribed by the Act. Deductions and exemptions from the total income can only be those that are provided under the Act. This aspect of the case has been brought out with clarity in The Union of India vs Madan Gopal Kabra(3). The facts in that case were : the respondent resided and carried on business in the District of Jodhpur in Rajasthan which was one of the States specified in Part B. of the First Schedule to the Constitution of India, 1950. The (1) , 223. (3) (2) 307 Constitution came into force on January 26, 1950. The Indian Finance Act, 1950, amended the Indian Income tax Act, 1922, in certain respects and made it applicable to the whole of India, except the State of Jammu and Kashmir. In May 1950, the respondent was required to file a return of his income for the year ending March 31, 1950. It was contended by the respondent that the income which accrued or arose to him or was received by him prior to April 1, 1950, was not liable to tax on the ground that such income was not liable to be charged under the provisions of any law validity in force in: Rajasthan. This Court held that under sub cl. (1) of cl. (b) of section 2(14A) of the Income tax Act, Rajasthan was to be deemed to be a taxable territory for the purpose of section 4A as respects any period before or after March 31, 1950. On that fiction, as the respondent was a resident in such territories within the meaning of section 4A, the income accruing or arising to him in Rajasthan during the year 1949 50 would be taxable. This Court further pointed out that Parliament under articles 245 and 246 of the Constitution, read with entry No. 82 of List 1 of the Seventh Schedule thereof, can make laws with respect to taxes on income for the whole of the territory of India with retrospective effect. The effect of the said decision is that though by reason of the Finance Act of 1950 the assessee was assessable to income tax only from April 1, 1950, his income of the previous year was taxable even though the said income was not liable to tax before the Indian Income tax Act was made applicable to Rajasthan. To that limited extent it had retrospective operation. If so, we do not see how a person, who was exempted from tax before the Act was extended under the State law or under the International Law, would be in a better position. The legal position as we apprehend may be stated thus Under the Act an individual is assessed to income tax on the income of the previous year at the rate or rates fixed for the year by the annual Finance Act. The total income of the assessee during the previous year is computed in accordance with the provisions of the Income tax Act after giving the relevant allowances and deductions therefrom. If during the assessment year an individual is assessable to tax, the fact that during the previous year he was not liable to tax at all because there was no income tax Act in the area to which the Act was extended or because that under an Income tax Act in force therein during that year his income was exempted from tax or because of any other law, including International Law, he was so exempt from tax, would not be of any relevance. After the extension of the Act to the 308 Hyderabad State the charge was under the Act and not under the provisions of the previous law. Thereafter, the charge as well as the manner of computation of income did not depend upon the preexisting law, but only upon the provisions of the Act. Applying the said principles to the instant case, it is manifest that after January 26, 1950, the assessee ceased to be a ruling chief and he was, therefore, liable to assessment under the Act. If he was assessable to tax, the statutory charge on his income during the previous year was only traceable to the Act, which was retroactive in operation to that 'extent. His right to exemption, if any, under International Law during the accounting year was irrelevant to the question of taxation under the Act,, as the said law ceased to apply to him during the assessment year. We, therefore, hold that the High Court went wrong in hold ing that the income received by the assessee up to January 26, 1950, was not liable to tax under the Act. The second question reads : "Whether, having regard to the provisions of Part B States (Taxation Concessions) Order, 1950, the assessee 's income during the year of account was totally exempt from tax." The High Court answered the question against the assessee. The facts relevant to the question are as follows : The assessee was assessed to income tax in respect of his income arising in Hyderabad in connection with the assessment years 1950 51 and 1951 52, having regard to the provisions of Part B States (Taxation Concession) Order, 1950. It was contended that the assessee was immune from liability to tax under the law of income tax of Hyderabad and, therefore, the rate payable by him in terms of the order would be nil; with the result that he would not be liable to any tax. The question turns upon the relevant provisions of the said Order. The said Order was issued by the Central Government in exercise of the power conferred on it under section 60 A of the Act. Under that section, the Central Government has the power, if it considers necessary or expedient so to do, to avoid any hardship or anomaly, or removing any difficulty, that may arise as a result of the extension of the Act to the merged territories, by general or special law to make an exemption, reduction in rate or other modification in respect of income tax in favour of any class of income, or in regard to the whole or any part of the, income of any person or class of persons. Pursuant to that power the Central Government issued Part B States (Taxation Concession) Order, 1950, making exemptions, reductions in the 309 rate of tax and modifications specified in that Order. At the outset it may be noticed that under this Order no exemption was given to an Ex Ruler from paying income tax or super tax in respect of income accrued to him in the Hyderabad State. A perusal of paragraphs 3 (ii) (a), 3 (iii), 3 (iv), 3 (v) and 3 (vi), Para 4(iii), Para 5 and Para 6 of the Order shows that the Order was made mainly to give relief to assessees in Part B States where the rates of tax were less than the rates prescribed in the Act. "Indian rate of tax" was defined in Para 3 (iii) and "State rate of tax" was defined in Para 3 (v). Under the Explanation to Para 3 (v), if there was no State law relating to charge of income tax and super tax, the Schedule annexed to the Order prescribed the rates. The tax on the basis of "Indian rate of tax" and the "State rate of tax before the appointed day were calculated and the lesser rate was made payable : see paras 5 and 6 of the Order. The entire scheme evolved a machinery to give a rebate on the difference of tax calculated on the basis of the said two rates. The said scheme had nothing to do with exemptions either under the said Order or under the Act. It was argued that, as under the State law the assessee was immune from liability to tax, he was in effect liable to pay only nil tax under the State law. On the basis of nil tax under the State law, the argument proceeded, by applying the principles of the said Order, no tax would be payable by the assessee. We cannot accept this argument. The Order was only intended to provide a machinery for scaling down the rates of tax in relation to the State rates. If there was a State law prescribing rates, it would afford the criterion for scaling down the Indian rate of tax; if there was no State law prescribing the rate, the schedule of rates annexed to the Order would govern the taxation. If the assessee was not liable to pay tax under the State law, his non liability related only to the domain of exemption. It would be incongruous to say that a person exempted from taxation was paying a nil rate. This would be an obvious attempt to subvert the scheme of the Order to reach a desired result. We, therefore, hold, agreeing with the High Court, that the assessee was not entitled to any exemptions under the said Order. We shall now take up the first part of the 4th question which reads : "Whether on the facts of the case the interest received by the Assessee in respect of 3% Nizam Government Income tax free loan, 1360 70 Fasli of the face value of Rs. 1,45,200, the 2 1/2% Nizam Government Income tax free development loan, 1364 69 fasli of the face value of Rs. 1.05 crores, the 21% Nizam Government loan, 1363 73 fasli of the face value of Rs. 200, and the 21% Hyderabad Government loan, 1384 fasli of the face value of Rs. 8 crores was exempt from tax. " This question relates only to the assessment year 1951 52. The securities were issued by the Hyderabad State free from income tax. The High Court held that they were exempt from income tax under section 8 of the Act. Under section 8 of the Act, tax shall be payable by an assessee under the head "interest on securities" in respect of the interest receivable by him on any of the securities of the State Government. But, under the third proviso thereto, the income tax payable on the interest receivable on the securities of the State Government issued income tax free shall be payable by the State Government. It was argued for the Revenue that the expression "securities of a State Government" in the proviso does not include the securities issued by the Hyderabad State. This contention was sought to be sustained on the basis of the definition of "Government securities" in section 3(24) of the , which reads : "Government securities" shall mean securities of the Central Government or of any State Government, but in any Act or Regulation made before the commencement of the Constitution shall not include securities of the Government of any Part B State. " Relying upon this clause it was contended that the securities issued by the Government were not covered by the said proviso. There is an obvious fallacy in this argument. To ascertain the ,meaning of an expression in a Central Act, it is permissible to look into the to find out how that expression is defined in the . The affords a dictionary for words used in the Central Acts to the extent provided thereunder. Proviso 3 to section 8 of the Act does not use the expression "Government securities", but only mentions '. 'securities" of a State Government. There is, therefore, no scope to ascertain the meaning of the latter expression with reference to the definition given to a different expression in section 3 (24) of the . On the other hand, the ,expression "State Government" is defined in cl. (60) of section 3 of the and it reads : " "State Government", (a) as respects anything done before the commencement of the Constitution, 311 shall mean, in a Part A State, the Provincial Government of the corresponding, Province, in a Part B State, the authority or person authorised at the relevant date to exercise executive government in the corresponding Acceding State, and in a Part C State, the Central Government. " Clause (58) of section 3 of the defines "State" to mean as respects any period before the commencement of the Constitution (Seventh Amendment) Act, 1956, a Part A State, a Part B State or a Part C State. With the aid of the said definitions it will be clear that the expression "State Government" used in the proviso to section 8 of the Act takes in the Government of the Hyderabad State. If so, in terms of that proviso, the income tax payable on the interest receivable on the securities of the Hyderabad Government issued income tax free shall be payable by the State Government. Therefore, there are no merits in the contention and the High Court rightly rejected it. In regard to the same securities the assessee claimed exemp tion from payment of income tax and super tax under item 8 of the Notification dated March 21, 1922, issued by the Finance Department of the Government of India. It reads : "The interest on Government securities held by, or on behalf of, Ruling Chiefs and Princes of India as their private property." This exemption applies both for income tax and super tax. If the assessee was entitled to this exemption, he would get a larger relief than he would under the third proviso to section 8 of the Act. The said securities were held by the assessee as his private property and, therefore, he was clearly entitled to this exemption. We, therefore, hold,agreeing with the High Court, that the assessee was entitled to the exemption under the said item in respect of the said securities. Then we come to questions 4(ii) and 4(iii). They read Question 4(ii) "Whether on the facts of the case the interest in respect of securities of the Government of India or of the Government of Hyderabad (including Nizam Government Promissory Note), which became payable to the Assessee under the trust created by him known as "the Family Trust", was exempt from payment of tax in his hands." Question 4(iii) "Whether the interest in respect of securities of the Government of India or of the 312 Government of Hyderabad (including Nizam Government Promissory Note,) which became payable to the Assessee under the trust created by him known as "the Miscellaneous Trust ' was exempt from payment of tax in his hands. " These two questions relate to Government securities settled by the assessee in trust, but the income whereof was payable to him under the provisions of the relevant deeds of trust. The assessee executed the two trusts one dated May 10, 1950, known as H.E.H. Nizam 's "Family Trust" and the other dated August 6, 1950, known as H.E.H. Nizam 's "Miscellaneous Trust '. Under cl. 3 of the deed of trust relating, to the Family Trust, the net income of the trust fund, after defraying the expenses and charges of collection, had to be paid by the trustees thereunder to the assessee for and during the term of his natural life. Under the Miscellaneous Trust it was provided that subject to the provisions of sub cls. (a) to (j) of cl. 2 of the said deed, the trustees should pay the balance of the interest and income of the trust fund to the assessee for and during the term of his natural life. At this stage it is not necessary to notice the other recitals in the deeds. We shall have to consider the recitals in the said two deeds in greater detail at a later stage. The assessee claimed exemption in regard to the said interest on the ground that he was exempted under the third proviso to section 8 of the Act and under item No. 8 of the notification issued by the Finance Department of Government of India on March 21, 1922. The High Court held that after the execution of the trust deed, the assessee was divested of his ownership of the securities and the trustees became their owners. On that basis, it further held that, though the income was interest on securities in the hands of the trustees, it was in the hands of the assessee only the income which he got from the trustees. Briefly stated, the High Court held that the character of the income, namely, interest on securities, had changed when it reached the hands of the assessee. The question falls to be decided on a construction of section 41 of the Act. The relevant part of section 41 reads : "(1) In the case of income, profits or gains chargeable under this Act which trustee or trustees appointed under a trust declared by a duly executed instrument in writing whether testamentary or otherwise are entitled to receive on behalf of any person, the tax shall be levied upon and recoverable from such trustee or trustees, in the like 313 manner and to the same amount as it would be leviable upon and recoverable from the person on whose behalf such income, profits or gains are receivable, and all the provisions of this Act shall apply accordingly (2) Nothing contained. in sub section (1) shalt prevent either the direct assessment of the person on whose behalf income, profits or gains therein referred to are receivable, or the recovery from such person of the tax payable in respect of such income, profits or gains. " Under this section the Revenue has the option to levy or collect tax from the trustee or the beneficiary; the tax can be levied upon and recoverable from the trustee in the like manner and to the same amount as it would be leviable upon and recoverable from` the person on whose behalf such income, profits or gains are receivable. In short, it imposes a vicarious liability on the trustee. The expression "all the provisions of this Act shall apply accordingly" indicates that there is no distinction in the matter of assessability of the income in the hands of a trustee or the beneficiary, as the case may be. Indeed, section 41 of the Act comes into play only after the income is computed in accordance with Ch. III of the Act. In the case of income from securities section 8 applies, and under the second proviso thereto, the income tax payable on the interest receivable on any security of the State Government issued income tax free shall be payable by the State Government. No tax on interest on such securities is payable by the assessee. After ascertaining the income and after giving the exemptions, the income tax authority has the option to assess the beneficiary directly or, in respect of the same income, the, trustee on behalf of the beneficiary. This construction finds support in the decision of the Bombay High Court in Commissioner of Income tax, Ahmedabad vs Balwantrai Jethalal Vaidya(1). If that be the scope of the assessment under section 41 of the Act, we find it difficult to appreciate the contention that the interest on securities in the hands of the trustee becomes an income other than such interest in the hands of the beneficiary. The interest retains its character whether the assessment is made on the trustee or the beneficiary. We cannot, therefore, accept the construction put upon section 41 of the Act by the High Court. This legal position only gives the assessee relief in regard ' to income tax payable on the interest from securities; but the third (1) 314 proviso to section 8 of the Act ' does not transfer the liability of the assessee to pay super tax to the State Government. The exemption from super tax was claimed under item 8 of the notification issued under section 60 of the Act. We have extracted that item earlier in another context. The interest mentioned in this item is exempt from both income tax and super tax. The short question, therefore, is whether the interest payable to the assessee was in respect of Government securities held by or on behalf of the assessee as his private property. The answer to this question depends upon the provisions of the said two trusts, namely, the Family Trust and the Miscellaneous Trust. The Family Trust was executed by the assessee on May 10, 1950, in respect of the Government securities of aggregate face value of Rs. 9 chores which were his private properties. Under the deed of trust, the trustees were appointed and the securities were handed over to them. The trustees so appointed were to collect and recover the interest and other income from the securities and were, after meeting the overhead charges, to pay the residue of the income of the trust fund to the assessee absolutely for and during the term of his natural life. After the death of the assessee, the trustees should divide the trust fund and allot it to the innumerable relatives and others mentioned in the trust deed. The trust deed also gave various other directions to the trustees. In short. under the said trust deed the title to the securities was transferred to the trustees and they were under an obligation to pay the interest or to give the corpus in the manner prescribed thereunder during the life time of the assessee or thereafter. Under the trust deed the securities were not held by the trustees on behalf of the assessee as his private property : they were held by the trustees for carrying out the trust in terms of the trust deed. After the execution of the trust deed, the securities ceased to be the private property of the assessee and thereafter he would only be entitled to the interest on the securities during his life time in the manner prescribed thereunder. We cannot, therefore, hold that the securities were held by the trustees as private property ;of the assessee. The Miscellaneous Trust consisted of Hyderabad and Govern ment of India Loans. Under this trust deed, trustees were appointed and the said amounts were transferred to them. Under the document the trustees wereunder an obligation to manage the said fund, recover interest and other income therefrom, and, after bearing the overhead charges, pay the income therefrom in different proportions to the relatives of the assessee and other persons mentioned therein. It is not necessary to consider the 315 complicated provisions of this document. It would be enough to state that under this trust deed also the amounts representing them loans mentioned therein ceased to be the private property of the, assessee and the trustees thereunder held the said property for discharging the various obligations imposed on them and for paying the income therefrom to the different persons mentioned therein and in the manner prescribed thereunder. The Government loans, therefore, ceased to be the private property of the assessee and after the execution of the trust deed they were held by the trustees not on behalf of the assessee as his private property, but for the purpose of discharging the obligations imposed on, them under the deed. We, therefore, hold that the income from the said two trusts did not earn the exemption under item 8 of the said notification. The result of our view is that in regard to the interest receivable by the assessee from the said securities and loans, he was not liable to pay income tax, but he was not exempt from payment of super tax under item 8 of the said notification. The next question, as recast by the High Court, reads Question 4 (iv) "Whether on the facts of the case, the interest at Rs. 1,97,180/ on the Government of India securities should be regarded as having accrued in the Hyderabad State and therefore chargeable at the rate obtaining under the Hyderabad Income tax Act. " It was argued that the income sought to be taxed accrued in Hyderabad, because the securities were effaced to be payable in Hyderabad and, therefore, chargeable only at the rate obtaining under the Hyderabad Income tax Act. The High Court negatived the contention. It held that the said interest accrued only in British India. Though the assessee raised the question of the correctness of the view expressed by the High Court in the special leave petition, at the time of arguments the learned counsel for the assessee did not press this point, Therefore, the opinion expressed by the High Court in this regard stands. We should not be understood to have expressed our view one way or other. In the result, we answer the questions as follows Question 1 in the affirmative. Question 2 in the negative. Question 3 in the negative. Question 4(i) : in the affirmative 316 .lm15 Question 4(ii) : the assessee was exempt from payment of income tax, but he was not exempt from payment of super tax. Question 4(iii) : the assessee was exempt from payment of income tax. but he was not exempt from payment of super tax. Question 4(iv) : in the negative. The aforesaid answers given by us to the 4 questions referred to the High Court by the Income tax Appellate Tribunal will be substituted in the place of those given by the High Court. We modify the order of the High Court accordingly in all the appeals. As the parties failed in part and succeeded in part, they will bear their own costs here and in the High Court. Appeals allowed in part.

IN-Abs

In respect of the assessments made on the Nizam of Hyderabad for the assessment years 1950 51 and 1951 52 the following questions arose in the High Court in a reference under section 66(1) of the Income tax Act 1922 : (i) Whether having regard to the Covenant dated 25th January 1950 entered into by the assessee with the Government of India at the time of merger of the State of Hyderabad with the Dominion of India the assessee was not liable to tax under the Income tax Act; (ii) whether under International law, the assessee was immune from taxation in respect of the assessment ear 1950 51; (iii) Whether having regard to the provisions of Part B States (Taxation Concession) order 1950 the assessee 's income was totally 'exempt from tax; (iv) whether the interest received by the assessee in respect of certain income tax free loans issued by the State Government was exempt from tax; and (v) whether the income payable to the assessee under two trusts the Family Trust and the Miscel laneous Trust arising from Government securities settled by the assesses on the trusts, was exempt from payment of tax. The High Court answered some of the questions in favour of the assessee and others against him. The Commissioner of Income tax and the assessee appealed to this Court. HELD : (i) The privileges guaranteed by the relevant articles of the merger agreement were only personal privileges of the assessee as an Ex Ruler, and those privileges did not justify his claim to immunity from taxation. [300 D] Sri Sudhansu Shekhar Singh Deo vs State of Orissa, ; , followed. (ii) Hyderabad State never acquired international personality under the International Law and so its ruler could not rely upon International law for claiming immunity from taxation of his personal properties. From 1858, Hyderabad was under the suzerainty of the British Crown till the. Indian Independence Act of 1947 was passed, and thereafter, after negotiations it acceded to the Indian Dominion. It was never recognised as an international personality by the family of nations. The High Court, therefore, erred in holding that the income received by the assessee up to 26th January 1950, was not liable to tax under the Income tax Act [302 E; 303 B; 304 F G; 305 B] Further, the assessee 's right to exemption if any, under International Law, during the accounting year, was irrelevant to the question of taxation under the Act. Under the Act, an individual is assessed to income tax on the income of the previous year at the rate or rates fixed for the year by the annual Finance Act. If during the assessment yew an individual is assessable to tax, the fact that during the previous year 2 97 he was not liable to tax at all because there was no income tax in the area to which the Act was extended, or because, under an income tax Act in force therein during that year his income was exempted from tax, or because, of any other law including international law he was so exempt from tax, would not be of any relevance. After the extension of the Indian Income tax Act to the Hyderabad State the charge was under the Act and not under the provisions of the previous law. Thereafter, the charge as well as the manner of computation of income did not depend upon the preexisting law, but only upon the provisions of the Act. After 26th January 1950, the assessee ceased to be a ruling Chief and he was, therefore, liable to assessment under the Act. If he was assessable to tax, the statutory charge on his income during the previous year was only traceable to the Act, which was retroactive in operation to that extent. [307 F H; 308 A C] (iii) The assessee was not entitled to any exemptions under the Part B State (Taxation Concessions) Order, 1950. [309 G] If the assessee was not liable to pay tax under the State law, his non liability related only to the domain of exemption. It would be incongruous to say that a person exempted from taxation was paying a nil rate and on that basis contend that no tax was payable by him. The Order was only intended to provide a machinery for scaling down the rates of tax in relation to the rates prevailing in the Part B State. If there was a State law prescribing rates, it would afford the criterion for scaling down the Indian rate of tax; if there was no State law prescribing the rate the schedule of rates annexed to the Order would govern the taxation. [309 E G] (iv) The assessee was entitled to exemption from tax both under section 8, proviso (3) of the Income tax Act, as well as under item 8 of the Notification dated 21st March 1922. [309 H; 311 F] In the case of the income from securities section 8 applies, and under the 3rd proviso thereto the, income tax payable on the interest receivable on any security of the State Government issued income tax free shall be payable by the State Government and no tax on interest on such securities was payable by the assessee. The, proviso does not use the ex pression "Government securities" but only mentions "securities of a State Government". Under cls. 58 and 60 of section 3 of the , the expression "State Government" takes in the Government of Hyderabad State. If so, in terms of the proviso, the income tax payable on the interest receivable on the securities of the Hyderabad Government, issued income tax free, shall be payable by the State Government and the assessee was not liable. Also, as the assessee held the securities as his private property, under the Notification, the exemption applied both for income tax and super tax B D, F] (v) In regard to the interest receivable by the assessee from the securities and loans of the two trusts, he was not liable to pay income tax, but he was not exempt from payment of super tax under item 8 of the Notification dated 21st March 1922. [313 H] The question had to be decided on a construction of section 41 of the Act. But it is only after ascertaining the income and after giving exemptions, that section 41 of the Act comes into play, and the income tax authority ha. . the option under section 41, to assess the beneficiary directly or, in respect of the same income, the trustee on behalf of the beneficiary. Under section 8 proviso (3) the assessee would not be liable to pay income tax on the interest from the income tax free securities. Since the interest on securities in the hands of the trustees does not become an income 298 other than such interest in the hands of the beneficiary, it retains its character as such interest whether the assess ment is made on the trustee or the beneficiary. Therefore the assessee would not be liable to pay income tax, but his liability to pay super tax is not transferred by the proviso to the State Government. Nor could the assessee claim the benefit of the Notification for an exemption with respect to super tax, because, under the trust deeds the Government loans ceased to be the private property of the assessee and after the ,execution of the trust deeds they were held by the trustees not on behalf of the assessee as his private property but for the purpose of discharging the obligations imposed on them under the trust deeds. [312 G; 313 E, F G, 314 A; 315 A D]

Appeal Nos. 491, 492 of 1964. Appeal by special leave from the judgment and order dated September 14, 1962 of the Andhra Pradesh High Court in Case Referred No. 4 of 1961. D. Narsaraju, Anwarullah Pasha, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. A. V. Viswanatha Sastri, N. D. Karkhanis, R. H. Dhebar and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Subba Rao, J. This appeal by special leave raises the question of the, true construction of the provision of section 4(3) (i) of the: Indian Income tax Act, 1922, hereinafter called the Act. The relevant facts may be briefly stated. By an indenture dated September 14, 1950, H.E.H. the Nizam of Hyderabad created a trust known as "H.E.H. the Nizam 's Religious Endowment Trust", hereinafter referred to as the Trust, under which he settled certain securities of the face value of Rs. 40 lakhs for implementing the objects described in the Trust deed. Under the Trust deed three trustees were appointed, including the settlor. It will be convenient at this stage to read the relevant provisions of the trust deed. Clause 3. The Trustees shall hold and stand possessed of the Trust Fund upon Trust. (a) To manage the Trust Fund and to recover the interest and other income thereof. (b) (c) During the life time of the Settlor the balance of the income shall be accumulated and shall be added to the corpus of the Trust Fund. (d) On and after the death of the Settlor the Trustees shall hold the accumulated corpus of the Trust Fund upon trust to spend the income thereof for any one or more of the following religious or charitable objects in such shares and proportions and in such manner as the Trustees shall in their absolute discretion deem proper. 3 86 (i) For annual religious offerings to the sacred places of the Muslims outside India, in Hedjaz and Iraq, viz., Macca, Madina Najaf Karbala, Kazamain, Sirraman Raa and Mashad (in Iran) and Baghdad and Basra. (ii) For help either in lump sum or by way of monthly allowances, to the Khuddam or the servants who are looking after the sacred Shrines, and also by way of charity to pious people residing at these holy places. (iii) For the up keep of the sacred buildings constructed in the life time of the Settlor such as, masjids (mosques), Azakhana (mourning house, built to commemorate the name of His Exalted Highness 's late mother), two Askurkhanas (where the Alam sits inside the City palace during Moharram and Ramzan), and the Maqbaras (Tombs) and particularly mentioned in the Second schedule hereunder written. (iv) For the annual expenditure during the mourning period of Moharram and Safer and also during other religious months, when different kinds of ceremonies, religious discourses (Taqreers) Id Tagreebs, etc. are performed, including the religious offerings to the sacred Shrines at Ajmer and Gulbarga. (v) It is the desire of the Settlor that the income of the Trust shall, as far as possible, be spent equally for the above mentioned four religious and charitable objects and purposes and in the event of there being any surplus then the same may be spent by the Trustees for any other religious and charitable objects for the benefit of Sunni Mohamedans with liberty X X to the Trustees in their absolute discretion to accumulate the surplus, if any, for any year or years and utilize the same for the purposes in this 387 clause provided for any subsequent year or years. Clause 4. It is hereby further agreed and declared that in all matters wherein the Trustees have a discretionary power the votes of the majority of the Trustees for the time being voting in the matter shall prevail and be binding on the minority as well as on those Trustees who may not have voted and if the Trustees shall be equally divided in opinion the matter shall during the life time of the Settlor be decided according to the opinion of the Settlor and after his death according to the opinion of the Trustee most senior in age for the time being. Briefly stated, under the deed the Trust fund was to be accumulated during the life time of the settlor and, after his death, the Trustees should hold the said fund upon trust to spend the income therefrom for one or more of the four religious and charitable objects mentioned therein. Two of the said objects were for religious and charitable purposes within the taxable territories and the other two for purposes outside the taxable territories. It is important to notice that under the deed no power was conferred on the trustees during the life time of the settlor to set apart and allocate the accumulated income or a part of it from the Trust properties for any one or more of the objects mentioned therein : that could be done only by the Trustees after the death of the settlor. The said settlor is still alive. For the assessment years 1952 53 and 1953 54 the Trustees were assessed to income tax on the income during the relevant previous years arising from the said Trust property. The Trustees claimed exemption under section 4(3) (ii) of the Act. The Income tax Officer, on appeal the Appellate Assistant Commissioner, and on further appeals the Income tax Appellate Tribunal, Hyderabad, concurrently held that the assessee was not entitled to the exemption under the said section. At the instance of the assessee, the following question was referred to the High Court under section 66(1) of the Act "Whether the income arising from property settled upon trust under the deed of settlement, dated 14 9 1950, or any part thereof is exempt from tax under Section 4(3) (i) of the Indian Income tax Act, 1922. " A Division Bench of the Andhra Pradesh High Court, Hydera bad, consisting of Seshachelapati and Venkatesam, JJ, on a 388 consideration of the relevant provisions of the deed and the Act, came to the conclusion that on the terms of section 4(3) (i) of the Act, the Trust was not entitled to the exemption. Hence the appeals. Mr. Narasa Raju, learned counsel for the assessee, contended that proviso (a) to section 4 (3 ) (i) of the Act would be attracted ,only when the Trustees exercised their option to apply the income to religious or charitable purposes without the taxable territories, that in the present case the Trustees had not exercised the said option and that, therefore, the assessee 's case was directly governed by the substantive part of cl. (i) of section 4(3) of the Act. As the income was being accumulated by the Trustees, the argument proceeded, without setting apart the whole or any part thereof for one or other of the purposes mentioned in the Trust deed, it should be held that the Trustees were accumulating the income for religious or charitable purposes within the taxable territories, since two of the named purposes were admittedly within the taxable territories. He would say that if the Trustees exercised their option to apply the fund for the purposes without the taxable territories, the Income tax authorities could, in terms of the proviso, include that income in the total income. Mr. A. V. Viswanatha Sastri, learned counsel for the Reve nue, on the other hand, argued that the assessee would be entitled to exemption under section 4(3) (i) of the Act only if the income was specifically accumulated for religious and charitable purposes within the taxable territories and that, as in the present ,case admittedly there was no setting apart of the income for the said purposes, the assessee could not claim any exemption thereunder. Let us now scrutinize the validity of the rival contentions. Section 4(3) (i) of the Act reads : "Subject to the provisions of clause (c) of subsection (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 389 Provided that such income shall be included in the total income (a) if it is applied to religious or charitable purposes without the taxable territories, but in the following cases, namely : (i) where the property is held under trust or other legal obligation created before the ,commencement of the Indian Income tax (Amendment) Act, 1953 (25 of 1953), and the income therefrom is applied to such purposes without the taxable territories; and (ii) where the property is held under trust or other legal obligation created after such commencement, and the income therefrom is applied without the taxable territories to charitable purposes which tend to promote international welfare in which India is interested. The Central Board of Revenue may, by general or special order, direct that it shall not be included in the total income. Under this section a particular class or kind of income is exempted from taxation. It is settled law that the burden is on the Revenue authorities to show that the income is liable, to tax under the statute; but the onus of showing that a particular class of income is exempt from taxation lies on the assessee. To earn the exemption, the assessee has to establish that his case clearly and squarely falls within the ambit of the said provisions of the Act. A brief history of cl. (i) of section 4(3) of the Act will be useful in the interpretation of its terms. The present cl. (i) was substituted for the following clause by the Income tax (Amendment) Act, 1953, with effect from April 1, 1952 : "(i) any income derived from property held in trust or other legal obligation wholly for religious or charitable purposes, and in the case of property so held in part only for such purposes, the income applied or finally set apart for application thereto. " Under the said clause,, trust income, irrespective of the fact whether the said purposes were within or without the taxable territories, was exempt from tax in so far as the said income was 390 applied or finally set apart for the said purposes. Presumably as the State did not like to forgo the revenue in favour of charity outside the country, the amended clause described with precision the class or kind of income that is exempt thereunder so as to exclude therefrom income applied or accumulated for religious or charitable purposes without the taxable territories. The substantive part of cl. (i) is in two parts : the first pan relates to the income derived from property held under trust wholly for religious or charitable purposes and the second part, to income derived from property so held in part only for such purposes. But the necessary condition for attracting the first part of the clause is that the said income is applied or accumulated for application to such religious or charitable purposes within the taxable territories; and to attract the second part, the income from the property so held in part shall have been applied or finally set apart for application to the said purposes. A comparative study of the two part , clarifies the scope of the provision. The expression used in the first part is "applied or accumulated for application" and the expression used in the second part is "applied or finally set apart for application". The words "applied or finally set apart for application" in the second part indicate that unless the income from the said property is applied or finally set apart for the purposes within the taxable territories, the said income does not earn the exemption. There cannot be any reason why a different meaning should be given to the expression "applied or accumulated for application" in the first part of the clause; for, on principle, there cannot be any possible distinction between such income from the property wholly held under trust or a part of the property held in trust. The words "applied" and "accumulated", therefore, must mean " applied or finally set apart". "Applied" means that the income is actually applied for the said purposes in the taxable territories; and "accumulated" means that the income is set apart during the year for future spending on the said purposes. The expression "accumulated for a purpose involves a conscious act in present and posits a clear indication on the part of the trustee to set apart the income for that purpose. It is, therefore, manifest that under cl. (i), only income from the property wholly or in part held in trust actually applied or set apart for application for future spending on religious or charitable purposes within the taxable territories is exempted from inclusion in the total income. As has been pointed out by Craies in his book on Statute Law, 6th Edn. at p. 217, "The effect of an excepting or 391 qualifying proviso, according to the ordinary rules of construction, is to except out the preceding portion of the enactment, or to qualify something enacted therein, which but for the proviso would be within it. " The proviso to cl. (i) excepts the two classes of income subject to the condition mentioned therein from the operation of the substantive clause. It comes into operation only when the said income is applied to religious or charitable purposes without the taxable territories. In that event, the Central Board of Revenue, by general or special order, may, direct that it shall not be included in the total income. The proviso also throws light on the construction of the substantive part of cl. (i) as the exception can be invoked only upon the application of the income to the said purposes outside the taxable territories. The application of the income in presents or, in future for purposes in or outside the taxable territories, as the case may be, is the necessary condition for invoking either the substantive part of the clause or the proviso thereto. The argument of Mr. Narasa Raju, namely, that as at the time the income was accumulated the Trustees did not exerciser the option, the accumulation would necessarily be for some of the purposes within the taxable territories, leads to a fallacy. If accepted, it would enlarge the scope of the exemption : while the section expressly exempts only such income as is applied or accumulated for application for such purposes within the taxable territories, the income would be exempted even though it was accumulated for mixed purposes, that is, for purposes both within and without the taxable territories. Purposes within the taxable territories are not the same as mixed purposes. At best the amounts are kept under a suspense account with an Options to the trustees to set apart at a later date for purposes within or without the taxable territories. Howsoever the option is exercised at a later stage, it is not an accumulation during the, relevant accounting year for purposes within the taxable territories. Some of the cases cited at the Bar may not be of direct application, but the principle laid down therein may be helpful in construing the terms of the present Trust deed. The Judicial Committee in Mohammad Ibrahim Riza vs Income tax Commissioner, Nagpur(1) held that where the purposes of a trust were not wholly charitable or religious and no portion of the property had 'been set aside for those purposes, the income from the trust could not be identified as appropriated exclusively thereto. The (1) (1930) L.R. 57 I.A. 260. 392 principle underlying this decision is, where a trust is for mixed purposes, some religious and other secular, with an option to the trustee to select one or other of the purposes, it is not possible to predicate till the selection is made that the object is for religious or charitable purposes. In the present case, an option is given to the Trustees to set apart the income for the purposes within the taxable territories or without such territories and till a selection is made it is not equally possible to predicate that the accumulation of income is for purposes within the taxable territories. Till the Trustees set apart the accumulation for the purposes within the taxable territories, it cannot be said that the purposes are within the taxable territories. Mr. Narasa Raju attempted to argue that in the present case the income was set apart for purposes within the taxable territories. This aspect of the question was never raised till now. It involves a question of fact. Clause 3 (d) (v) of the Trust deed on which reliance is placed is only an expression of desire on the part of the settlor that the income of the Trust should be spent equally on the four religious and charitable purposes mentioned in the deed. The said desire does not amount to setting apart by the Trustees of the whole or a part of the income from the Trust for purposes within the taxable territories. Indeed, cl. 3 (d) of the Trust deed indicates that the Trustees have no power to set apart or accumulate the income for any of the purposes mentioned in the Trust deed till after the death of the settlor. We cannot, therefore, hold on the material placed before us that the Trustees have set apart the accumulated income for purposes within the taxable territories. For the aforesaid reasons we hold that the answer given by the High Court to the question referred to it by the Income tax Appellate Tribunal is correct. The appeals fail and are dismissed with costs. One hearing fee. Appeals dismissed.

IN-Abs

A trust was created for four religious and charitable objects, two of the objects were within taxable territories and the other two were outside the taxable territories. The income derived from the trust property was not allocated or set apart for the said purposes. The Trustees were assessed to Income tax on income derived on the Trust property. The Trustees ' claim for exemption under s ' 4(3) (ii) of the Income tax Act was not accepted by the Revenue and the High Court. In appeal to this Court the, Trustees contended that proviso (a) to s ' 4(3) (i) of the Act would be attracted only when the Trustees exctcised their option to apply the income to religious or charitable purposes outside the taxable territories, that in the present case the Trustees had not exercised the said option, and that therefore their case was directly governed by the substantive part of cl. (i) of section 4(3) of the Act. HELD : Under cl. (i) of section 5(3) of the Act only income from the property wholly or in part held in trust actually applied or set apart for application for future spending on religious or charitable purposes within the taxable territories is exempted from inclusion in the: total income [390 G H] The substantive part of cl. (i) of section 4(3) is in two parts : the first part relates to the income derived from property held under trust whooly for religious or charitable purposes and the second part to income derived from property held in part only for such purpose. The words "applied 'Or finally set apart for application" in the second part indicate that unless the income from the, said property is applied or finally set apart for the purposes within the taxable territories, the said income does not earn the exemption. There cannot be any reason why a different meaning should be given to the expression "applied or accumulated for application" in the first part of the clause, for, on principle, there cannot be any possible distinction between such income from the property wholly held under the trust or a part of the property held in trust. The words "applied" and "accumulated" , therefore, must mean "applied or finally set apart". "Applied" means that the income is actually applied for the said purposes in the taxable territories; and "accumulated" means that the income is set apart during the year for future spending on the said purposes. The expression "accumulated for a purpose" involves a conscious act in presenti and posits a clear indication on the part of the trustee to set apart the income for that purpose [390 B G] 'Till the Trustee set apart the accumulation for the purposes within the taxable territories, it cannot be said that Me, purposes are within the taxable territories. Mohammad Ibrahim Riza V. Income tax Commissioner, Nagpur, (1930) L.R. 57 I.A. 260, referred to.

o. 305 of 1964. Appeal by Special Leave from the order dated the 9th April, 1963 of the Labour Court, Coimbatore, in C.S.O. Appeal No. 1 of 1962. M. C. Setalvad, and Naunit Lai, for the appellant. M. K. Ramamurthi, R. K. Garg, D. P. Singh and section C. Agar wala, for the respondents. The Judgment of the Court was delivered by Gajendragadkar, C.J. The appellant, Salem Erode Electricity Distribution Co., Ltd., is a licensee under the , and its business consists in buying electrical energy in bulk from the State Electricity Board of Madras and selling it to consumers in Salem and Erode and certain rural districts in the State of Madras. For the purpose of carrying on this business, the appellant has an industrial establishment at Salem. In or about 1940, when the number of the appellant 's con sumers was about 3,000, and that of its workmen 'about 45, the appellant framed certain terms and conditions of its workmen 's employment. Amongst these were included terms about leave and holidays. Later, when the (No. 20 of 1946) (hereinafter called 'the Act ') came into force, the provisions as to leave and holidays which had been introduced by the appellant in the terms and conditions of the employment of its workmen, were embodied in the appellant 's Standing Orders which were certified under the relevant provisions of the Act in or about 1947. The said terms read thus : "Standing Order 5(b) The number of holidays to be granted to the workmen and the days which shall be observed as holidays by the Establishment shall be regulated in accordance with the or other relevant law for time being in force and the custom or usage of the Establishment, viz., holidays under the and festival holidays peculiar to this locality which are being given. 5 0 0 Standing Order 10(a) : Leave will be given in accordance with the law and existing practice provided the leave facilities now available to the workers are not curtailed in any manner". The proceedings which have, given rise to the present appeal by special leave between the appellant and the respondents, its employees, began with the application made by the appellant on the 6th October, 1960, before the Certifying Officer, Madras, for the amendment of the certified Standing Orders to which we have just referred. By its application, the management of the appellant wanted the said Orders to read thus "Standing Order 5(b) : For all workmen who have joined service prior to . holidays under the , and festival holidays of one day per year which day may be chosen by the workmen shall be given. For all workmen who have joined on and after holidays under the Madras Industrial Establishments (National and Festival holidays) Act, 1958 shall be given." "Standing Order 10(a) Leave will be given to all employees who are appointed on and after . iii accordance with the provisions of the Madras Shops and Establishment Act, 1947 or any statutory modification thereof (irrespective of whether this Act applies or not to any category of employee or employees). Provided, however, that for all employees who have been confirmed prior to the above said date, viz the leave facilities now available are not curtailed in any manner". It is relevant to mention the background of the present application. The appellant believed that the urgent need for increased production and for increased supply of electrical energy could be met if the existing rules embodied in Standing Orders 5(b) and 10(a) were suitably modified; and so, the appellant wanted to make the change in the said two Standing Orders on the lines indicated by it in its application to the Certifying Officer. It appears that these Rules were introduced by the appellant on the 1st October, 1960, and were embodied in the contracts of service of new entrants who joined the appellant 's employment as from that date. In fact, they were agreed to by such new entrants. 501 In order to regularise the steps taken by the appellant by revising the relevant Rules in respect of the new entrants to its employment, the appellant made the present application. The change proposed to be made by the appellant in the two Standing Orders in question was resisted by the respondents ' Union. It was urged by the respondents that the proposed change was unfair and unreasonable, and it was also argued that it would introduce discrimination between one set of employees and another working under the same employer, and that would naturally cause industrial unrest and disharmony. The Certifying Officer upheld the pleas raised by the respondents and he accordingly directed that the proposed amendments should be negatived. The appellant then preferred an appeal against the said order before the appellate authority. Both the parties urged similar contentions before the appellate authority and the said authority agreed with the view taken by the Certifying Officer and dismissed the appeal preferred by the appellant. It is against this order that the appellant has come to this Court by special leave. On behalf of the appellant, Mr. Setalvad has urged that the change which the appellant wants to make in the two relevant orders is, on the merits, fair and reasonable; and he adds that the appellant wanted to prove its bona fides by making the changed Standing Orders applicable to the future entrants and not extending them to its employees who were already in its employment and who are governed by the existing Standing Orders. According to Mr. Setalvad, the Certifying Officer and the appellate authority have erred in law in not certifying the changed Standing Orders as proposed by the appellant. In dealing with this point, it is necessary to examine the broad features of the Act and consider its main purpose and object. The Act was passed in 1946 and its main object was to require the employers in industrial establishments to which the Act applied, to define formally the terms and conditions of employment in their respective establishments. In imposing this obligation on the employers, the Act intended that the terms and conditions of industrial employment should be well defined and should be known to the employees before they accepted the employment. As we will presently point out, one of the objects of the Act was to introduce uniformity of terms and conditions of employment in respect of workmen belonging to the same category and discharging the same or similar work under an industrial establishment. Before the Act was passed, employees in many industrial establishments were governed by oral terms and conditions of service which CI/66 2 502 were not uniform and which had been entered into on an ad hoc basis. The Act now requires that terms and conditions of employment in relation to matters specified in the Schedule must be included in the Standing Orders and they must be certified. It would at once be clear that by the operation of the Act, all industrial establishments will have to frame terms and conditions of service in regard to all the matters specified in the Schedule, and that naturally would introduce an element of uniformity inasmuch as industrial employment in all establishments to which the Act applied would, after the Act was passed, be governed by terms and conditions of service in respect of matters which are common to all of them. That, in brief, is the object which the Act intends to achieve. Let us now see the scheme of the Act. "Standing Orders" are defined by section 2(g) as meaning rules relating to matters set out in the Schedule; these matters are 11 in number, and the last one of them refers to any other matter which may be prescribed "Prescribed" according to section 2(f) means prescribed by rules made by the appropriate Government under this Act; and so, Standing Orders mean rules made in relation to the matters enumerated in clauses 1 to 10 in the Schedule as well as any other matter which may in future be added by means of rules to be made by the appropriate Government. This gives a general idea about the matters which are intended to be covered by the Standing Orders. Section 3 of the Act requires the submission of draft Stand ing Orders by the employer within six months from the date on which the Act becomes applicable to an industrial establishment. A statutory obligation has been imposed upon the employer to take necessary action as required by section 3(1). Section 4 requires that the Standing Orders must deal with every matter set out in the Schedule which is applicable to the industrial establishment, and must be in conformity with the provisions of the Act. Section 5 deals with the proceedings for certification of the standing orders by the Certifying Officer. Section 6 provides for appeals against the orders passed by the Certifying Officer Section 7 prescribes the date on which the certified standing orders will come into operation. Section 10(2) provides for the modification of the standing orders. Section 13A provides for the machinery to deal with questions in relation to the application or interpretation of the standing orders certified under the Act; and section 15 confers powers on the appropriate Government to make rules to carry out the purposes of the Act. 5 0 3 When the Act was originally passed, the powers of the Certi fying Officer as well as those of the appellate authority were limited to consider the question as to whether the standing orders submitted for certification were in accordance with the Act or not. By an amendment made in 1956, jurisdiction has been conferred on the Certifying Officer as well as the appellate authority to adjudicate upon the fairness or reasonableness of the provisions of the Standing Orders submitted for certification. That means the jurisdiction of the appropriate authorities functioning under the Act has now been widened and they are required to consider whether the Standing Orders submitted to them for their approval are fair or reasonable. Parties can make their contentions in respect of the fairness or reasonableness of the proposed Standing Orders, and the appropriate authorities will adjudicate upon the said contentions. That is one change made in 1956. The other change made in the original provisions of the Act which is relevant for our purpose is in regard to the provisions contained in section 10(2). Under the original provision of section 10(2), it was only the employer who was authorised to make an application to the Certifying Officer to have the Standing Orders modified. By the amendment made in 1956, even workmen are now entitled to apply for the modification of the Standing Orders. The result of this amendment is that if workmen are dissatisfied with the operation of the existing Standing Orders, they can move for their modification by applying to the Certifying Officer in that behalf. Before this amendment was made, the only course open to the workmen to adopt for securing any modification in the existing Standing Orders was to raise an industrial dispute and move the appropriate government to refer the said dispute to the adjudication of the appropriate Industrial Tribunal. Both these amendments have been introduced by Act No. 36 of 1956. Now, the question which we have to decide is : is it permis ible for an industrial establishment to have two sets of Standing Orders to govern the relevant terms and conditions of its employees ? Mr. Setalvad argues that if the change is intended to be made in the existing Standing Orders, it should be permissible and indeed legitimate for an employer to seek for the change on .he ground that the said change would be reasonable and fair,, provided the existing rights of employees already employed are ,lot affected by such change. Prima facie, this argument appears to be attractive; but if we examine the scheme of the relevant Provisions of the Act in the light of the matters specified in the schedule in respect of which Standing Orders are required to be 504 made, it appears that two sets of Standing Orders cannot be made under the Act. Let us first examine the matters specified in the Schedule. They are specified under cls. ( 1 ) to ( 11 ). The first is in regard to classification of workmen. The second is in relation to the manner of intimating to workmen periods and hours of work, holidays, pay days and wage rates. The third has reference to shift working; the fourth to attendance and late coming. Clause (5) relates to conditions of, procedure in applying for, and the authority which may grant, leave and holidays. Clause (6) deals with the requirement to enter premises by certain gates, and liability to search. Clause (7) is concerned with the closing and reopening of sections of the industrial establishment, and temporary stoppages of work and the rights and liabilities of the employer and workmen arising therefrom. Clause (8) deals with the termination of employment, and the notice thereof to be given by employer and workmen. Clause (9) covers the subject of suspension or dismissal for misconduct, and acts or omissions which constitute misconduct. Clause (10) relates to means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servants. Clause (11) is the residuary clause which refers to any other matter which may be prescribed. One has merely to examine these clauses one by one to be satisfied that there is no scope for having two separate Standing Orders in respect to any one of them. Take the case of classification of workmen. It is inconceivable that there can be two separate Standing Orders in respect of this matter. What we have said about classification is equally true about each one of the other said clauses; and so, the conclusion appears to be irresistible that the object of the Act is to certify Standing Orders in respect of the matters covered by the Schedule; and having regard to these matters, Standing Orders so certified would be uniform and would apply to all workmen alike who are employed in any industrial establishment. Prior to the enactment of the Act, industrial establishments used to employ workmen on different terms and conditions of service and they used to enter into separate agreements with employees on an ad hoc basis. It was precisely with the object of avoiding this anomalous position that the Act has been passed, and an obligation has been imposed upon the industrial establishments to have their Standing Orders certified by the appropriate authorities. Therefore, we do not think Mr. Setalvad is right in 505 contending that it is open to an industrial establishment to have two sets of Standing Orders certified in relation to leave and holidays provided that the modified Standing Orders apply to future entrants and the existing Standing Orders apply to entrants who are already in the employment of the establishment. On principle, it seems expedient and desirable that matters specified in the Schedule to the Act should be covered by uniform Standing Orders applicable to all workmen employed in an industrial establishment. It is not difficult to imagine how the application of two sets of Standing Orders in respect of the said matters is bound to lead to confusion in the working of the establishment and cause dissatisfaction amongst the employees. If Mr. Setalvad is right in contending that the Standing Orders in relation to these matters can be changed from time to time, it may lead to the anomalous result that in course of 10 or 15 years there may come into existence 3 or 4 different sets of Standing Orders applicable to the employees in the same industrial establishment, the application of the Standing Orders depending upon the date of employment of the respective employees. That, we think, is not intended by the provisions of the Act. Once the Standing Orders are made, it is not unlikely that disputes may arise between the employer and the employees in regard to their application or their interpretation, and the Act has specifically made a provision for dealing with problems of this kind. As we have already indicated, section 13A provides that if any question arises as to the application or interpretation of a Standing Order certified under the Act, an employer or a workman may refer the question to any one of the Labour Courts indicated by the section, and the said Labour Court shall, after giving the parties an opportunity of being heard, decide the question and such decision be final and binding on the parties. The result, therefore, appears to be that in regard to the certification of the Standing Orders, the Act provides for a self contained Code. The Certifying Officer is given the power to consider questions of fairness and reasonableness as well as the other questions indicated by section 4(a) and (b). An appeal is provided against the decision of the Certifying Officer and in case a dispute arises as to the interpretation or the application of the Standing Order, a remedy is provided by section 13A. Besides, as we have already pointed out, a right is given both to the employer and the workmen to move the appropriate authorities for modification of the existing Standing Orders. That is why we do not think that Mr. Setalvad is right in contending that the Certifying 506 Officer as well as the appellate authority erred in law in refusing to certify the modified Standing Orders submitted by the appellant for certification. It may be that even in regard to matters covered by certified Standing Orders, industrial disputes may arise between the. employer and his employees, and a question may then fall to be considered whether such disputes can be referred to the Industrial Tribunal for its adjudication under section 10(1) of the Industrial Disputes Act. In other words, where an industrial dispute arises in respect of such matters, it may become necessary to consider whether, notwithstanding the self contained provisions of the Act, it would not still be open to the appropriate Government to refer such a dispute for adjudication. We wish to make it clear that our decision in the present appeal has no relation to that question. In the present appeal, the only point which we are deciding is whether under the scheme of the Act, it is permissible to the em ployer to require the appropriate authorities under the Act to certify two different sets of Standing Orders in regard to any of the matters covered by the Schedule. It now remains to consider the three decisions to which Mr. Setalvad has invited our attention. In Rai Bahadur Diwan Badri Das vs The Industrial Tribunal, Punjab(1), this Court had to consider the question as to whether the Tribunal against whose award an appeal had been brought to this Court by the appellant Rai Bahadur Diwan Badri Das was in error in refusing to allow the appellant 's prayer that he should be permitted to introduce a new rule in respect of leave with wages applicable to the entrants in his employment after the 1st of July, 1956. It appears that on the said date, the appellant made a rule that every workman employed on or before that date would be entitled to 30 days leave with wages after working for 11 months and workmen employed after that date would be entitled to earned leave in accordance with the provisions of section 79 of the Indian . This rule led to an industrial dispute which was referred to the Industrial Tribunal, and the Tribunal held that all the workmen were entitled to 30 days earned leave as under the existing rule and that the rule made by the appellant on the 1st of July, 1956 cannot be enforced. It was this award which was challenged by the appellant before this Court, and the challenge was based on the broad and general ground that the employer had full freedom of contract to make a rule for the employment of his employees and that the Industrial Tribunal is not entitled to (1) 507 interfere with his freedom of contract. It appears that the change which the employer sought to make by the new rule did not involve any appreciable financial burden, and it was not the case of the appellant that the existing rule caused any hardship to him. The appellant, however, wanted to urge before this Court the theoretical ground that in a matter of employment, an industrial employer is entitled to make his own conditions with his employees and that industrial adjudication should not interfere with his freedom of contract in that behalf. Indeed, as the majority judgment shows, the appellant was a good employer and was treating his employees in a very liberal manner. He, however, brought the dispute before this Court in order to assert the general principle which was raised for the decision of this Court. That is the background of the majority decision in Rai Bahadur Diwan Badri Das 's(1). Dealing with the broad point raised by the learned Solicitor General on behalf of the appellant in that case, this Court held that several decisions pronounced by industrial adjudication had now established the principle that the doctrine of absolute freedom of contract had to yield to the higher claims for social justice. Even so, this Court took the precaution of making it clear that the general question about the employer 's right to manage his own affairs in the best way he chooses, cannot be answered in the abstract without reference to the facts and circumstances in regard to which the question is raised, and it was pointed out that in industrial matters of this kind, there are no absolutes and no formula can be evolved which would invariably give an answer to different problems which may be posed in different cases on different facts. Having thus dealt with the general point raised by the learned Solicitor General in Rai Bahadur Diwan Badri Das 's(1) case, the majority decision considered the facts in that particular case and held that the Tribunal was not shown to have been in error when it held that in the matter of earned leave there should be uniformity of conditions of service governing all the employees in the service of the appellant. It was in that connection that reference was made to the fact that in regard to all the other terms and conditions of service, there was uniformity in the appellant 's establishment itself; and so, it was thought that the Tribunal might have been justified in discouraging a departure from the said uniformity in respect of one item, viz., earned leave. It would thus be clear that this decision does not lay down any general (1) 508 principle at all. In fact, this decision emphatically brings out the point that in dealing with industrial disputes, industrial adjudication should always resist the temptation of laying down any broad, general or unqualified propositions. Therefore, we do not think that the decision of this Court in the case of R. B. Diwan Badri Das(1) is of much assistance. In that case, the Court was dealing with an award pronounced by an Industrial Tribunal in an industrial dispute; and the narrow question which the Court decided was that the Industrial Tribunal was not in error in not upholding the rule made by the employer on the 1st July, 1956. In the present case, we are dealing with proceedings arising under the Act and that means that considerations which govern the present proceedings are not necessarily the same as those which would govern the decision of an industrial dispute brought before the Industrial Tribunal for its adjudication under the Industrial Disputes Act. The next decision to which Mr. Setalvad has referred was pronounced by this Court in the case of Associated Cement Staff Union and Another vs Associated Cement Company and Others(1). During the course of the hearing of this appeal, some arguments were urged before us on the question about the relation between terms and conditions of service governing working hours, leave, and the like, and the wages paid to the employees. Mr. Ramamurti who appeared for the respondents conceded that the terms and conditions in regard to leave or working hours can be changed; but he contended that the increase in the working hours or the reduction of earned leave should not be permitted to be introduced without taking into account the question about the consequent increase in the wage structure itself; and it was with a view to combat this contention that Mr. Setalvad referred us to the decision in the Associated Cement Co.(1). In that case, the question of holidays, working hours and wages were all referred to the Industrial Tribunal for its decision. The matter which arose for the decision of this Court in the appeals which were brought to this Court in that case, was, inter alia, in regard to holidays. The Tribunal had allowed 21 holidays, whereas this Court reduced the number to 16. Dealing with the question about the normal working hours, this Court observed that "once a conclusion about the normal working hours is reached after considering the optimum working hours on a consideration of all the relevant factors, industrial adjudication cannot hesitate to give effect to its conclusion merely because the workmen would have been entitled (1) (2) 509 to more wages at overtime rates if the hours of work had been fixed at less". Mr. Setalvad relies upon this observation. But we think it would be unreasonable to read this observation in isolation, because in the very next sentence, this Court has added that it is true that in fixing the proper wage scale, the question of workload and the matter of working hours cannot be left wholly out of consideration, though it further observed that many other factors including the need of the workmen, the financial resources of the employer, the rates of wages prevailing in other industries in the region, have all to be considered in deciding the wage scale. It appears that in that case, the Tribunal itself had held that 21 holidays erred on the side of excessive liberality, and yet it did not reduce that number. That is why this Court reduced the number of holidays from 21 to 16. This decision, in our opinion, does show that where industrial adjudication has to deal with an industrial dispute in relation to wage structure, working hours, and holidays, it must consider the problem comprehen sively and in prescribing the working hours, and making provision for holidays and leave with or without pay, amongst other relevant factors, the wages paid to the 'employees have no doubt to be taken into account. But these considerations do not arise in the present proceedings, because what the appropriate authorities under the Act had to consider was whether two sets of Standing Orders should be permitted under the same establishment or not. The last case to which reference must be made is Guest, Keen, William Private Ltd. vs P. J. Sterling and Others(1). In that case, the Standing Order had been certified under the Act prior to its amendment. The relevant Standing Order had relation to the age of retirement of the employees under the establishment in question. When the Standing Order was certified, its fairness and reasonableness could not have been examined by the Certifying Authority. After it was certified, the employer sought to give effect to the age of retirement in regard to employees who were already in its employment; and that gave rise to an industrial dispute. The employees who were already in the employment of the employer, contended that prior to the certification of the Standing Order, there was no, age of retirement in the concern and they urged that the certified Standing Order could not affect their right to continue in the employment so long as they were fit to discharge their duties. It was in the contending this dispute that the question arose as to whether the certified Standing Order applied to the previously existing employees. The Labour Appel (1) ; 510 late Tribunal against whose decision the appeal was brought to this Court by the appellant Guest, Keen, Williams Private Ltd., had held that the certified Standing Order could not apply to the ,employees who were already in the employment of the appellant. This Court affirmed the view expressed by the Labour Appellate Tribunal that the certified Standing Order could not affect the rights of the previous employees; nevertheless, it was held that the question of prescribing an age of retirement for them could be considered in the proceedings before the Court and under the special circumstances to which reference has been made in the judgment, it was thought that the age of superannuation for prior employees could be reasonably and fairly fixed at 60 years. This decision again is not of any assistance, because the matter came to this Court from an industrial dispute which was the subject,matter of industrial adjudication before the Industrial Tribunal and the Labour Appellate Tribunal; and all that this Court did was to fix an age of superannuation or workmen who had been employed prior to the date of the certification of the relevant Standing Order, at 60, and that course was adopted under the special and unusual circumstances expressly stated in the course of the judgment. As we have already pointed out, the question as to whether two sets of Standing Orders can be certified under the provisions of the Act, did not fall to be considered in that case. Therefore, we are satisfied that the Certifying Officer as well as the appellate authority committed no error of law in refusing to certify the modified Standing Orders submitted by the appellant in the present proceedings. The result is, the appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellant company, which carried on the business of buying bulk electrical energy and distributing it to consumers, made an application under the , to the Certifying Officer, Madras, for an amendment of two of its certified Standing Orders relating to holidays and leave. It was claimed by the appellant that the urgent need for increased production and for increased supply of electrical energy could be met if the existing rules embodied in the two standing orders were suitably amended; the amendments pro posed sought to introduce different rules relating to holidays and leave for employees who were appointed before a specified date and those who joined service after that date. The proposed amendments were resisted by the respondents ' union on the ground, inter alia, that they would introduce discrimination between one se of employees and another resulting in industrial unrest and disharmony. The Certifying Officer upheld the respondents I plea and nega tived the amendments. An appeal to the appellate authority against this decision was dismissed. it was contended on behalf of the appellant that the proposed amendments were fair and reasonable and that the Certifying Officer and, the appellate authority had erred in law in not certifying the Standing Orders as proposed to be amended. HELD : (i) The Certifying Officer and the appellate authority committed no error of law in refusing to certify the modified Standing Orders. [510 E] The Act provides a self contained code and the Certifying Officer is given the power to consider questions of fairness and reasonableness as well as other questions indicated by section 4(a) and (b). An appeal is provided against the decision of the Certifying Officer and in case a dispute arises as to the interpretation or the application of the Standing Order, a remedy is provided In section 13A. A Tight is given both to the employer and the workman to move the appropriate authorities for modification of the existing Standing Orders. [505 G H] (ii) It is clear from the provisions of the Act requiring industrial establishments to have their Standing Orders certified that matters specified in the Schedule to the Act should be covered by uniform Standing Orders applicable to all workmen employed in an industrial establishment. [505 B] 499 Rai Bahadur Diwan Badri Das V. The Industrial Tribunal, Punjab;[1963] 3 S.C.R. 930; Associated Cement Staff Union vs Associated Cement Co.,& Ors. ; Guest Keen Williams Private Ltd. vs F. I. Sterling and others: ; ; referred to.

Appeal No. 274 of 1964. 494 Appeal by special leave from the award dated May 31, 1963 of the Industrial Tribunal, Maharashtra in Reference (I.T.) No. 59 of 1963. section B. Naik and K. R. Chaudhury, for the appellants. section V. Gupte, Solicitor General, G. B. Pal, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for respondent No. 1. A. section R. Chari, K. Raiendra Chaudhury, M. section K. Aiyangar and M. R. K. Pillai, for respondent No. 2. A. section R. Chari, M. K. Ramamurthi, for interveners. The Judgment of the Court was delivered by Wanchoo, J. The only question raised in this appeal by spe cial leave is the propriety of a service condition in the respondent concern by which unmarried women in a particular department have to resign on their getting married. A dispute was raised about this condition by the appellant union on behalf of the workmen and was referred to the Industrial Tribunal, Maharashtra, in the following terms "The existing bar on ladies that on their getting married they have to leave the service of the company should be removed. " The respondent is a pharmaceutical concern. It appears that there is a rule in force in the respondent concrn according to which if a lady workman gets married, her services are treated as automatically terminated. It appears that such a rule is in force in other pharmaceutical concerns in that region and the matter came up on two occasions before industrial tribunals for adjudication with reference to other pharmaceutical concerns, and on both occasions the challenge by the workmen to such a rule failed. On the first occasion the dispute was between the Boots Pure Drug Co. (India) Limited vs Their Workmen(1) and a similar rule was upheld in 1956. On the second occasion the dispute was between Sandoz (India,) Limited vs Workmen employed under it(2). There was agitation in the respondent concern in connection with this rule and the present reference was eventually made in February 1963. The tribunal followed its earlier decision in Sandoz Limited case(2 ) and rejected the contention that the rule be abrogated. The appellant obtained special leave to appeal from this Court; and that is how the matter has come up before us. (1) B.G.G. Part I L, dated Jan. 26,1966. (2) (1962) Industrial Court Reporter 22. 495 Ordinarily we see no reason for such a rule requiring un married women to give up service on marriage, particularly when it is not disputed that no such rule exists in other industries. It is also not in dispute that no such rule exists in other departments of the respondent concern itself and it is only in one department that the rule is in force. It can only be upheld if the respondent shows that there are good and convincing reasons why in this particular department of the pharmaceutical industry it is necessary to have such a rule. The only reason given for enforcement of this rule in this department of the respondent concern is that the workmen have to work in teams in this department and that requires that they should be regular and that this cannot be expected from married women for obvious reasons, and that there is greater absenteeism among married women than among unmarried women or widows against whom there is no bar of this kind. We are not impressed by these reasons for retaining a rule of this kind. The work in this department is not arduous for the department is concerned with packing, labelling, putting in phials and other work of this kind which has to be done after the pharmaceutical product has been manufactured. Nor do we think that because the work has to be done as a team it cannot be done by married women. We also feel that there is nothing to show that married women would necessarily be more likely to be absent than unmarried women or widows. If it is the presence of children which may be said to account for greater absenteeism among married women, that would be so more or less in the case of widows with children also. The fact that the work has got to be done as a team and presence of all those workmen is neces sary, is in our opinion no disqualification so far as married women are concerned. It cannot be disputed that even unmarried women or widows are entitled to such leave as the respondent 's rules provide and they would be availing themselves of these leave facilities. The only difference in the matter of absenteeism that we can see between married women on the one hand and unmarried women and widows on the other is in the matter of maternity leave which is an extra facility available to married women. To this extent only, married women are more likely to be absent than unmarried women and widows. But such absence can in our opinion be easily provided for by having a few extra women as leave reserve and can thus hardly be a ground for such a drastic rule as the present which requires an unmarried woman to resign as soon as she marries. We have been unable to understand how it can be said that it is necessary in the interest of efficient ope 496 ration and in the company 's economic interest not to employ married women. So far as efficient operation is concerned, it can hardly be said that married women would be less efficient than unmarried women or widows so far as pure efficiency in work is concerned, apart of course from the question of maternity leave. As to the economic interest of the concern, we fail to see what difference the employment of married women will make in that ,connection for the emoluments whether of an unmarried woman ,or of a married woman are the same. The only difference between the two as we have already said is the burden on account ,of maternity leave. But as to that the respondent contends that the reason for having this rule is not the respondent 's desire to avoid the small burden to be placed on it on account of maternity leave. If that is so, we fail to see any justification for a rule ,of this kind which requires an unmarried woman to give up service immediately she marries. We are therefore of opinion that there is no good and convincing reason why such a rule should continue in one department of the pharmaceutical industry. The fact that such a rule exists in other such concerns is no justification, if the rule cannot be justified on its own merits. Then it is urged that the employer was free to impose any condition in the matter of employment when he employs a now workman and that industrial adjudication should not interfere with this right of the employer. AR that need be said in this connection is that it is too late in the day now to stress the absolute freedom of an employer to impose any condition which he likes on labour. It is always open to industrial adjudication to consider the conditions of employment of labour and to vary them if it is found necessary, unless the employer ran justify an ,extraordinary condition like this by reasons which carry conviction. In the present case the reasons which the respondent has advanced and which were the basis of the two decisions referred to earlier do not commend themselves to us as sufficient for such a rule. We are therefore of opinion that such a rule should be abrogated in the interest of social justice. Lastly it is urged that a similar rule exists in certain government services and in this connection our attention is drawn in particular to r. 5(3) of the 1954 Indian Administrative Service (Recruitment) Rules. That rule reads as follows : "No married woman shall be entitled as of right to be appointed to the Service, and where a woman appointed to the Service subsequently marries, the Central Government may, if the maintenance of the 497 efficiency of the Service so requires, call upon her to resign. " It will be seen that this rule for the Indian Administrative Service is not unqualified like the rule in force in the respondent 's concern. It only lays down that where an unmarried woman marries subsequently, the Central Government may, if the maintenance of the efficiency of the Service so requires call upon her to resign. Therefore this rule does not compel unmarried women to resign on marriage as a matter of course as is the case in the respondent concern. It is only when the Central Government considers that marriage has impaired the efficiency of the woman concerned that the Central Government may call upon her to resign. The rule which is in force in the respondent concern however assumes that merely by marriage the efficiency of the woman employee is impaired and such an assumption in our opinion is not justified. At any rate this rule for the Indian Administrative Service which has been brought to our notice only for purposes. of comparison does not justify the drastic rule that we have in the present case where an unmarried woman is compelled to resign immediately she marries without regard to her continued efficiency. On a careful consideration of the reasons advanced on behalf of the respondent in support of the existing rule we are of opinion that the reasons do not justify such a drastic rule. We therefore allow the appeal and direct that the rule in question in the form in which it exists at present be abrogated. The abrogation shall take effect from the date of this judgment. The appellants will get their costs from the respondent company. Appeal allowed.

IN-Abs

The respondent concern had a rule in its packing and labelling department that if a woman employee got married her service would stand automatically terminated. The appellant union raised an industrial dispute on this question and it was referred to the Industrial Tribunal, Maharashtra. The Tribunal held that the rule was justified whereupon, the appellant came to this Court by special leave. The justification given on behalf of the respondent for the said rule was that in the particular department where the rule operated team work was required for which regular attendance was necessary, and married women, for obvious reasons, could not be expected to be regular in attendance. It was also contended for the respondent that industrial adjudication should not interfere with the employer 's right to impose any condition in the matter of employment when he employs new workmen. Rule 5(3) of the Indian Administrative Service (Recruitment) Rules, 1964, was referred to as carrying a similar condition. HELD: (i) There was nothing to show that married women would by the more likely to be absent than unmarried women or widows. The only difference was that married women would ask for maternity leave. This could be provided for by having a few extra women as leave reserve. So far as efficiency was concerned it could hardly be said that married women would be less efficient than unmarried ones or widows. The economic interest of the concern was also not affected in any material way. There was thus no good and convincing reason why such a rule should continue in one department of the pharmaceutical industry. The fact that such a rule existed in other concerns also was no justification, if the rule could not be justified on its own merits. The rule, therefore, had to be abrogated. [495E, G H; 496A B, D] (ii) It is too late in the day to stress the absolute freedom of an employer to impose any condition which he likes on labour. It is always open to industrial adjudication to consider the conditions of employment of labour and to vary them if it is found necessary. [496 E F] (iii) Rule 5(3) of the Indian Administrative Service (Recruitment) an unmarried woman marries subself the maintenance of the efficiency her to resign. This rule does on marriage as a matter of course as the case of the respondent concern. [497 B C]

Appeals Nos. 246 and 287 of 1965. Appeals by special leave from the Award dated March 5 1964 of the Seventh Industrial Tribunal West Bengal in Case No. VIII 60 of 1963. M. C. Setalvad, and D. N. MukherJee, for the appellant in (C. A. No. 246/65) and respondent in (C.A. No. 287/65). A.S. R. Chari and B. P. Maheshivari, for respondent in (C.A. No. 246/65) and appellant in (C.A. No. 287/65). Two matters in dispute between the management and the workmen Were referred to the tribunal relating to (i) the age of retirement of the workmen at the head office and the factory of the company and (ii) the introduction of : gratuity scheme for workmen employed at the head office and the factory. The tribunal fixed the age of retirement for clerical an( ,subordinate staff at 58 years and for workmen in the factory a 55 years. The tribunal also introduced a gratuity scheme after 5 2 5. considering the objections raised to the draft scheme proposed by the company. of the two appeals one is by the company relating to the gratuity scheme and the other by the workmen relating to the age of retirement as well as to the gratuity scheme. We shall first consider the question of age of retirement. It may be mentioned that there was no retirement age in force in this company and so the position when the reference was made was that the workmen could continue to work so long as they were physically or mentally fit. The workmen contended that the age of retirement both for the head office and factory workmen should be fixed at 60 years. The company however proposed that the age of retirement should be 55 years for all workmen. The tribunal as already indicated has fixed the age of retirement at 58 years for clerical and subordinate staff and 55 years for factory workmen and has apparently relied on the decision of this Court in Workmen of Jessop & Co. Limited vs Jessop and Company Limited(1). Now this is a case where there was no age of retirement before the reference was made and the workmen whether at the head office or at the factory were all entitled to work so long as they were physically or mentally fit. So far as the existing workmen are concerned, we think that the tribunal should have fixed the age of retirement at 60 years both for the factory workmen as well as head office workmen. It is enough in this connection to refer tothe decision of this Court in Guest, Keen,Williams (Private) Limited vs Sterling(P.J.) (2) where in a similar situation this Court fixed the ageof retirement at 60 years in the case of existing workmen. Then there is the question as to future workmen and whether their age of retirement should also be fixed at the same level as in the case of existing workmen. We are of opinion that generally speaking there should not be any difference in the age of retirement of existing workmen and others to be employed in future in a case like the present unless there are special circumstances justifying such difference. In this connection our attention is drawn to the case of Guest, Keen, Williams (P) Limited(2) where the age of retirement of future workmen was 55 years. In that case however the age of retirement of future workmen was fixed at 55 years by the Standing Order and the question whether that age of retirement should be changed was not before this Court for consideration. All that this Court had to consider in that case was whether the age of retirement of existing employees, before the Standing Order fixing the age of retirement at 55 years was intro (1) (2) ; : :526 educed, should be 60 years or not. In the present company so far there is no age of retirement and unless there are valid and cogent reasons for making a diference in the age of retirement of existing workmen and those employed in future, the future workmen .should also have the benefit of the same, age of superannuation. Considering that there has been a general improvement in the standard of health in this country and also considering that longevity has increased, fixation of age of retirement at 60 years appears to us to be quite reasonable in the present circumstances. Age of retirement at 55 years was fixed in the last century in government service and had become the pattern for fixing the age of retirement everywhere. But time in our opinion has now come considering the improvement in the standard of health and increase in longevity in this country during the last fifty years that the age of retirement should be fixed at a higher level, and we consider 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. Now so far as the clerical and subordinate staff are concerned, we are of opinion that there is no reason for any difference in the age of retirement as between the existing staff and the future staff. Their work is exactly the same, and in the circumstances there ;should be the same age of retirement. As to the factory workmen, it is urged that their age of retirement should be fixed at a lower level as work in the factory is more arduous than the work of clerical and subordinate staff, and in this connection reliance is placed on the decision of this Court in Jessop and Company(1) where one age was fixed for clerical and .subordinate staff and a slightly lower age was fixed for the factory workmen. Here again we are of opinion that generally speaking, there is no reason for making a difference in the age of retirement as between clerical and subordinate staff on the one hand and 'factory workmen on the other, unless such difference can be justified on cogent and valid grounds. It is only where work in the factory is of a particularly arduous nature that there may be reason for fixing a lower age of retirement for factory workmen as compared to clerical and sub ordinate staff. This appears to have been no in the case of jessop and Company(1) for that was a heavy engineering concern, where presumably work in the factory was much more arduous as com (1)[1964] 527 pared to the work of clerical and subordinate staff. There might therefore have been then some justification for fixing a lower age, of retirement for factory workmen in the case of those factories where the work is of a particularly arduous nature. But the present company is a paints manufacturing company and there is in our opinion no reason to suppose that the work in the factory in the present case is particularly arduous as compared to the work of clerical and subordinate staff. We therefore think that even in the case of future factory workmen in the present concern there is no special reason why the age of retirement should be fixed at a lower level. It is of course always possible for an employer to terminature the services of a workman if he becomes physically or mentally incapable of working before the, age of retirement. This power being there, there is no reason to suppose that there will be inefficiency in work on account of fixing the age of retirement at 60 years; on the other hand with the age of retirement at 60 years there *HI be added advantage that more experienced workmen will be available to the management and that would be a cause for greater efficiency. On the whole therefore we are of opinion that the age, of retirement in the case of factory workmen also in the present company should be fixed at the age of 60 years. We therefore modify the award of the tribunal and fix the age of retirement for the clerical and subordinate staff as well as for the factory workmen, whether existing or future, at the age of 60 yews. We now turn to the gratuity scheme. Two points have been urged on behalf of the company in this connection. The tribunal has fixed five years minimum service in order to enable a workman to earn gratuity. This has been provided in the event of (a) death of an employee while in service of the company, (b) discharge or voluntary retirement of an employee on grounds of medical unfitness, (c) voluntary retirement or resignation before reaching the age of superannuation, (d) retirement on reaching the age of superannuation, or (e) termination of service by the company for reasons other than misconduct resulting in loss to the company in money and property. The management objects to the minimum period being five years in the case of voluntary retirement or resignation before reaching the age of superannuation. It is contended that gratuity schemes usually provide for a longer minimum of service in the case of voluntary retirement or resignation before reaching the age of superannuation. We think that there is substance in this contention. The reason for providing a longer minimum period for earning gratuity in the case of 528 voluntary retirement or resignation is to see that workmen do not leave one concern after another after putting the short Minimum service qualifying for gratuity. A longer minimum in the case of voluntary retirement or resignation makes it more probable that the workmen would stick to the company where they are working. That is why gratuity schemes usually provide for a longer minimum in the case of voluntary retirement or resignation. We may in this connection refer to the Express Newspapers (Private) Limited vs the Union of India(1) where a short minimum for voluntary retirement or resignation was struck down. Again in The Garment Cleaning Works vs Its Workmen(2), 10 years minimum was prescribed to enable an employee, to claim gratuity if he resigned. In the Management of Wenger and Company vs Their workmen(3), a distinction was made between termination of service by the employer and termination resulting from resignation given by an employee. In the first case the minimum was fixed at 5 years; in the second the minimum period was fixed at 10 years by this Court. We therefore modify the gratuity scheme in this regard and order that in the case of voluntary retirement or resignation by an employee before reaching the age of superannuation, the minimum period of qualifying service for gratuity should be ten years, and not five years as prescribed by the tribunal. The next point that has been urged on behalf of the manage ment in this connection is that the tribunal has while fixing 21 days ' basic wage or salary as the quantum for gratuity for each completed year of service included dearness allowance in the words "basic wage or salary". It is urged that the usual pattern of gratuity scheme provides for gratuity on basic wages, and dearness allowance generally speaking is not included in basic wages for fixing the quantum of gratuity. It is further urged that by including dearness allowance within the definition of "basic wages or salary" as given in the scheme in this case, the tribunal has really more or less doubled the quantum of gratuity for each completed year of service. There is in our opinion force in this contention also. In May and Baker (India) Limited vs Their workmen(4), the workmen claimed in this Court that gratuity should be fixed on gross salary. In that case the tribunal had fixed the quantum on basic salary i.e. it had not included (1)[1955] S.C.R.12, at p. 158. (3)A.I.R. (2)[1962] 1 S.C,R. 711, 714. (4) [1961] 11 L.L.J. 529 dearness allowance for this purpose and the reason given by the tribunal for fixing the quantum of gratuity on basic salary was that the workmen in that case were getting double retiring benefit, namely both gratuity and provident fund. That view of the tribunal was upheld by this Court. On the other hand, it has been urged that in some cases quantum of gratuity has been fixed on gross salary i.e. basic wages plus dearness allowance and in this connection reference was made to British India Corporation vs The Workmen(1). In that case this Court upheld the award of the tribunal fixing gratuity on the basis of consolidated wages. This Court pointed out that the usual pattern was to fix quantum of gratuity on the basis of basic wages but refused to interfere in that case because the practice in the concern in that case already existing was to fix gratuity on consolidated wages. In the present case also there is a provident fund scheme in force. So with the introduction of the gratuity scheme, the employees will be getting double retiring benefit. In such circumstances we are of opinion that the tribunal should not have defined basic wages so as to include dearness allowance. Besides as the gratuity scheme is being introduced for the first time in this concern, it would be proper to follow the usual pattern of fixing the quantum of gratuity on basic wages (excluding dearness allowance), especially when there is another retiring benefit in the shape of provident fund already existing in this concern. We therefore modify the award of the tribunal in this respect and order that gratuity should be paid at the rate of 21 days ' basic wages or salary for each completed year of service, and this basic wage will not include dearness allowance or any other allowance. Subject to these modifications, the scheme framed by the tribunal will stand. The workmen have also assailed the gratuity scheme and their case is that they should have been granted 30 days wages as prayed for by them instead of 21 days ' basic wages fixed by the tribunal. We do not think there is any case for increasing the quantum of gratuity fixed by the tribunal at 21 days ' basic wages as modified by us for each completed year of service, for there is a provident fund scheme also in force in this concern and the workmen are thus getting two retiring benefits. No other point has been pressed before us. (1) (1965) Vol. 10 Factory Law Reports 244. 5 30 We therefore partly allow the appeal of the company and make the two modifications in the gratuity scheme as indicated above. We also partly allow the appeal of the workmen and fix the retirement age for all workmen existing or future clerical, subordinate and factory workmen at 60 years. In the circumstances we make no order as to costs in both the appeals. Appeals allowed in part.

IN-Abs

Two matters in dispute between the management of a paints manufacturing company and their workmen, namely: (1) the are of retirement of the workmen and (ii) the introduction of a gratuity scheme for them, were referred to the Industrial Tribunal. Before the reference was made the workmen were entitled to work so long as they were physically and mentally fit. The Tribunal fixed the age of retirement for clerical and subordinate staff at 58 years and for the factory workmen at 55 )rears. The Tribunal also introduced a gratuity scheme. It fixed 5 years minimum service in order to enable a workman to earn gratuity and while fixing 21 days ' basic wage or salary as the quantum for gratuity for each completed year of service, included dearness allowance in the words "basic wage or salary. " Both the management and workmen appealed to this Court. The workmen contended that : (i) the age of retirement both for the staff of the head office and the factory workmen should be fixed at 60 years, and (ii) 30 days ' wages instead of 21 days should have been fixed as the quantum for gratuity. The management objected to the minimum period of five years to enable a workman to earn gratuity even in the case of voluntary retirement or resignation and contended for a longer minimum of service. The management also urged that dearness allowance should not be included in the basic wages for fixing the quantum of gratuity. HELD:(i) The award of the Tribunal should be modified, fixing :he age of retirement, for the clerical and subordinate staff as well as for the factory workmen, whether existing or future,at the age of 60 years. [527 E] Age of retirement of 55 years was fixed in the last century in government service and had become the pattern for fixing the age of retirement everywhere. But considering the improvement in the standard of health and increase in longevity, the age of retirement should be fixed ordinarily it the higher level of 60 years. Since the work in the factory in the present case was not particularly arduous as compared to that of the clerical and subordinate staff, even in the case of factory workmen there s no reason why the age of retirement should be fixed at a lower level, specially when the management could always terminate the services of a workman if he becomes physically or mentally incapable of working, before the age of retirement. With the age of retirement at 60 years here will be the added advantage that more experienced workmen will be available to the management and that would be a cause for greater efficiency. As there are no valid and cogent reasons for making a difference in the age of retirement of existing workmen and those employed in future, the future workmen, both clerical and subordinate staff as 524 well as factory workmen, should also have the benefit of the same age of superannuation. [526 B D; 527 B D] (ii)No case for increasing the quantum of gratuity from 21 days basic wage to 30 days ' basic wage had been made out by the workmen, especially when there was a provident fund scheme also in force in the concern and the workmen, were thus getting two retiring benefits. [529 H] (iii)In the case of voluntary retirement or resignation by an employee before reaching the age of superannuation, the minimum period of qualifying service for gratuity should be 10 years, and not 5 years as prescribed by the Tribunal. [528 E] The reason for pro tiding a longer minimum period of earning gratuity in the case of voluntary retirement or resignation is to see that workmen do no ' leave one concern after another, after putting in the short minimum service qualifying for gratuity; and gratuity schemes usually provide for a longer minimum in the case of voluntary retirement or resignation. [527 A B] (iv)Gratuity should be paid at the rate of 21 days ' basic wage or Wary for each completed year of service, but such basic wage would not include dearness or any other allowance. [529 F] As the gratuity scheme was being introduced for the first time in the concern, it would be proper to follow the usual pattern of fixing the quantum of gratuity on basic wages, excluding dearness allowance, especially when there was another retiring benefit in the shape of provident fund already existing in the concern. [529 E] Case law reviewed.

Appeal No. 541 of 1963. Appeal by special leave from the order dated August 23, 1961 of the Punjab High Court in Civil Misc. No. 120 of 1961. Bhagwani Lal, E. C. Agarwala and P. C. Agarwalla, for the appellant. Deepak Dutt Chaudhry and B. R. G. K. Achar, for respondents Nos. 1 to 3. Janardhan Sharma, for respondent No. 4. The Judgment of SUBBA RAO and BACHAWAT, JJ. was delivered by BACHAWAT, J., MUDHOLKAR, J. delivered a separate but con curring Judgment. Bachawat, J. The appellant is a displaced person to whom 105 ordinary acres of land equivalent to 42 standard acres 11 units in village Jamalpur, Tehsil Hansi, District Hissar, were allotted by the Custodian on October 5, 1949 under the conditions published in the Notification of the East Punjab Government No. 4892/S dated July 8, 1949. The Punjab Security of Land Tenures Act, 1953 (Punjab Act No. 10 of 1953), hereinafter 513 ,referred to as the Act, came into force on April 5, 1953. On that date, the aforesaid land was equivalent to 42 standard acres II units, and having regard to proviso (ii) (b) to section 2 (3) of the Act, was permissible area in relation to the appellant, and as the appellant did not own any other land in the State of Punjab, he was a shall landowner within the meaning of section 2(2) of the Act. On October 22, 1955, as a result of consolidation proceedings, the appellant was granted 101.4/5 ordinary acres of land in exchange for the land originally allotted to him in 1949. Respondent No. 4 is a tenant of the appellant in respect of a portion of this land. On February 20, 1958, the appellant filed an application before the Assistant Collector, 1st Grade, Hissar for ejectment of respondent No. 4 under section 9 (1) (i) of the Act on the ground that he is a tenant of the appellant who is a small landowner. On that date, the aforesaid 101.4/5 acres of land owned by the appellant was equivalent to more than 50 standard acres. On February 17, 1960, the Assistant Collector dismissed the application. He held that the appellant was a big landowner, because on the date of the application the land owned by him was equivalent to more than 50 standard acres. On appeal, on May 2, 1960, the Collector of Hissar set aside the aforesaid order, and allowed the application for ejectment. He held that the appellant was a small landowner as he was a displaced person and an allotted of less than 50 standard acres. On August 30, 1960, the Commissioner, Ambala Division, dismissed a second appeal, and on January 2, 1961, the Financial Commissioner dismissed a revision petition filed by respondent No. 4. Following his previous ruling in Pat Ram vs Milawa Ram(1) and Har Chand Singh vs The Punjab State(2), the Financial Commissioner held that the status of the appellant must be determined on the date of the commencement of the Act and subsequent accretions to his holding arising out of consolidation of holdings and improvements due to good husbandry or advent of irrigation should be ignored. On August 22, 1961, the Punjab High Court allowed a petition preferred by respondent No. 4 under article 227 of the Constitution of India and set aside the orders of the Collector, the Commissioner and the Financial Commissioner. The High Court held that the status of the appellant must be determined by evaluating his land in terms of standard acres on the date of the application for ejectment. The appellant now appeals to this Court by special leave. (1) (1961) 40 Lahore Law Times, P. 28. (2) (1961) 40 Lahore Law Times, p. 9. 5 14 The question is whether the appellant is asmall landowner within the meaning of section 9 (1) (i) of the Act. On a combined reading of sections 2, 3, 4, 5, 5A, 5B, 5C, 10A,19A and 19D, the scheme of the Act appears to be as follows : The entire land held by the landowner in the State of Punjab on the date of the commencement of the Act must be evaluated as on that date and the status of the landowner and his surplus area, if any, must be then ascertained. If he is then found to be a small landowner, he continues to be so for the purpose of the Act, until he acquires more land, and on taking into account the value of the land in terms of standard acres on the date of the acquisition, he is found to be a big landowner. The landowner is required to make the necessary reservations or selections and to give the necessary declarations so that his status and the surplus area, if any, held by him may be so determined. If he is a small landowner at the commencement of the Act, his status is not altered by reason of improvements in the value of his land or re allotment of land on compulsory consolidation of holdings. In an unreported decision in Surja vs Financial Commissioner of Punjab and others(1), the Punjab High Court held that the status of the landowner for the purposes of an application under section 14A of the Act should be determined by evaluating his land on the date of the application. On the basis of this ruling, the improvements in the land subsequent to the commencement of the Act could not be ignored; but the legislature considered that this decision had the effect of defeating the purpose of the Act. It is well known that with a view to get rid of this decision, the legislature inserted section 19 F(b) in the Act by the Punjab Security of Land Tenures (Amendment and Validation) Act, 1962 (Punjab Act No. 14 of 1962). The object of this amendment will appear from the following passage in the statements of Objects and Reasons published in the Punjab Gazette (Extr.) dated April 27, 1962 : "Some of the recent judicial pronouncements have the effect of defeating the objectives with which the Punjab Security of Land Tenures Act, 1953 was enacted and amended from time to time. Under the scheme of the parent Act a specific period was allowed for filing of reservations by the landowners the object of which was to find out whether a person was a small landowner or not. Once that was found the intention was that such a person should continue to be treated as (1) Civil Writ No. 486 or 1961. 515 such for the purposes of the Act so long as he did not acquire more lands. In other words, his status was not to be altered on account of improvements made on the land or reallotment of land during consolidation. However, the High Court took a different view in Civil Writ No. 486 of 1961 (Surja versus Financial Com missioner, Punjab and others. ). Accordingly clauses 3, 6 and 7 of the Bill seek to neutralise the effect of the aforesaid decisions. " Clause 7 of the Bill related to sections 19 E and 19 F. The amending Act of 1962 was passed on July 4, 1962 during the pendency of the appeal in this Court. Section 19 F is retrospective in operation and is deemed to have come into force on April 15, 1953. Section 19 F(b) reads : "19 F. For the removal of doubts it is hereby declared, (b)that for evaluating the land of any person at any time under this Act, the land owned by him immediately before the commencement of this Act, or the land acquired by him after such commencement by inheritance or by bequest or gift from a person to whom he is an heir, shall always be evaluated for converting into standard acres as if the evaluation was being made on the date of such commencement, and that the land acquired by him after such commencement in any manner shall always be evaluated for converting into standard acres as if the evaluation was being made on the date of such acquisition. " On a reading of section 19 F(b), it would appear that for the purpose of determining the status of the landowner and evaluating his land at any time under the Act, the land owned by him immediately before the commencement of the Act must always be evaluated in terms of standard acres as if the evaluation was being made on the date of such commencement. It is not disputed that if the land held by the appellant immediately before the commencement of the Act is so evaluated, the appellant would be a small landowner. There is no scope for evaluating the subsequent improvements in the land due to consolidation operations or otherwise. The appellant did not acquire any land after the commencement of the Act. His status as a small landowner was not altered by reason of subsequent improvements or 516 re allotments of land on compulsory consolidation of holdings. On the date of the application for eviction, he, therefore, continued to be a small landowner. The High Court was in error in holding that the status of the appellant should be determined by evaluating his land in terms of standard acres on the date of the application for eviction. In the result, the appeal is allowed. We set aside the order of the High Court and restore that of the Financial Commissioner upholding the orders of the Commissioner and the Collector. We direct that costs throughout will be borne by the parties as incurred. Mudholkar, J. This is an appeal by special leave from a judgment of the High Court of Punjab allowing a writ petition under article 227 of the Constitution and setting aside orders of the Collector, the Commissioner and the Financial Commissioner made under certain provisions of the Punjab Security of Land Tenures Act, 1953 (hereafter referred to as the Act). The relevant facts are briefly these : The appellant Bhagwandas is a displaced person from West Pakistan. He owned 74 standard acres 133 4 units of agricultural land in certain villages in West Pakistan. On October 5, 1949 he was allotted 42 standard acres and 11 units of land in the village Jamalpur, Tehsil Hansi, District Hissar. Subsequently proceedings for consolidation of holdings were taken under the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948 (Act 50 of 1948). After those proceedings were finalised the appellant was granted an equivalent area of land in the same village as described in a sanad granted by the President on October 22, 1955 in exchange for the land earlier granted to him. Under the sanad the appellant was granted proprietary rights in the land. On February 20, 1958 the appellant, claiming to be a small holder made an application under section 14 A(i) of the Punjab Security of Land Tenures Act, 1953 before the Assistant Collector, I Grade, Hissar, for the ejectment of respondent No. 4 who was a tenant of the land. In his application the appellant alleged that as 'he held less than 50 standard acres of land he was a "small land owner" and as such had the right to evict the tenant and instead cultivate the land himself. The application was rejected by the Assistant Collector. Unfortunately neither party has placed the order of the Assistant Collector on the record of this appeal. It is, however, common ground that the reason for rejecting the application was that the Assistant Collector found that because of certain improvements the income from the lands 5 17 had risen considerably and that consequently the standard acreage of this land had risen from 42 standard acres to a standard acreage above 50 standard acres and that the appellant 's application was, therefore., untenable under section 14 A. In an appeal preferred by the appellant the Collector, Hissar held by his order dated May 2, 1960 that since the appellant was allotted only 42 standard acres and 11 units he is entitled to be treated as a small owner of the land and since the tenant had more than 5 standard acres under his cultivation in addition to the appellants land he was liable to be ejected from the land belonging to the appellant which was in his possession. The Collectors order was upheld by the Commissioner, Ambala Division by his order dated August 30, 1960. The tenant moved the Financial Commissioner, Punjab in revision against the order of the Commissioner but without success. He then preferred a writ petition before the High Court which, as already stated, was granted. According to the High Court the status of a landlord had to be ascertained as existing on the date of the application under section 14 A of the Act and not on the date of the allotment. Further, according to the High Court, what is "permissible area" available to a landlord under the Act has allow to be determined as obtaining on the date of the application for eviction made by the landlord. In coming to the conclusion the High Court followed a judgment of section B. Capoor J., in a similar matter. In order to appreciate the contentions urged before us on behalf of the par ties, it is necessary to refer to certain provisions of the Act. At the outset I must point out that the object of the Act was to provide to the tenants a security against ejectment by the landlords except for a just cause. The Act has, however, drawn a distinction between "small land owner" and a "large land owner". Sub section (2) of section 2 of the Act defines small land. owner to mean one whose entire land in the State of Punjab does not exceed the permissible area. Now, sub section (3) of section 2 defines permissible area. This definition draws a distinction between a land owner who is not a displaced person and one who, is a displaced person. In so far as the former is concerned the permissible area is 30 standard acres. In so far as the latter is concerned the second proviso to sub section (3) enacts "Provided that (ii) for a displaced person (a) who has allotted land in excess of fifty standard acres, the permissible area shall be fifty standard ip. Cl/66 3 518 acres or one hundred ordinary acres, as the case may be. (b) who has been allotted land in excess of thirty standard acres, but less than fifty standard acres, the permissible area shall be equal to his allotted area. (c) who has been allotted land less than thirty standard acres, the permissible area shall be thirty standard acres, including any other land or part thereof, if any, that he owns in addition. Explanation : For the purposes of determining the permissible area of a displaced person, the provisions of proviso (ii) shall not apply to the heirs and successors of the displaced person to whom land is allotted. " The expression 'standard acre ' is defined thus in sub section (5) of section 2 "Standard acre" means a measure of area convertible into ordinary acres of any class of land according to the prescribed scale with reference to the quantity of yield and quality of soil. " If a land owner is in possession of land in excess of the permissible area he is required to follow a certain procedure for indicating which particular land he wants to be treated as "reserved area". Land in excess of that area is treated surplus area. The former expression means the area lawfully reserved under the Punjab Tenants (Security of Tenures) Act, 1950 while the latter expression is defined in sub section (5 A) of the Act. It is not necessary to set out this definition for the purpose of the discussion of the question before us. Under section 27 of the Act rules have been framed for carrying out the purpose of the Act. There are two sets of rules, one is the Security of Land Tenures Rules, 1953 and the other is Punjab Security of Land Tenures Rules, 1956. The latter are supplementary to the rules of 1953. Rule 2 of the Rules of 1953, which is the relevant rule, is as follows : "Conversion of ordinary acres into standard acres. The equivalent, in standard acres, of one ordinary acre of any class of land in any assessment circle, shall be determined by dividing by 16, the valuation shown in Annexure 'A ' to these rules for such class of land in the said assessment circle 519 Provided that the valuation shall be (a) in the case of Banjar Qadim land, one half of the value of the class previously described in the records and in the absence of any specific class being stated, one half of the value of the lowest barani land; (b) in the case of Banjar Jadid land, seventh eighth of the value of the revelant class of land as previously entered in the records, or in the absence of specified class in the records, of the lowest barani land; and (c) in the case of cultivated that land subject to waterlogging, one eighth of the value of the class of land shown in the records or in the absence of any class, of the lowest barani land". In the table, Annexure A, land is classified under four heads which are: "Irrigated (nehri)", "Irrigated Chahi" "Irrigated" and "Sailab". Irrigated nehri is further classified as "perennial" and "non perennial". In Col. 3 is given the valuation for irrigated nehri land. For Hansi tehsil valuation of the land which is perennially irrigated by canals is given as 16 which means 16 annasing the rupee per acre and of non perennial as 10 annas in the rupee per acre. The valuation for irrigated chahi land in the entire tehsil is 10 annas in the rupee per acre and of un irrigated land as 5 annas in the rupee per acre. There is no valuation for sailab land which apparently means there is no land of this category in the tehsil. From Table, A it would appear that land which falls under one classification at the time of allotment or at the time of coming into force of the Act may well fall under some other head later on because the quantity of yield is liable to vary. For instance, if irrigation facilities come to be provided in land which is unirrigated at the time of coming into force of the Act or making the allotment the land may receive the benefit of irrigation later either perennially or non perennially and its yield therefrom may accordingly increase. Provisions relating to the valuation of lands under the Act are to be found in section 19F thereof which reads thus : "For the removal of doubts it is hereby declared, (a) that the State Government or any officer empowered in this behalf shall be competent and 520 shall be deemed always to have been competent, to determine in the prescribed manner the sur plus area referred to in section 10 A of a landowner out of the lands owned by such land owner immediately before the commencement of this Act; and (b) that for evaluating the land of any person at any time under this Act, the land owned by him immediately before the commencement of this Act, or the land acquired by him after such commencement by inheritance or by bequest or gift from a person to whom he is an heir, shall always be evaluated for converting into standard acres as if the evaluation was being made on the date of such commencement and that the land acquired by him after such commencement in any other manner shall always be evaluated for converting into standard acres as if the evaluation was being made on the date of such acquisition. " Now, surplus area would fall to be determined only where the land owner is in possession of land in excess of the permissible area. I have already given the definition of permissible area. Where, as here, the landlord is a displaced person and the land allotted to him is less than 50 acres the permissible area so far as he is concerned would be the area actually allotted to him. In the case of the appellant it would thus be 42 standard acres and II units. Out of this he alleges that he has sold 18 standard acres. As, however, no argument was advanced before us on this basis I leave this circumstance out of account and proceed on the footing that the appellant is in possession not of an area less than the permissible. area but of an area equal to the permissible area. Surplus area means an area other than the reserved area and, where no area is reserved, the area in excess of the permissible area. Where there is no reserved area or where the area hold by a person is not in excess of the permissible area the provisions of section 4 which deal with, the reservation of area or those of sections 5 A to 5C which deal with selection of permissible area or those of section 10 A which deal with the utilization of surplus area are not attracted. Therefore, the provisions of section 19F(a) which are attracted to a case falling under section 10 A will a so not apply. Moreover the provisions of section 10 A have no bearing on 521 a case like the one before us. For, they contemplate the ascertainment of surplus area held immediately before the commencement of the Act. Obviously, therefore, the determination must refer to the classification of the land at that time. Apart from that, the appellant does not possess any surplus area since what is in his possession is merely the permissible area. The question of utilization of any surplus area cannot thus arise in his case. That being so, no question can arise of evaluating his lands afresh. Indeed, fresh evaluation at any time is permissible only under section 19 F(b), but that provision deals with only special types of cases. It may be mentioned that sections 5 A to 5 C which deal with the selection of permissible area do not contemplate a case where the classification of land held by the landlord has undergone a change because of rise in the yield therefrom and the standard acreage of the land in his possession could be said to have increased. Section 19 A of the Act specifically prohibits the future acquisition by the landlord of land by transfer, exchange, lease., agreement or settlement any land which with or without the land already held by him exceeds the permissible area. Similarly the Act has made specific provisions to deal with a case of augmen tation to the land held by the landlord subsequent to the commencement of the Act by inheritance, bequest or gift. These are to be found in section 19 B. What is to be done in a case of that type is provided for by section 19 F(b). The power to evaluate land conferred by this provision is exerciseable at 'any time ' but obviously that power is exerciseable only in the context of the circumstances set out therein, that is to say where the landlord obtains land after the commencement of the Act by inheritance, bequestor gift and in no other circumstance. It would, therefore, seem that where the provisions of section 19F are not attracted the Revenue Assistant before whom an application under section 14 A for ejectment of a tenant is made by a landlord, is not entitled to evaluate the land of the landlord afresh for ascertaining whether he is in possession of land in excess of the permissible area. Elaborate rules have been framed under the Act and elaborate provisions are also contained in the Act with a view to extend its protection as far as possible to tenants cultivating land. The omission, therefore, to make any provision as to what has to be done, if as a result of improvements made by the landlord or by reason of the rise in the yield of the land through other causes would point only to one conclusion and that is that this circumstance is not to be taken into account for evaluating the land afresh and re calculating the standard acreage. If that is so, then it would follow that the High Court and the Assistant Commissioner were in error whereas 522 the Collector, Commissioner and the Financial Commissioner were right in deciding this case. For these reasons I set aside the order of the High Court and restore that of the Financial Commissioner upholding the orders of the Commissioner and the Collector. In the particular circumstances of the case 1, however, direct that costs throughout will be borne by the parties as incurred. Appeal allowed.

IN-Abs

The appellant was a displaced person from West Pakistan. In 1949 he was allotted 42 standard acres and 11 units of land which were later consolidated. In 1958 claiming to be a small holder he made an application under section 14 A(1) of the Punjab Security of Land Tenures Act 1953 before the Assistant Collector for the ejectment of respondent No. 4 who was a tenant of the land. The Assistant Collector rejected application on the ground that because of improvements the income from the lands had risen considerably and consequently the land had become equivalent to more than 50 standard acres, and therefore the applica tion was untenable under section 14 A. In appeal the Collector held that since the appellant was allotted only 42 standard acres and 11 units he was entitled to be treated as a small land holder. The Collector 's order was upheld by the Commissioner and by the Financial Commissioner. The tenant thereupon filed a writ petition before the High Court. According to the High Court the status of a landlord had to be ascertained as existing on the date of the application under section 14 A of the Act and not on the date of the allotment. Farther according to the High Court what is 'permissible area ' available to a landlord under the Act had also to be determined as obtaining on the date of the application for eviction made by the landlord. On this view the High Court allowed the tenant 's writ petition. In appeal by special leave to this Court, HELD: Under the provisions of the Act the entire land held by the landowner in the State of Punjab on the date of the commencement of the Act must be evaluated as on that date and the status of the landowner and his surplus area must then be ascertained. If he is then found to be 'a small landowner, he continues to be so for the purpose of the Act, until he acquires more land and on taking into account the value of the land in terms of standard acres on the date of the acquisition, he is found to be a big landowner. The landowner is required to make the necessary reservations or selections and to give the necessary declarations so that his status and the surplus area, if any, held by him may be so determined. If he is a small landowner at the commencement of the Act, his status is not altered by reason of improvements in the value of his land or re allotment of land on compulsory consolidation of holdings. section 19 F(b) which was introduced into the Act during the pendency of the appeal clarified the position to the same effect. [514 B D; 515 F] The appellant did not acquire any land after the commencement of the Act. His status as a small landowner was not altered by reason of subsequent improvements or re allotments of land on compulsory consolidation of holdings. On the date of the application, he therefore continued to be a small landowner. The High Court was in error in holding that the status of the appellant should be determined by evaluating his 5 12 land in terms of standard acres on the dates of the application for eviction. [515 H; 516 A B] Per Mudholkar J : Provisions relating to the valuation of lands under the Act are to be found in section 19 F(a) and 19F(b). The former did not apply to the present case as it applies only to the ascertainment of ,surplus area ' held by a landowner at the commencement of the Act; the appellant held only 'permissible area ' and no 'surplus are at all. Under section 19 F(b) fresh evaluation of land can take place "at any time" but the power under that section is exercisable only in the context of special circumstances, that is to say, where the landlord owns land after the commencement of the Act by inheritance, bequest or gift. These special circumstances did not exist in the present case. [519 H; 520 H; 521 B, D] When the provisions of section 19F are thus not attracted, the Revenue Assistant before whom an application under section 14 A for ejectment of a tenant is made by a landlord, is not entitled to evaluate the land of the landlord afresh for ascertaining whether he is in possession of land in excess of the permissible area. [521 F] Elaborate rules have been framed under the Act and elaborate provisions are also contained in the Act with a view to extend its protection as far as possible to tenants cultivating land. The omission, therefore, to make any provision as to what has to be done, if as a result of improvements made by the landlord or by reason of the rise in the yield of the land through other causes would point only to one conclusion and that is that this circumstance is not to be taken into account for evaluating the land afresh and recalculating the standard acreage. [521 G H] It would follow that the High Court was in error and its order must be set aside.

Appeal No. 512 of 1964. Appeal from the judgment and decree dated December 23, 1960 of the Allahabad High Court in Income tax Misc. Case No. 475 of 1954. A. V. Viswanatha Sastri, 4. Ganapathy lyer, R. H. Dhebar and R.N. Sachthey, for the appellant. section T. Desai, and J. P. Goyal, for the respondent. The Judgment of the Court was delivered by Shah, J. Under an agreement dated January 2, 1931, Lab Manmohan Das hereinafter called 'the assessee was appointed Treasurer of the Allahabad Bank Ltd. in respect of certain Branches, Sub Agencies and Pay Offices. The assessee was assessed to income tax as representing his Hindu undivided family, and the income received by the assessee under the terms of the agreement with the Allahabad Bank, was treated as income of the Hindu undivided family. In the previous year corresponding to the assessment year 1950 51 the assessee in performing his duties as a Treasurer suffered a net loss of Rs. 38,027. For the assessment year 1951 52, the profit and loss account of the assesses showed Rs. 73,815 as receipts, against which were debited outgoings amounting to Rs. 39,370 which included Rs. 20,000 being the loss suffered by the assessee as Treasurer of the Patna Branch of the Allahabad Bank arising from misappropriation by an Assistant Cashier. The Income tax Officer refused to allow the loss suffered in the previous year to be set off against the net profit of Rs. 34,445 and brought that amount of profit to tax as remuneration received by the assessee as Treasurer of the Allahabad Bank. The order of the Income tax Officer was conflrmed in appeal by the Appellate Assistant Commissioner. The 5 33 Income tax Appellate Tribunal held that the remuneration received by the assessee as Treasurer of the Allahabad Bank was income arising from pursuit of a profession or vocation within the meaning of section 10 of the Act and the loss suffered during the preceding year was liable to be set off against the assessee 's income from that source in the year under consideration. At the instance of the Commissioner of Income tax, U.P., the following questions were referred to the High Court of Allahabad under section 66(1) of the Income tax Act, 1922: "(1) Whether on a true interpretation of the deed of agreement dated 2nd January, 1931, appointing the assessee as Treasurer of the Allahabad Bank Limited, income earned by the assessee from his activities as such Treasurer fell to be computed under Section 10 of the Act or Section 7 or Section 12 of the Income tax Act ? If the answer to this question is that such income is liable to be computed under Section 10 of the Act, (2)Whether the assessee could claim a set off of the loss suffered by him in the preceding year 1950 51 against his profits in the year under consideration, i.e., 1951 52 having failed to prefer an appeal against the refusal by the Income tax Officer making the assessment for the year 1950 51 to allow the assessee to carry forward the loss under Section 24(2) of the Act ?" The High Court held that the remuneration received by the from the Allahabad Bank was income liable to be taxed under section 10 of the Income tax Act, and that the assessee could claim to set off the loss computed in the assessment year 1950 51 against the profit in the subsequent year. With certificate granted by the High Court, this appeal has been preferred by the Commissioner of Income tax. The second question presents little difficulty. In making his order of assessment for the year 1950 51 the Income tax Officer declared that the loss computed in that year could not be carried forward to the next year under section 24(2) of the Income tax Act, as it was not a business loss '. The Income tax Officer has under section 24(3) to notify to the assessee the amount of loss as computed by him, if it is established in the course of assessment of the total income that the assessee has suffered loss of profits. Section 24(2) confers a statutory right (subject to certain conditions which are not material) upon the assessee who sustains a loss of profits in any year in any business, profession or vocation to carry forward L3Sup. Cl/66 4 5 34 the loss as is not set off under sub section (1) to the following year, and to set it off against his profits and gains, if any, from ',the same business, profession or vocation for that year. Whether the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and against the same business, profession or vocation under section 24(2) has to be determined by the Income tax Officer who deals with,the assessment of the subsequent year. It is for the Income tax Officer dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year. A decision recorded by the Income tax Officer who computes the loss in the previous year under section 24(3) that the loss cannot be set off against the income of the subsequent year is not binding on the assessee. The answer to the first question depends upon the true interpretation of the terms of the agreement between the Allahabad Bank and the assessee ' If under the terms of the agreement it is found that the assessee was carrying on a business, profession or vocation, the assessee would be entitled to carry forward the loss suffered therein and set it off against the profits in the subsequent year of the same business, profession or vocation under section 24(2). If the remuneration was received by the assessee as a servant of the Bank, and on that account has to be computed under section 7 of the Act, the right to set off the loss cannot be claimed under section 24(2). The fact that the assessee held an office is however not decisive of the question whether remuneration earned by him was as a servant of the. Allahabad Bank. Receipt of remuneration for holding an office does not necessarily give rise to a relationship of master and servant between the holder of the office and the person who pays the remuneration. The agreement is between the Allahabad Bank Ltd., and Lala Manmohan Das called in the agreement "Treasurer", and the expression Treasurer includes "his heirs and representatives".; By cl. 2 it is recited that the Treasurer is appointed for the Bank 's Branches and Sub Agencies and Pay Offices mentioned therein and such other offices in other parts of India for which he may be appointed, and that the Treasurer has agreed to provide security to the Bank for the discharge and performance of his duties and obligations to the Bank. The agreement I then proceeds to set out the conditions of the agreement, the following of which are relevant: (1) "The Treasurer shall serve, the Bank as Treasurer for its Branches,, Sub Agencies and: Pay 535 Offices until, this agreement is determined as hereinafter provided." (2)"The remuneration of the. Treasurer shall be a monthly allowance for each of the Branches, SubAgencies and Pay Offices the total of such monthly allowance to be Rs. 2,250 (Rupees two thousand two hundred and fifty) plus Rs. 350 (Rupees three hundred fifty) for travelling expenses. " (3)"The duties, liabilities and responsibilities of the Treasurer to the Bank shall be such as either by custom or contract usually devolve on a Treasurer in the service of the Bank including the duties, liabilities and responsibilities hereinafter mentioned and the Treasurer shall faithfully discharge his duties and duly perform his obligations to the Bank." (4)"The Treasurer shall with the approval of the Bank appoint at adequate salaries to be paid by the Bank all the Indian staff as may be con sidered sufficient by the Bank for the business of the Cash Department of the Bank 's Branches, Sub Agencies and Pay Offices . and shall dismiss any person or persons so appointed whom he shall be reasonably directed by the Bank to dismiss and shall with like approval appoint another or others in the place of person or persons so dismissed. The Treasurer shall be deemed to have appointed the present staff of the Cash Department of the Branches, Sub Agencies and Pay Offices aforesaid. Provided always that the Bank shall accept any proposal of the Treasurer for transfer, suspension or dismissal of any member of the Cash staff in the Bank." (5) "The Treasurer shall be responsible to the Bank for the work and conduct of every person to be appointed or employed on his staff and shall make good to the Bank any loss or damage sustained or incurred by the Bank from any embezzlement, theft, fraud, misappropriation, misconduct, mistake, omission, negligent act or default of any such person or persons." (6)"The Treasurer shall keep under his care and supervision or that of his staff the moneys, cash bullion, securities, cheques, notes, hundies, drafts, orders and 536 other documents or property which may from time to time be entrusted to him at the Branches, Sub Agencies and Pay Offices. . and shall whenever so required to do so transmit from one place to another place under such guard as may be provided by the Bank all such money, documents or properties and shall be responsible for the care and proper custody of the same while in transit. Thai the Bank shall for the efficient working of its Cash Department provide proper iron safes and a strong room in each of the said Branches, Sub Agencies and Pay Offices and the Treasurer shall be responsible to the Bank for any loss occasioned to the Bank through the negligence, malfeasance or misfeasance of any of his servants or agents by the payment or delivery of any money, document or property aforesaid to a wrong person whether owing to forgery, mistake, fraud or otherwise. " (7)"The Treasurer shall be responsible for the correctness and genuineness of all hundies, cheques, drafts, securities, vouchers, documents, writing and signature in an Indian language or character which the Treasurer or any of his staff may accept and certify as genuine and correct and shall make good to the Bank any loss or damage from any forged instrument or signature on a document as dealt with and shall also be liable for any loss occasioned to the Bank by receipt of any bad or base money coin or bullion or any forged or fraudulently altered currency note." (9)"The Treasurer shall not nor shall any substitute or any one of the staff of the Treasurer publish or divulgeany of the business affairs or transactions of the Bank or any of its constituents." (10) "The Treasurer 's employment. . may be determined at any time by either party giving to the other three calendar months written notice to that effect, and in case of the Treasurer 's death, this agreement as regards the Treasurer 's liabilities and obligations for the staff and other persons shall remain in force so as to bind his heirs, representatives and estate for any loss then accrued or accruing claim of the Bank hereunder but also for any future claim of the Bank in respect of any subsequent transaction or occurrence unless and 5 37 A until determined by his heirs or representatives giving like notice to the Bank. " The agreement contains certain peculiar covenants : for instance, the expression "Treasure" includes the heirs and representatives and except where the content may justify a contrary implication, the rights, obligations and liabilities of the Treasurer would apparently be enforceable by or be enforced against the heirs and legal representatives of the assessee. The Treasurer is entitled under the terms of cl. (4) to transfer, suspend and dismiss any member of the staff in the cash department of the Bank and his recommendation in that behalf has to be accepted by the Bank. The Treasurer has if reasonably directed by the Bank, but not otherwise, to dismiss any member of the Indian staff appointed by him, and to appoint another in the place of the person so dismissed. The staff in the Cash department is referred in cls. (5), (6) & (7) as the Treasurer 's staff. Under cl. (4) all the staff originally in the employment of the Bank at the date of the agreement and 3 the staff subsequently appointed were to be paid by the Bank, but the Treasurer was to stand responsible for any loss or damage which may be sustained not only for embezzlement, theft, fraud, misappropriation, misconduct, but even for mistake, omission, negligent act or de fault of any member of the staff. The Treasurer has by the agreement undertaken to keep the moneys, cash, bullion, securities, cheques, notes, hundies, drafts, orders, and other documents or property under his care and supervision through his staff, and is liable to protect the property of the Bank in his custody, and has to make good any loss occasioned to the Bank by the negligence, malfeasance or misfeasance of any of "his servants or agents" even though not belonging to the Cash Department. The Treasurer is responsible for the "correctness and genuineness" of all hundies, cheques, drafts, securities, vouchers, documents, writing and signature in an Indian language and he is responsible for any loss or damage from any forged instrument or signature on a document dealt with by his staff, and also for any loss arising from receipt, of any bad or base money coin or bullion or any forged or fraudulently altered currency note. It may be noticed that the liability imposed under that covenant is for the acts of the staff appointed by him or deemed to have been appointed by him within the meaning of cl. (4), and also for loss arising from the receipt of any bad or base money coin or bullion or any forged or fraudulently altered currency note by any person employed by the Bank. The agreement also contemplates that the Treasurer may appoint any substitute to carry on the work of the Bank. The Treasurer is under the agreement 538 responsible for the acts of the Indian staff at the Branches, SubAgencies and Pay. Offices as far apart as Calcutta, Lahore, Lucknow, Patna, Amritsar, Benaras and Secunderabad. On a fair reading of the terms of the agreement it appears that the Treasurer had to provide the staff for the cash section : he had power to suspend, transfer or dismiss any member of the staff or to appoint another person in his place: he had to perform the duties, liabilities and responsibilities which by custom or contract usually devolve upon a Treasurer and the duties specified in the agreement, and he was responsible for all acts of the staff so appointed which result in loss or damage to the Bank. The Treasurer was also responsible for the protection of the property of the Bank and was also responsible for receipt of any bad or base money coin or bullion or any forged or fraudulently altered currency note. Personal attendance by the Treasurer and supervision over the staff in the cash section in all the Branches and Pay Offices being in the very nature of things impossible, it was open to the Treasurer to appoint his own agents to supervise the work of the cash section. An office of Treasurer was undoubtedly created by the agree ment. It is recited in cl. (1) that the Treasurer shall serve the Bank and in cl. (3) that the duties, liabilities and responsibilities I of the Treasurer shall be such as by custom or contract usually devolve on a Treasurer in the service of the Bank. For performing these duties there is a fixed remuneration which is paid to the Treasurer, beside the travelling expenses. But the use of the expressions "serve. , the Bank" and "in the service of the Bank" have to be read in the setting of the other covenants. By them I selves they are not decisive of the ' intention of the parties to the agreement. The office of the Treasurer can be determined only by notice on either side of a duration of three months, and even on the death of the assessee, the Treasurer 's obligations accrued or accruing during his life time, and future claims in respect of any transactions, even subsequent to his death, remain enforceable. Express reference to liability of the Treasurer for future claims for subsequent transactions clearly indicates that the agreement does not come to an end by the death of the assessee : it is determined only by notice of three months ' duration. Liability for transactions subsequent to the death of the person for the time being acting as Treasurer remaining enforceable, it is reasonable to infer that the right to receive remuneration would tenure to the person who would step into the office of the Treasurer. 539 The office of Treasurer is therefore to be held by the assessee, and After his death by, his heirs and legal representatives. It is unnecessary to consider whether the agreement would be determined by any supervening disability of the Treasurer, which may render the contract impossible of performance. But the Treasurer holds the office not as a servant of the Bank. The Treasurer has unquestionably undertaken very onerous responsibilities. There is however no covenant which authorises the Bank to control the Treasurer in the due performance of duties undertaken by him under the terms of the agreement. Business of the Bank has undoubtedly to be carried on in the manner normally done by the Banks, and the duties, liabilities and responsibilities of the Treasurer are to be such as "either by custom or contract usually devolve on a Treasurer". The Bank pays the Indian staff in the Cash Department, but the control is of the assessee. He has control over the staff appointed by him or deemed to be appointed by him: he has therefore the power to initiate proposals for transfer, suspension or dismissal of any member of the cash staff. This Court in Dharangadhara Chemical Works Ltd. vs State of Saurashtra(1) observed "The principles according to which the relationship as between employer and employee or master and servant has got to be determined are well settled. The test which is uniformly applied in order to determine the relationship is the existence of a right of control in res pect of the manner in which the work is to be done. A distinction is also drawn between a contract for service and a contract of service and that distinction is put in this, .,way.: "In the one case the master can order or require what is to be done while in the other case he cannot only order or require what is to be done but how itself it shall be done"." After referring to a large number of cases the Court observed P. 160 "The nature or extent of control which is requisite to establish the relationship of employer and employee must necessarily vary from business to business and is by its very nature incapable of precise definition. it is not necessary for holding that a person is an employee, that the employer should be proved to have exercised control over his work, that the test of control (1)[1957] S.C.R., 152, 157. 54 0 was not One of universal application and that there were many contracts in which the master could not control the manner in which the work was done. The correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due control and supervision by the employer or. to use the words of Fletcher Moulton, L.J., at page 549 in Simons vs Health Laundry Company [(1910)1 K.B. 543] ". it is impossible to lay down any rule of law distinguishing the one from the other. It is a question of fact to be decided by all the circumstances of the case. The greater the amount of direct control exercised over the person rendering the services by the person contracting for them the stronger the grounds for holding it to be a contract of service, and similarly the greater the degree of independence of such control the greater the probability that the services rendered are of the nature of professional services and that the contract is not one of service". " Under the contract the Treasurer had to procure due performance of the duties of the Cash Department by employees under his supervision and that he was to be responsible for all acts done by them and to make good the loss which may result from any embezzlement, theft, fraud, misappropriation, mistake, misconduct, omission, negligent act or default of any such person. In carrying out his duties under the contract apparently he was not to be controlled or supervised by the Bank. The contract was therefore ,one for service and the Treasurer could not be called a servant of the Bank. But Mr. Sastri on behalf of the Revenue contended relying upon Shivnandan Sharma vs The Punjab National Bank Ltd.(1) and Piyare Lal Adishawar Lal vs Commissioner of Income tax, Delhi(2), that under the contracts substantially similar to the contract in this case, Treasurers were held merely to be servants of the Banks, business whereof they attended. It is true that in each of these cases this Court in interpreting a contract in which a Treasurer was appointed to supervise the Cash Department of a Bank, held that the Treasurer was a servant of the Bank, and not an independent contractor. But unless the terms of the contracts (1) [1955]1 S.C.R. 1427. (2) ; 541 and the circumstances in which they are made are identical, interpretation of one contract cannot be regarded as a guide for determining the intention of parties to another contract. In Shivnandan Sharma 's case(1) the position of a Treasurer of a Bank fell to be determined somewhat indirectly. Shivnandan a head cashier in one of the branches of the Punjab National Bank appointed by the Treasurer who was in charge of the Cash Department of the Bank under an agreement between the Bank and the Treasurer, was dismissed from the service by the Bank. In a reference made to the Industrial Tribunal of certain industrial disputes including one for reinstatement of Shivnandan, it was held by this Court that under the terms of the agreement between the Treasurer and the Bank, the Treasurer was the servant of the Bank and not an independent contractor. In coining to that conclusion the Court was substantially guided by the covenants which reposed the direction and control over Shivnandan and of the ministerial staff in charge of the Cash Department in the Bank. The covenants of the agreement between the Treasurer and the Bank disclosed that the Treasurer had agreed to serve the Bank and to obey and observe all lawful orders and instructions of the Bank and to carry out such duties and to discharge such responsibilities as usually devolve upon a Treasurer in the employment of the Bank and in consideration thereof to receive remuneration mentioned in the Schedule. The Treasurer and his nominees were bound as expressly stipulated to obey all the orders, rules, and regulations prescribed by the Bank with regard to the discharge of their duties by the cashiers as well as with regard to the amount of balance they were allowed to keep with them. The Bank was also given power in case of gross negligence or misconduct or of any fraud, misappropriation or embezzlement by the Treasurer or any of the nominees in the discharge of their duties to dispense with the services of the Treasurer forthwith. The Treasurer was not to engage any person as his assistant or, peon about whose character, conduct or reliability the manager of the Board of Directors of the Bank may have any objection. Shivnandan was a nominee of the Treasurer, but from the terms of his employment it appeared that he was working directly under the control and supervision of the Punjab National Bank. This Court held that the Treasurer 's relation to the Bank was that of a servant to the master, and the ministerial staff of the Cash Department appointed by him were also the employees in the Cash Department. It is difficult to regard the agreement in Shivnandan Sharma 's case(1) as even substantially similar to (1) [1955]1 S.C.R. 1427. 542 the agreement in the present case between the Allahabad Bank and the Treasurer, so as to make the interpretation of the agreement a guide or a precedent in the interpretation of the agreement before us. In Piyare Lal Adishwar Lal 's case(1), one Sheel Chandra was appointed Treasurer of the Central Bank for various branches on a monthly salary. Under the agreement between Sheel Chandra and the Bank, Sheel Chandra had to engage and employ all subordinate staff. He had the power to control, dismiss and change the staff at his pleasure, but he could not engage or transfer any member of the staff except with the approval of the Bank and he had to dismiss any such member if so required by the managing director of the Bank or Agent of the office. The Treasurer was responsible for the acts and omissions of his representatives ' whom he was entitled to appoint at the various branches with the approval of the Bank, and he had agreed to indemnify the Bank against any loss arising from any neglect or omission on their part. But the Treasurer and his staff were under the direct control of the Bank. The agreement which was terminable by three calendar months ' notice in writing by either side, could in the event of any breach of any condition of the agreement by the Treasurer be terminated by the Bank forthwith. Having regard to the nature of his work and the control and supervision of the Bank over the Treasurer, it was held that the Treasurer was a servant of the Bank and the emoluments received by the Treasurer were in the nature of salary and assessable under section 7 of the Income tax Act and not profits and gains of business under section 10. Some of the covenants of the contract between the Central Bank and the Treasurer are similar to the agreement under consideration in this appeal, but in Piyarelal Adishwar Lars case(1) this Court founded its conclusion upon the existence of control and supervision of the Bank over the Treasurer and upon the power vested in the Bank to summarily dismiss the Treasurer in case of breach of any of the conditions of the agreement. In the present case there is no covenant which either expressly or impliedly confers upon the Bank such control and supervision over the work done by the Treasurer, and the agreement is not liable to summary determination. His duties, liabilities and responsibilities are to be such as either by custom or contract usually devolve upon the Treasurers and those which are specified in the agreement. It is true that under cl. (d) he has to transmit from one place to another place whenever so required, under such guard (1) [1960]1 S.C.R. 669. 543 as may be provided by the Bank, all such money, cash, bullion, securities, cheques, notes, hundies, drafts, orders and other documents, but that does not put the Treasurer under the general supervision of the Bank. On a careful consideration of the covenants, we are of the view that the Treasurer was not a servant of the Allahabad Bank under the terms of the agreement dated January 2, 1931, and the remuneration received by him was not "salaries" within the meaning of section 7 of the Income tax Act. But that is not sufficient to conclude the matter in favour of the assessee. The benefit of section 24(2) of the Indian Income tax Act may be availed of by the assessee only if the loss sought to be set off was suffered under the head "Profits and gains . in any business, profession or vocation". It is difficult to regard the occupation of the Treasurer under the agreement as a profession, for a profession involves occupation requiring purely intellectual or manual skill, and the work of the Treasurer under the contract cannot be so regarded. Occupation of a Treasurer is not one of the recognized professions, nor can it be said that it partakes of the character of a business or trade. In performing his duties under the agreement the assessee exercised his skill and judgment in making proper appointments and made arrangements for supervising the work done by the 'Staff in the Cash Department of the Bank 's Branches. The remuneration received by him was for due per formance of the duties and also for the guarantee against loss arising to the. Bank out of the acts or omissions of the Cash and other staff of the Bank. Taking into consideration the nature of the duties performed, and the obligations undertaken, together with the right to remuneration subject to compensation for loss arising to the Bank from his own acts and omissions or of the servants introduced by him into the business of the Bank, the assessee may be regarded as following a vocation. The remuneration must therefore be computed under section IO of the Income tax Act and loss of profit suffered in that vocation in any year may be carried forward to the next year and be set off against the profit of the succeeding year. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The respondent was appointed Treasurer of a Bank in respect of certain of its branches, sub agencies and pay offices. In the previous year corresponding to the assessment year 1950 51, he suffered a loss in performing his duties as Treasurer. But the Incometax Officer, in assessing the respondent to income tax, declared that the loss could not be carried forward to the next year under section 24(2) of the Income tax Act ' 1922, on the ground that it was not a business loss. For the assessment year 1951 52, the Income tax Officer refused Lo allow the loss to be set off against the net profit for the year and brought that amount of profit to tax as remuneration received by the respondent as Treasurer of the Bank. The order was confirmed by the Appellate Assistant Commissioner,. but the Appellate Tribunal held that the remuneration received by the respondent was income arising from the pursuit of a profession or vocation. within the meaning of section 10 of the Act and therefore the loss suffered during the preceding year could be set off against his income in the subsequent year. On a reference the High Court agreed with the Tribunal. In appeal to this Court, HELD:(i) The decision recorded by the Income tax Officer, who. computed the loss in the previous year under a. 24(3), that the loss could. not be set off against the income of the subsequent year was not binding on the respondent, as, under section 24(2), it is for the Income tax Officer dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year. [534 A C (ii)The use of the expressions "serve the Bank" and "in the service of the Bank" in the contract appointing the respondent as Treasurer of the Bank have to be read in the setting of the other covenants and are not decisive of the question whether the respondent was a servant of the Bank. Under the contract the respondent had to procure due performance of the duties of the cash department by employees under his supervision and he was to be responsible for all acts done by them and to make good the loss which might result from any embezzlements theft, fraud, misappropriation, mistake, misconduct, omission, negligent act or default of any such person. in carrying out his duties under the contract he was not to be controlled or supervised by the Bank and the agreement was not liable to summary determination. The contract was therefore for service and the respondent could not be called a servant of the Bank. Therefore, the remuneration received by him was not "salaries" within, the meaning of section 7 of the Act. [538 F 0; 540 E F; 543 B) Section 24(2) confers a statutory right upon the assessee who sustains a loss of profits in any year in any business, profession or vocation to carry forward so much of the loss as is not set off under sub section (1) to the following year, and to set it off against his profits and gains, if 532 any, from the same business, profession or vocation for that year. The occupation of a Treasurer is not a profession, nor does it partake of the character of a business or trade. But taking into consideration the nature of the duties performed, and the obligati7on undertaken, together with the right to remuneration subject to compensation for loss arising to the Bank from his own acts and omissions or of the servants introduced by 'him into the business of the Bank, the respondent could be regarded as following a vocation. His remuneration must therefore be computed under section 10 and loss of profit suffered in that location in any Vear could be carried forward to the next year and be set off against the profit of that year. [543 B, C D, F G] Dharangadhara Chemical Works Ltd. vs State of Saurashtra, ; , followed. Shivnandan Sharma vs The Punjab National Bank Ltd. ; and Piyare Lal Adishwal Lal vs Commissioner of Income tax, Delhi , distinguished.

Appeal No. 64 of 1953. Appeal by special leave from the Judgment and Decree, dated the 29th November, 1951, of the Court of the Judicial Commissioner for Himachal Pradesh at Simla in Civil Revision No. 52 of 1951. Gopal Singh for the appellants. section C. Isaacs (Amar Nath Chona, with him) for the respondents. January 19. The Judgment of the Court was delivered by DAS J. This is an appeal by special leave against the order made on the 20th November, 1951, by the Judicial Commissioner of Himachal Pradesh in proceedings instituted by the respondents under articles 226 and 227 of the Constitution of India. There is no substantial dispute as to the facts leading up to the present appeal. The 'appellants 567 were tenants of a certain shop premises situate in Solan Bazar in the district of Mahasu in Himachal Pradesh. On the llth October, 1947, they had executed a rent deed by which they agreed to pay an annual rent of Rs. 175 payable as to Rs. 50 on the last of Baisakh and as to the balance of Rs. 125 in the month of October, in default of which payment,% the respondents, as landlords, would be entitled to recover the whole of the said rent in one lump sum. The tenancy created by the rent deed was only for one year in the first instance but it provided that if the tenants desired to continue in occupation they must execute a further rent deed before the expiration of the said term. The appellants never executed any further rent deed but held over and continued in occupation of the demised premises. The appellants fell into arrears with the payments of rents due for the years 1948 and 1949 and the respondents made applications to the Rent Controller for eviction of the appellants under section 13 (2) (i) of the East Punjab Urban Rent Restriction Act, 1949, as extended to Himachal Pradesh. The appellants, however, paid up the arrears of rent into court and claimed the benefit of the proviso to section 13 (2) (i). The claim was allowed and the said applications were dismissed accordingly on the 18th December, 1950. The appellants again fell into arrears with the pay ment of rent due for the year 1950. On the 26th December, 1950, the respondents served on the appellants a notice c alling upon the latter to pay whole of the said rent forthwith but the appellants failed to do so. The respondents thereupon, on the 2nd January, 1951, filed an application under section 13 (2) (i) for the eviction of the appellants on the ground of nonpayment of rent. Thereafter, on the 10th January, 1951, the appellants made an application to the Rent Controller for the fixation of a fair rent under section 4 of the said Act. On the 25th January, 1951, the appellants filed their written statements in the proceedings under section 13 568 (2) (i) admitting the nonpayment of rent and the receipt of the notice but pleaded (i) that the respondents ' application was barred by reason of the rejection of the previous applications for eviction made by the respondents and (ii) that the present application could not be entertained in view of the pendency of their application for fixation of a fair rent under section 4 of the said Act. On the 20th February, 1951, the Rent Controller framed the following issues: (1) Whether the application in question was not entertainable in view of the judgment of the District Judge, dated the 18th December, 1950 Onus on defendants. (2) If issue No. I is not proved, had the opposite party (tenants) not paid the rent and as such were they liable to be ejected? Onus on plaintiffs. (3) Have the opposite party already filed an application in the said court for the fixation of rent and are they, therefore, not liable for ejectment pending the decision on the application and what is its effect on the said application? Onus on defendants. By his judgment, dated the 29th May, 1951, the Rent Controller held that as the previous applications related to non payment of rents for the years 1948 and 1949 the present application which was founded on non payment of rent for 1950 was not barred under section 14 of the said Act but, although the fact of rent being in arrears was admitted, the Rent Controller did not think fit to make an order directing the appellants to put the respondents in possession of the demised premises. The reasons given by him were as follows: " Regarding the non payment of the rent when the plea of the tenant is only that he is waiting for the fixation of fair rent by the Rent Controller there is not enough ground for ejectment. A civil suit for the recovery of the rent would have been a more appropriate method of obtaining that rent. I therefore dismiss the suit. ' The parties should bear their own 569 The respondents preferred an appeal to the District Judge of Mahasu under section 15 of the said Act. The learned District Judge dismissed the appeal observing "On behalf of the landlord it was urged that under section 13 (2) of the Punjab Urban Rent Restriction Act, as applied to Himachal Pradesh, the Controller, if it came to the finding that rent had not been paid, had no option but to direct the tenant to put the landlord in possession. Undoubtedly, that is the correct legal position, but in the present case the non payment of rent was due to a misapprehension of the legal position created by the tenant filing an application for fixing fair rent. 1, therefore, think that this case can be distinguished and does not fall within section 13 (2), Punjab Urban Rent Restriction Act. " The respondents moved the Judicial Commissioner, Himachal Pradesh, under articles 226 and 227 of the Constitution of India for setting aside the order of the District Judge. The learned Judicial Commissioner held that in view of the admitted failure to pay the rent as provided by the rent deed or at the first hearing of the court under the proviso to section 13 (2) (i) the courts below had acted arbitrarily in refusing to make an order for ejectment against the tenants who had not done what was incumbent on them to do under the law and that such a situation called for inter ference by the court of the Judicial Commissioner in order to keep the subordinate courts within the bounds of their authority. He accordingly set aside the orders of the courts below and allowed the application for ejectment but gave the appelants three months ' time for vacating the premises. The appellants have now come up before this court on appeal by special leave obtained from this court. Learned advocate appearing in support of this appeal urges that the learned Judicial Commissioner acted wholly without jurisdiction inasmuch as (1) the Rent Controller or the District Judge exercising powers 570 under the Act was not amenable to the jurisdiction of the High Court and, therefore, article 227 confers no power on the court of the Judicial Commissioner over the Rent Controller or the District Judge, and (2) that article 227 read with article 241 confers no power of judicial superintendence on the court of the Judicial Commissioner. Re. l. The court of the Judicial Commissioner of Himachal Pradesh exercises jurisdiction in relation to the whole of the territories of Himachal Pradesh. The Rent Controller and the District Judge exercising jurisdiction under the Act are certainly tribunals, if not courts, and they function within the territories of Himachal Pradesh. Therefore, article 297 (1) read with article 241 confers on the court of the Judicial Commissioner power of superintendence over such tribunals. The words " in relation to which " obviously qualify the word " territories " and not the words "courts and tribunals". 2.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. That the Rent Controller and the District Judge exercising jurisdiction under the Act are tribunals cannot and has not been controverted. The only question raised is as to the nature of the power of superintendence conferred by the article. Reference is made to clause (2) of the article in support of the contention that this article only confers on the High Court administrative superintendence over the subordinate courts and tribunals. We are unable to accept this contention 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 conferring revisional jurisdiction on the High Court. In this connection it has to 571 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 nothing in the section should be construed as giving the High Court any jurisdiction to,question any judgment of any inferior court which was not 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 note 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, 186 1, and section 107 of the Government of India Act, 1915. See the cases referred to in Moti Lal vs The State through Shrimati Sagrawati(1). Our attention has not been drawn to any case which has taken a different view and, as at present advised, we see no reason to take a different view. This power of superintendence conferred by article 227 is, as pointed out by Harries C. J., in Dalmia Jain Airways Ltd. vs Sukumar Mukherjee(2), to be exercised most sparingly and only in appropriate cases in order to keep the Subordinate Courts within the bounds of their authority and not for correcting mere errors. As rightly pointed out by the Judicial Commissioner in the case before us the lower courts in refusing to make an order for ejectment acted arbitrarily. The lower courts realised the legal position but in effect declined to do what was by section 13 (2) (i) incumbent on them to do and thereby refused to exercise jurisdiction vested in them by law. was, therefore, a case which called for an interference by the court of the Judicial Commissioner and it acted (1) I.L.R. [1952] 1 All. 558 at p. 567, (2) A.I.R. 1951 Cal. 75 572 quite properly in doing so. In our opinion there is no ground on which in an appeal by special leave under article 136 we should interfere. The appeal, therefore, must stand dismissed with costs. Appeal dismissed.

IN-Abs

The Court of the Judicial Commissioner of Himachal Pradesh exercises jurisdiction in relation to the whole of the territories of Himachal Pradesh. The Rent Controller and the District Judge exercising juris. diction under the East Punjab Rent Restriction Act,,1949, are certainly tribunals it not courts within the meaning of article 227 of the Constitution and they function within the territories of 566 Himachal Pradesh. Therefore article 227(1) read with article 241 confers on the Court of the Judicial Commissioner power of superintendence over such tribunals. The words "in relation to which" in article 227(1) qualify the word "territories" and not the words "courts and tribunals". There is no force in the contention that cl. (2) of article 227 only confers on the High Court administrative superintendence over the subordinate courts and tribunals because cl. (2) of the article is expressed to be without prejudice to the generality of the provisions in cl. The power of superintendence conferred by article 227 should be exercised most sparingly and only in appropriate cases in order to keep the subordinate courts within the bounds of their authority and not for correcting mere errors. In view of the admitted failure by the tenants to pay the rent as provided by the rent deed or at the first hearing of the court under the proviso to section 13(2)(1) the lower courts had acted arbitrarily in refusing to make an order for ejectment against the tenants who had not done what was incumbent on them to do under the law and thereby refused to exercise jurisdiction vested in them by law and it was a case which called for interference by the Court of Judicial Commissioner and it acted quite properly in doing so. Moti Lal vs The State through Shrimati Sagrawati (I.L.R. [1952] 1 All. 558 at p. 567) and Dalmia Jain Airways Ltd. vs Sukumar Mukherjee (A.I.R. 1951 Cal. 193) referred to.

Appeals Nos. 569 to 571 of 1964. Appeals from the judgment and orders dated August 4, 1961 of the Calcutta High Court in Appeals from Original Orders Nos. 22, 29 and 30 of 1959. B. Sen and section N. Mukherjee, for the appellants. K. R. Chaudhuri, for the respondents. 454 The Judgment of the Court was delivered by Gajendragadkar, C. J. These three appeals arise out of three writ petitions filed by the three respondents, Jaffar Imam, Brindaban Nayak and Jambu Patra, respectively on the Original Side of the Calcutta High Court against the appellant, the Calcutta Dock Labour Board. Each one of the respondents challenged the validity of the order passed by the appellant, terminating his employment as a registered dock worker with the appellant, on the ground that the said order was illegal and inoperative. The basis on which the impugned orders were challenged was that the enquiry which had been held before passing the said orders had not afforded to the respondents a reasonable opportunity to defend themselves and as such, the principles of natural justice had not been followed and even the relevant statutory provisions had been contravened. The writ petitions filed by Jaffar Imam and Jambu Patra were heard by Sinha, J., whereas the writ petition filed by Bridaban Nayak was heard by P.B. Mukherji, J. The learned single Judges who heard these respective writ petitions substantially took the same view and rejected the contentions raised by the respondents. In the result, the writ petitions were dismissed. Against these decisions, the respondents preferred appeals before a Division Bench of the Calcutta High Court. The Division Bench has allowed the appeals and has issued an appropriate writ directing that the impugned orders by which the employment of the respondents was terminated by the appellant should be quashed. The appellant then applied for and obtained a certificate from the said High Court and it is with the certificate thus granted to it that it has come to this Court in appeal. It appears that the three respondents were Dock workers at tached to the Port of Calcutta and were registered in the Reserve Pool. On August 12, 1955, the Commissioner of Police, Calcutta, passed an order under section 3(1)(a)(ii) of the (No. 4 of 1950) (hereinafter called 'the Act ') directing that the respondents should be detained, as he was satisfied that they were guilty of violent and riotous behaviour and had committed assault and as such, it was necessary to detain them with a view to preventing them from acting in any manner prejudicial to the maintenance of public order. The respondents then made representations to the State Government under section 7 of the Act alleging that the grounds set out in the detention orders passed against them were untrue and that their detention was in fact malafide. On receipt of these representations, they were forwarded by the State Government to the Advisory Board under section 9. It is wellknown that the Act had made a provision for referring orders of detention to the Advisory Boards constituted under section 8. When the Advisory Board received the representations made by the respondents, it took into account the material placed before it, considered the said representations, and submitted its report within the time 455 specified by section 10(1). Since the report was against the respondents, their detention was confirmed by the State Government under section 11 of the Act and in consequence, their detention was continued for about 11 months. After they were released from detention, they applied for allocation to registered dock employment, but instead of passing orders in favour of such allocation, the appellant commenced disciplinary proceedings against them and notices were served on them to show cause why their services should not be terminated on 14 days ' notice in terms of clause 36(2)(d) of the Calcutta Dock Workers (Regulation of Employment) Scheme, 1951 (hereinafter called "the Scheme"). The principal ground in these notices was that the respondents had been detained for acts prejudicial to the maintenance of public order and as such, their services were liable to be terminated. Accordingly, the respondents showed cause against the proposed order, but the Deputy Chairman of the appellant was net satisfied with their representations, and so, he terminated their services on December 17, 1956. While doing so, each one of them was given 14 days ' wages in lieu of notice for the equivalent period,. The respondents challenged this decision by preferring appeals to the Chairman of the appellant, but their appeals did not succeed and the orders passed by the Deputy Chairman were confirmed on April 4, 1957. It is against these appellate orders that the respondents filed the three writ petitions which have given rise to the pre sent appeals. It is plain that both the Deputy Chairman who passed the im pugned orders against the respondents, and the Chairman of the appellant who heard the respondents ' appeals, have taken the view that the orders of detention passed against the respondents, in substance, amounted to orders of conviction and as such, the appellant was justified in terminating the respondents ' employment. Both the original as well as the appellate orders unequivocally state that having regard to the fact that the respondents had been detained, and that their detention was confirmed and continued after con sultation with the Advisory Board, it is clear that they were guilty of the conduct alleged against them in the orders of detention. In that connection, it was pointed out that the Advisory Board consisted of persons of eminent status and undoubted impartiality, and so, the fact that the representations made by the respondents were not accepted by the Advisory Board and that their detention was, confirmed by the State Government in consultation with the Advisory Board, was enough to justify the appellant in terminating the employment of the respondents. The two learned single Judges who heard the respective writ petitions substantially took the same view. Sinha, J. has observed that the respondents had a hearing before a very responsible body and the report that went against them showed that the detaining authority was justified in holding that the respondents were guilty 456 of the charges and had thus committed acts of indiscipline and misconduct within the meaning of the Scheme. In fact, Sinha J., felt no hesitation in holding that the appellant would be entitled to take disciplinary action against the respondents upon suspicion, and he held that the appellant 's suspicion against the respondents was more than justified by the fact that the detention of the respondents received the approval of the Advisory Board. P.B. Mukherjee, J., also approached the question on the same lines. He held that the appellant was entitled to take into consideration the fact that the respondents had been detained, that the statutory Advisory Board had considered the representations of the respondents and had not accepted them, and that the grounds of detention showed that the detaining authority was satisfied that the respondents were guilty of the conduct which was prejudicial to the maintenance of public order. "In the premises", said the learned Judge, "I am satisfied that the order terminating Brindaban Nayak 's services was justified". The Court of Appeal which heard the three appeals filed by the respondents against the respective orders passed by the two learned single Judges has disagreed with the approach adopted by them in dismissing the respondents ' writ petitions. It has held that in acting merely on suspicion based on the fact that the respondents had been detained, the appellant had acted illegally and that made the impugned orders invalid and inoperative. Mr. B. Sen for the appellant contends that the view taken by the Court of Appeal is erroneous in law. Before dealing with this point, it would be useful to refer to the relevant provisions of the Scheme. The Scheme has been made by the Central Government in exercise of the powers conferred on it by sub section (1) of section 4 of the (IX of 1948). Clause 3(n) defines a "reserve pool" as meaning a pool of registered dock workers who are available for work, and who are not, for the time being, in the employment of a registered employer as a monthly worker. The three respondents belong to this category of workers. Clause 23 of the Scheme guarantees the specified minimum wages to workers on the Reserve Pool Register. Clause 29 prescribes the obligations of registered dock workers, whereas clause 30 provides for the obligations of registered employers. Clause 31 prescribes restriction on employment, Clause 33 deals with wages, allowances and other conditions of service, whereas clause 34 is concerned with pay in respect of unemployment or underemployment. Clause 36 deals with disciplinary procedure and it is with this clause that we are directly concerned in these appeals. Clause 36(2) provides that a registered dock worker in the Reserve Pool who is available for work and fails to comply with any of the provisions of the Scheme, or commits any act of indiscipline or misconduct may be reported in writing to the Special Officer, who may. after investigating the matter and without prejudice to and in addition to the powers conferred by clause 35, 457 take any of the five steps indicated by sub clauses (a) to (e) as regards that worker. Sub clause (e) refers to dismissal of the guilty workman. Clause 36(3) lays down that before any action is taken under sub cl. (1) or (2), the person concerned shall be given an opportunity to show cause why the proposed action should not be taken against him. Clause 36A provides for the disciplinary powers of the Chairman of the Board. Clause 37 deals with termination of employment. Clauses 38 and 39 provide for appeals. That, in brief, is the nature of the Scheme. This Scheme was substituted by another Scheme in 1956. Clause 45(6) of this new Scheme corresponds to cl. 36(3) of the earlier Scheme. In other words, the relevant clauses under both the Schemes require that before any disciplinary action is taken against a worker, an opportunity must be given to him to show cause why the proposed action should not be taken against him. There can be no doubt that when the appellant purports to exercise its authority to terminate the employment of its employees such as the respondents in the present case, it is exercising authority and power of a quasi judicial character. In cases where a statutory body or authority is empowered to terminate the employment of its employees, the said authority or body cannot be heard to say that it will exercise its powers without due regard to the principles of natural justice. The nature or the character of the proceedings which such a statutory authority or body must adopt in exercising its disciplinary power for the purpose of terminating the employment of its employees, has been recently considered by this Court in several cases, vide the Associated Cement Companies Ltd. V. P. N. Sharma & Another,(1) and Lala Shri Bhagwan and Another vs Shri Ram Chand & Anr.(2 ) and it has been held that in ascertaining the nature of such proceedings with a view to decide whether the principles of natural justice ought to be followed or not, the tests laid down by Lord Reid in Ridge vs Baldwin & Others(3) are relevant. In view of these decisions, Mr. Sen has not disputed this position and we think, rightly. Therefore, the question which falls to be considered is whether the appellant can successfully contend that it was justified in acting upon suspicion against the respondents, the basis for the suspicion being that they were detained by orders passed by the appropriate authorities and that the said orders were confirmed by the State Government after consultation with the Advisory Board. It is hardly necessary to emphasise that one of the basic postulates of the rule of law as administered in a democratic country governed by a written Constitution, is that no citizen shall lose his liberty without a fair and proper trial according to law; and legal and proper trial (1) ; (2) ; (3) ; , 458 according to law inevitably means, inter alia, a trial held in accordance with the relevant statutory provisions or in their absence, consistently with the principles of natural justice. The Act is an exception to this rule and in that sense, it amounts to an encroachment on the liberty of the citizen. But the said Act has been held to be constitutionally valid, and so far as detention of a citizen effected by an order validly passed by the appropriate authorities in exercise of the powers conferred on them is concerned, its validity can be challenged only on grounds permissible in the light of the relevant provisions of the Act or on the ground of malafides. Whenever detenus move the High Courts or the Supreme Court challenging the validity of the orders of detention passed against them, the scope of the enquiry which can be legitimately held in such proceedings is thus circumscribed and limited. In such proceedings, Courts cannot entertain the plea that the loss of liberty suffered by the detenu by his detention is the result of mere suspicions entertained by the detaining authorities, provided the detaining authorities act bona fide; their subjective judgment about the prejudicial character of the activities or conduct of the citizen sought to be detained, is not open to challenge or scrutiny in ordinary course, and in that sense, it may have to be conceded that the loss of liberty has to be suffered by a citizen if he is detained validly under the relevant provisions of the Act. Thus far, there is no dispute. But the question which we have to consider in the present appeals is of a different character. A citizen may suffer loss of liberty if he is detained validly under the Act; even so, does it follow that the detenion order which deprived the citizen of his liberty should also serve indirectly but effectively the purpose of depriving the said citizen of his livelihood? If the view taken by the appellant 's officers who tried the disciplinary proceedings is accepted, it would follow that if a citizen is detained and his detention is confirmed by the State Government, his services would be terminated merely and solely by reason of such detention. In our opinion, such a position is obviously and demonstrably inconsistent with the elementary concept of the rule of law on which our constitution is founded. When a citizen is detained, he may not succeed in challenging the order of detention passed against him, unless he is able to adduce grounds permissible under the Act. But we are unable to agree with Mr. Sen 's argument that after such a citizen is released from detention, an employer, like the appellant, can immediately start disci plinary proceedings against high and tell him in substance that he was detained for prejudicial activities which amount to misconduct and that the detention order was confirmed by the State Government after consultation with the Advisory Board, and so, he is liable to be dismissed from his employment. It is obvious that the Advisory Board does not try the question about the propriety or validity of the citizen 's detention as a Court of law would; indeed, its function is limited to consider the relevant material placed before it and the representation received from the detenu, and then submit 459 its report to the State Government within the time specified by s.10(1) of the Act. It is not disputed that the Advisory Board considers evidence against the detenu which has not been tested in the normal way by cross examination , its decision is essentially different in character from a judicial or quasi judicial decision. In some cases, a detenu may be given a hearing; but such a hearing is often, if not always, likely to be ineffective, because the detenu is deprived of an opportunity to cross examine the evidence on which the detaining authorities rely and may not be able to adduce evidence before the Advisory Board to rebut the allegations made against him. Having regard to the nature of the enquiry which the Advisory Board is authorised or permitted to hold before expressing its approval to the detention of a detenu, it would, we think, be entirely erroneous and wholly unsafe to treat the opinion expressed by the Advisory Board as amounting to a judgment of a criminal court. The main infirmity which has vitiated the impugned orders arises from the fact that the said orders equate detention of a detenu with his conviction by a criminal court. We are, therefore, satisfied that the Court of Appeal was right in taking the view that in a depart mental enquiry which the appellant held against the respondents it was not open to the appellant to act on suspicion, and inasmuch as the appellant 's decision is clearly based upon the detention orders and nothing else, there can be little doubt that, in substance, the said conclusion is based on suspicion and nothing more. Even in regard to its employees who may have been detained under the Act, if after their release the appellant wanted to take disciplinary action against them on the ground that they were guilty of misconduct, it was absolutely essential that the appellant should have held a proper enquiry. At this enquiry, reasonable opportunity should have been given to the respondents to show cause and before reaching its conclusion, the appellant was bound to lead evidence against the respondents, give them a reasonable chance to test the said evidence, allow them liberty to lead evidence in defence, and then come to a decision of its own. Such an enquiry is prescribed by the requirements of natural justice and an obligation to hold such an enquiry is also imposed on the appellant by clause 36(3) of the Scheme of 1951 and cl. 45(6) of the Scheme of 1956. It appears that in the present enquiry, the respondents were not given notice of any specific allegations made against them, and the record clearly shows that no evidence was led in the enquiry at all. It is only the detention orders that were apparently produced and it is on the detention orders alone that the whole proceedings rest and the impugned orders are founded. That being so, we feel no hesitation in holding that the Court of Appeal was perfectly right in setting aside the respective orders passed by the two leaned single Judges when they dismissed the three writ petitions filed, by the respondents. Mr. Sen strenuously contended that if we were to insist upon a proper enquiry being held against the respondents before termi 460 nating their services, the appellant would find it impossible to take any disciplinary action against them. He urges that the respondents are bullies and they have terrorised their co workers to such an extent that no one would be willing or prepared to give evidence against them in a departmental enquiry. Even assuming that Mr. Sen is right that the appellant would experience difficulty in bringing home its charges to the respondents, we do not see how such a fear could justify the approach adopted by the enquiry officer in the present case. What would happen if a desperate character who is in the employment of the appellant had not been detained under the Act? In such a case, before the appellant can validly dismiss such an employee, it will have to hold a proper enquiry. The circumstance that the respondents happened to be detained can afford no justification for not complying with the relevant statutory provision and not following the principles of natural justice. Any attempt to short circuit the procedure based on considerations of natural justice must, we think, be discouraged if the rule of law has to prevail, and in dealing with the question of the liberty and livelihood of a citizen, considerations of expediency which are not permitted by law can have no relevance whatever. The result is, the appeals fail and are dismissed with costs. Appeals dismissed.

IN-Abs

The respondents had been detained under the Preventive Detention Act. On their release their employer the appellant Board, commenced disciplinary proceedings and issued show cause notices why their services should not be terminated on the principal ground that they had been detained for acts prejudicial to the maintenance of public order. Not being satisfied with their answers, the appellant terminated their services. The respondents ' appeals to the Chairman of the appellant Board were dismissed. Thereupon, the respondents filed writ petitions in the High Court, challenging the orders on the grounds that reasonable opportunity was not given to them, and that even the relevant statutory provisions had been contravened. The petitions were dismissed, but were allowed by a Division Bench on appeal. In the appeal to this Court, HELD: If the appellants wanted to take disciplinary action against respondents on the. ground that they were guilty of misconduct, it was absolutely essential that the appellant should have held a proper enquiry instead of equating the detention to a conviction by Criminal Court. At this enquiry, reasonable opportunity should have been given to the respondents to show cause and before reaching its conclusion, the appellant was bound to lead evidence against the respondents, and give them a reasonable chance to test the evidence in accordance with the rules of natural justice. Therefore, the Court of appeal was right in taking the view that in the departmental enquiry which the appellant held against the respondents it was not open to the appellant to act on suspicion, and inasmuch as the appellant 's decision was based only upon the detention orders and nothing else, there could be little doubt that the said conclusion was based on suspicion and nothing more. [459E H] Case law referred to: An obligation to hold such an enquiry is also imposed on the employer by cl. 36(3) of the Calcutta Dock Workers (Regulation of Employment) Scheme, 1951, and cl. 45(6) of the Scheme of 1956. [459G]

Appeal No. 116. of 1964. Appeal from the judgment and order dated September 13, 1960, of the Allahabad High Court in Special Appeal No. 212, of 1956. J. P. Goyal and B. P. Jha, for the appellants. A. V. Ranganadham Chetty and A. V. Rangam, for the res pondents. At the time when the present suit was brought, the U.P. (Temporary) Control of Rent and Eviction Act, 1947 (U.P. Act III of 1947) (hereinafter called 'the Act ') was in force. Section 3 of the Act imposes certain restrictions on the landlord 's right to eject his tenant from the premises to which the Act applies. Broadly stated, the effect of the provisions contained in section 3(1) is that a landlord can evict his tenant if he satisfies two conditions. The first condition is that he must obtain the permission of the District Magistrate to file such a suit; and the second condition is that he must provethe existence of one or the other of the seven grounds; enumeratedin clauses (a) to (g) of section 3(1). We shall presently refer to therelevant provisions of this section. In their plaint, the appellants pleaded that they needed the premises in suit to carry on their own business in the shop, and they alleged that they had applied for permission to the District Magistrate, Moradabad, under section 3 (1 ) of the Act; that the said permission had been refused by him, whereupon they had moved the Commissioner in his revisions jurisdiction under section 3(2) of the Act; and that the Commissioner had given them permission to file the suit. That is how the appellants claimed to have satisfied both the, conditions prescribed by section 3 (1). The appellants further claim 555 ed ejectment of the respondents and asked for a decree for damages. for use and occupation of the suit premises from 11th April, 1953 to 11th July, 1954 Rs. 35/ per month. The suit (No. 349, of 1954) was filed on the 14th July, 1954. The respondents resisted the claim made by the appelants on. several grounds. They urged that the suit was bad for non joinder of necessary parties; that the permission to sue granted to the appellants by the Commissioner was not valid in law; that the rent note executed by them was not admissible in evidence; and that the notice given by the appellants under section 106 of the Transfer of Property Act was also invalid in law. On these pleadings, the learned Munsif, Chandausi, framed appropriate issues. Evidence wag led by both the parties in support of their respective contentions. The learned trial Judge recorded findings in favour of the appellants on all the issues and decreed their suit with costs on the 25th March, 1955. The respondents then preferred an appeal (Civil Appeal No. 213 of 1955) in the Court of the District Judge, Moradabad, and urged that the findings recorded by the trial Judge were erroneous and asked for the reversal of the decree passed by him. The learned District Judge rejected the respondents ' contentions and confirmed the decree under appeal on the 2nd June, 1955. That took the respondents to the High Court at Allahabad in second appeal (No. 1106 of 1955). The learned single Judge of the said High Court who heard this appeal, upheld the respondents ' contention that the permission granted by the Commissioner under section 3(3) of the Act was invalid in law; and so, he came to the conclusion that the appellants ' suit was incompetent. This judgment was delivered on the 26th July, 1956. The learned Judge, however, allowed the appellants leave to file a Letters Patent Appeal. The Letters Patent Appeal was placed before a larger Bench of three learned Judges of the High Court, because it was thought that the question raised by the appellants was of some importance. On the question as to whether the permission granted by the Commissioner was valid or not, the learned Judges who heard the appeal differed. Two of the learned Judges held that the said permission was invalid, whilst the third learned Judge held that it was valid. In accordance with the majority opinion the Letters Patent appeal.preferred by the appellants was dismissed on the 13th September, 1960. The appellants then applied for 556 and obtained a certificate from the High Court and it is with the said certificate that this appeal has come to this Court. At the hearing of this appeal, the first point which Mr. Goyal for the appellants has raised for our decision is that the courts below had no jurisdiction to consider the question about the validity of the permission granted by the Commissioner. He contends that section 3 of the Act provides a self contained code for the grant of permission, and all questions in relation to the grant or refusal of the said permission have to be decided by the appropriate authorities constituted under the Act. Once the question about the grant of permission asked for by a landlord is determined by the appropriate authorities, their decision is final and cannot be questioned in a civil court. In support of this argument, Mr. Goyal has based himself on the provisions contained in section 3 (4) and section 16 ,of the Act. Section 3 (4) provides that the order of the Commissioner under sub section (3) shall subject to any order passed by the State Government under section 7 F, be final. Similarly, section 16 provides that no order made under this Act by the State Government or the District Magistrate shall be called in question in any Court. The combined effect of these two provisions, according to Mr. Goyal, is to exclude the jurisdiction of the civil courts to entertain the question about the correctness, propriety or legality of the order passed by the Commissioner in the present case whereby he granted permission to the appellants to bring the present suit. In order to appreciate the validity of this argument, it is necessary to consider the scheme of the, relevant provisions of the Act. Section 3(1) reads thus.: "Subject to any order passed under sub section (3) no suit shall, without the permission of the District Magistrate, be filed in any Civil Court against a tenant for his eviction from any accommodation, except on one or more of the following grounds". It is unnecessary to cite the said grounds, because it is not disputed that the ground of personal need set out by the appellants justifies their claim for the respondents ' ejectment. Section 3(2) and (3) as they stood at the relevant time read thus : "(2) The party aggrieved by the order of District Magistrate granting or refusing to grant the permission referred to in sub section (1) may, within 30days from the date of the order or the date on which it is communi 5 57 cated to him, whichever is later, apply to the Commissioner to revise the order. (3) The Commissioner shall, as far as may be, hear the application within six weeks from the date of its making, and, if he is satisfied that the District Magistrate has acted illegally or with material irregularity or has wrongly refused to act, he may confirm or set aside. the order of the District Magistrate". We have already referred to section 3(4). It would thus be seen that the scheme of section 3 is that if a landlord wants to bring a suit to eject his tenant, he has to apply to the District Magistrate for permission to do so. The District Magistrate may grant or refuse to grant such permission. After the District Magistrate makes an order on the landlord 's application, the party aggrieved by the order can apply in revision to the Commissioner within 30 days; and the Commissioner, in exercise of his revisional jurisdiction, has to deal with the revision application under section 3(3). If he is satisfied that the District Magistrate has acted illegally or with material irregularity, or has wrongly refused to act, he can make an appropriate order; and the order thus made by him is final under sub section (4), subject to any order that the State Government may pass under section 7 F of the Act. Section 7 E provides for the revisional powers of the State Government in very wide terms. It reads thus : "The State Government may call for the record of any case granting or refusing to grant permission for the filing of a suit for eviction referred to in section 3 or requiring any accommodation to be let or not to be let to any person under section 7 and may make such order as appears to it necessary for the ends of justice". It is clear that the power conferred on the State Government by section 7 F to revise the orders passed by the Commissioner under section 3 (3 ) is very wide. In the first place, the State Government need not necessarily be moved by any party in that behalf. It may call for the record suo moto and it can exercise its powers in the interests of justice. In other words, whenever it is brought to the notice of the State Government either by a party aggrieved by the order passed by the Commissioner, or otherwise, that the order passed by the Commissioner is unfair or unjust, the State Government may in the ends of justice pass an appropriate order revising the order made by the Commissioner. That, in brief, is the 558 scheme of. the relevant provisions of the Act relating to the grant of permission to the landlord to sue his tenant in ejectment. Mr. Goyal contends that the words of section 3 (4) read with section 16 are clear and unambiguous, and they indicate that the jurisdiction of the civil courts is completely excluded in relation to the question as to whether permission has been properly or validly granted or refused by the appropriate authorities exercising their powers under the relevant provisions of the Act. It cannot be seriously disputed that the jurisdiction of the civil courts to deal with civil causes can be excluded by the Legislature by special Acts which deal with special subject matters; but the exclusion of the jurisdiction of the civil courts must be made by a statutory provision which expressly provides for it, or which necessarily and inevitably leads to that inference. In other words, the jurisdiction of the civil courts can be excluded by a statutory provision which is either express in that behalf or which irresistibly leads to that inference. One of the points which is often treated as relevant in dealing with the question about the exclusion of civil courts ' jurisdiction, is whether the special statute which, it is urged, excludes such jurisdiction, has used clear and unambiguous words indicating that intention. Another test which is applied is : does the said statute provide for an adequate and satisfactory alternative remedy to a party that may be aggrieved by the relevant order under its material provisions ? Applying these two tests, it does appear that the words used in section 3 (4) and section 16 are clear. Section 16 in terms provides that the order made under this Act to which the said section applies shall not be called in question in any court. this is an express provision excluding the civil courts ' jurisdiction. Section 3 (4) does not expressly exclude the jurisdiction of 'the civil courts, but, in the context, the inference that the civil courts ' jurisdiction is intended to be excluded, appears to be inescapable. Therefore, we are satisfied that Mr. Goyal is right in contending that the jurisdiction of the civil courts is excluded in relation to matters covered by the orders included within the provisions of section 3 (4) and section 16. This conclusion, however, does not necessarily mean that the plea against the validity of the order passed by the District Magistrate, or the Commissioner, or the State Government, can never be raised in a civil court. In our opinion, the bar created by the relevant provisions of the Act excluding the jurisdiction of the civil courts cannot operate in cases where the plea raised before the civil court goes to the root of the matter and would, if upheld, 559 lead to the conclusion that the impugned order is a nullity. Take,, for instance, the case of an order purported to have been passed by a District Magistrate who is not a District Magistrate in law. If it is shown by a party impeaching the validity of the order in a civil court that the order was passed by a person who was not a District Magistrate, the order in law would be a nullity, and such a plea cannot be ruled out on the ground of the exclusion of the jurisdiction of the civil court. Similarly, if an order granting permission to a landlord is passed by a District Magistrate of one District when the property in question is situated in another district outside his jurisdiction, a party would be entitled to urge before a civil court that the permission purported to have been granted by the District Magistrate is wholly invalid and a nullity in law. Let us take another case to illustrate the position. If section 3 had provided that before a District Magistrate grants permission to the landlord to sue his tenant, he shall issue notice to the tenant and give him an opportunity to represent his case before the application of the. landlord is dealt with on. the merits; and in the face of such a statutory provision, the District Magistrate grants permission ex parte without issuing notice to the tenant; in such a case, the failure of the District Magistrate to comply with the mandatory provision% prescribed in that behalf, would render the order passed by him completely invalid, and a plea that an order has been passed by the District Magistrate without complying with the mandatory provision of the Act, would be open for examination before a civil court. Likewise, in the absence of such a statutory provision, if it is held that the proceedings before the appropriate. authorities contemplated by section 3 are in the nature of quasi judcial proceedings and they must be tried in accordance with the principles of natural justice, and it is shown that in a given case, an order has been passed without notice to the party affected by such order, it would be open to the said party to contend that an order passed in violation of the principles of natural justice is a nullity and it existence should be ignored by the civil court. Such a plea cannot, in our opinion, be excluded by reason of the provisions contained in section 3 (4) and section 16 of the Act. In this connection, we may incidentally refer to a recent deciSion of this Court in Lala Shri Bhagwan & A nr. vs Shri Ram Chand and Another(1). In that case, this Court upheld the decision of the Allahabad High Court which had set aside the order passed by the appropriate authority under the relevant provisions the Act on the ground that in passing the said order, principles of natural (1) ; 560 justice had not been followed. The view which was taken by this Court in that case was that the proceedings taken by a landlord under section 3 are proceedings of a quasi judicial nature and the appropriate authorities, in exercising their powers in relation to such proceedings, must act in accordance with the principles of natural justice. It must, however, be made clear that in that ,case, the question as to whether such a plea can be raised in a civil court having regard to the bar created by sections 3 (4) and 16 of the Act, was not raised and has not been considered. We ought to point out that the provisions contained in sec tions 3(4) and 16 undoubtedly raise a bar against pleas which ,challenge the correctness or propriety of the orders in question. The merits of the order are concluded by the decision of the ,appropriate authorities under the Act and they cannot be agitated in a civil court. But where a plea seeks to prove that the impugned order is a nullity in the true legal sense, that is a plea which does not come within the mischief of the bar created by sections 3(4) and 16 of the Act. Similar questions have often been considered by judicial ,decisions to some of which we will now refer. In The Secretary ,of State for India in Council vs Roy Jatindra Nath Chowdhury and A nr., (1) dealing with the effect of section 6 of the Bengal Alluvion and Diluvion Act (IX of 1847), the Privy Council observed that the finality of the orders specified in the said section had to be read subject to two conditions; the first was that the said orders should not suffer from any fundamental irregularity, that is to say, "a defiance or noncompliance with the essentials of the procedure"; and the second condition was that the alleged defiance or non compliance, with the essentials of the procedure must be strictly proved by the party alleging it. This decision show that if the special statute prescribes certain mandatory conditions subject to which the orders in question can be passed, and the said mandatory provisions are violated, the validity of the said orders ,can be challenged in a civil proceeding. Similarly, if principles ,of natural justice are not complied with, the orders passed in violation of the said principles would be wholly inoperative in law and their validity can be impeached in civil proceedings. The same principle has been emphasised by the Privy Council in Secretary of State vs Mask & Co.(1). In that case, though the words used in sections 188 and 191 of the Sea Customs Act (1878) were held to exclude the jurisdiction of the civil courts, (1) A.I.R. 1924 P.C. 175. (2) 67 1. A. 222 561 the Privy Council observed that even where jurisdiction is excluded, the civil courts have jurisdiction "to examine into cases where the provisions of the Act have not been complied with, or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure". This latter clause presumably covers cases where orders are passed in violation of the principles of natural justice. In M/s Kamala Mills Ltd. vs The State of Bombay(1), while dealing with a similar point, this Court has considered the effect of the two decisions of the Privy Council, one in the case of Mask & Co.(1), and the other in Raleigh Investment Company Ltd. vs Governor General in Council(3). The conclusion reached by this Court in M/s. Kamala Mill 's case(1) also supports the view which we are taking in the present appeal. Therefore, while upholding the contention raised by Mr. Goyal that the jurisdiction of the civil courts is barred, we wish to make it clear that this contention will not avail Mr. Goyal if the respondents ' plea, if upheld, would render the permission granted by the Commissioner totally invalid land a nullity. The second point which then calls for our decision in the present appeal is: is the permission granted by the Commissioner without jurisdiction and as such, a nullity ? The majority decision of the Allahabad High Court is in favour of the respondents; and Mr. Goyal 's argument is that the said decision is inconsistent with the true scope and effect of the provisions prescribed by section 3 (3) of the Act. The decision of this point lies within a very narrow compass. The majority decision is that the jurisdiction conferred on the Commissioner under section 3(3) is exactly similar to the jurisdiction conferred on the High Court under section 115 of the Code of Civil Procedure. It will be recalled that. 115 of the Code confers revisional jurisdiction on the High Court to make such order as it thinks fit in a given case, if the subordinate court whose order is brought before the High Court under section 115 "appears (a) to have exercised a jurisdiction not vested in it by law, or (b) to have failed to exercise a jurisdiction so vested, or (c) to have acted in exercise of its jurisdiction illegally or with material irregularity". There is no doubt that the requirements of clauses (a), (b) & (c) all centre round the question about the jurisdiction of the subordinate court, and the view which has been accepted by the majority decision under appeal is that the same limitation must be imported in construing (1) ; (3) 74 T. A. 50, at pp. 62 63. (2) 67 I.A. 222. 56 2 the scope of the authority and power conferred on the Commissioner by section 3(3). Let us examine whether this conclusion is right. In construing the provision of section 3 (3), one factor which is patent is that it ,does not refer to any considerations of jurisdiction at all. In fact, it is not easy to conceive of a limitation as to jurisdiction being relevant in section 3(3), because the said provision deals with .orders passed by District Magistrates, and the District Magistrates normally would have jurisdiction to deal with applications made by landlords. But quite apart from this aspect of the matter, the words used in section 3(3) are unambiguous. There are 'three ,categories of cases in which the Commissioner can interfere with the order passed by the District Magistrate. If the District Magistrate has acted illegally, the Commissioner can interfere with his order; so can he interfere with the order if the District Magistrate has acted with material irregularity; and lastly, the Commissioner can interfere with the order of the District Magistrate if the District Magistrate has wrongly refused to act. This last clause is wide enough to empower the Commissioner to correct the error committed by the District Magistrate in making an order brought before it; quite clearly if the District Magistrate refuses to grant permission and the Commissioner thinks that in doing so, he has committed an error, that would be a case where the District Magistrate has wrongly refused to act, and that would give the,Commissioner jurisdiction to exercise his revisional power. It is significant that the revisional application can be made to the Commissioner only against orders passed by the District Magistrate granting or refusing to grant such permission. It is, we think, fallacious to assume that a party can move the Commissioner under section 3(3) in cases where the District Magistrate just refuse to make an order on the application made by the landlord for permission to bring a suit against the tenant. If a District Magistrate just does not deal with the application and passes no, order on it, the party aggrieved may be justified in applying for an appropriate writ to the High Court or adopt some other suitable remedy in law; but a revision in such a case does not appear to be competent under section 3 (3). Besides, the illegality or the irregularity to which section 3 (3) refers need not necessarily be correlated with questions of jurisdic tion. Therefore, we are satisfied that the High Court was not justified in introducing a limitation pertaining to questions of jurisdiction in determining the scope of the width of the revisional ,visional power conferred on the Commissioner by section 3 (3). That is why it must be held that the High Court was in error in coming to the conclu 563 sion that the permission granted by the Commissioner in exercise of the powers conferred on him by section 3 k 3) is invalid in law. As we have already emphasised, the only plea which can be raised before a civil court in relation to orders passed under the relevant provisions of the Act can be a plea which, if sustained, would render the order wholly invalid and as such, a nullity. No other plea can be raised, because all other pleas are barred by sections 3 (4) and 16 of the Act. In this connection, we may incidentally point out that by a subsequent amendment of section 3(3), the Legislature has made it clear that its intention is to confer wide jurisdiction on the Commissioner. The amendment in question has been introduced by Act 17 of 1954. The amended provision reads thus : " 'The Commissioner shall hear the application made under sub section (2), as far as may be, within six weeks from the date of making it, and he may, if he is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate or as to the regularity of proceedings held before him, alter or reverse his order, or make such other order as may be just and proper". There is no doubt that under this amended provision, the Commissioner can deal not only with the legality, but also with the correctness and propriety of the order passed by the District Magistrate. In our opinion, the position about the Comissioner 's powers was not different even under the unamended provision. It may also be relevant to point out that the power conferred on the State Government at all material times by section 7 F was very wide. As we have already indicated, in exercise of its powers under section 7 F, the State Government can pass such orders as appear to it to be necessary in the ends of justice. Therefore, there is no doubt that the relevant provisions of the Act did not intend, even prior to the amendment of 1954, to limit the jurisdiction of the Commissioner only to cases where irregularity or illegality bad been committed by the District Magistrate in granting or refusing, to grant permission. The result is, the appeal is allowed, the order passed by the High Court in the Letters Patent Appeal is set aside, and that of the District Court restored with costs throughout. Appeal allowed.

IN-Abs

The appellants sued the respondents their tenants for ejectment from their shop. They had applied to the District Magistrate for the requisite permission to institute the suit under section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act. When the permission was refused they moved the Commissioner in his revisional jurisdiction under section 3(2) of the Act and the Commissioner gave the permission. The Munsif decreed the suit. This was confirmed in appeal by the District Judge. The High Court, on appeals, upheld the respondents contention that the permission granted by the Commissioner under section 3 (3) of the Act, was invalid in law, and so concluded that the appellants ' suit was incompetent. In this Court the appellants contended (i) sections 3(4) and 16 of the Act totally excludes the jurisdiction of civil courts in relation to the question as to whether permission has been properly or validly granted or refused by the appropriate authority exercising their powers under the relevant provisions of the Act, and (ii) the decision of the High Court that the permission granted by the Commissioner was invalid in law was inconsistent with the true scope and effect of the provisions prescribed by section 3(3) of the Act. HELD:(i) Section 3 (4) and 16 of the Act create a bar against pleas which challenge the correctness or propriety of the orders in question. [558 G] The two tests, which are often considered relevant in dealing with the question about the exclusion of civil courts ' jurisdiction are (a) whether the special statute which excludes such jurisdiction has used clear and unambi guous words indicating that intention; and (b) does that statute provide for an adequate and satisfactory alternative remedy to a party that may be aggrieved by the relevant order under its material provisions. Applying these tests the inference is inescapable that the jurisdiction of the civil courts is intended to be excluded. [558 D G] This conclusion, however, does not necessarily mean that the plea against the validity of order passed by. the District Magistrate, or the Commissioner, or the State can never be raised in a civil court. The bar excluding the jurisdiction of civil courts cannot operate in cases where the plea raised before the civil court goes to the root of the matter and would, if upheld, lead to the conclusion that the impugned order is a nullity. [558 G H] (ii)The High Court was not justified, in introducing a limitation pertaining to questions of jurisdiction in determining the scopeof the width of the revisional power conferred on the Commissionerby section 3 (3). There are three categories of cases in which the commissioner 'can interfere with the order passed by the District Magistrate :(a) if the District Magistrate has acted illegally; (b) if he has acted with material irregularity and(c) if he has wrongly refused to act. This last ground is wide enough 5 54 to empower the Commissioner to correct the error committed by District Magistrate in making an order brought before it; clearly if the District Magistrate refused to grant permission and the Commissioner thinks that in doing so, he has committed an error, that would be a case where the District Magistrate "has wrongly refused to act" and that would give the Commissioner jurisdiction to exercise his revisional powers. [562 C E, H]

Appeals Nos. 589 to 590 of 1964. Appeal by special leave from the judgment and order dated October 12, 13, 1961 of the Bombay High Court in Income tax Reference No. 56 of 1956. K. N. Rajagopal Sastri, J. B. Dadachanji, for the appellants. A. V. Viswanatha Sastri, R. Ganapathy Iyer, R. H. Dhebar and R. N. Sachthey, for the respondent. The appellant held 1000 shares in an investment company styled Home Mehta and Sons Ltd. (hereinafter called 'the Company ') which carried on the business of investing in shares in companies registered in British India and in the former Indian States. Dividends from the British Indian companies were received by the Company at its registered office at Bombay, and dividends from the Indian States ' companies were received by the Company at its registered office at Billimora in the State of Baroda. In the calendar years 1948 and 1949 the appellant received at Billimora Rs. 65,000 and Rs. 2,10,000 respectively as dividend in respect of shares held by it in the Company. The 2nd Income tax Officer, A I Ward, Bombay, upheld the claim of the appellant that its dividend income received from the Company 581 at Billimora had accrued or arisen in the Baroda State and as the income was not brought into British India, it was exempt from liability to tax by virtue of section 14(2)(c) of the Income tax Act. The Commissioner of Income tax, Bombay held that the income accrued or arose to the appellant in Bombay where the dividend was declared, and was on that account liable to be assessed under the Income tax Act, 1922. The Commissioner accordingly directed the Income tax Officer to pass orders imposing tax on the dividend income received by the appellant from the Company. On appeal, the Income tax Appellate Tribunal held that the dividend income accrued or arose at Billimora and not at Bombay, but by reason of the definition of "taxable territories" the income which accrued at Baroda attracted liability to tax under the Income tax Act and did not qualify for rebate under paragraph 6 of the Merged States (Taxation Concessions) Order, 1949. The following questions were referred by the Tribunal under section 66(1) of the Indian Income tax Act, 1922, to the High Court: of Bombay for its opinion "(1) Whether on the above facts and circumstances of the case the assessee is entitled to rebate equal to the difference between the British Indian rate and Baroda State rate in respect of the dividend income ? (2) Whether on the facts and circumstances of the case the dividend income accrued or arose to the assessee at Bombay ?" The High Court held, following its earlier judgment in Mrs., Kusumben D. Mahadevia, Bombay vs The Commissioner of Income tax, Bombay City, Bombay(1) that the Merged States (Taxation Concessions) order, 1949 did not apply to the income of a resident assessee and therefore the first question must be answered in the negative. The High Court declined to answer the second question. With special leave granted by this Court, the appellant has appealed to this Court. Income received by the Company from its transactions in the Indian States was retained at its office in Billimora and dividend ' declared out of that income was paid to the appellant at the registered office in the State of Baroda. This dividend it is common ground was not brought into British India. To appreciate the claim that the income qualifies for rebate under paragraph 6 of the Merged States (Taxation Concessions) Order, 1949, the (1) Income tax Ref. No. 28 of 1955 decided, on February 20, 1956 (unreported). p. C.I`./66 7 5 82 relevant statutory developments in tax laws to effectuate the merger of the former Indian States since August 15, 1947 may be briefly set out. Under section 14(2) (r.) of the Income tax Act, added by Act 23 of 1941 and amended by Act 22 of 1947, it was enacted that : "The tax shall not be payable by an assessee . in respect of any income, profits or gains accruing or arising to him within an Indian State unless such income, profits or gains are received or deemed to be received in or are brought into British India in the previous year by or on behalf of the assessee, or are assessable under section 12B or Section 42. " By paragraph 3 of the States ' Merger (Governors ' Provinces) Order, 1949, it was provided that the States specified in Sch. 11 shall, as from August 1, 1949, be administered in all respects as if they formed part of the Provinces specified in the Schedule, and by paragraph 4 all the laws in force in the merged States or in any part thereof immediately before August 1, 1949, were to continue in force until repealed, modified or amended by a competent Legislature or other competent authority. The State of Baroda was one of the States specified in the Schedule and it was to be administered as if it formed part of the Province of Bombay. The Indian Income tax Act was applied to the merged States by section 3 of the Taxation Laws (Extension to Merged States and Amendment) Act 67 of 1949 with retrospective effect from April 1, 1949, and by section 7 corresponding laws relating to income tax in the merged States were repealed. It was provided that if immediately before the 26th day of August, 1949, there was in force in any of the merged States any law relating to income tax, supertax or business profits tax, that law shall cease to have effect except for the purposes of the levy, assessment and collection of income tax and super tax in respect of any period not included in the previous year for the purposes of assessment under the Indian Income tax Act, 1922, as extended to that State by section 3, or, as the case may be, the levy, assessment and collection of business profits tax for any chargeable accounting period ending on or before the 31st day of March, 1948, and for any purposes connected with such levy, assesssment or collection. By the application of Act 67 of 1949, and the repeal of laws corresponding to those applied to the merged States by section 3, residents in former British India and in the merged States were sought to be treated equally. But the result was a sudden imposition of high rates of taxation under the Indian Income tax Act read with the appro 583 priate Finance Acts upon the residents of the merged States. With a view to cushion the impact, the Central Government in exercise of the powers conferred by section 60A of the Indian Income tax Act granted certain exemptions from and reductions in the rates of tax and made certain other modifications in the tax structure in its application to the merged States. By paragraph 3 (i) of the Merged States (Taxation Concessions) Order, 1949 the expression "Act" was defined as meaning the Taxation Laws (Extension to Merged States and Amendment) Act 67 of 1949. Paragraphs 4, 5, 6 and 6A of the Order as amended or added by the notification dated March 11, 1949, provided : 4. "The provisions of paragraphs 5, 6, 9, 10 and 11 of this Order shall apply to only so much of the income, profits and gains included in the total income of an assessee as would, had he been resident in British India have been exempt under clause (c) of subsection (2) of section 14 of the Indian Income tax Act, 1922, if the Act had not been passed." 5. "(1) The income, profits and gains of an) previous year ending after the 31st day of March, 1948, which is a previous year (i) for the merged State assessment year 1948 49, or (ii) for the merged State assessment year 1949 50,shall be assessed under the Indian Income tax Act, .1922, if, and only if, such income, profits and gains have not, before the 1st day of August, 1949, been assessed under the State law. (2) Where the income, profits and gains referred to in sub paragraph (1) have not been assessed under the State law, they shall be assessed under the Indian Income tax Act, 1922, and the tax payable thereon shall be determined as hereunder (i) the tax on the amount of such income, profits and gains included in the total income shall be computed at the Indian rate of tax; (ii) the amount of such income, profits and gains shall be commuted under the State law aid the tax thereon computed at the merged Slate rate of tax; 584 (iii) the amount, if any, by which the tax computed under clause (i) exceeds the tax computed under clause (ii) shall be allowed as rebate from the first mentioned tax, and the amount of the first mentioned tax as so reduced shall be the tax payable. (3) For the purposes of this paragraph (a) the merged State assessment year 1948 49 means the assessment year which commences on any date between the 1st April, 1948, and the 31st December, 1948, both dates inclusive; and (b) the merged State assessment year 1949 50 means the assessment year which commences on any date between the 2nd January, 1949, and the 31st July, 1949, both dates inclusive. " 6. "(1) The income, profits and gains of any previous year ending after the 31st day of March, 1948, which does not fall within paragraph 5 of this Order or of any previous year commencing after the previous year referred to in the said paragraph shall be assessed under the Indian Income tax Act, 1922, but the tax payable on so much of the income as pertains to the period ending before the 1st day of August, 1949, shall be determined as hereunder (i) the tax on so much of such income included in the total income shall be computed (a) at the Indian rate of tax and (b) at the rates of tax in force in the merged State immediately before the 1st day of August, 1949; (ii) the amount by which the tax computed under sub clause (a) of clause (i) exceeds the tax computed under sub clause (b) of clause (i) shall be allowed as rebate from the first mentioned tax, and the amount of the first mentioned tax as so reduced shall be the tax payable. (2) Where any previous year falls partly before and partly on or after the 1st day of August, 1949, the income, profits and gains pertaining to the period falling before the said date shall, unless the Income tax Officer, having regard to any special circumstances, otherwise 585 directs with the approval of the Inspecting Assistant Commissioner of Income tax, be in the proportion which the period before the said date bears to the whole previous year. " 6A. "The income, profits and gains of any previous year, referred to in paragraph 5 or 6 of this Order, which accrue or arise without the taxable territories to a person who is resident but who would not be resident in the taxable territories if the Act had not been passed, shall be charged to tax in the same manner and to the same extent as specified in the said paragraph 5 or 6, as the case may be." By the application of the Income tax Act, 1922, to the territories of the merged States, income received, accrued or arisen or deemed to be received, accrued or arisen to any person resident within the territory of the merged States became chargeable to tax under that Act. With a view to avoid hardship caused by the sudden application of high rates of taxation, the Central Government exercised its powers under section 60A of the Indian Income tax Act and modified the tax levy so as to give certain exemptions and benefits to residents in the areas of the former Indian States. By paragraph 6 of the Merged States (Taxation Concessions) Order, 1949, in respect of the income of any previous year ending with March 31, 1948 which accrued or arose to persons who were residents in the territories of the merged States, benefit of the same rate of income tax to which it was subject in the merged State was granted by providing that the difference between tax computed at the Indian rate and the State rate shall be allowed as rebate. In respect of income of residents in the merged States arising outside the taxable territories, a similar rebate was to be given (paragraph 6A). The result was that income of residents of the merged States became chargeable to tax under the Indian Income tax Act, but it was to continue to get for a limited period benefit of the lower rates of tax operative under the law in force in the States before merger. This concession or benefit was to apply by the express provisions contained in paragraph 4 only to so much of the income, profits and gains included in the total income of an assessee as would, had he been resident in the taxable territories, have been exempt under cl. (c) of sub section (2) of section 14 of the Indian Income tax Act, 1922, if the Act had not been passed. Counsel for the appellants claims that paragraph 4 applies to income of all assessees resident within British India as defined 586 in section 2(3A) at the relevant time, and not merely to residents in the territories of the merged States. It is contended that by paragraph 4 it was intended not only to give the benefit of the State rate of taxation to residents of the former Indian States which were merged with the Provinces under the States Merger (Governors ' Provinces) Order, 1949, but also to preserve the benefit which was conferred by section 14(2) (c) of the Income tax Act to residents of the territories of British India before August 15, 1.947 in respect of income arising or accruing to them within the teffitory of the merged States. It is said that by the application of Act 67 of 1949 all residents in the taxable territory became liable to pay tax at Indian rates, but with a view to maintain the status quo ante, it was intended by the Taxation Concessions Order, 1949 to restore the State rates of taxation to residents in the former Indian States, and also to continue the exemption in respect of the income of the former British Indian residents arising or accruing in the territory of the merged States within the limits prescribed by section 14(2) (c). But paragraph 4 of the Taxation Concessions Order, 1949, is not susceptible of any such interpretation. Paragraph 4 of the Order, and sections 3, 4, 4A, 4B and section 14(2) (c) of the Income tax Act must be read together. The Indian States specified in the Schedule to the States Merger Order on their merger with the Provinces of British India ceased to be separate entitles and became part of British India, and by the application of Act 67 of 1949 the Indian Income tax Act was applied to the territories comprised within British India. Section 14(2)(c) undoubtedly remained in force even after the merger of the Indian States effected by the States Merger Order, but its operation was restricted. After the merger of the States, income arising or accruing within the territory of such merged State, could not be deemed to be income arising or accruing within an Indian State, for the State had ceased to exist, and the income was for the purpose of section 4 of the Income tax Act income arising or accruing to a person resident within the taxable territories. There is nothing in paragraph 4 of the Concessions Order which seeks to grant exemption from liability to tax in respect of income which prior to merger of the States was not liable to tax by virtue of section 14 (2) (c), but has since the application of the Income tax Act become so liable. The claim that paragraph 4 applies to income of residents of former British India which was exempt from taxation under section 14(2) (c) is belied by the plain words of the Order. Para graph 4 does not substantively grant any exemption : it merely designates income to which the provisions of the Order granting 587 exemption will apply. It applies to income which would, if Act 67 of 1949 had not been passed, have been regarded as accruing or arising in an Indian State, and the assessee would in respect of that income had he been a resident of the taxable territory before merger, have been exempt under section 14(2) (c). The use of the expression "had he been a resident ' implies that the benefit is not to enure to persons who were before the merger entitled to the exemption under section 14(2) (c). The Order provides that paragraphs 5, 6, 9, 10 and 11 apply to a slice of income and not to the entire income of an assessee, and by the express terms, it is that slice of the income, as would, had the assessee been resident in the taxable territories, have been exempt under cl. (c) of sub section (2) of section 14 of the Indian Incometax Act, if the Taxation Laws Act, 1949, had not been passed. In terms the concession is not given to residents of the territories of British India, and the context does not warrant an implication to the contrary. It is true that by this interpretation of paragraph 4, British Indian residents are denied the benefit of the exemption under section 14(2) (c) in respect of income arising or accruing in the territories of the former merged States. But that denial is the result of merger of the States into British India. The operation of section 14 (2) (c) had become restricted by the modification of the definition of British India. Since that amendment, income accruing or arising after the merger in Indian States outside British India alone would be exempt under section 14 (2) (c) There is nothing in the Concessions Order which suggests that it was intended to ensure continuance of the exemption under section 14(2) (c) to residents of British India as it was before merger, as if the merger had not taken place. The use of the expression "had he been resident in the taxable territories" introduces a fiction : it grants the benefit of section 14(2) (c), though on the express terms it is not available, to a person who was not before the merger covered thereby, and in respect of income which would have been, if the Merger Act had not been passed, exempt from taxation in his hands, if he had been resident in British India. In our view, Chagla, C.J., was right in observing in Mrs. Kusumben D. Mahadevia 's case(1) that : "A person resident in a Merged State, whose income accrued to him there, could not possibly claim exemption under Section 14 (2) (c). Such an exemption could "only be claimed by a person resident in the taxable territories. In order to give this particular (1) Income tex Ref. No. 28 of 1955 decided on February 20, 1956 (unreported). 588 concession to a resident in a merged State this paragraph was enacted, and the particular language which we find in this paragraph was used. " In the view we have taken on the first question, it is unnecessary to record an answer on the second question. The appeals therefore fail and are dismissed with costs. Appeals dismissed.

IN-Abs

By the Taxation Laws (Extension to Merged States and Amendment) Act of 1949 the Income tax Act. 1922 was applied to the territories of the former Indian States which were merged with the former British Indian Provinces under the States Merger (Governors ' Provinces) Order. By such application, the income received, accrued or arisen or deemed to be received, accrued or arisen to any person resident within the territory of the merged State became chargeable to income tax. With a view to avoid hardship to residents of former Indian States, caused by the sudden application of the high rates of taxation, the Central Government issued the Merged States (Taxation Concessions) Order of 1949 under a. 60A of the Income tax Act. Under Paragraphs 6 and 6A of Us Order income of residents of the merged States became charageable to tax under the Indian Income tax Act, but the income of any previous year ending after 31st March 1948 was to continue to get for a limited Period the benefit of lower rates of tax operative under the law in force in the States before merger. This concession was to apply, under paragraph 4 of the Order, only to so much of the income, profits and gains included in the total income of an assessee as would, had he been resident in the taxable territories, have been exempt under section 14(2)(c) of the Income tax Act if the Taxation Laws Extension Act had not bee passed, that is, in respect of income arising or accuring to him :within territory of the merged State. In the Calendar years 1948 and 1949, the assessee, who was resident and ordinarily resident within British India in 1948, received certaining as dividend in the State of Baroda which was one of the merged States. The Income tax Officer upheld its claim that the dividend income had accrued or arisen in the Baroda State and as the income was not brought into British India, it was exempt from liablility to tax under section 14(2)(c) of the Income tax Act. The Appellate Tribunal held that the dividend income arose in Baroda State, but by reason of the definition of "taxable territories" in section 2(14A) of the Income tax Act, the income attracted liability to tax and did not qualify for the rebate equal to the difference between the British Indian rate and the Baroda State rate in respect of the dividend income, under paragraph 6 of the Taxation Concessions Order. The High Court also, on a reference, held that the assessee was not entitled to the rebate. In appeal to this Court, the assessee contended that by the application of the Taxation Laws Extension Act, all residents in the taxable territory become liable to pay tax at the Indian rates, but with a view to maintain the status quo ante, it was intended by the Taxation Concessions Order, to restore the State rates of taxation to residents in the former Indian States, and also to continue the exemption in respect of the income of the former British India residents, arising or accruing 5 80 in the territory of the merged States within the limits prescribed by section 14(2) (c). HELD : in terms the concession is not given to residents of the territories of British India, and the context does not warrant an implication to the contrary. [587 C D] There is nothing in paragraph 4 of the Concessions Order which seeks to grant exemption from liability to tax in respect of income which prior to merger of the States was not liable to tax by virtue of section 14(2) (c), but has, since the application of the Income tax Act, become so liable. The paragraph applies to income. which would, if the Taxation Laws Extension Act had not been passed, have been regarded as accuring or arising in an Indian State, and the assessee would in respect of that income, had he been a resident of the taxable territory before merger, have been exempt under section 14(2)(c). It is true that by this interpretation of paragraph 4 British Indian residents are denied the benefit of the exemption under section 14(2)(c) in respect of income arising or accruing in the territories of the merged State. But the use of the expression "had he been resident in the taxable territories" implies that the benefit is not to tenure to persons who were before the merger entitled to the exemption under section 14(2)(c). [587 A B, D]

Civil Appeal No. 535 of 1964. Appeal by special leave from the judgment and order dated July 25, 1961 of the Allahabad High Court in Sales Tax Reference No. 460 of 1954. A. V. Viswanatha Sastri and K. K. Jain for appellant. C. B. Agarwala and 0. P. Rana, for respondent. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Judicature at Allahabad passed 608 in a reference made to it under section II of the U.P. Sales Tax Act, 1948 (U.P. Act XV of 1948) hereinafter referred to as the Act. In this reference the following question was referred by the Judge (Revision), Sales Tax at the instance of the appellant,Modi Sugar Mills Ltd., hereinafter called the assessee: "Whether a dealer who has been assessed to tax on the turnover of the previous year according to his election can change his option and elect the assessment year by filing quarterly returns without the previous sanction of Sales Tax Commissioner The High Court answered the question in the negative. The answer to this question depends upon the interpretation of section 7(1) of the Act, and rr. 39, 40 and 41 of the U.P. Sales Tax Rules, and form IV prescribed under these rules. These provisions are as under: "section 7 (1). Subject to the provisions of section 18, every dealer whose turnover in the previous year is Rs. 12,000 or more in a year shall submit such return or returns of his turnover of the previous year within sixty days of the commencement of the assessment year in such form and verified in such manner as may be prescribed : Provided that the Provincial Government may prescribe that any dealer or class of dealers may submit, in lieu of the return or returns specified in this section, a return or returns of his turnover of the assessment year at such intervals, in such form and verified in such manner as may be prescribed, and thereupon all the provisions of this Act shall apply as if such return or returns had been duly submitted under this Section. Provided further that the assessing authority may in his discretion extend the date of the submission of the return by any person or class of persons. Rule 39 : Election of Assesment year. (1) Any dealer may elect to submit returns of his turnover of the assessment year in lieu of the returns of the turnover of the previous year, and shall signify such election in the return filed by him in Form IV. 609 Provided that a dealer who did not carry on business during the whole of the previous year shall elect to submit his returns of the assessment year. (2) A dealer who has once signified his election under sub rule (1) shall not again exercise his option so as to vary the basis of assessment Provided that the Sales Tax Commissioner may, for reasons to be recorded in writing and on such conditions as he deems fit permit a dealer to exercise a fresh option. Rule 40. Submission of returns Every dealer who elects to submit return of his previous year shall, within sixty days of the commencement of the assessment year, submit to the Sales Tax Officer a return in Form IV showing his turnover for the previous year Provided that no dealer whose turnover in the previous year was less than Rs. 15,000 shall be required to furnish such returns. Rule 41. Returns of assessment year. (1) Every dealer whose estimated turnover during the assessment year is not less than Rs. 15,000 and who elects to submit returns of such year shall before the last day of July, October, January and April submit to the Sales Tax Officer, a return of his gross turnover for the quarters ending June 30, September 30, December 31 and March 31, respectively, in Form IV Provided that every dealer or firm, to whom the pro visions of sub section (3) of Section 18 are applicable shall submit such returns within seven days of the expiry of each month during the year in which the business is commenced. " Before we deal with the interpretation of the section and the rules it is necessary to give a few relevant facts. It appears that for the assessment year 1948 49, 1949 50 and 1950 51, the assessee was assessed on the basis of returns filled for the turnover of the previous year relev ant to each of these assessment years. For the assessment year 1951 52, however, the assessee purporting to make an election under r. 39 of the rules filed returns of his turnover of the assessment year instead of the returns of the turn 610 over of the previous year. The Judge (Revision) held that without sanction of the Sales Tax Commissioner the assessee was not entitled to do so. Mr. Sastri, the learned counsel for the assessee, submits that the above rules should be interpreted as follows : Under sub rule (1) of r. 39 the election is to Me returns of the turnover of the assessment year instead of returns of the turnover of the previous year and not vice versa. Sub rule (2) also deals with the same election, i.e., the election to file returns of the turnover of the assessment year instead of the turnover of the previous year. Rule 40 does not displace the above reading of r. 39 because it covers the case of every dealer who wishes to submit a return of the turnover of the previous year. There is no other rule which deals with such a dealer, and he says that the word 'elects ' may perhaps have reference to the election mentioned in form IV which we will presently consider. At any rate, he says that sub r. (2) of r. 39 has nothing to do with the election mentioned in r. 40. He then submits that r. 41 is concerned with the dealer who has elected under r. 39(1) to submit returns of the turnover of the assessment year and this rule provides various matters in this connection. The learned counsel for the State, Mr. C. B. aggarwala, on the other hand, contends that section 7 of the Act, read with the rules, gives a dealer an option to file returns in respect of the turnover of the previous year or returns of the turnover of the assessment year, and he says that this option is and can only be exercised in the first year when a dealer becomes taxable under the Act, and it is this option or election that is covered by sub rule (2) of r. 39. He relies strongly on form IV in which the following lines occur "I have elected to submit return of my turnover of the previous year ending/month or months of the assessment year". In the alternative he contends that even if r. 3 9 (2) does not cover the filing of the returns of the previous year, according to general principles the assessee having exercised an option to be assessed in respect of the turnover of the previous year cannot now change the basis of assessment. In our opinion the Judge (Revision) was in error in holding that the assessee was not entitled to make an election under r. 39 (1) without the sanction of the Sales Tax Commissioner, and the answer to the question referred to the High Court should be in favour of the assessee. Rule 39(2) specifically mentions an elec 611 tion under sub r. (1) and there is only one kind of election under r. 39(1) and that is for a dealer to elect to submit returns of his, turnover for the assessment year in lieu of the returns of the turnover of the previous year. In other words, under r. 39(1) the, dealer makes a choice that he will be assessed in respect of the turnover not of the previous year, which is normally the rule under section 7, but in respect of the return of the turnover of the assessment year. It seems to us that r. 39(2) covers only the case where: election has been made by a dealer to be assessed in respect of the turnover of the assessment year. It is true that r. 40 also uses the word 'elects ' but this may have reference to the lines in form IV which we have already reproduced above. But assuming that when a dealer submits a return in respect of the previous year under r. 40 and he is treated to have elected within r. 40, yet there is no provision like r. 39(2) which debars him from exercising the option under r. 39(1). In our opinion an express provision like r. 39(2) was necessary to prevent a dealer from exercising the option given to him under r. 39(1). We do not express any opinion whether such a rule could validly be made under section 7 (1). We are not impressed by the argument of Mr. Aggarwal that general principles debar the assessee from exercising the option under r. 39 (1). It is a statutory right given to the assessee and the general principles, if applicable, cannot displace the statutory right. We may mention that the reasoning in the judgment under appeal has been doubted in an unreported judgment of the Allahabad High Court in M/s Mahesh Company Kahoo Kothi Kanpur vs The Commissioner of Sales Tax, Uttar Pradesh(1). In the result we accept the appeal, and answer the question.referred to the High Court in the affirmative. The appellant will have his costs here and in the High Court.

IN-Abs

For the assessment years 1948 49, 1949 50 and 1950 51, the appellant was assessed on the basis of returns filed for the turnover of each relevant previous year. For the assessment year 1951 52, the appellant, purporting to make an election under r. 39(1) of the U.P. Sales Tax Rules, filed returns of his turnover of the assessment year instead of the previous year. The Judge (Revision) Sales Tax held that without the sanction of the Sales Tax Commissioner under r. 39(2), the appellant was not entitled to do so, and the High Court also, on a reference, held against the appellant. In appeal to this Court, HELD : The answer of the High Court should have been in favour of the appellant. [610 HI Under r. 39(1), the dealer makes a choice that he will be assessed in respect of the turnover not of the previous year, which is the normal position under section 7, but in respect of the turnover of the assessment year. Rule 39(2), requiring the sanction of the Sales Tax Commissioner covers only the, case where such election has been made under r. 39(1), that is, where the election has been made by a dealer to be assessed in respect of the turnover of the assessment year, and the dealer wishes to exercise a fresh option. Even assuming that, when a dealer submits a return in respect of the previous year under r. 40 be is treated to have elected within that rule, yet, there is no provision like r. 39 (2) which debars him from exercising the option under r. 39(1). In the absence of an express provision like r. 39(2), general principles cannot debar an assessee from exercising a statutory right given to him. [611 A E]

No. 95 of 1965. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. R. K. Garg, M. K. Ramamurthi, section C. Agarwal and D. P. Singh, for the petitioner. G. section Kasliwal, Advocate General, Rajasthan and R. N. Sachthey, for respondent No. 2. 574 The Judgment of the Court was delivered by Ramaswami, J. In this case the petitioner Durgadas Shirali has obtained a rule calling upon the respondents to show cause why a writ of habeas corpus should not be issued under article 32 of the Constitution directing his release from detention under an order passed by the District Magistrate of Bhilwara, Rajasthan under Rule 30(1) (b) of the Defence of India Rules. Cause has be= shown by the Advocate General of Rajasthan on behalf of the respondents to whom notice of the rule was ordered to be given. The petitioner was arrested on January 2, 1965 at Jaipur in Pursuance of an order dated December 29, 1964 made by res Pondent No. 3, Shri Narayan Das Mehta, District Magistrate of Bhilwara which states as follows : "It is reliably brought to my notice that the Leftist wing of the Communist Party has been carrying on antinational and pro Chinese propaganda and are preparing to act as Pekings member. The party having been formed at Peking 's behest are preparing for widespread agitation with the object of establishing communist regime by subversion and violence. 1, therefore, come to the irresistible conclusion that the Leftist Communist Party constitutes a real danger to external and internal security of the country and that it has become necessary to take immediate action. I am also satisfied from the report that Shri Durgadas Shirali of Bhilwara is the Secretary of the Leftist Wing of the Communist Party and he is likely to act in manner which is prejudicial to the Defence of India and Civil Defence, India 's relations with Foreign powers, public safety and the maintenance of the public order. I, Narayan Das Mehta, District Magistrate, Bhilwara in exercise of the powers delegated to me under rule 30(1) clause (b) of the Defence of India Rules 1962 vide Government of Rajasthan Notification No.1 F. 7/1(16)Home(A.Cr. 1)63 dated the 4th November, 1963 and all other powers enabling in that behalf direct the Superintendent of Police, Bhilwara that Shri Durga Das Shirali be arrested and detained in the Bhilwara Jail until further orders. " On January 13, 1965 the orders of the District Magistrate was reviewed by the Reviewing Authority who recommended that 575 the detention order dated December 29, 1964 should be confirmed. The State Government confirmed the detention order by its order No. F7/1(19)Home(A Cr. (I)/65 dated January 22, 1965. On behalf of the petitioner it was contended by Mr. Garg that the District Magistrate had not applied his mind to the specific activities of the petitioner and there was complete absence of material before the District Magistrate to suggest that the conduct of the petitioner would be "prejudicial to the Defence of India and Civil Defence, India 's relations with foreign powers, public safety and the maintenance of the public order". It was, therefore, submitted on behalf of the appellant that the order of detention made by the District Magistrate was mala fide and illegal. Mr. Garg submitted, in the second place, that one of the grounds mentioned in the order of detention was that the petitioner was a member of the Leftist Wing of the Communist Party of India and Secretary of the local branch of that party at Bhilwara. The Leftist Communist Party has been carrying on antinational and pro Chinese propaganda and the District Magistrate was of the opinion that the Leftist Communist Party, therefore, constituted a real danger to external and internal security of the country. It was submitted by Mr. Garg that the Leftist wing of the Communist Party had not been declared illegal or banned by the Government of India and the membership of the petitioner of the Leftist Communist Party of India was, therefore, not a relevant ground for the order of detention. Before proceeding to deal with these points raised on behalf of the petitioner it is necessary to state that in Makhan Singh Tarsikka vs The State of Punjab(1) this Court had occasion to consider the legal effect of the proclamation of Emergency issued by the President on October 26, 1962 and two orders of the President one dated November 3, 1962 and the other dated November 11, 1962 issued in exercise of the powers conferred by cl. (1) of article 359 of the Constitution. It was held by this Court that the sweep of article 359(1) and the Presidential Order issued under it is wide enough to include all claims made by citizens in any Court of competent jurisdiction when it is shown that the said claims cannot be effectively adjudicated upon without examining the question as to whether the citizen is, in substance, seeking to enforce fundamental rights under articles 14, 19, 21 and 22. It was pointed out that during the pendency of the Presiden tial Order the validity of the Ordinance or any rule or order made thereunder cannot be questioned on the ground that it contravenes (1)[1964] 4S.C.R. 797 576 articles 14, 21 and 22. But this limitation cannot preclude a citizen from challenging the validity of,the, Ordinance or any rule or order made thereunder on any other ground. If the petitioner seeks to challenge the validity of the Ordinance, rule or order made thereunder on any ground other than the contravention of articles 14, 21 and 22, the Presidential Order cannot come into operation. It is not also open to challenge the Ordinance rule or order made thereunder on the ground of contravention of article 19, because as soon as a Proclamation of Emergency is issued by the President under article 358 the provisions of article 119 are automatically suspended. But a petitioner can challenge the validity of the Ordinance, rule or order made thereunder on a ground other than those covered by article 358, or the Presidential Order issued under article 359(1). Such a challenge is outside the purview of the Presidential Order. For instance, a citizen will not be deprived of his right to move an appropriate Court for a writ of habeas corpus on the ground that his detention has been ordered mala fide. Similarly, it will be open to the citizen to challenge the order of detention on the ground that any of the grounds given in the order of detention is irrelevant and there is no real and proximate connection between the ground given and the object which the legislature has in view. It is contended, in the first place, on behalf of the petitioner, that the order of detention is bad because the District Magistrate had not applied his mind to the specific activities of the petitioner. It was pointed out that in the order of detention the District Magistrate has mainly dealt with the activities of the Leftist Wing of the Communist Party of India which was carrying on antinational and pro Chinese propaganda. The District Magistrate proceeds to say that the party was formed at Peking 's behest and was preparing for widespread agitation with the object of establishing communist regime by subversion and violence. The District Magistrate, therefore, reached the conclusion that the Leftist Wing of the Communist Party constituted a real danger to external and internal security of the country. So far as the petitioner is concerned, the District Magistrate has described him as Secretary of the Leftist Wing of the Communist Party and has proceeded to state that he was satisfied that the petitioner was likely to act in a manner which was prejudicial to the Defence of India and Civil Defence, India 's relations with foreign powers, public safety and the maintenance of the public order. In reply to the petition of the detenu the District Magistrate`, Bhilwara has filed an affidavit in this Court. In paragraph 3 of the a davit the District Magistrate has stated that he was satisfied from the 577 reports that the petitioner was carrying on anti national and pro Chinese propaganda as a member of the Leftist Wing of the Communist Party. In paragraph 5 the District Magistrate has stated that he passed the order of detention after satisfying himself on the reports that the petitioner was the Secretary of the Leftist Wing of the Communist Party of India, Bhilwara branch and that he was likely to act in a manner prejudicial to Defence of India and Civil Defence, India 's relations with foreign powers, public safety and the maintenance of public order. In view of the affidavit of the District Magistrate it is not possible for us to accept the argument of Mr. Garg that the District Magistrate did not apply his mind to the specific activities of the petitioner and that he made the order of detention solely on the ground that the Leftist wing of the Communist Party of India was carrying on anti national and pro Chinese propaganda. It was next argued on behalf of the petitioner that the Leftist wing of the Communist Party of India has not been declared illegal by the Government of India and the party has not been banned. It was submitted, therefore, that membership of that party was not per se illegal and the order of detention of the petitioner cannot be legally based upon this ground. In other words, it was submitted by Mr. Garg that the ground. that the petitioner was the Secretary of the Leftist Wing of the Communist Party of India was irrelevant for the purpose of Rule 30 of the Defence of India Rules. The argument was put forward that if this ground was irrelevant for the purpose of the Rule or was wholly illusory, the order of detention as a whole was vitiated and must be quashed by grant of a writ of habeas corpus. In support of his argument Mr. Garg referred to the decision of this. Court in Shibban Lal Saksena vs The State of Uttar Pradesh(, ). We are unable to accept the argument of Mr. Garg as correct. It is not correct to state that the activities of the Leftist wing of the Communist Party cannot in any circumstances be illegal and would necessarily be irrelevant merely because the Government of India has not declared the party illegal or imposed a ban. In considering the question whether the petitioner was acting in a manner prejudicial to the defence of India within the meaning of Rule 30 of the Defence of India Rules it is open to the District Magistrate to take into account the reports which he had received as to the political association of the petitioner, his political friends and his political loyalties. In considering the circumstance that the petitioner was a member of the Leftist wing of the Communist (1) ; 578 Party of India which, according to the said reports, was preparing for a widespread agitation with the object of establishing communist regime by subversion and violence the District Magistrate was not applying his mind to any irrelevant circumstance with regard to the need for detention of the petitioner under the Defence, of India Rules. In our opinion, in the light of the reports received by the District Magistrate the political association of the petitioner and his membership of a particular political group is a relevant consideration in the matter of detention of the petitioner. This ground has close and proximate connection with the security of State and maintenance of public order as contemplated by Rule 30 of the Defence of India Rules. In our opinion,Mr. Garg is unable to make good his submission on this aspect of the case. For these reasons we hold that the petitioner has not made .out a case for the grant of a writ under article 32 of the Constitution. The Writ Petition fails and is accordingly dismissed. Petition dismissed.

IN-Abs

The petitioner was detained under rule 30 of the Defence of India Rules 1962, by an order of the District Magistrate and the necessary formalities were gone through. He filed a petition under article 32 and contended : (1) The order of the District Magistrate was mala fide as he had not applied his mind to tile specific activities of the petitioner and there was complete absence of material before him to suggest that the conduct of the petitioner would be prejudicial to the defence of India etc. (2) One of the grounds of detention mentioned in the order was that the petitioner was a member of the Leftist Communist Party of India and Secretary of one of its branches. This consideration was not relevant as the said party had not been declared illegal or banned by the Government. HELD : (i) It was open to the petitioner to challenge his detention on the ground of mala fide or on the ground that all or any of the grounds mentioned in the order of detention were irrelevant. Such pleas were not covered by article 358 and were outside the purview of the Presidential Orders under article 359(1). [576 D] Makhan Singh Tarsikka vs State of Punjab, referred to. (ii) Taking into account the affidavit filed by the District Magistrate it could not be said that he did not apply his mind to the specific activities of the petitioner or that there was no material before him to justify the order. [577 C] (iii) It was not correct to State that the activities of the Leftist wing of the Communist Party cannot in any circumstances be illegal and would necessarily be irrelevant merely because the Government of India has not declared the Party illegal or imposed a ban. In the light of the reports received by the District Magistrate the political association of the petitioner and his membership of a particular political group was a relevant consideration in the matter of detention of the petitioner. This ground had close and proximate connection with the security of State and maintenance of public order as contemplated by rule 30 of the Defence of India Rules. [578 A C]

N: Civil Appeals Nos. 10061011 of 1963. Appeal from the judgment and order dated September 25, 1959 of the Bombay High Court in Income tax Reference No. 36 of 1955. G. section Pathak, B. Dutta, R. J. Kolah and J. B. Dadachanji, for the appellant. Niren De, Addl. Solicitor General, Gopal Singh and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Bachawat, J. These appeals arise out of proceedings for assessment of income tax of the appellant Company (hereinafter referred to as the assessee) for the assessment years, 1943 44, 1944 45, 1945 46, 1946 47, 1947 48 and 1948 49, the relevant 653 accounting years being the Calendar years, 1942, 1943, 1944, 1945, 1946 and 1947 respectively. During the relevant accounting years, the assessee was a nonresident. It carried on the business of manufacturing textile goods at Indore then situated in an Indian State, and had offices at Indore and Bombay. The assessee supplied goods to the Indian Stores Department, Government of India, under purchase orders placed by the latter with the assessee at Indore. Duplicate copies of the purchase orders signed on behalf of the assessee at Indore used to be sent to the Government of India in British India. The goods used to be inspected at Indore by an inspecting officer of the Government and the inspection certificates were issued at Indore. One of the conditions of the contract was that the delivery would be F.O.R., Indore, and the freight from Indore would be borne by the Government of India. The goods used to be despatched by railway from Indore station and the railway receipts used to be made out in the name of a representative of the Government. There were two types of purchase orders, namely, (1) purchasewar order and (2) bulk purchase order. Clause 9 of the bulk purchase order was in these terms "9. Payment : Unless otherwise agreed between the parties, payment for the delivery of the stores will be made on submission of bills in the prescribed form in accordance with the instructions given in the Acceptance of Tender by cheque on a Government Treasury in British India or on a branch in British India of the Reserve Bank of India or the Imperial Bank of India transacting Government business. " From the judgment of K. T. Desai, J. it appears that in the High Court both parties agreed that the aforesaid cl. 0 was one of the terms on which all the goods were supplied by the assessee. In paragraph 2 of the petition for leave to appeal to this Court and, paragraph 3 of the appellant 's statement of case also, the assessee stated that the contracts between the parties were subject to the aforesaid cl. 9. The prescribed form of the bill (Form No. WSB. 116) which the assessee was required to submit to the Goverment of India, Department of Supply, contained inter alia, the following receipt clause Received payment one anna Please pay by cheque receipt stamp on to Self on Bank original only Bank Treasury Contractor 's at. . . . . signature Contractor 's signature. " 654 Instructions Nos. 13 and 14 with regard to payment were as follows : "13. If payment is desired to be made to the Con tractor 's Bankers or other parties, the endorsement must be completed on the Bill Form (W.S.B. Form No. 116) and signed separately and the word 'Self ' scored out; in addition, a power of attorney will be necessary in such cases, except when payment is desired to a Bank mentioned in the second schedule to the Reserve Bank Act. Payment in all cases will be made to the Contractors by the Accounts Officer named in the Acceptance of Tender by means of crossed cheques, unless a specific request is made to the contrary for the issue of an open cheque on the bill. " The assessee used to make out bills in the prescribed form. The receipt clause in the completed bill used to be in the following terms : "Please pay by cheque to self on a bank at Indore." The receipt clause in the bill used to be signed in advance on behalf of the assessee on a one anna stamp. The bills with the signed receipts of the assessee then used to be sent to the Controller of Supplies, New Delhi after the latter was debited with the amounts of the bills in the books of the assessee. On receipt of the bills, the Government of India used to draw cheques on the Reserve Bank of India, Bombay in favour of the assessee and used to send them by post to the assessee at Indore. On receipt of the cheques, the assessee used to credit the Controller of Sup plies in its books with the amount of the cheques, and then used to deposit the cheques in their account with the Imperial Bank of India, Indore, and thereupon, the Bank used to credit the assessee in the aforesaid account with the amount of the cheques. The question is whether on these facts the profits of the assessee, a non resident, in respect of the supplies were received by the assessee in British India and, therefore, taxable under section 4(1) (a) of the Indian Income tax Act, 1922. Before the Appellate Tribunal and at all stages of the assessment proceedings, the contention of the revenue authorities wag that the profits were received at Bombay where the. cheques on the Reserve Bank of India, Bombay were encashed. By its order dated March 13, 1953, the Appellate Tribunal negatived this contention, and held that the amounts of the cheques were received by it at Indore. On the application of the Commissioner of Income tax, Central 655 Bombay under section 66(1) of the Indian Income tax Act, 1922, the Tribunal by its order dated March 4, 1955 referred the following question of law to the Bombay High Court: "Whether the assessee Company is liable to pay tax in the taxable territories on the ground that the sale proceeds, which included the profit element therein, were received in the taxable territories ?" In its order dated March 4, 1955, the Tribunal referred to the decision of this Court in Commissioner of Income tax vs Kirloskar Bros. Ltd.(1) decided on April 19, 1954, and stated that on the facts of the case, a contention might arise that the assessee had requested the Government to send the cheque by post and the post office as the agent of the assessee, had received the cheques in British India, but the Tribunal pointed out that this contention had not been raised before it. The reference under section 66(1) was heard by a Division Bench of the Bombay High Court consisting of J. C. Shah and section T. Desai, JJ. J. C. Shah, J. answered the question referred to the High Court in the affirmative, whereas section T. Desai, J. answered it in the negative. The matter then went before the third Judge, K. T. Desai, J. who agreed with J. C. Shah, J. and answered the question in the affirmative. The majority of the Judges held that the cheques were received by the assessee through its agent, the post office in British India and the Revenue authorities were entitled to urge this contention for the first time in the High Court. The assessee now appeals to this Court on a certificate granted by the Bombay High Court. In the appeals before us, the following two questions arise (1) Was the post office the agent of the assessee to receive the cheques representing the sale proceeds on its behalf, and did the assessee consequently receive the sale proceeds through its agent in British India; and (2) whether the Revenue authorities could raise this contention for the first time at the hearing of the reference before the High Court, though this contention was not raised by it before the Tribunal or at any stage of the assessment proceedings ? Where, as in this case, the question of law in issue between the parties and referred to the High Court is the board question whether or not the assessee is liable to pay tax on the ground that the sale proceeds including the profits of the sale were received (1) 656 by the assessee in British India, the Revenue authorities may be permitted to argue for the first time at the hearing of the reference that on the facts found by the Tribunal, the post office was the agent of the assessee for the purpose of receiving the cheques representing the sale proceeds and the assessee received the sale proceeds in British India where the cheques were posted, though this aspect of the question was not argued before the Tribunal and though the only point there argued was that the sale proceeds were received at Bombay where the cheques were encashed. See The Commissioner of Income tax vs Messrs. Ogale Glass Works Ltd(1) Zoraster & Co. vs Commissioner of Income tax(2). See also Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co. Ltd.(3). The decision in The New Jehangir Vakil Mills Ltd. vs The Commissioner of Income tax(4 ) relied on by the assessee is distinguishable. There, the question of law referred to the High Court was "Whether the receipt of the cheques at Bhavnagar amounted to receipt of sale proceeds in Bhavnagar ?", and this question was not broad enough to cover the enquiry whether there were postings of the cheques at the request of the assessee and receipts of the cheques by the assessee through the post office in British India. The precise point decided by this Court in the New Jehangir Vakil Mills '(4) case was that the High Court has no jurisdiction under section 66(4) to direct the Tribunal to collect evidence not already on the record and to make it a part of a supplementary statement of case, and this decision was followed and affirmed recently in Keshav Mills Co. Ltd. vs Commissioner of Income tax("). But, in the instant case, the High Court did not call for any supplementary statement of case. Nor is the question of law referred in this case a narrow one as in the New Jehangir Vakil Mills ' case(4) so as to exclude consideration of the contention that the assessee received the sale proceeds through its agent, the post office in British India. We are, therefore, satisfied that the Revenue authorities can raise this contention for the first time in the High Court. ' The next question is whether the post office was the agent of the assessee to receive the cheques representing the sale proceeds and whether the assessee received the sale proceeds in British India where the cheques were posted. Now, if by an agreement, express or implied, between the creditor and the debtor or by a request, express or implied, by the creditor, the debtor is authorised to pay the debt by a cheque and to send the cheque to the creditor (1) (3) ; ,814. (5) ; (2) [1961] 1 S . C.R. 210. (4) ; 657 by post, the post office is the agent of the creditor to receive the cheque and the creditor receives payment as soon as the cheque is posted to him. See The Commissioner of Income tax vs Messrs. Ogale Glass Works Ltd.(1), Jagdish Mills Ltd. vs The Commissioner of Income tax(2 ) approving Norman vs Ricketts(1), Thairlwall vs The Great Northern Railway(3). In Messrs. Ogale Glass Works ' case(1), there was an express request by the assessee at Aundh to its debtor in Delhi to remit the amount of the bills by cheques. In Jagdish Mills case (2), there was a stipulation between the assessee and its debtor that the debtor in Delhi should pay the assessee in Baroda the amount due to the assessee by cheques, and this Court held that there was by necessary implication a request by the assessee to the debtor to send the cheques by post from Delhi, thus constituting the post office its agent for the purpose of receiving the payments. In the instant case, cl. 9 of the terms and conditions of the contract read with the prescribed form of the bills and the instructions regarding payment show that the parties had agreed that the assessee would submit to the Government of India, Department of Supply, New Delhi, bills in the prescribed form requesting payment of the price of the supplies by cheques together with signed receipts and the Government of India would pay the price by crossed cheques drawn in favour of the assessee. Having regard to the fact that the assessee was at Indore and the Supply Department of the Government of India was at New Delhi, the parties must have intended that the Government would send the cheques to the assessee by post from New Delhi, and this inference is supported by the fact that the cheques used to be sent to the assessee by post. In the circumstances, there was an implied agreement between the parties that the Government of India would send. the cheques to the assessee by post. Mr. Pathak argued that the assessee had requested the Government to pay money by cheques on a bank at Indore and as that request was not complied with and the Government of India sent instead cheques on the Reserve Bank of India, Bombay, there was no effective request by the assessee to the Government to send the cheque by post. But independently of any subsequent request by the assessee, the contract between the parties authorised the Government of India to pay the price by cheques drawn on the Reserve Bank of India, Bombay and imported a request by the assessee to the Government of India to send the cheques by post. (1) (2) ; (3) (1886) 3 Times Law Reports. (4) 658 The Government of India was entitled to ignore the subsequent request of the assessee for cheques on an Indore bank and the assessee received payments of the price as and when the cheques on the Reserve Bank of India, Bombay were posted in British India in accordance with the contract. In Thairlwall vs Great Northern Railway(1) Lord Coleridge, J. observed : "The real question is whether the posting of the warrant was payment of the amount of the dividend. To establish that it was, the defendants must prove a request by the plaintiff or an agreement between the plaintiff and the defendants that payment should be made by means of a warrant posted to the plaintiff. If such a request or agreement is proved, then payment is established by posting even although the instrument is lost in the post : Norman vs Ricketts(2)." Mr. Pathak contended that the assesseee and the Government of India had agreed that the sale proceeds would be paid to the assessee in Indore outside British India, and therefore the rule in Messrs. Ogale Glass Works ' case(3) did not apply, having regard to the decision in Commissioner of Income tax vs Patney & Co.(4). We are not inclined to accept this contention. There is nothing on the record to show that there was any express agreement between the parties that the sale proceeds would be paid to the assessee at Indore. We are satisfied that the post office was the agent of the assessee for the purpose of receiving the cheques representing the sale proceeds and the assessee received the sale proceeds in British India where the cheques were posted, and consequently, the profits in respect of the sales were taxable under section 4 (1) (a). The High Court, therefore, rightly answered the question in the affirmative. Mr. Pathak and following him Mr. Kolah submitted that the assessee would have led additional evidence to disprove the contention that the post office acted as its agent, had that contention been raised before the Tribunal, and the Revenue authorities should not, therefore, have been allowed by the High Court to raise the new contention. On being asked what additional evidence would have been led by the assessee, counsel said that the assessee would have led evidence to show (a) that the purchase orders were accepted by the assessee under compulsion of the (1) (2) (1886) 3 Times Law Reports 182. (3) (4) 659 Defence of India Act and Rules and consequently there was no voluntary request by the assessee for payment by cheques, and (b) the Imperial Bank of India, Indore, as the statutory agent of the Reserve Bank of India, Bombay, paid the amount of the cheques to the assessee at Indore. But counsel was unable to show any provision of the Defence of India Act or Rules under which the assessee was obliged to accept the purchase orders, and we need not, therefore, enquire into the correctness of counsel 's assumption that acceptance of the purchase orders under compulsion of law would have negatived the contention that the post office acted as the agent of. the assessee. And if the assessee received payment by cheques posted in British India, the fact that subsequently the Imperial Bank of India, Indore as the statutory agent of the Reserve Bank of India, Bombay paid the amount of the cheques at Indore would not take the case of the assessee out of the purview of section 4 (1) (a). We are, therefore, satisfied that the assessee was not prevented from adducing any material evidence by reason of the omission of the Revenue authorities to argue the new point before the Tribunal. We do not, therefore, think it necessary to express any opinion on the question whether the Court should refuse to allow the Revenue authorities to raise a new contention where by reason of their omission to raise the contention before the Tribunal, the assessee had been prevented from adducing material evidence on the point. In the result, the appeals are dismissed with costs, one set. Appeals dismissed.

IN-Abs

The appellant company carried on the business of manufacturing textile goods at Indore and had offices at Indore and Bombay. During its account years 1942 to 1947 it supplied goods to the Indian Stores Department, Government of India. The purchase orders were placed by the latter with the appellant at Indore which was then in an Indian State. On receipt of bills from the appellant the Government of India used to draw cheques on the Reserve Bank of India, Bombay, in favour of the appellant and used to send them by post to the appellant at Indore. The appellant used to deposit the cheques with the Imperial Bank of India Indore for the purpose of realisation from the Reserve Bank of India. In connection with the assessment years 1943 44 to 1948 49 the question that arose in income tax proceedings was whether the profits of the appellant a non resident in respect of the supplies were received by the appellant in British India and therefore taxable under section 4(1)(a) of the Indian Income tax Act, 1922. The departmental authorities held that the payment was received by the appellant at Bom bay where the cheques were encashed but the Appellate Tribunal took the view that the payment was received at Indore. In reference the High Court held on the basis of this Court 's decision in Commissioner of Income tax vs Kirloskar Bros. Ltd. which had meanwhile been delivered that the cheques were received by the assessee through its agent, the post office in British India and further held that the Revenue authorities were entitled to raise the contention for the first time in the High Court. With certificate the appellant came to this Court. HELD : (i) Whereas in the present case the question of law in issue between the parties and referred to the High Court is the broad question whether or not the assessee is liable to pay tax on the ground that the sale proceeds including the profits of the sale were received by the assessee in British India, the Revenue authorities may be permitted to argue for the first time at the hearing of the reference that on the facts found by the Tribunal, the post office was the agent of the assessee for the purpose of receiving the cheques representing the sale proceeds and the assessee received the sale proceeds in British India where the chequest were posted though this aspect of the question was not argued before the Tribunal and though the only point there argued was that the proceeds were received at Bombay where the cheques were encashed. [655 H] Commissioner of Income tax vs M/s. Ogale Glass Works Ltd. , Zoraster & Co. vs Commissioner of Income tax, ; and Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co. Ltd., ; , referred to. The New Jahangir Vakil Mills Ltd. vs Commissioner of Income tax ; and Keshav Mills Co. Ltd. vs Commissioner of Income tax; , , distinguished. 652 (ii) If by an agreement, express or implied, between the creditor and the debtor or by request, express or implied, by the creditor, the debtor is authorised to pay the debt by a cheque and to send the cheque to the creditor by port, the post office is the agent of the creditor to receive the cheque and the creditor receives payment as soon as the cheque is posted to him. [656 G] Commissioner of Income tax vs M/s. Ogale Glass Works Ltd., , Jagdish Mills Ltd. vs The Commissioner of Income tax, ; , Norman vs Ricketts, (1886) 3 Times Law Reports 182 and Thairlwall vs The Great Northern Railway, , relied on. (iii) In the instant case cl. 9 of the terms and conditions of the contract read with the prescribed form of the bills and the instructions regarding payment showed that the parties had agreed that the assessee would submit to the Government of India, Department of Supply, New Delhi, bills in the prescribed form requesting payment of the price of the supplies by cheques together with signed receipts and the Government of India would pay the price by crossed cheques drawn in favour of the assessee. Having regard to the fact that the assessee, was at Indore and the Supply Department of the Government of India was at Now Delhi, the parties must have intended that the Government would send the cheques to the assessee by post from New Delhi, and this inference was supported by the fact the cheques used to be sent to the assessee by post. In the circumstances there was an implied agreement between the parties that the Government of India would send the cheques by post. The Government of India was entitled to ignore the subsequent request of the. assessee for cheques on an Indore bank and the assessee received payment of the price as and when the cheques on the Reserve Bank of India Bombay, were posted in British India in accordance with the contract (657 D; 658 Al Thairlwall vs The Great Northern Railway, [1910] 2 K.B. 509 and Commissioner of Income tax vs Patney & Co. , referred to. On the above view the profits in respect of the sales were taxable under section 4(1) (a) of the Indian Income tax Act, 1922.

Appeal No. 30 of 1965. 5 9 0 Appeal by special leave from the judgment and order dated September 8, 1962 of the Bombay High Court in Special Civil Application No. 364 of 1961. C. B. Agarwala, 0. P. Malhotra, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant. G. L. Sangli and A. G. Ratnaparkhi, for respondent No. 3. The Judgment of the Court was delivered by Wanchoo, J. The only question raised in this appeal by special. leave is whether the Central Provinces and Berar Industrial Disputes Settlement Act, No. XXIII of 1947, (hereinafter referred to as the Act) is applicable to the head office of the appellant which is known as the Ballarpur Collieries Company. The head office is situate in Nagpur and has a staff of about 35 employees. The business of the head office is to look after the sale of coal extracted from the collieries. The question arises in this way. Bapat respondent was a stenographer working in the head office at Nagpur. He was dismissed from service on July 31, 1959. It is not necessary for present purposes to go into the facts and circumstances leading to this dismissal. Suffice it to mention that an enquiry was said to have been held before the dismissal order was passed. While this enquiry was pending Bapat made an application under section 16 of the Act before the Assistant Commissioner of Labour, Nagpur, on July 21, 1959. In this application Bapat prayed that the employer should be ordered to pay him wages from the date of dismissal, discharge or removal to the date of the order under section 16 in addition to a sum not exceeding Rs. 2,500 by way of compensation. It was also prayed that the employer should be ordered to pay retrenchment compensation under Chap. V A of the Industrial Disputes Act, No. 14 of 1947 (hereinafter referred to as the Central Act No. 14). Though this application was headed as application for reinstatement and compensation etc. , there was no prayer for reinstatement and Bapat was only content to ask for a sum of Rs. 2,500 by way of compensation. While this application was pending, Bapat was, as already indicated, dismissed on July 31, 1959. Thereupon he filed another application under section 16 of the Act on August 19, 1959. In this application he prayed for reinstatement or in the alternative for full com pensation amounting to Rs. 2,500 and such other relief as he might be entitled to. The main contention of the appellant before the Assistant Commissioner of Labour was that the Act did not apply to it and 591 therefore the Assistant Commissioner had no jurisdiction to proceed in the matter. The Assistant Commissioner held that the Act applied and he had jurisdiction to deal with the matter. He therefore gave relief by setting aside the order of dismissal and directing that the employer should pay Rs. 2,000 as compensation and wages from the date of dismissal to the date of his order. This order was taken in revision by the appellant to the State Industrial Court at Nagpur, and the main contention again urged there was that the Act did not apply to the appellant and the Assistant Commissioner had no jurisdiction to deal with the matter. This contention did not find favour with the State Industrial Court with the result that the revision was dismissed. The appellant then filed a petition under Articles 226 and 227 of the Constitution in the High Court, and the same contention was raised that the Act did not apply and the Assistant Commissioner had no jurisdiction in the matter. The High Court held on a construction of the relevant provisions of the Act and the notification issued thereunder that the Act was applicable and in consequence the writ petition was dismissed. The High Court having refused to give leave to appeal to this Court, the appellant obtained special leave from this Court; and that is how the matter has come before us. Section 1 of the Act came into force on June 2, 1947, andas provided by section 1(3) thereof, the rest of the Act came into force on November 21, 1947, on a notification being issued by the State Government in that behalf. Section 1(3) lays down that "the State Government may by notification bring the remaining sections or any of them into force in such area or industry and on such date as may be specified in the notification. " By virtue of the power conferred on the State Government by section 1(3) the following notification was issued on November 2, "In exercise of the powers conferred by sub section (3)of section 1, of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947, the Provincial Government are pleased to direct that sections 2 to 61 of the said Act shall come into force on the 21st November 1947, in all the industries except the following namely : (i) Textile industry. (ii) Employment in any industry carried on by or under the authority of the Central Government 592 by an Indian State Railway or by a Railway Company operating an Indian State Railway. (iii) Mines. (iv) Saw Mills. " It is the interpretation of this notification which calls for consideration in the present appeal. The appellant 's contention is that by this notification, the Act was applied as from November 21, 1947, to all industries except four specified therein; and of these, the third was mines. It is urged on behalf of the appellant that when the notification provided for the application of the Act to .all industries except four which were excepted it was exempting the mining industry by the third item of exemption. The nlining industry according to the appellant will include the head office, for as the High Court says, "it is not disputed that the Head Office is a part of integrated activity of the petitioner company which carries on the business of producing coal and its sale and supply to its various customers. " The argument is that the head office at Nagpur being a part of integrated activity of carrying on the mining industry by the appellant, the head office was equally exempt from the application of the Act by the notification in question. If that is so, no application under section 16 of the Act could be made by Bapat to the Assistant Commissioner of Labour. It is also pointed out on behalf of the appellant that Bapat would have a remedy under the Central Act No. 14 of 1947 which came into force earlier than the Act from April 1, 1947, though the procedure for obtaining relief under that Act would be different namely, through a reference by the appropriate Government under section 10 of the Central Act No. 14 of 1947. The High Court however held that what was exempted by the third item in the notification was not the head office of a mine but the mine itself and no more. Consequently the employees at the head office of the appellant were governed by the Act. This view of the High Court is being supported by the respondents before us, and it is urged that the notification uses the word " mines" and not the words "mining industry" in the exemption part and therefore what was exempted from the Act were merely the coal mines where mining operations were carried on and not the mining industry, which may include the head office also. We are of the opinion that the contention raised on behalf of the appellant is correct, and what the notification exempted was the mining industry from the operation of the Act. In this %connection we may refer to the following words in the notification 5 93 namely, "the said Act shall come into force on the 21st November, 1947 in a11 the industries except the following". Grammatically the word "industries" must be understood as following the word"following" appearing in the above sentence. Thus what the notification in effect said was that the said Act shall come into force on 21st November 1947 in all the industries except the following, industries. It has however, been urged that if that was so, it was not necessary, for example, in the first item of examption to use the words "textile industry", and it would have been sufficient to use the word "textile". All that we need say is that the notification is not a work of art and has to be read in its tenor without trying to find out why the word "industry" was used in the first item and why the same was not used in the third and fourth items, which deal with "Mines" and "Saw Mills" respectively. Grammatically, however, this part of the notification clearly says that the Act would apply to all industries except the four industries specified therein for the purpose of exemption. These four exemptions include the industry of mines. We see no difference between the words "mining industry" and "industry of mines", for they mean the same thing, namely, the industry which is concerned with mines. If therefore the notification exempted the industry of mines or the mining industry it cannot be said that it merely exempted that part of the said industry of mines or mining industry which consisted of raising coal at the colliery and did not include the head office thereof. As we have already indicated, the High Court has said that "it is not disputed that the head office is a part of integrated activity of the petitioner company which carries on the business of producing coal and its sale and supply to its various customers". Therefore, when the industry of mines or the mining industry was exempted from the operation of the Act, the exemption applied not only to that part of the industry which consisted of raising coal at the colliery but also to that part of it which consisted in the sale of coal and its supply to customers and would thus include the head office also. As we read the notification we see no escape from the conclusion that what was exempted from the application of the Act was the industry of mines or the mining industry and that would include not only the colliery where the coal was raised but also the head office from where the coal was sold 'and distributed to the customers. It now remains to refer to two cases on which reliance was placed by the High Court. The first is Messrs. Godavari Sugar Mills Ltd. vs D. K. Worlikar(1). In that case this Court held (1) ; 5 9 4 that the notification under challenge there did not apply to the head office of the Sugar Mills. That decision turned on the actual words of the notification and is of no assistance to the respondents. It was pointed out in that case that if the notification had merely used the words "sugar industry" it would have been possible to construe that expression in a broader sense having regard to the wide definition of the word "industry"; but the notification had deliberately adopted a different phraseology and had brought within its purview not the sugar industry as such but the manufacture of sugar and its by products. The words of the notification in that case were "the said Act shall apply to the following industry, namely, the manufacture of sugar and its by products". Therefore on the words of the notification in that case, the wide implication which might have arisen if the notification had merely stated that the Act applied to the sugar industry was cut down by the specific words in the notification, namely, manufacture of sugar and its by products, which would clearly apply only to a part of sugar industry which dealt with the manufacture of sugar and the by products and would not apply to the head office which did not deal with the actual manufacture but dealt with the consequent steps following on the manufacture viz., sale and distribution to customers. In the present case the notification clearly applied to the industry of mines which in our opinion is nothing different from mining industry and must therefore take in the entire industry including the raising of coal from the colliery as .well as its distribution, sale and supply to the customers. That case therefore is of no help to the respondents. The next case to which reference is made is Messrs. Serajuddin and Company vs Their workmen(1). In that case a dispute relating to the head office of a mining company was referred by the Government of West Bengal to the industrial tribunal and a question arose whether the Government of West Bengal was the appropriate government within the meaning of section 2 (a) (i) of the Central Act No. 14 of 1947. It was held that the West Bengal Government was the appropriate government and the decision turned on the interpretation of section 2 (a) (i) of the said Act which defined "appropriate government". The words which came in for interpretation were "in relation to an industrial dispute concerning a banking or an insurance company, a mine, an oil field, or a major port". It was held that the word "mine" as used in section 2 (a) (i) of the Central Act No. 14 of 1947 referred to a mine as defined in the Mines Act and that a dispute with reference to the head office of a mine was not a dispute concerning the mine which (1) [1962] 3 Supp. S.C.R. 934. 5 9 5 must mean a mine as defined in the Mines Act. That case also is of no help to the respondents for here we are not concerned with the word "mine '; what we are concerned with is whether the exemption clause in the notification which exempts the industry of mines or the mining industry will take in the head office. The words therefore in the present notification are different and the decision in that case is of no help. We have no doubt that when the notification exempts the industry of mines or the mining industry which in our opinion mean the same thing, the exemption includes the he ad office also which must be treated as an integral part of the mining industry, for it deals with the subse quent steps taken to dispose of, in this case, the coal raised from the colliery. Learned counsel for the appellant wished to argue that the head office carried on other activities besides the activity of selling coal raised from the colliery. We have not allowed him to raise this point for this was not raised in the High Court. We have already referred to the observation of the High Court that it was not disputed that the head office was a part of integrated activity of the appellant company which carried on the business of producing coal and its sale and supply to its various customers. It was not even the case of the respondents in reply in the High Court that the head office carried on other activities besides the sale and distribution of the coal produced in the colliery. In the view we have taken of the notification and its interpretation we are of opinion that the Assistant Commissioner of Labour had no jurisdiction under the Act to deal with the application of Bapat. In this view of the matter the appeal must be allowed and the orders of the High Court, the State Industrial Court and the Assistant Commissioner of Labour are set aside. We therefore direct the dismissal of the application under section 16 of the Act. In the circumstances we pass no order as to costs. Appeal allowed.

IN-Abs

The appellant was a mining company with its head office at Nagpur. The business of the head office was to look after the sale of coal extracted from the collieries. An employee of the company working in the head office made applications under section 16 of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947, to the Assistant Commissioner of Labour, Nagpur. The company objected that by virtue of the notification under section 1(3) of the Act the mining industry had been exempted from the operation of the Act including section 16 and therefore the Assistant Labour Commissioner had no jurisdiction. The authorities under the Act as well as the High Court under articles 226 and 227, re jected the company 's contention. The High Court took the view that what was exempted by the third item in the notification was not the head office of a mine but the mine itself and consequently the employees of the head office were governed by the Act. The company appealed to the Supreme Court by special leave. HELD : The notification in question said that the Act would come into force on 21st November, 1947 "in all the industries except the following" and then went on to name four industries the third one being 'Mines '. After the word 'following ' the, word industries must be read and thus read the notification in effect said the Act would come into effect on the given date in all industries except the industries mentioned. Therefore it was not only mines but the mining industry itself that was exempted from the operation of the Act. [593 A B, D E] If the notification exempted the industry of mines or the mining industry it could not be said that it merely exempted that part of the said industry of mines or mining industry which consisted of raising coat at the colliery and did not include the head office thereof. As the High Court said, the head office was part of the integrated activity of the company. Therefore when the mining industry was exempted from the operation of the Act the exemption applied not only to that part of the industry which consisted of raising coal at the colliery but also to that part of it which consisted in the sale of coal and its supply to the customers and would thus include the head office also. [593 E G] M/s. Godavari Sugar Mills Ltd. vs D. K. Worlikar, A.I.R. and M/s. Serajuddin and Co. vs Their Workmen, [1962] 3. S.C.R. 934, distinguished. On the above view the Assistant Labour Commissioner had no jurisdiction under the Act to deal with the matter in question. [595 E]

Civil Appeal No. 842 of 1964. Appeal by special leave from the judgment and order dated February 19, 1963 of the Kerala High Court in Income tax Referred Case No. 23 of 1962. R. Ganapathy Iyer and B.R.G.K. Achar and R. N. Sachthey, for the appellant. 675 A. V. Viswanatha Sastri and R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Subba Rao, J. The respondent, the South India Bank Limited, Trichur, is a banking company. This appeal is concerned with the assessment year 1956 57, corresponding previous year being the calendar year 1955. During the accounting year the Bank received a sum of Rs. 44,720/ towards interest in respect of taxfree Cochin and Travancore Securities. During the course of the assessment of its income to tax, it claimed that rebate should be allowed on the entire sum of Rs. 44,720/ received as interest from the said securities. But, the Income tax Officer, while completing the assessment, arrived at the figure of Rs. 33,444/ as the sum representing two items, viz., (i) reasonable sum expended by the assessee in realizing the said interest; and (ii) the interest payable on the money borrowed for the purpose of investment. After deducting the said sum from the interest receivable from the said securities, he granted only a sum of Rs. 7,276/ as rebate for income tax. On appeal, the Appellate Assistant Commissioner upheld the view of the Income tax Officer. On a further appeal, the Income tax Appellate Tribunal, Madras Bench, held that the Bank was entitled to a, rebate on the gross amount of interest amounting to Rs. 44,720/ . At the instance of the Department, the Tribunal referred the following question to the High Court of Kerala for its decision : "Whether, on the facts and circumstances of the case, the Tribunal was right in holding that Explanation to section 8 is not applicable in this case and that the entire interest of Rs. 44,720/ earned by the assessee from securities issued by the former Native States, etc. is entitled to rebate of income tax." A Division Bench of the High Court expressed the opinion that the entire interest of Rs. 44,720/ was entitled to rebate for income tax under the notification issued by the Central Government in exercise of its powers under section 60 A of the Indian Income tax Act, 1922. Hence the appeal. Mr. R. Ganapathy Iyer, learned counsel for the Revenue, argued that under section 8 of the Indian Income tax Act, income tax was computed under the head "interest on securities" in respect of the interest received by an assessee on any government securities minus the expenditure incurred by him to realise the same in 676 terms of the first proviso and the Explanation thereto, that when under the third proviso the assessee was exempted from paying tax on the interest receivable on any securities of State Government issued income tax free, he was only exempted from such tax payable by him if it was not so exempted. To put it differently, his argument was that the exemption under the third proviso was only in regard to that part of the interest which was taxable but for the exemption. His further contention was that the notification issued by the Central Government under section 60A of the Income tax Act did not enlarge the scope of the exemption but that the said notification must be construed only in terms of section 8 of the Income tax Act. Mr. A. V. Viswanatha Sastri, learned counsel for the respondent, argued that the substantive part of section 8, read with the first proviso and the Explanation thereto, had no application to securities issued income tax free and that the interest from the State Government securities was governed by the third proviso which did not provide for any deduction from the interest receivable from such securities for the purpose of income tax. Further he sought to sustain the order of the High Court on the ground that the interest in question was solely governed by the notification issued by the Central Government whereunder the entire interest receivable from such securities was exempted from income tax. As we agree with the High Court on the construction of the notification issued by the Central Government, we do not propose to express our opinion on the rival contentions of the parties based upon the provisions of section 8 of the Income tax Act. Section 8 of the Income tax Act provides for the computation of income and deductions therefrom under the head "interest on securities". Section 60 of the Act confers a power on the Central Government to make an exemption, reduction in rate, or other modifications in respect of income tax in favour of any class of income or in regard to the whole or any part of any income of any class of persons. This power is conferred on the Government to meet special situations de hors section 8. If section 8 of the Income tax Act makes an exemption in respect of a particular income, there is no scope or occasion for invoking the special power conferred on the Central Government under section 60A of the Income tax Act. Unless we accept the contention that the notification under section 60A was issued by the Central Government in superabundant caution to cover the same ground occupied by section 8 we need not attribute any such redundancy to the Central Government we do not see any reason why the notification should not be construed on its own 677 terms in its application to the question of rebate raised in this, case. The said notification reads : "No income tax shall be payable by an assessee on the interest receivable on the following income tax free loans issued by the former Government of Travancore or by the former Government of Cochin, provided that such interest is received within the territories of the State of Travancore Cochin and is not brought into any other part of the taxable territories to which the said Act applies. Such interest shall, however, be included in the total income of the assessee for the purposes of Section 16 of the Indian Income tax Act, 1922 It is common case that this notification applies to the securities in question. It will be noticed that this notification does not refer to the provisions of section 8 of the Income tax Act at all. It gives a total exemption from income tax to an assessee in respect of the interest receivable on Income tax ' free loans mentioned therein. It gives that exemption subject to two conditions, namely, (i) that the interest is received within the territories of the State of Tranvancore Cochin, and (ii) that it is not brought into any other part of the taxable territories. It includes the said exempted interest in the total income of the assessee for the purpose of section 16 of the Income tax Act. Shortly stated, the notification is a self contained one; it provides an exemption from income tax payable by an assessee on a particular class of income subject to specified conditions. Therefore, there is no scope for controlling the provisions of the notification with reference to section 8 of the Income tax Act. The expression "interest receivable on income tax free loans" ' is clear and unambiguous. Though the point of time from which the exemption works is when it is received within the territories of the State of Travancore Cochin, what is exempted is the interest receivable. "Interest receivable" can only mean the amount of interest calculated as per the terms of the securities. It cannot Jr obviously mean interest receivable minus the amount spent in receiving the same. We, therefore, hold, agreeing with the High Court, that no income tax is payable in respect of the entire interest of Rs. 44,720/ earned by the assessee from securities issued by the former native States. In the result, the appeal fails and is dismissed with costs.

IN-Abs

The respondent was a banking company. During the accounting year for the assessment year 1956 57 the Bank received a certain sum towards interest in respect of tax free securities, and claimed rebate for the whole amount under the notification issued by the Central Government in exercise of its power under section 60 A of the Indian Income tax Act, 1922. The Income tax Officer however, while completing the assessment allowed rebate only on the amount of interest that remained after deduction of sums expended by the assessee in realising the said interest and the interest payable on the money borrowed for the purpose of investment. The Appellate Assistant Commissioner upheld the order of the Income tax Officer but the Tribunal held that the respondent was entitled to rebate on the gross amount of interest. In reference, a Division Bench of the High Court upheld the Tribunal 's view; the Commissioner of Income tax appealed to this Court. It was contended for the Revenue that the exemption under the third proviso to section 8 was only in regard to that part of the interest which was taxable but for the exemption. The further contention was that the notification issued by the Central Government under section 60 A of the Income tax Act did not enlarge the scope of the exemption but that the said notification must be construed only in terms of section 8 of the Income tax Act. HELD : The notification had to be construed on its own terms in its application to the question of rebate raised in the present case. It is not intended to cover the same ground occupied by section 8, and there is no scope for controlling the provisions of the notification with reference to section 8. The expression 'interest receivable on income tax free loans ' in the notification is clear and unambiguous, and can only mean the amount of interest calculated as per the terms of the securities. It cannot obviously mean interest receivable minus the amount spent in receiving the same. No income tax was therefore payable in respect of the interest by the assessee from the securities in question. [677 E G]

er Petition No. 7 of 1965.(Under Section 527 of Criminal Procedure Code). T. R. Bhasin, for the petitioner. G. C. Kasliwal, Advocate General for the State of Rajasthan, K. K. Jain and R. N. Sachthey for the Respondent. The Judgment of the Court was delivered by Hidayatullah, J. This is a petition under section 527 of the Code of Criminal Procedure for the transfer of a criminal case (No. 2 of 1964 state vs Gurcharan Dass Chadha I.P.S.) which is pending in the Court of the Special Judge, Bharatpur, Rajasthan to another criminal court of equal or superior jurisdiction subordinate to a High Court other than the High Court of Rajasthan. The petitioner is the accused in that case and he is being tried under sections 120B/161, Indian Penal Code and section 5(1)(a)(d) and 5`2) of the Prevention of Corruption Act. prosecution has been sanctioned by the Government of India. In December, 1962, he was serving as Superintendent of Police and was selected to be Commandant of 8th Batallion of Rajasthan Armed Constabulary. He avers that he took over as Commandant on January 7, 1963 but was placed under suspension the same day and a case was registered on January 12, 1963 which has resulted in the present prosecution against him. The petitioner apprehends for reasons to be stated presently that he is not likely to get a fair, just and impartial trial in the State of Rajasthan owing to the hostility and influence of the then Law Minister who was also Minister incharge of Home Department of the State, the Additional Inspector General of Police, Anti Corruption, and the Deputy Inspector General of Police, Ajmer Range, Jaipur. In support of his petition he has referred to many incidents and filed many documents. He has sworn an affidavit that he entertains an apprehension that these persons would interfere with the trial of the case in the State of Rajasthan and that a transfer of the case outside the State is in the interest of justice. 680 The State Government has opposed the application strenu. ously and has questioned the jurisdiction of this Court to transfer under the powers conferred on it by section 527 Code of Criminal Procedure a case made over by the Government of the State of Rajasthan for trial to a Special Judge under the Criminal Law Amendment Act, 1952 (Act 46 of 1962). In addition, the State Government joins issue on the facts alleged and the merits of the claim for the transfer of the case. While this petition was pending the State Government served the petitioner with a notice and a charge sheet to show cause why he should not be proceeded against for breach of Rule No. 8 of the All India Services (Conduct) Rules, 1954, because he had communicated "directly/indirectly official documents and information to Government servants/other persons to whom he was not authorised to communicate such documents/information" as indicated and detailed in a statement of allegations accompanying the notice and the charge. The State Government has appended to this charge two appendices giving details of 31 and 16 docu ments respectively, which were said to have been so communicated by the petitioner to his counsel Messrs. R. K. Rastogi and D. P. Gupta, Advocates of Jodhpur and others named as "non petitioners" in a writ petition which he had filed in the High Court of Rajasthan (No. 794 of 1964) and which he subsequently withdrew on December 23, 1964 before taking action to file the present petition. The notice, the charge and the statement of allegations accompanying them were signed by Mr. Vishnu Dutt Sharma, Special Secretary to Government. On receiving this charge, the petitioner moved another petition in this Court for taking action against Mr. Shrama and the Government of Rajasthan for contempt of this Court. At an earlier hearing, where we were considering the petition for transfer, the other petition was brought to our notice and we were about to order issuance of notices to the contemners but the Advocate General of the Government of Rajasthan took notice of the petition and offered to take action in respect thereof. As a result the State of Rajasthan through the Chief Secretary to the Government and Mr. Sharma separately filed their replies to the second petition and attempted justification. Mr. Sharma abjured knowledge of the contents of the petition for transfer and denied any malice, ill will or grudge, pleading good faith. The matter would have received serious attention from us but for the fact that at the next hearing the plea for justification was abandoned and an unconditional apology was entered on behalf of the State Government as well as Mr. Sharma. The latter was present in Court and expressed regret for what had. happened. 681 We accepted the appology and do not, therefore,feel called upon to consider the plea of justification which, in any event, is not a plea heard in bar when contempt is clear and manifest. There could be no question in the present case that by charging the petitioner with proceedings of a different kind there was, if not direct, at least indirect pressure brought upon him in the prosecution of his petition for. transfer. Of this we would have taken serious note be cause it was likely to have hampered the petitioner in prosecuting his petition freely before this Court and would have resulted in obstruction of administration of justice. If the petitioner was guilty of any lapse under the Services (Conduct) Rules or even guilty of an offence the action to which he would be otherwise subject could wait till the present proceedings had terminated and there was really no reason to hurry with a charge against the petitioner which charge would have put him under duress of some kind. Such a course of action 'is to be deprecated and we are glad to note that the Government of Rajasthan and the Secretary concerned have seen the matter in this light and have made amends by proper contrition. We do not feel called upon to say more than this on the petition for contempt which shall be filed. We shall now take up the objection that this Court lacks jurisdiction to transfer the case pending before the special Judge, Bharatpur. This objection goes to the root of the matter. Questions of inherent jurisdiction must always be decided before the merits are considered because to dismiss the petition after consideration of merits itself involves an assumption of jurisdiction. We must accordingly consider the objection even though we are satisfied that the petition must fail on merits. The power which the petitioner is invoking flows from section 527 of the Code of Criminal Procedure. The first two sub sections of that section are material here and they read: "527. Power of Supreme Court to transfer cases and appeals. (1) Whenever it is made to appear to the Supreme ' Court that an order under this section is expedient for the ends of justice, it may direct that any particular case or appeal be transferred from one High Court to another High Court or from a Criminal Court subordinate to one High Court to another Criminal Court of equal or superior jurisdiction subordinate to another High Court. (2) The Supreme Court may act under this section only on the application of the Attorney General of India 682 or of a party interested, and every such application shall be made by motion which shall, except when the applicant is the Attorney General of India or the Advocate General, be supported by affidavit or affirmation. It is conceded by the Advocate General that the power to transfer criminal cases as laid down in the section is ordinarily available but he contends that a case assigned by the State Government under the Criminal Law Amendment Act, 1952 to a special Judge cannot be transferred at all because under the terms of that Act, which is a self contained special law, such a case must be tried by the special Judge designate only. The argument is extremely plausible but does not bear close scrutiny. To understand the argument and how it is refuted certain provisions of the Act may be seen. The first section of the Act gives the short title of the Act. Sections 2 and 3 of the Act introduce changes in the Indian Penal Code by increasing the punishment in section 165 and by inserting section 165A which provides for punishment for abetment of offences defined in sections 161 and 165. Sections 4 and 5 of the Act make some amendments in section 164 of the Indian Penal Code and section 337 of the Code of Criminal Procedure. These four sections have been repealed by the Repealing and Amending Act, 1957 as they were no longer necessary. The sections which we have to consider are sections 6, 7 and 8 of the Act. Section 6 confers power on the State Government to appoint special Judges for the trial of certain offences. The parts relevant to our purpose read "6. Power to appoint special judges. (1) The State Government may, by notification in the official Gazette, appoint as many special Judges as may be necessary for such area, or areas as may be specified in the notification to try the following offences, namely : (a) an offence punishable under section 161, section 162, section 163, section 164, section 165, or section 165 A of the Indian Penal Code (Act XLV of 1860), or sub section (2) of section 5 of the Prevention of Corruption Act, 1947 (11 of 1947) (b) Any conspiracy to commit or any attempt to commit or any abetment of any of the offences specified in clause (a). 683 Section 7 next provides what cases shall be tried by special Judges. The first two sub sections read : "7. Cases triable by special Judges. (1) Notwithstanding anything contained in the Code of Criminal Procedure, 1898 (Act V of 1898) or in any other law the offences specified in sub section (1) of section 6 shall be triable by special Judges only. (2) Every offence specified in sub section (1) of section 6 shall be tried by the special Judge for the area within which it was committed, or where there are more special Judges than one for such area, by such one of them as may be specified in this behalf by the State Government." The procedure which the special Judge has to follow is laid down in section 8 (1) and by sub section (2) of the same section certain powers are confered on the special Judge. Sub section (3) then provides: "8. Procedure and Powers of Special Judges. (1). . . . . . (2). . . . . . (3) Save as provided in sub section (1) or sub section (2), the provisions of the Code of Criminal Procedure, 1898, shall so far as they are not inconsistent with this Act, apply to the proceedings before a special Judge; and for the purposes of the said provisions, the Court of the Special Judge shall be deemed to be a Court of Session trying cases without a jury or without the aid of assessors and the person conducting a prosecution before a special Judge shall be deemed to be a public prosecutor. . . There is no need to refer to other provisions of the Act which do, not bear upon this matter. The Advocate General, Rajasthan in opposing the petition relies, principally on the provisions of section 7(1) and (2) and contends that the two sub sections create two restrictions which must be read together. The first is that offences specified in section 6(1) can be tried by special Judges only. The second is that every such offence shall be tried by the special Judge for the area within which it is committed and if there are more special Judges in that area, by the 684 special Judge chosen by Government. These two conditions, being Statutory, it is submitted no order can be made under section 527 be because on transfer, even if a special Judge is entrusted with the case, the second condition is bound to be broken. No doubt sub section (1) of section 7 lays down that the trial of an offence specified in sub section (1) of section 6 must be by a special Judge only but that condition can be fully met by transferring the case to another special Judge. Indeed section 527 itself contemplates that the transfer should be to a court of equal or superior jurisdiction and we presume that there are special Judges in every State of India. The selection of a special Judge causes no difficulty. It is the second condition which is really pleaded in bar. The provision of sub section (2) of section 7 is that an offence shall be tried by the special Judge for the area within which it is committed. This condition, if literaly understood would lead to the conclusion that a case once made over to a special Judge in an area where there is no other special Judge, cannot be transferred at all. This could hardly have been intended. If this, were so, the power to transfer a case intrastate under section 526 of the Code of Criminal Procedure, on a parity of reasoning, must also be lacking. But this Court in Ramchandra Prasad vs State of Bihar(1) upheld the transfer of a case by the High Court which took it to a special Judge who had no jurisdiction in the area where the offence was committed. In holding that the transfer was valid this Court relied upon the third sub section of section 8 of the Act. That sub section preserves the application of any provision of the Code of Criminal Procedure if it is not inconsistent with the Act, save as provided in the first two sub sections of that section. The question, therefore, resolves itself to this : is there an inconsistency between section 527 of the Code and the second sub section of section 7 ? The answer is that there is none Apparently this Court in the earlier case found no inconsistency and the reasons appear to be these : The condition that an offence specified in section 6(2) shall be tried by a special Judge for the area within which it is committed merely specifies which of several special Judges appointed in the State by the State Government shall try it. The provision is analogous to others under which the juris diction of Magistrates and Sessions Judges is determined on a territorial basis. Enactments in the Code of Criminal Procedure intended to confer territorial jurisdiction upon courts and Presiding Officers have never been held to stand in the way of transfer of ,criminal cases outside those areas of territorial jurisdiction. The (1) ; 685 order of transfer when it is made under the powers given by the Code invests another officer with jurisdiction although ordinarily he would lack territorial jurisdiction to try the case. The order of this Court, therefore, which transfer a case from one special Judge subordinate to one High Court to another special Judge subordinate to another High Court creates jurisdiction in the latter in much the same way as the transfer by the High Court from one Sessions Judge in a Session Division to another Sessions Judge in another Session Division. There is no comparison between the first sub section and the second sub section of section 7. The condition in the second sub section of section 7 is not of the same character as the condition in the first sub section. The first sub section creates a condition which is a sine qua non for the trial of certain offences. That condition is that the trial must be before a special Judge and laye emphasis on the fact that trial must be before a special Judge appointed for is on a par with the distribution of work territorially between different Sessions Judges and Magistrates. An order of transfer, by the very nature of things must, some times, result in taking the case out of the territory and the provisions of the Code which are preserved by the third sub section of section 8 must supervene to enable this to E be done and the second sub section of s, 7 must yield. We do not consider that this creates any inconsistency because the territorial jurisdiction created by the second sub section of section 7 operates in a different sphere and under different circumstances. Inconsistency can only be found if two provisions of law apply in identical circumstances and create contradictions. Such a situation does not arise F when either this Court or the High Court exercises its powers of transfer. We are accordingly of the opinion that the Supreme Court in exercise of its jurisdiction and power under section 527 of the Code of Criminal Procedure can transfer a case from a special Judge subordinate to one High Court to another special Judge subordinate to another High Court. This brings us to the question of the merits of the petition. The petitioner is being prosecuted for offences under section 120B/161 of the Indian Penal Code and section 5(1)(a)(d) and 5(2) of the Prevention of Corruption Act. His apprehension is that the case against him is H the result of the machination of two Police Officers and one Mr. Mathura Dass Mathur who was the Home Minister in 1962.He also alleges hostility on the part of the State Government. He has given instances which in his opinion prove that the above two 686 officers, the Home Minister and the State Government are hostile to him. In relation to the State Government he has alleged that when he was appointed Commandant of the 8th Battallion of Rajasthan Armed Constabulary the State Government down graded his post, otherwise he would have received a higher starting pay. He also alleges that his suspension and prosecution were made to coincide With his assumption of new duties so that he might not be able to join his new post. With regard to the Home Minister the petitioner has given five instances in which he apparently crossed the minister 's path and gave him room for annoyance. In regard to the two Police Officers he has averred that the Deputy Inspector General of Police, Ajmer Range (Hanuman Prasad Sharma) and he had some differences on three occasions. He has also given similar instances of hostility towards him entertained by Sultan Singh, Deputy Inspector General of Police. On the basis of these he says that he entertains an apprehension that he will not receive justice in the State of Rajasthan. The law with regard to transfer of cases is well settled. A case is transferred if there is a reasonable apprehension on the part of a party to a case that justice will not be done. A petitioner is not required to demonstrate that justice will inevitably fail. He is entitled to a transfer if he shows circumstances from which it can be inferred that he entertains an apprehension and that it is reasonable in the circumstances alleged. It is one of the principles of the administration of justice that justice should not only be done but it should be seen to be done. However, a mere allegation that there is appre hension that justice will not be done in a given case does not office. The Court has further to see whether the apprehension is reasonable or not. To judge of the reasonableness of the apprehension the State of the mind of the person who entertains the apprehension is no doubt relevant but that is not all. The apprehension must not only be entertained but must appear to the Court to be a reasonable apprehension. Applying these principles it may be said that there is a possibility that the petitioner entertains an apprehension that certain persons are hostile to him but his apprehension that he will not receive justice in the State of Rajasthan is not in our opinion reasonable. All the facts which he has narrated bear upon past events in his official life. Nothing has been said which will show that there is in any manner an interference direct or indirect with the investigation of the offences alleged against him or the trial of the case before the special Judge, Bharatpur. A general feeling that some persons are hostile to the petitioner is not sufficient. There must be material 687 from which it can be inferred that the persons who are so hostile are interfering or are likely to interfere either directly or indirectly with the course of justice. Of this there is no trace either in his petition or in the arguments which were advanced before us. Nor does the petitioner allege anything against the special Judge who is trying the case. In this view of the matter we decline to order trans fer of the case from the special Judge, Bharatpur. The petition accordingly fails and will be dismissed. Petition dismissed.

IN-Abs

The petitioner was a member of an All India Service serving in the State of Rajasthan. The State Government ordered his trail before the Special Judge of Bharatpur under section 120B/161 of the Indian Penal Code and section 5(1) (a) (d) and section 5(2) of the Prevention of Corruption Act. He moved the Supreme Court under section 527 of the Code of Criminal Procedure praying for the transfer of his case to another State, on various grounds. On behalf of the State it was contended that the Supreme Court could not exercise its powers under section 527 of the Code of Criminal Procedure in the matter because section 7(1) of the Prevention of Corruption Act required the offences in question to be tried by a special judge only, and section 7(2) of the Act required the offence to be tried by a Special Judge for the area within which they were committed which condition could never be satisfied if there was a transfer. HELD : (i) The condition in sub section (1) of section 7 of the Prevention of Corruption Act that the case must be tried by special judge is a sine qua non for the trial of offences in Section 6. This condition can be satisfied by transferring the case from one special judge to another special Judge. [684 B] Sub section (2) of section 7 merely distributes work between special judges appointed in a State with reference to territory. This Provision is on a par with the section of the Code of Criminal Procedure which confer territorial jurisdiction on Sessions Judges and Magistrates. An order of transfer by the very nature of things must sometimes result in taking the case out of the territory. [685 D] (ii) The third sub section of section 8 of the Act preserves the application ,of any provision of the Code, of Criminal Procedure if it is not inconsistent with the Act save as provided in the first two sub sections of that section. Section 527 of the Code therefore remains applicable; if it is not inconsistent with section 7(2) of the Act. There is no inconsistency between section 527 of the Code and section 7(2) of the Act because the territorial jurisdiction created by the latter operates in a different Sphere and under different circumstances. Inconsistency can only be found if two pro visions of law apply in identical circumstances, and create contradictions. Such a situation does not arise when either this Court or the High Court exercises the power of transfer. Therefore this Court in exercise of its jurisdiction and power under section 527 of the Code can transfer a case from a special judge subordinate to one High Court to another special judge subordinate to another High Court [685 E] Ramchandra Prasad vs State of Bihar, A.I.R. 1961 S.C. 129, referred to, 679 (iii) On merits however the petition in the present case could not succeed. There was nothing in it which would show that there was any interference direct or indirect with the investigation of the offences alleged against the petitioner or the trial of the case by the special judge. A general feeling that some persons are hostile to the petitioner is not sufficient. The Court has further to see whether the apprehension is reasonable. [686 H]

Appeal No.100 of 1953. Appeal by special leave from the Judgment and Order, dated the 27th November, 1952, the High Court of Judicature, Punjab, Circuit Bench at Delhi, in Civil Writ No. 65 D of 1952 arising out of the 893 Judgment and Order, dated the 11th November, 1952, of the Election Tribunal at Delhi in Election Petition No. 10 of 1952. N.C. Chatterjee (A. N. Sinha, with him) for the appellant. S.P. Sinha (R. Patnaik, with him) for the respondent. January 20., The Judgment of the Court was delivered by MAHAJAN C. J. This is an appeal by special leave against the decision of the Delhi Election Tribunal, dated the 11th November, 1952, in Election Petition No. 10 of 1952. The appellant Jagan Nath was elected a member of the Delhi State Legislative Assembly from Constituency No. 25 (Roshanara) of the Delhi State. The polling in this constituency took place on the 14th January, 1952. On the 26th April, 1952, which was the last date under the law for the presentation of an election petition, Jaswant Singh (respondent No. 1) presented such a petition before the Secretary of the Election Commission at New Delhi challenging the election of the appellant and contesting the order of the Returning Officer rejecting his nomination paper. In the petition he impleaded as respondents, Brahma Sarup, Ram Prashad Poddar and the appellant, Jagan Nath, but he omitted to implead, as required by section 82 of the Representation of the People Act, 1951, Baijnath, one of the candidates, whose nomination had been accepted but who had withdrawn his candidature subsequently. On the 14th July, 1952, the Election Commissioner appointed an Election Tribunal comprising respondents 5 to 7. This appointment was published in the Gazette of India on the 26th July, 1952, and the election petition after due publication was referred to the tribunal. On the 26th August, 1952, which was the first date of hearing before the tribunal, the appellant raised a preliminary objection that the omission to implead Baijnath, a duly nominated candidate as a respondent in the petition. was fatal to its 894 maintainability. The petitioner contended that Baijnath was neither a necessary nor a proper party and that in any event the non joinder of a party. was not fatal to the petition in view of the provisions of Order 1, rule 9, Civil Procedure Code. In the alternative, it was claimed that if it was considered that he was a necessary or proper party, permission may be given to the petitioner to implead him. The tribunal decided the preliminary point in favour of the petitioner and held that the non joinder of Baijnath as a respondent was not fatal to the petition. On the finding, however, that Baijnath was a proper party to be impleaded in the case, the tribunal directed that he added as a respondent in the petition and notice of the petition be served on him. In the view of the tribunal Baijnath was not a necessary party in the sense that in his absence no effective decision could be given in the case and that being a proper party, there was no obstacle to his being joined as a respondent even after the expiry of the period of limitation prescribed for making the petition. The appellant being dissatisfied with this decision, made an application to the Punjab High Court under articles 226 and 227.of the Constitution of India for the issue of a writ of certiorari quashing the order of the tribunal on the ground that it was without jurisdiction and for an order that the election petition be dismissed as there was no valid petition before the Election Tribunal for trial. This petition was summarily rejected by the High Court on the 27th November, 1952. On a petition presented to this court under article 136 of the Constitution, special leave was granted by this court. In this appeal it was contended before us that the Election Tribunal was not a court of general jurisdiction, that it was established by the Representation of the People Act, 1951, for the special purpose of trying election petitions, that its jurisdiction was derived from the statute upon certain specified terms and conditions precedent contained in the statute itself and that it had no general and inherent powers of an 895 existing court and that being so, if the terms and conditions precedent prescribed by the statute were not complied with, it had no jurisdiction to act. According to the appellant, the scheme of the Act was that no election could be called in question except by an election petition presented in accordance with the provisions of Part VI of the Act (section 80), and it was suggested that unless all the requirements of sections 81, 82, 83 and 117 were complied with, an election could not be questioned and that no subsequent addition or amendment of the petition after the expiry of the 14 days prescribed for presenting a petition was permissible. It was further contended that the provisions of section 82 were explicit and mandatory and admitted of no exceptions and the petition not being in accordance with the provisions of the law, there was no valid petition which the tribunal could proceed to try. Lastly, it was contended that the provisions of the Code of Civil Procedure were applicable to the trial of petitions but could not be of assistance in determining whether a petition had been validly presented. The general rule is well settled that the statutory requirements of election law must be strictly observed and that an election contest is not an action at law or a suit in equity but is a purely statutory proceeding unknown to the common law and that the court possesses no common law power. It is also well settled that it is a sound principle of natural justice that the success of a candidate who has won at an election should not be lightly interfered with and any petition seeking such interference must strictly conform to the requirements of the law. None of these propositions however have any application if the special law itself confers authority on a tribunal to proceed with a petition in accordance with certain procedure and when it does not state the consequences of non compliance with certain procedural requirements laid down by it. It is always to be borne in mind that though the election of a successful candidate is not to be lightly interfered with, one of the essentials of that law is also to safeguard the purity of the election process and also 896 to see that people do not get elected by flagrant breaches of that law or by corrupt practices. In cases where the election law does not prescribe the consequence, or does not lay down penalty for non compliance with certain procedural requirements of that law, the jurisdiction of the tribunal entrusted with the trial of the case is not affected. It is in these circumstances necessary to set out the different provisions of the Act relevant to the matter canvassed before us. Part VI of the Act deals with "Disputes regarding Elections. " Chapter I of this Part is the definition chapter. Chapter 11 consists of six sections. Section 80 provides that no election on shall be called in question except by an election petition presented in accordance with the provisions of this Part. Section 81 provides that an election petition calling in question any election may be presented on one or more of the grounds specified in Sub sections (1) and (2) of sections 100 and 101 to the Election Commission by any candidate at such election or any elector in such form and within such time but not earlier than the date of publication of the name or names of the returned candidate or candidates at such election under section 67, as may be prescribed; that an election petition shall be deemed to have been presented to the Election Commission_ "(a) when it is delivered to the Secretary to the Commission or to such other officer as may be appointed by the Election Commission in this behalf (i) by the person making the petition, or (ii) by a person authorized in writing in this behalf by the person making the petition ; or (b) when it is sent by registered post and is delivered to the Secretary to the Commission or the officer so appointed. " Section 82 provides as follows: "A petitioner shall join as respondents to his petition all the candidates who were duly nominated at the election other than himself if he was so nominated." 897 Section 83 states that an election petition shall contain a concise statement of the material facts on which the petitioner relies and shall be signed by the petitioner and verified in the manner laid down in the Code of Civil Procedure for the verification of pleadings. It further provides that the petition shall be accompanied by a list signed and verified in like manner setting forth full particulars of any corrupt or illegal practice which the petitioner alleges, including as full a statement as possible of the names of the parties alleged to have committed such corrupt or illegal practice and the date and place of the commission of each such practice. Provision is also made in the section empowering the tribunal to obtain further particulars by allowing an amendment. Section 84 concerns the relief which a petitioner may claim, and section 85 provides that if the provisions of sections 81, 83 or 117 are not complied with, the Election Commission shall dismiss the petition. Power is however given to the Commission to condone delay in making the petition for sufficient cause. Chapter III of Part VI deals with the trial of election petitions. It consists of 21 sections. Section 86 provides that if the petition is not dismissed under section 85, the Election Commission shall appoint an election tribunal for the trial of the petition. Provision, is then made for constituting the ' tribunal and the place where the trial should take place. Section 90 prescribes the procedure to be followed by the tribunal. Sub section (2) of section 90 is in these terms : "Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the tribunal, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908, to the trial of suits. " Sub section (4) provides that notwithstanding anything contained in section 85, the tribunal may dismiss an election petition which does not comply with the provisions of sections 81, 83 or 117. It is significant that both the Election Commission and the tribunal have been given powers in express 116 898 terms to dismiss an election petition which does not comply with the requirements of sections 81, 83 or 117, but no such powers are given to dismiss a petition in limine which does not comply with the provisions of section 82. Such a petition can only be dismissed at the conclusion of the trial and on grounds sufficient to dismiss it (section 98). Specific provisions have been made to ensure that allegations of corrupt practice etc. are not lightly or frivolously made by providing that the petition must be. properly verified and the allegations contained therein stated with a certain amount of definiteness and accuracy and it is an express provision of Part VI itself that the procedure of the tribunal is to be governed by the Code of Civil Procedure and where a petition complies with sections 81, 83 or 117, the Commission is bound to refer the petition to an election tribunal and the tribunal, unless it is of the opinion that the petition is not in accordance with sections 81, 83 or 117, is bound to try it and decide it according to the provisions of law. Provision has been made in section 90 (1) for any other candidate subject to the provisions of section 119, to have himself impleaded as a party in the case within a prescribed period. This provision indicates that the array of parties as provided by section 82 is not final and conclusive and that defects can be cured. Provisions of sections 110, 115 and 116 of Chapter IV of this Part also support this view. Section,110 provides the procedure for the withdrawal of a petition. It says that any person who might himself have been a party may within 14 days of the publication of the notice of withdrawal in the official gazette apply to be substituted as a petitioner in the place of the party withdrawing it. Section 115 provides that such a person can be substituted as a petitioner on the death of the original petitioner while section 116 provides that if a sole respondent dies or gives notice that he does not wish to oppose the petition or any of the respondents dies or gives such notice and there is no other respondent who is appearing in the petition, the tribunal shall 899 cause notice of such event to be published in the official gazette and thereupon any person who might have been a petitioner may within 14 days of such publication apply to be substituted in the place of such respondent and oppose the petition and shall be entitled to continue the proceedings on such terms as the tribunal may think fit. These provisions suggest that if any proper party is omitted from the lists of respondents, such a defect is not fatal and the tribunal is entitled to deal with it under the provisions of the Code of Civil Procedure, Order I, rules 9, 10 and 13. Baijnath was a candidate who had withdrawn his candidature and had not contested the election. By reason of his absence or presence having regard to the grounds on which the petition was based no prejudice was likely to result to the respondent No. I because the main ground on which the petition was based was that the petitioner 's nomination paper had been wrongly rejected. Baijnath did not claim that he had acquired any substantive rights by reason of the failure of the petitioner to implied him within the period prescribed and there is no question of depriving him of any such rights. In our opinion, the tribunal rightly disallowed the preliminary objection. Mr. Chatterjee, the learned counsel for the appellant, drew our attention to certain decisions given by the different election tribunals constituted under the Representation of the People Act, 1951, in support of his contention. On a careful perusal of the different decisions given by the various election tribunals it appears that there is no uniformity of opinion between them on this point. Conflicting opinions have been expressed by these tribunals. It is unnecessary to discuss all these decisions in detail. It will be sufficient to say. that we are in entire agreement with those decisions which have held that non compliance with the provisions of section 82 is not fatal to the petition. The matter has to be determined in accordance with the rules of the Code of Civil Procedure which have Is been made expressly applicable. Mr. Chatterjee laid emphasis on the decision of the Election Tribunal, Lucknow, presided over by 900 Shri N. section, Lokur in Election Petition No. 287 of 1952 published in the Gazette of India dated 20th December, 1951, Part 11, Section 3, page 1034. In that case two persons who had been duly nominated as candidates but who had withdrawn their candidature were not impleaded as respondents as required by section 82 of the Representation of the People Act, 1951 It was held that the non joinder was fatal ,to the petition. It was said that the wording of the Act is peremptory and mandatory and it makes it incumbent on the petitioner to join as respondents all candidates duly nominated and it gives him no option and the failure to do so involves rejection of the petition. Reliance was placed on certain decisions of Election Tribunals given under the election rules in force under the Government of India Act, 1935, and the decision of another Election Tribunal, Quilon, in Sri Ramchandra Nair vs Sri Ramehandra Das reproduced At page 2396e, Gazette of India Extraordinary, Part I, Section 1, dated the llth of November, 1952. It was said that unless all the requirements of rules 81, 82 and 83 are complied with the election cannot be questioned. As regards the omission of section 82 from the provisions of section 85, it was observed that the Election Commission can at once discover whether the provisions of sections 81, 83 and 117 are complied with but the same cannot be said about the requirements of section 82 and that the Election, Commission will have to hold an inquiry as to who were the candidates duly nominated before determining whether all of them had been joined or not, that this burden of inquiry was not thrown on the Commission but it was left for the determination of the tribunal, and hence it was that section 82 was not included in section 85. Both the reasons given by the tribunal cannot, in our opinion, be sustained. The provisions of section 82 are in terms similar to the provisions of Order XXXIV, rule I of the Code of Civil Procedure. Therein it is provided that all persons having an interest either in the mortgage security or in the right of redemption shall be joined as parties to any suit relating to the 901 mortgage. There is ample authority for the view that this is merely a directory provision and non joinder of any party is not a fatal defect and a decree can be passed so far as the parties actually on record are concerned unless the party omitted is a necessary party in the sense that in his absence no relief could be given at all even as regards parties actually on record. There is no valid reason for treating the word "shall" in section 82 in a manner different from the same word used in Order XXXIV, rule 1, Civil Procedure Code. It is one of the rules of construction that a provision like this is not mandatory unless non compliance with it is made penal. As regards the dictum of the Lucknow Tribunal that no inquiry is required to be made in the case of non compliance with the provisions of sections 81, 83 and 117 but that an inquiry would be necessary to determine whether certain parties were nominated candidates or not, in our opinion it cannot stand scrutiny. Whether a petition has been presented by a person who has purported to sign it or by someone else or whether an agent who has signed the petition is a duly authorized agent or not are its much matters of inquiry as the question of determination of the names of nominated candidates. This fact can be easily determined by reference to the Returning Officer. That this reasoning of the tribunal is not sound is fully demonstrated by a reference to the next case cited by the learned counsel and decided by the same tribunal presided over by Shri N. section Lokur. In that case the question arose whether the petition was duly verified and whether it was accompanied by all the necessary lists required by section 83 (2). An elaborate inquiry had to be conducted to ' determine the point whether the petition was typed on blank paper signed by the petitioner or whether it was signed by him or some person authorized on his behalf after it had been typed. It is thus clear that it is no valid explanation to say that section 82 was omitted from the provisions of section 85 simply on the ground that the Election Commission was absolved from the duty of making elaborate inquiries at the stage when it had to say whether the provisions of sections 81, 83 and 902 117 had been complied with. From the circumstance that section 82 does not find a place in the provisions of section 85 the conclusion follows that the directions contained in section 82 were not considered to be of such a character as to involve the dismissal of a petition in limine and that the matter was such as could be dealt with by the tribunal under the provisions of the Code of Civil Procedure specifically made applicable to the trial of election petitions. The Bombay Tribunal, presided over by Shri B. D. Nandkarni has taken a contrary view in Election Petition No. 72 of 1952, page 286, Gazette of India Extraordinary, dated the 5th February, 1953. The issue in this case was whether Shri T. C. Patil, was a necessary party and whether by the omission to implead him the whole petition was bad. The tribunal held that the defect was not fatal. In another case, Petition No. 113 of 1952, decided on 28th July, 1953, the majority of the Bombay Tribunal, decided otherwise. The view of the majority was that the mandatory nature of the provisions of section 82 itself contains within it the consequence of dismissal for non compliance with its provisions and a separate provision for the dismissal of the petition for non compliance with its provisions was not necessary and it would have been superfluous. These observations run counter to the scheme of the Act itself as envisaged by section 85. The provisions of sections 81, 83 and 117 are also mandatory and still in section 85 it is provided in specific terms that the Election Commission shall dismiss the petition if it is not in accordance with the provisions of those sections. The, tribunal is given a similar power by section 90 (4). The member of the tribunal who dissented from the majority view gave cogent and sound reasons for holding that non joinder of a duly nominated candidate who has withdrawn was not necessarily fatal to the petition. In Election Petition No. 83 of 1952 decided by the Election Tribunal presided over by Shri B. C. Vakil, the tribunal took the view that such a defect was fatal. A Division Bench of the Bombay High Court in Special 903 Civil Appeal No. 2017 of 1952, decided on the 19th of December, 1952, allowed even a defective verification to be amended. It is not necessary to express any final opinion on matters specifically covered by sections 81, 83 and 117 and dealt with by section 85 of the Act but at the same time it is not possible to accept the view 'that in spite of the provisions of section 85 failure to comply strictly with the provisions of section 82 has, the same consequences as are contained in section 85. In our opinion the determination of the question whether the parties to the petition have been properly impleaded is a matter not for the Election Commission but for the tribunal. Various provisions of the Act referred to above show that the election petition does not necessarily abate or fail by reason of the death of the petitioner or any of the respondents or by their ceasing to take any interest in the trial of the petition once that petition has been referred to the tribunal. On the other hand, any person who could be a petitioner can continue the petition in spite of the death of either the petitioner or the respondents to the petition and on the original parties failing to prosecute it. These provisions have been made to ensure that the election process on which the democratic system of Government is based is not abused or misused by any candidate and that inquiry is not shut out by collusion between persons made parties to the petition or by their respective deaths. It is therefore clear that the provisions of the law relating to the impleading of parties are not necessarily fatal and can be cured. It is for the tribunal to determine the matter as and when it arises in accordance with the provisions of the Code of Civil Procedure. For the reasons given above we are of the opinion that the decisions of the tribunal and of the High Court in this case were right. We accordingly dismiss the appeal with costs. Appeal dismissed. Agent for respondent No. K. L. Mehta.

IN-Abs

Held, (i) that non compliance with the provisions of section 82 of the Representation of the People Act, 1951 (XLIII of 1951), and the omission of a proper party from the list of respondents is not fatal and the tribunal is entitled to deal with the matter in accordance with the rules of the Code of Civil Procedure which have been made expressly applicable; (ii) that it is one of the rules of construction that a provision similar to the one in section 82 is not mandatory unless noncompliance with it is made penal. Order XXXIV, r. 1, of the Code of Civil Procedure, referred to. General principles governing the decision of election peti tions discussed.

Civil Appeal No. 871 of 1964. Appeal from the judgment and order dated January 16, 17, 1961 of the Gujarat High Court in Special Civil Application No. 233 of 1960. N. D. Karkhanis, T. A. Ramachandran, 0. C. Mathur, Ravinder Narain and J. B. Dadachanii, for the appellant. A. V. Viswanatha Sastri, R. Ganapathy Iyer, B. R. G. K. A char and R. N. Sachthey, for the respondents. The Judgment of the Court was delivered by Shah, J. The appellants Company registered under the Indian Companies Act, 1913 was assessed in the assessment years 1948 49 to 1953 54 in respect of the profits earned in its business, and was allowed rebate under the appropriate provisions contained in the Schedules to the relevant Finance Acts on the undistributed profits of the previous years. On December 31, 1956 at an annual general meeting of the shareholders the Company declared an aggregate sum of Rs. 2,15,232/ as dividend for the year ending December 31, 1956. Thereafter a special resolution was passed for voluntary winding up of the Company with effect from October 1, 1957, and for appointing a liquidator to wind up the affairs of the Company. On October 20 & 21, 1957 the liquidator distributed to the shareholders thereafter on February 21 & 22, 1958; July 27, 1959 the liquidator distributed to the shareholders. In respect of each liquidator issued an "income tax refund that the amount was distributed out of accumulated profits of earlier years. The Income tax Officer, Special Investigation Circle B, Ahmedabad in exercise of the power under section 35(10) of the Indian Income tax Act, 1922, passed an order withdrawing the rebate, 734 granted in respect of each of the six assessment years 1948 49 to 1953 54 and demanded payment of tax on the amount of the rebate. The appellant then applied to the High Court of Bombay for writs quashing the orders of the Income tax Officer and the notice of demand and directing the Income tax Officer to withdraw and cancel the order and notice of demand. The petition was dismissed by the High Court. With certificate granted by the High Court, this appeal has been preferred. Two questions are raised for determination in this appeal (1) Whether section 35(10) authorises the Income tax Officer to bring to tax rebate granted in assessment years commencing prior to April 1, 1956; and (2) whether distribution by the liquidator of accumulated profits in the previous years could be regarded as declaration of dividend within the meaning of section 35(10) so as to attract the applicability of the provisions enabling withdrawal of rebate and demand for tax. The first question is concluded by a recent judgment of this Court in Ahmedabad Manufacturing and Calico Printing Co. Ltd. vs section G. Mehta, Income tax Officer and Another(1). In that case this Court held that section 35(10) applied even though dividend was declared before April 1, 1956. Counsel for the Company urged that in the Ahmedabad Manufacturing and Calico Printing Co. 's case it was held that power to withdraw rebate granted in the year before April 1, 1952 was not exercisable by the Incometax Officer under section 35(10) and consistently with that view withdrawal of rebate granted in the years ending on and before March 31, 1952 was unauthorised. In Ahmedabad Manufacturing and Calico Printing Co. 's case(1) declaration of dividend by the Com pany was made on April 20, 1953. The financial year in which the amount on which rebate of income tax was allowed was availed of by the Company for declaring dividends was 1953 54, and within four years from the end of that year an order calling upon the Company to show cause why action should not be taken under section 35(10) to recall the proportionate part of the rebate was issued. It was said by Hidayatullah, J. : "Since the power commenced on April 1, 1956, the utmost reach of the Income tax Officer would be the end of the assessment year 1952. Any declaration of (1) [1963] Supp. 2 S.C.R. 92. 735 dividend after 1st day of April, 1952, out of accumulated profits of any of the years in which rebate was earned would be within the time for the recall of any rebate. But a declaration prior to April 1, 1952, would be beyond the power of the Income tax Officer to recall." Power to withdraw rebate was in that case held exercisable within four years from the end of the financial year in which the amount of rebate was availed of : it was not held that the power was exercisable in respect of rebate granted only in respect of four years before April, 1956. The argument raised by counsel importing a limitation contrary to the plain words of the statute must therefore be rejected. Sub section (10) of section 35 was inserted in the Income tax Act by section 19 of the Finance Act, 19@6, with effect from April 1, 1956. It provides "Where, in any of the assessments for the years beginning on the 1st day of April of the years 1948 to 1955 inclusive, a rebate of income tax was allowed to a company on a part of its total income under clause (i) of the proviso to Paragraph B of Part I of the relevant Schedules to the Finance Acts specifying the rates of tax for the relevant year, and subsequently the amount on which the rebate of income tax was allowed as aforesaid is availed of by the company, wholly or partly, for declaring dividends in any year, the amount or that part of the amount availed of as aforesaid, as the case may be, shall, by reason of the rebate of incometax allowed to the company and to the extent to which it has not actually been subjected to an additional income tax in accordance with the provisions of clause (ii) of the proviso to Paragraph B of Part I of the Schedules to the Finance Acts above referred to,. be deemed to have been made the subject of incorrect relief under this Act, and the Income tax Officer shall recompute the tax payable by the company by reducing the rebate originally allowed, as if the recomputation is a rectification of a mistake apparent from the record within the meaning of this section and the provisions of sub section (1) shall apply accordingly, the period of four years specified therein being reckoned from the end of the financial year in which the amount on which rebate of 736 income tax was allowed as aforesaid was availed of by the company wholly or partly for declaring dividends. " It is urged by counsel for the Company that power under sub section (10) of section 35 cannot be exercised because distribution of accumulated profits by the liquidator is not distribution by the Company. The argument is wholly without substance. On the passing of a special resolution by the Company that it be wound up voluntarily under the Companies Act 1 of 1956, the Company does not stand dissolved. That is so expressly provided by section 487, of the Companies Act. A Company which has resolved to be voluntarily wound up may be dissolved in the manner provided by section 497(5) : till then the Company has corporate existence and corporate powers. The property of the Company does not vest in the liquidator : it continues to remain vested in the Company. On the appointment of a liquidator, all the powers of the Board of directors and of the managing or whole time directors, managing agents, secretaries and treasurers cease (section 491), and the liquidator may exercise the powers mentioned in section 512, including the power to do such things as may be necessary for winding up the affairs of the Company and distributing its assets. The liquidator appointed in a members ' winding up is merely an agent of the Company to administer the property of the Company for purposes prescribed by the statute. In distributing the assets including accumulated profits the liquidator acts merely as an agent or administrator for and on behalf of the Company. It is then urged that on the commencement of winding up, distinction between the capital and accumulated profits of the Company disappears, and what remains in the hands of the liquidator are the assets of the Company, and distributions made by the liquidator are distributions of capital, regardless of the source from which the funds are distributed is capital or accumulated profits. In distributing the surplus assets in his hands, the liquidator is therefore not "declaring dividends" within the meaning of section 35(10). In support of this contention, reliance was placed upon Inland Revenue Commissioners vs George Burrell(1). The Court in that case held that on the winding up of a limited company the undivided profits of the past year and the year in which winding up occurred were only assets of the company and on distribution amongst the shareholders supertax was not payable on the undivided profits as income. (1) 737 Under the , accumulated profits of the Company at the commencement of the winding up of the Company undoubtedly come into the hands of the liquidator as assets for the purpose of satisfying liability of the Company and for distribution among the shareholders. But the rule in Burrell 's cave(1) since the amendment of the definition of "dividend" in section 2(6A) by the Finance Act, 1956, no longer applies, when the liability to assessment of income tax in respect of amounts distributed out of accumulated profits by a liquidator in a winding up falls to be determined. The Parliament had devised by the Indian Income tax (Amendment) Act 7 of 1939, a special inclusive definition for the Income tax Act, 1922 of "dividend" in section 2(6A). Being an inclusive definition, the expression "dividend" means dividend as ordinarily understood under the and also the heads of payment or distribution specified therein. Clause (c) as originally enacted, included distributions made to the shareholders of a Company out of accumulated profits on the liquidation of the Company. This was clearly an attempt to supersede the rule in Burrell 's case(1). It was pointed out by this Court in Dhandhania Kedia & Co. vs Commissioner of Income tax(2) that section 2 (6A) (c) was enacted to remove the anomaly which was created by the judgment in Burrell 's case(1), and to assimilate the distribution of accumulated profits by a liquidator to a similar distribution by a Company which is working. But the language of the clause and the proviso thereto included only those accumulated profits which had not been capitalized, and which arose during the six previous years preceding the date of commencement of the year of account in which the liquidation commenced. By the Finance Act, 1955, the proviso to cl. (c) was omitted : thereby accumulated profits whether capitalized or not and without any restriction as to time were brought within the definition. By the Finance Act, 1956, cl. (c) was recast as follows : " any distribution made to the shareholders of a company on its liquidation, to the extent to which the distribution is attributable to the accumulated profits of the company immediately before its liquidation, whether capitalized or not. " Amendment to cl. (c) in section 2(6A) was made and section 35(10) was inserted in the Income tax Act simultaneously by the Finance Act, 1956. It would be reasonable to regard the provisions of section 35(10) and amended cl. (c) of sub section (6A) of section 2 as part of a (1) L3Sup. CI/66 18 (2) 738 single scheme to declare distribution of accumulated profits, capitalized or not, as dividends, and to bring the rebate granted on undistributed profits to tax if availed of by the company or by the liquidator of a company for distributing dividends. Counsel for the Company contended that the amount distributed out of accumulated profits by the liquidator is not dividend in the hands of the Company. For this distinction again there is no warrant. Distribution of accumulated profits by a Company not subject to winding up is distribution of dividend by virtue of section 2(6A) (a), and distribution of accumulated profits in the course of liquidation is dividend by virtue of section 2(6A)(c). It is true that the definition of "dividend" in section 2(6A)(c) win apply only if there is nothing repugnant in the subject or context in which the expression "dividend" occurs in section 35(10), but there is nothing in section 35(10) which suggests that the expression "dividend" was to have a meaning different from the meaning assigned to it by the interpretation clause. It was urged that assuming that accumulated profits of a Company distributed by the liquidator may be regarded as dividends, power under section 35(10) cannot be exercised in respect of those profits, because the liquidator is not in distributing the profits "declaring dividends". But the assumption underlying the argument that the provides that dividends may be deemed to be declared only if certain mandatory provisions are complied with is without substance. By section 205 of the Indian (before it was amended in 1960) it was provided that no dividend shall be declared or paid except out of the profits of the company or out of moneys provided by the Central or a State Government for the payment of the dividend in pursuance of a guarantee given by such Government. The Company in the present case was registered under the Indian Companies Act, 1913. The Articles of Association of the Company are not before us, but the Articles relating to distribution of dividend being under section 17(2) of the Companies Act, 1913, obligatory, articles 95, 96 and 97 in Table A of Act 7 of 1913 applied. By article 95 it was provided that a company in general meeting may declare divi dends, but no dividends shall exceed the amount recommended. But to the distribution of interim dividends, the condition that it must be declared in general meeting of the Company did not apply, and such interim dividends as appeared to the directors to be justified by the profits of the company could be distributed (article 96). The only other relevant condition was in article 97 that no dividend shall be paid otherwise than out of profits of the year or any other undistributed profits. 739 The liquidator of the appellant company did from time to time distribute accumulated profits, and within the meaning of section 2(6A)(c) read with the provisions of the Companies Act, they were distribution of interim dividends. It is true that power under section 35(10) may be exercised if accumulated profits are availed of by the Company "for declaring dividends in any year", but since the Companies Act does not in the matter of distribution of interim dividends set up any special machinery, nor impose any special condition before power in that behalf may be exercised, no artificial meaning can be attached to the word "declaring dividends". Distribution of accumulated profits by the liquidator together with the income tax refund certificate in the course of voluntary winding up may therefore, for the purpose of section 2(6A)(c), be regarded as declaration of dividend. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellant company was assessed to tax in the assessment years 1948 49, to 1953 54, in respect of its profits, and was allowed rebate on the undistributed profits. It was resolved to voluntarily wind up the company with effect from October 1, 1957. The liquidator, during the years 1957 to 1959 distributed, from time to time, the accumulated profits to the shareholders and also issued income tax refund certificates. The Income tax Officer, under section 35(10) of the Income Tax Act, 1922, withdrew the rebate granted in respect of each of the assessment years 1948 49 to 1953 54 and demanded payment of tax. The company applied for a writ quashing the order, but the High Court dismissed the petition. In appeal to this Court, the company contended that : (i) Section 35(10) did not authorise the Income tax Officer to bring to tax the amount on which rebate tax was granted in assessment years commencing prior to 1st April 1956, and (ii) the distribution by the liquidator of accumulated profits could not be regarded as declaration of dividend by the company within the meaning of section 35(10). HELD : (i) The power to withdraw rebate was exercisable within 4 years from the end of the financial year in which the amount on which rebate was allowed was availed of by the company for declaring dividends. 1735 B C] Ahmedabad Manufacturing and Calico Printing Co. Ltd. vs S.G. Mehta, [1963] Supp. 2 S.C.R. 92, followed, (ii) Distribution of accumulated profits by the liquidator together with the income tax refund certificates, in the course of voluntary winding up, can be regarded as declaration of dividend, so as to attract the applicability of provisions enabling the withdrawal of rebate and demand for tax. [739 C] On the passing of a resolution for voluntary winding up the company does not stand dissolved and its property does not vest in the liquidator. lit distributing the assets, including accumulated profits, the liquidator acts merely as an agent or administrator for and on behalf of the company. Therefore, distribution by the liquidator is distribution by the company. [736 B C, E] There is nothing in section 35(10) which suggests that the expression dividend was to have a meaning different from the meaning assigned to it by section 2(6A) in the interpretation clause. By the omission of the proviso to section 2(6A)(c) by the Finance Act, 1955, distribution of accumulated profits, whether capitalised or not and without any restriction as to time, was brought within the definition of dividend. The provisions of sections 35(10) and 2(6A)(c) are part of a single scheme to declare distribution of accumulated profits, capitalized or not, as dividends, and 733 to bring the undistributed profits on which rebate was granted to tax, if availed of by the liquidator of the company for distributing dividends. [737 F, H; 738C D] Power under section 35(10) may be exercised if accumulated profits are availed of by the company "for declaring dividends in any year", that is, after following the procedure in article 95 of Table A of the Companies Act, 1913, under which the assessee was registered. But, the distribution made by the liquidator, was a distribution of interim dividend, and, in the matter of distribution of interim dividend, the Companies Act does not set up any special machinery nor does it impose any special condition before power in that behalf may be exercised. [739 A C]

ON: Criminal Appeals Nos.165 168 of 1962. Appeals by special leave from the judgment and order dated August 25, 1962 of the Patna High Court in Criminal Revisions Nos.527 to 530 of 1962. Nuruddin Ahmad and U. P. Singh, for the appellants. section P. Varma and R. N. Sachthey, for the respondents. The Judgment of the Court was delivered by Mudholkar, J. This judgment will also govern Crl.No. 166 of 1962, 167 of 1962 and 168 of 1962. A common question arises in these appeals from a judgment of the Patna High Court dismissing four revision applications preferred before it by four sets of appellants in the appeals before us. Counsel on both the sides agree that since the relevant facts of all the proceedings are similar and the question of law arising from them is the same it will be sufficient to refer to the facts of Case No. TR 320/60. Four informations were lodged at the police station, Ghora Saha on April 14, 1960 by different persons against the different appellants in these cases and a similar information was lodged against some of the appellants by one Mali Ram. In all these cases the allegations made by the informants were that each set of the accused persons armed with deadly weapons went to the shops of the various informants, demanded from them large sums of money and threatened them with death if they failed to pay the amounts demanded by them. The informations also stated that 742 some of these persons paid part of the money and were given time to pay the balance while some agreed to pay the amounts demanded. Upon informations given by these persons offences under section 392, Indian Penal Code, were registered by the station officer and after investigation five challans were lodged by him, in the court of Magistrate. First Class at Motihari. One of the cases ended in an acquittal but we have not been informed of the date of the judgment in that case. In the other four cases trial had come to a close in that all the prosecution witnesses and the defence witnesses had been examined and the cases had been closed for judgment. In the case against the appellants in Crl. A. 165 of 1962 the challan was presented on October 27, 1960. The order sheet of that date reads as follows: Date of order Order with the Office action section No. or proceeding signature of taken with the Court date 1.27 10 1960 All the 4 accused are present Heard both sides. It is argued on behalf of the prosecution that it is a fit case for adopting procedure under Chapter XVIII Cr. P. C. and also that the entire occurrence relates to offences committed on 4 dates so that all of them cannot be dealt with in a single case. Discussed law point "Charge u/s 302, I.P.C. framed against accused Thakur Ram and Jagarnath Pd. and explained to them. They plead not guilty. This case will constitute an independent case. As for the other parts of the alleged occurrence accused Jagarnath, Kamal Ram and Bansi Rain are charged separately u/s 384, I.P.C. and further accused Thakur Ram u/s 384/109, I.P.C. and explained to the respective accused. They plead not guilty. These charges relating to three incidents on 3 dates will constitute a separate single case. Start separate order sheet for both Summons P.W. for 26 10 60 and 27 11 60.Accused as before. Sd/ O. Nath". The trial dragged on for nearly 15 months and then the prosecution made an application to the court for framing a charge 743 under section 386 or section 387, Indian Penal Code and for committing the case to a court of Sessions. This was disposed of by the learned Magistrate on January 25, 1962. The relevant portion of his order sheet of that date reads thus "Accused absent. A petition for their representation u/s 540 A, Cr P.C. is filed. Allowed. No reference book is produced. Persued the record. The prosecution has pressed to refer the case to the Court of Sessions u/s 386 or 387 I.P.C. On close scrutiny I find that the robbery defined inside 390 I.P.C. fully cover the ingredients pointed out and asked by the prosecution side. The case has entered in the defence stage. This point was not introduced ever before. The charge was framed u/s 392, I.P.C. after hearing the parties. Although it may be referred to the superior court at any stage, I find no reason to do so. Put up on 28 2 62. All accused to appear with D.Ws without fail. Accused as before. " On February 28, 1962 the prosecution moved a petition for stay of proceedings on the ground that it wanted to prefer an application for revision of the order of January 25, 1962. Stay was refused and the case was proceeded with. On March 17, 1962 the defence case was closed and the case was fixed for March 29, 1962 for arguments. On that date a second application was made for committing the case to a court of Sessions. It would appear from the order sheet of March 29, 1962 that the Magistrate heard the parties and ordered the case to be put up on the next day, that is March 30, 1962. On this day the Magistrate passed an order to the following effect "30 3 62 All the 2 accused persons are present. Having carefully gone through the law points and section 236 Cr.P.C. I do not find that it is a case exclusively coming u/s 386 or 387 I.P.C. Hence the prosecution prayer is rejected." Immediately thereafter a revision application was preferred, not by the prosecution, but by Sagarmal, an informant in one of the other three cases. The Sessions Judge, Champaran, after briefly reciting the facts and reasons on which the order of the trying Magistrate was founded, disposed of the revision application in the following words: .lm15 "The cases are of very serious nature and the framing of charges under sections 386 or 387, I.P.C. can 744 not be ruled out altogether. Consequently, I direct that each of these cases should be tried by a Court of Session. The learned Magistrate will commit the accused persons for trial accordingly. The applications are thus allowed. " An application for revision was preferred by the appellants before the High Court and the main ground urged on their behalf was that the Sessions Judge had no jurisdiction to pass an order for commitment as there was no order of discharge by the Magistrate. There is conflict of authority on the question whether under section 437, Cr.P.C. a Sessions Judge can, in the absence of an express order of discharge, direct commitment of a case to it while the trial is proceeding before a Magistrate in respect of offences not exclusively triable by a Court of Sessions. After referring to some decisions and relying upon two decisions of the Allahabad High Court the learned Judge who disposed of the revision application observed as follows "As I have already indicated, in the instant cases, the trial Magistrate, after hearing the parties, refused to frame a charge for the major offence under section 386 or section 387 of the Indian Penal Code. The refusal by the Magistrate to frame a charge under section 386 or 387 of the Indian Penal Code was a final order and it amounted to an order of discharge of the accused of the offence under those sections. That being the position, the learned Sessions Judge had full jurisdiction to order for commitment." The learned Judge further observed "Without expressing any opinion on the merits of the four cases, I would state, that, on the materials on record, the Sessions Judge was not unjustified in passing the impugned order for commitment of the accused in the four cases. The order of the Magistrate refusing to frame a charge under section 386 or section 387 of the Indian Penal Code, which amounted to an order of the implied discharge of the accused, was improper in all the four cases." and dismissed the revision applications. Am application was made for a certificate of fitness to appeal to this Court. That was rejected and the appellants have come here by special leave. 745 The ambit of the powers of the Sessions Judge under section 437, Cr.P.C. has been considered by a Full Bench of the Allahabad High Court in Nahar Singh vs State(1). In that case it was held that the powers conferred by that section are exercisable only in a case where a Magistrate by an express order discharges an accused person in respect of an offence exclusively triable by a court of Sessions. The learned Judges constituting the Full Bench have taken the view that in the light of certain provisions of the Code to which they adverted, the failure of or refusal by a Magistrate to commit an accused person for trial by a court of Sessions does not amount to an implied discharge of the accused person so as to attract the power of the Sessions Judge under section 437, Cr.P.C. to direct the Magistrate to commit the accused person for trial by a court of Sessions on the ground that the offence is exclusively triable by a Court of Sessions. The Full Bench decision has been followed in Sri Dulap Singh & ors.vs State through Sri Harnandan Singh(2). Before us reliance is also placed on behalf of the appellants on the decision in Yunus Shaikh vs The State(3). That decision, however, is of little assistance to them because the ground on which the High Court set aside the order of the Sessions Judge is not that he had no jurisdiction to make it under section 437, Cr.P.C. but that the action of the Magistrate in not framing a charge under section 366 of the Indian Penal Code but framing a charge only under section 498, T.P.C. did not, in the light of the material before him, amount to an improper discharge of the accused in respect of an offence triable by a Court of Sessions. The view taken by the Allahabad High Court has been accepted as correct in Sambhu Charan Mandal vs The State(4 ) . On the other hand a Full Bench of the Madras High Court has held in in re Nalla Baligadu(5) that where under section 209(1) a Magistrate finds that there are not sufficient grounds for committing the accused for trial and directs such person to be tried before himself or some other Magistrate, the revisional powers under section 437, Cr.P.C. can be exercised before the conclusion of the trial before such Magistrate. The learned Judges expressly dissented from the view taken by the Full Bench of the, Allahabad High Court. This decision has been followed in, Rambalam Pd.Singh vs State of Bihar(6). Other decisions which take the same view as the Madras High Court are : Krishnareddi (1) I.L.R. [1952] 2 All. 152.(3) A.I.R. 1953 Cal.(5) A.I.R. 1953 Mad. 801.(2) A.I.R. 1954 All.(4) (6) A.I.R. 1960 Patna 507.746 v.Subbamma(1); Shambhooram vs Emperor(2); Sultan Ali vs Emperor( '); and in re Valluru Narayana Reddy & ors.(4 ) . In order to decide the question which has been raised before us it would be desirable to bear in mind the relevant provisions of the Code of Criminal Procedure. Section 207 provides that in every inquiry before a Magistrate where the case is triable exclusively by a Court of Sessions or High Court, or, which in the opinion of the Magistrate, ought to be tried by such Court, the Magistrate must in any proceeding instituted on a police report, follow the procedure specified in section 207 A. Under section 207 A the Magistrate, after perusing the police report forwarded under section 173, has to fix a date for hearing and require the production of the accused on that date. He has also the power to compel the attendance of such witnesses or the production of any document or thing on that date if an application is made in that behalf by the officer conducting the prosecution. On the date of hearing the Magistrate, after satisfying himself that copies of the documents referred to in section 173 have been furnished, has to proceed to take the evidence, of such persons, if any, as are produced as witnesses to the actual commission of the offence. After the examination of those witnesses and after their cross examination by the accused the Magistrate may, if he thinks it necessary so to do in the interest of justice, take the evidence of any one or more of the other witnesses for the prosecution. He has then to examine the accused for the purpose of enabling him to explain the circumstances appearing in the evidence against him and hear both the proseeution as well as the accused. If at that stage he is of opinion that no round for committing the accused for trial exists, the Magistrate can, after recording his reasons, discharge the accused. If, however, it appears to the Magistrate that such person should be tried by himself or some other Magistrate he must proceed accordingly. This contingency will arise if the Magistrate forms an opinion that no case exclusively triable by a Court of Sessions is disclosed but a less serious offence which it is within the competence of the Magistrate to try is disclosed. In that case he has to proceed to try the accused himself or send him for trial before another Magistrate. Where the Magistrate is of opinion that the accused should be committed for trial he has to frame a charge and declare with what offence the accused should be charged. With the remaining provisions of s, 207 A we are not concerned. It will thus be seen that where the police report suggests the commission of an offence which is exclusively triable by a Court (1) I.L.R. (3) A.I.R. 1934 Lahore 164.(2) A.I.R. 1935 Sind 221.(4) A.I.R. 1955 Andhra 48.747 of Sessions, the Magistrate can nevertheless proceed to try the accused for an offence which is triable by him if he is of the view that no offence exclusively triable by a Court of Sessions is disclosed. Similarly, even in a case where an offence is triable both by a Magistrate and a Court of Sessions, the Magistrate is of the view that the circumstances do not warrant a trial by a Court of Sessions he can proceed with the trial of the accused for that offence himself. Section 347 which occurs in chapter XXIV headed "General provisions as to Inquiries and Trials" empowers a Magistrate to commit a person for trial by a Court of Sessions if in the course of the trial before him and before signing the judgment it appears to him at any stage of the proceeding that the case ought to be so tried. These provisions would thus indicate that an express order of discharge is contemplated only in a case where a Magistrate comes to the conclusion that the act alleged against the accused does not amount to any offence at all and, therefore, no question of trying him either himself or by any other court arises. They also show that where an accused person is being tried before a Magistrate in respect of an offence triable by that Magistrate it appears to the Magistrate that the act of the accused amounts to an offence which is triable either exclusively or concurrently by a Court of Sessions he has the power to order his committal. This power, however, has to be exercised only before signing the judgment. It cannot obviously be exercised thereafter because of the provisions of section 403(1) which bar the trial of the person again not only for the same offence but also for any other offence based on the same facts. It would follow from this that where on a certain state of facts the accused is alleged by the prosecution to have committee an offence exclusively triable by a Court of Sessions but the Magistrate is of the opinion that the offence disclosed is only an offence which he is himself competent to try and either acquits or convicts him there is an end of the matter in so far as the very set of facts are concerned. The facts may disclose really a very grave offence such as, say, one under section 302, I.P.C. but the Magistrate thinks that the offence falls under section 304 A which he can try and after trying the accused either convicts or acquits him. In either case the result would be that the appropriate court will be prevented from trying the accused for the grave offence which those very facts disclose. It is to obviate such a consequence and to prevent inferior courts from clutching at jurisdiction that the provisions of section 437, Cr.P.C. have been enacted. To say that they can be availed of only where an express order of discharge is made by a Magistrate despite the wide language used in section 437 would have 748 the result of rendering those provisions inapplicable to the very class of cases for which they were intended. When a case is brought before a Magistrate in respect of an offence exclusively or appropriately triable by a Court of Sessions what the Magistrate has to be satisfied about is whether the material placed before him makes out an offence which can be tried only by the Court of Sessions or can be appropriately tried by that Court or whether it makes out an offence which he can try or whether it does not make out any offence at all. In Ramgopal Ganpatrai vs State of Bombay(1) this Court has pointed out : "In each case, therefore the Magistrate holding the preliminary inquiry, has to be satisfied that a prima facie case is made out against the accused by the evidence of witnesses entitled to a reasonable degree of credit and unless he is so satisfied, he is not to commit." It has, however, also to be borne in mind that the ultimate duty of weighing the evidence is cast on the court which has the jurisdiction to try an accused person. Thus, where two views are possible about the evidence in a case before the Magistrate, it would not be for him to evaluate the evidence and strike a balance before deciding whether or not to commit the case to a Court of Sessions. If, instead of committing the case to a Court of Sessions, he proceeds to try the accused upon the view that the evidence found acceptable by him only a minor offence is made out for which no commitment is required he would obviously be making an encroachment on the jurisdiction of the appropriate court. This may lead to miscarriage of justice and the only way to prevent it would be by a superior court stepping in and exercising its revisional jurisdiction under section 437 Cr.P.C. There is nothing in the language of section 437 from which it could be said that this power is not exercisable during the pendency of a trial before a Magistrate or that this power can be exercised only where the Magistrate has made an express order of discharge. Express orders of discharge are not required to be passed by the Court in cases where, upon the same facts, it is possible to say that though no offence exclusively or appropriately triable by a Court of Sessions Judge is made out, an offence triable by a Magistrate is nevertheless made out. One of the reasons given by the Allahabad High Court in support of the view taken by it is that a Magistrate has power even during the course of the trial to commit the accused to a Court of Sessions and that to imply a discharge from his omission to commit or refusal to commit (1) [1958] S.C.R.618.749 would not be consistent with the existence of the Magistrate 's power to order commitment at any time. That does not, however, seem to be a good enough ground for coming to this conclusion. The power to commit at any stage is exercisable by virtue of the express provisions of section 347 or section 236 and a previous discharge of an accused from a case triable by a Court of Sessions would not render the power unexercisable thereafter. Moreover, even if an express order of discharge is made by a Magistrate in respect of an offence exclusively triable by a Court of Sessions but a trial on the same facts for a minor offence is proceeded with the Magistrate has undoubtedly power to order his commitment in respect of the very offence regarding which, he has passed an order of discharge provided of course the material before him justifies such a course. There is nothing in section 347 which precludes him from doing this. It will, therefore, be not right to say that the power conferred by section 437 is exercisable only in respect of express orders of discharge. In this context it will be relevant to quote the following passage from the judgment of the Full Bench of the Madras High Court in Krishna Reddy 's case(1) : "I do not think that the order of the Sessions Judge was one which he had no jurisdiction to make. In my view the decision of the Magistrate must be taken to be not only one of acquittal of an offence punishable under section 379, Indian Penal Code, but one of discharge so far as the alleged offence under section 477, Indian Penal Code is concerned. The complaint against the accused was that he committed an offence punishable under section 477, Indian Penal Code. Such offence is triable exclusively by the Court of Sessions. The Magistrate could neither acquit nor convict him of such offence. He was bound either to commit him to the Sessions Court or to discharge him. He did not commit him. The only alternative was to discharge him, and that, I take it, is what the Magistrate really did do. It is not suggested that the charge under section 477 is still pending before the Magistrate. It has been disposed of, and the only question is as to what the disposal has been. It seems to me that the accused has been discharged so far as the charge under section 477 is concerned. The Magistrate 's order, if stated fully,should have been 'I discharge him as regards the offence punishable under section 477, and I acquit him as regards the offence punishable under section 379 (1) L.L.R. 750 We agree and are, therefore, of the view that the High Court was right in holding that the Sessions Judge had jurisdiction to make an order directing the Magistrate to commit the case for trial by a Court of Sessions. The provisions of section 437, however, do not make it obligatory upon a Sessions Judge or a District Magistrate to order commitment in every case where an offence is exclusively triable by a Court of Sessions. The law gives a discretion to the revising authority and that discretion has to be exercised judicially. One of the factors which has to be considered in this case is whether the intervention of the revising authority was sought by the prosecution at an early stage. It would be seen that an attempt to have the case committed failed right in the beginning and was repeated not earlier than 15 months from that date. The second attempt also failed. Instead of filing an application for revision against the order of the Magistrate refusing to pass an order of commitment the prosecution chose to make a second application upon the same facts. It may be that successive applications for such a purpose are not barred but where a later application is based on the same facts as the earlier one the Magistrate would be justified in refusing it. Where the Magistrate has acted in this way the revisional court ought not to with propriety interfere unless there are strong grounds to justify interference. While rejecting the application on January 25, 1962 the ground given by the learned Judge was that the case had already entered the defence stage and the attempt to have the committal was very belated. Matters had advanced still further when a third attempt failed on March 30, 1962. By that date not only had the defence been closed and arguments heard, but the case was actually closed for judgment. It would be a terrible harassment to the appellants now to be called upon to face a fresh trial right from the beginning which would certainly be the result if the Magistrate were to commit the appellants for trial by a Court of Sessions now. It is further noteworthy that after the last attempt failed it was not the prosecution which went up in revision before the Sessions Judge but the informants and, as pointed out earlier, in the matter concerning the appellants before us it was not even the informant Shyam Lall but one Sagarmal, the informant in another case who preferred a revision application. In a case which has proceeded on a police report a private party has really no locus standi. No doubt, the terms of section 435 under which the jurisdiction of the learned Sessions Judge was invoked are very wide and he could even have taken up the matter suo motu. It would, however, not be irrelevant to bear in mind the fact that the court 's 751 jurisdiction was invoked by a private party. The criminal law is not to be used as an instrument of wreaking private vengeance by an aggrieved party against the person who, according to that party, had caused injury to it. Barring a few exceptions, in criminal matters the party who is treated as the aggrieved party is the State which is the custodian of the social interests of the community at large and so it is for the State to take all the steps necessary for bringing the person who has acted against the social interests of the community to book. In our opinion it was injudicious for the learned Sessions Judge to order the commitment of the appellants particularly so without giving any thought to the aspects of the matter to which we have adverted. Even the High Court has come to no positive conclusion about the propriety of the direction made by the Sessions Judge and has merely said that the Sessions Judge was not unjustified in making the order which he made in each of the applications. For all these reasons we allow the appeals, quash the orders of the Sessions Judge as affirmed by the High Court and direct that the trials of each of the appellants shall proceed before the Magistrate according to law from the stages at which they were on the date on which the stay order became operative. Appeals allowed.

IN-Abs

The accused were charged under section 392, Indian Penal Code in the Court of a Magistrate. The prosecution failed in its attempt to have the procedure under Ch. XVIII, Code of Criminal Procedure adopted. After 15 months, the prosecution made an application to the Magistrate to frame a charge under section 386 or section 387 Indian Penal Code (which are exclusively triable by a Court of Sessions) and to commit the accused to the Court of Sessions, which was refused. Thereafter a second application was made for committing the case to the Court of Sessions. This, too, was rejected by the Magistrate. Immediately thereafter, one of the informants, filed a revision which the Sessions Judge allowed being of the view that the framing of charges under section 386 or 387, I.P.C. could not be ruled out altogether and directed the Magistrate to commit the accused to the Court of Sessions. The appellants preferred revision to the High Court, contending that the Sessions Judge had no jurisdiction to pass an order for commitment as there was no order of discharge by the Magistrate. The High Court rejected the revision application. In appeal to this Court HELD : There is nothing in the language of section 437 of the Code of Criminal Procedure from which it could be said that this power is not exercisable during the pendency of a trial before a Magistrate or that this power can be exercised only where Magistrate had made an express order of discharge. The provisions of the Code indicate that an express order of discharge is contemplated only in a case where a Magistrate comes to the conclusion that the act alleged against the accused does not amount to any offence at all and, therefore, no question of trying him either himself or by another court arises. Where on a certain set of facts the accused is alleged by the prosecution to have committed an offence exclusively triable by a Court of Sessions but the Magistrate is of the opinion that the offence disclosed is only an offence which he is himself competent to try and either acquits or convicts him there is an end of the matter in so far as the very set of acts are concerned. The facts may disclose really a very grave offence such as, say, one under section 302 I.P.C. but the Magistrate thinks that the offence falls under section 304A which he can try and after trying the accused either convicts or acquits him. In either case the result would be that the appropriate court will be prevented from trying the accused for the grave: offence which those very facts disclose. It is to obviate such a consequence and to prevent inferior courts from clutching at jurisdiction that the provisions of section 437, Criminal Procedure Code have been enacted. G] Nahar Singh vs State, I.L.R. (1952) 2 All. 152, Sri Dulap Singh Ors. vs State through Sri Harnandan Singh A.I.R. 1954 All. 163 and Sambhu Charan Mandal vs the State , disapproved. 741 In re : Nalla Baligadu, A.T.R. , Rambalam Pd. Singh vs State of Bihar, A.I.R. 1960 Patna 507, Krishnareddi vs Subbamma,I.L.R. Shambhooram vs Emperor, A.I.R. 1935 Sind 221,Sultan Al; vs Emperor, A.I.R. 1934 Lahore 164 and In re Valturu Narayan Reddy & Ors. A.I.R. 1955 Andhra 48. , approved. Yunus Shaikh vs The State, A.I.R. 1953 Cal.567 distinguished. The provisions of section 437, however, do not make it obligatory upon a Sessions Judge or a District Magistrate to order commitment in every case where an offence is exclusively triable by a Court of Sessions. The law gives a discretion to the revising authority and that discretion has to be exercised judicially. [750 B] Considering the delay in moving the Sessions Judge, the terrible harassment that the accused would be called upon to face if the Magistrate were to commit them for trial by a Court of Sessions now, and further that it was a private party who had no locus standi that went up in revision before the Sessions judge after the last attempt by the prosecution had failed, it was injudicious for the Sessions Judge to order the commitment of the accused, [150 F H; 751 B C]

minal Appeal No. 177 of 1963. Appeal from the judgment and order dated May 14, 1963 of the Calcutta High Court in Criminal Appeal No. 380 of 1962. section C. Das Gupta and Sukumar Ghose, for appellants. C. K. Daphtary, Attorney General, A. N. Sinha and P. K. Mukherjee, for the respondent. The Judgment of MUDHOLKAR and SATYANARAYANA RAJU JJ. was delivered by MUDHOLKAR J. BACHAWAT J. delivered a separate Judgment. Mudholkar, J. This is an appeal by certificate from a judg ment of the High Court of Calcutta setting aside the acquittal of M/s. Baburally Sardar of Steward Hogg Market, Calcutta, appellant No. 1 and of Abdul Razzak, a partner of that firm, appellant No. 2, in respect of an offence under section 16 (1) (a) (i) of the read with section 7(1) of that act. The facts which are not in dispute are briefly these : On June 1, 1960 a Food Inspector of the Corporation of Calcutta visited the shop of the appellants. At that time Abdul Razzak was in charge. He took samples of Comela Brand condensed milk from the shop, one of which was sent to the Public Analyst. Upon an analysis made by the Public Analyst the milk fat content of the condensed milk was found to be 3.4% which did not conform to the prescribed standard in respect of condensed milk. A complaint was thereupon lodged against the firm before the Municipal Magistrate and Additional Chief Presidency Magistrate, 817 Calcutta. Apart from the firm five other persons, including Abdul ' Razzak were also named as accused persons. One of the accused persons, Mohd. Yasin did not appear but it was represented to the learned Magistrate that the person was not mentally fit. Thereupon the counsel for the Corporation gave him up. The other accused persons pleaded not guilty and were eventually acquitted by the Magistrate. Against that order an appeal was preferred before the High Court under section 417 of the Code of Criminal Procedure. The High Court, however, allowed the appeal only against the appellants but dismissed it against the remaining accused persons. The defence of the appellants was based upon section 19(2) of the Act and was briefly this : The tins of condensed milk were purchased by the firm on May 3, 1960 from Messrs section Choudhury Brothers under a document of sale exhibit A. At that time the firm had demanded a warranty from the traders, that is, Messrs. Choudhury Brothers, but they did not furnish a written guarantee on the ground that a certificate and a warranty had been given on each tin of condensed milk. The appellants further pleaded that the tins were in the same condition in which they were when they were purchased from Messrs Choudhury Brothers and that they had no reason to believe that there was any alteration in their nature, substance or quality subsequent to the purchase of the tins. It may be mentioned that an attempt was made to secure the appearance of section Choudhury of Messrs. Choudhury Brothers, but it failed because he could not be traced at the address given in the cash memo. Section 16(1) (a) (i) of the Act, amongst other things, pro vides that if any person, whether by himself or by any person on his behalf stores or sells any article of food in contravention of any provisions of the Act or of the rules made thereunder he shall 'be punishable for the first offence with imprisonment for a term which may extend to one year and/or with fine which may extend to Rs. 2000 or both. Section 2(i) defines the word "adulterated". According to the definition an article of food shall be deemed to be adulterated in various circumstances, one of which is where the quality or purity of the article falls below the pres cribed standard. In the Act "prescribed" means prescribed by the rules. Rule 5 of the Rules framed by the Central Government under section 23(1) of the Act read with section 4(2) thereof runs thus "Standards of quality of the various articles of food specified in Appendix B to these rules as defined in that appendix. " 818 The definition of standard of quality for condensed milk is give in A. 1 1.07 of Appendix B and runs thus : "Condensed milk means milk which has been con centrated from full cream milk by removal of part of its water with or without the addition of sugar, and includes the article commonly known as 'evaporated milk ' but does not include the article commonly known as 'dried milk ' or 'milk powder '. It shall be free from preservatives other than sugar and contain at least 31 per cent of milk solids of which at least 9 per cent shall be fat. " As already stated, the Public Analyst found that the fat content of the condensed milk was only 3.4% whereas the minimum prescribed in the Appendix is 9%. It is, therefore, clear that the condensed milk stored by the appellants for sale was adulterated and, therefore, there was a breach of the provisions of section 16(1)(a) (i) of the Act. In view of the provisions of section 19(1) it was not open to the appellants to contend that they were ignorant of the nature, substance and quality of the condensed milk sold by them. Subsection (2) of section 19, however, furnishes a defence to a vendor ignorant of the nature, substance and quality of food sold by him provided he satisfies the requirements of that provision. Omitting the second proviso thereto, which is not relevant in the present case, sub section (2) of section 19 reads thus : " (2) A vendor shall not be deemed to have committed an offence if he proves (i) that the article of food was purchased by him as the same in nature, substance and quality as that demanded by the purchaser and with a written warranty in the prescribed form, if any, to the effect that it was of such nature, substance and quality; (ii) that he had no reason to believe at the time when he sold it that the food was not of such nature, substance and quality; and (iii)that he sold it in the same state as he purchased it : Provided that such a defence shall be open to the vendor only if he has submitted to the food inspector or the local authority a copy of the warranty with a written notice stating that he intends to rely on it and 819 specifying the name and address of the person from whom he received it, and has also sent a like notice of his intention to that person. " The aforesaid defence was available to the appellants provided that they showed, in the first place, that what was stored by them for sale to purchasers demanding condensed milk was in fact milk which had been concentrated from full cream milk so as to conform to the standard of quality given in A. 1 1.07 of Appendix B. For, it would be milk which satisfies the standard prescribed therein which can be regarded as 'condensed milk ' under the Act. Upon analysis, however, it was found that the so called condensed milk contained in the samples taken by the Food Inspector from the appellants was far inferior to that prescribed for "condensed milk". It could, therefore, not be regarded as "the same in nature, substance and quality as that demanded by the purchaser". Nor again, had the appellant obtained a warranty in the prescribed form. Rule 12 A provides that every trader selling an article of food to a vendor shall deliver to the vendor a warranty in form 6 A, if required to do so by the vendor. No such warranty was demanded by the appellants, nor given by Messrs. section Chaudhury Brothers. No doubt, under the proviso to the aforesaid sub rule no warranty in the prescribed form is necessary if the label on the article of food or cash memo delivered by the trader to the vendor in respect of that article contains a warranty certifying that the food contained in the container or mentioned in the cash memo is the same in nature, substance and quality as demanded by the vendor. Mr. Das Gupta for the appellants, says that the labels on the tins satisfy the requirements of the proviso and faintly suggested that the cash memo also satisfies the conditions. The contents of the label upon which reliance is placed by him are as follows : " 'Comela ' Full Cream sweetened condensed milk made on formula of Holland Product. 'Comela Brand ' 'The contents of the tin are scientifically preserved, pure and produced from healthy Cow 's milk. Comela full cream condensed milk easily digestable and are ideal food for babies. Special care is taken to maintain freshness Prepared by Kwality Diary. " This label contains no warranty of the kind referred to in the proviso. Moreover, it is not even in the form given for a label 820 prescribed for "Sweetened condensed milk". Under r. 42 B(b) the label prescribed is as follows CONDENSED FULL CREAM MILK (Sweetened) This tin contains the equivalent of . litres of milk with sugar added. It may be that the inscription on the prescribed label "This tin contains an equivalent of. . litres of milk with sugar added" was meant to serve the purpose of a warranty though it is couched in different language. For, it may be possible to ascertain by reference to standard tables the quantity of milk solids and fat from the quantity of milk condensed and from the quantity of condensed milk contained in the tin. It would not be possible even to do this on the basis of the particulars given on the labels borne on the tins which were taken as samples by the Food Inspector from the appellants. Mr. Das Gupta strongly relied upon the words "Full Cream" and said that where condensed milk is said to have been obtained from full cream the requirements of law must be deemed to have been satisfied. For one thing "Full cream" has nowhere been defined in the Act or the rules. Moreover, without knowing the quantity of "Full cream" which was condensed in the milk contained in each tin it is impossible even to calculate the quantity of milk solids and fat in each tin. The label, therefore, is of little assistance to the appellants. Moreover, when a vendor accepts from the trader tins purported to be of condensed milk bearing a label of this kind he cannot be said to have "had no reason to believe" that it was not condensed milk of the prescribed nature, substance and quality. It may be that the appellants sold them in the same state as they purchased them. But this fact is by itself not sufficient to absolve them. As for the so called cash memo it is sufficient to point out that all that it specifies is : Quantity Description Rate Per Amount 1 C/C Comela Milk C 70/ Case Rs. 70 00 There is not a whisper of any warranty on it. In the circumstances, therefore, the High Court was right in setting aside the acquittal of the appellants and convicting them of the offence under section 1 6 (1) (a) of the Act and sentencing them to pay fine of Rs. 2,000 each. The appeal is without merit and is dismissed. 821 Bachawat, J. The defence under section 19(2) of the cannot succeed, as the appellants failed to prove that they purchased the articles of food with a written warranty in the prescribed form. The label on the tin container gave a description of the article of food, but it did not give a warranty certifying that the food is the same in nature, substance and quality as demanded by the vendor. In the absence of such a warranty, the appellants have failed to establish the defence under section 19 (2) read with R. 12 (a) and Form VI A. Had there been such a written warranty on the label, the appellants would have established the defence. I agree that the appeal be dismissed. Appeal dismissed.

IN-Abs

Samples of a certain brand of tinned condensed milk were taken from the appellants ' shop by the Food Inspector. The Public Analyst found the fat content of the condensed milk below standard. When prosecuted under section 16(1) (a) (i) of the the appellants took a plea based on section 19(2) of the Act and claimed that the label on the tins was a warranty within the meaning of that section as well as of the proviso to Rule 12 A. The label on the tins described the milk as "Full cream sweetened condensed milk made on formula of Holland product ' and inter alia said : "The contents of the tin are scientifically preserved, pure and produced from healthy cow 's milk." The trial Magistrate accepted the appellants ' plea and acquitted them but on appeal by the State the High Court convicted them. They appealed to this Court with certificate. HELD : (i) Defence under section 19(2) of the Act was available to the appellants provided they showed in the first place, that what was stored by them for sale to the purchasers demanding condensed milk was in fact milk which had been concentrated from full cream milk so as to conform to the standard of quality given in A 11.07 of Appendix B. For, it would be milk which satisfies the standard prescribed therein which can be regarded as 'condensed milk ' under the Act. Since however the milk stored by the appellants was found to be below standard it could not be regarded as 'the same in nature, substance and quality as that demanded by the purchaser '. Nor again had the appellants obtained a warranty in the prescribed form. Thus the requirements of s.19 (2) (i) were not satisfied. [819 B C] (ii) No doubt, under the proviso to Rule 12 A no warranty in the prescribed farm is necessary if the label on the article of food or cash memo delivered by the trader to the vendor in respect of that article contains a warranty certifying that the food contained in the container or mentioned in the cash memo is the same in nature, substance and quality as demanded by the vendor. But the labels on the tins stared by the appellants contained no warranty of the kind referred to in the proviso. The labels were not in the form prescribed under r. 42B(b) and it was not possible from the matter printed thereon to ascertain by reference to standard tables the quantity of milk solids and fat from the quantity of milk condensed and from the quantity of condensed milk contained in the tin. [819 D 820 D] (iii)The words "Full cream" on the tin did not satisfy the requirements of the law either. 'Full cream ' has nowhere been defined in the Act or the rules. Without knowing the quantity of 'full cream ' which 816 was condensed in the milk contained in each tin it was impossible even to calculate the quantity of milk solids and fat in each tin. The label therefore was of little assistance to the appellants. [820 D E] Similarly the cash memos carried no warranty whatsoever. (iv) When a vendor accepts from the trader tins purported to be of condensed milk hearing a label of the above kind he cannot be said to have "had no reason to believe" that it was not condensed milk of the prescribed nature, substance and quality. It may be that the appellants sold the tins in the same state as they purchased them. But this fact was by itself not sufficient to absolve them. [820 F] Per Bachawat, J The defence under section 19(2) of the Act could not succeed as the appellants failed to prove that they purchased the articles of food with a written warranty in the prescribed form. The label on the tin container gave a description of the article of food but it did not give a warranty certifying that the food was the same in nature, substance and quality as demanded by the vendor. In the absence of such a warranty. the appellants had failed to establish the defence under section 19(2) read with r. 12 A and Form VI A. [821 A B.]

Civil Appeal No. 156 of 1965. Appeal by special leave from the judgment and order dated August 12, 1963 of the Bombay High Court (Nagpur Bench) in Special Civil Application No. 315 of 1962. V. P. Sathe and A. G. Ratnaparkhi, for the appellants. 661 M. N. Phadke, J. B. Dadachanji, O.C. Mathur and Ravinder Narain, for respondents Nos. 1 and 3. N. section Bindra and B. R. G. K. Achar, for respondent No.4. The Judgment of the Court was delivered by Satyanarayana Raju, J. This is an appeal, by Special Leave,, against the judgment of a Division Bench of the Bombay High Court dismissing an application for the issue of a Writ of certiorari under article 226 of the Constitution to quash the order of the State Industrial Court at Nagpur. For a proper appreciation of the questions that have been raised in the appeal, it would be necessary to state the material facts. The Model Mills, Nagpur (hereinafter referred to as the Mills) is a public limited company incorporated under the Indian Companies Act. On July 18, 1959, in exercise of the powers conferred by section 18 A of the Industries (Development and Regulation) Act, 1951, the Central Government took over the management of the Mills and appointed the 3rd respondent as the authorised Controller of the Mills. On March 25, 1960 the State of Bombay (now the State of Maharashtra), in exercise of the powers conferred by sections 3 and 4 of the Bombay Relief Undertakings (Special Provisions) Act, 1958 (hereinafter referred to as the Bombay Act) made a notification declaring the Mills to be a ' "relief undertaking" for a period of one year commencing from March 26, 1960 and ending with March 25, 1961. The appellants, eight in number, were, at the relevant time, the permanent employees of the Mills. It would be convenient to refer to them as "employees". On December 15, 1960, when the notification made by the State Government under the Bombay Act was in force, the employees abstained from work. Thereupon, the 1st respondent who is the Factory Manager of the Mills issued notices to the employees to show cause why they should not be dismissed from service for joining an "illegal strike". On January 6, 1961 the Factory Manager passed orders dismissing the employees from service. On January 12, 1961 the employees filed an application in the High Court of Bombay for the issue of a writ of mandamus directing the employees to be reinstated in service. On April 4, 1961, the exemption of the Mills from the application of section 16 of the Central Provinces and Berar Industrial Disputes Settlement Act (XXIII of 1947) (herein after called the State Act) was made. On April 25, 1961 the employees filed applications before the Assistant Commissioner Sup. CI./76 12 662 of Labour claiming reinstatement with back wages. The High Court dismissed the Writ Petition filed by the employees with liberty to file a fresh petition, if necessary, since they were prosecuting their applications for relief of reinstatement before the Assistant Commissioner of Labour. In and by his order dated September 29, 1961, the Assistant Commissioner allowed the applications filed by the employees. He held that as there was no illegal strike the orders of dismissal were unsustainable and should be set aside. He directed that the employees should be reinstated with back wages. Against the orders passed by the Assistant Commissioner, the Mills preferred applications in revision to the State Industrial Court. By its order dated February 16, 1962, the Industrial Court allowed the revision applications filed by the Mills on the ground that the applications before the Assistant Commissioner were not maintainable. On the merits, the Industrial Court agreed with the Assistant Commissioner that there was no illegal strike. Aggrieved by the orders of the Industrial Court, the employees filed an applicaton under articles 226 and 227 of the Constitution for the issue of a writ of certiorari to quash the orders of dismissal passed by the Factory Manager and to direct their reinstatement with back wages. By its judgment dated August 12, 1963 the High Court dismissed the Writ Petition filed by the employees. The High Court has held that the right to claim reinstatement is not a right which is available to an employee under the Common Law and that the relief of reinstatement is a special right which has been conferred on an employee under section 16 of the State Act. In the opinion of the High Court, the essential pre condition for an employee to claim relief under section 16 is that he is an employee in an industry to which that section is applicable and in respect of which a notification under section 16(1) also has been issued. The High Court has reached this conclusion by reason of the fact that the State Government issued a notification exempting the Mills from the operation of section 16 of the State Act and that the exemption was withdrawn only on April 4, 1961 while the employees were dismissed on January 6, 1961. In the opinion of the High Court, by reason of the fact that section 16 of the Act was not applicable, the dismissal of the employees even if it was wrongful did not give them a right to claim TV instatement and that to hold otherwise would be to give retrospective operation to section 16 of the State Act which became applicable to the Mills on and from April 4, 1961 by reason of the withdrawal of the exemption. in the result, the High Court confirmed the finding of the State Industrial Court that the employees had 663 no right to file applications under section 16 of the State Act and the applications filed by them before the Assistant Commissioner were not maintainable. Now it is contended by Mr. V. Sathe on behalf of the employees that though the industry was exempt from the operation of certain sections including section 16 of the Act, on the date when the appellants were dismissed, there was an existing industrial dispute relating to an industrial matter between the employees and the Mills on April 4, 1961, when the notification withdrawing the exemption in favour of the Mills from the operation of section 16 of the State Act was issued by the Government, that on the date when the employees filed an application under section 16 before the Commissioner of Labour, the period of six months provided by that section had not elapsed and that therefore the employees could invoke the provisions of section 16 and claim reinstatement. The learned counsel for the Mills, Mr. Phadke, has endeavoured to support the judgment of the High Court and the reasons on which its conclusions were rested. The questions which arise for determination in this appeal are : 1. Whether the right of a dismissed employee to claim reinstatement, in appropriate cases, exists. de hors section 16 of ' the State Act ? 2. Whether by reason of the State Government 's exemption of the industry from the operation of section 16 on the date when the employees were dismissed from service, their right to apply for reinstatement ceased to exist ? For a proper determination of the above questions, it is necessary to refer to the material statutory provisions. The State Act became law on June 2, 1947. section 15 of the State Act empowers the State Government to appoint any person as Labour Commissioner for the State and he shall exercise all or any of the powers of the Labour Commissioner. Now section 16 of the State Act as it stood at the relevant date provides as follows: "(1) Where the State Government by notification so directs, the Labour Commissioner shall have power to decide an industrial dispute touching the dismissal, discharge, removal or suspension of an employee working in any industry in general or in any local area as may be specified in the notification. 664 .lm15 (2) Any employee, working in an industry to which the notification under sub section (1) applies, may, within six months from the date of such dismissal, discharge, removal or suspension, apply to the Labour Commissioner for reinstatement and payment of compensation for loss of wages. The different powers that could be exercised by the Labour Commissioner are then set out in sub section (3) : "On receipt of such application, if the Labour Commissioner, after such enquiry as may be prescribed, finds that the dismissal . was in contravention of any of the provisions of this Act or in contravention of a standing order. he may direct that the employee shall be reinstated forthwith or by a specified date and paid for the whole period from the date of dismissal . to the date of the order of the Labour Commissioner". It is common ground that section 16 is made applicable to the textile industry with effect from. March 1, 1951 by a notification dated February 22, 1951. The provisions of section 16 were thus applicable to the Mills till March 25, 1960, on which date, however, the State Government issued a notification in exercise of the powers conferred under sections 3 and 4 of the Bombay Act declaring the Mills to be a 'relief undertaking '. The notification directed that the provisions of section 16 of the State Act and Chapter V A of the Industrial Disputes Act (XIV of 1947) (Lay off and Retrenchment) shall not apply to the Mills and that it shall be exempt therefrom. This notification was extended by the State Government on March 8, 1961 for a further period of one year. A subsequent notification dated April 4, 1961 issued by the State of Bombay amended the earlier notification by withdrawing the exemption in so far as it related to section 16 of the State Act. The alleged participation by the employees in an illegal strike occurred on December 15, 1960 and the 1st respondent dismissed the employees in and by his order dated January 6, 1961. It was during the period between March 25, 1960 and April 4, 1961 when the exemption was in force that the incident which resulted in the Mills framing a charge against the employees happened and the subsequent orders of dismissal were passed. It is submitted by the learned counsel on behalf of the Mills that the right of an employee to claim reinstatement has been granted by section 16 of the State Act and since the Mills were exempt 665 from the provisions of that section on the material dates the employee had no right to claim reinstatement. The Industrial Disputes Act (XIV of 1947) came into force on April 1, 1947. For our present purposes, it is not necessary to consider whether the right to claim reinstatement by a dismissed employee existed before the Central Act became law. The question about the jurisdiction of an Industrial Tribunal to direct reinstatement of a dismissed employee was raised as early as 1949, before the Federal Court in Western India Automobile Association vs Industrial Tribunal, Bombay(1). In that case, the Federal Court considered the larger question about the powers of industrial tribunals in all its aspects and rejected the argument of the employer that to invest the tribunal with jurisdiction to order reinstatement amounts to giving it authority to make a contract between two persons when one of them is unwilling to enter into a contract of employment at all. This argument, it was observed, "overlooks the fact that when a dispute arises about the employment of a person at the instance of a trade union or a trade union objects to the employment of a certain person, the definition of industrial dispute would cover both those cases. In each of those cases, although the employer may be unwilling to, do, there will be jurisdiction in the tribunal to direct the employment or non employment of the person by the employer". The Federal Court also added "The disputes of this character being covered by the definition of the expression 'industrial disputes ', there appears no logical ground to exclude an award of rein statement from the jurisdiction of the Industrial Tribunal. For nearly two decades the decision of the Federal Court has been accepted without question. Therefore, after the , at any rate, the right of a dismissed employee to claim reinstatement in proper cases has been recognised. It is no doubt true that under the Central Act the right to claim reinstatement has to be enforced in the manner laid down by that statute, whereas under the State Act it is open to an employee to claim reinstatement without the intervention of the appropriate Government. This would not however make any difference. It is argued that by reason of the exemption granted by the Bombay State when it declared the Mills to be a relief undertaking, rights and obligations which accrued to the employees or were incurred by the Mills during the period of exemption, stood (1) 666 abrogated. This takes us to the question as to the legal effect of 'the exemption granted by the State of Bombay. The notification issued by the State of Bombay is in the following terms : "The Government of Bombay hereby directs that in relation to the said relief undertaking and in respect of the said period of one year for which that relief undertaking continues as such, the provisions of (i) Sections 16, 31 and 37, section 40 (in so far as it relates to lock out) and section 51 and section 61 [in so far as it relates to clauses (b) and (c) of Rule 36 of the Central Provinces and Berar Industrial Disputes Settlement Rules, 1949] Central Provinces and Berar Act No. XXIII of 1947 and (ii) Chapter V A of the (XIV of 1947) shall not apply and the said relief undertaking shall be exempt from the aforesaid provisions of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947 (Central Provinces and Berar Act No. XXIII of 1947) and the (XIV of 1947). " The contention urged on behalf of the Mills proceeds on the assumption that the right to claim reinstatement has been granted by section 16 of the State Act. As we have already stated, section 16 only recognises the right of a dismissed employee, in appropriate cases, to claim reinstatement but does not confer the right. The section provides the procedure for enforcing the right. In this view, the right of the dismissed employee to claim reinstatement was in existence even during the period of exemption, but only it could not be enforced under section 16. Once the exemption is withdrawn the status quo ante is restored and it is open to the employee to file an application for reinstatement provided, however, his application is within the period of six months from the date of his dismissal. Under section 4 ( 1 )(a), on a notification being made, the industry becomes a relief undertaking and the laws enumerated in the Schedule to the Bombay Act shall not apply. The Schedule specifies Chapter V A of the and section 16 of the State Act. Section 4 ( 1 )(a) (i) also provides that the relief undertaking shall be exempt from the operation of the Acts mentioned in the Schedule. Learned counsel drew a distinction between the expressions exemption ' and 'suspension ' by relying upon the meanings given to these words in the Oxford Dictionary. 'Exempton ' means 667 'immunity from a liability ' whereas the word 'suspension ' means 'put it off '. Basing himself on the dictionary meanings, learned counsel for the Mills has contended that the word 'exemption ' is of a wider connotation than 'suspension ' and means that the industry shall be immune from the liabilities arising under the statutes specified in the Schedule and that the order of dismissal having been passed while the exemption was in force, the Mills were immune from liability to reinstate the employees on their dismissal being held to be wrongful. The order dismissing the employees was passed on January 6, 1961 when the notification was in force. The employees filed applications before the Commissioner of Labour on April 25, 1961. On the date of their applications, the exemption granted to the Mills by the State Government was no longer in operation. The decision in Birla Brothers, Ltd. vs Modak(1) has firmly established the principle that for a dispute which originated before the came into force but was in existence on the date when that Act became law, the Act applied to the dispute since it was in existence and continuing on that date and no question of giving retrospective effect to the Act arose. At p. 22 1, the learned Chief Justice, Harries, who spoke for the Court stated thus : "In my judgment, the Act of 1947 clearly applies to the present dispute without any question arising of giving the Act any retrospective effect. It is true the dispute arose before the Act was passed, but on April 1, 1947, when the Act came into force, the dispute was in existence and continuing. The employees were on strike and the strike actually continued until May 19, that is, five days after the Government made the order referring the dispute to arbitration. In my judgment, the Act must apply to any dispute existing after it came into force, no matter when that dispute commenced. There is nothing in the Act to suggest that it should apply only to disputes which originated after the passing of the Act. On the contrary, the opening words of s.10 of the Act make it clear that the Act would apply to all disputes existing when it came into force. The opening words of section 10(1) are If any industrial dispute exists or is apprehended, the appropriate Goverment may, by order in writing etc. (1) L.L.R. 668 It seems to me that these words make it abundantly clear that the Act applies to any industrial dispute existing when it came into force and, therefore, the Act applies to this dispute. " It is argued by Mr. Phadke that the, notification dated April 4, 1961 withdrawing the exemption is only prospective and no retrospective effect can be given to it. This argument proceeds on a fallacy. There is no question of the notification withdrawing an exemption being prospective or retrospective. It is finally submitted by learned counsel for the Mills that the validity of the order passed by the Factory Manager dismissing the employees from service has not been determined by the High Court and that the matter must be remitted to that Court for a consideration of that question. We may point out that the Assistant Commissioner of Labour has held that the dismissal is wrongful. This conclusion is affirmed by the Industrial Court. The validity of the dismissal was therefore finally concluded in favour of the employees. There is therefore no question of the validity of the dismissal order now being considered by the High Court. We may now summarise the conclusions reached by us as a result of the above discussion. The right of an employee to claim reinstatement on a wrongful dismissal exists de hors section 16 of the State Act. Section 16 provides a forum for a dismissed employee to claim reinstatement but does not create a right. The effect of an exemption granted by the notification issued under the Bombay Act is not to destroy the right but to suspend the remedy prescribed by section 16 for enforcing that right during the period when the exemption remains in force. The right can be enforced by a dismissed employee by resorting to the provisions of section 16 of the Act provided he makes the application within six months from the date of his dismissal. In the present case, the appellants filed their applications within the period specified in section 16 of the State Act. The High Court was in error in holding that the applications were not maintainable. In the result the judgment of the High Court and the order of the Industrial Court are set aside and the award made by the Assistant Commissioner of Labour is restored. The appeal is allowed and the appellants will have their costs in this Court paid by respondent No. 1. Appeal allowed.

IN-Abs

The State of Bombay by a notification under the Bombay Relief Undertakings (Special Provisions) Act 1958 declared a Mill a 'relief undertaking ' and exempted it from the applicability of section 16 of the C.P. and Berar Industrial Dispute& Settlement Act, 1947. During the period the exemption was in force, the appellants employees of the Mill abstained from work and were dismissed for joining an illegal strike. After the exemption was withdrawn and was no longer in operation, the employees filed applications before the Labour Commissioner claiming reinstatement with back wages. The Labour Commissioner allowed the applications. The Mill preferred revisions to the Industrial Court which were allowed. In writ petitions filed by the employees, the High Court confirmed the finding of the Industrial Court, that the employees had no right to file applications under section 16 and the applications filed by them before the Labour Commissioner were not maintainable. In appeal to this Court. HELD : The High Court was in error in holding that the applications were not maintainable. The right of an employee to claim reinstatement on a wrongful dismissal existed de hors section 16 of the Central Provinces and Berar Industrial Disputes Settlement Act. Section 16 provides a forum for a dismissed employee to claim reinstatement but does not create a right. The effect of an exemption granted by the notification issued under the Bombay Relief Undertakings (Special Provisions) Act, is not to destroy the right but to suspend the remedy prescribed by section 16 for enforcing that right during the period when the exemption remains in force. The right can be enforced by a dismissed employee by restoring to the provisions of section 16 of the Act provided he makes the application within six months from the date of his dismissal. [668 E]

Civil Appeal No. 95 of 1964. Appeal from the judgment and order dated April 14, 1961 of the Punjab High Court in Income tax Reference No. 23 of 1958. section T. Desai, R. Ganapathy Iyer, Gopal Singh, B.R.G.K. Achar and R. N. Sachthey, for the appellant. A. V. Viswanatha Sastri, T. A. Ramachandran, O. C. Mathur for the respondent. The Judgment of the Court was delivered by Shah, J. Hakam Mal Tani Mal a Hindu undivided family was assessed to tax under the Indian Income tax Act, 1918, in respect of income from business, inter alia, in timber at Abdullapur. In 1934 there was a partition of the Hindu undivided family, and five members of that family entered into a partnership to carry on in the name of M/s Hakam Mal Tani Mal the business which was originally carried on by the undivided family. Accounts of this firm were settled till March 31, 1939, and the firm was dissolved. The timber business of the firm was taken over by two partners of the firm Gajjan Mal and Jodha Mal, who entered into an agreement of partnership to carry on the business in the name of R. B. Jodha Mal Kuthiala hereinafter called 'assessee '. An instrument of partnership recording the terms of the partnership and reciting the dissolution of the earlier partnership was executed on June 29, 1939. The assessee was dissolved in March 1943. In assessment proceedings for 1943 44 the assessee contended that the firm Messrs Hakam Mal Tani Mal was dissolved on March 31, 1939, before the Income tax (Amendment) Act 7 of 1939 had come into force and the first succession to the business after April 1, 1939 was in March 1943, when the assessee was dissolved and on that account the assessee was entitled to relief under section 25(3), or in the alternative under section 25(4) of the Indian Income tax Act, 1922. The Income tax Officer completed the assessment without giving to the assessee the benefit of sub sections (3) or (4) of section 25 of the Indian Income tax Act, 1922. The Appel 647 late Assistant Commissioner confirmed the order holding that succession to the family firm Messrs. Hakam Mal Tani Mal took place on April 1, 1939, and that firm alone was entitled to relief under section 25(4) and to the second succession which took place on April 1, 1943, after Act 7 of 1939 was brought into force relief under section 25(4) was not admissible. The Income tax Appellate Tribunal agreed with the view of the Appellate Assistant Commissioner. Thereafter as directed by the High Court of Punjab under section 66(2) of the Indian Income tax Act, 1922, the Tribunal drew up a statement of the case and submitted the following ques tion of law for the opinion of the High Court : "Whether in the facts and the circumstances of the case, the Tribunal is correct in law in holding that the assessee firm (R. B. Jodha Mal Kuthiala, Abdullapur Depot, Simla) was not entitled to the benefit provided in Section 25 (3) or 25 (4) of the Income tax Act, in relation to the assessment in question ?" The High Court held that the assessee was carrying on business when Act 7 of 1939 was brought into operation and was on that account entitled to the benefit of section 25 (4) of the Act. With certificate granted by the High Court, this appeal has been preferred. Sub section (4) was inserted in section 25 of the Indian Incometax Act, 1922, by the Income tax (Amendment) Act 7 of 1939. It provides : "Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939 (VII of 1939), carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change "in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the in come, profits and gains of the said period. Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said 648 period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference : Provided. . . There is no dispute that the Hindu undivided family of Hakam Mal Tani Mal was taxed under the Indian Income tax Act, 1918, in respect of the, timber business and Messrs. Hakam Mal, Tani Mal succeeded to that business in 1934. Accounts of Messrs. Hakam Mal Tani Mal were settled on March 31, 1939, and the business in timber which was carried on by that firm was taken over by the assessee. The departmental authorities held that the assessee was at the commencement of the Indian Incometax (Amendment) Act 7 of 1939 not carrying on business, and that it succeeded to the business on April 1, 1943. The High Court disagreed with that view and opined that the assessee was at the commencement of Act 7 of 1939 carrying on business, and correctness of that opinion is challenged in this appeal. The Indian Income tax (Amendment) Act 7 of 1939 was brought into force on April 1, 1939. Section 5 (3) of the General Clauses Act 10 of 1897 provides that unless the contrary is expressed, a Central Act or Regulation shall be construed as coming into operation immediately on the expiration of the day preceding its commencement. Act 7 of 1939 must therefore be deemed to have come into operation at a point of time immediately on the expiration of March 31, 1939. The assessee contends, and the contention has found favour with the High Court, that the assessee was carrying on business at the commencement of the Indian Income tax (Amendment) Act 7 of 1939. In support of the plea of the assessee reliance was placed only upon the instrument of partnership which was executed on June 29, 1939. The question in dispute must, therefore, be determined on a true interpretation of the terms of the instrument of partnership. Insofar as it is material, the instrument recites : "We, R. B. Jodha Mal Kuthiala son of Lala Gopi Mal Sahib Sud of the one part and Gajjan Mal Kuthiala son of Lala Hakam Mal Sahib Sud Kuthiala of the other part, residents of Haroli, District Hoshiarpur. and presently of Simla. 649 Whereas we, the deponents, were partners and shareholders in the firm of Lala Hakam Mal Tani Mal Simla and all the partners of firm Lala Hakam Mal Tani Mal understood and settled their accounts upto the 31st of March 1939, on the 31st of March, 1939, and all the partners have become separate from the 1st of April, 1939, and the business at Abdullapur in the name of firm Hakam Mal Tani Mal and R. B. Jodha Mal Kuthiala has fallen to our share to run which we have by means of an oral agreement constituted a separate partnership styled R. B. Jodha Mal Kuthiala,, Abdullapur from the 1st of April, 1939. Now the said oral (agreement) is being reduced to writing and we agree that :" The instrument of partnership in the first instance recites that the accounts of Messrs. Hakam Mal Tani Mal were settled on March 31, 1939 and upto March 31, 1939. It is then recited that all the partners had become separate from April 1, 1939. This is an ambiguous recital : it may mean that the dissolution had taken place on April 1, 1939 i.e., the business had continued for the whole or a part of the day on April 1, 1939, or it may mean that from the end of March 31, 1939, there had been separation. When a deed recites that a transaction is effective from a particular date it has to be determined in the context in which that expression occurs, whether the date mentioned has to be excluded or to be included. The recitals in the instrument that the accounts were settled upto March 31, 1939, and that the partners had become separate, would imply that the firm of Messrs Hakam Mal Tani Mal did not do business after March 31, 1939. no date of the oral agreement constituting a separate partnership of the assessee is not set out in the instrument, and there is no other evidence in that behalf. But the assessee was constituted to carry on the timber business allotted to it at the time of dissolution from April 1, 1939. The timber business was an old and a running business, and an intention to maintain continuity of the business and its transactions may reasonably be attributed to the assessee. It must therefore be held that the assessee commenced doing business immediately after the dissolution of the firm Messrs Hakam Mal Tani Mal become effective. In the absence of other evidence, it may be held that the business of Messrs. Hakam Mal Tani Mal continued till the midnight of March 31, 1939, and immediately thereafter the business of the assessee commenced. 650 The partnership therefore came into being at the precise point of time at which the Indian Income tax (Amendment) Act 7 of 1939 came into force and it could not be said that the assessee was not carrying on business at the commencement of the Indian Income tax (Amendment) Act 7 of 1939. The High Court was, therefore, in our judgment, right in holding that the assessee was entitled on the dissolution of that firm in March 1943 to the benefit of section 25(4) of the Indian Income tax Act. The appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

A Hindu undivided family was assessed to tax under the Indian Income tax Art 1918 in respect of its business, inter alia, in timber. In 1934 there was dissolution of the family and five of its members entered into a partnership to carry on the business. Ibis firm was dissolved on March 31, 1939 and its accounts were settled on and up to that date. The timber business of the dissolved firm was taken over by the assessee firm. An instrument of partnerhip for the new firm was drawn up on June 29, 1939 in which the facts relating to the dissolution of the earlier firm were also recited. The new firm the assessee was also dissolved in March 1943. In assessment proceedings for 1943 44 the assessee claimed benefit under section 25(3) or in the alternative section 25(4) of the Indian Income tax Act, 1922. The claim was rejected by the assessing and appellate authorities but in reference, the High Court allowed the claim under section 25(4). The Commissioner of Income tax, with certificate, appealed to the Supreme Court. The material question for determination was whether the assessee was carrying on business at the commencement of Act 7 of 1939 so as to be entitled to the benefit under section 25(4). HELD: The Indian Income tax (Amendment) Act 7 of 1939 was brought into force on April 1. 1939. Section 5(3) of the General Clauses Act (10 of 1897) provides that unless the contrary is expressed, a Central Act or Regulation shall be construed as coming into being on the expiration of the day preceding its commencement. Act 7 of 1939 must therefore be deemed to have come into operation at a point of time immediately on the expiration of March 31, 1939. [648 D E] Whether the assessee was carrying on business at the point of time which Act 7 of 1939 came into force had to be decided from the recitals in the partnership deed executed by the respondents on June 29, 1939. The recitals in the instrument that the accounts were settled up to March 31, 1939 and that the erstwhile partners had become separate would imply that the firm formed in 1934 did not do business after March 31, 1939, the assessee was constituted to carry on the timber business allotted to it at the time of dissolution from April 1, 1939. The timber business was an old and running business and an intention to maintain continuity of the business and its transactions may reasonably be attributed to the assessee. It must therefore be held that the assessee commenced doing business immediately after the dissolution of the firm of 1934 become effective. The business of that firm continued up to the midnight of March 31, 1939, and immediately thereafter the business of the assessee commenced. [649 E H; 650 A] 646 The new partnership therefore came into being at the precise period of time at which Act 7 of 1939 came into force and it could not be said that the assessee was not carrying on business at the commencement of the Act. The High Court was therefore right in holding that the assessee was entitled on the dissolution of the firm in March 1943 to the benefit of section 25(4) of the Indian Income tax Act, 1922.

Civil Appeal No. 814 of 1964. Appeal by special leave from the judgment and order dated October 24, 1961 of the Madhya Pradesh High Court in Misc. Petition No. 125 of 1958. I.N. Shroff, for the appellants. C.B. Agarwala and C. P. Lal, for the respondent. The Judgment of the Court was delivered by Subba Rao, J. This appeal by special leave raises the question of the intepretation of Item No. 39 of the Notification 753 No. 58, dated October 24, 1953, hereinafter called the 'Notification ', issued by the Government of Madhya Bharat under the Madhya Bharat Sales Tax Act, Samvat 2007 (Act No. 30 of 1950), hereinafter called the Act. The facts are as follows : Hiralal, the respondent, is the: manager of a joint Hindu family carrying on business in the name and style of "Messrs. Tilokchand Kalyanmal". The joint family owns a re rolling mill situated in Indore City called the Central India Iron and Steel Company. The said family purchases scrapiron locally and imports iron plates from outside and after converting them into bars, flats and plates in the Mills sells them in the market. The respondent made a default in furnishing the returns prescribed by section 7(i) of the Act for the period April 1, 1954, to March 31, 1955. On February 27, 1956, the Sales tax. Officer, Indore, determined the taxable turnover at Rs. 2,26,000and the sales tax payable thereon at Rs. 8,000; and he also imposed a penalty of Rs. 1,000 under section 14 (1) (c) of the Act. On the same day he issued demand notices to the respondent for the payment of the said sales tax and the penalty. On September 10, 1956, the respondent filed a petition in the High Court of Madhya Bharat (afterwards Madhya Pradesh) under articles 226 and 227 of the Constitution for the issue of appropriate writs quashing, the assessment of tax and penalty and to restrain the State from giving effect to the said orders of the Sales tax Officer. A Divi sion Bench of the High Court held that the iron bars, flats and ' plates sold by the respondent were exempted from sales tax under the Notification. In that view, the orders of the Sales tax Officer were quashed. The state has filed the present appeal, by special ' leave. The only question in this appeal is whether the said iron bars, flats and plates are not iron and steel within the meaning of ' Item No. 39 of the Notification. Parliament enacted Essential Goods (Declaration and Regulation of Tax on Sales or Purchases) Act, 1952 (Act No. 52 of ' 1952), which came into force on August 9, 1952. In Schedule I of the said Act, iron and steel were declared essential for the life of the community. Thereafter, the Government of Madhya. Bharat, in exercise of the powers conferred by section 5 of the Act, issued the Notification as also Notification No. 59, dated October 24, 1953. The material part of Schedule I of Notification 58 reads 754 "No tax shall be payable on the sale of the following goods S.No. Description of goods. 39 Iron and steel. Notification No. 59 described the goods sales of which were taxable at particular rates. Schedule IV thereof reads : "List of articles under section 5 of the Madhya Bharat Sales Tax Act, 1950, on the assessable sale proceeds of which sales tax at the rate of Rs. 3/2/ per cent. shall be payable, showing the nature of articles on which the tax is payable. Name of article Stage of sale in Madhya Bharat at which the tax is payable. 9 . goods prepared from any Sale by imported or pro metal sale by importer or producer. ducer. other than gold and silver. . Learned counsel for the State contends that the expression "iron and steel" means iron and steel in the original condition : and not iron and steel in the shape of bars, flats and plates. In our view, this contention is not sound. A comparison of the said two Notifications brings out the distinction between rawmaterials of iron and steel and the goods prepared from iron and steel : while the former is exempted from tax, the latter is taxed. 'Therefore, iron and steel used as raw material for manufacturing other goods are exempted from taxation. So long as iron and steel continue to be raw materials, they enjoy the exemption. Scrap iron purchased by the respondent was merely re rolled into bars,flats and plates. They were processed for convenience of sale. The raw materials were only re rolled to give them attractive and acceptable forms. They did not in the process lose their character as iron and steel. The dealer sold "iron and steel" in the shape of bars, flats and plates and the customer purchased "iron and steel" in that shape. We, therefore, hold that the bars, flats and plates sold by the assessee are iron and steel exempted under the Notification. The conclusion arrived at by the High Court is ,correct. In the result, the appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The respondent as head of a joint Hindu family owned a re rolling mill at which scrap iron locally purchased, and iron plate , imported from outside, were converted into bars, flats and plates in the Mills and thereafter sold in the market. The sales tax authorities held that iron bars, flats and plates sold by the respondent were not 'iron and steel ' exempted by notification No. 58 dated October 1953 issued under the Essential Goods (Declaration and Regulation of Sales and Purchasees) Act, 1952. In a petition under articles 226 and 227 filed by the respondent challenging the said assessment the High Court decided that iron bars, flats and plates were exempted under the notification. The State appealed to this Court. HELD : Goods prepared from metals other than gold and silver are made taxable by notification No. 59 whereas notification No. 58 exempts iron and steel from tax. A comparison of the said two notifications brings out the distinction between raw materials of iron and steel and the goods prepared from iron and steel. While the former is exempted from tax the latter is taxed. Therefore iron and steel used as rawmaterial for manufacturing other goods are exempted from taxation. So long as iron and steel continue to be raw materials, they enjoy the exemption. Scrap iron purchased by the respondent was merely rerolled into bars, flats and plates for convenience of sale. The rawmaterials were only re rolled to give them attractive and acceptable forms. They did not in the process lose their character as iron and steel. The bars, flats and plates sold by the respondent were therefore iron and steel exempt under the notification. [754 D G]

Appeal Nos. 164 of 1965 and 1105 of 1964. 865 Appeals by special leave from the orders dated the June 29, 1963 and August 31, 1963 of the Industrial Tribunal (II) Uttar Pradesh and Industrial Tribunal (H), Uttar Pradesh (Appellate authority) in Appeals Nos. 1 of 1963 and 4 of 1963 respectively. M. C. Setalvad, B. L. Khanna and K. K. Jain, for the appellant (in C.A. No. 164/65). B. L. Khanna and K. K. Jain, for the appellant (in C.A. No. 1105/65). C. B. Agarwala and O. P. Rana, for respondents 1 and 2. The Judgment of the Court was delivered by Gajendragadkar, C.J. This appeal has been brought to this Court by special leave and it challenges the validity of certain orders passed by the Certifying Authorities in respect of the draft Standing Orders which the appellant, The Rohtak Hissar District Electric Supply Co. Ltd., had submitted to them for certification. Five respondents have been impleaded to this appeal; they are the State of U.P., Certifying Officer for Standing Orders and Labour Commissioner, U.P., Kanpur, and three representatives of the employees respectively. At the hearing before us, the employees ' representatives have not appeared and the appeal has been contested by respondent No. I alone. The appellant is a Joint Stock Company incorporated under the Companies Act, and it has its registered office at Allahabad. The principal object for which this Company has been incorporated is to carry on the business of generation and distribution of electricity. In accordance with the provisions of the (No. 20 of 1946) (hereinafter called 'the Act '), the appellant prepared draft Standing Orders in consultation with its employees and submitted the same to the Certifying Officer on the 24th December, 1950, for certification. At that time, the workmen employed by the appellant had not formed any Union, and so, the Labour Department held proceedings for the election of the three representatives from the said workmen. Normally, a Union representing the workmen would have been competent and qualified to represent the workmen in the certification proceedings; but since there was no Union in existence, the Labour Department had to adopt, the expedient of asking the workmen to elect three representatives. That is how respondents 3 to 5 came to be elected as the representatives of workmen. In the certification proceedings, these representatives took no objection to the draft Standing Orders submitted by the 866 appellant. In fact, the said draft Standing Orders were submitted to the Certifying Officer on the basis that they had been agreed to by the appellant and its workmen. The Certifying Officer, however, examined the fairness and reasonableness of the provisions contained in the said draft Standing Orders and made several changes in them. The draft Standing Orders with the changes made by the Certifying Officer were accordingly certified on the 21st November, 1962. Against the said order passed by the Certifying Officer, the appellant filed an appeal before the Industrial Tribunal, U.P., Allahabad, which had been appointed the Appellate Authority under the Act. It was urged by the appellant before the Appellate Authority that the Certifying Officer was in error in making modifications in the draft Standing Orders submitted to him for his certification, but the Appellate Authority did not accept the appellant 's contention and, in substance, confirmed the order passed by the Certifying Officer. In the result, the appeal preferred by the appellant was dismissed by the Appellate Authority on the 29th June, 1963. It is against this appellate order that the appellant has come to this Court by special leave. Along with this appeal, Civil Appeal No. 1105 of 1964 has been placed before us for hearing and final disposal. This appeal arises between the appellant M/s Amitabh Textile Mills Ltd., and its workmen and it raises substantially the same points as arise in 'Civil Appeal No. 164 of 1965. Mr. K. K. Jain, who appeared for the appellant in this appeal, has stated before us that the decision in this appeal will follow our decision in Civil Appeal No. 164 of 1965. That is why we do not propose to refer to the facts in this appeal nor deal with it separately. The first point which Mr. Setalvad has raised before us in Civil Appeal No. 164 of 1965 is of a general character. He contends that the Model Standing Orders which have been followed as a pattern by the certifying authorities in the present certification proceedings, are themselves invalid in some material particulars. His argument is that the Model Standing Orders permissible under the Act should be confined to matters which do not fall within the purview of the provisions of the (No. 14 of 1947) (hereinafter called 'the Central Act ') ,or of the U.P. (No. 28 of 1947) (hereinafter called 'the U.P. Act '). Before dealing with this point, it is necessary to indicate the broad features of the Act. The Act was passed on the 23rd 867 April, 1946, and the Standing Orders framed by the U.P. Gov ernment under section 15 of the Act were published on the 14th May, 1947. The Central Act came into force on the 1st April, 1947, whereas the U.P. Act came into force on the 1st February, 1948. It will thus be seen that the Act came into force before either the Central Act or the U.P. Act was passed. The scheme of the Act originally was to require employers in industrial establishments to define with sufficient precision the conditions of employment under them and to make the said conditions known to the workmen employed by them. The Legislature thought that in many industrial establishments, the conditions of employment were not always uniform, and sometimes, were not even reduced to writing, and that led to considerable confusion which ultimately resulted in industrial disputes. That is why the Legislature passed the Act making it compulsory for the establishments to which the Act applied to reduce to writing conditions of employment and get them certified as provided by the Act. The matters in respect of which conditions of employment had to be certified were specified in the Schedule appended to the Act. This Schedule contains 11 matters in respect of which Standing Orders had to be, made. In fact, the words "Standing Orders" are defined by section 2(g) as meaning rules relating to matters set out in the Sche dule. The "Certifying Officer" appointed under the Act is defined by section 2(c), whereas "Appellate Authority" is defined by section 2(a). Originally, the jurisdiction of the Certifying Officer and the. Appellate Authority was very limited; they were called upon to consider whether the Standing Orders submitted for certification conformed to the Model Standing Orders or not. Section 3(2) provides that these Standing Orders shall be, as far as practicable, in conformity with such Model Standing Orders. Section 15 which deals with the powers of the appropriate Government to make rules, authorises, by cl. (2) (b), the appropriate Government to set out Model Standing Orders for the purposes of this Act. That is how the original jurisdiction of the certifying authorities was limited to examine the draft Standing Orders submitted for certification and compare them with the Model Standing Orders. In 1956, however, a radical change was made in the provisions of the Act. Section 4 as amended by Act 36 of 1956 has imposed upon the Certifying Officer or the Appellate Authority the duty to adjudicate upon the fairness or the reasonableness of the provisions of any Standing Orders. In other words, after the amendment was made in 1956, the jurisdiction of the certifying authorities has become very much wider and the scope of the 868 enquiry also has become correspondingly wider. When draft Standing Orders are submitted for certification, the enquiry now has to be twofold; are the said Standing Orders in conformity with Model Standing Orders; and are, they reasonable or fair ? In dealing with this latter question, the Certifying Officer and the Appellate Authority have been given powers of a Civil Court by section 11(1). The decision of the Certifying Officer is made appealable to the Appellate Authority under section 6 at the instance of either party. Similarly, by an amendment made in 1956 in section 10(2) both the employer and the workmen are permitted to apply for the modification of the said Standing Orders after the expiration of 6 months from the date of their coming into operation. It will thus be seen that when certification proceedings are held before the certifying authorities, the reasonableness or the fairness of the provisions contained in the draft Standing Orders falls to be examined. That is one aspect of the matter which has to be borne in mind in dealing with Mr. Setalvad 's contention. The second aspect of the matter which is relevant on this point is that the Standing Orders have to cover the matters specified in the Schedule attached to the Act. Item 1 1 in the said Schedule refers to any other matter which may be prescribed. We have already mentioned the fact that section 15 confers power on the appropriate Government to make rules. Section 15 (2) (a) provides that the appropriate Government may, by rules, prescribe additional matters to be included in the Schedule, and the procedure to be followed in modifying Standing Orders certified under this Act in accordance with any such addition. Thus there can be no doubt that the Act contemplates that the Standing Orders must cover matters initially included in the Schedule as well as matters which may be added to the Schedule by the appropriate Government in exercise of the authority conferred on it by section 1 5. In fact, by virtue of this power, the U.P. Government has added several items to the list contained in the Schedule; they are 8A issue of service certificate; 9A censure and warning notice; 11 A issue of wage slips; II B introduction of welfare schemes such as provident fund, gratuity etc.; and 11C age of superannuation or retirement, rate of pension or any other facility which the employers may like to extend, or may be agreed upon between the parties. We will have occasion to deal with item 11C later. The position, therefore, is that in the State of U.P. Standing Orders have to cover the items originally included in the Schedule as well as the items which have been subsequently added thereto. Mr. Setalvad 's argument is that in determining the scope of the Standing Orders and the character and extent of the jurisdic 869 tion conferred on the certifying authorities under the Act, we should not overlook the fact that when the Act was passed, the Central Act and the U.P. Act had not come into operation; and as it was originally passed, the Act required certification of Standing Orders which were in conformity with the Model Standing Orders without examining their reasonableness or fairness. The position under the original Act, according to Mr. Setalvad, therefore was that the conditions of employment which had to be included in the Standing Orders were no better than, or different from, similar conditions which would otherwise have been included in contracts of service between the employers and their employees. After the Central Act and the U.P. Act were passed, a different situation has arisen. The U.P. Act, following the pattern of the Central Act, has provided for the settlement of industrial disputes and other incidental matters in accordance with its own scheme. Sections 4(A) and 4(B) of the U.P. Act deal with the establishment of Labour Courts and Industrial Tribunals, and section 4K gives power to the State Government to refer disputes for adjudication to Labour Courts or Industrial Tribunals. The First Schedule to the U.P. Act sets out 6 items of industrial disputes which can be referred to the Labour Courts, whereas the Second Schedule refers to 11 items of industrial disputes which can be referred for adjudication to the Industrial Tribunals. Thus, an elaborate machinery has now been established by the U.P. Act for the purpose of dealing with industrial disputes concerning the matters specified in the First and the Second Schedules to the U.P. Act. That is why any attempt which the certifying authorities may purport to make in devising elaborate provisions in respect of matters covered by the First or the Second Schedule of the U.P. Act, would trespass upon the provisions of the said Act, and in that sense, would be invalid. Let the operation of the Act be confined to its original form and no further; that, in substance, is the general point raised by Mr. Setalvad before us. We are not inclined to accept this contention. In substance, the argument proceeds on the assumption that there is a conflict between the Act and the U.P. Act. Since we are not satisfied that there is any such conflict, it is not necessary for us to consider what would have been the result if we had taken the view that there was any such conflict between the said two Acts. The schemes of the two Acts are in essence different in character. The Act purports to secure to industrial employees clear and unambi guous conditions of their employment. The obvious object of the Act is to avoid any confusion in the minds of the employers or the employees in respect of their rights and obligations concerning the 870 terms and conditions of employment and thereby avoid unnecessary industrial disputes. The result of the Standing Orders which are certified under the Act is to make it clear to both the parties on what terms and conditions the workmen are offering to work and the employer is offering to engage them. The scheme of the U.P. Act, on the other hand, is to deal with the problem posed by industrial disputes which have actually arisen or are apprehended, and naturally the nature of the industrial disputes which may arise or which may be apprehended, relates to items larger in number than the items covered by the Act. It is true that some of the items are common to both the Acts, but as we have just indi cated, the scopes of the provisions of the two respective Acts and the fields covered by them from that point of view are not the same. After the Act was amended in 1956, the Legislature has pro vided a speedy and cheap remedy available to individual employees to have their conditions of employment determined in the manner prescribed by the Act. If employees or employers desire any modification in the said Standing Orders, that remedy is also provided. The decision of the Certifying Officer is made subject to an appeal, and so, after its amendment in 1956, the Act provides for a self contained Code for the fixation of conditions of employment in establishments to which the Act applies. It is true that the original scope of the Act was rather narrow and limited; but even after the scope of the Act has been made wider, we cannot see how it can be said to conflict with the provisions of the U.P. Act or the Central Act. Therefore, we are not impressed by the argument that the procedure adopted by the certifying authorities in the present case in dealing with the question of the fairness or reasonableness of the draft Standing Orders submitted for certification is invalid, and for that reason alone, some of the draft Standing Orders certified by them should be set aside. The next contention which Mr. Setalvad has raised is that the appropriate authorities under the Act were in error in insisting upon conformity with the Model Standing Orders under section 3(4). His argument is that in certifying the Standing Orders the appropriate authorities may, no doubt, compare them with the Model Standing Orders, but they need not insist upon strict compliance with them. He also suggested that it would be open to the employers to include matters in the Standing Orders which may not strictly be included in the Schedule. In this connection, he relied on the fact that the draft Standing Orders which the appellant had submitted for certification, had been assented to by the 871 employees. In our opinion, this contention is misconceived and, must be rejected. The consent of the employees is, no doubt, a relevant factor which the certifying authorities may bear in mind in dealing with the question as to the fairness or reasonableness of the said Orders. If both the parties agree that certain Standing Orders submitted for certification are fair and reasonable, that, no doubt, is a consideration which the appropriate authority must take into account; but clearly, the appropriate authority cannot be denied the jurisdiction to deal with the matter according to its own judgment. It is for the appropriate authority to decide whether a particular Standing Order is fair or reasonable, or not. Sometimes, the employees may not be organised enough to resist the pressure of the employer or may not be articulate; and where the employees are not organised or strong enough to put forward their point of view vigorously, the fact that the employer has persuaded his employees to agree to the draft Standing Orders, will not preclude the appropriate authority from discharging its obligation by considering the fairness or reasonableness of the draft. The present case itself is an illustration in point. When the Standing Orders were drafted by the appellant and submitted for certification, it was found that the employees of the appellant had no Union of their own; and so, three representatives were elected by the employees at the instance of the Labour Department. The fact that the employees ' representatives have not appeared before this Court also shows that they are either not organised enough, or have not the financial capacity to take steps to engage lawyers to appear before this Court. Therefore, we do not think that the consent of the employees can have a decisive significance in certification proceedings. Then in regard to the matters which may be covered by the Standing Orders, it is not possible to accept the argument that the draft Standing Orders can relate to matters outside the Schedule. Take, for instance, the case of some of the draft Standing Orders which the appellant wanted to introduce; these had reference to the liability of the employees for transfer from one branch to another and from one job to another at the discretion of the management. These two Standing Orders were included in the draft of the appellant as Nos. IO and II. These two provisions do not appear to fall under any of the items in the Schedule; and so, the certifying authorities were quite justified in not including them in the certified Standing Orders. In this connection, we may incidentally add that if the appropriate Government adds to the list of items in the Schedule, it may, 3Sup. CI/66 9 872 in some cases, be permissible to the certifying authorities to say that having regard to the relevant factors, no provision need be made for some of the items thus added. The U.P. Government has, by adding clause II B to the Schedule, referred to items of welfare schemes such as provident fund, gratuities, etc. It would, we think, be unreasonable to hold that the Standing Order must necessarily refer both to provident fund and gratuities, and other welfare schemes. It is well known that the introduction of these amenities in industrial establishments involves financial liabilities for the employers, and the decision as to whether these amenities should be introduced or not, depends upon a consideration of several relevant factors; and so, if the additional items are included in the Schedule, and they appear to overlap or cover the same or similar ground, the appropriate authorities may, for good reasons, take the view that the provision need not be made for each one of those items. This position has not been seriously disputed before us by Mr. Agarwal for respondent No. 1. He has fairly conceded that it is not obligatory on the employer to have a scheme ,for provident fund as well as gratuity in every case. Thus, the true position appears to be that under section 3 (2) of the Act the employers have to frame draft Standing Orders and they must normally cover the items in the Schedule to the Act. If, however, it appears to the appropriate authorities that having regard to 'the relevant facts and circumstances, it would be unfair and unreasonable to make a provision for a particular item, it would be competent for them to do so; but the employer cannot insist upon adding a condition to the Standing Order which relates to a matter which is not included in the Schedule. Then in regard to the conformity with the Model Standing Orders, the position is clear. Section 3 (2) of the Act specifically requires that the Standing Orders shall be, as far as practicable, in conformity with the model. These words indicate that the appropriate authority may permit departure from the Model Standing Orders if it is satisfied that insistence upon such conformity may be impracticable. This fact also shows that in a given case, the appropriate authority may permit departure from the Model Standing Orders and may come to the conclusion that one or the other of the conditions included in the Model Standing Orders may not, for the time being, be included in the Standing Orders of any particular establishment vide Associated Cement Company Ltd.v. P. D. Vyas, and Others(1). (1) ; [1960) 873 The next point raised by Mr. Setalvad is in relation to the addition of two items to the Schedule by respondent No. 1. We have already mentioned these items. Mr. Setalvad objects to the addition of item II B which has reference to welfare schemes, such as provident fund, gratuities, etc., as well as item 11C which has reference to the age of superannuation or retirement, rate of pension or any other facility which the employers may like to extend or may be agreed upon between the parties. We do not think that this argument is well founded. We have already emphasised the fact that the Act, even in its original form, was intended to require the employers to define with sufficient precision the conditions of employment under them. In pursuance of the said object, the Schedule enumerated 10 items in respect of which Standing Orders had to be drafted by the employers and submitted for certification. Item 1 1 in the Schedule refers to any other matter which may be prescribed. When the appropriate Government adds any item to the Schedule, the relevant question to ask would be whether it refers to the conditions of employment or not. If it does, it would be within the competence of the appropriate Government to add such an item. Section 15(1) confers wide powers on the appropriate Government to make rules to carry out the purposes of the Act; and section 15(2) specifies some of the matters enumerated by clauses (a) to (e), in respect of which rules may be framed. It is well settled that the enumeration of the particular matters by sub section (2) will not control or limit the width of the power conferred on the appropriate Government by sub section (1) of section 15; and so, if it appears that the item added by the appropriate Government has relation to conditions of employment, its addition cannot be challenged as being invalid in law. Whether or not such addition should be made, is, a matter for the appropriate Government to, decide in its discretion. The reasonableness of such addition cannot be questioned, because the power to decide which additions should be made has been left by the Legislature to the appropriate Government. Having regard to the development of industrial law in this country during recent years, it cannot be said that gratuity or provident fund is not a term of conditions of employment in industrial establishments. Similarly, it would be difficult to sustain the argument that the age of superannuation or retirement is not a matter relating to the conditions of employment. Therefore, we are satisfied that the contention raised by Mr. Setalvad that the addition of items 11B and 11C to the Schedule is invalid, must fail. That takes us to the points raised by Mr. Setalvad on the merits of the Standing Orders. Lot us begin with the Standing 874 Order in relation to the age of superannuation. The appellant had made a provision about the age of superannuation in its draft Standing Orders and it was numbered as 59. The Certifying Officer had dropped this draft Standing Order, because the appellant did not agree to provide for any retirement benefits. On appeal, however, the appellate authority has made substantial alterations in the said draft provisions and has numbered it as Standing Order 54. Under Standing Order NO. 54 as certified, it is provided that " a workman shall retire from service after attaining the age of 55 years, or after putting in 30 years service whichever is earlier. If he has put in more than seven years ' service, he shall get a pension at the rate specified by the said Standing Order. " Mr. Setalvad contends that even if the addition of item 11C is valid, the relevant certified Standing Order is not justified by item 11C. In our opinion, this argument is sound and must be upheld. We have already noticed that item 11C provides for the fixation of the age of superannuation or retirement, and in that connection, it incidentally refers to the rate of pension or any other facility which the employer may like to extend or may be agreed upon between the parties. This item consists of two parts; the first relates to the age of superannuation or retirement; and the second refers to the rate of pension or any other facility. In regard to this latter part of item 11C, the important provision is that this rate of pension or any other facility should be such as the employer may like to extend, or as may be agreed upon between the parties. It is plain that the provision for pension which the certified Standing Order 54 purports to make was neither extended by the employer, nor agreed upon between the parties. On this narrow ground alone, the said provision. in certifying S.O. No. 54 must be regarded as invalid. That raises the question as to whether it would be fair or reasonable to retain the other part of certified S.O. 54 without the provision as to payment of pension. It appears to us that it would not be fair or reasonable to introduce a term of retirement in the conditions of service without making any provision for a suitable retiral benefit; but such a provision cannot be made suo Moto by the appropriate authority under item 11C; it has to be made either at the initiative of the employer, or by consent of parties. Mr. Setalvad did not dispute the position that it would be equitable to make some suitable provision for retiral benefit to the employees, particularly the existing employees, if an age of superannuation or retirement is going to be fixed for the first time in this establishment. He was, therefore, prepared that the whole of certified S.O. No. 54 should be deleted and the matter of retire 875 ment of the employees should be left to be determined under the existing practice. It is common ground that under the existing practice, there is no age of superannuation or retirement. The next certified Standing Orders which are challenged by Mr. Setalvad are in regard to the payment of compensation for "lay off"; they are Nos. 29 and 30. Clause (a) of the certified S.O. 29 reads thus: "The employer may at any time or times, in the event of a fire, catastrophe, break down of machinery or stoppage of power supply, epidemic, civil commotion or other causes, whether of a like nature or not, beyond the control of the employer, stop any machine or machines or department or departments, wholly or partly for any period or periods, by giving two days ' notice, if possible. If two days ' notice of closure has not been given, the employer shall pay wages in lieu of such notice, i.e., two days ' wages. Provided that no compensation in lieu of notice in excess of wages for the actual period of closure shall be payable when the period of closure is less than two days". Mr. Setalvad argues that it is wholly unreasonable to expect that where work is stopped for any of the reasons mentioned in this clause, it would be possible for the employer to give two days ' notice before such stoppage of work. All the causes mentioned in this clause are causes over which the employer has no control and which would overtake the establishment suddenly and unexpectedly. We have no difficulty in accepting this argument. We would, therefore, modify the last sentence in the first paragraph of certified S.O. No. 29(a) by providing that if in cases where it would have been possible to give two days ' notice of closure, but the employer has not given such a notice. he shall pay wages in lieu of such notice, i.e., two days ' wages. Plainly stated,. having regard to the nature of the causes mentioned in this clause, such a case can rarely arise. Then as regards Standing Order No. 30, Mr. Setalvad 's con tention is that this Standing Order conflicts with section 6K of the U.P. Act. This section deals with the right of workmen laid off for compensation. It is not necessary to refer in detail to the provisions of this section for the purpose of dealing with Mr. Setalvad 's argument. It would be enough to state that this section refers to cases in which workmen laid off are entitled to compen 876 sation, and it provides for the scales at which 'such compensation should be computed. Mr. Setalvad suggests that the matter of payment of compensation for Jay off having thus been covered by section 6K, it would not be legitimate for the Standing Orders to make a separate provision in that behalf. The field in question is covered by a specific provision of the U.P. Act and matters relating to that field must be dealt with by section 6K and no other provision. in this connection, Mr. Setalvad referred us to section 6K of the U.P. Act. Section 6 R(1) provides that the provisions from section 6 J to 6 Q shall have effect notwithstanding anything inconsistent therewith contained in any other law (including Standing Orders) made under the . There is a proviso to this sub section which is also relevant. It says that nothing contained in this Act shall have effect to derogate from any right which a workmen has under the , or any notification or order issued thereunder or any award for the time being in operation or any contract with the employer. It is clear that the proviso cannot cover the cases of Standing Orders which are expressly included in section 6 R(1). It is true that the Standing Orders, when certified, in substance embody statutory conditions of employment, but they cannot be treated as a contract within the meaning of the proviso. The context obviously negatives such a construction; and so, if the point raised by Mr. Setalvad had to be decided solely by reference to the provisions of section 6 K and 6 R, there would have been considerable force in his argument. But the difficulty in accepting Mr. Setalvad 's argument is created by the provisions of section 25 J of the Central Act. Section 25 J corresponds to section 6 R of the U.P. Act, except this that the proviso to section 25 J(1) and sub section (2) of section 25 J which have been recently added by Act 36 of 1964, make a substantial departure from the pre existing position of the law even under the Central Act. Section 25 J(2) is more important for our purpose. It reads thus : "For the removal of doubts, it is hereby declared that nothing contained in this Chapter shall be deemed to affect the provisions of any other law for the time being in force in any State in so far as that law provides for the settlement of industrial disputes, but the rights and liabilities of employers and workmen in so far as they relate to Jay off and retrenchment shall be determined in accordance with the provisions of this Chapter". 877 It is thus clear that the last part of section 25 J(2) categorically provides that the rights and liabilities of the employers and workmen in relation to lay off shall be determined in accordance with the provisions of Chapter V A of the Central Act. This clearly means that in regard to the question about the payment of compensation for lay off and retrenchment, the relevant provisions of the Central Act will apply and not those of the U.P. Act. This position cannot be, and is not, disputed by Mr. Setalvad. Once we reach this stage, we have to go to the proviso to section 25.J(1), because it is one of the provisions contained in Chapter V A which is made applicable by section 25 J (2); and this proviso clearly and unambiguously lays down, inter alia, that where under any Standing Orders, a workman is entitled to benefits in respect of any matter covered by Chapter V A which are more favourable to him than those to which he would be entitled under this Act, he shall continue to be entitled to the more favourable benefits in respect of that matter, notwithstanding that he receives benefits in respect of other matters under this Act. The position, therefore, is that section 25 J(2) makes Chapter V A of the Central Act applicable to disputes in relation to compensation for lay off, notwithstanding section 6 K and 6 R of the U.P. Act; and amongst the provisions thus made applicable by section 25 J(2) is the proviso to section 25 J(1) under which the Standing Orders which give more favourable benefits to the employees in respect of compensation for lay off, will prevail over the provisions of the Central Act. We ought to add in fairness that as soon as this aspect of the matter was brought out in the course of arguments, Mr. Setalvad conceded that his contention against the validity of certified Standing Order 30(a) could not be pressed. A somewhat similar question was raised before this Court and has been considered in Workers of Dewan Tea Estate and Others vs Their Management(1). There is one more point which still remains to be considered. In this connection, the controversy centres round certified Standing Orders 47, 48 and 49. These Standing Orders purport to have been made under item 10 of the Schedule to the Act. Item 10 refers to the means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servants. Standing Order 47 deals with the procedure for enquiring into complaints. The substantive part of this Standing Order is not in dispute; what is challenged is the validity of the two provisos to the said Standing Order, and the whole of Standing Orders 48 (1) 878 and 49. The first proviso to S.O. 47 gives a right to the complainant workman to appeal to the Labour Commissioner or to a Conciliation Officer of the U.P. Government, or to the machinery provided by collective agreements, if any, against the decision of the investigating officer or the employer, without prejudice to any right of the workmen aggrieved by the decision of the investigating officer or the employer to resort to proceedings in a court of law. The second proviso authorises a workman or a registered Union of which he is a member to submit a complaint of dismissal for the decision to the Labour Commissioner or to a State Conciliation Officer direct without first referring it to the Labour Officer of the industrial establishment or if there is none, any other officer appointed by the employer in this behalf or the employer. Standing Order 48(a) purports to provide that the decision of the employer upon any question arising out of, in connection with, or incidental to, these orders shall be final, subject to the appeals indicated by clauses (1) and (2) thereto. Standing Order 48 (b) seems to lay down that as soon as a workman or an employer sends a notice through a legal practitioner or resorts to any legal process whatsoever, or indicates in any other manner his intention of having recourse to legal process, no appeal shall be heard by the Labour Commissioner. Standing Order 49 empowers the employer at its discretion to refer any matter for decision to the Labour Commissioner, without giving any prior decision of his own; and it prescribes that the decision of the Labour Commissioner in such matters shall be final and binding on the workmen and the employer, subject to the provisions of the Act or the Rules. Mr. Setalvad argues that this elaborate provision for appeals contemplated by certified Standing Order 48 (a) ( 1 ) & (2) as well as the finality assigned to the decision of the Labour Commissioner under S.O. 49, are entirely outside the purview of the Act, and as such invalid. Similarly, he argues that the two provisos to S.O. 47 are invalid, because appeals of the kind contemplated by the said provisos do not fall within the scope of the Act. We are inclined to uphold this contention. Though the scheme of the Act, as modified in 1956, has widened the scope of the enquiry before the appropriate authorities, we do not think that the Act authorises the introduction of Standing Orders which would result in appeals to outside authorities either by the workmen or the employer. The Standing Orders which fall within the contemplation of the Act, are intended to regulate the conditions 879 of service of the employees, and in that behalf they may legitimately make provisions concerning the rights and liabilities of the parties and their enforcement by an internal arrangement which can be regarded as a domestic arrangement between the employer and his employees. It is not permissible under the Act to introduce appeals to outside authorities, and thereby extend the scope of the provisions which can legitimately be made by the Standing Orders. Besides, on the merits, Standing Order 48(a) (2) seems to be unfair inasmuch as it does not give a right of appeal to the employer in regard to decisions reached by the Joint Disciplinary Committee under S.O. 48 (a) ( 1 ) even though the employer may feel aggrieved by them. Likewise, the finality assigned to the decision of the Labour Commissioner by S.O. 49 would plainly be inconsistent with the provisions of the U.P. Act inasmuch as disputes arising from matters covered by the decision of the Labour Commissioner are completely taken out of the purview of section 4 K of the said Act; and prima facie, that does not seem to be permissible under the impugned provision of finality. But quite apart from these considerations, we have no hesitation in holding that the eleborate provisions made by the two provisos to S.O. 47, as well as Standing Orders 48 and 49 are outside the purview of the Act, and therefore, must be held to be bad in law. Mr. Setalvad attempted to argue that some other Standing Orders certified by the appropriate authorities should not have been so certified; but we have not allowed him to proceed with this part of his case, because we do not think that in an appeal brought to this Court under article 136 of the Constitution, we would be justified in examining the correctness of the conclusion reached by the appropriate authorities in dealing with the reasonableness or fairness of the Standing Orders in question. That is a matter which is left to the discretion of the Certifying Officer in the first instance, and the Appellate Authority when the matter goes in appeal before it. These are not matters which can be legitimately raised before this Court under article 136. The result is, certified Standing Order 29(a) is modified as indicated in this judgment; Standing Order 54 which deals with the age of superannuation or retirement and provides for consequential payment of pension, as well as the two provisos to Standing Order 47, and Standing Orders 48 and 49 are struck down and deleted from the list of certified Standing Orders. The rest of the 880 order passed by the Appellants Authority is confirmed. The certified Standing Orders will now have to be renumbered. As we have already indicated, this order will govern also Civil Appeal No. 1105 of 1964, with the result that the Standing ,Orders in this appeal which correspond to the Standing Orders in C.A. No. 164 of 1965, will be modified or struck down in accordance with this judgment. There would be no order as to costs in both the appeals. Appeal allowed in part.

IN-Abs

In accordance with the provisions of the , the appellant prepared draft standing orders in consultation with its employees and submitted the same to the Certifying Officer for certification. Since the appellant 's workers had not formed any union, three. representatives of the workmen were elected to represent them at the certification proceedings. These representatives took no objection to the draft standing orders submitted by the appellant. The Certifying Officer examined the reasonableness of the provisions contained in the draft Standing Orders made several changes in the draft and accordingly certified them. The appellant 's appeal to the Appellate Authority was dismissed. In appeal by special leave, HELD : (i) The contention that the procedure adopted by the certifying authorities in dealing with the question of the fairness or reason ableness of the draft Standing Orders is invalid, must fail. Though, originally the jurisdiction of the certifying officer and the Appellate Authority was very limited., section 4 as amended by Act 56 of 1956 has imposed upon the certifying officer or the appellate authority the duty to adjudicate upon the fairness or the reasonableness of the provisions of any Standing Orders and thus the jurisdiction of these authorities and the scope of inquiry have become wider. The Act contemplates that the Standing Orders must cover matters initially included in the Schedule as well as matters which may be added to the Schedule by the appropriate Government in exercise of the authority conferred on it by s.15. [867 H; 868 F] It cannot be said that since an elaborate machinery has been established by the U.P. Industrial Disputes Act, 1948 any attempt by the certifying authorities to devise detailed provisions in respect of matters covered by the First and Second Schedules to the U.P. Act would trespass upon the provisions of that Act. The scope of the provisions of the two Acts and the fields covered by them are not the same. While the purports to secure to industrial employees clear and unambiguous conditions of their employment, the scheme of the U.P. Act is to deal with problems posed by Industrial Disputes which have actually arisen or are apprehended. [869 G 870 C] (ii)Consent of the employees, though relevant cannot have a decisive significance in certification proceedings. The authority has to deal with the matter according to its own judgment and must decide in appropriate cases, like the instant case where the employees are not organised or strong enough, whether or not a particular standing order is fair or reasonable. [871 A C] 864 (iii) The draft Standing Orders cannot 'relate to matters outside the Schedule to the Act. By section 3 (2) of the Act the employers have to frame draft Standing Orders and these must normally cover the items in the schedule to the Act. If, however, it appears to the appropriate authorities that having regard to the relevant facts and circumstances it would be unfair and unreasonable to make provision for a particular item, it would be competent to the authorities not to frame draft Standing Orders in that behalf, but the employer cannot insist upon adding a condition to the Standing Order which relates to a matter which is not included in the Schedule. E] (iv) The wording of section 3 (2) of the Act indicates that the appropriate authority may permit departure from the Model Standing Orders if it is satisfied that insistence upon such conformity may be impracticable. [872 G] Associated Cement Co. Ltd. vs P. D. Vyas ; [1960] 1 L.L.J. 565, referred to. (v)The object of the Act being to require the employers to define with sufficient precision the conditions of employment under them, it is open to the appropriate Government to add to the Schedule if the item added has relation to conditions of employment. The enumeration of particular matters by section 15(2) will not control or limit the width of the power conferred on the appropriate Government by section 15(1). Whether or not an addition should be made is a matter for such Government to decide in its discretion and the reasonableness of such addition cannot be questioned. So, having regard to the development of industrial law in this country it cannot be said that gratuity, provident fund and the age of superannuation or retirement are not matters relating to conditions of employment. [873 E H] (vi)The provision for pension which the certified Standing Order No. 54 purports to make must be regarded as invalid since it was neither extended by the employer nor agreed upon between the parties as required by item 11 C of the Schedule to the Act. As such, it will not be fair or reasonable to retain the other part of Standing Order No. 54 dealing with retirement age without the provision as to payment of pension. [874 E H] (vii)The two provisos to Standing Order 47 as well as Standing Orders 48(a)(1) & (2) which make elaborate provisions for appeals and the finality assigned to the decision of the Labour Commissioner under Standing Order 49 are outside the purview of the Act and therefore must be held to be bad in law. Though the scheme of the Act, as modified in 1956, has widened the scope of the enquiry before the appropriate authorities, the Act does not authorise the introduction of Standing Orders which would result in appeals to outside authorities either by the workmen or the employer and thereby extend the scope of the provisions which can legitimately be made by Standing Orders. The Standing Orders are intended to regulate the conditions of service of the employees and in that behalf may legitimately make provisions concerning the rights and liabilities of the parties and their enforcement by an internal arrangement between the employer and his employees. [878 H 879 B] (viii)In an appeal under article 136 of the Constitution this Court would not be justified in examining the correctness of the conclusions reached by the appropriate authorities in dealing with the 'reasonableness or fairness of the Standing Orders. That is a matter left to the discretion of the authorities. [879 F]

Civil Appeal No. 968 of 1965. Appeal from the judgment and order dated February 5, 1965 of the Assam and Nagaland High Court in Civil Rule No. 286 of 1964. M. C. Setalvad, and D. N. Mukherjee, for the appellant. C. K. Dapthary, Attorney General, and Naunit Lal, for the respondents. The Judgment of GAJENDRAGADKAR, C.J., WANCHOO, RAMASWAMI AND RAJU, JJ. was delivered by GAJENDRAGADKAR, C.J. HIDAYATULLAH, J. delivered a dissenting Opinion. Gajendragadkar, C.J. The appellant, Edwingson Bareh, belongs to the village of Barato in Jowai area of the United Khasi Jaintia Hills District in Assam. He is an elector from the said area to the District Council of the said United Khasi Jaintia Hills District. In fact, he was elected as a member to the said District Council from Nongjngi Constituency (No. 23). This constituency fell within the Jowai area of the said District. Later, the appellant was elected as Chief Executive Member of the District Council in March, 1963. By virtue of his office, he draws a monthly salary and other allowances under the provisions of the United Khasi Jaintia Hills District Council Chairman 's, Deputy Chairman 's and Executive Member 's Salaries and Allowances Act, 1953. He is entitled to hold the said office till a new District Council is elected and takes over. On the 26th January, 1950, when the Constitution came into force, the United Khasi Jaintia Hills District was formed as one of the Tribal Areas of Assam, and in this area were merged the Khasi States with the other areas of the Khasi Jaintia Hills. The boundaries of this area are defined by paragraph 20(2) of the Sixth Schedule to the Constitution. All the Tribal Areas mentioned in Part A and Part B of the Table appended to paragraph 20 of the Sixth Schedule are governed by the provisions prescribed by the Sixth Schedule. Under paragraph 2(4) of the said Schedule, the administration, of the United Khasi Jaintia Hills District vested in the District 774 Council which was inaugurated on the 27th June, 1952. This Council consists of 24 different constituencies out of which 6 are in the Jaintia Hills area. The District Council has been clothed with administrative, legislative and judicial powers over the territory of the District by the relevant provisions of the Sixth Schedule. By the notification issued on the 1st of June, 1964, No. TAD/R/8/62, the term of the present District Council was extended up to the 2nd January,. 1965, or until the newly elected District Council takes over. By a subsequent notification issued in December, 1964, No. TAD/R/8/62, the period of the said ,Council was further extended from 3rd January, 1965 to the 2nd May, 1965. Under the present administration set up, the Executive Committee of the District Council consists of three members including the Chief Executive Member and two other members, and all the executive functions of the said Council are vested in the Executive Committee. Purporting to act on certain representations received by him, the Governor of Assam appointed a Commission under paragraph 14(1) of the Sixth Schedule on the 26th August, 1963. This Commission was required "to examine and report in the matter of, (1) creation of a new autonomous District for the people of Jowai Sub Division of the United Khasi Jaintia Hills Autonomous District, and (2) exclusion of the area from the United Khasi Jaintia Hills Autonomous District. " The Commission made its report on the 20th January, 1964 and recommended the creation of a new autonomous District Council for the Jowai Sub Division of the United Khasi Jaintia Hills Autonomous District by excluding the areas comprising the area of the said Sub Division from the United Khasi Jaintia Hills Autonomous District. " Thereafter, the Minister in charge of the Tribal Areas and Welfare of Backward Classes Department of the Government of Assam laid before the Assam Legislative Assembly during its autumn session of 1964 the report of the Commission with an explanatory memorandum made on the 25th September, 1964. This memorandum stated that the Government had decided to accept the recommendation of the Governor on the said re port and give effect to it. After the report was thus placed before the Legislative Assembly, the Assembly passed a resolution approving of the action proposed to be taken by the Government of Assam on the report in question. On the 23rd November, 1964, a notification No. TAD/R/50/64 (hereinafter referred to as 'the Notifica 775 tion ') was issued by the Governor of Assam in accordance with the memorandum which had been placed before the Legislative Assembly of Assam. By this notification, the Governor of Assam was pleased "to create a new Autonomous District to be called the Jowai District by excluding the Jowai Sub Division of the United Khasi Jaintia Hills District with effect from 1st December, 1964; and that the boundaries of the Jowai District shall be the boundaries of the Jowai Sub Division of the United Khasi Jaintia Hills District. " The appellant challenged the constitutional validity of this notification by filing a writ petition before the High Court of Assam and Nagaland on the 30th November, 1964. In his writ petition, the appellant alleged that the notification was invalid and ultra vires the powers of the Governor. Alternatively, it was urged that in exercising his powers, the Governor has contravened the mandatory requirements prescribed by paragraph 14 of the Sixth Schedule to the Constitution. The appellant 's case was that even if it was assumed that the Governor had the power to issue the impugned notification, inasmuch as the mandatory provisions of paragraph 14 had not been complied with, the notification was invalid. To this petition, the appellant impleaded five respondents; the first amongst them was the State of Assam; the others were : the Minister in charge of Tribal Areas and Welfare of Backward Classes Department; the Secretary to the Government of Assam, T.A., O.B. & W.B.C. Department; the Chief Secretary to the Government of Assam; and the Deputy Secretary to the Government of Assam, Tribal Areas & Backward Classes Department, respectively. The respondents disputed the validity of the contentions raised by the appellant in his writ petition. They urged that the notification had been issued by the Governor in exercise of the powers conferred on him by paragraph 1(3) of the Sixth Schedule and that all the relevant requirements of paragraph 14 had been complied with The respondents did not accept the correctness of the appellant 's argument that in issuing the notification, the Governor had acted outside his authority. Since the point raised by the petition was of considerable importance, and related to the construction of the relevant provisions contained in the Sixth Schedule, the writ petition was placed for hearing before a special Bench of the Assam High Court consisting of three learned Judges. After the writ petition was argued, the High Court, by a majority decision, has rejected the contentions raised by the appellant and has dismissed the writ Sup. CI/66 3 776 petition filed by him. The minority judgment has upheld the arguments of the appellant and has held that the impugned notification is invalid. After the decision of the High Court was pronounced, the appellant applied for and obtained a certificate under article 132 of the Constitution, and it is with the said certificate that he has come to this Court in the present appeal. On behalf of the appellant, Mr. Setalvad argues that paragraph 1(3) of the Sixth Schedule does not confer on the Governor the power to constitute a new autonomous district. For the valid creation of a new autonomous district, parliamentary legislation is necessary. In support of this plea, Mr. Setalvad has relied en what he describes as "legislative practice" in that behalf. He further contends that even if the Governor had the power to create new autonomous district under paragraph 1(3), the exercise of that power can be effective only after Parliament passes a law in accordance with the decision of the Governor. In other words, the argument is that the Governor may, by virtue of his power, decide to create a new autonomous district under paragraph 1(3), but the decision of the Governor must be confirmed by parliamentary legislation before it becomes effective. In the alternative, Mr. Setalvad contends that even if the Governor can effectively create a new autonomous district by virtue of his powers under paragraph 1(3), he can do so only after complying with the mandatory provisions of paragraph 14; and since these provisions have not been complied with, the impugned notification is invalid. Before dealing with these points, it would be convenient to refer broadly to the scheme of the Sixth Schedule which contains the provisions in relation to the administration of tribal areas in Assam. Article 244(2) provides that the provisions of the Sixth Schedule shall apply to the administration of the tribal areas in the State of Assam; and that means that tribal areas in Assam would be governed not by the other relevant provisions of the Constitution which apply to the other constituent States of the Union of India, but by the provisions contained in the Sixth Schedule. These provisions purport to provide for a selfcontained code for the governance of the tribal areas forming part of Assam and they deal with all the relevant topics in that behalf. The areas described in the table appended to paragraph 20 of the Sixth Schedule, consisting of Part A and Part B, constitute the tribal areas within the State of Assam; sub paragraph (1) of the said paragraph so provides. Sub paragraphs (2), (2A), (2B) and (3) of paragraph 20 describe the boundaries of the 777 items mentioned in the Table. Part A of the table originally consisted of six items; the first amongst them was the United Khasi Jaintia Hills District. The item of 'The Naga Hills District ' which was originally included in Part A has been subsequently taken out of Part A and has been added to Part B. Part B which originally consisted of only one item, now consists of two items; the first item is North East Frontier Tract including other Tracts therein described; and the second is the 'Naga Hills Tuensang Area '. Thus, paragraph 20 read with the Table gives a comprehensive description of the tribal areas falling within the State of Assam for whose administration provision is made by the other paragraphs of the Sixth Schedule. Paragraph 1 of the Sixth Schedule deals with autonomous districts and autonomous regions and confers certain specified powers on the Governor. It is necessary to read this paragraph "1. (1) Subject to the provisions of this paragraph, the tribal areas in each item of Part A of the table appended to paragraph 20 of this Schedule shall be an autonomous district. (2) If there are different Scheduled Tribes in an autonomous district, the Governor may, by public noti fication, divide the area or areas inhabited by them into autonomous regions. (3) The Governor may, by public notification: (a) include any area in Part A of the said table, (b) exclude any area from Part A of the said table, (c) create a new autonomous district, (d) increase the area of any autonomous district, (e) diminish the area of any autonomous district, (f) unite two or more autonomous districts or parts thereof so as to form one autonomous district, (g) define the boundaries of any autonomous district : Provided that no order shall be made by the Governor under clauses (c), (d), (e) & (f) of this subparagraph except after consideration of the report of a Commission appointed under sub paragraph (1) of paragraph 14 of this Schedule. " 778 Then follow several paragraphs dealing with the constitution of District Councils and Regional Councils; their powers to make laws; the administration of justice in autonomous districts and autonomous regions; conferment of powers under the Code of Civil Procedure, 1908, and the Code of Criminal Procedure, 1898, on the Regional and District Councils and on certain courts and officers for the trial of certain suits, cases and offences; these are covered by paragraphs 2, 3, 4 and 5 respectively. Paragraph 6 deals with the powers of the District Council to establish Primary Schools, etc. Paragraph 7 deals with the District and Regional Funds; paragraph 8 refers to powers to assess and collect land revenue and to impose taxes. 9 has relation to licences or leases for the purpose of prospecting for, or extraction of, minerals. 10 confers on the District Council power to make regulations for the control of money lending and trading by nontribals. Paragraphs 11 & 12 deal with the publication of laws, rules and regulations made under the Schedule; and the application of Acts of Parliament and of the Legislature of the State to autonomous districts and autonomous regions respectively. Paragraph 13 is concerned with the question of estimated receipts and expenditure pertaining to autonomous districts which have to be shown separately in the annual financial statement. Paragraph 14 is concerned with the appointment of a Commission and for the purpose of the present appeal, it is necessary to read it : "(1) The Governor may at any time appoint a Commission to examine and report on any matter specified by him relating to the administration of the autonomous districts and autonomous regions in the State, including matters specified in clauses (c), (d), (e) and (f) of sub paragraph (3) of paragraph 1 of this Schedule or may appoint a Commission to inquire into and report from time to time on the administration of autonomous districts and autonomous regions in the State generally and in particular on (a) the provision of educational and medical facilities and communications in such districts and regions; (b) the need for any new or special legislation in respect of such districts and regions; and (c) the administration of the laws, rules and regulations made by the District and Regional Councils; and define the procedure to be followed by such Commission. 779 .lm15 (2) The report of every such Commission with the recommendations of the Governor with respect thereto shall be laid before the Legislature of the State by the Minister concerned together with an explanatory memorandum regarding the action proposed to be taken thereon by the Government of Assam. (3) In allocating the business of the Government of the State among his Ministers the Governor may place one of his Ministers specially in charge of the welfare of the autonomous districts and autonomous regions in the State. " Paragraph 15 deals with the annulment or suspension of acts and resolutions of District and ' Regional Councils. Paragraph 16 deals with the dissolution of a District or a Regional Council; paragraph 17 is concerned with the exclusion of areas from autonomous districts in forming constituencies in such districts. Paragraph 18 is concerned with the application of the provisions of this Schedule to areas specified in Part B of the table appended to paragraph 20; while paragraph 19 deals with the transitional provisions. Paragraph 21 which is the last paragraph in the Sixth Schedule, is relevant for our purpose; it reads thus: "(1) Parliament may from time to time by law amend by way of addition, variation or repeal any of the provisions of this Schedule and, when the Schedule is so amended, any reference to this Schedule in this Constitution shall be construed as a reference to such Schedule as so amended. (2) No such law as is mentioned in sub paragraph (1)of this paragraph shall be deemed to be an amendment of this Constitution for the purposes of Article 368. " That, broadly stated, is the scheme of the provisions contained in the Sixth Schedule. It is plain that under paragraph 21, Parliament can make a law amending by way of addition, variation or repeal any of the provisions of the Sixth Schedule and when such an amendment is made, reference to the Sixth Schedule in the Constitution shall naturally be construed as a reference to such Schedule as so amended. In other words, Parliament is clothed with legislative competence of the widest amplitude in relation to any changes it likes to make in any of the provisions contained in the Sixth Schedule. Paragraph 21(2) has provided that any changes 780 sought to be introduced by parliamentary legislation under the power conferred on Parliament by sub paragraph (1) thereof shall not be deemed to amount to an amendment of the Constitution for the purposes of article 368. There can thus be no doubt that if Parliament wants to make any changes in any provisions of the Sixth Schedule, it is entitled to do so; and that obviously means that the change which has been introduced by the impugned notification might as well have been made by Parliament. The question which calls for our decision is : can the same change be validly introduced by the Governor in exercise of the powers conferred on him by paragraph 1(3) or not ? We have already noticed that the effect of paragraph 20 read with the table appended to it is that the areas specified in Part A and Part B of the said table amount to tribal areas within the State of Assam. Now, paragraph 1(1) of the Sixth Schedule provides that the tribal areas in each item of Part A of the table .appended to paragraph 20 shall be an autonomous district, subject to the provisions of paragraph 1. This provision is clear in two respects. It does not cover the areas specified in Part B of the table; its application is confined to the areas in each item of Part A of the table alone. It is also clear that the tribal areas in each item of Part A aforesaid shall be an autonomous district, but that would be so subject to the provisions of paragraph 1. In other words, if any changes are made by the Governor in ,exercise of the powers conferred on him by paragraph 1(3), those changes will have to be read into the relevant item in Part A of the table, and paragraph 20 will have to be considered in the light of the changes thus introduced in the said item. What is the extent of the power conferred on the Governor by paragraph 1(3) and how it can be exercised, are matters to which we will turn presently; but confining ourselves to the provisions of para 1(1), it seems clear that the exercise of the powers prescribed by para 1 (3) has an impact on the description of the items in Part A of the table appended to para 20; and that impact is that the changes made in the description of the items will be introduced in Part 9 and thereby the scope and effect of para 20 will, in consequence, be suitably modified. Paragraph 1(3) confers on the Governor power to issue notification for the purpose of bringing about any of the results enumerated seriatim by clauses (a) to (g). In the present case, we are not called upon to consider what clauses (a) and (b) really denote. The notification with which we are concerned is referable to clauses (c), (e) and (g). Clause (c) refers to the power 781 to create a new autonomous district, and this power has been exercised by the Governor in creating a new autonomous district to be called the Jowai District. Clause (e) refers to the power to diminish the area of any autonomous district, and this power has been exercised by the Governor by diminishing the area of the pre existing United Khasi Jaintia Hills District. Clause (g) refers to the power to define the boundaries of any autonomous district, and this power has, in substance, been exercised by the Governor inasmuch as after the creation of the new Jowai District, the boundaries of the pre existing United Khasi Jaintia Hills District, as well as the boundaries of the newly created District are automatically defined. Similar power can be exercised under clauses (d) and (f). The proviso to para 1(3) imposes a condition on the exercise of the power prescribed by clauses (c), (d),. (e) and (f) of para 1(3). It requires that before the Governor exercises his power under any of the said four clauses, he has to appoint a Commission under para. 14(1) and consider its report. The reason why the condition prescribed by the proviso is not made applicable to cases falling under clause (g) can be easily understood; the power conferred by the said clause appears, in the context, to be merely consequential on the powers prescribed by the previous four clauses. It is, however, not quite clear why the exercise of the power conferred by clauses (a) and (b) has not been made subject to the condition prescribed by the proviso; but, as we have already indicated, we are really not called upon to consider that aspect of the matter. Now, reading para 1(3) by itself, it seems difficult to appreciate Mr. Setalvad 's argument that though the Governor may have the power to create a new autonomous district, the notification that he may issue in exercise of the said power, will not take effect unless Parliament by law provides for the creation of the said new district. It is true that the said Dower has to be exercised subject to the condition prescribed by the proviso to para 1(3). But if the said condition is satisfied, and the requirements prescribed by para 14 are complied with, is there anything in the provisions of para 1 as well as para 14 which would justify the argument that the exercise of the relevant powers is not intended to be effective unless it receives the approval of parliamentary legislation ? In our opinion, this question cannot be answered in favour of the appellant. When clause (c) of paragraph 1(3) provides that the Governor may, by public notification, create a new autonomous district, it does not seem to contemplate that for 782 the creation of a new autonomous district, the Constitution requires something more to be done by Parliament itself in order to make the public notification issued by the Governor effective, In our view, paragraph 1(3) clearly indicates that the Constitution has delegated to the Governor a part of the power conferred on Parliament itself by paragraph 21. Paragraph 21 shows that Parliament has undoubtedly the power to make any change in any of the provisions contained in the Sixth Schedule. A part of this wide power has, however, been conferred on the Governor, because the Constitution makers apparently thought that Parliament need not be called upon to exercise its own power for bringing about comparatively smaller and minor changes in Part A of the Table, and it accordingly decided to confer the appropriate power on the Governor to take action in that behalf. If the Governor has been clothed with the relevant power, the exercise of the power must, by itself, be effective to bring about the results intended by clauses (c), (d), (e) and (f) of para 1(3). This power must, no doubt, be exercised subject to the condition prescribed by the proviso to para 1(3). But once it is properly exercised as required by the relevant provisions of the Sixth Schedule, it becomes effective and there is no need for parliamentary legislation in that behalf. In support of his contention that Parliament has legislated in respect of matters falling under para 1(3). Mr. Setalvad has referred us to two parliamentary statutes. The first one is Act No. 18 of 1954. This Act was passed by Parliament on the 29th April, 1954 to change the name of the Lushai Hills District. Section 2 of this Act provides that the tribal area in Assam now known as the Lushai Hills District shall, as from the commencement of this Act, be known as the Mizo District. Section 3 made a corresponding change in paragraph 20 of the Sixth Schedule and in Part A of the table appended thereto. It is doubtful if the power exercised by Parliament in re naming a District by passing Act 18 of 1954 is covered by any of the clauses of para 1 (3); but even if it was, the exercise of the said power by Parliament cannot show that the same power, if delegated to the Governor, cannot be exercised by him without the assistance of parliamentary legislation in that behalf. This Act, therefore, is not at all decisive on the point raised by Mr. Setalvad. The other Act on which Mr. Setalvad relies is Act No. 42 of 1957. This Act was passed by Parliament on the 29th November, 1957. Section 3 of this Act omitted item 4 'Naga Hills District ' from Part A of the table appended to para 20 of the 783 Sixth Schedule; and substituted "The Naga Hills Tuensang Area" as item 2 in Part B of the said table; and made the necessary change in para 20. What we have said about Act No. 18 of 1954 is equally true about this Act also. It is doubtful whether excluding an item from Part A and including it in Part B would fall within any of the clauses prescribed by para. 1(3); but even if it is so, the fact that Parliament exercises its legislative power in regard to an item delegated to the Governor will not show that the Governor does not possess that power. Therefore, Mr. Setalvad 's argument based upon what he calls "legislative practice" does not really assist him. Incidentally, Mr. Setalvad suggested that it would be anomalous to hold that the power conferred on the Governor by para 1(3) of the Sixth Schedule can be effectively exercised by him without confirmation by parliamentary legislation. He illustrates this point by taking a case where the Governor decides to exercise his powers under para. 1(3) and issues a public notification accordingly. If Parliament does not approve of the said decision, it may make a law reversing the decision in question; and the Governor may adhere to his earlier decision and issue another public notification. Such a course of events, says Mr. Setalvad, would lead to a very anomalous situation; and the anomaly can be avoided by holding that the exercise of the Governor 's power under para. 1(3) has to be confirmed by parliamentary legislation under para. 21 before it becomes effective. We are not impressed by this argument. As we have already observed, the power of Parliament under paragraph 21 is very wide; it includes the power to modify or take away the power conferred on the Governor by para. 1(3), and in the very unlikely event of the Governor attempting to challenge the decision of Parliament, Parliament can take away his power altogether by suitable legislation. We have no doubt that the argument based on a possible anomaly overlooks the fact that such an anomaly can inherently be said to exist wherever the same power is vested in two alternative authorities. That being so, the argument of possible anomalies does not assist Mr. Setalvad 's contention that parliamentary legislation is necessary before the Governors decision becomes effective. Before we part with this topic, it is necessary to refer to another aspect of the problem which has relation to paragraph 20 H of the Sixth Schedule. We have already observed that the exercise of the powers prescribed by paragraph 1(3) has an impact on the description of the items in Part A of the Table appended to para 20, and we have also indicated that the said impact is 784 that the changes made in the description of the items will be introduced in Part A and thereby the scope and effect of para 20 will, in consequence, be suitably modified. It is now necessary ,to consider the nature of the modifications which may be made in paragraph 20 and their impact on the question as to whether parliamentary legislation is necessary to make the impugned notification effective. Paragraph 20(1) provides that the areas specified in Parts A ,and B of the table shall be the tribal areas within the State of Assam. The impugned notification has made a change in the composition of the United Khasi Jaintia Hills District by carving ,out of the said item in Part A of the table two separate items, 'viz., the United Khasi Jaintia Hills District, and the Jowai District. It is, however, clear that this change does not make any addition to or subtraction from, the total area covered by Part A of the table, and in that sense, the modification made by the Governor by the impugned notification does not affect in any manner the contents of para 20(1). Even after the said notification has come into force, para 20(1) truly and correctly provides that the areas specified in Part A and B of the table shall be the tribal areas within the State of Assam. It cannot, however, be disputed that as a result of the modification made by the impugned notification, paragraph 20(2) has to be changed. Paragraph 20(2), as it originally stood, describes in detail the territories comprised in the United. Khasi Jaintia Hills District, and as a result of the impugned notification, the said description will have to be modified, because the said District has now been split up into two Autonomous Districts. That, however, is a change consequent upon the change made by the Governor by issuing the impugned notification in exercise ,of the powers conferred on him by para 1(3). In our opinion, where the Governor makes changes by virtue of the powers conferred on him by para. 1(3)(c), (d), (e), (f) and (g), what follows is a change in the internal composition of the different items in Part A of the table. The exercise of the said powers does not change, and in the present case it has not changed, the total area comprised in Part A. What it purports to do is to change one item into two items of Autonomous Districts. Since the power to bring about this change is expressly conferred on the Governor by paragraph 1(3)(c), (d), (e), (f) and (g), it is not unreasonable to hold that the exercise of the said power should, H as in the present case, lead to a consequential change in para 20(2). Such a change in para 20(2) is a logical corollary of 785 the exercise of the power conferred on the Governor by para 1(3)(c), (d), (e), (f) and (g). It is possible that by the exercise of the powers conferred on the Governor by paragraph 1(3)(a) and (b), the area included in Part A of the table may conceivably be either increased or diminished, because the powers conferred on the Governor by para 1 (3) (a) and (b), prima facie, refer to the inclusion of any area in Part A, or exclusion of any area from Part A of the table. We have not thought it necessary to consider or decide what is the nature of the power prescribed by para. 1(3)(a) or (b). If the power prescribed by para. 1(3)(a) or (b) is construed in a narrow way in the light of the context of para. 1(3) and is con fined to making changes either by inclusion or exclusion in regard to areas already included in Part A, the total area of Part A may not be altered even by the exercise of such power. But assuming that the exercise of the said power would enable the Governor to add to the area included in Part A of the table, or to diminish the area included in the said Part by excluding it from the said Part, a question may arise as to the effect of such modification. In such a case, paragraph 20(1) itself may be affected, and if that happens, it would become necessary to enquire whether the exercise of the Governor 's power prescribed by para. 1(3)(a) or (b) can, without parliamentary legislation, validly make a change in para. 20(1). In dealing with this question, different considerations would arise. If an addition is made to the area covered by Part A of the table by including in it some outside area, or if a portion of the area included in the said Part is taken out, it would alter the content and com plexion of the table considered as a whole, and the question about the necessity of parliamentary legislation to make such a change effective may assume a different aspect. Including any area in Part A, or excluding any area from Part A in the wide sense of the terms used in the said two clauses may, prima facie, import considerations of general policy which, it may be urged, can be effectively dealt with only by parliamentary legislation; such considerations do not apply where the exercise of the powers conferred on the Governor by para. 1(3)(c), (d), (e), (f) and (g) means nothing more than permutation and combination of the areas already included in Part A, and that is purely a matter of internal administration. We are, however, not concerned with the aspect of the problem relating to para. 1(3)(a) and (b) in the present case, and need not, therefore, pronounce any opinion on it. 786 What has happened in this case is that one Autonomous District has been split up into two separate Autonomous District without making any change in the totality of the area include in Part A of the table; and that does not bring about any change in para 20(1). Paragraph 20(2), however, stands on a different footing; it just gives a description of the area included in the United Khasi Jaintia Hills District, and the change made in the said description by the impugned notification is of such a purely consequential character in relation to the internal adjustment of the areas mentioned in Part A of the table that we do not think parliamentary legislation is required to make such a change effective. Therefore, we are satisfied that it would not be reasonable to hold that without parliamentary legislation, the impugned notification cannot validly effect any change in item 1 of Part A of the table appended to paragraph 20. In this connection, we may incidentally refer to the provisions of paragraph 18 which deals with the problem of the application of the provisions of the Sixth Schedule to areas specified in Part B of the table appended to para. 18(1)(b) provides that the Governor may, with the previous approval of the President, by public notification, exclude from the said table any tribal area specified in Part B of that table or any part of such area. This shows that where any area from Part B of the table has to be excluded from it, it can be done by the Governor with the previous approval of the President. Action taken by the Governor in exercise of this power may conceivably fall under paragraph 1(3)(a), and in that sense, the inclusion of the area in Part A of the table would, in substance, be the result of the decision of the President. It is significant that paragraph 18(3) specifically provides that in the discharge of his functions under subparagraph (2) of this paragraph as the agent of the President,the Governor shall act in his discretion. Thus, it is clear that paragraph 18 deals with the areas in Part B of the table independently, and in respect of them, the Governor functions as the agent of the President when he exercises his power under sub paragraph (2) of the said paragraph. That takes us to the question as to whether Mr. Setalvad is right in contending that the notification is invalid, because before issuing it, the mandatory requirements of paragraph 14 have not been complied with. What then are the requirements of para 14 ? The first requirement is that before taking any action in exercise of the powers conferred on him by clauses (c), (d), (e) and (t) of para. 1(3), the Governor must appoint a Commission to 787 examine and report on any matter covered by the said clauses. 'he second requirement is that the Governor should consider the report made by the Commission and make his recommendations with respect thereto. The third requirement is that the Commission 's report along with the Governor 's recommendations has to be placed before the Legislature of the State by the Minister concerned, and this has to be accompanied by an explanatory memorandum regarding the action proposed to be taken thereon by the Government of Assam. There is no doubt that in the present case, the Governor of Assam did appoint a Commission. We have already indicated the terms of reference under which the Commission was appointed. There is also no doubt that the Commission made its report, and it recommended the creation of a new autonomous District Council for the Jowai Sub Division of the United Khasi Jaintia Hills Autonomous District by excluding the areas comprising the areas of the said Sub Division from the United Khasi Jaintia Hills Autonomous Districts. Mr. Setalvad contends that this report did not in fact recommend the creation of a new Autonomous District at all; and in support of this argument, he relies on the fact that the recommendation, in terms, refers to the creation of a new autonomous District Council. He also points out that the Commission has observed that "if the inhabitants of the Jaintia Hills work together and maintain the existing system of administration, there is no reason why a separate District Council for Jowai should.not be a success." The Commission also added that the establishment of a separate District Council would resolve the prevailing tension and bitterness, due to a lack of uniformity in administration, between them and in Khasis; and the Commission hoped that the creation of a separate District Council would lead to a better understanding between them. It is true that the reference to the creation of a new District Council is somewhat inappropriate in the context; but on considering the Commission 's recommendations as a whole, there is no doubt that what the Commission recommended was the creation of a new Autonomous District. It would be noticed that the Commission has expressly recommended that the areas comprising the areas of the Jowai SubDivision should be excluded from the existing Autonomous District known as the United Khasi Jaintia Hills Autonomous District, and that necessarily means that the Sub Division area has to be taken out and formed into a new Autonomous District. Therefore, there can be no doubt that the condition about the appointment of a Commission has been satisfied, and that, in fact, the Commission which was appointed by the Governor, has 788 recommended the creation of a new Autonomous District on the lines ultimately adopted in the impugned notification. It still remains to consider whether the other two conditions prescribed by paragraph 14 have been satisfied or not. Has the Governor considered the report submitted by the Commission and made his recommendations, and have those recommendations along with the report been placed before the Legislature by the Minister concerned along with an explanatory memorandum ? As to the latter requirement, there is no dispute. The evidence shows that the report along with an explanatory memorandum was placed by the Minister concerned before the Legislature. This memorandum 'set out the history about the appointment of the Commission, and the receipt of its report; and it added that "after a careful consideration of the report and the recommendations of the Governor, the Government has decided to accept the recommendations of the Commission and give effect to them by taking necessary administrative and other steps in this direction. " The main controversy centres round the question as to whether the Governor considered the report and made his recommendations. In pressing his argument that it is not shown that the Governor considered the report and made his recommendations thereon, Mr. Setalvad assumes that the Governor, in the context, is not functioning as the Constitutional Governor who receives the advice of his Council of Ministers, but is functioning in his own individual character as Governor; and before the validity of the notification can be upheld, it must be established that the Governor did consider the report and did make his own recommendations. It is not seriously disputed by Mr. Setalvad that the power which is conferred on the Governor by para. 1(3) of the Sixth Schedule, has to be exercised by him as a Constitutional Governor; that is to say, he must act on the advice of his Council of Ministers. It is also not disputed by Mr. Setalvad that ultimately it is the Government of Assam which has to decide what action to take in such matter. Paragraph 14(2) expressly says that the explanatory memorandum which has to be laid before the Legislature of the State must indicate the action proposed to be taken by the Government of Assam. Mr. Setalvad, however, argues that having regard to the context of para. 14(2), it is clear that the Governor acts on his own in considering the report and making his recommendations. His suggestion is that under para 14(2), the report must first go to the Governor; he must consider it and make his recommendations; and the Council of Ministers must then decide what action to take. After that 789 stage is over, the report made by the Commission, the recom mendations of the Governor thereon, and the explanatory memorandum drawn by the Government of Assam had to be placed before the Legislature of the State. According to the respondents, what actually happened in the present case was that after the report of the Commission was received, the Council of Ministers considered the report at its meeting on the 28th April, 1964, and decided to accept the recommendations of the Commission. An explanatory memorandum was then drawn up, and the whole file was placed before the Governor. After the Governor read the file, on the 21st September, 1964, he wrote on it "Seen, thanks". The affidavit filed by the respondents shows that after the matter was considered by the Council of Ministers, the proceedings were placed before the Governor, and he read the proceedings and expressed his concurrence with the words "Seen, thanks" The question is whether the procedure thus followed in the present case complied with the relevant conditions prescribed by para 14(2) or not. For the purpose of dealing with this aspect of the matter in the present appeal, we are prepared to assume that when para 14(2) refers to the Governor, it refers to him as Governor who must act on his own and not be assisted by the advice, tendered to him by the Council of Ministers. Even on that assumption, we are unable to see how the procedure followed in the present case can, in substance, be said to contravene the substantial requirements of para 14(2). What para 14(2) requires is that before the matter. goes to the Legislature of the State, the Governor must apply his mind to it and make his recommendations on it. It would be unreasonable to suggest that in considering the report, the Governor is precluded from receiving the assistance of the Council of Ministers before he makes up his mind as to what recommendations should be sent before the Legislature of the State. If the Governor thinks that the questions raised by the report should first be considered by the Council of Ministers and then submitted to him, we do not see how it can be said that para 14(2) has not been complied with. On the other hand, if the Governor, in the context, is expected to act as a Constitutional Governor, it would be appropriate that the matter should first be examined by the Council of Ministers and then submitted to him for his own recommendations. However one looks at it, the facts disclosed in the counter affidavit filed on behalf of the State of Assam unmistakably show that the matter has been considered both by the Governor and the Council of Ministers and they are 790 all agreed that the recommendations of the Commission should be accepted. The criticism that the Governor has not made any recommendations as such, but has merely contented himself with making a short note "Seen, thanks", has, in our opinion, no substance. We have looked at the counter affidavit filed on behalf of the State of Assam and have examined the other documentary evidence to which our attention was drawn. In the present case, the record clearly shows that the Commission recommended that a new Autonomous District should be created, the Governor agreed with the said recommendation, and so did the Council of Ministers. Therefore, we see no reason to interfere with the majority decision of the High Court that the power conferred on the Governor by paragraph 1(3) of the Sixth Schedule has been validly and properly exercised by him. The result is, the appeal fails and is dismissed with costs. Hidayatullah, J. The appellant impugns the judgment of the High Court of Assam and Nagaland at Gauhati, dated February 5, 1965, by which his petition under article 226 of the Constitution, filed to challenge notification No. TAD/R/50/64, dated November 23, 1964, which set up an autonomous District of Jowai after separating the Sub Division of Jowai from the United Khasi Jaintia Hills Autonomous District, was dismissed. According to the appellant the notification forming the new autonomous dis trict was ineffective without an amendment of the Sixth Schedule of the Constitution by parliamentary legislation; and even by itself was insufficient because some necessary steps leading up to the notification were not taken. In the High Court the petition, from which this appeal arises by a certificate of the High Court under article 132, was heard by a Full Bench and was rejected by majority. The learned Chief Justice (Dutta J. concurring) was of the view that the contentions of the appellant were unsupportable while C. section Nayudu J. was of the opposite opinion. I have had the benefit and the privilege of reading the judgment just delivered by my lord the Chief Justice, but I have the misfortune to disagree with the conclusion that this appeal should be dismissed. The facts are fully set out by my lord and I need not repeat them. Before I give my reasons why I hold that this appeal should succeed, I find it convenient to refer to the constitutional provisions bearing upon this matter which I apprehend differently. Originally the territories of India consisted of the States named in Parts A, B and C of the First Schedule and the territories specified in Part D of the same Schedule. Them were 791 9 States in Part A, 9 in Part B and 10 in Part C. Part D consisted of the Andaman and Nicobar Islands. Assam was the first State to be named in Part A. Its territories were described as follows : "The territory of the State of Assam shall comprise the territories which immediately before the commencement of this Constitution were comprised in the Province of Assam, the Khasi States and the Assam Tribal Areas. " Different parts in the Constitution laid down provisions as to the administration of the different States in the First Schedule. Part VI dealt with States in Part A, Part VII with States in Part B, Part VIII with States in Part C, Part IX with territories in Part D and such other territories not specified in the First Schedule and Part X with the Scheduled and Tribal Areas. After the Constitution (7th Amendment) Act, 1956, the whole of the First Schedule was substituted by another Schedule and some of the States had to be renamed and classified, as a result of the reorganisation of the States. Indian territory thereafter stood divided into : I the States (14 in number) and 11 the Union Territories (6 in number). The reference to the territories of Asam was also altered and it now reads : "The territories which immediately before the commencement of this Constitution were comprised in the Province of Assam, the Khasi States and the Assam Tribal Areas, but excluding the territories specified in the Schedule to the Assam (Alteration of Boundaries) Act, 195 1 ". The Parts of the Constitution dealing with the administration of the several territories, already mentioned, were also revised. Part VI continued to govern the administration of the States and Part VIl continued to govern the administration of the Union territories. Such changes as were necessary in view of the reorganisation effected in the First Schedule were, of course, made in these two Parts, but I am not concerned with them. Part VII and IX were repealed as they were not required. Part X con tinued as before with an amendment deleting reference to States in Part A or Part B of the First Schedule. As Part X consists of a single article it may conveniently be set down here : "244. Administration of Scheduled Areas and tribal areas. Cl/66 4 792 (1) The provisions of the Fifth Schedule shall apply to the administration and control of the Scheduled Areas and Scheduled Tribes in any State other than the State of Assam. (2) The provisions of the Sixth Schedule shall apply to the administration of the tribal areas in the State of Assam. " We are really not concerned with the first clause of article 244 but it may be noticed that there are two different schedules. Schedule 5 is for Scheduled Areas and Scheduled Tribes in States other than Assam and Schedule 6 is for the tribal areas in the State of Assam. It may also be noticed that the Fifth Schedule contemplates not only administration but also control of the areas referred to in article 244(1) while the Sixth Schedule refers to administration only and not control. When I contrast the provisions of these two schedules the last distinction will have some materiality. We are concerned with the tribal areas in the State of Assam and the entire question falls to be considered under the Sixth Schedule. There is no connection between Part VI and Part X and the provisions of the latter Part cannot be amplified by the provisions of the former in any respect. This is a fact which is fundamental to the view I am going to put forward. Although strictly speaking we are not concerned with the Fifth Schedule, I shall refer to it briefly because it enables us to see the special and very different provisions regarding the tribal areas in the State of Assam. Scheduled Areas and Scheduled Tribes situated in other parts of India are governed in common by the Fifth Schedule. The tribal areas in Assam are, however, separately provided for. The difference between the two Schedules throws some light upon the way the Sixth Schedule is intended to work and it shall be my endeavour to unravel that working but I shall begin with analysing the Fifth Schedule first. The Fifth Schedule is divided into four Parts A, B, C and D and consists of seven paragraphs. Part A is general. Paragraph 2 in that Part says that subject to the provisions of the Fifth Schedule the Executive power of the State extends to the Scheduled Areas in a State. Paragraph I excludes the State of Assam from the expression "State". As we shall see presently, the Sixth Schedule does not contain such provision at all. The Executive power of the State of Assam has not been extended to the tribal areas in Assam. Paragraph 3 of the Fifth Schedule then 793 requires the Governor of each State to report to the President annually or as often as required by the President, regarding the administration of the Scheduled Areas in the State and the executive power of the Union extends to the giving of directions to the State as to the administration of the areas. Again, there is no provision of this kind in the Sixth Schedule. The only control of the President there, is in respect of a portion of the Tribal Area described in Part B of the Paragraph 20 to which I shall refer later. Reverting to the Fifth Schedule Part B, which is headed 'Administration and Control of the Scheduled Areas and Scheduled Tribes ', contains the following scheme. Under Paragraph 4, Tribes Advisory Councils are to be established. The duty of these Councils is to advise on matters pertaining to the welfare and advancement of the Scheduled Tribes in the State ', referred to the Councils by the Governors. The affairs of the Councils are governed by rules made by the Governor. By paragraph 5 the Governor is authorised to direct by public notification that any particular Act of Parliament or of the Legislature of the State shall not apply to a Scheduled Area or any part of the Scheduled Area in the State and in applying the law the Governor can make such exceptions and modifications as he may specify. The Governor is given the power to make regulations for the peace and good Government of any area in a State which is for the time being a Scheduled Area. The words 'peace and good Government ' were always understood as giving the utmost discretion in law making: Riel vs The Queen(1) and Peare Dusam vs Emperor (2). In making the law the Governor has been given the power to repeal or amend any Act of Parliament or of the Legislature of the State or any existing law which is for the time being applicable to the area in question. The words " exceptions and modifications" have also been interpreted as giving powers of amendment : Queen vs Burah(3). These are legislative powers of a very wide nature. They are subject to two restrictions only. The first is that before making any regulation the Governor shall consult the Council and all regulations must be submitted to the President and until assented to by him, do not have effect. Part C consists of one paragraph. This is paragraph 6. By sub paragraph (1) the expression "Scheduled areas" is defined as such areas as the President may by order declare to be Scheduled Area. The President has passed two such orders in 1950 relating to Part A and Part B States respectively. By sub paragraph (2) the President may at any time by order (1) (3) (2) 794 (a) direct,that the whole or any specified part of a Scheduled Area shall cease to be a Scheduled Area or a part of such an area; (b) alter,but only by way of rectification of boundaries,any Scheduled Area; (c) on any alteration of the boundaries of a State or on the admission into the Union or the establishment of a new State, declare any territory not previously included in any State to be, or to form part of, a a Scheduled Area; and any such order may contain such incidental and consequential provisions as appear to the President to be necessary and proper, but save as aforesaid, the order made under sub paragraph (1) of this paragraph shall not be varied by any subsequent order. " Part D then lays down that Parliament may, from time to time, by law amend the Schedule by way of addition, variation or repeal, any of the provisions and such an amendment shall not be deemed to be an amendment of the Constitution for the purpose of article 368. To summarize: under the Fifth Schedule the Governor is the sole legislature for the Scheduled areas and the Scheduled Tribes. He makes the Regulations after consulting the Tribes Advisory Council and submits them to the President for the latter 's assent. The executive authority of the State extends to the Scheduled Areas but the executive authority of the Union extends to giving of directions to the State as to the administration of such areas. These areas are determined by the President by an order and may be altered from time to time by the President by another order but the President cannot alter an order made under sub paragraph (1) except as laid down in cls. (a), (b) and (c) of the second subparagraph. Any amendment of the Schedule must be done by Parliament. I shall now turn to the Sixth Schedule which differs in many significant respects. The gist of the provisions as to the administration of Tribal Areas in Assam is contained in the first and second subparagraphs of paragraph 1. It is that the tribal areas in each item of Part A of the table appended to paragraph 20 of the Schedule shall be autonomous districts and if there are different Scheduled Tribes in an autonomous district the Governor may, by public notification, divide the area or areas inhabited by them into autonomous regions. The word 'autonomous ', that is to say, 795 the possession of the right of self government is the key note of the provisions. As will appear presently, the legislature, the executive and the judiciary (except the High Court) in the State of Assam do not freely function for these autonomous districts. The Table attached to the Schedule gives the list of these districts and the Tribal areas. It has been changed by Parliamentary legislation from time to time. TABLE PART A I. The United Khasi Jaintia Hills District. The Garo Hills District. The Mizo District. The North Cachar Hills. The Mikir Hills. (The name Mizo District was substituted for the Lushai Hills District by the Lushai Hills District (Change of Name) Act 1954 (18 of 1964) and item No. 4 "Naga Hills District" was omitted and was substituted as "Naga Hills Tuensang Area" as item 2 in Part B by the by Act 42 of 1957]. PART B 1. North East Frontier Tract including Balipara Frontier Tract, Tirap Frontier Tract, Abor Hills District and Misimi Hills District. The Naga Hills Tuensang Area". [Item 2 has been deleted by the (27 of 1962)]. How deep is the autonomy in the Autonomous Districts and in the Autonomous Regions can be gauged by a short survey of some of the other paragraphs of the Schedule. Under paragraph 2 provision is made for constitution of District Councils and Regional Councils which have power after they are constituted under rules framed by the Governor to make rules for their own composition, delimitation of constituencies, qualifications of voters, conduct of elections and generally for the conduct of busi ness before them and the appointment of officers. Their powers and jurisdictions go much further than that of ordinary local 796 authorities. They have under paragraph 3 power to make laws for various matters and such laws are effective after the Governor assents to them. Under paragraph 4 the administration of justice is entirely under the control of the District and Regional Councils and they can constitute courts and appoint persons to be presiding officers of such courts and no other court, except the High Court of the State and the Supreme Court, has jurisdiction over suits or cases assigned to the courts so set up. The Councils can also frame regulations (with the previous approval of the Governor) laying down the procedure to be followed in trial of cases and regarding such appeals as may be prescribed. Under paragraph 5 the Governor may, for the trial of suits or cases arising out of any law in force in any autonomous district or region being a law specified in that behalf by the Governor, or for the trial of offences punishable with death, transportation for life, or imprisonment for a term of not less than five years under the Indian Penal Code or under any other law for the time being applicable, confer on the District Council or the Regional Council, having authority over such district or region, or on courts constituted by such District Council or on any officer apointed in that behalf by the Governor, such powers under the Code of Civil Procedure 1908 or as the case may be, the Code of Criminal Procedure, 1898, as he deems appropriate. The two Codes abovementioned apply only thus far and no further. Paragraph 6 gives power to the District Council to ' establish primary schools, dispensaries, markets, cattle pounds, ferries, fisheries, roads and waterways in the district and to prescribe the language of instruction. Under paragraph 7 District and Regional Funds have to be constituted to finance administration. Under paragraph 8 power to assess and collect land revenue on principles followed generally by the Government of Assam and to impose specified taxes is given. Under paragraph 9 the District Councils are entitled to a fair share of the royalties accruing from licences and leases for the purpose of prospecting for, or the extraction of minerals granted by the Government of Assam in respect of any area within an autonomous district. In ' case of dispute the Governor is to decide the matter in his discretion. Under paragraph 10 the District Council can make regulations for controlling and regulating money lending and trading within the District and for licensing of certain trades and of money lenders. All laws, regulations or rules made by the District and Regional Councils are to be published in the Official Gazette of the State and on publication have the force of law. Paragraph 12 provides that no Act of the Legislature of the State in respect of which the District or Regional Councils 797 have power to make law shall apply unless the District Council by public notification directs and the District Council can in so applying the law make any exceptions or modifications it thinks fit. In respect of any other law made by Parliament for the Legislature of the State the Governor shall determine whether it shall not apply to the autonomous districts or regions and, if so, the Governor may make such exceptions or modifications as he may notify with or without retrospective effect. Under paragraph 13, the estimated receipts and expenditure pertaining to autonomous districts have to be separately shown in the annual financial statement of the State and laid before the Legislature of the State under article 202. 1 shall omit paragraph 14 at this stage and come back to it later. Under paragraph 15 the Governor may annul any act or resolution of a District or Regional Council which is likely to endanger the safety of India and may even assume to himself all or any of the powers vested in the Councils. Any order made by the Governor is to be laid before the Legislature of the State and unless revoked by it, continues for a period of 12 months and if so resolved by Legislature for a further period of twelve months unless cancelled earlier by the Governor himself. The Governor may, on the recommendation of a Commission appointed under paragraph 14, dissolve a Council, direct fresh general election, and subject to the previous approval of the Legislature of the State, assume the administration, or place it under the said Commission. No action to assume the administration shall be taken by the Governor without giving the Council affected an opportunity of placing its views before the Legislature of the State. Paragraph 17 enables the Governor to exclude an autonomous district in forming constituencies in the District. I shall presently refer to paragraph 18 which applies the above mentioned provisions with some modifications to Part B of the Table appended to the Schedule. Paragraph 19 includes transitional provisions. The Governor was required by that paragraph to constitute a District Council for each autonomous district in the State and till then the administration of the District was to vest in him. He could make regulations for the peace and good government and they were to become law on the President 's assent. He could also direct the application of an Act of Parliament or of the Legislature of the State with such exceptions and modifica tions as he thought fit and unless he applied it the law was inapplicable in the Districts. These are the provisions for the administration of Autonomous Districts and Regions. To summarize: the laws made by Parliament or the Legislature of the State do not run automati 798 cally in these areas. The laws are either made by the District Councils or are applied by them. The administration of justice is achieved by the District and Regional Councils through their own agencies except that in serious offences the Governor has to decide whether to invest the Councils and the courts set up by the Councils with jurisdiction to try them. The Councils enjoy the powers of taxation and establishing of institutions mentioned in paragraph 6. They have their own funds. Some actions of the District or Regional Councils are capable of being annulled by the Governor and the Governor may even dissolve the Councils. There is complete autonomy as far as the powers and jurisdiction of the Councils go. A check is supplied by the Governor and the Legislature of the State comes into picture only when the Governor takes action against the Councils to revoke their acts or resolutions or dissolves them and takes over the administration himself. I shall now refer to the paragraphs I did not mention so far. I shall begin by referring to paragraph 18. That paragraph may be reproduced here : "18. Application of the provisions of this Schedule to areas specified in Part B of the table appended to paragraph 20. (1) The Governor may (a) subject to the previous approval of the President, by public notification, apply all or any of the foregoing provisions of this Schedule to any tribal area specified in Part B of the table appended to paragraph 20 of this Schedule or any part of such area and thereupon such area or part shall be administered in accordance with such provisions, and (b) with like approval, by public notification, exclude from the said table any tribal area specified in Part B of that table or any part of such area. (2) Until a notification is issued under sub paragraph (1) of this paragraph in respect of any tribal area specified in Part B of the said table or any part of such area, the administration of such area or part thereof, as the case may be, shall be carried on by the President through the Governor of Assam as his agent and the provisions of article 240 shall apply thereto as if such area or part thereof were a Union territory specified in that article. 799 (3) In the discharge, of his functions under subparagraph (2) of this paragraph as the agent of the President the Governor shall act in his discretion. Three matters are provided here. The first is that the Government may by public notification, apply all or any of the provisions of the Sixth Schedule contained in paragraphs 1 17 to any tribal area specified in Part B of the table quoted by me earlier. The second is that the Governor may exclude from that table any tribal area specified in Part B. Both these powers are subject to prior approval of the President. The third matter is that until the tribal areas in Part B are brought in line with the autonomous districts, the administration must be carried on by the Governor in his discretion as the agent of the President, in the same manner as if those areas were Union territory. These provisions show that in respect of the tribal areas in Part B the Governor acts for himself when carrying on the administration and any change as contemplated by clauses (a) and (b) of sub paragraph (1) of Paragraph 18 must receive prior approval of the President. The State Executive or the Legislature have no say in the matter. I now come to the provisions of paragraph 1(3) read with paragraph 14 and 20 under which the present action purports to be taken. It is convenient to look at paragraph 20 first. The table appended to that paragraph has already been quoted. The main part which describes the ' extent of the autonomous districts named in Part A of the table at the end may now be read: "20. Tribal Areas. (1) The areas specified in Parts A and B of the table below shall be the tribal areas within the State of Assam. (2) The United Khasi Jaintia Hills District shall comprise the territories which before the commencement of this Constitution were known as the Khasi States and the Khasi and Jaintia Hills District, excluding any areas for the time being comprised within the cantonment and municipality of Shillong, but including so much of the area comprised within the municipality of Shillong as formed part of the Khasi State of Mylliem: Provided that for the purposes of clauses (e) and (f) of sub paragraph (1) of paragraph 3, paragraph 4, paragraph 5, paragraph 6, sub paragraph (2), clauses (a),(b) and (d) of sub paragraph (3) and sub paragraph (4) 800 of paragraph 8, and clause (d) of sub paragraph (2) of paragraph 10 of this Schedule, no part of the area comprised within the municipality of Shillong shall be deemed to be within the District. (2A) The Mizo District shall comprise the area which at the commencement of this Constitution was known as the Lushai Hills District. (3) Any reference 'in the table below to any district (other than the United Khasi Jaintia Hills District) and the Mizo District or administrative area shall be construed as a reference to that district or area at the com mencement of this Constitution Provided that the tribal areas specified in Part B of the table below shall not include any such areas in the plains as may, with the previous approval of the President, be notified by the Governor of Assam in that behalf. " These sub paragraphs give the extent of the autonomous districts. The table does not identify any area except by name but the demarcation of the areas is done by the above sub paragraphs. The tribal areas are not immutable. They can be changed, so also the autonomous districts. The question is how is this to be done ? The third sub paragraph of the first paragraph lays down one of the steps. It provides : "1. Autonomous districts and autonomous regions. (2) . . (3) The Governor may, by public notification, (a) include any area in Part A of the said table, (b) exclude any area from Part A of the said table, (c) create a new autonomous district, (d) increase the area of any autonomous district, (e) diminish the area of any autonomous district, (f) unite two or more autonomous districts or parts thereof so as to form one autonomous district, (g) define the boundaries of any autonomous district. Provided that no order shall be made by the Governor under clauses (c), (d), (e) and (f) of this subparagraph except after consideration of the report of a 801 Commission appointed under sub paragraph (1) of paragraph 14 of this Schedule. " Some other steps are laid down in paragraph 14 mentioned here It provides : 14. Appointment of Commission to inquire into and report on the administration of autonomous districts and autonomous regions. (1) The Governor may at any time appoint a Commission to examine and report on any matter specified by him relating to the administration of the autonomous districts and autonomous regions in the State, including matters specified in clauses (c), (d), (e) and (f) of sub paragraph (3) of paragraph 1 of this Schedule, or may appoint a Commission to inquire into and report from time to time on the administration of autonomous districts and autonomous regions in the State generally and in particular on (a) the provision of educational and medical facilities and communications in such districts and regions; (b) the need for any new special legislation in respect of such districts and regions; and (c) the administration of the laws, rules and regulations made by the District and Regional Councils; and define the procedure to be followed by such Commission. (2) The report of every such Commission with the recommendations of the Governor with respect thereto shall be laid before the Legislature of the State by the Minister concerned together with an explanatory memo randum regarding the action proposed to be taken thereon by the Government of Assam. (3) In allocating the business of the Government of the State among his Ministers the Governor may place one of his Ministers specially in charge of the welfare of the autonomous districts and autonomous regions in the State. " Lastly there are the provisions,of paragraph 21 and the question is whether they involve the final step or are irrelevant in this behalf. Paragraph 21 reads : 802 "21. Amendment of the Schedule. (1) Parliament may from time to time by law amend by way of addition, variation or repeal any of the provisions of this Schedule and, when the Schedule is so amended, any reference to this Schedule in this Constitution shall be construed as a reference to such Schedule as so amended. (2) No such law as is mentioned in sub paragraph (1) of this paragraph shall be deemed to be an amendment of this Constitution for the purposes of article 368. " Now the case of the appellant is that although a Commission was appointed and made its report to the Governor, the Governor neither considered the report nor made his recommendations as required by paragraph 14. The Government of Assam drew up its proposals which were sent to the Governor who merely noted on the file, "Seen Thanks" and returned the papers which were then placed before the Legislature of the State and the Legislature :approved the proposals by a resolution. The contention of the appellant is that far from playing the key role which the policy underlying the Schedule envisages, the Governor left the entire matter to the Government and at the end of the deliberations expressed himself by saying "Seen Thanks" which at best was a very vague expression. In the alternative it is contended that no action could be effective without Parliamentary legislation under paragraph 21, to amend the operative portion of paragraph 20 which Parliament alone can amend. Reference is made to legis lation by which the tribal areas were changed on previous occasions by Parliament. In my judgment both these criticism are well founded. It will be noticed that the Governor 's powers under sub paragraph 3 of paragraph I are to include or to exclude any area from Part A of the Table. These are clauses (a) and (b) of this sub paragraph. Then the powers are to create a new autonomous district (cl. (c) ), to increase (cl. (d) ) or diminish (cl. (e) ) the area of any autonomous district, unite two or more autonomous districts or parts thereof so as to form one autonomous district (cl. (f)), define the boundaries of an autonomous district cl. Powers in clauses (a), (b) and (g) are not subject to the proviso and the Commission under paragraph 14 need not be consulted before taking action under them. Action taken under 'Clauses (a), (b) and (g) need not be reported to the Legislature 803 of the State. I shall have something to say about it later because unless clauses (a) and (b) are also considered it is not possible to, interpret the other clauses. We are concerned with powers exercisable under clauses (c),. (d) and (e) and the procedure contemplated by the proviso to, paragraph 1(3) read with paragraph 14 must be followed. The Governor has issued the public notification. There is no provision which bars inquiry : Is the action taken valid ? Since the action is not under clauses (a) and (b) even Part A of Table attached to paragraph 20 is not altered either directly or by implication. Paragraph 1(3) also says nothing about the amendment of paragraph 20 and as that power cannot be implied in view of paragraph 21 that paragraph also continues unaltered. The notification thus says one thing and paragraph 20 and the Table another. This is clearly a situation which could not have been. intended. We are dealing with a Constitution which no agency less than Parliament can amend. Take another example. Suppose the Governor next intends to exclude so much of the area com prised within the Municipality of Shillong as forms part of the Khasi State of Mylliem. If he can do that by a notification he may but what about paragraph 20(2) and the Table ? His notification will be that the area comprised within the Municipality of Shillong as forms part of the Khasi State of Mylliem shall form the autonomous district. The other part will form another autonomous district or go out of the tribal area. Suppose the Governor next divided the Khasi and Jaintia Hills sections and formed two autonomous districts by another notification. The Governor has no power under clauses (c), (d) and (e) to amend paragraph 20 or the Table. Whether he has that power over paragraph 20 even under clauses (a) and (b) is open to much doubt. The paragraph and the Table will thus remain unaltered and the notification will render them obsolete. It was argued by the learned Attorney General that the paragraph and the Table will be impliedly amended. I regret I cannot accept this argument. We are dealing with the Constitution. It provides within itself how Schedules 5 and 6 can be amended. Any other mode of amendment is necessarily prohibited. There can be no amendment by any other agency much less an implied repeal and an implied amendment. Is the amendment of the Constitution such a simple affair that a notification of the Governor amends its provisions by implication ? I shall now consider the cases arising under clauses (a) and '(b). There is some difference between clauses (a) and (b) on the 804 One hand and clauses (c), (d), (e) and (f) on the other. It is significant that the procedure of paragraph 14 need not be followed when the Governor acts under the former group. Clauses (a) and (b) cannot therefore cover the same ground as ,clauses (c), (d), (e) and (f). They are not a summary of the action envisaged by the other clauses. They must represent inclusion and exclusion of areas from Part A of the Table. Otherwise there would be a reference to them in the proviso. The proviso covers only those cases where the area of the autonomous districts is involved and changes are made therein. The first two clauses mention the Table but not the others. Now the legislative power of the State does not extend to the tribal areas. The executive power being coextensive with the legislative power does not extend either. In Schedule 5 the executive power has been expressly extended. In Schedule 6 there is no such extension. Similarly the word 'control ' is omitted in article 244(2). The Union Government also has not been given the power to issue directions to the State Government as is the case in Schedule 5. There is no requirement of prior consent of the President or his approval as in the Fifth Schedule or paragraph 18 of the sixth Schedule. A notification under clauses (a) and (b) would be subject to no control except that of Parliament. This demonstrates the utter need of Parliamentary legislation to amend the schedule particulary paragraph 20 and the Table. The notification issued by the Governor is not under clauses ,(a) and (b) but that hardly makes any difference. It does not amend paragraph 20 or the Table. No doubt when all proper motions have been gone through the United Khasi Jaintia Hills District will be cut down by excluding the Jowai Sub Division and the Jowai Sub Division will emerge as an autonomous district. But one such step and the final step must be to amend the Sixth Schedule. That can only be amended by Parliament under the powers granted by paragraph 21. If the notification alone did that there would be antinomy between the notification and the Schedule. Paragraph 21 says that Parliament may amend the Schedule by way of addition, variation and repeal. In my opinion this power still remains to be exercised to complete the chain of steps necessary to alter the autonomous districts, the names and areas of which are laid down by Parliament. The Governor 's notification is no doubt one of the means of achieving the change but the effectiveness can only be given by Parliament. No wonder that on three previous occasions Parliamentary power was in fact exercised. Sub paragraph 2(A) was added by Parliament. At 805 that time consequential changes were also made in sub paragraph (3) and item No. 3 of Part A of the Table was also changed. It is to be noticed that there is a difference between paragraph 6(2) of the fifth Schedule and paragraph 1(3) of the sixth Schedule. The former authorises the President to include in his order such incidental and consequential provisions as may appear to him to be necessary and proper. As this, extra jurisdiction is missing the Governor acting under the Sixth Schedule can only draw up a notification. He cannot do anything more. Till Parliamentary legislation follows, the final and effective step is wanting in the purported action. It is as if the key stone is missing. The action of the Governor is, with respect, not sustainable on the other ground also. The analysis of the provisions of Schedules 5 and 6 into which I went earlier clearly demonstrates that the Governor is made specially responsible for various matters connected with the administration of the autonomous districts. We have seen above that the executive authority of the State of Assam does not extend to the autonomous districts as it does to the tribal areas in States other than Assam. Further the Union has not been given the power to give directions as to the administration of the autonomous districts. This is because the autonomous districts and autonomous regions are administered by Councils which, subject to the control of the Governor, function independently. What the real position of the Governor is, vis a vis the Councils on the one hand and the State Government on the other will be clear if we look into the history of the administration of these areas and the previous constitutional provisions relating to the excluded and partially excluded areas as they were previously called. These areas, which were known as backward areas, were from the earliest times excluded from the operation of laws, either completely or partially and they were directly administered under laws made by the Executive under the authority of the Governor General. These orders bore resemblance to the Orders in Council of the Crown. As the legality of the laws was seriously in question the Indian Councils Act of 1861, made provision validating these so called laws, by enacting that "no rule, law or regulation made before the passing of the Act, by the Governor General or certain other authorities shall be deemed invalid by reason of not having been made in conformity with the provisions of the Charter Act. " The power, which was taken away, was again conferred on the Governor General by the Government of India Act 1870 (33 and 34 Vict. c. 3) and the Governor General was allowed to legislate 806 separately for these backward tracts. Draft regulations were submitted by the Governors in Council, Lieutenant Governors or Chief Commissioners and after their approval by the Governor General became law for these areas. This state of affairs existed right down to the Government of India Act 1915. As difficulty arose in determining what laws were in force in which area, the Scheduled Districts Act XIV of 1874 was passed which enabled public notifications to be issued. The preamble of that Act clearly sets out that the object inter alia was to ascertain the enactments in force in any territory and the boundaries of such territories. This Act then specified the "Scheduled tracts" and the Local Gov ernments were given the power to extend by public notification to any Scheduled District, with or without modification, any enactment in force in British India. When the Government of India Act 1915 was enacted, the Government of India Act 1870 (33 and 34 vict. c. 3) was repealed by the 4th Schedule and section 71 was included which in effect provided the same procedure for making and applying laws as has been described above. When the Government of India Act 1919 (9 and 10 Geo. 101) was passed section 52 A was inserted which read: "The Governor General in Council may declare any territory in British India to be a 'backward tract ' and may, by notification, with such sanction as aforesaid, direct that this Act shall apply to that territory subject to such exceptions and modifications as may be prescribed in the notification. Where the Governor General in Council has, by notification, directed as aforesaid, he may, by the same or subsequent notification, direct that any Act of the Indian legislature shall not apply to the territory in question or any part thereof, or shall apply to the territory or any part thereof, subject to such exceptions or modifications as the Governor General thinks fit, or may authorise the Governor in Council to give similar directions as respects any Act of the local legislature. " Thus at the inauguration of the Government of India Act 1935 the position was that the Governor General in Council or the Governor etc. under his directions legislated for these backward tracts and the Governor General could direct that any Act of the Indian Legislature should not apply at all or should apply with such exceptions and modifications as the Governor General might think fit. Most of these areas were excluded from the legislative power of the Central and Provincial legislatures and 807 The Governors were responsible for their administration. In the bill of the Government of India Act 1935 the distinction between the excluded and partially excluded areas was made. This allowed the White Paper and a Sixth Schedule was framed in which the list of these areas was given. But this Schedule was withdrawn and the designation of the areas was &one by the Government of India (Excluded and Partially Excluded Areas) Order 1936, dated March 3, 1936. The distinction between the excluded and partially excluded areas was this: Excluded areas came directly under the Governor in his discretion and therefore the administration of the areas was a direct responsibility of the Governor himself. (Parl. Debates Vol. 301, col. 1395). In the Report of the Joint Committee it was stated (para. 67) that in spite of Provincial Autonomy, "the Excluded Areas (i.e., tracts where any advanced form of political Organisation is unsuited to;the primitive character of the inhabitants). will be administered by the Governor himself and Ministers will have no constitutional right to advise him in connection with them. " Paragraph 89 again stated that "Ministers shall advise the Governor in all matters other than the administration of Excluded Areas. " The position about the Excluded Areas was summed up in paragraph 144 of the Report thus : "It is proposed that the powers of a Provincial Legislature shall not extend to any part of the Province which is declared to be an "Excluded Area" or a 'Partially Excluded Area '. In relation to the former, the Governor will himself direct and control the administration; in the case of the latter he is declared to have a special responsibility. In neither case will any Act of the Provincial Legislature apply to the Area, unless by direction of the Governor given at his discre tion, with any exceptions or modifications which he may think fit. The Governor will also be empowered at his discretion to make regulations having the force of law for the peace and good government of any Excluded or Partially Excluded Area. We have already expressed our approval of the principle of Excluded Areas, and we accept the above proposals as both necessary and reasonable, so far as the Excluded Areas proper are concerned. We think, however, that a distinction might well be drawn in this respect between Excluded Areas and Partially Excluded Areas and that the application of Acts to, or the framing of Regulations for, Partially Excluded Areas is an Sup. CI/66 5 808 executive act which might appropriately be performed by the Governor on the advice of his Ministers, the decisions taken in each case being, of course, subject to the Governor 's special responsibility for Partially Excluded Areas, that is to say, being subject to his right to differ from the proposals of his Ministers if he thinks fit. " The administration of these areas thus followed the analogy of the Governor General 's reserved departments, and the expenditure for these areas required by the Governor, whether from the Provincial or Central revenues was not subject to the vote of the Provincial Legislature. In the administration of the Tribal areas the Governor was to act as the agent of the Governor General. The administration of the partially excluded areas was a special responsibility of the Governor General. These provisions of the Government of India Act were, therefore, so designed that the "Excluded Areas" were excluded from the Provincial and Central Legislatures and the administration of these areas was vested in the Governor in his discretion while the administration of the "partially excluded areas" was in the control of the Ministers subject to the special responsibilities of the Governor acting in his individual judgment. As regards the machinery for transfer of areas the Parlia mentary Debates (Vol. 299, cols. 1553 54) contain the following policy statement : "There is bound to be infiltration from one district to another, and in the course of times, we may be able to bring certain of these districts under the ordinary administration. In that case there ought to be power to make the transfer and the powers ought to be exercised in such a way that there is Parliamentary protection behind the transferred area. We ensure that the transfer, can only be undertaken by an order in Council, which has to obtain the approval of both Houses. " The Order in Council now has the counterpart in the notification of the Governor and the approval of the Parliament has its counterpart in the amendment of Schedules 5 and 6 which our Parliament alone can undertake. The resulting position was the enactment of sections 91 and 92 in the Government of India Act 1935 which may be set out here "91. Excluded areas and partially excluded areas. 809 (1) In this Act the expressions 'excluded area ' and "partially excluded area" mean respectively such areas as His Majesty may by Order in Council declare to be excluded areas or partially excluded areas. The Secretary of State shall lay the draft of the Order which it is proposed to recommend His Majesty to make under this sub section before Parliament within six months from the passing of this Act. (2) His Majesty may at any time by Order in Council (a) direct that the whole or any specified part of an excluded area shall become, or become part of, a partially excluded area; (b) direct the whole or any specified part of a partially excluded area shall cease to be a partially excluded area or a part of such an area; (c)alter, but only by way of rectification of boundaries, any excluded or partially excluded area; (d)on any alteration of the boundaries of a Province, or the creation of a new Province, declare any territory not previously included in any Province to be, or to form part of, an excluded area or a partially excluded area, and any such Order may contain such incidental and consequential provisions as appear to His Majesty to be necessary and proper, but save as aforesaid the Order in Council made under subsection (1) of this section shall not be varied by any subsequent Order." "92. Administration of excluded areas and partially excluded areas. (1)The executive authority of a Province extends to excluded and partially excluded areas therein, but, notwithstanding anything in this Act, no Act of the Federal Legislature or of the Provincial Legislature, shall apply to an excluded area or a partially excluded area, unless the Governor by public notification so directs, and the Governor in giving such a direction with respect to any Act may direct that the Act shall in its application to the area, or to any specified part thereof, have effect subject to such exceptions or modifications as he thinks fit. 810 (2)The Governor may make regulations for the peace and good government of any area in a Province which is for the time being an excluded area, or a partially excluded area, and any regulations so made may repeal or amend any Act of the Federal Legislature or of the Provincial Legislature, or any existing Indian law, which is for the time being applicable to the area in question. Regulations made under this sub section shall be submitted forthwith to the Governor General and until assented to by him in his discretion shall have no effect, and the provisions of this Part of this Act with respect to the power of His Majesty to disallow Acts shall apply in relation to any such regulations assented to by the Governor General as they apply in relations to Acts of a Provincial Legislature assented to by him. (3) The Governor shall, as respects any area in a Province which is for the time being an excluded area, exercise his functions in his discretion. " After these two sections were enacted the Scheduled District Act 1874 became obsolete and was repealed by the Adaptation of Laws Order 1936. The question is : has the position changed in any way ? I think not. The fundamental fact, as I said before, is that article 244(2) very tersely says that the provisions of the Sixth Schedule shall apply to the administration of the tribal areas in the State of Assam. No inspiration can, therefore, be drawn from the other parts of the Constitution. No doubt the Governor is the constitutional head of the State of Assam having a Council of Ministers. But the history of these backward tracts and the scheme of the Sixth Schedule show that the Governor is intended to discharge special functions in the administration of the Tribal Areas in Assam in which a start in democratic institutions is being made. There is no dyarchy in the Tribal areas in Assam so that the Governor may be induced by the Council of Ministers to do contrary to what his judgment requires. Nor are the functions of the Governor made subject to the scrutiny of the Government of Assam. Indeed the Government of Assam is mentioned in four places only and an examination reveals that no special power has been granted to it at least in three places. In paragraph 3(a) proviso it is provided that no law of the District or Regional Councils shall prevent the compulsory acquisition of land for public purposes by the Government of Assam, in paragraph 8 811 the assessment of land revenue and its collection by the Councils is to be in accordance with the principles followed by the Government of Assam in the State of Assam generally, in paragraph 9 if any dispute arises between the Councils and the Government of Assam over the distribution of royalties the Governor is to decide in his discretion what the share of each should be. The fourth and the last reference is at the end of paragraph 14(2). Under that paragraph there is provision for the appointment of Commissions for various purposes mentioned in the paragraph and paragraph 16. One such commission considers the forma tion of and changes in the autonomous districts as contemplated by paragraph 1(3)(c), (d), (e) and (f). The sub paragraph contemplates all these reports because the report of every commission appointed for any purpose mentioned in paragraph 14(1) or paragraph 16 together with the recommendations of the Governor and an explanatory memorandum regarding the action proposed to be taken thereon by the Government of Assam has to be laid before the Legislature of the State. Confining myself to the changes in autonomous districts contemplated by paragraph 1(3)(c), (d), (e) and (f), it is clear that if the State Government agreed with the Governor there would be no need explaining what action the Government was going to take. The State Government would not then be required to take any action (apart from implementing the decision administratively) and the Governor would notify the changes. The need for an explanatory memorandum regarding the action proposed to be taken by the Government would really arise in a situation in which the Governor 's recommendations are not accepted by the State Government. We must not forget that there are many other matters for which diverse commissions may be appointed and there would be different kinds of reports. There may be room for detailed differences over the reports of other commissions which the Legislature may have to consider. The Governor must be expected to act independently and not with the advice of Ministers. Should differences arise the Legislature would decide. It is intended to wield control over the Governor. It is the authority to decide whether the Governor 's action in annulling or suspending acts and resolutions of District and Regional Councils should continue or not. The Governor also has to obtain the previous approval of the Legislature of the State before assuming the administration of the area of a Council dissolved by him and the Council must be heard by the Legislature. There would be no need to bring in the Legislature if the Governor was already being advised by his Council of Ministers. Apart from this control of the Legisla 812 ture of the State in specified matters, there is nothing to show that in addition the District and Regional Councils which are autonomous in almost every way, are to be controlled by the Council of Ministers through the Governor. It is in this background that the action of the Governor must be considered and the totality of the action taken this time compared with what was done in the past. I shall first take the facts. The Commission made its report on the 24th January, 1964. In the opinion of Nayudu J. it is mentioned that the entire proceedings were placed before the High Court and the learned Judge observes that on 28th August, 1964, there was a note taken on the file which read : "In the present case we have not referred the matter to H.E. (the Governor) at any stage '. The report together with the explanatory memorandum regarding the action proposed to be taken by the Government of Assam was placed before the Legislature of the State on September 25, 1964. This memorandum in its last paragraph said : "After a careful consideration of the report and the recommendation of the Governor, the Government has decided to accept the recommendations of the commission and give effect to them by taking necessary admi nistrative and other steps in this direction. " There is no doubt a mention of the "recommendations" of the Governor but in point of fact there was no recommendation. All that the Governor did was to see the file before it went to the Legislature and wrote "Seen, thanks". This in my opinion, and I say it respectfully, hardly squared with the special responsibilities contemplated by the Sixth Schedule. When we turn to the commission 's recommendations we find some confusion as to whether a separate Regional Council was being recommended for Jowai Sub Division or a separate autonomous district. The recommendation of the Commission reads "To sum up, we feel that if the inhabitants of the Jaintia Hills work together and maintain the existing system of administration, there is no reason why a separate District Council for Jowai should not be a success. The establishment of a separate District Council would, we think, resolve the prevailing tension and bitterness, due to lack of uniformity in administration, between them and the Khasis, and we hope lead to a better understanding between them. 813 We accordingly recommend the creation of a new Autonomous District Council for the Jowai Sub division of the United Khasi and Jaintia Hills Autonomous District by excluding the areas comprising the areas of the said Sub division from the United Khasi and Jaintia Hills Autonomous District. As we see it, the main obstacle to smooth working of the new District Council will be the Jaintias who are opposed to bifurcation. In conclusion, we may point out that,according to the 1961 Census, the area of Jowai Sub division is 1,515 square miles with a population of 82,147 compared with 1,888 square miles and population of 54,319 in the North Cachar Hills, where there is already a separate District Council". The language is appropriate to the formation of a Regional "Council but it may be conceded that on the whole an autonomus district was meant. In view of what I have said here bearing upon the special responsibility of the Governor as envisaged by the sense and letter 'of the Sixth Schedule considered in the light of the long and uniform history of these backward tracts which have always been specially administered, it is perhaps right to think that the Governor was very much in the background and the initiative and the formation of opinion was by the State Government. The Governor was apparently only informed after everything was over as to what was being done. No doubt the Governor 's remarks "Seen, thanks" did not express a dissent when he saw the file and it may be presumed that he accepted the proposals of Government. But that was hardly what the Sixth Schedule expected of the Governor. No material from any former occasion when the changes were made in the tribal areas, was placed before us lo show the practice or procedure then followed. The only circumstance that has come to light shows that on three separate occasions parliamentary legislation was undertaken, although it is not in evidence whether it was supplemental to action under paragraph 1(3) by the Governor or without it. It is true that legislative practice is not regarded as conclusive and it will be less so here because Parliament was always competent to act by itself to amend the Schedule. But it is a circumstance which also points in the direction that Parliamentary legislation must cap all other steps if the Schedule is to read true to the new situation. 814 Without Parliamentary legislation amending the Schedule, readers of the Constitution will have to hunt for Governor 's notifications to know what is the extent of tribal area in Assam, how it is divided into autonomous districts and what is the tribal area governed under paragraph 18. In course of time when many such notifications have issued paragraph 20 will become obsolete ,and out of date. On the opposite view which I have been unable to accept, it is, even today, inaccurate and does not mean What it says. In this view of the matter I am of the opinion that the appeal should be allowed and the respondent State ordered to bear costs throughout. ORDER In accordance with the opinion of the majority the appeal is dismissed with costs.

IN-Abs

On 26th January 1950, the United Khasi Jaintia Hills District was formed as one of the Tribal Areas of Assam. The area along with other Tribal Areas mentioned in Parts A and B of the Table appended to paragraph 20 of the Sixth Schedule to the Constitution, are governed by the provisions prescribed by that Schedule. Under Paragraph 2(4) of the Schedule, the administration of the United Khasi Jaintia Hills District vested in the District Council inaugurated on 27th June 1952. The appellant was elected as Chief Executive Member of the District Council in March 1963, and by various notifications the term of the District Council has been extended up to 2nd May 1965. On 26th August 1963, the Governor of Assam appointed a Commission under paragraph 14(1) to examine and report on the creation of a new autono mous district for the people of Jowai sub division and for excluding it from the United Khasi Jaintia Hills District. The Commission made its report for such creation and exclusion on 20th January 1964. The Council of Ministers considered the 'report, decided to accept the recommendation, drew up an explanatory memorandum as required by paragraph 14(2) of the Schedule and sent the entire file to the Governor who noted on it "seen thanks". The Minister in charge, then laid the report of the Commission and the explanatory memorandum, stating that the Government had decided to accept the recommendation of the Governor on the report, before the Assembly, and the Assembly passed a resolution approving the action proposed. On 23rd November 1964, the Governor issued a Notification by which the new autonomous district was created and was "eluded from the United Khasi Jaintia Hills District with effect from 1st December 1964. The appellant challenged the Notification by a petition for the issue of a writ in the High Court., which was dismissed. In appeal to this Court, it was contended that : (i) Paragraph 1(3) of the Schedule does not confer upon the Governor power to constitute a new autonomous district and that it could be done only by Parliamentary legislation under Paragraph 21 of the Schedule under which powers are granted to Parliament to amend the Schedule and even if be had the Dower, the Governor 's decision must be confirmed by Parliamentary legislation; and (ii) the Notification was invalid because the mandatory provisions of paragraph 14 bad not been complied with. HELD (Per Chief Justice, Wanchoo, Ramaswami and Satyanarayana Raju, JJ.):(i) When paragraph 1(3)(c) provides that the Governor may, by public notification, create a new autonomous districts; it does not contemplate, that the Constitution requires something more to be done by Parliament, in order to make the notification effective. [782 A] 771 Paragraph 1(3) confers on the Governor power to issue a notification for the purposes of bringing about any of the results enumerated by cls. (a) to (g) of the paragraph. Clause (c) refers to the power of Governor to create a new autonomous district; cl. (e) refers to the power to diminish the area of any autonomous district, and cl. (g) refers to the power to define the boundaries of any autonomous district. The proviso to the paragraph imposes a condition on the exercise of the powers conferred by cls. (c) to (f) by requiring the Governor before exercising the powers to appoint a Commission under Paragraph 14(1) to report on those matters and then to consider its report Paragraph 1(3) indicates that the Constitution has delegated to the Governor a part of the power conferred on Parliament itself by paragraph 21. If the Governor has been clothed with the relevant power, the exercise of the power must by itself, be effective to bring about the results intended by cis. (c) to (i) of paragraph 1(3). The power must be exercised subject to The condition prescribed by the proviso, but once it is properly exercised it becomes effective and there is no need for parliamentary legislation in that behalf. [780 H; 781 A B, C D; 782 B, C D] The two Acts, namely Act 18 of 1954 and Act 42 of 1957, one for renaming a District and the other for excluding an item from Part A and including it in Part B, do not show any legislative practice requiring parliamentary legislation with respect to the matters covered by the Notification. [782 G; 783 D] It is not necessary that for an effective exercise of his power by the Governor there should be confirmation by Parliamentary legislation, because, the power of Parliament under paragraph 21 is very wide and includes the power to take away the Governor 's power, and in the very unlikely event of the Governor attempting to challenge the decision of Parliament in respect of any of the matters mentioned in Paragraph 1(3), Parliament can take away his power altogether by suitable legislation.[783 F] The modification made by the impugned Notification does not affect the contents of paragraph 20(1), because, even after the Notification the paragraph truly and correctly provides that the areas specified in Parts A and B of the table shall be tribal areas within the State. What the Notification purports to do is to change one item into two. Since the power to bring about the change is expressly conferred on the Governor by paragraph 1(3)(c) to (g), the exercise of that power, which leads to a consequential change in paragraph 20(2) which just gives a description of the areas, does not require Parliamentary legislation to make the change effective. Therefore, it would not be reasonable to hold that without Parliamentary legislation the impugned Notification cannot validly effect any change in item 1 of Part A of the table appended to paragraph 20. [784 C E, H; 786 B, C] (ii) The power conferred on the Governor by paragraph 1(3) had been validly and properly exercised by him. One of the conditions prescribed by paragraph 14 is that the Governor should consider the report submitted by the Commission and make his recommendations. Even if the Governor was expected to apply his mind and make a recommendation. , he is not precluded from receiving the assistance of the Council of Ministers before he makes up his mind, and on the record it must be held that the Commission recommended that a new autonomous district should be created and that the Governor agreed with the recommendation. B] Though the Commission appointed under paragraph 14 used the words "District Council" on considering its recommendations as a whole 772 there is no doubt that what it recommended was the creation of a new autonomous district. [787 F G] Per Hidayatullah, J. (dissenting) : No action could be effective without Parliamentary legislation under Paragraph 21 to amend the operative portion of paragraph 20 which Parliament alone can amend, Further, the Governor, far from playing the key role which the policy underlying the Schedule envisages, left the entire matter to the Government. (i) When the final step is taken to divide a tribal area it amends the Sixth Schedule. Paragraph 1(3) says nothing about the amendment of paragraph 20, and the Governor has no power under cls. (c), (d) and (e) to amend the paragraph or the Table appended to it. A power to amend paragraph 20 and an amendment of the. paragraph and the table cannot be implied, in view of paragraph 21, under which powers are granted to Parliament to amend the Schedule. Even if it is not an amendment for purposes of article 368, the amendment cannot be such a simple affair that a Notification of the Governor amends the provisions by implication. If the Notification alone did that there would be antinomy between the Notification and the Schedule. Paragraph 20 and the Table will remain unaltered and the Notification will render them obsolete. Therefore, to complete the chain of steps the power under paragraph 21 must be exercised to alter the autonomous districts. the names and areas of which are laid down by Parliament. The Governor 's Notification is one of the means of achieving the change but effectiveness can only be given by Parliament as it was done on previous occasions when Act 18 of 1954 and Act 42 of 1957 were passed. There is no material as to what the practice or procedure was that was followed when changes were made in the tribal areas, except that on previous occasions Parliamentary legislation was undertaken, and while it is not conclusive, it is a circumstance which also points in the direction that Parliamentary legislation must cap all other steps if the Schedule is to read true to the new situation. [803 C,F H; 804 F H; 813 FIH] (ii) The history of these backward tracts and the scheme of 'he Sixth Schedule show that the Governor is intended to discharge special functions in the administration of the tribal areas in Assam in which a start in democratic institution is being made. In the present case the Governor was very much in the background and the information and formation of opinion was by the State Government. He was only informed after everything was over. E] The functions of the Governor are not made subject to the scrutiny of the Government of Assam, and the Union also has not been given the power to give directions as to the administration of these autonomous districts. The Governor is expected to act independently and not with the advice of Ministers. Should difference arise between them the legis lature would decide. Under paragraph 14(2) there is provision for the appointment of Commissions for various purposes mentioned in that paragraph and paragraph 16. As regards the changes in autonomous districts contemplated by paragraph 1(3)(c) to (f), if the State Government agreed with the Governor there would be no need to explain what action the Government was going to take; it has only to implement the decision administratively and the Governor would notify the changer. The need for an explanatory memorandum arises if the Governor 's recommendations are not accepted by the State Government. Apart from this control by the Legislature in specified matters, there is nothing to ,show that in addition the District and Regional Councils, which are autonomous in almost every way, are to be controlled by the Council of 773 Ministers through the Governor. The Governor 's note hardly squared with the special responsibilities contemplated by the Schedule. [805 D E; 810 G; 811 B, D G; 812 A, F] Even in the Commission 's recommendation there was some confusion, though it may be conceded that when reference was made to a council, an autonomous district was meant. [813 D]

Appeals Nos. 311 to 366 of 1964. Appeals from the judgment and decrees dated December 6, 1957, December 16, 1958, January 29, 1959 of the Allahabad High Court in Special Appeals Nos. 343 and 381 416 of 1955, 548 of 1958 49 55 and 57 67 of 1959 respectively. M. C. Setalvad, B. P. Jha and J. P. Goyal, for the appel lant. G. section Pathak, B. Dutta and Naunit Lal, for the respondents (in C.A.s Nos. 311 366/64). The Judgment of the Court was delivered by Hidayatullah, J. These appeals involve a short common point of law and to appreciate it the narration of a few simple facts will be sufficient. On October 29, 1941, the Hardwar Union Municipal Board (for brevity called the Board in this Judgment) issued a notification (No. 4188/XI 416 41) by which it imposed a toll on motor vehicles and tongas entering or leaving the municipal limits with passengers, at the rate of 2 annas per passenger. There were nine classes of persons who were exempted and one such class was persons travelling in motor vehicles and tongas from Rishikesh. Exemption certificates valid to the end of the calendar year were available in respect of some of the other classes. The notification purported to be issued in exercise of powers conferred by section 128(1)(xiv) of the U.P. Municipalities Act 1916 (U.P. Act 2 of 1916). Accompanying the notification were rules for the levy ,and collection of the toll. On February 22, 1955, a second notification was issued (No. 830/XXIII 16(C) 53 54), this time in exercise of the powers conferred by section 128(1)(vii) of the Act, and it increased the toll from 2 annas to 4 annas per passenger and added rickshaws to the vehicles. This notification also removed the exemption in favour of persons travelling from Rishikesh. The Board established a toll barrier on the Rishikesh/ Hardwar road at a place called Kharkhari within the limits of Hardwar Municipality. Toll was collected at that barrier from 893 vehicles entering the municipal area or departing from it, at the rate of 4 annas per passenger travelling by motor car, tonga or rickshaw. On September 18, 1957, a third notification (No. 2706B (a)XI C 57) was issued, once again in exercise of powers conferred by section 128(1)(xiv) and the Board amended the description of the toll in the notification of 1941 and deleted the exemption which had been granted to persons travelling between Rishikesh and Hardwar. The final description of the tax reads "In the Description of the tax (i) . "A toll tax on motor vehicles, rickshaws and tongas entering or leaving the limits of the Hardwar Union Municipality with passengers to be levied at the rate of annas 4 per passenger". (ii)Delete the clause (c) "All persons travelling in motor vehicles and tongas from and to Rishikesh ' given under the proviso 2 to paragraph 1. " The last notification was issued after the respondents who are owners of motor vehicles plying between Rishikesh and Hardwar had filed their petitions under article 226 of the Constitution challenging the toll. The judgment, which is impugned here by the Board as appellant, is by a Divisional Bench consisting of Mootham C.J. and Shrivastava J. in a special appeal decided on December 6, 1957. The special appeal was filed against a judgment of Mehrotra J. dated September 26, 1955. Mr. Justice Mehrotra had held that toll could not be levied at all on vehicles going outside the Municipal limits and he issued a writ ordering the Board to desist from collecting toll on vehicles leaving Hardwar Union Municipality. He upheld the levy of toll on vehicles entering the municipal limits. Other contentions against, the notifications which sought to have the levy of toll in any shape or form declared illegal were rejected. The Divisional Bench maintained the order but held that although toll could be levied on vehicles leaving the municipal area, it could not be levied on the same vehicle if it had been once levied on its entry into the municipal area. The Divisional Bench modified the order by adding a direction that the appellant Board should not levy toll on vehicles leaving the municipal limits, which had paid toll on entry into these limits. The Bench observed further "We think, therefore, with respect, that the learned Judge went too far when he said that a toll cannot be 894 levied on a vehicle going out of the limits of the Municipal Board. . " Following its own decision the Divisional Bench dismissed the other special appeals but certified all cases as fit for appeal to this Court and that is how these fifty six appeals are before us. Now it has been ruled on many an occasion in this Court that local authorities like the Board do not act as legislatures when they impose a tax but as the agent of the State Legislatures. Their powers and the extent of these powers must be found in the statute which erects them and endows them with such powers. This proposition is so indisputable that Mr. Setalvad for the Board did not seek to contradict it in any way. We must, therefore, look at the U.P. Municipalities Act first. Section 128(1) of the Act read in 1941 as follows : "128. Taxes which may be imposed : (1)Subject to any general rules or special orders of the Provincial Government in this behalf, the taxes which a board may impose in the whole or any part of a municipality are . . . (vii)a toll on vehicles and other conveyances, animals and laden coolies entering the municipality; . . . (xiv)any other tax which the Provincial Legislature has power to impose in the Province under the Government of India Act, 1935. (The words "Provincial Legislature", "Province" and "the Government of India Act 1935" have now been replaced by the words "State Legislature", "State" and "the Constitution" respectively.) Mr. Setalvad has relied upon both the clauses of section 128(1) quoted above. He has further relied upon the concept of tolls which according to him envisages collection both on entry and departure. He has drawn particular attention to the first and the third notifications in which cl. (xiv) is mentioned as the source of power and has contended that the clause being residuary and enabling can bring the full amplitude of the power of the legislature to levy tolls to the aid of cl. (vii) which is restricted in its operation. We shall now consider these arguments. 895 The scheme of section 128 is that it enumerates by name certain taxes, and confers power on the Boards to levy them and then it enacts cl. (xiv) which is intended to cover other taxes which the Provincial (now the State) Legislature has authority to impose but which are not in the enumeration. In this way the delegated powers of the Boards are equated to the legislative powers of the Legislature of the Province (now the State). Since tolls were first imposed in Hardwar in 1941, we must view cl. (Xiv) in the light of the Government of India Act 1935. The powers of the Provincial Legislature in this context could flow from entries 52 and 53 only of the Provincial Legislative List in the Seventh Schedule of the Constitution Act of 1935. These entries read 52 "Dues on passengers and goods carried on inland waterways;" 53 "Tolls". The corresponding provisions under the Constitution are to be found in entries 56 and 59 of the State List. They read : 56 "Taxes on goods and passengers carried by road or on inland waterways;" 59 "Tolls". It will thus be seen that in 1941 the Provincial Legislature had no power to impose a tax on passengers carried over inland roads and whether or not the levy we are considering could be regarded at all as a tax on passengers, it could not be so regarded in 1941. It could be justified as a toll only under entry No. 53. The difficulty in accepting the first notification in respect of toll on vehicles leaving the municipality which is sought to be supported under cl. (xiv)is this : the Provincial Legislature expressly gave a limited power to levy toll on vehicles entering the municipality. Power which flowed from entry 53, whatever it might have been, was made over to the municipal Board to be exercised in a particular manner and that manner was stated in cl. (vii). If the matter is confirmed to cl. (vii) it is clear that the Board could levy toll only on vehicles entering the municipality and not on vehicles leaving the municipality. The Legislature having expressly so limited the power of the Board, we think that no extension of that power could be contemplated under cl. (xiv) even if it may be right to say that tolls as such can be levied on vehicles leaving the municipality as well as on vehicles entering the municipality a point which we do not decide. The larger power, if any, must be held to be cut down by necessary implication. To permit tolls to be levied on vehicles leaving the municipality would render ineffec 896 tive that part of cl. (vii) which lays emphasis on vehicles entering the municipality. Such an extension of power through cl. (xiv) cannot be supported. When the Board amended the notification in 1955 the position regarding tolls remained unaltered. The power of the Legislature derivable from entry 59 of the Constitution was not available because the tax was not a tax on passengers but on vehicles and the power to levy tolls continued to be res tricted to vehicles entering the municipality. That restriction made it impossible to extend the power regarding tolls in respect of vehicles leaving the municipality. The second notification also drew power from cl. (vii) only and that was patently wrong because that clause limited the power to levy tolls on vehicles entering the municipality. The third notification was irrelevant as it came after the petitions were filed in the High Court and it was also subject to the same restriction. We were referred to dictionaries and to rulings of the English Courts in an attempt to widen the meaning of the word "toll". There were many kinds of tolls and all, of course, must be taken to be comprehended by the entry relating to tolls in the Government of India Act, 1935 or the Constitution. There were for example toll thorough and toll traverse which were the two main subdivisions and there was toll stallage. The first was a levy prescribed by towns for animals or men that went through highways of a town or over ferries, bridges etc. belonging to it. Toll traverse was charged for passing over a private person 's ground. Toll stallage was a charge for occupation of land by pitching stalls in fairs and markets. A toll was thus a tribute or custom paid for a privilege, generally for passage over or for using a bridge, road, ferry, railway and sometimes for occupation of market, port, anchorage etc. The justification for tolls was that the person charged enjoyed a privilege and the amount went towards the construction, improvement or upkeep of these things. Tolls were a common feature of mediaeval Europe and England and toll roads and turnpike roads were so common that it was impossible to go any distance without having to pay some charge. Tolls went out of fashion and were abandoned because they were very unpopular and the charges for maintenance of roads, bridges, ferries etc. were directly levied as taxes. They lingered for sometime as octrois which were picturesquely described as "in gate" tolls being collected at the gates of a town or toll barriers. Even octrois have disappeared in Europe and England but they have continued to persist in India. Whether such tolls were collected only on entry or only on departure or both on entry and departure it is not easy to say. 897 Mr. Setalvad could give no instance of any practice in which they were levied both on entry and exit on the same vehicle. The better view appears to be that they can be collected only once and at the point of entry only though for convenience, they may be collected at any one end as for example toll for crossing a bridge which allows either entry to the bridge or takes the toll after the bridge is traversed. It is taken from those about to enter and from those about to leave but not twice. We need not concern ourselves with this problem which was placed before us by Mr. Setalvad because toll as such can only be collected under the Municipalities Act from vehicles entering the municipal limits. This, in our opinion, exhausts all the power delegated by the Legislature to the municipal Boards and that power cannot be extended either by considerations derived from the nature of tolls or from the residuary cl. (xiv). It is, therefore, sufficient to say that in the Hardwar Municipality the power to collect tolls was limited in 1941 by cl. (vii) of section 128 (1 ) and that power continues to be so limited. In this view of the matter the distinction made by the Divi sional Bench between vehicles which need not pay toll on leaving the municipal limits because they have paid toll on entry and vehicles which have not paid any toll till leaving, may not be quite correct. Mr. Setalvad contended that this distinction must not continue because the amount of toll is dependent on the number of passengers in the vehicle and the vehicle may enter with few passengers and leave with many more. That in our opinion is an irrelevant consideration because the right to levy toll is confined to vehicles entering the municipality and no question of vehicles leaving the municipality can enter the discussion. The Divisional Bench was in error in introducing this consideration and the decision of Mehrotra J. was right in all the circumstances of the case. As, however, the owners of vehicles have not appealed or objected, we will only dismiss the appeals and order no modification in the order of the Divisional Bench. The appellant Board shall bear the cases of this appeal. One hearing fee. Appeals dismissed.

IN-Abs

In 1941 the appellant Municipal Board issued a notification under section 128 (1) (xiv) of the U.P. Municipalities Act,, 1916, by which it imposed a toll on motor vehicles and tongas entering or leaving the municipal limits with passengers, at the rate of 2 as per passenger. In 1955, a second notification was issued under section 128(1)(vii) by which the toll was increased from 2 as. to 4 as. The respondents, who were owners of motor vehicles, filed petitions under ArT 226 challenging the toll. Thereafter, a third notification was issued under section 128(1)(xiv) by which the description of the toll was amended. A single judge of the High Court held that the toll could not be levied on vehicles leaving the municipal limits and issued a writ prohibiting the collecting of toll on such Vehicles. On appeal, a Divisional Bench of the High Court held that toll could also be levied on vehicles leaving the municipality, but it could not be levied on the same vehicle if the toll had been levied on its entry into the municipality. In this Court, it was contended by the appellant that, cl. (xiv) being residuary and enabling, brought the full amplitude of the power of the State Legislature or levy toll to the aid of el. (vii), and therefore, according to the concept of a toll it could be levied on vehicles both on entering into and departing from the municipality. HELD:Section 128(1) (vii) which enabled the levy of toll on a vehicle entering the municipality, exhausted all the power delegated by the Legislature to the appellant and that power could not be extended either by the considerations derived from the nature of tolls or from the residuary el. (xiv). Therefore, the toll could be collected only from vehicles entering the municipality. The distinction made by the Divisional Bench between vehicles which pay toll on entering and which do not pay any toll till leaving was irrelevant, because the question of vehicles leaving the municipality could not enter the discussion. [897 B F] Since the tolls were first imposed in 1941, el. (xiv) must be viewed in the light of the Constitution Act of 1935. The scheme of section 128 of the U.P. Act is that it enumerates certain taxes and confers powers on municipalities to levy them and then it enacts el. (xiv) which is intended to cover the taxes not enumerated which the Provincial Legislature had authority to impose. The relevant powers of theprovincial Legislature were found in Entries 52 and 53 of the Provincial Legislative List of the Constitution Act of 1935. Entry 52 could not be relied did not enable the Provincial Legislature to impose taxes carried over inland routes. The power which flowed from made over to the appellant to be exercised in the particular in el. (vii), that is, on vehicles entering the municipality, the tolls to be levied on vehicles leaving the municipality el. (vii) ineffective. [895 A C, E G, H] on because it on passengers Entry 53 was manner stated and to permit would render 892 The power of the State Legislature derivable from Entries 56 and 59 of the State List of the Constitution was not available for the second notification because, while Entry 56 permitted tax on passengers, the toll was not a tax on passengers but on vehicles; and the power to levy tons under Entry 59 continued to be restricted to vehicles entering the municipality. Besides, cl. (vii) under which it was issued limited the power to vehicles entering the municipality. The third notification was irrelevant, as was issued after the petitions were filed. [896 A C]

Appeal No. 956 of 1964. 860 Appeal by special leave from the judgment and order dated October 7, 9, 1961 of the Bombay High Court in I.T. Reference No. 6 of 1960. A. V. Viswanatha Sastri, Gopal Singh, B. R. G. K. A char and R. N. Sachthey, for the appellant. Mahinder Narain, Rameshwar Nath, section N. Andley and P. L. Vohra, for the respondent. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Judicature at Bombay answering the following question against the appellant : "Whether depreciation is allowable on the original cost of the various components of the Plant and Machinery and other assets of the company as acquired and used prior to 1 7 1953 ?" The relevant facts are these. We are concerned with the assessment year 1955 56 (accounting year being April 1, 1954 to March 31, 1955). The respondent, Dharampur Leather Company Ltd., Bombay, hereinafter referred to as the assessee company, was incorporated on June 15, 1943, as a private limited company, and later on November 24, 1949, it became a public limited company. On August 1, 1949, the Dharampur State merged with the Province of Bombay. Before its incorporation, the promoters of the assessee company had negotiated with the Ruler of Dharampur and secured from the Ruler total exemption from the State Income Tax of profits of the company for a period of seven years from the commencement of its working. The factory commenced working from June 15, 1949. After the merger the assessee company applied to the Commissioner of Income Tax, Bombay, by its letter dated June 22, 1951, for relief under para 15 of the Merged States (Taxation Concessions) Order, 1949. The Com missioner of Income Tax communicated the decision of the Government in his letter dated March 8, 1952, to exempt the company from income tax and super tax for a period of five years with effect from April 1, 1950. It was, however, stated that the shareholders of the company would be liable to pay tax on the amount of dividend received by them. The Merged States (Taxation Concessions) Order, 1949, was issued by the Central Government in exercise of the powers conferred by section 60A of the Indian Income Tax Act, 1922, hereinafter 861 referred to as the Act, and section 23A of the Business Profits Tax Act, 1947. Para 15 of the said order provides as follows : "15(1) Where any industrial undertaking situate in a merged State claims that it has been granted any exemption from or concession in respect of income =, super tax or business profits tax by the Ruler of the State before the 1st day of August, 1949, it shall submit an application to the Commissioner of Income tax giving the following particulars : 1. Name of the Industrial undertaking. Status (i.e. whether public or private company, firm, individual or Hindu undivided family). Nature of business. Date of commencement of the business. Nature of the concessions granted. Period for which concessions granted. Unexpired period of the concessions from the 1st day of August, 1949. (2) The application shall be accompanied by a copy of the orders of the State granting the concession or of the agreement with the State. (3) The Commissioner shall, after obtaining such other information as he may require, forward the application to the Central Government which, having regard to all the circumstances of the case, may grant such relief, if any, as it thinks appropriate. " The assessee company contended before the Income Tax Officer in the course of the assessment proceedings for the assess ment year 1955 56 that this being the first assessment year after it commenced working as a factory, no depreciation had in fact been actually allowed to the assessee in any earlier assessment year, and, therefore, the depreciation should be computed on the original cost of the various items of plant and machinery and other assets of the company. The Income Tax Officer, however, rejected this contention and held that depreciation must be computed on the written down values of machinery computed as if the income of the assessee had been worked out properly in the years when the company was exempted and the depreciation being allowed at the usual rates. The assessee failed before the Appellate Assistant Commissioner and the Appellate Tribunal. The Appellate Tribunal held that the words "actually allowed" in section 10(5)(b) 862 of the Act were wide enough to cover the case of the assessee. The High Court, however, held that if in the prior years no depreciation had been actually allowed then the actual cost incurred by the assessee for acquiring the machinery would be the written down value of the machinery. Mr. Sastri, the learned counsel for the appellant, first urges that on a proper interpretation of section 10 (5) (b) of the Act, the depreciation must be deemed to have been allowed to the assessee in the years in which the income of the assessee company was ,exempted. There is no force in this contention. We have delivered judgment today in Commissioner of Income Tax, Madhya Pradesh vs Messrs Straw Products Limited Bhopal(1) and held that the words "actually allowed" in para 2 of the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949, did not include any notional allowance. Following that judgment, we must interpret the words 'actually allowed ' occurring in section 10(5) (b) of the Act in the same manner. Mr. Sastri next contends that the Taxation Laws (Merged States) (Removal of Difficulties) Order, 1949, as amended by the Taxation Laws (Merged States) (Removal of Difficulties) (Amendment) Order, 1962, hereinafter referred to as 1962 Order, applies to the facts of the case. He says that the exemption was ,originally given by the Ruler of Dharampur State under an agreement with the assessee company and the concession by the Commissioner of Income Tax vide his letter dated March 8, 1952, was in fact a continuance of the agreement, and therefore, this exemption must be deemed to have been granted under an agreement with the Ruler, within the meaning of 1962 Order. We are unable to accede to this contention. In our opinion, the Explanation inserted by 1962 Order has no bearing on the facts of this ,case. The exemption granted by the Central Government is granted under para 15 of the Merged States (Taxation Concessions) Order, 1949, which was itself issued under section 60A of the Act. The result is that the exemption was granted under the Act and not under any agreement. The case of the assessee must be determined with reference to section 10 (5) (b) of the Act, unaffected by the amendment made by the 1962 Order. In the result we agree with the High Court that the answer to the question referred to should be in the affirmative. The :appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The respondent company obtained under an agreement with the Ruler of the erstwhile State of Dharampur an exemption from levy of income tax and super tax for the first seven years of its working. it commenced business in June 1949. In August 1949 the State of Dharampur merged with the Province of Bombay. The company then applied for and obtained under para 15 of the Merged States (Taxation Concession) Order, 1949, an exemption from income tax and supper tax for five years commencing from April, 1950. In the assessment year 1956 57 when the company was to be assessed under the Indian Incometax Act, 1922, for the first time, it claimed that as no depreciation had actually been allowed to it earlier the original cost of its machinery etc. should be taken as the written down value for the purpose of calculating the allowable depreciation. The assessing and appellate authorities held against the company but the High Court held in its favour. In appeal to this Court by the Revenue it was contended that (1) on a proper interpretation of section 10(5)(b) of the Indian Income tax Act, 1922 the depreciation must be deemed to, have been allowed to the assessee in the years in which its income was exempted and (2) the concession given by the Commissioner must be deemed to be a continuation of the agreement with the Ruler and therefore the Taxation Laws (Merged States) (Removal of difficulties) Order 1949 as amended by the Taxation Laws (Merged States) (Removal of Difficulties) (Amendment Order,), 1962 applied to the facts of the case. HELD: (i) The words 'actually allowed ' in section 10(5)(b) did not include any notional allowance and the High Court had rightly decided that the original cost was the written down value. [862 C] Commissioner of Income tax, Madhya Pradesh vs M/s. Straw Products Limited, Bhopal, [1966] S.C.R. applied. (ii) The exemption granted to the company under para. 15 of the Merged States (Taxation Concession) Order, 1949 was an exemption under section 60A of the Income tax Act and not under any agreement. The case of the assessee had therefore to be determined with reference to section 10(5)(b) of the Act unaffected by the amendment made by the 1962 Order. [862 G]

vil Appeal No. 160 of 1950. Appeal against the judgment and Decree dated the 30th March, 1951, of the High Court of judicature at Bombay (Chagla C. J. and Tendolkar J.) in Income Tax Reference No. 34 of 1950. C. K. Daphtary, Solicitor General for India, (Porus A. Mehta, with him) for the appellant. R. J. Kolah for the respondent. December 18. The judgment of the Court ,was delivered by MAHAJAN J. This is an appeal from the Judgment of the High Court of Judicature at Bombay delivered on a reference under section 66 (1) of the Indian Income tax Act, 1922, whereby the High Court answered the first referred question in the negative. The assessment in question concerns the year 194344. A Hindu undivided family was carrying on business in Bombay. , Madras and the Mysore State. Its business was taken over by a registered firm on 17th March, 1942. For the purpose of this appeal however this circumstance is not material. The case has been dealt with on the assumption that a single assessee carried on, business from 10th October, 1941 to 8th November, 1942, the relevant accounting year. According to the accounts of the assessee, during this period the Mysore branch purchased goods from the Bombay head office and the Madras Branch of the value of Rs. 2,45,455. The Income tax officer estimated these purchases of the Mysore branch in British India at Rs. 3,00,000 and its profits at Rs. 75,000 on the sale of these goods in Mysore. In view of the provisions of section 42 of the Act, half of this profit, i.e., to the extent of Rs. 37,000, was deemed to accrue or arise in British India, because of the business connection of the non resident, branch in British India. It was contended that the assessee being a person resident in India, section 42 could not be invoked in the case, because that section had application only to 446 cases of non residents. The Income tax Tribunal following the decision of the Bombay High Court, in Commissioner of Income tax 'V. Western ,India Life, Insurance Co. Ltd.(1), upheld this contention, 'and ruled that no part of the Mysore profit could be taxed in British India. At the instance of the Commissioner of Income tax/Excess Profits Tax, Bombay City, three questions were referred to the High Court under section 66 (1), the first of these being "Whether in the circumstances of the case can the profits on the sale of goods in the Mysore State be deemed to accrue or arise in British India under ' section 42 (1) of the Indian Income tax Act" The High Court returned an answer to the question ' in the negative after resettling it in these terms : "Whether on the facts and in the circumstances of the case the Income tax Officer was right in applying the provisions of section 42 (1) of the Income tax Act, and holding that Rs. 37,500 were profits deemed to accrue in British India and in including in the assesment a portion thereof. " This appeal is before us on a certificate granted by the High Court, and the only question canvassed here is whether section 42 (1) of the Indian Income tax Act has application to the case of a resident assesses or whether its scope is limited to a non resident assessee alone. It is common ground that if section 42 of the Act has no application to the case of a resident assessee, the whole of the Mysore profit, namely Rs. 75,000, cannot be included in the assessment of the year 1943 44. On the other hand, if such an assessee is within the ambit of the section, in that event the sum of Rs. 37,000 or any part of it would be liable to assessment during the assessment year in question. Section 42 of the Act is in these terms: "(1) All income, profits or gains accruing or arising, whether directly or indirectly, through or from any business connection in the taxable territories ' (1) [1945]13I.T.R.465. 447 or through or from any money lent at interest and brought into the taxable territories in cash or in kind or through or from the sale, exchange or transfer of a capital asset in the taxable territories, shall be chargeable to income tax either in his name or in the name of his agent, and in the latter case such agent shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income tax : Provided that where the person entitled to the income, profits or gains is not resident in the taxable territories, the income tax so chargeable may be recovered by deduction under any of the provisions of section 18 and that any arrears of tax may be recovered also in accordance with the provisions of this Act from any assets of the non resident person which are, or may at any time come within the taxable territories Provided further that any such agent, or any person who apprehends that he may be assessed as such an agent, may retain out of any money payable by him to such non resident person a sum equal to his estimated liability under this sub section, and in the event of any disagreement between the non resident person and, such agent or person as to the amount to be so retained, such agent or person may secure from the Income tax Officer a certificate stating the amount to be so retained pending final settlement of the liability, and the certificate so obtained shall be his warrant for retaining that amount Provided further that the amount recoverable from such agent or person at the time of final settlement shall not exceed the amount specified in such certificate except to the extent to which such agent or person may at such time have in his hands additional assets of such non resident person. (2) Where a person not resident or not ordinarily resident in the taxable territories carries on business ,with a person resident in the taxable territories, and it appears to the Income tax Officer, that owing to the close connection between such persons the course 448 of business is so arranged that the business done by the resident person with the person not resident or not ordinarily resident produces to the resident either no profits or less than the ordinary profits which might be expected to arise in that business, the profits derived therefrom or which may reasonably be deemed to have been derived therefrom, shall I* chargeable to income tax in the name of the resident person who shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income tax. (3) In the case of a business of which all the operations arc not carried out in the taxable territories the profits and gain 's of the business deemed under this section to accrue or arise in the taxable territories shall be only such; profits and gains as are reasonably attributable to that part of the, operations carried out in the taxable territories. " Before its amendment in the year 1939 the first part of the section tin thus: "42(1). In the of any person residing out of British India, all profits or gains accruing or arising to such person, whether directly or indirectly, through or from any business connection or property in British India, shall be deemed to be income accruing or arising within British India, and shall be chargeable to income tax in the name of the agent of any such person, and such agent shall, be deemed to be, for all the purposes of this Act, the assessee in respect of such income tax:" The rest of the section was substantially in the same terms. Inspite of its amendment in 1939 the marginal note to the section continued to refer to "non resident" as before, though the words 'residing out of British India" were deleted from the body of subsection (1). The retention of this marginal note gave rise to conflicting decisions on the question whether the section, in spite of the change made in its language in 1939 still continued to have application to cases of " non residents" alone. In order to clarify this matter, by Act XXII, of 1947, the marginal note was amended and it now is in these terms: 449 "Income deemed to accrue or arise within British India. " It is significant that the changes made in section 42 in the year 1939 were consequential to the entire recasting of section 4 of 'the Act., Section 4 as it stood prior to 1939 charged income tax on all income, profits or gains, from whatever source derived, accruing or arising or received in British India or deemed under the provisions of the Act to ' accrue, or arise, or ' to be received in British India. It further ' provided that the"income,profits and gains accruing or arising , without British India to a person resident in British, ' India, shall, 'if they are received in or brought into British India, be ' deemed to have accrued or arisen in British India and to be income, profits and gains, of the year in which they are so received or brought, notwith standing the fact that they did not so, accrue or arise in that year. By the amendment in the year 1939, the total income of any previous ' year of any person was defined as including 'all income, Profits and gains from whatever source derived which a) are received or are deemed to be received in British(a) India in such year by or on behalf of such person, or (b) if such person is resident in British India during such year, (1) accrue or arise or are deemed to accrue or arise to him in British India during such year; or (ii) accrue or arise to him without British India during such year ; or. . (c) if such person is not resident in British India during such year, accrue or arise or are deemed to accrue or arise to him in British India during such year;. " This legislative change in the Act made all income accruing or arising or deemed to accrue or arise in British India during the previous year to a resident the subject of a charge, apart from income accruing or arising without British India during the previous year. 450 The term "deemed" brings within the net of chargeability income not actually accruing but which is supposed notionally to have accrued. It involves a number of concepts. By, statutory fiction income which can in no sense be said to accrue at all may be considered as so accruing. Similarly, the fiction may relate to the place, the person or be in respect of the year of taxability. Section 42(1) defines what income is deemed to accrue within the taxable territories. It is only by application of this definition that one class of income "deemed to accrue to a resident within taxable territories" within the meaning of section 4(1) (b) () can be estimated. The words "In the case of any person residing out of British India" were deleted from section 42(1) during the pendency of the amendment. Bill of 1939 in the Council of State presumably with the object of making the section applicable to any person who had any income which in a primary sense arose in British India, even though technically it had arisen abroad, irrespective of the circumstance whether that person was resident, ordinarily resident or not ordinarily resident. By section 8 of Act XXIII of 1941, clause (c) was added to section 14 of the Act. No effect was to be given to this amendment before the year ending 31st March, 1943. The relevant part of section 14, after this amendment is in these terms: "The tax shall not be payable by an assessee in respect of any income, profits or gains accruing or arising to him within, a Part B State, unless such income, profits or gains are received or deemed to be received in or are brought into the taxable territories in the previous year by or on behalf of the assessee, or are assessable under section 12 B or section 42. " In view of these legislative changes in the provisions of sections 4, 14 and 42 of the Act, the conclusion is irresistible that the object of recasting section 41(1) in general terms was to make the definition of "deemed income" given in the section generally applicable to all classes of assessees. This sub section has been drafted in the widest terms and there is nothing whatsoever in 451 its language residents only. Wherever the legislature intended to limit the operation of any part of this section to non residents alone, it said so in express terms. Sub section (2) and the latter portion of sub section (1) expressly concern themselves with the case of nonresidents, while sub sections (1) and (3) are so framed that they cover both residents and non residents. A Bench of the Bombay High Court in Commissioner ,,of Income tax vs Western India Life Insurance Co.(1), held that notwithstanding its amendment in 1939 the section applied only to non residents. Reliance was placed, inter alia, on the circumstance that the marginal note appended to the section indicating that it applied to non residents alone, had not been deleted. To avoid this criticism and to remove doubts the legislature by Act XXII of 1947 changed the marginal note also. It seems to us that any other construction of the section would create an anomaly, inasmuch as the Part B State income failing under section 42 would not be assessable in the hands of a resident, but it would be assessable in the, hands of a non resident, because the Income tax Act while it ropes in world income of a resident, exempts income accruing within the Part B States from its ambit except when such income is received or is brought into taxable territory or comes within the ambit of section 42. Such a construction would be contrary to the policy of the Act. It is unnecessary to dwell on, this point at any great length in view of the circumstance that the decision in 'Commissioner of Income tax vs Western India Life Insurance Co.(1), has been dissented from and for good reasons, in subsequent cases. In Sutlej Cotton Mills Ltd. vs Commissioner of Income tax, West Bengal(2 ) a Bench of the Calcutta, High Court considered this matter at some length and reached the ,decision that sub sections (1) and (3) of section 42 ,covered cases of both residents as well as non residents. The same view was taken by a Bench of the Madras High Court in Commissioner of Income tax/Excess (1) [1945]13 I.T.R.405. (2) A.I.R. 1950 Cal. 452 Profits Tax, Madras,v,. Parasuram Jethanand (1). Again the matter was discussed in this court in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co.(2) by, Patanjali Sastri J., as he then was, and also by Mukherjea J. in the same case. This is what Patanjali Sastri J. said on this point: "It is noteworthy that the first part of sub section (1) of section 42 providing that certain classes of ' income,, are to be deemed accrue or arise in British India is not confined in its application to nonresidents, but is in general terms so as to be applicable to both residents and non residents. Before its amendment in 1939 the subsection began with the words 'in the case of any person residing out of British India ' which obviously restricted the application of the provision to non resident person but in its amended form the sub section has been recast into two distinctparts, the first of which is not so restricted, and the second part alone, which begins with the words 'and, where the person entitled to the income profits and gains is not resident in British India, is made applicable 'to non resident persons, thereby showing that the former part applies to both residents and non residents. The opening words of the first proviso also point to the same conclusion, for these words would be surplusage if the sub section as a whole applied only to non residents. A contrary view has, no doubt, been expressed by a Division Bench of the Bombay High Court, in Commissioner of Income tax vs Western India Life Insurance Co. Ltd.(3). Though reference was made in that case to the alteration in the structure of subsection (1) its significance, as it seems to me, was not properly appreciated. The facts that the marginal note to the whole section refers to 'non reside ' and that the section itself finds a place in Chapter IV headed 'Liability in special cases ' were relied upon as supporting the view that sub sections (1) as a whole applies only to non residents. As pointed out 'by the Privy Council in Balraj Kunwar vs Jagatpal Singh(4), marginal notes in an Indian statute, as in an (1) A.I.R. 1950 Mad. (2) ; (3) (4) 26 All. 393, 406. 453 Act of Parliament, cannot be referred to for the pur pose, of construing the statute, and it may be mentioned in this connection that the, marginal note relied on has since been replaced by the words 'Income deemed to accrue ;or arise within ', British India which makes it clear that the 'main object, of sub section (1) was to define that expression (see section 12 (a) of Act XXII Of 1947). Nor can the title of a chapter be legitimately used to restrict the plain terms of an enactment. " The same view was expressed by Mukherjea J. ,Nothing that has been said by Mr. Kolah before us justifies reconsideration of these opinions. Mr. Kolah argued that when the world income of a resident was, brought within the net of chargeability by section 4 in 1939 it was then wholly unnecessary to include such an assessee in the ambit of section 42. In our judgment, this contention is fallacious. Whatever income arises in a primary sense to a resident in taxable territories is chargeable under section 4 (1) (b) (1). Hence it was necessary to make section 42 applicable to such a case. Whatever other consideration may arise in estimating the foreign income of a resident will not be applicable to income deemed to accrue within taxable territory. Moreover, as above pointed out, in view of the provisions of section 14 (c) resident assessees but for section 42(1) would not be liable to assessment regarding income accruing to them in Part B States, even if there is a business connection in taxable territory. Mr. Kolah was unable to suggest any reasonable explanation for the deletion of the words "any person residing out of British India" from section 42(1) as it stood before 1930. The Only purpose in deleting these words could be to bring residents within the a ambit of the section. There is no reason whatsoever for not giving to the plain words of the section the meaning that on the face of it they bear. For the reasons given above we are of the that the answer by the High of Bombay to the first question referred to it was wrong. We therefore allow this appeal with costs and answer 7 93 S.C.India/59 454 this question referred to the High Court in the affirmative. Appeal allowed.

IN-Abs

A Hindu undivided family was carrying on business in Bombay, Madras and the Mysore, being treated as a single assessee and its relevant accounting period was 10th October, 1941, to 8th November, 1942. During this period, the Mysore branch purchased goods from the Bombay head office and the Madras branch of the value of Rs ' 2 lakhs odd. The In tax 'Officer estimated these purchases of the Mysore in British India at Its. 3 lakhs and its profits at Rs 75,000 on the sale of these goods in Mysore. In view of the provisions of section 42 of the Indian Income tax Act, half of this profit, i.e., to the extent of Rs. 37,500, was deemed to accrue or arise in British India because of the business connection of the L non resident branch in British India: Held, that, on the facts and circumstances of the case, the Income tax Officer was right in applying the provisions of section 42 1 of the Income tax Act and holding that RS. 37,500 were deemed to accrue in British India and in including in the assessment a portion thereof. Held also, that section 42 sub sections (1) and (3), cover Cases of both residents as well as non residents. Commissioner of Income tax vs 'Western India Life Insurance Co. dissented from. Sutlej Cotton Mills Ltd. V. Commissioner of Income tax, West Bengal (A.I.R. 1950 Cal. 551), Commissioner of Income tax/Excess Profits Tax, Madras vs Parasuram Jethanand (A.I.R 1950,Mad. 631), Commissioner of Income tax. Bombay V. Ahmedbhai Umarbhai & Co. ([1950] S.C.R. 335), referred to. 445

N: Civil Appeal No. 798 of 1963. Appeal by Special Leave from the judgment and Order dated the 19th August, 1960 of the Madras High Court in Second Appeal No. 871 of 1958. R. Ganapathy lyer, for the appellant. C. B. Agarwala and R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Ranmswami, J. This appeal is brought, by special leave, on behalf of the plaintiff from the judgment of the High Court of Madras dated August 19, 1960 in Second Appeal No. 871 of 1958. The disputed property consisted of 16 acres and 27 cents of land in Sokkanur village of Coimbatore district of which half share belonged to Palani Moopan and the other half to his daughter Palani Mooppachi. Palani Moopan executed the document exhibit B 1 with regard to his share of the property in favour of the 1st defendant for a consideration of Rs. 4,000/on May 28, 1946. Out of the consideration, a sum of Rs. 2,000/was reserved with the vendee to pay off an earlier mortgage and the balance of Rs. 2,000/ was paid to the vendor in cash. The first defendant discharged the earlier mortgage in accordance with the directions in exhibit B 1. The document, B 1 was in the form of a sale deed but it contained a stipulation that the 1st defendant should reconvey the property to Palani Moopan on his repaying the amount of Rs. 4,000/ after 5 years and before the end of the 7th year. After the death of Palani Moopan his sons executed an assignment deed in favour of the plaintiff, exhibit A 1 dated August 10, 1950 for a sum of Rs. 1,600/ . On the basis of exhibit A 1 the plaintiff has brought the present suit for redemption of the disputed property. The case of the plaintiff was that exhibit B 1 must be deemed in law to be a mortgage by conditional sale and that he was entitled to redeem as the assignee of the equity of redemption. The plaintiff further claimed that being an agriculturist, he was entitled to the benefits of Madras Act TV of 1938 as amended. The plaintiff pleaded alternatively that if Sup. Cl/66 12. was held to be an out right sale with a condition to repurchase, the first defendant was bound to reconvey the property to him on payment of the amount of Rs. 4,000/ . The plaintiff alleged that he tendered the amount to the first defendant several times but the latter refused to accept the same. The suit was contested by the 1st defendant who denied that exhibit B 1 was a mortgage by conditional sale. It was alleged that exhibit B 1 was an out right sale with a covenant to repurchase and as no tender was made by the plaintiff within the time stipulated in the document, the suit was barred by time. Upon these rival contentions the trial court held that exhibit B 1 was a mortgage by conditional sale and accordingly granted a preliminary decree to the plaintiff for redemption under O. 34. r. 7 of the Civil Procedure Code. The first defendant took the matter in appeal to the Subordinate Judge of Coimbatore but the appeal was dismissed. The 1st defendant preferred second appeal in the Madras High Court which set aside the decrees of the lower Courts and ordered that the suit should be dismissed, holding that the transaction was an out right sale and not a mortgage by conditional sale. As regards the alternative plea based on the covenant for reconveyance, the High Court considered that there was no proof that the plaintiff had tendered the amount within the period stipulated in the document. The question of law involved in this appeal is whether the document, exhibit B 1 executed by Palani Moopan in favour of the 1st defendant is, in its true effect, a mortgage by conditional sale or a sale with a condition for retransfer. By section 58(c) of the a mortgage by conditional sale is defined as follows : "58. (c) Where the mortgagor ostensibly sells the mortgaged property on condition that on default of payment of the mortgaged money on a certain date the sale shall become absolute, or on condition that on such payment being made the sale shall become void, or on condition that on such payment being made the buyer shall transfer the property to the seller, the transaction is called a mortgage by conditional sale and the mortgagee a mortgagee by conditional sale: 921 Provided that no such transaction shall be deemed to be a mortgage, unless the condition is embodied in the document which effects or purports to effect the sale. " The proviso to this clause was added by Act 20 of 1929. Prior to the amendment there was a conflict of decisions on the question whether the condition contained in a separate deed could be taken into account in ascertaining whether a mortgage was intended by the principal deed. Legislature resolved this conflict by enacting that a transaction shall not be deemed to be a mortgage unless the condition referred to in the clause is embodied in the document which effects or purports to effect the sale. But it does not follow that if the condition is incorporated in the deed effecting or purporting to effect a sale a mortgage transaction must of necessity have been intended. The question whether by the incorporation of such a condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The definition of a mortgage by conditional sale postulates the creation by the transfer of a relation of mortgagor and mortgagee, the price being charged on the property conveyed. In a sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified. The distinction between the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. The form in which the deed is clothed is not decisive. The question in each case is one of determination of the real character of the transaction to be ascertained from the provisions of the document viewed in the light of surrounding circumstances. If the language is plain and unambiguous it must in the light of the evidence of surrounding circumstances be given its true legal effect. If there is ambiguity in the language employed, the intention may be ascertained from the contents of the deed with such extrinsic evidence as may by law be permitted to be adduced to show in what manner the language of the deed was related to existing facts. In the present case, the document exhibit B 1 reads as follows ". . . . . . I have settled to sell to you on this day for a suit of Rs. 4,000 0 0 the undermentioned immovable pro 922 perties and have received the consideration of rupees four thousand only, as detailed below : In the matter of my having directed you yourself to pay the sum of Rs. 2,000/ , being my half share payable towards the usufructuary mortgage deed executed on 7th September 1944, in respect of the share of properties detailed below and in respect of some other share of properties, jointly by me and Palani Mooppachi, wife of one Palani Mooppan of the aforesaid place in favour of M. Maniyam P. V. Ramaswami Goundar, son of Venkatachala Goundar, residing in Pattampalayam village cusba, Palladam taluk, for a sum of Rs. 4,000/ and registered as Document No. 1122 of 1944, Book 1, Volume 210, pages 415 and 416 in the Office of the Sub Registrar of Kunnathur to the aforesaid usufructuary mortgagee, get release of the properties mentioned herein and take possession of the same, the amount received by me is Rs. 2,000/ . The amount which I have received in cash on this day is Rs. 2,000/ . As, in all, I have received the sale consideration of Rs. 4,000/ as detailed above, you yourself shall, in future, hold and enjoy absolutely the undermentioned properties. In future, neither myself nor my heirs shall have any right or future claim, whatever, in respect of these properties. There is no other encumbrance, whatever, except the encumbrance mentioned above, in respect of these properties. In case anything is left out, I am bound to get the same discharged from and out of my other properties. Whereof, in all these, and in the well in good condition, situate in Government Survey No. 93/1 and in the cocoanut, palmyrah, tamarind and wood apple trees and in the fruit bearing and timber trees, which are in the aforesaid fields, the half share in common. In future I have neither share nor right, whatever, in the aforesaid fields. The aforesaid Palani Mooppachi shall discharge the above mentioned balance usufructuary mortgage amount of Rs. 2,000/ from and out of the balance of the usufructuary of mortgage properties. Should I pay in cash the aforesaid sale consideration of rupees four thousand after a period of five years within a period of seven years from the date of 923 the execution of the deed, during the date of expiry of the said deed of any year (the said properties) should be reconveyed for the very same amount to me. This condition is not valid after the aforesaid period. " We consider that in the present case there are several cir cumstances to indicate that exhibit B 1 was a transaction of mortgage by conditional sale and not a sale with a condition for, retransfer. In the first place, there is the important circumstance that the condition for repurchase is embodied in the same, document. In the second place, there is the significant fact that the consideration for exhibit B 1 was Rs. 4,000/ , while the real value of the property was, according to the Munsif and the Subordinate Judge, Rs. 8,000/ . The High Court has dealt with this question and reached the finding that the value of the property was Rs. 5,5001 , but it is submitted by Mr. Ganapathi lyer on behalf of the appellant that the question of valuation was one of fact and the High Court was not entitled to go into the question in the second appeal. The criticism of learned Counsel for the appellant is justified and we must proceed on the basis that the valuation of the property was Rs. 8,000/ and since the consideration for exhibit B 1 was only Rs. 4,000/ it was a strong circumstance suggesting that the transaction was a mortgage and not an out right sale. In the third place, there is the circumstance that the patta was not transferred to the 1st defendant after the execution of exhibit B 1 by Palani Moopan. It appears that defendant No. I did not apply for the transfer of patta and the patta admittedly continued in the name of Palani Moopan even after the execution of exhibit B 1. Exhibits A 6 and A 7 are certified copies of thandal extract of patta for the years 1945 54 and they prove this fact. These exhibits also show that the plaintiff had obtained patta for the land on the basis of exhibit A 2. The registered deed of transfer of patta was executed by the sons of Palani Moopan in favour of the plaintiff. There is also the circumstance that the, kist for the land was continued to be paid by Palani Moopan and after his death, by the sons of Palani Moopan. Lastly, there is the important circumstance that the consideration for reconveyance was Rs. 4,000/ , the same amount as the consideration for exhibit B 1. Having regard to the language of the document, exhibit B 1 and examining it in the light of these circumstances we are of the opinion that the transaction under exhibit B 1 was mortgage by conditional sale and the view taken by the High Court with regard to the legal effect of the transaction must be reversed. It follows, therefore, that the plaintiff is entitled to a preliminary decree for redemption under 0. r. 7, Civil Procedure Code, 924 for taking accounts and for declaration of the amounts due to the 1st defendant under exhibit B 1. For these reasons we set aside the judgment and decree of the High Court and. restore the judgment and decree of the Subordinate Judge of Coimbatore granting the plaintiff a preliminary decree for redemption of the mortgage. A period of six months is granted for payment of the amount under the preliminary decree. The appeal is accordingly allowed with costs. Appeal allowed.

IN-Abs

M executed a document exhibit B 1 on May 28, 1946, in respect of his half share in certain lands in favour of the defendant for a consideration of Rs. 4,000/ . The document was in the form of a sale deed but it contained a stipulation that the defendant should reconvey the property to M on his repaying the amount of Rs. 4,000/ after five years and before the end of the seventh year. After M 's death his sons executed an assignment deed in favour of the plaintiff in August 1950 for a sum of Rs. 1,600/ and on the basis of this deed, the plaintiff filed a suit for re demption of the disputed property. He claimed, inter alia, that exhibit B 1 must be deemed in law to be a mortgage by conditional sale and that he was entitled to redeem as the assignee of the equity of redemption; or alternatively, that exhibit B 1 was a sale with a condition to repurchase and the defendant was bound to reconvey the property to him on payment of Rs. 4,000/ and that although this amount had been tendered several times, the defendant had refused to accept it. On the other hand the defendant denied that exhibit B 1 was a mortgage by conditional sale and contended that it was an outright sale with a covenant for repurchase and as the plaintiff did not tender the amount within the time stipulated in the document, the suit was barred by time. The trial court held that exhibit B 1 was a mortgage by conditional sale and granted a preliminary decree; but the High Court, in appeal, reversed this decision. On appeal to this Court, HELD : exhibit B 1 was a transaction of mortgage by conditional sale and not a sale with a condition for retransfer. The question whether by the incorporation of a condition a transaction ostensibly of sale may be regarded as a mortgage is one of intention of the parties to be gathered from the language of the deed interpreted in the light of the surrounding circumstances. The definition of a mortgage by conditional sale postulates the creation by the transfer of a relation of mortgagor and mortgagee, the price being charged on the property conveyed. In a sale coupled with an agreement to reconvey there is no relation of debtor and creditor nor is the price charged upon the property conveyed, but the sale is subject to an obligation to retransfer the property within the period specified. The distinction between the two transactions is the relationship of debtor and creditor and the transfer being a security for the debt. [921 C F] In the present case the following circumstances indicated that the transaction was a mortgage by conditional sale : (i) As required by the proviso to section 58(c). the condition for repurchase was embodied in the same document; (ii) the consideration for exhibit B 1 was Rs. 4,000/. while the real value of the property was Rs. 8,000/ ; 919 (iii)the patta was not transferred to the defendant after the execution of exhibit B 1 by M; (iv) M, and after his death, his sons, continued to pay kist for the land; and (v) the consideration for reconveyance was the same amount as the consideration for exhibit B 1, i.e. Rs. 4,000/ . [923 B G]

ivil Appeal No. 243 of 1965. Appeal by special leave from the judgment and order dated January 13, 1965 of the Madhya Pradesh High Court in Misc. Petition No. 624 of 1964. S.V. Gupte, Solicitor General, and 1. N. Shroff, for the appellant. A.G. Ratnaparkhi, for the respondent No. 3. The Judgment of the Court was delivered by Ramaswami, J. This appeal raises an important question as to the scope and interpretation of section 62(c) of the Motor Vehicles Act and as to whether the appellant The Madhya Pradesh State Road Transport Corporation was entitled, in the circumstances of the case, to the grant of a temporary permit for 4 months under section 62(c) of the Motor Vehicles Act. On November 27, 1962 applications were invited for a permit for running a town bus service in Raipur. On February 20, 1963 it was decided by the Regional Transport Authority to grant a permit for the service to the 3rd respondent Madhya Pradesh Transport Co. (Pvt.) Ltd, Raipur but the 3rd respondent did not produce buses of the required specifications for operating the service though several opportunities were given. The order granting the permit to the 3rd respondent was consequently revoked by the Regional Transport Authority on September 13, 1964. Shortly thereafter the Regional Transport Authority granted a temporary permit to the appellant for a period of two months i.e. from September 29, to November 28, 1964 in respect of the aforesaid bus service. By the order dated November 25, 1964 the Regional Transport Authority granted another temporary permit for 4 months to the appellant. The order of November 25, 1964 states: 788 "From the large number of letters from some responsible members of the public received with this application and the statistics of the traffic catered to by the buses operated by the Corporation, it is now clear that the public of Raipur is feeling the need of the town bus operations. It has been decided by this Authority separately that applications for regular operations on two routes actually operated temporarily with some extensions and one additional route be invited. However, it has to be accepted that expectations of the public for these transport facilities at least on the existing two routes have been aroused and have created a particular need which has to be met temporarily till regular operations are introduced. The restrictions put by the first proviso to section 62 of the Motor Vehicles Act and which has been emphasized in the decision of their Lordships of the M.P. High Court in Shri Ram Khanna vs Raingopal Satyanarain (1961 M.P.L.J. notes 121) will not operate in sanctioning a further grant for a period of four months till nearly the end of March when the academic year may end for a large number of students availing of this facility. A temporary permit for a period of four months from the date of expiry, i.e., 28 11 1964, on the routes and timings covered by the previous order of ,grant dated 19 9 1964 is approved. This will stand cancelled if regular operations covering these routes are introduced in the meantime. " The 3rd respondent thereupon moved the High Court Of Madhya Pradesh on December 19, 1964 for grant of a writ of certiorari to quash the order of the Regional Transport Authority granting temporary permits to the appellant for operating the bus service. The application was allowed by the High Court on January 13, 1965 and a writ in the nature of certiorari was issued quashing the order of the Regional Transport Authority dated November 25, 1964 by which a temporary permit was granted to the appellant. The High Court took the view that a temporary permit cannot be granted for any route when there is a permanent need for providing transport facilities on that route and it has been decided to invite applications for that purpose. This appeal is brought, by special leave, by the Madhya Pradesh 'State Road Transport Corporation against the judgment of the High Court in the writ petition. Section 62 of the Motor Vehicles Act states: "62. A Regional Transport Authority may without following ,the procedure laid down in section 57, grant permits. to be ,effective for a limited period not 'in any case. 789 to exceed four months, to authorise the use of a transport vehicle temporarily (a) for the conveyance of passengers on special occasion such as to and from fairs and religious gatherings, or (b) for the purposes of a seasonal business, or (c) to meet a particular temporary need, or (d) pending decision on an application for the renewal of a permit; and may attach to any such permit any condition it thinks fit: Provided that a temporary permit under this section shall, in no case, be granted in respect of any route or area specified in an application for the grant of a new permit under section 46 or section 54 during the pendency of the application: Provided further that a temporary permit under this section shall, in no case, be granted more than once in respect of any route or area specified in an application: for the renewal of a permit during the pendency of such application for renewal. " On behalf of the appellant it was contended, in the first place, that there was a particular temporary need for the provision of transport facilities and the High Court was erroneous in taking view that whenever there was a permanent need there could be no temporary need, and so temporary permit could not be granted under section 62(c) of the Motor Vehicles Act. In our opinion, the argument put forward by the learned Solicitor General on behalf of the appellant is well founded and must be accepted as correct. It appears from the order of the Regional Transport Authority that after the regular permit granted to respondent No. 3 was can , celled there was a shortage of necessary number of transport vehicles on the route and the Regional Transport Authority thought it fit to provide for this temporary need until regular operations were introduced and regular permits were granted after following the procedure prescribed under section 57 of the Motor Vehicles Act. Section 62(c) of the Motor Vehicles Act states that the Regional Transport Authority may grant a temporary permit meet a particular temporary ' need" and. we see no reason why this clause should be given any special or restricted meaning. There is no antithesis between a particular temporary need and a permanent need and it is manifest that these two kinds of need :may coexist on a particular route. If, therefore. the Regional Transport Authority considered that, in the circumstances of the case, there. 790 was a particular temporary need, and granted a temporary permit to the appellant, the action of the Regional Transport Authority cannot be challenged as legally invalid. Reference may be made, in this connection, to section 62(d) which contemplates that temporary permits may be granted to authorise the use of a transport vehicle temporarily pending decision on an application for the renewal of a permit. This sub section, therefore, contemplates that there may exist a temporary need for transport facilities on a particular route even in case of permanent need for such facilities. We are accordingly of opinion that the Regional Transport Authority was right as a matter of law in granting a temporary permit to the appellant under section 62(c) of the Motor Vehicles Act in the circumstances of this case and the view expressed by the High Court is not correct. It was also contended on behalf of respondent No. 3 by Mr. Ratnaparkhi that, in any event, the Regional Transport Authority ought not to have granted a temporary permit for a total period exceeding the limit of 4 months. Learned Counsel placed reliance the words "in any case" appearing in section 62 of the Motor Vehicles Act which has already been quoted. It was urged that the words "in any case" mean that under no circumstances a temporary permit can be granted on any route for more than a total period of 4 months. We are of opinion that the words "in any case" do not mean "in any circumstance". The section means that at any one time the Regional Transport Authority is not permitted to issue to any person a temporary permit for a period exceeding 4 months, but if the temporary need persists, as, for example, where 'the formalities under section 57 are not completed within a period of 4 months, it would, in our opinion, be permissible for the Regional Transport Authority to grant a second temporary permit in order to meet the temporary need. We should, of course, make it clear that the Regional Transport Authority cannot abuse its power : 'and go on granting temporary permits in quick succession and not 'take speedy action for completing the procedure under section 57 of the Motor Vehicles Act. If upon the facts of any particular case it appears that the Regional Transport Authority is so abusing its powers its action is liable to be corrected by grant of a writ, but 'where such abuse of power is not alleged or shown the mere fact that the Regional Transport Authority has granted a temporary permit for a second time and the total duration of the two periods 'is more than 4 months, would not invalidate the second permit. We accordingly reject the argument of learned Counsel for respondent No. 3 on this point. With regard to the construction of section 62(c) of the Motor Vehicles Act there is divergen of opinion among ,the various High Courts. In Jairam Dass vs Regional Transport Authority(1) (1) I.L.R. 791 it was held by the Rajasthan High Court that in a case where the Regional Transport Authority was of the view that the. existing regular bus service was not sufficient to meet the traffic and decided to increase the number of regular buses plying on the route, it had the power to grant a temporary permit till the necessary formalities for increasing the regular permits were gone through and that this would amount to a temporary need. The same view has been taken by the Assam High Court in Chandi Prasad Mahajan vs The Regional Transport Authority, Gauhati(1) in which it was said that section 62(c) of the Motor Vehicles Act is quite general in terms and is not restricted to an existing particular need but includes a particular temporary need created by the inability of government or an individual to provide transport immediately. A contrary view has been expressed by Madras High Court in Sri Rama Vilas Service Ltd. vs The Road Traffic Board, Madras,C) by Kerala High Court in Balagangadharan vs Regional Transport Board, Quiton,(3) by Nagpur High Court in Shah Transport Co., Chhindwara vs The State of Madhya Pradesh,(4) and by Mysore High Court in Mallasattappa vs The Chairman, Regional Transport Authority, Bangalore.(5) For the reasons already expressed, we hold that the view taken by the Rajasthan High Court in Jairam Dass vs Regional Transport Authority(6) and the Assam High Court in Chandi Prasad Mahajan vs The Regional Transport Authority, Gauhati(1) as to the interpretation and the effect of section 62(c) of the Motor Vehicles Act is correct. It was submitted on behalf of respondent No. 3 that the order of the Regional Transport Authority dated November 25, 1964 had already expired and the Regional Transport Authority had invited fresh applications for permanent permit by Gazette notification dated December 14, 1964. It was contended by Mr. Ratnaparkhi that any declaration that this Court may make with regard to the grant of temporary permit dated November 25, 1964 would be academic. But the Solicitor General submitted on behalf of the appellant that it was necessary for this Court to declare the true position in law, so that in consideration of fresh applications for a temporary permit in future no mistake may be made. The view taken by the High Court in the judgment under appeal would bind the Regional Transport Authorities in the State unless it is set aside. We agree with the contention of Solicitor General and consider that, in the circumstances of this case, the question is not totally academic. (1) I.L.R. (2) A.I.R. 1948 Madras 400. (3) A.I.R. 1958 Kerala 144. (4) A.I.R. 1952 Nagpur 353. (5) A.I.R. (6) I.L.R. 792 We accordingly allow this appeal and set aside the order passed. by the High Court dated, January 13. 1965 and declare that the order of the Regional ' Transport Authority dated November 25. 1964 granting a temporary permit to the appellant is legally valid. There will be no order with regard: to costs of this appeal. Appeal allowed.

IN-Abs

In February, 1963, the first respondent, Regional Transport Authority, granted a permit to the third respondent for running a town bus service in Raipur, but as the latter was unable to. put the service into operation, the permit was revoked in September, 1964. Thereafter, the first respondent granted a temporary permit to the appellant for a period of two months and in November, 1964 pending the grant of a permit for permanent regular operations, granted a second temporary permit to the appellant for four months. The third respondent thereupon filed a petition in the High Court for a writ of certiorari to quash the order of the first respondent granting a temporary permit to the appellant on the ground, inter alia, that such grant was in violation of section 62 of the Motor Vehicles Act. The High Court allowed the petition, being of the view that a temporary permit could not be granted for any route when there was a permanent need for providing transport facilities on that route and it had been decided to invite applications for that purpose. In the appeal before this Court, it was also contended that the provision in section 62 that a temporary permit could be granted for a period not "in any case" to exceed four months meant that under no circumstances could a temporary permit be granted on any route for more than a total period of four months. On the other hand, it was the appellant 's contention that in the circumstances of the case, there was a "particular temporary need" within the meaning of section 62(c) and the High Court was in error in taking the view that whenever there was a permanent need, there could be no temporary need. HELD: (i) The Regional Transport Authority was right as a matter of law in granting a temporary permit to the appellant under section 62(c) of the Act in the circumstances of the case. [790 C] After the regular permit granted to the third respondent was ,cancelled, in view of a shortage of transport vehicles on the route the Regional Transport Authority thought it fit to provide for this temporary need until permanent regular operations could be introduced in accordance with the procedure prescribed in section 57. There was no reason why the clause "to meet a particular temporary need" should be given any special or restricted meaning. There is no antithesis between a particular temporary need and a permanent need and it is manifest that these two kinds of need may co exist on a particular route. [789 G H] 786 787 (ii) The words "in any case" in section 62 do not mean "in any circumstance". The section means that at any one time the Transport Authority is not permitted to issue to any person a temporary permit for a period exceeding 4 months; but if the temporary need persists then, except where an abuse of the power is shown, it would be permissible to grant a second temporary permit to meet the temporary need. [790 D F] Jairam Dass vs Regional Transport Authority, I.L.R. ; Chandi Prasad Mahajan vs The Regional Transport Authority, Gauhati, I.L.R., , approved. Sri Rama Vilas Service Ltd. vs The Road Traffic Board, Madras, A.I.R., 1948 Madras 400, Balagangadharan vs Regional Transport Board, Quilon, A.I.R., 1958, Kerala 144, Shah Transport Co., Chhindwara vs The State of Madhya Pradesh, A.I.R., 1952 Nagpur 363, Mallasattappa vs The Chairman, Regional Transport Authority, Bangalore, A.I.R., , disapproved.

Appeals Nos. 629 to 632 of 1964. Appeals from the order dated September 22, 1961 of the Madhya Pradesh High Court in Misc. Civil Case No. 277 of 1960. A. V. Viswanatha Sastri, R. Ganapathy Iyer, B. R. G. K. Achar and R. N. Sachthey, for the appellant. 928 section T. Desai, T. A. Ramachandran, J. B. Dadachanji, for the respondent. The Judgment Of SUBBA RAO and SIKRI, JJ. was delivered by SUBBA RAO, J. SHAH J. delivered a dissenting opinion. Subba Rao, J. These appeals raise the question of construc tion of the provisions of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, hereinafter called the Order, in the matter of computation of the aggregate depreciation allowances for the purpose of assessment to tax. Nandlal Bhandari Mills Ltd., is a public company incorpo rated in Indore under the Indore Companies Act, 1914. It owns and runs a textile mill and some ginning factories. The Income tax Officer assessed the Company for the assessment years 1950 51, 1951 52, 1952 53 and 1953 54 on its income of the corresponding accounting years. ' being the calendar years 1949, 1950, 1951 and 1952. In the course of the assessments it became necessary to ascertain the written down value of the building, machinery, plant etc. of the respondent company as on January 1, 1949. On April 1, 1950, the Indian Income tax Act, 1922, was extended to Part B States, including Madhya Bharat of which Indore became a part. Till the said date, the assessee was for many years assessed in the Companies Circle, Bombay, as a non resident and for some years as a resident under the Indian Income tax Act, 1922. It was also assessed to Industrial Tax under the Indore Industrial Tax Rules, 1927. For those years in which it was assessed as a non resident under the Indian Income tax Act, 1922, only that part of its profits which could be said to be attributable to the sale proceeds of goods received in British India or in regard to which contracts were accepted in British India was brought to tax. After the Indian Income tax Act was extended to Indore, diffi culties arose in the matter of fixing depreciation allowances, for the rates obtaining under the Indian Income tax Act and those obtaining under the Indore Industrial Tax Rules, 1927, were not the same. After the merger of the State in the Indian Union, in order to rationalize the tax structure, the Central Government in exercise of the power conferred on it under section 12 of the Finance Act, 1950, issued the Order where under in the case of such disparity the greater of the two sums allowable was directed to be adopted. During the assessment years, pursuant to the terms of that Order, the Income tax Officer took into account the depreciation allowances for the years up to and including 1944 as computed under the Indian Income tax Act, 1922, and for the 929 subsequent years 1945 to 1948, the depreciation allowance as computed under the Indore Industrial Tax Rules, 1927. On that basis he arrived at the written down value of the building, plant, machinery etc. of the assessee as on January 1, 1949. On appeals, the Appellate Assistant Commissioner and, on further appeals, the Appellate Tribunal, confirmed the orders of the Income tax Officer. At the instance of the assessee, the following questions, among others, were referred to the High Court of Madhya Pradesh, Jabalpur: (1) Whether the computation of the written down value of the assets of the applicant in the light of the provisions of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, is legal and valid. (2) Whether the provisions of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, and the subsequent modifications thereof were valid in law in the light of the provisions of the Indian Income tax Act, 1922, the Finance Act, 1950, and the Constitution of India. (3) Whether the Indore Industrial Tax Rules, 1927, could be regarded as rule or law of a Part B State for the purpose of the said Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, and, if so, whether the same are valid in law; and (4) Whether the depreciation 'actually allowed ' means the depreciation deducted in arriving at the taxable income or in arriving at the world income. Before the High Court the third question was not pressed; and the second question was concluded by the decision of this Court in Commissioner of Income tax, Hyderabad vs Dewan Bahadur Ramgopal Mills Ltd.(1). The correctness of the answers given by the High Court in respect of these two questions is not questioned before us and, therefore, nothing further need be said about them here. Questions 1 and 4, in substance, form two parts of the same question. On question 1, the High Court held that the depreciation allowed for the years up to and including 1944 in the (1) 930 assessments made in the taxable territories would be the depreciation which was actually allowed against the taxable income ,and not the depreciation computed against the total world income. On the 4th question, it answered that the depreciation actually allowed meant the depreciation deducted in arriving at the taxable income. The present appeals filed by the Revenue question the correctness of the answers given by the High Court in regard to questions 1 and 4 referred to it. Mr. A. V. Viswanatha Sastri, learned counsel for the Reve nue, argued that the assessee was only entitled to depreciation on the written down value calculated after deducting all the amounts of depreciation that had been taken into consideration in determining the world income. He argued that depreciation was allowed in respect of the user of the assets in the business '. that the allowance did not depend on the assessable income and that the High Court, therefore, went wrong in striking a proportion on the basis of a part of the income actually assessed under the Indian Income tax Act. Mr. Desai, learned counsel for the assessee, contended that no depreciation as such having been allowed for the years upto and including 1944 as computed under the Indian Income tax Act, the original cost itself should be taken as the written down value of the assets. Alternatively, he argued that in any event only that part of the depreciation which had entered into the computation of income found liable to income tax under the Indian Income tax Act, which income was calculated on proportionate basis alone, should be deducted from the original cost in determining the written down value under section 10(5) (a) of the Indian Income tax Act. We shall deal with questions 1 and 4 together, as, as we have indicated earlier, they are really parts of the same question. The answer to the questions turns upon the interpretation of the provisions of the Order. It is, therefore, necessary to read the relevant provisions of the Order. Paragraph 2. Computation of aggregate depreciation allowance and the written down value. In making any assessment under the Indian In come tax Act, 1922, all depreciation actually allowed under any laws or rules of a Part B State relating to income tax and super tax, or any law relating to tax, on profits of business, shall be taken into account in computing the aggregate depreciation allowance refer 931 red to in sub clause (c) of the proviso to clause (vi) of sub section (2) and the written down value under clause (b) of sub section (5) of section 10 of the said Act : Provided that where in respect of any asset, depreciation has been allowed for any year, both in the assessment made in the Part B State and in the taxable territories, the greater of the two sums allowed shall only be taken into account. Explanation. For the purpose of this paragraph, the expression "all depreciation actually allowed under any laws or rules of a Part B State" means and shall be deemed always to have meant the aggregate allowance for depreciation taken into account in computing the written down value under any laws or rules of a Part B State or carried forward under the said laws or rules. After the Indian Income tax Act, 1922, was extended to the Indore State, difficulties arose in the matter of fixing the allowances for depreciation. The rates of depreciation under the Act and under the Order were not the same. Paragraph 2 of the Order provides that in making an assessment under the Act all depreciation allowances actually allowed under the laws obtaining in the Part B State before the Act was extended to it shall be allowed. The proviso thereto says that when there is a conflict between the two rates, the greater of the two sums allowed shall be taken into account. The Explanation to the section defines the expression "all depreciation actually allowed under any laws or rules of a Part B State" to mean the aggregate allowances for depreciation taken into account in computing the written down value under the laws prevalent in the Part B State or carried forward under the said laws or rules. The argument turned upon the following expressions in the said paragraph : "actually allowed" in the main part of the paragraph; "allowed in the assessment" in the proviso; and "taken into account in computing" in the Explanation. It is true that decided cases have given a very wide meaning to the word "assessment". It means some times "the computation of income"; sometimes, the determina tion of the amount of tax payable; and sometimes, the procedure laid down in the Act for imposing liability upon the taxpayer. The proviso used the word "assessment" both with reference to Part B States and also with reference to taxable territories. But we are really not concerned with the shades of meaning the said 932 word bears under the Act. For the purpose of computing the written down value, the amount of depreciation allowed for the purpose of the assessment is only relevant. The key to the understanding of the paragraph is the expression "allowed". The expression "actually allowed" in the main paragraph, "allowed" in the proviso, and "taken into account" in the Explanation mean the same thing. What the Income tax Officer has to take into consideration in computing the written down value is the depreciation actually allowed under the Income tax Act or the laws obtaining in Part B States and adopt the greater of the two sums so allowed under that head. It was conceded that the rates under the Indian Income tax Act were higher for some years than those obtaining under the laws in force in the Indore State. The question, therefore, is what was the amount actually allowed to the assessee towards depreciation under the Income tax Act during the years up to and inclusive of 1944. This would depend upon the provisions of the Indian Income tax Act. Under section 10(2) of the Indian Income tax Act, profits or gains ,of business shall be computed after making the allowances enumerated therein. Under cl. (vi), in respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessee, a sum equivalent to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any other cases, to such percentage on the written down value thereof as may in any case or class of cases be prescribed be allowed. Under section 10(5) (b), "writtendown value" means in the case of assets acquired before the 'previous year ' the actual cost to the assessee less the depreciation actually allowed to him under the Act. Under the Indian Income tax Act, income is to be charged to tax without reference to diminution in the value of capital or the wear and tear involved in the user of the assets; but in respect of specified assets 'like building, machinery, plant and furniture etc. , the Act grants an allowance in the manner prescribed thereunder. Depreciation allowance is in respect of such assets as are used in the business and shall be calculated on the written down value, which means, in the case of assets acquired in the previous year, the actual cost to the assessee and, in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under the Act. The allowance towards depreciation is conditioned on the user of the assets, wholly or in part, during the accounting year and thus contributing to the earning of the income. Though it is not unrelated to the profits, it does not 933 depend upon the increase or decrease in the earning capacity of the assets, but is only linked up with physical depreciation in their value. Even so, only the amount of depreciation actually allowed can be deducted from the original cost of the assets to ascertain the written down value. De hors such an allowance, it has no significance in the income tax law. So the question is, what was allowed as depreciation by the income tax authorities in the computation of the taxable income upto and inclusive of the year 1944 ? During the said years the assessee was taxed as a non resident on the income which fell under section 4 (1) (a) or under section 4 (1) (c), read with section 42 of the Indian Income tax Act. The assessee was only assessed during the said years in respect of that part of its profits which could be said to be attributable to the sale proceeds or goods received in British India or in regard to which contracts were accepted in British India. Such income was brought to tax in terms of r. 33 of the Indian Income tax Rules, 1922. Under the said rule, if the actual amount of the income, profits or gains accruing or arising to a non resident cannot be ascertained, the amount of such income, profits or gains for the purposes of assessment to income tax may be calculated on such percentage of the turnover so accruing or arising as the Income tax Officer may consider to be reasonable, or on an amount which bears the same proportion to the total profits of the business of such person, such profits being computed in accordance with the provisions of the Indian Income tax Act, as the receipts so accruing or arising bear to the total receipts of the business, or in such other manner as the Income tax Officer may deem suitable. Under this provision the Income tax Officer could proceed thereunder only if he could not ascertain the actual amount of the income, profits or gains accruing or arising to a non resident. If he could not, he could adopt one or other of the three methods mentioned in the rule to ascertain the said income. Two of the said methods permit the Income tax Officer to make a reasonable or suitable estimate of such income. But, under the third method, which was adopted in the present case, the amount of such income for the purpose of income tax shall be calculated on an amount which bears the same proportion to the total profits of the business of such person as the receipts so accruing or arising bears to the total receipts of the business. The working out of this method may best be understood by an illustration. Suppose the total profit of a business is Rs. 100/and the receipt in India is Rs. 25/ , i.e., the income accrued in India is one fourth of the total income. If a sum of Rs. 51represents the depreciation of the assets used in the business and 934 if this is allowed, the total income will be Rs. 95/ ; and one fourth of Rs.95/ is Rs. 23 75 : that is the income accrued in India under this formula. In arriving at Rs. 23.75 as the income in India, only Rs. 1.25, which is one fourth of Rs. 51 , the total depreciation, is deducted from Rs. 25/ towards the depreciation, that is to say, only. 1.25 is actually allowed towards depreciation. The same illustration may also be put in another way. Rs. 25/ is the gross income accrued in India to a non resident; Rs. 51 is the value of the depreciation on the total assets. By taking one fourth of Rs. 51 , i.e., Rs. 1.25, we get at the figure of Rs. 23.75, that is to say, only one fourth of the amount representing depreciation is allowed in ascertaining the taxable income in India. It is, therefore, manifest that the Income tax Officer, who applied the formula laid down in r. 33 of the Income tax Rules, 1922, in fixing the depreciation allowance, had actually allowed only a fraction of the amount towards depreciation allowable in assessing the world income of the assessee. But the learned counsel for the Revenue contended that the entire depreciation of the assets was taken into consideration in computing the taxable income and, therefore, the entire amount should have been taken into account by the Income tax Officer in arriving at the written down value of the assets. It appears that the Income tax Officer in assessing the non resident upto 1944 had, in calculating the total world income of the assessee. allowed the entire amount of depreciation; thereafter, he arrived at the taxable income in India by the application of r. 33. As we have pointed out, the mere fact that in the matter of calculation the total amount of depreciation was first deducted from the world income and thereafter the proportion was struck in terms of r. 33 does not amount to an actual allowance of the entire depreciation in ascertaining the taxable income accrued in India. The Income tax Officer, as we have pointed out earlier. could have adopted a different method by first ascertaining the gross income accrued in India and then deducting from it the allowance under the Act proportionate to the said income. Whatever method was adopted, only a fraction of the total depreciation was actually allowed in ascertaining the taxable income in India. Learned counsel for the assessee contended that under the method adopted in terms of r. 33 of the Income tax Rules, 1922, no depreciation was allowed at all in ascertaining the taxable income in India, for that was only taken into consideration in arriving at the total world income. 935 We cannot accept this argument we may say that the learned counsel did not press this point seriously either. As we have indicated earlier, only a fraction of the amount of depreciation was actually allowed in the assessment of the income accrued in India. We do not propose to express any opinion on the question whether, if the other methods suggested in r. 33 of the Rules were adopted, it could be held that no depreciation was actually allowed in making the assessment. Our conclusion finds support in the judgment of the Bombay High Court in Hakumchand Mills Ltd. vs Commissioner of Income tax (Central), Bombay(1). We endorse the view expressed therein. In the result, we hold that the High Court has given correct answers to questions 1 and 4 referred to it. The appeals fail and are dismissed with costs. Shah, J. The respondent, a public limited company was incorporated in the former Indian State of Indore. The Com pany was being assessed to pay income tax in the Indore State under the Indore Industrial Tax Rules, 1927, on profits earned in its business of manufacturing cotton textiles. In assessing tax under the Industrial Tax Rules the Tax Officer of the Indore State allowed depreciation on the assets at rates prescribed by the Industrial Tax Rules. The Company was also assessed to tax in British India under the Indian Income tax Act, 1922, for some years as a resident and in others as a non resident. The State of Indore became a part of the United States of Gwalior, Indore and Malwa in May, 1948, and the United States of Gwalior, Indore and Malwa became on January 26, 1950 a constituent State in the Indian Union as part of the Part B State of Madhya Bharat. The Finance Act, 1950 by section 13 repealed the Taxation Laws in force in the territories of the Part 'B ' States. In proceedings for assessment under the Indian Income tax Act for the assessment years 1950 51, 1951 52, 1952 53 and 1953 54, the Income tax Officer worked out the written down value of the buildings, plant and machinery of the Company on January 1, 1949 by taking into account the depreciation allowed under the Indian Income tax Act, 1922, till January 1, 1945, and thereafter the depreciation allowed under the Indore Industrial Tax Rules, and assessed tax on that footing. The order of the Income tax (1) [1963]47 I.T.R. 949. CI./66 13 936 Officer was confirmed by the Appellate Assistant Commissioner and the Income tax Appellate Tribunal. The Tribunal referred under section 66(1) of the Indian Income tax Act four questions to the High Court of Madhya Pradesh at Jabalpur. The High Court did not answer questions Nos. 2 & 3, because one of the questions in view of the judgment of this Court Commissioner of Income tax vs Dewan Bahadur Ram gopal Mills(1) did not require consideration, and the other was not canvassed. The two other questions are : .lm15 " (1) Whether the computation of the written down value of the assets of the applicant in the light of the provisions of Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950 is legal and valid ? (4)Whether the depreciation 'actually allowed ' means the depreciation deducted in arriving at the taxable income or in arriving at the world income ?" The High Court recorded on the first question the answer that depreciation allowed in the years up to and inclusive of the year 1944 in the assessment made in the taxable territories would be the. depreciation which was actually allowed against the total income and not the depreciation computed against the total world income, and on the fourth question that the depreciation 'actually allowed ' means depreciation deducted in arriving at the taxable income. With certificate granted by the High Court, this appeal has been preferred. Under the Indore Industrial Tax Rules, 1927, depreciation ,was allowed at certain rates in respect of buildings, plant and machinery. By section 10(2) (vi) of the Indian Income tax Act in computing profits or gains of a business, depreciation allowable in respect of buildings, machinery, plant and furniture used for the purpose of business being the property of the assessee, is a sum equivalent to such percentage on the original cost thereof to the assessee as may in any case or class of cases be prescribed and in any. other case, at such percentage on the, written down value thereof as may in any case or class of cases be prescribed. By sub section (5) of section 10, written down value in sub section (2) is defined. By virtue of section 4A(c) a company is regarded as resident in the taxable territories in any year (i) if the control and management of its affairs is situated wholly in the taxable territories in that year, or (ii) if its income arising in the taxable territories (1) :41 I.T.R. 280 937 in that year exceeds its income arising without the taxable territories in that year. Control and management of the affairs of the Company was at all material times situated at Indore, but in the years in which its British Indian income exceeded the income without British India, the Company was treated as resident for the purpose of the Indian Income tax Act, and in the other years it was treated as non resident. In assessing income of the Company under the Indian Income tax Act in the years before 1950, the Income tax Officer had, whether the Company was assessed as resident or non resident, to ascertain its world income, and for that purpose to take into account the depreciation allowable under section 10(2) (vi) read with section 10 (5) (b). Depreciation allowance in respect of the profits of the Company was therefore computed before the Indian Income tax Act, 1922, was made applicable to the territory of the State of Indore by the Finance Act, 1950, under two different statutes the Indian Income tax Act, and the Indore Industrial Tax Rules, and in the assessment year 1950 51 there were two different sets of written down values of the buildings, plant and machinery of the Company. To remove anomalies arising from the application of the Income tax Act in the computation of taxable income of assessees from the Part B States, the Central Government issued under section 12 of the Finance Act, 1950, the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950. Paragraph 2 of that Order as originally promulgated read as follows : "In making any assessment under the Indian Income tax Act, 1922, all depreciation actually allowed under any laws or rules of a Part B State relating to income tax and super tax, or any law relating to tax on profits of business, shall be taken into account in computing the aggregate depreciation allowance referred to in sub clause (c) of the proviso to clause (vi) of sub section (2) and the written down value under clause (b) of sub section (5) of section 10 of the said Act : Provided that where in respect of any asset, depreciation has been allowed for any year both in the assessment made in the Part B State and in the taxable territories, 'the greater of the two sums allowed shalt only be taken into account. " 938 But the expression "all depreciation actually allowed under any laws or rules of a Part B State" in paragraph 2 was ambiguous. The Central Government purported to issue a notification under section 60A of the Indian Income tax Act incorporating an Explanation to paragraph 2, but the notification was declared by the High Court of Hyderabad as invalid: section V. Naik vs Commissioner of Income tax, Hyderabad(1). 'thereafter, the Central Government issued an amendment to the Order in exercise of the powers under section 12 of the Finance Act, 1950, and incorporated an Explanation with retrospective operation. The Explanation which became effective from May 8, 1956, provided : "For the purpose of this paragraph, the expression "all depreciation actually allowed under any laws or rules of a Part B State" means and shall be deemed always to have meant the aggregate allowance for depreciation taken into account in computing the written down value under any laws or rules of a Part B State or carried forward under the said laws or rules. " By the Explanation it was sought to evolve a method of calculation of depreciation under the law or rules in force in a Part 'B ' State : it was in effect a definition clause. Therefore if before the application of the Income tax Act, an assessee in a Part 'B ' State was being assessed to tax only under a State law, depreciation actually allowed had to be taken into account for ascertaining the written down value of buildings, plant and machinery in the assessment year 1949 50 : if he was assessed under the Indian Income tax Act as well as the State law, in determining the appropriate written down value, the proviso to paragraph 2 had to be applied, and depreciation actually allowed under the State law had to be compared with the depreciation actually allowed under the Indian Income tax Act. The expressions "depreciation actually allowed under any law or rule of a Part B State" in the first clause, and the expressions "depreciation has been allowed . in the assessment in the Part B State" in the proviso have in relation to any year of assessment the same connotation. That is common ground. The point in dispute is about the true import of the expression "depreciation . allowed for any year . in the taxable territories". The normal scheme of depreciation under the income tax Act is that depreciation progressively decreases every year, being a percentage of the written down value, which in the first year is the actual cost to the (1) 939 assessee, and in the years following the actual cost less all depreciation allowed under the Income tax Act, 1922 or any Act repealed thereby : see section 10(5) (b). The Indore Industrial Tax Rules were, however, repealed by the Finance Act, 1950 and not by the Income tax Act, and the definition of written down value on section 10(5) (b) was in terms inapplicable, and depreciation had to be calculated under the special machinery prescribed by 'the proviso to paragraph 2 of the Taxation Laws (Part B States) Removal of Difficulties) Order, 1950, when assessment of income had been made both under the State law and the Indian income tax Act, 1922. In determining the written down value of the buildings, plant and machinery of the Company, the Appellate Tribunal held that the expression "actually allowed" in paragraph 2 means depreciation which is availed of for the purpose of assessment of tax, and not merely a fraction of the total depreciation allowance taken into account in levying charge upon a part of the taxable income at a rate determined by the total world income. That is stated in paragraph 10 of the judgment of the Tribunal : "The last contention of the assessee is that the Income tax Officer should not have taken the full depreciation availed of in the preceding years, but that the depreciation should be apportioned in the same manner as the income brought to assessment. The deduction should only be made in respect of that depreciation which can reasonably be attributable to the Indian income. We think that the law does not make any distinction as to the part of income which was brought to assessment under the Indian Income tax Act. If depreciation has in fact been availed of by the assessee either under the Indian Income tax Act or under the Industrial Rules of the State deduction has to be made. " The High Court did not accept this view. They observed in paragraph 8 of their judgment ". .the depreciation in respect of an asset under the Indian Income tax Act would clearly be the 'one actually allowed as laid down in Section 10 (5) (b) and the depreciation under the Part B State 's law would also be the one actually allowed as provided in the substantive part of paragraph 2. It follows, therefore, that under the proviso it is the greater of the two 940 depreciation allowances actually allowed that has to be taken into account in computing the written down value under section 10(5) (b). The word "allowed" used in the proviso thus takes its colour from the expression "all depreciation actually allowed to him under this Act" as used in Section 10(5) (b) and the words "all depreciation actually allowed under any laws or rules of a Part B State" used in paragraph 2. The "Appellate Assistant Commissioner and the Tribunal adopted this construction of the word "allowed" as used in the proviso; but inconsistently with this they held that the words "in the assessment made" used in the proviso indicated that it was the greater of the depreciation not actually allowed but taken into account against the total world income that was to be taken into account in computing the written down value under section 10(5)(b) after 1950. We are unable to agree with this view. The proviso has to be read with the substantive part of paragraph 2 and section 10(5)(b) and is concerned only with laying down the rule that the greater of the two depreciation allowances shall be taken into account. " Under section 10 of the Income tax Act taxable profits or gains earned by an assessee under the head "business" after making appropriate allowances under sub section (2) have to be computed. One of such allowances is depreciation in respect of buildings, machinery, plant and furniture being the property of the assessee and used for the purpose of the business, at such percentage on the original cost thereof to the assessee or such percentage on the written down value thereof as may in any case or class of cases be prescribed. The view which has appealed to the High Court is that even though in determining the rate at which Lax was to be charged in respect of the income of the company as resident (subject to the deductions permissible under section 14(2) (c) or as a non resident, the entire depreciation at rates applicable under the Indian Income tax Act had to be taken into account, depreciation allowed in the taxable territories within the meaning of the proviso meant only the fraction of the total amount of depreciation calculated in determining the income, equal to the fraction which the income taxable under the Indian Income tax Act bore to the total income of the Company. But depreciation determined according to the rules merely enters into the computation of taxable profits, whether the assessee is a 941 resident or a non resident. In the assessment of a Company the same rates of tax apply under the Indian Income tax Act, whether the Company is resident or non resident. If the Company is resident under section 4A(c) its entire world income would be chargeable, subject of course to special exemptions like those provided by section 14 (2) (c) : if it is non resident only a slice of that income would be chargeable. In determining the chargeable income from business, profession or vocation and the rate applicable thereto, the same rules apply, whether the Company is taxed as resident or nonresident. Under the scheme of the Income tax Act depreciation like any other allowance has to be allowed in computing the total profit : after the total profit is determined depreciation does not survive as a separate head of allowance. A part only of the total profit of a Company determined in the manner prescribed by section 10 may, for reasons already mentioned, be taxable. But total profit being determined after depreciation is allowed, between the taxable profits which may be a fraction of the total profits and depreciation there is no definable relations Therefore it is wrong to presume that the depreciation allowed in the taxable territories, which is to be taken into account under the proviso to paragraph 2 of the Removal of Difficulties Order is only a fraction of the depreciation considered for computing total profit. The view which prevailed with the Tribunal that in deter mining the depreciation allowed within the meaning of the proviso, it is wholly immaterial that a part of the total income was chargeable to tax "if depreciation has in fact been availed of by the assessee", is in my judgment correct. Reliance was sought to be placed upon r. 33 of the Indian Income tax Rules, by counsel for the Company in support of his plea. The material part of the Rule is : "In any case in which the Income tax Officer is of opinion that the, actual amount of the income, profits or gains accruing or arising to any person residing out of the taxable territories whether directly or indirectly. in the taxable territories. cannot be ascertained, the amount of such income, profits or gains for the purposes of assessment to income tax may be calculated on such percentage of the turnover so accruing or arising as the Income tax Officer may consider to be reasonable, or on an amount which bears the same proportion to the total profits of the business of such 942 person (such profits being computed in accordance with the provisions of the Indian Income tax Act) as the receipts so accruing or arising bear to the total receipts of the business, or in such other manner as the Income tax Officer may deem suitable." The rule in terms applies only when the Income tax Officer cannot ascertain the actual income, profits or gains accruing or arising to any person residing outside the taxable territories. Where from the evidence actual income can be determined the rule has no application. Again the rule contemplates the computation of income of a non resident in three different ways : (1) on such percentage of the turnover so accruing or arising as the Income tax Officer may consider to be reasonable; (2) on an amount which bears the same proportion to the total profits of the business of such person as the receipts so accruing or arising bear to the total receipts of the business (such profit being computed in accordance with the provisions of the Indian Income tax Act); and (3) in such other manner as the Income tax Officer may deem suitable. In the computation of income of a non resident by the second method it may be necessary to determine and allow deprecia tion. When the first or the third method is resorted to, determination of depreciation would normally be out of place, because by the first method the income is taken as a percentage of the turnover accruing or arising, and by the third method taxable income may be determined in such other manner as the Income tax Officer deems suitable. Paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, applies only to cases in which in making an assessment under the Indian Income tax Act depreciation allowed has to be taken into account in computing the total profits or income. Where the question of considering the depreciation allowed does not arise, because in the method adopted determination of depreciation does not enter, paragraph 2 of necessity would have no application. What must, however, be noticed is that in the ascertainment of total profits, either for the purposes of assessment in the ordinary manner when the income of the assessee is determinable, or where a fraction is to be adopted for the purpose of the second method contemplated by r. 33, there is no scope for assuming that only a fraction of the depreciation is actually allowed. Depreciation is deducted once and for all, and it is deducted in determining the total profits of the business. 943 There is therefore no warrant either in section 10(2) (vi) or in paragraph 2 of the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950, or in r. 33 framed under the Indian Income tax Act, for the view that depreciation allowed is a fraction of the total depreciation of the business. I am unable to agree with the view taken by the High Court that in determining the appropriate written down value, by the application of the rule contained in the proviso to paragraph 2, only a fraction of the depreciation allowed in assessments made under the Indian Income tax Act, should be taken into account. I record an answer on the first question in the affirmative, and on the fourth question that the depreciation actually allowed means the depreciation taken into account in arriving at the total or world income. ORDER In accordance with the opinion of the majority, the appeals are dismissed with costs.

IN-Abs

In the years prior to 1950 the respondent company with headquarters in the erstwhile state of Indore was assessed to tax under the Indore Industrial Rules, 1927 and also under the Indian Income tax Act, 1922 in so far as its income fell within sections 4(1) (a) and 4(1)(c) read with section 42 of the Act. Depreciation had been allowed to it under the Indore Industrial Rules as well as the Indian Act. The written down value of its assets for the purpose of 1950 51 and subsequent assessments had to be determined under the Taxation Laws (Part B States) (Removal of Difficulties) Order, 1950 which laid down in the proviso to paragraph 2 that .where in respect of any asset, depreciation has been allowed for any year, both in the assessment made in the Part B State and in the taxable territories, the greater of the two sums allowed shall only be taken into account. " The Income tax Officer found that up to and including the year 1944 the sum allowed as depreciation under the Indian Income tax Act was larger and therefore in computing written down value as on 1 1 49 he took the sum allowed as depreciation under the Indian Act up to the end of 1944 and under the Indore Industrial Rules after that date. In the assessments made for the period up to the end of 1944 the respondent company had been treated as a non resident and its taxable income under the Indian Income tax Act had been worked out under Rule 33 of the Indian Income tax Act, 1922 as a fraction of its total world income. In determining the total world income the depreciation claimable under the Indian Act had been allowed, and it was the full amount of this depreciation allowed against the total world income that the Income tax Officer took into account in determining the written down value of the respondent company 's assets for the purpose of the 1950 51 assessment. The respondent company claimed that as only a fraction of the total world income had been treated as taxable income, therefore only a fraction of the depreciation allowed against the world income should be taken as having been 'actually allowed ' in the terms of paragraph 2 of the Removal of Difficulties Order. The Income tax Officer, the Appellate Assistant Commissioner and the Appellate Tribunal having rejected this plea the matter went in reference to the High Court. That Court took the view contended for by the respondent viz. that only the proportionate amount of depreciation which was attributable to the taxable income could be taken into account. The Revenue appealed to this Court It was urged on behalf of the appellant that depreciation was allowed in respect of the use of the assets in the business, that the allowance did not depend on the assessable income, and that the High Court, therefore went wrong in striking a proportion on the basis of a part of the income 926 actually assessed under the Indian Income tax Act. The different expressions used in various parts of paragraph 2 of the Removal of Difficulties Order came for consideration. HELD : Per Subba Rao and Sikri, JJ. (i) The word "assessment" used in the proviso to paragraph 2 has been given a very wide meaning in decided cases. It means sometimes 'the computation of income ', sometimes the determination of the amount of tax payable; and some,times the procedure laid down in the Act for imposing liability upon the tax payer. The proviso used the word 'assessment ' both with reference to Part B States and also with reference to the taxable territories. But in the present case the different shades of meaning of the said word were not relevant. For the purpose of computing the written down value, the amount of depreciation allowed for the purpose of the assessment only was relevant. [931 G H; 932 A] (ii)The key to the understanding of paragraph 2 is the expression "allowed '. The expression 'actually allowed ' in the main paragraph, 'allowed ' in the proviso, and 'taken into account ' in the Explanation mean the same thing. What the Income tax Officer has to take into consideration in computing the written down value is the depreciation actually allowed under the Income tax Act or the laws obtaining in Part B States and adopt the greater of the two sums so allowed under that head. The determination of the depreciation actually allowed under the Income tax Act for the years up to and including 1944 must depend on the provisions of that Act. [932 B] (iii)Under the Income tax Act depreciation allowance is in respect of such assets as are used in the business and shall be calculated on the written down value, which means, in the case of assets acquired in the previous year, the actual cost to the assessee, and in the case of assets acquired before the previous year, the actual cost to the assessee less all depreciation actually allowed to him under the Act. The allowance towards depreciation is conditioned an the user of the assets, wholly or in part., during the accounting year and thus contributing to the earning of the income. Though it is not unrelated to the profits it does not depend upon the increase or decrease in the earning capacity of the assets, but is only linked up with physical depreciation in their value. Even so only amount of depreciation actually allowed can be deducted from the original cost of the assets to ascertain the written down value. De hors such an allowance. , it has no significance in income tax law. [932 F H;933 A B] (iv) During the years up to and including 1944 the assessee was taxed as a nonresident on the income which fell under section 4(1)(a) or unders. 4(1)(c), read with section 42 of the Indian Income tax Act. The assessee was only assessed during the said years in respect of that part of its profits which could be said to be attributable to the sale proceeds or goods received in British India or in regard to which contract , were signed in British India. Such income was brought to tax in terms of r. 33 of the Indian Income tax Rules, 1922. The method adopted was that the amount of income for the purpose of Indian Income tax was calculated on an amount which bore the same proportion to the total profits of the business as the receipts accruing or arising in India bore to the total receipts, of the business. By applying the formula in r. 33 the Income tax Officer had actually allowed only a fraction of the amount towards depreciation allowable in assessing the world income of the assessee. The mere fact that in the matter of calculation the total amount of depreciation was first deducted from the world income and thereafter the proportion was struck in terms of r. 33 does not amount to an actual allowance of the entire depreciation in ascertaining the tax 927 able income accrued in India. The Income tax Officer could have adopted a different method by first ascertaining the gross income accrued in India and then deducting from it the allowance under the Act proportionate to the said income. Whatever method was adopted only a fraction of the total depreciation was actually allowed in ascertaining the taxable income in India. The view taken by the High Court was therefore correct. [933 B H] Hakumchand Mills Ltd. vs Commissioner of Income (Central) Bombay, , endorsed. Per Shah, J. (dissenting) Under section 10 of the Income tax Act taxable profits or gains earned by an assessee under the head 'business ' after making appropriate allowances under Subs. (2) have to be computed. One of such allowances is depreciation in respect of the assets used for the purpose of business. But depreciation determined according to the rules merely enters into the computation of taxable profits, whether the assessee is a resident or a non resident. In the assessment of a company the same rates of tax apply under the Income tax Act, whether the company is resident or non resident. If the company is resident under section 4A(c) its entire world income would be chargeable, subject of course to special exemptions like those provided in section 14(2)(c) : if it is nonresident only a slice of the income would be chargeable. Under the scheme of the Indian Income tax Act depreciation like any other allowance has to be allowed in computing the total profit; after the total profit is determined depreciation does not survive as a separate head of allowance. A part only of the total profit of a company determined in the manner prescribed by section 10, may be taxable. But total profit being determined after depreciation is allowed, between the taxable profits which may be a fraction of total profits and depreciation there is no definable relation. Therefore it is wrong to presume that the depreciation allowed in the taxable territories which is to be taken into account under the proviso to paragraph 2 of the Removal of Difficulties Order is a fraction of the depreciation considered for computing total profits. [940 E H; 941 A D] The fact that income was computed under r. 33 made no difference. In the ascertainment of total profits either for the purposes of assessment in the ordinary manner when the income of the assessee is determined or when a fraction is to be adopted for the purpose of the second method contemplated by section 33, there is no scope for assuming that only a fraction of the depreciation is actually allowed. Depreciation is deducted only once and for all, and it is deducted in determining the total profits of the business. [942B D] There is therefore no warrant either in section 10(2)(vi) or in paragraph 2 of the Removal of Difficulties Order or in r. 33 framed under the Indian Income tax Act for the view that the depreciation allowed is a fraction of the total depreciation of the business. [942 H]

Appeal No. 1106 of 1964. Appeal by special leave from the judgment and order dated the October 31, 1961 of the Madras High Court in Tax Case No. 67 of 1958. A. V. Viswanatha Sastri, R. Venkataraman and R. Gopala krishnan, for the appellant. section T. Desai, Gopal Singh, B. R. G. K. Achar and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Judicature at Madras answering the following question of law in favour of the respondent : "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the sum of rupees 84,633/ expended by the assessee in obtaining the loan or any part thereof is an allowable expenditure ?" The facts and circumstances of the case as stated by the Tribunal in the statement of the case are as follows : The appellant, India Cements Limited, Madras, hereinafter referred to as the assessee, is a public limited company. The question arises in respect of the assessment year 1950 51, accounting period April 1, 1949 to March 31, 1950. During the accounting year it obtained a loan of 40 lakhs of rupees from the Industrial Finance Corporation of India. This loan was secured by a charge on the fixed assets of the company. Since Mr. section T. Desai, the learned counsel for the respondent, has disputed some facts as stated by the Appellant Tribunal, it would be convenient to give these facts in the words of the Appellate Tribunal. It is stated in the statement of the case that "the proceeds of this loan was utilised to pay off a prior debt of 25 lakhs due to Messrs A. F. Harvey Limited and Madurai Mills, Limited. It cannot be stated definitely how the balance of 15 lakhs was used but the directors, while reporting on the accounts for the year ended 946 31 3 1949 on 4 10 1949 stated that that was utilised towards working funds. " The expenditure of Rs. 84,633/ in connection with this loan was made up of thefollowing items : Stamps 60,02300 Registration Fee 16,,06700 Charges for certified copy of the mortgage deed 2800 Indemnity deed by Essen and Company, Limited 1500 Vakil 's fee for drafting deed 7,50000 Legal fees 1,00000 Total Rs. 84,633 0 0 The assessee did not charge this expenditure in the profits and loss account for that year. It was shown in the Balance Sheet as mortgage loan expenses. It continued to be so shown till March 31, 1952. In the accounts for March 31, 1953 this was written off by appropriation against the profits of that year. The Income Tax Officer refused to allow the deduction of Rs. 84,633/ . He observed "As per the information furnished by the auditors, Rs. 25 lakhs of the loan was to be paid to Messrs A. F. Harvey, Limited, and Mathurai Mills, Limited in, discharge of the amount borrowed from them and utilised on the capital assets of the company. Though in the Company 's books the amount of Rs. 84,633 was not charged to revenue but capitalised and carried forward in the Balance Sheet, for purposes of income tax, the Company 's auditors claim the same as an admissible item of revenue expenditure." He held that the expenditure was incurred in obtaining capital and should be distinguished from interest on borrowed capital which was alone admissible as a deduction under section 10 (2) (iii). According to him, section 10 (2) (xi) specifically excludes from consideration any item of capital expenditure. He further held that the case was not distinguishable from the decision in The Nagpur Electric Light and Power Co. vs Commissioner of Income tax, Central Provinces(1). The Appellate Assistant Commissioner agreed with the Income Tax Officer. The Appellate Tribunal distinguished the case of Nagpur Electric Light and Power Co. (1) 947 vs Commissioner of Income Tax(1) on the ground that in the Nagpur Electric Light(1) case money was expended for obtaining capital. It observed as follows "Here we find the position to be different. A study of the balance sheets of the company as at 31 3 1949 discloses the fact that the paid up capital was sufficient to cover the entire capital outlay of the company and that the further borrowal of Rs. 25 lakhs was for aug menting the working. funds of the company. It appears to us that even at that early stage the money was borrowed and used not for capital purposes but for augmenting the working funds of the company. We, therefore, consider that the whole of the mortgage loan was used firstly to discharge the loan of Rs. 25 lakhs and the balance for working funds and, as such, the whole of the amount was purely for the purposes of augmenting the working capital of the company and that it could not be stated that it was used for capital purposes. In this view of the matter, we hold that the money expended in obtaining the loan is an allowable expenditure." The High Court, after noticing the findings of the Income Tax Officer and the Tribunal preferred the findings of fact made by the Income Tax Officer. It observed "At this stage, we may point out that the conclusion reached by the Tribunal that the money was borrowed only for working expenses and not for capital investment proceeded on an inference based upon the balance sheet. The Tribunal did not investigate how the sum of Rs. 25 lakhs earlier borrowed from A. H. Harvey and Madurai Mills Ltd. was actually utilised. Though in the order of the Income tax Officer it is found stated that that amount was utilised on the capital assets of the company and that statement was based on the authority of the information furnished by the auditors of the assessee, the Tribunal either overlooked or ignored this circumstance. In the face of the statement so recorded by the Income tax Officer, the Tribunal does not appear to have been justified in relying upon inferences in ascertaining whether the earlier borrowal was on capital or revenue account." (1)6 I.T.C. 28. 948 The High Court after reviewing various cases, observed : "If we ask for what purpose the expenditure in the present case was incurred, the only answer must be that it was incurred for the purpose of bringing into existence an asset in the shape of borrowing these Rs. 40 lakhs. The further question would then be whether this asset or advantage was not for the enduring benefit of the business and whether the expenditure incurred was one which was incurred once and for all. The answer to both questions would again be in the affirmative. It is true that the borrowed money has to be repaid and it cannot be an enduring advantage in the sense that the money becomes part of the assets of the company for all time to come. But, it certainly is an advantage which the company derives from the duration of the loan and undoubtedly it could not have been for any purpose other than an advantage to the business that the borrowing was made. That it is not enduring in the sense that the borrowing has to be repaid after a short or long period, as it were, cannot affect the conclusion that it was nevertheless an asset or an advantage that was secured. Viewed in the light of the tests adumbrated in the above decision Assam Bengal Cement Co. Ltd. vs Commissioner of Income Tax(1) it seems to us that the expenditure must be regarded as capital expenditure. As the facts of the case which we have set out earlier indicate, there can be no doubt that at least to the extent of Rs. 25 lakhs that amount was expended for purposes of a capital nature, clearly in order to bring into existence capital assets. We have also pointed out that though it was vaguely stated by the Tribunal that the other sum of Rs. 15 lakhs was utilised as working funds, there seems to be no material whatsoever before the Tribunal to justify its coming to that conclusion." The learned counsel for the assessee company, Mr. A, V. Viswanatha Sastri, urges that the expenditure is admissible as a deduction under section 10(2) (xv) of the Act. He says that the High Court erred in holding that the expenditure was made to acquire any asset or advantage of an enduring nature within the test laid down by Viscount Cave and approved by this Court in Assam, Bengal Cement Co. Ltd. vs Commissioner of Income Tax(1). He (1) 949 further says that what was secured by the expenditure was a loan and in India money expended in raising a loan, whether by means of a debenture or a mortgage and whether you call it a loan capital or not, is not an expenditure in the nature of capital expenditure. He further submits that the expenditure was expended wholly and exclusively for the purpose of the business of the company. The learned counsel for the revenue, Mr. section T. Desai, supports the reasoning of the High Court. He says that the High Court was right in preferring the findings of the Income Tax Officer on the ground that there was no material for the finding made by the Appellate Tribunal and the finding was based on surmises and material evidence was ignored. He says that the High Court in a reference is entitled to ignore any findings of fact made by the Appellate Tribunal if those findings are vitiated. In the alternative, he says that the question referred is wide enough to include the question whether there was any material for the finding of the Appellate Tribunal. On the merits he contends that expenditure takes the colour from the thing on which the expenditure is made. If the money is spent to obtain capital then the expenditure assumes the nature of capital expenditure, but if the money is spent to obtain raw materials then the expenditure takes the colour of revenue expenditure. He further says that the borrowed money is an enduring asset and any expenditure made to obtain this money falls within the test laid down by Viscount Cave and approved by this Court. A number of cases have been referred to during the hearing of the case by both the counsel but we do not propose to refer to all of them. We must start first with the cases decided by this Court and see what principles have been laid down for distinguishing revenue expenditure from expenditure in the nature of capital expenditure, and especially those cases which dealt with similar problems. We will first consider State of Madras V. G. J. Ceolho(1). This was not a case arising under the Indian Income Tax Act but under the Madras Plantations Agricultural Income Tax Act, 1955, in which a section exactly similar to section 10 (2) (xv) existed. In brief, the facts in that case were that the assessee had borrowed money for the purpose of purchasing the plantations and he claimed that in computing his agricultural income from these plantations the entire interest paid by him on moneys borrowed for the purpose of purchasing the plantation should be deducted as expenditure, under section 5(e) of the Act. In (1) [1964]8 S.C.R. 60 1 ; 950 the Madras Act there was no provision similar to section 10(2) (iii) of the Act and thus interest was not expressly deductible as an allowance. This Court applied the test formulated by Viscount ,Cave, L. C., in Atherton vs British Insulated and Helsby Cables Ltd.(1) and approved by the Court in Assam Bengal Cement Co. Ltd. vs Commissioner of Income Tax(1), and held that the payment of interest was a revenue expenditure. It observed that "no new asset is acquired with it; no enduring benefit is obtained. Expenditure incurred was part of circulating or floating capital of the assessee. In ordinary commercial practice payment of interest would not be termed as capital expenditure. " This Court further held that the expenditure was for the purpose of business. Mr. Desai tried to distinguish that case on the ground that what was at issue was interest on loan and not expenditure incurred for ,obtaining the loan. In our opinion, there is no justification for drawing this distinction in India. As observed by Lord Atkinson in Scottish North American Trust vs Farmer(1) "the interest is, in truth, money paid for the use or hire of an instrument of their trade as much as is the rent paid for their office or the hire paid for a typewriting machine. It is an outgoing by means of which the Company procured the use of the thing by which it makes a profit, and like any similar outgoing should be deducted from the receipts, to ascertain the taxable profits and gains which the Company earns. Were it otherwise they might be taxed on assumed profits when, in fact, they made a loss. " It will be remembered that there was no section like section 10(2) (iii) of the Act in the English Income Tax Act. On the other hand, there were certain rules prohibiting the deduction in respect of "any capital withdrawn from, or any sum employed or intended to be employed as capital in such trade. " or "any interest which might have been made if any such sums as aforesaid had been laid out at interest." Lord Atkinson first held in that case that the express prohibitions did not apply to the facts of the case and then proceeded to discuss general principles. These observations show that where there is no express prohibition, an outgoing, by means of which an assessee procures the use of a thing by which it makes a profit, is deductible from the receipts of the business to ascertain taxable income. On the facts of this case, the money secured by the loan was the thing for the use of which this expenditure was made. In principle, apart from any statutory provisions, we see no distinction between interest in respect of a loan and an expenditure incurred for obtaining the loan. (1) (2)[1955] 1 S.C.R. 972 : (3)5 T.C. 693 at 707. 951 Mr. Desai urges that these observations of Lord Atkinson should be limited to a case where temporary borrowings are made. It is true that the House of Lords. was dealing with the case of a company and the moneys that were borrowed were of a temporary character. But this fact was only relied on to hold that the moneys secured were not 'capital ' within rule 3 of First Case, section 100 (5 and 6 Vic. 35) of the Income Tax Act, 1842, for Lord Atkinson observed at p. 706; ". it appears to me, simply, amounts to this that the word "capital" must, in this rule, be held to bear a wholly artificial meaning differing altogether from the ordinary signification, though there be no context in the clause requiring that there should be given to it a meaning different from that which it bears in ordinary commercial transactions." He then referred to the decision in Bryon vs The Metropolitan Saloon Omnibus Company(1) to show that the borrowing by a joint stock company of money by the issue of debentures does not amount to an increasing of the capital of the company. In Bombay Steam Navigation Co. Ltd. vs Commissioner of Income Tax(2), this Court again examined the question of distinguishing between capital expenditure and revenue expenditure. This Court first held that on the facts of the case, cl. (iii) of section 10(2) did not apply, because the assessee in that case had agreed to pay the balance of consideration due by the purchaser and this did not, in truth, give rise to a loan. Then Shah, J., observed : "Whether a particular expenditure is revenue expenditure incurred for the purpose of business must be determined on a consideration of all the facts and circumstances, and by the application of principles of commercial trading. The question must 'be viewed in the larger context of business necessity or expediency. If the outgoing or expenditure is so related to the carrying on or conduct of the business, that it may be regarded as an integral part of the profit earing process and not for acquisition of an asset or a right of a permanent character, the possession of which is a condition of the carrying on of the business, the expenditure may be regarded as revenue expenditure: ' (1) 3 D.G. and J. 123. (2) ; : L8Sup. Cl/63 14 952 We will now briefly deal with relevant decisions of the High Courts. The first case referred is In re Tata Iron and Steel Company Ltd.(1) In that case, the Tata Iron and Steel Co. Ltd. had incurred an expenditure of Rs. 28 lakhs as underwriting commission paid to underwriters on an issue of 7 lakhs preference shares of Rs. 100/ each and the company claimed to deduct this amount as expenses under section 9 (2) (ix) of the Indian Income Tax Act (VII of 1918). Macleod, C.J., observed: "If it is admitted that the cost of raising the original capital cannot be deducted from profit after the first year, it is dffficult to see how the cost of raising additional capital can be treated in a different way. Expenses incurred in raising capital are expenses of exactly the same character whether the capital is raised at the flotation of the company or thereafter : The Texas Land and Mortgage Company vs William Holtham (2)". He further observed that "as long as the law allows preliminary expenses and goodwill to be treated as assets, although of an intangible nature, the money so spent is in the nature of capital expenditure just as much as money spent in the purchase of land and machinery." The Chief Justice accordingly held that Rs. 28 lakhs could not be treated as expenditure (not in the nature of capital expenditure) solely incurred for the purpose of earning the profits of the company 's business. Shah, J., also came to the same conclusion, and he thought that the ratio decidendi in Texas Land and Mortgage Company vs William Holtham (2 ) and the principles underlying the decision in Royal Insurance Company vs Watson(1) lent support to this conclusion. At this stage it would be convenient to consider the Case of Texas Land and Mortgage Company vs William Holtham (2) relied on in this decision. We have already mentioned that the statute law in England is different from the law in India and the observations of the learned Judges in the English cases must be appreciated in the light of the background of the English Income Tax Act. In this case a mortgage company had raised money by the issue of debentures and debenture stock and incurred expenses for the issue of mortgage and placing of such debentures and debenture stock. The Company claimed to deduct these expenses but the High Court held that the expenses could not be deducted under Schedule D of the English Income Tax Act as trading ex (1) (3) ; (2) 953 penses. Mathew, J., gave the following reasons for disallowing the claim: "The amount paid in order to raise the money on debentures, comes off the 'amount advanced upon the debentures, and, therefore, is so much paid for the cost of getting it, but there cannot be one law for a company having sufficient money to carry on all its operations and another which is content to pay for the accommodation. This appears to me to be entirely concluded by the decision of yesterday. (Anglo Continental Guano Works vs Bell(1)". In the course of arguments, Cave J., had remarked "It is only so much capital. A man wants to raise pound 1 00,000 of capital, and in order to do that he has to pay pound 4,000. That makes the capital pound 96,000. That is all. " In reply to the argument of Finlay, Q.C., that "the capital of the, company, properly so called, is the share capital" Cave, J. remarked : "To the extent that you borrow you increase the capital of the company." In our opinion, if one keeps in mind the background of the English Income Tax Act, the observations reproduced above have no relevance to cases arising under the Indian Income Tax Act. In face of rule 3, Case 1, section 100 (5 & 6 Vict. 35) prohibiting the deduction of any expenditure in respect of any sum employed or intended to be employed as capital, Mathew and Cave, JJ. were only concerned with the question whether the amount secured by debentures and the amount obtained by the issue of debentures and debenture stock could be called capital employed or intended to be employed within the meaning of this rule. Rightly or wrongly, the English Courts have held that the amount obtained by the issue of debentures is capital employed within the meaning of the rule, but this does not give us any guidance in interpreting the words 'capital expenditure ' occurring in section 10 (2) (xv) of the Act. In our opinion, the Bombay High Court was wrong in relying on Texas Land and Mortgage Company vs William Holtham(2). But we do not say that the Tata Iron and Steel (1) (2) 954 Co. (1) case was wrongly decided. Obtaining capital by issue of shares is different from obtaining loan by debentures. In Nagpur Electric & Light Co. vs Commissioner of Income Tax(1), the Court of the Judicial Commissioner, Nagpur, held that expenses for raising debenture loan required for changing the system of supplying current from D.C. to A.C. and for discharging a prior loan was not allowable as deduction of the company 's assessable income. The Judicial Commissioner followed the case of Texas Land and Mortgage Company vs William Holtham(3) and In re Tata Iron and Steel Company Ltd.(1). After referring to these two cases, the only additional reason given was that "apart from authority it seems to us to stand to reason that money expended in obtaining capital must be treated as capital expendiure." With great respect we must hold that this case was wrongly decided. The Kerala High Court in Western India Plywood Ltd. vs Commissioner of Income Tax, Madras(4)held that the expenditure incurred by the company a capital expenditure and was 10(2)(xv). The High Court Trust Company vs Jackson(5) Du#(1) and some other cases Madras(4) held that the expenditure raise a loan by debenture was therefore not deductible under section relying on European investment and Ascot Gas Water Heaters vs drew a distinction between the borrowing of capital and securing merely temporary or day to day accommodation or banking or trading facilities. According to the High Court, the expenses for borrowing capital could not be treated as revenue expenditure. This distinction may be valid in English Law but we are unable to appreciate how the distinction is valid under the Indian Income Tax Act. As the decision is mainly based on this distinction and relies inter alia on In re Tata Iron and Steel Co. Ltd.(") and Nagpur Electric and Light Co. vs Commissioner of Income Tax (2 we must with respect hold that the case was wrongly decided. In Vizagapatnam Sugars and Refinery Ltd. vs Commissioner of Income Tax(") the Andhra Pradesh High Court relying on Texas Land and Mortgage Company V. William Holtham(3) and the decision in Western India Plywood Ltd. vs C.I.T., Madras(4) held that on the facts and circumstances of that case, brokerage and commission of four annas on every maund of sugar paid by (2) (3) (1) (4) (5) (6) (7) 955 the assessee company was not revenue expenditure but capital expenditure. In our opinion, the derision, as far as the brokerage was concerned, was wrong, but we do not say anything in this case with respect to the decision as far as the commission on sale of goods was concerned. The Calcutta High Court examined the question in great detail in Sri Annapurna Cotton Mills Ltd. vs Commissioner of Income Tax(1), Bachawat, J., held that the loan of Rs. 10 lakhs obtained by the company was an asset or advantage for the enduring benefit of the business of the assessee. He placed reliance on a number of cases,some of which we have already considered. But we are unable to agree that a loan obtained can be treated as an asset or advantage for the enduring benefit of the business of the assessee. A loan is a liability and has to be repaid and, in our opinion, it is erroneous to consider a liability as an asset or an advantage within the test laid down by Viscount Cave and approved and applied by this Court in many cases. Sinha, J., after referring to a number of cases, felt that the raising of capital by issue of debentures was a recognised mode of raising capital and he felt that the decided cases had laid down the proposition that borrowing money by the issue of debentures was an acquisition of capital asset and that any commission or expenditure incurred in respect thereof was of a capital nature and not to be considered as in the nature of revenue. He was impressed by the fact that not a single case to the contrary was brought to his notice. But we have to decide the case on principle, and with respect it seems to us that he erred in treating the loan as equivalent to capital for the purpose of section 10(2) (xv) of the Act. In section F. Engineer vs Commissioner of income Tax (2) the Bombay High Court held that the expenditure incurred for raising loan for the carrying on of a business cannot in all cases be regarded as an expenditure of a capital nature. On the facts of the case they held that as construction and sale of the building was the sole business of the firm and the building was its stock intrade, and the loan was raised and used wholly for the purpose of acquiring this stock in trade and not for obtaining any fixed assets or raising any initial capital or for expansion of the assessee 's business, the expenditure incurred for the raising of loan was not an expenditure of capital nature but revenue expenditure. Although the conclusion of the High Court was correct, we are not able to agree with the principle that the nature of the expenditure incurred in raising a loan would depend upon the nature and purpose of (1) (2) 956 the loan. A loan may be intended to be used for the purchase of raw material when it is negotiated, but the company may after raising the loan change its mind and spend it on securing capital assets. Is the purpose at the time the loan is negotiated to be taken into consideration or the purpose for which it is actually used ? Further suppose that in the accounting year the purpose is to borrow and buy raw material but in the assessment year the company finds it unnecessary to buy raw material and spends it on capital assets. Will the income tax officer decide the case with reference to what happened in the accounting year or what happened in the assessment year ? In our opinion, it was rightly held by the Nagpur Judicial Commissioner in Nagpur Electric Light and Power Co. vs Commissioner of Income Tax(1) that the purpose for which the new loan was required was irrelevant to the consideration of the question whether the expenditure for obtaining the loan was revenue expenditure or capital expenditure. To summarise this part of the case, we are of the opinion that (a) the loan obtained is not an asset or advantage of an enduring nature; (b) that the expenditure was made for securing the use of money for a certain period , and (c) that it is irrelevant to consider the object with which the loan was obtained. Consequently, in the circumstances of the case, the expenditure was revenue expenditure within section 10(2)(xv). The last contention of Mr. Desai is that even if it is revenue expenditure, it was not laid out wholly and exclusively for the purpose of business. Subba Rao, J., reviewed the case law in Commissioner of Income Tax vs Malayalam Plantation(1) and observed as follows : "The expression "for the purpose of the business" is wider in scope than the expression "for the purpose of earning profits. " Its range is wide : it may take in not only the day to day running of a business but also the rationalisation of its administration and modernization of its machinery; it may include measures for the preservation of the business and for the protection of its assets and property from expropriation, coercive process or assertion of hostile tide; it may also comprehend pay ment of statutory dues and taxes imposed as a precondition to commence or for carrying on of a business; it may comprehend many other acts incidental to the carrying on of a business." (1) (2) ; 957 Mr. Desai says that the act of borrowing money in this case was not 'incidental to the carrying on of a business. We are unable to accept this contention. In Eastern Investments Ltd. vs Commissioner of Income Tax(") this Court held that the Eastern Investments Ltd., an investment company, when it borrowed money on debentures, the interest paid by it was incurred solely for the purpose of making or earning such income, profits or gains within the purview of section 12(2) of the Indian Income Tax Act. It held on a review of the facts that the transaction was voluntarily entered into in order indirectly to facilitate the running of the business of the company and was made on the ground of commercial expediency. This case, in our opinion, directly covers the present case, although Mr. Desai suggests that the case of an investment company stands on a different footing from the case of a manufacturing company. In some respects, their position may be different but in determining the question whether raising money is incidental to a business or not, we cannot discern any difference between an investment company and a manufacturing company. We may mention that in that case this Court was not considering whether the expenditure was in the nature of a capital expenditure or not, because it was agreed all through that the expenditure was not in the nature of capital expenditure, and the only question which this Court dealt with was whether the expenditure was incurred solely for the purpose of making or earning income, profits or gains. The case of Dharamvir Dhir vs Commissioner of Income Tax(1) also supports the conclusion we have arrived at on this part of the case. It was held in that case that the payment of interest and a sum equivalent to 11/16th of the profits of the business of the assessee in pursuance of an agreement for obtaining loan from the lender were in a commercial sense expenditure wholly and exclusively laid out for the purpose of the assessees business and they were, therefore, deductible revenue expenditure. Before we conclude we must deal with the point raised by Mr. Sastri that the High Court erred in law in preferring the findings of the Income Tax Officer to that of the Appellate Tribunal. It is not necessary to decide this question but it seems to us that in a reference the High Court must accept the findings of fact made by the Appellate Tribunal and it is for the person who has applied for a reference to challenge those findings first by an application under section 66(1). If he has. failed to file an application under (1) (2) ; : 958 S.66(1) expressly raising the question about the validity of the findings of fact, he is not entitled to urge before the High Court that the findings are vitiated for one reason or the other. To conclude we hold that the expenditure of Rs. 84,633/ was not in the nature of capital expenditure and was laid out or expended wholly and exclusively for the purpose of the assessee 's business. The answer to the question referred, therefore, must be in the affirmative. The appeal is allowed, the judgment of the High Court set aside and the question referred answered in the affirmative. The appellant will have its costs incurred here and in the High Court. Appeal allowed.

IN-Abs

During the accounting period relevant for the assessment year 1950 51 the appellant company obtained a loan of 40 lakhs of rupees from the Industrial Finance Corporation of India. The loan was secured by a charge on the fixed assets of the company. A sum of Rs. 84,633 was shown in the Balance Sheet for the said accounting year as mortgage loan expenses; the sum was not charged as expenditure in the profit and loss account. In the accounts for the accounting year ending March 31, 1953, this sum was written off by appropriation against profits of that year. The Income tax Officer disallowed the deduction; he held that the expenditure was incurred in obtaining capital and should be distinguished from interest on borrowed capital which alone was admissible as a deduction under section 10(2)(iii). In his view the expenditure was of a capital nature and therefore not admissible under section 10(2)(xv) either. After intermediate proceedings the High Court in reference gave a finding upholding the view of the Income tax Officer. The appellant by special leave, came to this Court. It was contended on behalf of the appellant that : (1) the expenditure in question was not incurred to acquire any asset or advantage of an enduring nature; (2) it was applied wholly and exclusively for the purposes of the business; and (3) was admissible as a deduction under section 10 (2) (xv). HELD : In the circumstances of the case the expenditure in question was revenue expenditure within section 10(2)(xv). (i)When there is no express prohibition, an outgoing, by means of which an assessee procures the use of a thing by which it makes a profit, is deductible from the receipts of the business to ascertain taxable income. On the facts of the instant case, the money secured by the loan was the thing for the use of which this expenditure was made. In principle, apart from any statutory provisions, there is no distinction, as drawn by the Income tax Officer, between interest in respect of a loan and an expenditure incurred for obtaining the loan. [950 G H] (ii)A loan obtained cannot be treated as an asset or advantage for the enduring benefit of the business of the assessee. A loan is a liability and has to be repaid and it is erroneous to consider a liability as an asset or an advantage. [955 C] (iii)The nature of the expenditure incurred in raising a loan cannot be made to depend on the nature and purpose of the loan. A loan may be intended to be used for the purchase of raw material when it is negotiated but the company may after raising the lo an change its mind and spend it on securing capital assets, [955 11 956 B] 945 (iv)The loan was voluntarily entered into in order to facilitate the running of the business of the company and it could not be said that it was not laid out wholly and exclusively for the purpose of the business. [958 B] Case law considered.

Civil Appeal No. 763 of 963. Appeal by special leave from the judgment and order dated March 30, 1961 of the Punjab High Court in Civil Appeal Writ No. 1100 of 1959. Bishan Narain and R. N. Sachthey, for the appellant. section N. Andley, for the respondent. The Judgment of the Court was delivered by Gajendragadkar, C.J. The short question of law which arises in this appeal relates to the construction of section 5(2) of the Punjab Cinemas (Regulation) Act, 1952 (No. 11 of 1952) (hereinafter called 'the Act '). The respondent, Hari Krishan Sharma, who claims to be the owner of a certain site in the town of Jhajjar, desired to construct a cinema hall at the said place for the purpose of exhibiting cinematography. On December 16, 1956, he submitted an application to appellant No. 2, the Subdivisions Officer, Jhajjar, for the grant of the licence to construct and run a permanent cinema hall on his site. On February 22, 1957, appellant No. 2 forwarded the said application to the Tehsildar for inspection of the site. It appears that on April 24, 1957, the Government of appellant No. 1, the State of Punjab, had issued instructions in regard to the grant of licences under the relevant provisions of the Act. These instructions required that all requests for the grant of permission for opening all new permanent cinemas should be referred to appellant No. 1 for orders. On September 26, 1957, the Tehsildar made a report that the site was in accordance with the provisions of the Act and that the respondent was its owner. On September 30, 1957, another memorandum was issued by appellant No. 1 addressed to all the District Magistrates and the Sub Divisional Officers conveying the decision of appellant No. 1 that when an application for grant of permission to construct a permanent cinema was referred to the Government, it should be accompanied by the particulars enumerated in the memorandum. Amongst the items thus enumerated were the population of the town where the permanent cinema is proposed to be constructed; whether there are any permanent cinemas already in existence in the town, and if so, how many; whether the applicant/applicants has/have been taking any part in any activity undermining the security of the State; and whether the financial position of the applicant/applicants is/are sound. These notifications were issued by appellant No.1 8Sup. CI/66 16 984 while the application made by the respondent was pending co; sideration. On April 24, 1958, appellant No. 2 informed the respondent that the site proposed by him for the construction of the cinema hall had been approved. The respondent was required to submit a plan of the building within a month and he was warned not to transfer the ownership of the site without the previous sanction of the licensing authority. On May 23, 1958, the respondent submitted the building plans. These plans were forwarded by appellant No. 2 to the Executive Engineer, Provincial Division, Rohtak, for scrutiny. While forwarding the plans to the Executive Engineer, appellant No. 2 had stated that the respondent had been allowed to construct a permanent cinema hall at Jhajjar and the site plans were being submitted for proper scrutiny and approval at an early date. Meanwhile, it appears that one Mohan Lal had also applied for grant of a licence for construction of a cinema hall in June, 1958, but he was informed that permission had already been granted to one person, and there was no scope for a second cinema hall. That is why he was told that his application could not be considered. Yet another person, Sultan Singh by name, made a similar application on August 26, 1958. On October 7, 1958, the Provincial Town Planner, Punjab, wrote to the Executive Engineer that the building plans submitted by the respondent had been checked and they appeared to satisfy the rules framed under the Act so far as the structural features of the building were concerned. On October 6, 1958, however, appellant No. 2 addressed a memorandum to the respondent informing him that the site plans prepared by him for the construction of a permanent cinema hall would be referred to appellant No. 1 for approval "according to the latest instructions". Then followed a report made by appellant No. 2 to appellant No. 1 on October 31, 1958, mentioning all the relevant facts in regard to the application of the respondent, and adding that the report was forwarded to appellant No. I for its consideration. On December 20, 1958, appellant No. 2 submitted another report to appellant No. 1 saying, inter alia, that it had been reported by the police that the respondent had been arrested in connection with "Save Hindi Agitation" and was discharged on tendering apology and that he did not pay any income tax. On March 4, 1959, appellant No. 2 informed the respondent that his application had been rejected by appellant No. as the same did not fulfil the conditions laid down in the memorandum, dated 985 September 3 0, 1957. It appears that appellant No. I had decided of grant the licence to Sultan Singh, and that probably is the reason why the application of the respondent was rejected. On receiving this communication from appellant No. 2, the respondent preferred an appeal to appellant No. 1 under section 5(3) of the Act, but his appeal was rejected on April 14, 1959; and that drove the respondent to the High Court of Punjab to seek an appropriate relief under its jurisdiction under Article 226 of the Constitution. In his petition, the respondent alleged that the order passed by appellant No. I rejecting his application for a licence under section 5 was illegal, arbitrary, capricious, oppressive, and without jurisdiction. In support of his plea, the respondent had also alleged that in rejecting his application, appellant No. 1 had been influenced by extraneous considerations which had no relevance to the decision of the question as to whether a licence should be granted to him or not. The suggestion made by the respondent was that appellant No. 1 wanted to prefer Sultan Singh to him for extraneous considerations, and that rendered the impugned order invalid. On these allegations, the respondent claimed that a writ in the nature of certiorari be issued setting aside the said order, and directing the appropriate authority under section 5 of the Act to deal with the respondent 's application in accordance with law. The appellants disputed the allegations made by the respon dent in his writ petition. It was urged that appellant No. I had taken into account the relevant considerations prescribed by the instructions issued by it by virtue of its authority under section 5(2) of the Act, and had come to the conclusion that the respondent 's application could not be granted. The plea made by the respondent that appellant No. I had been influenced by extraneous considerations, was denied. On these pleas, the High Court was called upon to consider five issues. The important ones amongst these issues were about the jurisdiction of appellant No. 1 to pass the order rejecting the respondent 's application for a licence, and about the invalidity of the order resulting from the fact that it was based on extraneous considerations. The High Court has upheld the respondent 's contention on the first point, and has held that appellant No. I had no jurisdiction to deal with the matter as it has purported to do. On that view, the High Court did not think it necessary to consider the other issues, particularly because "they involved questions of fact which are more or less disputed and on which 986 it will not be possible to come to any clear conclusion on the factual side". In the result, the High Court has allowed the writ petition filed by the respondent and has directed the appellants to treat the order made by appellant No. as void, ineffective, invalid and of no binding effect. In consequence, a writ of mandamus has also been issued requiring the licensing authority to deal with the respondent 's application in accordance with law. It is against this order that the appellants have come to this Court by special leave and the only question which they have raised before us for our decision is whether the High Court was right in holding that appellant No. I had no jurisdiction to deal with the respondents application in the manner it has done under section 5(2) of the Act. That is how the question about the construction of section 5(2) falls to be decided in the present appeal. Before dealing with this question, we may very briefly indicate the effect of the broad provisions of the Act. The Act was passed in 1952 in order to make provisions for regulating exhibitions by means of cinematography in the Punjab. Section 3 of the Act provides that no person shall give an exhibition, by means of a cinematography, elsewhere than in a place licensed under this Act or otherwise than in compliance with any condition and restriction imposed by such licence. Section 4 provides that the licensing authority under the Act shall be the District Magistrate. The proviso to this section authorises the Government, by notification, to constitute for the whole or any part of the State, such other authority as it may specify therein, to be the licensing authority for the purposes of the Act. It is common ground that appellant No. 2 has been constituted a licensing authority for the area with which we are concerned in the present appeal. That takes us to section 5 which must be read "5. (1) The licensing authority shall not grant a licence under this Act unless it is satisfied that (a) the rules made under this Act have been complied with; and (b) adequate precautions have been taken in the place, in respect of which the licence is to be given, to provide for the safety of the persons attending exhibitions therein. (2) Subject to the foregoing provisions of this section and to the control of the Government, the licensing authority may grant licences under this Act to such 987 persons as it thinks fit, on such terms and conditions as it may determine. (3) Any person aggrieved by the decision of the licensing authority refusing to grant a licence under this Act may, within such time as may be prescribed, appeal to the Government or to such officer as the Government may specify in this behalf and the Government or the officer, as the case may be, may make such order in the case as it or he thinks fit". Sub section (4) of section 5 authorises the Government to issue directions to licensees generally or to any licensee in particular for the purpose specified by it. Section 6 confers powers on Government or local authority to suspend exhibition of films in certain cases; and section 7 prescribes penalties. Section 8 empowers the State Government or the licensing authority to suspend, cancel or revoke a licence granted under section 5, on one or more of the grounds indicated by clauses (a) to (g) of sub section The other sub sections of section 8 prescribe the procedure which has to be followed in exercising the powers conferred by sub section Section 9 confers on the Government the power to make rules by a notification; this power can be exercised for any of the purposes mentioned in clauses (a), (b) & (c) of the said section. Section 10 gives power to the State Government to exempt any cinematograph exhibition or class of cinematograph exhibitions from the operation of any of the provisions of the Act; and section 1 1 provides that the (No. 11 of 1918) in so far as it relates to matters other than the sanctioning of cinematograph films for exhibition, is hereby repealed. There is a proviso to this section with which we are not concerned in the present appeal. That, broadly stated, is the scheme of the Act. There are two Central Acts dealing with the same subject. The first one is Act II of 1918 which, as we have seen, is repealed in the manner prescribed by section 1 1 of the Act so far as the Punjab is concerned. Section 5 of this Act corresponds generally to section 5 of the Act. The Central Act II of 1918 has been subsequently repealed by Central Act 37 of 1952. Section 12 of this latter Act corresponds generally to section 5 of the Act. The question which we have to decide in the present appeal lies within a very narrow compass. What appellant No. 1 has done is to require the licensing authority to forward to it all applications received for grant of licences, and it has assumed power and authority to deal with the said applications on the merits for itself in the, first instance, Is appellant No. 1 justified in 988 assuming jurisdiction which has been conferred on the licensing authority by section 5(1) and (2) of the Act ? It is plain that section 5(1) and (2) have conferred jurisdiction on the licensing authority to deal with applications for licences, and either grant them or reject them. In other words, the scheme of the statute is that when an application for licence is made, it has to be considered by the licensing authority and dealt with under section 5(1) and (2) of the Act. Section 5(3) provides for an appeal to appellant No. 1 where the licensing authority has refused to grant a licence; and this provision clearly shows that appellant No. 1 is constituted into an appellate authority in cases where an application for licence is rejected by the licensing authority. The course adopted by appellant No. 1 in requiring all applications for licences to be forwarded to it for disposal, has really converted the appellate authority into the original authority itself, because section 5(3) clearly allows an appeal to be preferred by a person who is aggrieved by the rejection of his application for a licence by the licensing authority. It is, however, urged by Mr. Bishan Narain for the appellants that section 5(2) confers very wide powers of control on appellant No. 1 and this power can take within its sweep the direction issued by appellant No. I that all applications for licences should be forwarded to it for disposal. It is true that section 5(2) provides that the licensing authority may grant licences subject to the provisions of section 5(1) and subject to the control of the Government; and it may be conceded that the control of the Government subject to which the licensing authority has to function while exercising its power under section 5(1) and (2), is very wide; but however wide this control may be, it cannot justify appellant No. 1 to completely oust the licensing authority and itself usurp his functions. The Legislature contemplates a licensing authority as distinct from the Government. It no doubt recognises that the licensing authority has to act under the control of the Government; but it is the licensing authority which has to act and not the Government itself. The result of the instructions issued by appellant No. 1 is to change the statutory provision of section 5(2) and obliterate the licensing authority from the Statute book altogether. That, in our opinion, is not justified by the provision as to the control of Government prescribed by section 5(2). The control of Government contemplated by section 5(2) may justify the issue of general instructions or directions which may be legitimate for the purpose of the Act, and these instructions and directions may necessarily guide the licensing authority in dealing with applications for licences. The said control may, therefore, take the form of the issuance of general directions and instructions 989 which are legitimate and reasonable for the purpose of the Act. The said control may also involve the exercise of revisional power after an order has been passed by the licensing authority. It is true that section 5(2), in terms, does not refer to the revisional power of the Government; but having regard to the scheme of the section, it may not be unreasonable to hold that if the Government is satisfied that in a given case, licence has been granted unreasonably, or contrary to the provisions of section 5(1), or contrary to the general instructions legitimately issued by it may suo moto exercise its power to correct the said order by exercising its power of control. In other words, in the context in which the control of the Government has been provided for by section 5(2), it would be permissible to hold that the said control can be exercised generally before applications for licences are granted, or particularly by correcting individual orders if they are found to be erroneous; but in any case, Government has to function either as an appellate authority or as a revisional authority, for that is the result of section 5(2) and (3). Government cannot assume for itself the powers of the licensing authority which have been specifically provided for by section 5(1) and (2) of the Act. To hold that the control of the Government contemplated by section 5(2) would justify their taking away the entire jurisdiction and authority from the licensing authority, is to permit the Government by means of its executive power to change the statutory provision in a substantial manner; and that position clearly is not sustainable. Section 5(3) provides for an appeal at the instance of the party which is aggrieved by the rejection of its application for the grant of a licence. No appeal is provided for against an order granting the licence; but as we have just indicated, in case it appears to the Government that an application has been granted erroneously or unfairly, it can exercise its power of control specified by section 5(2) and set aside such an erroneous order, and that would make the provision as to appeal, or revision self contained and satisfactory. The scheme of the Act clearly indicates that there are, two authorities which are expected to function under the Act the licensing authority, as well as the Government. Section 8 is an illustration in point. It empowers the State Government or the licensing authority to suspend, cancel or revoke a licence on the grounds specified by it; and that shows that if a licence is granted by the licensing authority, it has the power to suspend, cancel or revoke such a licence just as Government has a similar power to take action in respect of the licence already granted. We are, therefore, satisfied that the High Court was right in coming to the conclusion that appellant No. 1 had no authority or power to 990 require all applications for licences made under the provisions of the Act to be forwarded to it, and to deal with them itself in the first instance. Section 5 clearly requires that such applications must be dealt with by the licensing authorities in their respective areas in the first instance, and if they are granted, they may be revised by Government under section 5(2); and if they are rejected, parties aggrieved by the said orders of rejection may prefer appeals under section 5(3) of the Act. The basic fact in the scheme of the Act is that it is the licensing authority which is solely given the power to deal with such applications in the first instance, and this basic position cannot be changed by Government by issuing any executive orders or by making rules under section 9 of the Act. It appears that this question has been considered by the Andhra Pradesh, and the Rajasthan High Courts and they have taken the view that the Government can, by virtue of the power of control, deal with the applications for licences themselves in the first instance lvide Karnati Rangaiah vs A. Sultan Mohiddin and Brothers, Tadipatri & Ors.(1) and M/s. Vishnu Talkies vs The State & Others(1) respectively.] We are satisfied that this view does not correctly represent the true legal position under the relevant provisions of the Acts prevailing in the two respective States. In Bharat Bhushan vs Cinama and City Magistrate & Anr. (3 ) also, the powers of the State Government under section 5(3) of the , have been similarly construed and that again, in our opinion, cannot be said to be right. In dealing with the question about the scope and effect of the power of control conferred on the State Government, the Allahabad High Court has taken the view that the power of control which has been conferred on the State Government by section 5 (2) is wide enough to enable the State Government to revise an order passed by a licensing authority granting a licence. This observation, in our opinion, correctly represents the true scope and effect of the power of control conferred on the State Government. The result is, the appeal fails and is dismissed with costs. Appeal dismissed. (1) Al. R. (2) Raj. (3) A.I.R. 1956 AU.

IN-Abs

The second appellant the Sub divisional Officer had been constituted as the licensing authority, under section 4 of the Punjab Cinemas (Regulation) Act, 1952, for the area concerned in the present case. The respondent made an application to him for a licence to construct a permanent cinema hall. Pending the application, instructions were issued by the first appellant the State Government that all such applications for licence shall be forwarded to the State Government for orders accompanied with certain particulars regarding the applicant. The second appellant forwarded the respondent 's application with the relevant facts to the first appellant and the first appellant rejected the application. The respondent 's appeal to the first appellant under section 5(3) of the Act was also rejected. The respondent then moved the High Court under article 226 and the High Court held that the first appellant had no authority or power to require all applications for licences under the Act to be forwarded to it and to deal with them itself. In appeal to this Court, the first appellant contended that it had jurisdiction to deal with the application because section 5(2) of the Act conferred very wide powers of control on it and that the power took within its sweep the directions issued by it. HELD : The scheme of the Act indicates that there are two authorities which are expected to function under the Act the licensing authority as well as the State Government. The basic fact in the scheme is that it is the licensing authority which is solely given the power to deal with the applications for licence in the first instance, and this basic position cannot be changed by the State Government by issuing any executive orders or by making rules under section 9 of the Act. [989 G; 990 B C] The control of the State Government under section 5(2) subject to which the licensing authority has to function is very wide; but however wide this control may be, it cannot justify the State Government to completely oust the licensing authority and itself usurp its functions. The licensing authority has to act under the control of the State Government, but it is the licensing authority which has to act and not the Government itself. The said control can be exercised generally before applications are granted by issuing general instructions which are legitimate and reasonable for the purpose of the Act, or particularly by correcting individual orders granting licences if they are found to be erroneous, but in any case the State Government has to function either as an appellate authority under section 5(3) or as a revisional authority under section 5(2), but it cannot assume for itself the powers of the licensing authority. [988 H 989 E] Karnati Rangaiah vs A. Sultan Mohiddin, A.I.R. 1957 A.P. 513, M/s. Vishnu Talkies vs The State, Rai. 14 and Bharat Bhushan vs Cinema and City Magistrate, A.I.R. 1956 All. 99, overruled.

Appeal No. 804 of 1963. Appeal by special leave from the judgment and decree, dated January 3, 1961 of the Orissa High Court in Appeal under Orissa High Court Order No. 3 of 1959. 25 K. R. Chaudhuri, for the appellant. C. B. Aggarwala, B. Parthasarathy, J. B. Dadachanji, O.C. Mathur, and Ravinder Narain, for respondent No. 1. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought by special leave on behalf of the judgment debtor against the judgment of the Orissa High Court, dated January 3, 1961 in Letters Patent Appeal No. 3 of 1959. The deceased plaintiff filed Original Suit No. 500 of 1941 against the appellant defendant in the Court of the Additional Munsif, Aska claiming Rs. 970 on the basis of a promissory note. The suit was dismissed on August 17, 1942. The plaintiff preferred an appeal No. 178 of 1942 before the District Judge who allowed the appeal and set aside the decree of the Munsif and decreed the suit ex parte on March 9, 1943. Against this decree of the appellate Court, the appellant filed Second Appeal No. 100 of 1943 in the Orissa High Court which set aside the decree of the District Judge on November 11, 1946 and remanded the suit to the lower appellate court for disposal. The lower appellate court in its turn remanded the suit to the trial court by its judgment, dated April 11, 1947. In the meantime the original plaintiff died and the present respondents were brought on record as his legal representatives. The suit was again dismissed by the trial court on November 29, 1947 but on appeal the Additional Subordinate Judge set aside the judgment and decree of the Munsif on November 30, 1948. The appellant carried the matter in Second Appeal No. 12 of 1949 to the Orissa High Court which dismissed the appeal on August 27, 1954. After the ex parte decree was passed inappeal No. 178 of 1942 by the District Judge on March 9,1943, the plaintiff executed the decree, attached the propertiesin dispute and himself purchased the properties in Court auction. The plaintiff also took delivery of the properties on May 17, 1946 and since that date the respondents have been in possession of the properties and enjoying the usufruct. After the decree of the High Court, dated November 11. 1946 in Second Appeal No. 100 of 1943 the appellant made an application for restitution in the Court of the Additional Munsif in Miscellaneous Judicial Case No. 34 of 1947. The plaintiff obtained a stay of the hearing of the Miscellaneous Judicial Case from the Court of the Additional District Judge but on March 30, 1948 the order of stay was discharged. In Civil Revision No. 75 sup, Cl/66 3 2 6 of 1948 the High Court also granted interim stay in the proceedings in the Miscellaneous Judicial Case at the instance of the plaintiff but the order of stay was vacated by the High Court on April 28, 1949. Thereafter the present appellant got the Miscellaneous Judicial Case stayed till disposal of his Second Appeal after remand. On July 12, 1956 the Miscellaneous Judicial case was allowed by the Munsif and an order of restitution was made in favour of the appellant. The respondents filed an appeal before the Subordinate Judge of Berhampur who allowed the appeal and set aside the order of restitution. The appellant took the matter before the High Court in Miscellaneous Appeal No. 24 of 1958 which was allowed by P. V. Balakrishna Rao, J. on October 3, 1958 and it was ordered that the restitution of the properties should be made to the appellant subject to the condition that he must deposit the amount decreed in favour of the plaintiff decree holder. The order of the learned Single Judge was, however, set aside in Letters Patent appeal by a Division Bench which held that the appellant was not entitled to restitution of properties sold in the execution case. The question presented for determination in this case is whether the appellant was entitled to restitution of his properties purchased by judgment debtor in execution of the decree passed by the District Judge on the ground that the decree was set aside by the High Court and the suit was remanded for rehearing and fresh disposal under the provisions of section 144 of the Civil Procedure Code which states as follows 144 (1) Where and in so far as a decree or order is varied or reversed, the Court of first instance shall, on the application of any party entitled to any benefit by way of restitution or otherwise, cause such restitution to be made as will, so far as may be, place the parties in the position which they would have occupied but for such decree or such part thereof as has been varied or reversed; and, for this purpose, the Court may make any orders, including orders for the refund of costs and for the payment of interest, damages, compensation and mesne profits, which are properly consequential on such variation or reversal. " On behalf of the responds Mr. aggarwala made the submission that after the suit was re heard a decree was passed in favour of the respondents and that decree was eventually affirmed by the High Court., and the appellant was, therefore, not entitled to 27 restitution under the provisions of this section. We are unable to accept this argument as correct. The properties of the appellant were sold in execution at the instance of the respondents who were executing the ex parte decree passed by the District Judge on March 9, 1943. In this execution case, the properties of the appellant were sold and the respondents got delivery of possession on May 17, 1946. It is true that the suit was eventually decreed after remand on August 27, 1954 by judgment of the High Court, but we are unable to accept the argument of the respondents that the execution sale held under the previous ex parte decree which was set aside by the High Court, is validated by the passing of the subsequent decree and therefore the appellant is not entitled to, any restitution. It is evident that the application for restitution was filed by the appellant in 1947 in Miscellaneous Judicial Case, No. 34 of 1947 before the passing of a fresh decree by the High Court in the Second Appeal. At the time of the application for restitution, therefore, the appellant was entitled to restitution,. because on that date the decree in execution of which the properties. were sold had been set aside. We are of the opinion that the appellant is entitled to restitution notwithstanding anything which happened subsequently as the right to claim restitution is based upon the existence or otherwise of a decree in favour of the plaintiff ' at the time when the application for restitution was made. The principle of the doctrine of restitution is that on the reversal of a decree, the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost. This obligation arises automatically on the reversal or modification of the decree and ' necessarily carries with it the right to restitution of all that has been done under the erroneous decree; and the Court in making restitution is bound to restore the parties, so far as they can berestored, to the same position they were in at the time when the Court by its erroneous action had displaced them from. It should be noticed, in the present case, that the properties were purchased ' by the decree holder himself in execution of the ex parte decree and not by a stranger auction purchaser. After the ex parte decree was set aside in appeal and after a fresh decree was passed on remand, the sale held in execution of the ex parte decree becomes invalid and the decree holder who purchased the properties in executions of the invalid decree is bound to restore to the judgment debtor what he had gained under the decree which was subsequently set aside. The view that we have expressed is borne out by the decision of the Judicial Committee in Zain Ul Abdin Khan vs 28 Muhammad Asghar Ali Khan(1) in which a suit was brought by the judgment debtor to set aside the sale of his property in execution of the decree against him in force at the time of the sales, but afterwards so modified, as the result of an appeal to Her Majesty in Council, that, as it finally stood, it would have been satisfied without the sales in question having taken place. The judgmentdebtor sued both those who were purchasers at some of the sales, being also holders of the decree to satisfy which the sales took place, and those who were bona fide purchasers at other sales, under the same decree, who were no parties to it. The Judicial Committee held that, as against the latter purchasers, whose position was different from that of the decree holding purchasers, the suit must be dismissed. At page 172 of the Report, Sir B. Peacock observed as follows "It appears to their Lordships that there is a great distinction between the decree holders who came in and purchased under their own decree, which was afterwards reversed on appeal, and the bona fide purchasers who came in and bought at the sale in execution of the decree to which they were no parties, and at a time when that decree was a valid decree, and when the order for the sale was a valid order." The same principle has been laid down by the Calcutta High Court in Set Umedmal and another vs Srinath Ray and another (2 ) where certain immovable properties were sold in execution of an exparte decree and were purchased by the decree holder himself. After the confirmation of the sale, the decree was set aside under section 108 of the Civil Procedure Code, 1882 at the instance of some of the defendants in the original suit. On an application unders. 244 of the Civil Procedure Code, 1882 having been made by adecree, to set aside the sale held in execution of the ex parte decree the defence was that the application could not come under section 244 of the Civil Procedure Code, 1882, and that the sale could not be set aside, as it had been confirmed. It was held by the Calcutta High Court that the ex parte decree having been set aside the sale could not stand, inasmuch as the decree holder himself was the purchaser. At page 813 Maclean, C.J. stated : "As regards the second point, viz., whether, notwithstanding the confirmation, the sale ought to be set aside, (1) I.L,R. 10 All, 166. (2) I.L.R. 29 the fact that the decree holder is himself the auction purchaser is an element of considerable importance. The distinction between the case of the decree holder and of a third party being the auction purchaser is pointed out by their Lordships of the Judicial Committee in the case of Nawab Zainal abdin Khan vs Mahommed Asghar Ali (I.L.R. 10 All., 166), and also in the case of Mina Kumari Bibee vs Jagat Sattani Bibee (I.L.R. , which is a clear authority for the proposition that where the decree holder is himself the auction purchaser, the sale cannot stand, if the decree be subsequently set aside. I am not aware that this decision, which was given in 1883, has since been impugned. " The same view has been expressed in Raghu Nandan Singh vs Jagdish Singh(1) where it was held that if an ex parte decree has been set aside, it cannot by any subsequent proceeding be revived and if a decree is passed against judgment debtors on re hearing, it is a new decree and does not revive the former decree. The same opinion has been expressed in Abdul Rahaman vs Sarafat Ali(2) in which it was pointed out that as soon as an ex parte decree was set aside, the sale, where the decree holder was the purchaser, falls through and was not validated by a fresh decree subsequently made. The same principle was reiterated by the Bombay High Court in Shivbai Kom Babya Swami vs Yesoo.(3). In that case, an ex parte decree was passed against the defendant, in execution of which the defendant 's house was sold and purchased by the plaintiff decree holder. The ex parte decree was subsequently set aside; but at the retrial, a decree was again passed in plaintiffs favour. In the meanwhile, the defendant applied to have the sale of the house set aside. It was held, in these circumstances, by the Bombay High Court that the previous sale of the house in execution under the previous decree which had been set aside should itself be set aside as being no longer based on any solid foundation; but subject in all the circumstances to the condition that the defendant should pay up the amount due under the second decree within a specified time. On behalf of the respondents reference was made to the decision of this Court in Lal Bhagwant Singh vs Rai Sahib Lala Sri Kishen Das. (4 ) But the ratio of that case has no application to the present case. It should be noticed that the decree in that case was affirmed at all stages of the litigation except that the amount of (1) 14 Calcutta Weekly Notes, 182. (3) I.L.R. (2) 20 Calcutta Weekly Notes, 667. (4) 30 the decree was slightly altered from Rs. 3,38,300 and odd to Rs. 3,76,790 and odd which amount was ultimately decreed by the Privy Council in the appeal which the judgment debtor preferred from the decision of the Oudh Chief Court which restored the decree of the trial Judge who decreed a sum of Rs. 3,88,300. It was held by this Court that the Privy Council had merely restored the amended decree without altering the provisions as to payment by instalments or extending the time for payment by instalments and its decree did not in any way alter the position of the parties as it stood under the amended decree, and, the sale was not in consequence of any error in a decree which was reversed on appeal by the Privy Council and so the judgment debtor was not entitled to restitution. In the present case the material.facts are manifestly very different. For the reasons expressed, we are satisfied that the appellant is entitled to restitution of the properties sold in execution of the export decree subject to equities to be adjusted in favour of the respondent decree holders. We order that the appellant should be restored back to possession of the properties sold in the execution case subject to the condition that he deposits the amount of Rs. 970 in the Court of the Munsif, Aska within two months from this date. If no deposit is made within this time this appeal will stand dismissed with costs. But if the appellant makes the deposit within the time allowed the sale of the properties in the execution case will be set aside and the respondents will make over the possession of the properties sold to the appellant. The appellant will not be entitled to any past mesne profits but if the respondents do not deliver the possession of the properties the appellant will be entitled to the future mesne profits from the respondents from the date of deposit till the actual date of delivery of possession. Learned Counsel for the appellant has informed us that the deposit has already been made by the appellant in pursuance of the order of the learned Single Judge of the High Court, dated October 3, 1958. If the deposit has already been made the appellant will be entitled to take possession of the properties through the executing court and to future mesne profits from the date of this judgment till the actual date of delivery of possession. We accordingly allow the appeal to the extent indicated above. In the circumstances of the case we do not propose to make any order as to costs. Appeal allowed in part.

IN-Abs

A money suit against the appellant was dismissed by the trial court but the first appellate court passed an ex parte decree against him. The appellant 's property was sold in execution and purchased by the decreeholder. The appellant went to the High Court which set aside the exparte decree and remanded the suit. The appellant then filed an appli cation for restitution under section 144 of the Code of Civil Procedure. It was stayed pending proceedings in the main suit. 'Me suit was finally decided against the applicant, by the High Court. Thereafter the trial court allowed the appellant 's application for restitution. After intermediate proceedings the High Court decided in Letters Patent Appeal that the appellant was not entitled to restitution. He appealed to this Court by special leave. HELD: The application for restitution was filed by the appellant before the passing of a fresh decree by the High Court in second appeal. At the time of the application therefore the appellant was entitled to restitution because on that date the decree in execution of which the properties were sold had been set aside. The appellant was therefore entitled to restitution notwithstanding anything which happened subsequently. [27 C E] The principle of the doctrine of restitution is that on the reverse of a decree the law imposes an obligation on the party to the suit who received the benefit of the erroneous decree to make restitution to the other party for what he has lost. The Court in making restitution is bound to restore the parties so far as they can be restored to the same position they were in at the time when the Court by its erroneous action had displaced them from. [27 E F] Zainal Abdin Khan vs Muhammad Asghar All Khan, I.L.R. 10 All 166, relied on. Set Umedmal & Anr. vs Srinath Ray & Anr. I.L.R. 27 Cal. 810, Raghu Nandan Singh vs Jagdish Singh, , Abdul Rahaman vs Sarafat Ali, and Shivbai Kom Babya Swam vs Yesoo, I.L.R. , referred to. Lal Bhagwant Singh vs Rai Sahib Lala Sri Kishen Das, , distinguished.

Appeal Nos. 86 to 89 of 1965. Appeals by special leave from the judgment and order, dated October 17, 1963 of the Allahabad High Court in section T. Ref. No. 109 of 1956. A. V. Viswanatha Sastri and B. N. Kripal, for the appellant. N. D. Karkhanis and O. P. Rana, for the respondent, K. K. Jain, for intervener. The Judgment of the Court was delivered by Sikri, J. These four appeals by special leave are directed against the judgment of the Allahabad High Court in a Sales Tax Reference made by the Judge (Revisions), Sales Tax, Uttar Pradesh, Lucknow, on being directed to do so by the High Court under section 11 of the Uttar Pradesh Sales Tax Act, 1948, hereinafter referred to as the Act. The question referred was as follows : "Whether in law the revising authority was right in holding that the sales in dispute were not for delivery outside Uttar Pradesh and that the applicant Was not entitled to a rebate under sec. 5 of the Act. " The question was referred in the following circumstances. The appellant, hereinafter referred to as the assessee mills, carries on the business of manufacturing and selling sugar and is registered as a dealer under the provisions of the Act. During the previous year relevant to the Assessment Year 1948 49, the assessee company had sold sugar to parties who carried on business outside Uttar Pradesh and also delivered the same outside Uttar Pradesh. It also sold sugar to parties who carried on business inside Uttar Pradesh but the sugar was despatched to stations outside Uttar Pradesh in compliance with the instructions issued by the buyers. The assessee mills submitted an application.under section 5 of the Act in form VII, prescribed by, the Uttar Pradesh Sales Tax (Temporary) Rules, 1948, claiming 50% rebate on the sales of sugar delivered outside Uttar Pradesh. The Sales Tax Officer allowed rebate in respect of the sales of sugar to parties who carried on business outside Uttar Pradesh but rejected the claim for the sales which were made to parties carrying on business inside Uttar Pradesh. In respect of the assessment year 1948 49 there were four assessment orders covering each quarter of the year,, the, 47 first quarter being April 1948 to July 1948. Section 5 of the Act reads as follows "Sales of certain goods for delivery outside the State In respect of such manufactured goods as may be notified by the State Government and subject to such restrictions and conditions as may be prescribed, a rebate of one half of the tax levied on sales of such goods for delivery outside the Uttar Pradesh shall be allowed if such goods are actually so delivered. " In exercise of the powers conferred by section 5 of the Act, the Governor was pleased to order that rebate of one half of the tax levied on sales of certain goods including sugar manufactured in Uttar Pradesh for delivery outside Uttar Pradesh shall be allowed if such goods were actually so delivered. It appears that this notification was modified on March 30, 1949, but we are not concerned with this modification. The Sales Tax Officer dealt with the question at issue in his order in respect of the quarter ending March 31, 1949, in detail and he was of the view that if property passed from the seller to the purchaser in Uttar Pradesh, section 5 and the notification issued under it could not apply. The assessee mills then filed four revision applications before the Judge (Revisions) Sales Tax. The Judge (Revisions) disposed of the four applications by two orders, first dated February 1, 1950, and the second dated December 5, 1950. He held that "the words 'sales of such goods for delivery outside U.P. clearly show that the intention of the framers of the act was to allow a rebate only in cases in which the goods are sold subject to the condition that they would be delivered outside U.P. It is also clear that section 5 contemplates only one buyer who purchase the goods and also take their delivery outside U.P. In other words the party who buys the goods and the party who takes the delivery must be one and the same. It is not disputed that the sales of sugar in respect of which the claim has been disallowed were in favour of one party and delivery was taken by another party outside U.P. The party after buying the sugar under a contract of sale had the goods despatched outside U.P. by the Mills to another party outside U.P." He added later that "on a true construction of section 5 rebate will be permissible only if delivery is taken outside U.P. by the same party which purchased the sugar from the mills." Then 48 on the facts he held that the selling agents, Tandon Bros., who entered into a contract with the assessee mills for sale of the goods were really the buyers and although the goods were despatched outside Uttar Pradesh in accordance with the despatch instructions of some contract arrived at between Tandon Bros., and the party to which the goods were ultimately delivered, the assessee mill had not entered into the contract with the parties to which the goods were despatched outside Uttar Pradesh. He further repelled the argument that despatch instructions formed part of the contract. The assesses mills then filed four applications under section 1 of the Act, but the Judge (Revisions) Sales Tax rejected the applications on the ground that no question of law arose. The High Court, however, directed the Judge (Revisions) to state a case under section 11 of the Act. A consolidated statement of the case was referred. The Judge (Revisions) drawing up the statement of the case was not the Judge (Revisions) who had disposed of the revision applications. In the statement of the case certain further facts were given and those are as under "The applicants (assessee mills) were members of the Indian Sugar Syndicate Ltd., and they were entitled to send sugar under the orders of the Syndicate through some selling agents of their own. M/s. Tandon Bros., were the selling agents of the Mills. It was through them that the sales had been made to buyers outside U.P. The goods were despatched outside U.P. under the instructions received from the buyers through the selling agents. The delivery of the goods was made outside U.P. It is on the basis of these facts that the applicants (assessee mills) claimed that the sales had been made for delivery outside U.P." The standard contract form prescribed by the Indian Sugar Syndicate has been annexed to the case and the following terms are relevant : "AN AGREEMENT made this Sixteenth day of October 1948 between the AMRITSAR SUGAR MILLS CO. LTD. ROHANA KALAN (hereinafter called "the Seller") and Tandon Brothers New Mandi Muzaffarpur (hereinafter called "the Buyee") for the sale of the following goods by the Seller to the Buyer upon the following terms and conditions 49 A B C D E F Factory Description Price per Md. ofQuantity Period(s) Re (short) of quality 40 Srs. 82 2/7 lb. of marks Name F.O.R. Factory delivery Station Ex Factory. Rohana Average colour Rs. Thirty Six Bags 4,000 Ready Mills. not lower than annas two & I.S.S. No. 127 pies three only. Average grain not Each of pack finer than I.S.S. ing 2/30. No. D. or I. 36/2/3 2. Delivery is to be made F.O.R. Rohana Kalan station, all terms and conditions of the Railway (torn) to be binding on the Buyer. The goods shall be deemed to have been delivered (a) when tendered Ex Factory godown, (b) when put on F.O.R. at Factory Station or (c) when tendered for carriage by rail at the said station, and in case of delay in accept (torn) by the Railway after such tender the said goods shall be deemed to be held by the Seller on account of the Buyer until they are put on rail. When the goods are received by Railway, all the terms and conditions of the Railway shall be deemed to be accepted by the buyer. Tender to the Railway for carriage shall be deemed to have been made when a (torn) carriage or a Forwarding Note has been given to the Station Master of the Station. The seller shall not, (torn) circumstances whatsoever, be responsible for non despatch, or refusal to despatch or delay in despatch or any (torn) mistake in despatch by the Railway. Where (after tender as aforesaid) any delay in despatch occurs, the Buyer shall (torn) delivery of the goods without any claim against the Seller on account of such delay or the consequence thereof (torn) delay in despatch is due to non supply of wagons or due to booking restrictions, the Seller, shall, if required by the (torn) obtain from the factory a letter stating the cause of the delay. Where owing to restriction of whatsoever nature imposed by Carriers on despatches, Seller is unable to despatch according to the route requested by the Buyer, then Seller shall have the right, after giving to the Buyer 50 three days time to despatch by the cheapest available route at Seller 's sole discretion to the destination required by the original despatch instructions. Within the period of three days above mentioned, Buyer may change the destination provided the (torn) despatching instructions are capable of immediate execution. In the case of despatch by road, river or other transport any combination thereof, all the terms and conditions of the Carriers are be a binding on the Buyer, and tender to Carrier shall be a good delivery within the meaning of the clause. The buyer is to give the Seller despatching instructions in accordance with the above schedule, in the case (torn) ready sales within ten days from the date hereof when the quantity is less than 1500 bags, and within fifteen days when quantity is 1500 bags or more; and in the case of forward sales, not less than fourteen days prior to the expiry of the (torn) for delivery of the goods as provided in the above Schedule. When goods are for delivery in instalments the times (torn) clause provided shall apply to the despatching instructions for each instalment. The sugar will be despatched at (torn) Risk unless the buyer shall give to the Seller instructions to the contrary in the Despatching Instructions. The despatching instructions to be given as aforesaid shall be such as the Seller will then be in a position to carry (torn) having regard to restrictions on booking, availability of wagons, transshipment difficulties and other matters. The despatch (torn) instructions once given shall not ordinarily be amended or altered and they can be altered or amended only with the consent of the seller and before the goods have left the factory, the Seller is not in any way responsible for any delays that may arise through error or mistake in the despatching instructions sent by the buyer. If the Buyer fails to give despatching instructions within the time and in the manner aforesaid he will be deemed not to have given any despatching instructions at all. No complaint as regards description, quality or condition of any consignment will be admitted unless the Buyer has complied with Clause 3 thereof and has paid to the Seller the full price and all overdue or other 51 charges and unless the complaint is made in writing to the Seller within three days from the arrival of such consignment at destination, the date of such arrival being deemed to be the date of arrival entered in the Books of the Railway Co., Steamer Co., Carrier or Port Authorities. The completion of Risk Note form A as required by the Railway authorities at certain seasons of the year shall not be construed as adverse remarks as to the condition of the goods or its packing. If any complaint, as to quality condition quantity or weight is referred to arbitration and an allowance is awarded in thereof, the Buyer shall retain the goods and such allowance shall be deducted from the price and be refunded by the Seller. " The High Court, in view of its finding that the delivery was contracted to be made ex factory, the factory being within the State of Uttar Pradesh and the contract not containing any condition requiring the assessee to deliver the goods outside Uttar Pradesh, held that rebate was not admissible under section 5. The High Court said that its detailed reasons were contained in its, judgment in Lord Krishna Sugar Mills vs Commissioner Sales Tax, II.P.(1) In that case Desai, C.J., held that the obligation to deliver goods outside Uttar Pradesh must arise only from a term in the contract, and in the absence of such a term it could, not be said that the goods were to be delivered outside Uttar Pradesh. The learned Chief Justice further observed as follows A term in a contract that despatch instructions would be furnished later necessarily means that the seller undertakes to comply with them. If under a contract itself something is to be settled later, what is settled later becomes as much binding under the contract itself as the terms already settled under the contract. Still, I do not think that the sales in those cases in which the contracts provided for despatch instructions to be given later became sales for delivery outside Uttar Pradesh merely because the despatch instructions were that they should be despatched outside Uttar Pradesh. All that can be said is that the sales were for "delivery in accordance with despatch instructions" and a sale for "delivery in accordance with despatch instructions" is not necessarily a sale for "delivery outside Uttar Pradesh." (1) Sales Tax Reference No. 263 of 1954 judgment delivered on, March 19, 1963. 52 He seemed to be of the view that in order to come within the expression "delivery outside Uttar Pradesh ' it must be one of the terms settled at the time of the formation of the contract itself that the goods will be delivered outside Uttar Pradesh, and if this is not so settled and all that is settled is that they will be delivered in accordance with despatch instructions, the sale would neither be a sale for delivery outside Uttar Pradesh nor a sale for delivery inside Uttar Pradesh. He was clearly of the view that despatch instructions were not a part of the contract when it was formed and did not get incorporated into it or become a part of it when given. Pathak, J., in a concurring judgment, was of the view that it must be in the contemplation of the parties at the time of entering into the contract that the goods which were the subject of sale must be delivered outside Uttar Pradesh. He observed that "there is a distinction between settling and determining the terms of a contract and complying with the terms 'of that contract. The former relates to the formation of the contract, the latter to its execution. " The first question which arises in these appeals is whether the word "delivery" in the expression "sales of such goods for delivery outside Uttar Pradesh" occurring in section 5 of the Act means actual delivery or constructive delivery. If it means constructive delivery then there is no doubt that on the facts as stated by the Judge (Revisions) the contract provided for constructive delivery inside Uttar Pradesh and the assessee mills would not be entitled to rebate under section 5. The Madras High Court had occasion to consider a similar question in India Coffee and Tea Distributing Co. Ltd., vs The State of Madras.(1) It held that the word "delivery" in section 5 of the Madras General Sales Tax Act, 1939, which exempts from taxation sales of tea "if the sale is for delivery outside the State and delivery actually was made" did not include anything which the law deemed "delivery" but was restricted to physical delivery of the thing sold. In coming to this conclusion, Subrahmanyam, J., observed : "In deciding whether the word "delivery" in section 5 (v) includes delivery in law, we have to have regard to the objects of the Legislature in enacting section 5 (v). The object obviously was the promotion of the export of tea. The Legislature intended that where tea was (1) 10 S.T.C. 359. 53 exported from the State for being delivered outside the State, the sale which resulted in such export should be exempt from taxation. 'Mat object would not be wholly achieved if we hold that delivery of documents of title in the State of Madras would make the sale liable to taxation. " We agree with the view expressed by the Madras High Court. It seems to us that the object underlying section 5 is to encourage export of goods manufactured in Uttar Pradesh and notified under section 5. The course of trade adopted by the Indian Sugar Syndicate Ltd. and the assessee mills shows that if the word "delivery" is interpreted to mean 'constructive delivery ' very few 'export sales ', if we may use the expression, would enjoy rebate under section 5. As long as the contract evinces an intention to export and actual delivery is given to effectuate that intention the object of the Legislature to ensure that only real 'export sales ' enjoy the rebate would be fulfilled. It seems to us that in the context of section 5 the word 'delivery ' occurring in section 5 means 'actual delivery '. The next question that arises is whether the sales by the assessee mills were for actual delivery outside Uttar Pradesh. The answer to this problem depends on the answer to the question whether despatch instructions contemplated by clause 2 and clause 3 of the contract were part of the contract entered into by the assessee mills. It seems to us that they were. The contract by the assessee mills was to actually deliver at a place to be communicated. This view is reinforced by what is contained in clause 11 of the contract. This clause contemplated a destination in spite of constructive delivery having been contracted to be made at Rohana Kalan Station. Further, the contract was not to actually deliver at some place to be chosen or assented to by the assessee mills but at any place without restrictions. The contract required nothing more for completion than a mention of the place. When the despatch instructions were given, it was not a case of performing the contract but specifying a term of the contract. If the place of actual delivery had been specified and it was a question merely of communicating the route by which the goods were to be delivered this would perhaps related the mode of performance of the contract. But communication of the place where actual delivery is to be given does not relate to the mode of performance but formation of the contract. It seems to us, with respect, that the High Court reared in relating despatch instructions to the mode of performance of the contract. 54 In the result we hold that the assessee mills is entitled to rebate under section 5. We set aside the judgment of the High Court and answer the question as follows : "The revising authority was not right in holding that the sales in dispute were not for delivery outside Uttar Pradesh. Further, the applicant was entitled to rebate under section 5 of the Act. " The appellant will have his costs incurred in the High Court and here. One hearing fee. Appeal allowed.

IN-Abs

The assessee sugar mill sold sugar to parties who carried on business inside the State of Uttar Pradesh, but the sugar was despatched to stations outside the State of Uttar Pradesh and delivered to another party in compliance with the instructions issued by the buyers. Under the contract entered between the assessee and the buyer, the assessee was to deliver the sugar at places to be communicated by the buyer. The assessee mill claimed rebate on these sales under section 5 of the Uttar Pradesh Sales Tax Act, 1948. The Sales Tax authorities rejected the claim. 'Me High Court held that the rebate was not admissible under section 5 because the contract did not contain any condition requiring the assessee to deliver goods outside Uttar Pradesh and because the despatch instructions.were not a part of the contract when it was formed and did not get incorporated into it or become a part of it when given. In appeal to this Court. HELD : (i) In. the context of section 5 of the Act the word 'delivery ' occurring therein means 'actual delivery '. The object underlying section 5 is to encourage export of goods manufactured in Uttar Pradesh and notified under section 5. The course of trade adopted by the buyers and the assessee shows that if the word 'delivery ' is interpreted to mean 'constructive delivery ' very few 'export sales ' would enjoy rebate under section 5. As long as the contract evinces an intention to export and actual delivery is given to effectuate that intention the object of the legislature to ensure that only real 'export sales ' enjoy the rebate would be fulfilled. [53 B D] Lord Krishna Sugar Mills vs Commissioner of Sales Tax, U.P. S.T. reference No. 263/54 dated March 19, 1963, disapproved. India Coffee and Tea distributing Co. Ltd. vs The State of Madras 10 S.T.C. 359, approved. (ii)The sales by the assessee were for actual delivery outside Uttar Pradesh. The despatch instructions contemplated by the contract entered into by the assessee, were part of the contract. The contract contemplated a destination in spite of constructive delivery having been contracted to be made at the station where the assessee mill was situated. Further the contract was not to actually deliver at some place to be chosen or assented to by the assessee mill but at any place without restrictions. The contract required nothing more for completion than a mention of the place. when the despatch instructions were given, it was not a case of performing the contract but specifying a term of contract. [53 EG] 4 6

APPEAL No. 757 of 1964. Appeal by Special Leave from the Judgment and Order, dated the 28th May, 1963 of the Gujarat High Court in Special Civil Application No. 419 of 1963. R. Gopalakrishnan, for the appellant. N. section Bindra and B. R. G. K. A char, for the respondent. The Judgment of the Court was delivered by Satyanarayana Raju, J. This appeal, by special leave, is against the judgment and order of the High Court of Gujarat at Ahmedabad, dated May 28, 1963, dismissing in limine an application filed by the appellant under article 226 of the Constitution. The facts material for the purposes of this appeal may be briefly stated. 'Me appellant was a permanent employee of the State Transport Corporation, Gujarat, hereinafter referred to as the Corporation. At the material time he was employed as a Writer in the Visnagar Depot of the Corporation in Mahasana District. On January 15, 1962, the appellant applied to the Divisional Controller, State Transport, Mahasana, for leave for 15 days on the ground that he had to attend to his 'personal work. On January 16, 1962, he was transferred from Visnagar to Ambaji where there was a vacancy in the office of the Depot Manager. On January 31, 1962, a formal order transferring the appellant from Visnagar to Ambaji was passed, and he was directed to join duty at Ambaji. On that date, the appellant applied for extension of leave on medical grounds but his request was refused by an order, dated February 15, 1962. He was directed to report for duty at Ambaji within 48 hours of the receipt of notice failing which, he was warned, he would be removed from service. On March 3, 1962, the appellant wrote a letter to the Divisional Controller intimating him of his inability to join duty as he was still not well. To this letter, he enclosed a medical certificate. By an order, dated March 9, 1962, the services of the appellant were terminated with effect from January 16, 1962, on the ground of long absence. The appellant made a representation to the Divisional Controller on March 17, 1962 and thereafter preferred an appeal to the General Manager of the Corporation. Both of them were rejected. A further appeal preferred by him to the L9SUPCI/66 4 4 2 appellate Committee was also unsuccessful. The Committee held that the leave applications of the appellant were made only with a view to evade joining duty at Ambaji. The appellant applied to the High Court of Gujarat under articles 226 and 227 of the Constitution, impleading the Divisional Controller as respondent, for the issue of a writ of certriorari to quash the order of dismissal. His petition was dismissed in limine on May 28, 1963. On June 17, 1963, the appellant applied for a certificate to appeal to this Court but it was refused. Thereafter he applied for special leave and that was granted by this Court. It may be stated at the outset that the respondent is an autonomous statutory Corporation formed under the provisions of the . It is not disputed that the appellant could not invoke the provisions of article 311 of the Constitution. The short question for determination in the appeal is whether the appellant was entitled to an opportunity to show cause against the proposed punishment as required by regulation No. 61 of the Regulations which govern the service conditions of the employees of the Corporation. It is admitted that no charge was framed against him nor was he given an opportunity to show cause. It is contended for the respondent that though the order of termination referred to long absence as the cause of termination, the termination itself was not by way of punishment and the only right of the appellant was to two months ' pay in lieu of notice under regulation No. 61, that assuming that the termination was by way of punishment, the appellant, as would be evident from the correspondence and the circumstances of the case, had been given an opportunity to show cause and that there was in fact and in substance compliance with the rules of natural justice. We may, at this stage, read the relevant regulations which admittedly govern the service conditions of the employees of the G Corporation. Regulation No. 61 provides as follows : "The service of an employee, who does not hold a permanent appointment in State Transport or a lien on a permanent appointment in any Government Department from which he is transferred, are liable to be terminated by the Competent Authority by giving a calendar month 's notice or a calendar month 's pay in lieu : 43 Provided that the services of casual workers and part time workers may be terminated without any notice; Provided further that a permanent employee of State Transport shall be entitled to 60 days ' notice or 60 days ' pay in lieu. " Clauses 3 8, 40 and 4 (b) of Schedule A to the Regulations provide: "38. Irregular attendance, absence without leave and without reasonable cause and absence without permission. " 40.Failure, without sufficient cause, to report, when directed, for duty, on the part of an employee to whom the leave he has applied for is refused." "4(b). A person against whom action is proposed to be taken for any act of misconduct, shall be provided with a copy of the charge or charges as well as a statement of allegations that have been made against him, and over which enquiry is being held. " Clause 3 defines two classes of offences named acts of misconduct and minor lapses and delinquencies, respectively and sub cl. (ii) of cl. 3 states inter alia that the misconducts are those specified in Schedule A. Regulations 38 and 40 provide that irregular attendance, absence without leave and without reasonable cause and failure, without sufficient cause, to report, when directed, for duty amount to acts of misconduct. Clause 4(b) is specific and clear. Under that clause, it is obligatory on the part of the respondent, to give the appellant a reasonable opportunity to show cause, by providing him with a copy of the charge or charges, as well as the statement of the allegations that have been made against him. Admittedly, the respondent did not frame a charge against the appellant nor conduct any enquiry. It is true that the respondent may visit the punishment of discharge or removal from service on a person who has absented himself without leave and without reasonable cause, but this cannot entail automatic removal from service without giving such person reasonable opportunity to show cause why he be not removed. The appellant is entitled to a reasonable opportunity to show cause which includes an opportunity to deny his guilt and establish his innocence which he can do, only when he knows what the charges levelled against him are and the allegations on 44 which such charges are based. In our judgment the appellant was entitled to an opportunity to show cause against the action proposed to be taken against him. The order of termination passed against the appellant is bad in law since it contravenes the provisions of cl. 4(b) of the Regulation and also the principles of natural justice. In all the circumstances of the case, we are satisfied that the impugned order must be quashed. A writ of certiorari will accordingly issue quashing the order of dismissal, but this will not preclude the respondent from making a fresh enquiry against the appellant after giving him reasonable opportunity to show cause as provided under cl. 4(b) of the regulations. The appeal is accordingly allowed, but there will be no order as to costs. Appeal allowed.

IN-Abs

The appellant, who was a permanent employee of the respondent State Transport Corporation, proceeded on 15 days ' leave on January 15, 1962 and thereafter applied for an extension of his leave on medical grounds. This extension was refused and although the appellant was directed to report for duty immediately, he continued to be absent and wrote to the respondent on March 3, 1963, intimating him of his inability to join duty as he was still not well. By an order of the respondent dated March 9, 1962, the appellant 's services were terminated with effect from January 16, 1962 on the ground of long absence. After his representations and an appeal to higher authorities in the ;Corporation had been rejected, the appellant filed a petition for a writ of Certiorari to quash the dismissal order, but this petition was dismissed in limine. It was contended on behalf of the appellant that in accordance with Clauses 4(b), 38 and 40 of Schedule A to the Regulations governing his service conditions, a charge should have been framed against him and that be was entitled to an opportunity to show cause against the proposed 'punishment. On the other hand it was the respondents ' contention that though the order of dismissal referred to long absence as the cause of termination, the termination itself was not by way of punishment and the only right of the appellant under Regulation 61 was to two months ' notice in lieu of pay; and that an examination of the correspondence and the circumstances of the case showed that the appellant had been given to opportunity to show cause and that there was in fact and in substance compliance with the rules of natural justice. HELD : The order of termination passed against the appellant must be quashed as it was bad in law since it contravened the provisions of cl. 4(b) of the Regulations and also the principles of natural justice. [44 B] Clauses 38 and 40 provided that absence without leave and without reasonable cause, and failure, without sufficient cause. to report for duty when directed amount to acts of misconduct. Under clause 4(b) it was therefore obligatory on the part of the respondent to give the appellant a reasonable opportunity to show cause, by providing him with a copy of the charge or charges as well as the statement of the allegations that had been made against him.

Appeals Nos. 90 andand 91 of 1965. Appeals by special leave from the judgment and order dated September 4, 1963 of the Madras High Court in Tax Cases Nos. 120 and 121 of 1963. 80 A. Ranganandhan Chetty and A. V. Rangam, for the appel lant. T. A. Ramachandran and O. C. Mathur for the respondent. The Judgment of the Court was delivered by Subba Rao, J. These appeals, by special leave, raise the question of the true construction of the provisions of r. 5(1) (i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939, hereinafter referred to as the Rules. The facts are not in dispute and they may be briefly stated. The respondent, Messrs Swastik Tobacco Factory, is a dealer in tobacco. It purchased raw tobacco; by processing it in a prescribed manner, converted it into chewing tobacco and sold it as such in small paper packets. The said process has been described by a Division Bench of the Madras High Court in Bell Mark Tobacco Co. vs Government of Madras(1) thus : "Taking, however, the cumulative effect of the various processes to which the assessee subjected the tobacco before he sold it is clear that what was eventually sold by the assessee was a manufactured product, manufactured from the tobacco that the assesses had purchased. Soaking in jaggery water is not the only process to be considered. The addition of flavouring essences and shredding of the tobacco should establish that what the assesses sold was a product substantially different from what he had purchased." for the purpose of these appeals, it was not disputed that the respondent purchased raw tobacco, converted it by a manufacturing process into chewing tobacco and sold it in small paper packets. The respondent paid excise duty in respect of the raw tobacco purchased by it. For the assessment years 1955 56 and 1956 57, the Assistant cum Deputy Commercial Tax Officer assessed the respondent to sales tax on the turnover of Rs. 10,67,923 10 9 and Rs. 7,71,661 11 0 respectively. The respondent, claimed that the excise duty paid by it to the Central ' Government in respect of the raw tobacco should be deducted from the turnover ascertained by the said Officer. But his conten tion was rejected. On appeal, the order of the said Officer was confirmed by the Appellate Assistant Commissioner of Commercial Taxes. On a further appeal to the Sales Tax Appellate Tribunal, the assessee, in addition to the question of deduction, raised (1) (1961) 12 S.T.C. 126,132. 81 an additional ground that the entire turnover of the sales on chewing tobacco was not liable to be assessed. The Tribunal set aside the order of the Appellate Assistant Commissioner. The State carried the matter in two revisions to the High Court of Madras. A Division Bench of the said High Court agreed with the view expressed by the Tribunal and dismissed the revisions. Hence the present appeals. Mr. A. V. Rangam, learned counsel for the State, argued that the raw tobacco was converted by a manufacturing process into, chewing tobacco, a different commodity and that, therefore, under r. 5(1) of the Rules, as excise duty was paid only in respect of the raw tobacco and not chewing tobacco, the said duty was not deductible from the turnover of the assessee. He did not contest the correctness of the decision of the High Court on the question of the taxability of the chewing tobacco under section 5(vii) of the Act. Mr. T. A. Ramachandran, learned counsel for the respondent, contended that the said rule was couched in a comprehensive language so as to take in excise duty paid on raw tobacco converted by a manufacturing process into chewing tobacco. The relevant rule reads thus : "Rule 5. (1) The tax or taxes under section 3 or 5 or 5A or the notification or notifications under section 6(1) shall be levied on the net turnover of the dealers. In determining the net turnover the amounts specified in the following clauses shall, subject to the condition specified therein, be deducted from the gross turnover of a dealer : (i) the excise duty, if any, paid by the dealer to the Central Government in respect of the goods sold by him; Both the advocates argued, on the basis of the factual position,. that packets of chewing tobacco were goods different from tobacco from which the said goods were manufactured. While the learned counsel for the State laid emphasis on the words "goods sold by him", the learned counsel for the respondent relied upon the expression "in respect of" preceding the said words. If, instead of the expression "in respect of ', the word "on" were there, the intention of the rule would be manifest and the answer to the question raised would be obvious. The excise duty paid by the respondent was only on the raw tobacco and not on the goods ' sold by it and, therefore, the said duty was not deductible thereunder. So far there is no dispute. But it was said that the 82 expression "in respect of" made all the difference. The words "in respect of", it was said, meant "attributable" and, therefore, the argument proceeded, the excise duty paid on the tobacco, though it was not paid on the goods sold by the respondent, was attributable to the said goods sold. The object of the concession is presumably to avoid payment of tax on tax in respect of the same goods. If excise duty was paid by a dealer on certain goods, it would be deducted from the gross turnover of the dealer in regard to the said goods, as otherwise, in effect, sales tax would have to be paid on the amount paid towards excise duty. This concession could have no relevance if the goods subjected to excise duty were different from the goods sold. Raw tobacco, when converted by a process of manufacture into chewing tobacco, be comes a different marketable product. There will be no comparison between the raw tobacco and the chewing tobacco in the matter of demand or even price. Duty on raw tobacco may have some effect on the cost of the manu factured product, but it cannot possibly be said that the said duty is paid in respect of the manufactured product. Rule 5(1)(i) of the Rules, therefore, permits deduction from the gross turnover of the dealer only the excise duty paid by him in respect of the same goods sold by him. Learned counsel for the :respondent cited some English deci sions in support of his contention that the expression "in respect of the goods" was very wide and that it took in the raw material out of which the goods were made. The House of Lords in Inland Revenue Commissioners vs Courts & Co.(1), in the context of payment of estate duty, con strued the words "in respect of" in section 5(2) of the Finance Act, 1894 (57 & 58 Vict. c. 30) and observed that the phrase denoted some imprecise kind of nexus between the property and the estate duty. The House of Lords in Asher vs Seaford Court Estates Ltd. (2) in construing the provisions of section 2, sub section (3) of Increase of Rent and Mortgage Interest (Restrictions) Act, 1920 (10 & 11 Geo. 5, c. 17), held that the expression "in respect of ' must be read as equivalent to "attributable". The Privy Council in Bicber, Ltd. vs Commissioners of Income tax(1) observed that the said words could mean more than "consisting of" or "namely". It is not necessary to refer to other decisions. It may be accepted that the said expression received a wide interpretation, (1) , 732. (3) (2) 83 having regard to the object of the provisions and the setting in which the said words appeared. On the other hand, Indian tax laws use the expression "in respect of" as synonymous with the expression "on" : see article 288 of the Constitution of India; section 3 of the Indian Income tax Act, 1922; sections 3(2) and 3(5), Second Proviso, of the Madras General Sales Tax Act, 1939; section 3(1A) of the Central Excise and Salt Act, 1944; and sections 9 of the Kerala Sales Tax Act. We should not be understood to have construed the said provisions, but only have referred to their to state the legislative practice. Consistent with the said practice, r. 5(1)(i) of the Rules uses the same expression. When the said rule says "excise duty paid in respect of the goods", the excise duty referred to is the excise duty paid under section 3(1), read with the Schedule, of the (1 of 1944). Under the, said section, read with the Schedule, excise duty is levied on the goods described in the Schedule. Therefore, when r. 5(1)(i) of the Rules refers to the duty paid in respect of the goods to the Central Government, it necessarily refers to the duty paid on the goods mentioned in the Schedule. As the duty exempted from the gross turnover is the duty so paid under the Central Act, read with the Schedule, the expression "in respect of" in the context can only mean excise duty paid on goods. In our view, the expression "in respect of the goods" in r. 5(1)(i) of the Rules means only "on the goods". Even if the word "attributable" is substituted for the words "in respect of", the result win not be different, for the duty paid shall be attributable to the goods. If it was paid on the raw material it can be attributable only to the raw material and not to the goods. We, therefore, hold that only excise duty paid on the goods sold by the assessee is deductible from the gross turnover under r. 5(1)(i) of the Rules. We cannot, therefore, agree with the construction of r. 5(1)(i) of the Rules accepted by the High Court. No other question was raised before us. In the result, we modify the order of the High Court accordingly. In the circumstances, we direct the parties to bear their respective costs. Order modified.

IN-Abs

The respondent factory used to purchase raw tobacco and after processing it, sell it as chewing tobacco. Excise duty was paid by the factory in respect of raw tobacco purchased by it. In sales tax proceedings the factory contended that the excise duty so paid to the Central Government must be deducted to arrive at the net turnover under r. 5(1)i) of the Madras General Sales Tax (Turnover and Assessment) Rules, 1939. The assessing officer as well as the Appellate Assistant Commissioner rejected the contention but it was accepted by the Tribunal. The revision filed by the. State in the High Court was dismissed, whereupon the State appealed to this Court by special leave. It was contended on behalf of the appellant that the raw tobacco was converted by a manufacturing process into chewing tobacco, a different commodity and that, therefore, under r. 5(1)(i) of the Rules, as excise duty was paid only in respect of raw tobacco and not chewing tobacco the said duty was not deductible from the turnover of the assesses. HELD : 'Me object of the concession in r. 5(1)(i) is presumably to avoid payment of tax on tax in respect of the same goods. This concession would have no relevance if the goods subjected to excise duty were different from the goods sold. Tobacco when converted by a process of manufacture into chewing tobacco becomes a different marketable product. Duty on raw tobacco cannot therefore be said to be paid in respect of the manufactured product. [82 B D] The expression "in respect of the goods" in r. 5(1)(i) means only on the goods", and cannot take in the raw material out of which the goods were made. [83 E] Inland Revenue Commissioners vs Court & Co. [1963] 2 All. E.R. 722 and Asher vs Seaford Court Estates Ltd., L.R. , considered. The excise duty paid by the respondent was only on the raw tobacco and not on the goods sold by it, and therefore, the said duty could not be deducted from its turnover under r. 5(1) (i). [83 E F]

Appeals Nos. 167 and 169 of 1953. Appeals under articles 132(1) and 133(1) (c) of the Constitution of India from the Judgment and Order, dated the 7th April, 1953, of the High Court of Judicature of Orissa at Cuttack in Original Jurisdiction Cases Nos. 65, 67 and 68 of 1952. N. C. Chatterjee (B. Sen, K. C. Mukherjea and H.S. Mohanty, with him) for the appellant. M.C. Setalvad, Attorney General for India and Pitambar Misra, Advocate General of Orissa.(V. N. Sethi, with them) for the respondents. December 18. The Judgment of Patanjali Sastri C. J., Das and Ghulam Hasan JJ. was delivered by Das J. The Judgment of Mahajan J. and Bose J. was delivered by Bose J. DAS J. These three appeals which have been, heard together raise the same or similar questions. Appeal 844 No. 167 of 1953, relates to Hemgir of which the appellant, Shri Biswambhar Singh, is the proprietor. It comprises an area of about 360 square miles out of which 145 square miles are covered by forests. Appeal No. 168 of 1953 is by the appellant, Shri Janardhan Singh, who is the proprietor of Sarapgarh comprising an area of about 45 square miles. Appeal No. 169 of 1953 relates to Nagra the proprietor whereof is the appellant, Shri Sibanarayan Singh Mahapattra. It comprises an area of 545 square miles including 109 square miles of forests. All these proprietors are the descendants of Bhuiyan Chiefs and they claim that their ancestors were independent ruling chiefs of their respective principalities. There is no dispute that in course of time they became subordinate vassals of the Raja of Gangpur. It appears from Connolly 's Report, Mukherjee 's Report and Ramdhyani 's Report that neither the Raja of Gangngpur nor any of these proprietors was anxious to have their respective rights defined specifically and so the settlement officers made no attempt to do so with the result that their status Vis a vis the Raja of Gangpur remains undetermined. There is no evidence on record that the ancestors of the proprietors of Hemgir and Sarapgarh ever received or accepted any Sanad or grant from the Raja of Gangpur. There is, however, evidence that the ancestors of the proprietor of Nagra had executed an Ekrarnama in favour of the Raja of Gangpur as to which more will be said hereafter. There is no dispute that the ancestors of each of these proprietors paid every year to the Raja of Gangpur what has been called "Takoli" and the present appellants are continuing this annual payment. This payment has sometimes been called a tribute and sometimes even rent as in the order, dated the 9th August, 1878, of A. C. Mangles, the Commissioner of Chota Nagpurr. These considerable properties are and have been heritable and the rule of primogeniture prevails. By a certain process beginning with Agreement of integration made in December, 1947, and ending with the States ' Merger (Governor 's Province) Order made on the 27th July, 1949, by the then Governor General 845 of India in exercise of the powers conferred on him by section 290 A of the Government of India Act as amended by the Indian Independence Act, 1947, all the feudatory States of Orissa merged into and became part of the State of Orissa. In consequence of such merger the area comprised in Hemgir, Sarapgarh and Nagra as parts of the merged territories became parts of the State of Orissa. On the 17th January, 1950, a bill which eventually became the Orissa Estates Abolition Act was introduced in the Orissa Legislature. The Constitution of India came into operation on the 26th January, 1950. The bill having been passed by the Orissa Legislature on the 28th September, 1951, the Governor of Orissa reserved the same for the consideration of the President. On the 23rd January, 1952, the bill received the assent of the President and became law as Orissa Act I of 1952. An Act called the Orissa Estates Abolition (Amendment) Act, 1952, was passed on the 5th July, 1952, and was assented to by the President on the 27th August, 1952 The long title of the Act is as follows: " An Act to provide for the abolition of all the rights, title and interest in land of intermediaries by whatever name known, including the mortgagees and lessees of such interests, between. the raiyat and the State of Orissa, for vesting in the said State of the said rights, title and interest and to make provision for other matters connected therewith. " There are two preambles to the Act which recite: " Whereas in pursuance of the Directive Principles of State policy laid down by the Constitution of India it is incumbent on the State to secure economic justice for all and to that end to secure the ownership and control of all material resources of the community so that they may best subserve the common good, and to prevent the concentration of wealth and means of production to the common detriment; And whereas in order to enable the State to discharge the above, obligation it is expedient to provide for the abolition of all the rights, title and 846 interest in land of intermediaries by whatever name known, including the mortgagees and lessees of such interest, between the raiyat and the State of Orissa, for vesting in the said State of the said rights, title and interest and to make provision for other matters connected therewith;" The material parts of the 'definitions of "Estate" and "Intermediaries" set forth in section 2 are as follows: (g) "estate. . in relation to merged territories means any collection of Mahals or villages held by the same intermediary which has been or is liable to be assessed as one unit to land revenue whether such land revenue be payable or has been released or compounded for or redeemed in whole or in part. " (h) " Intermediary. . . .with referencre to the merged territories means a maufidar including the ruler of an Indian State merged with the State of Orissa, a Zamindar, Ilaquedar, Khorposhdar or Jagirdar within the meaning of the Wajib ul arz, or any sanad, deed or other instrument, and a gaontia or a thikadar of a village in respect of which by or under the provisions contained in the Wajib ul arz appli cable to such village the maufidar, gaontia or the thikadar, as the case may be, has a hereditary right to recover rent or revenue from persons holding land in such village." Section 3(1) runs thus: " 3. (1) The State Government may, from time. to time by notification, declare that the estate specified in the notification has passed to and become vested in the State free from all encumbrances. As was to be expected the constitutionality of the Act was challenged in a number of petitions under article 226 of the Constitution, but the Orissa High Court pronounced in favour of the validity of the Act,. That decision has since been upheld. by this court in Civil Appeal No. 71 'of 1953 (Maharaja Sri Krishna Chandra Gajapati Narayan Deo vs The State of Orisas(1).During the pendency of the writ petitions before the (1) [1954) S.C.R. 1. 847 High Court, the State Government on the 27th November, 1952, issued a number of notifications under section 3 covering a large number of estates including those of the three appellants before us and called upon them to deliver up possession. These appellants thereupon filed three separate writ petitions praying in each case for a writ in the nature of a writ of mandamus directing the State, of Orissa and the Collector of Sundargarh not to interfere with their possession of their respective estate or to intermeddle with it or to give effect to the provisions of the Act. These applications were opposed by the State of Orissa. The several grounds taken in support of the petititions were, very broadly speaking, (a) that they were not intermediaries, (b) that their properties were not estates, (c) that the forest areas within their properties were not estates ' (d) that the Act did not come under article 31A of the Constitution and was not entitled to its protection, (e) that the Act was discriminatory and offended against the provisions of article 14. The then Chief Justice of Orissa, again very broadly speaking, decided each of these issues against the appellants and was of opinion that the petitions should be dismissed. Narasimham J. agreed with the Chief Justice that the appellants were intermediaries and that immovable properties of the petitioners were estates, that the forest areas were included in their estates but he took a different view on two important questions. In his view the Act was not covered by article 31A and was not entitled to its protection and section 3 of the Act contravened article 14 of the Constitution and as it was the key section to the whole Act the entire Act was invalid in its application to the immovable properties of the appellants although it was valid in its application to other estates which come within article 31 A(2)(a). The learned Judge was accordingly of the opinion that the appellants were entitled to the reliefs prayed for by them. In view of this difference of opinion the applications were directed to be posted before a third Judge for hearing on fresh argument. Mahapatra J. before Whom the 848 applications were re argued agreed substantially with the learned Chief Justice that the Act was protected by article 31A and that in any case it did not violate the equal protection clause of the Constitution. In the result the applications were dismissed. Hence the present appeals. Section 3(1) authorises the State Government to, issue a notification declaring that the estate specified therein has passed to the State. The State Government has no power to issue a notification in respect of any property unless such property is an "estate" as defined in section 2(g) A perusal of the relevant part of that definition which has been quoted above will at once show that in order to be an " 'estate" the collection of mahals or villages must, amongst other things, be held by the same "intermediary". An "Intermediary", according to the definition in section 2(h), must be, amongst other things, "a Zamindar, Ilaqueder, Khorposhdar, or Jagirdar within the meaning of the wajib ul arz or any Sanad, deed or other instrument." The point to note is that in order to be an "intermediary" within the definition, it is not enough, if the person is a Zamindar, Ilaquedar, Khorposhdar or Jagirdar simpliciter but he must fall within one or other of the categories "within the meaning of the wajib ul arz or any sanad deed or other instrument. " accordingly the first head of argument advanced before is by learned counsel for the appellants is that the state government had no authority to issue the notification because they are not intermediaries and, therefore their properties are not estates. This argument obviously proceeds on the footing that the Act is intra vires the Constitution and if it succeeds then no question of constitutionality will arise. We have had the advantage of perusing the judgment prepared by our learned brother Bose and we agree, substantially for reasons stated therein, that the appellants Shri Biswambhar Singh and Shri Janardhan Singh are not intermediaries as defined in section 2(h) and their respective properties, namely, Hemgir and Sarapgarh are not "estates" within the meaning of section 2(g) and that that being so the State 849 Government had no jurisdiction or authority to issue any notification under section 3 with respect to their properties '. In this view of the matter no constitutional questions need be considered in Appeals Nos. 167 and 168 of 1953, which will, therefore, have to be allowed. Appeal No. 169 of 1953 filed by the appellant Shri Sibanarayan Singh Mahapatra of Nagra appears to us to stand on a different footing. In paragraph 13 of the counter affidavit filed by the State in opposition to this appellant 's petition specific reference was made to the Rubakari in the court of J. F. K. Hewitt, Commissioner of Chota Nagpur, dated the 10th March, 1879. At the hearing of the petition that Rubakari was filed in court without any objection. It is document No. 6(g). Evidently the commissioner sent for both the Raja of Gangpur and Balki Mahapatra, of Nagra and after referring to the then outstanding disputes between the then Raja of Gangpur and Balki Mahapatra, the predecessor in title of the appellant Shri Sibanarayan Singh Mahapatra this Rubakari records that "it was agreed upon that from future Balki Mahapatra would be paying to the Raja of Gangpur Rs. 700 as yearly rent from the year 1935 and thereafter instead of Rs. 425 which he used to pay. This amount of Rs.700 is the fixed rent. " The words rent and fixed rent are significant. It further appears that Rubakari decided, that "Balki Mahapatra and his heirs and successors should ever 'hold ' possession over this Nagra State Zamindari on the aforesaid fixed annual rent and nothing more would be demanded from him except marriage Pancha and Dashra Panch which according to local custom and usage he can pay The claim of the Raja about Rs. 200 as Raja Bijoy should be discontinued and the Raja should stop granting patta to the Gauntias of Nagra. " The Rubakari then concluded thus: " This Ekrarnama being signed by them by their own pen was filed before me and they agreed to abide by the terms mentioned in the, Ekrarnama. So it has been ordered that copy of it may be sent to the Raja 110 850 of Gangpur and Balki Mahapatra of Nagra,for information and guidance. " It is thus quite clear from the above Rubakari that as far back as 1879 an Ekrarnama had been executed both by the then Raja of Gangpur and Balki Mahapatra of Nagra recording the terms on which the latter would "hold" possession of the Nagra Zamindari namely, that he must. pay a fixed annual rent besides certain customary dues. Years later, to wit on the 29th March, 1943, the Dewan of Gangpur State wrote a letter to the Zamindar of Nagra Estate calling upon him to show cause why the takoli should not be enhanced. This letter is document No. 6 (r 2). The Zamindar of Nagra to whom this letter was addressed was no other than the appellant Shri Sibanarayan Singh Mahapatra. On the 19th July, 1943, a long reply was sent by the latter. In the heading of this reply after the name of the appellant is added the description "Zamindar of Nagra". In paragraph 3 (XV) reference is made to the fact that takoli had been fixed in perpetuity and had been finally settled in the year 1879. The whole of Rubakari of J. F. K. Hewitt is set out in extenso in paragraph 14 of this reply. Paragraph 15 states : "That from the Rubakari proceeding of Mr. Hewitt it will appear that the then Raja Raghunath Sekhar Deo of Gangpur and Babu Balki Mahapatra, Zamindar, Nagra, duly signed a, deed of compromise in which it has been, clearly and in unequivocal terms, embodied that Gangpur Raja and his successors will be bound by that term and Nagra should only pay Rs. 700 as Takoli every year and nothing more and this Takoli should remain fixed for ever. " Reference is then made in paragraph 17 to the proceedings of the 29th June, 1891, before W.H. Grimley, the then Commissioner, which is marked as document, No. 6 (L). This also refers to the settlement made by J.F.K. Hewitt in 1879. There is, therefore, no getting away from the fact that an Ekrarnama had been executed by the Raja of Gangpur and Balki Mahapatra, the predecessor in title of this appellant,. 851 under which Balki Mahapatra "held" the estate of Nagra upon terms of payment of an annual rent. Indeed, the appellant Shri Sibanarayan Singh Mahapatra firmly takes his stand on the Ekrarnama and its terms. A question has been raised that the original Ekrarnama of 1879 has not been filed and as no evidence was led to explain the reason for its nonproduction, secondary evidence of its contents is inadmissible. We see no force in this belated contention. The Rubakari and the other documents referred to above were filed without any objection as to. their admissibility on the ground that they are merely secondary evidence of the contents of the Ekrarnama. Indeed, in the matter of production and proof of documents the parties undoubtedly proceeded a little informally. The following extract from the judgment of the learned Chief Justice will make the position clear: "As regards some of them, neither the originals, nor the authenticated copies have been filed before us, but typed paper books containing unauthenticated copies have been filed by both sides and have been treated as evidence, with the mutual consent of the parties. Those typed paper books have accordingly been placed on the record. Some annual administration reports of the Gangpur State as well as certain working plans for the reserved forests of Hemgir, Nagra and other zamindaris as also the Forest Act of Gangpur State have been filed and received without any objection from either side. Quite a number of further documents have been produced on behalf of the State as per the list of documents filed along with two affidavits dated the 9th and 10th February, 1953, and certain annexures have been filed on behalf of the petitioners along with an affidavit dated the 11th February, 1953. All these have been, without objection, treated as part of the record excepting one document to be presently noticed. The only document whose reception has been objected to is what is referred to as the Mukherjee 's Settlement Report, 852 item No. 18 in the list of documents filed on behalf of the State." Further and strictly speaking the appellant Shri Sibanarayan Singh Mahapatra having in his own letter dated the 19th July, 1943, referred to above admitted the existence and contents of the Ekrarnama, secondary evidence is, strictly speakina. admissible under section 65 (b) of the Indian Evidence Act. It may also be mentioned here that in the grounds of appeal set forth in the petition for leave to this court no grievance war, made that secondary evidence of the contents of the Ekrarnama had been wrongly let in. In the circumstances, this appellant cannot now be heard to complain of admission of inadmissible evidence as to the terms of the Ekrarnama. Apart from this, the recital of the Ekrarnama and its terms in an ancient public document like the Rubakari whose authenticity has not been, nor indeed could be, doubted furnishes strong evidence of the existence and genuineness of the settlement arrived at by the parties. Proceeding, then, on the footing that Balki Mahapatra and his descendants including the present proprietor held the Nagra Zamindari estate under the Ekrarnama on the terms of payment of a fixed annual rent there can arise no question as to the real status of the proprietor of Nagra vis a vis the Raja of Gangpur since 1879, whatever the position may have been prior thereto. It is, therefore, quite clear that the proprietors of Nagra are zamindars within the meaning of the Ekrarnama, call it a 'deed" or "other instrument" as one likes. In this view of the matter the appellant Shri Sibanarayan Singh Mahapatra is an intermediary as defined in section 2 (h) of the Act and his estate is an "estate" within the meaning of section 2 (g) and consequently there is no escape from the conclusion that the State Government had ample jurisdiction or authority to issue a notification under section 3 of the Act. A subsidiary point was raised that at any rate the forest lands which are not parts of any Mahal or village and are not assessed as one unit to land 853 revenue cannot possibly fall within the definition of estate. This contention was repelled by the High Court and there was no disagreement between the two learned Judges on this question. We find ourselves :in agreement with the High Court in this behalf. There is no dispute that geographically the forest tract is included within 'the Nagra Zamindari estate. Our attention was drawn to certain maps or plans which clearly indicate that the forest lands are scattered in blocks within the boundaries of the estate. There is no dispute that the annual rent fixed under the Ekrarnama was so payable in respect of the whole estate. In those days there was hardly any income from the forests as at present and, therefore, in those ancient days the existence of the forest like that of uncultivable waste land would not affect the assessment of the rent to any appreciable degree. There is no evidence on record that in fixing the annual rent the forests were left out of consideration in the sense that they were treated as a separate item of property. There is no proof on the record in support of such an unusual arrangement. If the forests are included within the boundaries of the estate and if the Zamindar of Nagra "holds" the estate under the Raja of Gangpur, he must be holding the forests also under the Raja of Gangpur. The suggestion that the proprietor of Nagra accepted a grant from the Raja of Gangpur only in respect of the collection of Mahals or villages but retained his independent chieftainship with respect to the forest lands interspersed between the villages but situate within the geographical limits of the entire estate is hardly convincing. For the above reasons and those set out in the judgment of the learned Chief Justice we are of the opinion that the forest lands are included within the estate held by the Zamindar of Nagr under the Raja of Gangpur. In the view that the Zamindar of Nagra is an intermediary and his territories are an estate it must follow that the appellant Shri Sibanarayan Singh Mahapatra; cannot get any relief if the Act is valid. Learned counsel appearing in support ' of his appeal (No. 169 of 1953) then falls back on the question of 854 the constitutionality of the Act. Here he has a preliminary hurdle to get over, for if the Act is covered and protected by article 31 A then the Act cannot be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by any provision of Part III of the Constitution. It has, therefore, been the endeavour of learned counsel for the appellant before us, as it was before the High Court, that Nagra was not an "estate" as defined in article 31 A (2)(a). The learned Chief Justice took the view that Nagra was an estate as defined and consequently the Act was within the protection of article 31 A but Narasimham J. took the opposite view. The third Judge Mahapatra J. agreed with the learned Chief Justice. In the view we take on the question of the alleged violation of the provisions of article 14 it is not necessary for us, for the purpose of disposing of this appeal, to enter into a long discussion on the applicability of article 31 A to the impugned Act. On the assumption, then, that article 31 A is out of the way the Act in question becomes liable to attack both under article 31 (2) and article 14. Learned counsel appearing before us did not call in aid article 31 (2) but confined himself to article 14. In the High Court article 14 was invoked in two ways namely (1) that the provision for assessing and fixing the amount of compensation is discriminatory and (2) that section 3 which gives an unfettered discretion to the State Government to issue or not to issue notification with respect to an estate is discriminatory in that it enables the State Government to issue notification with respect to those zamindars who opposed the ruling party in the election and to refrain from doing so with respect to others who were loyal to that party. The objection, as to discrimination founded on the manner of assessment of the compensation has not been pressed before us and learned counsel confined his arguments to the second ground. Here again the learned Chief Justice held that there was no violation of article 14 while Narasimham J. ' took the opposite view. Mr. Justice Mahapatra, 855 however, agreed with the Chief Justice. We find ourselves in agreement with the majority view. The long title of the Act and the two preambles which have been quoted above clearly indicate that the object and purpose of the Act is to abolish all the rights, title and interest in land of intermediaries by whatever name known. This is a clear enunciation of the policy which is sought to be implemented by the operative provisions of the Act. Whatever discretion has been vested in the State Government under section 3 or section 4 must be exercised in the light of this policy and, therefore, it cannot be said to be an absolute or unfettered discretion, for sooner or later all estates must perforce be abolished. From the very nature of things a certain amount of discretionary latitude had to be given to the State Government. It would have been a colossal task if the State Government had to take over all the estates at one and the same time. It would have broken down the entire administrative machinery. It could not be possible to collect sufficient staff to take over and discharge the responsibilities. It would be difficult to arrange for the requisite finance all at once. It was, therefore, imperative to confer some discretion on the State Government. It has not been suggested or shown that in practice any discrimination has been made. If any notification or order is made, not in furtherance of the policy of the Act but in bad faith and as and by way of discrimination such notification or order, which by virtue of article 13(3) comes within the definition of " Law ", will itself be void under article 13 (2). Learned counsel appearing for the.appellant has not shown, by advancing any cogent and convincing argument, how and why the reasonings adopted by the majority of the learned Judges below are faulty or untenable. In the premises, it is not necessary for us to pursue this, matter further beyond saying that we find ourselves in agreement with the conclusions of the majority of the learned Judges of the High Court. Learned counsel for the appellant referred to another point, namely that the amending Act altering the definition of the date of vesting was invalid as there 856 was no public purpose for taking away the vested right that the original definition of that expression in the Act had given to the persons whose estates had been. notified. Learned counsel, however, did not seriously press this objection and nothing further need be said about it. The result, therefore, is that appeals Nos. 167 and 168 of 1953 are allowed with costs and appeal No. 169 of 1953 is dismissed with costs. Bose J. These three appeals arise out of petitions made to the High Court of Orissa under article 226 of the Constitution by the Zamindars of Hemgir, Sarapgarh and Nagra. On the 28th of September, 1951, the Orissa State Legislature passed the Orissa Estates Abolition Act of 1951* (Orissa Act I of 1952). The Act was reserved for the assent of the President and became law on the 23rd of January, 1952, when the President gave his assent. The Act enables the State Government to take over ' the " estates " of all " intermediaries " situate in the State of Orissa. In pursuance of the powers so conferred the State Government issued notifications from time to time under section 3 of the Act and among the notifications so issued are the three which affect the present petitioners. This action of the State Government was challenged on a number of grounds, among them the following: (1) that the Act was invalid as it infringed the fundamental provisions of the Constitution, (2) that even if it is valid the notifications are ultra vires because (a) the zamindaris in question are not " estates " within the meaning of section 2 (g) of the Act and because (b) the petitioners are not " intermediaries " within the meaning of section 2(h). We will first deal with the question of " estates and " intermediaries ". The question assumes importance because of section 3 (1) which enacts that "The State Government may, from time to time by notification, declare that the estate specified in the 857 notification has passed to and become vested in the State free from all encumbrances. " The definition of an "estate" is given in section 2(g) and is as follows: "estate. . in relation to merged territories means any collection of Mahals or villages held by the same intermediary which. has been or is liable to be assessed as one unit to land revenue. " Intermediary " is defined in section 2 (h) "Intermediary. . with reference to the merged territories means a maufidar including the Ruler of an Indian State merged with the State of Orissa, Zamindar, Ilaquedar, Khorposhdar or Jagirdar within the meaning of the wajib ul arz, or any sanad, deed or other instrument. It is admitted that the territories with which we are concerned are merged territories, so the portions of the definition that we have reproduced above are all we need consider. Before any property can be taken over under the Act it must be an '. 'estate" within the meaning of the above definition and so must belong to an " intermediary " as defined in clause (h). We will start with the definition of "intermediary. " It is admitted by both sides that the petitioners are zamindars but the petitioners contend that they are not "intermediaries" because the definition does not include all zamindars but only those who are zamindars, etc., within the meaning of (a) any wajib ul arz " (b) any sanad, deed or other instrument. We have grouped the last three together because that is how the appellant 's learned counsel says they should be read. According to him, the "deed" and "other instrument" must be read ejusdem generis with "sanad" and so must be confined to a document of title like a sanad in which one party creates or confers a zamindari estate on another. We do not agree. In our opinion, the words must be read disjunctively and be interpreted according to their ordinary meaning. For example, a document by 111 858 an intermediary acknowledging the overlordship of ,another would, in our opinion, fall within the definition. Now had these zamindars been in what was once British India there would.be no difficulty because the first part of the definition in section 2(h) is straightforward and clear. The petitioners in these case would have fallen under one or other of the categories mentioned there. But when we come to the merged territories the definition changes and an "intermediary " there no longer means this or that (except in the case of a maufidar) but this or that "within the meaning of " certain documents. Thus an " intermediary " neither "includes" a zamindar nor "means" a zamindar, but means a zamindar within the meaning of (1) the wajib ul arz (2) any sanad (3) any deed or (4) any other instrument. We take it that this was deliberate and that there was purpose behind the change. What then do the words " within the meaning of signify ? They cannot mean mere mention of A as a zamindar. They cannot mean that if A is mentioned in one of those documents and is called or referred to as a zamindar that makes him an intermediary, for if that had been the intention, the definition would have said so. In our opinion, the words have been inserted to include only those documents which deal, or purport to deal, with true intermediaries, that is to say, with persons who hold an interest in the land between the raiyat or actual cultivator and the overlord of the demesne. Two illustrations will show what we mean. A may be a zamindar in one State and yet 'May hold lands, which have no connection with his zamindari, as an ordinary tenant in another State. Now A may well execute a kabuliat or enter into a lease with his immediate landlord in that other State and refer to himself as a zamindar, but that would not make him a zamindar within the meaning of that deed because the deed does not purport to deal with zamindars but with a landlord and his tenant. Though called a zamindar 859 there, the word would only be descriptive, and he would really be a tenant within the meaning of that deed. Consider a second illustration. A ruling Chief might acquire a zamindari of the intermediary type in a neighbouring State by purchase or otherwise. In documents relating to the zamindari he may well be described as the Raja or Chief of so and so but he would not be a ruling Chief within the meaning of that document though so called. He would only be a zamindar. That is the only way in which we are able to interpret this clause in section 2. We cannot ignore the change in the two parts of the definition and we are bound to assign some intelligible purpose to the words " within the meaning of " The distinction is of importance because zamindars are of various kinds; some are true intermediate in that they are the collectors of the revenue of the State.from the raiyats and other under tenants of lands. They have an interest in the land but not the true fee simple of English law. They are not the lords of the manor as in England and bear little or no resemblance to an English landlord though they have some of his attributes, (See Baden Powell 's Land Systems of British India, Vol. I, pages 130, 519 and 523); others are either Ruling Chiefs or court favourites with a mere courtesy title or just peasant cultivators. The following description by Baden Powell at page 508 of Volume I is illuminating. He is dealing with the decline of the Moghul Empire in the year 1713 and says that the decline was marked by a relaxation of control, not only over the outlying provinces, but over the whole administrative machinery, and by the substitution of plans of farming the revenues of convenient tracts. Then comes this passage "Then it was that besides the Rajas, Chiefs and ancient grantees, who had a real hold over the country, and were already spoken of as the zamindars, other classes of persons were employed as farmers, and the same name and the same designation came to be applied to them also. As a matter of fact, we find ex officials 860 possessed of wealth and energy amils, karoris, etc.also bankers and court favourites, receiving the name of zamindar. And such persons would, besides taking the name, also ape the dignities and importance of the older landholders. " At page 401 he tells us that some of the zamindars were old Rajas who had a very close connection with the land (see also page 579) and at page 7 he says that in some parts of India the term means a petty peasant cultivator. The net result is that he calls the word zamindar" a "Protean term" at page 261 because of the variety of shapes which it takes, not only in different places but at different stages of history in the same place. At one moment we are dealing with a rajah or petty chieftain exercising sovereign or quasisovereign powers, at another with revenue farmers, at another with landlords of small estates in the English sense of the term, at another with a petty peasant cultivator and at times with mere courtesy titles which have no legal foundations or backing. We do not think the Act can be applied to peasants who own their own land and cultivate it, that is to say, to the raiyats, nor do we think it can be applied, to a landlord in the English sense of the term, the man who is the true lord of the soil, because the title of the Act, the preamble and the definitions, all point the other way. The title and the preamble use the same language and describe the Act and its purpose as one " to provide for the abolition of all the rights, title and interest in land of intermediaries by whatever name known. We are therefore bound to construe the ambiguous words which we have examined above in a sense which will carry out the purpose of the Act and not in a way which will travel beyond it. We accordingly hold that the kind of zaminder referred to in section 2 (h) is one who is what we may call a " true intermediary " within the meaning of the four documents set out there, that is to say, persons who hold an interest in the land between the raiyat and the overlord of the estate. 861 It is unfortunate that we should have to call them true intermediaries " when the whole purpose of the discussion is to examine what an " intermediary " means but that is a convenient term and we do not think it will mislead when read in conjunction with what we have said. Now the mere fact that the zamindari lands in the present cases are situate within the boundaries of the Gangpur State is not conclusive to show that the petitioners who own them are "intermediaries" because, as the Privy Council has pointed out in two cases, the mere fact that disputed lands are within the geographical boundaries of a larger estate is not conclusive proof that they are part of that estate [see Secretary of State for India vs Raja Jyoti Prashad Singh(1) and Forbes vs Meer Mahomed Tuquee(2)]; nor is the fact that the Raja of Gangpur exercises a general superintendence over these zamindars in certain matters necessarily conclusive, for, as Lord Phillimore says in Secretary of State for India vs Raja Jyoti Prashad Singh(1) at page 552, care must be taken not to confound hierarchical superintendence with what may be called feudal overlordship. The contention of the petitioners that they are not "intermediaries" but are the direct landlords of the soil will best be understood if we refer again to the Privy Council decision just cited. The zamindar there claimed to be the overlord of the Ghatwali Digwars in the same way as Gangpur is said to be the overlord of the zamindaris in the present cases. Lord Phillimore said at page 553 "It is agreed that these digwars have existed from time immemorial and may be coeval with the Raja and may have been created or recognised by a sovereign power superior to both." The Judicial Committee held that though the Ghatwali lands they were dealing with fell within the geographical limits of the Raja 's zamindari, they did not form part of it. (1) I.L.R. at 547. (2) (1870) 13 I.A. 438 at 457. 862 Similar questions arose for consideration in Bir Bikram Deo vs Secretary of State for India(1), where the Privy Council examined claims made by eight of the Central Provinces zamindars. They also claimed semi sovereign status. The history of the Central Provinces zamindaris was elaborately set out in the lower courts and copious extracts from their judgments are given in the report. The lower courts held that the zamindars in that area were of two kinds feudatory and non feudatory (page 637). The Privy Council remarking on this at page 657 said " The status of the Zamindar of Khariar and the plaintiffs in the other suits is simply the status of an ordinary British subject. That matter was determined by the grant in 1864 after ail exhaustive enquiry into the position of the petty chiefs of the Central Provinces. A few were recognised as feudatories having some of the attributes of sovereigntv. The rest were classed as non feudatories and declared to be ordinary British subjects. " Now if the State of Gangpur be substituted for the British Government the claim made by the present petitioners vis a vis the State of Gangpur becomes the same as the claims which the plaintiffs in the suit made against the Secretary of State for India. The status of the plaintiffs in that case vis a vis the British Government was settled because the question had been definitely raised and examined in the year 1863 and determined in the year 1864 and in 1874 sanads were granted to and accepted by the ancestors of the parties to that litigation (page 637). In the present cases the question of the present petitioners ' status vis a vis the State of Gangpur was repeatedly raised and as often deliberately not decided; and it is an admitted fact that there are no sanads. There is another point. The petitioners are Bhuyans and they have repeatedly claimed that their ancestors were the original settlers who were 'on the soil long before the Chiefs of Gangpur came on the scene. Now Baden Powell sets out the history of (1) I.L.R. 863 the Bhuyans in the Bengal and Chota Nagpur area of what was once British India in Volume I of his book. At page 577 he explains that the Bhuyans were the original founders of the village and at page 581 he says that "Anciently the theory was that no bhuinhar (of, an original founders ' family) could ever lose his lands; so that after years of absence he might return and claim it from the present holder. " But he says at page 580 that When British rule began, some of the surviving Rajas, chiefs and grantees, were recognised as "Zamindars" with a permanent settlement When the old Rajas(or their successors) became Zamindar landlords they did their best to reduce to a minimum the rightsof the 'bhuinhars ' in their free allotments; and this led to so much discontent as to cause rebellion in 1831 32 and again 1858 In 1869 it was deter mined to put an end to the uncertainty and discontent which arose from the encroachments of the landlords who had ignored the old tenures and infringed the bhuinhari rights.". Accordingly, a Special Commissioner was appointed in that year to examine, define and record all the various classes of rights and, in accordance with that, determine the status of the Bhuyans in British India Vis a Vis the "zamindars" who were the surviving Rajas and petty chiefs. This was done and settlements were made and accepted. But that was British India. In the present case, every attempt to settle the same question between the Bhuyan petitioners and the Ruler of Gangpur ended in failure. No decision has been reached to this day. Reference is made to the Bhuyans 'in the Gangpur State in Dalton 's Ethnology of Bengal (1873), pages 139 and 140. According to that author the Bhuyans in Gangpur possess proprietary rights under the Chiefs. But he weakens this by saying in the next sentence that 864 "They are the barons from whom those Chiefs originally derived their authority, and are either the support or the sap of that authority according to the side they take in the politics of the State. " This is evidence to indicate that the Bhuyans in Gangpur were there before the Rulers of Gangpur. In the ' year 1891 a dispute arose between the Raja of Gangpur and the Zamindars of Hemgir and Nagra. The Bengal Nagpur Railway cut through a part of their lands and both claimed compensation from the railway for timber which was out from the forests. The Commissioner Mr. W. H. Grimley refused to pay the Raia any compensation for timber taken from the zamirndari forests and only paid him for what was taken from his Khalsa lands. In the course of his decision be refers to Hewitt 's Settlement of 1879 and quotes the following from the report: " The contention that the Zamindar of Nagra is merely a tehsildar or rent collector subordinate to the Raja is therefore invalid, and it is established beyond doubt that the zamindar has a permanent interest in the Nagra Estate and is practically on the same footing as a zamindar under permanent settlement in Bengal." He then concludes " The above extracts and remarks show that the zamindars of Nagra and Hemgir and other zainindars of Gangpur were regarded by a former Commissioner not only as possessing permanent rights in their zamindaris but as having full and exclusive rights over the jungles in their estates. They seem to be the original settlers of the soil, and their position appears to be analogous to that of the Mankis in Lohardugga and Manbhum, who, as aboriginal chiefs, or heads of the clans holding groups of twelve or more villages, exercise jungle rights and are independent of the superior Raja or zamindar, a creature of subsequent growth. " We need not make further extracts from the large volume of historical material which was placed before us because we are, not deciding the point ' here and it 865 would be wrong to any more than is necessary for the present case as the Raja of Gangpur is not before us. It is enough to say that there is much historical material to indicate that the Bhuyan tenures had their origin in pre historic times and were not the creations of a conquering line of Rajput Rajahs. As Mr. Forbes put it in Political Suit No. 26 of 1900 1901: "The British Government had the unquestionable rights of the conqueror and is in a position to dictate its terms in its Sanads to the Chiefs. But the Chiefs are very far from being in a similar position of authority in regard to the landholders. " Similar observations occur in Hunter 's Imperial Gazetteer Volume 4, page 478, and Sir Richard Temple 's Treaties, Zamindaries, Chieftainships in the Central Provinces, page 18. But we wish to emphasise that this is only one side of the picture and that there may be much ' to indicate the contrary and in the a sence of,the Ruler of Gangpur it would not be right to say that this is the full picture especially as two successive Settlement Officers have refused to decide the question despite raising of the dispute on the occasions which we have indicated. Connolly in his Settlement Report of 1907 1911 says "There are four zamindaris in the State. . all held by Bhuias. No attempt has, been made in this settlement to determine their relations to the Chief. " Mukherji in his Settlement Report of 1929 36 also says that "The relations of the zamindars with the Chief have, not been expressed in any administration paper which is accepted by the zamindar in each settlement. " In the year 1941 Ramdhyani was appointed an Officer on Special Duty to report on the Land Tenures and the Revenue System of the Orissa and Chhattiagarh States. In paragraph 75 of the first volume of his Report he says that the zamindars on the one hand refuse to accept sanads to determine their rights and the Rulers on the other hand do not favour precise laws which will tie their hands. And in Volume III he says that. 112 866 "No sanads have been issued by the State to the zamindars and thus there is no clear definition of their rights. " That there can be another side to the picture is evident from the historical material collected in Kunwarlalsingh vs Provincial (Government, Central Provinces and Berar(1) and in Rajkrishna Prasadlal Singh Deo vs Baraboni Coal Concern Ltd.(1) In many cases, 'even though the zamindars started as independent sovereigns vis a vis the ruling power, their rights were so whittled away in course of time that whatever they may once have been their present status has become one of subordination. Whether that happened in these cases has never been determined and it would not be right for us to assume anything one way or the other in the absence of the Raja of Gangpur. Our object in delving into this mass of historical material is to show that the mere use of the word "zamindar" proves nothing and that a passing reference to the term in the various documents which we will now examine cannot fix the petitioners ' status as "intermediaries" when the Settlement Reports to which the documents appertain state in categorical terms that neither side would agree to a definition of their rights vis a vis each other and that consequently no attempt was made to define them. The first document on which reliance is placed by the State is the Wajib ul arz. Much research and learning were expended on finding out what a Wajibul arz means and what it consists of. We do not intend to go into any of that. We will assume for the purposes of this case (without deciding the point) that the only document relied on by the State of Orissa as a Wajib ul arz though it is called the Record of Rights, is a Wajib ul arzwithin the meaning of the Act. But what is that document? It records the rights of the raiyats and the gaontias vis a vis the "Chief or Ilaquedar"; The word "zamindar" is not used and neither the word "Chief" nor the word (1) I.L.R. at 215 tO 221. (2) I.L R. at 354 & 355. 867 "Ilaquedar" ha is been gtruck out. All it says is that the "malguzari" will be paid to the "Chief or Ilaquedar" and that all lawful orders of the "Chief or Ilaquedar" will immediately be carried out without any objection. We have the further fact that the petitioners have been issuing pattas to the gaontias in their areas apparently in conformity with this Record of Rights because their pattas expressly refer to it; also that the petitioners have signed the pattas as zamindars. A typical patta is in this form: "Gountia Patta: This Gountia Patta is granted to you. . . according to the rules and conditions mentioned in the Record of Rights included hereunder. ' You should deposit the malguzari and the cess in the Treasury according to the kists mentioned below. . (Sd.) (Signature) Zamindar. " Now when this is read along with Connolly 's Settlement Report of which it forms a part, it is evident that the document does not pretend to deal with the rights and status of the petitioners vis a vis the Chief of Gangpur, because Connolly expressly says that those rights were neither agreed upon nor determined. It is true the petitioners style themselves as zamindars in the pattas, but the whole question is what kind of zamindar is meant. That is deliberately left indeterminate by the continued use of the words "Chief" or "Ilaquedar". The petitioners ' case is that they are the overlords within the meaning of these documents an d that the gaontias are their intermediaries and, as we have seen, there is ground for that contention. We are therefore unable to hold that the petitioners are "zamindars" within the meaning of this "Wajibul arz" (even if the document is assumed to be a Wajib ul arz), taking "zamindar" to mean, as it must under the definition, what we have called a "true intermediary". it was also said that certain Settlement Khewats and Khatians formed part of the Wajib ul arz in this part of the country. ' We were not shown anything to support 868 that beyond the bare assertion, that was so but even if that is correct we cannot read more into these documents than what the Settlement Commissioner expressly stated. The Khatians, for example, merely say that the name of the person who receives the revenue is "Zamindar so and so of Khewat No. 2". It is to be observed that the column refers to the name of the person and not to his designation. But quite apart from that, we find it impossible to separate the statements in these documents from the categorical reservation made by the Settlement Officer in his report. If it was understood on all hands, and was solemnly recorded in the Settlement Report, that the dispute about the relations between the Ruler of Gangpur and the petitioners was neither agreed to nor decided in these Settlements we can hardly conclude that despite that solemn assurance a number of subsidiary documents settled the matter and that therefore the petitioners must be taken to be "true intermediaries" within the meaning of the Wajib ularz. The same is true of the Khewats. It is true one of the columns shows that these petitioners hold under the Chief of Gangpur and it is possible that the Officer preparing the Khewats thought that was the true position 'But the final assessment is in the Settlement Report and that, in our opinion, must be regarded as the governing factor. Whatever else a Wajib ul arz may be, it is only a part of the Record of Rights and entries in the Record of Rights have only a presumptive value. They can be shown to be wrong. And what better proof can there be of that than the categorical statement of the Settlement Commissioner who was in charge of those very returns. Even as late as 1935 we have the Secretary to the Agent to the Governor General saying "The record of rights of the settlement of Gangpur State of the year 1911 seems to the Governor General in the main to support the contentions of the zamindar as enjoying his zamindari on the same rights as the State enjous in Khalsa. " We are therefore unable to regard the petitioners as zamindars within the meaning of the Wajib ul arz. 869 We turn next to the portion of the definition in section 2 (h) which refers to a "deed or other instrument." Now even if the Parchas and Khatians and Khewats are either "deeds" or "instruments", they are of no assistance in these cases for the reasons we have just given. It is necessary in this connection to say that though the documents filed clearly establish that the petitioners have been paying a certain sum of money each year to the Chief of the Gangpur State, that in itself does not show that they are municipally, as opposed to politically, subordinate to him. These moneys have been variously described at different times. Sometimes they are called malguzari, at others takoli, at others revenue and sometimes rent. But none of that is conclusive because what we have to determine is whether the petitioners are "true intermediaries" within the meaning of certain documents, and there the overriding factor is the repeated assertions of the Settlement Officer that at no time has their status inter se been agreed upon or decided. Among the documents relied on as "deeds or other instruments" are the pattas to which we have just referred. The petitioners are said to have signed them as "zamindars", or some one else is said to have signed for them. The signatures were not admitted in all the cases but even if they were validly signed by or on behalf of the petitioners that would not make the petitioners "zamindars" within the, meaning of the pattas. The word "zamindar" under their respective signatures is merely descriptive and does not in itself indicate what kind of zamindar is meant and since everybody agreed that question should be left on the pattas cannot be taken to mean that the petitioners are the kind of zamindars about which there is a dispute and that they have the status which they have stoutly contested at every stage. The rest of the documents, except one which concerns Nagra alone, are merely historical material. They are neither, Wajib ul arz nor deeds nor other instruments. We have already referred to a number on which the petitioners rely '. There are others 870 which are more favourable to Gangpur as, for example, a Political Book of 1831 1833 and an order of the Commissioner of the Chota Nagpur dated 9th August, 1878. The Imperial Gazetteer, Volume IV, ' was also relied on by the State but we do not think that helps it much. The passage in point says that "Included within the State are two Feudatory Chiefships subordinate to the Raja, Nagra in the East and Hemgir in the West." But this appears to point more to political than to municipal subordination and, that is just what the petitioners say they are. They claim to be feudatory chiefs vis a vis Gangpur and say that the money they pay to the Raja is tribute and not revenue. However, these historical document are not relevant except to show that the word "zamindar" has different meanings, one of which lifts them out of the category of I intermediaries" within the mearing of that part, of the definition which applies to the merged territories. We are not called upon to decide the actual relationship between the Chief of Gangpur and the petitioners but only to see whether the petitioners are "zamindars" within the meaning of certain specified docu ments. Even if they are "intermediaries" within the broader sense of the term, they are not so within the meaning of the specified documents and that the definition to which we are tied. We do not intend, therefore, to examine them further. That leaves a document which concerns Nagra. In or about the year 1,879 the Zamindar of Nagra is said to have executed an Ekranama in favour of the Raja of Gangpur. The Ekrarnama has not been produced and there is nothing on record to show that it has been lost and that despite a search it cannot be found, nevertheless we are asked to hold that such a document was executed and to deduce its contents from a description of it given by Mr. Hewitt, the Officiating Commissioner in a Rubakari dated 10th March, 1879. In the absence of the document itself we do not think it would be right to infer that the Zamindar of Nagra had suddenly surrendered the 871 claims to municipal independence which he had been contesting for years and which he has continued to contest to the present day. The immediate cause of the dispute was about Gangpur 's right to grant leases to Gaontias in the zamindari, about a royalty of Rs. 200, about the Raja 's right to interfere with the policing of the zamindari tract and about certain taxes. The zamindar agreed to pay the Raja a fixed yearly sum of Rs. 700 as "rent" while the Raja agreed that the Nagra Zamindar should police his own estate and agreed that he, the, Raja, would not grant any more pattas to the Gaontias in that area; also that the Raja would not collect taxes from the Kumbars etc., but would instead settle separately with the zamindar after first submitting his report about this to the Commissioner. The only point here against the Zamindar is that the word " rent " is used instead of " tribute ", but this loses all its force in view of the fact that the Diwan of the Gangpur State writing to the Zamindar of Nagra himself called it Takoli in a letter dated 29th March, 1943. The rights of the Zamindar regarding Gaontias and the policing of his own tracts were conceded. Now the right to police a tract of land is one of the first attributes of sovereignty. The power can be delegated but that is at the will of the sovereign and not the other way round; the subject cannot resist the sovereign 's right to police his own State. The settlement about the taxes is neither here nor there because that was done as a matter of compromise without either side admitting the basic rights of the other or surrendering his own. Read as a whole, the settlement supports the Zamindar 's claims rather than negatives them. And as to the word "rent" the English of the document shows that it was not written or drawn up by an Englishman though it was signed by one, so no one can know just what was meant. The Ekrarnama would, we take it, have been in the vernacular and unless we know just what term was used there it would be wrong to assume on the basis of this Rubakari that the Zamindar had suddenly abandoned the position for which he had been fighting 872 all this time. If the original word was " takoli ", as it would seem to have been because of the Gangpur State Diwan 's letter of 29th March, 1943, it is as consistent with tribute as with revenue, especially when we read it along with the concessions made by Gangpur about the police powers and the Gaontias. Takoli is a term which has no fixed meaning and is what the Zamindars of Hemgir and Sarapgarh also pay the Raja of Gangpur. The only difference in their cases is that their Takoli can be enhanced from time to time where. as that of Nagra cannot; that we think places Nagra in a much stronger position than the other two and so, far from showing municipal subordination to Gangpur, indicates the contrary particularly when read in conjunction with the police powers which Nagra retained in defiance of Gangpur 's claim. We are accordingly not able to conclude on the basis of this imperfect secondary evidence that, the meaning of the Ekrarnama was to define the Zamindar 's status as that of a " true intermediary. " The result is that there is no deed or other instrument within whose meaning the petitioners can be said to be the kind of zamindar 's which are " true intermediaries ", and we so hold. It follows that the petitioners are not " intermediaries " within the meaning of section 2(h). If they are not " intermediaries ", Then their lands are not an " estate" within the meaning of section (2) (g) and so cannot be taken over by the State of Orissa under section 3. In view of this, it is not necessary to examine any other points. The learned Judges of the High Court differed on the remaining points and so those points were referred to a third Judge. But on the definition of " intermediary " there was no difference of opinion. Both the Chief Justice and Narasimham J. agreed that the petitioners were " intermediaries. " We disagree for the reasons we have given above. The result is that, in our opinion, all three appeals should be allowed and that the decision of the High Court should be set aside and a nwndamus issued to the State of Orissa directing that State not to give 873 effect to.the provisions of the Orissa Estates Abolition Act of 1951 and not to take possession of the several estates of the three petitioners under that Act. The costs of the petitions here and in the High Court should, in our opinion, be paid by the State of Orissa. Appeals Nos. 167 and 168 allowed.

IN-Abs

The State Government is empowered under section 3(1) to issue a notification declaring that the estate specified therein has passed to the State, but the notification must be in respect of the ' property which is defined as an estate in a. 2(g) and that estate must be held by an intermediary as defined in section 2(h). In order to be an intermediary according to the definition in section 2(h) the person must be, among other things, "a Zamindar, Ilaquedar, Kherposhdar or Tagirdar within the meaning of Wajibul arz or any Sanad, deed or other instrument." 843 Held, that the proprietors of Hamgir and Serapgarh properties were not intermediaries as defined in section 2(h) and their respective properties were not "estates" within the meaning of section 2(g) and therefore Government had no jurisdiction or authority to issue any notification under section 3 with respect to their properties. Held (Per PATANJALI SASTRI C.J.,DAS and GHULAM HASAN JJ., MAHAJAN and BOSE JJ., dissenting), as respects the Nagra Zamindari that the Zamindar (appellant) was an intermediary as defined in a. 2(h) of the Act and his estate was an estate within the meaning of section 2(g) because the predecessor in title of the present Zamindai had acknowledged the overlordship of Raja of Gangpur and there fore the State Government had jurisdiction to issue a notification under section 3 of the Act declaring that the estate had passed to and become vested in the State. Per MAHAJAN and BosE JJ. The words "deed" and "other instruments" in a. 2(h) are not to be read ejusdem generis with "Sanad" and thus are not confined to a document of title like a Sanad in which one party creates or confers a zamindari estate on another. The words must be read disjunctively and be inter. preted according to their ordinary meaning. With reference to merged territories an intermediary neither "includes" a zamindar nor "means" a zamindar, but means a zamindar "within the meaning of" (1) the Wajib ul arz (2) any Sanad (3) any deed or (4) of any others instrument. The kind of zamindar referred to in section 2(h) is one who may be called "a true intermediary" within the meaning of the four documents set out there, that is to may, persons who hold an interest in the land between the raiy at and the overlord of the estate.

Appeal No. 766 of 1964. Appeal by special leave from the judgment and order, dated September 19, 1963 of the Allahabad High Court in Special Appeal No. 268 of 1963. section P. Sinha and Shaukat Husain, for the appellant. Niren De, Additional Solicitor General, K. C. Chawla and R. H. Dhebar, for the respondent. The Judgment of the Court was delivered by Satyanarayana Raju, J. This appeal, by special leave, is against the judgment of a Division Bench of the Allahabad High Court which affirmed the judgment of a Single Judge of that Court. The facts giving rise to this appeal may be shortly stated as follows. The appellant had been in the service of North Eastern Rail way holding the substantive post of Travelling Ticket Examiner. The post of Travelling Ticket Inspector, which is the next higher post, is a selection post. Selection is made by a Selection Board in accordance with the Promotion and Selection Rules (Non Gazetted) framed under para 158 of the Indian Railway Establishment Code, Volume I (hereinafter referred to as the rules). Every year, an assessment of the number of vacancies that are likely to occur during that year is made. The Chief Commercial Superintendent is the appointing authority for the posts of Ticket Inspectors. In accordance with r. 8(7), eligible staff, up to four times the number of anticipated vacancies, shall be called up for written and viva voce tests. After the examination and the interview, the Board prepares a panel and promotions are made from the said panel. In the year 1959, a Selection Board for preparing a panel for the ex Muzaffarpur region was constituted. There were, during that year, eight existing vacancies which were to be fined up immediately. In addition, a panel of six was required to be drawn up. It was also expected that there would be nine more vacancies on account of upgrading of posts but this did not actually materialise. But, due to an incorrect assessment of the anticipated number of vacancies, 92 persons were called up for examination, whereas 56 persons should have been called up for written and viva voce tests. There was a written examination on February 22, 1959 and March 31, 1959, and thereafter the Selection Board interviewed 63 the candidates. As a result of the examination and the viva voce test, the Selection Board prepared a panel of fourteen persons and the appellant was given the twelfth rank in the panel. He was posted as officiating Travelling Ticket Inspector on or about July 28, 1960. The final list of persons brought on the panel was published in the Railway Gazette on January 1, 1961 and the appellant was shown at serial No. 13 in that panel. But a note was appended to the notification stating that the selection of the appellant and five others was provisional. By a letter, dated September 29, 1961, the Chief Commercial Superintendent, North Eastern Railway, Gorakhpur, under the orders of the General Manager, the prescribed authority, deleted the name of the appellant and five others who were shown at serial numbers 9 to 14 in the panel. On November 28, 1961, the appellant filed a petition under article 226 of the Constitution for the issue of a writ of certiorari, impugning the validity of the order dated September 29, 1961 in and by which his name had been removed from the panel. Her contended that the deletion of his name from the panel indefinitely postponed his right of promotion and therefore amounted to a reduction in rank. The respondents contested the petition. They averred that the name of the appellant was deleted from the panel in accordance with rules, that he had no subsisting right to the post merely by reason of the fact that his name was included in the panel, that the appellant and five other persons were called up for examination on an incorrect assessment of the number of vacancies. It was also contended for the respondents that the provisions of article 311 were not attracted. By judgment, dated March 14, 1963, the learned Single Judge dismissed the writ petition filed by the appellant. He held that the deletion of the appellant 's name from the panel did not amount to reduction in rank under article 311 and that therefore he was not entitled to the notice prescribed by that article. The learned Judge also held that the appellant had not established that the decision of the respondent amounted to a violation of any constitutional provision or statutory rule. The appellant preferred an appeal which was summarily dismissed by a Division Bench. An application for leave to appeal to this Court was also rejected. Thereupon, the appellant obtained special leave from this Court. 64 In support of the appeal, it is contended for the appellant by Mr. section P. Sinha, that the deletion of the appellants name from the panel amounted to a reduction in rank and that the order was bad in law for the reason that the appellant was not given an opportunity to explain or defend himself before his name was deleted from the panel. Now, as has been explained by this Court in Parshotam Lal Dhingra vs The Union of India(1) the expressions "dismissal ', 'removal ' or 'reduction in rank ' are technical words taken from the service rules where they are used, to denote the three major categories of punishments. The question for determination is whether the deletion of the appellant 's name from the panel amounts to a reduction in rank within the meaning of article 311. Mention has already been made of the fact that the panel was prepared under the rules. Rule 8 lays down the procedure to be followed by the Selection Board. Sub rule (7) of that rule reads : "Eligible staff up to 4 times the number of anticipated vacancies as defined below shall be called up for written and/or viva voce test." Under the above rule, eligible staff up to four times the number of anticipated vacancies should be called for written and viva voce test. The vacancies to be filled up were 8 and in addition a panel of 6 was required to be drawn up; thus for the 14 persons to be included in the panel, 56 eligible staff were to be called. On account of an incorrect assessment of the anticipated vacancies, 92 persons were called to take the promotion examination. The appellant 's number in the eligible staff was after 56 and, but for the mistake, he would not have been called for the examination. Rule 11 Provides that panels for selection posts framed by a duly constituted Selection Board and approved by the competent authority shall not be cancelled or amended without reference to an authority next above the one that approved the panel. Now, the panel was prepared by (he Chief Commercial Superintendent, Gorakhpur, who was subordinate to the General Manager, North Eastern Railway. The panel, as originally drawn, was subsequently amended by the Chief Commercial Superintendent under instructions from the General Manager. This was in accordance with rule II. In the final list of the personnel included in the panel, the names of Sahai and Ramanand were included. The name of the first of them was included by reason of the fact that his marks (1) [958] S.C.R. 828. 65 were not correctly totaled up and the second was included by reason of the fact that he belonged to the Scheduled Caste. The complaint made by the appellant is that by reason of the inclusion of the said two persons in the final panel of Travelling Ticket Inspectors there was no post in which he could be kept and he was therefore reverted till another vacancy occurred, that by reason of the deletion of his name from the panel it would be necessary for him to appear before another Selection Board and until his name was again brought into the panel he would have no chance of being promoted to the post of Travelling Ticket Inspector. It is to be noted that in the panel prepared by the Selection Board the word 'provisional ' was specifically noted against the name of the appellant which clearly shows that he did not acquire a right to the post. The deletion of his name from the panel therefore does not attract the provisions of article 311. If a civil servant has a right to a particular rank, then the very reduction from that rank will operate as a penalty, for he will then lose the emoluments and privileges of that rank. If, however, he has no right to the particular rank, his reduction from an officiating higher rank to his substantive lower rank will not ordinarily be a punishment : vide Dhingra 's Case(1). It is no doubt true that in the said case it has been held that when reversion entails penal consequences, it would be reduction in rank, but the instant case is not one in which penal consequences have been visited on the appellant. Learned counsel for the appellant has relied upon the decision of a Single Judge of the High Court of Calcutta as supporting his contention that the deletion of the appellant 's name from the panel would amount to a reduction in rank. That decision is reported as Dineshwar vs Chief Commercial Superintendent, Eastern Railway (2). At p. 21 1, the learned Judge observed: "The question is whether the striking of the petitioner 's name from the panel, has affected his future right of promotion. In my opinion, the escapable conclusion is that it has so affected the petitioner. As I have mentioned above, promotion from Class III post to a Class II post is to be done according to the recommendations made by Selection Boards. Where there is such a list or a panel, then a person not in the list cannot hope to be promoted. . It is implied, that in order (1) ; (2) A.I.R. 1960 Cal. 209 66 to have a chance of promotion the petitioner would have to be in the selection list, that is to say, in the panel But with regard to the second contention, viz., that the striking out of his name from the panel affected his chances of future promotion, it is a point of substance and must be upheld. What the authorities should have done before striking out the name of the petitioner from the panel was to give him an opportunity of showing cause as to why his name should not be struck off from the panel and the order could only be made after giving the petitioner an opportunity of being heard. " We are of opinion that this is not a correct statement of the law, in view of the decision of this Court in High Court, Calcutta vs Amal Kumar Roy(1). There the facts were these. The respondent was a Munsif in the West Bengal, Civil Service (Judicial). When the cases of several Munsifs came up for consideration before the High Court for inclusion of names in the panel of officers to officiate as Subordinate Judges, the respondent 's name was excluded. He was told by the Registrar of the Court, on a representation made by him, that the Court had decided to consider his case after a year. As the result of such exclusion, the respon dent, who was then the senior most in the list of Munsifs, lost eight places in the cadre of Subordinate Judges before he was actually appointed to act as an Additional Subordinate Judge. He filed a suit praying that a declaration might be made that he occupied the same position in respect of seniority in the cadre of Subordinate Judges as he would have done if no supersession had taken place. His case, in substance, was that as a result of the High Court 's order he was reduced by eight places in the list of Subordinate Judges, and that in law amounted to reduction in rank within the meaning of article 311(2) of the Constitution. This Court held at p. 453 as follows : "In our opinion, there is no substance in this contention because losing places in the same cadre, namely, of Subordinate Judges does not amount to reduction in rank, within the meaning of article 311(2). The plaintiff sought to argue that 'rank ', in accordance with dic tionary meaning, signifies 'relative position or status or place '. According to Oxford English Dictionary, the word 'rank ' can be and has been used in different senses in different contexts. The expression 'rank ' in article (1) ; 67 311(2) has reference to a person 's classification and not his particular place in the same cadre in the hierarchy of the service to which he belongs. Hence, in the context of the Judicial Service of West Bengal, 'reduc tion in rank ' would imply that a person who is already holding the post of a Subordinate Judge has been reduced to the position of a Munsif, the rank of a Subordinate Judge being higher than that of a Munsif. But Subordinate Judges in the same cadre hold the same rank, though they have to be listed in order of seniority in the Civil List. Therefore, losing some places in the seniority list is not tantamount to reduction in rank. Hence, it must be held that the provisions of article 311(2) of the Constitution are not attracted to this case. " This decision has established the following principle, viz., the expression 'rank ' in article 311(2) has reference to a person 's classification and not his particular place in the same cadre in the, hierarchy of the service to which he belongs and therefore losing some places in the seniority list is not tantamount to reduction in, rank within the meaning of article 311(2) of the Constitution. It is perhaps true that the hopes of the appellant were raised ' by reason of the inclusion of his name in the panel. It is also true that the respondent made an incorrect assessment of the anticipated number of vacancies, but the fact remains that his inclusion in the panel was expressly stated to be provisional. The appellant cannot therefore complain of any infraction of the guarantee given by the Constitution to Government servants. The appeal fails and is dismissed. In all the circumstances of ' the case, there will be no order as to costs.

IN-Abs

Selection to the post of Travelling Ticket Inspector from that of Travelling Ticket Examiner is made by a Selection Board in accordance with the Promotion and Selection Rules (Non Gazetted) framed under the Indian Railway Establishment Code Every year, the number of vacancies that are likely to occur during the year is assessed and in accordance with r. 8(7), eligible staff upto 4 times the number of anticipated vacancies are called up for written and viva voce tests. Thereafter, the Board prepares a panel and promotions are made from the panel. In 1959, there were 8 vacancies, in the ex Muzaffarpur region of the North Eastern Railway, which were to be filled up immediately and in addition a panel of 6 was required to be drawn up. But, due to an incorrect assessment, 92 persons of whom the appellant was one, were called up for examination instead of 56. As a result of the tests a panel of 14 persons was prepared and the appellant was given the 12th rank. The final list was then prepared and the appellant was given the 13th rank; but a note was appended that the selection of candidates 9 to 14 was provisional. Later, under orders of the General Manager, who was the prescribed authority, the names of candidates 9 to 14 were deleted from the panel. The appellant filed a petition under article 226, but the High court dismissed it. In appeal to this Court it was contended by the appellant that the deletion amounted to a reduction in rank and that the order was bad in law, because, the appellant was not given an opportunity before his name was deleted. HELD : If a civil servant has a right to a particular rank, then the very reduction from that rank will operate as a penalty, for he win then lose the emoluments and privileges of that rank. If, however, he has no right to the particular rank, his reduction from an officiating higher rank to his substantive lower rank will not ordinarily be a punishment. Since, in the panel prepared, the word "provisional" was specifically noted against the name of the appellant, it shows that he did not acquire a right to the post. The appellant could not complain of any infraction of the guarantee given by the Constitution to government servants and no penal consequences have been visited on him. Therefore the deletion of his name from the panel did not attract the provisions of article 311. [65 C E,, 67 E] Parshotam Lal Dhingra vs The Union of India, [1958] S.C.R. 828, followed. Dineshwar vs Chief Commercial Superintendent Eastern Railway, A.I.R. 1960 Cal. 209, overruled.

Appeal No. 92 of 1965. Appeal by special leave from the order dated September 24, 1963 of the Commissioner of Sales Tax, Orissa, at Cuttack made under Rule 83 of the Orissa Sales Tax Rules, 1947. A. V. Viswanatha Sastry and B. P. Maheshwari, for the appellant. V. D. Mahajan and R. N. Sachthey, for the respondent. The judgment of the court was delivered by Subba Rao, J. This appeal, by special leave, raises the scope of the jurisdiction of the Commissioner of Sales Tax under Rule 83 of the Orissa Sales Tax Rules, 1947. The facts may be briefly stated. The appellant is a private limited company carrying on business mainly as building contractors in the State of Orissa. He was a registered dealer under the provisions of the Orissa Sales Tax Act, 1947, hereinafter called the Act. He was assessed to sales tax under section 12 sub section (4) of the Act in respect of all quarters ending on and in between June 30, 1949 to March 31, 1954. He was also assessed to sales tax under so 12 sub section (8) of the Act in respect of an quarters ending on and between the dates September 30, 1949 to March 31, 1950. Towards the said assessments between December 6, 1950 to June 1954, he paid by way of sales tax sums amounting to Rs. 53,220 14 0. On August 27, 1954, on the basis of the decision of the Supreme Court in the case of State of Madras vs Gannon Dunkerley & Co.(1) the appellant filed a petition in the High Court of Orissa under article 226 of the Constitution of India for a writ of certiorari to quash the said assessments. On April 22, 1958 the said High Court quashed the said assessments and directed refund of that portion of the tax which was not barred (1) 101 by limitation on the date of the filing of the said application On July 9, 1958 the appellant filed an application before the Sales Tax Officer for the refund of the amounts payable to him in view of the said decision. On May 15, 1961 the Sales Tax Officer, while holding that the appellant was entitled to the refund of the amounts paid by him, rejected his application on the ground that it was filed only by one of the directors whereas it should have been filed jointly by all the parties. On May 15, 1962 the Commissioner of Sales Tax, respondent No. 2 in this appeal, in a revision filed against the said order set aside the order of the Sales Tax Officer and held that the appellant was entitled to the refund applied for and directed the said Officer to issue refund payment orders as early as possible. On January 5, 1963 the sad Commissioner issued a notice to the appellant under r. 83 of the said Rules calling upon him to show cause why the order dated May 15, 1962 should not be reviewed. On September 24, 1963 the said Commissioner reviewed his previous order and held that the appellant would be entitled to refund of the taxes paid subject to the disallowances made in his order. Hence the present appeal. Mr. Mahajan, the learned counsel for the respondents, raised a preliminary objection to the maintainability of the appeal on the ground that the appellant could not file the appeal unless it had exhausted the remedy under article 226 of the Constitution of India. There are no merits in this contention. article 136 confers a discretionary appellate jurisdiction on this Court against any order passed by any Tribunal in the territory of India. The said jurisdiction is not subject to any condition that the party who seeks special leave of this Court to appeal from such order should exhaust all his other remedies. The existence of a statutory remedy to such a. party may persuade this Court not to give leave to appeal to the party. In the present case, the Act does not provide for a further remedy against the order made by the Commissioner in revision. Under article 226 of the Constitution of India, the High Court 's jurisdiction is discretionary and the scope of the jurisdiction, in view of the decisions of this Court, is rather limited. In the circumstances, we do not see any justification to throw out this appeal on the ground, that the appellant has not exhausted all his remedies. On the merits, Mr. Viswanatha Sastry appearing for the appellant, raised before us two points : (1) under r. 83 of this Rule the jurisdiction of the Commissioner is very Limited in that he can only correct arithmetical and clerical mistakes and errors apparent on the face of the record arising from an accidental slip or omis 102 sion. But the commissioner in the instant case,practically reheard the revision and came to a conclusion different from that, which he had arrived on the earlier occasion. (2) The conclusions arrived at by the Commissioner are not correct both on law and on facts. Mr. Mahajan contended that the order made by the Commissioner was within the scope of his jurisdiction for he had only reviewed the previous order in respect of the amounts not paid by the appellant to the Sales Tax authorities and in respect of those amounts directed to be repaid under a misapprehension that the said amounts were the subject matter of the appeals against the orders of assessment, and the application in respect thereof was within time. Mr. Mahajan attempted to take us through the particulars and details of such payments, but we did not permit him to do so as nothing would turn upon the said details to show whether the Commissioner had jurisdiction or not in reviewing his own order. If he had not, the fact that his order was not correct on facts would be quite irrelevant for the disposal of this appeal. The material part of r. 83 of the said Rules reads "The Commissioner of Sales Tax. . may at any time correct any arithmetical or clerical mistakes or any error apparent on the face of the record arising or occurring from. accidental slip or omission in an order passed by him, or it. " Rule 83 provides a summary remedy within a narrow compass. The jurisdiction of the Commissioner under this rule is limited and is confined only to the correction of mistakes or omissions mentioned therein. An arithmetical mistake is a mistake of calculation; a clerical mistake is a mistake in writing or typing. An error arising out of or occurring from an accidental slip or omission is an error due to a careless mistake or omission unintentionally made. There is another qualification namely, such an error,shall be apparent on the face of the record, that is to say, it is not an error which depends for its discovery, on elaborate arguments on questions of fact or law. The accidental slip or omission is an accidental slip or omission made by the court. The obvious instance is a slip or omission to embody in the order something which the court in fact ordered to be done. This is sometimes described as a decretal order not being in accordance with the judgment. 'But the slip or omission may be attributed 103 to the Judge himself. He may say something or omit to say something which he did not intend to say or omit. This 'is described as a slip or omission in the judgment itself. The cause for such a slip or omission may be the Judge 's inadvertence or the, advocate 's mistake. But, however wide the said expressions are construed, they cannot countenance a re argument on merits on questions of fact or law, or permit a party to raise new arguments which he has not advanced at the first instance. If that, was. the scope of r. 83, the question is, whether the Commissioners order is within its scope. On May 15, 1961, the Sales Tax Officer dismissed the appli cation filed by the dealer for refund. Though he held that the appellant was entitled for refund, he dismissed the application on the around that it was signed only by one of the directors. In the appeal filed by the appellant against the said order to the Commissioner, the Commissioner by his order dated May 15, 1962 came to the conclusion that the appellant was entitled to the refund applied for and the Sales Tax Officer went wrong in rejecting the said application for refund. A perusal of the order shows that the Commissioner had looked into the connected assessment record and came to the conclusion that, in view of the Supreme Court judgment and the order made by the Sales Tax Tribunal, Orissa, the appellant was entitled to the refund. But, in his order dated September 24, 1963, he practically re heard the entire matter both on facts and on law and came to the conclusion that a part of the money, directed to be refunded by his, earlier order. should not be refunded. He has dealt with five items. Item (a) relates to the assessment for the quarters ending 30 9 1949 made under section 12(1) of the Act and the assessment made under section 12(7) for the quarters ending 31 12 1949 to 31 3 50. He made a distinction between assessments made under section 12(1) and section 12(7) of the Orissa Sales Tax Act and held the period of limitation would commence from the date of the orders made thereunder respectively. So holding he came to ' the con clusion that the assessments under section 12(7) were made final by November 1951; and an application for refund of 'the said amounts covered by the said assessments was barred by limitation. In respect of assessments made under section 12(1), except in regard to Rs. 299 1 1 0, he held the claim was barred by limitation. In regard to item (b), as it is a clear mistake, the learned counsel for the assessee conceded both in the court below and before us that the amount covered by that item may be disallowed. Item (c) relates to the assessments made for the quarters 104 ending 31 3 52, 30 6 53, 30 9 53,13 12 53 and 13 2 1954.those assessments were set aside by the first appellate authority by its order dated May 28, 1958. But the Commissioner held that the admitted tax paid before the orders of assessment was not the subject matter of appeals and therefore the amount NW towards the admitted tax was not refundable. The contention of the ass was that as the appellate authority had set aside the entire assessment, the assessee would be entitled to a refund of the entire tax, whether paid before or after the order of assessment. Item (d) relates to the assessment for the quarters ending 30 9 50 to, 31 12 51 and 30 6 52 to 31 3 53 (10 quarters ex cepting quarter ending 31 3 52). On the same reasoning adopted by the Commissioner in respect of item (c), he held that, in regard to the amounts paid before the assessment, the assessee was not entitled to a refund of the same. On behalf of the assessee, it was contended that as the assessment orders were set aside he was entitled to refund of the amounts whether paid before or after the orders setting aside the assessments. Item (e) relates to refund of taxes paid in respect of Puri 11 and Cuttack II Circles. That part of the order was not questioned before us. It is therefore clear that the Commissioner reviewed his previous order which was passed on merits mainly on two grounds: (i) that the application for refund in respect of certain amount was barred by limitation; and (ii) the assessee was not entitled to a refund of the amounts paid before the assessment orders were made on the ground that the said amounts were not the subject matter of the appeals wherein the assessments were set aside. Both the question of limitation as well as the question of construc tion of the appellate orders and the impact of those orders on the amounts paid towards tax before the assessments, were arguable questions of fact and law. The Department should have raised the said questions before the Commissioner at the time he first made the order directing refund of the amounts claimed by the assessee. The wrong conclusion, if any, arrived at by the Commissioner in his earlier order, because of the fact that the said two arguments were not advanced before him, cannot be said to be errors apparent on the face of the record arising or accruing from an accidental slip or omission. The errors, if any, arose because the Department did not raise those points before the Commissioner. They were also errors not apparent on the face of the record for the decision depends upon consideration of arguable questions of limitation and construction of documents. Indeed 105 the Commissioner re heard arguments and came to a conclusion different from that which he arrived on the earlier occasion. This is not permissible under r. 83 of the Rules. In this view, it is unnecessary to consider the argument ad vanced by Mr. Sastry that the application for refund was not barred by limitation as the final orders in regard to the assessments was made by the Tribunal only in the year 1958. In the result, the order of the Commissioner is set aside, except in regard to items (b) and (e) mentioned in paragraph 7 of his order. In the circumstances, there will be no order as to costs.

IN-Abs

The appellant was a private limited company carrying on business mainly as building contractors in the State of Orissa. It was assessed to sales tax under the provisions of the Orissa Sales Tax Act, 1947 and made payments towards the tax assessed. Subsequently on the basis of the decision of this Court in State of Madras vs Gannon Dunkerley & Co. 119591 S.C.R. 379, the appellant filed a writ petition in the High Court challenging the said assessments. The High Court quashed the assessments and directed refund of that portion of the tax which was not barred by limitation on the date of filing the application The appellant thereupon filed an application before the Sales Tax Officer for refund of the amount payable to him in view of the said decision. The Sales Tax Officer rejected the, application on the ground that it was made by only one of the directors. The Commissioner of Sales Tax in A revision filed against the said order set aside the order of the Sales Tax Officer and held that the appellant was entitled to the refund applied for and directed the said officer to issue refund payment orders as early as possible. Subsequently the Commissioner issued a notice to the appellant under r. 83 of the Orissa Sales Tax Rules, 1947 calling upon it to show cause why the order earlier passed by him should not be reviewed. The Commissioner then reviewed his. previous orders and held that the appellant would be entitled to refund of the taxes paid subject to the disallowances made in his order. The appellant appealed to this Court by special leave. The question for consideration was whether the Commissioner 's Order in review was a proper order under r. 83. HELD: Rule 83 provides a summary remedy within a narrow compass. The jurisdiction of the Commissioner under this rule is a limited one and is confined only to the correction of arithmetical or clerical mistakes or 'errors apparent on the face of the 'record arising or occurring from accidental slip or. omission in an order passed by him. However widely the said expressions are construed they cannot countenance a reargument on merits on questions of fact or law, or permit a party to raise new arguments which he has not advanced in the first instance. B] In the present case the Commissioner reversed his previous order which was passed on merits mainly on two grounds : (i) that the application for refund in respect of certain amounts was barred by limitation , and (ii) the assessee was not entitled to a refund of the amounts paid before the assessment orders were made on the grounds that the said amounts were not the subject matter of the appeals wherein the assessments were set aside. Both the question of limitation as well as the question of construction of the appellate orders and the impact of those orders on the amounts paid towards tax before the assessments were arguable questions of fact and law. The Department should have raised the said questions before the Commissioner at the time he first made the 100 order directing refund of the ammounts claimed by the assessee. The wrong conclusion if any arrived at by the Commissioner in his earlier order, because of the fact that the said two arguments were not advanced before him, cannot be said to be error on the face of the record arising or accruing from an accidental slip or omission. The errors if any arose because the Department did not raise those points before the Commissioner. They were also errors not apparent on the face of the record for the decision depended upon consideration of arguable questions of limitation and construction of documents. Indeed the Commissioner reheard the argument and came to a conclusion different from that which he arrived at on the earlier occasion. That is not permissible under 83 of the Rules. [104 E 105 A]

Appeal No. 975 of 1964. Appeal by special leave from the judgment and order December 12, 1962, of the Mysore High Court in W.P. No. 531 of 1961. Bishan Narain, Naunit Lal and B.R.G.K. Achar, for the appellant. section K. Venkataranga Iyengar and R. Gopalakrishnan, for the respondent. The judgment of the Court was delivered by Satyanarayana Raju, J. This appeal, by special leave, raises a somewhat important question of all, which is whether the reversion of a Government servant from an officiating post to his substantive post, while his junior is officiating in the higher post, does not, by itself, constitute a reduction in rank within the meaning of article 311(2) of the Constitution. For the purpose of deciding the point raised in the appeal, it would be necessary to state the material facts. The Southern Railway has two grades of Train Examiners, one in the scale of Rs. 100 5 125 6 185 and the other in the scale of Rs. 150 225. The respondent was employed in the lower scale as a Train Examiner. By an order dated April 7, 1959, the respondent was promoted to officiate in the higher scale with a starting salary of Rs. 150 per month. That order read as follows : "2. Sri section Raghavendrachar, TXR YPR in scale Rs. 100 185 is promoted to officiate as TXR in scale Rs. 150 225 on Rs. 150 per month and retained YPR as TXR IC. 185 is promoted to officiate as TXR in scale Rs. 150 225 on Rs. 150 per month and transferred to SBC BG vide item above. Sanction endorsed by D.S. for promotion of items 2 and 3. " 108 There is a note appended to the order which is important "Note: 1. The promotion of items 2 and 3 are purely provisional subject to revision when Divisional Seniority lists are drawn up. " By an order dated November 27, 1959, the respondent was reverted. ]Mat order was as follows : "Sri section Raghavendrachar, TXR/YPR (officiating) in scale Rs. 150 225 is reverted to scale Rs. 100 185 on Rs. 130 per month and transferred to SBC/MG. " On receipt of this order, the respondent made representations to the appellant. The appellant sent to the respondent communication dated May 25, 1960 : "As per the existing instructions an officiating employee with less than 18 months of service in the higher grade may be reverted to lower scale without assigning any reason for such reversion by a competent authority. Since the period of your officiating in scale Rs. 150225 was less than 18 months and since your reversion from scale Rs. 150 225 to Rs. 100 185 has been ordered by a competent authority, no reasons need be assigned as requested in your representation dated 8th/9th December 1959. As regards the confirmation of TXRs in scale Rs. 150 225, who were your juniors while you were officiating in scale Rs. 150 225, 1 have to advise you that consequent on your reversion to scale Rs. 100 185, all your juniors, in scale Rs. 150 225, have become your seniors and their confirmations in preference to you are in order. Regarding your re promotion to scale Rs. 150 225, it will be considered in the normal course according to your, seniority and suitability to hold the post in scale Rs. 150 225." The respondent made a further appeal to the Divisional Superintendent, Mysore, on July 2, 1960 and sent him two reminders. Not having got any response, he filed an appeal on January 31, 1961, to the General Manager, Southern Railway. The respondent sent a reminder to the latter on March 31, 1961. In reply, 109 the Divisional Personnel Officer wrote to the respondent as follows by letter dated April 30, 1961 : Rs. 150 225 (PS) was not a penalty as presumed by you, in your above representations. The vacancy thus released by you in scale Rs. 150 225 (PS) and the vacancies which existed on the date of your reversion were filled up on 14th February 1960. You are therefore eligible to be considered for promotion against a vacancy which occurred after the date of your reversion and not against the vacancies which existed on the date of your reversion and also the vacancy caused by your reversion. No regular vacancy (other than short term leave vacancy) in scale Rs. 150 225 has occurred from the date of your reversion till date. You will therefore be considered for promotion against the next vacancy, subject to the condition of seniority cum suitability, on the basis of which only promotions to non selection posts are to be ordered. As regards seniority, all those hitherto promoted to scale Rs. 150 225 (PS) will automatically rank seniors to you and your seniority if promoted will be reckoned only from the date of your promotion in future vacancy. Your contention that, when you were promoted to officiate for 2 months against the leave vacancy of Shri Venkataraman, as per this office order No. M. 542/PI of 14th November 1960, you should have been continued even after the expiry of the leave vacancy, and that Shri Varghese should have been reverted, is not correct, for the reasons stated in paragraph 2 above. Your representation of 30th January 1961 to GM(P) Madras is therefore withheld. " Aggrieved by the order dated November 27, 1959, the res pondent moved the Mysore High Court, on the failure of his representations to the hierarchy of Departmental Heads, for a writ of certiorari to quash the impugned order made by the appellant. By judgment dated December 12, 1962, a Division Bench of the High Court quashed the order of reversion. The High Court observed that it was not necessary to express any opinion on the question whether the reversion of the respondent on the ground that his work was unsatisfactory amounted to a reduction 110 in rank within the meaning of that expression occurring in article 311(2) of the Constitution. But the High Court held that the reversion of the respondent amounted to a reduction in rank because he was reverted from the higher post to the lower post notwithstanding the fact that his juniors were still retained in the higher posts. In reaching this conclusion the High Court purported to follow the decision of this Court in Madhav Laxman Vaikunthe vs State of Mysore(.). The Divisional Personnel Officer, Southern Railway, Mysore,obtained special leave from this Court against the order of the High Court. It is contended by Mr. Bishan Narain, learned counsel for the appellant, that the High Court misunderstood the ratio of the judgment of this Court in Vaikunthe 's case(1), that there is no right in a Government servant to promotion as of right, that the mere reversion of a Government servant from an officiating post to his substantive post, notwithstanding that his juniors are retained in the higher posts, does not amount to a reduction in rank and the provisions of article 311(2) are not attracted. On the other hand, it is contended by Mr. section K. Venkataranga lyengar, learned counsel for the respondent, that the circumstances of the case clearly indicated that the reversion of the respondent amounted to a reduction in rank and since the procedure prescribed by article 311(2) was not complied with, the order of reversion was bad in law. It may be taken to be settled by the decisions of this Court that since article 311 makes no distinction between permanent and temporary posts, its protection must be held to extend to all government servants holding permanent or temporary posts or officiating in any of them, but that protection is limited to the imposition of three major penalties contemplated by the Service Rules, viz., dismissal or removal or reduction in rank. The first of the cases which may be considered is the decision in Parshotam Lal Dhingra vs Union of India(2), Commonly known as Dhingra 's case. In this case, Das C.J., who spoke for the majority, considered comprehensively the scope and effect of the relevant constitutional provisions, service rules and their impact on the question as to whether reversion of Dhingra offended against the provisions of article 311(2). Dhingra was appointed as a Signaller in 1924 and promoted to the post of Chief Controller in 1950. Both these posts were in Class III Service. In (1) ; (2) ; 111 1951, he was appointed to officiate in Class II Service as Assistant Superintendent, Railway Telegraphs. On certain adverse remarks having been made against him, he was reverted as a subordinate till he made good his 'short comings. Then, Dhingra made a representation. Subsequently, the General Manager gave him notice reverting him to Class III appointment. It was this order which was challenged by Dhingra by a writ petition, in the High Court and, eventually, in this Court. The question for decision was whether the order of the General Manager amounted to reduction in rank within the meaning of article 311(2) of the Constitution, and Dhingra was entitled to a reasonable opportunity to show cause against the order. This Court held that the reversion of an officiating officer to his substantive post did not attract the provisions of article 311(2) and that Dhingra was not entitled to the protection of that article. It is however true that even an officiating government servant may be reverted to his original rank by way of punishment. It was therefore observed in Dhingra 's case(") at p. 863 : "Thus if the order entails or provides for the forfeiture of his pay or allowances or the loss of his seniority in his substantive rank or the stoppage or postponement of his future chances of promotion, then that circumstance may indicate that although in form the Gov ernment had purported to exercise its right to terminate the employment or to reduce the servant to a lower rank under the terms of the contract of employment or under the rules, in truth and reality the Government has terminated the employment as and by way of penalty. " One test for determining whether the termination of service was by way of punishment or otherwise is to ascertain whether under the Service Rules, but for such termination, the servant has the right to hold the post. It was held in Dhingrads case(1) that he was holding an officiating post and had no right under the rules of the Railway Code to continue in it, that under the general law such appointment was terminable at any time on reasonable notice and the reduction could not operate as a forfeiture of any right, that the order of the General Manager visited him with no evil consequences and that the order therefore did no", amount to a reduction in rank. (1) (1958] S.C.R. 828. 112 Vaikunthe 's case(1) was relied upon by the High Court in support of its conclusion that the reversion of the respondent amounted to a reduction in rank. It is therefore necessary to scrutinize the facts of that case. The appellant Vaikunthe, who held the rank of a Mamlatdar in the first grade, and was officiating as District Deputy Collector, was alleged to have wrongly charged travelling allowance for 59 miles instead of 51 and was, as the result of a Departmental enquiry, reverted to his substantive rank for three years and directed to refund the excess he had charged. He made a representation to the Government which was of no avail although the Accountant General was of the opinion that the appellant had not over charged and committed no fraud. Ultimately, the appellant was promoted to the Selection Grade but the order of reversion remained effective and affected his position in the Selection Grade. After retirement he brought a suit for a declaration that the order of reversion was void and for recovery of a certain sum as arrears of salary and allowances. The trial Court held that there was no compliance with the provisions of section 240(3) of the Government of India Act, 1935, granted the declaration but refused the arrears claimed. Vaikunthe filed an appeal and the State a cross objection. The High Court dismissed the appeal and allowed the cross objection, holding that the order of reversion was not a punishment within the meaning of section 240(3) of the 1935 Act. This Court held that the matter was covered by the observations in Dhingra 's case(1) and the tests of punishment laid down by this Court viz., (1) whether the servant had a right to the rank or (2) whether he had been visited with evil consequences of the kind specified therein, and that the second test certainly applied. This Court concluded that Vaikunthe might or might not have the right to hold the higher post, but there could be no doubt that he was visited with evil consequences as a result of the order of reversion. It was there held : "Mere deprivation of higher emoluments, however, in consequence of an order of, reversion could not by itself satisfy that test which must include such other consequences as forfeiture of substantive pay and loss of seniority." Since the requirement of section 240(3) of the 1935 Act, which corresponds to article 311(2) of the Constitution, had not been found to have been fully complied with, the order of reversion was held to be void. (1) ; (2) ; 113 There was an important aspect of this decision which was lost sight of by the High Court. The impugned order there ran as follows : "After careful consideration Government have decided to revert you to Mamlatdar for a period of three years. . It was pointed out in Dhingra 's case( ) that if the order of reversion entailed or provided for the forfeiture of the pay or allowances of the Government servant or loss of his seniority in his substantive rank or the stoppage or postponement of his future chances of promotion, then that circumstance might 'Indicate that although in form the Government had purported to exercise its right to terminate the employment or to reduce the servant to a lower rank under the terms of the contract of employment or under the rules, in truth and reality the Government had terminated the employment as and by way of penalty. At p. 891, Sinha, C.J., who spoke for the Court, pointed out: he would have continued as a Deputy Collector but for the Order of the Government, dated August 11, 1948, impugned in this case, as a result of the enquiry held against him, and that his reversion was not as a matter of course or for administrative convenience. The Order, in terms, held him back for three years. (Italics ours). Thus his emoluments, present as well as future, were adversely affected by the Order aforesaid of the Government. In the ordinary course, he would have continued as a Deputy Collector with all the emoluments of the post and would have been entitled to further promotion but for the set back in his service as a result of the adverse finding against him which finding was ultimately declared by the Accountant General to have been under a misapprehension of the true facts. It is true that he was promoted as a result of the Government Order dated March 26, 1951, with effect from August 1, 1950. But that promotion did not entirely cover the ground lost by him as a result of the Government Order impugned in this case. " Again, at p. 893, the learned Chief Justice pointed out"If the loss of the emoluments attaching to the higher rank in which he was officiating was the only consequence of his reversion as a result of the enquiry against him, the appellant would have no cause of (1) 114 action. But it is clear that as a result of the Order dated August 11, 1948 (exhibit 35), the appellant lost his seniority as a Mamlatdar, which was his substantive post. That being so, it was not a simple case of reversion with no evil consequences; it had such consequences as would come within the test of punishment as laid down in Dhingra 's case. " Finally, it was pointed out : "If the reversion had not been for a period of three years, it could not be Said that the appellant had been punished within the meaning of the rule laid down in Dhingra 's Case. It cannot be asserted that his reversion to a substantive post for a period of three years was not by way of punishment. From the facts of this case it is clear that the appellant was on the upward move in the cadre of his service and but for this aberration in his progress to a higher post, he would have, in ordinary course, been promoted as he actually was some time later when the authorities realised perhaps that he had not been justly treated. The real ground on which Vaikunthe 's reversion to his original post of Mamlatdar was held to be a violation of his Constitutional grantee was that his chances of promotion were irrevocably barred for a period of three years. If this aspect of Vaikunthe 's case(1) is borne in mind, it will be found that there is no basic inconsistency between the decisions which have a bearing on the question as to in what cases reversion would amount to a reduction in rank. Even so, it is contended by learned counsel for the respon dent that the real reason which operated on the mind of the appellant was that the respondent 's work in his officiating capacity was unsatisfactory. Assuming that to be so, the question is whether his reversion to his original post, because he was found unsuitable for the higher rank to which he had been given the officiating chance, is valid. In State of Bombay vs F. A. Abraham(2) the respondent held the substantive post of Inspector of Police and had been officiating as Deputy Superintendent of Police. He was reverted to his original rank without being given an opportunity of being heard in respect of the reversion. His request to furnish him with reasons for his reversion was refused. Later, a departmental (1)[1962]1 S.C.R.886. (2) [1962] Supp. 2 S.C.R. 92. 115 enquiry was held behind his back in regard to certain allegations of misconduct made against him in a confidential communication from the District Superintendent of Police to the Deputy Inspector General of Police, but these allegations were not proved at the enquiry. The Inspector General of Police, however, thereafter wrote to the Government that the respondent 's previous record was not satisfactory and that he had been promoted to officiate as Deputy Superintendent of Police in the expectation that he would turn a new leaf. The High Court held, following its earlier decision in M. A. I. Waheed vs State of Madhya Pradesh(1) that if a person officiating in a higher post is reverted to his original post in the normal course, that is, on account of cessation of the vacancy or his failure to acquire the required qualification, the reversion did not amount to a reduction in rank but if he is reverted for unsatisfactory work, then the reversion would amount to a reduction in rank. This Court did not agree with the ob servations in Waheed 's case(1) that when a person officiating in a post s reverted for unsatisfactory work, that reversion would amount to a reduction in rank. This Court took the view that the Government had a right to consider the suitability of the respondent to hold the position to which he had been appointed to officiate and that it was entitled for that purpose to make inquiries about his suitability and that was all what the Government had done in that case. Two more cases cited at the Bar now require to be consider ed. In The High Court, Calcutta vs Amal Kumar Roy (2) this Court held that the word 'rank ' in article 311(2) referred to classification and not to a particular place in the same cadre in the hierarchy of service. The facts of the case were as follows. The respondent was a Munsif in the West Bengal Civil Service (Judicial). When the cases of several Munsifs came up for consideration before the High Court for inclusion in the panel of officers to officiate as Subordinate Judges, the respondent 's name was excluded. On a representation made by him, the respondent was told by the Registrar of the High Court that the Court had decided to consider his case after a year. As a result of such exclu sion, the respondent, who was then the senior most in the list of Munsifs, lost eight places in the cadre of Subordinate Judges before he was actually appointed to act as an Additional Subordinate Judge. His case mainly was that this exclusion by the High Court amounted in law to the penalty of 'withholding of promotion ' without giving him an opportunity to show cause. He pray (1) (2) ; 116 ed that a declaration might be made that he occupied the same position in respect of seniority in the cadre of Subordinate Judges as he would have done if no supersession had taken place and claimed arrears of salary, in a suit filed by him. The trial Court decreed the suit. On behalf of the appellants a preliminary objection was taken in this Court that the controversy raised was not justiciable. This Court held that there was no cause of action for the suit and the appeal must succeed. It was there contended on behalf of the respondent that even though there, might not have been any disciplinary proceed ings taken against him, the effect of the High Court 's order was that he was reduced by eight places in the list of Subordinate Judges and that in law amounted to a reduction in rank within the meaning of article 311 (2) of the Constitution. At p. 453 it was pointed out as follows : "In our opinion, there is no substance in this contention because losing places in the same cadre, namely, of Subordinate Judges does not amount to a reduction in rank within the meaning of article 311(2). The plaintiff sought to argue that 'rank ', in accordance with dictionary meaning, signifies 'relative position or status or place, according to Oxford English Dictionary. The word 'rank ' can be and has been used in different senses in different contexts. The expression 'rank ' in article 3 1 1 (2) has reference to a person 's classification and not his particular place in the same cadre in the hierarchy of the service to which be belongs. Hence, in the context of the Judicial Service of West Bengal, 'reduc tion in rank ' would imply that a person who is already holding the post of a Subordinate Judge has been reduced to the position of a Munsif, the rank of a Subordinate Judge being higher than that of a Munsif. But Subordinate Judges in the same cadre hold the same rank though they have to be listed in order of seniority in the Civil List. Therefore, losing some places in the seniority list is not tantamount to reduction in rank. Hence, it must be held that the, provision , of article 311 (2) of the Constitution are not attracted to this case. " This decision therefore is authority for the position that losing some places in the seniority list is not tantamount to reduction in rank 117 The respondent relied upon the decision of this Court in P. C. Wadhwa vs Union of India(1). There, the appellant, a member of the Indian Police Service and holding the substantive rank of Assistant Superintendent of Police (a post in the junior time scale of pay) in the State of Punjab, was promoted to officiate as Superintendent of Police, which was a post carrying a higher salary in the senior time scale, and posted as Additional Superintendent of Police. After he had earned one increment in that post, he was served with a charge sheet and before the enquiry, which had been ordered, had started, he was reverted to his substantive rank of Assistant Superintendent of Police, the ground suggested for reversion being unsatisfactory conduct. No details of the unsatisfactory conduct were specified and the appellant was not asked for any explanation. At the time when the appellant was reverted officers junior to him in the I.P.S. Cadre of the State were officiating in the senior scale. The order entailed loss of pay as well as loss of seniority and postponement of future chances of promotion. It was held that the order of reversion made against the appellant was in effect a 'reduction in rank ' within the meaning of article 311(2) of the Constitution and inasmuch as he was given no opportunity of showing cause against the said order of reversion, there was violation of article 311. On a consideration of the circumstances of the case, this Court reached the conclusion that the action of the Government reverting the appellant was mala fide. But that was not the sole ground on which the order of reversion was held to be bad. After an examination of the legal position from the large body of rules to which reference was made, it was held that in so far as the Indian Police Service is concerned there was only one cadre, that appointment to posts borne on that cadre were to be made by direct recruitment except to the extent of 25 per cent of the senior posts which may be filled by promotion from the State Police Service. A special feature of the All India Services like the Indian Police Service and the Indian Civil Service is that pro motion is a matter of right. It was for this reason that this Court, by a majority pointed out at p. 622 that in the case of ' those services there was no rule which, specifically provided that an officer had to be freshly appointed to a post carrying a salary in the senior scale of pay. (1) 118 At p. 627 it was said "In our opinion, the whole scheme of the rules indicates that a person borne on the junior scale of pay has a right to hold a post on the senior scale of pay depending upon the availability of, a post and his seniority in the junior scale of pay. If a person hold ing a post in the senior scale, though in an officiating capacity, is found to be unfit to hold that post, action will have to be taken against him as required by r. 5 of Discipline and Appeal Rules because his reversion to a post in the lower scale would amount to reduction in rank within the meaning of article 311 of the Constitution. " On a consideration of the circumstances of that case, it is clear that the decision itself proceeded on the basic fact that for members of All India Services like the Indian Police Service, promotion was a matter of right and special considerations would have to be applied to them. Now, in the light of the principles established by the above decisions, we may consider the respondent 's case. The Southern Railway has two grades of Train Examiners. The respondent and one James Blazey were promoted from the lower grade to officiate in the higher grade. The respondent was shown at item No. 2 and James Blazey at item No. 3 in the promotion list. A note was appended to the order that the promotion of the respondent and Blazey were 'purely provisional subject to revision when seniority lists were drawn up for the Division '. By reason of the order dated November 27, 1959, the respondent was reverted to the lower grade while Blazey was retained in the higher grade. The case of the respondent is that Blazey was junior to him and that since he was reverted while Blazey was not, it would amount to a reduction in rank so far as he was concerned. It is plain that what he complains of is that he lost his seniority by reason of the retention of Blazey in the officiating higher post. The respondent 's rank in the substantive post i.e., in the lower grade, was in no way affected by this. In the substantive grade, the respondent retained his rank. It may also be added that he was visited with no penal consequences. It is no doubt true that it is not the form but the substance that matters, but once it is accepted that the respondent has no right to the post to which he was provisionally promoted, there can be no doubt that his reversion does not amount to a reduction in rank. 119 None of the decisions considered above lends support to the contention for the respondent. It was finally argued that the procedure prescribed by rr. 1609 to 1619 of the rules contained 'in the Indian Railway Establishment Code, Vol. I., were contravened. Rule 1609 reads "As a general rule, in no circumstances, should a gazetted railway servant be kept in ignorance for any length of time that his superiors, after sufficient experience of his work, are dissatisfied with him; where a warning might eradicate a particular fault, the advantages of prompt communication are obvious. On the other hand, the communication of any adverse remarks removed from their context is likely to give a misleading impression to the gazetted railway servant concerned. The procedure detailed in rule 1610 should therefore be followed. " Rules 1609 to 1618 apply only to gazetted railway servants. 'Me respondent is not a gazetted railway servant and there is no question of his claiming that he is entitled to the right given under the above rules. Rule 1619 refers to non gazetted railway servants. That rule Provides that in general conformity with the principles laid down in the preceding rules applicable to Gazetted Railway Servants, a General Manager may frame detailed rules for the preparation, submission and disposal of confidential reports on non gazetted railway servants. Learned counsel for the respondent could not place before us those rules, if any. The contentions raised by the respondent having been nega tived, this appeal must succeed, and it is accordingly allowed, but, in the circumstances of the case, there will be no order as to costs. Appeal allowed.

IN-Abs

The respondent was employed in the Southern Railway as Train Examiner in the scale of Rs. 100 5 125 6 185. He was promoted to officiate in the next higher scale of Rs. 150 225. Subsequently he was reverted to the lower scale, and his departmental representations and appeals having failed, he filed a writ petition under article 226 of the Constitution. The High Court held that the reversion of the respondent amounted to a reduction in rank because he was reverted from the higher post to the lower post notwithstanding the fact that his juniors were still retained in the higher posts. As this reduction of rank was in violation of article 311(2) the High Court granted the writ prayed for. The Divisional Personnel Officer, Southern Railway appealed to this Court by special leave. It was contended on behalf of the appellant that the High Court had misunderstood the ratio of the judgment of this Court in Vaikunthe 's case and that the respondent had not suffered any reduction in rank within the meaning of article 311(2). HELD : (i) The reversion of a Government servant from an officiating post to his substantive post, while his junior is officiating in higher post, does not, by itself, constitute a reduction in rank within the meaning of article 311(2) of the Constitution. [110 D] (ii) An important aspect of the decision in Vaikunthe 's case was lost sight of by the High Court. The real ground on which Vaikunthe 's reversion to his original post of mamlatdar was held to be a violation of his constitutional guarantee was that his chances of promotion were irrevocably barred for a period of three years. There was no such bar on promotion in the present case. [114 E] Madhav Laxman Vaikunthe vs State of Mysore, [1962] 1 S.C.R. 886, distinguished. (iii) The respondent 's complaint was that he had lost his seniority by reason of the retention of his juniors in the officiating higher post. But his rank in the substantive post i.e. in the lower grade, was in no way affected by this. In the substantive grade the respondent retained his rank and was not visited with any penal consequences. The respondent had no right to the post to which he was provisionally promoted. His reversion in these circumstances did not amount to reduction in rank. [118 G 119 A] 107 Parshotam Lal Dhingra vs Union of India, ; , State of Bombay vs F. A. Abraham, [1962] Supp. 2 S.C.R. 92 and The High Court, Calcutta vs Amal Kumar Roy, ; , 'relied on. P. C. Wadhwa vs Union of India, , distinguished. M. A. Waheed vs State of Madhya Pradesh, [1954] Nag. L. J. 305, referred to.

Appeal No. 123 of 1965. Appeal by special leave from the judgment and order, dated November 28, 1963 of the Allahabad High Court in A.I.T. Reference No. 16 of 1960. section T. Desai and O. P. Rana, for the appellant. A. V. Viswanatha Sastri, M. V. Goswami and B. C. Misra, for the respondent. The Judgment of the Court was delivered by Shah, J. By order, dated May 14, 1949 the Sub Divisional Officer, Jaunpur, assessed Raja Yadvendra Dutt Dube hereinafter called 'the respondent ' under section 16(3) of the U. P. Agricultural Income tax Act, 1948 to pay agricultural income tax for the account period 1355 Fasli (July 1, 1947 to June 30, 1948) on a net income of Rs. 72,769/15/2. Being of the view that a part 163 of the income of the respondent had escaped assessment, the Collector of Jaunpur by order, dated June 9, 1950, recomputed tax under section 25 read with section 16(4) of the Act for the said account period on a total net income of Rs. 80,859/13/6. In appeal by the respondent the Agricultural Income tax Commissioner by order dated March 5, 1952, set aside the orders of the Collector and also of the Sub Divisional Officer and directed that the assessment be reopened by the Collector and fresh assessment of the income for 1355 Fasli be made after giving notice to the respondent. In the view of the Commissioner, assessment made by the Sub Divisional Officer was without jurisdiction, and the order of reassessment by the Collector "being in review and substitution of the order of assessment", want of jurisdiction in the order of assessment attached to the order of reassessment as well. The respondent then moved the Board of Revision against the order of the Commissioner. The Board agreed with the Commissioner, that the assessment order made by the Sub Divisional Officer was "illegal and invalid", but in the view of the Board the Commissioner exceeded his authority in setting aside the order of the Sub Divisional Officer, which was not challenged in appeal before him. However, the Board observed, the illegality and invalidity of the order of assessment having come to their notice, they would take up the matter suo motu in exercise of their revisional jurisdiction and declare the order passed by the Sub Divisional Officer as illegal and set it aside. Accordingly, in setting aside the order of the Commissioner, they also set aside the order of assessment made by the Sub Divisional Officer, and directed that "Fresh assessment will be made according to law". The Board then referred under section 24(4) of the Act the following question of law to the High Court of Allahabad for opinion : "Whether on the facts and having regard to the provisions of section 25 of the Act, the Board could on the 15th October, 1952, direct a fresh assessment to be made ?" The High Court, recorded an answer in the negative. The State of Uttar Pradesh has appealed to this Court. The relevant provisions of the Act are briefly these : "Assessing authority" under the Act means a person authorised by the State Government to assess agricultural income tax : section 2(6). By section 3 charge of agricultural income tax and super tax at the rate or rates specified in the Schedule on the total agricultural income of the previous year of every person is imposed. Section 14 sets 164 up Assessing authorities and prescribes their powers. it provides : " (1) For the purposes of this Act, every Collector, and Assistant Collector in charge of a sub division shall be assessing authority and shall exercise and perform within his revenue jurisdiction such powers and duties as may be prescribed, provided that the State Government may appoint any officer as an assessing authority for such area as may be prescribed. (2) In particular and without prejudice to the generality of the provisions of sub section (1), the following authorities shall be the assessing authorities in the cases mentioned against each namely : (a) Assistant Collector Incharge of sub division. : Where the gross agricultural come does not exceed Rs. 1 lakh. (b) Collector : In all cases. (c) Officer appointed under proviso to sub section (1): In such cases as may be prescribed". Section 15, insofar as it is material provides: "(1) The Collector shall give notice,by the publication in the Official Gazette and in such other manner as may be prescribed, requiring every person, whose total agricultural income during the previous year exceeded the maximum amount which is not chargeable to agricultural income tax to furnish to such assessing authority and within such period, not being less than thirty days, as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner, setting forth his total agricultural income during the previous year (2) (3) In the case of any person whose total agricultural income is, in the opinion of the assessing authority, such amount as to render such person liable to payment of agricultural income tax in any year, he may serve in that year a notice in the prescribed form requiring such person to furnish within such period, not being less than thirty days as may be specified in the notice, a return in the prescribed form and verified in the prescribed manner setting forth his total agricultural income during the previous year 165 Section 16 sets out the procedure of assessment by the assessing authority, and against the order of assessment by the assessing authority, an appeal lies under section 21 to the Commissioner. By section 22 power is conferred upon the Board of Revision either on their own motion or on an application to call for the record of any proceeding under the Act pending before or decided by any authority subordinate to the Board, and after such inquiry as they deem necessary, may pass such orders as they think fit. Section 24 provides for reference of questions of law to the High Court for opinion. Sub section (2), insofar as it is material, provides : "Within sixty days of the communication of an order under section 21 or section 22 the assessee may, by application apply to the Board to refer to the High Court any question of law arising out of such order or decision, and the Board shall, within sixty days of the receipt of such application, draw up a statement of the case, and refer it, with their opinion to. the High Court:" Under sub section (4) of section 24 the High Court is authorised, where the Board has rejected the application under sub section (2) or refused to state the case on such application, if the High Court is not satisfied about the correctness of the decision of the Board, to require the Board to state the case and refer it to the High Court. Section 25 authorises the assessing authority to assess or reassess income which has escaped assessment in any year or has been assessed at too low a rate, after serving a notice on the person liable to pay agricultural income tax within one year of the end of the year in which the income has escaped assessment. Section 44 confers power upon the State Government to make rules for carrying out the purposes of the Act. Under the scheme of the Act, the Collector of the District is the assessing authority generally in respect of the entire District over which he has revenue jurisdiction, and he is invested with the power to issue a general notice calling upon every person whose income is chargeable to tax, to make a return of his income. The Assistant Collector (who is also called the Sub Divisional Officer) in charge of a sub division is invested with power as assessing authority within his revenue jurisdiction, where the gross agricultural income of an assessee does not exceed Rs. 1 lakh. Power of the assessing authority under section 15(3) to issue a special notice calling for a return may be exercised within the year of assessment, and not thereafter. Power to reassess under section 25 166 is also restricted and the assessing authority may not issue a notice of "escaped assessment" after one year from the end of the year of assessment. It is necessary to remember that these proceedings come before us in appeal against the order passed by the High Court on a reference made under section 24. Jurisdiction of the High Court under section 24 is advisory : the High Court must answer the question referred to it and cannot travel outside the terms of the reference. This caution is necessary because learned counsel appearing for the parties have sought to canvass many questions which were never raised before the Board and even before the High Court. The question whether the order passed by the Board setting aside the orders of a assessment of the Sub Divisional Officer and of the Collector and even of the Commissioner is justifiable in law is not referred to us. We are only concerned to deal with the limited question whether the Board had authority on the view expressed by it to make the order directing re assessment, and that question must be decided in the light of the provisions of section 15(3) and section 25 of the Act. It may be assumed that a notice under section 15(1) was issued by the Collector (though there is no reference to such a notice in the record) requiring every person whose income exceeds the maximum amount exempt from tax to submit a return in the Form No. 1 (a) prescribed by the Rules. It is common ground however that the respondent filed the return in pursuance of a notice under section 15(3), and that the Sub Divisional Officer found in the course of the assessment proceeding that the gross agricultural income of the respondent exceeded Rs. 1 lakh. The order of assessment passed by the Sub Divisional Officer was set aside by the Board because the Sub Divisional Officer had no jurisdiction to assess to tax income of a person whose gross agricultural income exceeded Rs. 1 lakh, and the Board agreed with the Commissioner that the order of the Collector being in "review or substitution" of the order of the Sub Divisional Officer was also liable to be set aside. Counsel for the State raised three contentions in support of the plea that the Board had power to direct the Collector to make a fresh assessment : (1) The Sub Divisional Officer was invested with authority to issue a notice under section 15(3) calling for a return, and since this notice was not set aside by the Commissioner or by the Board of Revision, in making the order of assessment pursuant to the order of the 167 Board, the Collector will not be transgressing any statutory restrictions imposed by section 15(3) or section 25 of the Act. (2) Without a fresh notice under section 15(3), the Collector has the power, by virtue of the notice under section 15(1), to assess the income of the respondent on the return made pursuant to the notice issued by the Sub Divisional Officer. (3) Since notice under section 25 of the Act for reassessment of the escaped income was issued within the period prescribed by section 25(3), and the notice was otherwise valid, assessment proceedings directed by the Board may be founded by the Collector on that notice. In proceedings for assessment the Sub Divisional Officer found that the total gross income of the respondent exceeded Rs. 1 lakh, and under section 14(2) the Collector alone was the assessing authority in respect of the income of the respondent. The contention raised by counsel for the State that by the expression "without prejudice to the generality of the provisions of sub section (1)" in sub section (2) of section 14 power is intended to be conferred upon the Assistant Collector in charge of a sub division to assess income of an assessee whose gross agricultural income exceeds Rs. 1 lakh cannot be accepted. The first sub section of section 14 declares the Collector and the Assistant Collector in charge of a sub division as assessing authorities within the limits of their respective revenue jurisdictions. By sub section (2) it is directed that the authorities mentioned in sub section (2) shall be the assessing authorities in the cases "mentioned against each". Reading sub sections (1) and (2) together there can be no doubt that the Collector is the assessing authority within his revenue jurisdiction with unlimited jurisdiction, and the Assistant Collector in charge of a sub division is the assessing authority within his revenue jurisdiction with power only in cases in which the gross agricultural income of the assessee does not exceed Rs. 1 lakh. There is in the Act no procedure prescribed about ascertain ment of the gross agricultural income of an assessee which is determinative of the jurisdiction of the Sub Divisional Officer, but as in other taxing statutes where the taxing authority is constituted a tribunal of exclusive jurisdiction the authority has the power, subject to rectification by a superior Court, to decide facts on the proof of which his jurisdiction depends. The Sub Divisional Officer had therefore power to decide whether the gross agricul 168 tural income of the respondent did or did not exceed Rs. 1 lakh The notice under section 15(3) was issued to the respondent by the Sub Divisional Officer, presumably on the assumption that the gross agricultural income of the respondent did not exceed Rs. 1 lakh but when the Sub Divisional Officer found on scrutiny of the return that the gross agricultural income of the respondent exceeded Rs. 1 lakh, he could not exercise the powers of the assessing authority. There is no provision in the Act or the Rules for transfer of proceeding from the Sub Divisional Officer to the Collector, when the Sub Divisional Officer in dealing with a return finds that he has no jurisdiction. When he arrived at the conclusion that the gross income of the respondent exceeded Rs. 1 lakh, the proceeding initiated by the Sub Divisional Officer including the issue of notice must, unless that conclusion is set aside by a superior authority, be held unauthorised, for the power to issue a notice under section 15 (3) is only conferred upon the assessing authority, and the assessing authority within the meaning of section 2(6) is a person authorised to assess agricultural income tax. The Sub Divisional Officer had no power to assess agricultural income of the respondent, because his gross income exceeded Rs. 1 lakh, and he had on that account no power to issue the notice. It is true that the Board of Revision did not expressly Set aside the notice issued by the Sub Divisional Officer under section 15 (3), but the Board agreed with the Commissioner that the original order of assessment passed by the Sub Divisional Officer "was absolutely without jurisdiction", and directed that the entire case be reopened by the Collector and fresh assessment of the income for Fasli year 1355 be made by the Collector after giving notice to the respondent. The Board thereafter passed the same order which the Commissioner claimed without authority to make. It must, therefore, be held that the notice issued by the Sub Divisional Officer was not only unauthorised, but was also quashed by the Board. The second contention that when notice under section 15(1) is issued, the Collector may without a notice under section 15(3) commence fresh assessment proceeding on the return made to the Sub Divisional Officer has no substance. This question does not appear to have been raised or argued at any stage before the Board. Again, if the proceedings for assessment were commenced on a return made pursuant to an invalid notice, and the proceedings for assessment were set aside on the ground of want of jurisdiction of the authority making the assessment, the entire proceedings must, be deemed to be vacated, and relying upon the 169 return made to the authority who had assessed the income, another authority cannot proceed to assess the income of the assessee. Mere issue of a notice under section 15(1) cannot come to the aid of the Collector in commencing fresh assessment proceedings many years after the date on which that notice was issued, on a return which was not made to him. When after a general notice a special notice was issued unauthorisedly and proceedings were taken pursuant to that special notice, the general notice cannot be relied upon to start fresh proceeding for assessment on the assumption that the return must be deemed to be made to him pursuant to the general notice. The Collector must, before proceeding to assess, issue under section 15(3) a notice when no return was filed pursuant to the notice under section 15 ( 1 ), and a notice under s, 15(3) cannot issue after expiry of the year of assessment to which the notice relates. The third contention also has,no substance. The Collector issued a notice under section 25 for reassessing income which had escaped assessment and assessed the income of the respondent, but the proceeding of the Collector was set aside as unauthorised, and the Collector was directed to start a fresh proceeding for assessment. The notice issued by the Collector must also be deemed to be quashed. The Collector has, therefore, under the direction given by the Board, to issue a fresh notice before a proceeding for assessment may be started, and the earlier notice issued under section 25 cannot be relied upon by the Collector. The High Court was therefore right in the answer which it recorded. It is somewhat unfortunate that on account of the diverse orders passed by the authorities from time to time without a correct appreciation of the scheme. of the Act, the respondent escapes liability to pay tax which was lawfully due,by him, but that cannot justify the commencement of a fresh proceeding for assessment contrary to the provisions of the statute. The appeal fails and is dismissed. There will, however, be no order as to costs in this Court and in the High Court. Appeal dismissed.

IN-Abs

The respondent assessee had a gross agricultural income of more than Rs. 1 lakh in 1355 Fasli (July 1, 1947 to June 30, 1948). In response to a notice issued by the Assistant Collector under section 15(3) of the U.P. Agricultural Income tax Act, 1948, the assessee filled a return of his income and the said officer made an assessment though under section 14(2) of the Act Jurisdiction to assess in cases when the gross income exceeded Rs. 1 lakh lay within the Collector. The, Collector thereafter made a reassessment under section 25 read with section 16(4) within the period of limitation prescribed under the former section i.e. "within one year of the end of the year in which the income had escaped assessment". In appeal by the respondent the Agricultural Income tax Commissioner set aside the orders of the Collector and also of the Assistant Collector and directed the Collector to make a fresh assessment after giving notice to the res pondent. The Board of Revision held that the Commissioner had rightly decided that the orders in question were invalid but that the Commissioner was not empowered to set aside the order of the Assistant Collector which was not challenged before him. However the Board suo motu set aside the order of the Assistant Collector and directed that fresh assess ment be made "according to law". The High Court in reference under section 24(4) held that having regard to the limitation provided in section 25 the Board could not in 1952 direct the Collector to make a fresh assessment for the period in question. The State of Uttar Pradesh appealed to this Court. It was contended on behalf of the State that: (1) The Assistant Collector could make assessment even in cases when the gross income exceeded Rs. 1 lakh. (2) The notice under section 15(3) issued by the Assistant Collector not having been set aside by the higher authorities, the Collector could, as directed by the Board, make an assessment without transgressing any restrictions in section 15(3) or section 25. (3) without a fresh notice under section 15(3) the Collector had the power by virtue of the notice under section 15(1), to assess the income of the respondent on the return made pursuant to the notice issued by the Assistant Collector. (4) Since notice under 9. 25 for reassessment of the escaped income had been issued by the Collector within the period prescribed by section 25(3) and the notice was otherwise valid, assessment proceedings directed by the Board could be founded by the Collector on that notice. HELD : (i) Reading sub section (1) & (2) together there can be no doubt that the Collector is the assessing authority within his revenue jurisdiction with unlimited jurisdiction and the Assistant Collector in charge of a sub division is the assessing authority within his revenue jurisdiction with power only in cases in which the gross agricultural income of the assessee 162 does not exceed Rs. 1 lakh. The Assistant Collector is not entitled to make assessment in such a case relying on the generality of the provisions of section 14(1). [167 F G] (ii) When the Assistant Collector arrived at the conclusion that the gross income of the respondent exceeded Rs. 1 lakh the proceedings initiated by him including the issue of the notice must, unless that conclusion is set aside by a superior authority, be treated as unauthorised, for the power to issue a notice under section 15(3) is only conferred upon the assessing authority and the assessing authority within the meaning of section 2(6) s a person authorised to assess agricultural income tax. There is no provision in the Act or the Rules for transfer of proceedings from the Assistant Collector to the Collector when the Assistant Collector in dealing with a return finds that he has no jurisdiction. The Collector therefore could not in the present case make reassessment on the basis of the return filed under section 15(3). In fact having regard to the terms of the order passed by the Board it was clear that the notice under section 15(3) issued by the Assistant Collector had been quashed by the Board. [168 B F] (iii) If the proceedings for assessment were commenced on a 'return made pursuant to an invalid notice, and the proceedings for assessment were set aside on the ground of want of jurisdiction of the authority making the assessment the entire proceeding must be deemed to be vacated and relying upon the return made to the authority who had assessed the income another authority cannot proceed to assess the income of the assessee. Mere issue of a notice under section 15(1) could not come to the aid of the Collector in commencing fresh assessment proceedings many years after the date on which that notice was issued on a return which was not made; to him. [168 H 169 B] (iv) The notice under section 25 issued by the Collector must also be deemed to have been quashed by the Board. The Collector had therefore, under the direction given by !he Board, to issue a fresh notice before a proceeding for assessment could be started and a fresh assessment could not be based on the earlier notice. [169 E]

ppeal No. 223 of 1965. Appeal from the judgment and order dated February 23, 1962 of the Madhya Pradesh High Court in Misc. Civil Case No. 165 of 1961. 194 N. A. Palkhivala, section T. Desai, T.A. Ramachandran, J. B. Dadachanji, for the appellant. A. V. Viswanatha Sastri, R. H. Dhebar, N. D. Karkhanis and R. N. Sachthey, for the respondent. The judgment of the Court was delivered by Subba Rao, J. This appeal, on a certificate granted by the Madhya Pradesh High Court, raises the question whether an appeal lies under section 30(1) of the Indian Income tax Act, 1922, hereinafter called the Act, to the Appellate Assistant Commissioner against the order of an Income tax Officer cancelling an order granting registration of a firm under section 26 A of the Act. The facts material for the said question may be briefly stated. The appellant is a firm constituted under a deed of partnership dated July 16, 1948. The Income tax Officer registered the said firm under section 26 A of the Act for the year 1950 51. The registration was renewed for the years 1951 52 and 1952 53. On November 30, 1957, the Income tax Officer renewed the registration for the assessment year 1953 54. On March 6, 1959, on the ground that the firm was not a genuine one, the said officer cancelled the registration under Rule 6 B of the Income tax Rules. The appellant preferred an appeal against that order to the Appellate Assistant Commissioner, Indore. On July 15, 1959, the said Assistant Commissioner rejected the appeal for the reason that no appeal lay against the order of the Income tax Officer cancelling the registration. The appeal filed by the appellant against that order to the Income tax Appellate Tribunal, Bombay, was dismissed. At the instance of the appellant, the following question was referred to the High Court under section 66(1) of the Act : "Whether on the facts and circumstances of the case, the order passed by the Income tax Officer under Rule 6 B of the Indian Income tax Rules cancelling the certificate of renewal of registration granted to the assessee is appealable under section 30 of the Income tax Act. ,, A Division Bench of the High Court of Madhya Pradesh answer ed the reference against the appellant. It held that no appeal lay under section 30 of the Act against the order of the Income tax Officer cancelling registration to the Appellate Assistant Commissioner. Hence the appeal. 195 The only question in this appeal is, whether an order cancelling the certificate of renewal of registration made under section 26 A of the Act by an Income tax Officer is subject to an appeal under section 30(1) to the Appellate Assistant Commissioner. At the outset, the relevant provisions may be usefully read Section 26 A. (1) Application may be made to the Income tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax. (2) The application shall be made by such person or persons, and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed and it shall be dealt with by the Income tax Officer in such manner as may be prescribed. Rule 6. Any firm to, whom a certificate of registration has been granted under Rule 4 may apply to the Income tax Officer to have the certificate of registration renewed for a subsequent year Rule 6 A. On receipt of an application under Rule 6 the Income tax Officer may, if he is satisfied that the application is in order and that there, is or was a firm in existence constituted as shown in the Instrument of Partnership, grant to the assessee a certificate signed and dated by him in the following form: Rule 6 B. In the event of the Income tax Officer being satisfied that the certificate granted under Rule 4, or under Rule 6 A, has been obtained without there being a genuine firm in existence, he may cancel the Section 30. (1) Any assessee objecting to the cancellation by an Income tax Officer of the registration of a firm under sub section (4) of section 23 or to a refusal to register a firm under sub section (4) of section 23 or section 26 A may appeal to the Appellate Assistant Commissioner against the assessment or against such refusal or order. " 196 The gist of the said provisions relevant to the present enquiry may be stated thus : Under section 26 A of the Act an application may be made to the Income tax Officer on behalf of a firm for registration for the purposes of the Act. Such an application has to be filed and disposed of in the manner prescribed in the Act. Under the Rules, an application for the renewal of registration of a firm which has already been registered in the previous years has to be filed before the Income tax Officer. That application will be disposed of in the manner prescribed by Rules 6 A and 6 B. Under those rules, the Income tax Officer is authorized to make three kinds of orders, viz., (i) he can refuse to renew the registration of the firm; (ii) he can register the firm; and (iii) he can cancel the renewal of registration if he is satisfied that the renewal has been obtained without there being a genuine firm in existence. The crucial point to be noticed is that the said three kinds of orders, having regard to the circumstances of each case, will be made only in the application for renewal of registration. The Rules do not provide for independent proceedings for the cancel lation of the renewed certificate. In effect, the Income tax Officer, after setting aside his earlier wrong order made under a misapprehension, refuses renewal of the certificate of registration. If so, it follows that the order cancelling registration is nothing more than refusing to renew the certificate of registration. If that be the construction of an order made cancelling the certificate re newed, such an order directly attracts the appellate jurisdiction conferred on the Appellate Assistant Commissioner under section 30 of the Act. But Mr. Viswanatha Sastry for the Revenue contended that there was internal evidence in section 30 of the Act itself to show that such a construction was not possible. He further argued that under the Income tax law there was no scope for equitable considerations, and under the express provisions of section 30 no appeal Jay against the order of the Income tax Officer cancelling the certificate of registration. In support of his contention he relied upon that part of section 30 of the Act which we have extracted earlier and contended that when the Legislature in the context of the orders made under section 23 (4) spoke separately of the order of can cellation of registration of a firm and an order refusing to register a firm and in the same section, in the context of section 26 A, it mentioned only refusal to register a firm, it clearly expressed its mind that in the former case an appeal would lie against both the orders, whereas in the latter case an appeal would lie only against one of the orders. There is some force in this argument. But a 197 careful reading of the provisions of section 23 (4) and section 26 A brings out the difference in the phraseology used in section 30 in the matter of appeals against orders made under the said two sections. The relevant parts of section 23 (4) and section 26 A (2) may be placed in juxtaposition : Section 23(4) Section 26 A(2) be. dealt the case of a firm, may refuse to with by the Income tax Officer in register it or may cancel its registration such manner as may be prescribed. ration if it is already registered. A comparative study of the relevant parts of these two provisions at once shows the distinction between the two. Under section 23(4) while the Income tax Officer can make an order refusing to register a firm or may cancel the registration if it is already registered, under section 26 A(2) he can only make an order in such manner as may be prescribed. The manner prescribed, as we have already indicated earlier, provides for three different kinds of orders to be made in the same application with the result that an order of refusal to renew a certificate and the order cancelling the certificate renewed are given the same effect, namely, refusal of the application to register. That apart, when section 30 provides for an appeal against the orders under section 23(4) and also against orders under section 26 A, it has incorporated the two forms of orders embodied in section 23(4) and used a general word in providing an appeal against an order under section 26 A, for the nature of order is not described but left to be prescribed under the Rules. If so, it follows that the words "refusal to register a firm! ' in section 30 of the Act are wide enough to take in the orders made under rr. 6 A and 6 B refusing to renew the registration and also cancelling the certificate so renewed. By so holding we are not unaware that equity has no place, in construing the provisions of the Income tax Act. Indeed, we have not introduced any equitable consideration in the matter of construction. We have come to the conclusion on a fair reading of the relevant provisions of the Act and the Rules made thereunder. In the result, we answer the question propounded for the High Court 's decision in the affirmative. The order of the High Court is set aside and the appeal is allowed with costs. Appeal allowed.

IN-Abs

The Income, tax Officer cancelled the certificate of renewal of registration of the appellant firm, under r. 6B of the Income tax Rules, on the ground that the firm was not a genuine one. The Appellate Assistant Commissioner, the Tribunal and the High Court on reference, held that no appeal lay against the order of the Income tax Officer to the Appellate Assistant Commissioner under section 30(1) of the Income tax Act, 1922. In appeal to this Court, HELD :The words "refusal to register a firm" in section 30 are wide enough to take in the orders made under rr. 6A and 6B refusing to renew registration and also cancelling the certificate so renewed, and such an order directly attracts the appellate jurisdiction conferred on the Appellate Assistant Commissioner under the section. [196 E; 197 F] The fact that section 30 provides for an appeal separately against the orders under section 23 (4) either refusing to register a firm or cancelling the registration of a firm, but provides in the context of section 26A, for an appeal only against an order refusing to register the firm, does not affect this construction of section 30, because, when section 30 provides for an appeal against the orders under section 23(4), it has merely incorporated the two forms of orders embodied in section 23(4), and, when it provides for an appeal against the order under section 26A, it has used a general word, for the nature of the order under section 26A is not described but is left to be prescribed under the Rules. The application under section 26A made to the Income tax Officer on behalf of a firm for registration for the purposes of the Act, will be disposed of in the manner prescribed by rr. 6A and 6B. Under these Rules, the Income tax Officer is authorised to make three kinds of orders, namely, (i) he can refuse to renew the registration; (ii) he can register; and (iii) he can cancel the renewal if he is satisfied that a renewal was obtained without there being a genuine firm in existence. But the three kinds of orders, having regard to the circumstances of each case, will be made only on an application for renewal of registration, because, the Rules do not provide for independent proceedings to the cancellation of the renewed certificate. When the Income tax Officer cancels a renewed certificate, he sets aside his earlier order and refuses a renewal, with the result that, an order of refusal to renew a certificate and the order cancelling the renewed certificate are given the same effect, namely, refusal of the application to register. It follows that the order cancelling registration is nothing more than refusing to renew the certificate of registration. [196 A E: 197 C E]

Appeal No. 605 of 1963. Appeal by special leave from the judgment and order dated the January 24, 1961 of the Punjab High Court in Income tax Case No. 16 of 1956. Niren De, Additional Solicitor General, Gopal Singh and R. N. Sachthey, for the appellant. 178 Bishan Narain, O.C. Mathur and J. B. Dadachanji, for the respondent. The Judgment of Sarkar and Bachawat JJ. was delivered by Bachawat J. Mudholkar J, delivered a dissenting Opinion. Bachawat, J. This appeal by special leave is from an order of the Punjab High Court rejecting an application by the Commissioner of Income tax Punjab under section 66(2) of the Indian Income tax Act, 1922. On April 21, 1953, 14 partners of the firm of Messrs. Chander Bhan Harbhajan Lal of Rupar (hereinafter referred to as the assessee firm) constituted under the instrument of partnership dated December 5, 1952, applied to the Income tax Officer, Project Circle, Ambala for registration of the firm under section 26 A of the Indian Income tax Act. It may be. mentioned at this stage that there was another firm of the name of Chander Bhan & Co., of Ferozepore (hereinafter referred to as the Ferozepore firm), consisting of 8 partners and constituted under a deed dated June 14, 1952, which provided inter alia: "If any one of the executants enters into business individually or along with another person all the partners of the firm shall be entitled to the profit and liable for the loss, accruing from that business according to the shares hereinbefore mentioned. " One Gosain Chander Bhan was a partner of both the assessee firm and the Ferozepore firm. In course of proceedings arising out of the application for registration of the assessee firm under section 26 A, Harbhajan Lal, one of its partners, stated on January 30, 1954 : "I Harbhajan Lal son of Shri Ram Chand of Rupar solemnly declare that firm M/s. Chander Bhan Harbhajan Lal consisted of 14 partners as mentioned in the return and deed of partnership. Gosain Chander Bhan was partner not in his individual capacity but on behalf of the firm M/s. Gosain Chander Bhan and Company Ferozepur having about six partners. Other partners are partners in their individual capacity. ' It seems that other partners of the assessee firm made similar statements on February 27, 1954. The capital of the assessee firm was supplied by Gosain Chander Bhan. It appears that Gosain Chander Bhan had taken the capital from the Ferozepore firm, and the amount was shown as an item in his accounts with the Ferozepore firm. 179 By his order dated February 27, 1954, the Income tax Officer rejected the application under section 26 A. He held that (1) the deed dated December 5, 1952 did not specify the date of the constitution of the assessee firm; (2) some of the parties to deed having no experience in the business of the firm were not really partners therein, and the number of partners in the firm had been artificially increased with a view to reduce the taxable liability; (3) the firm was not genuine, as it had no banking account, did not possess the income tax clearance certificate, did not notify its constitution to the P.W.D., and payments were received from the P.W.D. in the name of Harbhajan Lal. On appeal, the Appellate Assistant Commissioner, Ambala Branch,. set aside all these findings of the Income tax Officer. The correct ness of the decision of the Appellate Assistant Commissioner on! these points is no longer challenged. The Income tax Officer so held that thought the deed dated December 5, 1952 stated that Gosain Chander Bhan was the partner having 6/16th share, in reality the Ferozepore firm was the partner of the assessee firm having 6/16th share therein and consequently, the assessee firm was illegally constituted, because (1) the Ferozepore firm could not legally be a partner in the assessee firm; (2) the total number of partners of the assessee firm was 21; and (3) moreover, the individual shares of the eight partners of the Ferozepore firm were not specified in the deed dated December 5, 1952. On these findings, the Income tax Officer rejected the application 'Under section 26 A. On appeal, the Appellate Assistant Commissioner set aside these findings, and held that Gosain Chander Bhan was the partner of the assessee firm in his individual capacity and not as representative of and on behalf of all the partners of the Ferozepore firm. He held that Gosain Chander Bhan had merely agreed to share his profits and losses in the assesses firm with his other partners of the Ferozepore firm, that such an agreement did not make the other partners of the firm, partners in the assessee firm, and the effect of the agreement was to constitute a sub partnership only. On further appeal, the Income tax Appellate Tribunal, Delhi Branch, upheld these findings of the Appellate Assistant Commissioner, and held that those findings were supported by the decisions in Commissioner of Income tax vs Messrs. Agardih Colliery(1) and Commissioner of Income tax vs Laxmi Trading Company(2). The Commissioner of Income tax, Punjab then applied to the Appellate Tribunal under section 66(1) of the Indian Income tax Act (1) A.I.R. 1955 Patna 225. (2) [1953]24 I.T.R. 173. 180 requiring the Tribunal to refer the following questions to the Punjab High Court: "1. Whether the Income tax Appellate Tribunal was right in applying the decision of the Patna High Court in the case of Commissioner of Income tax versus M/s. Agardih Colliery Company and of the Punjab High Court in the case of Commissioner of Income tax versus Lakshmi Trading Company to the facts of this case. If the answer to question No. 1 is in affirmative whether the rulings noted above lay down a correct law. Whether there is any material to show that there was a sub partnership formed by Gosain Chander Bhan with other persons at Ferozepore. Whether in the circumstances of the case the correct status of the assessee was firm or association of persons and whether registration under section 26 A of the Indian Income tax Act could be allowed in this case. " By its order dated September 5, 1955, the Tribunal rejected the application, and held that the questions were concluded by judicial decisions and no useful purpose will be served by referring them again to the High Court. On September 18, 1956, the Commissioner of Income tax applied to the Punjab High Court under section 66(2) of the Indian Income tax Act for an order directing the Tribunal to refer the aforesaid questions to the High Court, At the hearing of the application before the High Court, Counsel for the Commissioner of Income tax gave up questions Nos. 2 and 4, and submitted that the following two questions of law arose for decision : "(a) is there any material on the record to support the finding that Gosain Chander Bhan was the real partner of the assessee firm and is not a partner in a representative capacity representing all the partners of Gosain Chander Bhan and Company of Ferozepore, and (b) whether the present is a case of sub partnership to which the two cases referred to in the order by the Tribunal apply ?" By its order dated January 24, 1961, the High Court dismissed the application, and held that the questions of law were well settled. The Commissioner of Income tax now appeals to this Court by special leave. 181 Counsel for the appellant contended that all the partners of the Ferozepore firm were the partners in the assessee firm having, regard to (1) the fact that the capital of the assessee firm was secured by Gosain Chander Bhan from the Ferozepore firm, (2) the clause in the deed of partnership dated June 14, 1952 under which all the partners of the Ferozepore firm were entitled together profit and liable for the loss in respect of the share of Gosain Chander Bhan in the assessee firm, and (3) the statement of Harbhajan Lal and other partners of the assessee firm that Gosain Chander Bhan was a partner in the assessee firm not in his indivi dual capacity but on behalf of the Ferozepore firm. We are unable to accept this contention. The real question before us is whether any substantial question of law arises out of the order of the Tribunal. We think that no such question arises. The deed dated December 5, 1952 clearly stated that Gosain Chander Bhan and 13 other parties to the deed were the partners of the assesee firm. On the face of the deed, it does not appear that Gosain Chander Bhan was a partner in a representative capacity on behalf of the Ferozepore firm, or that the Ferozepore firm was the partner in the assessee firm. On the materials on the record, the Appellate Tribunal was entitled to come to the conclusion that Gosain Chander Bhan and not the Ferozepore firm was the partner in the assessee firm. The capital of the assesses firm was supplied by Gosain Chander Bhan. Gosain Chander Bhan in his turn had taken the amount of the capital from the Ferozepore firm, but there is no evidence to show that he took the money otherwise than in his individual capacity. The clause in the partnership deed constituting the Ferozepore firm to the effect that all the partners of the Ferozepore firm are entitled to the profits and liable for the losses accrued in the share of Gosain Chander Bhan in the assesses firm may show that there is a partnership between Gosain Chander Bhan and other partners of the Ferozepore firm in respect of the share of Gosain Chander Bhan in the profits and losses of the assessee firm. This partnership, if any, between the members of the Ferozepore firm does not make the Ferozepore firm a partner in the assessee firm. The Ferozepore firm is not a party to the agreement of partnership constituting the assesses firm. Gosain Chander Bhan in his individual capacity could legally be a partner in the assessee firm, and the fact that he secured the capital from the Ferozepore firm, or that he entered into a partnership with the other members of the Ferozepore firm in respect of his share in the assessee firm does not show that the Ferozepore firm is a partner of the assessee firm, or that the assessee firm is not validly 182 Exporting Co.(1), Subba Rao, J. observed: "A partner of a firm can certainly secure his capital from any source or surrender his profits to his sub partner or any other person. Those facts cannot conceivably convert a valid partnership into a bogus one. " The statements of Harbhajan Lal and other partners of the assessee firm do not carry the matter any further. In the statement dated January 30, 1954, Harbhajan Lal clearly stated that the assessee firm consisted of 14 partners as mentioned in the deed of partnership dated December 5, 1952. It is true that he stated also that Gosain Chander Bhan was a partner not in his individual capacity but on behalf of the Ferozepore firm, but this statement must be read in the background of the clause in the partnership deed constituting the Ferozepore firm, under which the partners of the Ferozepore firm were entitled to the profits and liable for the losses in the share of Gosain Chander Bhan in the assessee firm. The statement fairly read shows that only the 14 persons mentioned in the deed dated December 5, 1952 were the partners in the assessee firm. If the 8 partners of the Ferozepore firm were partners in the asses see firm, Harbhajan Lal could not have stated 'that the number of the partners of the assessee firm was 14 only. Counsel for the appellant pointed out that the High Court erron eously assumed that the partnership deed constituting the Ferozepore firm was dated June 14, 1954, whereas, in fact, this partnership was dated June 14, 1952. Counsel for the appellant rightly pointed out that on the erroneous assumption that the partnership deed constituting the Ferozepore firm was executed after 'December 5, 1952 when the assessee firm was constituted, the High 'Court held that there was a sub partnership between Gosain Chander. Bhan and the other partners in the Ferozepore firm in respect of the share of Gosain Chander Bhan in the assessee firm. 'Counsel then contended that in law, a sub partnership can be entered only after the partnership is constituted, and, therefore, there was no sub partnership between the members of the Ferozepore firm in respect of the share of Gosain Chander Bhan in the assessee firm. In support of this contention counsel relied on the following passage in Lindley on Partnership, 12th Edn, pp. 99 100: "A sub partnership is as it were, a partnership within a partnership; it presupposes the existence of a partnership to which it is itself subordinate." (1) ; , 27. 183 We did not enquire into the correctness of counsel 's assumption that this passage is an authority for the proposition that there cannot be an agreement of sub partnership in anticipation of the head partnership coming into existence. But the question whether the relevant clause in the deed dated June 14, 1952 created a sub partnership in respect of the share of Chander Bhan in the assessee firm having regard to the fact that this deed was executed before the assessee firm came to be constituted is not material for the purpose of the case, and need not be decided. The clause regulated the relationship of the partners of the Ferezepore firm inter se, and created a partnership between them in respect of the share of Gosain Chander Bhan in the assessee firm. Assuming, without deciding that this partnership was not, strictly speaking, a subpartnership, it does not follow that the partners of the Ferozepore firm became partners in the assessee firm. By reason of this clause vis a vis the partners of the Ferozepore firm, Gosain Chander Bhan could be reagrded as their representative in the assessee firm; nevertheless, they were strangers to the contract of partnership constituting the assessee firm and did not become partners therein. In Commissioner of Income tax vs Bagyalakshmi & Co.(1), Subba Rao, J. observed: "A contract of partnership has no concern with the obligation of the partners to others in respect of their shares of profit in the partnership. it only regulates the rights and liabilities of the partners. A partner may be the Karta of a joint Hindu family; he may be a trustee; he may enter into a sub partnership with others; he may under an agreement, express or implied, be the representative of a group of persons; he may be a benamidar for another. In all such cases he occupies a dual position. Qua the partnership, he functions in his personal capacity; qua the third parties, in his representative capacity. The third parties, whom one of the partners repre sents, cannot enforce their rights against the other partners nor the other partners can do so against the said third parties. Their right is only to a share in the profits of their partner representative in accordance with the terms of the agreement, as the case may be." Quite plainly, the relevant clause in the deed dated June 14, 1952 was not part of the agreement of partnership dated December 5, 1952 constituting the assessee firm, and did not affect the Tight of the partners of the assessee firm, to claim registration of (1) , 26. 184 the assessee firm under section 26 A. It is not possible to say that there are no materials on the record to support the finding that Gosain Chander Bhan was a partner of the assessee firm in his individual capacity and not as representing the Ferozepore firm. The question whether there was a sub partnership between the members of, the Ferozepore firm in respect of the share of Gosain Chander Bhan is not material because assuming that there was no sub partnership the members of the Ferozepore firm did not become partners in the assessee firm by virtue of the relevant clause in the deed dated June 14, 1952 or otherwise. We are, therefore, satisfied that no substantial question of law arises out of the order of the Appellate Tribunal. Counsel for the appellant submitted that as a question of law arose out of the order of the Tribunal, the High Court was bound to call for a statement of case. We are not inclined to accept this contention. Where, as in this case, the question of law is not substantial and the answer to the question is self evident, the High Court is not bound to require the Tribunal to refer the question. In our opinion, the High Court in the exercise of its discretion under section 66(2) rightly rejected the appellant 's application. In the result, the appeal is dismissed with costs. Mudholkar, J. This is an appeal from a judgment of the high Court of Punjab rejecting a petition made by the Commissioner of Income tax, Punjab under section 66(2) of the Indian Income tax Act, 1922 for calling upon the Income tax Appellate Tribunal to refer certain questions of law to the High Court. The relevant facts are these On December. 29, 1948 Gosain Chander Bhan and four others entered into a partnership for carrying on the business of contractors in the name of "Gosain Chander Bhan & Co." The partnership was entered into at Ferozepore and Gosain Chander Bhan wag a major shareholder in the firm. By a deed of partnership dated June 14, 1952 the firm was re constituted and three other persons were admitted as partners therein. old name, however, was continued. One of the terms of the partnership was that if any work was carried on by any one of the partners individually or in partnership with others, the profits and losses arising out of that work would be divided amongst all the partners in proportion of their shares in the firm. On December 5, 1952 a partnership firm bearing the name of "Messrs. Chander Bhan Harbhajan lal" was formed at Rupar. The dead of partnership sets out the names 185 object of the firm was to carry on business similar to that carried on by Gosain Chander Bhan & Co. It may be mentioned that in this firm also Gosain Chander Bhan was the major shareholder. For convenience we would call the firm constituted on June 14, 1952 as the Ferozepore firm and the one constituted on December 5, 1952 as the Rupar firm. On April 21, 1953 an application was presented by the part ners of the Rupar firm, accompanied by the deed of partnership dated December 5, 1952 before the Income tax Officer, Ambala for registration of the firm under section 26 A of the Act for the assessment year 1953 54. The Income tax Officer examined the partners constituting the firm and recorded their statements in order to ascertain the true position with regard to the constitution of the firm. Harbhajan Lal in his statement dated January 30, 1954 and the other partners in their statements dated February 27, 1954 admitted that Gosain Chander Bhan had entered into the partnership not in his individual capacity but on behalf of the Ferozepore firm. The Income tax Officer also found that the funds invested in the Rupar firm in the name of Gosain Chander Bhan were also provided by the Ferozepore firm. Upon these and some other facts he came to the conclusion that the deed of partnership dated December 5, 1952 did not specify the real partners of the firm and, therefore, the firm cannot be registered. He further came to the conclusion that as in reality all the partners of the Ferozepore firm and not Gosain Chander Bhan alone, were also partners along with 13 other persons in the Rupar firm, the total number of partners exceeded 20. Such a partnership being invalid in law the firm could not be registered under section 26A of the Act. He, therefore, dismissed the application by his order dated February 27, 1954. In appeal his order was, however, reversed by the Appellate Assistant Commissioner by his ' order dated August 12, 1954. The appeal preferred therefrom by the Income tax Officer before the Income tax Appellate Tribunal (Delhi Branch) was dismissed by it by its order dated September 5, 1955. In doing so the Tribunal based itself on the decisions in The Commissioner of Income tax vs Agardih Colliery Company(1) and Commissioner of Income tax vs Laxmi Trading Co.(2) The Commissioner of Income tax then applied to the Tribunal under section 66(1) to refer to the High Court four questions of law. The Tribunal, however, rejected the application on March 5, 1956. The Commissioner thereupon preferred a petition before the High Court under section 66(2) for (1) A.I.R. 1955 Patna 225. L 9 Sup C T /66 13 (2) 186 directing the Tribunal to refer four question of law to it. At the hearing, however, only the following two questions were pressed on his behalf : "(1) Whether there is any material on the record to support the finding that Gosain Chander Bhan was the real partner of the assessee firm and was not a partner in the representative capacity representing all the partners of Gosain Chander Bhan and Company of Ferozepur ? (2) Whether the present is a case of sub partnership to which two cases A.I.R. 1935 Patna 225 and referred to in the order of the Tribunal apply?" The High Court, as already stated, dismissed the application and now the matter is before us by special leave. Before us the learned Additional Solicitor General, appearing for the department, has raised the following two points : (1) that there was a question of law which it was incumbent on the Tribunal to refer to the High Court; (2) that both the Tribunal and the High Court proceeded to decide the question of law on erroneous premises. The question of law, according to learned Additional Solicitor General, is : "whether on the facts and circumstances of the case the firm Chander Bhan Harbhajan Lal was registrable under section 26A". It must be borne in mind that the question is not whether there was material on record on the basis of which the Tribunal could come to the conclusion that the firm was registrable but whether, upon the facts found it was registrable. In other words, the question is as to what is the cumulative effect of all the facts and not what is the effect of only some of the facts found. The contention of learned Additional Solicitor General is that when a question of law is said to arise the High Court is bound to call for a reference and it is immaterial that the question is settled already. If in the facts and circumstances of the case a question of Law arises, there is little doubt that under section 66(1) the Tribunal is bound to draw up a statement of the case and refer the question to the High Court. The Tribunal has no discretion in the matter. Where, however, the Tribunal refuses to do so and the High Court is moved under section 66(2) of the Act, the position 187 becomes different. Section 66(2) confers a discretion on the High Court and if the High Court is of the opinion that though a question of law arises it is not substantial or that it is well settled it can reject the petition. What we have, therefore, to ascertain is whether a question of law at all arises in this case and if so whether it is a substantial question of law. In order to ascertain whether a question of law arises it is necessary to ascertain the facts which have been found established by the Income tax authorities. I will recapitulate the facts found by the Income tax Officer. (1) The original firm Gosain Chander Bhan & Co., was formed at Ferozepore on December 29, 1948. (2) Gosain Chander Bhan had a major share therein. (3) This firm was dissolved and re constituted on June 14, 1952. (4) In the original firm there were only 5 partners including Gosain Chander Bhan while in the reconstituted firm there were 8 partners including Gosain Chander Bhan. (5) The largest share in the reconstituted partnership was that of Gosain Chander Bhan. (6) The partnership deed of December 5 1952 specified the names of 14 persons including Gosain Chander Bhan as partners but did not specify the names of all the partners of Gosain Chander Bhan & Co. of Ferozepore. (7) The funds invested by Gosain Chander Bhan in the Rupar firm came out of the funds belonging to the Ferozepore firm. (8) Harbhajan Lal and other partners of Rupar firm admitted that Gosain Chander Bhan was not a partner in the Rupar Firm in his individual capacity but had joined it on behalf of the Ferozepore firm. (9) The business carried on by the Ruper firm is similar to that carried on by the Ferozepore firm. None of these findings on questions of fact has, been negatived or upset by the Appellate Assistant Commissioner or by the Tribunal. These findings must, therefore, be taken as the basis for ascertaining whether a question of law arises, and if it does they have to be home in mind for deciding the question. At this stage 188 I would like to mention that the High Court committed an ob vious error in stating in its judgment that the re constituted Ferozepore partnership was formed on June 14, 1954, that is, after the Rupar partnership was formed. This error has obviously led it into a further error, that is, of coming to the conclusion that the Ferozepore partnership was a sub partnership in relation to the Rupar partnership. Now, ordinarily there can be a sub partnership only when there is already in existence another partnership. 'Since in point of fact the Rupar partnership came into existence after the formation of the Ferozepore partnership the latter cannot stand in relation to the former as a sub partnership. The law as stated in Lindley on Partnership at p. 99 is : "A sub partnership is as it were, a partnership within a partnership : it presupposes the existence of a partnership to which it is itself subordinate." The correctness of this statement of law is not assailed before us by either side. It is no doubt settled law that where an application for registration of a firm complies with the requirements of section 26 A and of the rules and it is found that the partnership is not genuine the Income tax Officer is not bound to admit the firm to registration. But it does not follow from this that for ascertaining whether the requirements of law have been satisfied and for ascertaining whether a firm is genuine or is bogus or that it has no legal existence the Income tax Officer must confine himself to the deed of partnership. He has power to examine the partners and to require them to adduce evidence for satisfying himself about the genuineness or otherwise of the firm and also for satisfying himself about compliance with the requirements of law. Paragraphs 2 and 3 of the order of the Appellate Assistant Commissioner, however, show that he has treated the recitals in the partnership deed of December 5, 1952 as conclusive of the question as to who were the real partners in the Rupar firm. I can find no discussion or even reference to the findings of the Income tax Officer which I have earlier summarised. No doubt in paragraph 4 he has referred to some of the facts found by the Income tax Officer and the inference drawn by him and rejected them. Leaving these facts out of account there are other facts which are relevant for consideration but they appear to have been ignored by the Appellate Assistant Commissioner. 'Ascertainment of the legal effect of those facts would in my judgment be a question of law. It is not disputed before us that the application for registra 189 tion should set out the names of all the persons who are real partners of the firm and, therefore it is incumbent on the Income tax authorities to ascertain whether any of the partners had joined the partnership in his individual capacity Dr as representing a group of persons. If, to the knowledge of the other partners he represents a group of persons, be they members of another partnership or a joint Hindu family, it would be a question for decision as to whether all those persons have thereby become partners and that would be a question of law. In paragraph 6 of his order the Appellate Assistant Commissioner seems to have had this in mind and it will be useful to quote the relevant portion of the paragraph : "There are two essential conditions before it can be stated that contractual relationship has been brought about between the partners which is the relationship of a partnership and the two conditions are that the partners must agree to share the profits of the business and the business must be carried on by all or any of them for all of them. There can in law be a partnership between the partner in a Head Firm and another individual in respect of the partner 's share in the Head Firm so as to entitle the partners in the sub firm to apply for registration thereof under section 26 A of the Indian Income tax Act. If several persons are partners and one of them agrees to share the profits derived by him with a stranger, this agreement does not make the stranger a partner in the original firm. The result of such an agreement is to constitute a sub part nership. It makes the parties to it partners inter se; it does not affect the other members of the principal firm. " The sole ground given by the Appellate Assistant Commis sioner for holding that Gosain Chander Bhan was a partner in the Rupar firm in his individual capacity is that the preamble to the partnership deed 'clearly sets out that the contracting parties were 14 and that Gosain Chander Bhan was a partner in his individual capacity. ' It is true that he has repelled some of the grounds given by the Income tax Officer in support of his conclusion but, as already stated, he has entirely omitted to consider other facts found by the Income tax Officer which bear directly on the point. It may be that the finding cannot be said to be based on no evidence but even so, as it has been arrived at by ignoring relevant facts, it is vitiated by an error of law. 190 The first sentence of Para 6 of the order, of the Appellate Assistant Commissioner quoted above paraphrases the provisions of section 4 of the Partnership Act and is unexceptionable. The rest of the quotation appears to have been lifted from the head note of the decision in Commissioner of Income tax, Punjab vs Laxmi Trading Co(1). The question which fell for decision in that case was "Whether there could in law be a partnership between a partner in a head firm and another individual in respect of the partner 's share in the head firm so as to entitle the partners in the sub firm to apply for registration thereof under section 26 A, Income tax Act, 1922?" and it was answered in the affirmative. A sub partnership can also, as stated by the learned Appellate Assistant Commissioner, apply for registration under section 26 A. But where does it all lead to ? Here the question which arises is whether the head firm as such has entered into partnership with another or whether only one of the partners of the head firm has entered into partnership with another. For, that is what the question really is. According to the appellant, the Ferozepore firm as a firm has become partner in the Rupar firm and not merely Gosain Chander Bhan. The learned Appellate Assistant Commissioner has not addressed himself to this aspect of the case. At the end of the paragraph the learned Appellate Assistant Commissioner has observed : "there is no data on the record to substantiate the finding of the Income tax Officer that the firm was not genuine in view of the local enquiries by him." That, however, is not the whole question. The whole question which arises in this case is whether in the facts and circumstances of this case the firm Chander Bhan Harbhajan Lal was registrable under section 26 A, the circumstances being that a partner of another and pre existing firm became a partner in Chander Bhan Harbhajan Lal on behalf of the partners of that other firm, that he had brought in funds belonging to that firm and that the new firm was to carry on business of the same kind as the old firm was carrying on. Further, the reasoning of the Appellate Assistant Commissioner would be pertinent only to a case of sub partnership. To put it somewhat differently the question is whether the application for registration reflects the true position as regards the real partners in the Rupar Firm. This has not been considered either by the Appellate Assistant Commissioner or by the Tribunal. (1) A.I.R. 1955 Pat. 191 The Tribunal merely referred to the decisions in Laxmi Trading Co. 's case (1) and in Agardih Colliery Co. 's case(2) and dismissed the department 's appeal. The latter is also a case of sub partnership and does not assist us in deciding the matter arising here. It is contended on behalf of the respondents that the question arising here has already been settled by three decisions of this Court. The first of these is Commissioner of Income tax, Madras vs Sivakasi Match Exporting Co., Sivakasi(3). In that case this Court held that the mere fact that one of the, partners of the firm seeking registration brought his capital from another firm of which he was one of the partners and the further circumstance that he shared the profits received by him from the former firm with his partners in the latter firm did not make the former partnership bogus. In the first place the circumstance that upon a certain set of facts this Court arrived at a particular decision would not necessarily make that a binding precedent even though the inference drawn by the Court upon which its judgment rests is one of law. In the second place we have here the fact that one of the partners of the firm seeking registration was a partner in his representative capacity and not merely a partner in his individual capacity. The next case relied on is Commissioner of Income tax, Ahmedabad vs Abdul Rahim & Co.(4) In that case this Court held that the circumstance that one of the partners was a benamidar for another does not justify a refusal to register the firm under section 26 A and reiterated the essential conditions which must be satisfied by the firm seeking registration which have been stated in Commissioner of Income tax, Bombay vs Dwarkadas Khetan & Co.(5) It does not advance the respondent 's case any further. The third decision is that in Commissioner of Income tax vs Bagyalakshmi & Co.(6). There Subba Rao J., speaking for the Court has observed : "A partner may be the karta of a joint Hindu family; he may be a trustee; he may enter into a sub partnership with others; he may, under an agreement, express or implied, be the representative of a group of persons; he may be a benamidar for another. In all such cases he occupies a dual position. Qua the partnership he functions in his personal capacity; qua the third parties, in his representative capacity. The third parties, whom (1) A.I.R. 1955 Pat. (3) ; (5) ; (2) (4) ; (6) ; 192 one of the partners represents, cannot enforce their rights against the other partners nor the other partners can do so against the said third parties. Their right is only to a share in the profits of their partner representative in accordance with law or in accordance with the terms of the agreement, as the case may be. " It is upon these observations that learned counsel for the respondents has placed strong reliance. These observations are based on the fact that the person admitted as a partner in the firm seeking registration was so admitted as an individual. They cannot apply and were apparently not intended to apply to a kind of case as the one we have here, that is, where the partner to the knowledge of other partners was joining on behalf of and representing several persons. What has to be determined is the cumulative effect of this circumstance taken along with the other cir cumstances established in the case. That is a question of law and I am clear that question is far from being settled and also that it is a substantial question of law. A further question which arises on the particular facts of this case is whether the Rupar firm can be said to have legal existence because its real partners are not merely 14 persons but there are 7 persons in addition to that number. Under the provisions of section 11 of the (section 4 of the 1913 Act) where the number of partners exceeds 20 the firm has to be incorporated and that is admittedly not what has been done here. If, therefore, the number is in excess of 20 the firm being unincorporated, it cannot be said to have a legal existence. Unfortunately the Income tax Appellate Tribunal has not discussed the facts and circumstances of this case but dismissed the second appeal preferred by the appellant on the short ground that there was no merit in it in view of the decisions cited by it. It was necessary for the Tribunal to ascertain whether on the facts of this case those decisions concluded the matter. The questions which arise are, in My Opinion, substantial between the parties and are not settled. For these reasons I allow the appeal, set aside the judgment of the High Court and direct the Tribunal to refer the question earlier set out to the High Court. Costs so far incurred will abide the result. ORDER In accordance with the opinion of the majority, Civil Appeal No. 605 of 1963 is dismissed with costs. Civil Appeals Nos. 810 and 811 are dismissed, but there will be no order as to costs.

IN-Abs

The assessee firm, consisting of 14 partners, applied for registration under section 26A of the Income tax Act, 1922. One G, who was a partner of the assessee firm, was also partner of another firm, the Ferozepore firm. The Ferozepore firm consisted of 8 partners who had agreed that if any work was carried on by any one of them with others the profits and losses arising out of that work would be divided amongst all the partners in proportion to their shares in that firm. In the course of the proceedings for the registration of the assessee firm all its partners had stated before the Income tax Officer that G was a partner in the as firm, not in his individual capacity but on behalf of the Ferozepore firm. It was found by the Income tax Officer that the capital of the assesseefirm was supplied by G who had taken the amount from the Ferozepore firm, and, that the assessee firm was to carry on the same kind of business as the Ferozepore firm. The Incom tax Officer rejected the application for the reason that 'in reality it was not G but the Ferozepore firm that was the partner of the assessee firm and consequently, the assessee firm was illegally constituted because : (i) Ferozepore firm could not legally be a partner in the assessee firm; (ii) the total number of partners of the assessee firm would then be 21; and (iii) the individual shares of the partners of the Ferozepore firm were not specified in the partnership deed of the assessee firm. The Appellate Assistant Commissioner, on appeal, reversed that order, holding that G was a partner of the assaw firm in his individual capacity and not as a representative of the Ferozepom Am and that the effect of his agreement to share his profits and losses in the assessee firm with the other partners of the Ferozepore firm was only to constitute a sub partnership between G and the other partners in the Ferozepore firm, in respect of the share of G in the assessee firm. The Appellate Tribunal upheld the order of the Appellate Assistant Commissioner on the short ground that there was no merit in the appeal in view of certain decisions cited by it, and also dismissed the application under section 66(1) to refer to the High Court four questions of law. The Commissioner preferred a petition before the High Court under section 66(2) for directing the Tribunal to refer the questions; (1) whether G was a partner of the assessee firm in his individual capacity or representing the partners of the Ferozepore, firm, and (ii) whether the Ferozepore firm was a sub partnership; but the High Court dismissed the application holding that the questions of law were well settled. In appeal to this Court, it was contended that : (i) under the circumstances, G was a partner of the assessee firm not in his individual capacity but on behalf of the Ferozepore firm; (ii) the High Court held that there was a sub partnership on the erroneous assumption that the: Ferozepore firm came into existence after the assessee firm was constituted; and since a sub partnership can be entered into only after a partnership was constituted, there could be no sub partnership between the members of the 177 Ferozepore, firm; and (iii) as a question of law arose out of the order of Tribunal, the High Court was bound to call for a statement of case. HELD : (per Sarkar and Bachawat, JJ.) on the materials on record, the Appellate Tribunal was entitled to come to the conclusion that G and not the Ferozepore firm was the partner in this assessee firm [181 D E] Commissioner of Income tax vs Sivakasi Match Exporting. Co. ; , followed. (ii) The question whether there was a sub partnership between the members of the Ferozepore firm in respect of the share of G is not materail, because, assuming that there was no sub partnership, the members of the Ferozepore firm did not become partners in the assessee firm by virtue of the clause which only regulated the relationship of the partners of the Ferozepore firm inter se and created a partnership between them in respect of the share of G in the assessee firm. [183 B D] Commissioner of Income tax vs Bagyalakshmi & Co. ; , followed. (iii) Though a question of law arose out of the order of the Appellate Tribunal, since it was not a substantial question of law and the answer to the question was self evident, the High Court was not bound to require the Tribunal to refer the question. [184 D] Per Mudholkar, J. (dissenting) : The main question which arose in the present cast was whether in the circumstances of the case, the assesseefirm was registrable under section 26A. Ascertainment of the legal effect of &we circumstances would be a question of law. The Appellate Assistant Commissioner and the Tribunal had not considered the question whether the application for registration reflected the true position as regards the real partners in the assessee firm. The reasoning of the Appellate Assistant Commissioner was pertinent only to a case of sub partnership, and the Tribunal merely referred to certain decisions and dismissed the Department 's appeal. Since the finding of the Appellate Assistant Commissioner and also of the Tribunal was arrived at by ignoring the relevant facts found by the Income tax Officer, the finding was vitiated by an error of law. The High Court has also committed an obvious error as to when the Ferozepore firm was constituted and that error has led to the further error that the Ferozepore firm was sub partnership in relation to the assessee firm. Moreover the decisions in Commissioner of Income tax vs Sivakasi Match Exporting Co. and Commissioner of Income tax vs Bagyalakshmi & Co. ; do not apply to the facts of this case, because, the observations in those cases are based on the fact that the person admitted as a partner in the firm seeking registration was admitted as an individual, whereas in the present case one of the partners of the firm seeking registration was a partner in his re presentative capacity. Thus the question in the instant case was a substantial question of law which has not been settled. Therefore, the High Court should have directed the Tribunal to refer the question. [188 H; 190 H. 189 H; 188 A B; 192 B D]

il Appeal No. 543 of 1963. Appeal from the judgment and decree, dated October 10, 1958 of the Madras High Court in O.S. Appeal No. 1 of 1954. 209 T. V. R. Tatachari, for the appellant. M. Sundaram, K. Jayaram and R. Thiagarajan, for respondent No. 1. The Judgment of the Court was delivered by Mudholkar, J. This is an appeal from a judgment of the Madras High Court modifying the decree passed by a single Judge of that High Court in a suit for recovery of money. Admittedly the appellant had executed a promissory note at Madras for a sum of Rs. 10,600 in favour of one Narayana Iyer, since deceased, on January 28, 1946 and agreed to pay interest on that amount at 12% p.a. It is also admitted that no repayment was made by the appellant. Narayana Iyer, therefore, instituted a suit against him for recovery of a sum of Rs. 14,402 5 0, which includes interest upon the sum of Rg. 10,600. The appellant contended that the promissory note was only a renewal of a previous promissory note which itself as well as three earlier promissory notes were in renewal of the original promissory note for Rs. 1,000 executed in the year 1930. According to the appellant that promissory note was executed by his brother but was renewed by the appellant himself in the year 1932; that this promissory note was renewed on January 11, 1937 by him and that at that time Narayana Iyer had given an additional amount of Rs. 350 to him. The amount for which his promissory note was executed was Rs. 4,000 and it included interest on the first advance up to that date. Narayana lyer, however, instead of taking a promissory note in his own name took it in the name of General Bank which is a private limited company which admittedly was under his control. The debt was renewed in favour of the General Bank on January 3, 1940 by executing a fresh promissory note for Rs. 5,650 on that date and again on September 13, 1944 when it was renewed by obtaining a promissory note for Rs. 9,275. According to the respondents Narayana lyer paid off the dues to the General Bank at the instance of the appellant and obtained a promissory note in his favour for Rs. 10,600. As the amount was not paid, Narayana lyer instituted the suit out of which this appeal arises. He, however, died during the pendency of the suit and is now represented by his sons, the respondents. Upon the aforesaid facts and the further fact that the appellant is an agriculturist he claimed that he was entitled to the benefits of the Madras Agricul 210 turists Relief Act IV of 1938. He claimed that under the provisions of that Act he was entitled to have the debts scaled down. His plea was upheld by the learned single Judge of the High Court who held that the respondents after scaling down the interest as provided in the Act were entitled to a sum of Rs. 1,350 together with interest thereon at 6 1/4% from March 22, 1938 up to the date of the decree. In the appeal preferred by the respondents under the Letters Patent the appeal court held that the respondents were entitled to a decree for the entire amount for which the promissory note was executed, that is, Rs. 10,600 together with interest thereon at 61% p.a. In coming to this conclusion the appeal court placed an interpretation on explanation III to section 8 of the Act different from that placed by the learned single Judge. Section 7 of the Act provides that all debts payable by an agriculturist at the commencement of the Act shall be scaled down in accordance with the provisions of Chapter II. The Act received assent of the Governor General on March 11, 1938 and was first published in the Official Gazette on March 22, 1938 and must be deemed to have come into force as from the former date. Section 8 provides for the scaling down of debts incurred before December 1, 1932. Sub section (1) thereof says that all interest outstanding on the 1st of October, 1937 against an agriculturist shall be deemed to be discharged and only the principal outstanding on that date shall be deemed to be the amount repayable by the agriculturist debtor. Sub sections (2), (3) and (4) of that Act deal with classes of cases in which payments have been made from time to time by the debtor to the creditor. It is not necessary to refer to them because even according to the appellant he had not made any repayments before the execution of the promissory note in the suit. It is common ground that explanations 1, II and IV have no application to the present case. The only explanation which is relevant is explanation III. This explanation has been twice amended. The original explanation was as follows : "Where a debt has been renewed or included in a fresh document in favour of the same creditor the principal originally advanced by the creditor together with such sums, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repayable by the agriculturist under this section. " 211 The amending Act 23 of 1948 substituted for it the following "Where a debt has been renewed or included in a fresh document executed before or after the commencement of this Act, whether by the same or a different debtor and whether in favour of the same or a different creditor the principal originally advanced together with such sums, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repayable under this section. " This was amended by Madras Act 24 of 1950 and now runs thus : "Where a debt has been renewed or included in a fresh document executed before or after the commencement of this Act, whether by the same debtor or by his heirs, legal representatives or assigns or by any other person acting on his behalf or in his interest and whether in favour of the same creditor or of any other person acting on his behalf or in his interest, the principal originally advanced together with such items, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repayable under this section. " It is common ground that it is the explanation which was amended by Act 24 of 1950 which applies to the case before us. It will be seen that under the original explanation the benefit of sub section (1) of section 8 was available only in cases where the debt had been renewed in favour of the same, creditor as the one from whom it was originally obtained. It is contended on the appellant 's behalf that by virtue of the amendment of 1948 the benefit of the provision was available even if the creditor in whose name the debt was renewed was different from the one who had originally advanced the loan and also even where the original debtor was different from the one who executed the document under which the debt was renewed. It is pointed out that the second amendment was necessitated by reason of certain decisions of the Madras High Court holding that the words "different creditor" in Explanation III to section 8 did not include a third party in whose favour the debtor had executed a document renewing an earlier debt. According to learned counsel this interpretation defeated the object which the Legislature had in view in amending Explanation III in 1948 and that, therefore, that explanation was amended a second time to make it 212 clear that once it is found that a document was in renewal of a previous debt the benefit of section 8 would be available to the promisor whether the person renewing it or the person in whose favour it is renewed is different. It is unnecessary for us to consider what the reason for amending Explanation III by Act 23 of 1948 was. All that we are concerned with is the explanation as amended by Act 24 of 1950. By virtue of this explanation the benefit of section 8(1) would be available in a case where (a) a debt has been renewed or included in a fresh document; and where that is done (b) (i) by the same debtor, or (ii)by his heirs, legal representatives or assigns; or (iii)by any other person acting on his behalf; or (iv) by any other person acting in his interest. Such a transaction will be entitled to the benefit of the Act if the renewal or fresh agreement is in favour of (a) the same creditor; or (b) of any other person acting in his behalf or (c) any other person acting in his interest. In the instant case though the debtor in the transaction of 1930 was stated to be the appellant 's brother, in all subsequent transactions it was the appellant who was the debtor It would follow, therefore, that the requirements of the explanation pertaining to the debtor are satisfied in the sense that the same person has been the debtor. The second requirement of the explanation is with respect to the creditor. As already stated, after 1940 it was not Narayana lyer but the General Bank which was the creditor up to January 28, 1946 on which date the promissory note in suit was executed by the appellant in his favour. The General Bank has an independent existence and even though the controlling interest therein was with Narayana lyer and his family it would not be correct to say that there is an identity between that bank and Narayana lyer. Mr. Tatachari, however, contended that it was Narayana lyer who was the original creditor and that as he had full power of management and control with respect to the General Bank he went on obtaining promissory notes from the appellants, sometimes in his own favour and some times in favour of the Bank. For all practical purposes, therefore, according to the appellant, the creditor has been the same throughout. We cannot accept this argument in the absence of any material to show that the Bank acted on his behalf when the appellant executed the promissory notes, dated January 3, 1940 ,and September 30, 1944 in favour of the Bank. The contention 213 of Mr. Tatachari then is that the Bank in obtaining those promissory notes in renewal of the original debt was acting in his interest and that, therefore, the explanation was available to the appellant. In the High Court it was urged that when the appellant executed the promissory note dated January 28, 1946 Narayana lyer acted in the interest of the Bank. The ground on which the argument advanced before the High Court and the argument advanced before us is, however, the same. It is that the words "in the interest of" mean "for the benefit of". Even assuming that that is the meaning to be given to these words the argument of learned counsel cannot be sustained on the facts of this case. It has been found as a fact by the appeal court that Narayana Iyer actually paid Rs. 10,600 by cheque in favour of the General Bank Ltd., to the credit of the appellant. It has also been found by the High Court that Narayana lyer paid off the debt due from the appellant to the Bank at the request of the appellant for discharging the appellant 's liability upon the promissory note executed by him in favour of the Bank. These findings of the High Court have not been seriously challenged before us and in our opinion quite rightly. In view of these findings the contention of learned counsel that the payment was made "in the interest of the creditor" cannot be sustained. In the circumstances, therefore, we uphold the decree of the appeal court and dismiss the appeal with costs. Appeal dismissed.

IN-Abs

In 1932, the appellant renewed a promissory note executed in 1930 by his brother in favour of N, the father of the respondents, for Rs. 1,000. The promissory note was renewed in 1937, 1940 and 1944 for the principal amount together with interest. The last 3 promissory notes were taken in the name of a Bank which was admittedly under the control of N. In 1946, at the instance of the appellant, N paid off the debt due from the appellant to the Bank and obtained a promissory note in his own favour for Rs. 10,600, the amount then due. As no repayment was made, N instituted a suit on the original side of the High Court which was decided by a judge sitting singly. Applying Explanation III to section 8 of the Madras Agriculturists ' Relief Act, 1938, he gave a decree only for Rs. 1,350 together with interest at 6 1/4 % from the date of the Act. In appeal therefrom under the Letters Patent, the High Court held that the respondents were entitled to a decree for the entire amount of Rs. 10,600 with interest at 6 1/4 %. Before this Court, it wag contended that, under the Explanation as amended by Act 24 of 1950, once it was found that a document was in renewal of a previous debt the benefit of section 8 would be available was promisor even if the creditor in whose name the debt was renewed was different from the one who had originally advanced the loan and also even where the original debtor was different from the one who executed the document under which the debt was renewed. HELD : Though the requirement of the Explanation pertaining to the debtor was satisfied in the sense that the same person had been the debtor, the requirement with respect to the creditor was not satisfied. The benefit of the Act would be available to a debtor if the renewal was in favour of: (a) the same creditor; or (b) any other person acting in his behalf; or (c) any other person acting in his interest. Since the Bank has an independent existence, even though the controlling interest herein was with N, it would not be correct to say that there was identity between him and the Bank. Neither was there any material to show that the Bank acted on N 's behalf when the appellant executed the promissory notes in favour of the Bank; and, even if the words "in the interest of" mean "for the benefit of" it cannot be said that the Bank, in obtaining the promissory notes in renewal of the original debt was acting in N 's interest. Therefore, the Explanation was not available to the appellant. [212 D G; 213 A E]

Appeal No. 885 of 1963. Appeal from the judgment and decree, dated April 8, 1960 of the Andhra Pradesh High Court in Appeal No. 21/1 of 1956. T. V. R. Tatachari, for the appellant. N. section Bindra and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Wanchoo, J. The only question raised in this appeal on a certificate granted by the Andhra Pradesh High Court is whether the suit brought by the appellant is barred under section 46 of the Administration of Evacuee Property Act, No. 31 of 1950, (hereinafter referred to as the Act). The facts are not in dispute and may be briefly narrated. On November 15, 1946, the appellant claimed to have pur chased certain patta lands from one Abdul Aziz Khan and paid him Rs. 6,127/8/ in Osmania Sicca. The appellant got possession of the land and thereafter in June 1949 Abdul Aziz Khan applied in the Tahsil office for the transfer of the patta in the name of the appellant. Before, however, any transfer was made, Abdul Aziz Khan seemed to have migrated to Pakistan. Consequently, the Deputy Custodian took steps to declare Abdul Aziz Khan an evacuee. In that connection the appellant received notice from the Deputy Custodian in December 1950 under section 7 of the Act asking him to show cause why the land should not be declared evacuee property. Though the appellant 's case was that he engaged a counsel to appear on his behalf before the Deputy Custodian, no one seems to have appeared on his behalf, and in consequence, the Deputy Custodian declared the property to be evacuee property. Thereafter the appellant was given a notice requiring him to surrender possession of the land to the Tahsildar. The appellant then made representation before the Deputy Custodian that he had purchased the property from Abdul Aziz Khan in 1946 and was the owner thereof from before the Evacuee Property Law came into force. The Deputy Custodian called upon him to produce evidence and thereafter recommended to the Custodian that the property might be declared not to be evacuee property. The Custodian did not accept this recommendation on the ground that there was no registered sale deed duly executed by Abdul Aziz Khan in favour of the appellant and 216 no transfer of property could therefore be said to have taken place in 1946, and ordered that the declaration of the property as evacuee property should stand and further said that if the appellant was aggrieved by this decision he could obtain a declaration of his rights from a competent court. In consequence, the appellant filed the suit out of which the present appeal has arisen in the court of the Subordinate Judge, Nizamabad and prayed that a declaration be made that he was the owner of the property and in possession thereof and that the Custodian be ordered to execute and register a sale deed thereof in his favour. The suit was resisted by the Custodian and the main contention raised on his behalf was that the suit was barred under section 46 of the Act. The Subordinate Judge however held that the appellant was entitled to the benefit of section 53 A of the Transfer of Property Act (No. 4 of 1882) and that the civil court had jurisdiction inasmuch as the sale had taken place before 1947. The Custodian then went in appeal to the High Court, and the only question raised there was that the suit was barred under section 46 of the Act. The High Court reversed the decision of the Subordinate Judge and held that the appellant had been given notice under section 7 of the Act in December 1950 and did not appear before the Deputy Custodian with the result that the property was declared as evacuee property. The High Court further held that after this declaration the appellant 's remedy was to proceed by way of appeal or revision under the Act and that a suit was barred in view of section 46 thereof. The appellant 's contention that as he was a third party he was entitled to maintain the suit was negatived by the High Court. In consequence the High Court dismissed the suit but directed the parties to bear their own costs. The appellant then obtained a certificate from the High Court to appeal to this Court, and that is how the matter has come up before us. We are of opinion that there is no force in this appeal. It is unnecessary to consider the cases cited at the bar on behalf of the appellant for whatever may be the position of law where the title of the evacuee himself is in dispute, as to which we express no opinion, there can be no doubt that where the property admittedly belonged to the evacuee and the person filing the suit claims to be a transferee from the evacuee, the suit would certainly be barred in view of section 46 of the Act. Section 46 inter alia lays down that "save as otherwise expressly provided in this Act, no civil or revenue court shall have jurisdiction to entertain or adjudicate upon any question whether any property or any right to or 217 interest in any property is or is not evacuee property. " It is admitted that the appellant had received notice from the Deputy Custodian under section 7(1) of the Act but had neglected to appear before him and it was in those circumstances that the Deputy Custodian declared the property to be evacuee property. That order of the Deputy Custodian could be taken in appeal under section 24 by the appellant to the authorities provided under the Act, and if necessary the appellant could also go in revision to the Custodian General under section 27. The scheme of the Act clearly is that where the property admittedly belongs to the evacuee any person claiming the property or any interest or right therein has on receipt of a notice under section 7(1) to appear before the authorities entitled to deal with the matter under the Act. Any person aggrieved by an order of such an authority made under section 7 has the right to appeal under section 24 and if necessary to go in revision under section 27. The Act thus provides a complete machinery for a person interested in any property to put forward his claims before the authorities competent to deal with the question and to go in appeal and in revision if the person interested feels aggrieved. Having provided this complete machinery for adjudication of all claims with respect to evacuee property, the Act, by section 46, bars the jurisdiction of civil or revenue courts to entertain or adjudicate upon any question whether any property or any right to or interest in any property is or is not evacuee property. Where therefore the property or any right to or interest in any property undoubtedly belonged to the evacuee and any transferee from the evacuee claims the property or any right to or interest therein he has to avail of the remedies provided under the Act. If he fails to do so he cannot file a suit in the civil or revenue court to have the question whether any property or any right to or any interest therein is or is not evacuee property decided in view of the clear provision of section 46 (a) of the Act. The fact that the Custodian in his order said that the appellant could go and establish his right in a competent court is of no assistance to the appellant, for if the law bars the jurisdiction of civil and revenue courts the Custodian 's observation that the party before him could go to a competent court to establish his right will not confer jurisdiction on a civil or revenue court. Nor can it be said on the facts found in the present case that the appellant had become the owner of the property before 1947, for, admittedly the property was worth more than Rs. 100 and it is not disputed that a registered sale deed was necessary to pass title from Abdul Aziz Khan to the appellant. No registered sale deed was executed in this case and therefore the property did not pass from Abdul Aziz Khan to 218 the appellant even up to the time when Abdul Aziz Khan became an evacuee. It may be that if Abdul Aziz Khan had tried to get back the property, section 53 A of the Transfer of Property Act would come to the aid of the appellant in defence. But the present suit has been filed to establish the right of the appellant as owner of the property and in such a suit the appellant cannot take the benefit of section 53 A of the Transfer of Property Act. We, therefore, hold in agreement with the High Court that the suit is clearly barred under section 46 (a) of the Act. The appeal therefore fails and is hereby dismissed. In the circumstances we pass no order as to costs. G.C. Appeal dismissed.

IN-Abs

The appellant purchased certain land from one A in 1946. Although the land was valued at more than Rs. 100 no registered deed of sale was executed. In 1949, A was declared an evacuee and the appellant was given notice by the Deputy Custodian of Evacuee Property to show cause why the land should not be declared evacuee property. No appearance was put in by the appellant in answer to the notice and the land was declared evacuee property. The appellant represented to the departmental authorities that he had become owner of the land before the Evacuee Property law came into force. The Custodian did not accept the plea and observed that if the appellant was aggrieved by the decision he could obtain a declaration of his rights from a competent court. The appellant therefore filed a suit which was contested by the department on the ground that section 46 of the Administration of Evacuee Property Act was a bar. The subordinate Judge held that the court had jurisdiction because of section 53A disagreed with the Subordinate Judge and reversed his decision. The appellant then came to this Court by special leave. HELD : The scheme of the Evacuee Property Act clearly is that when the property admittedly belongs to the evacuee any person claiming the property or any interest or right therein has, on receipt of a notice under section 7(1), to appear before the authorities entitled to deal with the matter under the Act. Any person aggrieved by an order of such an authority made under 3. 7 has the right to appeal under section 24 and if necessary to go in revision under section 27. The Act thus provides a complete machinery for a person interested in any property to put forward his claims before the competent authorities. Having provided this machinery the Act by section 46 bars the jurisdiction of civil and revenue courts to entertain or adjudicate upon any question whether any property or any right or interest in any property is or is not evacuee property. Any transferee from an evacuee claiming the property or any right or interest therein has to avail of the remedies under the Act and cannot go to a civil court. The fact that in the present case the Custodian in his order said that the appellant could go to a competent court could not confer jurisdiction on the Court. Nor could it be said on the facts found that the appellant had become the owner of the property before 1947, for, admittedly the property was worth more than Rs. 100 and without a registered sale deed it was not possible for the title to pass. It way be that if A tried to get back the property section 53 A of the Transfer of Property Act would come to the aid of the appellant in de 215 fence. But the present suit had been filed to establish the right of the appellant as owner of the property and in such a suit the appellant could not take the benefit of section 53 A. [217 B 218 B]

Appeal No. 328 of 1965. Appeal from the judgment and order dated June 20, 1962 of the Mysore High Court in Income tax Reference Case No. 15 of 1961. K. Srinivasan and R. Gopalakrishnan, for the appellant. A. V. Viswanatha Sastri, R. Ganapathy lyer and R. N. Sach they, for the respondent. section T. Desai, R. P. Kapur for I. N. Shroff, for the intervener. The Judgment of the Court was delivered by Shah, J. One Buddappa, his wife, his two unmarried daughters and his adopted son Buddanna were members of a Hindu undivided family. Buddappa died on July 9, 1952. In respect of the business dealings of the family, Buddappa was assessed during his life time in the status of a manager of the Hindu undivided family. For the assessment year 1951 52 the Additional Income tax Officer, Raichur assessed Buddanna in respect of the income of the previous year which ended on November 8, 1950 as a Hindu undivided family under the title "Sri Gowli Buddappa (deceased) represented by his legal successor Sri Gowli Buddanna, On Mills Owner, Raichur". The order of assessment was confirmed in appeal by the Appellate Assistant Commissioner, subject to the variation that the assessment was made under the title "Buddanna a Hindu undivided family". The Income tax Appellate Tribunal confirmed the order of the Appellate Assistant Commissioner. The Tribunal then referred the following questions of law to, High Court of Mysore for opinion under section 66(1) of the Indian Income tax Act : (i) Whether the sole male surviving coparcener of the Hindu joint family, his widowed mother and sisters constitute a Hindu undivided family within the meaning of the Income tax Act ? 226 (ii) Whether the assessment of the income in the hands ' of the Hindu undivided family was correct ? (iii) Whether the Appellate Assistant Commissioner was entitled to correct the status ?" The High Court recorded answers in the affirmative on all the questions. With certificate granted by the High Court under section 66 A of the Indian Income tax Act, Buddanna has appealed to this Court. Before the Appellate Assistant Commissioner it was contended by Buddanna that he could in law have only been assessed as an individual and that the Income tax Officer was precluded by virtue of the proviso to section 26(2) to pass the order for assessment for the year 1951 52 against him. The Appellate Assistant Commissioner and the Appellate Tribunal rejected that contention. Buddappa was a resident of and carried on business at Rai chur which before January 26, 1950, formed part of the territory of H.E.H. the Nizam. The joint family of Buddappa and Buddanna was governed by the Mitakshara School of Hindu law, and there was at the material time no legislation in force in the territory by which on the death of a male member in a joint Hindu family interest in the family estate devolved upon his widow. Such a widow had therefore only a right to receive maintenance from the estate. Counsel for the appellant urged that the expression "Hindu undivided family" used in section 3 of the Income tax Act a Hindu coparcenary and when on the death of one out of two coparceners the entire property devolves upon a single coparcener, assessment cannot be made on the surviving coparcener in the status of a Hindu undivided family. Alternatively, it was contended that even if the entity Hindu undivided family in the charging section of the Income tax Act is intended to mean a Hindu joint family, there must be at least two male members in the family, and where there are not two such members the sole surviving male member of the family, even if there be widows entitled to maintenance out of the estate, may be assessed in the status of an individual, and not of a Hindu undivided family, unless , . the widows of deceased male members are entitled to the benefit of the Hindu Women 's Rights to Property Act, 1937, or the . 227 The first contention is plainly unsustainable. Under section 3 of the Income tax Act not a Hindu coparcenary but a Hindu undivided family is one of the assessable entities. A Hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and un married daughters. A Hindu coparcenary is a much narrower body than the joint family: it includes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grandsons and great grandsons of the holder of the joint property for the time being. Therefore there may be a joint Hindu family consisting of a single male member and widows of deceased coparceners. In Kalyanji Vithaldas & Others vs Commissioner of Income tax, Bengal(1), delivering the judgment of the Judicial Committee, Sir George Rankin observed: "The phrase "Hindu undivided family" is used in the statute with reference not to one school only of Hindu law but to all schools; and their Lordships think it a mistake in method to begin by pasting over the wider phrase of the Act the words "Hindu coparcenary", all the more that it is not possible to say on the face of the Act that no female can be a member." The plea that there must be at least two male members to form a Hindu undivided family as a taxable entity also has no force. The expression "Hindu undivided family" in the Income tax Act is used in the sense in which a Hindu joint family is understood under the personal law of Hindus. Under the Hindu system of law a joint family may consist of a single male member and widows of deceased male members, and apparently the Income tax Act does not indicate that a Hindu undivided family as an assessable entity must consist of at least two male members. Counsel for the appellant said that there are certain intrinsic indications in the annual Finance Acts which support the contention that the income received or arising from property in the hands of a sole surviving male member in a joint Hindu family, even if there be females having a right to maintenance out of that property, is taxable as income of an individual, and not of the family. He relied by way of illustration upon the Finance Act, 1951, which in the First Schedule sets out the rates of income tax payable by individuals, Hindu undivided family, unregistered firm (1) 64 I.A. 28. 228 and other association of persons. The relevant part of the First Schedule prescribing rates of tax is as follows "Provided that (i) no income tax shall be payable on a total income which, before deduction of the allowance, if any, for earned income, does not exceed the limit specified below; The limit referred to in the above proviso shall be (i) Rs. 7,200 in the case of every Hindu undivided family which satisfies as at the end of the previous year either of the following conditions, namely : (a) that it has at least two members entitled to claim partition who are not less than 18 years of age; or (b) that it has at least two members entitled to claim partition neither of whom is a lineal descendant of the other and both of whom are not lineally descended from any other living member of the family; and (ii) Rs. 3,600 in every other case." But the. Schedule sets out the limits of exempted income: it does not state or imply that a Hindu undivided family must consist of at least two members entitled to claim partition. The text of the clause furnishes a clear indication to the contrary. Reliance was also placed upon the form of "Return" prescrib ed under the Rules, which by section 59 of the Income tax Act, 1922 have effect as if enacted in the Act. Part IIIA of the Form prescribes certain particulars to be incorporated in the case of a Hindu undivided family, viz. names of members of the family at the end of the previous year who were entitled to claim partition, relationship, age at the end of the previous year and remarks, but thereby it is not intended that a Hindu undivided family as an assessable entity does not exist so long as there are not at least two or more members entitled to claim partition. The informa tion is required to be given in Part MA of the Form merely to enable the Income tax Officer to consider which of the two parts of the proviso in the First Schedule to the relevant Finance Act prescribing the limit of exemption in respect of the Hindu undivided family applies. 229 Sub section (1) of section 25 A on which reliance was placed also does not imply that a Hindu undivided family must consist of more male members than one. The subsection only prescribes the procedure whereby the members of a family which has kither to been assessed in the status of a Hindu undivided family may obtain an order that they may, because of partition of the joint status, be assessed as separated members. 'Me clause is purely procedural: it does not enact either expressly or by implication that a Hindu undivided family assessed as a unit must consist of at least two male, members who are capable of demanding a partition. Counsel for the appellant placed strong reliance upon certain observations of the Judicial Committe in the judgment in Kalyanji Yithaldas 's case(1) in which they disapproved of the view expressed by the Bombay High Court in Commissioner of Income tax Bombay vs Gomedalli Lakshminarayan (2 ). In the case decided by the Bombay High Court a joint family consisted of a father and a son and their respective wives. The father died, and in the year of assessment the joint family consisted of the son, his mother and his wife. In dealing with the question referred by the Commissioner of Income tax whether the income received by the son should be regarded as his individual income or as the income of a Hindu undivided family for the purpose of assessment to super tax under the Indian Income tax Act, the Bombay High Court held that the expression "Hindu undivided family" as used in the Income tax Act includes families consisting of a sole surviving male member and female members entitled to maintenance, and the income of the assessee should therefore be treated as the income of a Hindu undivided family. In Kalyanji Vithaldas 's case(1) which dealt with a group of appeals from the judgment of the Calcutta High Court in In re Moolji Sicka & Others(3) the Judicial Committee observed : "The High Court (of Calcutta) approached the cases by considering first whether the assessee 's family was a Hindu undivided family, and in the end left unanswered the question whether the income under assessment was the income of that family. This is due no doubt to the way in which the Commissioner had stated the questions. But, after all if the relevant Hindu law had been that the income belonged,.not to the assessee L.R. 64 T. A. 28. (3) (2) 230 himself, but to the assessee, his wife and daughter jointly, it is difficult to see how that association of individuals could have been refused the description "Hindu joint family"The Bombay High Court, on the other hand, inLaxminarayan 's case having held that the see,his wife and mother were a Hindu undivided family, arrived too readily at the conclusion that the income was the income of the family." The Judicial Committee further observed "Under Section 3 or Section 55 income is not to be attributed to any one of the five classes of persons mentioned by any loose or extended interpretation of the words, but only where the application of the words is warranted by their ordinary legal meaning . In an extra legal sense, and even for some purposes of legal theory, ancestral property may perhaps be described, and usefully described, as family property; but it does not follow that in the eye of the Hindu law it belongs, save in certain circumstances, to the family as distinct from the individual. By reason of its origin a man 's property may be liable to be divested wholly or in part on the happening of a particular event, or may be answerable for particular obligations, or may pass at his death in a particular way; but if, in spite of all such facts, his personal law regards him as the owner, the property as his property and the income therefrom as his income, it is chargeable to income tax as his, i.e, as the income of an individual. In their Lordships ' view it would not be in consonance with ordinary notions or with a correct interpretation of the law of the Mitakshara, to hold that property which a man has obtained from his father belongs to a Hindu undivided family by reason of his having a wife and daughters. " The facts of the cases which were decided by the Judicial Committee need to be scrutinized carefully. Before the Judicial Committee there were six appeals by six partners of the firm Moolji Sicka: they were Moolji, Purshottam, Kalyanji, Chaturbhuj, Kanji and Sewdas. Moolji, Purshottam and Kalyanji had each a son or sons from whom he was not divided. But the income of the firm, which had to be assessed to super tax was the separate 231 income of each of these partners. Chaturbhuj had a wife and daughter but no son, and the income was his separate property. Kanji and Sewdas, sons of Moolji, were married men, but neither had a son : they received by gift from Moolji their respective interests in the firm, and for the purpose of the case it was assumed that the interest of each was ancestral property in which if he had a son the son would have taken an interest by birth. But no son having been born, the interest of Kanji and Sewdas in the property was not diminished or qualified. The Judicial Committee held that the wife and the daughters of a Hindu had right to maintenance out of his separate property as well as out of his coparcenary interest, but the mere existence of a wife or daughter did not make ancestral property in his hands joint. They observed : "Interest ' is a word of wide and vague significance, and no doubt it might be used of a wife 's or daughter 's right to be maintained which right accrues in the daughter 's case on birth; but if the father 's obligations are increased, his ownership is not divested, divided or impaired by marriage or the birth of a daughter. This is equally true of ancestral property belonging to himself alone as of self acquired property." The Judicial Committee accordingly held that in none of the six appeals before them could the income falling to the shares of the partners of a registered firm be treated as income of a Hindu undivided family and assessed on that footing. In the view of the Judicial Committee, income received by four out of the six partners was their separate income: in the case of the remaining two partners the income was from sources which were ancestral. But merely because the source was held by a member who had received it from his father and was on that account ancestral, the income could not be deemed for purposes of assessment to be income of a Hindu undivided family, even though Kanji had a wife and a daughter, and Sewdas had a wife who had rights to be maintained under the Hindu law. In Gomedalli Lakshminarayan 's case(1) the property was an cestral in the hands of the father, and the son had acquired by birth an interest therein. There was a subsisting Hindu undivided family during the life time of the father and that family did not come to an end on his death. On these facts the High Court of Bombay held that the income received from the property was (1) S I.T.R. 367. L10SupCI/66 2 232 liable to super tax in the hands of the son who was the surviving male member of the Hindu undivided family in the year of assessment. This distinction in the facts in the case then under discussion and the facts in Gomedalli Lakshminarayan 's case(1) was not adverted to and the Board observed in Kalyanji Vithaldas 's case (2) that the Bombay High Court "arrived too readily at the conclusion that the income was the income of the family. " When Gomedalli Lakshminarayan 's case(1) was carried in appeal to the Judicial Committee, the Board regarded themselves as bound by the interpretation of the words "Hindu undivided family" employed in the Indian Income tax Act in the case of Kalyanji Vithaldas (2) , and observed that since the facts of the case were not in any material respect different from the facts in the earlier case, the answer to the question referred should be that "the income received by right of survivorship by the sole surviving male member of a Hindu undivided family can be taxed in the hands of such male member as his own individual income for the purpose of assessment to super tax under section 55 of the Indian Income tax Act, 1922.": Commissioner of Income tax vs A. P. Swamy Go medalli(8). It may however be recalled that in Kalyanji Vithaldas 's case( 2 income assessed to tax belonged separately to four out of six partners : of the remaining two it was from an ancestral source but the fact that each such partner had a wife or daughter did not make that income from an ancestral source income of the undivided family of the partner, his wife and daughter. In Gomedalli Lakshminarayan 's case(1) the property from which income accrued belonged to a Hindu undivided family and the effect of the death of the father who was a manager was merely to invest the rights of a manager upon the son. The income from the property was and continued to remain the income of the undivided family. Ibis distinction which had a vital bearing on the issue falling to be determined was not given effect to by the Judicial Committee in A. P. Swamy Gomedalli 's case(3). A recent judgment of the Judicial Committee in a case aris ing from Ceylon Attorney General of Ceylon vs A. R. Aruna chalam Chetiar and Others (4 ) is in point. One Arunachalam a Nattukottai Chettiar and his son constituted a joint family governed by the Mitakshara School of Hindu law. The father and the son were domiciled in India and had trading and other interests in India, Ceylon and Far Eastern Countries Vide Attorney (2) 64 I.A. 28. (3) (4) I.T.R. Suppl. 233 General vs A. R. Arunachalam Chettiar (No. 1) (L.R.[1957] A. C. 513). The undivided son died in 1934 and Arunachalam became the sole surviving coparcener in a Hindu undivided family to which a number of female members belonged. Arunachalam diedin 1938 shortly after the Estate Duty Ordinance No. 1 of 1938 came into operation in Ceylon. By section 73 of the Ordinance itwas provided that property passing on the death of a member of a Hindu undivided family was exempt from payment of estate duty. At all material times, the female members of the family had the right of maintenance and other rights which belonged to them as such members. The widows in the family including the widow of the predeceased son had also the power to introduce coparceners in the family by adoption, and that power was exercised after the death of Arunachalam. On a claim to estate duty in respect of Arunachalam 's estate in Ceylon, it was held that Arunachalam was at his death a member of a Hindu undivided family, the same undivided family of which his son, when alive was a member, and of which the continuity was preserved after Arunachalam 's death by adoptions by the widows of the family. The Judicial Committee observed at p. 543: ". . though it may be correct to speak of him (the sole surviving coparcener) as the "owner", yet it is still correct to describe that which he owns as the joint family property. For his ownership is such that upon the adoption of a son it assumes a different quality : it is such too, that female members of the family (whose members may increase) have a right to maintenance out of it and in some circumstances to a charge for maintenance upon it. And these are incidents which arise, notwithstanding his so called ownership, just because the property has been and has not ceased to be joint family property. . it would not appear reasonable to imp art to the legislature the intention to discriminate, so long as the family itself subsists, between property in the hands of a single coparcener and that in the hands of two or more coparceners. " Dealing with the question whether a single coparcener can alienate the property in a manner not open to one of several coparceners, they observed that it was, "can irrelevant consideration. Let it be assumed that his power of alienation is unassailable: that means no more than that he has in the circumstances the power to alienate joint family property. That is what it is 234 until he alienates it, and, if he does not alienate it, that is what it remains. The fatal flaw in the argument of the appellant appeared to be that, having labelled the surviving coparcener "owner", he then attributed to his ownership such a congeries of rights that the property could no longer be called "joint family property". The family, a body fluctuating in numbers and comprised of male and female members, may equally well be said to be owners of the property, but owners whose ownership is qualified by the powers of the coparceners. There is in fact nothing to be gained by the use of the word "owner" in this connexion. It is only by analysing the nature of the rights of the members of the un divided family, both those in being and those yet to be born, that it can be determined whether the family property can properly be described as "joint property" of the undivided family. " Property of a joint family therefore does not cease to belong to the family merely because the family is represented by a single coparcener who possesses rights which an owner of property may possess. In the case in hand the property which yielded the income originally belonged to a Hindu undivided family. On the death of Buddappa the family which included a widow and females born in the family was represented by Buddanna alone but the property still continued to belong to that undivided family and income received therefrom was taxable as income of the Hindu undivided family. The High Court was therefore right in recording their answers referred for opinion. We may observe that in this case we express no opinion on the question whether a Hindu undivided family may for the purpose of the Indian Income tax Act be treated as a taxable entity when it consists of a single member male or female. The appeal is dismissed with costs. Appeal dismissed.

IN-Abs

B, his wife, his two unmarried daughters and the appellant who was B 's adopted son, were members of a Hindu undivided family. In respect of the income from dealings of the family, B was assessed during his life time in the status of a manager of the Hindu undivided family. After his death for the assessment year 1951 52, the Income tax Officer the appellant on the basis that the income was that of a Hindu undivided family and rejected the latter 's contention that he should be assessed as an individual. The order of assessment was confirmed by the Appellate Assistant Commissioner, the Tribunal and on a reference, by the High Court. It was contended on behalf of the appellant that the expression 'Hindu undivided family ' used in section 3 of the Income Tax Act, 1922, means a Hindu coparcenary and when on the death of one out of two co parceners the entire property devolves upon a single co parcener, asssesment cannot be made of the surviving co parcener, in the status of a Hindu undivided family. Alternatively it was contended that even if the entity 'Hindu undivided family ' in section 3 is intended to mean a Hindu joint family. a sole surviving male member of the family, even if there be widows in the family entitled to maintenance, may only be assessed as an indivi dual. HELD : Property of a Joint family does not cease to belong to the family merely because the family is represented by a single co parcener who possesses rights similar to those of an owner of property. In the present case the property which yielded the income originally belonged to a Hindu undivided family. On the death of B although the family which included a widow and females born in the family was represented by the appellant alone, the property continued to belong to the undivided family and income received therefrom was taxable as income of the Hindu undivided family. [234 D] Under section 3 of the Act, it is not a Hindu coparcenary but a Hindu undivided family which one of the assemble entities. A Hindu joint family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters. A Hindu coparcenary is a much narrower body and includes only those persons who acquire by birth a status in the joint or co parcenary property. Therefore there may be a Joint Hindu family consisting of a, single male member and widows of deceased of co parceners. [227 A] There was no force in the alternative plea that there must be at least two male members to form a Hindu undivided family as a taxable entity. The expression 'Hindu undivided family ' in the Act is used in the sense in which a Hindu joint family is understood in Hindu law. Under the 225 Hindu system of law a joint family consist of a single male member and widows of deceased male members and there is nothing in the Act to indicate that a Hindu undivided family as an assessable entity must consist of at least two male members. [231 E] Kalyanji Vithaldas & Others vs C.I.T., Bengal, (64 I.A. 28) C.1.7 '. , Bombay vs Gomedalli Lakshminarayan, ; ln re Moolji Sicka & others, ; C.I.T. vs A. P. Swamy Gomedalli, ; Attorney General of Ceylon vs A. R. Arunachalam Chettiar and others, ; 34 I.T.R. Supp. 42, discussed.

CIVIL APPEALS Nos. 118 to 121 of 1952. (Appeals under article 133 (1) (c) of the Constitution of India from the Judgment and Order dated the 10th August, 1950, of the High Court of Judicature, Punjab at Simla (Khosla and Kapur JJ.) in Civil Miscellaneous Nos. 256, 260, 261 and 262 of 1950). Dr. Balkshi Tek Chand (T. N. Sethi, with him) for the appellants. M.C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the respondents. January, 22. The Judgment of the Court was delivered by MUKHERJEA J. These four consolidated appeals, which have come before us, on a certificate granted by the High Court of Punjab under article 133 (1)(c)of the Constitution, are directed against one common judgment of a Division Bench of that court dated the 10th August, 1950, by which the learned Judges dismissed four analogous petitions, presented on behalf of the different appellants, claiming reliefs under articles 226 and 227 of the Constitution, in respect of certain income tax investigation proceedings commenced against them under Act XXX of 1947. It appears that a partnership firm carrying on business under the name and style of K.S. Rashid & Son was started on the 5th of May, 1934, the partners being three in number to wit K.S. Rashid Ahmed, Saeed Ahmed, his son, and Mrs. Zafar Muhammed, his mother Mrs. Zafar Muhammed died on the 7th of January, 1946, and as a result of her death the partnership stood dissolved. Immediately on the day following, 740 that is to say on the 8th of January, 1946, a new firm was started bearing the same name, with the two surviving partners of the original firm and one Saeeda Begum, a daughter of K.S. Rashid, as the third partner. On the 31st of December, 71947, the Central Government referred the cases of this firm, as well as of the individuals constituting it, to the Income taxInvestigation Commission for enquiry and report under section 5of Act XXX of 1947, presumably on the ground that there had been substantial evasion of payment of income tax in these cases. The authorised official appointed under section 5 (4)(3) of the Act, who figures as respondent No. 2 in all these appeals, in due course started investigation in these cases and the appellants ' complaint is, that contrary to the provisions of the Act, he extended his investigations to a period subsequent to the 31st March, 1943, up to which date the income tax assessment in all these cases was completed. A petition embodying this complaint was made to the authorised official on the 8th of April, 1949, but no order was passed on the petition, as the Commission was expecting an early change of law in this respect. The law was amended by an Ordinance dated the 5th of July, 1949, but the appellants still contended that the amendment was neither retrospective in its operation, nor did it enable the authorised official to carry on his investigation beyond the 31st March, 1943. The account books, however, were shown to the official under protest. On the 17th September, 1949, three applications were filed before the Commission, one with regard to the affairs of Mrs. Zafar Muhammed stating that no investigation could take place in regard to her as she was already dead;the second with regard to the affairs of Saeeda Begum on the ground that she being a new partner and not having been assessed before, was not subject to 'the jurisdiction of the Commission; while the third application was to the effect that the new firm, which came into existence on the 8th of January, 1946, could not have its affairs enquired into at all under the provisions of the Act. After that, in June, 1950, four miscellaneous petitions were filed, (being C.M. Gases Nos. 259 to 262 741 of 1950) on behalf of the appellants, before the High Court of Punjab, and the prayers made therein were of a three fold character. It was prayed in the first place that a writ of prohibition might be issued to the Commission and the authorised official directing them not to proceed with the investigation of cases referred to the Commission under section 5 of Act XXX of 1947. The second prayer was for a writ in the nature of certiorari for quashing the proceedings already commenced. The third and the alternative claim was that the proceedings before the Commission might be revised under article 277 of the Constitution and suitable orders passed as the justice of the case would require. Upon these petitions, rules were issued on the 25th of July, 1950, after a report from the Investigation Commission had been called for. On behalf of the respondents, who resisted these petitions, certain preliminary points were raised in bar of the petitioners" claim. It was contended in the first place that the petitioners being assessees belonging to U.P., their assessments were to be made by the Income tax Commissioner of that State and the mere fact that the location of the Investigation Commission was in Delhi would not confer jurisdiction upon the Punjab High Court to issue writs under article 226 of the Constitution. The second objection was that the Act itself being of a special nature which created new rights and liabilities, the remedies provided for in the Act itself for any breach or violation thereof were the only remedies which could be pursued by the aggrieved parties and article 226 or 227 of the Constitution would not be available to the petitioners. The third ground taken was that the court could not give relief to the petitioners because of sections 5(3) and 9 of Act XXX of 1947. These contentions found favour with the learned Judges who heard the petitions, and although they did not express any final opinion on the third point raised they dismissed the applications of the petitioners on the first two grounds mentioned above. It is against these orders of dismissal that the present appeals have been taken to this court and Dr. Tek Chand, who appeared on behalf of the appellants, has assailed the 742 propriety of the decision of the High Court both the points. So far as the first, point is concerned, which relates to the question of jurisdiction of the Punjab High Court to issue writs of certiorari or prohibition in these cases, the learned Judges based their decision entirely upon the pronouncement of the Judicial Committee in the well known case of Ryots of Garabandho vs ' Zamindar of Parlakitnedi(1). The question for consideration in that case was, whether the High Court of Madras had jurisdiction to issue a writ of certiorari in respect of an order passed by the Collective Board of Revenue, as an appellate authority, in certain proceedings for settlement of rent between the Zamindar of Parlakimedi and the Ryots of certain villages within his estate situated in the district of Ganjam which was wholly outside the limits of the Presidency town of Madras. The question was answered in the negative. The Judicial Committee laid down that the three Chartered High Courts of Calcutta, Madras and Bombay had powers to issue, what were known as the high prerogative writs, as successors to the Supreme Courts which previously exercised jurisdiction over these Presidency Towns; but the exercise of the powers under the Charter was limited to persons within the ordinary original civil jurisdiction of the three High Courts, and outside that jurisdiction it extended only to 'British subjects ' as defined in the Charter itself. It was held that the Supreme Court of Madras had no jurisdiction under the Charter which created it to correct or control a country court of the the East India Company deciding a dispute between Indian inhabitants of the Ganjam district about the rent payable for land in that district; and no such power was given by any subsequent legislation to its successor, the High Court . A contention seems to have been raised on behalf of the appellants that the jurisdiction to issue writs could be rounded on the fact that the office of the Board of Revenue, which was the appellate authority in the matter of settlement of rents, was located within the town of Madras (1) 70 I.A. 129. 743 and the order complained of was made in that town and reliance was placed in this connection upon the case of Nundo Lal Bose vs The Calcutta Corporation (1), where a certiorari was issued by the Calcutta High Court to quash an assessment made by the Commissioners of the town of Calcutta on a certain dwelling house. This contention was repelled by the Judicial 'Committee with the following observations: "The question is whether the principle of that case can be applied in the present case to the settlement of rent for land in Ganjam, merely on the basis of the location of the Board of Revenue, as a body which is ordinarily resident or located within the town of Madras, or on the basis that the order complained of was made within the town. If so, it would seem to follow that the jurisdiction of the High Court would be avoided by the removal of the Board of Revenue beyond the outskirts of the town, and that it would never attach but for the circumstance that an appeal is brought to, or proceedings in revision taken by, the Board of Revenue. Their Lordships think that the question of jurisdiction must be regarded as one of substance, and that it would not have been within the competence of the Supreme Court to claim jurisdiction over such a matter as the present by issuing certiorari to the Board of Revenue on the strength of its location in the town. Such a view would give jurisdiction to the Supreme Court, in the matter of the settlement of rents for ryoti holdings in Ganjam between parties not otherwise subject to its jurisdiction, which it would not have had over the Revenue Officer who dealt with the matter at first instance. " It is on the basis of these observations of the Judicial Committee that the learned Judges have held that the mere location of the Investigation Commission in Delhi is not sufficient to confer jurisdiction upon the Punjab High Court to issue a writ in the present case. It is said that the petitioners are assessees within the U. P State and their original assessments were made by the Income tax Officers of that State. (1)I.L.R. II Cal. 275 744 The subsequent proceedings, which had to be taken in pursuance of the report of the Investigation Commission, would have to b.e taken by the Income tax authorities in the U.P., and if a case had to be stated, it would be stated to the High Court at Allahabad. Taking, therefore, as the Privy Council had said, that, the question of jurisdiction is one of substance, it was held that no jurisdiction in the present case could be vested in the Punjab High Court, for that jurisdiction could be avoided simply by removal of the Commission from Delhi to another place. This line of reasoning does not appear to us to be proper and we do not think that the decision in the Parlakimedi 's case(1) is really of assistance in determining the question of jurisdiction of the High Courts in the matter of issuing writs under article 226 of the Constitution. The whole law on this subject has been discussed and elucidated by this court in its recent pronouncement in Election Commission vs Venkata Rao(2 ) where the observations of the Judicial Committee in Parlakimedi 's case, upon which reliance has been placed by the Punjab High Court, have been fully explained. It is to be noted first of all, that prior to the commencement of the Constitution the powers of issuing prerogative writs could be exercised in India only by the High Courts of Calcutta,, Madras and Bombay and that also within very rigid and defined limits. The writs could be issued only to the extent that the power in that respect was not taken away 'by the Codes of Civil and Criminal Procedure(3) and they could be directed only to persons and authorities within the original civil jurisdiction of these High Courts. The Constitution introduced a fundamental change of law in this respect. As has been explained by this Court in the case referred to above, while article 225 of the Constitution preserves to the existing High Courts the powers and jurisdictions which they had previously, article 226 confers, on all the High Courts, new and very wide powers (1) 70 I.A. 139. (1) ; (3) Vide in this connection Besant vs Tire Advocate General of Madras. 46 I.A. 176. 745 in the matter of issuing writs which they never possessed before. "The makers of the Constitution" thus observed Patanjali Sastri C.J. in delivering the judgment of the court, "having decided to provide for certain basic safeguards for the people in the new set up, which they called fundamental rights, evidently thought it necessary to provide also a quick and inexpensive remedy for the enforcement of such rights, and, finding that the prerogative writs, which the courts in England had developed and used whenever urgent necessity demanded immediate and decisive interposition, were peculiarly suited for the purpose, they conferred, in the State 's sphere, new and wide powers on the High Courts of issuing directions, orders, or writs primarily for the enforcement of fundamental rights, the power to issue such directions, etc. 'for any other purpose ' being also included with a view apparently to place all the High Courts in this country in somewhat the same position as the Court of King 's Bench in England. " There are only two limitations placed upon the exercise of these powers by a High Court under article 226 of the Constitution; one is that the power is to be exercised "throughout the territories in relation to which it exercises jurisdiction", that is to say, the writs issued ' by the court cannot run beyond the territories subject to its jurisdiction. The other limitation is that the person or authority to whom the High COurt is empowered to issue writs "must be within those territories" and this implies that they must be amenable to its jurisdiction either by residence or location within those territories. It is with reference to these two conditions thus mentioned that the jurisdiction of the High Courts to issue writs under article 226 of the Constitution is to be determined. The observations of the Judicial Committee in Parlakimedi 's case(1) have strictly speaking no direct bearing on the point. It is true as the Privy Council said in that case that the question of jurisdiction must be regarded as one of substance, but the meaning and implication of this observation could be ascertained only with reference to the context of (1) 701. A. 129. 11 95 S.C. 1./59 746 the facts and circumstances of that case. As was pointed out by this court in the case referred to above(1): "Their Lordships considered, in the peculiar situation they were dealing with, that the mere location of the appellate authority alone in the town of Madras was not a sufficient basis for the exercise of jurisdiction whereas both the subject matter, viz., the settlement of rent for lands in Ganjam, and the Revenue Officer authorised to make the settlement at first instance were outside the local limits of the jurisdiction of the High Court. If the Court in Madras were recognised as having jurisdiction to issue the writ of certiorari to the appellate authority in Madras, it would practically be recognising the court 's jurisdiction over the Revenue Officer in Ganjam and the settlement of rents for lands there, which their Lordships held it never had. That was the 'substance ' of the matter they were looking at. " In our opinion, therefore, the first contention raised by Dr. Tek Chand must be accepted as sound and the view taken by the Punjab High Court on the question of jurisdiction cannot be sustained. So far as the second point is concerned, the High Court relies upon the ordinary rule of construction that where the legislature has passed a new statute giving a new remedy, that remedy is the only one which .could be pursued. It is said that the Taxation on Income (Investigation Commission) Act, 1947, itself provides a remedy against any wrong or ' illegal order of the Investigating Commission and under section 8 (5) of the Act, the aggrieved party can apply to the appropriate Commissioner of Income tax to refer to the High Court any question of law arising out of such .order and thereupon the provisions of sections 66 and and 66 A of the Indian Income tax Act shall apply with this modification that the reference shall be heard by a Bench of not less than three Judges of the High Court. We think that it is not necessary for us to express any final opinion in this case as to whether section 8 (5) of the Act is to be regarded as providing the only remedy available to the aggrieved party and that it excludes altogether the remedy provided for (1) A.I.R. z953 S.C. 310, 214; ; 747 under article 226 of the Constitution. For purposes of this case it is enough to state that the remedy provided for in article 226 of the Constitution is a discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. So far as the present case is concerned, it has been brought to our notice that the appellants before us have already availed themselves of the remedy provided for in section 8(5) of the Investigation Commission Act and that a reference has been made to the High Court of Allahabad in terms of that provision which is awaiting decision. In these circumstances, we think that it would not be proper to allow the appellants to invoke the discretionary jurisdiction under article 226 of the Constitution at the present stage, and on this ground alone, we would refuse to interfere with the orders made by the High Court. Dr. Tek Chand argues that the Income tax authorities have not referred all the matters to the High Court which the appellants wanted them to do. But for this there is a remedy provided in the Act itself and in case a proceeding occasions a gross miscarriage of justice, there is always the jurisdiction in this court to interfere by way of special leave. In the result, we dismiss the appeals but in the circumstances of the case make no order as to costs. ' Appeals dismissed.

IN-Abs

The Punjab High Court has jurisdiction to issue a writ under article 226 of the Constitution to the Income tax Investigation Commission located in Delhi and investigating the case of the petitioner under 5 of the Taxation on Income (Investigation Commission) Act, 1947, although the petitioners were assessees within the U.P. State and their original assessments were made by the Income tax authorities of that State. Article 226 of the Constitution confers on all the High Courts new and very wide powers in the matter of issuing writs which they never possessed before. There are only two limitations placed upon the exercise of such powers by a High Court; one is that the power is to be exercised "throughout the territories in relation to which it exercises jurisdiction", that is to say, the writs issued by the court cannot run beyond the territories subject to its jurisdiction. The other is that the person or authority to whom 739 the High Court is empowered to issue writs "must be within those territories" and this ,implies that they must be amenable to its jurisdiction either by residence or location within those territories. The remedy provided in article 226 of the Constitution is a discretionary one and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. Ryots of Garabandho vs Zamindar of Parlakimedi (70 I.A. 129) and Election Commission v; Saka Venkata Subba Rao ; referred to.

Appeal No. 236 of 1965. Appeal from the judgment and order dated August 30, 1961. of the Bombay High Court in Income tax Reference No. 12 of 1959. A. V. Viswanatha Sastri, N. D. Karkhanis, R. H. Dhebar and R. N. Sachthey, for the appellant. N. A Palkivala, T. A. Ramachandran, J. B. Dadachanji, O. C. Mathur and Ravinder Narain for the respondent. The Judgment of the Court was delivered by Sikri, J. This appeal by certificate granted by the High Court of Judicature at Bombay under section 66 A(2) of the Indian Income Tax Act, 1922, hereinafter referred to as the Act, is directed against its judgment in a reference made to it by the Income Tax Appellate Tribunal. The following two questions were referred (1)Whether on the facts and in the circumstances of the case, the surplus or difference arising as a result of devaluation in the process of converting dollar currency in regard to the sum of $36,123/02 repatriated to India was profit which was taxable in the hands of the assessee ? (2)Whether the said sum of $36,123/02 having been taxed in the relevant earlier years, the surplus or difference in dollar exchange account arising by reason of the repatriation thereof as a result of devaluation was rightly taken as profit taxable ? The relevant facts and circumstances, as stated in the Statement of the Case, are as follows : The respondent, Tata Locomotive and Engineering Co. Ltd., hereinafter referred to as the assessee, is a limited company registered under the Indian Companies Act (VII of 1913), and has its registered office at Bombay. The main business of the assessee is the manufacture of locomotive boilers and locomotives. For the purpose of this manufacturing activity the assessee had to make purchases of plant and machinery, etc., in various countries including the U.S.A. The assessee 2 3 7 appointed M/s Tata Inc., New York, as its purchasing agent in the U.S.A. With the sanction of the Exchange Control Authorities a remittance of $33,830 was made in 1949 to Messrs. Tata Inc., New York for the purpose of purchasing capital goods from the U.S.A. and meeting other expenses connected therewith. The assessee was also the selling agent of Baldwin Locomo tive Works, for the sale of their products in India, and in connection with the sale of the products of Baldwin Locomotive Works in India the assessee had to incur expenses on their behalf in India. These expenses were re imbursed to the assessee by Baldwin Locomotive Works in the U.S.A. by paying the amount due to Messrs. Tata Inc., New York. The amount so paid to Tata Inc. was retained in the assessee 's account with Messrs. Tata Inc. for purchase of capital goods. As the sole selling agent the assessee was entitled to com mission from Baldwin Locomotive Works. The commission pay able to the assessee in dollars was not actually sent from the U.S.A. to India, but with the sanction of the Exchange Control Authorities was made over to the assessee 's purchasing agents, Messrs. Tata Inc., New York. The reason why this was done was explained in the assessee 's letter dated October 26, 1948, to the Reserve Bank of India. In it the assessee stated, inter alia, as follows : "It would be more convenient if the amount of commission payable to us periodically be deposited into our account with our representative, Messrs. Tata Inc., New York, opened with reference to your letter FC.BY. 7031/74/46 dated 2nd October, 1946, as the same would go to reduce the amount of remittance to be made from here in recoupment of that amount from time to time. These amounts will be utilised solely for the purposes detailed in our letter to you TC 679 dated 15th August, 1946. " The purposes referred to in the said letter of August 15, 1946, were purchase of capital goods. The amount received as commission was taxed in the relevant assessment years on the accrual basis and tax has been paid. On September 16, 1949, there was a balance of $48,572/30 in the assessee 's account with Messrs. Tata Inc. made up as under (1) Remittances from Bombay $33,850 00 Less : Dollars spent in the U.S.A. for capital $30,282. 96 purposes $3,567.04 238 (2) Amount reimbursed by Baldwin Loco $8,882.24 motive Works against funds made available to its representatives in India (3) Commission actually received from Baldwin Locomotives Works and retain $36,123. ed in the U.S.A. TOTAL $48, 572.30 On September 16, 1949, the pound sterling was devalued. Prior to the devaluation the rate of exchange between rupee and dollar was Rs. 3.330 per dollar and on devaluation the rate became Rs. 4.775 per dollar. The result was that the assessee found it more expensive to buy American goods and as the Government of India also imposed some restrictions on imports from the U.S.A., the assessee decided to repatriate the dollars and for the purpose applied to the Reserve Bank of India on December 17, 1949. The Reserve Bank of India gave permission and a sum of $40,000 was repatriated to India. Under similar circumstances in October, 1950, a sum of $9,500 was repatriated to India. Though the two remittances from the U.S.A. to India of $40,000 and $9,500 fell into different accounting years, the case proceeded before the Income tax authorities as well as before the Tribunal on the footing that the two remittances be considered as falling in the accounting year ended March 31, 1950 for the purpose of the appeal before the Tribunal. The remittances of $49,500 includes the sum of $48,572/30 that was held by the assessee on September 16, 1949. This repatriation of the sum of $48,572/30 gave rise to a sum of Rs. 70,147 as surplus in the process of converting dollar currency into rupee currency. The Income tax Officer assessed the amount of Rs. 70,147 on the ground that it represented profits that arose to the assessee "incidentally to its carrying on the business". The Income tax Officer observed : "Whether the funds were sent to America with the object of purchasing of capital equipment or for the purchase of stores, or for reimbursement of revenue expenditure there need not be distinction that only such portion of the profits arising on funds remitted for revenue expenditure only has to be treated as revenue and the balance should be treated as capital. " The Appellate Assistant Commissioner substantially affirmed the odrer of the Income tax Officer except that he reduced 239 the amount by Rs. 6,894. He was of the view that the permission of the Reserve Bank by itself did not convert the true nature of the amount lying there. He was further of the view that the amounts available for remittance consisting of the commission and the reimbursement of expenses by Baldwin Locomotive Works were acquired in the ordinary course of business of the sole selling agency of Baldwin Locomotive Works, and, therefore. any exchange profit on such amounts which formed part of the assets employed as circulating capital in trade did arise directly in the course of business and formed part of the trading receipts. The Tribunal held that the sums of $3,567/04 and $8,882/24 included in the sum of $48,572/30 were held by the assessee for capital purposes and hence any profit that arose to it as a result of its conversion into rupee currency on account of appreciation of the dollar, in relation to the rupee, must be held on capital account and, ' accordingly, the Tribunal excluded ' profits attributable to these amounts. But regarding the sum of $36,123/02 the Tribunal held that it would not be justified in coming to the conclusion that there was any constructive remittance, first in the direction the U.S.A. to India and then of an equivalent sum from India to the U.S.A. It further held that "the amount was earned as commission. It was received in dollars and was retained in that form for the changed purpose under the authority of the Reserve Bank of India. When the Company found that the purpose for which it was to be used failed, viz., acquisition of capital equipment etc. , it requested the Reserve Bank of India to permit it to bring to India, vide assessee 's letter dated 17 12 1949 where it sought Reserve Bank 's permission to bring $40,000 to India and referred to in paragraph above. This permission was granted by the Reserve Bank. Dollars were changed into rupees and money received here. Hence before there was actual remittance of $40,000 from the U.S.A. to India, there was reconversion, the purpose having failed, of the sum if there was initial conversion as contended by Mr. Chokshi. " In the alternative, the Tribunal held that "as and when the commission was earned in dollars, the Company did bring it into its account books in the rupee currency at the then prevailing rate of exchange but the commission amount physically remained in the U.S.A. and when occasion arose to bring it physically to India it had to be converted into rupee currency and this conversion was necessarily incidental to the asssessee 's business as selling agents of the foreign entity the Baldwins. Hence whatever the profit the Company made on such exchange of the commission earned by it in the course of its 2 4 0 selling agency business must be brought to tax as a trading profit made by it incidentally in the course of that business. " The High Court answered the two questions in the negative. It held that although the character of the commission earned was at the inception that of income, but when the assesee appropriated that sum for the specific purpose of purchasing capital goods with the permission of the Reserve Bank of India, the initial character of this sum underwent a change and it assumed the character of fixed capital of the Company. This character was retained right up to September 16, 1949 when the pound sterling was devalued, and it did not undergo any change till the benefit accrued on this amount to the assessee company as a result of change in the exchange rate. The High Court further held that "there is no evidence in this case nor a finding recorded by the Tribunal that the assessee company had at any time decided not to utilise these amounts for the purpose of purchasing capital goods, and, therefore, repatriated these amounts to India." The High Court further held that the sum of $36,123 02 was "part of its fixed capital and remained so till the date it was repatriated to India. The surplus or difference arising as a result of devaluation in the process of converting these dollars into rupee currency in repatriating them to India was an accretion to its fixed capital and was not, therefore, liable to tax. " The High Court felt that the ratio of the decision in Davies vs The Shell Company of China(1) supported the view it had taken. The learned counsel for the revenue, Mr. A. V. Viswanatha Sastri, contends that if the commission had been allowed to remain in the U.S.A. up to September 16, 1949, and it had been repatriated on September 17, 1949, the assessee would have been liable to tax on the profits received as a result of devaluation. He says that if this is so, the permission of the Reserve Bank and the decision of the Company to hold it to buy capital goods does not make any difference. He further says that the fact that the assessee credited the rupee equivalent of this sum in his books and paid tax on the basis of accrual does not also make, any difference. The learned counsel for the assesee, Mr. Palkhiwala, on the other hand contends that the assessee is not a dealer in foreign exchange and it had not acquired or held foreign exchange for revenue purposes or for purposes incidental to trading operations. He says that "when foreign currency is kept or used on capital account e.g. to acquire capital assets, and not as circulat (1) 22 I.T.R. Supp. 1. 2 4 1 ing capital, the profit made on realisation is capital appreciation, even though the foreign currency may have been originally acquired as a revenue receipt. " A number of cases have been cited before us, but it seems to us that the answer to the questions depends on whether the act of keeping the money, i.e. $36,123 02 for capital purposes after obtaining the sanction of the Reserve Bank was part of or a trading transaction. If it was part of or a trading transaction then any profit that would accrue would be revenue receipt; if it was not part of or a trading transaction then the profit made would be a capital profit and not taxable. There is no doubt that the amount of $36,123.02 was a revenue receipt in the assessee 's business of commission agency. Instead of repatriating it imme diately the assessee obtained the sanction of the Reserve Bank to utilise the commission in its business of manufacture of locomotive boilers and locomotives for buying capital goods. That was quite an independent transaction and it is the nature of this transaction which has to be determined. In our view it was not a trading transaction in the business of manufacture of locomotive boilers and locomotives; it was clearly a transaction of accumulating dollars to pay for capital goods, the first step to the acquisition of capital goods. If the assessee had repatriated $36,123.02 and then after obtaining the sanction of the Reserve Bank remitted $36,123.02 to the U.S.A., Mr. Sastri does not contest that any profit made on devaluation would have been a capital profit. But, in our opinion, the fact that the assessee kept the money there does not make any difference especially, as we have pointed out, that it was a new transaction which the assessee entered into, the transaction being the first step to acquisition of capital goods. In the view we have taken it is really not necessary to discuss cases cited at the Bar because none of the cases are exactly in point. In our view the High Court was right in answering the questions in the negative. In the result the appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The assessee was a limited company with its registered office at Bombay. Its main business was the manufacture of locomotive boilers and locomotives, and for that purpose the assessee had to make purchases of plant and machinery, in various countries including the U.S.A. The assessee appointed M/s. Tata Inc., New York, as its purchasing agent in the U.S.A. The assessee was also the selling agent of Baldwin Locomotive Works, U.S.A., for the sale of their products in India, and the commission payable to the assessee as their sole selling agent was made over to the assessee 's purchasing agent in Now York with the sanction of the Reserve Bank and for the purchase of capital goods. This amount was taxed in the relevant assessment years on the accrual basis and the ix was paid. On 16th September 1949, the pound sterling was devalued and the rate of exchange between rupee and dollar which was Rs. 3.33 per dollar before devaluation, became Rs. 4.775 per dollar thereafter, On 'hat date, there was in the assessee 's account with the purchasing agent a sum of $ 36,123.02 representing the commission received from Baldwin locomotive Works. With the permission of the Reserve Bank this sum was repatriated to India in 1950 and the change in the exchange rate gave these to a surplus in rupees. The Income tax Officer, the Appellate Assisant Commissioner and the Appellate Tribunal held that this surplus amount was liable to tax. The High Court, on a reference, held that the sum was not taxable in the hands of the assessee. In appeal to this Court, it was contended that the assessee was liable 3 tax because; (i) if the commission bad been allowed to remain in the J.S.A. up to 16th September 1949 and had been repatriated on 17th September, the assessee would have been liable to tax and therefore the Permission of the Reserve Bank and the decision of the assessee to hold to buy capital goods did not make any difference; and (ii) the fact hat the assessee credited the rupee equivalent of the sum in his books and paid tax on the basis of accrual did not also make any difference to the ssessee 's liability. HELD:The High Court was right in deciding in favour of the assessee. The assessee 's liability to tax would depend on whether the 'act of seeping the money for capital purposes after obtaining the sanction of he Reserve Bank was part of or a trading transaction. The amount no doubt, was a revenue receipt in the assessee 's business of commission agency. But instead of repatriating it immediately, the assessee obtained the sanction of the Reserve Bank to utilize the commission for buying capital goods, and that was an independent transaction. It was not a 236 trading transaction but was a transaction of accumulating dollars to pay for capital goods, the first step to the acquisition of capital goods. if the assessee had repatriated the amount and then, after obtaining the sanc tion of the Reserve Bank, remitted it to the U.S.A. any profit made on devaluation would only be a capital profit. therefore, the fact that the assessee kept the money b e n the U.S.A. did not make any difference under the circumstances. [241 B P]

Appeal No. 517 of 1964. Appeal from the judgment and decree, dated October 3, 1958 of the Bombay High Court in First Appeal No. 107 of 52. Vasant J. Desai, M. L. Bhalja and A. G. Ratnaparkhi, for the appellants. C. K. Daphtary, Attorney General, Atiqur Rehman and K. L. Hathi, for respondent No. 1. C. K. Daphtary, Attorney General, N. section Bindra and B. R. G. K. Achar, for respondent No. 2. section V. Gupte, Solicitor General, and B. R. G. K. Achar, for the intervener. The Judgment of the Court was delivered by Gajendragadkar, C.J. The principal question which arises in this appeal is whether the Bombay High Court was right in holding that the Swaminarayan Sampradaya (sect) to which the appellants belong, is not a religion distinct and separate from the Hindu religion, and that the temples belonging to the said sect do come within the ambit of the provisions of the Bombay Hindu Places of Public Worship (Entry Authorisation) Act, 1956 (No. 31 of 1956) (hereinafter called 'the Act '). The suit from which the present appeal arises was instituted by the appellants on the 12th January, 1948, in the Court of the Joint Civil Judge, Senior Division, Ahmedabad. Before the suit was instituted, the Bombay Harijan Temple Entry Act, 1947 (No. 35 of 1947) 245 (Hereinafter called 'the former Act ') had come into force on the 23rd November, 1947. The appellants are the followers of the Swaminarayan sect, and are known as Satsangis. They have filed the present suit on behalf of themselves and on behalf of the Satsangis of the Northern Diocese of the sect at Ahmedabad. They apprehended that respondent No. 1, Muldas Bhudardas Vaishya, who is the President of the Maha Gujarat Dalit Sangh at Ahmedabad, intended to assert the rights of the non Satsangi Harijans to enter the temples of the Swaminarayan sect situated in the Northern Diocese at Ahmedabad in exercise of the legal rights conferred on them by section 3 of the former Act of 1947. Section 3 of the said Act had provided, inter alia, that every temple to which the Act applied shall be open to Harijans for worship in the same manner and to the same extent as other Hindus in general. To this suit the appellants had impleaded five other respondents, amongst whom was included the Province of Bombay as respondent No. 4, under the order of the Court at a later stage of the proceedings on the 18th July, 1949. In their plaint, the appellants had alleged that the Swaminarayan temple of Sree Nar Narayan Dev of Ahmedabad and all the temples subordinate thereto are not temples within the meaning of the former Act. Their case, was that the Swaminarayan sect represents a distinct and separate religious sect unconnected with the Hindus and Hindu religion, and as such, their temples were outside the purview of the said Act. On the basis of this main allegation, the appellants claimed a declaration to the effect that the relevant provisions of the said Act did not apply to their temples. In the alternative, it was urged that the said Act was ultra vires. As a consequence of these two declarations, the appellants asked for an injunction restraining respondent No. 1 and other non Satsangi Harijans from entering the Swaminarayan temple of the Northern Diocese of the Swaminarayan sect; and they prayed that an appropriate injunction should be issued directing respondents 2 and 3 who are the Mahants of the said temples to take steps to prevent respondent No. 1 and the other non Satsangi Harijans from entering and worshipping in the said temples. Pending these proceedings between the parties, the former Act was amended by Bombay Act No. 77 of 1948; and later, the Constitution of India came into force on the 26th January, 1950. As a result of these events, the appellants applied for an amendment of the plaint on the 30th November, 1950, and the said application was granted by the learned trial Judge. In consequence of 24 6 this amendment, the appellants took the plea that their temples were not temples within the meaning of the former Act as amended by Act No. 77 of 1948; and they urged that the, former Act was ultra vires the powers of the State of Bombay inasmuch as it was inconsistent with the Constitution and the fundamental rights guaranteed therein. It was contended by them that the Swaminarayan sect was an institution distinct and different from Hindu religion, and, therefore, the former Act as amended could not apply to or affect the temples of the said sect. On this additional ground, the appellants supported the original claim for declarations and injunctions made by them in their plaint as it was originally filed. This suit was resisted by respondent No. 1. It was urged on his behalf that the suit was not tenable at law, on the ground that the Court had no jurisdiction to entertain the suit under section 5 of the former Act. Respondent No. 1 disputed the appellants ' right to represent the Satsangis of the Swaminarayan sect, and he averred. that many Satsangis were in favour of the Harijans ' entry into the Swaminarayan temples, even though such Harijans were not the followers of the Swaminarayan sect. According to him, the suit temples were temples within the meaning of the former Act as amended and that non Satsangi Harijans had a legal right of entry and worship in the said temples. The appellants ' case that the former Act was ultra vires, was also challenged by respondent No. 1. Respondents 2 and 3, the Mahants of the temples, filed purshis that they did not object to the appellants ' claim, while respondent No. 4, the State of Bombay, and respondents 5 and 6 filed no written statements. On these pleadings, the learned trial Judge framed several issues, and parties led voluminous documentary and oral evidence in support of their respective contentions. After considering this evidence, the learned trial Judge held that the suit was maintainable and was not barred under section 5 of the former Act. He found that the former Act was intra vires the legislative powers of the Bombay State and did not infringe any fundamental rights of the appellants. According to him, the Swaminarayan sect was not distinct and different from Hindu religion and as such, the suit temples were temples which were used as places of religious worship by the congregation of the Satsang which formed a section of the Hindu community. The learned trial Judge, however, came to the conclusion that it had not been established that the suit temples were used by non Satsangi Hindus as places of religious worship by custom, usage or otherwise, and consequently, they did not 247 come within the meaning of the word "temple" as defined by the former Act. Thus, the conclusion of the learned trial Judge on this part of the appellants ' case decided the fate of the suit in their favour, though findings were recorded by the trial Judge in favour of respondent No. 1 on the other issues. In the result, the trial court passed a decree in favour of the appellants giving them declarations and injunctions as claimed by them. This judgment was pronounced on the 24th September, 1951. The proceedings in the trial court were protracted and lasted for nearly three years, because interim proceedings which led to certain interlocutory orders, were contested between the parties and were taken to the High Court on two occasions before the suit was finally determined. The decision of the trial court on the merits was challenged by Respondent No. 4 and respondent No. 1 who joined in filing the appeal. The appeal thus presented by the two respondents was heard by the High Court on the 8th March, 1957. At this hearing, two preliminary objections were raised by the appellants against the competence and maintainability of the appeal itself. It was urged that the appeal preferred by respondent No. 4 was not competent, inasmuch as respondent No. 4 had no locus standi to prefer the appeal in view of the fact that the former Act in the validity of which respondent No. 4 was vitally interested had been held to be valid. This objection was upheld and the appeal preferred by respondent No. 4 was dismissed. In regard to the appeal preferred by respondent No. 1, the appellants contended that the Vakalatnama filed on his behalf was invalid and as such, the appeal purported to have been preferred on his behalf was incompetent. It appears that respondent No. 1 had authorised the Government Pleader to file an appeal on his behalf, whereas the appeal had actually been filed by Mr. Daundkar who was then the Assistant Government Pleader. The High Court rejected this objection and held that the technical Irregularity on which the objection was founded could be cured by allowing the Government Pleader to sign the memorandum of appeal presented on behalf of respondent No. 1 and endorse acceptance of his Vakalatnama. Having thus held that the appeal preferred by respondent No. 1 was competent, the High Court proceeded to consider the merits of the said appeal. It was urged before the High Court by respondent No. 1 that the declarations and injunctions granted to the appellants could not be allowed to stand in view of the Untouch 10Sup. CI/63 3 248 ability (Offences) Act, 1955 (Central Act 22 of 1955) which had come into force on the 8th May, 1955 and which had repealed the former Act. This contention did not find favour with the High Court, because it took the view that the declarations and injunctions granted by the trial court were not based on the provisions of the former Act, but were based on the view that the rights of the appellants were not affected by the said Act. The High Court observed that in dealing with the objections raised by respondent No. 1, it was unnecessary to consider whether on the merits, the view taken by the trial court was right or not. The only point which was relevant for disposing of the said objection was to consider whether any relief had been granted to the.appellants under the provisions of the former Act or not; and since the reliefs granted to the appellants were not under any of the said provisions, but were in fact based on the view that the provisions of the said Act did not apply to the temples in suit, it could not be said that the said reliefs could not survive the passing of the Untouchability (Offences) Act, 1955. The High Court, however, noticed that after the trial court pronounced its judgments, the Bombay Legislature had passed the Act (No. 31 of 1956) and respondent No. 1 naturally relied upon the material provisions of this Act contained in section 3. Thus, though the substance of the controversy between the parties remained the same, the field of the dispute was radically altered. The former Act had given place to the Act and it now became necessary to consider whether the Act was intra vires, and if yes, whether it applied to the temples in suit. Having regard to this altered position, the High Court took the view that it was necessary to issue a notice to the Advocate General under O.27A of the Code of Civil Procedure. Accordingly, a notice was issued to the Advocate General and the appeal was placed before the High Court on the 25th March, 1957 again. At this hearing, the High Court sent the case back to the trial court for recording a finding on the issue " whether the Swaminarayan temple at Ahmedabad and the temples subordinate thereto are Hindu religious institutions within the meaning of article 25 (2) (b) of the Constitution". Both parties were allowed liberty to lead additional evidence on this issue. After remand, the appellants did not lead any oral evidence, but respondent No. 1 examined two witnesses Venibhai and Keshavlal. Keshavlal failed to appear for his final cross examination despite adjournments even though the trial court had appointed a Commission to record his evidence. Nothing, however, turned upon this oral evidence. In the remand proceedings, 249 it was not disputed before the trial court that the temples in suit were public religious institutions. The only question which was argued before the court was whether they could be regarded as Hindu temples or not, The appellants contended that the suit temples were meant exclusively for the followers of the Swaminarayan sect; and these followers, it was urged, did not profess the Hindu religion. The learned trial Judge, however, adhered to the view already expressed by his predecessor before remand that the congregation of Satsang constituted a section of the Hindu community; and so he found that it was not open to the appellants to contend before him that the followers of the Swaminarayan sect were not a section of the Hindu community. In regard to the nature of the temples, the learned trial Judge considered the evidence adduced on the record by both the parties and came to the conclusion that the Swaminarayan temples at Ahmedabad and the temples subordinate thereto were Hindu religious institutions within the meaning of article 25 (2) (b) of the Constitution. This finding was recorded by the trial Judge on the 24th March 1958. After this finding was submitted by the learned trial Judge to the High Court, the Appeal was taken up for final disposal. On ' this occasion, it was urged before the High Court on behalf of the appellants that the members belonging to the Swaminarayan sect did not profess the Hindu religion and, therefore, their temples could not be said to be Hindu temples. It was, however, conceded on their behalf that in case the High Court came to the conclusion that the Swaminarayan sect was not a different religion from Hinduism, the conclusion could not be resisted that the temples in suit would be Hindu religious institutions and also places of public worship within the meaning of section 2 of the Act. That is how the main question which was elaborately argued before the High Court was whether the followers of the Swaminarayan sect could be said to profess Hindu religion and be regarded as Hindus or not. It was urged by the appellants that the Satsangis who worship at the Swaminarayan temple may be Hindus for cultural and social purposes, but they are not persons professing Hindu religion, and as such they do not form a section, class or sect or denomination of Hindu religion. Broadly stated, the case for the appellants was placed before the High Court on four grounds. It was argued that Swaminarayan, the founder of the sect, considered himself as the Supreme God, and as such. the sect that believes in the divinity of Swaminarayan cannot be assimilated to the followers of Hindu religion. It was also urged that the temples in suit had been established for the worship of 250 Swaminarayan himself and not for the worship of the traditional Hindu idols, and that again showed that the Satsangi sect was distinct and separate from Hindu religion. It was further contended that the sect propagated the ideal that worship of any God other than Swaminarayan would be a betrayal of his faith, and lastly , that the Acharyas who had been appointed by Swaminarayan adopted a procedure of "Initiation" (diksha) which showed that on initiation, the devotee became a Satsangi and assumed a distinct and separate character as a follower of the sect. The High Court has carefully examined these contentions in the light of the teachings of Swaminarayan, and has come to the conclusion that it was impossible to hold that the followers of the Swaminarayan sect did not profess Hindu religion and did not form a part of the Hindu community. In coming to this conclusion, the High Court has also examined the oral evidence on which the parties relied. While considering this aspect of the matter, the High Court took into account the fact that in their plaint itself, the appellants had described themselves as Hindus and that on the occasion of previous censuses prior to 1951 when religion and community used to be indicated in distinct columns in, the treatment of census data, the followers of the sect raised no objection to their being described as belonging to a sect professing Hindu religion. Having thus rejected the main contention raised by the appellants in challenging their status as Hindus, the High Court examined the alternative argument which was urged on their behalf in regard to the constitutional validity of the Act. The argument was that the material provision of the Act was inconsistent with the fundamental rights guaranteed by Articles 25 and 26 of the Constitution and as such was invalid. The High Court did not feet impressed by this argument and felt no difficulty in rejecting it. In the result, the finding recorded by the trial Judge in favour of the appellants in regard to their status and character as followers of the Swaminarayan sect was upheld; inevitably the decree passed by the trial Judge was vacated and the suit instituted by the appellants was ordered to be dismissed. It is against this decree that the present appeal has been brought to this Court on a certificate issued by the High Court. Before dealing with the principal point which has been posed at the commencement of this Judgment, it is necessary to dispose of two minor contentions raised by Mr. V. J. Desai who appeared 251 for the appellants before us. 'Mr. Desai contends that the High Court Was in error in treating as competent 'the appeal preferred by respondent No. 1. His case is that since the said appeal had not been duly and validly filed by an Advocate authorised by respondent No. 1 in that behalf, the High Court should have dismissed the said appeal as being incompetent. It will be recalled that the appeal memo as well as the Vakalatnama filed along with it were signed by Mr. Daundkar who was then the Asstt. Government Pleader; and the argument is that since the Vakalatnama had been signed by respondent No. 1 in favour of the Government Pleader, its acceptance by the Assistant Government Pleader was invalid and that rendered the presentation of the appeal by the Assistant Government Pleader on behalf of respondent No. 1 incompetent. O.41, r. 1 of the Code of Civil Procedure requires, inter alia, that every appeal shall be preferred in the form of a memorandum signed by the appellant or his Pleader and presented to the Court or to such officer as it appoints in that behalf. O. 3, r. 4 of the Code relates to the appointment of a Pleader. Sub r. (1) of the said Rule provides, inter alia that no Pleader shall act for any person in any court unless he has been appointed for the purpose by such person by a document in writing signed by such person. Sub r. (2) adds that every such appointment shall be filed in court and shall be deemed to be in force until determined with the leave of the Court in the manner indicated by it. Technically, it may be conceded that the memorandum of appeal presented by Mr. Daundkar suffered from the infirmity that respondent No. 1 had signed his Vakalatnama in favour of the Government Pleader and Mr. Daundkar could not have accepted It, though he was working in the Government Pleader 's office as an Assistant Government Pleader. Even so, the said memo was accepted by the office of the Registrar of the Appellate Side of the High Court, because the Registry regarded the presentation of the appeal to be proper, the appeal was in due course admitted and it finally came up for hearing before the High Court. The failure of the Registry to invite the attention of the Assistant Government Pleader to the irregularity committed in the presentation of the said appeal cannot be said to be irrelevant in dealing with the validity of the contention raised by the appellants. if the Registry had returned the appeal to Mr. Daundkar as irregularly presented, the irregularity could have been immediately corrected and the Government Pleader would have signed both the memo of appeal and the Vakalatnama. It is an elementary rule of justice that no party should suffer for the mistake of the court or its Office. Besides, one of the rules framed by the High Court 252 on its Appellate Side Rule 95 seems to authorise an Advocate practising on the Appellate Side of the High Court to appear even without initially filing a Vakalatnama in that behalf. If an appeal is presented by an Advocate without a Vakalatnama duly signed by the appellant, he is required to produce the Vakalatnama authorising him to present the appeal or to file a statement signed by himself that such Vakalatnama has been duly signed by the appellant in time. In this case, the Vakalatnama had evidently been signed by respondent No. 1 in favour of the Government Pleader in time; and so, the High Court was plainly right in allowing the Government Pleader to sign the memo of appeal and the Vakalatnama in order to remove the irregularity committed in the presentation of the appeal. We do not think that Mr. Desai is justified in contending that the High Court was in error in overruling the objection raised by the appellants before it that the appeal preferred by respondent No. 1 was incompetent. The next contention which Mr. Desai has urged before us is that section 3 of the Act is ultra vires. Before dealing with this contention, it is relevant to refer to the series of Acts which have been passed by the Bombay Legislature with a view to remove the disabilities from which the Harijans suffered. A brief resume of the legislative history on this topic would be of interest not only in dealing with the contention raised by Mr. Desai about the invalidity of section 3, but in appreciating the sustained and deliberate efforts which the Legislature has been making to meet the challenge of untouchability. In 1958, the Bombay Harijans Temple Worship (Removal of Disabilities) Act (No. 11 of 193 8) was passed. This Act represented a somewhat cautious measure adopted by the Bombay Legislature to deal with the problem of untouchability. It made an effort to feel the pulse of the Hindu community in general and to watch its reactions to the efforts which the Legislature may make, to break through the citadel of orthodoxy, and conquer traditional prejudices against Harijans. This Act did not purport to create any statutory right which Harijans could enforce by claiming an entry into Hindu temples; it only purported to make some enabling provisions which would encourage the progressive elements in the Hindu community to help the Legislature in combating the evil of untouchability. The basic scheme of this Act was contained in sections 3, 4 & 5. The substance of the provisions contained in these sections was that in regard to temples. the trustees could by a majority make a declaration that 253 their temples would be open to Harijans notwithstanding the terms of instrument of trust, the terms of dedication or decree or order of any competent court or any custom, usage or law for the time being in force to the contrary. Section 3 dealt with making of these declarations. Section 4 required the publication of the said declarations in the manner indicated by it, and section 5 authorised persons interested in the temple in respect of which a declaration had been published under section 4 to apply to the court to set aside the said declaration. such an application is received, the jurisdiction has been conferred on the court to deal with the said application. Section 5(5) provides that if the court is satisfied that the applicant was a person interested in the temple and that the impugned declaration was shown not to have been validly made, it shall set aside the declaration; if the court is not so satisfied, it shall dismiss the application. Section 5(7) provides that the decision of the Court under sub section (5) shall be final and conclusive for the purposes of this Act. The court specially empowered to deal with these applications means the court of a District Judge and includes the High Court in exercise of its ordinary Original Civil jurisdiction. The jurisdiction thus conferred on the court is exclusive with the result that section 6 bars any Civil Court to entertain any complaint in respect of the matters decided by the court of exclusive jurisdiction purporting to act under the provisions of this Act. This Act can be regarded as the first step taken by the Bombay Legislature to remove the disability of untouchability from which Harijans had been suffering. The object of this Act obviously was to invite cooperation from the majority of trustees in the respective Hindu temples in making it possible for the Harijans to enter the said temples and offer prayers in them. Then followed Act No. 10 of 1947 which was passed by the, Bombay Legislature to provide for the removal of social disabilities of Harijans. This Act was passed with the object of removing the several disabilities from which Harijans suffered in regard to the enjoyment of social, secular amenities of life. Section 3 of this Act declared that notwithstanding anything contained in any instrument or any law, custom or usage to the contrary, no Harijan shall merely on the ground that he is a Harijan, be ineligible for office under any authority constituted under any law or be prevented from enjoying the amenities described by clauses (b) (i) to (vii). The other sections of this Act made suitable provisions to enforce the statutory right conferred on the Harijans by section 3. 254 Next we come to the former Act No. 35 of 1947. We haveA already seen that when the present plaint was filed by the appellants, they challenged the right of the non satsangi Harijans to enter the temples under section 3 of this Act, and alternatively, they challenged its validity. This Act was passed to entitle the Harijans to enter and perform worship in the temples in the Province of Bombay. Section 2(a) of this Act defines a "Harijan" as meaning a member of a caste, race or tribe deemed to be a Scheduled caste under the Government of India (Scheduled Castes) Order, 1936. Section 2(b) defines "Hindus" as including Jains; section 2(c) defines "temples ' as meaning a place by whatever designation known which is used as of right by, dedicated to or for the benefit of the Hindus in general other than Harijans as a place of public religious worship; and section 2(b) defines "Worship" as including attendance at a temple for the purpose of darshan ' of a deity or deities installed in or within the precincts thereof. Section 3 which contains the main operative provision of this Act reads thus : "Notwithstanding anything contained in the terms of any instruments of trust, the terms of dedication, the terms of a sanad or a decree or order of a competent court or any custom, usage or law, for the time, being in force to the contrary every temple shall be open to Hari jans for worship in the same manner and to the same extent as to any member of the Hindu community or any section thereof and the Harijans shall be entitled to bathe in, or use the waters of any sacred tank, well, spring or water course in the same manner and to the same extent as any member of the Hindu Community or any section thereof. " Section 4 provides for penalties. Section 5 excludes the jurisdiction of Civil Courts to deal with any suit or proceeding if it involves a claim which if granted would in any way be inconsistent with the;provisions of this Act. Section 6 authorises the police officer not below the rank of Sub Inspector to arrest without warrant any person who ;is reasonably suspected of having committed an offence punishable under this Act. Section 2(c) of the former Act was later amended by Act 77 of 1948. The definition of the word "temple" which was thus inserted by the amending Act reads thus : "Temple, means a place by whatever name known and to whomsoever belonging, which is used as a place 2 5 5 of religious worship by custom, usage or otherwise by the members of the Hindu community or any section thereof and includes all land appurtenant thereto and subsidiary shrines attached to any such place. " It will be recalled that after this amended definition was introduced in the former Act, the appellants asked for and obtained permission to amend their plaint, and it is the claim made in the amended plaint by relation to the new definition of the word "temple" that parties led evidence before the trial court. This act shows that the Bombay Legislature took the next step in 1947 and made a positive contribution to the satisfactory solution of the problem of untouchability. It conferred on the Harijans a right to enter temples to which the Act applied and to offer worship in them; and we have already seen that worship includes attendance at the temple for the purpose of darshan of a deity or deities in the precincts thereof. On the 26th January, 1950 the Constitution of India came into force, and article 17 of the Constitution categorically provided that untouchability is abolished and its practice in any form is forbidden. The enforcement of any disability arising out of "Untouchability" shall be an offence punishable in accordance with law. In a sense, the fundamental right declared by Art, 17 afforded full justification for the policy underlying the provisions of the former Act. After the Constitution was thus adopted, the Central Legislature passed the Untouchability (Offences) Act, 1955 (No. 22 of 1955). This Act makes a comprehensive provision for giving effect to the solemn declaration made by article 17 of the Constitution. It extends not only to places of public worship, but to hotels, places of public entertainment, and shops as defined by section 2 (a), (b), (c) and (e). Section 2 (d) of this Act defines a "place of public worship" as meaning a place by whatever name known which is used as a place of public religious worship or which is dedicated generally to, or is used generally by, persons professing any religion or belonging to any religious denomination or any section thereof, for 'the performance of any religious service, or for offering prayers therein; and includes all lands and subsidiary shrines appurtenant or attached to any such place. The sweep of 'the definitions prescribed by section 2 indicates the very broad field of socio religious activities over which the mandatory provisions of this Act are intended to operate. It is not necessary for our purpose to refer to the provisions of this Act in detail. 'It is enough to state that sections 3 to 7 of this Act provide 25 6 different punishments for contravention of the constitutional guarantee for the removal of untouchability in any shape or form. Having thus prescribed a comprehensive statutory code for the removal of untouchability, section 17 of this Act repealed twenty one State Acts which had been passed by the several State Legislatures with the same object. Amongst the Acts thus repealed are Bombay Acts 10 of 1947 and 35 of 1947. That takes us to the Act No. 31 of 1956 with which we are directly concerned in the present appeal. After the Central Act 22 of 1955 was passed 'and the relevant Bombay statutes of 1947 had been repealed by section 17 of that Act, the Bombay Legislature passed the Act. The Act is intended to make better provision for the throwing open of places of public worship to all classes and sections of Hindus. It is a short Act contain 8 sections. Section 2 which is the definition section is very important; it reads thus : "2. In this Act, unless the context otherwise requir es, (a)"place of public worship ' means a place, whether a temple or by any other name called, to whomsoever belonging which is dedicated to, or for the benefit of, or is used generally by, Hindus, Jains, Sikhs or Buddhists or any section or class thereof, for the performance of any religious service or for offering prayers therein; and includes all lands and subsidiary shrines appurtenant or attached to any such place, and also any sacred tanks, walls, springs, and water courses the waters of which are worshipped, or are used for bathing or for worship; (b)"section" or "class" of Hindus includes any division, sub division, caste, sub caste, sect or denomination whatsoever of Hindus. " Section 3 is the operative provision of the Act and it is necessary to read it also : "3. Notwithstanding any custom, usage or law for the time being in force, or the decree or order of a court, or anything contained in any instrument, to the contrary, every place of public worship which is open to Hindus generally, or to any section or class thereof, shall be open to all sections and classes or Hindus; and no Hindu of whatsoever section or class, shall in any manner be prevented, obstructed or discouraged from entering such place of public worship, or from worship 257 ping or offering prayers threat, or performing any religious service therein, in the like manner and to the like extent as any other Hindu of whatsoever section or class may so enter, worship, pray or perform. " Section 4(1) provides for penalties for the contravention of the provisions of the Act and section 4(2) lays down that nothing in this section shall be taken to relate to offences relating to the practice of "untouchability". Section 5 deals with the abetment of offences prescribed by section 4(1). Section 6 provides, inter alia, that no Civil Court shall pass any decree or order which in substance would in any way be contrary to the provisions of this Act. Section 7 makes offences prescribed by section 4(1) cognisable, and compoundable with the permission of the Court; and section 8 provides that the provisions of this Act shall not be taken to be in derogation of any of the provisions of the Untouchability (Offences) Act 22 of 1955 or any other law for the time being in force relating to any of the matters dealt with in this Act. That in brief is the outline of the history of the Legislative efforts to combat and meet the problem of untouchability and to help Harijans to secure the full enjoyment of all rights guaranteed to them by article 17 of the Constitution. Let us now revert to Mr. Desai 's argument that section 3 of the Act is invalid inasmuch as it contravenes the appellants ' fundamental rights guaranteed by article 26 of the Constitution. Section 3 throws open the Hindu temples to all classes and sections of Hindus and it puts an end to any effort to prevent or obstruct or discourage Harijans from entering a place of public worship or from worshipping or offering prayers threat, or performing any religious service therein, in the like manner and to the like extent as any other Hindu of whatsoever section or class may so enter, worship, pray or perform. The object of the section and its meaning are absolutely clear. In the matter of entering the Hindu temple or worshipping, praying or performing any religious service therein, there shall be no discrimination between any classes or sections of Hindus, and others. In other words, no Hindu temple shall obstruct a Harijan for entering the temple or worshipping in the temple or praying in it or performing any religious service therein in the same manner and to the same extent as any other Hindu would be permitted to do. Mr. Desai contends that in the temples, in suit, even the Satsangi Hindus are not permitted to enter the innermost sacred part of the temple where the idols are installed. It is only the Poojaris who are authorised to enter the said sacred portion of the 258 temples and do the actual worship of the idols by touching the idols for the purpose of giving a bath to the idols, dressing the idols, offering garlands to the idols and doing all other ceremonial rites prescribed by the Swaminarayan tradition and convention; and his grievance is that the words used in section 3 are so wide that even this part of actual worship of the idols which is reserved for the Poojaris and specially authorised class of worshippers, may be claimed by respondent No. 1 and his followers; and in so far as such a claim appears to be justified by section 3 of the Act, it con travenes the provisions of article 26(b) of the Constitution. article 26(b) provides that subject to public order, morality and health, every religious denomination or any section thereof shall have the right to manage its own affairs in matters of religion, and so, the contention is that the traditional conventional manner of performing the actual worship of the idols would be invaded if the broad words of section 3 are construed to confer on non Satsangi Harijans a right to enter the innermost sanctuary of the temples and seek to perform that part of worship which even Satsangi Hindus are not permitted to do. In our opinion, this contention is misconceived. In the first place it is significant that no such plea was made or could have been made in the plaint, because section 3 of the former Act which was initially challenged by the appellants had expressly defined " worship" as including a right to attend a temple for the purpose of darshan of a deity or deities in or within the precincts thereof, and the cause of action set out by the appellants in their plaint was 'hat they apprehended that respondent No. 1 and his followers would enter the temple and seek to obtain darshan of the deity installed in it. Therefore, it would not be legitimate for the appellants to raise this new contention for the first time when they find that the words used in section 3 of the Act are somewhat wider than the words used in the corresponding section of the former Act. Besides, on the merits, we do not think that by enacting section 3, the Bombay Legislature intended to invade the traditional and conventional manner in which the act of actual worship of the deity is allowed to be performed only by the authorised Poojaris of the temple and by no other devotee entering the temple for darshan. In many Hindu temples, the act of actual worship is entrusted to the authorised Poojaris and all the devotees are allowed to enter the temple up to a limit beyond which entry is barred :to them, the innermost portion of the temple being reserved only for the authorised Poojaris of the temple. If that 259 is so, then all that section 3 purports to do is to give the Harijans the same right to enter the temple for 'darshan ' of the deity as can be claimed by the other Hindus. It would be noticed that the right to enter the temple, to worship in the temple, to pray in it or to perform any religious service therein which has been conferred by section 3, is specifically qualified by the clause that the said right will be enjoyed in the like manner and to the like extent as any other Hindu of whatsoever section or class may do. The main object of the section is to establish complete social equality between all sections of the Hindus in the matter of worship specified by section 3; and so, the apprehension on which Mr. Desai 's argument is based must be held to be misconceived. We are, therefore, satisfied that there is no substance in the contention that section 3 of the Act is ultra vires. That takes us to the main controversy between the parties. Are the appellants justified in contending that the Swaminarayan sect is a religion distinct and separate from the Hindu religion, and consequently, the temples belonging to the said sect do not fall within the ambit of section 3 of the Act ? In attempting to answer this question, we must inevitably enquire what are the distinctive features of Hindu religion? The consideration of this question, prima facie, appears to be somewhat inappropriate within the limits of judicial enquiry in a court of law. It is true that the appellants seek for reliefs in the present litigation on the ground that their civil rights to manage their temples according to the religious tenets are contravened; and so, the Court is bound to deal with the controversy as best as it can. The issue raised between the parties is undoubtedly justiciable and has to be considered as such; but in doing so, we cannot ignore the fact that the problem posed by the issue, though secular in character, is very complex to determine; its decision would depend on social, sociological, historical, religious and philosophical considerations; and when it is remembered that the development and growth of Hindu religion spreads over a large period nearly 4,000 years, the complexity of the problem would at once become patent. Who are Hindus and what are the broad features of Hindu religion, that must be the first part of our enquiry in dealing with the present controversy between the parties. The historical and etymological genesis of the word "Hindu, ' has given rise to a controversy amongst indologists; but the view generally accepted by scholars appears to be that the word "Hindu" is derived from the river Sindhu otherwise known as Indus which flows from the Punjab. "That part of the great Aryan race", says Monier 260 Williams, "which immigrated from Central Asia, through the mountain passes into India, settled first in the districts near the river Sindhu (now called the Indus). The Persians pronounced this word Hindu and named their Aryan brethren Hindus. The Greeks, who probably gained their first ideas of India from the Persians, dropped the hard aspirate, and called the Hindus "Indoi". " The Encyclopaedia of Religion and Ethics, Vol. VI, has described "Hinduism" as the title applied to that form of religion which prevails among the vast majority of the present population of the Indian Empire (p. 686). As Dr. Radhakrishnan has observed; "The Hindu civilization is so called, since its original founders or earliest followers occupied the territory drained by the Sindhu (the Indus) river system corresponding to the North West Frontier Province and the Punjab. This is recorded in the Rig Veda, the oldest of the Vedas, the Hindu scriptures which give their name to this period Indian history. The people on the Indian side of the Sindhu were called Hindu by the Persian and the later western invaders".(2) That is the genesis of the word "Hindu". When we think of the Hindu religion, we find it difficult, if not impossible, to define Hindu religion or even adequately describe it. Unlike other religions in the world, the Hindu religion does not claim any one prophet; it does not worship any one God; it does not subscribe to any one dogma; it does not believe in any one philosophic concept; it does not follow any one set of religious rites or performances; in fact, it does not appear to satisfy the narrow traditional features of any religion or creed. It may broadly be described as a way of life and nothing more. Confronted by this difficulty, Dr. Radhakrishnan realised that "to many Hinduism seems to be a name without any content. Is it a museum of beliefs, a medley of rites, or a mere map, a geographical expression?"(3) Having posed these questions which disturbed foreigners when they think of Hinduism, Dr. Radhakrishnan has explained how Hinduism has steadily absorbed the customs and ideas of peoples with whom it has come into contact and has thus been able to maintain its supremacy and its youth. The term 'Hindu ', according to Dr. Radhakrishnan, had originally a territorial and not a credal significance. It implied residence in a well defined geographical area. Aboriginal tribes, (1) "Hinduism" by Monier Williams, p. 1. (2) "The Hindu View of Life" by Dr. Radhakrishnan, p. 12. (3) Ibid p. 11. 261 savage and half civilized people, the cultured Dravidians and the Vedic Aryans were all Hindus as they were the sons of the same mother. The Hindu thinkers reckoned with the striking fact that the men and women dwelling in India belonged to different communities, worshipped different gods, and practised different rites (Kurma Purana)(1). Monier Williams has observed that "it must be borne in mind that Hinduism is far more than a mere form of theism resting on Brahmanism. It presents for our investigation a complex congeries of creeds and doctrines which in its gradual accumulation may be compared to the gathering together of the mighty volume of the Ganges, swollen by a continual influx of tributary rivers and rivulets, spreading itself over an ever increasing area of country and finally resolving itself into an intricate Delta of tortuous steams and jungly marshes. . The Hindu religion is a reflection of the composite character of the Hindus, who are not one people but many. It is based on the idea of universal receptivity. It has ever aimed at accommodating itself to circumstances, and has carried on the process of adaptation through more than three thousand years. It has first borne with and then, so to speak, swallowed, digested, and assimilated something from all creeds. "(2) We have already indicated that the usual tests which can be applied in relation to any recognised religion or religious creed in the world turn out to be inadequate in dealing with the problem of Hindu religion. Normally, any recognised religion or religious creed subscribes to a body of set philosophic concepts and theological beliefs. Does this test apply to the Hindu religion ? In answering this question, we would base ourselves mainly on the exposition of the problem by Dr. Radhakrishnan in his work on Indian Philosophy. (3) Unlike other countries, India can claim that philosophy in ancient India was not an auxiliary to any other science or art, but always held a prominent position of independence. The Mundaka Upanisad speaks of Brahma vidya or the science of the eternal as the basis of all sciences, 'sarva vidyapratishtha '. According to Kautilya, "Philosophy" is the lamp of all the sciences, the means of performing all the works, and the support of all the duties. "In all the fleeting centuries of history", says Dr. Radhakrishnan, "in all the vicissitudes through which India has passed, a certain marked identity is visible. It has held fast to certain psychological traits which constitute its special (1) lbid p. 12. (2) "Religious Thought & Life In India" by Monier Williams, p. 57. (3) "Indian Philosophy" by Dr. Radhakrishrian, Vol. 1, pp. 22 23. 262 heritage, and they will be the characteristic marks of the Indian people so long as they are privileged to have a separate existence". The history of Indian thought emphatically brings out the fact that the development of Hindu religion has always been inspired by an endless quest of the mind for truth based on the consciousness that truth has many facets. Truth is one, but wise men describe it differently.(1) The Indian mind has, consistently through the ages, been exercised over the problem of the nature of godhead the problem that faces the spirit at the end of life, and, the interrelation between the individual and the universal soul. "If we can abstract from the variety of opinion", says Dr. Radhakrishnan, "and observe the general spirit of Indian thought, we shall find that it has a disposition to interpret life and nature in the way of monistic idealism, though this tendency is so plastic, living and manifold that it takes many forms and expresses itself in even mutually hostile teachings".(2) The monistic idealism which can be said to be the general distinguishing feature of Hindu Philosophy has been expressed in four different forms : (1) Non dualism or Advitism; (2) Pure monism: (3) Modified monism; and (4) Implicit monism. It is remarkable that these different forms of monistic idealism purport to derive support from the same vedic and Upanishadic texts. Shankar, Ramanuja, Vallabha and Madhva all based their philosophic concepts on what they regarded to be the synthesis between the Upanishads, the Brahmasutras and the Bhagavad Gita. Though philosophic concepts and principles evolved by different Hindu thinkers and philosophers varied in many ways and even appeared to conflict with each other in some particulars, they all had reverence for the past and accepted the Vedas as the sole foundation of the Hindu philosophy. Naturally enough, it was realised by Hindu religion from the very beginning of its career that truth was many sided and different views contained different aspects of truth which no one could fully express. This knowledge inevitably bred a spirit of tolerance and willingness to understand and appreciate the opponents point of view. That is how "the several views set forth in India in regard to the vital philosophic concepts are considered to be the branches of the self same tree. The short cuts and blind alleys are somehow reconciled with the main road of advance to the truth. "(3) When we consider this broad sweep of the Hindu philosophic concepts, it would be realised that under Hindu philosophy, there is no scope for ex (2) lbid, p. 32. (3) lbid P. 48. 263 communicating any notion or principle as heretical and rejecting it as such. Max Muller who was a great oriental scholar of his time was impressed by this comprehensive and all pervasive aspect of the s`weep of Hindu philosophy. Referring to the six systems known to Hindu philosophy, Max Muller observed: "The longer I have studied the various systems, the more have I become impressed with the truth of the view taken by Vijnanabhiksu and others that there is behind the variety of the six systems a common fund of what may be called national or popular philosophy, a large manasa (lake) of philosophical thought and language far away in the distant North and in the distant past, from which each thinker was allowed to draw for his own purposes".(1) Beneath the diversity of philosophic thoughts, concepts and ideas expressed by Hindu philosophers who started different philosophic schools, lie certain broad concepts which can be treated as basic. The first amongst these basic concepts is the acceptance of the Veda as the highest authority in religious and philosophic matters. This concept necessarily implies that all the systems claim to have drawn their principles from a common. reservoir of thought enshrined in the Veda. The Hindu teachers were thus obliged to use the heritage they received from the past in order to make their views readily understood. The other basic concept which is common to the six systems of Hindu philosophy is that "all of them accept the view of the great world rhythm. Vast periods of creation, maintenance and dissolution follow each other in endless succession. This theory is not inconsistent with, belief in progress; for it is not a question of the movement of the world reaching its goal times without number, and being again forced back to its starting point. It means that the race of man enters upon and retravels its ascending path of realisation. This interminable succession of world ages has no beginning(2) It may also be said that all the systems of Hindu philosophy believe in rebirth and pre existence. "Our life is a step on a road, the direction and goal of which are lost in the infinite. On this road, death is never an end of an obstacle but at most the beginning of new steps".(8) Thus, it is clear that unlike other religions and religious creeds, Hindu religion is not tied to any definite set of philosophic concepts as such. Do the Hindus worship at their temples the same set or number of gods ? That is another question which can be asked in this (1) "Six Systems of Indian Philosophy" by Max Muller p. xvii. (2) In Philosophy" by Dr. Radhakrishnan, Vol. IT., V. 26 (3)idib. L10 Sup. C.I./6" 2 64 connection; and the answer to this question again has to be in the negative. Indeed, there are certain sections of the Hindu community which do not believe in the worship of idols; and as regards those sections of the Hindu community which believe in the worship of idols, their idols differ from community to community and it cannot be said that one definite idol or a definite number of idols are worshipped by all the Hindus in general. In the Hindu Pantheon the first gods that were worshipped in Vedic times were mainly Indra, Varuna, Vayu and Agni. Later, Brahma, Vishnu and Mahesh came to be worshipped. In course ,of time, Rama and Krishna secured a place of pride in the Hindu Pantheon, and gradually as different philosophic concepts held sway in different sects and in different sections of the Hindu ,community, a large number of gods were added, with the result that today, the Hindu Pantheon presents the spectacle of a very large number of gods who are worshipped by different sections ,of the Hindus. The development of Hindu religion and philosophy shows that from time to time saints and religious reformers attempted to remove from the Hindu thought and practices elements of corruption and superstition and that led to the formation of different sects. Buddha started Buddhism; Mahavir founded Jainism; Basava became the founder of Lingayat religion, Dnyaneshwar and Tuk aram initiated the Varakari cult; Guru Nank inspired Sikhism; Dayananda founded Arya Samaj, and Chaitanya began Bhakti cult; and as a result of the teachings of Ramakrishna and Viveka nanda, Hindu religion flowered into its most attractive, progressive and dynamic form. If we study the teachings of these saints and religious reformers, we would notice an amount of divergence in their respective views; but underneath that divergence, there is a kind of subtle indescribable unity which keeps them within the sweep of the broad and progressive Hindu religion. There are some remarkable features of the teachings of these saints and religious reformers. All of them revolted against the dominance of rituals and the power of the priestly class with which it came to be associated; and all of them proclaimed their teachings not in Sanskrit which was the monopoly of the priestly class, but in the languages spoken by the ordinary mass of people in their respective regions. Whilst we are dealing with this broad and comprehensive ,aspect of Hindu religion, it may be permissible to enquire what, :according to this religion, is the ultimate goal of humanity? It 265 is the release and freedom from the unceasing cycle of births and rebirths; Moksha or Nirvana, which is the ultimate aim of Hindu religion and philosophy, represents the state of absolute absorption and assimilation of the individual soul with the infinite. What are the means to attain this end ? On this vital issue, there is great divergence of views; some emphasise the importance of Gyan or knowledge, while others extol the virtues of Bhakti or devotion; and yet others insist upon the paramount importance of the performance of duties with a heart full of devotion and mind inspired by true knowledge. In this sphere again, there is diversity of opinion, though all are agreed about the ultimate goal. Therefore, it would be inappropriate to apply the traditional tests in determining the extent of the jurisdiction of Hindu religion. It can be safely described as a way of life based on certain basic concepts to which we have already referred. Tilak faced this complex and difficult problem of defining or at least describing adequately Hindu religion and he evolved a working formula which may be regarded as fairly adequate and satisfactory. Said Tilak : "Acceptance of the Vedas with reverence; recognition of the fact that the means or ways to salvation are diverse and realisation of the truth that the number of gods to be worshipped is large, that indeed is the distinguishing feature of Hindu religion"(1). This definition brings out succinctly the broad distinctive features of Hindu religion. It is somewhat remarkable that this broad sweep of Hindu religion has been eloquently described by Toynbee. Says Toynbee : "When we pass from the plane of social practice to the plane of intellectual outlook, Hinduism too comes out well by comparison with the religions and ideologies of the South West Asian group. In contrast to these Hinduism has the same outlook as the pre Christian and pre Muslim religions and philosophies of the Western half of the old world. Like them, Hinduism takes it for granted that there is more than one valid approach to truth and to salvation and that these different approaches are not only compatible with each other, but are complementary"(2). The Constitution makers were fully conscious of this broad and comprehensive character of Hindu religion; and so, while guaranteeing the fundamental right to freedom of religion, Explanation II to article 25 has made it clear that in sub clause (b) of clause (2), the reference to Hindus shall be construed as (B.G.Tilak 's"Gitarahasya") (2) "The Present Day Experiment in Western Civilisation" by Toynbee, pp. 48 49. 266 including a reference to persons professing the Sikh, Jaina or Buddhist religion, and the reference to Hindu religious institutions shall be construed accordingly. Consistently with this constitutional provision, the ; the ; the Hindu Minority and Guardianship Act, 1956; and the have extended the application of these Acts to all persons who can be regarded as Hindus in this broad and comprehensive sense. Section 2 of the, , for instance, provides that this Act applies (a)to any person who is a Hindu by religion in any of its forms or developments, including a Virashaiva, a Lingayat or a follower of the Brahmo, Prarthana or Arya Samaj, (b)to any person who is a Buddhist, Jaina, or Sikh by religion, and (c)to any other person domiciled in the territories to which this Act extends who is not a Muslim, Christian, Parsi or Jew by religion, unless it is proved that any such person would not have been governed by the Hindu law or by any custom or usage as part of that law in respect of any of the matters dealt with herein if this Act had not been passed. The same provision is made in the other three Acts to which we have just referred. It is in the light of this position that we must now proceed to consider whether the philosophy and theology of Swaminarayan show that the school of Swaminarayan constitutes a distinct and separate religion which is not a part of Hindu religion. Do the followers of the said sect fall outside the Hindu brotherhood, that is the crux of the problem which we have to face in the present appeal. In deciding this question, it is necessary to consider broadly the philosophic and theological tenets of Swaminarayan and the characteristics which marked the followers of Swami narayan who are otherwise known as Satsangis. In dealing with this aspect of the problem, it would be safe to rely upon the data furnished by Monier Williams in his book "Religious thought and life in India" (1883). It is hardly necessary to emphasise that Monier Williams played a very important role in explaining the religious thought and life in India to the English speaking world outside India. "Having been a 2 67 student of Indian sacred literature for more than forty years," observed Monier Williams "and having twice travelled over every part of India, from Bombay to Calcutta, from Cashmere to Ceylon, I may possibly hope to make a dry subject fairly attractive without any serious sacrifice of scientific accuracy, while at the same time it will be my earnest endeavour to hold the scales impartially between antagonistic religious systems and as far as possible to do justice to the amount of truth that each may contain" (P. 1). It is remarkable tribute to the scholarship of Monier Williams and of his devotion to the mission which he had undertaken that though his book was written as early as 1883, it is still regarded as a valuable source of information in dealing with problems connected with the religious thought and life in India. Let us then refer briefly to the life story of Swaminarayan for that would help us to understand and appreciate the significance of his philosophic and religious teachings. The original name of Swaminarayan was Sahajananda. By birth, he was a high caste Brahaman. He was born at Chapai, a village 120 miles to the North west of Lucknow, about the year 1780. He was born to Vaishnava parents, but early in his career he was "disgusted with the manner of life of the so called followers of Vallabhacharya, whose precepts and practice were utterly at variance, and especially with the licentious habits of the Bombay Maharajas. " He was then determined to denounce these irregularities and expose the vices that had crept into the lives of the Bombay Maharajas. Swaminarayan was a celibate and he "lived an ascetical, yet withal a large hearted and philanthropic, life" and the showed a great aptitude for learning. In 1800, he left his home and placed himself under the protection of the chief Guru, named Ramananda Swami at a village within the jurisdiction of the Junagarh Nawab. When Ramananda Swami removed to Ahmedabad in 1804, Sahajananda followed him. Soon Sahajananda collected around him a little band of disciples, which rapidly grew "into an army of devoted adherents". That naturally provoked the wrath of the orthodox Brahmans and magnates of Ahmedabad who began to persecute him. That drove Sahajananda to Jetalpur, 12 miles south of Ahmedabad, which became the, focus of a great religious gathering. Thousands of people were attracted by this young religious teacher who now took the name of Swaminarayan. Swaminarayan then retired to the secluded village of Wartal, where he erected a temple to Narayana (otherwise Krishna, or Vishnu, as the Supreme Being) associated with the goddess Lakshmi. From this Central scene of his religious activities, Swaminarayan mounted a strong crusade 2 68 against the licentious habits of the gurus of the Vallabhacharya sect. His watchword was "devotion to Krishna with observance of, duty and purity of life". The two principal temples of the Swaminarayan sect are at Wartal, which is about four miles to the west of the Baroda railway station, and at Ahmedabad. In about 1826 27, a formal constitution of the sect appears to have been prepared; it is known as the 'Iekh ' or the document for the apportionment of territory (Deshvibhaga Lekh). By this document, Swaminarayan divided India into two parts by a national line running from Calcutta to Navangar and established dioceses, the northern one with the temple of Nar Narayan at Ahmedabad, and the southern one which included the temple of Lakshminarayan at Wartal. To preside over these two dioceses Swaminarayan adopted his two nephews Ayodhyaprasad and Raghuvir respectively. Subordinate to these Gadis and the principal temples, two score large temples and over a thousand smaller temples scattered all over the country came to be built in due course. The Constitution of the Swaminarayan sect and its tenets and practices are collected in four different scriptures of the faith viz., (1) the "Lekh" to which we have just referred; (2) the "Shikahapatri" which was originally written by Swaminarayan himself in about 1826 A.D.; the original manuscript does not appear to be available, but the Shikshapatri was subsequently rendered into Sanskrit verses by Shatanandswami under the directions of Swaminarayan himself. This Sanskrit translation is treated by the followers of Swaminarayan as authentic. This book was later translated into Gujarati by another disciple named Nityanand. This Shikshapatri is held in high reverence by the followers of the faith as a prayer book and it contains summary of Swaminarayan 's instructions and principles which have to be followed by his disciples in their lives; (3) the "Satsangijiwan" which consists of five parts and is written in Sanskrit by Shathnand during the lifetime of Swaminarayan. This work gives an account of the life and teachings of Swaminarayan. It appears to have been completed in about 1829. Shikshapatri has been bodily in corporated in this work; (4) the "Vachanamrit" which is a collection of Swaminarayan 's sermons in Gujarati. This appears to have been prepared between 1828 and 1830. Swaminarayan died in 1830. It is necessary at this stage to indicate broadly the principles which Swaminarayan preached and which he wanted his followers to adopt in life. These principles have been suscinctly sum 269 marised by Monier Williams. It is interesting to recall that before Monier Williams wrote his Chapter on Swaminarayan sect he visited the Wartal temple in company with the Collector of Kaira on the day of the Purnima, or full moon of the month of Karttik which is regarded as the most popular festival of the whole year by the Swaminarayan sect. On the occasion of this visit, Monier Williams had long discussions with the followers of Swaminarayan and he did his best to ascertain the way Swaminarayan 's principles were preached and taught and the way they were, practised by the followers of the sect. We will now briefly reproduce some of the principles enunciated by Swaminarayan. "The killing of any animal for the purpose of sacrifice to the gods is forbidden by me. Abstaining from injury is the highest of all duties. No flesh meat must ever be eaten, no spirituous or vinous liquor must ever be drunk, not even as medicine. My male followers should make the vertical mark (emblematical of the footprint of Vishnu or Krishna) with the round spot inside it (symbolical of Lakshmi) on their foreheads. Their wives should only make the circular mark with red powder or saffron. Those who are initiated into the proper worship of Krishna should always wear on their necks two rosaries made of `Tulsi wood, one for Krishna and the other for Radha. After engaging in mental worship, let them reverently bow down before the pictures of Radha and Krishna, and repeat the eight syllabled prayer to Krishna (Sri Krishnan saranam mama, 'Great Krishna is my soul 's refuge ') as many times as possible. Then let them apply themselves to secular affairs. Duty (Dharma) is that good practice which is enjoined both by the Veda (Sruti) and by the law (Smriti) founded on the Veda. Devotion (Bhakti) is intense love for Krishna accompanied with a due sense of his glory. Every day all my followers should go to the Temple of God, and there repeat the names of Krishna. The story of his life should be listened to with the great reverence, and hymns in his praise should be sung on festive days. Vishnu, Siva, Ganapati (or Ganesa), Parvati, and the Sun; these five deities should be honoured with worship. Narayana and Siva should be equally regarded as part of one and same Supreme Spirit, since both have been declared in the Vedas to be forms of Brahma. On no account let it be supposed that difference in forms (or names) makes any difference in the identity of the deity. That Being, known by various names such as the glorious Krishna, Param Brahma, Bhagavan, Puru shottama the cause of all manifestations, is to be adored by us as our one chosen deity. The philosophical doctrine approved by me is the Visishtadvaita (of Ramanuja), and the desired heavenly 270 abode is Goloka. there to worship Krishna and be united with him as the Supreme Soul is to be considered salvation. The twice born should perform at the proper seasons, and according to their means, he twelve purification rites (sankara), the (Six) daily duties, and the Sradha offerings to the spirits of departed ancestors. A pilgrimage to the Tirthas, or holy places, of which Dwarika (Krishna 's city in Gujarat) is the chief, should be performed according to rule. Almsgiving and kind acts towards the poor ,Should always be performed by all. A tithe of one 's income should be assigned to Krishna; the poor should give a twentieth part. Those males and females of my followers who will act according to these directions shall certainly obtain the four great objects of all human desires religious merit, wealth, pleasure, and beatitude"(1). The Gazetteer of the Bombay Presidency has summarised the teachings embodied in the Shikshapatri in this way : "The book of precepts strictly prohibits the destruction of animal life; promiscuous intercourse with the other sex; use of animal food and intoxicant liquors and drugs on any occasion, suicide, theft and robbery; false accusation against a fello wman, blasphemy; partaking of food with low caste people; caste pollution; company of atheists and heretics and other practices which might counteract the effect of the founder 's teachings".(2) It is interesting to notice how a person is initiated into the sect of Satsangis. The ceremony of initiation is thus described in the Gazetteer of the Bombay Presidency : "The ceremony of initiation begins with the novice offering a palmful of water which he throws on the ground at the feet of the Acharya saying : I give over to Swami Sahajanand my mind, body, wealth, and sins of (all) births, 'Man ', tan, dhan, and janmana pap. He is then given the sacred formula 'Sri Krishnastwam gatirmama, Shri Krishna thou art my refuge. The novice then pays at least half a rupee to the Acharya. Sometimes the Acharya delegates his authority to admit followers as candidates for regular discipleship, giving them the Panch Vartaman, formula forbiding lying, theft, adultery, intoxication and animal food. But a (1) "Religious thought and life in India" ' By Monier Williams pp. 155 58. (2) Gazetteer of the Bombay Presidency, Vol. IX, Part 1, Gujarat Population, 1901, p. 537. 2 7 1 .lm15 perfect disciple can be made only after receiving the final formula from one of the two Acharyas. The distinguishing mark, which the disciple is then allowed to make on his forehead, is a vertical streak of Gopichandan clay or sandal with a round redpowder mark in the middle and a necklet of sweet basil beads".(1) Now that we have seen the main events in the life and career of Swaminarayan and have examined the broad features of his teachings, it becomes very easy to, decide the question as to whether the Swammarayan sect constitutes a distinct and separate religion and cannot be regarded as a part of Hindu religion. In our opinion, the plea raised by the appellants that the Satsangis who follow the Swaminarayan sect form a separate and distinct community different from the Hindu community and their religion is a distinct and separate religion different from Hindu religion, is entirely misconceived. Philosophically, Swaminarayan is a follower of Ramanuja, and the essence of his teachings is that every individual should follow the main Vedic injunctions of a good, pious and religious life and should attempt to attain salvation by the path of devotion to Lord Krishna. The essence of the initiation lies in giving the person initiated the secret 'Mantra ' which is : "Lord Krishna, thou art my refuge : Lord Krishna, I dedicate myself to thee '. Acceptance of the Vedas with reverence recognition of the fact that the path of Bhakti or devotion leads to Moksha, and insistence on devotion to Lord Krishna unambiguously and unequivocally proclaim that Swaminarayan was a Hindu saint who was determined to remove the corrupt practices which had crept into the lives of the preachers and followers of Vallabhacharya, and who wanted to restore the Hindu religion to its original glory and purity. Considering the work done by Swaminarayan, history will not hesitate to accord him the place of honour in the galaxy of Hindu saints and religious reformers who by their teachings, have contributed to make Hindu religion ever alive, youthful and vigorous. It is, however, urged that there are certain features of the Satsangi followers of Swaminarayan which indicate that the sect is a different community by itself and its religion is not a part of Hindu religion. It is argued that no person becomes a Satsangi by birth and it is only by initiation that the status of Satsangi is conferred on a person. Persons of other religions and Harijans can join the Satsangi sect by initiation. Swaminarayan himself is (1) Gazetteer of the Bombay Presidency, Vol. IX Part 1, Gujarat Population, pp. 538 39. 2 72 . treated as a God and in the main temple, worship is offered to Swaminarayan pre eminently; and that, it is argued, is not consistent with the accepted notions of Hindu religion. Women can take Diksha and become followers of Swaminarayan though Diksha to women is given by the wife of the Acharya. Five vows have to be taken by the followers of the Satsang, such as abstinence from drinking, from non vegetarian diet, from illegal sexual relationship, from theft and from inter pollution. Separate arrangements are made for Darshan for women, special scriptures are honoured and special teachers are appointed to worship in the temples. Mr. Desai contends that having regard to all these distinctive features of the Swaminarayan sect, it would be difficult to hold that they are members of the Hindu community and their temples are places of public worship within the meaning of section 2 of the Act. We are not impressed by this argument. Even a cursory study of the growth and development of Hindu religion through the ages shows that whenever a saint or a religious reformer attempted the task of reforming Hindu religion and fighting irrational or corrupt practices which had crept into it, a sect was born which was governed by its own tenets, but which basically subscribed to the fundamental notions of Hindu religion and Hindu philosophy. It has never been suggested that these sects are outside the Hindu brotherhood and the temples which they honour are not Hindu temples, such as are contemplated by section 3 of the Act. The fact that Swaminarayan himself is worshipped in these temples is not inconsistent with the belief which the teachings of Bhagvad Gita have traditionally created in all Hindu minds. According to the Bhagvad Gita, whenever religion is on the decline and irreligion is in the ascendance, God is born to restore the balance of religion and guide the destiny of the human race towards salvation.(1) The birth of every saint and religious reformer is taken as an illustration of the principle thus enunciated by Bhagvad Gita; and so, in course of time, these saints themselves are honoured, because the presence of divinity in their lives inevitably places them on the high pedestal of divinity itself. Therefore, we are satisfied that none of the reasons on which Mr. Desai relies, justifies his contention that the view taken by the High Court is not right. It is true that the Swaminarayan sect gives Diksha to the followers of other religions and as a result of such initiation, they Gita 4 .7. 273 become Satsangis without losing their character as the followers of their own individual religions. This fact, however, merely shows that the Satsang philosophy preached by Swaminarayan allows followers of other religions to receive the blessings of his teachings without insisting upon their forsaking their own religions. The fact that outsiders are willing to accept Diksha or initiation is taken as an indication of their sincere desire to absorb and practice the philosophy of Swaminarayan and that alone is held to be enough to confer on them the benefit of Swaminarayan 's teachings. The fact that the sect does not insist upon the actual process of proselytising on such occasions has really no relevance in deciding the question as to whether the sect itself is a Hindu sect or not. In a sense, this attitude of the Satsang sect is consistent with the basic Hindu religious and philosophic theory that many roads lead to God. Didn 't the Bhagavad Gita say: "even those who profess other religions and worship their gods in the manner prescribed by their religion, ultimately worship me and reach me. "(1) Therefore, we have no hesitation in holding that the High Court was right in coming to the conclusion that the Swaminarayan sect to which the appellants belong is not a religion distinct and separate from Hindu religion, and consequently, the temples belonging to the said sect do fall within the ambit of section 2 of the Act. The present suit began its career in 1948 and it was the result of the appellants ' apprehension that the proclaimed and publicised entry of the non Satsangi Harijans would constitute a violent trespass on the religious tenets and beliefs of the Swaminarayan sect. The appellants must no doubt, have realised that if non Satsangi Hindus including Harijans enter the temple quietly without making any public announcement in advance, it would be difficult, if not impossible, to bar their entry; but since respondent No. 1 publicly proclaimed that he and his followers would assert their right of entering the temples, the appellants thought occasion had arisen to bolt the doors of the temples against them; and so, they came to the Court in the present proceedings to ask for the Court 's command to prevent the entry of respondent No. 1 and his followers. It may be conceded that the genesis of the suit is the genuine apprehension entertained by the appellants; but as often happens in these matters, the said apprehension is founded on superstition, ignorance and complete misunderstanding of the true teachings Gita 9.23. 27 4 of Hindu religion and of the real significance of the tenets and philosophy taught by Swaminarayan himself. While this litigation was slowly moving from Court to Court, mighty events of a revolutionary character took place on the national scene. The Constitution came into force on the 26th January, 1950 and since then, the whole social and religious outlook of the Hindu community has undergone a fundamental change as a result of the message of social equality and justice proclaimed by the Indian Constitution. We have seen how the solemn promise enshrined in article 17 has been gradually, but irresistibly, enforced by the process of law assisted by enlightened public conscience. As a consequence, the controversy raised before us in the present appeal has today become a matter of mere academic interest. We feel confident that the view which we are taking on the merits of the dispute between the parties in the present appeal not only accords with the true legal position in the matter, but it will receive the spontaneous approval and response even from the traditionally conservative elements of the Satsang community .Whom the appellants represent in the present litigation. In conclusion, we would like to emphasise that the right to enter temples which has been vouchsafed to the Harijans by the impugned Act in substance symbolises the right of Harijans to enjoy all social amenities and rights, for, let it always be remembered that social justice is the main foundation of the democratic way of life ,,enshrined in the provisions of the Indian Constitution. The result is, the appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellants, who are the followers of the Swaminarayan sect and known at Satsangis, filed a representative suit: (i) for a declaration that the relevant provisions of the Bombay Harijan Temple Entry Act, 1947, as amended by Act 77 of 1948, did not apply to their temples, because, the religion of the Swaminarayan sect was distinct and different from Hindu religion and because, the relevant provisions of the Act, were ultra vires, and (ii) for an injunction restraining the 1st respondent and other non Satsangi Harijans from entering the Swaminarayan temple. The Trial Court decreed the suit. Pending the 1st respondent 's appeal in the High Court, the Bombay Hindu Places of Public Worship (Entry Authorisation) Act, 1956, was passed, and since the 1947 Act gave place to the 1956 Act, it became necessary to consider whether the 1956 Act was intra vires. The High Court allowed the appeal and dismissed the suit holding that the followers of the Swaminarayan sect professed Hindu religion and that the Act of 1956 was constitutionally valid. In appeal to this Court it was contended that : (i) the High Court erred in treating the 1st respondent 's appeal as competent when the vakalatnama filed on his behalf was invalid (ii) section 3 of the 1956 Act was ultra vires as it contravened article 26(b) of the Constitution; and (iii) the religion of the Swaminarayan sect was distinct and separate from Hindu religion and that therefore the temples belonging to that sect did not fall within the ambit of the 1956 Act. HELD: (i) The appeal to the High Court was properly presented. Technically the memorandum of appeal presented by the Assistant Government Pleader on behalf of the 1st respondent suffered from an infirmity, because, the 1st respondent signed the vakalatnama in favour of the Government Pleader. But, since the Registry had not returned the appeal for correcting the irregularity, and since r. 95 of the Appellate Side Rules of the High Court authorises an advocate to appear even without initially filing a vakalatnama, the High Court was right in allowing the Government Pleader to sign the memorandum of appeal and the vakalatnarna, in order to remove the irregularity. [251 E G; 252 A C] (ii) There is no substance in the contention that section 3 contravenes article 26(b) of the Constitution and is therefore ultra vires. 243 The right to enter temples which has been vouchsafed to the Harijans by the impugned Act substance symbolises the right of Harijans to enjoys all social amenities and rights, for, social justice is the main foundation of the democratic way of life enshrined in the provisions of the Indian Constitution. After the Constitution came into force, the whole social and religious outlook of the Hindu community has undergone a fundamental change as a result of the message of social equality and justice proclaimed by the Constitution; and the solemn promise in article 17, abolishing untouchability has been gradually, but irresistibly enforced by the process of law assisted by enlightened public conscience. All that section 3 of the 1956 Act purports to do is to give the Harijans the same right to enter the temple for darshan of the deity as can be claimed by the other Hindus. The act of actual worship of the diety is allowed to be performed only by the authorised poojaris of the temple and by no other devotee entering the temple for darshan. Therefore, it was nont intended to invade the tradition and conventional manner of performing the actual worship of the idol. (iii) The High Court was right in coming to the conclusion that the religion of the Swaminarayan sect is not, distinct and separate from Hindu religion, and consequently, the temples belonging to the sect did fall within the ambit of section 2 of the Act. The Indian mind has consistently through the ages, been exercised, over the problem of the nature of godhead, the problem that faces the spirit at the end of life, and the interrelation between the individual and the universal soul. According to Hindu religion the ultimate goal of humanity is release and freedom from the unceasing cycle of births and rebirths and a state of absorption and assimilation of the individual soul with the infinite. On the means to attain this and there is a great divergence of views; some emphasise the importance of Gyana, while others extol the virtue of Bhakti or devotion, and yet others insist upon the paramount importance of the performance of duties with a heart full of devotion and in mind inspired by knowledge. Naturally it was realised by Hindu religion from the very beginning of its career that truth was many sided and different views contained different aspects of truth which no one could fully express. This knowledge inevitably bred a spirit of tolerance and willingness to understand and appreciate the opponent 's point of view. Because of this broad sweep of Hindu philosophic concept under Hindu philosophy, there is no scope for excommunicating any notion or principle as heretical and rejecting it as such. The development of Hindu religion and philosophy shows that from time to time saints and religious reformers attempted to remove from Hindu thought and practices, elements of corruption and superstition, and revolted against the dominance of rituals and the power of the priestly class with which it came to be associated; and that led to the formation of different sects. in the teaching of these saintns and religious reformers is noticeable a certain amount of divergence in their respective views; but underneath that divergence lie certain broad concepts which can be treated as basic, and there is a kind of subtle indescribable unity which keeps them within the sweep of broad and progressive Hindu religion. The first among these basic concepts is the acceptance of the Vedas as the highest authority in religious and philosophic matters. This concept necessarily implies that all the systems claim to have drawn their principles from a common, reservoir of thought enshrined in the Vedas. Unlike other religions in the world, the Hindu religion does not claim any one prophet; it does no( worship any one God; it does not subscribe to any one dogma;it does 244 not believe in any one philosophic concept; it does not follow any one set of religious rites or performances; in fact, it does not satisfy the traditional features of a religion or creed. It is a way of life and nothing more. The Constitution makers were fully conscious, of the broad and comprehensive character of Hindu religion; and while guaranteeing the fundamental right to freedom of religion made it clear that reference to Hindus shall be construed as including a reference to persons professing the Sikh, Jaina or Buddhist religion. Philosophically, Swaminarayan was a follower of Ramanuja and the essence of his teachings is acceptance of the Vedas with reverence, recognition of the fact that the path of Bhakti or devotion leads to Maksha, insistence or devotion to Loard Krishna and a determination to remove corrupt practices and restore Hindu Religion to its original glory and purity. This shows unambiguously and unequivocally that Swaminarayan was a Hindu saint. Further, the facts that initiation is necessary to become a Satsangi, that persons of other religions could join the sect by initiation without any process of proselytising on such occasions, and that Swaminarayan himself is treated as a God, are not inconsistent with the basic Hindu religious and philosophic theory.

"Appeals Nos. 10481050 of 1963. Appeals from the judgment and debreedated September 1958 of the Bombay High Court iii special Civil Applications Nos. 1100, 1161 and 1162 of 1958. D. B. Padhya, J. B. Nagar and. A.G. Ratnaparkhi, for the appellants (in all the appeals). section G. Patwardhan, and R. H. Dhebar, for the respondents Nos. 2 and 3 (in all the three appeals). 414 The following Judgments were delivered Sarkar, J. These three appeals concern compensation payable under the Bombay Personal Inams Abolition Act, 1952 to the appellants for abolition of their inams. Some of the appellants held shares in the inam village of Wanz and some in that of Dindoli. The appellants had moved the High Court at Bombay by several petitions under articles 226 and 227 of the Constitution for quashing the decision of the Bombay Revenue Tribunal regarding the compensation. The petitions were disposed of by the High Court by a common judgment. These appeals are against that judgment under a certificate granted by the High Court. The appellants had claimed compensation under several heads based on different grounds but two of them survive. The first is that the appellants are entitled to compensation for loss of assessment payable to them by inferior holders, a special class, of tenants holding lands from them. The Act does not expressly provide for compensation in respect of such lands. Sub section (1) of section 17 of the Act however provides that if any person is aggrieved by the provisions of the Act abolishing any of his rights to or interest in property and if compensation for such abolition has not been provided for, such person may apply to the Collector for compensation. The appellants, base their claim on this section. Sub on (5) of this section makes the right under sub section (1) unavailable in a certain case and the question is whether the appellant 's claim fell within it. Now the sub section is in these terms: section 17(5) Nothing in this section shall entitle any person to compensation on the ground that any inam village or inam land which has (sic.) wholly or partially exempt from the payment of land revenue has been under the provisions of this Act made subject to the payment of full assessment in accordance with the provisions of the Code. Clearly this sub section applies only to a certain kind of claim for compensation in respect of an inam village exempt from payment of land revenue. The appellants say that their inams were not of this kind and so the subsection does not affect their claim. According to them, their inams consisted of a grant of land re. venue only. The nature of an inam depends on the sanad or the terms of the grant. The High Court held on a construction of the sanads that the inams were grants of the villages with exemption from land revenue, because the words of the grant conveyed the soil and rights over trees, water, mines etc. This view is obviously correct. The appellants then said that notwithstanding that the soil had been granted, their inams were none the less of land revenue only. Their contention is that before the grants the tenants in 415 occupation paid revenue to the Government and thereafter to the inamdars and the latter being exempt from the liability to pay it over to the Government, the net result was that the inamdars retained the land revenue and were, therefore, the grantees thereof This contention is idle. There is nothing to show that there were tenants holding lands in the villages before the grants which were made in 1794 and 1803 respectively and whether they paid anything and if so, what ? Furthermore, what the tenants paid to the inamdars (holders of the inams) after the grants was rent and not revenue; it was for the inamdars to fix the amount of it or forego it altogether if they so liked. What the tenants paid to the inamdars. was not something which was due to the Government which the inamdars kept to themselves having been exempted from the liability to pay it over to the Government; it was rent due to the inamdars. It was next said that whatever might have been the position earlier, after the introduction of the survey in the villages in 1900 under the Bombay Land Revenue Code, 1879 what a tenant paid to, an inamdar was land revenue. There is no justification for this. contention either. No doubt since the introduction of the survey the amounts payable by the tenants to the inamdars were all assessed under the Code. The nature of the assessment payable was not however altered thereby nor did it become land revenue. The survey fixed the amount payable by, a tenant to the inamdar and gave him certain rights. It also conferred certain benefits on the inamdar in the matter of the realisation of his dues. The fact that the assessment was made in the same way as land revenue. made no difference. It did not change the right to the assessment. Notwithstanding all this the inamdar remained the grantee of the soil and a person who was not liable to pay revenue in respect of it and likewise the tenant remained liable as before to pay rent to the inamdar. Furthermore, the distinction between the two kinds of grants, is well recognised and has been maintained by the Act by specifying in section 2 (1)(e) that an inam means a grant of a village with exemption from liability to pay land revenue and also a grant of land revenue only. The appellants ' contention would in effect wipe out this distinction and cannot therefore be accepted. The appellants then contended that even if their inams were grants of villages exempt from payment of land revenue, sub section (5) of section 17 did not bar their claim because they were not claiming compensation on the ground that the inam villages previously exempted from land revenue had under the Act been made subject to it. They say that they have not been made liable to pay land revenue themselves and are only claiming the loss of the money that they used to collect from the inferior holders, the right to 416 which collection was abolished by the Act. This contention is based on section 5 of the Act which is set out below: section 5. (1) All inam villages or inam lands are and shall be liable to the payment of land revenue in accordance with the provisions of the Code and the rules made thereunder and the provisions of the Code and the rules relating to unalienated land shall apply to such lands. (2)(a) An inamdar in respect of the inam land in his actual possession or in possession of a person holding from him other than an inferior holder, referred to in clause(b) below, or (b) an inferior, holder holding inam land on payment of annual assessment only shall primarily be liable to the State Government for the payment of land Revenue, due in respect of such land held by him and shall be entitled to all the rights and shall be liable to all obligations in respect of such land as an occupant under the Code or the rules made thereunder or any other law, for the time being in force. It seems to 'me that this contention is also without any foundation. The inamdar 's right to appropriate to himself the assessment Axed by the survey and collected from the inferior holders existed on because ' be was exempt from the liability to pay land 'revenue. If he was not so exempt, then what he collected from the inferior holders would have to be paid over to the Government. 'It would. follow that the loss for ' Which the appellants claim compensation was really occasioned by the lands being subjected to revenue by section 5(2)(b). The fact that the inamdar has not himself been made liable for the revenue in respect of the lands held by inferior holders makes no difference. The substance of the matter is th the inamdar has been deprived of his right to the assessment from the inferior holders and the inferior holders have been made liable to pay that assessment to the Government. So in actual result the inamdar has been deprived of his right to the assessment because the land has been made subject to payment of land revenue. His claim for the loss of assessment is,, therefore, in reality based on the ground that the lands which were free from revenue have been made subject to it. Sub section (5) of section 17 does provide that the bar mentioned in it operates only when land revenue is made payable the inamdar. It also seems to me that any other interpretation would lead to a result which could not have been intended. It is not in dispute that for the loss. of rights in respect of lands in his own possession excepting those mentioned in section 7 or any lands in possession of persons holding from him other than as inferior holders an inamdar is 'not entitled to compensation. It is admitted that 417 such compensation could not be allowed in view of section 17 (5). It would be difficult to imagine a reason for the legislature to have made a distinction between such lands and lands in the possession of inferior holders. The other part of the claim concerns the right to forfeit the ,inferior holders ' tenancies for nonpayment of rent and the right of reversion in respect of them. These the appellants, have no doubt lost. The Collector asked the appellants to produce evidence in support of their claims under this head. They failed to do so. They could not even cite one instance of the exercise of any such right. It would be impossible to 'value the loss in respect of them as no material for doing so, is on the record nor was furnished by, the appellants. No compensation can,. therefore, be assessed or awarded for the loss of these rights. The result is that the appeals fail and they are dismissed. There will be no ' order as to costs. Mudholkar, J. These appeals are from a judgment of the Bombay High Court dismissing the writ petitions preferred by the ;appellants before it. The appellants art co sharers either in the former Inam village Wanz or in the former Inam village Dindoli, both of which are situate in Surat District. Under the Bombay Personal Inams Abolition. Act, 1952 all personal Inams were extinguished and all Inam villages as well as all Inam lands were ,made liable to the payment of land revenue in accordance with the provisions of the Land Revenue Code. The Act did not provide for compensation to the Inamdars with respect to the loss of their rights to hold their villages or lands free from payment of land revenue. Under section 10 of the Act, however, compensation to the Inmadars was provided for the extinguishment of certain rights possessed by them in their Inam villages. Those rights vest, by virtue of the provisions of section 7 of the Act, in the Government. "Section 17(1) of the Act provides for payment of compensation to a person aggrieved by the provisions of the Act which abolished, extinguished or modified any of his rights or interests in property .provided that compensation for such abolition, extinguishbment or modification of those rights had not ,been provided for in any of the provisions of the Act. To this provision the following exception has been made in sub section (5): "Nothing in this section shall entitle any person to compensation on the ground that any main village or inam land which has wholly or partially exempt from the payment of land revenue has been under the provisions of this Act made subject to the payment of full assessment in accordance with the provisions of the Code. " 418 It is common ground that in both the villages there were holders of land called inferior holders. These were persons claiming through tillers in cultivating possession of different pieces of land in the Inam villages at the time of the grant of the Inams. It is common ground that their rights to continue to be in possession of those lands and cultivate them were left in tact by the Inamdars and the grantees of the Inams were only entitled to claim rents from them. It is common ground that under section 216 of the Bombay Land Revenue Code, 1879 settlement was introduced both in Wanz and Dindoli villages though at different points of time. It is also the common case of the parties that after the introduction of the survey, land revenue was assessed on the lands held by the inferior holders and in place of their liability to pay such rent as may be fixed from time to time by the Inamdars they thenceforward were rendered liable to pay to the Inamdar only the land revenue assessed at the settlement. So far as the Government was concerned the grantees of the villages Wanz and Dindoli were exempt from paying land revenue not only in respect of lands held by the inferior holders but also in respect of lands held by the Inamdars themselves or held by persons holding through the Inamdars. Now, in consequence of the extinguishment of the right of the Inamdars to hold the villages revenue free they have been rendered liable to pay land revenue, to the Government in respect of the lands in their possession or in the possession of persons holding through them. No liability is, however, cast upon them to pay to the Government land revenue in respect of lands in the possession of inferior holders. This follows clearly from section 5 of the Act and is not disputed by either set of parties to the appeal. No compensation is expressely provided for the loss of the right of the Inamdar to recover from the inferior holders land revenue assessed on the lands in their possession. Mr. Padhya contends that the appellants would, therefore, be entitled to claim compensation in respect of this loss under section 17(1). He points out that the loss of this right to the Inamdars is not occasioned because of the fact that the Ina= villages were made liable to pay full assessment but because the inferior holders have now been required to pay land revenue to the Government instead of to the bamdars. It is difficult to accept this argument. The relevant provision of the Act for consideration s.5 which runs thus: "5(1) AR inam villages or main lands are and shall be liable to the payment of land revenue in accordance with the provisions of the Code and the rules made thereunder and the provisions of the Code and the rules relating to unalienated land shall apply to such lands. (2)(a) An inamdar in respect of the inam land in his actual possession or in possession of a person holding from 419 him other than an inferior holder, referred to in clause (b) below, or (b) an inferior holder holding inam land on payment of annual assessment onlv shall primarily be liable to the State Government for the payment of land revenue due in respect of such land held by him ano shall be entitled to all the rights and shall be liable to all obligations in respect of such land as an occupant under the Code or the rules made thereunder or any other law for 'the time being in force." .lm0 It is sub section (1) of this section which creates liability to pay land revenue. Sub section (2) then proceeds to say as to who is made liable to pay land revenue: the Inamdar or holder from the Inamdar or an inferior holder. Clause (b) of sub section (2) which deals with the liability placed on inferior holders has, therefore, to be read with sub section (1) and when they are so read it would be clear that the loss resulting to the Inamdar is the direct consequence of the operation of these provisions. In other words it is the direct consequence of the provisions of the Act that lands in possession of inferior holders are made liable to pay full assessment "in accordance with the provisions of the Code". This in the context means, liable to pay full assessment to the Government. It is true that by making this provision the Inamdars have sustained loss of one of their rights in property. it is also true that if section 17(1) does not apply as in my view it does not applyno compensation is payable to the Inamdars. However, as no argument has been raised before us that the aforesaid provision of the Act infringes the guarantee incorporated in article 31(1) of the Constitution and is, therefore, unconstitutional the provisions of section 5 of the Act must be held to be fully operative. It was faintly urged by learned counsel that the Inamdar 's right of reversion and right of escheat have also been taken away by the Act and no compensation is provided foe it. No provision was, however, brought to our notice by virtue of which it could be said that these rights of the Inamdars have at all been touched by the Act. Even assuming that these rights have been taken away it seems to me that the grounds given by the High Court for rejecting the appellants claim are cogent and adequate In the 'result, therefore, I agree that the appeals be dismissed. I would make no order as to costs. Bachawat, J. The appellants were holders of shares in inam villages; some held shares in the inam village of Wanz, others held shares in the inam village of Dindoli. The inams were abolished by the Bombay Personal Inams Abolition Act, 1952. By section 4 of the Act, save as expressly provided by or under the Act, all rights in the inams were extinguished Sections 10 and 17(1) provided for payment of compensation. In view of sub section (5) of s.17, no compensation can be claimed under sub section (1) of section 17 on the ground that any inam village or inam land which was wholly or partially exempt from payment of land revenue has been under the Act made subject to the payment of full assessment. The appellants filed claims for compensation under sections 10 and 17 (1) of the Act before the Collector of Surat. We are now concerned with the following. two claims for compensation. under section 17(1) of the Act: (1) loss for the abolition of the right of the appellants to recover assessment from the inferior: holders in respect of the lands in their possession; (2) loss for the extinction of the right of reversion and forfeiture in respect of those lands. The Collect or of surat and the Bombay Revenue Tribunal concurrently held that the claim for compensation, in respect of the first item was barred by section 17(5) of the Act and in respect of the claim under the second head, the appellants failed to prove that they sustained any loss. The appellants filed applications under articles 226 and 227 of the Constitution before the High Court at Bombay challenging the: Correctness of these findings. The High Court dismissed the 'applications. Section 2(1)(e) of the Act, classifies personal inams into two categories. ' The appellants Content that their inams were grants of land revenue and therefore personal inams of the second category specified in section 2(1)(e)(ii). In respect of the personal inam ' of the second category, the bar of s . 17(5) is not attracted. On the other ' hand, the respondents contend that the inams in question were grants of villages partially exempt from payment of the land revenue, and therefore personal, inams of the first category specified in s ' 2(1)(e)(i). In respect of personal inams of the first category, the. bar of section 17(5) is attracted. The High Court held and, in my opinion, rightly that the grants of the villages, on their true construction were grants of the soil. The inamdars were not required to pay any land revenue except the quit rent and some small haqs. Consequently, the grants were grants of villages with) partial exemption from payment of, the land revenue and were Personal inams, of the first category specified in section l(1)(e)(i). The survey and settlement of the villages under section 216 of the Land Revenue Code, 1879 made no difference in the character of the inams. The introduction of the survey settlement did not confer on the inferior holders the status, of occupants, nor render them liable to pay land revenue to the Government,, they continued to, be inferior holders under the inamdar and liable to Day the assessments to him. In spite of the survey settlement, the villages continued to be alienated villages and the inams continued to be personal inams of the first category referred to in section 2(1)(e)(i) of the Act. The High Court rightly held that the appellants are not en.; titled to claim compensation in, respect of the abolition of their 421 421 right to recover assessment from the inferior holders. The inam lands ' no longer enjoyed either total or partial exemption from, payment of land revenue. By section 5(1) of the Act, all inam lands are now liable to payment of full land revenue. By section 5(2)(b), in respect of lands held by inferior holders on payment of assessment only, the inferior holders now enjoy the status of occupants, and are liable to pay the land revenue directly to the State Government. In respect of those lands, the inamdars are neither entitled to collect the assessment from the inferior holders nor liable to. pay land, revenue to the State Government. Had the appellants ' right to recover assessment from the inferior holders not been abolished, they would have been entitled to recover the, amounts. of assessments from the inferior holders and at the same time would have been liable to pay the identical amounts to the Government on account of land revenue. The loss consequential on the abolition of the right to recover assessment is, therefore, nil. The claim under this head is really on the ground that the. inam lands which were formerly exempt from payment of land revenue have been subjected by the Act to payment of full assessment. Such a claim is barred by section 17(5) of the Act. With regard to the claim for compensation under the second head, the High Court rightly held that the appellants could not establish any loss under this head. They failed to show that they exercised any right of forfeiture or claimed any right of reversion at any time. I see no reason for disturbing the finding of the High Court and the Tribunals below on this point. The appellants submit that in view of the ephemeral nature of their rights of reversion and forfeiture in respect of the lands held by the inferior holders, the grants of villages, as far as they relate to those lands, are assimilated to grants of land revenue. They submit that the High Court and the Tribunals below while holding that the only right of the appellants in respect of those lands was to recover the assessments from the inferior holders, have inconsistently and unjustly held that the grants were grants of inam villages and not of land revenue so as to attract the bar of section 17(5). This submission is not well founded. A grant of a village or land with total or partial exemption from payment of land revenue is essentially different from a grant of land revenue, and the distinction has been preserved by the Act. On the extinction of the grant of land revenue, the inamdar loses all rights in respect of the grant, and he is therefore entitled to full compensation under section section 17(1). On the other hand, on abolition of the grant of an inam village or land, the inamdar is allowed to retain and enjoy various rights and benefits arising out of the grant. Section 5(2)(a) gives him the rights of an occupant in respect of lands in his actual possession or in possession of persons holding from him other than 422 inferior holders. The grants of inam lands, on their true construction, may include the right to mines or mineral products see Secretary of State for India vs Shantaram Naravan(1), and this right of the inamdar, if any, is preserved by section 9 'of the Act. By section 10 of the Act the inamdar holding inam villages or lands is entitled to compensation in respect of any right or interest in any property referred to in section 7. He is also entitled to compensation under section 17(1), but this right is subject to the provisions of section 17(5). It will appear, therefore, that the Act treats the inams of the two ,categories very differently. While the holder of the inam of the first category referred to in section 2(1)(e)(i) suffers from the disadvantage of the bar of section 17 (5) in respect of compensation, he enjoys numerous advantages which are denied to the holder of the inam of the second category referred to in section 2(i)(e)(ii). The appeals fail, and are dismissed. There will be no order as to costs. Appeals dismissed. (1) (1925) 1.

IN-Abs

The appellants were holders of shares in Inam villages. on the, Inams being abolished by Bombay Personal In Abolition ACt, 1953 they claimed compensation for their Inam under section 17(1) of the Act. By a. 17(5). "Nothing is this section shall entitle any person to compensation on the ground that any inam village, or inam land which has (sic.) wholly or partially exempt from the payment of land revenue has been under the provision of this Act made subject to the payment of full assessment in accordance with the ;provisions of the Code ." section 5 of the Act provide, "(i) All inam villages or inam, lands are and shall be liable to the Payment of land revenue in accordance with the provisions of the Code and rules made thereunder and the provisions the Code and the rules relating to unalienated land shall apply to such lands. (12) (a) An inamdar in respect of the inam land in his actual Possession or in possession of a person holding from him other than 'an inferior holder, referred to in clause (b) below or (b) an inferior holder holding inam land on payment of annual assessment only shall Primarily be liable to the State Government for the payment of land revenue, due in respect of such land held by him and shall be entitled to all the rights and shall be liable to all obligations in respect of such land as An ocupant under the Code or the rules made thereunder or, any other law for the time being in force. " HELD (Per Sarkar J.) (1). On a construction of the Sanad by which the inams were granted, the,grants were of villages and exemption from land revenue as mentioned, 14 section 17(5). Mat the tenants paid to the Inamdars was not something which was due to the Government which, the Inamdars kept to themselves but was Tent due to the Inamdars. [414 G;415 C] Even after the survey in the Inam villages in 1900 under the Bombay Land Revenue Code, 1879 the Inamdars remained the grantees of the soil exempt from payment of revenue and the tenants remained liable, as before, to pay rent to the Inamdars. [415 E F] (2) Section 5 of the Act does not show that the Inamdars were claiming compensation for the loss of money that they used to collect from the inferior holders, the right to which collection was abolished by the Act and, therefore section 17(5) did not apply to them. The fact that under a. 5 the Inamdar has not himself been made liable for 'the revenue in respect of the land held by the inferior holders, made no differentce. By section 5 an 7 413 Inamdar has been deprived of his right to the assessment from the inferior holders and the inferior holders have been made liable to pay that assesment to the Government. Therefore, in actual result, the Inamdar has been deprived of his right to the assessment because the land has, been made subject to the payment of land revenue and he was, therefore covered by section 17 (5.). [416 E G] Per Mudholkar, J. : Section 5 (1) of the Bombay Personal Inams Abolition Act, 1953, creates liability to pay and revenue to the Government with respect to inam laads, in accordance with the provisions of the Bombay Land Revenue Code, 1879. Where lands were in possession inferior holders section 5(2) (b) places the liability, on the inferior holders. The loss resulting to the inamdars is the. direct consequence of the operation of these provisions. Therefore section 17(5) of the Act bars the claim for compensation for loss of the right of the appellants to recover from the inferior holders land revenue, assessed 'on the lands in their posmsion. [419 C E] Per Bachawat, I The grants of the villages,. on the construction of the deeds were grants of villages Partial exetmption from payment of land revenue and were personal of the category specified in section 2(1) (e) (i). The introduction of, the survey settlement made no difference in the character pi the inams. After the Abolition .Act,; the lands no longer enjoyed either total or Spartial exemption from payment of land revenue. By section 5 (.1) of the Act, all inam lands are now liable to payment of full land revenus By section 5 (2) (b), in respect of lands held by inferior holders the inferior holders now enjoy the status of occupants, and are liable to pay the land revenue directly to the State Government. The appellants were not entitl ed to claim compensation in respect of the abolition of their right to recover assessment from the inferior hoders, because such a claim is really on the ground that the inam lands which were formerly exempt from payment of land I revenue have been subjected by the Act to payment of full assessment. Such a claim is based by section 17(5). A grant of village or land with total or partial exemption of land revenue is essentially different from a grant of land revenue and the distinction has been Preserved by the Act, On the extension of the, grant of land revenue, the "namdar lows all right in respect of the grant and he is therefore entitled to full compensation order section 17(1). On the other hand, on. abolition of the grant of an. in= village or land the inamdar is allowed to retain and enjoy various rights and benefits, but at the 6 ' .Me time the right to compensation under section 17(1) is subject to the bar of [420 H 421 H]

Appeal No. 354 of 1965 Appeal by special leave from the judgment and order dated December 18, 1962 of the Madhya Pradesh High Court (Indore Bench) in Second Appeal No.77 of 1960. B R. L. lyengar, G. L. Sanghi and A. ' G. Ratnaparkhi for the appellants. MIC Sup. C.I./66 14 424 section N. Andley, Rameshwar Nath and P. L. Vohra, for the respondent. B. R. L. Iyengar, G. L. Sanghi and A. G. Ratnaparkhi, for intervener No. 1. J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for intervener No. 2. The Judgment of the Court was delivered by Shah, J. In 1936 certain home farm land in Mouza Belam Bujurg, Paragana Burwaha, of the estate of the respondent were leased for cultivation to one Mangtya by the Court of Wards which was in management of the estate. The Court of Wards released the estate on June 14, 1951. The respondent thereafter terminated the tenancy and instituted a suit in the Court of Civil Judge, Class 11, Burwaha, against Mangtya for a decree in ejectment and for mesne profits. The Trial Court decreed the suit for possession and awarded mesne profits at the rate of Rs. 300/per annum from the date of the decree till delivery of possession. The decree passed by the Trial Court was confirmed in appeal by the District Court, Nimar, and the High Court of Madhya Pradesh. Sons of Mangtya, who died after the judgment of this High Court have preferred this appeal with special leave. The land in dispute is ryotwari land and Mangtya was a ryot wari sub lessee of the land. It was contended before the High Court in Rao Nihalkaran vs Ramchandra & Others ' that even though a ryotwari sub lessee of land in the Madhya Bharat region may ordinarily acquire under section 185 (1)(ii)(b) on the commencement of the Code the status of an occupancy tenant, the tenant Mangtya was disentitled to that status since at the commencement of the tenancy the respondent was subject to a disability of the character set out in section 168(2). The High Court upheld the plea of the respondent; they held that the expression "holds the land from a Bumiswami who belongs to any one or mor of the classes" pre dicates two conditions that the land is held by a tenant under a Bhumiswami, and that at the co ormmencement of the tenancy the landlord who subsequently acqured the status of a Bhumiswami belonged to any one or more of the classes mentioned in sub section (2) of section 168 of the Code. The only question which falls to be determined in this appeal is whether under section 185 (3) of the, Madhya Pradesh Land Revenue Code the tenant Mangtya was disqualified from claiming the status of an occupancy tenant. By section 151 of the Code there was to be in the State of Madhya Pradesh a single class of tenure holders of land held from the State to be known as Bhumiswami. The (1) L. P. A. No. 14 of 1961 decided on Sgt. 24, 1962. 425 respondent may be by virtue of section 158(b) deemed to be a Bhumiswami. The rights of a Bhumiswami under the Code are heritable, but in the matter of transfer inter vivos they are subject to restrictions prescribed by sections 165 & 168. Land comprised in the holding of a Bhumiswami may not by virtue of section 168(1) be transferred by way of a lease, except in the conditions mentioned in sub sections (2) & (3) of section 168. A Bhumiswanii subject to one or more of the disabilities mentioned in sub section (2) may grant a lease of his holding. It has to be noticed that the provisions which create the tenure of a Bhumiswami and the restrictions thereon are prospective. We have held in Appeal No. 365 of 1965 Rao Nihalkaran vs Ramgopal(1) that a person whose tenancy rights were determined before the commencement of the Code will be invested with the status of an occupancy tenant provided he. holds land of the nature described in sub section (1) of section 185. But upon this rule is engrafted an exception by sub section (3) of section 185 that nothing in sub section (1) shall apply to a person who at the commencement of the Code holds the land from a disabled Bhumiswami. At the commencement of the Code the respondent acquired the tenure of a Bhumiswami under section 158(b) of the Code, but it cannot be said that the respondent "belongs to any one or more of the classes mentioned in sub section (2) of section 168". For the exemption from the operation of section 185(i) it had to be established that the respondent at the commencement of the Code "belongs" to the disabled class. He undoubtedly did belong to the disabled class when the lease was granted, but not at the commencement of the Code, and what is decisive for the operation of the exemption under sub section (3) is the status of Bhumiswami at the commencement of the Code. By section 168(2) the prohibition against a Bhumiswami against transfer by way of a lease of the land comprised in his holding is inoperative, where the Bhumiswami is subject to any one of the disabilities mentioned in cls. (i) to (ix) of sub section That provision is undoubtedly prospective. The Legislature has by sub section (3) of section 185 prohibited the acquisition of occupancy tenancy rights by a tenant of 'a Bhumiswami who was when the Code came into force subject to any of the disabilities mentioned in section 168 (2). It is clear from the terms of sub section (2) of section 168 proviso 2 that a lease made by a Bhumiswami who is subject to a disability remains valid only during the disability and one year after the determination of that disability, by death or otherwise. Therefore a lease created by a Bhumiswanii, even if he was at the date when he created the lease subject to a disability would become invalid on the termination of the disability and a period of one year thereafter. By sub section (4) of section 168 it is provided that a lease granted in pursuance of sub sections (2) or (3) shall be held on such terms and conditions as may be agreed upon between the lessee and the Bhumiswami and it is further (1) ; 426 provided by sub section (5) that on the coming into force of the Code where any land is held on lease from a Bhumiswami who belongs to any one or more of the classes mentioned in sub section (2) such lease shall, on the coming inito force of the Code, be deemed to be a lease granted in. pursuance of sub section (2). The lease granted by a person who on the commencement of the Code acquires the status of a Bhumiswami is therefore deemed to be a lease granted in pursuance of sub section (2) of section 168, if the Bhumiswami "belongs" to the class mentioned in sub (2). Reading section 185(3) with section 168 (2) and section 168 (5) it is clear that to attract exclusion from the operation of section 185 (1) the Bhumiswami must, at the commencement of the Code, be subject to the disability mentioned in sub section (2) of section 168. What is determinative is not the existence of disability at the date of the grant of the lease before the commencement of the Code, but the disability of the Bhumiswami at the commencement of the Code. On the date on which the Code was brought into force, the respondent was not a Bhumiswami belonging to any one or more of the classes mentioned in sub section (2) of section 168, and the exception provided by section 185 (3) will not apply. It is true that the respondent was a minor at the time when the lease was granted by the Court ,of Wards. But he ceased to be a minor in 1951. By virtue of section 185 (1) the tenant, notwithstanding the institution of the suit, became an occupancy tenant of the land when the Code was brought into operation and the mere fact that the respondent was a minor at the date of the lease did not prevent the statutory acquisition of the status of an occupancy tenant by Mangtya under section 185(1). The appeal must therefore be allowed and the decree passed by the High Court set aside. The suit filed by the respondent will :stand dismissed. There will be no order as to costs throughout.

IN-Abs

In 1936, certain ryotwari lands belonging to the estate of the respondent in Madhya Bharat were leased for cultivation to the appellants ' father M by the Court of Wards which was in management of the estate. After the Court of Wards released the estate in 1951 the respondent terminated the tenancy and instituted a suit for a decree in ejectment and for mesne profits. The trial Court passed a decree in the respondent 's favour and this was confirmed in appeal by the District Court as well as by the High Court. It was contended on, behalf of the appellants that on the coming into force of the Madhya Pradesh Land Revenue Code, 1954, M acquired the status of an occupancy tenant as he held land of the nature described by section 185(1). On the other hand it was the respondent 's contention that even though a ryotwari sub lessee might acquire the status of an occupancy tenant; the tenant M was disentitled to that status since at the commencement of the tenancy the respondent, was subject to a disability of the character set out in section 168(2). Accordingly, the case fell within the exception to section 185(1) provided in sub section (3) of that section. By virtue of section 185(1), M became an occupancy tenant of the land when the Code was brought into operation; the appeal must therefore be allowed and the respondent 's suit dismissed. [426 E] For the exemption from the operation of section 185(1) to apply, it had to be established that the respondent at the commencement of the code belonged to the disabled class. Although being a minor he belonged to the disabled class at the time when the lease w ; granted, he did not belong to the disabled class at the commencement of the Code. What is decisive for the operation of the exemption under section 185(3) read with section 168(2) is the status at the commencement of the code. [425 E] Rao Nihalkaran vs Ramgopal ; , referred to.

Appeal No. 365 of 1965. Appeal by special leave from the Judgment and order dated February 18, 1963 of the Madhya Pradesh High Court (Indore F Bench) in Second Appeals Nos. 68 and 70 of 1961. C. B. Agarwala, B. Dutta, J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the appellant. K. B. Chaudhry, for the respondent. B. R. L. lyengar, G. L. Sanghi and A. G. Ratnaparkhi for Intervener No. 1. J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for interveiier No. 2. The Judgment of the Court was delivered by Shah, J. Ramgopal respondent in this appeal was a tenant F of certain Inam land situate in village Nanda Panth in Indore Tahsil. the appellant Rao Nihalkaran holder of the Inam 429 served a notice terminating the tenancy on the ground that he needed the land for personal cultivation, and commenced an action in the Court of the civil Judge, Class 11, Indore, on July 21, 1950, against Ramgopal for a decree in ejectment. The Trial Court decreed the suit. During the pendency of the appeal to the District Court, Indore, by Ramgopal against the decree, Madhya Bharat Muafi & Inam Tenants and Sub tenants Protection Act 32 of 1954 was enacted, and pursuant to the provisions thereof hearing of the appeal remained stayed till 1960. in the mean time the Madhya Pradesh Land Revenue Code (Act 20 of 1959) was brought into force. Ramgopal urged before the District Court that he had by virtue of section 185 of the Code acquired rights of an occupancy tenant and the appellant 's right to obtain an order in ejectment on the ground set up must be refused. The District Judge accepted the contention of the respondent and allowed the appeal. Against the decree passed by the District Court, Indore, the appellant appealed to the High Court of Madhya Pradesh, Indore Bench. Following their judgment in Rao Nihalkaran vs Ramchandra and Others (1), the High Court confirmed the decree of. the District Judge, and dismissed the appeal. With special leave granted by this Court, this appeal has been preferred. The dispute in the appeal centres round the meaning of the expression "tenant" used in section 185(i) cl. (ii) (a) of the Madhya Pradesh Land Revenue Code. The material part of the clause reads: "Every person who at the coming into force of this Code holds (i) (ii) in the Madhya Bharat region (a) any Inam land as a tenant, or as a sub tenant or as an ordinary tenant, shall be called an occupancy tenant, and shall have all the rights and be subject to all the liabilities conferred or imposed upon an occupancy tenant by or under this Code. " It is common ground that the tenancy of ran occupancy tenant may be determined under section 193 of the Madhya Pradesh Land Revenue Code by an order of the Sub Divisional Officer on the grounds specified in that section, and personal requirement of the land lord is not one of such grounds. But counsel, for the appellant urged that the rights of an occupancy tenant arise in favour of a person under section 185 (1) cl. (ii) (a) only if there is between him and the claimant to the land a subsisting relation under which he holds land (1) L. P. A. No. 14 of 1961 decided on Sept. 24, 1962. 430 as a tenant at the date when the Code came into force. The Code has, it is said, no retrospective operation, and the person who under the law in force before the commencement of the Code had ceased to be a tenant because, of termination of the contract between, him and the landlord is not invested with the rights of an occupancy tenant under section 185 (1) (ii) (a). In the alternative it is contended that by virtue of section 261 and section 262(2), operation of section 185 is expressly excluded, when a person against whom proceedings have been instituted prior to the commencement of the Code for ' a decree in ejectment in enforcement of a right acquired under the law then in force, claims the states of an occupancy tenant. The District Court held that the expression "tenant" within the meaning of section 185 (1)(ii)(a) of the Code includes a person whose tenancy stood determined before the commencement of the Code, and with that view the High Court agreed. Counsel for the appellant complained that in reaching this conclusion, the Courts below ignored the definition in section 2(y) of the Code that the expression "tenant" means a person holding land from a Bhumiswami as an occupancy tenant under Ch. XIV, and said that a person qua whom the contractual relation under which he was inducted as a tenant was determied prior to the commencement of the Code is not a tenant within the meaning of section 185(i)(ii)(a). To appreciate this argument it is necessary to examine the relevant legislative history culminating in the enactment of the Code in 1959. In 1948 twenty Indian States including the States of Gwalior, Indore and Malwa formed themselves into a Union. Five more States were later incorporated into this Union. Under the Constitution, Madhya Bharat was formed as a Part B State out of the territories of the United States of Gwalior, Indore & Malwa and certain enclaves merged therein and the Chief Commissioner 's Province of Panth Piploda. Under the a new State of Madhya Pradesh was formed as from November 1, 1956 consisting of the Part B State of Madhya Bharat, parts of the former State of 'Madhya Pradesh, the territories of the States of Bhopal and Vindhya Pradesh and Sironj sub division of Kotah in the former State of Rajasthan. Apparently the diverse land tenures prevalent in the covenanting States and the laws governing them remained in operation in their respective territories, even after the formation if the Part B State of Madhya Bharat. Attempts were made to evolve a uniform pattern of revenue administration in conformity with the directive principles of State Policy in the Constitution to bring the tiller of the soil into direct relation with the State. The Legislature of the Part B State of Madhya Bharat enacted Act 66 of 1950 to consolidate and declare the law relating to revenue administration in the United States of Gwalior, Indore and Malwa and land revenue, land tenure 431 and other matters connected with the land in the Ryotwari tracts or villages of the United States. Section 54 of Act 66 of 1950 defined "Pakka tenant", "ordinary tenant", "sub tenant" and prescribed the duties of a tenant by section 55. By section 73 a "Pakka tenant" was prohibited from sub letting for any period any land comprised in his holding, unless he belonged to any of the classes mentioned in section 74. By section 74 certain classes of disabled persons were permitted to sub let the whole or any part of their holding. But such a sub lease made in pursuance of the provisions of the Act was to cease to be in force after one year of the determination of the disability by death or otherwise. By section 75 it was provided that a sub lease of the whole or any part of the holding of a "Pakka tenant" effected "properly and legally" prior to the commencement of the Act was to terminate after the expiry of the period of sub lease or expiry of four years after the commencement of the Act, whichever period was less. By section 76 a sub lessee failing to hand over pos session after expiry of his right was to be deemed a tresspasser and liable to ejectment in accordance with the provisions of the Act. The Legislature with the object of improving the conditions of agriculturists and with a view to remove the middleman between the State and the tiller of the soil also enacted the Zamindari Abolition Act and the Abolition of Jagirs Act. Another statute which has a bearing on the dispute in this appeal the Madhya Bharat Muafi and Inam Tenants and Sub tenants Protection Act 32 of 1954 was enacted to provide, for the duration of the Act, for the protection of tenants or ordinary tenants and sub tenants of Muafidars, Inamdars and Istumurardars in Madhya Bharat against eviction by such Muafidars or Inamdars of their tenants, as the case may be, and for stay of suits and other proceedings relating to such eviction. By section 2(ii) the terms "tenant", "sub tenant", "ordinary tenant" and "rent" were given the same meaning as was assigned to them in sub sections (1) (7), (8) & (9) of section 54 of Act 66 of 1950. By section 1 a restriction was placed, upon eviction of any tenant, sub tenant. or ordinary tenant of Inam land during the continuance Act and it was declared that the tenant, sub tenant or ordinary tenant shall not pay rent higher than what he was 'paying in the agricultural year ending June 30, 1948. By section 4 all suits, proceedings in execution of decrees or orders and other proceedings for the eviction of Inam land tenants, sub tenants or ordinary tenants from Inam lands, or in which a claim for such eviction was involved, pending in the Court at the commencement of the Act or which may be instituted after such commencement, were to be stayed subject to the provisions contained in the Act. By sub section (II) of section 4 it was provided that if the Inamdar, Muafidar or Istumurardar had taken possession of the land illegally from a tenant, sub tenant or an ordinary tenant after August 15, 1947 such a tenant, sub tenant or an ordinary 432 tenant may apply to the Tahsildar to be restored to possession of such land and on such application the Tahsildar shall cause the land to be returned to such tenant, sub tenant or ordinary tenant from the Inamdar, Muafidar, or Istumurardar, as the ease may be. By section 6 it was provided that all suits and proceedings shall, after the expiration of the Act, be proceeded with subject to the provisions of any law which may then be in force from the stage which had been reached when the suit or proceeding was stayed. Act 32 of 1954 was intended initially to remain in force for a period of two years, but its life was extended by later enactments. Protection against eviction during the continuance of Act 32 of 1954 by enforcement of a decree passed in a suit or a proceeding either before or after the date on which the Act was brought into force was conferred upon tenants, sub tenants and ordinary tenants. It is clear from the terms of sections 3 & 4 of the Act that the Legislature did not seek to grant protection only to persons between whom and the claimants for protection there was a subsisting contractual relation. A person who was inducted into the land as a tenant, sub tenant or ordinary tenant and who continued to hold the land at the commencement of the Act was entitled to protection, notwithstanding that under the law in force prior to the Commencement of the Act the contractual relation was determined. The Madhya Pradesh Land Revenue Code was enacted in 1959. By section 157 of the Code it was declared that there shall be only one class of tenure holders of lands held from the State to be known as Bhumiswami, and by section 158 it was provided that every person, who at the time of coming into force of the Code, belongs to any of the four classes specified shall be called a Bhumiswami, and shall have all the rights and be subject to all the liabilities conferred or imposed upon a Bhumiswami by or under the Code, and among the persons specified is "every person in respect of land held by him in the Madhya Bharat region as a Pakka tenant or as a Muafidar, Inamdar or Concessional holder as defined in the Madhya Bharat Land Revenue and Tenancy Act Samvat 2007". The argument of counsel for the appellant is that the respondent not being a tenant at the commencement of the Code could not acquire the rights of an occupancy tenant, and that any proceeding instituted against the tenant must be heard and disposed of according to the law in force prior to the commencement of the Code. The definition of the expression "tenant" in section 2(y) postulates a subsisting tenancy, but that definition may be resorted to for interpreting section 185 (1) only if the context or the subject matter of the section does not suggest a different meaning. A tenant is by the definition a person who holds land as an occupancy tenant from a Bhurmiswami: but the status of a Bhumiswami is recognized 433 for the first time by the Code, and an occupancy tenant from a Bhumiswami would mean only a person belonging to that class who acquires rights of occupancy tenant after the Code comes into force. The position of a tenant prior to the date on which the Code was brought into force does not appear to have been dealt with in this definition. The definition which is specially devised for the purpose of the Act throws no light on the nature of the right which invests. the holder of land with the status of an occupancy tenant at the commencement of the Code. In the context in which the expression "tenant" occurs in section 185 the defi nition could not be intended to apply in determining the conditions which invest upon a holder of land the status of an occupancy tenant. If the expression "tenant" in section 185 (1) be released from the artificial definition as given in section 2(y), in view of the context in which it occurs, the expression "tenant" in section 185(1)(ii)(a), having regard to the object of the enactment would be ascribed the meaning that expression had in Act 32 of 1954. This view is strengthened by certain indications found in cl. (ii)(b) if section 185 (1) which provides that in the Madhya Bharat region every person who at the commencement of the Code holds any land as ryotwari sub lessee as defined in the Madhya Bharat Ryotwari Sub Lessee Protection Act 29 of 1955 shall be called an occupancy tenant. Unless a ryotwari sub lessee as defined in Act 29 of 1955 included a sub lessee whose tenure was terminated before the commencement of the Code, that clause would not apply to any concrete case. The Court would not unless compelled by unambiguous language impute to the Legislature an intention to enact a provision which was ineffective. By section 73 of Act 66 of 1950 a Pakka tenant could not sub let for any period any land comprised in his holding except in the cases provided for in section 74,, and by section 75 it was provided that all sub leases in force at the commencement of the Act were to terminate either on the expiry of the period of sub lease or expiry of four years whichever was earlier. All sub leases except those which were covered by section 74 i.e. sub leases granted by disabled persons before the commencement of Act 66 of 1950 stood terminated some time before the end of 1954 and by the express terms of section 76 the sublessees were to be deemed trespassers and liable to ejectment in accordance with the provisions of the Act. Notwithstanding these provisions, by another Act 29 of 1955, scheme of which was substantially the same as the scheme of Act 32 of 1954, ejectment of ryotwari sub lessees other than a sub lessee under section 74 of Act 66 of 1950 was suspended for the duration of the Act, and all suits and proceedings in execution for ejectment were to be stayed. By section 2(b) of Act 29 of 1955 "Ryotwari sub lessee" was defined as meaning "a person to whom a Pakka tenant of any ryotwari land has sub let on sub lease any part of his ryotwari land". By 434 section 3 a ban was imposed against ejectment of all ryotwari sub lessees other than sub lessees under section 74 of Act 66 of 1950. By section 4 provision was made for ejectment of ryotwari sub lessees and provisions similar to sections 5 & 6 of Act 32 of 1954 were made in this Act also. A ban was therefore imposed against eviction of ryotwari sub lessees and proceedings for eviction against them were stayed by Act 29 of 1955. Therefore ryotwari sub lessees who had ceased by determination of the sub leases to have right in the lands were still protected from eviction during the pendency of Act 29 of 1955, and by section 185(1)(ii)(b) of the Code upon the ryotwari sub lessees the rights of occupancy tenants were conferred. If the expression "ryotwari sub lessee" were to be construed to mean a ryotwari sub lessee between whom and his lessor there was a subsisting contract of sub letting, the protection for all purposes would be ineffective, for, by express statutory provision read with section 74 of Act 66 of 1950 all ryotwari sub leases stood determined before Act 29 of 1955 was brought into force, and by virtue of section 185 (3) of the code a holder of land from a disabled Bhumiswami belonging to a class mentioned in section 168(2) of the Code does not qualify for the status of an occupancy tenant. It may be noticed that in the class of disabled persons in sub s (2) of section 168 of the Code are included all persons who are declared disabled by sub section (2) of section 74 of Act 66 of 1950. If ryotwari sub lessees of disabled persons mentioned in subs. (2) of section 74 of Act 66 of 1950 cannot claim rights of occupancy tenants by virtue of section 185 (3) of the Code and other ryotwari sublessees cannot qualify for those rights because of the determination of their interest as sub lessees by virtue of sections 75 & 76 of Act 66 of 1950 section 185, (1)(ii)(b) of the Code will not apply to any class of ryotwari sub lessees. This is a strong ground in support of the view taken by the High Court that the expression "ryotwari sublessee" in section 185 (1)(ii)(b) of the Code include persons whose contractual relation has been det ermined either under the terms of contract of sub lease or statutorily under Act 66 of 1950. If that be the true meaning of the expression "ryotwari sub lessee ' there would be no reason to think that the Legislature sought to make a distinction between tenants, sub tenants and ordinary tenants of Inam land in section 185(1)(ii)(a) of the Code and ryotwari sub lessees of other lands in section 185(1)(ii)(b). A member belonging, to those classes would therefore be included in the protection provided at some time prior to the date on which the Code was brought into force, if he was in possession of land as a tenant, sub tenant or ordinary tenant and he continued to hold the land till the date of commencement of the Code. The alternative argument that section 185 of the Code has Po application in respect of pending proceedings for ejectment is without substance. By section 261 of the Code a large number of 435 statutes specified in Sch. II were repealed. By section 261 certain enactments specified in Sch. 11 including the Madhya Bharat Land Revenue and Tenancy Act 66 of 1950 and the Madhya Bharat Muafi and Inam Tenants and Sub tenants Protection Act 32 of 1954 were wholly repealed. But it is expressly provided in section 261 that the repeat shall not affect(a) the previous operation of any law so repealed or anything duly done or suffered thereunder; or (b) any right, privilege, obligation or liability acquired, accrued or incurred under any law so repealed or (c ) any penalty, forfeiture or punishment incurred in respect of any offence committed against any law so repealed; or (d) any invest igation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid; and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the Act had not been passed. Section 262 which deals with transitory provisions by sub section (2) provides: "Any case pending in Civil Court at the coming into force of this Code, which would under this Code be exclusively triable by a Revenue Court, shall be disposed of by such Civil Court according to the law in force prior to the commencement of this Code." Relying upon these two provisions it was urged that persons who were tenants, sub tenants or ordinary tenants of Inam land prior to the date on which the Code was brought into for , whose rights have consistently with the law in force before that date been terminated, cannot set up rights of occupancy tenants acquired under section 185, for, within the meaning of section 261 the right to eject a tenant has accrued to the landlord before the commencement of the Code and a proceeding for enforcement of that right may be continued and the right enforced as if the Code had not been passed, and the Court in which the proceeding is pending would be bound to dispose of the proceeding according to the law in force prior to the commencement of the Code. The argument is misconceived. Act 66 of 1950 did not deal With the right of a landlord to evict a tenant from land. Act 66 of 1950 was expressly repealed by the Code, but since the right to evict a tenant was governed G by the general law of landlord and 'tenant the proviso to section 261 had no operation. In terms the proviso to section 261 protects a right, privilege, obligation, or liability which had been acquired, accrued or incurred under the law repealed by the Code. The right to obtain possession not having been acquired under the law repealed, a legal proceeding pending at the date of the commencement of the Code will be disposed of according to the law "then in force '. That was expressly provided by section 6 of Act 32 of 1954 and by section 6 of Act 29 of 1955. If at the date of the trial the tenant had acquired the right of an occupancy tenant, he could not be evicted 436 otherwise than in the manner and for reasons mentioned in section 19 3 of the Code. Personal requirement for cultivation of land is not, however, a ground on which claim, since the commencement of the Code, for ejectment may be maintained. Section 262(2) is a transitory provision which enables a Civil Court to hear and dispose of a suit notwithstanding that under the Code such a proceeding would be triable by a Revenue Court. It is expressly declared that such a proceeding shall be disposed of according to the law in force prior to the commencement of the Code. That however does not imply that the contract between the parties which was sought to be enforced unaffected by the statutory declaration of occupancy tenants under section 185 in favour of the tenant may be enforced. In our view sub section (2) is only procedural: it provides that a Civil Court will continue to have jurisdiction to dispose of a civil suit pending before it at the commencement of the Code, which if it had been instituted after the Code was passed, would have been tried by a Revenue Court, and in the disposal of such a suit the Civil Court will be governed by the procedural law applicable thereto prior to the commencement of the Code. There is nothing in section 262(2) which seeks to nullify the statutory conferment of occupancy rights upon persons in the position of tenants, sub tenants or ordinary tenants against whom proceedings were taken at the date when the Code was brought into force. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellant (holder of an inam in Madhya Pradesh) served a notice an his tenant, the respondent, terminating to tenancy on the ground that he wanted the land for personal cultivation and filed a suit for ejectment. The trial court decreed the suit. During the pendency of the appeal in the District Court, article 32 of 1954 was enacted, and pursuant to its provisions the hearing of the appeal was stayed. After the Madhya Pradesh Land Revenue Code came into force in 1959, the District Court held that by virtue of section 185 of that Code the respondent acquired the rights, of an occupancy tenant and dismissed the suit. The High Court confirmed the judgment of the District Court. In appeal to this Court, it was contended that : (i) the rights of an occupancy tenant arise in favour of a personl under section 185(1) (i) (a) only if there was between him and the landlord a subsisting tenancy at the date when the Code came into force and since under the law in force before the commencement of the Code, the respondent had ceased to be a tenant because of the notice terminating the contract of tenancy the respondent was not invested with the rights of an occupany tenant; and (ii) bi virtue of sections 261 and 262(2), the operation of section 185 is expressly excluded when a person, against whom ejectment proceedings have been instituted prior to the commencement of the Code in enforcement of a right then acquired, claims the status of an occupancy tenant. HELD : (i) The respondent acquired the right of an occupancy tenant under the Code, because the expression "tenant" in section 185 (1) (ii) (a) includes a person whose tenancy was terminated before the commencement of the Code. The definition of the expression "tenant" in the Code postulates a subsisting tenancy, but the position of a tenant prior to the date on which the Code was brought into force is not dealt with in the definition. In the context in which the expression "tenant" occurs in section 185(1), that definition could not be intended to apply in deter ining the conditions which invest a holder of land with the status of an occupancy tenant at the commencement of, the Code. Therefore having regard to the object of the enactment the expression should be ascribed the meaning it 'has in Act 32 of 1954. Under sections 3 & 4 of that Act a person who was inducted into the land as a tenant and who continued 'to hold the land at the commencement of the Act was entitled to protection against eviction and continue as tenant, notwithstanding that under the law in force prior to the commencement of the Act. the contractual relationship of landlord and tenant was determined. [432 D; 432 14 433 C] 428 There is no reason to think that the Legislature sought to make a A distinction between tenants of Inam land in section 185 (1) (ii) (a) and ryotwari sub lessees of other lands in section 185(1)(ii)(b). Therefore, if the expression "ryotwari sub lessee ' in section 185(1)(ii)(b) includes a sub lessee whose tenaure was terminated before the commencement of the Code, a tenant of inam land, whose tenancy has been terminated would also be included in the protection, provided at some time prior to the date on which the Code was brought into force, he was in possession of the land as a tenant, and he continued to hold the land till the date of the commencement of the Code. [434 E H] (ii) The provisions of the Code appeal to tenants in proceedings for ejectment pending at the commencement of the Code. The proviso to section 261 protects a right which had been acquired under a law repeated by the Code and the right could be enforced as if the code had not been passed. But the right to evict a tenant was governed by the general law of landlord and tenant and was not acquired under any repealed law. The proviso had no operation and a legal proceeding pending at the date of the commencement of the Code will be disposed of according to the law enacted in the Code. Therefore, the tenant could not ' be evicted otherwise than in the manner and for reasons mentioned in a. 193 of the Code but, personal requirement for cultivation of land is not a ground on which a claim for ejectment could be maintained. [435 G436 A] Section 262(2) is only procedural it provides that a civil court will continue to have jurisdiction to dispose of a civil suit pending before it at the commencement of the Code, Which, if it had been instituted after the Code was passed would have been tried by a revenue court; and in the disposal of such a suit, the civil court will be governed by the procedural law applicable there to prior to the commencement of the Code. It does not nullify the statutory conferment of occupancy right upon persons in the position of tenants against whom proceedings were taken at the date when the Code was brought into force. [436 B D]

Appeal No. 436 of 1965. Appeal from the judgment and order dated November 17, 1964 of the Calcutta High Court in Civil Rule No. 849(W) of 1963. A. D. Mukherjee, Arun Dutta, section P. Mukhopadhya, M. Raja gopalan, D. N. Mukherjee, K. Rajendra Chaudhury and K. R. Chaudhury, for the appellants. C. K. Daphtary, Attorney General, B. Sen and B. R. G. K. Achar, for respondents nos. 1 and 2. B. Sen, section C. Bose and P. K. Bose, for respondents nos. 3 and 4. The Judgment of the Court was delivered by Gajendragadkar, C.J. The writ petition from which this appeal arises was filed by the six appellants who reside within the limits of Thana Jalpaiguri in the district of Jalpaiguri. To their petition, they had impleaded as opponents the four respondents, the Union of India, the Secretary of External Affairs, Government of India, the State of West Bengal, and the Collector of Jalpaiguri. 'Me substance of the prayer made by the appellants in their writ petition was that the respondents were attempting or taking steps to transfer a portion of Berubari Union No. 12 and the village of 433 Chilahati to Pakistan and they urged that the said attempted transfer was illegal. That is why the writ petition prayed that appropriate writs or directions should be issued restraining the respondents from taking any action in pursuance of their intention to make the said transfer. Appellants 1 and 2 are the original inhabitants of villages Senpara and Deuniapara respectively which are within the limits of Berubari Union No. 12. They own ancestral homes and cultivated lands in the said villages, and they live in the homesteads. Appellants Nos. 3 and 4 originally resided in villages in Thana Boda adjoining Thana Jalpaiguri; but when Thana Boda was transferred to Pakistan as a result of the partition in 1947, they came over to the villages of Senpara and Gouranga bazar respectively within the limits of Berubari Union No. 12; since then, they have acquired lands there and built their homesteads in which they live. Appellants Nos. 5 and 6 are the inhabitants of village Chilahati, and according to them, this village is situated in Thana Jalpaiguri. In this village, these two appellants have their ancestral homes and cultivated lands. It is a matter of common knowledge that on September 10, 1956, an agreement was reached between the Prime Ministers of India and Pakistan with a view to settle some of the disputes and problems pending between the two countries. This agreement was set out in the note jointly recorded by the Commonwealth Secretary, Ministry of External Affairs, Government of India, and the Foreign Secretary, Ministry of Foreign Affairs and Commonwealth Relations, Government of Pakistan. After this agreement was entered into, the President of India referred three questions to this Court for consideration and report thereon, under article 143(1) of the Constitution, because he took the view that the said questions had arisen and were of such nature and of such importance that it was expedient that the opinion of the Supreme Court of India should be obtained thereon.(1) These three questions were thus formulated : "(1) is any legislative action necessary for the implementation of the Agreement relating to Berubari Union ? (2) If so, is a law of Parliament relatable to Article 3 of the Constitution sufficient for the purpose or is an amendment of the Constitution in accordance with Article 368 of the Constitution necessary, in addition or in the alternative? (1) Special Reference No I of 1959. In re: The Berubari Union and Exchange of Enclaves (1) at pp. 256, 295 4. 434 (3) Is a law of Parliament relatable to Article 3 of the Constitution sufficient for implementation of the Agreement relating to Exchange of Enclaves or is an amendment of the Constitution in accordance with Article 368 of the Constitution necessary for the purpose, in addition or in the alternative ?" On the above Reference, this Court rendered the following ,answers : Q. (I ) Yes. Q. (2) (a) A law of Parliament relatable to article 3 of the Constitution would be incompetent; (b) A law of Parliament relatable to article 368 of the Constitution is competent and necessary; (c) A law of Parliament relatable to both article 368 and article 3 would be necessary only if Parliament chooses first to pass a law amending article 3 as indicated above; in that case, Parliament may have to pass t law on those lines under article 368 and then follow it up with a law relatable to the amended article 3 to implement the Agreement. Q. (3) Same as answers (a), (b) and (c) to Question 2. As a result of the opinion thus rendered, Parliament passed the Constitution (Ninth Amendment) Act, 1960 which came into operation on December 28, 1960. Under this amendment, "appointed day" means such date as the Central Government may, by notification in the Official Gazette, appoint as the date for the transfer of territories to Pakistan in pursuance of the 'Indo Pakistan Agreements ' which means the Agreements dated the 10th September, 1958, the 23rd October, 1959, and the 11th January, 1960 entered into between the Government of India and Pakistan. The relevant extracts. from the said Agreements have been set out in the Second Schedule to the Ninth Amendment Act. The material portion of the said Schedule reads as follows "(3) Berubari Union No. 12 This will be so divided as to give half the area to Pakistan, the other half adjacent to India being retained by India. The division of Berubari Union No. 12 will be horizontal, starting from the north east corner of Debi ganj Thana. 435 The division should be made in such a manner that the Cooch Behar enclaves between Pachagar thana of East Pakistan and Berubari Union No. 12 of Jalpaiguri thana of West Bengal will remain connected at present with Indian territory and will remain with India. The Cooch Behar enclaves lower down between Boda thana of East Pakistan and Berubari Union No. 12 will be exchanged along with the general exchange of enclaves and will go to Pakistan. " The appellants alleged that it had come to their knowledge that about a month before the date of their petition, officers of the two Governments had gone to the locality to make demarcation by holding a survey and that the respondents intended to effect a partition of Berubari Union No. 12 with a view to transfer the southern part of the said Union to Pakistan. They had also come to know that a similar attempt to transfer village Chilahati was being made. The appellants also alleged that the language of the Amendment Act in question in so far as it relates to Beru bari Union No. 12 is involved and confused and is incapable of implementation. In the alternative, it is urged that if the division of Berubari Union No. 12 is made as directed by the said amendment, no portion of Berubari Union No. 12 would fall to the south of the horizontal line starting from the northeast comer of Debiganj Thana, and so, no portion of the said Union can be transferred to Pakistan. In regard to the village of Chilahati, the appellants ' case was that the said village was not covered either by the Indo Pakistan Agreements or by the Ninth Amendment Act. According to them, this village was a part of West Bengal and it was not competent to the respondents to transfer it to Pakistan without adopting the course indicated in that behalf by the opinion of this Court on the earlier Reference. That is how the appellants claimed the issue of a writ of in the nature of mandamus commanding the respondents to forbear from proceeding any further with the survey and demarcation of the area of Berubari Union No. 12 and Chilahati and from giving effect to their intentions to transfer a part of Berubari Union No. 12 and Chilahati to Pakistan. That is the substance of the petition filed by the appellants before the Calcutta High Court on December 4. 1963. The respondents disputed the appellants right to obtain any writ or direction in the nature of mandamus as claimed by them. They urged that the relevant provisions of the Ninth Amendment Act were neither vague nor confused, and were capable of imple 436 mentation. It was alleged that the assumption made by the appellants that a strict horizontal line had to be drawn from the north cast comer of Debiganj Thana under the provisions of the said Amendment Act, was not valid; and they urged that the said Amendment Act had provided for the partition of Berubari Union No. 12 half and half in the manner indicated by it. The respondents were, therefore, justified in giving effect to the material provisions of the said Amendment Act. In regard to the village of Chilahati, the respondents contended that the said village formed part of Debiganj Thana and had been assigned to the share of Pakistan by the Radcliffe Award. All that the respondents intended to do was to transfer to Pakistan a small area of about 512 acres of the said village which had not been delivered over to Pakistan on the earlier occasion when partition was made. That being so, the intended transfer of the said village was fully legal and valid and did not contravene any provisions of the, Constitution. On these pleadings, the parties led evidence in the form of maps, and the case was argued elaborately before the learned trial Judge. The trial Judge has found against the appellants on all the important issues. He has held that the map Ext. A 1 on which the appellants substantially based their case, was really not admissible under section 36 of the Indian Evidence Act. Alternatively, he found that the map was not reliable and could not be legitimately utilised for the purpose of determining the merits of the appellants ' contention. The learned Judge examined the maps produced by the respondents and came to the conclusion that they were admissible and reliable. On examining these maps, the learned Judge held that Berubari Union No. 12 could be divided half and half as required by the material provisions of the Amendment Act and that the appellants were not justified in contending that the said provision was not capable of implementation. In that behalf, the learned Judge placed considerable reliance on the congregated map Ext. The learned Judge has rejected the contention of the appellants that if a fair partition of Berubari Union No. 12 is made as directed by the Amendment Act, no part of Berubari Union No. 12 would fall to the south and as such, no part of the said Union could be transferred to Pakistan. He was not impressed by the appellants ' argument that the division of Berubari Union No. 12 had to be made by a strict horizontal line; in his opinion, the north east comer of Debiganj Thana mentioned in the relevant provision was not a geometrical point, but it gives some scope for shifting the point of commencement to suit the process of division, when the provision says that the division shall be made horizontal, it only means that it was not to 437 be vertical; it had to be according to the latitude and not according to the longitude. He observed that the problem presented by the relevant provisions of the Amendment Act was not intended to be solved as a mathematical problem, and that when the appellants contended that the division had to be made by a strict mathematical line, they ignored the fact that the said provision made no reference to any tangential planes or geometrical lines. On these findings, the learned Judge rejected the appellants ' prayer for the issue of a writ in respect of the proposed transfer of Berubari Union No. 12. In regard to the appellants ' case about the village of Chilahati, the learned Judge held that Chilahati was a part of Debiganj . Thana and had been allotted to the share of Pakistan under the Radcliffe Award. The theory set up by the appellants that the village of Chilahati which was being transferred to Pakistan was different from Chilahati which was a part of the Debiganj Thana, was rejected by the learned Judge; and he found that a small area of 512 acres appertaining to the said village had not been delivered to Pakistan at the time of the partition; and so, when the respondents were attempting to transfer that area to Pakistan, it was merely intended to give to Pakistan what really belonged to her; the said area was not, in law, a part of West Bengal, and no question in relation to the constitutional validity of the said proposed transfer can, therefore, arise. The plea of adverse possession which was made by the appellants alternatively in respect of Chilahati was rejected by the learned Judge. In the result, the appellants ' prayer for the issue of a writ or order in the nature of mandamus in respect of the said proposed transfer of Chilahati was also disallowed. It appears to have been urged before the learned Judge that in order to make the transfer of a part of Berubari Union No. 1.2 to Pakistan, it was necessary to make a law relating to article 3 of the Constitution. The learned Judge held that this plea had been rejected by this Court in the opinion rendered by it on the earlier Reference; and so, an attempt made by the respondents to implement the material provisions of the Ninth Amendment Act was fully valid and justified. That is how the writ petition filed by the appellants came to be dismissed. The appellants then moved the learned Judge for a certificate, to prefer an appeal to this Court; and after the learned Judge was pleased to grant them the said certificate, they have come to this Court by their present appeal. 438 Before proceeding to deal with the points which have been raided before us by Mr. Mukherjee on behalf of the appellants, it is necessary to advert to the opinion expressed by this Court in Re The Berubari Union and Exchange of Enclaves(1) with a view to correct an error which has crept into the opinion through inadvertence. On that occasion, it was urged on behalf of the Union of India that if any legislative action is held to be necessary for the implementation of the Indo Pakistan Agreement, a law of Parliament relation to article 3 of the Constitution would be sufficient for the purpose and that it would not be necessary to take any action under article 368. This argument was rejected. In dealing with this contention, it was observed by this Court that. the power to acquire new territory and the power to cede a part ,of the national territory were outside the scope of article 3(c) of the Constitution. This Court then took the view that both the powers were the essential attributes of sovereignty and vested in India as an independent Sovereign Republic. While discussing the significance of the several clauses of article 3 in that behalf, it ,seems to have been assumed that the Union territories were outside the purview of the, said provisions. In other words, the opinion proceeded on the basis that the word "State" used in all the said clauses of article 3 did not include the Union territories specified in the First Schedule. Apparently, this assumption was based on the distinction made between the two categories of terri tories by article 1(3). In doing so, however, the relevant provisions of the General Clauses Act (Act X of 1897) were inadvertently not taken into account. Under section 3(58)(b) of the said Act, "State" as respects any period after the commencement of the 'Constitution (Seventh Amendment) Act, 1956, shall mean a 'State as specified in the First Schedule to the Constitution and shall include a Union territory. This provision of the General Clauses Act has to be taken into account in interpreting the word "State" in the respective clauses of article 3, because article 367(1) specifically provides that unless the context otherwise requires, the , shall, subject to any adaptations and modifications that may be made therein under article 372, apply for the interpretation of this Constitution as it applies for 'the interpretation of an Act of the Legislature of the Dominion of India. Therefore, the assumption made in the opinion that article 3 in its several clauses does not include the Union territory is misconceived and to that extent, the incidental reason given in support of the main conclusion is not justified. How ever, the conclusion itself was based primarily on the view that (1) 439 the power to cede a part of the national territory and the power to acquire additional territory were the inherent attributes of sovereignty; and if any part of the national territory was intended to be ceded, a law relating to article 3 alone would not be enough unless appropriate action was taken by the Indian Parliament under article 368. It is common ground that the Ninth Constitution Amendment Act has been passed by Parliament in the manner indicated in the opinion rendered by this Court on the said Reference. Reverting then to the points urged before us by Mr. Mukerjee, the first question which falls to be considered is whether the learned trial Judge was in error in holding that the map Ext. A 1 on which the appellants had rested their case was neither relevant nor reliable. There is no doubt that the sole basis on which the appellants challenged the validity of the intended transfer of a part of Berubari Union No. 12 was that the division had to be made by a strict horizontal line beginning with the north east corner of the Debiganj Thana and drawn east west, and that if such a division is made, no part of Berubari Union No. 12 could go to Pakistan. It is common ground that the intention of the relevant provision is that after Berubari Union No. 12 is divided, its northern portion should remain with India and the southern portion should go to Pakistan. The appellants, urged that if a horizontal line is drawn from the north east comer of Debiganj Thana from east to west, no part of Berubari Union No. 12 falls to the south of the horizontal line, and therefore, it is impossible to divide Berubari Union No. 12 into two halves by the process intended by the Amendment Act. Now, the 'wall map ' Ext. A 1 purports to have been prepared by Shashibhushan Chatterjee, F.R.G.S. & Sons, of the District of Jalpaiguri in the scale of 1"=3.8 miles. The learned Judge has pointed out that on the record, there is no material whatever to vouch for the accuracy of the map. It was not stated who Shashibhushan Chatterjee was, and it is plain that the map is not in official map. The sources on which Mr. Chatterjee relied in preparing the map are not indicated; on the other hand, there are intrinsic indications of its shortcomings. The learned Judge has referred to these shortcomings in the course of his judgment. When the questions about the admissibility of this map and its validity were argued before the learned Judge, an attempt was made by the appellants to support their case by filing further affidavit made by Mr. Sunil Gupta, the 'tadbirkar ' of the appellants. In this affi davit, it was alleged that the said map was one of the numerous 440 maps published by Mr. Shashibhushan Chatterjee and generally offered for public sale. This latter statement was made obviously to meet the requirements of section 36 of the Evidence Act. Ms statement has been verified by Mr. Gupta as "true to his knowledge". but no statement was made to show bow the deponent came to have personal knowledge in the matter. The map bears no date and no evidence is adduced to show when it was prepared. The learned Judge, therefore, rejected the statement made by M. Gupta. The question about the admissibility of the map has to be considered in the light of section 36 of the Evidence Act. The said section provides that : "Statements of facts in issue or relevant facts, made in published maps or charts generally offered for public sale, or in maps or places made under the authority of the Central Government or any State Government, as to matters usually represented or stated in such maps, charts or places, are themselves relevant facts. " The map in question clearly does not fall under the latter category of maps; and so, before it is treated as relevant, it must be shown that it was generally offered for public sale. Since the learned Judge has rejected the statement of Mr. Gupta on this point, this requirement is not satisfied. We see no reason why the view taken by the learned Judge in regard to the credibility of Mr. Gupta 's affidavit should be reversed. So, it follows that without proof of the fact that the maps of the kind produced by the appellants were Generally offered for public sale, Ext. A 1 would be irrelevant. It is true that section 83 of the Evidence Act provides that the Court shall presume that maps or plans purporting to be made by the authority of the Central Government or any State government were so made, and are accurate; but maps or plans made for ,he purposes of any cause must be proved to be accurate. The presumption of accuracy can thus be drawn only in favour of maps which satisfy the requirements prescribed by the first part of section 83. A 1 obviously does not fall under the category of the said maps, and so, there can be no question of drawing any presumption in favour of the accuracy of the said map. In fact, as we have already indicated, the learned Judge has given very good reasons for showing that the map does not appear to be accurate. Therefore, even if the map is held to be relevant, its accuracy is not at all established; that is the conclusion of the 441 learned Judge and Mr. Mukerjee has given us no satisfactory reasons for differing from the said conclusion. Mr. Mukerjee then contended that in the present case it should be held that on the allegations made by the appellants and on the evidence such as they have produced, the onus to prove that the relevant portion of the Amendment Act was capable of implementation, had shifted to the respondents. lie argues that the location of different villages in different Thanas is a matter within the special knowledge of the respondents, and under section 106 of the Evidence Act, they should be required to prove the relevant facts by leading adequate evidence. He also attempted to argue that the respondents had deliberately suppressed material evidence from the Court. The learned Judge was not impressed by these arguments and we think, rightly. It is true that the official maps in regard to the area with which we are concerned are not easy to secure. It is not, however, possible to accept the theory that they have been deliberately withdrawn from the market In fact, during the course of the hearing of the writ petition, the appellants themselves produced two maps Exts. A 7 and A 8. Besides, as the learned Judge points out, when the case was first argued before him, the learned Attorney General appearing for the respondents produced most of the maps relied upon by him, and the learned Judge directed that they should be kept on the record to enable the appellants to take their inspection. Under these circumstance, ,, we do not see how the appellants can complain that the respon dents have suppressed evidence, or can ask the Court to hold that the onus was on the respondents to prove that the relevant provisions of the Amendment Act can be implemented. The onus must primarily lie on the appellants to show that what is attempted to be done by the respondents in pursuance of the provisions of the Amendment Act is illegal or unconstitutional; and if they are not able to produce evidence in support of their plea, they cannot require the respondents to show that the plea made by the appellants is untenable. The location of the villages in the different Thanas cannot be regarded as a matter within the exclusive knowledge of the respondents and in any case, it has to be proved by the production of reliable maps. Both parties have produced maps; and the learned trial Judge has refused to accept the maps produced by the appellants as reliable and has treated the maps produced by the respondents as worthy of credence. Under these circumstances, no question of onus really arises. 442 The respondents have produced eight maps in all. One of them purports to be a congregated map of Police Station Jalpaiguri, Pochagar, Boda and Debiganj made and published under authority of Government dated September, 1930. With regard to the congregated map, the learned Judge has observed : "One has only to see Ext. 2 map of Police Station Jalpaiguri and the congregated map Ext. 6 to find that the north eastern hump of Debiganj is not of the shape shown in the wall map of Sashi Bhushan Chatterjee Ext. It is wholly different. " That is one of the reasons given by the learned Judge for disbelieving the appellants ' map Ext. The learned Judge then proceeded to compare the maps produced by the respondents and the congregated map of the District of Jalpaiguri and found that they tally in all details. Having thus examined the relevant material produced before , the learned Judge came to the definite conclusion that the congregated map had been reasonably and accurately drawn and should be relied upon. In fact, the learned Judge has given six different reasons for rejecting the map produced by the appellants, and he found no difficulty in accepting the maps produced by the respondents. The learned Judge thought that the case made out by the appellants was entirely misconceived since it was solely based on an incorrect map. Having regard to the finding made by the learned Judge on these maps, we do not see how the appellants can contend that they have established their plea that the relevant portion of the Constitution Amendment Act is incapable of implementation. It is true that the appellants contended before the learned Judge that the Agreement in question requires that a geometrical point be fixed at the north eastern extremity of Debiganj and then a geometrical line be drawn in a plane tangential to that geometric point, in the direction east to west, at an angle of 90 to the vertical, and this line should divide Berubari Union No. 12 into two exact equal halves. The learned Judge found no difficulty in rejecting this contention, and we are satisfied that the conclusion of the learned Judge is absolutely right. It would be recalled that the relevant portion of the Agree ment which had been included in the Second Schedule to the Ninth Amendment Act, in substance, provides for the division of Berubari Union No. 12 half and half. This division has to be so made that the southern portion goes to Pakistan and the northern portion which is adjacent to India remains with India. When it is said that the division will be "horizontal", starting from the north east comer of Debiganj Thana, it is not intended 443 that it should be made by a mathematical line in the manner suggested by the appellants. In fact, the provision does not refer to any line as such; it only indicates broadly the point from which, the division has to begin east to west, and it emphases that in making the said division, what has to be borne in mind is the fact that the Union in question should be divided half and half. Even this division half and half cannot, in the very nature of things, be half and half in a mathematical way. The latter provision of the Agreement in relation to Cooch Behar also gives additional guidance which has to be taken into account in effecting the partition of Berubari Union No. 12. Therefore, the learned Judge was plainly right in rejecting the contention of the appellants that a straight horizontal line has to be drawn from the north east comer of Debiganj Thana in order to effect the, division of Berubari Union No. 12. So, there is no substance in the contention raised by Mr. Mukerjee before us that the learned Judge should have issued a writ or order in the nature of mandamus prohibiting the division of Berubari Union No. 12. In the course of his arguments, Mr. Mukerjee no doubt faintly suggested that the Schedule annexed to the Amendment Act should itself have shown how the division bad to be made. In other words, the argument was that more details should have been given and specific directions issued by the Ninth Amendment Act itself as to the manner of making the division. This contention is clearly misconceived and must be rejected. All ' that the relevant provision has done is to record the decision reached by the Prime Ministers of the two countries and make it effective by including it in the Constitution Amendment Act as suggested by this Court in its opinion on the Reference in respect of this case. That takes us to the case of Chilahati. It was urged before the learned trial Judge that Chilahati admeasuring about 512 acres which is proposed to be transferred to Pakistan is not a part of Debiganj Thana, but is a part of thana Jalpaiguri and as such, is outside the Radcliffe Award. It is common ground that Chilahati which is a part of Debiganj Thana has been allotted ' to Pakistan by the said Award. But the contention is that what is being transferred now is not a part of the said Chilahati The learned Judge has rejected this contention broadly on two grounds. He has held that the plea that there are two Chilahatis, one, situated in Debiganj Thana, and the other in Thana Jalpaiguri, was not clearly made out in the writ petition as it was filed. This plea was introduced by Ram Kishore Sen and Dhaneswar Roy in 444 their affidavit filed on February 7, 1964. The learned Judge has found that this theory is plainly inconsistent with the maps produced in the case. The maps show only one Chilahati and that, according to the learned Judge, is a part of Debiganj Police Station. This finding is substantially based on the affidavit made by Mr. C. section Jha, Commonwealth Secretary in the Ministry of External Affairs, and the notification filed along with it. This notification which has been issued on July 28, 1925, shows that Chilahati was to form part of Debiganj Police Station. It stated that its serial number in the General Jurisdiction List is 61. The Jurisdiction List relating to Thana Jalpaiguri was also produced. The relevant entry at p. 13 shows the Jurisdiction List No. as 248, and in the last column, the Police Station under which the village of Chilahati is shown to exist is Debiganj; its area is 10,006.75 acres which is equal to roughly 15 to 16 square mile& In fact, the maps Exts. A 7 and A 8 produced by Mr. Mukerjee show that the Jurisdiction List number of Chilahati is 248, and that, in turn, proves the respondents ' case that Chilahati is within the jurisdiction of Police Station Debiganj. The two survey maps produced by the respondents Exts. 8 and 9 also corrobo rate the same conclusion. When these two maps were put side by side, the learned Judge found that their edges exactly fit into one another. Mr. Mukerjee very strongly relied on certain private docu ments produced by the appellants in the form of transfer deeds In these documents, no doubt, Chilahati has been referred to as forming part of District Jalpaiguri. These documents range between 1925 A.D. to 1945 A.D. It may well be that a part of this elongated village of Chilahati admeasuring about 15 to 16 square miles may have been described in certain private documents as falling under the district of Jalpaiguri. But, as pointed out by the learned Judge, in view of the maps produced by the respondents it is difficult to attach any importance to the recitals made by individuals in their respective documents which tend to show that Chilahati is a part of Police Station Jalpaiguri. Indeed, no attempt was made to identify the lands concerning the said deeds with the Taluka maps with the object of showing that there was another Taluka Chilahati away from Berubari Union No. 12. The learned Judge has also referred to the fact that Mr. Mukerjee himself relied upon a map of Taluka Chilahati which is in Police Station Debiganj and not Jalpaiguri. Therefore, we see no justification for Mr. Mukerjee contention ,that the learned Judge was in error in rejecting the appellants, case that a part of Chilahati which is being handed over to 445 Pakistan does not pertain to village Chilahati which is situated in Debiganj Police Station, but is a part of another Chilahati in the district of Jalpaiguri. There is no doubt that if a small portion of land admeasuring about 512 acres which is being transferred to Pakistan is a part of Chilahati situated within the jurisdiction of Debiganj Thana, there can be no valid objection to the proposed transfer. It is common ground that the village of Chilahati in the Debiganj Thana has been allotted to Pakistan; and it appears that through inadvertence, a part of it was not delivered to Pakistan on the occasion of the partition which followed the Radcliffe Award. It is not surprising that in dividing territories under the Radcliffe Award, such a mistake should have occurred; but it is plain that what the respondents now propose to do is to transfer to Pakistan the area in question which really belongs to her. In our opinion, this conduct on the part of the respondents speaks for their fair and straightforward approach in this matter. That takes us to another contention raised by Mr. Mukerjee in respect of the village of Chilahati. He argues that having regard to the provisions contained in Entry 13 in the First Schedule to the Constitution of India, it must be held that even though a portion of Chilahati which is being transferred to Pakistan may have formed part of Chilahati allotted to Pakistan under the Radcliffe Award, it has now become a part of West Bengal and cannot be ceded to Pakistan without following the procedure prescribed by this Court in its opinion on the earlier Reference. Entry 13 in the First Schedule on which this argument is based, provides, inter alia, that West Bengal means the territories which immediately before the commencement of this Constitution were either comprised in the Province of West Bengal or were being administered as if they formed part of that Province. Mr. Mukerjee 's argument is that it is common ground that this portion of Chilahati was being administered as if it was a part of the Province of West Bengal; and so, it must be deemed to have been included in the territory of West Bengal within the meaning of the First Schedule, and if that is so, it is a part of the territory of India under article 1 of the Constitution. It is true that since this part of Chilahati was not transferred to Pakistan at the proper time, it has been regarded as part of West Bengal and administered as such. But the question is : does this fact satisfy the requirement of Entry 13 on which the argument is based ? In other words, what is the meaning of the clause "the territories which were being administered as if they formed part of that 65Sup. CI/65 14 446 Province"; what do the words "as if" indicate in the context ? The interpretation of this clause necessarily takes us to its previous history. First Schedule enumerated Part A States. The territory of the State of West Bengal was one of such States. The Schedule then provided the territory of the State of West Bengal shall comprise the territory which immediately before the commencement of this Constitution was comprised in the Province of West Bengal. The territory of the State of Assam was differently described; but with the description of the said territory we are not concerned in the present appeal. The territory of each of the other States was, however, described as comprising the territories which immediately before the commencement of this Constitution were comprised in the corresponding Province and the territories which, by virtue of an order made under section 290A of the Government of India Act, 1935, were immediately before such commencement being administered as if they formed part of that Province. It is significant that this descriptive clause was not used while describing the territory of the State of West Bengal by the Constitution as it was first enacted. The Constitution (Amendment of the First and Fourth Sche dules) Order 1950, however, made a change and brought the territory of the State of West Bengal into line with the territories of the other States covered by the clause which we have just quoted. This Order was passed on January 25, 1950, and it deleted the paragraph relating to the territory of the State of West Bengal, with the result that the last clause of the First Schedule became applicable to it. In other words, as a result of the said Order, the territory of the State of West Bengal must be deemed to have always comprised the territory which immediately before the commencement of the Constitution was comprised in the Province of West Bengal, as well as the territories which, by virtue of an order made under section 290A of the Government of India Act, 1935, were immediately before such commencement being administered as if they formed part of West Bengal. Let us now refer to section 290A of the Government of India Act, 1935. The said section reads thus "Administration of certain Acceding States as a Chief Commissioner 's Province or as part of a Governor 's or Chief Commissioner 's Province: 447 (1) Where full exclusive authority, jurisdiction and powers for and in relation to governance of any Indian State or any group of such States are for the time being exercisable by the Dominion Government, the Governor General may by order direct (a) that the State or the group of States shall be administered in all respects as if the State or the group of States were a Chief Commissioner 's Province; or (b) that the State or the group of States shall be administered in all respects as if the State or the group, of States formed part of a Governor 's or a Chief Commissioner 's Province specified in the Order. " It will be noticed that the significant and material words with which we are concerned have been used in clauses (a) and (b) of section 290A and have been reproduced in the relevant clause of the First Schedule to the Constitution. It is well known that at the relevant time, merger of States was taking place on a large scale and the covenants which were being executed in that behalf conformed to the same pattern. The Order No. S.O. 25 made by the Governor General on July 27, 1949 and published for general information provided by clause 3 that as from the appointed day, the States specified in each of the Schedules shall be administered in all respects as if they formed part of the Province specified in the heading of that Schedule. The effect of this clause was that when any territory merged with a neighbouring State, it came to be administered as if it was a part of. the said State. That is the purport of the relevant clause of the covenants signed on the occasion of such mergers. In fact, a similar clause was included in the State Merger (West Bengal) Order, 1949. In view of this constitutional background, the words "as if" have a special significance. They refer to territories which originally did not belong to West Bengal but which became a part of West Bengal by reason of merger agreements. Therefore, it would be impossible to hold that a portion of Chilahati is a territory which was administered as if it was a part of West Bengal. Chilahati may have been administered as a part of West Bengal; but the said administration cannot attract the provisions of Entry 13 in the First Schedule, because it was not administered as if it was a part of West Bengal within the meaning of that Entry. 'Me physical fact of administering the said area 448 was not referable to any Merger at all; it was referable to the accidental circumstance that the said area had not been transferred to Pakistan as it should have been. In other words, the clause "as if" is not intended to take in cases of territories which are administered with the full knowledge that they do not belong to West Bengal and had to be transferred in due course to Pakistan. The said clause is clearly and specifically intended to refer to territories which merged with the adjoining States at the crucial time, and so, it cannot include a part of Chilahati that was administered by West Bengal under the circumstance to which we have just referred. That is why we think Mr. Mukerjee is not right in contending that by reason of the fact that about 512 acres of Chilahati were not transferred to Pakistan and continued to be administered by the West Bengal Government, that area became a part of West Bengal within the meaning of Entry 13 in Schedule 1. The West Bengal Government knew all the time that it was an area which belonged to Pakistan and which had to be transferred to it. That is, in fact, what the respondents are seeking to do; and so, it would be idle to contend that by virtue of the accidental fact that this area was administered by West Bengal, it has constitutionally and validly become a part of West Bengal itself. That being so, there can be no question about the constitutional validity of the proposed transfer of this area to Pakistan. What the respondents are seeking to do is to give to Pakistan what belongs under the Radcliffe Award. Mr. Dutt, who followed Mr. Mukerjee, attempted to argue that the village of Chilahati has become a part of West Bengal and as such, a part of the Union of India because of adverse possession. He contends that ever since the Radcliffe Award was made and implemented, the possession of West Bengal in respect of this area is adverse; and he argues that by adverse possession, Pakistan 's title to this area has been lost. We do not think it is open to the appellants to raise this contention. It has been fairly conceded by Mr. Dutt that no such plea had been raised in the writ petition filed by the appellants. Besides, it is plain that neither the Union of India, nor the State of West Bengal which are impleded to the present proceedings make such a claim. It would indeed be surprising that even though the Union of India and the State of West Bengal expressly say that this area belongs to Pakistan under the Radcliffe Award and has to be delivered over to Pakistan, the petitioners should intervene and contend that Pakistan 's title to this property has been lost 449 because West Bengal had been adversely in possession of it. It is, therefore, unnecessary to examine the point whether a plea of this kind can be made under international Law and if yes, whether it is sustained by any evidence on the record. The result is, the appeal fails and is dismissed. There would be no order as to costs. Appeal dismissed.

IN-Abs

As a result of the 'Indo Pakistan Agreements ' entered into in 1956 between the Prime Ministers of India and Pakistan half of the area known as Barubari Union No. 12, and a portion of Chilahati village admeasuring 512 acres were agreed to be transferred by India to Pakistan. Certain questions arising out of the implementation of the sand Agreements were referred by the President under article 143 (1) of the Constitution, to this Court, and were answered by this Court in Special Reference No. 1 of 1959. In accordance with the answers therein given, Parliament passed the Constitution (Ninth Amendment) Act, 1960. There was provision in the Act for a date, to be appointed by notification in the Official Gazette, for the transfer of the areas in question of Pakistan. In regard to Berubari Union No. 12 the Second Schedule to the Amending Act, inter alia, This will be so divided as to give half the area to Pakistan, the half adjacent to India being retained by India. The division of Berubari Union No. 12 will be horizontal, starting from the north east comer of Debiganj Thana. " The appellants filed a writ petition in the High Court of Calcutta challenging the legality of the proposed transfer of the said areas of Berbubari Union No. 12 and Chilahati village to Pakistan. The language of the Amending Act in regard to Berubari Union No., 12 was, they urged, so confused that it was incapable to implementation. In regard to Chilahati village they urged that it was outside the Radcliffe Award. Reliance was placed by them on an unofficial map, Ext. The High Court found that Ext. A 1 was inadmissible and unreliable. Relying on the maps produced by the respondents it dismissed the writ petition filed by the appellants who, with certificate, appealed to this Court. It was urged on behalf of the appellants : (1) If the division of Barubari Union No. 12 was made as directed by the said amendment no portion of Berubari Union No. 12 would fall to the south of the horizontal line starting from the north cast corner of Debiganj Thana, so that no part of the said Union could be transferred to Pakistan. (2) The High Court erred in holding that map Ext. A 1 was neither relevant nor accurate. (3) The location of different villages in the various Thanas was a matter within the special knowledge of the respondents and under section 106 of the Evidence Act the onus of proving the relevant facts was on the respondents. (4) The portion of Chilabati village in question was different from the village of Chilabati which bad gone to Pakistan under the Radcliffe Award, as was shown not only by maps but by certain private documents which described Chilabati as part of Jalpaiguri Thana. (5) Entry 13 in the First Schedule to the Constitution provides, inter alia, that West Bengal means the territories which immediately before the commencement of the Constitution were either comprised in the Province of West Bengal or were being administered 'as if ' they formed part of that Province. 'Me portion of Chilahati in question was being administered 'as if ' it was a part of the Province of West Bengal and must be deemed to have been included 431 in the territory of West Bengal within the meaning of the First Schedule,, and if that was so, it was a part of the territory of India under article 1 of the Constitution. It could not therefore be ceded to Pakistan without following the, procedure laid down by this Court in Special Reference No. 1 of 1959. (6) In any case Pakistan 's title to Chilahati had been lost by adverse possession. HELD : (i) It had not been proved that Ext. A 1, relied on by the appellants, was generally offered for public sale. The requirements of section 36 of the Evidence Act were thus not satisfied and Ext. A 1 was irrelevant. Even if the said map was treated as relevant its accuracy had not been established and no presumption as to its accuracy could be made under section 83 of the Evidence Act, since the requirements laid down in the first part of the section were not satisfied, [440 E H] (ii) Me location of ' villages of different Thanas could not be regarded as a matter within the exclusive knowledge of the respondents so as to attract the provisions of section 106 of the Evidence Act. Both parties had; produced maps, the High Court refused to accept the maps produced by the appellants and treated the maps produced by the respondents as worthy of credence. Under the circumstances no question of onus really arose. [441 G H] (iii) The map produced by them having been rejected by the High Court, the appellants were hardly in a position to contend that they had established their plea that the relevant portion of the Constitution Amendment Act was incapable of implementation. [442 D E] (iv) When it was said that the division of Berubari Union No. 12. would be 'horizontal ' starting from the north east corner of Debiganj Thana it was not intended that it was to be made by a mathematical line in the manner suggested by the appellants. The provision did not refer to any line as such, it only indicated broadly the point from which the division was to begin east to west , and it emphasised that in making the said division what had to be borne in mind was the fact that the Union in question was to be divided half and half. The contentions of the appellants in regard to Berubari Union No. 12 were therefore rightly rejected by the High Court. [442 H 443 D] (v) The materials on record showed that the contention of the appellants that Chilahati village formed part of Thana Jalpaiguri was incorrect : it clearly lay within Debiganj Thana and under the Radcliffe Award had been allotted to Pakistan. The private documents produced by the appellants for the purpose of showing that a part of Chilahati village lay in jalpaiguri Thana were rightly rejected by the High Court, as in view of the maps produced by !he respondents it was difficult to attach any importance to the recitals by individuals in their respective documents. It was plain that through inadvertence a part of village Chilahati was not delivered to Pakistan on the occasion of the partition which followed the Radcliffe Award. What the respondents proposed to do wag to transfer to Pakistan the area in question which really belonged to her. This conduct of the respondents spoke of their fair and straightforward approach to this matter. [444 E 45 D] (vi) The clause 'as if ' in Entry 13 of the First Schedule to the Constitution was not intended to take in cases of territories which were administered with the full knowledge that they did not belong to West Bengal ' and had to be transferred in due course to Pakistan. 'Me said clause was clearly and specifically intended to refer to territories which merged with the adjoining States at the crucial time and so it could not include the part of Chilahati administered by West Bengal. It would be idle to contend 432 that by virtue of the accidental fact that this area had not been transferred to Pakistan, though it should have been, it had constitutionally and validly become a part of West Bengal itself. That being so, there could be no question about the constitutional validity of the proposed transfer of this area to Pakistan. What the respondents were seeking to do was to give to Pakistan what belonged to Pakistan under the Radcliffe Award. [448 A E] (vii) The Plea of adverse possession was not raised by the appellants in their writ petition. Besides it was plain that neither the Union of India nor the State of West Bengal, which were impleaded to the present proceedings, made such a claim. It would indeed be surprising that even though the Union of India and the State of West Bengal expressly said that this area belonged to Pakistan under the Radcliffe Award and had to be delivered to Pakistan, the petitioners should intervene and contend that Pakistan 's title to this property had been lost because West Bengal had been adversely in possession of it. [448 G H] (viii) In Special Reference No. 1 of 1959 it had been inadvertently assumed while discussing the several clauses of article 3 that the word 'State ' used therein did not include Union Territories. In view of section 3 (58) (b) of the General Clauses Act (10 of 1897) this assumption was not correct. However the opinion of the Court in that Reference was not based mainly on the above assumption, but on the view that the power to cede a part of national territory and the power to acquire additional territory were the inherent attributes of sovereignty. [438 H]

Appeal No. 459 of 1965. Appeal by special leave from the judgment and order dated July 14, 1964 of the Punjab High Court in First Appeal from Order No.1 E of 1964. Bishan Narain, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants. section section Shukla, for respondent No. 1. The Judgment of the Court was delivered by Wanchoo,J. This is an appeal by special leave from the judgment of the Punjab High Court. In the general election held in 1962 for Parliament (House of the People), the appellant was elected from the Sangrur parliamentary. constituency. Pritam Singh respondent was also one of the contesting candidates but lost in the election. Thereupon he filed an election petition against the appellant challenging his election on a number of grounds. In the present appeal we are only concerned with one ground, and that was that the nomination papers of one of the candidates for the ,election, namely, Wazir Singh, had been rejected improperly by the returning officer. Wazir Singh had filed three nomination papers; with one of them he had attached a copy of a part of the electoral roll. He attached no such copy with the other two nomination papers. When the nomination papers were being scrutinised, an objection was taken to the validity of the nomination papers. The returning officer first took up the nomination paper with which a copy of part of the roll had been filed and rejected it on the ground that the name of the parliamentary constituency and the name of the village and the assembly constituency and the part number of the electoral roll of the candidate was not mentioned also because the name of the parliamentary constituency (House of the People) of proposer was not given. After rejecting this nomination paper, the returning offices took up the other two nomination papers and rejected them on the ground that a copy of the electoral roll of the constituency concerned or of the relevant part thereof or a certified 545 copy of the relevant entries had not been filed along with these nomination papers. It may be added that the returning officer refused to look into the copy of the part of the roll which Wazir Singh had filed along with his nomination paper which the returning officer had already rejected before he took up the other nomination papers. The main contention of respondent Pritam Singh in the election petition was that the returning officer was wrong in not looking into the copy of the part of the roll which had been filed with the first nomination paper of Wazir Singh and that merely because that nomination paper had been rejected, the returning officer was not precluded from looking into the copy of the part of the roll which had been produced with that nomination paper for the purpose of scrutiny of the other two nomination papers. The appellant on the other hand contended that the nomination papers had been rightly rejected, and this contention was based on three points raised on his behalf, namely (i) that a copy of the electoral roll of that constituency or a relevant part thereof or a certified copy of the relevant entries of such roll should have been produced with each nomination paper separately; (ii) in any case the copy produced should have been of the parliamentary constituency and not of the assembly constituency; and (iii) that the copy produced of the part of the roll was not a complete copy of the part and therefore was not a compliance with the requirements of section 33 (5) of the Representation of the People Act, No. 43 of 1950, (hereinafter referred to as the Act). The Election Tribunal seems to have taken the view that the copy filed along with the first nomination paper could not be looked into when the returning officer came to scrutinise the other nomination papers, even if it might be assumed to be a copy of the parliamentary electoral roll. It further held that even if the copy could be looked into, it was not a complete copy and therefore there was no compliance with section 33 (5) of the Act and in consequence the Tribunal held that the returning officer was justified in rejecting the nomination papers notwithstanding the provisions of section 36 (4) of the Act. Pritam Singh then went in appeal to the High Court. The High Court held that the returning officer was wrong in not looking into the copy which had been produced along with the first nomination paper, and that the copy produced, though it was apparently of an assembly constituency, could also be taken to be a copy of the parliamentary roll. Lastly on the question whether the copy produced was a complete copy or not, the High Court held that the copy actually produced, though it admittedly did not contain certain pages, was sufficient for the purposes of section 33 (5) of the Act. In this view, the High Court held that one of the nomination papers of 546 Wazir Singh was improperly rejected and in consequence of that the result of the election was materially affected. It therefore set aside the election. The High Court having refused to grant a certificate, the appellant applied to this Court for special leave which was granted; and that is how the matter has come before us. The same three points which were urged before the Tribunal on behalf of the appellant have been raised before us. In the first place it is urged that the necessary copy required under section 33 (5) of the Act must be produced with every nomination paper, and that it is not enough where more nomination papers than one are filed that a copy should have been filed with only one of them. Secondly it is urged that the copy produced was of the assembly constituency while it should have been of the parliamentary (House of the People) constituency. Lastly the argument is that in any case the copy produced was not complete and therefore there was no compliance with section 33 (5) of the Act. The returning officer therefore was justified in rejecting the nomination paper under section 36 (2) (b) of the Act and that section 36 (4) did not apply in the circumstances of the case. We shall deal with these points seriatim. Section 32 at the relevant time provided that "any person may be nominated as a candidate for election to fill a seat if he is qualified to be chosen to fill that seat under the provisions of the Constitution and this Act. " Section 4 (d) of the Act requires that in the case of any other seat for the House of the People besides those mentioned in cls. (a), (b) and (c) of that section, a person has to be an elector for any parliamentary constituency (House of the People) to be entitled to stand for election to the House of the People. It is with this qualification alone that we are concerned in the present appeal. "Elector" is defined in section (2) (e) of the Act as meaning "in relation to a constituency a person whose name is entered in the electoral roll of that constituency for the time being in force and who is not subject to any of the disqualifications mentioned in section 16 of the Representation of the People Act, 1950." Therefore if a person is an elector in a parliamentary (House of the People) constituency and is not subject to any disqualification he can stand for election to the House of the People from any constituency. Then we come to section 33 (5). The object of this provision obviously is to enable the returning officer to check whether the person standing for election is qualified for the purpose. The electoral roll of the constituency for which the returning officer is making scrutiny would be with him, and it is not necessary for a candidate to produce the copy of the roll of that constituency. But where the candidate belongs to another constituency the returning officer would not have the roll of that other constituency with him and therefore the provision contained in section 33 (5) has been made by the legislature to enable the returning officer to check that the candidate is qualified 547 for standing for election. For that purpose the candidate is given the choice either to produce a copy of the electoral roll of that other constituency, or of the relevant part thereof or of a certified copy of the relevant entries in such roll before the returning officer at the time of the scrutiny, if he has not already filed such copy with the nomination paper. Naturally where the candidate is standing for a parliamentary constituency (House of the People) he will have to file a copy of the roll of some parliamentary constituency. The argument on behalf of the appellant is that under the proviso to section 33(6) a candidate is entitled to file upto four nomination papers and therefore when section 33(5) says that a copy would be filed with the nomination paper it requires that one copy should be filed with each nomination paper and if that has not been done there is no compliance with section 33(5). Section 33(5) does not require that a copy must be filed with each nomination paper for, the candidates is given the alternative to produce before the returning officer such copy at the time of the scrutiny. So the candidate need not file any copy with the nomination paper and it is enough if he has a copy in his possession which he produces before the returning officer at the time of the scrutiny. Further there is nothing in section 33(5) which requires that if a candidate has (say) filed four nomination papers he should have four copies with him to produce before the returning officer at the time of the scrutiny. It would in our opinion be enough if he has one copy with him at the time of the scrutiny and shows it again and again as each nomination paper is taken up for scrutiny by the returning officer. We see no sense in holding that. in such a situation the candidate should arm himself with four copies for the purpose of showing the copy to the returning officer at the time of scrutiny. The same copy in our opinion can be produced again and again before the returning officer as he takes up the scrutiny of each of the nomination papers filed on behalf of a candidate. If that is so we see no difficulty in holding that where a number of nomination papers have been filed and a copy has been filed with one of them, that is enough. Again we see nothing in section 33(5) which prevents a returning officer from looking at the copy filed with one nomination paper, even after that nomination paper has been rejected or with a nomination paper which is vending before him for scrutiny, when he comes to deal with other nomination papers. As we have said before, the purpose of filing the copy is to ensure that the returning officer is able to check whether the candidate concerned is qualified or not and that purpose would be effectively served even if only one copy is filed with one nomination paper and no copies are filed with the other nomination papers. It may be that for certain purposes each nomination paper stands by itself, but so far as filing of a copy with a nomination paper under section 33(5) is concerned, we must look at the object behind the provision, and if that object is served by filing a copy with one nomi 548 nation paper, we see no sense in requiring that where a number of nomination papers are filed there should be a copy with each, nomination paper. There is nothing in section 33(5) which prevents, them returning officer from looking at a copy filed with a nomination paper which has been rejected, or which is still to be scrutinised for the purpose of satisfying himself when he takes up the other. nomination papers that the candidate is qualified to stand. Nor has any rule been shown to us which in terms prevents the returning officers from looking into a copy which has been filed with a nomination paper (which might have already been rejected) for the purpose of scrutinising other nomination papers of the same candidate. If the purpose of section 33(5) can be served by the production of one copy at the time of scrutiny when it has not been filed with the nomination paper, we do not see why that purpose could not be served by filing a copy with one nomination paper where more nomination papers than one have been filed by the same candidate. We therefore agree with the High Court that the returning officer was wrong in not looking at the copy filed with one nomination paper when he was dealing with other nomination papers of Wazir Singh. This brings us to the second point raised before us, namely, that the copy filed was not of the parliamentary (House of the People) constituency but of the assembly constituency. This contention also has no force. If we look at the Representation of the People Act, 1950 we find that Part III thereof provides for the preparation of electoral rolls for assembly constituencies. So far as parliamentary constituencies (House of the People) are concerned, section 13D provides inter alia that the electoral roll for every parliamentary constituency shall consist of the electoral rolls of so much of the assembly constituencies as are comprised within that parliamentary constituency; and it shall not be necessary to prepare or revise separately the electoral roll for any such parliamentary constituency. It is clear therefore that the electoral roll for a parliamentary constituency is no other than the electoral roll for the assembly constituencies comprised within that parliamentary constituency. It is not in dispute that the electoral roll for a parliamentary constituency is made up by stitching together the electoral rolls of the assembly constituencies comprised therein. Therefore if a candidate files a copy of the electoral roll of an assembly constituency, that copy is sufficient to show that he is an elector in the parliamentary constituency, in which that assembly constituency is included. The argument that the copy filed in the present case did not comply with section 33(5) as it was not a copy of the parliamentary constituency must therefore fail. The copy was of an assembly constituency in this case; and if the candidate was an elector in the assembly constituency he would be an elector in the parliamentary (House of the People) constituency which includes 549 that assembly constituency. The High Court therefore was right in rejecting the contention that the copy of the roll of the parliamentary (House of the People) constituency was not filed. This brings us to the last point raised on behalf of the appellant, namely, that the copy filed was not a complete copy and therefore there was no compliance with section 33(5) of the Act. It is not in dispute that the copy filed was not a complete copy. The appellant produced a complete copy of that part of the roll and that showed that pages 19 to 22 and page 25 of that part of the roll were not filed by Wazir Singh. Now section 33 (5) gives three options to a candidate in the matter of filing a copy. He may file either a copy of the electoral roll which means a copy of the entire electo ral roll of the parliamentary (House of the People) constituency, or a copy of the relevant parts thereof, which means the whole of the parts concerned. Under the Registration of Electors Rules, 1960 (hereinafter referred to as the Rules), it is provided by r. 5 that "the roll shall be divided into convenient parts which shall be numbered consecutively". Therefore when section 33(5) refers to a copy of the relevant parts thereof, it means a part as defined in r. 5 above. Besides these two alternatives, a candidate has a third alternative, namely, the production of certified copies of the entries of his name and the name of the proposer from any roll. In the present case, the candidate Wazir Singh chose the second alternative, namely, he produced a copy of the relevant part thereof. The part in question produced in this case was part IV of the Simla legislative assembly electoral roll. Section 33(5) therefore required the candidate (namely, Wazir Singh) to produce the whole of this part. It is not in despute that he did not produce the whole of this part and the question is whether his failure to do so would result in the rejection of his nomination paper. To decide this question it is necessary to refer to the Rules. Rule 10 requires that "as soon as the Roll for a constituency is ready, the registration officer shall publish it in draft by making a copy thereof available for inspection and displaying a notice in form 5." Under r. II, the registration officer is required to give further publicity to the roll and to the notice in form 5. There after r. 12 provides for claims for the inclusion of a name in the roll and objections to an entry therein. After such claims and objections have been made, the registration officer has to consider them under r. 18. Under r. 19, he gives a hearing if necessary and thereafter he orders the inclusion of names in the roll or exclusion of ' names from the roll under r. 20. Then under r. 22, the registration officer has to prepare a list of amendments to carry out his decisions under ff. 18, 20 and 21 and he may correct any clerical or printing errors or other inaccuracies subsequently discovered in the roll. He then publishes the roll together with the list of 550 amendments by making a complete copy thereof available for inspection, and displaying a notice in form 16. On such publication the roll together with the list of amendments shall be the electoral roll of the constituency. The scheme of these Rules therefore, is that a draft is first prepared. Thereafter claims and objections are disposed of. If any claim is admitted, the name is included in the roll, if any objection is allowed the name already in the draft roll (or may be in an earlier amendment) is deleted. This inclusion or deletion is made by publishing amendments to the roll and thereafter the draft roll along with one or more amendments becomes the electoral roll of the constituency. It will be seen from this that where a name is excluded on an objection being allowed, the name is not scored out. What the rule provides is that deletion of a name from a draft or even from an earlier amendment made by inclusion by the registration officer, is included in the list of amendments published Under r. 23, an appeal is allowed from any decision of the registration officer including a name or excluding a name, so that where the registration officer includes a name after hearing a claim that is subject to an appeal and the appellate officer may reject the claim whereupon the amendment made by the registration officer by including a name may fall through. Under sub r. (5) of r. 23 of the Rules, the registration officer is given power to cause such amendments to be made in the roll as may be necessary to give effect to the decisions of the appellate officer. This shows that when section 33 (5) requires that a copy of the relevant part of the roll may be filed or produced the copy is to be a complete copy along with all amendments, for it may be that even though a name may be included in the first amendment by the registration officer it may be excluded in the second amendment if the appellate officer has rejected the claim. We have already said that the object of producing the copy under section 33(5) is to enable the returning officer to check whether the candidate and the proposer are qualified or not, one for the purpose of standing and the other for the purpose of proposing. In order to check this, the returning officer must have a complete copy of the relevant part. If the copy is not a complete copy it is possible that a name which may have been included in the draft or in the first amendment may have been excluded in the second amendment made on the basis of an order of the appellate officer. Therefore to enable the returning officer to decide whether, a candidate,date is qualified to stand or whether a proposer is qualified to propose he must have a complete copy of the relevant part of the. roll. If he has not a complete copy he will not be able to decide whether the candidate or the proposer has the necessary qualification. In the present case it is not in dispute that Wazir Singh did not produce a complete copy of Part IV of the roll. Part IV consisted 551 of 25 pages; of these Wazir Singh did not produce pages 19 to 22 and page as appears from the complete copy of the roll filed by the appellant contained a second list of amendments. It is true that Wazir Singh 's name did appear in the first amendment at No. 1853; but that as we have already shown was not conclusive for the second amendment which was not produced might have deleted that name. Therefore the copy produced by Wazir Singh not being complete was not sufficient to enable the returning officer to decide whether he was qualified to stand or not for his name might have been deleted in the second list of amendments in which case he would not have been qualified. It is true that in actual fact it appears from the copy which was produced by the appellant before the Tribunal that Wazir Singh 's name was not deleted in the second list of amendments; but that appears from the copy produced by the appellant before the Tribunal and not from the copy produced by Wazir Singh before the returning officer. Section 33(5) requires that it is the copy produced by the candidate which should show whether he is qualified or not and for that pur pose a copy produced by the candidate should be complete whether it is of the roll or of the relevant part thereof. To such a case section 36(4) has no application. That provision is to the effect that the returning officer shall not reject any nomination paper on the ground of any defect which is not of a substantial character. But the non production of a complete copy of the relevant part in our opinion is a defect of a substantial character for it makes it impossible for the returning officer to decide whether the candidate s qualified or not. Qualification for standing for election is a matter of substantial character. We are therefore of opinion that the High Court was not right in the view it took that the production of an incomplete copy of the relevant part was not a defect of a substantial character which would make the nomination paper liable to be rejected. The fact that the returning officer rejected the nomination paper on some other ground is of no consequence. If there was in truth a defect of a substantial character in the matter of compliance with section 33 of the Act, the nomination paper was liable to be rejected, and if it was so rejected, rejection would be proper whatever may have been the reason given by the returning officer. In the present case we are of the opinion that the production of a copy of the electoral roll which is incomplete is a defect of a substantial character. This defect will invalidate all the nomination papers. The nomination papers of Wazir Singh were rightly rejected by the returning officer, though he gave different reasons for doing so. The appeal therefore succeeds and is hereby allowed with costs. The election petition is dismissed. Pritam Singh, respondent, will pay the costs. Appeal allowed.

IN-Abs

The appellant 's election to Parliament was challenged by the first respondent on the ground that the nomination papers of the third candidate, W, had been wrongly rejected by the returning officer and this had materially affected the result of the election. We had filed three nomination papers with one only of which he had filed a copy of the electoral roll of the assembly constituency in purported compliance with section 33(5) of the Representation of the People Act, 1950. The nomination paper with which W had filed the said copy was rejected on account of technical defects; the other two were rejected because no such copy was filed with them. The Election Tribunal dismissed the first respondent 's petition holding that the returning officer had rightly rejected the nomination papers of W. The High Court took the opposite view and set aside the election. The appellant came to this Court by certificate and contended that W had not complied with section 33(5) because (i) under that section a copy of the electoral roll must be produced with every nomination paper, (ii) W had filed a copy of the electoral roll of the assembly constituency and not of the Parliamentary constituency, (iii) the copy produced was not a complete copy of the relevant 'part ' of the electoral roll. HELD : (i) The returning officer was wrong in not looking at the copy of the electoral roll filed with one of the nomination papers filed by W when dealing with the other nomination papers filed by him. Section 33(5) does not require that a copy must be filed with each nomination paper or that any copy should be filed at all, for the candidate is given the alternative to produce before the returning officer such copy at the time of scrutiny. The purpose of filing the copy is to ensure that the returning officer is able to check whether the candidate concerned is qualified or not and that purpose would be effectively served even if only one copy is filed with one nomination paper and no copies are filed with the other nomination papers by the said candidate. [547 F 548 D] (ii) The electoral roll for a parliamentary constituency is made up by stitching together the electoral rolls of the assembly constituencies comprised therein. Therefore if a candidate files a copy of the electoral roll of an assembly constituency that copy is sufficient to show that he is an elector in the parliamentary constituency in which that assembly constituency is included. W had filed copy of the assembly constituency in which he was recorded as an elector and the High Court was right in rejecting the contention based on the fact that the copy of the roll of the parliamentary constituency was not filed. [548 G, H] 544 (iii) Under r. 5 of the Registration of Electors Rules, 1960 it is provided that "the roll shall be divided into convenient parts which shall be numbered consecutively". When a. 33(5) refers to a copy of the relevant parts of the electoral roll it means a part as defined in r. 5. In producing not the full part but only a portion of the electoral roll in which he was recorded as an elector W did fail to comply with the requirements of section 33(5). A complete copy would carry the various amendments made in the roll and enable the returning officer to see whether the name of the candidate continued in the roll for the whole of the relevant period. The High Court was not right in its view that the production of an incomplete copy was not a defect of substantial character which would make the nomination paper liable to be rejected. The nomination papers of W were rightly rejected by the returning officer though for different reasons. [549 D; 551 E F]

Appeal No. 7 of 1964. Appeal from the judgment and decree dated January 7, 1955 of the Madras High Court in Appeal Suit No. 371 of 1959. 609 R. Ganapathy Iyer and R. Thiagarajan, for appellants. In the suit which is the subject matter of this appeal the plaintiffs alleged that Plaint 'A ' Schedule properties belonged to the second defendant and his son, the third defendant. The second defendant sold the village for Rs. 28,000/ to one Swaminatha Sarma by a sale deed exhibit A dated December 12, 1912 which he executed for himself and as guardian of the third defendant who was then a minor. The second defendant also agreed to indemnify any loss that might be caused to his vendee in case the sale of his minor son 's half share should later on be set aside. Accordingly the second defendant executed the Indemnity Bond exhibit B in favour of Swaminatha Sarma. The sons of Swaminatha Sarma sold Plaint 'A ' Schedule village to the father of the Plaintiffs for a sum of Rs. 53,000/ . On the same date they assigned the Indemnity Bond exhibit B to the father of the plaintiffs under an Assignment Deed exhibit The third defendant after attaining majority filed O.S. No. 640 of 1923 in the Chief Court of Pudukottai for setting aside the sale deed exhibit A in respect of his share and for partition of joint family properties. The plaintiffs were impleaded as defendants 108 and 109 in that suit. The suit was decreed in favour of the third defendant and the sale of his share was set aside on condition of his paying a sum of Rs. 7,000/ to defendants 108 and 109, and a preliminary decree for partition was also granted. In further proceedings, the village was divided by metes and bounds and a final decree exhibit F was passed on October 6, 1936. Meanwhile, a creditor of the third defendant obtained a money decree and in execution thereof, attached and brought to sale the third defendant 's half share in the 'A ' Schedule village. In the auction sale Subbaiah Chettiar, the plaintiff 's brother in law purchased the property for a sum of Rs. 736/ subject to the liability for payment of Rs. 7,000/ under the decree in O.S. No. 640 of 1923. Thereafter, the plaintiffs have brought the present suit on the allegation that they have sustained damage by the loss of one half of the 'A ' Schedule village and are entitled to recover the same from the second defendant personally and out of the 'B ' Schedule properties. The plaintiffs have claimed damages to the extent of half of the consideration for the sale deed exhibit C. minus Rs. 7,000/ withdrawn by them. The plaintiffs claimed a further sum of Rs. 500/as Court expenses making a total of Rs. 20,000. The suit was contested on the ground that the Court sale in favour of Subbaiah Chettiar was benami for the plaintiffs and the latter never lost ownership or possession of a half share of the 'A ' Schedule village and consequently the plaintiffs did not sustain any loss. The trial court held that Subbaiah Chettiar P.W. I was benamidar of 610 the plaintiffs who continued to remain in possession of the whole village. The trial court was, however, of the opinion that though the plaintiffs had, in fact, purchased the third defendant 's halfshare in the Court sale, they were not bound to do so and they could claim damages on the assumption that third parties had purchased the same. The trial court accordingly gave a decree to the plaintiffs for the entire amount claimed and made the payment of the amount as charge on 'B ' Schedule properties. The second defendant took the matter in appeal to the Madras High Court which found that the only loss actually sustained by the plaintiffs was the sum of Rs. 736/ paid for the Court sale and the sum of Rs. 500/ spent for the defence of O.S. No. 640 of 1923. The High Court accordingly modified the decree of the trial court and limited the quantum of damages to a sum of Rs. 1236/ and interest at 6 per cent p.a. from the date of the suit. The question presented for determination in this appeal is what is the quantum of damages to which the plaintiffs are entitled for a breach of warranty of title under the Indemnity Bond exhibit B dated December 19, 1912. It was contended by Mr. Ganapathy Iyer on behalf of the appellants that in O.S. No. 640 of 1923, defendant No. 3 obtained a partition decree and a declaration that defendant No. 2 was not entitled to allenate his share in the 'A ' Schedule properties. It was submitted that on account of this decree the appellants lost title to half share of 'A ' Schedule properties and accordingly the appellants were entitled to get back half the amount of consideration under the Indemnity Bond exhibit The argument was stressed on behalf of the appellants that the circumstance that the plaintiffs had a title of benamidar to the half share of the third defendant in Court auction, was not a relevant factor so far as the claim for damages was concerned. It was suggested that the purchase in court auction was an independent transaction and the defendants ,could not take the benefit of that transaction. We are unable to accept the contention of the appellants as correct. In the present case it should be observed, in the first place, that the Indemnity Bond exhibit B states that defendant No. 2 shall be liable to pay the amount of loss "in case the sale of the share of the said minor son Chidambaram is set aside and you are made to sustain any loss". In the second place, it is important to notice that the sale deed exhibit A executed by the second defendant in favour of Swaminatha Sarma was only voidable with regard to the share of the third defendant and the family properties. The sale of the half share of defendant No. 3 was not void ab initio but it was only voidable if defendant No. 3 chose to avoid it and proved in Court that the alienation was not for legal necessity. In a case of this description the Indemnity Bond becomes enforceable only if the vendee is dispossessed from the properties in dispute. A breach of the 611 convenant can only occur on the disturbance of the vendee 's possession and so long as the vendee remains in possession, he suffers no loss and no suit can be brought for damages either on the basis of the Indemnity Bond or for the breach of a convenant of the warranty of title. The view that we have expressed is borne out by the decision of the Madras High Court in Subbaroya Reddiar vs Rajagopala Reddiar (1) in which A who had a title to certain immovable property, voidable at the option of C, sold it to B and put B in possession thereof. C then brought a suit against A and B, got a decree and obtained possession thereof in execution. In this state of facts it was held by Seshagiri Ayyar, J. that B 's cause of action for the return of the purchase money arose not on the date of the sale but on the date of his dispossession when alone there was a failure of consideration and the article applicable was article 97 of the Limitation Act. At page 889 of the Report Seshagiri Ayyar, J. states: "The cases can roughly speaking be classified under three heads: (a) where from the inception the vendor had no title to convey and the vendee has not been put in possession of the property; (b) where the sale is only voidable on the objection of third parties and possession is taken under the voidable sale; and (c) where though the title is known to be imperfect, the contract is in part carrried out by giving possession of the properties. In the first class of cases, the starting point of limitation will be the date of the sale. That is Mr. Justice Bakewell 's view in [Ramanatha Iyer vs Ozhapoor Pathiriseri Raman Namburdripad ; and I do not think Mr. Justice Miller dissents from it. However, the present case is quite. different. In the second class of cases the cause of action can arise only when it is found that there is no good title. The party is in possession and that is what at the outset under a contract of sale a purchaser is entitled to, and so long as his possession is not disturbed, he is not damnified. The cause of action will therefore arise when his right to continue in possession is disturbed. The decisions of the Judicial Committee of the Privy Council in Hanuman Kamat vs Hanuman Mandur (I Cal. 123 (P.C.) and in Bassu Kuar vs Dhum Singh (I 889) I.L.R. II All. 47 (P.C.) are authorities for this position. " A similar view has been expressed by the Allahabad High Court in Muhammad Siddiq vs Muhammad Nuh (2) and the Bombay High Court in Gulabchand Daulatram vs Survajirao Ganpatrao.(3) In the present case it has been found by the High Court that P.W. 1, the auction purchaser was the brother in law of the plaintiffs (1) I.L.R. (2) I.L.R. 52 All. 604. (3) A.I.R. 1950 Bom. 612 and that he was managing the estate of the plaintiffs and defending O.S. 640 of 1923 on their behalf It has also been found that P.W. I did not take possession at any time and plaintiffs have been cultivating and enjoying the whole village all along and at no time were the plaintiffs dispossessed of the property. The only loss sustained by the plaintiffs was a sum of Rs. 736/ paid at the Court sale and a sum of Rs. 5001 spent for the defence of O.S. No. 640 of 1923 which the plaintiffs had to incur for protecting the continuance of their possession over the disputed share of land. Accordingly the High Court was right in granting a decree to the plaintiffs only for a sum of Rs. 1236/ which was the actual loss sustained by them and they are not entitled to any further amount. For these reasons we hold that there is no merit in this appeal which is dismissed with costs. Appeal dismissed.

IN-Abs

The second defendant sold property belonging to himself and his minor son the third defendant. and also executed an indemnity bond in favour of the vendee agreeing to indemnify him for any loss that might be caused to him in case the sale of the third defendant 's half share should later on be set aside. vendee sold the property to the plaintiffs and assigned the indemnity bond in their favour and the plaintiffs took possession of the property. The third defendant, after attaining majority, sued for ,setting aside the sale in respect of his half share and for partition. The plaintiffs contested the suit but the third defendant 's suit was decreed. He, however, did not dispossess the plaintiffs. Meanwhile, a creditor of .the third defendant obtained a money decree against him and in execution ,thereof attached and brought to sale the third defendant 's half share, and, ,the brother in Law of the plaintiffs purchased the property, but ,the plaintiffs continued in possession of the property. The plaintiffs, thereafter, filed the suit for recovery of half the consideration paid by them, on the allegation that they sustained damage by the loss of one half of the property bought by them, and that they were entitled to recover damages from the second defendant. The suit was contested on the ground that the court sale in favour of the brothers in law of the plaintiffs was benami for the plaintiffs, and that as the plaintiffs never lost ownership or possession of the halfshare, they did not sustain any loss. .The trial court decreed the suit. The High Court, on appeal, confined the decree to the actual loss sustained, namely, the amount for the court sale and the amount spent for the defence of the third defendant 's suit. In appeal to the Court, on the question of the quantum of damages to which the plaintiffs were entitled, HELD : High Court was right in granting a decree to, the plaintiffs only for the sum which was the actual loss sustained by them. The sale of the half share of the third defendant was not void ab initio but was only voidable. In such a case the indemnity bond becomes enforceable only if the vendee is dispossesed from the properties, because, a breach of the covenant can only occur on the disturbance of the vendees possession. SD long as the vendee remains in possession, he suffers no loss and no suit can be brought for damages either on the basis of the indemnity bond or for the breach of a convenant of the warranty of title. [610 H 611 B] Subbaroya Reddiar vs Rajagopala Reddiar, Mad. 887 Muhammad Siddiq vs Muhammad Nuh, I.L.R. 52 All. 604 and Gulabchand Daulatram vs Suryaji Rao Ganpatrao, A.I.R. 1950 Bom. 401, approved.

minal Appeal No . 167 of 1964. Appeal from the judgment and order November 4, 1963 of the Gujarat High Court in Criminal Appeal No. 734 of 1962. G. section Patwardhan, R. N. Sachthey and B.R.G.K. Achar, for the appellant. The respondent did not appear. 614 The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought by the State of Gujarat against the judgment of the High Court of Gujarat at Ahmeda bad dated November 4, 1963 in Criminal Appeal No. 734 of 1962. The respondent was charged in the Court of the Judicial Magistrate First Class, Bulsar under sections 4 and 5 of the Bombay Prevention of Gambling Act, 1887 (Bombay Act IV of 1887), hereinafter called the 'Act '. The case of the prosecution was that on January 31, 1962 at about 9 p.m. the respondent was found accepting bets on American futures. On being searched in the presence of panchas currency notes of Rs. 119/ and two slips on which Ameri can futures were recorded were found. The trying Magistrate, however, held that slips were not "instruments of gaming" within ,the meaning of section 7 of the Act. The Magistrate was also not satisfied that the police officer who carried out the search and .seized the articles had reasonable grounds to believe that the slips and other articles recovered from the respondent were instruments of gaming. The Magistrate held that the presumption under section 7 of the Act could not be raised. The respondent was, therefore, acquitted of the charge. Against the order of acquittal the State of Gujarat preferred an appeal to the High Court of Gujarat at Ahmedabad in Criminal Appeal No. 734 of 1962. The appeal was dismissed by Raju, J. on November 4, 1963. In support of this appeal Mr. Patwardhan submitted that the High Court was in error in holding that it is necessary to examine an expert to corroborate the evidence of the prosecuting Sub Inspector that the articles seized were "instruments of gaming". It was also contended by Counsel that the High Court was not right in taking the view that the evidence of the Police Inspector to whom the warrant was issued under section 6 of the Act required corroboration in each and every case. In our opinion, both the contentions of Mr. Patwardhan are well founded and must be Section 3 of the Act defines the expression "instruments of gaming" as including any article used or intended to be used as a subject or means of gaming, any document used or intended to be used as a register or record or evidence of any gaming, the proceeds of any gaming, and any winnings or prizes in money or ,otherwise distributed or intended to be distributed in respect of ,any gaming. Section 6 provides for entry and search by police officers in gaming houses. Section 6(1) states: "6. (1) It shall be lawful for a Police Officer (i) in any area for which a Commissioner of Police has been appointed not below the rank of a Sub Inspector and either empowered by general order in writing or 615 authorized in each case by special warrant issued by the Commissioner of Police, and (ii) elsewhere not below the rank of a Sub Inspector of Police authorised by special warrant issued in each case by a District Magistrate or Sub Divisional Magistrate or by a Taluka Magistrate specially empowered by the State Government in this behalf or by a Superintendent of Police or by an Assistant or Deputy Superintendent of Police especially empowered by the State Government in this behalf, and (iii) without prejudice to the provision in clause (ii) above, in such other area as the State Government may, by notification in the Official Gazette, specify in this behalf, not below the rank of a Sub Inspector and empowered by general order in writing issued by the District Magistrate. (a) to enter, with the assistance of such persons as may be found necessary, by night or by day, and by force, if necessary, any house, room or place which he has reason to suspect is used as a common gaming house. (b) to search all parts of the house, room, or place which he shall have so entered, when he shall have reason to suspect that any instuments of gaming are concealed therein, and also the persons whom he shall find therein whether such persons are then actually gaming or not, (c) to take into custody and bring before a Magistrate all such persons, (d) to seize all things which are reasonably suspected to have been used or intended to be used for the purpose of gaming, and which are found therein: Section 7 of the Act relates to presumptive proof of keeping or gaming in common gaming house. Section 7 provides as follows: "7. When any instrument of gaming has been seized in any house, room or place entered under section 6 or about the person of anyone found therein, and in the case of any other thing so seized if the court is satisfied that the Police officer who entered such house, room or place had reasonable grounds for suspecting that the thing so seized was an instrument of gaming, the seizure of such instrument or thing shall be evidence, until the contrary is proved, that such house, room or place is used as a common gaming house and the persons found therein were then present for the purpose of gaming, although no gaming was actually seen 616 by the Magistrate or the Police officer or by any person acting under the authority of either of them: There is nothing in the Act to suggest that in order to prove that the articles seized are "instruments of gaming" it is the duty of the prosecution to examine an expert in every case. It is open to the prosecution to prove that the articles seized are instruments of gaming by proper evidence and it is, not necessary to examine an expert for the purpose in each and every case. It is also not proper to make a distinction between the evidence of an officer who makes a complaint under the proviso to section 6 of the Act and to whom a warrant is issued for search and the evidence of a person to whom a warrant is issued but who makes no such complaint under the proviso. The question as to whether the evidence of the person who executes the warrant requires corroboration depends on the facts and circumstances of each case and no legal distinction can be made merely because the person who executes the warrant happens to be the person who makes the complaint under the proviso to section 6 of the Act to the Commissioner of Police or to the Magistrate. We do not, however, propose to interfere with the order of acquittal in this case, because the offence is petty and the offence was committed several years back. We accordingly dismiss the appeal. Appeal dismissed.

IN-Abs

The respondent was charged under sections 4 and 5 of the Bombay Prevention of Gambling Act, on the allegation that be was found accepting bets on American futures, and on being searched currency notes and two slips, on which American Futures wore recorded, were found. The trial, Magistrate acquitted the respondent, which was confirmed, on appeal, by the High Court. In appeal to this Court the appellant State contended that it was not necessary to examine an expert to corroborate the evidence of the prosecuting sub Inspector that the articles seized were "instruments of gaming" and that the evidence of the Police Inspector to whom the warrant was issued under section 6 of the Act did not require corroboration, in each and .very case. HELD : The contentions are well founded and must be accepted as correct. There is nothing in the Act to suggest that in order to prove that the articles seized are "instruments of gamine ' it is the duty of the prosecution to examine an expert in every case. It is open to the prosecution to prove that the articles seized are instruments of gamiag by proper evidence and it is not necessary to examine an expert for the purpose in each and every case. It is also not proper to make a distinction between the evidence of an officer who makes a complaint under the proviso to section 6 of the Act and to whom a warrant issued for search and the evidence of a person to whom a warrant is issued but who makes no such complaint under the proviso. The question as to whether the evidence of the person who executes the warrant requires corroboration depends on the facts and circumstances of each case and no legal distinction, can be made merely because the person who executes the warrant happens to be the person who makes the complaint under the proviso to section 6 of the Act to the Com missioner of Police or to the Magistrate. [616 A C]

minal Appeal No. 67 of 1964. Appeal by special leave from the judgment and order dated March 2, 1964 of the Orissa High Court in Government Appeal No. 49 of 1963. R. K. Garg, section C. Agarwala, M. K. Ramamurthy and D. P. Singh, for the appellants. H. R. Khanna and R. N. Sachthey, for the respondent. , 637 The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the Orissa High Court dated March 2, 1964 in Government Appeal No. 49 of 1963 by which the High Court set aside the order of acquittal passed by the Assistant Sessions Judge of Puri and convicted the appellants under section 353 of the Indian Penal Code and sentenced them to 4 months ' rigorous imprisonment. The decree holders Panu Sahu and Naha Sahu levied execution of the decree (exhibit Case No. 125/62) in the Court of the Munsif, Puri against the appellants and a writ of attachment of the moveables of the judgment debtor was issued for execution through P.W. 2, Sadhu Charan Mohanty, a peon of the Civil Court, Puri, returnable by August 10, 1962. P.W. 2 reached the village of the judgment debtors on August 10, 1962 at 10 a.m. with the warrant of attachment and asked the judgment debtors to pay the decretal dues of Rs. 952 10 nP, and when he was going to seize some of the moveables, the appellants came there with lathis and resisted him. P.W. 2 sent a report exhibit 4 to the Court through Nabaghan requesting the Court to give necessary police help. Accor dingly on the same day the Munsif wrote a letter, exhibit 2, requesting the Superintendent of Police, Puri to direct the Officer in charge, Sadar Police Station, to give immediate police help to the process server. In pursuance of this letter, P.W. 1, the Assistant Sub. Inspector, Sadar Police Station, Puri was deputed along with two constables including P.W. 3, Constable No. 613. They went to the village Sanua where the writ of attachment was to be executed ' P.W. 6 the Naib Sarpanch and P.W. 8 the Chowkidar of the village Chhaitna also accompanied them. On reaching the spot, they found P.W. 2 sitting in front of the house of Durga Charan Naik One of the judgment debtors. The A.S.I. then called out Fakir Charan Naik, father of Durga Charan Naik one of the judgment debtors, who opened the door and paid Rs. 952 10 nP to the process server, Sadhu Charan Mohanty and obtained a receipt from him. After the money was paid, all of them left the village and at about 7 p.m. while they were crossing a river nearby in a boat, P.W. I saw the appellant Durga Charan with 10 or 12 persons coming from the opposite direction. On seeing them, P.W. I apprehended some trouble and directed P.W. 2 to hand over the money to the chowkidar, P.W. 8. When all of them got down from the boat, appellant Durga Charan forcibly dragged the A.S.I. A number of other persons including the other appellants assembled at the spot. Durga Charan threatened to assault the A.S.1 if he did not return the money. Durga Charan also searched hi pockets and Netrananda threatened the A.S.I. by saying that he would not leave the place until the money was returned. When P.W. I wanted to write a report to his police station, Netrananda MllSup. Cl/66 9 638 obstructed him by holding his right hand. Bipra and Jugal caught hold of the hands of P.W. 2 and took him to the river bank and demanded return of the money. Then at the intervention of some outsiders the appellants left the spot. P.W. I lodged the first information report at the police station next morning and after investigation the appellants were charge sheeted and committed to the court of Sessions. The appellants were charged under sections 143/402, Indian Penal Code on the allegation that they formed an unlawful assembly with the common object of committing dacoity. Durga Charan, Jugal, Bipra along with three others were further charged under section 186, Indian Penal Code for having voluntarily obstructed P.Ws I and 2 in the discharge of their public duty. Durga Charan and Netrananda were also charged under section 353, Indian Penal Code for having used criminal force against P.W. I and Bipra Charan and Jugal were similarly charged under section 353, Indian Penal Code for having used criminal force against P.W. 2 while both of them were dis charging their duty as public servants. The Additional Sessions Judge acquitted the appellants of all the charges. The State Government took the matter in appeal to the Orissa High Court which set aside the order of acquittal with regard to the 4 appellants and convicted them under section 353, Indian Penal Code. The High Court, however, held that there was no satisfactory evidence to convict the appellants under sections 143/402, Indian Penal Code. As regards the charge under section 186, Indian Penal Code, the High Court expressed the view that the prosecution was barred under the provisions of section 195, Criminal Procedure Code. In support of this appeal Mr. Garg submitted, in the first place, that the High Court had no justification for interfering with the order of acquittal passed by the Additional Sessions Judge and that 'it has not applied the correct principle in a matter of this description. Learned Counsel took us through the judgments of the High Court and of the trial court and stressed the argument that there was no evidence upon which the High Court reached the finding that the appellants used criminal force against P.Ws I and 2. We are unable to accept the argument of Mr. Garg as correct. The High Court has mainly relied upon the evidence of P.Ws 1, 2 and 3 and P.Ws 9 to 13 for holding that the appellants used criminal force against P.Ws I and 2. The High Court has also observed that P.W. 2 was entrusted with the execution of the writ of attachment. He was also entrusted with the official cheque book (exhibit 5) to give the receipt in token of payment of the decretal dues. In the course of his official business P.W. 2 was carrying the money realised from the judgment debtors for necessary deposit in Court. So far as P.W. I was concerned, he was deputed to render assistance to P.W. 2 in executing the writ of attachment. It is manifest that both P.Ws. I and 2 were assaulted by the appellants when they 639 were discharging their duties as public servants. The High Court has also accepted the evidence of P.W. I that Durga Charan caught hold of his hands and demanded money on the threat of assault. P.W. 2, the process server stated that Bipra Charan and Jugal caught hold of his hands and Durga Charan told him that he would not let anybody go unless the money was returned. P.W. 2 added that Bipra and Jugal also snatched away his bag. The High Court analysed the evidence of P.Ws 9 to 13 and reached the conclusion that the appellants used criminal force against P.Ws I and 2 in the course of the performance of their duties. The High Court has also dealt with the reasoning of the trial court and has pointed out that the order of acquittal of the appellants with regard to section 353, Indian Penal Code was not justified. In Sanwat Singh & Others vs State of Rajasthan(1) it was pointed out by this Court that an appellate court has full power to review the evidence upon which the order of acquittal is founded and that the principles laid down by the Judicial Committee in Sheo Swarup 's case (2) afford a correct guide for the appellate court 's approach to a case disposing of such an appeal. It was further observed that different phraseology used in the judgments of this Court, such as "substantial and compelling reasons", "good and sufficiently cogent reasons" and "strong reasons" are not intended to curtail the undoubted power of an appellate Court in an appeal against acquittal to review the entire evidence and to come to its own conclusion, but in doing so should not only consider every matter on record having a bearing on the questions of fact and the reasons given by the Court below in support of its order of acquittal in arriving at a conclusion on those facts, but should express the reasons in its judgment, which led it to hold that the acquittal was not justified. The same opinion has been expressed by this Court in a later decision in M. G. Agarwal and M. K. Kulkarni vs State of Maharashtra (3). It was pointed out in that case that there is no doubt that the power conferred by cl. (a) of section 423(1) which deals with an appeal against an order of acquittal is as wide as the power conferred by el. (b) which deals with an appeal against an order of conviction, and so, it is obvious that the High Court 's powers in dealing with criminal appeals are equally wide whether the appeal in question is one against acquittal or against conviction. It was observed that the test suggested by the expression "substantial and compelling reasons" for reversing a judgment of acquittal, should not be construed as a formula which has to be rigidly applied in every case, and so, it is not necessary that before reversing a judgment of acquittal, the High Court must necessarily characterise the findings recorded therein as perverse. Tested in the light of these principles laid down by those authorities, we are satisfied that the High Court was justified, in the present case, in interfering with the order of acquittal passed by (1) ; (2) 61 I.A. 398. (3) ; 640 the Additional Sessions Judge with regard to the charge under section 353, Indian Penal Code and the judgment of the High Court is not vitiated by any error of law. We accordingly hold that Mr. Garg is unable to make good his argument on this aspect of the case. We pass on to consider the next contention of the appellants that the conviction of the appellants under section 353, Indian Penal Code is illegal because there is a contravention of s.195(1) of the Criminal Procedure Code which requires a complaint in writing by the process server or the A.S.I. It was submitted that the charge under section 353, Indian Penal Code is based upon the same facts as the charge under section 186, Indian Penal Code and no cognizance could be taken of the offence under section 186, Indian Penal Code unless there was a complaint in writing as required by section 195(1) of the Criminal Procedure Code. It was argued that the conviction under section 353, Indian Penal Code is tantamount, in the circumstances of this case, to a circumvention of the requirement of section 195(1) of the Criminal Procedure Code and the conviction of the appellants under section 353, Indian Penal Code by the High Court was, therefore, vitiated in law. We are unable to accept this argument as correct. It is true that most of the allegations in this case upon which the charge under section 353, Indian Penal Code is based are the same as those constituting the charge under section 186, Indian Penal Code but it cannot be ignored that sections 186 and 353, Indian Penal Code relate to two distinct offences and while the offence under the latter section is a cognizable offence, the one under the former section is not so. The ingredients of the two offences are also distinct. Section 186, Indian Penal Code is applicable to a case where the accused voluntarily obstructs a public servant in the discharge of his public functions but under section 353, Indian Penal Code the ingredient of assault or use of criminal force while the public servant is doing his duty as such is necessary. The quality of the two offences is also different. Section 186 occurs in Ch. X of the Indian Penal Code dealing with Contempts of the lawful authority of public servants, while section 353 occurs in Ch. XVI regarding the offences affecting the human body. It is well established that section 195 of the Criminal Procedure Code does not bar the trial of an accused person for a distinct offence disclosed by the same set of facts but which is not within the ambit of that section. In Satis Chandra Chakravarti vs Ram Dayal De(1) it was held by Full Bench of the Calcutta High Court that where the maker of a single statement is guilty of two distinct offences, one under section 21 1, Indian Penal Code, which is an offence against public justice, and the other an offence under section 499, wherein the personal element largely predominates, the offence under the latter section can be taken cognizance of without the sanction of the court concerned, as the Criminal Procedure Code has not provided for sanction of court (1) 641 for taking cognizance of that offence. It was said that the two offences being fundamentally distinct in nature, could be separately taken cognizance of. That they are distinct in character is patent from the fact that the former is made non compoundable, while the latter remains compoundable; in one for the initiation of the proceedings the legislature requires the sanction of the court under section 195, Criminal Procedure Code, while in the other, cognizance can be taken of the offence on the complaint of the person defamed. It is pointed out in the Full Bench case that where upon the facts the commission of several offences is disclosed some of which require sanction and others do not, it is open to the complainant to proceed in respect of those only which do not require sanction; because to hold otherwise would amount to legislating and adding very materially to the provisions of sections 195 to 199 of the Code of Criminal Procedure. The decision of the Calcutta case has been quoted with approval by this Court in Basir ul Huq and Others vs The State of West Bengal (1) in which it was held that if the allegations made in a false report disclose two distinct offences, one against a public servant and the other against a private individual, the latter is not debarred by the provisions of section 195, Criminal Procedure Code, from seeking redress for the offence committed against him. In the present case, therefore, we are of the opinion that section 195, Criminal Procedure Code does not bar the trial of the appellants for the distinct offence under section 353 of the Indian Penal Code, though it is practically based on the same facts as for the prosecution under section 186, Indian Penal Code. Reference may be made, in this connection, to the decision of the Federal Court in Hori Ram Singh vs The Crown (2). The appellant in that case was charged with offences under sections 409 and 477 A, Indian Penal Code. The offence under section 477 A could not be taken cognizance of without the previous consent of the Governor under section 270(1) of the Constitution Act, while the consent of the Governor was not required for the institution of the proceedings under section 409, Indian Penal Code. The charge was that the accused dishonestly misappropriated or converted to his own use certain medicines entrusted to him in his official capacity as a sub assistant surgeon in the Punjab Provincial Subordinate Medical Service. He was further charged that being a public servant, he wilfully and with intent to defraud omitted to record certain entries in a stock book of medicines belonging to the hospital where he was employed and in his possession. The proceedings under section 477 A were quashed by the Federal Court for want of jurisdiction, the consent of the Governor not having been obtained, but the case was sent back to the sessions judge for hearing on the merits as regards the charge under section 409, Indian Penal (1) (2) 642 Code, and the order of acquittal passed by the sessions judge under that charge was set aside. Two distinct offences having been committed in the same transaction, one an offence of misappropriation under section 409 and the other an offence under section 477 A which required the sanction of the Governor, the circumstance that cognizance could not be taken of the latter offence without such consent was not considered by the Federal Court as a bar to the trial of the appellant with respect to the offence under section 409. We have expressed the view that section 195, Criminal Procedure Code does not bar the trial of an accused person for a distinct offence disclosed by the same or slightly different set of facts and which is not included within the ambit of the section, but we must point out that the provisions of section 195 cannot be evaded by resorting to devices or camouflage. For instance, the provisions of the section cannot be evaded by the device of charging a person with an offence to which that section does not apply and then convicting him of an offence to which it does, on the ground that the latter offence is a minor one of the same character, or by describing the offence as one punishable under some other section of the Indian Penal Code, though in truth and substance the offence falls in the category of sections mentioned in section 195, Criminal Procedure Code. Merely by changing the garb or label of an offence which is essentially an offence covered by the provisions of section 195 prosecution for such an offence cannot be taken cognizance of by misdescribing it or by putting a wrong label on it. On behalf of the appellants Mr. Garg suggested that the prosecution of the appellants under section 353, Indian Penal Code was by way of evasion of the requirements of section 195, Criminal Procedure Code. But we are satisfied that there is no substance in this argument and there is no camouflage or evasion in the present case. For these reasons we hold that the judgment of the High Court dated March 2, 1964 must be affirmed and this appeal must be dismissed. Appeal dismissed.

IN-Abs

The appellants were charged with offences under section 143/402, 186 and 353, Indian Penal Code for having obstructed and assaulted two public servant in the discharge of their public duty of executing the decree of a Civil Court. They were acquitted by the trial Court, but on appeal, the High Court convicted them under section 353, acquitted them under sections 143/402 and held that the prosecution under section 186 was barred by a. 195, Criminal Procedure Code, which requires a complaint in writing by the public servant before a court could take cognizance of the offence. In appeal to this Court, it was contended that the prosecution under section 353, Indian Penal Code, was also barred by section 195 Criminal Procedure Code. HELD : Sections 186 and 353, Indian Penal Code, relate to two distinct offences and section 353 is not referred to in section 195 Cr. P.C. Section 195, Criminal Procedure Code, does not bar the trial of an accused person for a distinct offence disclosed by the same set of facts, but which is not within the ambit of that section, when there is no camouflage or evasion to circumvent the Section. Therefore the trial of the appellants for the distinct offence under section 353 was not barred though it was based practically on the same facts as for the prosecution under section 186, and the High Court was justified, on the evidence, in interfering with the order of acquittal passed by the trial Court in regard to that charge. [640 E, G; 641 E] Sanwat Singh vs State of Rajasthan ; and Agarwal and Kulkarni vs State of Maharashtra, ; , followed. Basir ul Huk V. State of West Bengal ; and Hori Ram Singh vs The Crown, , referred to.

CIVIL APPEAL No. 141 of 1952. Appeal from the Judgment and Order dated the 29th August 1950 of the High Court of Judicature at Bombay (Chagla C.J. and Gajendragadkar J.) in Appeal No. 48 of 1950 arising out of the Judgment and Decree dated the 28th June, 1950, of the said High Court (Bhagwati J.) in its Ordinary Original Civil Jurisdiction in Suit No. 438 of 1950. M.P. Amin (M. M. Desai and K.H. Bhabha, with him) for the appellant. 679 M.C. Setalvad, Attorney General for India and C. K. Daphtary, Solicitor General for India (G. N. Joshi, with them) for respondents Nos. 1 to 4 and 6 tO 8. M.C. Setalvad, Attorney General for India (G. N. Joshi and Porus A. Mehta, with him) for respondent No. 9. 1953. December 18. The following Judgments were delivered. PATANJALI SASTRI C.J. I have fully discussed and explained the meaning and effect of articles 19 and 31 in my Judgment just delivered in Civil Appeal No. 107 of 1952 The State of West Bengal vs Subodh Gopal Bose and Others. On that view I agree with my learned brothers that the impugned Ordinance authorises, in effect, a deprivation of the property of the Company within the meaning of article 31 without compensation and is not covered by the exception in clause (5)(b). (ii) of that article. The Ordinance thus violates the fundamental right of the. Company under article31(2), and the appellant as a preference shareholder who is now called upon to pay the moneys unpaid on his shares is entitled to impugn the constitutionality of the Ordinance. I also agree with my learned brother Mahajan that the previous of this Court in Chiranjit Lal Chowdhuri vs The Union of India and Others(2) is distinguishable and has no application here for the reasons mentioned by him. MAHAJAN J. This is an appeal from the judgment and decree of the High Court of Judicature at Bombay 'passed on the 29th day of August, 1950, in Appeal No. 48 of 1950. The appeal concerns the validity of the same piece of legislation that was considered by this court in the case of Chiranjit Lad Chowdhuri (2). There, an ordinary shareholder of the defendant company holding one fully paid up share claimed relief under article 32 of the Constitution of India on the ground that the provisions of the Sholapur Spinning & Weaving Company (Emergency Provisions) Act, XXVIII of (1) ; (2) ; 680 1950 abridged his fundamental rights conferred under Articles 14, 19 and 31 of the Constitution. This Court by a majority of 3 to 2 dismissed the petition holding that the presumption in regard to the constitutionality of the Act had not been displaced by the petitioner and that it had not been proved that the impugned statute was a hostile or a discriminatory piece of legislation as against him, or that the State had taken possession of his share. The minority held that the impugned statute was, void as it abridged the petitioner 's fundamental rights under article 14 of the Constitution. This decision was delivered on 4th December, 1950. The suit out of which this appeal arises was decided by the High Court of Bombay during the pendency of Chiranjit Lal Chowdhuri 's petition in this court. Most of the facts furnishing the cause of action for the suit have been detailed in the judgment of this court in that case, but it seems necessary to briefly re state them from a proper appreciation of the contentions that have been raised in the appeal. The Sholapur Spinning and Weaving Company Ltd., was incorporated under the Indian Companies Act with an authorized capital of Rs. 48 lakhs divided into 1,590 fully paid up ordinary shares of Rs. 1,000 each, 20 fully paid up ordinary shares of 500 each, and 32,000 partly paid up cumulative preference shares of Rs. 100 each, the paid up capital of the company being Rs. 32 lakhs comprised of Rs. 16 lakhs fully paid up ordinary shares and Rs. 16 lakhs partly paid up preference shares, Rs. 50 being unpaid on each of the 32,000 cumulative preference shares. The company did good business and declared high dividends for some time; but in the year 1949, there was accumulation of stocks and financial difficulties. In order to overcome this situation the directors decided to close the Mills and on the 27th July, 1949, they gave notice of this decision to the workers. Pursuant to this notice the Mills were closed on the 27th August, 1949. This created a labour problem and to solve it the Government on the 5th October, 1949, appointed, a 681 Controller to supervise the affairs of the Mills under the Essential Supplies Emergency Powers Act, 1946. On the 9th November, 1949, the Controller in order to resolve the deadlock decided to call in more capital and he asked the directors of the company to make a call of Rs. 50 per share on the preference shareholders, the amount remaining unpaid on each of the preference shares. The directors refused to comply with this requisition, as in their judgment that was not in the interest of the company. Thereupon the Governor General on the 9th January, 1950, promulgated the impugned Ordinance, under which the Mills could be managed and run by directors appointed by the Central Government. On the 9th January, 1950, the Central Government acting under section 15 of the Ordinance delegated all its powers to the Government of Bombay. The Government of Bombay then appointed certain directors who took over the assets and management of the Mills. On the 7th February, 1950, they passed a resolution making a call of Rs. 50 on each of the preference shares payable at the time stated in the resolution. Pursuant to this resolution a notice was addressed on the 22nd February, 1950, to the plaintiff in the suit, who held preference shares, to pay Rs. 1,62,000, the amount of the said call on or before the 3rd April, 1950. The plaintiff instead of meeting the demand, filed the present suit on the 28th March, 1950, in a representative capacity on behalf of himself and other preference shareholders against the company and the directors appointed by the Government of Bombay challenging the validity of the Ordinance and questioning the right of the directors to make the call. On the 19th April, 1950, a notice was given to the Attorney General of India of the said suit and the Union of India was added as defendant No. 9 therein. The principal allegations in the suit were that the Ordinance was illegal, ultra vires and invalid as it contravened the provisions of section 299 (2)of the Government of India Act, 1935, and all the provisions contained in Part III of the Constitution, and that the resolution of the directors dated 7th February, 7 95 S.C. India/59. 682 1950, making a call was illegal and ultra vires, as the law under which they were appointed was itself invalid. The plaintiff claimed relief in the form of a declaration regarding the invalidity of the Ordinance and prayed for an injunction restraining the directors from giving effect to the resolution. The defendants denied the correctness of the contentions put forward by the plaintiff. Mr. Justice Bhagwati, who tried the suit, framed the following issues therein : 1. Whether by the Ordinance the plaintiff and holders of preference shares have been deprived of their interest in the Ist defendant company by taking possession of or requisitioning or acquiring the same as alleged in para 6 of the plaint; 2. Whether section 4 (d) or ' the Ordinance is illegal, ultra vires, and void in law as alleged; and 3. Whether the resolution dated the 7th February, 1950, made by defendants 2 to 6 is illegal, ultra vires, void and inoperative in law for the reasons mentioned in para 6 of the plaint or any of them. By his judgment dated the 28th June, 1950, the learned Judges answered all the three issues in the negative and dismissed the suit,and this decision was affirmed on appeal. It was held that by force of the Ordinance the State had neither acquired the property of the plaintiff, nor of the company, nor had it taken possession of it, but that the title to the property and its possession were with the respective owners, and the State was only supervising the affairs of the company through its nominated directors. It was further held that the Ordinance had not in any manner infringed the rights of the plaintiff under article 14 of the Constitution and there had been to him no denial of equality before the law or equal protection of laws, as the Ordinance was based on a classification which rested upon a ground having a fair and substantial relation to the object of the legislation and that it had a reasonable basis for that classification. It was also held that the restrictions 683 imposed on the right of the appellant and the company to hold his or its property were imposed in the interests of the general public. The principal questions for consideration in this appeal are : 1. Whether the provisions of the Ordinance for taking over the management and administration of the company, contravene the provisions of article 31 (2) of the Constitution; and 2. Whether the Ordinance as a whole or any of its provisions infringe articles 14 and 19 of the Constitution. In order to decide these issues it is necessary to examine with some strictness the substance of the legislation for the purpose of determining what it is that the legislature has really done; the court, when such questions arise, is not overpersuaded by the mere appearance of the legislation. In relation to constitutional prohibitions binding a legislature it is clear that the legislature cannot disobey the prohibitions merely by employing indirect method of achieving exactly the same result. Therefore, in all such cases the court has to look behind the names, forms and appearances to discover the true character and nature of the legislation. The preamble of the ' Ordinance states : "On account of mismanagement and neglect a situation has arisen in the affairs of the Sholapur Spinning & Weaving Company, Ltd., which has prejudicially affected the ' production of an essential commodity and has caused serious unemployment amongst a certain section of the community". Section 3 is the most material section and is in these terms : "The Central Government may at any time by notified order appoint as many persons as it thinks fit to be directors of the company for the purpose of taking over its management and administration and may appoint one of such directors to be the chairman. " 684 The provisions of this section are supplemented by what is subsequently provided for in section 12 which provides that notwithstanding anything contained in the Companies Act or in the memorandum or articles of association of the company, it shall not ,be lawful for the shareholders of the company or any other person to nominate or appoint any person to be a director of the company, that no resolution passed at any meeting of the shareholders of the company shall be given effect to unless approved by the Central Government, and that no proceeding for the winding up of the company or for the appointment of a receiver in respect thereof shall lie in any court unless by or with the sanction of the Central Government, and subject to such exceptions, restrictions and limitations as the Central Government may by .notified order specify, the Companies Act shall continue to apply to the company in the same manner as it applied thereto before the issue of the notified order under section 3. Section .4 states the effect of the order of the Central Government appointing directors. It provides that all the directors of the company who were holding office as such immediately before the issue of the notified order shall be deemed to have vacated their offices. In other words, the directors elected and appointed by the shareholders stand automatically dismissed without more. Not only do the directors stand automatically dismissed by legislative action the managing agents also share their fate and their contracts come to an end. Section 4 directs the persons appointed under section 3 to take into custody and under their control all the property, effects and actionable claims to which the company is or appears to be entitled and to exercise all the powers of the directors of the company, whether those powers are derived from the Companies Act or from the memorandum or articles of association or from any other source. By section 5 these nominated directors are given powers to raise funds in such manner and offer Such security as they may deem fit. They are given the overriding power of cancelling and varying contracts and agreements 685 entered into between the company and ' any other person at any time if they are satisfied that the contract or the agreement is detrimental to the interests the company. Section 10 denies to the managing agents compensation for the ' premature termination of the contract of management entered into by the company and it also says that no person shall be entitled to compensation in respect of a cancelled or varied contract under this. Ordinance, entered into with the company. The Ordinance thus confers powers on the directors of overriding all contracts and deprives persons who had entered into contracts with the company of their right under the ordinary law to, recover compensation, Sections 6, 7 and 8 of the Ordinance lay down, the method and ' manner how the existing directors were to give charge of the company 's affairs and properties. to the directors nominated by the Central Government under section 3 and any default in the matter of handing over charge is made punishable by imprisonment or other punitive action. The result of these provisions is that all the properties and effects of the company pass into the hands of persons nominated by the Central Government who are not members of the company or its shareholders, or in any way connected with it, and who are merely the creatures of the Central Government or its dummies. The combined effect of the provisions of sections 3, 4 and 12 is that the Central Government becomes vested with the possession, control and management of the property and effects of the company, and the normal function of the company under its articles and the Indian Companies Act comes to an end. The shareholders ' most valuable right to appoint directors to manage the affairs of the company and be in possession of its property and effect is taken away. Resolutions passed by them lose all vigour and become subject to the veto of the Central Government. Their power of voluntarily winding up the company formed by them or of winding it up through court also becomes subject to the veto of the Central Government. The Central Government by 686 executive action can override, if it likes, all the provisions of the Indian Companies Act. In substance therefore by the provisions of this Ordinance the company and its shareholders as well as 'its directors and managing agents have been completely deprived of possession of the property and effects of the company, and its possession has been taken by the Central Government, i.e., by the Union of India. The undertaking purports to have been taken over for a public purpose, namely, to keep up the production of an essential commodity, and to avoid serious unemployment amongst a certain section of the people. The majority of the court in Chiranjitlal Chowdhuri 's case(1), was inclined to take the view that that was the true effect of the provisions of the Ordinance. Mukherjea 1. with whose views Kania C.J., concurred, and to whose views to a certain extent Fazl Ali 1. subscribed. on this part of the case said as follows : "Mr. Chaff, on the other hand, has contended on behalf of the petitioner that after the management is taken over by the statutory directors, it cannot be said that the company still retains possession or control over its property and assets. Assuming that this State management was imposed in the interests of the shareholders themselves and that the statutory directors are acting as the agents of the company, the possession of the statutory directors could not, it is argued, be regarded in law as possession of the company so long as they are bound to act in obedience to the dictates of the Central Government and not of the company itself in the administration of its affairs. Possession of an agent, it is said, cannot juridically be the possession of the principal, if the agent is to act not according to the commands or dictates of the principal, but under the direction of an exterior authority. There can be no doubt that there is force in this contention." Mr. Justice Patanjali Sastri, as he then was held that the effect of the Act was that all the properties and effects of the company passed into the absolute (1) ; 687 power and control of the Central Government and the normal function of the company as a corporate body came to an end. Mr. Justice Das on this part of the case said as follows : "It is, however, urged by the learned Attorney General that the mills and all other assets now in the possession and custody of the new directors who are only servants or agents of the said company are, in the eye of the law, in the possession and custody of the company and have not really been taken possession of by the State. This argument, however, overlooks the fact that in order that the possession of the servant or agent may be juridically regarded as the possession of the master or principal, the servant or agent must be obedient to, and amenable to the directions of, the master or principal. If the master or principal has no hand in the appointment of the servant or agent or has no control over him or has no power to dismiss or discharge him, as in this case, the possession of such servant or agent can hardly, in law, be regarded as the possession of the company. In this view of the matter there is great force in the argument that the property of the company has been taken possession of by the State through directors who have been appointed by the State in exercise of the powers conferred by the Ordinance and the Act and who are under the direction and control of the State and this has been done without payment of any compensation . . . . Here, therefore, it may well be argued that the property of the company having been taken possession of by the State in exercise of powers conferred by a law which does not provide for payment of any compensation, the fundamental right of the company has, in the eye of the law, been infringed. " The learned Attorney General combated this view and strenuously argued that the Ordinance could not be construed in the manner suggested above and on its true construction its effect was that the Government took under its superintendence the affairs of the company without in any way disturbing its title in the property and that the shareholders have still to a certain extent an effective voice in its affairs. Illustratively 688 he said that ' the company was in the same state as a disqualified owner is under the provisions of the Court of Wards Act and that the provisions of the Ordinance should be construed in that light. To emphasize the same point of view reference was also made to the provisions of the Lunacy Act, the provisions of sections 52 A and 52 B introduced in the Insurance Act by Act 47 of 1950, the provisions of the Railway Companies Emergency Powers Act (51 of 1951), and also to the provisions of Act 65 of 1951 (Development of Industries Act), and it was contended that the impugned Ordinance was a piece of social control. legislation as were the provisions contained in the statutes referred to above. In my opinion, these contentions. are not well founded. Reference to illustrative pieces of legislation designed on the same pattern is neither very happy nor apposite; on the other hand, it is apt to mislead because except in the case of the Court of Wards Act, all the laws to which reference was made were enacted after the enactment of the Ordinance in question. The different Court of Wards Acts being existing laws have been excepted from the fundamental right guaranteed by article31 (2). That being so, they can afford little assistance in judging the validity of the impugned law. In dealing with constitutional matters of this kind it is always well to bear in mind what Bradley, J., speaking for the court said in Boyd v United States(1) at page 635 : "Illegitimate and unconstitutional practices get their first footing in that way, namely, by silent approaches and slight deviations from legal modes of procedure. This can only be obviated by adhering to the rule that constitutional provisions for the security of person and property should be liberally construed. A close and literal construction deprives them of half their efficacy and leads to gradual depreciation of the right, as if it consisted more in sound than in substance. It is the duty of courts to be watchful for the constitutional rights of the citizen and against any stealthy encroachments thereon," (1) ; 689 These illustrative pieces of ' legislation to which the learned Attorney General made reference may well have to be judged in the light of these observations when occasion arises. Reference may also be made to the observations of Holmes C.J. in Pennsylvania Cod Co. vs Mahon(1), wherein that learned Judge said as follows : "As long recognized, some values were enjoyed under an implied limitation and must yield to police power but obviously the implied limitation must have its limits or the contract and due process clauses are gone. One fact for consideration in determining such limits is the extent of the diminution. When it reaches a certain magnitude, in most, if not in all cases, there must be an exercise of eminent domain and compensation to sustain the act. " In my judgment, in the determination of all such cases no abstract standard or general rule can be laid down and the question is really one of degree and hence its determination depends on the facts of each case. In these circumstances, what is to be determined here is:whether the provisions of the Ordinance have not overstepped the limits of social legislation and whether they do not come within the ambit of article 31 (2). The Ordinance in question is not a law of a general character and ' applicable to all companies that may fall in a particular category or class. It deals only with a single company and it is difficult to say that mismanagement is a vice peculiar to this company alone and good management 'is a virtue possessed by all other incorporated companies. That being so, can it be reasonably held that by promulgating this Ordinance the Government has merely taken over the superintendence of the affairs of the company ? Or, has it in effect and substance taken over the under taking itself ? Obviously, the field of superintendence has to be ' demarcated from the field of eminent domain. It is one thing to superintend the affairs of a concern and it is quite ' another thing to take over its affairs (1) 690 and then proceed to carry on ,its trade through agents appointed by the State itself. It seems to me that under the guise of superintendence the State is carrying on the business or trade for which. the company was incorporated with the capital of the company but through its own agents who take orders from it and are appointed by it and in the appointment and dismissal of whom the shareholders have absolutely no voice. The purpose of taking over the company 's undertaking is a public purpose, namely, to keep the labour going and contended and to maintain the supply of essential commodity. The company is debarred from carrying on its business in the manner and according to the terms of its charter. Its old complexion stands changed by the terms of the Ordinance. The Ordinance overrides the directors, deprives the shareholders of their legal rights and privileges and completely puts an end to the contract of the managing agents. Without there being any vacancy in the number of directors new directors step in and old directors and managing agents stand dismissed. Exercise of any power by them under the articles is subject to heavy penalties. In this situation it is not possible to subscribe to the contention of the learned AttorneyGeneral that the effect of the Ordinance is that the Central Government has taken over the superintendence of the affairs of the company and that the impugned legislation is merely regulative in character. In the present case, practically all incidents of ownership have been taken over by the State and all that has been left with the company is mere paper ownership. This Ordinance, in my judgment, is an apposite illustration of what Holmes C. J. had in mind when he made the following observations in the case already referred to : "Where the seemingly absolute protection in respect of private property given by the Constitution is found to be qualified by the police power, the natural tendency of human nature is to extend the qualification more and more until at last private property disappears. We are in danger of forgetting that a strong public desire to improve the public 691 condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change and that the general rule is that while property may be regulated to a certain extent but if the regulation goes too far it will be recognized as a taking. " For the reasons given above I am of the opinion that the impugned statute has overstepped the limits of legitimate social control legislation and has infringed the fundamental right of the company guaranteed to it under article 31(2) of the Constitution and is therefore unconstitutional. Next it was contended that the Ordinance in question in any event could not fall within the mischief of article 31 (2) because the State had not acquired title in the property of the company under its provisions and that whatever possession had been taken had been taken for the purpose of managing the company 's property on the company 's behalf and that it had not been requisitioned for any State purpose. It was said that unless the property of the company by the provisions of the Ordinance was vested in the State or was commandeered by the State for State purposes, article 31 (2) could not be invoked to judge the constitutionality of the Ordinance, that article 31 (2) covered within its ambit only two forms of taking of property by the State, namely, where the State acquired title in the property or where the State temporarily commandeered it, and that all other forms of taking the property were outside the fundamental right guaranteed by article 31 (2). It was suggested that the scope of the protection given to private property by our Constitution was not as large as it was contained in the Fifth Amendment of the Constitution of the United States of America. According to the learned Attorney General, the true content of the fundamental right guaranteed by article 31 (1) was that a person could not be deprived of his property except by statutory authority, but once a law was made depriving a person of his property then the article afforded no further protection. Support for this 692 contention was sought to be derived from the reasoning employed in Gopalan 's case (1). There it was held that the freedoms relating to the person of a citizen guaranteed by article 19 assume the existence of a free citizen and can no longer be enjoyed if a citizen is deprived of his liberty by the law of preventive or punitive detention. In like manner it was argued that the freedom relating to property guaranteed by article 19 also vanished as soon as a person was deprived of his property under a law enacted by an appropriate legislature. The learned Attorney General suggested that the two clauses of article 31 were in the nature of two exceptions to the provisions of article 19 (1) (f). The first exception was that the guarantee of freedom given by article 19 (1)(f) could be defeated simply by enacting a statute and the second exception was that it could also be defeated by the State acquiring title ' in the property in exercise of its power of eminent; domain ' within the limited field prescribed by article 31 (2) but that if a certain deprivation of property did not fail within the prescribed ' field of article 31 (2) and fell within article 31 (1), then for such deprivation no compensation was payable. As regards clause (5) which excepted certain laws from the ambit of article 31 (2), it was argued that this clause had been inserted in the article by way of abundant caution. In my judgment, none of these ' contentions have any validity. The construction sought to be placed by the learned Attorney General on the language of article 31 is neither borne out by the phraseology employed in that article nor by the scheme of Part III of the Constitution. It seems to me that our Constitution subject to certain exceptions has guaranteed the fullest protection to private property. It has not only provided that no person can be deprived of property by the executive without legislative sanction but it has further provided that even the legislature cannot deprive a person of his property unless there is a public purpose and ' then only on payment of compensation. This article provides as follows : (1) ; 693 "31. (1) No person shall be deprived of his property save by authority of law. (2) No property, movable or immovable, including any interest, in, or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the ,property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which, the 'compensation is to be determined and given. (3) No such law as is referred to in clause (2) made by the Legislature of a State shall have effect unless such law, having been reserved for the consideration of the President, has received his assent. (4) If any Bill pending at the commencement of this Constitution in the legislature of a State has, after it has been passed by such Legislature, been reserved for the consideration of the President and has received his assent, then, notwithstanding anything in this Constitution, the law so assented to shall not be called in question in any court on the ground that it contravenes the provisions of clause (2). (5) Nothing in clause (2) shall affect (a) the provisions of any existing law other than a law to which the provisions of clause (6) apply, or (b) the provisions of any law which the State may hereafter make (i)for the purpose of imposing or levying any tax or penalty, or (ii) :for the promotion of public health or the prevention of danger to life or property, or (iii) in pursuance of any agreement entered into between the Government of the Dominion of India or the GoVernment of India and the Government of any other country, or otherwise, with respect to property, declared by law to be evacuee property. 694 (6) Any law of the State enacted not more than eighteen months before the commencement of this Constitution may within three months from such commencement be submitted to the President for his certification; and thereupon, if the President by public notification so certifies, it shall not be called in question in any court on the ground that it contravenes the provisions of clause (2) of this article or has contravened the provisions of sub section (2) of section 299 of the Government of India Act, 1935. " It bears the heading "Right to Property". It is significant that the different articles in Part III have been put in several groups, each bearing a heading of its own. These headings briefly indicate the nature and character of the fundamental rights thus grouped. The first group of articles 14 to 18, bears the heading "Right to Equality". The fundamental right of equality in matters of law, religion, social status etc. is mentioned in the different articles grouped under this heading. Articles 19 to 22 have been grouped under the heading "Right to Freedom". Not only are the protections given against deprecation of personal freedom mentioned in this group but it also mentions cases where personal freedom can be deprived by certain laws. Similarly, other articles in this part have been grouped under the headings "Right against exploitation", "Educational rights" and "Constitutional remedies". Under this scheme the fundamental right regarding property apart from personal and property freedoms has been dealt with in this part separately as a self contained provision and as a distinct subject from the various freedoms declared by article 19. In considering article 31 it is significant to note that it deals with private property of persons residing in the Union of India, while article 19 only deals with citizens defined in article 5 of the Constitution. It is thus obvious that the scope of these two articles cannot be the same as they cover different fields. It cannot be seriously argued that so far as citizens are concerned, freedoms regarding enjoyment of property have been granted in two articles of the Constitution, while the protection to property qua all 695 other persons has been dealt with in article 31 alone. If both articles covered the same ground, it was unnecessary to have two articles on the same subject. The true approach to this question is that these two articles really deal with two different subjects and one has no direct relation with the other, namely, article 31 deals with the field of eminent domain and the whole boundary of that field is demarcated by this article. In other words, the State 's power to take the property of a person is comprehensively delimited by this article. The article has been split up in six clauses. Moreover, by the amendment of the Constitution certain kinds of laws have been exempted from the operation of the article or from the whole of Part III of the Constitution by the addition of articles 31A and 31B. Article 31(1) declares the first requisite for the exercise of the power of eminent domain. It guarantees that a person cannot be deprived of property by an executive fiat and that it is only by the exercise of its legislative powers that the State can deprive a person of his property. In other words, all that article 31(1)says is that private property can only be taken pursuant to law and not otherwise. A reference to Cooley 's Constitutional Limitations fully bears out what the true content of article 31(1) is. This is what he has said at page 1119 (8th edn.) : "Legislative authority requisite: The right to appropriate private property to public uses lies dormant in the State, until legislative action is had, pointing out the occasions, the modes, conditions and agencies for its appropriations. Private property can only be taken pursuant to law. " Article 31 (2) defines the powers of the legislature in the field of eminent domain. It declares that private property shall not be taken by the State under a law unless the law provides for compensation for the property, taken. It is also implicit in the language of the article that such taking can only be for public purposes. Clause (3) of the article places an additional limitation on State laws enacted on this subject while clause (4) limits the justiciability of the quantum of compensation in certain cases. Clause (5) is the saving clause. It saves 696 from the operation of clause (2) laws made on certain subjects. The scope of the first clause being merely to save private property from being taken purely by executive action and the only clause which limits 'legislative action in the field of eminent domain being clause (2), the saving clause therefore concerns itself with clause (2) only. As pointed out in Willis on Constitutional Law, at ' page 716, police power, power of taxation and eminent domain are all forms of social control and probably include all the forms of social control known to the law: but each differs from the others; though it is possible to distinguish each from the others, yet each has characteristics which resemble the characteristics of others and there are times when it is very difficult to draw a line between the one and the others. The saving clause (5) in article 31 has been designed with the express purpose of saving to a certain extent laws made in exercise of the police power of the State which may lead to deprivation property. It has also saved laws relating to tax. It has thus delimited from the field of eminent domain the field of exercise of police power and the exercise of the power of taxation. Not only has it saved from the mischief of clause (2) of article 31 provisions of laws made for the purpose of imposing or levying any tax or penalty and the laws made for promotion of public health or the prevention of danger to life or property, but it has also saved from the mischief of the clause the provisions of all existing laws which may be construed as amounting to deprivation of property of a person as well as evacuee property laws under which the State takes possession of properties of persons who have left India for Pakistan. In the result the saving clause comprehensively includes within the ambit all the powers of the State in exercise of which it could deprive a person of property without payment of compensation. In other words, all forms of deprivation of property by the State without payment of compensation have 'been included within the ambit of the exception clause, while other forms of deprivation of property which are outside the ambit of the exception 697 clause are inevitably within the mischief of clause (2) of the article. From the language employed in the different sub clauses of article 31 it is difficult to escape the conclusion that the words "acquisition" and "taking possession" used in article 31 (2) have the same meaning as the word "deprivation" in article 31(1). The learned Attorney General suggested that much weight could not be attached in construing article 31 to the provisions of clause (5) inasmuch as the saving clause had been introduced by the article merely by way of abundant caution. I am unable to accede to this contention as it seems to me that the Constitution while defining and delimiting fundamental rights would not introduce in the articles dealing with those rights some matter merely by way of abundant caution. To my mind, it was essential while delimiting and defining fundamental rights to fully define the field of the right and to say what was not included within that right. As already said, the article read as a whole comprehensively defines the State 's power of eminent domain as distinguished from all its other powers the exercise of which may amount to the taking of private property. The argument that these exceptions were incorporated in article 31 by way of abundant caution further stands negatived by the contents of sub clause (5) (b) (ii) of the article. Only laws made for the promotion of public health or for prevention of danger to life or property have been excluded from the mischief of clause (2) of the article, while other laws made in exercise of power of social control which deprive a person of property have not been saved from the operation of clause (2). Illustratively, laws made by the State dealing with morality and which may lead to deprivation of property are outside the ambit of the exception clause. A fortiori, any deprivation of property under a law made for promotion of morality would fail within the mischief of clause (2) of article 31. It is thus clear that only that form of legislation which promotes public health or prevention of danger to life or property is saved from the provisions of article 31(2), while other laws made in exercise of the power of social control, if they deprive a person of 8 95 S.C.I./59 698 property, are not saved from the operation of clause (2) of article 31. In support of his contention that the content of article 31(1) was larger than that of article 31(2) and that except in cases where the form of taking private property took the shape of acquisition of title or requisition for State uses, in all other cases the State could deprive a person of his property by simply making a law, the learned Attorney General placed reliance on the following observations of my brother Das in Chiranjit Lal Chowdhuri 's case(1) : "Article 31 (1) formulates the fundamental right in a negative form prohibiting the deprivation of property except by authority of law. It implies that a person may be deprived of his property by authority of law. Article 31(2) prohibits the acquisition or taking possession of property for a public purpose under any law, unless such law provides for payment of compensation. It is suggested that clauses (1)and (2) of article 31 deal with the same topic, namely, compulsory acquisition or taking possession of propetty, clause (2) being only an elaboration of clause (1) There appear to me to be two objections to this suggestion. If that were the correct view, then clause (1) must be held to be wholly redundant and clause (2), by itself, would have been sufficient. In the next place, such a view would excludedeprivation of property otherwise than by acquisitionor taking of possession. One can conceive of circumstances where the State may have to deprive a person of his property without acquiring or taking possession of the same. For example, in any emergency, in order to prevent a fire spreading, the authorities may have to demolish an intervening building. This deprivation of property is different from acquisition or taking of possession of property which goes by the name of 'eminent domain ' in the American law. The construction suggested implies that our Constitution has dealt with only the law of 'eminent domain ', but has not provided for deprivation of property in exercise of (1) ; 699 'police power '. I am not prepared to adopt such construction, for I do not feel pressed to do so by the language used in article 31. On the contrary, the language of clause (1) of article 31 is wider than that of clause (2), for deprivation of property may well be brought about otherwise than by acquiring or taking possession of it. I think clause (1) enunciates the general principle that no person shall be deprived of his property except by authority of law, which, put in a positive form, implies that a person may be deprived of his property, provided he is so deprived by authority of law. No question of compensation arises under clause (1). The effect of clause (2) is that only certain kinds of deprivation of property, namely, those brought about by acquisition or taking possession of it, will not be permissible under any law, unless such law provides for payment of compensation. If 'the deprivation of property is brought about by means other than acquisition or taking possession of it, no compensation is required, provided that such deprivation is by authority of law. " Similar observations were made by my brother in the Bihar Zamindari case(1). Undoubtedly great weight must be given to the opinion expressed on this question by my learned brother and had I not felt ' convinced that his approach to this question was illiberal and restricted, I would have hesitated to differ from his views. After a full consideration of the problem and after giving due weight to the reasoning of my learned brother, I am unable, for reasons above stated, ' to agree with him. The objections envisaged by my brother in Chiranjit Lal Chowdhuri 's case (2) against the suggestion that clauses (1) and (2) of article 31 deal with the same topic of compulsory acquisition or taking of property do not at all oppress me and do not seem to me to be insurmountable or cogent. On the assumption that clauses (1) and (2) of article 31 deal with the same topic, it is not clear to me why in that context article 31(1) somehow becomes (1) (2) ; 700 redundant. This is the only clause in the article which gives protection to private property from being taken Under executive orders without legislative sanction behind them. The first requisite for the exercise of the power of eminent domain is that it can only be exercised pursuant to law. It was necessary while delimiting the field of eminent domain to state that in the article. If the State had been entitled by clause (1) to take away private property merely by making a law, then no question of paying compensation would arise, whether the taking assumed one form or another. Acquisition of property or its requisition, on that construction of the article, are merely two modes of depriving a person of property and must be held to be included within the ambit of clause (1)of article 31, and clause (2) has not been drafted in the nature of an exception to the provisions of clause (1) of article 31. On this construction of clause (1) of article 31 the logical conclusion is that what has been done by this clause 'is that it has declared a fundamental right in the State as against an individual. Such a construction of the article in Part III, in my opinion, has to be avoided, as the purpose of those articles is to declare the fundamental rights possessed by the citizens or other persons residing within the Union, rather than to declare the rights of the State against them. Secondly, my learned brother was oppressed with the idea that if a wide construction was not placed on the phraseology employed in clause (1), deprivation of property by the State in cases Of emergency, for instance, in order to prevent a fire from spreading, would also have to be paid for. It seems that in that case pointed attention was not drawn during arguments to the comprehensive provisions of the saving clause of the article which seems fully to cover cases of that kind. The ConstitUtion makers were fully alive to cases of that character and considering that all such cases, unless excepted, would fall within the mischief of clause (2), they purposely excepted them from the ambit of the clause. 701 The majority of the court in Chiranjit Lal Chowdhuris case(1) refrained from expressing any opinion on the scope of article 31 (1). My brother Mukherjea made a reference to this question but declined to express any opinion on it. There is thus no consensus of opinion on the scope of the provisions ,of clause (1) of article 31 in this court and no final opinion has been pronounced upon it so far. The result of the above discussion is that, in my opinion, article 31 is a self contained provision delimiting the field of eminent domain and article 31 clauses (1) and (2) deal with the same topic of compulsory acquisition of property. The contention of the learned Attorney General that on the analogy of the decision of this court in Gopalans case(2) it should be held that when a person is deprived of private property by authority of law that deprivation puts an end to all the freedoms regarding property guaranteed under article 19, does not require any detailed examination in the light of the construction placed by me on the language of article 31(1). It was conceded by the learned counsel that that decision would have had no application once it was held that clauses (1) and (2) of article 31 dealt with the same topic of compulsory acquisition of property. The next contention of the learned counsel that the word "acquisition" in article 31 (2) means the acquisition of title by the State and that unless the State becomes vested with the property there can be no acquisition within the meaning of the clause and that the expression "taking possession" connoted the idea of requisition cannot be sustained and does not, to my mind, affect the decision of the case. As above pointed, both these expressions used in clause (2) convey the same meaning that is conveyed in clause (1) 'by the expression "deprivation". As I read article 31, it gives complete protection to private property as against executive action, no matter by what process a (1) ; (2) ; 702 person is deprived of possession of it. In other words, the Constitution declares that no person shall be deprived of possession of private property without payment of compensation and that too under the authority of law, provided there was a public purpose ' behind that law. It is immaterial to the person who is deprived of property as to what use the State makes of his property or what title it acquires in it. The protection is against loss of property to the owner and there is no protection given to the State by the article. It has no fundamental right as against the individual citizen. Article 31 states the limitations on the power of the State in the field of taking property and those limitations are in the interests of the person sought to be deprived of his property. The question whether acquisition has a larger concept than is conveyed by the expression "taking possession" is really of academic interest in view of the comprehensive phraseology employed by clause (2)of article 3L As the matter was argued at some length, I propose to briefly indicate my opinion on that point. For the proposition that the expression "acquisition" has the concept of vesting of title in the State reliance was placed on the opinion of Latham C.J. in Minister of State for the Army vs Dalziel(1 ). By virtue of the provisions of section 51, placitum (xxxi) of the Constitution of Australia, the Commonwealth Parliament is empowered to make laws with respect to "the acquisition of property on just terms from any state or person for any purpose in respect of which the Parliament has power to make laws.", General regulations styled as the National Security Regulations were made under the national Security Act, 1939 1943, section 5 Regulation 54 relates to the taking of possession of land by the Commonwealth and other regulations provide for the ascertainment and payment of compensation for toss or damage suffered by reason of things done in pursuance of the regulation. The Supreme Court of New South Wales ' held that taking possession of land in pursuance of Reg. 54 amounted to acquisition (1) 68 C.W.L.R. 261. 703 of property within the meaning of section 51 (xxxi)of the Constitution, On appeal Latham C.J. made the following observations : "The Commonwealth cannot be held to have acquired land unless it has become the owner of land or of some interest in land. If the Commonwealth becomes only a possessor but does not become an owner of land, then, though the Commonwealth may have rights in respect to land, which land may be called property, the Commonwealth has not in such a case acquired property . . Accordingly, m my opinion, the facts that the right to possession n is the most valuable attribute of ownership,that possession is prima facie evidence of ownership,and that possession may develop into ownership,do not justify any identification of possession with ownership, but, on the contrary, emphasize the distinction between the two ideas. The fact that the Commonwealth is in possession of land as a result of action under the Regulations does not show that the Commonwealth has become the owner of the land or of any estate in the land". The majority of the court held otherwise and expressed the opinion that the taking under Regulation 54 of the National Security (General) Regulations by the Commonwealth for an indefinite period of the exclusive possession of property constituted an acquisition of property within the meaning of section 51 (xxxi) of the Constitution. This is what Rich J. said, representing the majority opinion : "It would, in my opinion, be wholly inconsistent with the language of the placitum to hold that, whilst preventing the legislature from authorizing the acquisition of n citizen 's full title except upon just terms, it leaves it open to the legislature to seize possession and enjoy the full fruits of possession, indefinitely, on any terms it chooses, or upon no terms at all. In the case now before us, the Minister has seized and taken away from Dalziel everything that made his weekly tenancy worth having, and has left him with the empty husk of tenancy. In such circumstances, he may well say : 704 'You take my house, when you do take the prop That doth sustain my house; you take my life, When you do take the means whereby I live. '" In the present case nothing has been left with the company but the mere husk of title. In my judgment, the true concept of the expression "acquisition" in our Constitution as well as in the Government of India Act is the one enunciated by Rich J. and the majority of the court in Dalzie 's case(1). With great respect I am unable to accept the narrow view that "acquisition" necessarily means acquisition of title in whole or part of the property. It has been tightly said that a close and literal construction of constitutional provisions made for the security of person and property deprives them of half their efficacy and ends in a gradual depreciation of the right as if the right consisted more in sound than in substance. In other words, such provisions cannot be construed merely by taking a dictionary in hand. The word "acquisition" has quite a wide concept, meaning. the procuring of property or the taking of it 'permanently or temporarily. It does not necessarily imply the acquisition of legal title by the State in the property taken possession of. The learned Attorney General combated this view and contended that such a wide concept of the meaning of the word "acquisition" was contrary to legislative practice in India which practice was in accord with the view enunciated by Latham C.J. in the case above cited. It was said that the decided cases in India supported that con struction of the word. Reference was made to a decision of Bhagwati 1. in Tan Bug Taim vs Collector Bombay(2). That case concerned the requisition by the State of the premises of a leading Bombay Chinese restaurant. On a petition presented to court under section 45 of the Specific Relief Act, Bhagwati 1. held that having regard to the principles applicable to British jurisprudence which had been enacted in section 299 (1) and (2) of the Government of India Act, (1) 68 C.W.L.R 261. (2) I.L.R. 1946 Born. 705 requisition of land could not be considered as being included either in item 9 or item 21 of List II of the 7th Schedule of the Act, that the word "acquisition" implied ownership in the property or rights in or over such property, while "requisition" implied deprivation of the owner of the property for the time being of the use and possession thereof and meant control of the property, and that there was no warrant for holding that so far as legislative practice in India was concerned, "requisition"was included in "acquisition". The learned Judge preferred to follow the view of Latham C.J. and refused to follow the majority judgment in Dalziel 's case(1). Having considered the matter in full, and with respect to the learned Judge, I prefer to follow the view of the majority of the court, because it seems to me that it is more in consonance with juridical principle that possession after all is nine tenths of ownership, and once possession is taken away, practically everything is taken away, and that in construing the Constitution it is the substance and the practical result of the act of the State that should be considered rather than its purely legal aspect. As already said, the correct approach in such cases should be this: what in substance is the loss or injury caused to the owner and not what manner and method has been adopted by the State in taking the property. That the view expressed by Bhagwati J. did not truly represent the intent of Parliament in drafting entry 9 of List II of the 7th Schedule becomes clear from what happened subsequent to this pronouncement. After this judgment was delivered, an Act was passed by Parliament ,amending the Government of India Act nullifying the effect of the judgment as regards requisition of property. The Indian (Proclamation of Emergency) Act, 1945, (9 & 10 Geo. 6, Ch. 23) was promulgated on February 14, 1946, the judgment of Bhagwati J. having been delivered on August 9, 1945, section 102 of the Government of India Act was amended and by it the Central Legislature, when a proclamation of emergency was in force, (1) 68 C.W.L.R. 261. 706 was empowered to make laws for a province or a part thereof, in respect of any matters not enumerated in any of the lists of the 7th Schedule. Reference was also made to certain observations of my brother Das in Chiranjit Lal Chowdhuri 's case(2) 'in which the opinion was expressed that the 'word "acquisition" had implicit in it the idea of vesting of property in property in the State. For the reasons already given, with great respect, I am unable to subscribe to that view. Reference was also made to a decision of the Punjab High Court in Jupiter General Insurance Co. vs Rajagopalan (2). This case concerned the provisions of sections 52 and 52(a) of the Insurance Amendment Act, 1950. It was contended there that those provisions abridged the fundamental rights guaranteed by article 31(2) of the Constitution. In view of the decision of this Court in Chiranjit Lal Chowdhuri 's case(1), the Punjab High Court construed the word "acquisition" in the narrower sense and held that as the beneficial interest in the property remained in the insurer the provisions of the impugned section did not amount to appropriation of the insurer 's property and merely amounted to exercise of police power. It was further held that the pith and sub stance of the impugned legislation was the regulation of insurance companies and winding up such corporations, if that was most advantageous to the general interest of policy holders. It is unnecessary for the purpose of this case to say anything about the correctness of that decision. In the light of these different decisions the Constitution employed more comprehensive phraseology in article 31 than had been employed in the entries of the 7th Schedule appended to the Government of India Act, 1935, and which became the subject matter of construction in the case decided by Bhagwati J. In the entries of the 7th Schedule appended to the Constitution the word used is "requisition" but the same phraseology has not been employed purposely in clause (2)of article 31, in all (1) ; (2) A.I.R. 1952 Punjab 9, 707 probability to avoid any controversy on the scope of the article by giving a limited meaning to these two words. On the finding that the company 's property was in effect taken possession of under the provisions of the Ordinance by the State and that the company was deprived of it, there is no escape from the conclusion that the impugned Ordinance and the statute following it are void as both of them encroach on the fundamental right of the company under article 31(2) of the Constitution. It was then argued that even so the plaintiff in the suit was not entitled to the relief claimed by him as it was the company alone that could complain about the abridgement of its fundamental rights by the Ordinance in question. It was also contended that the plaintiff 's fundamental right to property had not been infringed in any manner as his property in the share had not been taken possession of by the State. Finally it was said that on both these questions the majority decision of this court in ChiranJit Lal Chowdhuri 's case(1) was conclusive. I am unable to sustain any one of these contentions. Undoubtedly the majority decision in Chiranjit Lal Chowdhuri 's case (1) has binding force till it is reconsidered or overruled by this court. But this decision, in my opinion, has no apposite application to the facts and circumstances of this case and is clearly distinguishable. My reasons for saying so are these : 1. The decision in Chiranjit Lal Chowdhuri 's case(1) was given on a petition presented to this court in exercise of its jurisdiction under article 32 of the Constitution. Inter alia, Chowdhuri 's grievance was that his fundamental right under article 31(2)of the Constitution had been infringed by the impugned law, inasmuch as the State had taken possession of the company 's property and that all the rights and privileges annexed to his share had thereby been lost. The majority of the court took the view that the petitioner was still in possession of his share and that he had power to dispose of that share, that he could (1) ; 92 708 receive a dividend on that share, and that though he had lost some of the privileges annexed to his share, it could not be said that the State had taken possession of his share or was exercising the privileges which he enjoyed as a shareholder. The situation however of the present plaintiff and of all the preference shareholders whom he represents is quite different. Chiranjit Lal was an ordinary shareholder of a fully paid up share. The plaintiff and the other preference shareholders are in a different situation from Chiranjit Lal. All of them hold partly paid up preference shares on which their liability amounts to a sum of Rs. 16 lakhs, the plaintiff alone being under a liability of Rs. 1,62,000. In case this liability is not met when it is sought to be enforced, the shares are liable to forfeiture. The plaintiff and the other preference shareholders therefore are in imminent danger of losing the shares themselves or losing valuable property in the nature of money which they will have to pay out in order to meet the call. For all practical purposes the plaintiff is in danger of losing valuable property which the State is threatening to take possession of. Not only will these shareholders lose their shares and be deprived of them but they will also be forced to pay large sums of money and all this will be in exercise of the powers conferred on the directors appointed by the State by the Ordinance in question. There can thus be no comparison between the rights and liabilities of Chiranjit Lal with the rights and liabilities of the present plaintiff and the other preference shareholders. The rights and privileges of preference shareholders even in winding up and in earning dividends are somewhat different from the rights and privileges of the ordinary fully paid up shareholders. The court in Chiranjit Lal Chowdhuri 's case(1) did not at all advert to the case of preference shareholders and the effect the Ordinance had on their rights. It is evident that it was the refusal of the directors to obey the mandate of the Controller appointed by the Central Government to make a call on the preference (1) ; 709 shareholders that to a certain extent resulted in the making of the Ordinance. On the 5th October, 1949, the Government appointed a Controller to supervise the affairs of this ,company. On the 9th November, 1949, the Controller asked the directors of the company to make a call on the preference shareholders. Soon after the directors passed a resolution refusing to comply with the command. On the 9th January, 1950, the Ordinance was promulgated, i.e., soon after the refusal, and on the same day powers were delegated by the Central Government to the Bombay Government under the Ordinance. Next day on the 10th January, 1950, the Bombay Government appointed its nominees as directors of the company. On the 7th February, 1950, these directors passed a resolution to call up the uncalled capital and actually on the 22nd February, 1950, call was made and the plaintiff was called Upon to pay a sum of Rs. 1,62,000. In these circumstances, it cannot be held to be an unreasonable inference that one of the purposes of the Ordinance was to raise further finance for the business of the company so that it may start working. In any case, that was clearly the effect of the Ordinance on the property of the preference shareholders. In these circumstances, it cannot be said that on the rule of stare decisis the plaintiff is out of court in view of that decision. In the case of Chiranjit Lal Chowdhuri(1) the court was influenced considerably by. the fact that a solitary shareholder was trying to enforce the company 's fundamental right in the exercise of its jurisdiction under article 32 and that he could not do so unless his own fundamental right under article 31 (2) had been infringed. It was said that the complainant could not succeed because somebody else was hurt and that it was an elementary principle of law that in order to justify the grant of extraordinary relief the complainant 's need of it and the absence of an adequate remedy at law must clearly appear. Das J. also pointed out that article 32 can only be invoked for the purpose of enforcement of the fundamental right and that that article does not permit an application merely (1) ; 710 for the purpose of agitating the competence of the appropriate legislature in passing any particular enactment unless the enactment also infringes any of the fundamental rights. The learned Judge concluded by saying "In exceptional cases where the company 's property is injured by outsiders, a shareholder may under the English law, after making all endeavours to induce the persons in charge of the affairs of the company to take steps, file a suit on behalf of himself and other shareholders for redressing the wrong done to the company, but that principle does not apply here for this is not a suit, nor has it been shown that any attempt was made by the petitioner to induce the old directors to take steps nor do these proceedings purport to have been taken by the petitioner on behalf of himself and the other shareholders of the company. " Here it is quite clear that the present contention has been raised in a suit and not in an application for a writ under article 32. That itself distinguishes Chiranjit Lal Chowdhuri 's case(1) from the present. It is further clear that all the necessary steps visualised by my learned brother have been taken by the preference shareholders. A requisition ' for calling a meeting of the shareholders of, the company was made on 3rd August, 1950, a meeting was actually held on 28th September, 1950, and on subsequent days and on 5th November, 1950, resolutions were passed that the call should not be made. The resolutions were, however, vetoed by the Government. All the preference shareholders are represented in this suit including some of the directors, the company has been impleaded as a defendant and the old directors of the company have made an application that they should be allowed tO support the appeal. On these facts the present case is clearly distinguishable from that of Chiranjit Lal Chowdhuri(2). In any case, even if it is held that in view of the binding character of this court 's decision in Chiranjit Lal Chowdhuri 's case(1) the point is concluded, that the State has not taken possession of the shareholders property, I am of the opinion that the plaintiff (1) ; 711 and the other preference shareholders are entitled in this suit to attack the validity of the Ordinance on the basis of the infringement of the fundamental right of the company. The plaintiff has every right to challenge the authority of the directors to make the call and to question their locus standi before they can fix a liability on him. The directors seek to derive authority from the Ordinance. If, however, the Ordinance is void as against the company obviously they are not to be regarded as the directors of the company and would thus have no authority to make the call. It would indeed 'be a strange thing to hold that the plaintiff in a suit cannot question the authority and the credentials of the person who is seeking to enforce a demand against him. Unless the person making the demand makes out his authority or his credentials to do so, he is not entitled to enforce the demand. In all cases where a pecuniary or other similar liability is sought to be enforced by a person, it is always open to the person challenging the liability to raise the question of the locus standi and authority of the person making the demand. 'If that person claims in the status of an agent of some other person, unless his appointment is validly made, he would have no authority. In this case the shareholders under the articles of association were under a contractual liability to meet calls made by the directors of the company appointed by ' them. They never agreed to meet a call made by persons appointed by an external authority and in these circumstances they are entitled to question the authority of the person making the call. The directors appointed by the Government can only invoke in aid the authority given to them by the Ordinance and if the Ordinance is void as against the company,, they cannot be held to be directors of the company and would therefore have no authority to make the call. In my judgment, therefore, it is plain that the plaintiff is entitled to succeed on the basis of the infringement of the company 's fundamental right under article 31 (2), because that is the only authority under which the directors have been brought into existence and are exercising powers by virtue of the provisions of the Ordinance. If they are 712 not the validly appointed agents of the company qua the company, they cannot function as directors qua the shareholders. The learned Attorney General drew our attention to a number of cases for the proposition that unless there was a direct infringement of the fundamental right of the shareholders it was not open to them to take advantage of the breach of a fundamental right of the company. In these wide terms I am unable to accede ' to this proposition. In my opinion, the correct rule on this point has been stated in Willoughby, at page 20, on the authority of the decision in chusetts vs Mellon(1), and is in these terms: "We have no power per se to review and annul acts of Congress on the ground that they are unconstitutional. That question may be considered only when the justification for some direct injury suffered or threatened, presenting a justiciable issue is made to rest upon such an act. Then the power exercised is that of ascertaining and declaring the law applicable to the controversy. It amounts to little more than the negative power to disregard an 'unconstitutional enactment, which otherwise, would stand in the way of the enforcement of a legal right. The party who invokes the power must be able to show, not only that the statute is invalid, but that he has sustained or is immediately in danger of sustaining some direct injury as the result of its enforcement, and not merely that he suffers in some indefinite way in common with people generally. If a case for preventive relief be prevented, the court enjoins, in effect, not the execution of the statute, but the acts of the official, the statute notwithstanding". The rule stated above has apposite application to this case. The plaintiff and the other preference shareholders are in imminent danger of sustaining direct injury as a result of the 'enforcement of this Ordinance, the direct injury being the amount of the call that they are called upon to pay and the consequent forfeiture of their shares. Not only would, they lose (1) ; 713 their shares, if they do not meet the demand, but they would also have to pay the amount of the call. My brother Das elaborately dealt with this question in Chiranjit Lal 's case(1), and made reference to all the cases that were cited by the Attorney General on this subject, viz., McCabe vs Atchison(2); Jeffrey Manufacturing Co. vs Blagg(3); Hendrick vs Maryland(4); Newark Natural Gas & Fuel Co. vs The City of Newark (5); and in which the rule laid down was that in order to justify the granting of extraordinary relief the complainant 's need of it and the absence of an adequate remedy at law must clearly appear and that the complainant cannot succeed because some one else was hurt. He also made reference to the cases of Truax vs Raich (6), and Buchanan vs Warley (7). There the court allowed the plea to be raised because in both. these cases the person raising it was directly affected. In the first of the two last mentioned cases an Arizona Act of 1914 requiring employers employing more than five workers to employ not less than eighty per cent. native born citizens was challenged by an alien who had been employed as a cook in a restaurant. That statute made a violation of the Act by an employer punishable. The fact that the employment was at will or that the employer and not the employee was subject to prosecution did not prevent the employee from raising the question of constitutionality because the statute, if enforced, would compel the employer to discharge the employee and, therefore, the employee was directly affected by the statute. In the second case a city Ordinance prevented the occupation of a plot by a coloured person in a block where a majority of the residences were occupied by white persons. A white man sold his property in such a block to a Negro under a contract which provided that the purchaser should not be required to accept a deed unless he would have a right, under the laws of the city, to occupy. the same as 'a residence. The vendor sued for (1) ; (5) (2) ; (6) (3) ; (7) 245 'U.S. 60. (4) ; 9 95 S.C.I./59 714 specific performance and contended that the Ordinance was unconstitutional. Although the alleged denial of constitutional rights involved only the rights of coloured persons and the vendor was a white person, yet it was held that the vendor was directly affected, because the courts below, in view of the Ordinance, declined to enforce his contract and thereby directly affected his right to sell his property. Reference was also made to the case of Darnell vs The State of Indiana (1). That is the only case in which a shareholder was not heard to complaining Iris own name when the Ordinance infringed the fundamental right of the company, his own rights had not been infringed. In view of this decision my brother Das took the view that Chiranjit Lal who was merely a shareholder and did not suffer any direct injury by the result of the law was not entitled to complain. That may very well have been the correct view in the case of a fully paid up shareholder who had no further liability or who was not likely to suffer in any manner by the enforcement of the Ordinance but the situation of a partly paid up preference shareholder as in this case is quite different and distinguishable and in my judgment the apposite rule to apply to the present case is the one laid down in the cases of Truax vs Raich (2) and Buchanan vs WarIcy(3 ). The result is that the plaintiff is entitled to challenge the constitutionality of the Ordinance on the basis that it abridges the company 's fundamental right under article 31 (2). The plaintiff is thus entitled to succeed in this suit which should have been decreed in the terms in which it was laid. I am further of the opinion that the question of the locus standi of the plaintiff to raise the pica that the Ordinance being void against the company the directors had no authority to make the call, is really of academic interest in this case because here the company has been impleaded as a defendant. Its old directors have made an application to this court supporting the case of the plaintiff on the ground that the Ordinance (1) (2) ; (3) 245 u.s. 60. 715 is void as it infringes the company 's fundamental right under article 31 (2). The learned Attorney General when asked about this application said that it not having been made in the High Court and having only been made at the last stage of the case should not be entertained. In my view, when the question in issue is one concerning constitutional rights, the matter cannot be viewed purely from a technical angle and if in the interests of doing substantial justice it is necessary to grant permission to the old directors to have their say, technical considerations should not stand in the way of doing so. If the Ordinance qua the company is void, I do not see why the old directors should be debarred from saying so and if it is void qua the company, it can certainly not be sustained qua the shareholders. Some of the directors who are preference shareholders are also represented in the suit as well. In Chiranjit Lals case(1) the question of his locus standi was left open by the Chief Justice. This is what the learned Chief Justice said : "The first question is whether one individual shareholder can, under the circumstances of the case and particularly when one of the respondents is the company which opposes the petition, challenge the validity of the Act on the ground that it is a piece of discriminatory legislation . . do not think . it is necessary to pronounce a definite opinion on the first point. " In that case Patanjali Sastri J., as he then was, :also did not pronounce any definite opinion on the question so far as the shareholder 's right to question the invasion of the right to property of the company under article 31 was concerned. This is what the learned Judge said : "Whatever validity the argument may have in relation to the petitioner 's claim based on the alleged invasion of his right of property under article 31, were can be little doubt that, so far as his claim based on the contravention of article 14 is concerned, the petitioner is entitled to relief in his own right." (1) ; 716 The learned Judge did not offer any opinion on the other questions. Mukherjea J. decided the question on grounds somewhat different from that taken by Fazl Ali 1. This what the learned Judge said : "A discussion of the fundamental rights of the company as such would be outside the purview of our enquiry. It is settled law that in order to redress a wrong done to the company, the action should prima facie be brought by the company itself. It cannot be said that this course is not possible in the circumstances of the present case. As the law is alleged to be unconstitutional, it is open to the old directors of the company who have been ousted from their position by reason of the enactment to maintain that they are directors still in the eye of law, and on that footing the majority of shareholders can also assert the rights of the company as such. None of them, however, have come forward to institute any proceeding on behalf of the company. Neither in form nor in substance does the present application purport to be one made by the company itself. Indeed, the company is one of the respondents, and opposes the petition. " Even on the basis of this reasoning the situation of the present plaintiff, as already explained, is quite different and so is that of the company. In these circumstances it cannot be said that the decision given in Chiranjit Lal 's case(1) is binding on this point, as even the judgments of the Judges forming the majority did not speak with the same voice. For the reasons given above I would allow this appeal, set aside the judgment ' of the High Court and decree the plaintiff 's suit with costs. It is not necessary to give any decision on issue 2 in view of the decision reached above, viz., whether the law is void because it infringes the fundamental rights under articles 14 and 19. DAS J. I agree that this appeal should be allowed but I prefer tO rest my decision ' on the grounds and reasonings set forth in detail in my judgment in (1) ; 717 Appeal No. 107 of 1952 [The State of West Bengal vs Subodh Gopal Bose(1)]. This is an appeal by the plaintiff in a suit filed in the Bombay High Court on behalf of himself and other preference shareholders of the respondent company praying for a declaration that the power given to the defendants respondents 2 to 8 who had been appointed directors under the Sholapur Spinning and Weaving Company (Emergency Provisions) Ordinance II of 1950 (hereinafter referred to as the said Ordinance) to make a call and the resolution passed by the defendants ' respondents 2 to 6 on the 7th February, 1950, for making a call of Rs. 50 per each preference share are illegal, ultra vires, void and inoperative in law. The plaintiff appellant is the registered holder of 3,244 preference shares of the respondent company of the face value of Rs. 100 per share out of which only Rs. 50 had been paid up and consequently if the call has been duly made, he will have to pay Rs. 1,62,200 in respect of his holding. The plaintiff appellant. resists the payment of the call on the ground, inter alia, that the said Ordinance is illegal, ultra vires and invalid under the provisions of the Government of India Act, 1935, and/or the Constitution of India. No oral evidence was adduced on either side. The matters in issue were argued with questions of law governed by the Constitution. The contention was that the Ordinance was inconsistent with or in derogation of the fundamental rights guaranteed by the Constitution. The suit was dismissed by the trial court and that dismissal was affirmed by the appeal court. The plaintiff has now come up on appeal before us after having obtained a certificate under article 132 (1)of the Constitution ' from the High Court. The material facts leading up to the institution of the suit and the terms of the impugned Ordinance have been set out in detail in the judgments delivered by this court in the case of Chiranjitlal Chowdhuri vs The Union. of India(2) where this very Ordinance and the Act which replaced it were challenged (1) ; (2) [1950] S.G.R. 863. 718 as unconstitutional and also in the judgment just delivered and it is not necessary for me to recapitulate the same. The determination of the ' matters in issue depends on the correct interpretation of article 19 (1) (f)read with article 19 (5), article 31 and article 14 of the Constitution. My view about the correlation between article 19 (1) (f) read with article 19 (5) and article 31 and the true meaning and the respective scope and effect of clauses (1)and (2) of article 31 have been set forth in detail in my judgment in Chiranjitlal 's case (1) and have been more fully explained in my ' judgment in Appeal No. 107 of 1952 [The State of West Bengal vs Subodh Gopal Bose and others(2)] and no reiteration of them is called for. In the light of the conclusions reached and the reasons in support thereof given by me in those judgments I proceed to examine the contentions advanced by the appellant. The appellant seeks to question the validity of the Ordinance on the ground that it infringes the fundamental rights of (a) the company, (b) the shareholders, (c) the managing agent% (d) the directors elected by the shareholders and (e) persons having contracts with the company. The first thing to consider is whether he can raise the question of constitutionality of the Ordinance rounded on the breach of the fundamental rights of anybody other than himself. The above matter was agitated in Chiranjitlal 's case (1). There Chiranjitlal Chowdhuri, who was the holder of one fully paid up ordinary share, applied to this ,court under article 32 challenging the validity of this very Ordinance which is now questioned before ' us and the Act which eventually replaced it. One of the grounds of attack was that the Ordinance had infringed the fundamental rights of the company under article 19 (1) (f) and article 31 in that it dismissed the managing agents and the directors and authorised the State to appoint new directors and authorised the directors so appointed under the Ordinance to take possession of the company 's assets without payment of any compensation. On the point (1) ; (2) ; 719 now under consideration Mukherjea J. expressed himself thus, at page 898: "An incorporated company, therefore, can come up to this court for enforcement of its fundamental rights and so may be individual shareholders to enforce their own; but it would not be open to an individual shareholder to complain of an Act which affects the fundamental rights of the company except to the extent that it constitutes an infraction of his own rights as well. This follows logically from the rule of law that a corporation has a distinct legal personality of its own with rights and capacities; duties and obligations separate from those of its individual members. As the rights are different and inhere indifferent legal entities, it is not competent to one person to seek to enforce the rights of another except where the law permits him to do so. A well known illustration of such exception is furnished by the procedure that is sanctioned in an application for a writ of habeas corpus." And again at page 899 : "The rights that could be enforced under article 32 must ordinarily be the rights of the petitioner himself who complains of infraction of such rights and approaches the court for relief. This being the position, proper subject of our investigation would be what rights, if any, of the petitioner as a shareholder of the company have been violated by the impugned legislation. A discussion of the fundamental rights of the company as such would be outside the purview of our enquiry. " At pages 904 909 the learned Judge discussed the question whether the impugned law had infringed any fundamental right of the shareholders under article 31 (2) or article 19(1) (f) and answered it in the negative. Kania C.J. agreed with the line of reasoning and the conclusion reached by Mukherjea J. on this point. Fazl Ali J. at page 876 referred to a passage in the judgment of Hughes J. in McCabe vs Atchison(1)and expressly held that no one except those whose rights 720 were directly affected by a law could raise the question of the constitutionality of the law. His Lordship said: "The company and the shareholders are in law separate entities, and if the allegation is made that any property belonging to the company has been taken possession of without compensation or the right enjoyed by the company under article 19 (1) (f) has been infringed, it would be for the company to come forward to assert or vindicate its own rights and not for any individual shareholder to do so." As to the question whether the petitioner had succeeded in showing that there had been an infringement of his own rights as a shareholder under articles 31 and 19 (1) (f) his Lordship agreed with and adopted the conclusions arrived at by Mukherjea J. without committing himself to the acceptance of all the reasonings of Mukherjea J. My Lord the present Chief Justice rested his decision on article 14 and came to the conclusion that the petitioner as a shareholder had been discriminated against. Having thus decided the question arising under article 14, he did not think it necessary to express any opinion on the questions raised under articles 19 and 31. .At pages 927 930 I dealt with the question whether the shareholder could impugn the constitutionality of the law on the ground that the fundamental right of the company had been infringed. After referring to several decisions of the Supreme Court of America I came to the following conclusion at page 930: "In my opinion, although a shareholder may, in a sense, be interested to see that the company of which he is a shareholder is not deprived of its property he cannot, as held in Darnell vs Indiana(1) be heard to complain in his own name and on his own behalf, of the infringement of the fundamental right to property of the company, for, in law, his own right to property has not been infringed as he is not the owner of the company 's properties. " In the premises, I think it is quite clear that the majority of the members of the Bench which heard (1) 721 Chiranjitlal 's case(1) held that the petitioner was not entitled to question the constitutionality of the Ordinance and the Act on the ground that the fundamental rights of the company under articles 19 (1) (f) and 31 had been infringed. He had, therefore, to rely on the plea of infringement of his own fundamental rights. The majority of the court held that there had been no infringement of his rights as a shareholder under article 19(1)(f) or article 31 and that the petitioner consequently had to fail back on article 14 in order to support his plea of the unconstitutionality of the Ordinance and the Act. Even here the majority of the Bench took the view that the petitioner had not discharged the onus that was on him of showing that in fact there had been any discrimination against him and other shareholders of the company. Learned Attorney General submits that in so far as the challenge to the validity of the law is, inthe present case, rounded on theinfringement of the company 's fundamental rights,it is concludedby the decision in Chiranjitlal 's case(1) for the reasons adopted by the majority in that case apply equally to the case now before us and the same conclusion must be drawn, namely, that the present appellant, who is also. a shareholder, cannot be permitted to impugn the said Ordinance on the ground that it infringes the fundamental rights of the company, or the managing agents or the directors or other persons having contracts with the company. It is, on the other hand, contended on behalf of the appellant that the present case is distinguishable from Chiranjitlal 's case(1) in that the question here arises in a regular suit and not on an application under article 32 for the enforcement of fundamental rights. I do not think that this, by itself, is a substantial ground of distinction at all. I cannot see how the mere form of the proceeding can affect the question. The true principle being that only a person who is directly affected by a law can challenge the validity of that law and that a person whose own right or interest has not been violated or threatened cannot impugn the law on the ground that somebody else 's right has been infringed, (1) ; 722 the same principle must prevail irrespective of the form of the proceeding in which the question of constitutionality is raised. Learned counsel for the appellant, however, urges that although on a parity of reasoning there has been no infringement of the fundamental right of the preference shareholders under article 19(1) (f) or article 31 (2), the impugned law, if it stands, certainly subjects the preference shareholders to the ' risk of being called upon to pay the amount of capital remaining unpaid on their respective shareholding. Indeed, the directors appointed under the said Ordinance have made a call for the payment of Rs. 50 on each preference share and the plaintiff appellant alone will have to pay Rs. 1,62,200 on his shares. There was no such liability on the petitioner in Chiranjitlal 's case(1) for the was the holder of only one fully paid up ordinary share. The impugned Ordinance, therefore, directly affects the preference shareholders by imposing on them this liability, or the risk of it, and gives them a sufficient interest to challenge the validity of the Ordinance. It is quite true, as submitted by the learned Attorney General, that the fact of the property of the company or the managing agents, or the directors or the other persons having contracts with the company having been taken possession of by the State through the directors appointed by the State under the Ordinance has no relation to or bearing on the imposition 'on the preference shareholders of the liability to pay the call, for the directors were not obliged to make the call because they had taken possession of the property of the company or the other persons and that this imposition of liabilityor risk cannot, therefore, be said to be the direct or even indirect result of the State having through the directors appointed under the Ordinance taken possession of the property of the company or the other persons. It is then urged by him that, that being so, the preference shareholders cannot be allowed to complain of the infringment of the rights of the company or of the other persons which does not concern or affect them. This argurncnt, however, overlooks the purpose (1) ; 723 and scope of the suit filed by the appellant for himself and all other preference shareholders. The appellant is disputing his liability to pay the call made by the directors appointed under the Ordinance. He is, therefore, entitled to show that the directors who have made the call are not competent to do so. It is open to him to allege and prove, if he can, that the gentlemen who have purported to make the call are not competent to do so because they are not the directors of the company. Take the case of a company which is not governed by this Ordinance. If a call is made on the shareholders of such 'a company, it is certainly open to a shareholder to resist the payment of the call by proving, if he can, that the persons who have purported to make the call are not the directors of the company. This he may do by showing that those persons have not the requisite qualifications or have not been duly elected. Likewise, on a parity of reasoning, the appellant as a preference shareholder in the respondent company is entitled to show, if he can, that the persons who have made the call are really not ' the directors of the company. Certainly he can show that the Ordinance under which these persons have been appointed was beyond the legislative competency of the authority which made it or that the Ordinance had not been duly promulgated. If he can, with a view to destroy the locus standi of the persons who have made the call, raise the question of the invalidity of the Ordinance on the grounds I have just mentioned, I can see no valid reason why for the self same purpose, he should not be permitted to challenge the validity of the Ordinance on the ground of its unconstitutionality for the breach of the fundamental rights of the company or of other persons. He may not be interested in or concerned with the facts which constitute the unconstitutionality, e.g., the taking of possession of the property of the company or of the other persons but he is certainly interested in getting out of the law so as to destroy the very foundation of the status of the persons who have made the call and thereby repel the attack on him and avoid his own liability. In Chiranjitlal 's case(1) the (1) ; 724 petitioner was held to have suffered no loss of his own fundamental right as a shareholder and, therefore, by raising the question of unconstitutionality of the Ordinance on the ground of the breach of the fundamental rights of the company, or of the other persons he was really fighting the battle of the company and the other persons and not of his own. Here the position is different. Here the law has made the imposition of a liability on him and other preference shareholders possible and he is seeking to resist that liability and as in the premises he is directly affected by the statute he has sufficient interest to challenge its validity. If as between the company or the other persons and these persons who, purporting to act as directors, have made the call the law is unconstitutional for breach of the former 's fundamental rights then it follows that these persons are not, in the eve of the law, the directors of the company at all and if they are not in law the directors of the company, surely they cannot arrogate to themselves the right to exercise any of the powers of the directors of the company and to make any call. If the said Ordinance stands, the directors appointed thereunder will have authority to make the call which they have done and the appellant 's liability to pay it will stand good. Therefore, the appellant as a preference shareholder is directly affected by the statute and this circumstance, in my opinion, distinguishes this case from Chiranjitlal 's case(1 ) and it must be held that, in the circumstances of this case, the appellant, who is a preference shareholder and as such liable to pay the call, is entitled to challenge the Ordinance which dismissed the directors elected by the shareholders, authorised the appointment of directors by the State and made it possible for the directors so appointed to make the call and thereby impose a liability on all preference shareholders including the appellant. On the hypothesis that, with a view to resist his own liability to pay the call, it is open to the appellant to impugn the Ordinance and the Act which has replaced it and for that purpose to call in aid the infringement of the fundamental right under article 31 (2) of the (1) ; 725 company or of the other persons mentioned above, it has yet to be shown that there has in fact been such infringement. Two questions will have to be considered and decided, namely, (1) whether the impugned law has authorised the taking of possession or acquisition of any property and (2) whether what has been taken possession of or acquired is "property" within the meaning of article 31(2). Taking the second question first, there cannot be any doubt that the mills, machineries, stocks etc., of the respondent company are "property" within the meaning of articles 19 and 31. A contract or agreement which a person may have with the company and which may be cancelled by the directors in exercise of powers under the Ordinance will undoubtedly be "property" within the meaning of the two articles. There may be some argument as to whether the office of managing agents or of the directors, though each of such offices carries substantial remuneration, can be said to be "property" which, by itself, can be acquired or taken possession of or disposed of. I need not dilate on this further, for the machinery etc., of the company and the benefits of agreements of persons having contracts with the company are certainly "property" within those articles and if those have been taken possession of or acquired that will be quite sufficient for the plaintiff appellant to sustain his challenge to the constitutionality of the impugned law, whether or no the office of the managing agents or of the directors is "property" or has been taken possession of or acquired. The next question is whether the impugned law has authorised the taking of possession or acquisition of the property of the shareholders, or of the company. It may be mentioned at the outset that the impugned law has not authorised any acquisition of any property in the sense of divesting the shareholders or the company of any property and vesting that property in the State or its nominee. In other words, there has been no transfer of title, voluntarily or by operation of law. It is, therefore, necessary to enquire and as certain whether the Ordinance or the Act which replaced it 726 has authorised the taking of possession of any property of the shareholders or of the company. As regards the property of the shareholders the position is the same as in Chiranjitlal 's case(1). The shares still belong to them. They can hold them or dispose. of them. If any dividend is declared they will get them. If there is any winding up and if after payment of all liabilities there remains any surplus then they will participate in that surplus. It is true that from a practical point of view it may be difficult for the shareholders, if they desire to sell the shares, to find a purchaser who will be willing to buy shares in a company which is governed by an Ordinance of this kind but, nevertheless, it cannot be said that the State has taken possession of the shares in the sense in which that expression used in article 31(2) has been explained by me in Subodh Gopal Bose 's case(2). It is said, as was done in Chiranjitlal 's case(1 ), that certain valuable rights of the shareholders, e.g., the right of voting, the right to elect directors and the right to apply for the winding up of the company have been taken away. In the first place, it is doubtful if any of these right can be called "property" within the meaning of article 31(2) for, by itself and apart from the shares, none of them can be acquired or disposed In the next place, the State has not taken possession of these rights as explained by Mukherjea J. in Chiranjitlal 's case (1 ) at pages 904 906 and by me at pages 923 924. Therefore, there has been no infringement of the shareholders right to property under article 31(2). What has happened is that these rights which are only incidents of the ownership of the shares have been suspended or kept in abeyance and if this may be regarded as amounting to imposing restrictions on the exercise of the rights of ownership of the shares it may possibly be justified as an exercise in any emergency of the State 's police power under clause (5) of article 19 by imposing by law reasonable restrictions in the interests of the general public so as to secure the supply of an essential commodity and to prevent unempolyment. (1 ; (2) ; 727 As regards the property of the company also there has been no transfer of title to any such property, voluntary or involuntary, from the company to the State or its nominee and, therefore, no question arises of any property of the company having been "acquired". The question remains whether any property of the company has been "taken possession of" by the State within the meaning of article 31 (2) as explained by me in Subodh Gopal Bose 's case(1). In Chranjitlal 's case(2) Mukherjea J. at pages 903 904 said: "Assuming that tiffs State management was imposed in the interests of the shareholders themselves and that the statutory directors are acting as the agents of the company, the possession of the statutory directors could not, it is argued, be regarded in law as possession of the company so long as they are bound to act in obedience to the dictates of the Central Government and not of the company itself in the administration of its affairs. Possession of an agent, it is said, cannot judicially be the possession of the principal, if the agent is to act not according to the commands or dictates of the principal, but under the direction of an exterior authority. There can be no doubt that there is force in this contention, but as I have indicated at the outset, we are not concerned in ' this case with the larger question as to how far the inter position of this statutory management and control amounts to taking possession of the property and assets belonging to the company. It is fairly clear that his Lordship was inclined to the view that the company 's properties had been taken possession of although he did not categorically an explicitly say so. I dealt with the matter at pages 926 927. After pointing out that the possession of directors who Were not obedient to or amenable to the company or its shareholders and are not liable to be dismissed or discharged by the company cannot, in the eye of the law, be regarded as the possession of the company I said: (1)[1954] S.C.R. 587. (2) ; 728 "In this view of the matter there is great force in the argument that the property of the company has been taken possession of by the State through directors who have been appointed by the State in exercise of the powers conferred by the Ordinance and the Act and who are under the direction and control of the State and this has been done without payment of any compensation ." Then after quoting a passage from the judgment of Holmes 1. in Pennsylvania Coal Company vs Mahon(1) concluded: "Here, therefore, it may well be argued that the property of the company having been taken possession of by the State in exercise of powers conferred by a law which does not provide for payment of any compensation, the fundamental right of the company, has, in the eye of the law, been infringed. " It is quite clear that although I used the words "there is great force in the argument" and "it may well be argued", the then inclination of my mind was definitely that the property of the company had been taken possession of as contemplated by article 31 (2). My observations were much more definite than those of Mukherjea J. Learned Attorney General contends that the taking of possession of the property of the company that has taken place in this case is clearly not an exercise of the power of eminent domain within article 31 (2) but constitutes an exercise of police power under article 31 (1). Here, according to him, the State has not taken possession of the company 's property on its own account to implement a public purpose such as is contemplated by article 31 (2) but the State has taken possession of the company 's property to prevent the company from using its own property to the detriment of the interests of the public and to do for the company what the company should itself have done. In order to determine to which category this taking of possession falls, it is necessary to keep in mind the circumstances in which the Ordinance and the, Act were passed and to ascertain from their language their immediate (1) 729 purpose and ultimate aim and to consider their effect on the rights of the company. It should be remembered that the Ordinance of 1950 was promulgated on the 9th January, 1950. The preamble to the Ordinance recited as follows: "Whereas on account of mismanagement and neglect a situation has arisen in the affairs of the Sholapur Spinning and Weaving Company, Limited, which has prejudicially affected the production of an essential commodity and has caused serious unemployment amongst a certain section of the community. " Then came the Act on the 10th April, 1950. There is no preamble to the Act. Although the short title of the Act contains a reference to emergency provisions the full title of the Act is as follows: An Act to make special provision for the proper management and administration of the Sholapur Spinning and Weaving Company Limited. There is no suggestion either in this long title or in the body of the Act except in section 12 that the Act is intended only to be a temporary emergency measure. The object of the Ordinance was stated to be to provide employment to a large number of workmen and to keep up the production of an essential commodity. There is no doubt that section 12 of the Act provides that the property of the company and the management and administration of its affairs would be restored to the company or its directors elected by the shareholders but that is left entirely to the unfettered discretion of the Government. The provisions of the Ordinance and the Act are drastic in the extreme. The managing agents and the elected directors have been dismissed and new directors have been appointed by the State. So far as the company is concerned it has been completely denuded of the possession of its property. All that is left to the company is its bare legal title. The carrying on of a business demands many personal qualities and considerable business acumen and is much more complicated than collecting 10 95 S.C. India/59 730 the rents of the estate of a disqualified proprietor. The impugned law has thrust upon the company a board of directors in whose business capacity the Company and its shareholders may have no confidence and over whom the company has certainly no vestige of control or authority and who are not answerable to them at all. Although in outward form the directors are the officers of the company and are bound to act under the articles of association in so far as they are not contrary to or inconsistent with the Ordinance and the Act, nevertheless, in effect and in substance, they are the creatures of the State and are answerable to the State and it is the State that has through these directors of its choice taken possession of the undertaking of the company and has been carrying on an experiment in State management of business at the risk and expense of the company and the shareholders. Indeed we are told that under such State management which is going on for pretty nearly four years the business has been running at a loss. At any rate no profit has been made or distributed as and by way of dividend during this long period a sad commentary on the efficacy of State management And nobody knows how long this state of affairs will continue, for the Act does not prescribe any definite time limit to this hazardous experiment. It is, in the premises, impossible to uphold this law as an instance of the exercise of the State 's police power as an emergency measure. It has far overstepped the limits of police power and is, in substance, nothing short of expropriation by way of the exercise of the power of eminent domain and as the law has not provided for any compensation it must be held to offend the provisions of article 31 (2). The last contention of the appellant is that the Ordinance is unconstitutional and void in that it infringes the fundamental rights of the shareholders under article 14. In Chiranjitlal 's case(1] my Lord the present Chief Justice and I were of the ' opinion that the Ordinance and the Act did not proceed on any rational basis of classification and that this company and its shareholders had been arbitrarily (1) ; 731 singled out for discriminatory treatment and that as equality before the law was denied to this company and its shareholders the Ordinance and the Act offended the equal protection clause of our Constitution. The majority of the Bench, however, took the view that, there being a presumption in favour of the constitutionality of the law and that the onus of displacing that presumption being on him who impugns the law, the petitioner in that case had not discharged that onus and that, therefore, he could not complain of discrimination. In the present case there is nothing more than what there was before the court in Chiranjitlal 's case(1 ). Indeed, the question of discrimination does not appear to have been argued before the trial court and the appeal court has rejected it by saying that the plaintiff had not shown that there were other companies which were guilty of the same conduct but had not been similarly dealt with. Learned Attorney General has submitted that this court is not ' bound by its previous decision and has pressed us to go behind the majority decision. Accepting that this court is not bound by its own decisions and may reverse a previous decision especially on constitutional questions the court will surely be slow to do so unless such previous decision appears to be obviously erroneous. But in view of the conclusion I have already arrived at on the other point I do not feel called upon to pursue this point of discrimination any further. In my judgment, therefore, this appeal should be allowed and the plaintiff 's suit should be decreed. The Union of India must pay the plaintiff his costs throughout. BOSE J. 1 agree with my brother Mahajan that the impugned Ordinance and Act offend article 31 (2)of the Constitution and so are void. But I prefer to rest my decision on simpler foundations. With the utmost respect I deprecate, as I have done in previous cases, the use of doubtful words like "police power" "social control", "eminent domain" and the like. I say doubtful, not because they are devoid of meaning but because they have different shades of meaning in different countries and because they represent powers (1) ; 732 which spring from widely differing sources. In my opinion, it is wrong to assume that these powers are inherent in the State in India and then to see how far the Constitution regulates and fits in with them. We have to interpret the plain provisions of ' the Constitution and it is for jurists and students of law, not for judges, to see whether our Constitution also provides for these powers and it is for them to determine whether the shape which they take in India resemble any of the varying forms which they assume in other countries. Article 19 (1) (f) confers a certain fundamental certain freedom on all citizens of India, namely, the freedom to acquire, bold and dispose of property. Article 31(1) is a sort of corollary, namely that after the property has been acquired it cannot be taken away save by authority of law. Article 31 is wider than article 19 because it applies to everyone and is not restricted to citizens. But what article 19 (1)(f) means is that whereas a law can be passed to prevent persons who are not citizens of India from acquiring and holding property in this country no such restrictions can be placed on citizens. But in the absence of such a law non citizens can also acquire property in India and if they do then they cannot be deprived of it any more than citizens, save by authority of law. I have put the matter broadly and ignored for the: moment the restrictions imposed by article 19 (5). The rights conferred by article 19 (1)(f) 'are not unfettered and the State can impose restrictions: provided they are (I) reasonable and (2) are in the ' interests of either the general public or for the protection of the interests of any Scheduled Tribe. But we are not concerned with article 19 in this. case because no one has prevented either the company or the plaintiff from acquiring and holding property. They actually did acquire property and they held it and nobody stopped them. The complaint is that they are now being deprived, in a manner not allowed by the Constitution, of the property which they were lawfully permitted to acquire and hold. That concerns article 31. 732 Now article 31(1) says that no one shall be deprived of property save by authority of law. That to my mind is straight forward and simple. It means that no one 's property can be taken away arbitrarily or by executive action. There must be legal sanction for every act of deprivation. Now an Act of the legislature is legal sanction, therefore it the rest of the article was not there a man could be deprived of his property by legislative enactment though not by executive action. But that brings in article 31(2). Restrictions are there placed even on the legislature. Unless the Act provides for compensation and either fixes the amount or specifies the principles on which, and the manner in which, it is to 'be determined it cannot be validly enacted. The only exceptions are ,those set out in clause (5). Therefore, 'to my ,mind, the simple question in this case is, do the impugned Ordinance and Act fail foul of article 31 (2) read with clause (5) ? All we have to do is to examine these provisions. We start with the word "property". Are the plaintiff 's "interests" in this company "property" within the meaning of this clause ? Property includes any interest" in "any commercial or industrial undertaking. " It also includes any interest in "any 'company owning" any interest in any commercial or industrial undertaking. That is how I read this clumsily drafted clause. The company here certainly has an interest in a commercial and industrial undertaking and the plaintiff has an undoubted interest in the company. He also has a direct interest in the undertaking that the company runs because, as a preference shareholder, he is a member of the company and would, on liquidation, be entitled to share in the distribution of its assets. Next, have these interests been "taken possession of" or "acquired"? Here again I have no doubt. In my judgment, the provisions in the Constitution touching fundamental fights must be construed broadly and liberally in favour of those on whom the rights have been conferred. But in any case, in this instance, 734 these words have to be read along with the word "deprived" in clause (1). In my opinion, the possession and acquisition referred to in clause (2)mean the sort of "possession" and "acquisition" that amounts to "deprivation" within the meaning of clause (1). No hard and fast rule can be laid down. Each case must depend on its own facts. But if there is substantial deprivation, then clause (2) is, in my judgment attracted. By substantial deprivation I mean the sort of deprivation that substancially robs a man of those attributes of enjoyment which normally accompany rights to, or an interest in, property. The form is unessential. It is the substance that we must seek. Has that happened here ? Of course, it has. The plaintiff and the company have been left with the mere husk of title and not only has every form of enjoyment which normally accompanies an interest in this kind of property been taken away from them but to add insult to injury the plaintiff has also been called upon to pay substantial sums of money; and for what ? not in compliance with any engagement into which he has entered, not in fulfilment of any duty or obligation which he has incurred, not in furtherance of his interests of which he is the best judge, but blankly and unashamedly because the furtherance of his interests affects "the production of an essential commodity" and, has caused "serious unemployment amongst a certain section of the community. " If that is not "deprivation" it is difficult to know what is. One of the privileges of a democracy of free men is the right to mismanage one 's own affairs within the confines of the law, and if A can mismanage his concerns in a particular way, so can B, C and D. The production of essential commodities and the employment of labour are matters for the State and statutory bodies to handle. They have the right, when the law so permits it, to take over this responsibility when the public interests so demand but if by doing so they deprive private individuals and non statutory bodies their interests in property in the sense explained above they 'must pay compensation. They cannot evade their own duties by lathering their obligations 735 on others ' who are not responsible for carrying on the affairs of the State. My brother Mahajan has dealt with this at length and there is no need for me to add to what he has said. The only other point I need consider is the applicability of clause (5)of article 31. The exceptions to clauses (1)and (2)lie there. I am clear that none of the exceptions set out there apply. The impugned Ordinance and Act have not been made for the promotion of public health nor to prevent danger to life ' and property. In my opinion, Chiranjit Lal 's case(1) is distinguishable. I do not think it is a bar here. My brother Mahajan has explained this at length and as I agree with him I need say no more. I would therefore also, in agreement with my learned brother, allow the appeal and decree the plaintiff 's claim with costs. GHULAM HASAN J. I have had the advantage of perusing the judgment of my learned brother Mr. Justice Mahajan and I agree with his conclusion that the appeal should be allowed and the plaintiff 's suit decreed with costs. I would like to add a few words. This appeal raises the question of the constitutional validity of the Sholapur Spinning and Weaving Company (Emergency Provisions) Ordinance II of 1950, subsequently replaced by Act XXVIII of 1950, which reproduced substantially the same provisions. This question arose originally upon a petition under article 32 of the Constitution filed by one Chiranjit Lal Chowdhuri an ordinary shareholder of the company, challenging the Act as being in violation of his fundamental rights under articles 14, 19 and 31 of the Constitution. By a majority of 3:2 it was held that the petitioner had failed to displace the presumption of the constitutionality of the Act or that there had been any abridgement of his fundamental rights. The minority declared the impugned Act as void as it violated the fundamental rights of the petitioner under article 14 of the Constitution. (1) ; 736 My learned brother has distinguished, and if I may say so respect successfully, the decision in Chiranjit Lal 's case(1)and has explained the ratio decidendi of the majority view in that case and I entirely agree with him. That decision does not, in my opinion, conclude the matter so far as the present case is concerned and no question of invoking the principle of stare decisis arises. The question which we are now invited to consider was raised by the appellant, a preference shareholder holding 3,244 preference shares of the face value of Rs. 100 out of which he had paid up Rs. 50 per share. He was called upon by the statutory directors nominated by the Government under the impugned Act to pay Rs. 1,62,000 as the balance of the amount of the call. Thereupon he filed the suit in a representative capacity on behalf of himself and other preference shareholders challenging the validity of the Act. The suit was dismissed by the trial Judge whose decision was affirmed on appeal by the Division Bench of the Bombay High Court. My learned brother has analysed in detail the relevant provisions of the impugned Act and I have no hesitation in agreeing with him that the Act in substance robs the company of every vestige of right except what has been laconically called the husk of title. I agree, therefore, that the impugned Act oversteps the constitutional limits of the power conferred upon the State and offends against the provisions of article 31 and must, therefore, be held void. Article 31 finds a place in Part III of the Constitution which deals with fundamental rights. It is headed "Right to Property". Upon a simple and straightforward construction of its language and the context in which it stands and unhampered by the provisions of the American Constitution the article confers upon every person, whether a citizen or not, a fundamental right of protection of property against encroachment by the executive without the authority of law and against the legislature unless the law passed by it satisfies the two essential conditions ; 737 laid down in (2) that there must be public purpose for taking away private property and that the law must provide for compensation and either fix the amount of such compensation or specify the principles on which and the manner in which the compensation shall be determined and given Article 31 (1) embodies a categorical declaration proclaiming the right of property and equally categorically prohibits the State from depriving the owner of that property by an executive act or without being backed by the authority of law. The intention underlying the article being the protection of property against invasion by the State, both parts (1)and (2)of article 31 should be read together so as to harmonize with that intention. Article 31, in my opinion, is wider than article 19(1) (f) which confers upon a citizen only the right to acquire, hold and dispose of property and is different in scope and content. Article 31 is self contained and (1) refers to deprivation of property general. Acquisition or taking possession in (2) are different modes of deprivation and are comprehensive enough to include all forms of taking away rights of property. Having regard to the setting in which article 31 is placed, the word 'property ' used in the article must 'be construed in the widest sense as con:noting a bundle of rights exercisable ,by the owner in respect thereof and embracing within its purview both corporeal and incorporeal rights. The word 'property ' is not defined in the Constitution and there is no good reason to restrict its meaning. Whether the ,facts in a given case: amount to deprivation of property within the meaning of article 31 will depend 'upon the circumstances of each case and it is not possible, in the nature of things, to lay down any inflexible test which may be universally applicable. When it can be shown that the statute substantially interferes with the right of enjoyment of property, it will, in my opinion, be hit by article 31 (2) and declared void, unless compensation is provided. I am not prepared to subscribe to the proposition that article 31 (1) stands by itself and should be read separately from (2) and I cannot attribute an intention 738 to our Parliament to deprive a person of his property merely by passing an Act. The two parts of the article form an integral whole and cannot be disassociated from each other. The result is that I agree with the order proposed by my learned brother. Appeal allowed. N. Shroff. Agent for respondents Nos. 1 to 4 and 6 to 8: Rajinder Narain. Agent for respondent No. 9: G.H. Rajadhyaksha.

IN-Abs

The Sholapur Spinning and Weaving Co., Ltd., was incorporated under the Indian Companies Act, 1913, with an authorised capital of Rs. 48 lakhs divided into 1590 fully paid up ordinary shares of Rs. 1,000 each, 20 fully paid up ordinary shares of Rs. 500 each and 32,000 partly paid up cumulative preference shares of Rs. 100 each, the paid up capital of the Company being Rs. 32 lakhs comprised of Rs. 16 lakhs fully ' paid up ordinary shares and Rs. 16 lakhs partly paid up preference shares, Rs. 50 being unpaid on each of the 32,000 cumulative preference shares. The Company did good business and declared high dividends for some time ; 'but in the year 1949 there was accumulation of stocks and financial difficulties. On the 27th July, 1949, the Directors gave notice of 675 their decision to close the Mills to the workers, and pursuant to this notice the Mills were closed. This created a labour problem and to solve it the Government on he 5th October, 1949, appointed a Controller to supervise the affairs of the Mills under the Essential Supplies Emergency Powers Act, 1946. On the 9th November, 1949, the Controller in order to resolve the deadlock decided to call in more capital and asked the Directors of the Company to make a call of Rs. 50 per share, on the preference shareholders, the amount remaining unpaid on each of the preference shares. The Directors refused to comply with this requisition, as in their judgment, this was not in the interests of the Company. Thereupon the Governor General on the 9th January, 1950, promulgated the impugned Ordinance, under which the Mills could be managed and run by the Directors appointed by the Central Government. On the 9th January, 1950, the Central Government acting under section 15 of the Ordinance delegated all its powers to the Government of Bombay. The Government of Bombay then appointed certain Directors who took over the assets and management of the Mills. On the 7th February, 1950, they passed a resolution making a call of Rs. 50 on each of the preference shares payable at the time stated in the resolution. Pursuant to this resolution a notice was addressed on the 22nd February, 1950, to the plaintiff in the suit who held preference shares, to pay Rs. 1,62,000 the amount of the said call on or before the 3rd April, 1950. The plaintiff instead of meeting the demand, filed the present suit on the 28th March, 1950, in a representative capacity on behalf of himself and other preference shareholders against the Company and the Directors appointed by the Government of Bombay challenging the validity of the Ordinance and questioning the right of the Directors to make the call. It was alleged in the suit that the Ordinance was illegal and ultra vires and invalid as it contravened the provisions of Section 299(2) of the Government of India Act, 1935, and the provisions of Part III of the Constitution and that the resolution of the Directors dated 7th February, 1950, making a call was illegal and ultra vires as the law under which they were appointed was itself invalid. The suit was dismissed by the Trial Judge and his decision was affirmed on appeal by a Division Bench of the Bombay High Court by the Judgment dated 29th August, 1950. The plaintiff preferred the present appeal to the Supreme Court. This appeal concerns the validity of the same Ordinance and the Act replacing it which were considered by the Supreme Court in the case of Chiranjit Lal Chowdhuri ; There an ordinary shareholder of the defendant Company holding one fully paid up share challenged the validity of the Sholapur Spinning and Weaving Co. (Emergency Provisions) Ordinance II of 1950 and Act XXVIII of 1950, seeking relief under Article 32 of the Constitution on the ground that the said. Ordinance and the Act abridged his fundamental rights conferred on him under Articles 14, 19 and 31 of the Constitution. The Supreme Court dismissed the petition by a majority of 676 3 to 2 holding that the presumption in regard to the Constitutionality of the Act had not been displaced by the petitioner and that it had not been proved that the impugned statute was a hostile or discriminatory piece of legislation as against him or that the State had taken possession of his share. The minority held that impugned statute was void as it abridged the petitioner 's fundamental rights under Article 14 of the Constitution. This decision was delivered on 4th December, 1950. The suit giving rise to the present appeal was decided by the Bombay High Court during the pendency of Chiranjit Lal Chowdhuri 's petition in the Supreme Court: Held, (pet ' PATANJALI SASTRI C.J., MAHAJAN, BOSE, and GHULAM HASAN JJ.) (i) that the impugned Ordinance and the Act replacing it authorise in effect a deprivation of the property of the Company within the meaning of Article 31 without compensation and are not covered by the exception in clause (5)(b)(ii)of that Article. The Ordinance and the Act thus violate the fundamental rights of the Company under Article 31(2) of the Constitution and the appellant as a preference shareholder who is called upon to pay the moneys unpaid on his shares is entitled to impugn their constitutionality. (ii) that the previous decision of the Supreme Court in Charanjit Lal Chowdhuri vs The Union of India and Others(1) is distinguishable and has no application to the present case. Per MAHAJAN J. (i) Constitutional provisions for the security of person and property should be liberally construed. A close and literal construction deprives them of half their efficacy and leads to gradual depreciation of the right, as if it consisted more in sound than in substance. It is the duty of Courts to be watchful for the constitutional rights of the citizen and against any stealthy encroachments thereon. Boyd vs United States (2) referred to. By promulgating the Ordinance, the Government has not merely taken over the superintendence of the affairs of the Company but has in effect and substance taken over the undertaking itself. In the situation ' the contention has no force that the effect of the Ordinance is that the Central Government has taken over the superintendence of the affairs of the Company and that the impugned legislation is merely regulative in character. In the present case 'practically all incidents of ownership have been taken over by the Sate and nothing ' has been left with the Company but the mere husk of title and in the premises the impugned statute has overstepped the limits of legitimate Social Control Legislation and has infringed the fundamental right of the Company guaranteed to it under: Article 31(2) of the Constitution and is, therefore unconstitutional. (1) ; (2) 677 (ii) It is significant that Article 31 deals with private property of persons residing in the Union of India, while Article 19 only deals with citizens defined in Article 5 of the Constitution. It is obvious that the scope of these two Articles cannot be the same as they cover different fields. The true approach to this question is that these two Articles really deal with two different subjects and one has no direct relation with the other amely. Article 31 deals with the field of eminent domain and the whole boundary of that field is demarcated by this Article. From the language employed in the different sub clauses of Article 31 it is difficult to escape the conclusion that the words "acquisition" and "taking possession" used in Article 31(2) have the same meaning as the word "deprivation" in Article 31(1). (iii) Article 31 is a self contained provision delimiting the field of eminent and clauses (1) and (2) of Article 31 deal with the same topic of compulsory acquisition of property. Article 31 gives complete protection to private property as against executive action, no matter by what process a person is deprived of possession of it. It is a narrow view that "acquisition" necessarily means acquisition of title in whole or part of the property and cannot be accepted. The word "acquisition" has quite a wide concept, meaning the procuring of property or the taking of it permanently or temporarily. It does not necessarily imply acquisition of legal title by the State in the property taken possession of. Minister of State for the Army vs Dalziel ; referred to. Per Das J. (I) As the appellant as a preference shareholder is directly affected by the impugned statute, which circumstance distinguishes this case from Chiranjit Lal 's case, it must be held that the appellant is entitled to challenge the Ordinance which dismissed the Directors elected by the shareholders, authorised the appointment of Directors by the State and made it possible for the Directors so appointed to make the call and thereby impose a liability on all preference shareholders including the appellant. (II) The provisions of the Ordinance and the Act are drastic in the extreme. The Managing Agents and the elected Directors have been dismissed and new Directors have been appointed by the State. So far as the Company is concerned it has been completely denuded of the possession of its property. All that has been left to the Company is its bare legal title. It is impossible to uphold this law as an instance of the exercise of the State 's police power as an emergency measure. It has far overstepped the limits of police power and is, in substance, nothing short of expropriation by way of the exercise of the power of eminent domain and as the law has not provided for any compensation it must be held to offend the provisions of Article 31(2). 678 Per Bose J. The words "taken possession of" or "acquired" in Article 31(2) have to be read along with the word "deprived" in clause (1). The possession and acquisition referred to in clause (2) mean the sort of "possession" and "acquisition" that amount to "deprivation" within the meaning of clause (1). No hard and fast rule can be laid down. Each case must depend on its own facts. But if there is substantial deprivation, then clause (2) is attracted. Per GHULAM HASAN J. The Act in substance robs the Company of every vestige of right, except what has been laconically called the husk of the title. The impugned Act oversteps the constitutional limits of the power conferred upon ' the State and offends against the provisions of Article 31 and must therefore be held to be void. The intention underlying Article 31 being the protection of property against invasion by the State, both parts (1) and (2) of Article 31 should be read together so as to harmonize that intention. The two parts of the Article form an integral whole and cannot be dissociated from each other. Article 31 is wider than Article 19(1)(f) which confers upon a citizen only the right to acquire, hold and dispose of property and is different in scope and content. Chiranjit Lal Chowdhuri vs The Union of India and Others ([1950] S.C.R. 869) distinguished, The State of West Bengal vs Subodh Gopal Bose and Others ([1954] S.C.R. 587), Boyd vs United States ; , Pennsylvania Coal Co. vs Mahon , A.K. Gopalan vs The State of Madras ([1950] S.C.R. 88), State of Bihar vs Maharajah Kameswar Singh and Others ([1952] S.C.R. 889), Minister of State for the Army vs Dalziel ; , Tan Bug Tain vs Collector of Bombay (I.L.R. , and Jupiter General Insurance Co. vs Rajagopalan (A.I.R. 1952 Punjab 9), referred to.

Appeal No. 795 of 1963. Appeal by special leave from the judgment and decree dated November 24, 1958, of the Madhya Pradesh High Court at Indore in Civil Special Appeal No. 5 of 1949. C. B. Agarwala, J. D. Patel, J. B. Dadachanji 0. C. Mathur and Ravinder Narain, for the appellant. M. P. Amin, C. B. Sanghi V. M. Amin and L N. Shroff, for the respondents. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment and decree of the Full Bench of the High Court of Madhya Pradesh in Civil Special Appeal No. 5 of 1949, and arises out of a suit filed by the appellant, Seth Gulabchand, hereinafter referred to as the plaintiff, against heirs and legal representatives of Seth Govindram Seksaria, on the original side of the High Court of the former Indore State for specific performance of an agreement dated February 28, 1941, entered into between the plaintiff and the deceased Govindram. Sanghi, J., decreed the suit on June 11, 1948. Against this judgment and decree, the defendants filed an appeal to a Division Bench of the Madhya Bharat High Court and the plaintiff also preferred a cross appeal. The Division Bench accepted the defendants ' appeal, reversed the judgment and decree of Sanghi, J., and dismissed the plaintiff 's suit as also his cross appeal. Thereafter the plaintiff filed an appeal under section 25 of the Madhya Bharat 'High Court of Judicature Act, 1949, as it stood before it was amended by Madhya Bharat Act No. 3 of 1950. When this appeal came up for hearing before a Full Bench of the Madhya Pradesh High Court, a preliminary objection as to the competency of the appeal was taken on behalf of the defendants respon 625 dents. The Full Bench held that the appeal was not competent, but this Court, on appeal, held that the appeal was competent and remitted the case to the High Court for decision on merits. On remand the Full Bench upheld the decision of the Division Bench and dismissed the appeal. The matter is now before us. In view of the arguments urged before us by learned counsel for the appellant, Mr. C. B. Aggarwala, it is not necessary to give in detail the history of the disputes between the parties, or all the points that were debated before the High Court. To appreciate the arguments addressed to us it is only necessary to give the following facts. Govindram Seksaria, Brijlal Ramjidas, Bilasrai Joharmal and four other persons entered into a deed of partnership on July 17, 1935 for carrying on the business of acting as Managing Agents and Selling Agents of Indore Malwa United Mills Ltd., a company owning a textile mill in Indore. Serious disputes arose between the partners. The Board of Directors of the Company appointed a Committee in November 1940 to enquire into certain allegations made against Govindram Seksaria, Brijlal and Bilasrai. The Committee consisted of Mr. R. C. Jall as Chairman, and Seth Hiralal and the plaintiff as members. In the meantime, the partners referred their differences to the arbitration of Col. Dina Nath, the Prime Minister of the former Holkar State. On February 8, 1941, the Arbitrator gave an award, inter alia deciding that Govindram Seksaria should buy up the five annas shares of Brijlal Ramjidas and Bilasrai Joharmal at par and that the latter should sell their respective shares of annas two and a half each in the rupee at par and also sell the debentures held by them to Govindram Seksaria at par. On February 12, 1941, Brijlal and Bilasrai instituted a suit in the Bombay High Court against Govindram and other partners of the Managing Agency contesting the validity of the award made by Col. Dina Nath. They failed before the Bombay High Court and ultimately before the Privy Council. On November 5, 1947, a deed of assignment of the four annas share of Brijlal and Bilasrai was executed in favour of the defendants as legal representatives of Govindram, who had died in the meantime in May 1946. On November 6, 1947, the plaintiff instituted the suit out of which this appeal arises. Various issues were raised in this suit but it is only necessary to mention issue No. 4, which was as follows: "Was the agreement to sell the two and a half annas share a bribe offered by the deceased Seth Govindram to the plaintiff to write a report favourable to him, the plaintiff being a member of the Committee of three persons appointed by the Directors of the Malwa Mills, Indore to 626 enquire into and report on the management of the Mills by Seth Govindram?" Both the Division Bench and the Full Bench on appeal have held this issue to be proved and it is common ground that if the decision of the Full Bench on this issue cannot be successfully assailed, no further point arises and the appeal must fail. We may here state the primary facts and the findings of the Division Bench and the Full Bench. After the award was made Govindram addressed a letter to Mr. Jall as a member of the Enquiry Committee on February 13, 1941, intimating to him that the Prime Minister of the Holkar State had given an award on February 8, 1941, in his favour, and forwarding a copy of the award. On the same date Govindram addressed a similar letter to the plaintiff. A day or two after the receipt of this letter by the plaintiff Govindram met him at his house and made him an offer of making him a partner of the managing agency firm by assigning two and half annas shares out of the share of Brijlal and Bilasrai which he was to get under the award. The next day the plaintiff accepted the offer and on February 28, 1941, the agreement was concluded between the parties. A day before the agreement was signed by the parties, Gulabchand, Plaintiff, addressed a letter to Mr. Jall, the Chairman of the Enquiry Committee, on February 27, 1941, for holding the meetings of the Committee daily so as to expedite its report. On February 8, 1941, Govindram met Mr. Jall, and offered to sell to him one anna share, which he rejected saying that " as he was the member of the Enquiry Committee, it would look as if he was making the offer to please him." The Committee gave its final report on April 7, 1941, which was favourable to Govindram, although the interim report dated December 16, 1940, was none too favourable to him. The plaintiff had no previous experience of the working of any Mill and had never been a managing agent of any textile mill. Govindram was a rich man and a millionaire. In 1942 Govindram suggested to the plaintiff that the share to be sold to him should be reduced to one and a half annas, but the plaintiff did not accept the suggestion. Later, in 1942, when Mr. Jall questioned Govindram about the intended reduction in the share which was to be sold to the plaintiff, Govindram re plied that he did not really intend to give any share to the plaintiff or anyone and that he proposed to give the entire four annas share to the Holkar State by way of charity. From all these facts the Division Bench inferred and con cluded that the offer of two and a half annas share by Govindram to the plaintiff, Gulabchand, was a bribe in order to induce him to report in his favour and was accepted as such by Gulabchand. This conclusion was challenged before the Full Bench on various grounds, but the Full Bench upheld the decision. The Full Bench 627 found that in making the offer of the sale of two and a half annas share to the plaintiff Govindram did not care for the plaintiff 's money or his services in the management of the mill because "Govindram continued to manage the Mill without the plaintiff, putting him off by saying that the contract would be fulfilled after the end of the litigation initiated by Bilasrai and Brijlal, and after the Enquiry Committee gave its final report Govindram actually suggested a reduction in the share and even told Mr. Jall that he was not going to sell it to the plaintiff or to anyone. The ostensible reason given for the intended partnership of Gulabchand is 'too thin to hide the real reason ', and its recital in the agreement is odd in itself" The Full Bench found that the balance sheets tendered in evidence in the case showed that Govindram had earned enough money by way of selling and managing agency commission and it was not necessary for him to find a financial partner in the plaintiff and that Govindram was prepared to give the entire four annas share he had obtained under the award to the Holkar State in charity was in itself an indication that the offer of two and half annas share to Gulabchand was not made by Govindram on account of his own financial stringency. After considering various facts the Full Bench concluded that "the share in the managing agency partnership of the mills was, therefore, not one which could be parted away easily by a partner or could be had by anyone for the mere asking and readiness to furnish the necessary proportionate capital and to purchase the debentures of the required amount, without any more. That "any more" in the present case, is, as the learned Judges of the Division Bench have suggested, nothing else than the anxiety of Govindram to get a favourable report from the Enquiry Committee and the willingness of the plaintiff to oblige him by making a favourable report. Taking into consideration the facts and circumstances narrated in the judgment of the Division Bench at pages 170 to 173 of the printed paper book, and those summarised above, the conclusion at which the learned Judges arrived that the transaction was in the nature of bribe to the plaintiff appears to us to have all the commendation which commonsense and the realities of the case can give it. It is one which legitimately can be drawn from the facts and circumstances proved in the case and in accordance with the probabilities of the case. It cannot, therefore, be maintained that the defendants have not discharged the burden of the proof that lay on them of establishing the plea of bribe. They were not required to prove that fact beyond reasonable doubt as in a criminal case." Mr. C. B. Aggarwala, while admitting that concurrent finding& of fact cannot ordinarily be assailed before this Court, contends that in this case there is no evidence in support of the findings arrived at by the Full Bench and that the findings are based on mere surmises. He further says that the Full Bench has misdirected 628 urges that where bribery is alleged in a civil case the same standard of proof should be required as in a criminal matter. He further urges that the High Court should have held that Hiralal 's evidence was not admissible. Another argument urged by him is that there was no proof at all that the plaintiff was a party to the intention of Govindram to bribe him. He says that there is presumption that the plaintiff acted honestly and no material has been placed to displace that presumption. We see no force in Mr. Aggarwala 's first contention that there is no evidence in support of the findings of the Full Bench or that the findings are based on mere surmises. It is true that there is distinction between a probability and a mere surmise. But in this case we are satisfied that the Full Bench did not rely on any surmises. The real complaint of Mr. Aggarwala in this case seems to be that as bribery was alleged the Full Bench should have gone into the question of bribery as if it was a criminal case. In this connection he relied on the following observations made by Woodroffe, J., in Weston vs Peary MohanDass(1). "And speaking for myself where, whatever be the form of the proceeding, charges of a fraudulent or criminal character are made against a party thereto, it is right to insist that such charges be proved clearly and beyond reasonable doubt, though the nature and extent of such proof must necessarily vary according to the circumstances of each case. There is a presumption against crime and misconduct, and the more heinous and improbable a crime is, the greater of necessity is the force of the evidence required to overcome such presumption. I cannot myself imagine a Court saying to a party, who, as in this case, may be a person holding a high and responsible position, with a previous unblemished record : "It is true that I have reasonable doubts whether you did the grossly criminal acts with which you are charged, but I find that you did so all the same." And this exclusion of reasonable doubt is all that the so called "criminal proof" requires. " Fletcher, J., the Trial Judge, relying on Jarat Kumari Dassi vs Bissesur(2) to which Woodroffe, J., was a party, had overruled the point that the standard of proof in a civil case, in which a charge ,of a criminal character is made, was the same as if the parties were being tried for a criminal offence. He observed that in India, under the , there is no rule that the standard ,of proof in a case like the present must be the same as if the (1) Cal. 898 at 916. (2) I.L.R. :16 C.W.N. 265. 629 defendants were being tried on a criminal charge. This case (Jarat Kumari Dassi vs Bissesur)(1) was followed in Prasannamayi Debya ,vs Baikuntha Nath Chattoraj(2). The Division Bench followed these observations of Jenkins, C. J., in Jarat Kumari Dassi 's(1) case : "Demonstrations, or a conclusion at all points logical cannot be expected nor can a degree of certainty be demanded of which the matter under investigation is not reasonably capable. Accepting the external test which experience commends, the Evidence Act in conformity with the general tendency of the day adopted the requirements of the prudent man as an appropriate concrete standard by which to measure proof The Evidence Act is at the same time expressed in terms which allow full effect to be given to circumstances or conditions of probability or improbability, so that where, as in this case, forgery comes in question in a civil suit, the presumption against misconduct is not without its due weight as a circumstance of improbability, though the standard of proof to the exclusion of all reasonable doubt required in a criminal case may not be applicable. " In section 3 of the , the words "proved", "disproved" and "not proved" and defined as follows : "Proved. A fact is said to be proved when, after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists." "Disproved. A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its non existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist." "Not proved. A fact is said not to be proved when it is neither proved nor disproved. " It is apparent from the above definitions that the applies the same standard of proof in all civil cases. It makes no difference between cases in which charges of a fraudulent or criminal character are made and cases in which such charges are not made. But this is not to say that the Court will not, while striking the balance of probability, keep in mind the presumption of honesty or innocence or the nature of the crime or fraud charged. In our (1) I.L.R. (2) I.L.R 630 opinion, Woodroffe, J., was wrong in insisting that such charges must be proved clearly and beyond reasonable doubt. Hiralal 's evidence was sought to be ruled out on the ground that what he had stated in his evidence had not been put to the plaintiff. HiralaI had deposed that after the award the plaintiff saw him and told him that there was some settlement between him and Govindram. It is not necessary to decide this point because the Full Bench did not base its findings on Hiralal 'section evidence. Mr. Aggarwala, relying on Raja Singh vs Chaichoo Singh(1) further urges that in case of circumstantial evidence the circumstances must be such so as to exclude any other reasonable possibility and he says that if this principle is applied to this case the finding of bribery must be reversed as the facts are equally consistent with the plaintiff having acted honestly. Meredith, J., had observed as follows "Now it is well settled that where fraud is to be inferred from the circumstances, and is not directly proved, those circumstances must be such as to exclude any other reasonable possibility. In other words, the criterion is similar to that which is applicable to circumstantial evidence in criminal cases. " We are unable to agree with these observations. As we have said before, the fact that the party is alleged to have accepted bribe in a civil case does not convert it into a criminal case, and the ordinary rules applicable to civil cases apply. The learned counsel has not been able to cite any other authority to show that there is any such well settled proposition, as stated by Meredith, J. Coming to the next contention, the fact whether the plaintiff was a party to the intention of Govindram to bribe him has to be judged like any other fact on the balance of probability. We are not satisfied that the Full Bench has misdirected itself in any manner in finding this fact. In the end Mr. Aggarwala urges that immorality within section 23 of the Indian Contract Act is confined to sexual immorality, but we are not concerned with the question whether the consideration is immoral or not. The case of bribery is clearly covered otherwise by section 23. In the result we hold that the findings of the Full Bench are, not vitiated and must be accepted. The appeal, therefore, fails and is dismissed with costs. Appeal dismissed. (1) A.T.R. 1940 Patna 210 at 203.

IN-Abs

G was one of a number of partners in a firm which carried on the business of acting as Managing Agents and Selling Agents of a company owning a textile mill in Indore. Serious disputes arose between the partners and soon thereafter the Directors of the managed company appointed a committee in November 1940, of which the appellant was a member, to inquire into certain allegations made against G and two other partbers of the managing agency firm. In February 1941, G entered into an agreement with the appellant to sell to him a share in the partnership which was to be transferred to G by virtue of an arbitration award on the disputes between the partners. In April 1941, the committee gave its final report which was favourable to G although the interim report of December 1940 had not been So favourable. Upon G failing to transfer the share in the partnership as provided in the agreement of February 1941, the appellant filed a suit against the heirs and legal representatives of G for specific performance of the agreement. The High Court decreed the appellant 's suit, but on appeal to the Division Bench of the High Court, the decree was set aside. A further appeal to the Full Bench of the High Court was dismissed. Both the Division Bench and the Full Bench held that the agreement to sell a share in the partnership was a bribe offered by G to the appellant to write a report favourable to him. In the appeal to this Court, it was contended on behalf of the appellant, inter alia, that there was no evidence in support of the finding relating to bribery arrived at by the Full Bench and that the said finding was based on mere surmises; that the Full Bench had misdirected itself in not adopting a strict standard of proof and that where bribery is alleged in a civil case, the same standard of proof should be required as in a criminal case , that in case of circumstantial evidence, the circumstances must be such so as to exclude any other reasonable possibility and that if this principle was applied to the present case, the finding of bribery must be reversed as the facts were equally consistent with the appellant having acted honestly; and that immorality within Section 23 of the Indian contract Act is confined to sexual immorality. HELD : On the facts, the Full Bench did not rely on any surmises and its findings were not vitiated. It is clear from Section 3 of the that the same standard of proof applies in all civil cases. It makes no difference between cases in which charges of a fraudulent or criminal character are made 624 and cases in which such charges are not made. But this is not to say that the Court will not, while striking the balance of probability, keep in mind the presumption of honesty or innocence or the nature of crime or fraud charged. [629 G H] Weston vs Peary Mahan Dass Cal. 898 at 916: disapproved. Jarat Kumari Dassi vs Bissesur: I.L.R. and Prasannamayt Debya vs Baikuntha Nath Chattoraj: I.L.R. ; referred to. It cannot be said that rules applicable to circumstantial evidence in criminal cases would apply where a party, in a civil case, is alleged to have accepted a bribe. The ordinary rules governing civil cases will continue to apply. [630 E] Raja Singh vs Chachoo Singh : A.I.R. 1940 Patna 210; referred to. It was unnecessary to consider whether the consideration for the agree. ment of February 1941 was unmoral or not. The caw of bribery is covered otherwise by Section 23 of the Contract Act. [630 G]

minal Appeal No. 214 of 1963. Appeal by special leave from the judgment and order dated September 18, 1963 of the Patna High Court in Criminal Appeal No. 368 of 1961. 644 Nur ud din Ahmed and D. Goburdhun, for the appellants. The respondent did not appear. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the High Court of Patna dated September, 1963 in Criminal Appeal No. 368 of 1961. The appellant, alongwith 13 others, was tried by the Additional 'Sessions Judge of Patna who by his judgment dated April 22, 1961 convicted all the accused under sections 302/149, Indian Penal Code and sentenced them to undergo rigorous imprisonment for life. Lakhan and Indo were convicted under section 148, Indian Penal Code and sentenced to undergo rigorous imprisonment for two years and Gopi was convicted under section 147, Indian Penal Code and sentenced to rigorous imprisonment for one year. Indo was also convicted under section 326, Indian Penal Code and Gopi was convicted under section 326/109, Indian Penal Code and were sentenced to undergo rigorous imprisonment for eight years. Appellant Lakhan was convicted under sections 326/149, Indian Penal Code but no separat sentence was awarded on this charge. Lakhan and Indo were convicted under section 19(f) of the Arms Act and sentenced to undergo rigorous imprisonment for two years each. Five of the accused persons were acquitted and 8 of them were convicted on charges The appellants alongwith 8 others who were so convicted, appealed to the High Court of Patna which allowed the appeal of the 8 persons but dismissed the appeal of the appellants with the following modifications: The conviction of the appellants under sections 302/149, Indian Penal Code, section 148, section 147 and sections S26/149, Indian Penal Code was set aside and the appellants were acquitted of those charges. The conviction of Lakhan under section 302/149, Indian Penal Code was altered into a minor offence under section 326, Indian Penal Code, but the sentence of life imprisonment imposed upon him was maintained. The conviction and sentence of Indo under section 326, Indian Penal Code and of Gopi under sections 326/109, Indian Penal Code were upheld. The conviction and sentence of Lakhan and Indo under section 19(f) of the Arms Act were also upheld. The case of the prosecution is that on October, 7, 1959 at about 10 a.m. deceased Sheosahay Mahto went to look after his paddy field in Belwa Khandha. On arriving at the spot, he found appellant Lakhan and one Ishwar putting up a net for catching fish in his field after cutting one of its ridges. Sheosahay protested and there was an altercation between the parties. Sheosahay threw aside the net and Ishwar and appellant Lakhan went away towards the village. Sheosahay then repaired the ridge of the 645 field and after weeding some grass he was returning to the village along the Bazerachak Road. While he was passing by the side of a brick kiln, appellant Lakhan suddenly emerged from behind it with a pistol in his hand and fired at Sheosahay hitting him on his chest. Sheosahay staggered for a few steps and fell down at the house of one Baiju. There were 15 or 20 other persons variously armed in the company of Lakhan. Akhji P.W. 3 wife of Jitu P.W.7 heard the report of a gunfire while she was in her house situated near the house of Baiju. She came out of her house and saw Sheosahay lying fallen in the village lane. She protested to Gopi who became furious and ordered that she should be assaulted. Upon his order, Rajendra who was carrying a gun fired at Akhji, P.W.3 on her left arm. After committing the assault all the members of the mob fled away. On the same evening, at about 5 p.m. a first information report was drawn up by the Assistant SubInspector of Police, P.W. 14 on the statement of Sheosahay and both the injured persons were forwarded to Nawadah hospital where Sheosahay died early next morning. The appellants pleaded not guilty to the charges and alleged that they were falsely implicated on account of previous enmity. The trial court held that it was unsafe to convict appellant Lakhan on the specific charge under section 302, Indian Penal Code for causing the death of Sheosahay as it appeared from the dying declaration of the deceased (exhibit 8) that accused Ishwar had also shot at him and as such appellant Lakhan was entitled to benefit of doubt. The trial court accordingly acquitted Lakhan on the charge under s.302, Indian Penal Code but convicted him and 2 other appellants under section 148, Indian Penal Code and sections 302/149, Indian Penal Code. The State Government did not prefer an appeal to the High Court against the acquittal of Lakhan on the charge under section 302, Indian Penal Code but on appeal preferred by the appellant against the judgment of the Sessions Judge, the High Court altered the conviction of Lakhan from section 302/149, Indian Penal Code to a minor offence under section 326, Indian Penal code and maintained the sentence of life imprisonment imposed upon him. The view taken by the High Court was that the evidence of P.Ws. 1, 6, 7 and 8 should be accepted as true and it must he held that it was Lakhan who fired the pistol at the deceased and it was Lakhan alone who fired the pistol shot and not Ishwar. The High Court held that it was competent to it in the appeal preferred by the appellant to alter the conviction of Lakhan from the constructive offence under section 302/149, Indian Penal Code to the substantive offence under s.302, Indian Penal Code, but "in order to obviate any technical objection" the High Court altered the conviction under s.302 read with section 149 to a minor offence under section 326, Indian Penal Code and regard being had to the gravity of the offence, the High Court maintained the sentence imposed upon Lakhan. 646 On behalf of appellant Lakhan learned Counsel submitted that he had been acquitted by the trial court on the specific charge under section 302, Indian Penal Code for the overt act of shooting at the deceased Sheosahay and he was convicted under sections 302/149, Indian Penal Code for being a member of an unlawful assembly, the common object of which was to kill deceased Sheosahay. It was pointed out that the State Government had not preferred an appeal against the acquittal of Lakhan on the charge under section 302, Indian Penal Code. It was submitted that the High Court cannot, in the absence of an appeal preferred in this behalf, convict Lakhan again under section 302, Indian Penal Code or under section 326, Indian Penal Code for the overt act of shooting. It was also pointed out for the appellant that there was the finding of the High Court that there was no unlawful assembly and consequently Lakhan was acquitted of the charge under section 302, I.P.C. read with section 149, I.P.C. The argument, therefore, presented on behalf of appellant Lakhan is that the conviction and sentence of Lakhan for a substantive offence under section 326, I.P.C. was illegal and must be quashed. The powers of the appellate court in disposing of an appeal are prescribed by section 423 of the Criminal Procedure Code which states "423.(1) The Appellate Court shall then send for the record of the case, if such record is not already in Court. After perusing such record, and hearing the appellant or his pleader if he appears, and the Public Prosecutor, if he appears, and, in case of an appeal under section 41 1 A, subsection (2) or section 417, the accused, if he appears, the Court may, if it considers that there is no sufficient ground for interfering, dismiss the appeal, or may (a) in an appeal from an order of acquittal, reverse such order and direct that further inquiry be made, or that the accused be retried or committed for trial, as the case may be, or find him guilty and pass sentence on him according to law; (b) in an appeal from conviction, (1) reverse the finding and sentence, and acquit or discharge the accused, or order him to be retried by a Court of competent jurisdiction sub ordinate to such Appellate Court or committed for trial, or (2) alter the finding maintaining the sentence or, with or without altering the finding, reduce the sentence, or, (3) with or without such reduction and with or without altering the finding, alter the nature of the sentence, but, subject to the provisions of section 106, sub section (3), not so as to enhance the same;" Section 423 (1)(a) expressly deals with an appeal from an order of acquittal and it empowers the Appellate Court to reverse the 647 order of acquittal and direct that further inquiry be made or that the accused may be tried or committed for trial, as the case may be, or it may find him guilty and pass sentence on him according to, law. Section 423(1)(b) in terms deals with an appeal from a conviction, and it empowers the Appellate Court to reverse the finding and sentence and acquit or discharge the accused or order a retrial by a Court of competent jurisdiction subordinate to such Appel late Court or committed for trial. It has been held by this Court in The State of Andhra Pradesh vs Thadi Narayana(1) that section 423(1)(b), Criminal Procedure Code is clearly confined to cases of appeals prefeffed against orders of conviction and sentence, and that the powers conferred by this clause cannot be exercised for the purpose of reversing an order of acquittal passed in favour of a party in respect of an offence charged while dealing with an appeal preferred by him against the order of conviction in respect of another offence charged and found proved. It was also pointed out in that case that where several offences are charged against an accused person the trial is no doubt one; but where the accused person is acquitted of some offences and convicted of others the character of the appellate proceedings and their scope and extent is necessarily determined by the nature of the appeal preferred before the Appellate Court. If an order of conviction is challenged by the convicted person but the order of acquittal is not challenged by the State then it is only the order of conviction that falls to be considered by the Appellate Court and not the order of acquittal. In exercising the powers conferred by section 423(1)(b) the High Court cannot therefore convert the order of acquittal into one of conviction and that result can be achieved only be adopting procedure prescribed under section 439 of the Criminal Procedure Code. In our opinion, the principle of this decision applies to the present case and it must accordingly be held that the High Court acted without jurisdiction in altering the finding of acquittal of Lakhan on the charge under section 302, Indian Penal Code and convicting him on the charge under section 326, Indian Penal Code and imposing a sentence of imprisonment on that charge. In this connection the High Court has taken the view that section 149, I.P.C. does not constitute a substantive offence and it was only an enabling section for imposition of vicarious liability and the conviction on vicarious liability can, therefore, be altered by the appellate court to conviction for direct liability, though there was an acquittal by the trial court of the direct liability of the offence. In our opinion, the view taken by the High Court is not correct. There is a legal distinction between a charge under section 302, I.P.C. and a charge of constructive liability under sections 302/149, I.P.C., i.e., being a member of an unlawful assembly, the common object of which was to kill the deceased Sheosahay. In Barendra Kumar Ghosh vs Emperor (2) Lord Sumner dealt with (1) ; (2) I.L.R. 648 the argument that if section 34 of the Indian Penal Code bore the meaning adopted by the Calcutta High Court, then sections 114 and 149 of that Code would be otiose. In the opinion of Lord Sumner, however, section 149 was certainly not otiose, for in any case it created a specific and distinct offence. It postulated an assembly of five or more persons having a common object, as named in section 141 of the Indian Penal Code and then the commission of an offence by one member of it in prosecution of that object. Lord 'Sumner referred, in this connection, to the decision of the Calcutta High Court in Queen vs Sabid All and Others(1). The observation of Lord Sumner was quoted with approval by this Court in Nanak Chand vs The State of Punjab(2) in which it was pointed out that by framing a charge under section 302, read with s.149, Indian Penal ,Code against the appellant it was not charging the appellant with the offence of murder and to convict him for murder and sentence him under section 302 of the Indian Penal Code was to convict him of an offence with which he had not been charged. It was accordingly held that the conviction of the appellant under section 302, I.P.C. was illegal. The same view has been reiterated by this Court in a 'later case in Suraj Pal vs The State of Uttar Pradesh.(3) For these reasons we hold that the conviction and sentence imposed by the High Court on Lakhan under section 326, Indian Penal Code is illegal and must be set aside. On behalf of the appellants it was also contended that the prosecution had not been able to establish the other charges of which they have been convicted, but having heard learned Counsel we are not satisfied that the convictions on the other charges are vitiated by any illegality and we see no reason for interfering with the judgment of the High Court. As already pointed out, we set aside the conviction and sentence imposed on Lakhan on the charge under section 326, Indian Penal Code; otherwise we affirm the decision of the High Court as regards Lakhan and also as regards the other two appellants and dismiss ,this appeal. Appeal dismissed. Conviction and sentence modified. (1) [1873] 20 W.R. (Cr.) 5.

IN-Abs

The trial court acquitted L, one of the appellants of the charge under section 302 I.P.C. but convicted him and the other appellants under section 149 I.P.C. and sections 302/149 I.P.C. The State Government did not prefer an appeal to the High Court against the acquittal of L under section 302 but on appeo preferred by L against his conviction, the High Court altered the conviction from a. 302/149 to a minor offence under section 326 and maintained the sentence of life imprisonment imposed upon him. In appeal to this Court : HELD : The High Court acted without jurisdiction in altering the finding of acquittal of L on the charge under section 302 I.P.C. and convicting him on the charge under section 326 I.P.C. and imposing a sentence of imprisonment on that charge. If an order of conviction is challenged by the convicted person but the order of acquittal is not challenged by the State then it is only the order of conviction that falls to be considered by the Appellate Court and not the order of acquittal. In exercising the powers conferred by section 423(1)(b) of Code of Criminal Procedure the High Court could not convert the order of the acquittal into one of conviction and that result can be achieved only by adopting procedure prescribed under section 439 of the Criminal Procedure Code. [647 D F] State of Andhra Pradesh vs Thadi Narayana, A.I.R. 1962 section C. 240, applied. The High Court erred in taking the view that section 149 I.P.C. did not constitute a substantive offence and that it was only an enabling section for imposition of vicarious liability and that the conviction on vicarious liability could, therefore, be altered by the appellate court to conviction for direct liability even though there was an acquittal by the trial court of the direct liability for the offence. There is a legal distinction between a charge under section 302 I.P.C. and a charge of constructive liability under section 302/149, I.P.C., I.e., being a member of an unlawful assembly, the common object of which was to kill a person. (647 G, H] Barendra Kumar Ghosh vs Emperor, I.L.R. , Queen vs Sabid Ali and Ors. [1873] 20 W.R. (Cr.) 5 Nanak Chand vs State of Punjab; , and Suraj Pat vs State of Uttar Pradesh, (19551 1 S.C.R. 1332. referred to.

iminal Appeal No. 26 of 1964. Appeal from the judgment and order dated November 20, 1963 of the Mysore High Court in Criminal Appeal No. 49 of 1963. B. R. L. Iyengar and A. G. Ratnaparkhi for the appellant. A. K. Sen, D. R. Prem, R. H. Dhebar and B. R. G. K. Achar, for the respondent. Niren De, Additional Solicitor General and B. R. G. K. Achar, for the intervener. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Mysore High Court. The appellant was prosecuted under section 167 (81) of the Sea Customs Act (No. 8 of 1878) read with section 9 of the Land Customs Act (No. 19 of 1924). The appellant lives in a village which is close to Goa. The incident out of which the present appeal has arisen took place on November 27, 1960 when Goa was not a part of India but was Portuguese territory. The Deputy Superintendent of Customs, Goa Frontier Division, Belgaum received information that contraband goods would be found in the house of the appellant. Consequently he raided the house in the company of three panchas. The appellant was not present in the house when the raid took place, but his mother and sisterin law were there. After necessary formalities the house was searched and a big steel trunk, a cane box and another steel trunk were taken down from the loft in the kitchen. On opening, a belt, with four pouches stitched to it, was found in the big steel trunk. Inside the pouches, four gold bars with foreign marks and labels of Goa Customs authorities were found. Besides these, a large sum of money and three small cut pieces of gold were also found in the box. In the other two boxes also various sums of money in currency notes were found. The weight of the gold bars was 343 tolas. On November 30, 1960, the appellant was arrested and inter rogated by the Deputy Superintendent of Customs and Excise. The answers given by him were reduced in writing and his signature was taken on the writing after it had been read over to him. During this interrogation, the appellant admitted that the four gold bars had been given to him on November 27, 1960 in the moming by one Vittal Morajkar of Goa so that he might deliver them back to Morajkar on the motor stand at Belgaum or near there, and be had kept them in his house. As the gold was foreign gold 700 and as under the notification under section 8(1) of the Foreign Exchange Regulation Act, 1947, import of gold into India had been for,bidden except with the general or special permission of the Reserve Bank of India, the appellant was prosecuted on a complaint filed by the Assistant Collector of Central Excise and Land Customs, Goa Frontier Division, Belgaum. The Magistrate convicted the appellant and sentenced him to imprisonment and fine and also ordered confiscation of the four gold bars. On appeal to the Sessions Judge, the appellant was acquitted relying on the decision of the Calcutta High Court in Sitaram Agarwala vs State(1). Then followed an appeal by the State to the High Court. The High Court disagreed with the view takeu by the Calcutta High Court in Sitaram Agarwal 's case(1) and held that even a person like the appellant who might have no direct concern with the import of gold in any way was liable under section 167(81) of the Sea Customs Act. The High Court then ,considered the evidence and relying on the statement made by the appellant to the Deputy Superintendent of Customs and Excise and also on the other evidence produced in the case held that the appellant was guilty. In consequence, the acquittal of the appellant was set aside and the order of conviction and sentence passed by the Magistrate was restored. The appellant then applied to the High Court for a certificate to appeal to this Court, and as two questions of law of general importance arose in this case, the High Court granted the certificate. The two questions were : (1) whether the view taken by the High Court differing from the view taken by the Calcutta High Court in Sitaram Agarwal 's case(1) with respect to the interpretation of section 167(81) was correct, and (ii) whether the statement made by the appellant to the Deputy Superintendent of Customs and Excise was admissible in evidence in view of section 25 of the Indian Evidence Act (No. 1 of 1872). These are the two questions which have been argued before us on behalf ,of the appellant in the present appeal. So far as the first question is concerned, namely, the interpretation of section 167(81) of the Sea Customs Act, the matter is now settled by the decision of this Court in Sachidananda 'Bannerjee, Assistant Collector of Customs vs Sitaram Agarwal and another(2). This Court has held therein that the interpretation put by the Calcutta High Court in the case of Sitaram Agarwala(1) is not correct and that section 167(81) of the Sea Customs Act can also take in persons who may not be concerned the actual import of prohibited goods. The view taken by the Mysore High Court is in accordance with the view taken by this Court in that appeal and in view of that,, learned counsel for the appellant has admitted (1) (2) 701 that the appellant would be guilty within the meaning of section 167 (81) of the Sea Customs Act. This leaves only the second question, and it has been urged on behalf of the appellant that a Central Excise Officer under the Central Excises and Salt Act, No. I of 1944 (hereinafter referred to as the Act) is a police officer within the meaning of those words in section 25 of the Evidence Act. Therefore even though the Deputy Superintendent of Customs and Central Excises may have acted under the powers conferred on him by the Sea Customs Act, he was still a police officer, and the statement made to him by the appellant on November 30, 1960 which is in the nature of a confession would be inadmissible under section 25 of the Evidence Act. It may be added that the High Court had in this connection relied on the judgment of this Court in the State of Punjab vs Barkat Ram( ) where it had been held by majority that a Customs. Officer under the Sea Customs Act was not a police officer within the meaning of section 25 of the Evidence Act. The appellant however relies on a later decision of this Court in Raja Ram Jaiswal vs State of Bihar(2) where by majority it was held that an excise officer under the Bihar and Orissa Excise Act (No. 2 of 1915) was a police officer within the meaning of section 25 of the Evidence Act. There has been difference of opinion among the High Courts in India as to the meaning of the words "police officer" used in section 25 of the Evidence Act. One view has been that those words must be construed in a broad way and all officers whether they are police officers properly so called or not would be police officers within the meaning of those words if they have all the powers of a police officer with respect to investigation of offences with which they are concerned. The leading case in support of this view is Nanoo, Sheikh Ahmed vs Emperor(3). The other view which may be called the narrow view is that the words "police officer" in section 25 of the Evidence Act mean a police officer properly so called and do not include officers of other departments of government who may be charged with the duty to investigate under special Acts special crimes thereunder like excise offences or customs offences, and so on. The leading case in support of this view is Radha Kishun Marwari vs King Emperor(4). The other High Courts have followed one view or the other, the majority being in favour of the view taken by the Bombay High Court. It is submitted on behalf 'of the appellant that the view taken by the Bombay High Court in Nanoo Sheikh Ahmed(3) is the correct view and that the view of the Patna High Court in Radha Kishun Marwari(4) is not correct. On the other hand it has been urged on behalf of the State that the view taken by the Patna High (1) ; (2) [1964]2 S.C.R. 752. (3) Bom. (4) patna 46. C.1./66 13 702 Court in Radha Kishun Marwari(1) is the correct one. Prima facie there is in our opinion much to be said for the narrow view taken by the Patna High Court. But as we have come to the conclusion that even in the broad view, a Central Excise Officer under the Act is not a police officer, it is unnecessary to express a final opinion on the two views on the meaning of the words "police officer" in section 25 of the Evidence Act. We shall proceed on the assumption that the broad view ' may be accepted and that requires an examination of the various provisions of the Act to which we turn now. The main purpose of the Act is to levy and collect excise duties and Central Excise Officers have been appointed thereunder for this main purpose. In order that they may carry out their duties in this behalf, powers have been conferred on them to see that duty is not evaded and persons guilty of evasion of duty are brought to book. Section 9 of the Act provides for punishment which may extend to imprisonment upto 6 months or to find upto Rs. 2,000 or both where a person (a) contravenes any of the provisions of a notification issued under section 6 or of section 8 or of a rule made under cl. (iii) of sub section (2) of section 37; (b) evades the payment of any duty payable under the Act; (c) fails to supply any information which he is required by rules made under the Act to supply or supplies false information; and (d) attempts to commit or abets the commission of any of the offences mentioned in cls. (a) and (b) above. Under section 13 of the Act, any Central Excise Officer duly empowered by the Central Government in this behalf may arrest any person whom he has reason to. believe to be liable to punishment under the Act. Section 18 lays down that all searches made under the Act or any rules made thereunder and all arrests made under the Act shall be carried out in accordance with the provisions of the Code of Criminal Procedure, 1898 relating respectively to searches and arrests made under that Code. Section 19 lays down that every person arrested under the Act shall be forwarded without delay to the nearest Central Excise Officer empowered to send persons so arrested to a Magistrate, or, if there is no such Central Excise Officer within a reasonable distance, to the officer in charge of the nearest police station. These sections clearly show that the powers of arrest and search conferred on Central Excise Officers are really in support of their main function of levy and collection of duty on excisable goods. Strong reliance has however been placed on behalf of the appellant on section 21 of the Act, the material part of which runs thus: "21. (1) When any person is forwarded under section 19 to a Central Excise Officer empowered to send persons so (1) Patna 46. 703 arrested to a Magistrate, the Central Excise Officer shall proceed to inquire into the charge against him. (2)For this purpose the Central Excise Officer may exercise the same powers and shall be subject to the same provisions as the officer in charge of a police station may exercise and is subject to under the Code of Criminal Procedure, 1898, when investigating a cognizable case; Provided that. . . . . . " It is urged that under sub section (2) of section 21 a Central Excise Officer under the Act has all the powers of an officer in charge of a police station under chapter XIV of the Code of Criminal Procedure and therefore he must be deemed to be a police officer within the meaning of those words in section 25 of the Evidence Act. It is true that sub section (2) confers on the Central Excise Officer under the Act the same powers as an officer in charge of a police station has when investigating a cognizable case; but this power is conferred for the purpose of sub section (1) which gives power to a Central Excise Officer to whom any arrested person is forwarded to inquire into the charge against him. Thus under section 21 it is the duty of the Central Excise Officer to whom an arrested person is forwarded to inquire into the charge made against such person. Further under proviso (a) to sub section (2)of section 21 if the Central Excise Officer is of opinion that there is sufficient evidence or reasonable ground of suspicion against the accused person, he shall either admit him to bail to appear before a Magistrate having jurisdiction in the case, or forward him in custody to such. Magistrate. It does not however appear that a Central Excise Officer under the Act has power to submit a charge sheet under section 173 of the Code of Criminal Procedure. Under section 190 of the Code of Criminal Procedure, a Magistrate can take cognizance of any offence either (a) upon receiving a complaint of facts which constitute such offence, of (b) upon a report in writing of such facts made by any police officer, or (c) upon information received from any person other than a police officer, or upon his own knowledge or suspicion, that such offence has been committed. A police officer for purposes of cl. (b) above can in our opinion only be a police officer properly so called as the scheme of the Code of Criminal Procedure shows and it seems therefore that a Central Excise Officer will have to make a complaint under cl. (a) above if he wants the Magistrate to take cognizance of an offence, for "ample, under section 9 of the Act. Thus though under sub section (2) of section 21 of the Central Excise Officer under the Act has the powers of an officer incharge of a police station when investigating a cognizable case, that is for the purpose of his inquiry under sub section (1) of section 21. Section 21 is in terms different fro section 78(3) of the Bihar and Orissa Excise Act,1915 which came to be considered in Raja Ram Jaiswal 's 704 case(1) and which provided in terms that "for the purposes of section 156 of the Code of Criminal Procedure, 1898, the area to which an excise officer empowered under section 77, sub section (2) , is appointed shall be deemed to be a police station, and such officer shall be deemed to be the officer in charge of such station". It cannot therefore be said that the provision in section 21 is on par with the provision in section 78(3) of the Bihar and Orissa Excise Act. All that section 21 provides is that for the purpose of his enquiry, a Central Excise Officer shall have the powers of an officerin charge of a police station when investigating a cognizable case. But even so it appears that these powers do not include the power to submit a charge sheet under section 173 of the Code of Criminal Procedure, for unlike the Bihar and Orissa Excise Act, the Central Excise Officer is not deemed to be an officer in charge of a police station. It has been urged before us that if we consider section 21 in the setting of section 14 of the Act, it would become clear that the enquiry contemplated under section 21(1) is in substance different from investigation pure and simple into an offence under the Code of Criminal Procedure. It is not necessary to decide whether the enquiry under section 14 must also include enquiry mentioned in section 21 of the Act. Apart from this argument we are of the opinion that mere conferment of powers of investigation into criminal offences under section 9 of the Act does not make the Central Excise Officer, a police officer even in the broader view mentioned above. Otherwise any person entrusted with investigation under section 202 of the Code of Criminal Procedure would become a police officer. In any case unlike the provisions of section 78(3) of the Bihar and Orissa Excise Act, 1915, section 21 (2) of the Act does not say that the Central Excise Officer shall be deemed to be an officer in charge of a police station and the area under his charge shall be deemed to be a police station. All that section 21 does is to give him certain powers to aid him in his enquiry. In these circumstances we are of opinion that even though the Central Excise Officer may have when making enquiries for purposes of the Act powers which an officer in charge of a police station has when investigating a cognizable offence, he does not thereby become a police officer even if we give the broader meaning to those words in section 25 of the Evidence Act. The scheme of the Act therefore being different from the Bihar and Orissa Excise Act, 1915, the appellant cannot take advantage of the decision of this Court in Raja Ram Jaiswals ' case(1) taking even the broader view of the words "police officer" in section 25 of the Evidence Act. We are of opinion that the present case is more in accord with the case of Barkat Ram(2). In this view, (1) ; , (2) ; 705 of the matter the statement made by the appellant to the Deputy Superintendent of Customs and Excise would not be hit by section 25 of the Evidence Act and would be admissible in evidence unless the appellant can take advantage of section 24 of the Evidence Act. As to that it was urged on behalf of the appellant in the High Court that the confessional statement was obtained by threats. This was not accepted by the High Court and therefore section 24 of the Evidence Act has no application in the present case. It is not disputed that if this statement is admissible, the conviction of the appellant is correct. As we have held that a Central Excise Officer is not a police officer within the meaning of those words in section 25 of the Evidence Act the appellant 's statement is admissible. It is not ruled out by anything in section 24 of the Evidence Act and so the appellant 's conviction is correct and the appeal must be dismissed. We hereby dismiss the appeal. Appeal dismissed.

IN-Abs

The appellant who lived in a village near Goa was found in possession of contraband gold. He was prosecuted under section 167(81) of the Sea Customs Act read with section 9 of the Land Customs Act (9 of 1924). The trial Magistrate convicted him but the Sessions Judge relying on the decision of the Calcutta High Court in Sitaram Agarwala 's case acquitted him. The High Court of Mysore, in appeal against the acquittal, considered the evidence and relying, inter alia, on the statement made by the appellant to the Deputy Superintendent of Customs and Excise held him guilty. With certificate the appellant came to this Court. The questions that felt for consideration were : (i) whether the view taken by the High Court differing from the view taken by the Calcutta High Court in Sitaram Agarwala 's case with respect to the interpretation of section 167(81) was correct, and (ii) whether the statement made by the appellant to the Deputy Superintendent of Customs & Excise was admissible in view of section 25 of the Indian Evidence Act. HELD : (i) The High Court was right in not following the view of the Calcutta High Court in Sitaram Agarwala 's case, the correct view as to the interpretation of section 167(81) of the Sea Customs being that the section takes in even those persons who may not be concerned with the actual import of the prohibited goods. [700 G H] Sachidananda Banerjee, Assistant Collector of Customs vs Sitaram Agarwal, , followed. Sitaram Agarwal vs State, , disapproved. (ii)The Central Excise and Salt Act, 1944 does not confer all the powers of the police officer on Central Excise Officers. The powers confered on them by section 21(2) of the Act are only for the purpose of inquiry under section 21(1); they would not entitle the said officers to file a charge sheetunder section 173 of the code of Criminal Procedure. Therefore even though a central excise officer may have when making enquiries for purposes of the Act, powers an officer in charge of a police station has when investigating a cognizable offence, he does not thereby become a police officer within the meaning of section 25 of the Indian Evidence Act, and the statement of an accused person recorded by him is not hit by that section . [704 B C, F G] Raja Ram Jaiswal vs State of Bihar, ; and Nanoo Sheikh Ahmed vs Emperor, Bom. 78, distinguished. State of Punjab vs Barkat Ram,, ; , relied on. 699 Radha Kishun Marwari vs King Emperor, Patna 46, referred to.

Appeals Nos. 461 of 1964. Appeals from the judgment and order dated October 11, 1962 of the Mysore High Court in Writ Petitions Nos. 1248, 1267, 1269, 1294 1298, 1311, 1312, 1318, 1341, 1354, 1355, 1382 and 1384. 684 M.C. Setalvad, section C. Javali, 0. C. Mathur, J. B. Dadachanji, and Ra.vinder Narain, for appellants Nos. 1 4, 6 45 and 48 76 (in C. As. 430 445 of 1964). A.K. Sen, B. R. L. Iyengar and B. R. G.K. Achar for respondents Nos. 2 and 3 (in C. As. 430 445 of 1964) and Appellants (in C. A. Nos. 446 461 of 1964). M. K. Nambyar, section N. Andley, Rameshwar Nath and P. L. Vohra,for respondents (in C. As. 446, 447, 449 452,456 and 459 of1964). J. B. Dadachanji, 0. C. Mathur and Ravinder Narain, for the Intervener. To appreciate the arguments addressed to us on behalf of the appellants and the respondents, it is necessary to give, in chronological order, the events leading up to the filing of the above writ petitions and their significance. On December 12, 1957, the Governor of Mysore made rules called the Mysore Public Service Commission (Functions) Rules, 1957, hereinafter called the Functions Rules, relating to the functions of the Mysore Public Service Commission. Rule 3 of these rules provides for recruitment by examination and r. 4 with which we are primarily concerned provides for recruitment by selection. Rule 4 is as follows : "When recruitment to a service or post is to be made by selection, and consultation with the Commission is required, the Commission shall (1)advise the Government in regard to the conditions of eligibility of candidates; (2)after the rules to be made have been approved by Government and a requisition for recruitment is received, invite applications from intending candidates after giving due publicity to conditions of eligibility, nature of com petition, number of vacancies to be filled where possible, and any other relevant material; (3)consider all applications received and when necessary interview such candidates as fulfil the prescribed conditions and whom it considers most suitable for ap pointment; 685 Note. Nothing contained herein shall preclude the Commission from considering the case of any candidate possessing the prescribed qualifications brought to its notice by Government, even if such a candidate has not applied in response to the advertisement of the Government. (4)forward to the Appointing Authority a list consisting of such number as it may fix, of the candidates whom the commission considers most suitable for appointment in order of preference; Provided that the Commission may invite Government to nominate an Officer to represent the Service or the Department for whom recruitment is being made, to be present at the interview referred to in clause (3) to assist the Commission in its work of selection. " We may here dispose of the point whether these rules are ex ecutive rules or statutory rules made under article 309 of the Constitution. The High Court held that "there can be little doubt that to the extent the Rules deal with the topic of regulating recruitment to Civil Services under the State, the source of the power could only be the proviso to article 309 of the Constitution." In our opinion, these rules are not rules made under article 309. First, the rules do not expressly say so, and secondly, the rules are dealing with the functions of the commission rather than with laying down the rules regarding recruitment to services or posts. Under article 320 (3) of the Constitution, it is the duty of the Government to consult and the duty of the Public Service Commission to advise, inter alia "on the principles to be followed in making appointments to civil services and posts. . and on the suitability of candidates for such appointments, promotions or transfers. " Sub rule (1) of r. 4 clearly provides the same thing as does article 320 (3) (b) and the other sub rules are really administrative arrangements apparently arrived at between the Commission and the Government as to how the Government and the Public Service Commission will take steps to recruit persons for the State Services or posts. To resume the narrative, on February 10, 1958, the Governor of Mysore, in exercise of the powers conferred by the proviso so article 309 of the Constitution, made the Mysore State Civil Services (General Recruitment) Rules, 1957, hereinafter called the General Recruitment Rules. There is no dispute that these are statutory rules and in so far as they direct anything to be done in a particular way, the Government would have to comply with the directions. Rule 3 of these Rules, on which reliance has been placed by the learned counsel for the respondents to urge that the GoveI Sup Cl/66 12 686 cannot recruit Assistant Engineers without framing rules, is in the following terms: "Method of recruitment. Recruitment to the State Civil Services shall be made by competitive examination or by promotion. The method of recruitment and qualifications for each State Civil Service shall be as set forth in the rules of recruitment of such service specially made in that behalf. " It would be convenient to deal with this argument at this stage. Mr. Nambiar contends that the words "shall be as set forth in the rules of recruitment of such service specially made in that behalf " clearly show that till the rules are made in that behalf no recruitment can be made to any service. We are unable to accept this contention. First it is not obligatory under proviso to article 309 to make rules of recruitment, etc., before a service can be constituted or a post created or filled. This is not to say that it is not desirable that ordinarily rules should be made on all matters which are susceptible of being embodied in rules. Secondly, the State Government has executive power, in relation to all matters with respect to which the Legislature of the State has power to make laws. It follows from this that the State Government will have executive power in respect of List II, Entry 41, State Public Services. It was settled by this Court in Ram Jawaya Kapur vs The State of Punjab(1) that it is not necessary that there must be a law already in existence before the executive is enabled to function and that the powers of the executive are limited merely to the carrying out of these laws. We see nothing in the terms of article 309 of the Constitution which abridges the power of the executive to act under article 162 of the Constitution without a law. It is hardly necessary to mention that if there is a statutory rule or an act on the matter, the executive must abide by that act or rule and it cannot in exercise of the executive power under article 162 of the Constitution ignore or act contrary to that rule or act. In the background of this position we are unable to inter pret r. 3 of the General Recruitment Rules as suspending the executive power of the State till rules of recruitment of a service are specially made in that behalf. Rules usually take a long time to make; various authorities have to be consulted and it could not have been the intention of r. 3 of the General Recruitment Rules, 1957, to halt the working of the public departments till rules were framed. This Court considered a similar point in T. Cajee vs U. Jormanik Siem(2) and arrived at a similar conclusion. The following observations of Wanchoo, J., who delivered the judg (1) (2) ; , 762 764. 687 ment on behalf of the majority, bring out clearly the fallacy in Mr. Nambiar 's argument: "The High Court has taken the view that the appointment and succession of a Siem was not an administrative function of the District Council and that the District Council could only act by making a law with the assent of the Governor so far as the appointment and removal of a Siem was concerned. In this connection, the High Court relied on para 3 (1) (g) of the Schedule, which lays down that the District Council shall have the power to make laws with respect to the appointment and succession of Chiefs and Headmen. The High Court seems to be of the view that until such a law is made there could be no power of appointment of a Chief or Siem like the respondent and in consequence there would be no power of removal either. With respect, it seems to us that the High Court has read far more into para 3 (1) (g) than is justified by its language. Paragraph 3 (1) is in fact something like a legislative list and enumerates the subjects on which the District Council is competent to make laws. Under para 3 (1) (g) it has power to make laws with respect to the appointment or succession of Chiefs or Headmen and this would naturally include the power to remove them. But it does not follow from this that the appointment or removal of a Chief is a legislative act or that no appointment or removal can be made without there being first a law to that effect." "Further once the power of appointment falls within the power of administration of the district the power of removal of officers and others so appointed would necessarily follow as a corollary. The Constitution could not have intended that all administration in the autonomous districts should come to a stop till the Governor made regulations under para 19 (1) (b) or till the District Council passed laws under para 3 (1) (g). The Governor in the first instance and the District Councils thereafter were vested with the power to carry on the administration and that in our opinion included the power to appoint and remove the personnel for carryinig on administration. Doubtless when regulations are made under para 19 (1) (b) or laws are passed under para 3 (1) with respect to the appointment or removal of the personnel of the administration, the administrative authorities would be bound to follow the regulations go made or the laws so passed. But from this it does not follow that till the regulations were made or the laws were passed, there could be no appointment or dismissal 688 of the personnel of the administration. In our opinion, the authorities concerned would at all relevant times have the power to appoint or remove administrative personnel under the general power of administration vested in them by the Sixth Schedule. The view therefore taken by the High Court that there could be no appointment or removal by the District Council without a law having been first passed in that behalf under para 3 (1) (g) cannot be sustained." Mr. Nambiar in this connection also relied on articles 15 and 16 of the Constitution. He urged that if the executive is held to have power to make appointments and lay down conditions of service without making rules in that behalf under the proviso to article 309, articles 15 and 16 would be breached because the appointments in that case would be arbitrary and dependent on the mere whim of the executive. We are unable to hold that articles 15 and 16 in any way lead us to this conclusion. If the Government advertises the appointments and the conditions of service of the appointments and makes a selection after advertisement there would be no breach of article 15 or article 16 of the Constitution because everybody who is eligible in view of the conditions of service would be ,entitled to be considered by the State. In conclusion we hold that r. 3 of the General Recruitment Rules, 1957, did not prevent the State from exercising its executive power of appointing Assistant Engineers and determining their conditions of service by executive order. Mr. Nambiar had at one stage contended that rules existing in the constituent parts of the new State of Mysore would be available for recruitment as they had been continued under the States Reorganisation Act, but it seems to us that these rules would not be available for recruitment purposes because the Government would be recruiting Assistant Engineers for the whole State and not for each of the constituent parts of the State. We may clarify that these remarks only deal with recruitment rules. This brings us to the next event, and that is Notification No E. 2666 58 9PSC dated October 1, 1958, issued by the Mysore Public Service Commission inviting applications in the prescribed form from qualified Indian citizens for recruitment of 40 Probationary Assistant Engineers in the Executive Cadre of the Mysore Public Works Department. The Notification prescribes the qualifications, pay, age limit, other conditions for eligibility, fee payable and the particulars of the candidates required to be furnished. On March 4, 1959, the Governor of Mysore in exercise of the powers conferred by the proviso to article 309 prescribed the maximum age limits for direct recruitment of graduates in Engineering for the posts of Supervisors and Assistant Engineers in the Mysore 689 Public Works Department. These age limits were to prevail until the rules of recruitment specially applicable to Mysore Public Works Department were promulgated. The maximum age limits were made retrospective. It was further provided that "anything done or any action taken by the Public Service Commission or other authority in respect of recruitment of Probationary Assistant Engineers between September 1, 1958 and the date of this Notification shall be deemed to have been done or taken under the provisions of this Notification. " On the same date the Secretary to the Government of Mysore, Public Works Department, Bangalore, wrote to the Secretary, Public Service Commission, Bangalore, stating inter alia, that; "The Public Service Commission has already taken action to recruit forty probationers in the Public Works Department for being absorbed as Assistant Engineers in due course after satisfactory completion of their training. I am to request the Public Service Commission to take action straightway to invite applications and send a list of 80 candidates in all for appointment as Probationers in the Department. " This clearly shows that the Government was aware of the action taken by the Public Service Commission in issuing the Notification dated October 1, 1958. After receipt of this letter, the Public Service Commission issued a Notification on May 4, 1959, inviting applications "from qualified Indian citizens of all classes for recruitment of 80 Probationary Assistant Engineers in the Executive Cadre of the Mysore Public Works Department, including the 40 posts already advertised in this office Notification No. E 3666 58 P.S.C. dated October 1, 1958". This Notification laid down the qualifications, pay during the period of probation, age limits, etc. The age limits prescribed were the same as in the State Government Notification dated March 4, 1959. The Public Service Commission Notification further included the usual particulars required to be furnished by the candidates. On March 1, 1960, the Governor issued a notification containing Order No. GAD 7 ORR 60 dated March 1, 1960, ordering "that for direct recruitment to appointments and posts in the services of the State, reservation for Scheduled Caste and Scheduled Tribes shall be 15% and 3%. The reservation for other backward classes shall be 25 % The rest of the appointments and posts shall be filled up on the basis of merit and shall be open to all classes. " The Public Service Commission then issued a Notification dated April 1, 1960, inviting applications for filling up of various posts in the several departments of Government of Mysore,. 690 including the 80 Probationary Assistant Engineers in the Public Works Department. These were included in Part 'A ' of the Notification, and it was provided inter alia in para 22 of the Notification as follows : "22. IMPORTANT NOTE: (i)The vacancies detailed in Part 'A ' of the Statement were previously advertised in this office notifications noted in column 8 against each item and such of the candidates who have already applied for the said vacancy/vacancies in response to the previous notification need not apply again. But they may furnish additional information, if any, if they so desire. (ii)Applications already received in this office for the vacancies under Part 'A ' will be considered on the basis of the revised classification issued by Government in their Order No. GAD 7 ORR 60, dated the 1st March, 1960. (iii)The qualifications, period of experience/training or service, the minimum and maximum age limits and all other requirements to be satisfied by the candidates for all the vacancies under Part 'A ' in the statement shall be determined as on the dates noted against each item of vacancy/vacancies in column 9 of the statement. (iv)Such of the candidates who do not satisfy these conditions as on the dates noted in column 9 of the state ment in respect of Part 'A ' vacancies, will not be eligible for the posts. " Column 8 of the statement mentions the previous notifica tions dated May 4, 1959 and October 1, 1958, and column 9 mentions the date "June 8, 1959". Column 5 prescribes the qualifications as follows : "A degree in Engineering (Civil or Mechanical) or an equivalent Examination. In addition candidates must have also either undergone practical training or rendered a service in the Technical Cadre of the P.W.D. for a minimum of 6 months. (A certificate to that effect issued by the Principal of the college or superior officer under whom they have undergone training or are working must accompany the application. " The maximum age limits were prescribed as under "33 years for Scheduled caste and scheduled tribes, 31 years for others, 35 years in the case of government servants holding substantive appointments or having 691 continuous government service for a period of not less than 3 years. " In October 1960 the Mysore Public Service Commission interviewed the candidates and on November 2, 1960, the Com mission sent to the Government a list of 80 candidates selected by them. On December 3, 1960, the Government of Mysore sanctioned the establishment of the State Service Cadre in respect of Mysore Public Works Engineering Department Service. On the same date, in exercise of the powers conferred by the proviso to article 309, the Governor of Mysore made the rules called the Mysore Public Works Engineering Department Services (Recruitment) Rules, 1960. It prescribed, in respect of each category of posts specified in column of the Schedule, methods of recruitment and the minimum qualifications and the period of probation, if any. For Assistant Engineers, the method of recruitment prescribed was 40 per cent by direct recruitment by the Public Service Commission after interview and oral test; 50 per cent by promotion from the cadre of Junior Engineers, and 10 per cent by promotion from the cadre of Supervisors. It prescribed the minimum qualifications and age as follows: "For Direct Recruitment Age Not above 31 years. A pass in Civil or Mechanical Engineering or a Certificate or Diploma from the Institute of Engineers that the candidate has passed Parts A. B. of the Associate Membership of the Institute of Engineers or equivalent qualification with practical. training for not less than 6 months during or after the course." One G. Govindaraju, Junior Engineer, filed a petition under article 226 of the Constitution for a mandamus to the State Government prohibiting the appointment of 80 persons selected by the Public Service Commission. It was contended by him that on December 3, 1960, under the proviso to article 309 of the Constitution the Governor had made rules regulating the recruitment to the posts of Assistant Engineers, and that under those rules, forty per cent of the appointments alone could be made by the Public Service Commission after an interview and an oral test. Various other arguments were urged before the High Court. The Ad vocate General stated before the High Court on behalf of the State Government that the list having been prepared by the Public Service Commission in response to the request made by the State Government in the exercise of its executive power which it possessed under article 162 of the Constitution, the State Government was not bound to make appointments only in accordance with that list, and that it was open to the State Government not to appoint any of those persons or to appoint only those persons who, in its 692 opinion, should be appointed amongst them. The High Court felt that this statement made before it by the Advocate General rendered unnecessary any investigation into the contention urged on behalf of the petitioner at that stage. The High Court further observed as follows: .lm15 "It would be for the State Government before it takes a decision on that question, to consider the effect of Rule 4(2) of the Public Service Commission (Function), Rules, made on December 10, 1957, Rules 3 and 4 of the Mysore State Civil Services General Recruitment Rules, which came into force on February 10, 1958, and of the Mysore Public Works Engineering Department Service (Recruitment) Rules, which came into force on December 3, 1960, and to further consider whether in the light of those provisions, appointments could be made to the posts of Assistant Engineers, except in accordance with the provisions of the Rules which came into force on December 3, 1960. On this question,, we should not, in my opinion, express any opinion at this stage. " With these observations, the High Court dismissed the peti tion as premature. This order was passed on September 29, 1961. On October 23, 1961, in exercise of the powers conferred by the proviso to article 309 of the Constitution and all other powers enabling him in that behalf, the Governor of Mysore made certain amendments to the Mysore Public Works, Engineering Department Services (Recruitment) Rules, 1960. The effect of these amendments, if valid, was to make the Mysore Public Works Engineering Department Services (Recruitment) Rules, 1960, retrospective with effect from the first day of March, 1958. Para 3 of this Notification further provided: "3. To rule 2, the following proviso shall be added and shall be deemed always to have been added, namely : "Provided that in respect of direct recruitment of Assistant Engineers for the first time under these rules the percentages relating to direct recruitment and recruitment by promotion specified in column 2 of the Schedule shall not be applicable and the minimum qualifications and the period of probation shall be the following, namely: Qualifications The candidates must be. a graduate in Engineering (Civil or Mechanical) or must have passed an equivalent examination and must have either undergone practical training or rendered service in a technical cadre in the Public Works Department for a minimum period 693 not less than six months. A certificate to that effect issued by the Principal of the College or Superior Officer under whom he has undergone training or is working must be enclosed to the application; Age limits must not be above (i) 35 years in the case of Government servantsholding appointment substantively or who have been in continuous Government service for a period of not less than 3 years and political sufferers; (ii)33 years in the case of candidates belonging to Sche duled Castes and Scheduled Tribes; (iii)31 years in the case of Backward Classes; (iv)28 years in the case of others; on the last date fixed for the receipt of applications. Period of Probation. Two years. " On October 31, 1961, the Governor of Mysore appointed 88 candidates as Probationary Assistant Engineers in the Mysore. Public Works Department and it is these appointments that were challenged before the Mysore High Court in the 16 writ petitions mentioned in the beginning of this judgment. Mr. Setalvad contends that under the proviso to article 309 the Governor is entitled to make retrospective rules and the position of the Government while acting under the proviso to article 309 is in no way different from the powers conferred on the legislature under article 309 read with articles 245 and 246 and item 41 of List 11. Mr. Setalvad further contends that the Government is not acting as a delegate of any legislature while exercising powers under the proviso to article 309; it is exercising a power conferred by the Constitution directly on the executive and the Constitution has not prescribed any guiding principles to be followed by the State Government while it is exercising powers under the proviso toart. 309, because the Constitution treats it having the same powers as the legislature. He further says that the State Government can amend and repeat any existing law relating to State Services continued in force by article 313 of the Constitution. He urges that if the Constitution makers had intended to place any fetters on the powers of the State Government under the proviso, these would have been mentioned specifically, and he says that we cannot treat it on the same basis as delegated legislation and, therefore,. even if it be the law, which he does not concede, that the executive when acting as a delegate under an act of Parliament or an act of a State Legislature, cannot make rules retrospectively, this principle does not apply to the exercise of powers under the proviso, to article 309 of the Constitution. 694 Mr. Nambiar contends that under an act of Parliament or an act of a State Legislature the executive cannot frame rules retrospectively unless the act specifically empowers it to do so. According to him the position is the same under the proviso to article 309. In our opinion, it is not necessary to decide this point in these cases because we are of the view that the appeal can be disposed of on another ground. Assuming for the sake of argument that Mr. Nambiar is right that the Mysore State Government could not make rules retrospectively and that the rules are thus void, so far as they operate retrospectively, we must ignore these rules and see whether the appointments made on October 31, 1961, can be upheld. We have come to the conclusion that these appointments can be considered to have been validly made in exercise of the executive power of the State under article 162 of the Constitution. The three notifications issued by the Public Service Commission on October 1, 1958, May 4, 1959 and April 1, 1960, must be treated to have been issued with the consent of the State Government. These notifications are not rules made under article 309 of the Constitution, as contended by Mr. Nambiar; they are mere executive notifications issued by the Public Service Commission at least with the implied consent of the State Government. The passage reproduced above from the letter of the Government dated March, 4, 1959, clearly shows .that the Government was well aware of what the Public Service Commission was doing. It was aware of the action being taken by the Public Service Commission, and indeed, it can safely be assumed that the Government was aware of each step being taken by the Public Service Commission including the publication of these notifications. The position is that if we accept Mr. Nambiar 's arguments that these rules purported to be made by the Mysore State Government had no retrospective validity, there were no statutory rules to govern the appointment of the 88 persons as Assistant Engineers. We have already held that the Mysore State Civil Service (General Recruitment) Rules, 1957, did not debar the Government from making appointments without making statutory rules. Therefore, we hold that these appointments were validly made. Mr. Nambiar sought to impeach the appointments on another ground. He said that the appointments violated Mysore Public Works Engineering Department Services (Recruitment) Rules, 1960, dated December 3, 1960, because the appointments were made on October 31, 1961, and according to him, these appointments had also to be made under the statutory rules made on December 3, 1960. We are unable to sustain this contention because it took about two years for the Public Service Commission to publish notifications, interview candidates and recommend names for appointment. The whole procedure having been 695 followed, it could not have been the intention of the Government while framing the rules to cover appointments made in pursuance of the recommendations of the Public Service Commission made in November 1960 after interviewing candidates in October 1960. It was urged in the alternative that the advertisement made by the Public Service Commission notification dated April 1, 1960 was different from the rules of March 4, 1959, in the matter of fixing the age limits, i.e., while the rules provided 28 years as the maximum age in the case of others, the notification provided the maximum age as 31 years. In our view the respondents are not entitled to make a grievance of this difference because there is nothing on the record to show that the ages of those appointed were against the rules of March 4, 1959. The learned counsel has not been able to satisfy us that they have suffered in any manner because of this difference in age. There remains one question and that is the question of mala fides which was alleged in the petition. There were 16 petitions but we will take the allegations from the first petition. Paras 16 and 17 in Writ Petition No. 1248 of 1961, before the High Court, in which the allegations of mala fides have been made read as under: "Further selection made by the Public Service Commission is arbitrary and made out of collateral considerations. Amongst the selected candidates, the following viz., (1) Sri D. C. Channe Gowda, who is the son inlaw of the 2nd member of the Public Service Commission, an ordinary B.E. Graduate with only 49% of marks; (2) Sri Kencharase Gowda, who is the sister 's son inlaw, an ordinary B. E. have been selected to the exclusion of myself and several others, who had superior qualification, both academically and by virtue of seniority in service. 17.Similarly, relations of prominent members of the local Legislature and of Parliament, relations of high placed officials including a Minister and an ex Minister have been selected. " The Chairman of the Mysore Public Service Commission filed a counter affidavit and replied to the above paras 16 and 17 as follows: " 3. Paragraph 16 of the Petitioner 's affidavit The statement that the selection made was arbitrary and made out of collateral considerations is incorrect. It is true that Shri D. C. Channe Gowda was among the candidates selected. The then Second Member of the 696 Public Service Commission abstained from participating in the interview of that candidate. I was not aware at the time of the selection, of the relationship of Kencharase Gowda, Shri T. Krishna, Shri Hanume Gowda and Shri M. N. Narase Gowda to the then Second Member of the Public Service Commission. The then Second Member of the Public Service Commission, Shri M. K. Appajappa is since dead. The dominant factor in making the selection was the performance of the candidate at the interview and the marks secured by the candidate in the Degree Examination was only one of the factors that was taken into, consideration. 4.Paragraph 17 of the Petitioner 's Affidavit I was not aware of the relationship, if any, of the candidates to prominent members of the local Legislature and of Parliament or of high placed officials including a Minister and an ex Minister. I submit that it is also incorrect to suggest that the selections were influenced by any such relationship". The High Court found it unnecessary to investigate this mat ter because it felt that the selections impugned were in valid on other grounds, but it observed as follows: "There is no denying the fact that the facts stated in the pleadings, especially in the light of the manner in which they are traversed in the counter affidavit of the Chairman of the Public Service Commission, do raise a strong suspicion." The High Court might well have abstained from expressing its strong suspicion if it was not going to give its final views on the question of malafides. We are unable to appreciate that the manner in which the counter affidavit of the Chairman of the Public Service Commission is expressed calls for any comment. In para 15 of the affidavit in support of Writ Petition No. 1269 of 1961 more details are given of the selected candidates and the counter affidavit filed by the Chairman of the Public Service Commission is common to all the petitions. But even so, the details mentioned did not call for any detailed reply. For example, it was alleged in para 15 that one Shri D.C. Channe Gowda who is the son in law of the Second Member of the Public Service Commission, Shri Appajappa, was an ordinary B. E. Graduate with only 49.8 % marks. But even if he had only 49.8 % of the marks, this is not conclusive to show that he should not have been selected because the whole object of interviewing candidates is to judge their eligibility or suitability apart from the standard displayed by them in the written examination. We are unable to hold that on these facts any mala fides or collateral object has been proved. 697 In the result the appeals both of the State and the other appellants are allowed and judgment of the High Court set aside. We may mention that some of the appellants have not prosecuted their appeals but there is no reason why they should not have the benefit of this judgment, and exercising our powers under article 142 of the Constitution, we direct that in order to do complete justice they should also have the benefit of the judgment given by us. There will be no order as to costs. Appeals allowed.

IN-Abs

By notifications issued in October 1958, May 1959 and April 1960, the Mysore Public Service Commission invited applications for the recruitment of 80 probationary Assistant Engineers . The qualifications, pay, age limit and other conditions for eligibility were prescribed by these notifications. On March 1, 1960, it was notified by the Governor, that for direct recruitment to appointments and posts in the services of the State, reservations for Scheduled Castes and Scheduled Tribes would be 15% and 3%; and the reservation for other backward classes would be 25%. Thereafter, in October and November 1960, the Mysore Public Service Commission interviewed the candidates and sent a list to the Government of 80 candidates selected by them. On December 3, 1960, the Government of Mysore sanctioned the establishment of the State Service Cadre in respect of the Mysore Public Works Engineering Department Service. On the same date, in exercise of the powers conferred by the proviso to article 309 the Governor made the rules called the Mysore Public Service Engineering Department Service (Recruitment) Rules 1960. These Rules prescribed in respect of each category of specified posts the methods of recruitment, whereby only 40% of the appointment could be made after an interview and an oral test and also prescribed the minimum qualifications, age limits, etc. for Assistant Engineers which were somewhat different from those prescribed in the earlier Notifications of the Mysore Public Service Commission relating to the recruitment of 80 Assistant Engineers. On October 23, 1961 the Governor made certain amendments to the 1960 Rules the effect of which was to make those rules retrospective with effect from March 1, 1958 and also, to waive the requirements of the rules relating to the percentages for direct recruitment, educational qualifications, and age requirements, etc. in respect of direct recruitment of Assistant Engineers for the first time. Thereafter, on October 31, 1961, the Governor appointed 88 candidates as probationary Assistant Engineers. These appointments were challenged in 16 Writ Petitions filed in the High Court on the grounds inter alia, that (1) in view of Rule 3 of the Mysore State Civil Services 683 (General Recruitment) Rules, 1957, which provided that the method of recruitment and qualifications for each State Civil Service shall be set forth in the rules of recruitment of such service specially made in that behalf, the Government could not recruit the Assistant Engineers without framing the necessary rules; (ii) the State Government could not make rules retrospectively unless it had express powers to do so under the relevant statute; (iii) the appointments which were made on October 31, 1951 had to be made in accordance with the 1960 Rules but in fact were not so made; (iv) some of the appointments were made mala fide. These writ petitions were allowed by the High Court. On appeal to this Court, HELD : The appointments of the 88 Assistant Engineers were validly made in the exercise of the executive power of the State under article 162 of the Constitution. It is not obligatory under the proviso to article 309 to make rules of recruitment etc. before a service can be constituted or a post created or filled. The State Government has executive power in relation to all matters with respect to which the Legislature of the State hag power to make laws. It follows from this that the State Government will have executive power in respect of List 11 Entry 41 "State Public Services". [686 C E] In this background, Rule 3 of the General Recruitment Rules of 1957 cannot be interpreted as suspending the executive power of the State till rules of recruitment of a service are specially made in that behalf. [686 G] Ram Jawaya Kapur vs State of Punjab, and T. Cajee vs K. Jormanic Siem, ; , referred to. Even if it were to be assumed that the rules purported to be made by the State Government had no retrospective validity the position would be that there were no statutory rules governing the appointment of the 88 Assistant Engineers; but that could not prevent the State Government from making valid appointments in the exercise of its executive powers. [694 P] It cannot be said that the appointments made in October 1960 had to be under statutory rules made on December 3, 1960. It took about two years for the Public Service Commission to publish notifications, interview candidates and recommend names for appoinment. The whole procedure having been followed, it could not have been the intention of the Government, while framing the rules, to cover appointments made in pursuance of the recommendations of the Public Service Commission made in November 1960 after interviewing the candidates in October 1960. [694 G 695 B] On the facts, no mala fide or collateral object had been proved. The Mysore Public Service Commission (Function) Rules, 1957 are not statutory rules made under article 309. First. the rules do not expressly say so; and secondly, they deal with the functions of the Commission rather than with the rules regarding recruitment to services or posts. [685 E]

iminal Appeals Nos. 150 152 of 1965. Appeals by special leave from the judgment and order dated March 17, 1965 of the Mysore High Court in Criminal Appeals Nos. 93 to 95 of 1965. B. R. L. Iyengar and B. R. G. K. Achar, for the appellant. K. R. Chaudhury, for the respondents. 812 The Judgment of the Court was delivered by Mudholkar, J. This judgment will also govern Criminal Ap peals Nos. 151 and 152 of 1965. The respondent was at the relevant time a dealer at Bijapur in groundnuts, cotton seed and other commodities and was registered as a dealer under the Mysore Sales Tax Act, 1957. For the period between November 12, 1958 and October 31, 1959 he was assessed to sales tax amounting to Rs. 9,864 31 ps. by the Commercial Tax Officer, Bijapur in his order dated December 4, 1963. On January 3, 1964 the Commercial Tax Officer served on him a notice of payment requiring him to pay the tax assessed on him within 21 days. He was similarly assessed to pay tax for two subsequent periods by two separate orders passed by the Commercial Tax Officer. Two separate notices of demand were served on him requiring him to pay the tax assessed within 21 days. It is common ground that the respondent did not comply with any of the three notices. Three separate complaints were, therefore, preferred against him by the Commercial Tax Officer before the Judicial Magistrate, First Class, second court, Bijapur for offences punishable under section 29(1)(d) of the Act. The respondent had preferred appeals against each of the three orders ,of assessment under sub section (1) of section 20 of the Act. He did not, however, pay the tax assessed against him or any portion thereof as contemplated in the second proviso of sub section (1) of section 20 nor did he seek or obtain from the appellate authority any order under the proviso to sub section (5) of section 20. The learned Magistrate held that since the respondent had preferred appeals against the orders of assessment and those appeals were still pending when the complaints were made before him the respondent was not liable for offences under section 29 (1) (d). On this ground the learned Magistrate acquitted the respondent in all the three cases. Appeals preferred by the State of Mysore against the orders of acquittal passed in favour of the respondent were rejected by the High Court on the ground that as the State could avail itself of other remedies under the Act for enforcing the payment of tax levied on the respondent it did not think it fit to exercise its discretion under section 421 (1) of the Code of Criminal Procedure and entertain the appeals. Mr. Chaudhuri refers to the proviso to sub section (3) of section 13 and contends that unless the requirements of the proviso are satisfied he is not liable to be proceeded against under section 29 (1) (d). In order to appreciate his argument it is desirable to reproduce the provision relied upon by him. Sub section (3) of section 13 reads as follows "Any tax assessed, or any other amount due under this Act from a dealer, may without prejudice to any other mode of collection, be recovered (a) as if it were an arrear of land revenue, or 813 (b) on application to any Magistrate, by such Magistrate as if it were a fine imposed by him: Provided that no proceeding for such recovery shall be taken or continued as long as he has, in regard to the payment of such tax or other amount, as the case may be, complied with an order by any of the authorities to whom the dealer has appealed, or applied for revision, under sections 20, 21, 22 23 or 24. " The matter dealt with by section 13 is "payment and recovery of tax". The substantive part of the provision renders an assessee in arrears of tax liable to be proceeded against under either cl. (a) or cl. (b) of the provision. Mr. Chaudhury, however, contends that by virtue of the proviso an assessee will not be liable to be proceeded against unless it is shown that he has failed to comply with an order made by the appropriate authority under one of the sections refered to in the proviso. He points out that though he has preferred appeals under section 20 of the Act no order has been made by the appellate authority in any of the appeals dealing with the question of payment or otherwise of the tax and that,the refore,there has been no failure on the part of the respondent to comply with an order made by the appropriate authority. Mr. Chaudhury in effect wants us to construe the proviso as if it contemplated the creation of liability to pay the tax by an order of the appropriate authority under one of the sections specified in the proviso. There is no warrant for such a construction. The liability to pay tax is created by the order of assessment. Where tax so assessed is not paid despite service of notice of demand the substantive portion of sub section (3) of section 13 renders the assessee liable to be proceeded against under cl. (a) or cl. (b) of that provision. The assessee who has moved the appropriate authority under one of the provisions referred to in the proviso has, however, been afforded interim protection from action under cl. (a) or cl. (b) provided that he approaches the appropriate authority and obtains from that authority an order of stay of proceedings under cl. (a) or cl. That, however, is not enough. If the order of the appropriate authority lays down any condition the proviso requires that the assessee must comply with those conditions before he can obtain interim relief under the proviso. Apart from that, we fail to see how the proviso to sub section (3) of section 13 can at all be an answer to a prosecution under section 29 (1) (d). What is rendered an offence under section 29 (1) (d) is the failure of the assessee to pay the tax within the time allowed. But where, as here, the assessee has not paid the tax within the time allowed by a notice of demand he immediately renders himself liable to be proceeded against under section 29 (1) (d). Mr. Chaudhury then contended that in view of the fact that an appeal has been preferred the liability of the assessee to pay 814 the tax must be deemed to have been suspended during the pendency of the appeal. This argument ignores the specific provisions of sub section (5) of section 20 and the proviso thereto. They read thus : "Notwithstanding that an appeal has been preferred under sub section (1), the tax shall be paid in accordance with the assessment made in the case : Provided that the appellate authority may, in its discretion give such directions as it thinks fit in regard to the payment of the tax before the disposal of the appeal, if the appellant furnishes sufficient security to its satisfaction in such form and in such manner as may be prescribed. " The provision we have just quoted is a complete answer to Mr. Chaudhuri 's contention. Mr. Chaudhury then contended that there was no wilful default on the part of the respondent. It is difficult to appreciate what he means by saying that there was no wilful default. The respondent knew that he was required to pay the tax within certain time and also knew that he had not complied with the notice of demand. His action in not paying the tax was quite clearly deliberate and, therefore, wilful. There is no substance in this contention. We are, therefore clear that the acquittal of the respondent for offences in the case was unwarranted. We would, therefore, have, after setting aside his acquittal in each of the three cases, convicted and sentenced him under section 29 (1) (d) of the Act but for the fact that when special leave was granted an undertaking was given by the State that irrespective of the result of the appeal the respondent would not be prosecuted. Probably what was meant was that the State would not press for conviction and sentence of the respondent. Therefore, though we allow the appeals and set aside the acquittal of the respondent in the three cases we leave the matter just there. Appeals allowed.

IN-Abs

The respondent was assessed to sales tax and was served with a notice requiring him to pay the amount within 21 days. He preferred an appeal against the order of assessment but did not pay the tax, nor did he obtain an order of stay of proceedings from teh appellate authority. While the appeal was pending a complaint was filed against him under section 29(1)(d) of the Mysore Sales tax Act, 1957, because the demand was not complied with, but the trial court and the High Court acquitted In appeal to this Court by the State, HELD: The acquittal of the respondent was unwarranted as his action in not paying the tax within the time allowed, was deliberate and therefore wilful and such failure to pay is rendered an offence under section 29(1)(d). [814 D, E] The liability to pay tax is created by the order of assessment. Where the tax so assessed is not paid despite service of notice of demand, the tax may be recovered under section 13(3)(a) as an arrear of land revenue or under section 13 (3) (b) on an application to a magistrate as if it were a fine imposed on the assessee. Under the proviso to section 13(3), the assessee has been afforded interim protection from action under section 13 (3) (a) or (b), provided he obtains from the appropriate appellate or revisional authority mentioned in the proviso, an order of stat of proceedings. Merely because an appeal has been preferred, the liability of the assessee to pay the tax cannot be deemed to be suspended under section 20(5). This provision requires that if the order of such appropriate authority lays down any condition, the proviso requires that the assess must comply with it before he can obtain interim relief. Apart from these two methods of obtaining interim relief, the proviso to section 13(3) cannot be an answer to a prosecution under section 29(1)(d). (813 E G]

minal Appeal No. 108 of 1964. Appeal from the judgment and order dated September 4, 1963 of the Calcutta High Court in Criminal Revision No. 396 of 1962. Debrata Mookerjee, B. L. Mehta, R. H. Dhebar and B. R. G. K. Achar, for the appellant. D. N. Mukherjee, for the respondent. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by certificate under article 134 (1) (c) of the Constitution, against the judgment of the High Court of Calcutta dated September 4, 1963 by which the conviction of the respondent Motilal Kanoria under section 5 of the Imports and Exports (Control) Act, 1947 and the sentence of fine of Rs. 200/(in default simple imprisonment for one month) imposed by the Presidency Magistrate, 6th Court, Calcutta, were set aside and an acquittal was entered. The facts of the case are not in controversy and may therefore be stated briefly. Motilal Kanoria was a director of Lachminarayan Jute Manufacturing Co. Ltd., Calcutta. The Company was managed by a firm of the name of Mukhram Lachminarayan and Motilal Kanoria was one of the partners of the firm. The Company and the Managing Agents had a common address in Calcutta. Motilal Kanoria used to sign on behalf of the Managing Agents and also generally to deal with the affairs of the Company. All transactions in this case were by Motilal Kanoria and he had signed the documents to which reference will be made presently. In February 1955 the Government of India approved of the proposal of the Company to manufacture hackle and combing pins and sanctioned the import of plant and machinery for the 93 5 purpose. The Company was permitted to apply to the Chief Controller of Imports, New Delhi for a licence. The letter of Government is exhibit 2 dated February 4, 1955. On February II. 1955 the Company applied to the Chief Controller of Imports, New Delhi, on the proper application form, for an import licence. In that application the Company stated that the machinery was to be installed or used at their Mills at Konnaggar, Eastern Railway (exhibit 1). On May 26, 1955 a licence was issued (exhibit 3). The licence read as follows "This licence is issued subject to the conditions to the goods licensed as detailed in the Policy Book for the current licensing period and any public notices that may be issued in this behalf from time to time. LICENCE NO. 035925 Counterfoil Not available for foreign exchange unless authorised by Reserve Bank of India. IMPORT TRADE CONTROL (Valid for all India Ports) (Not transferable except under a letter of authority from the authority who issued the licences or from any Import Trade Controller). Messrs. Shree Luchminarain Jute Manufacturing Co. Ltd., of 59, Netaji Subhas Road, Calcutta 1. are hereby authorised to Import the goods of which particulars are given below: 1. Country from which consigned: West Germany. Quantity & Description Machinery as per of goods: list attached for the manufacture of Hackling & combing pins. Approximate value C.I.F. Rs. 1,88,000/ (Rupees One Lakh and Eighty eight thousand only) 4. Period of shipment: Revalidated upto 31st May 1957. Name & Address of M/s. Schunacher Metal Manufacturer Shipper or Works Aktiengesche Suppliers: Ilacheft, Aachen, Germany. 936 6. Limiting factor for purpose of clearing through Customs: Value 7. Name of actual user in Self India This licence is granted under Government of India, late Commerce Department Notification No. 23. ITC/43 dated the 1st July 1943 as continued in force by the Imports and Exports (Control) Act 1947 18 of 1947) and subject to the rules and orders issued thereunder. This licence is also without prejudice to the applications of any other prohibitions or regulations affecting the importation of the goods which may be in force at the time of their arrival. Illegible Section Officer 26 5 55 for Chief Controller of Imports and Exports. 26 5 1955. Issued from file No. L. IV/49 (11) CG/55. (Space for Endorsements by Import Trade Control Authorities) This licence is issued with an initial validity period of one year from the date of issue. It will be revalidated at or before the end of the said period of one year, for a further period of two years, provided satisfactory evidence is produced that the order for the goods has been accepted by the foreign suppliers and a firm contract is made within the initial period of one year. In no case, however, will the validity period extend beyond three years from the date of issue. " In the covering letter, which was sent when forwarding the licence, the Chief Controller said inter alia, (3). The licence is granted to you subject to the following conditions: (a) In case the project involves any capital issue and if such capital issue is not sanctioned the licence is liable to cancellation. (b) That if any sanction to the project is necessary under the laws of the Central, Provin 937 cial or a State Government the same should be obtained and the position reported to this office by the licensee; in the absence of such sanction being received the licence is liable to cancellation. The licence is liable to cancellation if particulars as to progress of time in accordance with the detailed instructions contained in the accompanying slip are not furnished. The Government do not guarantee for supply of raw materials required for manufacture of the goods. On June 19, 1956 the Company asked for "revalidation" of the licence and the licence was extended to May 31, 1957. This extension is mentioned in the licence above reproduced at No. 4. On December 13, 1956 the Company entered into an agreement (exhibit 25) with Shalimar Wood Products (P) Ltd. of Calcutta for the sale of the machinery imported by the Company. The sale, it is submitted, was at invoice price and there was no profit. On the arrival of the machinery in February of the following year the Company authorised Shalimar Wood Products to receive the shipping documents from the Company 's bankers and to clear it from the Docks. The plant and machinery were then cleared by the Agents of the Shalimar Wood Products and the latter took them with a view to installing them in their own factory. On July 30, 1958 the Company wrote a letter (exhibit 7) to the Chief Controller of Imports informing him that owing to the death of their director of Sawal Ram Kanoria who was interested in the production of the said pins the Company was compelled to sell the imported plant and machinery to Shalimar Wood Products. (P) Ltd., Calcutta and asked for the approval of the transaction. The Chief Controller of Imports in reply pointed out that permission ought to have been obtained before the transfer and that the Company had apparently committed a contravention of the import licence. A report was made to the police for investigation and later a complaint under section 5 of the Import and Exports (Control) Act, 1947 was filed in the Court of the Chief Presidency Magistrate, Calcutta, by the Deputy Chief Controller of Imports and Exports. Lachminarain Jute Manufacturing Company was named as the accused "represented by Shri Motilal Kinoria". In paragraph 2 of the complaint the Company was stated to be the accused but in later paragraphs of the complaint Motilal Kanoria was named as the accused. In the prayer it was requested that the court should summon "accused Motilal Kanoria representing the Company and the Managing Agents" to answer the charge of a breach of the pCI/66 14 938 conditions of the licence which constituted an offence under section 5 of the Imports and Exports (Control) Act, 1947 read with clause (5) of the Imports (Control) Order No. 17 of 1955, dated December 17, 1955. Motilal Kanoria appeared at the trial, was questioned as an accused, pleaded not guilty and stood the trial. He does not appear to have objected to being arraigned as an accused person a point he took later in the High Court and has taken before us. The prosecution examined a large number of witnesses and filed documents to prove the above facts none of which is now denied. The Presidency Magistrate, 6th Court, Calcutta, convicted Kanoria under section 5 of the Imports and Exports (Control) Act, 1947 for contravention of clause (5) of the Imports (Control) Order, 1955 and sentenced him to a fine of Rs. 200/ or simple imprisonment for one month. On revision the High Court acquitted him but certified the case as fit for appeal to this Court and the present appeal is the result. As the prosecution is in respect of an offence under section 5 of the Imports and Exports (Control) Act, 1947, we shall begin by examining what the ingredients of that offence are. Under the scheme of that Act there is a power to prohibit or restrict imports and by section 3 the Central Government is enabled to make provision, by order published in the Official Gazette, for prohibiting, restricting or otherwise controlling them. Section 5 prescribes penalty for contravention of an order. The section, as amended by Act 4 1960, is set down here "5. If any person contravenes or attempts to contravene, or abets a contravention of, any order made or deemed to have been made under this Act or any condition of a licence granted under any such order, he shall, without prejudice to any confiscation or penalty to which he may be liable under the provisions of the , as applied by sub section (2) of Section 3, be punishable with imprisonment for a term which may extend to one year, or with fine, or with both". (The words underlined were introduced in 1960). The complaint in this case was filed after this amendment. Different orders at different times were passed by the Central Government under section 3 and a word may be said about the orders of 1943 and 1948, although on the date of the transfer of machinery (December 13, 1956) only the order of 1955 was in force. The first order was made under sub rule (3) of rule 84 of the Defence of India Rules in force in 1943 (Notification No. 23 I.T.C./ 43 dated 1st July, 1943). That order was general and there was no provision authorising the imposition of conditions in the licence, the breach of which would be deemed to be a breach of the order. 939 In 1948 another order was issued under section 3 (Notification No. 2 I.T.C. dated 6th March, 1948). It provided for imposition of conditions but the provisions of the order did not indicate that any particular condition would be deemed to be included in a licence if not expressly included. The provisions of that order may be read here: "In exercise of the powers conferred by sub section (1) and sub section (3) of section 3 of the Imports and Exports (Control) Act, 1947 (18 of 1947), the Central Government is pleased to make the following order namely: (a) Any officer issuing a licence under clauses (viii)to (xiv) of the notification of the Government of India in the late Department of Commerce No. 23 I.T.C./43, dated the 1st July, 1943, may issue the same subject to one or more of the conditions below: (i) that the goods covered by the licence shall not be disposed of or otherwise dealt with without the written permission of the licensing authority or any person duly authorised by it; (ii) that the goods covered by the licence on importation shall not be sold or distributed at a price more than that which may be specified in any directions attached to the licence; (iii) that the applicant for a licence shall execute a bond for complying with the terms subject to which a licence may be granted; (iv) that the licence shall not be transferable except in accordance with the permission of the licensing authority or a person duly authorised by it; (v) that such other conditions may be imposed which the licensing authority considers to be expedient from the ad ministrative point of view and which are not inconsistent with the provisions of the said Act. (b) Where a license is found to have con travened the order or the terms and conditions embodied in or accompanying a licence, the 940 appropriate licensing authority or the Chief Controller of Imports may notify him that, without prejudice to any penalty to which he may be liable under the Imports and Exports (Control) Act, 1947 (18 of 1947), or any other enactment for the time being in force he shall either permanently or for a specified period be refused any further licence for Import of goods. " By this order the licensing authority was given the power to include conditions in a licence. On December 7, 1955 an order was issued (Notification No. 17/55 dated December 7, 1955). It consolidated all the rules in one place and by clause 12 read with Schedule IV repealed the earlier two orders and some others but while effecting this repeal it added a saving clause "Provided that anything done or any action taken, including any appointment made or licence issued under any of the aforesaid Orders, shall be deemed to have been done or taken under the corresponding provision of this Order. " The order of 1955 also included several new provisions regarding conditions which may be introduced in licences and others which would be deemed to be so introduced. Conditions relevant here may be noticed. Conditions of Licence. (1) The licensing authority issuing a licence under this Order may issue the same subject to one or more of the conditions stated below: (i) that the goods covered by the licence shall not be disposed of, or otherwise dealt with, without the written permission of the licensing authority or any person duly authorised by it; (ii) that the goods covered by the licence on importation shall not be sold or distributed at a price exceeding that which may be specified in any directions attached to the licence; (iii) that the applicant for a licence shall execute a bond for complying with the terms subject to which a licence may be granted. (2) 941 (3) It shall be deemed to be a condition of every such licence, that: (i) no person shall transfer and no person shall acquire by transfer any licence issued by the licensing authority except under and in accordance with the written permission of the authority which granted the licence or of any other person empowered in this behalf by such authority. (ii) that the goods for the import of which a licence is granted shall be the property of the licensee at the time of import and thereafter upto the time of clearance through Customs. (iii) the goods for the import of which a licence is granted shall be new goods unless otherwise stated in the licence. (4) The licensee shall comply with all conditions imposed or deemed to be imposed under this clause. " Conditions 5 (1) (i), (ii) and (iii) and 5 (3) (i) are the same as conditions (a) (i) to (iv) of the 1948 Order but 5 (3) (ii) and (iii) and 5 (4) are new. Conditions 5 (3) (i), (ii) and (iii) become a part of every licence and further the licensee has to comply with all the conditions imposed or deemed to be imposed under clause 5. The effect of these clauses has to be considered in relation to the licence granted in this case but in this context the provisions of clause 7 are also relevant and the clause may be set down here: "7. Amendment of Licence. The licensing authority may, of its own motion or on application by the licensee, amend any licence granted under this Order in such manner as may be necessary to make such licence conform to the provision of the Act or this Order or any other law for the time being in force or to rectify any errors or omissions in the licence; Provided that the licensing authority may, on request by the licensee, amend the licence in any manner consistent with the Import Trade Control Regulations. " 942 Much of the argument in this case is based on the dates of these notifications and of the amendment of the section 5 of the Act, considered in relation to the dates on which the several facts in this case took place. The Presidency Magistrate applied the Order of 1955 because the licence was "revalidated" on June 27, 1956, and according to him, this was apparently done under powers derived from clause 7 of that Order. According to the Presidency Magistrate the Company had imported the plant and machinery for its own use (vide No. 7 of the licence) and this was an express condition of the licence. He also pointed out that the licence was expressly made subject to such restrictions as might be imposed from time to time and the Order of 1955 imposed conditions which made the transfer of machinery an offence being a breach of subclause (3) clause (5) of the 1955 Order. The High Court held that section 5 of the Act as it stood on December 13, 1956 when the alleged offence was committed, did not make breach,of a condition of a licence an offence and, therefore, there was no offence. The Division Bench relied principally on the observations of Sen and Mitter JJ. in C. T. section Pillai vs H. P. Lohia and Anr.(1) to the following effect : "It is clear, therefore, that the section penalises only contravention of any order made or deemed to have been made under the Act. But the question is whether contravention of a condition imposed by a licence issued under the Act or issued under a statutory order made under the Act is also an offence under section 5, Imports and Exports (Control) Act, 1947. Although license is granted under a statutory order made under the Act and conditions may be imposed in the license under another statutory order made under the Act, it is difficult to hold that the license or the conditions in the license amount to an order made or deemed to be made under the Act. Notification No. 23. I.T.C./43 dated 1 7 1943 merely provides that no goods shall be imported except goods covered by special license issued by an authorised officer. Notification No. 2 I.T.C./48 dated 6 3 1948 authorises a licensing officer to impose one or more conditions prescribed in that order and a licensing officer, therefore may impose a condition in view of the provision of Notification No. 2 I.T.C./48. But if the licensee contravenes the condition imposed by the license it can hardly be said that he has contravened the order under this Act, that is, the Notification No. 2 I.T.C./48. The order No. 2 I.T.C./48 does not directly impose any duty but it gives power to the licensing officer to impose certain conditions. But contravention of condition im (1) A. I. R. 943 posed by the licensing officer cannot prima facie be regarded as contravention of the notified order itself. When there is a special license covering certain goods and there is a condition imposed in the special license it cannot be said that by breach of the condition imposed in the special license it cannot be said that by breach of the condition there has been any breach of Order 231 I.T.C./43 or of the subsequent Notification No. 2 I.T.C./ 48. It may be mentioned that the difficulty apparently was realised in Pakistan and therefore the Imports and Exports (Control) Act, 1947, was first amended by an ordinance and then by the Imports and Exports (Control) Act, 1950, of Pakistan. Section 3(2) of that Act provides that 'no goods of the specified description shall be imported or exported except in accordance with the conditions of a license to be issued by the Chief Controller or any other Officer authorised in this behalf by the Central Government. The penal section 5, refers not only to contravention of an order or Rule made under the Act but also to the contravention of any condition imposed by the License. . It is clear that unless the penal section itself includes the contravention of a condition of the license as an offence, it is not possible to hold that the licensees by merely committing breach of a condition imposed by a license has committed the offence which consists in contravention of an order made or deemed to be made under this Act. In this view, therefore, although the reasons given by the learned Magistrate have not been considered by us as sound, it is clear that the prosecution of the opposite party under section 5 of Imports and Exports (Control) Act, 1947, must fail". These observations were referred to by the majority decision of this Court in East India Commercial Co. Ltd., Cakutta vs Collector of Customs, Cakutta (1) in the following words : before a division Bench of the Calcutta High Court, consisting of Mitter and Sen. JJ., and the learned Judges, by their judgment dated March,3, 1955 dismissed the revision holding that there had been no contravention of the order made or deemed to be made under the Act. The learned Judges construed section 5 of the Act and held that the said section penalised only a contravention of an order made or deemed to have been made under the said Act, but did not penalise (1) ; at 356, 369, 372. 944 the contravention of the conditions of licence issued under the Act or issued under a statutory order made under that Act, and dismissed the revision. It will be seen from this order that it does not provide for a condition in the licence 'that subsequent to the import the goods should not be sold. Condition (v) of cl. (a) only empowers the licensing authority to impose a condition from an administrative point of view. It cannot be suggested that the condition, with which we are now concerned, is a condition imposed from an administrative point of view, but it is a condition. which affects the rights of parties. It follows from the above that the infringement of a condition in the licence not to sell the goods imported to third parties is not an infringement of the order. . . The Division Bench considered that the earlier Calcutta case was approved. Following the above observations the learned Judges applied them to this case. They noted that the breach of a condition became an offence only after the 17th of March, 1960 when Act 4 of 1960 was passed and as it could not be an offence before, even if the Order of 1955 deemed certain conditions to be a part of the licence, their breach was not an offence. They distinguished the decision of the Bombay High Court ill State vs Abdul Aziz(1) on the ground that the licence in that case was granted on January 2, 1956, that is to say, after the coming into force of the Order of 1955. The Division Bench therefore held that no offence was committed. Adverting also to the fact that there was confusion as to which of the two the Company or Motilal Kanoria was the accused the learned Judges held that the Presidency Magistrate was further wrong in convicting Kanoria although the prosecution was really against the Company. The questions that arise in this case are really two and they are : (a) whether by disposing of the plant and machinery without permission an offence was committed; and (1) A.L.R. 945 (b) if so, by whom ? In our judgment both these questions must be answered in favour of the State of West Bengal. It was overlooked in the High Court that under the proviso to clause 12 of the Order of 1955 the licence, although granted before that Order was brought into force, came under its terms. The words of that proviso refer to a 'licence issued ' under any of the earlier orders as something done or action taken under the corresponding provision of the 1955 Order. The corresponding conditions were those we have extracted from the Order of 1955 and set down earlier. By the terms of the licence (item No. 7) the licensee undertook to use the goods himself. He further bound himself by "any other prohibitions or regulations affecting the importation of the goods which may be in force at the time of their arrival" and not to transfer the licence "except under a letter of authority from the authority who issued the licence or from any Import Trade Controller". The goods arrived long after the Order of 1955 came into force. By the operation of the revalidation under clause 7 and the conditions of the licence, even as they were, the provisions of the Order of 1955 were attracted. As clauses 5(3) and (4) became a part of the licence, their breach was a breach of the Order and an offence was, therefore, committed. It was decided in Abdul Aziz vs State of Maharashtra(1) (on appeal from the case sub. State vs Abdul Aziz of the Bombay High Court) that if the licence was issued under the Order of 1955, the provisions of sub cl. (4) of cl. 5 made it obligatory upon the licensee to comply with all the conditions imposed or deemed to be imposed under clause 5 and that the contravention of any condition of a licence amounted to the contravention of the provision of sub cl. (4) of cl. 5 of the Order and consequently to the contravention of the order made under the Imports and Exports (Control) Act and therefore the licensee became liable to the penalty under section 5 of the Act. The only distinction between Abdul Aziz 's case and this lies in the fact that the licence in the former was given after, and in this case before, the coming into force of Order of 1955. But this distinction loses significance when the provisions of clause 12 of the Order of 1955 are read in conjunction with the licence itself. Between them they bring into operation clause 5 of the Order of 1955 and the result reached by this Court in Abdul Aziz 's case obtains here also. The fact that the licence was revalidated presumably under clause 7 of the Order of 1955 further fortifies the above conclusion. The submission of Mr. D. N. Mukherji that this extension was under the last paragraph of the licence is not the whole of the matter. A power might have been reserved by that paragraph but it could only be (1) ; 946 exercised by the licensing authority after December 7, 1955 by virtue of the Order of 1955 because all previous orders were repealed. There was thus an offence under section 5 of the Imports and Exports (Control) Act for the breach of clause 5 of the Order of 1955. Mr. D. N ' Mukherjee seeks to distinguish between the transference of the licence and that of the machinery. This argument is not acceptable to us. The licence created its own conditions that the goods would be used by the licensee and the transfer of goods in circumstances is tantamount to transfer of the licence. It would be refining matters too finely to distinguish between the transfer of the licence and the transfer of the goods. Even if a distinction can be drawn the licence was for the actual use of the licensee. When the goods were sold condition No. 7 was broken and so would be a breach of the 1955 Order which had come into force. The final question is whether Kanoria can be said to have committed any offence and whether he was prosecuted at all. The section as amended in 1960 makes the abetment of contra vention an offence. If the amendment applied because the prosecution was after the amendment (a point we need not decide) Kanoria would be definitely guilty at least of abetment. In our opinion it is not necessary to decide this point because Kanoria is guilty as a principal offender and the section as it originally stood, must apply to him. The section said "if any person contravenes any order made or deemed to have been made. . "he shall be punishable with imprisonment for a term which may extend to one year, or with fine, or with both." The question is whether Kanoria was such a person. Kanoria was responsible for the issuance of the licence and for the transfer of the goods covered by the licence. He wrote every document connected with these two matters. He was, therefore, responsible principally along with the Company. In fact the Company could not have committed the offence of contravention if Kanoria had not acted as he did. Abetment, of which the section now speaks, is an act of a different kind. The act of Kanoria was not abetting any one else but one which by itself led to the contravention of the Order of 1955 and he was, therefore, liable principally. The complaint no doubt was not clear as to who was really meant to be prosecuted but it described Kanoria as an accused. Under the Explanation to section 537 of the Code of Criminal Procedure no error, commission or irregularity in the complaint should have led to a reversal of the finding that Kanoria was guilty unless there was. a failure of justice. The objection that he was not named. as an accused throughout the complaint and that he was thus not an accused could have been raised at the trial but it was not. On the contrary Kanoria entered a plea of not guilty on his own behalf and also stood examination as an accused. It is obvious 94 7 that he was regarded as the accused and he understood his own position. The objection could not be entertained in revision in the High Court as it was belated and the defect, if any, had not occasioned a failure of justice. This ground also has no force. For the above reasons we are satisfied that the High Court erred in interfering with the conviction of the respondent. We accordingly allow the appeal, set aside the acquittal ordered by the High Court and restore the conviction under section 5 of the Imports and Exports (Control) Act, recorded by the Presidency Magistrate together with the fine of Rs. 200 or simple imprisonment for one month. Appeal allowed.

IN-Abs

The respondent was the director of a company and also a partner in the firm managing it. On behalf of the company he made an application for an import licence under the Imports and Exports (Control) Act 1947, and in May 1955 the licence was granted. At that time the grant of licence was governed by an Order issued in 1948 issued under section 32 of the Act, and under that Order the Controller of Imports and Exports could attach conditions to licences issued by him. According to the terms of the licence granted to the aforesaid company the goods imported under the licence were to be employed for the company 's own use. In December 1955 the Imports (Control) Order No. 17 of 1955 was passed. Under cl. 5(3) of the Order certain conditions were deemed to be part of every licence and under cl. 5(4) every licencee was enjoined to observe the condition of the licence. In 1956 the respondent secured a revalidation of the licence issued to the company. Thereafter when the goods arrived they were sold by the respondent to another party. A complaint was filed against the respondent and the company for an offence under section 5 of the Imports and Exports (Control) Act 1947 read with cl. (5) of the Imports (Control) Order 1955. The respondent faced the trial as an accused and participated in the proceedings without any objection. He was convicted by the trial Magistrate but the High Court acquitted him on the ground that at the time when the transaction of sale was entered into i.e. in December 1956, breach of a condition of licence did not constitute an offence under section 5 of the Act of 1947. The State appealed to this Court. The questions that fell for determination were : (i) whether by disposing of the imported goods without permission any offence was committed; and (ii) if so whether the respondent was personally liable. HELD: (i) Although section 5 of the Imports and Exports (Control) Act, 1947 did not, before its amendment in 1960, specially provide that breach of a condition of licence would be deemed to be a breach of the Imports (Control) Order, yet by virtue of cls. 5(3) and (4) read with cl. 12 of the Imports (Control) Order 1955 the transfer of a licence was a breach of the said order and constituted an offence. No distinction could validly be made in the circumstances of this case between transfer of a licence and transfer of goods imported under it. [945 E G; 946 B C] C.T.S. Pillai vs H. P. Lohia & Anr. A.I.R. 1957 Cal. 83, referred to. East India Commercial Co. Ltd. Calcutta vs Collector of Customs, Calcutta, ; , distinguished. 934 Stare vs Abdul Aziz ; , applied. (ii) The fact that the licence was obtained by 'the respondent while the 1948 Order was in operation did not help the respondent as under cl. 12 of the 1955 Order any licence issued under any of the earlier Orders was deemed to have been issued under the corresponding provisions of the 1955 Order. The goods under the licence were, moreover, imported and sold after 1955. The licence itself was revalidated in 1956 and that could only have been done by power derived under cl. 7 of the 1955 Order. [945 B, D] (iii) The respondent was responsible for the issuance of the licence and for the transfer of the goods imported under it. He was therefore responsible principally along with the company. The complaint no doubt was not clear as to whom was really meant to be prosecuted but it described the respondent as an accused to which he did not object at his trial. The error, omission or irregularity, if any, in the complaint was curable under section 537 of the Code of Criminal Procedure and in the present case could not be said to have led to a failure of justice. [946 E H]

Appeal No. 756 of 1965. Appeal by special leave from the judgment and order dated April 9, 1965 of the Mysore High Court in Civil Revision Petition No. 1044 of 1962. section K. Venkatarangaiengar G. L. Sanghi, J. B. Dadachanji O. C. Mathur and Ravinder Narain, for the appellant. Mirle N. Lakshminaraynappa O. P. Malhotra, section section Khanduja Ganpat Rai, for the respondent. 869 The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Mysore in Civil Revision Petition No. 1044 of 1962, filed under section 17 of the Mysore House Rent and Accommodation Control Act, 1951 (Mysore Act 30 of 1951)hereinafter referred to as the Act whereby the High Court set aside the order passed by the III Additional District Judge, Bangalore. The III Additional Judge had set aside the order of ' the First Munsiff, Bangalore, who had directed the eviction of the tenant from the premises in dispute. The appellant before us, Padmanabha Setty, hereinafter referred to as the tenant, was the tenant of a non residential premises No. 281, Old Tharagupet, Bangalore City. ] 'be tenant had installed some machinery in the premises. The respondent, K. P. Papiah Setty, is the landlord. He had purchased the premises for his own use and occupation, namely, for the purpose of shifting his business which hewas carrying on in a rented building to the premises in dispute. The landlord tiled an application under s.8(3)(a)(ii) of theAct for the eviction of the tenant on the ground that he required the premises in dispute for his own use and occupation. It is not necessary to give the other allegations made in the application as both the First Munsiff, Bangalore, and the III Additional District Judge, Bangalore, have found that the landlord required the premises for his bonafide use and occupation, namely, for shifting his business from the rented premises to the premises in dispute. The III Additional District Judge, however, held that under section 8(3)(a)(ii) the landlord was not entitled to possession of the premises in dispute unless and until he was prepared to vacate the shops in which he was trading at the time. This finding of the learned Additional Judge was contrary to the decision of the Mysore High Court in section G. Narayanappa and Bros. vs A. N. Narasimhiah(1). The landlord then filed a revision petition under section 17 of the Act, and the High Court, following the decision in section G. Naravanappa and Bros. vs A. N. Narasimhiah(1) set aside the order of the Additional District Judge. The tenant having obtained special leave, the matter is now before us. Two points are raised before us: (1) that the construction put upon section 8(3)(a) (ii) of the Act by the Mysore High Court is erroneous and the construction put upon a similar provision by the Madras High Court in V. Thanappa Chetty vs Arcot Govindaswami Naicker(2) is correct; and (2) that the High Court was not right in setting aside the order of the Additional District Judge in a revision under section 1 7 of the Act. (1) (2) A.I.R, 1952 Mad. 870 The Act was passed to regulate the letting of residential and non residential houses and to control the rents of such houses and to prevent unreasonable eviction of tenants therefrom in the State of Mysore. The word "tenant" is defined as follows in sub section (9) of section 2 of the Act: " 'tenant ' means any person by whom or on whose account rent is payable for a house and includes the surviving spouse or any son or daughter of a deceased tenant who had been living with the tenant in the house as a member of the tenant 's family up to the death of the tenant and a person continuing in possession after the termination of the tenancy in his favour, but does not include a person placed in occupation of a house by its tenant or a person to whom the collection of rents or fees in a public market, cart stand or slaughter house or of rents for shops has been farmed out or leased by a local authority. " There is no doubt that the definition of the word "tenant" is wider than the ordinary meaning of the word and includes a person ,continuing in possession after the termination of the tenancy in his favour. Section 4 deals with the determination of fair rent and section 5 with lawful increase of or addition to or reduction in fair rent. Section 6 prohibits the landlord from claiming or receiving anything in excess of fair rent or agreed rent. Section 7 deals with issue of receipts for rent. Sections 7A and 7 B deal with the right of tenant to deposit rent in certain cases and time for deposit and savings. Section 7 C deals with eviction of tenant in occupation of a house under an allotment order. Section 8 deals with eviction of tenants and provides that ,a tenant shall not be evicted whether in execution of a decree or otherwise except in accordance with the provisions of s.7 C or of this section. Sub section (2) provides the circumstances in which a landlord would be entitled to seek eviction of a tenant in possession. For instance, a landlord is entitled to evict a tenant if the tenant has not tendered or paid the rent due by him in respect of the premises within the time fixed in the agreement of tenancy with the landlord on in the absence of any such agreement, by the last day of the month next following that for which the rent is payable; if he has transferred his right under the lease or sublet the entire premises or any portion thereof; or used the premises for the purpose other than that for which they were leased; or if the tenant has committed such acts of waste as are likely to impair materially the value or utility of the house; or if the tenant has without the landlord 's consent in writing erected on the house or any portion thereof any permanent ' structure; or if the tenant or any person residing with the tenant has been guilty of such acts and conduct as amounts to nuisance or annoyance to the adjoining or neighbouring occupiers 871 or has been using the house or allowing the house to be used for immoral or illegal purposes; or that the house is reasonably and bona fide required by the landlord for carrying out repairs or reconstruction which cannot be carried out without the house being vacated; or that the house has not been used without reasonable cause for the purpose for which it was let for a continuous period of three months immediately preceding the date of application; or that the tenant, after the commencement of the Act, has built, acquired vacant possession of or been allotted a suitable house. We have set out these conditions in detail because it would be relevant to consider whether in view of these conditions a tenant can be said to have a right to possession of the premises of which he is a tenant. Then we come to sub section (3) (a) which reads as follows: "(3)(a) A landlord may, subject to the provisions of clause (d) apply to the court for an order directing the tenant to put the landlord in possession of the house (i)in case it is a residential building, if the landlord requires it for his own occupation or for the occupation of a member of his family and if he or such member, as the case may be, is not occupying a residential building of his own in the city, town or village concerned; (ii)in case it is a non residential building, if the landlord requires it for a business which he or a member of his family is carrying on and if for the purposes of the said business is not in occupation of a non residential building which is owned by or to the possession of which the landlord or such member, as the case may be, is entitled whether under this Act or otherwise. " It is not necessary to set out the Explanation or the first proviso but the second proviso is relevant and runs thus: "Provided further that where a landlord has obtained possession of a house for his own use or occupation or for the use or occupation of a member of his family under this clause he shall not be entitled to apply again under this clause (ii)for possession of another non residential building of his own, for himself or for the same member of his family, in case he has obtained possession of a nonresidential building." The Madras High Court held in V. Thannappa Chetty vs Arcot Govindaswami Naicker (1) that the tenant under the Madras (1) A.I.R. 1952 Mad. 553 at p. 554 555. 872 Buildings (Lease and Rent Control) Act (Madras Act 15 of 1946) had a right to possession unless and until he was evicted under the provisions of the Madras Act, and, therefore, the landlord would not be entitled to possession of a non residential building if he was in possession of another non residential building as a tenant, for in such a case he would be entitled to possession of those premises. The reasoning of Subba Rao, J., then a Judge of the High Court of Madras, was as follows: "It will, therefore, be seen that the relationship between the landlord and tenant even in cases in which such relationship terminated under the provisions of the Transfer of Property Act, continues su bject to the provisions of the Act. The rights of the tenants as well as the landlord are defined. The tenant tinder the Act has a right to possession unless and until he is evicted under the provisions of the Act. Under the provisions of the Act, a landlord will not be entitled to the possession of his non residential buildings, if he obtains an order for eviction against another tenant in respect of another non residential building, or if he is in possession of another non residential building as a tenant; for in either case he is entitled to possession of that premises. The words used in the section, viz., "to the possession of which he is entitled" are wide and I do not see any reason why the latter category should be excluded from the express words used which in their ordinary meaning take in that class." "It was argued that a statutory immunity is different from a right to possession. But in my view a statutory immunity is not inconsistent with a right to possession. The statutory immunity itself creates a right in him to continue in possession till he is evicted under the provisions of the Act. " The Mysore High Court dissented from this decision of the Madras High Court, and the reasoning of Ahmed Ali Khan, J., in section G. Narayanappa and Bros. vs A. N. Narasimhiah(1) is as under: "After a careful consideration of the arguments advanced before me, I am of the opinion that the provision of the Act on the strength of which a tenant may resist the landlord 's claim to evict him cannot be described as a right to possession, but only as a statutory immunity from eviction, as observed by the Federal Court in the case Kai Khushrao vs Bai Jerbai (2). It appears that his Lordship in the Madras case distinguished the said observations in the said case of the Federa Court by stating that a statutory immunity is not inconsistent with the right to posses (1)[1962] Mys. L.J.76 (2) A. I. R. (128). 873 sion and that such immunity may itself create a right. The right to immunity from eviction involves a negative element in it. In other words it restricts the right of possession of the landlord. Hence, it cannot be construed to have an effect of creating a right of possession to a tenant. Though the statutory immunity from eviction may not be consistent with the right to possession, the fact remains in view of the inherent element involved in both the rights, that the immuni ty from eviction cannot be equated to the right to possession. Therefore, with great respect, I am of the view that we will not be justified in adopting the strict view while interpreting the words which occur in section 8(3) (a)(ii) of the Mysore House Rent and Accommodation Control Act, as taken in the Madras ruling cited above. " In our opinion, with great respect to Subba Rao, J., Ahmed Ali Khan, J., arrived at the correct conclusion. A tenant who can be evicted under the conditions prescribed in section 8(2) of the Act cannot be said, in our view, to be entitled to the possession of the premises of which he is a tenant. No doubt he cannot be evicted till one or more of the conditions prescribed by the section are fulfilled, but it is difficult to equate his right to stay in the premises till he is evicted to an entitlement of the possession of the premises. Section 8(3)(a)(ii) deals with two types of cases; first where the landlord is in occupation of a non residential building which is owned by him, and secondly, a non residential building of which he is in occupation not as a landlord but otherwise. The object of the Act is to prevent unreasonable evictions of tenants. Can it be said that the Legislature is considering it to be unreasonable for a landlord to shift to his own premises while he is in occupation of tenanted premises over which he has not an absolute right of possession but only a right to remain in possession till one of the conditions in section 8(2) is satisfied, and over one of which he has no control. For instance, the landlord may require the premises for repairs or reconstruction or the neighbours may complain that the tenant is guilty of nuisance or annoyance, or the landlord may think that the tenant has committed some acts of waste as are likely to impair materially the value or utility of the house. If any of these conditions is proved, he is liable to be evicted. In our view, in the context the words "entitled to possession" have a more positive content and are more akin to the right of possession which an owner has in respect of the building owned and occupied by him. In conclusion we are of the view that the High Court was right in holding that the Additional District Judge erred in not following the decision of the Mysore High Court in section G. Narayanappa and Bros. vs A. N. Narasimhiah.(1) (1) M12Sup. C.I.166 10 874 There is no force in the second point raised by the learned counsel of the tenant. It is true that the jurisdiction of a High Court under provisions similar to section 1 7 of the Act is limited, but we cannot say that the High Court was wrong in holding that the Additional District Judge acted with material irregularity in not following the decision of the Mysore High Court when that decision had been rendered in a case arising from an earlier order of the same Additional District Judge. It may be that this decision was not pointed out to the Additional District Judge but we cannot, in exercise of our jurisdiction under article 136 of the Constitution, say that the High Court should not have set aside the order of the Additional District Judge on this ground. In the result the appeal fails and is dismissed with costs. The tenant is granted two months ' time from today to vacate and deliver possession of the premises in dispute to the landlord. Appeal dismissed.

IN-Abs

The appellant and the respondent were the tenant and landlord respectively, of the non residential premises in dispute. The respondent 's application under section 8(3)(a)(ii) of the Mysore House Rent and Accommodation Control Act, 1951, for eviction of the appellant on the ground that the respondent required the premises for the purpose of shifting his business which he was carrying on in a rented building, was ordered, but the order was set aside by the appellate court. The High Court in revision set aside the appellate order and restored the order of eviction. In appeal to this Court, it was contended that : (i) since the respondent was, within the meaning of section 8(3)(a)(ii), "entitled to possession" of the building in his occupation he had no right to ask for the appellant 's eviction; and (ii) the High Court should not have interfered in revision under section 17 of the Act. HELD (i) The High Court was right in ordering the eviction of the appellant from the premises. The respondent, who was in occupation of a building as a tenant, and over which he had no absolute right of possession but only a right to remainin possession till one of the conditions in section 8(2) is satisfied. could notbe said to be "entitled to possession" of that building. Those words aremore akin to the right of possession which an owner has in respect ofa building owned and occupied by him. [873 F G] (ii)In not following the decision of the High Court in Narayanappa vs Narasimhiah, , the appellate court acted with material irregularity and so the High Court could set aside the appellate order in revision. [874 B] Thanappa Chetty vs Govindaswami Naicker, A.I.R. 1952 Mad. 553 overruled.

Appeal No. 1090 of 1963. Appeal by special leave from the judgment and decree dated June 2, 1961 of the Calcutta High Court in Appeal from Appellate Decree No. 786 of 1956. M. C. Setalvad and D. N. Mukherjee, for the appellant. A. K. Sen and P. K. Chatterjee, for the respondent. 16 The Judgment of the Court was delivered by Hidyatulla, J. This appeal by special leave against the judgment and order of the High Court of Calcutta, December 5, 1961, arises from a suit between landlord and tenant. The Indian Iron & Steel Co. Ltd. (appellant) is the landlord and Biswanath Sonar (respondent) is the tenant, and the tenancy is in respect of a piece of land with a rent of Rs. 4/ per month. According to the Company the tenancy commenced in December 1938 and according to the tenant in the beginning of 1935. The two courts of fact have found in favour of the Company on this point and the High Court has very properly accepted this concurrent finding but has held that tenancy began on the 1st of December, 1938, but more of that later. The suit was commenced in the Court of the Munsif at Asansol by the Company after serving a notice dated June 28, 1950 terminating the alleged monthly tenancy of the respondent with the expiry of December, 1950. The notice was served on June 29, 1950. The Company asked for the relief of khas possession by evicting the tenant and reserved the relief of compensation for wrongful occupation after January 1, 1951, for a separate suit. The Company offered to pay such reasonable compensation for structures on the land as the court might determine. The respondent claimed benefit of section 9(1)(iii) of the Bengal Non AgricuItural Tenancy Act under which, he submitted, his tenancy could not be determined except by service of six months ' notice in writing expiring with the year of tenancy. He contended that the notice served on the 29th of June terminating the tenancy at the end of December, 1950, was not in accordance with the provisions of the Act as the tenancy commenced in the beginning of 1935, and, therefore, the suit was not maintainable. The learned Munsif held the notice to be proper and dec. reed the suit. On appeal the Additional District Judge, Asansol confirmed the decree passed by the Munsif. On second appeal a learned single Judge in the High Court reversed the decision of the two courts below and ordered the dismissal of the suit. He followed a decision of a special Bench of his Court reported in the Indian Iron and Steel Co. Ltd. vs Baker Ali(1) which had approved of two unreported decisions of the same Court reported in Sudhindra Nath Roy vs Haran Chandra Mistry (S.A. No. 879 of 1950 dated 25 1 1955) and Narayan Chandra Sen vs Sripati Charan Kumar (S.A. No. 425 of 1952 dated 9 8 1955). The learned single Judge refused leave to file an appeal under the Letters Patent but the appellant was granted special leave by this Court to appeal against the judgment of the learned single Judge. In this appeal two questions arise, namely, (i) whether the provisions of section 9(1)(iii) of the Non Agricultural Tenancy Act apply to the present tenancy, and (ii) whether the notice served upon the respondent compiled with the terms of the Act. In so far as the A.I.B. 17 first question is concerned no further facts are necessary. This question should have given no difficulty but for the fact that the language of the enactment is far from clear. Section 9(1)(iii) reads as follows: "9. Incidents of non agricultural tenancies held for less than twelve years. (1) Notwithstanding anything contained in any other law for the time being in force or in any contract, if any non agricultural land has been held for a term of more than one year but less than twelve years (a) under a lease in writing for a term of more than one year but less than twelve years to which the provisions of clause (5) of section 7 do not apply, or (b) without a lease in writing, or (c) under a lease in writing but no term is specified in such lease, then the tenant holding such non agricultural land shall be liable to ejectment on one or more of the following grounds and not otherwise, namely: (i) (ii) (iii) on the ground that the tenancy has been terminated by the landlord by six months" notice in writing expiring with the end of a year of the tenancy served on the tenant in the prescribed manner in clause (b): Provided that a tenant shall not be liable to ejectment on the ground specified in clause (iii) except on payment of such reasonable compensation as may be agreed upon between the landlord and the tenant or if they do not agree, as may be determined by the Court on the application of the laodlord or such tenant. . . Difficulties arise in connection with two expressions in this section. Firstly what is meant by the phrase "for a term of more than one year but less than twelve years" in the opening part, and, secondly, what is meant by the phrase "six months ' notice in writing expiring with the end of the year of the tenancy" The appellant contends that the first phrase contemplates tenancies in which the agreed duration under a contract is more than one year but less than 12 years and the second phrase means that the notice in writing must expire with the end of the year of the tenancy when the tenancy is 18 from year to year and with the end of the term when, it is more than one year 's duration. The respondent contends that the two phrases respectively describe the duration for which non agricultural land must actually be held and that the notice of six months must end on the anniversary of the commencement of the tenancy. The appellant 's contention, shortly stated, is that a monthly tenancy cannot get the benefit of section 9(1)(iii) however long the occupation of the land. Both sides agree that this is non agricultural land and that the tenancy is from month to month. It has also been found that it is a monthly tenancy. If the provisions of section 9(1)(iii) apply also to a monthly tenant who has been in possession of land for more than a year, then the respondent will be protected from eviction, otherwise not. This depends on what is meant by the two phrases we have referred to earlier. The construction of the first phrase is rendered difficult because the Act does not use the words strictly in the same sense throughout. Sometimes the word "term" is used to indicate a period of time without any reference to a contract determining it and sometimes to a period settled, agreed or determined by a contract. In section 9(1)(iii) the word "term" is used and the question arises whether it indicates a period of occupation or a period agreed upon in a: contract. To determine the right meaning we shall first analyse the provisions of the Act generally and then consider what is the true meaning of the two expressions in section 9 on which there has been a difference of opinion between the High Court and the two courts below. The Act was passed to make comprehensive provisions relating to the law of landlord and tenant in respect of non agricultural tenancies in West Bengal and is a part of protection given in modern times by law to tenancies of various kinds of which the Rent Control Acts and Acts relating to agricultural tenancies represent some other aspects. After defining the terms such as 'land ', 'non agricultural land ' and 'non agricultural tenants ' (to which definition pointed reference here is unnecessary), the Act classifies non agricultural tenants into tenants and under tenants, and then it makes separate provisions for their protection. The Third Chapter (sections 6 to 15) provides for tenants and the Fourth Chapter for under tenants. The remaining Chapters providing for the manner of transfer of non agricultural tenancies ', preparation of records of rights, settlement, rents, etc. do not presently concern us. We shall, therefore, confine our attention to the chapter on tenants. Section 6 lays down the manner of use of non agricultural lands. It states generally that the tenant may use land in any manner not inconsistent with the purpose of the tenancy but so as not to impair its value. The section goes on to state that the tenants to whom ss, 7 and 8 apply may erect any structure including a pucca structure, dig any tank, plant and enjoy the flowers and fruits and fell and utilise or dispose of timber of any tree on such land, but the tenants to whom 19 section 9 applies may only erect structures other than pucca structures and may not dig tank, or fell, utilise or dispose of, trees not planted by :them. Sections 7, 8 and 9 lay down the incidents of two different kinds of tenancies: (a) those held for a term of not less than 12 ,years and (b) those held for a term of less than 12 years but more than one year and the question which we have stated earlier is whether by the word "term" is meant the duration of the least agreed upon or merely the period of occupation of the non agricultural land. A close study of the Act shows that the word "term" is used in both senses and the context must determine in which sense it is to be understood. We need not reproduce here all the sections or clauses in which the word "term" is used in one sense or the other because sub sections (3) and (4) of section 7 between them illustrate adequately this two fold meaning. We may reproduce them here: "7. Incidents of certain tenancies. Notwithstanding anything contained in any other law for the time being in force or in any contract (1) . . (3) If any non agricultural land has been held for a term of not less than twelve years under a lease in writing but no term is specified in such lease, or (4) if any non agricultural land held under a lease in writing for a period specified therein continues to be held with the express or implied consent of the landlord after the expiration of the time limited by such lease and the total period for which such land is so held is not less than twelve years, or (5) . then (i) the tenant holding the non agricultural comprised in such tenancy shall not be eject. ed by his landlord from such land except on the ground that he has used such land, in a manner which renders it unfit for use for the purposes of tenancy, (ii) the interest of the tenant in the non agricultural land comprised in such tenancy shall, in the case where such tenant dies intestate in respect of such interest. be transmitted by inheritance in the same manner as his other immovable property: . . " 20 A bare 'perusal of these enactments is sufficient to show that the word "term" used for the first time in (3) indicates that the period of occupation must not be less than 12 years. It cannot mean an agreed period because the latter part says that this applies where "no term" is specified in the lease and in this part the word "term" must obviously mean an agreed period. (4) shows that if land is held beyond the period specified in the lease in writing and if the total period then becomes not less than 12 years, the protection is again obtained. The word "term" thus may indicate a period specified in a lease or a period of occupation according as the context requires. This diversity of meaning is also illustrated by sections 7(2), 8(1) and 8(3). We now come to section 9 which we have already quoted. It begins by excluding any other law or contract of lease from consideration and speaks in the opening part of land held for a term of more than one year but not less than twelve years thereby distinguishing between tenancies on the basis of the length of occupation. As the marginal note says, the section deals with tenancies held for less than twelve years. Clauses (a), (b) and (c) also establish the above meaning because (a) applies to leases in writing for a term of more than one year but less than twelve years, (b) refers to cases in which the occupation Is without a lease in writing and (c) refers to cases in which there Is a lease in writing but no term is specified. In those cases in which there is no written lease or in which no term is specified in the lease in writing, the opening portion must obviously mean that the land must be held, that is, occupied for more than one year. The difference between sections 7 and 8 on the one hand and section 9 on the other lies in the kind of protec tion afforded. A tenant who has held the land under lease for more than 12 years cannot be ejected at all unless he has used such land in a manner which renders it unfit for use for the purpose of the tenancy, and his interest becomes heritable, transferable and devisable like any other immovable property. A tenant who has held land in occupation for less than 12 years but more than one year can,only be ejected by a notice of six months expiring with the end of a year of the tenan It is argued that the words "end of a year of tenancy" are inappropriate where the tenancy is from month to month because there is no year of tenancy. Those words no doubt are indicative of, a tenancy from year to year but they are not such as to be altogether inapplicable to a tenancy from month to month. What the section contemplates is occupation for more than one year and it says that a tenant who has held the land for more than a year, albeit, on a tenancy from month to month, shall only be evicted on the anniversary of the day on which his tenancy commences. Where the tenancy is from month to month " year" means a period of twelve months and the tenant may only be required to quit at the expiry of the whole year, that is to say, on the anniversary of the commencement of the lease. 21 it is argued that this would have the effect of converting the, tenancy from month to month into a tenancy from year to year. This is perhaps true. In the matter of certain rights of the tenants, particularly in the matter of termination of their tenancy by notice, it appears that this legislation intends to bring even a monthly tenant, who has occupied land for more than a year, within the protection of six months ' notice before he is evicted. A different protection is given to a tenant who occupies land for 12 years and in that case he cannot be evicted even by notice unless he uses the land in a manner which renders it unfit for the purposes of the tenancy or his other property goes to Government and his interest in the land is extinguished. Section 9(1)(iii) was interpreted in much the same way in the three decisions of the High Court of Calcutta above referred to and in our judgment those cases took the right view of the matter. The Company itself served a notice in June expiring with the end of the year alleging that the tenancy had commenced in December 1938 indicating quite plainly that it also. considered that a notice of 15 days expiring with the end of the month of the tenancy would not be sufficient. In its view also, the notice to be a valid notice had to be of six months expiring with the end of the year of tenancy. Therefore, the notice was despatched on the 28th of June, 1950 and was served on the following day. It asked the tenant to quit at the end of December, 1950. The High Court held that the tenancy must be deemed to have commenced on December 1, 1938 and the notice fell short of six months. In fact, the notice would fall short of the necessary period unless the tenancy had commenced on a date between the 29th and 31st December, 1938. There is no proof when the tenancy really commenced and the Company has not cared to give evidence on this part of the case. Even if we reject the finding of the High Court that the tenancy commenced on the 1st of December, we are not in a position to say that it commenced on any particular date. We are, however, relieved of the trouble to make the effort because the account books of the Company show that the tenant was on the land even in November and had paid rent. In view of this and in view of the construction we have placed on section 9(1)(iii) it is quite plain that the notice must fall short of the statutory six months. It was, therefore, quite ineffective and the High Court was right in holding that it was invalid although our reasons are different. The appeal has thus no force. If fails and will be dismissed with costs. Appeal dismissed.

IN-Abs

The appellant company gave on lease a piece of land to the respondent in 1938. On June 28, 1950 the company gave notice to the respondent terminating the tenancy. The period mentioned in the notice, which was received by the respondent on June 29, 1950 was six months ending with the expiry of December 1950. Later the company filed a suit for the eviction of the respondent. The latter claimed benefit of section 9(1) (iii) of the Bengal Non Agricultural Tenancy Act. The trial court decreed the suit and the first appellate Court upheld the decree, but the High Court set it aside and dismissed the suit. By special leave, the company appealed to this Court contending that since the respondent 's tenancy was from month to month section 9 (1) (iii) did not apply. It was urged: (i) the phrase "for a term of more than one year but less than twelve years" in the first part of the section contemplated tenancies in which the agreed duration under a contract was more than one year but less than 12 years; (ii) the phrase "six months ' notice expiring with the end of a year of the tenancy" in the latter part of the section meant that the notice in writing must expire with the end of the year of the tenancy when the tenancy was from year to year and with the end of the term when it was more than one year 's duration. HELD:(i) The Act uses the word "term" both in the sense of a period of occupation and of a period agreed, upon in a contract. The context must determine the sense in which it is to be understood. In the opening words of section 9(1) (iii) it means that the land must be held, that is, occupied, for more than one year. It does not signify that there should be an agreed term of more than one year. [18 C D; 19C; 20E] (ii) The words "end of a year of tenancy" in the latter part of section 9(1) (iii) are no doubt indicative of a tenancy from year to year but they are not such as to be inapplicable to a tenancy from month to month. What the section contemplates is occupation for more than one year and it says that a tenant who has held the, land for more than a year, albeit, on a tenancy from month to month. shall only be evicted on the anniversary of the day on which his tenancy commences. [20 F H]. (iii) The tenancy having commenced as held by the High Court on December 1, 1938 the notice given by the company in the present case fell short of the statutory six months and was therefore in valid. [21 E G].

Appeal No. 76 of 1964. Appeal by special leave from the judgment and order dated the October 26, 1960 of the Allahabad High Court in Civil Revision No. 1209 of 1957. J. P. Goyal, for the appellants. O. P. Rana, for the respondents. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of Dhavan, J., in Civil Revision No. 1209 of 1957. The 64 learned Judge, following Sarju Prasad vs Civil Judge, Farrukhabad(1) held that an order of the Court on an objection against an award made under section 12(4) of the Uttar Pradesh Consolidation of Holdings Act (U.P. Act V of 1954) (hereinafter called the Act) was appealable under section 39 of the (X of 1940) Mr. J. P. Goyal, learned Counsel for the appellant urges that this decision of the Allahabad High Court is wrong. In order to appreciate the contentions of Mr. Goyal, it is necessary to give a few facts and set out the relevant statutory provisions, During consolidation proceedings in village Dharaki Garhi, a question of title arose. The Consolidation Officer, acting under section 12(4) of the Act, referred the question of title to the Civil Judge, Aligarh, who referred the same to the arbitrator, Shri Vikram Singh, who had been appointed under section 37 of the Act. Section 12(4) reads as under: "12(4) Where the objection filed under sub section (1) involves a question of title and such question has not already been determined by a competent Court, the Consolidation Officer shall refer the question for determination to the Civil Judge having jurisdiction who shall thereupon refer it to the Arbitrator. " Section 37 provides: "37. Arbitration (1) Where any matter is, by or under this Act, directed to be referred to an Arbitrator for determination, the Arbitrator will be appointed by the State Government from amongst Civil Judicial Offi cers or Assistant Collector of the I class of not less than five years ' standing and in all other respects the matter shall be determined in accordance with the provisions of the . (2) The appointment of an Arbitrator under sub. section (1) may be made either generally or in respect of any particular case or class of cases or in respect of any specified area or areas. " The arbitrator gave his award on May 14, 1956, and submitted the same to the Civil Court for final decision. On May 19, 1956, Charan Singh, Dungar Singh, Maharaj Singh and Lajja Ram, appellants before us, filed objections before the Civil Judge, Aligarh. The Civil Judge, on September 8, 1956, modified the award dated May 14, 1956. Babu Lal, Mohar Singh and Ram Piyari filed an appeal before the District Judge against the order of the Civil Judge, dated September 8, 1956. Before the District Judge, a preliminary objection was raised. that no appeal lay (1) I.L.R. [1959] 1 All. 65 against the order of the Civil Judge. The District Judge overruled the objection. On the merits, the District Judge held that the Civil Judge was not justified, under section 15 of the , in modifying the award merely because he disagreed with the finding. He, therefore, allowed the appeal and set aside the order of the Civil Judge modifying the award, and the award announced by Shri Vikram Singh was accepted. Charan Singh, Maharaj Singh, Doonger Singh and Lajja Ram filed a petition before the High Court under section 115 of the Civil Procedure Code. As stated above, Dhavan, J., dismissed the petition on the ground that an appeal lay under section 39 of the . This Court granted special leave and now the matter is before us. Mr. Goyal contends that section 37 of the Act applies the provi sions of the only as far as procedure is concerned, and section 39 of the which provides for appeals does not apply to arbitrations referred to in section 37 of the Act. He relies strongly on section 12(6) of the Act which provides that the decision of the arbitrator under sub section (4) shall be final. We have already set out section 12(4). He, however, does not contend that the provisions of section 15 of the do not apply because the appellants had apparently applied under section 15 of the to the Court to modify the award made by Vikram Singh and they had succeeded in getting an order modifying the award in their favour. In our opinion, the High Court arrived at the correct con clusion in Sarju Prasad vs Civil Judge, Farrukhbad(1) and Sayeed Ullah Khan vs The Temporary Civil Judge of Sultanpur.(2) Section 12(4) of the Act provides for a statutory arbitration and section 37 of the Act provides for the appointment of an arbitrator by the State Government. It seems to us that apart from the question of appointment of the arbitrator, in all other respects the matter referred to, i.e. the question of title referred to under section 12(4) shall be determined in accordance with the provisions of the . Section 37 of the Act does not make any distinction between provisions like section 39 and section 15 of the . Further, the effect of section 46 and section 47 of the is that all the provisions of the except sub section (1) of section 6, sections 7, 12, 36 and 37, apply to arbitrations under the Consolidation of Holdings Act. Section 37 of the Act cannot be held as providing anything inconsistent with this. In our opinion, the effect of section 37 of the Act, read with sections 46 and 47 of the , is inter alia to apply sections 15 and 39 of the to the proceedings under the Act. It is not necessary to rely (1) I.L.R. (1959) 1 All. 354. (2) I.L.R. (1959) 1 All. 66 on ff. 63 and 64 of the Uttar Pradesh Consolidation of Holdings Rules, 1954, but we may mention that they proceed on the basis that sections 15, 16 and 30 of the apply to the arbitration proceedings under the Act. Mr. Goyal then urges that this Court in the case of Attar Singh vs The State of U.P.(1) understood section 37 of the Act to mean that it makes the applicable to the proceedings before the arbitrator in the matter of procedure only. It is true that at p. 935 of the judgment, Wanchoo, J., observed: "Further section 12 provides that where there is a dispute as to title and such question has not already been determined by any competent Court, the Consolidation Officer has to refer the question for determination to the Civil Judge who thereafter will refer it to the arbitrator. The arbitrator then proceeds in the manner provided by r. 73 (sic 63) and gives a hearing to the parties and takes evidence both oral and documentary before making his award; and section 37 of the Act makes the applicable to the proceedings before the arbitrator in the matter of procedure. " We are unable to agree with Mr. Goyal that this passage in any manner decides the point which is before us. This Court in Attar Singh 's(1) case was concerned with the validity of the Act, and ground No. 2 which was urged before the Court was: "Sections 8, 9 and 10 read with section 49 of the Act provide a procedure for the correction and revision of revenue records for villages under consolidation, which is vitally different from that applicable to villages not under consolidation, and there is thus discrimination which offends article 14 of the Constitution." In dealing with this ground, Wanchoo, J., made the observations which have been set out above. There was no question there of considering the effect of sections 46 and 47 of the , or considering whether section 39 of the applies to arbitrations under section 12(4) of the Act. Mr. Goyal also laid a great deal of emphasis on section 12(6) of the Act which provides that the decision of the arbitrator under sub section (4) shall be final. In our opinion, section 12(6) must be read with section 37 of the Act, and if it is so read it is quite clear that what is made final is the decision of the arbitrator as it emerges after appropriate proceedings, if any, have been taken under the provisions of the . (1) [1959] Supp. I SCR 928. 67 In the result we hold that the High Court is right in holding that the decision of the Civil Judge modifying the award was appealable under section 39 of the . The appeal accordingly fails and is dismissed with costs.

IN-Abs

During consolidation proceedings in a village, under the Uttar Pradesh Consolidation of Holdings Act, 1954, a question of title arose, and the Consolidation Officer referred the question to the Civil Judge who referred it to an arbitrator appointed under section 37 of the Act. The Arbitrator submitted his award to the Court. The appellants filed objections under section 15 of the , and the Civil Judge modified the award. On appeal by the respondents, the District Court held that the appeal was maintainable and that the Civil Judge was not justified in modifying the award. A revision petition to the High Court filed by the appellants was dismissed. In appeal to this Court, it was contended that section 39 of the , which provides for appeals does not apply to arbitrations under section 37 of the U.P. Act. HELD:The decision of the Civil Judge modifying, the award was appealable under section 39 of the . [67 A]. The effect of section 37 of the U.P. Act read with sections 46 and 47 of the is, to apply sections 15 and 39 of the to the proceedings under the U.P. Act; and under section 12(5) of the U.P. Act what is made final is the decision of the arbitrator as it emerges after appropriate proceedings, under the provisions of the . [65 G H; 66 H]. Carju Prasad vs Civil Judge, Farrukhabad, I.L.R. [1959]. 1 All354 and Sayed Ulla Khan vs The Temporary Civil Judge, Sultanpur, , approved. Attar Singh vs State of u.p. [1959] Supp. 1 S.C.R. 928, explained.

Appeal No. 164 of 1964. Appeal from the judgment and decree dated December 15, 1959 of the Madras High Court in O.S. Appeal No. 22 of 1955. P. Ram Reddy and A. V. Velayudhan Nair, for the appellant. K. R. Chaudhuri, and K. Rajendra Choudhury, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought against the judgment of the High Court of Madras dated December 15, 1959 in O.S. Appeal No. 22 of 1955. The respondent was a trader at Madras in hides and skins. The appellant was a firm, Gordon Woodroffe and Company (Madras), Limited, doing business among other things as exporters of hides and skins. For the period of 8 months commencing from January, 1949, there were as many as 101 contracts entered into between the appellant and the respondent. The case of the respondent was that he entered into an agreement with the appellant to act as agents for shipping the goods (hides and skins) to United Kingdom and for finding purchasers there. It is alleged that the appellant used to make payment to the respondent in respect of the goods sent to it for shipment in the nature of advances and he 3 used to set off these advances when payment was made to the respondent after the goods were shipped. The respondent will hereinafter be referred to as the plaintiff and the appellant as the defendants. The plaintiff tentatively claimed a sum of Rs. 56,564/and odd as due to him as balance of the price of the goods and a further sum of Rs. 40,275/ as representing the loss sustained by him by reason of the defendants ' conduct in not shipping his goods under the "Shaik mark". The plaintiff accordingly prayed that an account should be taken of the dealings between the parties for the period in question. The defendants contested the suit on the ground that it was not an agent of the plaintiff but it purchased hides from the plaintiff for export and for resale in the United Kingdom. The case of the defendants was that there was an outright purchase of the goods from the plaintiff for the purpose of resale in the United Kingdom. The defendants also contended that a sum of Rs. 4,351 / and odd was due to it from the plaintiff and it prayed for a decree against the plaintiff for that amount by way of counter claim. The trial Judge held, by his judgment dated May 6, 1954 that the defendants were only purchasers of the goods from the plaintiff and the idea of agency was quite inconsistent with the nature of the transactions between the parties. The trial Judge came to the conclusion that the plaintiff was bound by the statements of account rendered by the defendants from time to time. After giving an opportunity to the parties to produce further evidence, the trial Judge held that since there was no fraud the accounts could not be reopened and the claim of the plaintiff with regard to Rs. 157/ in respect of the marine insurance alone was sustainable. The trial Judge accordingly dismissed the suit and decreed that counter claim of the defendants after deducting the said sum of Rs. 157/ . The plaintiff preferred an appeal to the High Court of Madras under the Letters Patent. By its judgment dated December 15, 1959 the High Court reversed the decision of the trial Judge and held that the defendants acted as del credere agents of the plaintiff for effecting the sale of the plaintiff 's goods in the United Kingdom. On this basis the High Court decreed the plaintiff 's suit and directed the taking of accounts, as prayed for, from the defendants, though in respect of some of the items the claim of the plaintiff was negatived. The High Court also held that the plaintiff was liable to pay to the defendants the amount claimed by them by way of counter claim. The first question presented for determination in this case is whether the defendants were acting as del credere agents of the plaintiff or whether the defendants were outright purchasers of the goods supplied to them by the plaintiff. In the approach to this question it is necessary to notice the distinction between a contract of sale and a contract of agency. The essence of sale is the transfer of the title to the goods for price paid or to be paid. The transferee in such case becomes liable to the transferor of the goods 4 as a debtor for the price to be paid and not as agent for the proceeds of the sale. On the other hand, the essence of agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods and who is therefore liable to account for the proceeds. The true legal relationship between the parties in the present case has, therefore, to be inferred from the nature of the contract, its terms and conditions and the nature of respective obligations undertaken by the parties. It is necessary, at this stage, to set out briefly the course of the dealings between the parties which has been summarised by the High Court as follows: "The plaintiff used to purchase tanned hides of all sorts in Periamet (Madras), and in his godown assort them according to quality, pack them into bales and mark them with his mark, viz., Shaik or section M. A. Mark. Then the bales would be delivered into the defendants ' godown where the bales would be opened and re assorted so as to conform to London specification and standard. In the process of putting the goods into that shape, there used to be necessity for the defendants to cut and trim the pieces and sometimes call on the plaintiff for replacement of the pieces which fell below the standard. Thereafter, the defendants used to re pack them into bales each weighing 600 pounds and then ship the goods themselves as shippers and obtain the necessary shipping documents on the basis of c.i.f. contracts. The goods would be shipped to the defendants ' London Office where they were sold to London purchasers. All the expenses incurred in connection with the goods prior to shipment, such as carriage, trimming and assortment in the defendants ' godown were all to be borne by the plaintiffs. So also expense in connection with the shipment, such as freight, insurance, short weight, etc., were all to be home by the plaintiff. After the goods were shipped and as soon as the shipping documents were got ready. the price of the goods was calculated at the price fixed in the contract notes and after deducting the expenses and the advances with interest thereon, the balance, if any, was paid to the plaintiff either by cheque or by credit being given in his accounts. For every shipment a contract note was being sent by the defendants to the plaintiff. So also, a statement of account with a covering letter as well as a cheque for the balance found due to the plaintiff were being sent to the plaintiff from time to time. In all, there were 101 contract forms and several statements of accounts sent to the plaintiff 5 in respect of the shippers. To none of those contracts or statements of account did the plaintiff raise any objection at any time. " The question whether the defendants took delivery of the plaintiff 's goods as agents for sale or whether they purchased the goods outright must largely depend upon the terms of the contract of which a sample is exhibit P 1. All the 101 contracts were prepared in the same printed form. Exhibit P 1 is the contract dated January 21, 1949. It is in the form of a letter sent by the defendants to the plaintiff. It opens with the sentence "We confirm buying from you for resale the following subject to U.K. Import Licence". Then follows a description of the goods giving the number of bales, the average weight and range, the assortment and the price per lb. in pennies. The price quoted is said to be c.i.f. less 21 per cent. The goods were already shipped by the s.s. 'City of Florence '. The seller is said to be liable to pay brokerage at the rate of one pie per lb. Then follow the terms of the contract which are to the following effect: " Landed weight to be accepted, payment on presentation of documents in order. It is understood that the above goods are for re sale in United Kingdom. You are responsible irrespective of any inspection by us in Madras for selection and quality of the goods at destination where inspection and acceptance thereof will be made by our agents or the ultimate buyers. In the event of any dispute or claim in respect of goods covered by this contract, failing amicable settlement with buyers, such claim is to be submitted to arbitration according to the custom of the trade in the United Kingdom and the result of such settlement or arbitration is binding on you. We have a charge or lien on all goods covered by this contract for all moneys advanced by us including expenses incurred and interest thereon. Insurance through Gordon Woodroffe Company, Madras, Limited. Time is an essence of the contract. " In the first place, it is important to notice that the contract in the opening portion specifically makes a mention of the fact that the defendants were buying the goods for resale, and in the paragraph containing the terms of the contract it is reiterated that the goods were intended for resale in the United Kingdom. On the face of it, therefore, the contract is clearly not one of agency for sale but it reads as an agreement of sale. If the defendants were intended to be constituted as the agents for sale the terms of the contract would have been entirely different. Another important feature in this case is that there is a definite price fixed in the contract for the plaintiff 's goods. According to the plaintiff the rates fixed in the contract were the ones at which the goods were sold to London 6 purchaser and not a different rate and the defendants were agents who were obtaining for him only the price at which the goods were sold at London. It is true that the defendants admit that before fixing the price as between themselves and the plaintiff they used to ascertain the London price by cable. It is also true that the plaintiff was debited in the statement of account with the expenses of the cable. Even so, if the defendants were simply acting as agents for the sale there was no need at all to fix the price in the contract as between them and the plaintiff. It was contended for the plaintiff that according to the contracts the prices fixed are c.i.f. less 2 1/2 per cent and discount of 21 per cent was the commission for the defendants as agents. There is no use of the word " commission" in the contracts and we see no reason to hold that 2 1/2 per cent should be taken as commission and not as a margin of profit. The important point is that if the contract was one of agency there was no need to mention the price at all as between the plaintiff and the defendants. It may be that in most cases the prices which the defendants obtained from the London purchasers were the same as the prices stipulated in the contracts with the plaintiff but the fact remains that they obtained 21 per cent discount on the sale price, that is to say, they purchased the goods from the plaintiff 2 1/2% per cent less and sold them to their London purchasers at the full price, so that 2 1/2 per cent was their margin of profit. It is possible that sometimes they sold the goods to the London purchasers at a higher price in which case they would be entitled to the difference in prices as a profit in addition to the 2 1/2 per cent which they got from the plaintiff. In all there are 101 contract forms and in accordance with these contract forms statements of account were furnished by the defendants to the plaintiff. Exhibit P 1A is the statement of account dated January 25, 1949 based upon the contract note exhibit P 1. It is true that the plaintiff did not sign any one of the contract forms, but all of them were received by the plaintiff without any objection. Statements of account were Prepared in terms of these contracts and the plaintiff was receiving moneys from the defendants on the basis of these contracts and according to the price fixed therein. He did not, at any time, raise the slightest protest against the terms of the contract or against the price fixed therein. On the other hand, he received all the contract forms and statements of account as well as the moneys sent to him by cheque. The plaintiff cannot, therefore, be heard to say that he was not a consenting party to the contracts. There is also the circumstance that before the goods were shipped to London they were subjected to a process of trimming and reassortment in the godowns of the defendants with a view to make them conform to London standard and selection. In that process the defendants often called upon the plaintiff to replace the 7 pieces found defective. If the defendants were merely acting as agents the process of trimming and reassorting in the godowns to make the goods conform to London standards and specifications will be unnecessary, for in that case the defendants were merely bound to ship the goods as they were delivered to them. Another important feature of the transaction is that in several contracts time was fixed for delivery of the goods. In some cases like the contracts in forms like P 1 to P 3 the shipment has been effected before the contract forms were issued but there are some contracts which contained the stipulation that the bales were to be sent to the godowns of the defendants for shipment to be effected "promptly" which according to D.W. 1, Ayyalu Chetti meant two weeks. There were also some contracts like exhibit D 2(a) which required the goods to be sent for shipment to be effected within one month, and some other contracts within two months. All the contracts provided that time should be the essence of the contract. If the defendants were acting only as agents for the sale there is no reason why there should be a stipulation in the contract as to the time fixed for the delivery and the stipulation that time should be the essence of the contract. There is also a further condition in the contracts that the sales tax was on seller 's account, the seller being the plaintiff. This circumstance also indicates that the legal relationship between the parties was that of a seller and a purchases and not of a principal and agent. On behalf of the plaintiff it was argued that according to the contract the goods were to be marked with the plaintiff 's mark. It is true that in some of the defendants ' letters such as exhibit P 10 it was mentioned that the bales were sent with the plaintiff 's mark in some shipments but this circumstance has not significance. It only means that the buyer resold the goods to the London purchaser with the mark of the plaintiff. It was also contended on behalf of the plaintiff that "premium" was paid to the plaintiff in case the goods supplied were of special quality. It is in evidence, that the "premium" was extra price obtained in London if the Board of Control was satisfied about the special quality of the goods (vide D 1O). It was pointed out that if the defendants were purchasers the premium should go to them but in some cases the premium was paid to the plaintiff. Exhibits P 7, P 10 and P 1 8, show that for some shipments the premium was paid to the plaintiff. 'The explanation of D.W. 1, Ayyalu Chetti is that in some cases the premium was paid to the plaintiff ex gratia. If in London the quality of the goods was found particularly good the premium was obtained from the London purchaser, that is to say, the premium was obtained not as in terms of the contract but as a special payment if the goods happened to be of good quality. It is a payment therefore, L/S5SCI 3 8 made outside the terms of the contract and there is nothing significant if the defendants considered it fair and just to pay the whole of the premium to the plaintiff or to share it with him in some cases. It was also contended by the plaintiff that According to the terms of the contract the landed weight was to be accepted and the plaintiff was to be responsible for the selection and quality of goods at the destination where inspection would be made by the defendants ' agents or the ultimate London buyers. In some statements of account sent by the 'defendants the plaintiff has been debited various amounts for shortage in weight at London. The plaintiff was also informed about the claims made by the London purchasers on the ground of low standard and selection, that is to say, the plaintiff was made answerable for weight as well as quality. It is true that the liability of the, plaintiff is an additional burden thrown upon him under the terms of the contract but it is of 'no significance in considering the question as to whether the as transfer of title to the goods at the time of shipment from the plaintiff to the defendants. On behalf of 'the plantiff reference was also made to the fact that the contracts provided for a Hen on all the, goods covered by the contracts for all moneys advanced by the defendants, including expenses incurred and interest thereon. it is the admitted position that for purchasing skins and hides, the plaintiff was taking large sums of money as advances from the defendants. We find from the several statements of account that reference is made to all such advances. These advances together with interest thereon are deducted from the sale price payable to the plaintiff and for the balance alone cheques were sent: to him. It appears that on a later date, i.e., in June, 1949 the defendants took a regular hypothecation deed, exhibit P 19 from the plaintiff in respect of all the advances to be made by the defendants. But it should be noticed that in making such advances, the defendants were only acting as creditors of the plaintiff and were, therefore, entitled to charge interest on such advances till they actually purchased the goods from the plaintiff. After the purchase of the goods they did not charge any interest on the moneys paid by them. It appears from the statements of account that interest, was charged on advances upto the date of shipment. In other words the title in the goods passed to the defendants at the moment of shipment of the goods and the fact was that interest was charged on all advances only upto the date of shipment. The charge or lien on the, goods, therefore, subsisted till the time of shipment i.e., till the title in the goods passed to the defendants under the con. tract of sale. We are, therefore, unable to agree with the Counsel for the plaintiff that the clause with regard to the. lien is not consistent with the theory of the transactions being an outright sale,. There was also a suggestion on behalf of the plaintiff that there cannot be a contract of sale subject to c.i.f. terms if there was an out right sale at Madras between the parties. We do not think 9 there is any substance in this argument. The primary object of the contract was that there,was a purchase by the defendants from the plaintiff of the goods for resale in the United Kingdom and in keeping with this object the buyer stipulated with the seller for delivery of the goods abroad and for that purpose adopted a c.i.f. form of &de. It is also contended on behalf of the plaintiff that the term with regard to arbitration "according to the custom obtaining in United Kingdom" was not compatible with the theory of a sale between the parties. It is not possible to accept this argument as correct. It is open to the plaintiff to agree that even after the sale had taken place any dispute with regard to the quality of the goods and selection may be submitted to arbitration in the United Kingdom. It is true that a clause of this description is unusual but it is not inconsistent with the theory that there was a sale of goods between the parties at Madras. We have already observed that the contracts in this case were not c.i.f. contracts but the price alone was fixed on a c.i.f. basis. It is well established that even an agent can become a pur chaser when an agent pays the price to the principal on his own responsibility. In Ex parts White, In re Nevil(1) T & Co. were in the habit of sending goods for sale to N who was a partner in the, firm of N & Co., but received these, goods on his private account. The course of dealing between T & Co. and N was that the goods were accompanied by a price list. N sold the goods on what terms he pleased, and each month sent to T & Co., an ac. count of the goods he had sold, debiting himself with the prices named for, them in the price list, and at the expiration of another month he paid the amount in cash without any regard to the prices at which he had sold the goods, or the length of credit he had given. On these facts it was held by the Court of Appeal in Chancery that though both the parties might look upon the business as an agency, N did not, in fact, sell the goods as agent of T & Co., but on his own account, upon the terms of his paying T & Co. for them at a fixed rate if he sold them, and the moneys he received for them were therefore his own moneys, which T & Co., had no right to follow. A similar principle has been expressed in W. T. Lamb and Sons vs Goring Brick Company, Ltd.(1) In that case, certain manufacturers of ,bricks and other building materials, by an agreement in writing, appointed a firm of builders ' merchants as sole selling agents of all bricks and other materials manufactured at their works". The agreement was expressed to be for three years and afterwards continuous subject to twelve months ' notice by either party. While the ;agreement was in force the manufacturers informed the merchants that they intended in the future to sell their goods themselves without the intervention of any agent, (1) (2) L/S5SCI 3(a) 10 and thereafter they effected sales to customers directly. An action was then brought by the merchants for breach of the agreement. It was hold by the Court of Appeal that the effect of the agreement was to confer on the plaintiffs the sole right of selling the goods manufactured by the defendants at their works, so that neither the defendants themselves nor any agent appointed by them, other than the plaintiffs, should have the right of selling such goods. It was also held that the agreement was one of vendor and purchaser and not one of principal and agent. Though the term 'agent ' was used in the agreement, the Court of Appeal considered that the substance of the transaction was that the manufacturers sold their bricks to the so called agent who in turn sold them on their own responsibility to customers. The price charged by the manufacturers to the sole selling agents was the ruling market price and the sole selling agents were allowed a deduction of 10 per cent by way of commission on that price. The manufacturers had no concern at what rate the sole selling agents sold the goods to customers. It was clear from these facts that the sale by the selling agents to customers was a transaction in which the manufacturers were not interested and there was no privity of contract between the manufacturers and the ultimate purchasers. Reference may be made, in this connection to the following passage from Blackwood Wright, 'Principal and Agent '. Second Edn. page 5: "In commercial matters, where the real relationship is that of vendor and purchaser. persons are sometimes called agents when, as a matter of fact, their relations are not those of principal and agent at all, but those of vendor and purchaser. If the person called an 'agent ' is entitled to alter the goods, manipulate them, to sell them at any price that he thinks fit after they have been so manipulated, and is still only liable to pay for them at a price fixed beforehand, without any reference to the price at which he sold them, it is impossible to say that the produce of the goods so sold was the money of the consignors, or that the relation of principal and agent exists Ex parte White, In re Nevill (1871). 397A purchaser has not to account to his vendor , his only duty is to pay him; and all the other rights and duties which exist between principal, and agent do not exist between vendor and purchaser Ex parte Bright, In re Smith (1879), 10 Ch. 566; Ex parte White, In re Nevill (1871) 6 Ch. " For the reasons already given we are of the opinion that the defendants were purchasers of the plaintiffs goods under the several contracts and not his agents for sale and the view taken by the High Court on this aspect of the case is not correct and must be overruled. 11 We pass on to consider the second question involved in this viz., whether there was a settled account between the parties and whether it is open to the plaintiff to reopen it. It is admitted in this case that for almost every shipment the defendants prepared a statement of account and sent it to the plaintiff giving full particulars of the amount due to him together with the deduction and showing the net balance payable to him and enclosing a cheque for such balance or giving a credit for the sum the accounts. Copies of such accounts are exhibit P 1A,P 2A and P 3A corresponding to the contracts Exs. P 1, P 2 and P 3.Copies of other accounts have been filed by the defendants in the Court and marked exhibit D 18 series. The plaintiff in his evidence did not deny the receipt of these accounts. On the contrary, he admitted in cross examination that for every shipment he was getting accounts and cheques for the balance due. It is an admitted fact that to these statements of account no objection was raised by the plaintiff at any time. Nor a single document has been produced on his side to show that he ever wrote to the defendants raising an objection to the statements of account. Not only the plaintiff failed to raise objection to the several statements of account but at one stage sent a memorandum to the defendants accepting the accuracy of the accounts. On June 20, 1949, the defendants wrote a letter, exhibit P 16, to the plaintiff stating that there was a balance of Rs. 1,26,379/7/2 payable by him, and that against the balance they were holding certain goods belonging to the plaintiff and asking him to confirm the statements. On June 22, 1949 the defendants again wrote a letter exhibit D 5, en closing a statement of account exhibit P 17 showing the said balance of Rs. 1,26,379/7/2 and asking the plaintiff for confirmation. On receipt of this statement the plaintiff signed the memorandum, exhibit D 4 on June 22, 1949 and sent it to the defendants confirming the correctness of the balance as due by him and also confirming the stock of his goods remaining with the defendants. The plaintiff conceded in his evidence having signed exhibit D 4 after the receipt of the statement of account, exhibit P 17. The plaintiff explained that he did not look into the correctness of the figures but believed exhibit P 1 7 to be correct '&as it was sent by an English firm". The plaintiff also said that he was told by the defendants ' broker that if he did not sign it, it would be harmful to him. The trial Judge refused to accept the explanation of the plaintiff and held that the plaintiff had accepted all statements of account as correct and, therefore, it must be held in law that the accounts were settled and the plaintiff could be allowed to reopen it only by proof of fraud or mistake or any other sufficient equitable ground. The legal position is that the accounts are settled or stated if they are submitted and accepted as correct by the other side to whom the accounts have been rendered. Such a statement of 12 accounts need not be in writing, nor is it necessary that before the accounts are settled, they should be gone into by the parties and scrutinised and supported by vouchers. It is sufficient if the accounts are accepted and such acceptance may be inferred by conduct of parties. As observed in Diniell 's Chancery Practice, eighth edition, Vol. 1, p. 419: "The mere delivery of an account will not constitute a stated account without some evidence of acquiescence which may afford sufficient legal presumption of a settlement. " There is also the following passage in Bullen and Leake 's Prece. dents of Pleadings, ninth edition, p. 584: "It is not enough for the accounting party merely to deliver his account; there must be some evidence that the other, party has accepted ' it as correct But such acceptance need not be express; contemporaneous or subsequent conduct may amount to a sufficient acquiescence. Again, in Willis vs Jernegan(1) the Lord Chancellor was dealing with the two objections raised by ' the plaintiffs counsel to the defendant 's plea of a stated account. It was observed by the Lord Chancellor that there was no absolute necessity that the account should be signed by the parties who had mutual dealings to make it a stated account, for even where there were transactions, suppose, between a merchant in England and a merchant beyond sea, and an account was transmitted to England from the person who was abroad, it was not the signing which would make it a stated account, but the person to whom it was sent, keeping it by him any length of time, without making any objection which should bind him and prevent his entering into an open account afterwards. In another case, Tickel vs Short, (2) the Lord Chancellor expressed the opinion that it is the rule of the Court that where a merchant kept an account current by him for about two years without objection, the Court will consider that the accounts are stated or settled. The same principle has been expressed by the Bombay High Court in Seth Maneklal Mansukhbhai vs Jwaladutt Rameshwar Pillani(3) in which it was pointed out that it was sufficient if the accounts were accepted and such acceptance might be inferred by conduct of parties. The contention on behalf of the defendants is that there has been a "stated" or "settled" account in this case and in the ab. sence of fraud, mistake or any other sufficient equitable ground it is not liable to be reopened at the instance of the plaintiff. In connection it is necessary to state that the expression "account (1) ; (2)[1750 51) 2 Ves. (Son.) 239. (3) I.L.R. 13 stated" has more than one meaning. It sometimes means a claim to payment made by one party and admitted by the other to be correct An account stated in this sense is no more than an admission of a debt out of court, while it is no doubt cogent evidence against the admitting party, and throws upon him the burden of proving that the debt is not due, it may, like any other admission, be shown to have been made in error. Where the transaction is of this character, it makes no difference whether the account is said lo be " 'stated" or to be "stated and agreed";, the so called agreements is,without consideration and amounts to no more than an admission. There is however a second. kind of account stated where the, account contains items both of credit and debit, and the figures on both sides are adjusted between the parties and a balance struck. This is called by Mr. Justice Blackburn, in Laycock vs Pickkes(1) a "real account stated " and he describes it as follows: "There is a real account stated, called in old law an insimul computassent, that is to say, when several items of claim are brought into account on either side, and, being set against one another, a balance is struck, and the consideration for the payment of the balance is the discharge of the items on each side. It is then the same as if each item was paid and a discharge given for each, and in consideration of that discharge the balance was agreed. to be due. It is not necessary,. in order to make out a real account stated, that the debts should be debts in praesenti or that they should be regal debts. I think equitable claims might might be, brought into account, and I am not certain that a moral obligation is not sufficient. It is to be taken as if the sums had been really paid down on each side; and the balance is recoverable as if money had been really taken in satisfaction; subject to this, that where some of the items are such that, if they had been actually paid, the party paying them would have been able to recover them back as on a failure of consideration, the account stated would be invalidated. " In the present case, the "settled account" between the parties falls within the second kind of "account stated" and it is to an account of this description that the equitable doctrine of "settled account" has to be considered. This statement of the law has been affirmed by Lord Wright in delivering the opinion of the Judicial Committee in Bishnu Chan vs Birdhari Lal(2) as the follows: "Indeed, the essence of an account stated is not the ' character of the items on one side or the other, but the (1) 4 B. and B., 497. (2) A.I.R. 1934 P.C. 147, 14 fact that are cross items of account and that the parties mutually agree the several accounts of each. and by treating the items so agreed on the one side as discharging the items on the other side pro tanto, go on to agree that the balance only is payable. Such a transaction is in truth bilateral and creates a new debt and a new cause of action. There are mutual promises, the one side agreeing to accept the amount of the balance of the debt as true (because there must in such cases be. at least in the end, a creditor to whom the balance is due) and to pay it, the other side agreeing the entire debt as at a certain figure and then agreeing that it has been discharged to such and such an extent, so that there win be complete satisfaction on payment of the agreed balance. Hence, there is mutual consideration to support the pro mises on either side and to constitute the new cause of action. The account stated is accordingly binding. save that it may be re opened on any ground for instance. fraud or mistake which would justify setting aside any other agreement. " In the present case, the 'correctness of the statements of account furnished by the defendants has been challenged by the plaintiff under 13 heads. In view of our finding that the transactions between the parties were not on the basis of an agency but on the basis of an outright sale the accounts cannot be reopened under any of these heads of challenges. The trial court has already gone into the evidence and has reached the finding that there was no fraud, mistake or any other sufficient equitable ground for reopening the finality of the accounts. As regards one item, viz., rebate in marine insurance, the trial court has ordered that the plaintiff should be given credit for a small sum of Rs. 157/ though there was no evidence of fraud on the part of the defendants. The trial court has rejected the claim of the plaintiff for reopening the accounts on any other ground and in view of our finding that the legal relationship between the parties was not one of agency, we see no reason for interfering with the decision of the trial court on this aspect of the case also. For the reasons expressed, we allow this appeal and set aside the judgment and decree of the High Court in O.S. Appeal No. 22 of 1955 dated the 15th December, 1959 and restore the judgment and decree of the trial Judge dated May 6, 1954 dismissing the suit of the plaintiff and granting a decree for the counter claim of the defendants. The defendants are entitled to the costs of this appeal in this Court and in the High Court. Appeal allowed.

IN-Abs

The respondent was a trader in hider. and skins and the appellant was an exporter. During the period January to August 1949, there were several contracts between them. The contracts mentioned that the appellant was buying the goods for resale in U.K. The price quoted was C.I.F. less 2 1/2 %. The contracts also provided that time should be the essence of the contract, that the sales tax was on respondent 's ac count, that the respondent was answerable for weight as well as quality, that there should be a lien on the goods for moneys advanced by the appellant, and that any dispute regarding quality should be settled by arbitration according to the custom of the trade in the U.K. The course of dealing between them showed that before the goods were shipped they were subjected to a process of trimming and reassortment in the godowns of the appellant with a view to make them conform to London standards, that the goods were marked with the respondent 's mark and that premiums were paid to the respondent in case the goods supplied were of special quality. The respondent filed a suit on the original side of the High Court praying that an account should be taken of the dealings between himself and the appellant on the ground that the appellant was his agent. The appellant 's case was, that there was an outright purchase of the respondent 's goods and that the appellant was not an agent of the respon dent. The trial Judge dismissed the suit. On appeal the High Court held that the appellant acted as a del credere agent of the respondent and directed the taking of accounts. In appeal to this Court, it was contended by the appellant that: (i) the terms of the contracts and the course, of dealing between the parties showed that the appellant was not the agent of the respondent but was an outright purchaser of the goods, and (ii) that there was a settled account between the parties which the respondent could not reopen. HELD:(i) The appellant was the purchaser of the respondent 's goods under the several contracts and not his agent for sale, and therefore, the view taken by the High Court was not correct. The essence of sale is the transfer of title to the goods for price paid, or to be paid, whereas the essence of the agency to sell is the delivery of the goods to a person who is to sell them, not as his own property but as the property of the principal who continues to be the owner of the goods, and the agent is liable to account for the proceeds. On the terms of the contract and the course of dealing between the parties, the contract was not one of agency for sale but was an agreement of sale. The appellant purchased the goods from the respondent 2 1/2% less and sold them to the London purchasers at the full price so that the 2 1/2 % was its margin of profit and not its agency commission. The fact that the goods were sent with the respondents 2 mark, that the premium was paid outside the terms of the contract, that the appellant considered it fair and just to pay the whole of the premium to the respondent or to share it with him, and that additional burden with respect to weight and quality was thrown on the respondent, have no significance, in deciding the nature of the contract. The clause with regard to lien is consistent with the transac tion being an outright sale, because the appellant was acting as creditor of the respondent and charged interest on advances only till the date of shipment of the goods when it became the purchaser of the goods from the respondent. An agent can become a purchaser when the agent pays the price to the principal on his own responsibility. The clause regarding arbitration in the U.K., though unusual, is not also inconsistent with there being a sale of goods between the parties in India. [3H 4B; 5G H.] (ii) The accounts were settled between the parties and the respondent could not be allowed to reopen the settled account as there was no proof of fraud, mistake or any other sufficient ground. Accounts are "settled or started" if they are submitted and accepted as correct by the other side to whom they have been rendered. For almost every shipment the appellant prepared a full and detailed statement of account and sent it to the respondent. The account contained items both of credit and debit and the figures on both sides were adjusted between the parties and a balance struck and the respondent accepted their accuracy and never raised any objection to them. [11H; 14 E F]. Bishnu Chand vs Girdhari Lal, (1934) L. R. 61 I.A. 273 and Laycock vs Pickles, 4 B and S 497, applied.

ivil Appeals Nos. 4 and 6 of 1953. Appeals under article 132(1) of the Constitution of India from the judgment and Order dated the 4th December, 1952, of the High Court of Judicature of the State of Madhya Bharat at Gwalior in Civil Miscellaneous Cases Nos. 614 of 1951 and 1 of 1952. P.R. Das (B. Sen, with him) for the appellant in C.A. No. 4 of 1953. 749 Rameshwar Nath for the appellant in C.A. No. 6 of 1953. M.C. Setalvad, Attorney General for India, and K. A. Chitale, Advocate General of Madhya Bharat (Shiv Dayal, with them) for the respondent. February 2. The Judgment of the Court was delivered by MAHAJAN C.J. These appeals preferred on behalf of three zamindars of the State of Madhya Bharat against the judgment of the High Court of Judicature of that State dated the 4th December, 1952, raise common constitutional questions and can be disposed of by one judgment. The State also preferred cross appeals against the same judgment. During the pendency of these appeals, two petitions under article 32 of the Constitution of India were also made to this court to obtain the same relief as was claimed by the appellants in their respective appeals. During the course of the arguments, the counsel appearing for the appellant in Civil Appeal No. 5 of 1953 asked leave to withdraw the appeal. This was granted and the appeal was dismissed as having been withdrawn. Petitioner. Nos. 116 and 117 of 1953 preferred under article 3 were also withdrawn and were accordingly dismissed. Civil Appeals Nos. 4 and 6 of 1953 were argued before us and this judgment concerns them alone. The appellant in Civil Appeal No. 4 of 1953, Rajendra Maloji Rao Shitole, is the proprietor of extensive landed properties in the State of Madhya Bharat comprising 260 villages under different Sanads granted to his ancestors by the Rulers of Gwalior from time to time. It was alleged by him that his income from these properties was in the sum of Rs. 2,61,637 and that the State of Madhya Bharat, under purported exercise of its powers under section 3 of the Madhya Bharat Abolition of Jagirs Act, was about to issue a Notification for resumption of all his land. By a petition dated the 7th December, 1951, preferred to the High Court he asked for a mandamus to restrain the State from issuing any Notification under section 3(1) of the Act in respect of his properties and from 750 interfering with rights in the said property. The appellant in Civil Appeal No. 6 of 1953 is another Jagirdar of the same State. He preferred a similar petition to the High Court praying for the same relief. These two petitions, along with a number of other petitions preferred under article 226 of the Constitution challenging the validity of the Madhya Bharat Abolition of Jagirs Act and praying for the issue of a mandamus restraining the State from issuing the Notification under section 3(1) of the said Act, were heard by a Bench of three Judges of the High Court of Madhya Bharat. The ,court, by a majority judgment, declared that the Madhya Bharat Abolition of Jagirs Act No. XXVIII of 1951 was valid except as regards section 4(1)(g) and sub clauses (iv) and (v) of clause 4 of Schedule I which were held illegal and inoperative. A writ of mandamus was directed to be issued to the State Government directing it not to give effect to the procisions of the impugned Act stated above. Leave to appeal to the Supreme Court was granted to the paries and in pursuance of the leave the appellants referred the appeal above mentioned and the State referred the two cross appeals. The cross appeals were not pressed by the learned Attorney General and nothing more need be said about them. They are therefore dismissed with costs. As regards Civil Appeals . Nos. 4 and 6 of 1953, the facts are: That in April, 1948, after the partition of India, and the formation of two Dominions, India and Pakistan, the Rulers of the States of Gwalior, Indore and certain other States in Central India being convinced that the welfare of the people of that region could best be secured by the establishment of a State comprising the territories of ' their respective States with a common Executive, Legislature and Judiciary entered into an agreement for the formation of a United State of Gwalior, Indore and Malwa (Madhya Bharat). It was resolved by them to entrust to a Constituent Assembly consisting of elected representatives of the people the drawing up of a democratic Constitution for the State within the framework of the Constitution of India to which the Rulers of these 751 States had acceded. The covenant entered into by these Rulers was published on the 7th October, 1948. The Rulers agreed, under article III of the covenant, to elect a Rajpramukh of the United State, and by article VI the Ruler of each Covenanting State agreed to make over the administration of the State to the Rajpramukh not later than the first day of July, 1948, and it was agreed that thereupon all rights, authority and jurisdiction belonging to the Ruler which appertain, or are incidental to, the Government of the Covenanting States shall vest in the United State and were thereafter to be exercisable only as provided by the covenant or by the Constitution to be framed thereunder. By article X it was agreed that as soon as practicable a Constituent Assembly, for the purpose of framing a Constitution for the United State within the framework of the covenant and the Constitution of India, was to be formed and clause (2) of the said article provided: "The Rajpramukh shall constitute not later than the first day of August, 1948, an interim Legislative Assembly for the United State in the manner indicated in Schedule IV. " Schedule IV laid down the following procedure for the constitution of the Legislative Assembly: "1. The Legislative Assembly shall consist of (a) forty members elected by the members of the Gwalior Legislative Assembly; (b) fifteen members elected by the members of the Indore Legislative Assembly; and (c) twenty members elected by an electoral college to be constituted by the Rajpramukh in consultation with the Government of India to represent Covenanting States other than Gwalior and Indore. The election shall be by proportional representation by means of the single transferable vote. The Rajpramukh may make rules for carrying into effect the foregoing provisions of this Schedule and securing the due constitution of the interim Legislative Assembly. " 752 In pursuance of this covenant the Rajpramukh took the oath of office on the 28th of May, 1948. In the meantime 40 members representing the Indore group were elected to the interim legislative assembly on the 8th and 9th of May, 1948, respectively. As regards the election of 20 members that had to be elected by an electoral college, what happened was this. The Ministry of States, Government of India, on the 5th July, 1948, informed the Rajpramukh that there were many practical difficulties in setting up an electoral college consisting of elected representatives of the various States, because in many of the smaller States there were no elected bodies of any kind. After considering the various difficulties it was suggested to the Rajpramukh that the twenty seats may be allocated between the different States in a certain manner mentioned in the latter and out of these, fourteen may be allotted to the nominees of the Praja Mandal and the remaining six may be nominated by the Rajpramukh himself. This suggestion was modified by a letter of the 19th of November, 1948, and it was finally agreed upon that the Madhya Bharat Provincial Congress Committee may be asked to elect six persons 'to represent the smaller States in the Madhya Bharat interim legislative assembly. This suggestion was not exactly in accord with what had been indicated in clause 1 (c) of Schedule IV. These representatives were elected in the manner suggested in the two letters, on the 19th October, 1948, and they were declared to be validly elected in terms of the covenant. On the 30th of October, 1948, the Rajpramukh promulgated an Ordinance entitled "The Interim Legislative Assembly Ordinance Samvat 2005", Ordinance No. 18 of 1948. In the preamble to the Ordinance it was declared that in accordance with the provisions of the covenant the legislative assembly had already been duly constituted. The various sections of the Ordinance provided for the working of the interim legislative assembly, i.e., the manner in which it could be summoned and dissolved or prorogued, how its President and Deputy President were to be elected and how it was to exercise the power of 753 voting and what number of members would constitute the quorum. On the 6th of December, 1948, the Ordinance was repealed and Act XXIII of 1949 took its place. The legislative assembly thus constituted was actually functioning on the 26th of January, 1950, when the Constitution of India: came into force. In the meantime, by subsequent covenants, the Rulers of the Covenanting States had agreed to accept the Constitution of India as the Constitution of the United State of Madhya Bharat and had abandoned their covenant of forming a separate Constituent Assembly for framing a Constitution for the United State of Madhya Bharat. After the coming into force of the Constitution of India the interim legislative assembly constituted by the Rajpramukh and which was functioning on the 26th of January, 1950, continued to function till some time in the year 1952 when new elections took place and a legislative assembly in conformity with the provisions of the Constitution of India was duly constituted. On the 30th of November, 1949, the Government of the State of Madhya Bharat introduced a Bill entitled the "Madhya Bharat Abolition of Jagirs Bill ' before the interim legislative assembly and the Bill was passed into an Act on the 28th of August, 1951, and having been reserved for the consideration of the President received his assent on the 27th November, 1951. It was published in the Madhya Bharat Gazette Extraordinary on the 7th of December, 1951. The said Act, by section 3, provided for a date to be appointed by the Government by notification for resumption of all jagir lands in the State and by section 4 it provided that as from such a date, the right, title and interest of every jagirdar and of every other person claiming through him in his jagir lands including forests, trees, fisheries, wells, tanks, ponds, water channels, ferries, pathways, village sites, huts, bazaars and mela grounds and mines and minerals whether being worked or not, 'shall stand resumed to the State free from all encumbrances. The Act also provided a scheme for assessment of compensation m respect of jagirs thus resumed. 754 The appellants contested the validity of this law on a number of grounds, and, inter alia, on the following : (1) That the so called legislature which passed the Act was not a legislature within the meaning of the covenant entered into by the Rulers of Gwalior, Indore and certain other States in Central India for the formation of the United State of Gwalior, Indore and Malwa (Madhya Bharat) or_within the meaning of Schedule IV of the said covenant. (2) That the legislature of Madhya Bharat was, not competent to enact the said Act and the said acquisition or resumption of jagirs was not for a public. purpose and there was no provision for payment of compensation as understood in law, the compensation provided for being wholly illusory and the Act was a fraud on the Constitution. Before the High Court, Mr. P.R. Das who appeared for most of the petitioners, confined his arguments some of the grounds mentioned in clause (2)above. His first contention that the impugned Act was passed by a legislature not validly constituted, he reserved for arguing before this court as the Madhya Bharat High Court by a Full Bench decision in Shree Ram Dubey vs The State of Madhya Bharat(1), had already repelled that contention. The two points argued by him before the High Court were: (1) That there was no public purpose behind the acquisition for the resumption of jagir lands and therefore the Act was unconstitutional and illegal. (2) That some of the provisions of the impugned Act were ultra vires in so far as they constituted a fraud on the Constitution. Both these points which, were urged before the High Court were not argued before us by the learned counsel. The point that there was no public purpose behind the acquisition was abandoned because it was concluded by the decision of this court in the Orissa Zamindari appeals, K.C. Gajapati Narayan Deo and Others vs The State of Orissa(2). A.I.R. 1952 M.B. 57 178. ; ; 755 As regards the second point, as already indicated, three provisions of the impugned Act had been declared void by the High Court and Mr. Das contented himself by accepting that decision. The 'State Government had impugned the correctness of the decision of the High Court declaring these three provisions of the Act to be void but it also did not press that point. The result of these concessions in this court is that the arguments in the two appeals were limited to the first point urged in the petition, namely, whether the impugned Act was passed by a Legislature not validly constituted under the covenant entered into by the Rulers of Madhya Bharat. Mr. P.R. Das contended that as the Interim Legislative Assembly was not constituted according to the provisions of Schedule IV of the covenant it was a body of usurpers and therefore any laws made by it were wholly void and of no effect whatsoever. It was urged that the two bodies, viz. Praja Mandal and the Provincial Congress Committee who, in two separate divisions, elected fourteen and six members, did not constitute ' an electoral college to fulfil the requirement of clause 1 (c) of Schedule IV, and the members elected could not be said to have been elected in the manner prescribed by the Schedule and that the Rajpramukh and the Government of India, in the absence of an amending covenant, had no power to vary the provisions of the Schedule. It was said that the object of clause 1 (c) of Schedule IV was that the election of 20 members should be by an electoral college constituted by the Rajpramukh in consultation with the Government of India to represent the Covenanting States other than Gwalior and Indore and that the election by the Praja Mandal and the Congress Committee of 14 and 6 members was in clear breach of the terms of the covenant and that in this manner no representation was given to the minorities and full effect was not given to the rule that the election should be by proportional representation by means of single transferable vote. The learned Attorney General met these contentions by urging, (1) that the question was not open having regard to the provisions of article 385 of the Constitution of India 756 (2) that the election of 20 members representing the eighteen States took place in literal compliance of the covenant, (3) that in any event there was substantial compliance with the covenant, and lastly (4) that the declarations made in the Ordinance by the Rajpramukh and the provisions contained in the Ordinance were conclusive and were accepted by all the States concerned and could no longer be challenged. After a careful consideration of the respective arguments addressed by Mr. P.R. Das and the learned Attorney General we have reached the conclusion that it is not necessary to consider in detail all the points discussed by the learned counsel, as in our judgment the question seems to be concluded by the provisions of article 385 of the Constitution of India. There is no gainsaying the fact that the election of 20 members to represent the 18 States was not made strictly in the manner indicated in Schedule IV of the covenant, but it also cannot be disputed, and in fact was not disputed before the High Court, that the Legislative Assembly which passed the impugned Act was on the 26th of January, 1950, in spite of its defective constitution, in fact functioning as the Legislature of the State of Madhya Bharat. It had been declared to have come into existence by an Ordinance promulgated by the Rajpramukh and its factual existence is apparent from the laws that it made subsequent to its formation. Part XXI of the Constitution of India deals with "Temporary and Transitional Provisions". About two dozen articles in this Part concern themselves with the solution of the problems of their interval in between the repeal of the Government of India Act and the coming into being of bodies and authorities formed by the Constitution. Until the House or Houses of Legislature or bodies and authorities formed by the Constitution could be duly formed it was necessary to say with certain definiteness as to what bodies or authorities would exercise and perform the duties conferred by the different provisions of the Constitution in the meantime. When a silent revolution was taking place and Princely kingdoms were fast 757 disappearing and a new democratic Constitution was being set up and a provision had to be made for the interval between the switch over from one Constitution to another, there was hardly any time to enquire and consider whether the bodies or authorities or House or Houses of Legislature formed under the old Constitutions which were being scrapped had been formed in strict compliance with the provisions of those Constitutions or whether there were any defects in their formation. The Constitution makers therefore took notice of their factual existence and gave them recognition under the Constitution and invested the bodies that were actually functioning as such, whether regularly or irregularly, with the authority to exercise the powers and perform the duties conferred by the provisions of the Constitution. That is clearly the scheme of all the articles mentioned in Part XXI of the Constitution. Particular reference may be made to articles 379, 382 and to article 385 which specifically governs the present case. Article 379 is in these terms: "(1) Until both Houses of Parliament have been duly constituted and summoned to meet for the first session under the provisions of this Constitution, the body functioning as the Constituent Assembly of the Dominion of India immediately before the commencement of this Constitution shall be the provisional Parliament and shall exercise all the powers and perform all the duties conferred by the provisions of this Constitution on Parliament. Explanation. For the purposes of this clause. the Constituent Assembly of the Dominion of India includes (i) the members chosen to represent any State or other territory for which representation is provided under clause (2), and (ii) the members chosen to fill casual vacancies in the said Assembly. " The provision made in this article in unambiguous terms makes the body. functioning as the Constituent Assembly, whether constituted perfectly or 758 imperfectly and whatever its membership on the date immediately before the commencement of the Constitution, as the provisional Parliament and vests it with all the functions and duties conferred by the provisions of the Constitution on the Parliament. The President was given power under the provisions of this article to add members to this body to give representation to certain States who were not previously represented, and it was specifically prescribed that if there are any vacancies then the vacancies could be filled up and the members returned to fill these vacancies will be considered members of the provisional Parliament. These specific provisions are indicative of the fact that the Constitution makers, in enacting this article, took notice of the factual existence of certain bodies without concerning themselves with the question whether they had been validly constituted under the Constitution that brought them into being. Article 382 of the Constitution is similarly worded. It provides that until the House or Houses of the Legislature of each State specified in Part A of the First Schedule has or have been duly constituted and summoned to meet for the first session under the provisions of this Constitution, the House or Houses of the Legislature of the corresponding Province functioning immediately before the commencement of this Constitution shall exercise the powers and perform the duties conferred by the provisions of this Constitution on the House or Houses of the Legislature of such State. Article 385 is in exact conformity with the two earlier articles. It provides that "Until the House or Houses of the Legislature of a State specified in Part B of the First Schedule has or have been duly constituted and summoned to meet for the first session under the provisions of this Constitution, the body or authority functioning immediately before the commencement of this Constitution as the Legislature of the corresponding Indian State shall exercise the powers and perform the duties conferred by the provisions of this Constitution on the House or Houses of the Legislature of the State so specified. " 759 The whole intent and purpose of these articles was to give recognition to those bodies or authorities or House or Houses of Legislature which were actually functioning before the 26th of January, 1950, and to invest them with the powers conferred by the provisions of this Constitution. The Constitution makers wanted to indicate the arrangements made by them for the interval with certain amount of definiteness in order to avoid any disputes during the interim period as to who the body or authority was, to exercise the powers conferred by the provisions of the Constitution. They therefore chose the formula that whichever body or authority or House or Houses of Legislature was actually functioning immediately before the commencement of the Constitution would be the body or authority or the House that would exercise the powers and perform the duties conferred by the provisions of this Constitution on the House, body or authority specified in the Constitution. They did not take any risk on this question and the bodies actually functioning were, like persona designata, invested with powers conferred by the Constitution. That being the scheme of this Part and that being also the clear and unambiguous language of article 385 it follows that the Madhya Bharat . Interim Legislative Assembly that was actually functioning on the 26h January, 1950, was invested by the Constitution of India with powers conferred by the provisions of the Constitution, irrespective of the fact whether it had been properly constituted in accordance with the terms of the covenant or not. The inquiry into this question thus became barred by adopting this procedure. Such a procedure was fully justified and was rounded upon considerations of policy and necessity for, the protection of the public and individuals whose interests may be affected thereby. It is manifest that endless confusion would have resulted if the Constitution had not adopted that formula and had not barred an inquiry into all questions as to the original formation of such bodies by giving validity and recognition to those bodies or authorities as were actually functioning on the 26th of January, 1950. Not only did it give 760 validity and recognition to those bodies which were in fact functioning. then but it also invested these designated bodies and authorities with powers conferred by the provisions of the Constitution itself. That being our view as to the true meaning and 'intent of the language employed in article 385 of the Constitution it follows that the contention raised by Mr. P.R. Das as to the defective formation of the Interim Legislative Assembly of Madhya Bharat has no validity. Even if that body was not formed in strict compliance with the provisions indicated in Schedule IV of the covenant its defective formation does not affect the constitutionality of the impugned statute. The impugned statute was passed in the year 1951 after the Constitution of India had given recognition to, and conferred powers on, the Assembly under article 385 of the Constitution. When it made this law it was exercising its powers under the Constitution of India and not under the covenant which brought it into existence. The result therefore is that the only contention that Mr. P.R. Das argued before us cannot be sustained and it must be held that it is not well founded. For the reasons given above we see no force in these two appeals and they are therefore dismissed with costs. Appeals dismissed. Agent for the appellant in C.A. No. 4: 1. N. Shroff. Agent for the appellant in C.A. No. 6 :Rajinder Narain.

IN-Abs

The decision of the Madhya Bharat High Court declaring section 4 (1) (g) and sub cls. (iv) and (v) of cl. 4 of Schedule I of Madhya Bharat Abolition of Jagirs Act (XXVIII of 1951) as illegal and inoperative was not questioned by either of the parties. It was however, contended that the impugned Act (XXVIII of 1951) was void as it was not passed by a validly constituted legislature within the meaning of the covenant entered into by the Rulers of Madhya Bharat as the provisions of cl. 1(c) of Schedule IV of the covenant for the election of 20 members were not complied with. Held, that as the Madhya Bharat Legislative Assembly actually functioning on the 26th January, 1950, the validity of the Acts passed by it could not be questioned in view of article 385 of the Constitution irrespective of the fact whether it had been proPerly constituted in accordance with the terms of the covenant or not Scope of articles 379, 382 and 385 discussed.

Appeal No. 102 of 1964. Appeal by special leave from the judgment and order dated July 30, 1962 of the Punjab High Court (Circuit Bench) at Delhi in Civil Writ No. 402 D of 1962. D. Goburdhan for the appellants. section G. Patwardhan and B. R. G. K. Achar for the respondents. The Judgment of the Court was delivered by Wanchoo, J. The only question raised in this appeal by special leave from the judgment of the Punjab High Court is the interpretation of section 9 (1) of the Evacuee Interest (Separation) Act, No. LXIV of 1951 (hereinafter referred to as the Act). The question arises in this way. The appellants were mortgagees of certain properties, including a house, on the basis of a, mortgage bond dated July 19. 1928. The consideration of the bond was Rs. 25,000 and interest was provided at nine per cent per annum compoundable annually. Out of the properties covered by the bond, one of the properties was sold to Bibi Chand Tara on October 23, 1937 subject to the earlier mortgage of 1928. In October 1949, Bibi Chand Tara was declared an evacuee. In 1939 the appellant filed a suit against the orignal mortgagors and others including Bibi Chand Tara for the amount due under the mortgage. A preliminary decree was passed in their favour in March 1942 and the final decree followed in April 1945. It appears that certain sums were received by the appellants before they had filed the suit. Certain other sums were also received after the preliminary and final decrees. It further appears that certain Zamindari properties which were also included in the mortgage had been sold after the final decree and the money appropriated towards the decree. Another house which was also included in the mortgage bond was sold later and the sale money was again appropriated towards the decree. Eventually the appellants put the decree in execution in November 1952 against the house in dispute for a sum of Rs. 60,000 and odd,. There was a sale in that execution proceeding, but it was set aside on the application of the Assistant Custodian, Patna. Thereafter the appellants made an application before the Assistant Custodian for the recovery of the mortgage money claimed by them. and in this application their claim was for Rs. 40.000 and. This application was also dismissed as it was filed before a wrong authority. Eventually the. appellants filed a claim for the same. amount before the Competent Officer under the Act. inasmuch As the property in dispute was composite property in Which, the evacuee had mortgagor 's interest while the appellants who are non evacuee 's had mortgagees ' interest which had ripened into a decree for sale. This application was resisted by the Custodian on a number of grounds. In the present appeal we are only. 57 concerned with one ground based on section 9 (1) of the Act. , The contention of the Custodian was that the appellants were not entitled to any interest higher than five per cent per annum simple from the date of the mortgage under section 9 (1) of the Act. Therefore the Custodian claimed that the entire transaction should be reopened from the date of the mortgage and the amounts already received by the appellants should be taken into account after allowing interest at five per cent per annum simple to them and if, more interest had been paid that should be credited towards the principal and after such accounting the sum if any due on the mortgage could be claimed by the appellants. The Competent Officer held that though the provisions of section 9 (1) were retrospective to a certain extent they could not be stretched to mean that if a mortgagee had already realised interest at a rate exceeding five per centum Per annum simple even before the Act came into force the excess would go to liquidate the principal amount proportionately. He therefore held that in the absence of special provision to the effect that past accounts should be reopened, the amount received as interest prior to the decree could not be taken into account. The Competent Officer further held that the principal money could not be reduced on account of any excess realisation of interest when such excess was realised before the Act came into force. He therefore ordered that (1) the amount of interest exceeding five per cent per annum before the institution of the suit would not reduce the principal amount, (2) the appellants would be entitled to simple interest at six Per cent per annum, i.e. the rate at which interest was decreed in their favour in the mortgage suit from the date of the institution of the suit till November 26, 1952 on the principal sum only, (3) the appellants would be entitled to interest at five per cent per annum simple from November 27, 1952, and (4) the appellants would also be entitled to costs of the suit decreed in their favour. The actual amount due was ordered to be worked out on these principles. The Custodian took the matter in appeal to the Appellate Officer. The Appellate Officer held that on the words of section 9 (1) the entire account must be made afresh on the basis of interest being ,,allowed at five per cent per annum simple on the principal amount from . ' the date; of the. mortgage and that any sums received over above this would go to reduce the principal. He therefore allowed the appeal and set aside the order of the Competent Officer and ordered account to be taken in the manner indicated by him. The appellants,then applied to the punjab High Court by a writ petition, which was dismissed in limine. Their application for a leave to Appeal to this Court was also dismissed. Thereafter they ,obtained special leave from this: Court, and, that is how the matter has come before us L/S5SCI 6 58 The Act deals with separation of the interest of an evacuee from the interest of a non evacuee in composite properties. Under section 2 (d) "composite property" inter alia means any property which, or any property in which an interest, has been declared to be evacuee property and in which the interest of the evacuee is subject to mortgage in any form in favour of a person, not being an evacuee. Under section 2 (h), "principal money" in relation to a mortgage deed executed by an evacuee inter alia means in the case of mort gage deed which has not been executed by way of renewal of a prior mortgage deed, the sum of money advanced by way of loan at the time of the execution of the mortgage deed. Under section 3 the Act and the rules and orders made thereunder have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in force or in any instrument having effect by virtue of any such law, save as otherwise expressly provided in the Act. Sections 4 to 8 provide for machinery for separation of the claims of evacuees and non evacuees in composite properties. Then we come to section 9(1) which is in these terms: "(1) Notwithstanding anything to the contrary in any law or contract or any decree or order of a civil court or other authority, where the claim is made by a mortgagee, no mortgaged property of an evacuee shall, subject to the provisions of subsection (2) be liable for the payment of interest at a rate exceeding five per cent per annum simple on the principal money advanced or deemed to have been advanced. " It is unnecessary to refer to section 9(2) for we are not concerned with that provision in the present appeal. We may however refer to section 8(3) which is material and in these terms: "(3) If there is any dispute as to whether a liability is a mortgage debt or not or whether any claim submitted under section 7 exists, the Competent Officer shall decide such dispute : Provided that a decree of a civil court '(other than an ex parte decree passed after the 14th day of August, 1947) shall, subject to the provisions of sections 9 and 10, be binding on the Competent Officer in respect of any matter which has been finally decided by such decree , and where any matter was decided by an ex parte decree passed by a civil court after the 14th day of August, 1947, the Competent Officer may decide such matter afresh and on such decision being made the ex parte decree shall be deemed to have no effect." 59 Section 10 provides for separation of the interest of evacuee from the interest of claimants in composite properties and lays down how that will be done. Clause (b) specially provides for the manner in which the claim of a mortgagee will be dealt with by the Competent Officer, but we are not concerned with the details of that provision. It will be seen from a consideration of these provisions that the Competent Officer is bound by the decree of a civil court except an ex parte decree passed after August 14, 1947 in respect of a mortgage subject to the provisions of sections 9 and 10. Section 10 indicates how the Competent Officer is to separate the interest of an evacuee from the interest of a non evacuee, even in the case of a decree except an ex parte decree passed after August 14, 1947. Section 9(1) provides for interest at five per cent per annum simple, and the decree in a mortgage suit except an ex parte decree passed after August 14, 1947 which is otherwise binding on the Competent Officer is subject to the provisions of section 9(1) as to interest. It will also be noticed that there is no provision in the Act which specifically provides for reopening of transactions relating to mortgage and taking accounts from the date of the mortgage on the basis of interest provided in section 9(1) and for crediting anything paid as interest over and above the rate provided in section 9(1) to wards principal. Prima facie therefore in the absence of such a provision it cannot be assumed that the legislature intended that a mortgage transaction should be reopened from the date of the mortgage and accounts taken afresh and anything paid in excess of five per cent per annum simple interest applied towards reduction of the principal amount. We have therefore to see whether there is anything in the words of section 9(1) which leads to this result in the absence of a specific provision to that effect in the Act. Section 9(1) begins with a non obstante clause and lays down that it will apply notwithstanding anything to the contrary in any law or contract or any decree or order of a civil court or other authority. It then provides that where a claim is made by a mortgagee, as in the present case, no mortgaged property of an evacuee shall be liable for the payment of interest at a rate exceeding five per cent per annum simple on the principal money advanced. The key words in the provision are "no mortgaged property shall be liable". These words indicate that the Competent Officer when he comes to deal with a liability under a mortgage must calculate this liability on the basis that interest should be allowed only on the principal amount and only at the rate of five per cent per annum simple. , The liability which the Competent Officer has to determine is with respect to the amount still due to the non evacuee. Further as the non obstante clause includes any decree of a civil court and as such decree is subject to section 9(1) in view of the proviso to section 8(3), the Competent Officer would not be bound by the calculation of interest made by the civil court and would have to determine the 60 liability still due on the mortgage himself on the basis of simple interest at the rate of five per cent per annum on the principal sum advanced. Any calculation made by the civil court in arriving at the sum decreed by it on the basis of interest at more than five per cent per annum so far as the liability still due is concerned would not be binding on the Competent Officer and he will have to make his own calculations on the basis of simple interest at the rate of five per cent per annum. Similarly in a case where there is no decree and there is still some liability on the mortgage, the Competent Officer would not be bound by the rate of interest mentioned in the mortgage deed and will calculate the liability still due on the basis of simple interest at the rate of five per cent per annum on the principal amount advanced. But section 9(1) clearly shows that it applies only where the liability is still due and there is nothing in the words of section 9(1) which gives power to the Competent Officer to reopen the account under the mortgage from the date of the mortgage and for that purpose treat anything paid as interest under the contract over and above five per cent per annum simple interest as payment towards reduction of the principal amount Section 9(1) in our opinion only deals with liability still due and does not contemplate that any payments made already under the contract as interest should be taken partly towards interest and partly towards principal if they are above five per cent per annum simple interest. As section 9(1) speaks only of the liability of the mortgaged property it can only take in liability still due, for whatever has been paid in accordance with the contract towards interest is no longer a liability. This conclusion based on the words of section 9(1) is enforced by the fact that there is no specific provision in the Act for reopening all accounts under the mortgage from the date of the mortgage, treating any interest paid already at a rate higher than five per cent per annum simple as going towards reduction of the principal sum. Two situations may arise before the Competent Officer in such circumstances when calculating the liability under a mortgage. In one case there may be no decree already passed in favour of the mortgagee. In such a case in calculating the liability still due on the mortgage, the Competent Officer will calculate that liability on the basis of simple interest at the rate of five per cent per annum on the principal money advanced and may ignore the rate of interest mentioned in the contract. But even so, the words of section 9(1) do not give him power to reopen the accounts and what ever has been paid towards interest, if it is not in excess of the contractual rate of interest though it may be in excess of the rate of five per cent per annum simple interest, cannot be taken into account in reducing the principal amount. But whatever is still due under the mortgage will have to be worked out on the basis of simple interest at the rate of five per cent per annum on the prin cipal amount advanced. We may illustrate this by an example, 61 Suppose a mortgage was entered into on January 1, 1949 and the interest therein is nine per cent per annum. Suppose that interest for the years 1949 and 1950 has been paid at the contractual rate but nothing has been paid thereafter. in such a case, the amount paid in excess of five per cent per annum for 1949 and 1950 will not go to reduce the principal; but thereafter interest will be calculated at five per cent per annum to arrive at the liability on the mortgaged property or what is still due. The second case which may arise before the Competent Officer would be a case where a decree has been passed on the mort gage bond except an ex parte decree passed after August 14, 1947. In such a case also the Competent Officer cannot take into account anything paid in excess of five per cent per annum simple interest before the date of the suit provided it is not at more than the contractual rate; but as the decree is subject to section 9(1), the Competent Officer will have to calculate interest at five per cent per annum simple from the date of the suit and cannot award more interest in calculating the liability still due under the mortgage. Of course in both the cases if before the suit nothing has been paid towards interest or if something has been paid but it is less than five per cent per annum simple interest on the principal amount advanced. the Competent Officer in calculating the liability still due on the mortgage will have to allow five per cent per annum simple interest from the date of the mortgage to make up the deficiency, if any. As we read section 9(1), we find no provision in it for reopening the account from the very beginning and utilising any interest paid in excess of five per cent per annum simple but within the contractual rate towards reducing the principal amount. Section 9(1) only deals with the liability of the mortgaged property which may still be due when the claim is made before the Competent Officer. Though the provision is retrospective in the sense that where the liability is still there, interest has to be calculated at five per cent per annum simple there is nothing in the words of section 9(1) which authorises the reopening of accounts and utilising the excess over five per cent per annum towards reduction of principal provided the payment of interest already made is within the contractual rate. In this view the order of the Appellate Officer by which he ordered the reopening of the accounts and which was upheld by the High Court is incorrect. At the same time we are of opinion that the order of the Competent Officer is also not quite correct, though it is more in accord with the interpretation of section 9(1) which we have indicated above. On the view we have taken the liability will be calculated thus: Any amount paid before the date of the suit i.e. December 11, 1939, provided it is not more than the contractual rate of interest though it may be above five per cent per annum simple will not go to reduce the principal amount. From the date of the suit till the date of the final decree i.e. April 25. 62 1945, the appellants will only be entitled to simple interest at the rate of five per cent per annum on the principal amount advanced for the decree though binding on the Competent Officer is subject, under the proviso to section 8 (3), to section 9 (1). Further from the date of the final decree also the appellants will be entitled to simple interest at the rate of five per cent per annum on the principal amount only. Any payments made after the date of the suit will be adjusted first towards interest at the ' rate of five per cent per annum simple and any payment made in excess thereof will go to reduce the principal. The appellants will also be entitled to the costs of the suit which was decreed in their favour, but there will be no interest on such costs. The account will be made up accordingly to determine the liability due under the mortgage. Thereafter it will be for the Competent Officer to deal with the matter as provided under section 10(b) or (c). We therefore allow the appeal. The writ petition is allowed and the order of the Appellate Officer is set aside and the order of the Competent Officer varied in the manner indicated above. The appellants will get their costs from the Custodian Evacuee Property. Appeal allowed.

IN-Abs

The appellants were mortgagees of properties including a house on the basis of a mortgage bond executed in 1928. The interest provided in the bond was 9 % per annum compoundable annually. In 1937 the house above referred to was sold to B subject to the earlier mortgage. In 1939 the appellants filed a suit against the original mortgagors and others including B for the, amount due under the mortgage. Certain amounts towards the discharge of the liability under the mortgage were received by the appellants before as well as after the filing of the suit. A preliminary decree was passed in favour of the appellants in 1942 and the final decree in 1945. In 1949, B was declared an evacuee. When in 1952 the appellants put their decree in execution the property was treated as "composite property" and the Custodian of Evacuee Property contended before the Competent Officer that the appellants were not entitled to any interest higher than five per cent per annum simple from the date of the mortgage under section 9(1) of the Evacuee Interest (Separation) Act, 64 of 1951. The Custodian accordingly claimed that the entire transaction should be rib opened from the date of the mortgage and if more than five per cent simple interest had been received by the appellants the excess should be credited towards the principal amount. The Competent Officer held that the limit of five per cent could not apply before the Act came into force. The Appellate Officer however upheld the contention of the Custodian. The appellants thereupon filed a writ petition in the High Court which was dismissed in limine. By special leave they appealed to this Court. HELD:Section 9(1) only deals with the liability of the mortgaged property which may still be due when the claim is made before the competent officer. Though the provision is retrospective in the sense that where the liability is still there, interest has to be calculated at five per cent per annum simple, there is nothing in the Words of section 9(1) which authorises the reopening of the accounts ,and utilising the excess over five per cent per annum simple. towards reduction of principal provided the payment of interest al ready made in within the contractual rate. [61 F] On the above view the maximum rite of interest laid down in s.(1) was not applicable before the date of the suit. But under section 8(3) the decree of the Court was subject. to section 9 and therefore after the date of the suit the said rate was applicable. Directions 'given accordingly [61 H] L/S5SCI 6 56

Appeal No. 1107 of 1963. Appeal from the judgment and order dated September 8, 1959 of the Punjab High Court (Circuit Bench) at Delhi, in Civil Regular Appeal No. 17 D of 1954. B, D. fain, for the appellants. N. section Bindra and B. R. G. K. Achar, for the respondent. The Judgment of the Court was delivered by Shah, J. By a notification issued on March 2, 1937 under section 7 of the Delhi Laws Act, 13 of 1912, the Government of India extended, subject to certain modifications, the United Provinces Town Improvement Act, 8 of 1919, to the territory of Delhi, and thereafter set up an Improvement Trust under the Act for that territory. The Trust prepared an industrial development scheme with the object of relieving congestion by inducing a flow of population from the crowded parts of the town of Delhi to certain other areas. Under the scheme land in those areas was to be developed and after construction of roads, storm water drains, street lighting. 29 refuse and sewage disposal works, schools, parks, playgrounds, dispensaries, welfare centres and police station a part of the land was to be allotted to industrial concerns for construction of industrial buildings and the rest for construction of residential and other buildings. The scheme was sanctioned under section 42 of the Act by the government of India, and was duly promulgated. Thereafter the Trust resolved in June 1942 to make a supplementary scheme as the land covered by the original scheme was inadequate. It appeared that the Trust had agreed to provide under the original scheme a block of land comprising 268 acres of land to the Delhi Cloth & General Mills Co. Ltd. hereinafter called 'the Company ' on certain terms and conditions embodied in a resolution dated January 9, 1942, but the Trust was able to offer to the Company under the lay out of the original scheme only 174.84 acres. It was before proposed by the Trust to modify the scheme as sanctioned and to provide for acquisition of an additional area of 103.16 cres under a supplementary scheme. On July,18, 1942 notice under section 36 of the Act was published in respect of the supplementary scheme for development of the industrial area, specifying the boundaries of the land in which the scheme was to be worked and inviting objections to the scheme, within one month from the date of publication. No objections were, it appears raised to the proposed supplementary scheme, and it was finally approved by resolution dated July 31, 1944, and was notified under section 42 of the Act on June 28, 1946. Land acquisition proceedings were then commenced under section 58 of the Act and awards were made assessing compensation to be paid to the owners of the land for compulsory acquisition. In the scheme so notified was included an area of 13 bighas of land belonging to the appellants and that land was acquired. On May 3, 1949 the appellants sued the Delhi Improvement Trust for a declaration that the awards were "wrong and illegal and did not result in acquisition of the suit property" and for an order restraining the Trust from taking possession of their lands under the awards and from interfering in any way with their enjoyment of the lands. The appellants in support of their claim contended that the notification extending the United Provinces twon Improvement Act, 8 of 1919, was invalid, that the Improvement Trust was not lawfully constituted, that the industrial development schemes were invalid, that the Trust had no power to acquire lands for the purposes mentioned in the scheme, and that the resolutions and proceedings of the Trust being procedurally defective the scheme "was illegal". The appellants also contended that the scheme was framed at the instance of and solely for the benefit of the Company, since the land was intended to be given after acquisition to that Company or to other industrialists for 30 development by them for their own benefit. The Subordinate Judge, Delhi, held that the Act was properly extended to the Delhi territory. that the scheme was valid and the Trust had power to acquire the land, but in the view of the Subordinate Judge there was "nothing on the record to show that the area in suit" was "necessary for or" was "affected by the execution of this scheme," and that "the Act does not authorise compulsory acquisition for purposes of recoupment or for allotment to some company". The Subordinate Judge accordingly decreed the suit as claimed by the appellants. In appeal to the Senior Subordinate Judge with appellate powers the decree passed by the Trial Court was affirmed. In second appeal to the High Court of Punjab, Falshaw, J., reversed the decree passed by the First Appellate Court. In the view of the learned Judge, since the original industrial area scheme framed in 1940, was a valid scheme, acquisition of an additional area of land for meeting the requirements of that scheme was a legitimate extension thereof and merely because the Trust had resolved to acquire land for sale to the Company after development, the scheme was not open to challenge. He also held that the acquisition not being for the Company, Part VII of the Land Acquisition Act had no application and that the supplementary scheme was not invalid merely because the plan for development was to be worked out not by the Trust directly but by the Company under the general supervision and control of the Trust, and in accordance with the town planning scheme framed under section 192 of the Punjab Municipal Act. The decree passed by Falshaw, J., was confirmed by a Division Bench of the High Court. With certificate granted by the High Court, this appeal has been preferred. The arguments in this case have ranged over a wide field, but in the main three questions of law fall to be decided: (1) Whether acquisition of land of the appellants under the supplementary scheme was for the purposes of the Act; (2) whether for executing the supplementary scheme the Trust had power to compulsorily acquire land; and (3) whether land of the appellants could be acquired only in the manner provided by the Part VII of the Land Acquisition Act, 1894. The Act as the preamble discloses was enacted with a view to make provision for the improvement and expansion of towns Chapter 11 of the Act deals with the constitution of Improvement Trusts for carrying out the provisions of the Act. Chapter III deals with the proceedings of the Trust and Committees thereof. Chapter TV deals with different forms of improvement schemes. Section 2 ' describes in cls. (a) to (p) matters which may be provided for in an improvement scheme. Clauses (a) & (g) thereof read as follows: "(a) The acquisition by purchase, exchange, or otherwise any property necessary for or affected by the execution of the scheme. " 31 "(g) The sale, letting, or exchange of any property comprised in the scheme." By section 24 it is provided that an improvement scheme shall be one of the following types, or may combine any two or more of such types, or of any special features of, that is to say, (a) a general improvement scheme; (b) a re building scheme; (c) a re housing scheme , (d) a street scheme; (e) a deferred street scheme; (f) a development scheme , (g) a housing accommodation scheme , and (h) a town expansion scheme. Sections 25 to 32 set out the conditions in which the different classes of schemes may be framed and provisions which may be made in those schemes. Provisions relating to development schemes in section 30 and town expansion schemes in section 32 alone are material. By section 30 cls. (1) & (2) it is provided . "(1) In regard to any area to which this Act is extended, the Trust may, from time to time, prepare a scheme of proposed public streets with plans showing the direction of such streets, the streets alignment and building line on each side of them, their intended width and such other details as may appear desirable. (2) When any such scheme has been notified under section 42 the street to which it refers shall be deemed to be a projected public street. " Restrictions are then placed upon the right of occupants of the buildings to erect, re erect, add to or alter any building or wan, and provision is made for other related matters. Section 32 reads: "(1) Whenever the Trust is of opinion that it is expedient and for the public advantage to control and provide for the future expansion of a municipality in any area to which this Act is extended, the Trust may frame, a scheme (to be called a "town expansion scheme"). (2) Such scheme shall show the method in which it is proposed to lay out the area to be developed and the purposes for which particular areas are to be utilized. (3) For the purposes of a town expansion scheme the provisions of clause (a) of sub section (2) of section 40 shall not be applicable, but the Trust shall be required to supply such details as the State Government may consider necessary. (4) When any such scheme has been notified under section 42, if any person desires to erect, re erect, add to or alter any building or wall within the area comprised in the said scheme, he shall apply to the Trust for permission to do so. 32 (5) If the Trust refuses to grant permission to any person to erect, re erect, add to or alter any building or wall on his land in the area aforesaid, and if it does not proceed to acquire such land within one year from the date of such refusal, it shall pay reasonable compensation to such person for any damage sustained by him in consequence of such refusal." Section 33 deals with the procedure to be followed in framing improvement schemes. Section 36, inter alia, deals with the preparation, publication and transmission of notices about the improvement schemes. Section 38 deals with notice of proposed acquisition of land. Section 40 authorises the abandonment of and submission of the schemes for sanction to the State Government with such modifications as the Trust may consider necessary after considering the objections or representations which may be received. Section 41 authorises the State Government to sanction with or without modification, or refuse to sanction, or return for reconsideration, ,any improvement scheme submitted to it under section 40. Section 42 provides: "(1) Whenever the State Government sanctions an improvement scheme it shall announce the fact by notification, and except in the case of a deferred street scheme, development scheme, or town expansion scheme, the Trust shall forthwith proceed to execute the same. (2) The publication of a notification under sub section (1) in respect of any scheme shall be conclusive evidence that the scheme has been duly framed and sanctioned. " Section 43 provides for alteration in an improvement scheme before it had been carried into execution, subject to certain conditions specified therein. Chapter V deals with the powers and duties of the Trust in respect of a scheme which has been sanctioned. Section 55 authorises the Trust to enter into an agreement with any person for the purchase, lease or exchange by the Trust of any land which the Trust is authorised to acquire or any interest in such land Section 56 provides that the Trust may, with the previous sanction of the State Government, acquire land under the provisions of the Land Acquisition Act, 1894, as modified by the provisions of the Act for carrying out any of the purposes of the Act. Section 58 provides that for the purpose of acquiring land under the Land Acquisition Act for the Trust, the Tribunal constituted under section 57 shall be deemed to be the Court, and the President of the Tribunal shall be deemed to be the Judge under the said Act subject to further modifications indicated in the Schedule, and that the award of the Tribunal shall be deemed to be the award of a Court under the Land Acquisition Act, 1894, and shall be final. At this stage, the material provisions of the Schedule referred to in section 58 may be referred to. The Schedule amends the Land Aoquisition Act in certain respects. The expression "local authority" in section 3(ee) of the Land Acquisition Act includes a Trust constituted 33 under the United Provinces Town Improvement Act, 1919. By cl. 2(1) the first publication of the notice of an improvement scheme under section 36 of the Act is substituted for and has the same effect as publication in the Official Gazette and in the locality, of a notification under sub section (1) of section 4 of the Act, except where a declaration under section 4 or section 6 of the Act had previously been made and was still in force. By sub cl. (2) of cl. 2, inter alia, publication of a notification under section 42 is substituted for and has the same effect as a declaration by the State Government under section 6 of the Act, unless a declaration under the last mentioned section had previously been made and was still in force. By cl. 6, section 17 A is incorporated in the Land Acquisition Act, and it reads: "In every case referred to in section 16 or section 17, the Collector shall, upon payment of the cost of acquisition, make over charge of the land to the Trust; and the land shall thereupon vest in the Trust, subject to the liability of the Trust to pay any further costs which may be incurred on account of its acquisition. " Section 65 of the Act deals with disposal of land. It provides: Subject to any rules made by the State Government under section 72 of this Act, the Trust may retain, or may let on hire, lease, sell, exchange or otherwise dispose of, any land vested in or acquired by it under this Act. " Broadly stated the scheme of the Act is that with a view to make improvements in towns the Trust may make certain order after framing an appropriate scheme of a type or containing special features of different types of schemes mentioned in section 24. The scheme so framed may make provisions for matters which are prescribed by section 23 and such other matters as are provided for specially in the appropriate sections dealing with the different classes of schemes. The relevant resolutions adopted by the Trust for framing the original and supplementary schemes may be briefly noticed. On June 30, 1942 it was resolved by the Trust to acquire an additional area of 103.16 acres to be sold to the Company. The resolution reads as follows: "A reference is invited to Board 's resolution No. 78 of the 29th March, 1940 relating to the Trust 's Industrial Area Scheme. The scheme as approved by the Board and sanctioned by the Chief Commissioner covers an area of about 479.81 acres. . and provides for the acquisition and development of 271.21 acres of land. . at a cost not exceeding Rs. 6.84 lakhs, and the acquisition and development of the remaining 208.6 acres provided any one or more reputable industrialists deposit with or guarantee to the Trust the cost of acquiring and developing this additional area. As decided by the Board in their Resolution Nos. 108 and 109 34 of the 16th May, 194.1 the scheme as regards block 'I ' in sub. scheme 'A ' has been held in abeyance and land in block 11 has been acquired and is under development for factory sites. The Board have now agreed to sell 268 acres of land in the Industrial Area to the Delhi Cloth and General Mills Co. Ltd., on the terms and conditions embodied in Resolution No. 19 of the 9th of January, 1942 as amended by Resolution No. 50 of the 27th March, 1942. "The Trust can. . offer only 174.84 acres out of the land falling within the boundaries of the sanctioned scheme to the Company for the present. . . It is therefore proposed to alter under section 43 of the Trust Law, the scheme as sanctioned so as to provide for the acquisition of this additional area of 103.16 acres to be sold to the Company. As under the terms of the sale this additional area is to be developed by the Company, the Trust will have to incur initially expenditure only on acquisition of this land, Pursuant to this resolution notices were issued under section 36 of the Act in respect of the acquisition of the area. Thereafter a resolution was passed on July 31, 1944 and it was stated in the introductory part of the resolution: "The present site of the industrial area was selected as being suitably located vis a vis the city and the newly developed Trust area. There was no other site available where such facilities for roads and railway lines existed. The sizes of the plots were fixed on the basis of the demand of different indus trialists. " The scheme was then sanctioned under section 42 of the Act. The resolution of the Trust dated March 29, 1940, clearly indicates that the original scheme was intended to secure growth of an industrial area and thereby to relieve congestion in the over crowded localities in the town of Delhi. Such a scheme was primarily a town expansion scheme within the meaning of section 24(b) read with section 32. In framing such a scheme the provisions of a development scheme were incidentally incorporated, and that the Trust, by express enactment in section 24 was competent to do. It appears that neither before Falshaw, J., nor before the High Court the validity of the original scheme of 1940 was challenged. Counsel for the appellants contended that no reliance was ever placed by the Trust before the Trial Court or the First Appellate Court upon the original scheme and the appellants had no opportunity for challenging the validity of that scheme, but we are unable to accept that contention. The appellants by their plaint challenged the application of the U.P. Town Improvement Act, the constitu tion of the Trust and the various steps taken by the Trust resulting 35 in the acquisition of their land. The original scheme was tendered in evidence before the Court of First Instance. It is true that arguments in the Trial Court and the First Appellate Court were primarily directed to canvassing the validity of the supplementary scheme in enforcement of which the property of the appellants was acquired. But it cannot be said that the original scheme was not before the Court or that its validity was not challenged. In any event counsel for the appellants has not been able to suggest any ground on which that scheme is open to challenge. The supple mentary scheme, as the resolution dated June 30, 1942 clearly indicates, was framed for the further progress of the original scheme. The scheme was one for town expansion, and acquisition of land for town expansion, i.e. providing for industrial development and making provision for the residence of employees in the industries and of others, would clearly fall within the terms of section 24(h) read with section 32. It is true that in the resolution dated June 30, 1942 it is recited that the scheme was to provide for the acquisition of "an additional area of 103.16 acres to be sold to the Company". But from a perusal of the primary scheme it is clear that the Company had expressed its requirement for a large area of land under the development scheme and the resolution dated March 29, 1940 had approved of that requirement. It was recited in the resolution that the Company was employing a large number of labourers and removal of the factory to the outskirts of Delhi would contribute in a substantial measure to relief of congestion and also because establishment of a big concern in the industrial area would afford great stimulus to the development of the area. It was found after Part 'A ' of the original scheme was carried out that the area provided for the Company was inadequate for its requirements and the Company requested that a larger area may be provided, and accordingly the supplementary scheme was framed. Resort to the provisions of the Act for acquiring land with a view to hand it over to an industrial concern for private gain may not fall within the terms of the Act. But in the circumstances already set out a scheme framed which contemplates acquisition of land for effectuating the object of the original scheme is not open to challenge on the ground that it is a device to acquire land to be disposed of for private gain of an industrialist. The original and the supplementary schemes must be regarded as one composite scheme conceived in the interests of industrial development and relief of congestion by inducing a flow of population from the congested areas. The object of the supplementary scheme was to effectuate the purpose of the original scheme and failure to frame that scheme may seriously have affected the utility of the original scheme. There is no warrant for the contention raised by the appellants that the land was not to be developed by the Trust, but was to be acquired and handed over to the Company. It is clear from the scheme that the general supervision and control over the execution 36 of the supplementary scheme as over the original scheme was retained by the Trust and the Company was to develop the land subject to control under the Town Planning Scheme. The argument that in a town expansion scheme under section 32 read with section 24(h) of the Act, there is no power to acquire land compulsorily is futile. Section 23(a) in terms authorises acquisition by purchase, exchange, or otherwise of any property necessary for or affected by the execution of the scheme. That provision may be incorporated in any of the improvement schemes of the types mentioned in section 24. Again Section 32 clearly implies that in a town expansion scheme such a power would be reserved, for the Trust is statutorily declared liable to pay compensation when permission to alter any building or wall on the land in the area is denied, if the Trust does not proceed to acquire such land within one year from the date of such refusal. By section 55 a general power to purchase orlease by agreement of any land which the Trust is authorised to acquire is granted and by section 56 power to acquire land under the Land Acquisition Act, 1894, is expressly conferred. It is true that under the provisions relating to other classes of schemes, for instance, section 26(2)(f), section 28(2)(a), section 29(3) an express provision with regard to acquisition of land is made, and there is no such express provision in section 32. But that by itself is not sufficient to justify an inference that the provisions of section 23(a) relating to acquisition of land necessary for or affected by the execution of the scheme may not be conferred in sanctioning a town expansion scheme. If the view contended for be correct, section 23(a) will not have application to any scheme. We are unable to see any reason why section 56 which authorises the Trust to acquire land is to be restricted only to those cases in which in the case of a specific scheme an express provision conferring power of acquisition apart from section 23(a) is conferred. Nor is there any substance in the contention that the provi sions of Part VII of the Land Acquisition Act had to be resorted to by the Trust for acquiring land which was to be allotted to a Company after development. If the land is to be notified for acquisition under the Land Acquisition Act for a Company, the requirements of Part VII of the Land Acquisition Act must undoubtedly be complied with, and failure to do so would render the acquisition invalid. In this case, land was not to be acquired for the Company: it, was to be acquired for carrying out the industrial development and town expansion scheme of the Trust, and then it was to be allotted for carrying out the scheme to the Company for development. Power to include provision for sale of land comprised in the scheme may competently be conferred under section 23(g) of the Act and may be exercised under section 65. Mere inclusion of a power of sale of land acquired under a scheme does not therefore vitiate a scheme. The argument that in passing the resolution for bringing into force the supplementary scheme one of the Directors of the Company had participated need not detain us. This argument was 37 apparently not raised before the High Court, and having regard to the terms of sections 42 & 100 of the Act has no force. It is true that if the land of the appellants had been acquired under the Land Acquisition Act, the appellants may have become entitled to the statutory solatium in addition to the market value. But if the Act is valid, and could be resorted to for compulsorily acquiring land of the appellants, the awards made under the Act are not open to challenge on the ground that if another scheme of acquisition had been resorted to, the appellants may possibly have obtained more compensation. The appeal must therefore fail. Having regard however to the circumstances of the case, we think that in this case there should be no order as to costs throughout. Appeal dismissed.

IN-Abs

The Delhi Improvement Trust (set up under the U.P. Town Improvement Act (8 of 1908) extended to the territory of Delhi) prepared and notified under the Act an industrial development scheme intended to secure the growth of an industrial area so as to induce a flow of population away from the crowded parts of Delhi. Land in the area was to be developed by the Trust and a part of the land was to be allotted to industrial concerns for construction of industrial building and the rest for construction of residential and other buildings. Under the scheme one particular company was to be allotted a certain acreage of land but the land covered by the scheme was found inadequate for this purpose. A supplementary scheme was therefore notified modifying the original scheme and providing for the acquisition of an additional area of land, to be sold to the company. Under the terms of sale this additional area was to be developed by the Company. The appellants, whose lands were sought to be compulsorily acquired under the supplementary scheme, sued the Trust challenging the legality of the scheme and the award made in the acquisition proceedings. The Subordinate Judge decreed the suit but on appeal the High Court reversed this decision. In the appeal to this Court three questions fell for determination: (i) whether acquisition of I and of the appellants under the supplementary scheme was for the purposes of the Act; (ii) whether for executing the supplementary scheme the Trust had power to compulsorily acquire land; and (iii) whether land of the appellants could be acquired only in the manner provided by Part VII of the Land Acquisition Act 1894. HELD:The High Court was right in refusing to decree the suit. (i)The original and supplementary schemes had to be regarded as one composite scheme conceived in the interests of industrial development. The original scheme was primarily a town expansion scheme within the meaning of the Act; and the supplementary scheme was framed for the further progress of and to effectuate the purpose of the original scheme Acquisition of land for industrial development and making provision for the residence of employees in the industries would clearly fall within the terms of s.24(h), read with section 32. The provisions of the Act would not justify acquisition of land with a view to handing it over to an industrial concern for private gain. But this was riot the position in the present case, as a scheme 28 which contemplated acquisition of land for effectuating the object of the original scheme was not a device to acquire land for the private gain of an industrialist. The general supervision and control over the execution of the supplementary scheme, as over the original scheme, was retained by the Trust and the Compnay was to develop the land subject to control under the Town Planning Scheme. [35 C, F, G, HI (ii)Power to acquire land compulsorily was conferred by s.23 (a) which in terms authorised acquisition by purchase, exchange or otherwise of any property necessary or affected by the execution of the scheme, and this provision could be incorporated in any of the improvement schemes of the type mentioned in s.24. The power could also be exercised under ss.32, 55 and 56. Under the provisions relating to other classes of schemes express provision with regard to acquisition of land was made and such express provision was absent in s.32 dealing with town expansion schemes. But that would not justify the inference that the provisions of s.23(a) relating to acquisition of land necessary for or affected by the execution of the scheme were not available in sanctioning a town expansion scheme. Were it otherwise, s.23(a) would not have application to any scheme at all. [36 B E] (iii)The provisions of Part VII of the Land Acquisition Act 1894, did not have to be followed, for, in this case, land was not to be acquired for the company; it was to be acquired for carrying out an industrial development scheme. Mere inclusion of a provision for sale of land comprised in the scheme did not vitiate the scheme. If the Act was valid and could be resorted to for compulsorily acquiring land, the awards made under the Act were not open to challenge on the ground that if another scheme of acquisition had been resorted to, more compensation could have been paid to the appellants. [36 F, G; 37 B]