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No. 79 of 1965. Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights. The petitioner appeared in person. A. V. Viswanatha Sastri and section P. Varma, for the respondents. Sarkar J., Hidayatullah J. (on behalf of himself and Bachawat J.) and Mudholkar J. delivered separate concurring Judgments. Raghubar Dayal J. delivered a dissenting Opinion. Sarkar, J. Dr. Ram Manohar Lohia, a member of the Lok Sabha, has moved the Court under article 32 of the Constitution for a writ of habeas corpus directing his release from detention under an order passed by the District Magistrate of Patna. The order was purported to have been made under r. 30(1)(b) of the Defence of India Rules, 1962. Dr. Lohia, who argued his case in person, based his claim to be released on a number of grounds. I do not propose to deal with all these grounds for I have come to the conclusion that he is entitled to be released on one of them and to the discussion of 714 that ground alone I will confine my judgment. With regard to his ,other grounds I will content myself only with the observation that as at present advised, I have not been impressed by them. The order of detention runs thus : "Whereas 1, J. N. Sahu, District Magistrate, Patna, am satisfied that with a view to preventing him from acting in any manner prejudicial to the public safety and the maintenance of law and order, it is necessary to make an order that he be detained. Now, therefore, in exercise of the powers conferred by clause (b) of sub rule (1) of rule 30 of the Defence of India Rules, 1962 read with Notification No.180/COW I hereby direct that Dr. Ram Manohar Lohia be arrested and detained in the Contra Jail Hazaribagh, until further orders. " Now the point made by Dr. Lohia is that this order is not in terms of the rule under which it purports to have been made and, therefore, furnishes no legal justification for detention. The reason why it is said that the order is not in terms of the rule is that the rule does not justify the detention of a person to prevent him from acting in a manner prejudicial to the maintenance of law and order while the order directs detention for such purpose. It is admitted that the rule provides for an order of detention being made to prevent act prejudicial to the maintenance of public order, but it is said that public order and law and order are not the same thing, and, therefore, though an order of detention to prevent acts prejudicial to public order might be justifiable, a similar order to prevent acts prejudicial to law and order would not be justified by the rule. It seems to we that this contention is well founded. Before proceeding to state my reasons for this view, I have to dispose of an argument in bar advanced by the respondent State. That argument is that the petitioner has, in view of a certain order of the President to which I will presently refer, no right to move the Court under article 32 for his release. It is said that we cannot, therefore, hear Dr. Lohia 's application at all. To appreciate this contention, certain facts have to be stated and I proceed to do so at once. Article 352 of the Constitution gives the President of India a power to declare by Proclamation that a grave emergency exists whereby the security of India is threatened inter alia by external aggression. On October 26, 1962, the President issued a Proclamation under this article that such an emergency existed. This presumably was done in view of China 's attack on the north eastern frontiers of India in September 1962. On the same day as the 715 Proclamation was made, the President passed the Defence of India Ordinance and rules were then made thereunder on November 5, 1962. The Ordinance was later, on December 12, 1962, replaced by the Defence of India Act, 1962 which however continued in force the rules made under the Ordinance. On November 3, 1962, the President made an order under article 359(1) which he was entitled to do, declaring "that the right of any person to move any court for the enforcement of the rights conferred by article 21 and article 22 of the Constitution shall remain suspended for the period during which the Proclamation. . is in force, if such person has been deprived of any such rights under the Defence of India Ordinance, 1962 or any rule or order made thereunder. " There is no doubt that the reference in this Order to the "Defence of India Ordinance, 1962" must, after that Ordinance was replaced by the Act, as earlier stated, be understood as a reference to the Act: see Mohan Chowdhury vs The Chief Commissioner, Tripura(1). I should now state that the Proclamation is still in force. It is not in dispute that the present petition has been made for the enforcement of Dr. Lohia 's right to personal liberty under articles 21 and 22. These articles in substance and it should suffice for the present purpose to say no more give people a certain personal liberty. It is said by the respondent State that the President 's Order under article 359(1) altogether prevents us from entertaining Dr. Lohia 's petition and, therefore, it should be thrown out at once. This would no doubt, subject to certain exceptions to which a reference is not necessary for the purposes of the present judgment, be correct if the Order of November 3, 1962 took away all rights to personal liberty under articles 21 and 22. But this, the Order does not do. It deprives a person of his right to move a court for the enforcement of a right to such personal liberty only when he has been deprived of it by the Defence of India Act it is not necessary to refer to the Ordinance any more as it has been replaced by the Act or any rule or order made thereunder. If he has not been so deprived, the Order does not take away his right to move a court. Thus if a person is detained under the , his right to move the Court for enforcement of his rights under articles 21 and 22 remains intact. That is not a case in which his right to do so can be said to have been taken away by the President 's Order. This Court has in fact heard applications under article 32 challenging a detention under (1) ; 7 16 that Act : see Rameshwar Shaw vs District Magistrate of Burdwan(1). If any person says, as Dr. Lohia does, that he has been deprived of his personal liberty by an order not made under the Act or the Rules there is nothing in the President 's Order under article 359(1) to deprive him of his right to move the Court under article 32. The Court must examine his contention and decide whether he has been detained under the Act or the Rules and can only throw out his petition when it finds that he was so detained, but not before then. If it finds that he was not so detained, it must proceed to hear his petition on its merits. The right under article 32 is one of the fundamental rights that the Constitution has guaranteed to all persons and it cannot be taken away except by the methods as provided in the Constitution, one of which is by an order made under article 359. The contention that an order under that article has not taken away the constitutional right to personal liberty must be examined. Mr. Verma said that Smith vs East Elloe Rural District Coun cil(1) supported the contention of the respondent State. I do not think so. That case turned on an entirely different statute. That statute provided a method of challenging a certain order by which property was compulsorily purchased and stated that it could not be questioned in any other way at all. It was there held that an action to set aside the order even on the round of having been made mala fide, did not lie as under the provision no action was maintainable for the purpose. That case is of no assistance in deciding the question in what circumstance a right to move the court has been taken away by the entirely different provisions that we have to consider. Here only a right to move a court in certain circumstances has been taken away and the question is, has the court been moved on the present occasion in one of those circumstances ? The President 's Order does not bar an enquiry into that question. Apart from the fact that the reasoning on which the English case is based, has no application here, we have clear observations in judgments of this Court which show that the Order of the President does not form a bar to all applications for release from detention under the Act or the Rules. I will refer only to one of them. In Makhan Singh vs The State of Punjab (3) it was said, "If in challenging the validity of his detention order, the detenu is pleading any right outside the rights specified in the Order, his right to move any court in that behalf is not suspended" and by way of illustration of this proposition, a case where a (1) ; (2) ; (3) [1964] 4 S.C.R. 797. 717 person was detained in violation of the mandatory provisions of the Defence of India Act was mentioned. That is the present case as the petitioner contends that the order of detention is not justified by the Act or Rules and hence is against its provisions. The petitioner is entitled to be heard and the present contention of the respondent State must be held to be ill founded and must fail. I now proceed to consider the merits of Dr. Lohia 's contention that the Order detaining him had not been made under the Defence of India Rules. I here pause to observe that if it was not so made, there is no other justification for his detention; none is indeed advanced. He would then be entitled to his release. I have already stated that the Proclamation of Emergency was made as the security of India was threatened by external aggression. That Proclamation of emergency was the justification for the Act. The Act in fact recited the Proclamation in its preamble. Section 3 of the Act gave the Central Government power to make rules providing for the detention of persons without trial for various reasons there mentioned. Rule 30(1) (b) under which the order of detention of Dr. Lohia was made was framed under section 3 and is in these terms : "The Central Government or the State Government, if it is satisfied with respect to any particular person that with a view to preventing him from acting in any manner prejudicial to the defence of India and civil defence, the public safety, the maintenance of public order, India 's relations with foreign powers, the maintenance of peaceful conditions in any part of India, the efficient conduct of military operations or the maintenance of supplier, and services essential to the life of the community, it is necessary to do so, may make an order (a). . (b) directing that he be detained. " As I have said earlier, the order was made by the District Magistrate, Patna, to whom the power of the Government of the State of Bihar in this regard had been duly delegated under section 40(2) of the Act. Under this rule a Government can make an order of detention against a person if it is satisfied that it is necessary to do so to prevent him from acting in a manner prejudicial, among other things to public safety and the maintenance of public order. The detention order in this case is based on the ground that it was necessary to make it to prevent Dr. Lohia from acting in any manner prejudicial to public safety and the maintenance of law and order. I will, in discussing the contention of Dr. Lohia, proceed on the basis as if the order directing detention was only for preventing him from acting in a manner prejudicial to the 718 maintenance of law and order. I will consider what effect the inclusion in the order of detention of a reference to the necessity for maintaining public safety has, later. The question is whether an order could be made legally under the rule for preventing disturbance of law and order. The rule does not say so. The order, therefore, would not be in terms of the rule unless it could be said that the expression "law and order" means the same thing as "public order" which occurs in the rule. Could that then be said? I find no reason to think so. Many of the things mentioned in the rule may in a general sense be referable to the necessity for maintaining law and order. But the rule advisedly does not use that expression. It is commonplace that words in a statutory provision take their meaning from the context in which they are used. The context in the present case is the emergent situation created by external aggression. It would, therefore, be legitimate to hold that by maintenance of public order what was meant was prevention of disorder of a grave nature, a disorder which the authorities thought was necessary to prevent in view of the emergent situation. It is conceivable that the expression "maintenance of law and order" occurring in the detention order may not have been used in the sense of prevention of disorder of a grave nature. The expression may mean prevention of disorder of comparatively lesser gravity and of local significance only. To take an illustration, if people indulging in the Hindu religious festivity of Holi become rowdy, prevention of that disturbance may be called the maintenance of law and order. Such maintenance of law and order was obviously not in the contemplation of the Rules. What the Magistrate making the order exactly had in mind, by the use of the words law and order, we do not know. Indeed, we are not entitled to know that for it is well settled that courts cannot enquire into the grounds on which the Government thought that it was satisfied that it was necessary to make an order of detention. Courts are only entitled to look at the face of the order. This was stressed on us by learned counsel for the respondent State and the authorities fully justify that view, If, therefore, on its face an order of detention is in to of the rule, a court is bound to stay its hands and uphold the order. I am leaving here out of consideration a contention that an order good on the face of it is bad for reasons dehors it, for example, because it had been made mala fide. Subject to this and other similar exceptions to which I have earlier referred and as to 719 which it,, is unnecessary to say anything in the present context and also because the matter has already been examined by this Court in a number of cases court cannot go behind the face of the order of detention to determine its validity. The satisfaction of the Government which justifies the order under the rule is a subjective satisfaction. A court cannot enquire whether grounds existed which would have created that satisfaction on which alone the order could have been made in the mind of a reasonable person. If that is so, and that indeed is what the respondent State contends. it seems to me that when an order is on the face of it not in terms of the rule, a court cannot equally enter into an investigation whether the order of detention was in fact, that is to say, irrespective of what is stated in it, in terms of the rule. In other words, in such a case the State cannot be heard to say or prove that the order was in fact made, for example, to prevent acts prejudicial to public order which would bring it within the rule though the order does not say so. To allow that to be done would be to uphold a detention without a proper order. The rule does not envisage such a situation. The statements in the affidavit used in the present case by the respondent State are, therefore, of no avail for establishing that the order of detention is in terms of the rule. The detention was not under the affidavit but under the order. It is of some significance to point out that the affidavit sworn by the District Magistrate who made the order of detention does not say that by the use of the expression law and order he meant public order. It was said that this was too technical a view of the matter; there was no charm in words used. I am not persuaded by this argument. The question is of substance. If a man can be deprived of his liberty under a rule by the simple process of the making of a certain order, he can only be so deprived if the order is in terms of the rule. Strict compliance with the letter of the rule is the essence of the matter. We are dealing with a statute which drastically interferes with the personal liberty of people, we are dealing with an order behind the face of which a court is prevented from going. I am not complaining of that. Circumstances may make it necessary. But it would be legitimate to require in such cases strict observance of the rules. If them is any doubt whether the rules have been strictly observed, that doubt must be resolved in favour of the detenu. It is certainly more than doubtful whether law and order means the same as public order. I am not impressed by the argument that the 720 reference in the detention order to r. 30(1) (b) shows that by law and order what was meant was public order. That is a most mischievous way of approaching the question. If that were right, a reference to the rule in the order might equally justify all other errors in it. Indeed it might with almost equal justification then be said that a reference to the rule and an order of detention would be enough. That being so, the only course open to us is to hold that the rules have not been strictly observed. If for the purpose of justifying the detention such compliance by itself is enough, a non compliance must have a contrary effect. Carltona Ltd. vs Commissioners of Works(1) is an interesting case to which reference may be made in this connection. It turned on a statutory Regulation empowering a specified authority to take possession of land for the purposes mentioned in it in various terms but which term , did not include the expression " national interest". Under this Regulafion possession of certain premises of the Carltona Company was taken after serving a notice on it that was being done "in the national interest". It was contended by the Carltona Company that it had been illegally deprived of the possession of its premises because the notice showed that possession was not being taken in terms of the Reaulation. This contention failed as it was held that the giving of the notice was not a prerequisite to the exercise of the powers under the Regulation and that the notice was no more than a notification that the authorities were exercising the powers. It was said that the notice was useful only as evidence of the state of the mind of the writer and, that being so, other evidence was admissible to establish the fact that the possession of the premises was being taken for the reasons mentioned in the Regulation. Our case is entirely different. It is not a case of a notice. Under r. 30(1) (b) a person can be detained only by an order and there is no doubt that the order of detention has to be in writing. It is not a case where the order is only evidence of the detention having been made under the rule. It is the only warrant for the detention. The order further is conclusive as to the state of the mind of the person who made it; no evidence is admissible to prove that state of mind. It seems to me that if the Carltona case was concerned with an order which alone resulted in the dispossession, the decision in that case might well have been otherwise. I would here remind, to prevent any possible misconception, that I am not considering a case where (1) [1943) 721 the order is challenged on the ground of mala fides or other similar grounds to which I have earlier referred. Before leaving this aspect of the case, it is necessary to refer to two other things. The first is a mistake appearing in the order of detention on which some argument was based by Dr. Lohia for quashing the order. It will be remembered that the order mentioned a certain Notification No. 180/CW. The Notification intended to be mentioned however was one No. 1 1 15/CW and the Notification No. 180/CW had been mentioned by mistake. It was under Notification No. II 15/CW that the power of the State Government to make an 'order of detention was delegated to the District Magistrate under the provisions of section 40(2) of the Act to which I have earlier referred. The reference to the notification was to indicate the delegation of power. The Notification actually mentioned in the order did not, however, contain the necessary delegation. The result was that the order did not show on its face that the District Magistrate who had made it had the necessary authority to do so. This mistake however did not vitiate the order at all. Nothing in the rules requires that an order of detention should state that the authority making it has the power to do so. It may be that an order made by an authority to whom the Government 's power has not been delegated, is a nullity and the order can be challenged on that ground. This may be one of the cases where an order good on its face may nonetheless be illegal. When the power of the person making the order is challenged, the only fact to be proved is that the power to make the order had been duly delegated to him. That can be proved by the necessary evidence, that is, by the production of the order of delegation. That would be a case somewhat like the Carltona case. In spite of the mistake in the order as to the Notification delegating the power, evidence can be given to show that the delegation had in fact been made. To admit such evidence would not be going behind the face of the order because what is necessary to appear on the face of the order is the satisfaction of the authority of the necessity for the detention for any of the reasons mentioned in r. 30 (1) (b) and not the authority of the maker of the order. The second thing to which I wish to refer is that it appeared from the affidavit sworn by the District Magistrate that prior to the making of the order, he had recorded a note which raja in these words : "Perused the report of the Senior section P. Patna for detention of Dr. Ram Manohar Lohia, M.P. under rule 30(1) (b) of the Defence of India Rules, on the ground that his being at . C. 1.165 3 722 large is prejudicial to the public safety and maintenance of public order. From the report of the Sr. section P., Patna, I am satisfied that Dr. Ram Manohar Lohia, M.P. aforesaid be detained under rule 30(1)(b) of the Defence of India Rules. Accordingly, I order that Dr. Ram Manohar Lohia be detained. . am unable to see that this note is of any assistance to the respondent State in this case. It is not the order of detention. The respondent State does not say that it is. I have earlier stated that extraneous evidence is not admissible to prove that the rule has been complied with though the order of detention does not show that,. Indeed, this note does not even say that the District Magistrate was satisfied that it was necessary to make an order of detention to prevent Dr. Lohia from acting in a manner prejudicial to the maintenance of public order. It only says that the Superintendent of Police reported that he was so satisfied. The satisfaction of the Superintendent of Police would provide no warrant for the detention or the order; with it we have nothing to do. For these reasons, in my view, the detention order if it had been based only on the ground of prevention of acts prejudicial to the maintenance of law and order, it would not have been in terms of r. 30(1)(b) and would not have justified the detention. As I have earlier pointed out, however, it also mentions as another ground for detention, the prevention of acts prejudicial to public safety. In so far as it does so, 'it is clearly within the rule. Without more, we have to accept an order made on that ground as a perfectly legal order. The result then is that the detention order mentions two grounds one of which is in terms of the rule while the other is not. What then is the effect of that ? Does it cure the illegality in the order that I have earlier noticed ? This question is clearly settled by authorities. In Shibban Lal Saksena vs The State of Uttar Pradesh(1) it *as held that such an order would be a bad order, the reason being that it could not be said in what manner and to what extent the valid and invalid grounds operated on the mind of the authority concerned and contributed to the creation of his subjective satisfaction which formed the basis of the order. The order has, therefore, to be held illegal though it mentioned a ground on which a legal order of detention could have been based. I should also point out that the District Magistrate has not said in his affidavit that he would have been satisfied of the necessity of the detention order only (1) ; 723 for the reason that it was necessary to detain Dr. Lohia to prevent him from acting in a manner prejudicial to public safety. In the result, in my view, the detention order is not under the Rules. The detention of Dr. Lohia under that order is not legal and cannot be justified. He is entitled to be set at liberty and I would order accordingly. Hidayatullah, J. Dr. Ram Manohar Lohia, M.P., has filed this petition under article 32 of the Constitution asking for a writ of habeas corpus for release from detention ordered by the District Magistrate, Patna, under Rule 30(1)(b) of the Defence of India Rules, 1962. He was arrested at Patna on the night between 9th and 10th August, 1965. As it will be necessary to refer to the terms of the order served on him it is reproduced here "ORDER No. 3912 C. Dated, Patna, the 9th August 1965 Whereas 1, J. N. Sahu, District Magistrate, Patna, am satisfied with respect to the person known as Dr. Ram Manohar Lohia, Circuit House, Patna, that with a view to preventing him from acting in any manner prejudicial to the public safety and the maintenance of law and order, it is necessary to make an order that he be detained. Now, therefore, in exercise of the powers conferred by clause (b) of sub clause (i) of rule 30 of the Defence of India Rules, 1962, read with Notification No. 180/ CW, dated the 20th March, 1964, of the Government of Bihar, Political (Special) Department, I hereby direct that the said Dr. Ram Manohar Lohia be arrested by the police wherever found and detained in the Central Jail, Hazaribagh, until further orders. Sd/ J. N. Sahu, 9 8 1965 District Magistrate, Patna. Sd/ Ram Manohar Lohia. 10th August 1.40." Dr. Lohia was lodged in the Hazaribagh Central Jail at 3 30 p.m. on August 10, 1965. He sent a letter in Hindi together with an affidavit sworn in the jail to the Chief Justice, which was received on August 13, 1965, in the Registry of this Court. Although the petition was somewhat irregular, this Court issued a rule and as 724 no objection has been taken on the ground of form we say nothing more about it. In his affidavit Dr. Lohia stated that he was arrested at midnight on August 9, 1965 and was told that it was on charges of arson but later was served with the order of detention and that in this way his arrest for a substantive offence was turned into preventive detention. He further stated that the order of detention showed that he was to be detained in Bankipur Jail but the name of the Jail was scored out and "Central Jail, Hazaribagh" was substituted which led him to conclude that typed orders of detention were kept ready and that the District Magistrate did not exercise his mind in each individual case. He contended that his detention under Rule 30 (1) (b) was illegal because, according to him, that rule dealt with prejudicial activities in relation to the defence of India and civil defence and not with maintenance of law and order of a purely local character. He alleged that the arrest was mala fide and malicious; that it was made to prevent him from participating in the House of the People which was to go into Session from August 16 and particularly to keep him away from the debate on the Kutch issue. He further alleged that he had only addressed a very large gathering in Patna and had disclosed certain things about the Bihar Government which incensed that Government and caused them to retaliate in this manner and that detention was made to prevent further disclosures by him. In answer to Dr. Lohia 's affidavit two affidavits were filed on behalf of the respondents. One affidavit, filed by the District Magistrate, Patna, denied that there was any malice or mala fides in the arrest of Dr. Lohia. The District Magistrate stated that he had received a report from the Senior Superintendent of Police, Patna, in regard to the conduct and activities of Dr. Lohia and after considering the report he had ordered Dr. Lohia 's detention to prevent him from acting in any manner prejudicial to the public safety and maintenance of public order. He stated further that he was fully satisfied that the forces of disorder "which were sought to be let loose if not properly controlled would envelop the whole of the State of Bihar and possibly might spread in other parts of the country which would necessarily affect the problem of external defence as well in more ways than one". He said that the report of the Senior Superintendent of Police, Patna, contained facts which he considered sufficient for taking the said action but he could not disclose the contents of that report in the public interest. He sought to correct, what he called, a slip in the order passed by him, by stating that notification No. 11155C, dated 11th August 725 1964, was meant instead of the notification mentioned there. He stated further that as the disturbance was on a very large scale it was thought expedient to keep ready typed copies of detention orders and to make necessary alterations in them to suit individual cases, at the time of the actual issuance of the orders, and that it was because of this that the words "Central Jail Hazaribagh" were substituted for "Bankipur Jail". He denied that he had not considered the necessity of detention in each individual case. He repudiated the charge that the arrest was made at the instance of Government and affirmed that the action was taken on his own responsibility and in the discharge of his duty as District Magistrate and not in consultation with the Central or the State Governments. He denied that the arrest and detention were the result of anger on the part of any or a desire to prevent Dr. Lohia from circulating any damaging information about Government. The District Magistrate produced an order which, he said, was recorded before the order of detention. As we shall refer to that order later it is reproduced here "9.8.65. Perused the report of the Senior S.P., Patna, for detention of Dr. Ram Manohar Lohia, M.P., under rule 30 (1) (b) of the Defence of India Rules, on the ground that his being at large is prejudicial to the public safety and maintenance of public order. From the report of the Sr. S.P., Patna, I am satisfied that Dr. Ram Manohar Lohia, M.P., aforesaid be detained under rule 30(1)(b) of the D. fence of India Rules. Accordingly, I order that Dr. Ram Manohar Lohia be detained under rule 30(1)(b) of the Defence of India Rules read with Notification No. 180/CW dated 20.3.64 in the Hazaribagh Central Jail until further orders. Send four copies of the warrant of arrest to the Sr. S.P., Patna, for immediate compliance. He should return two copies of it after service on the detenu. Sd/ J. N. Sahu, District Magistrate, Patna". The second affidavit was sworn by Rajpati Singh, Police Inspector attached to the Kotwali Police Station, Patna. He stated in his affidavit that the order was served on Dr. Lohia at 1 40 A.M. on August 1O, 1965 and not at midnight. He denied that Dr. Lohia was arrested earlier or that at the time of his arrest, he was informed 7 26 that the arrest was for an offence or offences of arson. He admitted, however, that he, had told him that cases of arson and toot had taken place. He affirmed that there was no charge of arson against Dr. Lohia. Dr. Lohia filed a rejoinder affidavit and in that affidavit he stated that the internal evidence furnished by the order taken with the counter affidavits disclosed that his arrest and detention were patently illegal. He pointed out that while Rule 30(1)(b) provided that detention could be made for the maintenance of public order, the order stated that Dr. Lohia was arrested for maintenance of law and order. He characterised the counter affidavits as full of lies and narrated other facts intending to show that there was a conspiracy to seal his mouth so that disclosures against the Bihar Government might not be made. This represents the material on which the present petition is based or opposed. The petition was argued by Dr. Lohia in person though he was receiving assistance in constructing his arguments. His contentions are that he is not being detained under the Defence of India Rules but arbitrarily; that even if he is being detained under the said Rules the law has been flagrantly violated; that the order passed against him is mala fide; and that the District Magistrate did not exercise the delegated power but went outside it in various ways rendering detention illegal. On behalf of the State a preliminary objection is raised that the application itself is incompetent and that by the operation of article 359 read with the President 's Order issued under that Article on November 3, 1962, Dr. Lohia 's right to move the Supreme Court under article 32 of the Constitution is taken away during the period of emergency proclaimed under article 352 as long as the President 's Order continues. On merits it is contended on behalf of the State of Bihar that the petition, if not barred, does not make out a case against the legality of the detention; that this Court cannot consider the question of good faith and that the only enquiry open to this Court is whether there is or is not an order under Rule 30(1)(b) of the Defence of India Rules 1962. If this Court finds that there is such an order the enquiry is closed because the petition must then be considered as incompetent. The State Government admits that the words of Rule 30(1)(b) and section 3 of the Defence of India Act were not used in the order of detention but contends that maintenance of public order and maintenance of law and order do not indicate different things and that the area covered by maintenance of law and order is the same if not smaller than the area covered by the expression maintenance of public 727 order. We shall go into the last contention more elaborately after dealing with the preliminary objection. Questions about the right of persons detained under the Defence of India Rules to move the Court have come up frequently before this Court and many of the arguments which are raised here have already been considered in a series of cases. For example, it has been ruled in Mohan Choudhury vs Chief Commissioner, Tripura(1) that the right of any person detained under the Defence of India Rules to move any court for the enforcement of his rights conferred by articles 21 and 22 of the Constitution remains suspended in view of the President 's Order of November 3, 1962. It has also been ruled that such a person cannot raise the question that the Defence of India Act or the Rules are not valid because, if allowed to do so, that would mean that the petitioner 's right to move the court is intact. Other questions arising from detentions under the Defence of India Rules were further considered in Makhan Singh vs The State of Punjab(1). It is there pointed out that, although the right of the detenu to move the Court is taken away that can only be in cases in which the proper detaining authority passes a valid order of detention and the order is made bona fide for the purpose which it professes. It would, therefore, appear from the latter case that there is an area of enquiry open before a court will declare that the detenu has lost his right to move the court. That area at least embraces an enquiry into whether there is action by a competent authority and in accordance with Defence of India Act and the Rules thereunder. Such an enquiry may not entitle the court to go into the merits of the case once it is establish Id that proper action has been taken, for the satisfaction is subjective, but till that appears the court is bound to enquire into the legality of the detention. It was contended that Makhan Singh 's(2) case arose under article 226 and that what is stated there applies only to petitions under that article. This is a misapprehension. The ruling made no difference between the article 32 and article 226 in the matter of the bar created by article 359 and the President 's Order. What is stated there applies to petitions for the enforcement of Fundamental Rights whether by way of article 32 or article 226. Mr. Verma appearing for the State of Bihar, however, contends that the area of the enquiry cannot embrace anything more than finding out whether there is an order of detention or not and the moment such an order, good on its face, is produced all enquiry into good faith, sufficiency of the reasons or the legality or illegality (1) ; (2) [1964) 4 S.C.R. 797. 728 of the action comes to an end, for to go into such matters is tantamount to allowing the petitioner to move the court which the President 's Order does not permit. He contends that the courts ' power to issue a writ of habeas corpus in such cases is taken away as completely as if cl. (2) of article 32 made no mention of the writ of habeas corpus. According to him, an order under Rule 30(1)(b) proper on its face, must put an end to enquiry of any kind. In view of this objection it is necessary to state the exact result of the President 's Order for this has not been laid down in any earlier decision of this Court. The President declared a state of grave emergency by issuing a Proclamation under article 352 on October 26, 1962. This Proclamation of Emergency gave rise to certain extraordinary powers which are to be found in Part XVIII of the Constitution, entitled Emergency Provisions. Article 358 suspended the provisions of article 19 during the Emergency and article 359 permitted the suspension of the enforcement of the rights conferred by Part 111. That article reads : "359. Suspension of the enforcement of the rights conferred by Part III during emergencies (1) Where a Proclamation of Emergency is in operation, the President may by order declare that the right to move any court for the enforcement of such of the rights conferred by Part III as may be mentioned in the order and all proceedings pending in any court for the enforcement of the rights so mentioned shall remain suspended for the period during which the Proclamation is in force or for such shorter period as may be specified in the order. (2) An order made as aforesaid may extend to the whole or any part of the territory of India. (3) Every order made under clause (1) shall, as soon as may be after it is made, be laid before each House of Parliament. " The President issued an order on November 3, 1962. The Order reads : "ORDER New Delhi, the 3rd November, 1962. G.S.R. 1454. In exercise of the powers conferred by clause (1) of article 359 of the Constitution, the President hereby declares that the right of any person to move any court for the enforcement of the rights conferred by article 21 and article 22 of the Constitution shall remain suspended for the period during which the Proclamation of Emergency issued under clause (1) of article 352 thereof on the 26th October, 1962, is in force, if such person has been deprived of any such rights under the Defence of India Ordinance, 1962 (4 of 1962) or any rule or order made thereunder. No. F. 4/62 Poll(Spl.) V. VISWANATHAN, Secy." As a result of the above Order the right of any person to move any court for the rights conferred by articles 21 and 22 of the Constitution remains suspended, if such person is deprived of any such rights under the Defence of India Ordinance 1962 ( 'now the Defence of India Act, 1962) or any rule or order made thereunder. No doubt, as the article under which the President 's Order was passed and also that Order say, the right to move the court is taken away but that is in respect of a right conferred on any person by articles 21 and 22 and provided such person is deprived of the right under the Defence of India Ordinance (now the Act) or any rule or order made thereunder. Two things stand forth. The first is that only the enforcement in a court of law of rights conferred by articles 21 and 22 is suspended and the second is that the deprivation must be under the Defence of India Ordinance (now the Act) or any rule or order made thereunder. The word "thereunder" shows that the authority of the Defence of India Act must be made out in each case whether the deprivation is by rule or order. It, therefore, becomes necessary to inquire what are the rights which are so affected ? This can only be found out by looking into the content of the articles 21 and 22. Article 21 lays down that no person is to be deprived of his life or personal liberty except according to procedure established by law. This article thinks in terms of the ordinary laws which govern our society when there is no declaration of emergency and which are enacted subject to the provisions of the Constitution including the Chapter on Fundamental Rights but other than those made under the powers 7 30 conferred by the Emergency Provisions in Part XVIII. When the President suspended the operation of article 21 he took away from any person dealt with under the terms of his Order, the right to plead in a court of law that he was being deprived of his life and personal liberty otherwise than according to the procedure established by the laws of the country. In other words, he could not invoke the procedure established by ordinary law. But the President did not make lawless actions lawful. He only took away the fundamental right in article 21 in respect of a person proceeded against under the Defence of India Act or any rule or order made thereunder. Thus a person so proceeded could not claim to be tried under the ordinary law or bring an action under the ordinary law. But to be able to say that the right to move the court for the enforcement of rights under article 21 is suspended, it is necessary to establish that such person has been deprived of any such right under the Defence of India Act or any rule or order made thereunder, that is to say, under the authority of the Act. The action of the authorities empowered by the Defence of India Act is not completely shielded from the scrutiny of courts. The scrutiny with reference to procedure established by laws other than the Defence of India Act is, of course, shut out but an enquiry whether the action is justified under the Defence of India Act itself is not shut out. Thus the State Government or the District Magistrate cannot add a clause of their own to the Defence of India Act or even the Rules and take action under that clause. Just as action is limited in its extent, by the power conferred, so also the power to move the court is curtailed only when there is strict compliance with the Defence of India Act and the Rules. The Court will not enquire whether any other law is not followed or breached but the Court will enquire whether the Defence of India Act or the Rules have been obeyed or not. That part of the enquiry and consequently the right of a person to move the court to have that enquiry made, is not affected. The President 's Order next refers to article 22. That Article creates protection against illegal arrest and detention. Clause (1) confers some rights on the person arrested. Clause (2) lays down the procedure which must be followed after an arrest is made. By cl. (3) the first two clauses do not apply to an alien enemy or to a person arrested or detained under any law providing for preventive detention. Clauses (4), (5), (6) and (7) provide for the procedure for dealing with persons arrested or detained under any law providing for preventive detention, and lay down the minimum or compulsory requirements. The provisions of article 22 would have applied to arrest and detentions under the Defence of India 731 Act also if the President 's Order had not taken away from such a person the right to move any court to enforce the protection of article 22. The net result of the President 's Order is to stop all claims to enforce rights arising from laws other than the Defence of India Act and the Rules and the provisions of article 22 at variance with the Defence of India Act and the Rules are of no avail. But the President 's Order does not say that even if a person is proceeded against in breach of the Defence of India Act or the Rules he cannot move the court to complain that the Act and the Rules, under colour of which some action is taken, do not warrant it. It was thus that this Court questioned detention orders by Addi tional District Magistrates who were not authorised to make them or detentions of persons who were already in detention after conviction or otherwise for such a long period that detention orders served could have had no relation to the requirements of the Defence of India Act or the Rules. Some of these cases arose under article 226 of the Constitution but in considering the bar of article 359 read with the President 's Order, there is no difference between a petition under that article and a petition under article 32. It follows. therefore, that this Court acting under article 32 on a petition for the issue of a writ of habeas corpus, may not allow claims based on other laws or on the protection of article 22, but it may not and, indeed, must not, allow breaches of the Defence of India Act or the Rules to go unquestioned. The President 's Order neither says so nor is there any such intendment. There is, however, another aspect which needs to be mentioned here. That is the question of want of good faith on the part of those who take action and whether such a plea can be raised. This topic was dealt with in Makhan Singh 's case(1). At page 828 the following observation is to be found : "Take also a case where the detenu moves the court for a writ of Habeas Corpus on the ground that his detention has been ordered mala fide. It is hardly necessary to emphasise that the exercise of a power mala fide is wholly outside the scope of the Act conferring the power and can always be successfully challenged. It is true that a mere allegation that the detention is mala fide would not be enough; the detenu will have to prove the mala fides. But if the mala fides are alleged, the detenu cannot be precluded from substantiating his plea on the ground of the bar created by article 359(1) and the Presi (1) [1964] 4 S.C.R. 797. 732 dential order. That is an other kind of plea which is out side the purview of article 359(1). " Mr. Verma, however, contends on the authority of Smith vs East Elloe Rural District Cormical & Others(1) that the validity ,of the orders under the Defence of India Rules 1962 cannot be challenged on the ground of bad faith when the action is otherwise proper. That case dealt with the Acquisition of Land (Authorization Procedure) Act 1946 (9 & 10 Geo 6 Ch. 49). Paragraph 15 ( 1 ) of Part IV of Schedule to that Act provided "If any person aggrieved by a compulsory purchase order desires to question the validity thereof. on the ground that the authorization of a compulsory purchase thereby granted is not empowered to be granted under this Act he may, within six weeks from the date on which notice of the confirmation or making of the make an application The appellant more than six weeks after the notice had been published brought an action, claiming inter alia that the order was made and confirmed wrongfully and in bad faith on the part of the clerk. Paragraph 16 of that Act provided "Subject to the provisions of the last foregoing para.graph, a compulsory purchase order shall not . be questioned. in any legal procceding whatsoever The House of Lords (by majority) held that the jurisdiction of the court was ousted in such wise that even questions of bad faith could not be raised. Viscount Simonds regretted that it should be so, but giving effect to the language of paragraph 16, held that even an allegation of bad faith was within the bar of Paragraph 16. Lord Morton of Henryton, Lord Reid and Lord Somervill of Harrow were of opinion that Paragraph 15 gave no such opportunity. Lord Radcliffe dissented. The cited case can have no relevance here because the statute provided for ouster of courts ' jurisdiction in very different circumstances. Although this Court has already stated that allegations of bad faith can be considered, it may be added that where statutory powers are conferred to take drastic action against the life and liberty of a citizen, those who exercise it may not depart from the purpose. Vast powers in the public interest are granted but under strict conditions. If a person, under colour of exercising (1) ; 733 the statutory power, acts from some improper or ulterior motive, he acts in bad faith. The action of the authority is capable of being viewed in two ways. Where power is misused but there is good faith the act is only ultra vires but where the misuse of power is in bad faith there is added to the ultra vires character of the act, another vitiating circumstance. Courts have always acted to restrain a misuse of statutory power and the more readily when improper motives underlie it. The misuse may arise from a breach of the law conferring the power or from an abuse of the power in bad faith. In either case the courts can be moved for we do not think that article 359 or the President 's Order were intended to condone an illegitimate enforcement of the Defence of India Act. We now proceed to examine the contentions of Dr. Lohia by which he claims to be entitled to have the order of the District Magistrate set aside. It is convenient to begin with the allegation of want of good faith. Dr. Lohia alleges that there was a conspiracy between the Central Government, the State of Bihar, the Senior Superintendent of Police and the District Magistrate, Patna, to stifle his disclosures against the Bihar Government, the Chief Minister and others. He also alleges that he was arrested for a substantive offence under the Indian Penal Code but the arrest has been converted into preventive detention to avoid proof in a court of law. He says that he was about to leave Patna and if the train was not late he would have gone away and he hints that his detention was made to prevent him from taking part in the Session of Parliament. The District Magistrate and the Inspector of Police deny these allegations. The District Magistrate has given the background of events in which he made the order on his responsibility. On reading the affidavits on both sides, we are satisfied that the contentions of Dr. Lohia are ill founded and that the order of detention was made by the District Magistrate in good faith. There is no dispute that the District Magistrate was duly authorized to act under Rule 30 of the Defence of India Rules, 1962. Dr. Lohia, however, says that the order is in flagrant disregard of the requirements of the Defence of India Act, 1962 and the Rules. For this purpose he bases his argument on three circumstances (i) that the District Magistrate acted outside his jurisdiction as created by Notification No. 11155 C dated 11 8 1964 published in the Bihar Gazette Extra dated August 11, 1964; (ii) that the District Magistrate 's order is defective because he purports to derive power from notifica 7 34 tion No. 180 of March 20, 1964 which had been rescinded; and (iii) the District Magistrate purports to act to maintain law and order when he can only act to maintain public order under the Defence of India Act and the Rules thereunder. We shall now consider these grounds of objection. Before we do so we may read the provisions of the Defence of India Act and the Rules to which reference may be necessary. The first part of the Defence of India Act we wish to read is the long title and the preamble. They are: "An Act to provide for special measures to ensure the public safety and interest, the defence of India and civil defence and for the trial of certain offences and for matters connected therewith. WHEREAS the President has declared by Proclamation under clause (1) of article 352 of the Constitution that a grave emergency exists whereby the security of India is threatened by external aggression; AND WHEREAS it is necessary to provide for special measures to ensure the public safety and interest, the defence of India and civil defence and for the trial of certain offences and for matters connected therewith; We may next read section 3 which confers power to make rules: "3. Power to make rules. (1) The Central Government may, by notification in the Official Gazette, make such rules as appear to it necessary or expedient for securing the defence of India and civil defence, the public safety, the maintenance of public order or the efficient conduct of military operations, or for maintaining supplies and services essential to the life of the community. " Then by way of illustration and without prejudice to the generality of the powers conferred by sub section (1), certain specific things are mentioned for which provision may be made by rules. Clause 15 provides : 73 5 "(15) Notwithstanding anything in any other law for the time being in force, (i) the apprehension and detention in custody of any person whom the authority empowered by the rules to apprehend or detain (the authority empowered to detain not being lower in rank than that of a District Magistrate) suspects, on grounds appearing to that authority to be reasonable, of being of hostile origin or of having acted, acting, being about to act or being likely to act in a manner prejudicial to the defence of India and civil defence, the security of the State, the public safety or interest, the maintenance of public order, India 's relations with foreign States, the maintenance of peaceful conditions in any part or area of India or the efficient conduct of military operations, or with respect to whom that authority is satisfied that his apprehension and detention are necessary for the purpose of preventing him from acting in any such prejudicial manner, (ii) the prohibition of such person from entering or residing or remaining in any area, (iii) the compelling of such person to reside and remain in any area, or to do or abstain from doing anything, and (iv) the review of orders of detention passed in pursuance of any rule made under sub clause (1);" We need not trouble ourselves with the other clauses. Section 44 next provides : "44. Ordinary avocations of life to be interfered with as little as possible. Any authority or person acting in pursuance of this Act shall interfere with the ordinary avocations of life and the enjoyment of property as little as may be consonant with the purpose of ensuring the public safety and interest and the defence of India and civil defence. " By virtue of the powers conferred by section 3 of the Defence of India Ordinance, 1962 (now the Act), the Defence of India Rules 1962 were framed. Part IV of these Rules is headed "Restriction of Movements and Activities of Persons" and it consists of Rules 25 30, 30 A, 30 B and 31 34. These rules provide for various 7 36 subjects such as "Entering enemy territory" (Rule 25), "Entering India" (Rule 26), "Information to be supplied by persons entering India" (Rule 27) or "Leaving India" (Rule 28), "Regulation of Movement of Persons within India" (Rule 29), "Powers of photographing etc. of suspected person" (Rule 31), "Control and winding up of certain organisations" (Rule 32), provisions for "Persons captured as prisoners" (Rule 33) and "Change of name by citizens of India" (Rule 34). We are really not concerned with these rules but the headings are mentioned to consider the argument of Dr. Lohia on No ' (1) above. Rule 30 with which we are primarily concerned consists of eight sub rules. We are concerned only with sub rule (1). That rule reads : "30. Restriction of movements of suspected persons, restriction orders and detention orders. (1) The Central Government or the State Government, if it is satisfied with respect to any particular person that with a view to preventing him from acting in any manner prejudicial to the defence of India and civil defence, the public safety, the maintenance of public order, India 's relations with foreign powers, the maintenance of peaceful conditions in any part of India, the efficient conduct of military operations or the maintenance of supplies and services essential to the life of the community, it is necessary so to do, may make an order (a) (b) directing that he be detained; Under section 40 (2) of the Defence of India Act, the State Government may by order direct that the powers conferred by the Rules may be exercised by any officer or authority in such circumstances and under such conditions as may be specified in the direction. A special limitation was indicated in section 3 (15) of the Act, where authority is given for making rules in connection with the apprehension and detention in custody of persons, that the delegation should not be made to an officer below the rank of a District Magistrate. By virtue of these various powers the State Government issued a notification on March 20, 1964 authorising all District Magistrates to exercise the powers of Government under Rule 30 (1) (b). 737 That notification was later rescind Id by another notification issued on June 5, 1964. A fresh notification (No. 11155 C) was issued on August 11, 1964. This was necessary because of a mistake in the first notification. The new notification reads : "No. 11155 C. In exercise of the powers con ferred by sub section (2) of section (40) the Defence of India Act, 1962 (Act 51 of 1962), the Governor of Bihar is pleased to direct that the powers exercisable by the State Government under clause (b) of sub rule (1) of rule 30 of the Defence of India Rules, 1962, shall be exercised by all District Magistrates within their respective jurisdictions. By order of the Governor of Biharc M. K. Mukharji Secretary to Government". Dr. Lohia contends that the District Magistrate in his affidavit says that he apprehended danger not only in his district but in the whole of Bihar State and even outside and hence he has not acted within his jurisdiction. His argument attempts to make out, what we may call, an exercise of extraterrestrial jurisdiction on the part of the District Magistrate. He contends also that the notifications are bad because although the Defence of India Act contemplates the imposition of conditions, none were imposed and no circumstances for the exercise of power were specified. In our judgment, none of these arguments can be accepted. Section 40(2) of the Act does not require the imposition of any conditions but only permits it. This is apparent from the words "if any" in the sub section. The only condition that the State Government thought necessary to impose is that the District Magistrates must act within their respective jurisdictions. It cannot be said that this condition was not complied with. Dr. Lohia was in the Patna District at the time. There was nothing wrong if the District Magistrate took a broad view of his activities so as to weigh the possible harm if he was not detained. Such a viewing of the activities of _a person before passing the order against him does not necessarily spell out extraterrestrial in the sense suggested but is really designed to assess properly the potentiality of danger which is the main object of the rule to prevent. We find nothing wrong with the order on the score of jurisdiction and argument No. (i) stated above must fail. Argument No. (ii) is ,up. C. & I./65 4 7 38 not of any substance. There was a clerical error in mentioning the notification and the error did not vitiate the order of detention. This brings us to the last contention of Dr. Lohia and that is the most serious of all. He points out that the District Magistrate purports to detain him with a view to preventing him from acting in any manner prejudicial to the public safety and the maintenance of law and order and argues that the District Magistrate had misunderstood his own powers which were to prevent acts prejudicial to public order and, therefore, the detention is illegal. On the other side, Mr. Verma contends that the Act and the Rules speak of public order which is a concept much wider in content than the con cept of law and order and includes the latter, and whatever is done in furtherance of law and order must necessarily be in furtherance of public order. Much debate took place on the meaning of the two expressions. Alternatively, the State of Bihar contends that the order passed by the District Magistrate prior to the issue of the actual order of detention made use of the phrase "maintenance of public order" and the affidavit which the District Magistrate swore in support of the return also uses that phrase and, therefore, the District Magistrate was aware of what his powers were and did exercise them correctly and in accordance with the Defence of India Act and the Rules. We shall now consider the rival contentions. The Defence of India Act and the Rules speak of the conditions under which preventive detention under the Act can be ordered. In its long title and the preamble the Defence of India Act speaks of the necessity to provide for special measures to ensure public. safety and interest, the defence of India and civil defence. The expressions public safety and interest between them indicate the range of action for maintaining security, peace and tranquility of India whereas the expressions defence of India and civil defence connote defence of India and its people against aggression from outside and action of persons within the country. These generic terms were used because the Act seeks to provide for a congress of action of which preventive detention is just a small part. In conferring power to make rules, section 3 of the Defence of India Act enlarges upon the terms of the preamble by specification of details. It speaks of defence of India and civil defence and public safety without change but it expands the idea of public interest into "maintenance of public order, the efficient conduct of military operations and maintaining of supplies and services essential to the life of the community". Then it mentions by way of illustration in 739 cl. (15) of the same section the power of apprehension and detention in custody of any person whom the authority empowered by the rules to apprehend or detain (the authority empowered to detain not being lower in rank than that of a District Magistrate), suspects, on grounds appearing to that authority to be reasonable (a) of being of hostile origin; or (b) of having acted, acting or being about to act or being likely to act in a manner prejudicial to (i) the defence of India and civil defence; (ii) the security of the State; (iii) the public safety or interest; (iv) the maintenance of public order; (v) India 's relations with foreign states; (vi) the maintenance of peaceful conditions in any part or area of India; or (vii) the efficient conduct of military operations It will thus appear that security of the state, public safety or interest, maintenance of public order and the maintenance of peaceful conditions in any part or area of India may be viewed separately even though strictly one clause may have an effect or bearing on another. Then follows rule 30, which repeats the above conditions and per mits detention of any person with a view to preventing him from acting in any of the above ways. The argument of Dr. Lohia that the conditions are to be cumulatively applied is clearly untenable. It is not necessary to analyse rule 30 which we quoted earlier and which follows the scheme of section 3(15). The question is whether by taking power to prevent Dr. Lohia from acting to the prejudice of "law and order" as against "public order" the District Magistrate went outside his powers. The subject of preventive detention has been discussed almost threadbare and one can hardly venture in any direction without coming face to face with rulings of courts. These cases are now legion. It may be taken as settled that the satisfaction of the detaining authority cannot be subjected to objective tests, that the courts are not to exercise appellate powers over such authorities and that an order proper on its face, passed by a competent authority in good faith is a complete answer to a petition such as this. 740 The rulings in our country adopt this approach as do the English Courts. In England one reason given for the adoption of this approach was that the power was entrusted to the Home Secretary and to the Home Secretary alone. In India courts are ordinarily satisfied on the production of a proper order of detention made in good faith by an authority duly authorised and have not enquired further even though the power is exercised by thousands of officers subordinate to the Central and State Governments as their delegates. When from the order itself circumstances appear which raise a doubt whether the officer concerned had not misconceived his own powers, there is need to pause and enquire. This is more so when the exercise of power is at the lowest level permissible under the Defence of India Act. The enquiry then is not with a view to investigate the sufficiency of the materials but into the officer 's notions of his power, for it cannot be conceived for a moment that even if the court did not concern itself about the sufficiency or otherwise of the materials on which action is taken, it would, on proof from the order itself that the officer did not realise the extent of his own powers, not question the action. The order of detention is the authority for detention. That is all which the detenu or the court can see. It discloses how the District Magistrate viewed the activity of the detenu and what the District Magistrate intended to prevent happening. If the order passed by him shows that he thought that his powers were more extensive than they actually were, the order might fail to be a good order. The District Magistrate here acted to maintain law and order and not public order. There are only two possibilities : (i) that there was a slip in preparing the order, or (ii) that maintenance of law and order was in the mind of the District Magistrate and he thought it meant the same thing as maintenance of public order. As to the first it may be stated at once that the District Magistrate did not specify it as such in his affidavit. He filed an earlier order by him in which he had used the words "public order" and which we have quoted earlier. That order did not refer to his own state of the mind but to the report of the Senior Superintendent of Police. In his affidavit he mentioned "public order" again but did not say that the words "law and order" in his order detaining Dr. Lohia were a slip. He corrected the error about the notification but naively let pass the other, and more material error, without any remark. Before us every effort possible was made to reconcile "public order" with "law and order" as, indeed, by a process of paraphrasing, it is possible to raise an air of similitude between them. Such similitude is possible to raise even between phrases as dissimilar as "for preventing breach of the peace", "in the 741 interest of the public", "for protecting the interests of a class of persons", "for administrative reasons" and "for maintaining law and order". We cannot go by similitude. If public order connotes something different from law and order even though there may be some common territory between them then obviously the District Magistrate might have traversed ground not within "public order". It would then not do to say that the action is deferrable to one power rather than the other, just as easily as one reconciles diverse phrases by a gloss. When the liberty of the citizen is put within the reach of authority and the scrutiny from courts is barred, the action must comply not only with the substantive requirements of the law but also with those forms which alone can indicate that the substance has been complied with. It is, therefore, necessary to examine critically, the order which mentioned "law and order" with a view to ascertaining whether the District Magistrate did not act outside his powers. Before we do so we find it necessary to deal with an argument of Mr. Shastri who followed Mr. Verma. He contends that there is no magic in using the formula of the Act and Rules for the language of the Act and the Rules can be quoted mechanically. We regret such an attitude. The President in his Order takes away the fundamental rights under articles 21 and 22 from a person provided he has been detained under the Defence of India Act or the rules made thereunder. The Order is strict against the citizen but it is also strict against the authority. There can be no toleration of a pretence of using the Defence of India Act. The President 's Order itself creates protection against things such as arbitrariness, misunderstood powers, mistake of identity by making his order apply only to cases where the detention is under the Act or the rules thereunder. No doubt, what matters is the substance but the form discloses the approach of the detaining authority to the serious question and the error in the form raises the enquiry about the substance. It is not every error in the order which will start such an enquiry. We have paid no attention to the error in the reference to the notification because that may well be a slip, and power and jurisdiction is referrable to the notification under which they would have validity. The other is not such a veneal fault. It opens the door to enquiry what did the District Magistrate conceive to be his powers ? In proceeding to discuss this question we may consider a decision of the Court of Appeal in England in Carltona Ltd. vs Commissioners of Works and Others(1). Curiously enough it was 1. 742 brought to our notice by Dr. Lohia and not by the other side. That case arose under Regulation 51(1) of the Defence (General) Regulations in England during the last World War. The Regulation read : "A competent authority, if it appears to that authority to be necessary or expedient so to do in the interests of the public safety, the defence of the realm or the efficient prosecution of the war, or for maintaining supplies and services essential to the life of the community, may take possession of any land, and may give such directions as appear to the competent authority to be necessary or expedient in connection with the taking of possession of that land." There was an order against Carltona Ltd. by the Commissioner of Works requisitioning the factory. The order read: "I have to inform you that the department have come to the conclusion that it is essential, in the national interest, to take possession of the above premises occupied by you." It was objected on behalf of the Company that the mind was not directed to any one of the various heads mentioned in the Regulation which were put in the alternative. Lord Greene, M.R. speaking on behalf of Lord Goddard (then Lord Justice) and Lord du Parcq (then Lord Justice) observed : "It was said that it was the duty of the person acting in the capacity of 'a competent authority ' to examine the facts of the case and consider under which, if any, of those various heads the matter came, and it is said that the assistant secretary did nothing of the kind. It is to be observed that those heads are not mutually exclusive heads at all. They overlap at every point and many matters will fall under two or more of them, or under all four. I read the evidence as meaning that the assistant secretary, seeing quite clearly that the case with which he was dealing and the need that he wished to satisfy was one which came under the regulation, did not solemnly sit down and ask himself whether it was for the efficient prosecution of the war that this storage was required for maintaining supplies and services essential to the life of the community. He took the view that it was required either for all those purposes, or, at any 743 rate, for some of them, and I must confess it seems to me that it would have been a waste of time on the facts of this case for anyone seriously to sit down and ask himself under which particular head the case fell. He regarded it, as I interpret his evidence, as falling under all the heads, and that may very well be having regard to the facts that these heads overlap in the way that I have mentioned. It seems to me, therefore, that there is no substance in that point, and his evidence makes it quite clear that he did bring his mind to bear on the question whether it appeared to him to be necessary or expedient to requisition this property for the purposes named, or some of them." The case is distinguishable on more than one ground. To begin with, it dealt with an entirely different situation and different provision of law. No order in writing specifying satisfaction on any or all of the grounds was required. Detention under Regu lation 18 B required an order just as detention under the Defence of India Act. The distinction between action under Regulation 51 and that under Regulation 18 B was noticed by the Court of Appeal in Point of Ayr Collieries Ltd. vs Lloyd George("). It is manifest that when property was requisitioned it would have been a futile exercise to determine whether the act promoted the efficient prosecution of the war, or the maintaining of supplies and services. But when a person is apprehended and detained it may be necessary to set out with some accuracy what he did or was likely to do within the provisions of Rule 30, to merit the detention. The use of one phrase meaning a different thing in place of that required by the Act would not do, unless the phrase imported means the same thing as the phrase in the Act. Here the phrase used is maintenance of law and order and we must see how that phrase fits into the Rule which speaks of maintenance of "public order". The words "public order" were considered on some previous occasions in this Court and the observations made them are used to prove that maintenance of public order is the same thing as maintenance of law and order. We shall refer to some of these observations before we discuss the two phrases in the context of the Defence of India Rules. Reliance is first placed upon a decision of the Federal Court in Lakhi Narayan Das vs Province of Bihar(2) where the Court dealing with item 1 of Provincial List, 7th Schedule in the Government of India Act, 1935 which read 1. at 548. at 704. 744 .lm15 Public order (but not including the use of His Majesty 's naval, military or air forces in aid of the civil power) " observed that "public Order" with which that item began was "a most comprehensive term". Reference is also made to Ramesh Thapar vs State of Madras(1) where this Court dealing with the same subject matter also observed : ". 'Public order is an expression of wide connotation and signifies that state of tranquillity which prevails among the members of a political society as a result of internal regulations enforced by the Government which they have established it must be taken that 'public safety ' is used as a part of the wider concept of public order and referring to Entry 3 in List III (Concurrent List) of the 7th Schedule of the Constitution which includes the "security of a State" and "maintenance of public order" as distinct topics of legislation, observed in the field of public order or tranquillity, marking off, may be, roughly, the boundary between those serious and aggravated forms of public disorder which are calculated to endanger the security of the State and the relatively minor breaches of the peace of a purely local significance, treating for this purpose differences in degree as if they were differences in kind." Fazl Ali J. took a different view which he had expressed more, fully in Brijbhushan and Another vs the State of Delhi ( 2 ) but he also observed that "public safety" had, as a result of a long course of legislative practice, acquired a well rccognised meaning and was taken to denote safety or security of the State and that the expression "public order" was wide enough to cover small disturbances of the peace which do not jeopardise the security of the State and paraphrased the words "public order ' as public tran quillity. " Both the aspects of the matter were again before this Court in The Superintendent Central Prison, Fatehgarh vs Ram Manohar Lohia(3) when dealing with the wording of clause (2) of article 19 as amended by the Constitution (First Amendment) Act, 1951, it 1. at 598. 2. ; 3. ; 745 fell to be decided what "public order" meant. Subba Rao J. speaking for the Court referred to all earlier rulings and quoting from them came to the conclusion that "public order" was equated with public peace and safety and said : ". . Presumably in an attempt to get over the effect of these two decisions, the expression "public order" was inserted in article 19(2) of the Constitution by the Constitution (First Amendment) Act, 1951, with a view to bring in offences involving breach of purely local significance within the scope of article 19. . " Summing up the position as he gathered from the earlier cases, the learned Judge observed: ". "Public ordee, is synonymous with public safety and tranquillity: it is the absence of disorder involving breaches of local significance in contradistinction to national upheavals, such as revolution, civil strife, war, affecting the security of the State;. ". These observations determine the meaning of the words 'public order" in contradistinction to expressions such as "public safety", "security of the State". They were made in different contexts. The first three cases dealt with the meaning in the legislalative Lists as to which, it is settled, we must give as large a meaning as possible. In the last case the meaning of "public order" was given in relation to the necessity for amending the Constitution as a result of the pronouncements oil this Court. The context in which the words were used was different, the occasion was different and the object in sight was different. We have here a case of detention under Rule 30 of the Defence of India Rules which permits apprehension and detention of a person likely to act in a manner prejudicial to the maintenance of public order. It follows that if such a person is not detained public disorder is the apprehended result. Disorder is no doubt prevented by the maintenance of law and order also but disorder is a broad spectrum which includes at one end small disturbances and at the other the most serious and cataclysmic happenings. Does the expression "public ordee ' take in every kind of disorder or only some ? The answer to this serves to distinguish "public order" from "law and order" because the latter undoubtedly takes in all of them. Public order if disturbed, must lead to public disorder. Every breach of the peace does not lead to public disorder. When two drunkards quarrel and fight there is disorder but not public disorder. They can be dealt with under the powers 746 to maintain law and order but cannot be detained on the ground that they were disturbing public order. Suppose that the two fighters were of rival communities and one of them tried to raise communal passions. The problem is still one of law and order but it raises the apprehension of public disorder. Other examples can be imagined. The contravention of law always affects order but before it can be said to affect public order, it must affect the community or the public at large. A mere disturbance of law and order leading to disorder is thus not necessarily sufficient for action under the Defence of India Act but disturbances which subvert the public order are. A District Magistrate is entitled to take action under Rule 30(1)(b) to prevent subversion of public order but not in aid of maintenance of law and order under ordinary circumstances. It will thus appear that just as "public order" in the rulings of this Court (earlier cited) was said to comprehend disorders of less gravity than those affecting "security of State", "law and order" also comprehends disorders of less gravity than those affecting public order". One has to imagine three concentric circles. Law and order represents the largest circle within which is the next circle representing public order and the smallest circle represents security of State. It is then easy to see that an act may affect law and order but not public order just as an act may affect public order but not security of the State. By using the expression "maintenance of law and order" the District Magistrate was widening his own field of action and was adding a clause to the Defence of India Rules. We do not know the material on which the District Magistrate acted. If we could examine the reasons we may be able to say whether the action can still be said to fall within the other topic public safety. That enquiry is not open to us. If we looked into the matter from that angle we would be acting outside our powers. The order on its face shows two reasons. There is nothing to show that one purpose was considered to be more essential than the other. We are not, therefore, certain that the District Magistrate was influenced by one consideration and not both. The order of detention is a warrant which authorises action. Affidavits hardly improve the order as it is. If there is allegation of bad faith they can be seen to determine the question of good faith. If mistaken identity is alleged we can satisfy ourselves about the identity. But if action is taken to maintain law and order instead of maintaining public order, there is room to think that the powers were misconceived and if there is such a fundamental error then the 7 47 action remains vulnerable. It will not be possible to say that although maintenance of law and order were specified, what was considered was the problem of maintenance of public order. The error is an error of a fundamental character and unlike quoting a wrong notification. It is thus apparent why one error in the order of detention is admitted but not the other, and why with elaborate arguments it is attempted to establish that "public order" involves elements more numerous than "law and order" where, in fact, the truth is the other way. It may be mentioned that Dr. Lohia claimed that the satisfaction of the President under article 359 is open to scrutiny of the court. We have not allowed him to argue this point which is now concluded by rulings of this Court. In our judgment the order of the District Magistrate exceeded his powers. He proposed to act to maintain law and order and the order cannot now be read differently even if there is an affidavit the other way. We have pondered deeply over this case. The action of the District Magistrate was entirely his own. He was, no doubt, facing a law and order problem but he could deal with such a problem through the ordinary law of the land and not by means of the Defence of India Act and the Rules. His powers were limited to taking action to maintain public order. He could not run the law and order problems in his District by taking recourse to the provisions for detention under the Defence of India Act. If he thought in terms of "public ordee ' he should have said so in the order or explained how the error arose. He does neither. If the needs of public order demand action a proper order should be passed. The detention must, therefore, be declared to be outside the Defence of India Act, 1962 and the Rules made thereunder. Dr. Lohia is entitled to be released from custody and we order accordingly. Raghubar Dayal, J. In this writ petition Dr. Lohia challenges the validity of the order made by the District Magistrate, Patna, dated August 9, 1965, under cl. (b) of sub r. (1) of r. 30 of the Defence of India Rules, 1962, hereinafter called the Rules. This order is as follows : "Whereas 1, J. N. Sahu, District Magistrate, Patna, am satisfied with respect to the person known as Dr. Ram Manohar Lohia, Circuit House, Patna that with a view to preventing him from acting in any manner prejudicial to the public safety and the maintenance of law and 748 order, it is necessary to make an order that he be detained. Now, therefore, in the exercise of the powers conferred by clause (b) of sub rule (1) of rule 30 of the Defence of India Rules, 1962 read with Notification No. 180/CW dated the 20th March 1964 of the Govt. of Bihar, Political (Special) Department, 1 hereby direct that the said Dr. Ram Manohar Lohia be arrested by the police wherever found and detained in the Central Jail Hazaribagh, until further orders. " If this order is valid, Dr. Lohia cannot move this Court for enforcement of his rights conferred by articles 21 and 22 of the Constitution, in view of the Order of the President dated November 3, 1962, in the exercise of powers conferred on him by cl. (1) of article 359 of the Constitution. Dr. Lohia has challenged the validity of this order on several grounds. I agree with the views expressed by Hidayatullah J., about all the contentions except one. That contention is that the appropriate authority is not empowered to order detention with a view to prevent a person from acting in any way prejudicial to the maintenance of law and order. It is urged that though the District Magistrate could order the detention of the petitioner with a view to prevent him from acting in any way prejudical to the public safety and the maintenance of public order, he could not order detention with a view to prevent the petitioner from acting prejudicially to the public safety and maintenance of law and order, as the latter object, being not synonymous with the object of preventing him from acting prejudicial to public order, is outside the purview of the provisions of r. 30(1) of the rules and that, therefore, the entire order is bad. I do not agree with this contention. Under r. 30(1)(b), the District Magistrate could have made the order of detention with respect to Dr. Lohia if he was satisfied that he be detained with a view to prevent him from acting in any manner prejudicial to public safety or maintenance of public order. Such satisfaction is subjective and not objective. The Court cannot investigate about the adequacy of the reasons which led to his satisfaction. The Court can, however, investigate whether he exercised the power under r. 30 honestly and bona fide or not i.e., whether he ordered detention on being satisfied as required by r. 30. What is crucial for the validity of the detention order is such satisfaction and not the form in which the detention order is framed. A detenu can question the validity of the detention order valid 749 on its face on various grounds including that of mala fides. The onus will be on him to prove mala fides. He can question the validity of the detention order on the same ground when, on its face, it appears to be invalid. In such a case the onus will be on the detaining authority to establish that it was made bona fide. An order is made mala fide when it is not made for the purpose laid down in the Act or the rules and is made for an extraneous purpose. The contention of the petitioner to the effect that the detention order cannot be made on the satisfaction of the detaining authority that it is necessary to prevent him from acting in a manner prejudicial to the maintenance of law and order, in effect, amounts to the contention that it is made mala fide. The detaining authority is free to establish that any defect in the detention order is of form only and not of substance, it being satisfied of the necessity to detain the person for a purpose mentioned in r. 30 though the purpose has been inaccurately stated in the detention order. The existence of the satisfaction required by r. 30 does not depend on what is said in the detention order, and can be established by the District Magistrate by his affidavit. We have therefore to examine whether the District Magistrate was really satisfied about the necessity to detain Dr. Lohia with a view to prevent him from acting in a manner prejudicial to public safety and maintenance of public order. The impugned order was passed under r. 30 (1) (b) of the rules. The District Magistrate decided to detain the appellant with two objects, firstly, to prevent him from acting in any way prejudicial to public safety and, secondly, to prevent him from acting in any way prejudicial to the maintenance of law and order. The District Magistrate has even in the absence of any such contention as under discussion and which was raised after the filing of the District Magistrate 's affidavit said that having regard to, inter alia, the circumstances which were developing in Patna on August 9, 1965, he was fully satisfied, in view of the report made by the Senior Superintendent of Police, Patna, in regard to Dr. Lohia 's conduct and activities, that it was necessary to direct that he be detained in order to prevent him from acting further in any manner prejudicial to the public safety and maintenance of public order. There is no reason to disbelieve his statement. His original order, set out below, bears out this statement of his in his later affidavit : "Perused the report of the Senior section P. Patna for detention of Dr. Ram Manohar Lohia, M.P. under rule 7 50 30(1) (b) of the Defence of India Rules, on the ground that his being at large is prejudicial to the public safety and maintenance of public order. From the report of the Sr. section P., Patna, I am satisfied that Dr. Ram Manohar Lohia, M.P., aforesaid, be detained under rule 30(1) (b) of the Defence of India Rules. Accordingly, I order that Dr. Ram Manohar Lohia be detained under rule 30 (1) (b) of the Defence of India Rules read with Notification No. 180/CW dated 20 3 64 in the Hazaribagh Central Jail until further orders. " The District Magistrate 's omission to repeat in the second sentence where he speaks of his satisfaction that Dr. Lohia be detained with a view to preventing him from acting prejudicially to the public safety and maintenance of public order, does not mean that he was not so satisfied when the earlier sentence makes reference to the report of the Senior Superintendent of Police for detaining Dr. Lohia on the ground of his being at large to be prejudicial to public safety and maintenance of public order. The District Magistrate referred, in para 3 of his affidavit, to his satisfaction that the forces of disorder which were sought to be let loose, if not properly controlled, would envelop the whole State of Bihar and possibly might spread in other parts of the country which would necessarily affect the problem of external defence as well in more ways than one. The possibilities of such forces of disorder spreading to other parts of the country satisfied him with the necessity of taking immediate action to neutralize those forces. It appears from his statements in paras 6 and 7 of the same affidavit that actual disturbances took place at Patna that day and that he had to operate from the Control Room. In para 9 he states that the action taken against Dr. Lohia was purely for the purpose of maintenance of public peace in the circumstances stated by him earlier. In his rejoinder affidavit Dr. Lohia states with reference to the alleged forces of disorder referred to by the District Magistrate that even if he was promoting what the executive would call `forces of disorder ', he was doing so not with a view to impair the defences of the country but further to strengthen them, that the various allegations made against him were extraneous to the scope and purpose of the legislative provisions of the proclamations of emergency which had no rational relationship to the circumstances which were developing in Patna on August 9, 1965. 751 Even in his original affidavit Dr. Lohia stated in para 6 that : "It is also revealing to note that after the events of the 9th August for which responsibility should have been sought to be fixed either through trial or enquiry, on me or Government or anybody else, I addressed a crowd of nearly a lakh for over an hour after seven in the evening. " The setting of the events that appear to have happened at Patna on August 9, 1965 further bear out the statement of the District Magistrate that he was satisfied of the necessity to detain Dr. Lohia in order to prevent him from acting in a manner prejudicial to public order. Further, the expression 'maintenance of law and order 'is not used in cl. (1) of r. 30. The corresponding expression used therein is 'maintenance of public order '. The two expressions are not much different. The expression 'public order ' has been construed by this Court in a few cases, the latest of them being The Superintendent, Central Prison, Fatehgarh vs Ram Manohar Lohia(1) wherein it was said at p. 839 : " 'Public order ' is synonymous with public safety and tranquillity: it is the absence of disorder involving breaches of local significance in contradistinction to national upheavals, such as revolution, civil strife, war, affecting the security of the State." The expression 'maintenance of law and order ' would cover 'maintenance of public safety and tranquillity '. it may be, as urged for the petitioner, an expression of wider import than public order but, in the context in which it is used in the detention order and in view of its use generally, it should be construed to mean maintenance of law and order in regard to the maintenance of public tranquillity. It is not usually used merely with reference to enforcement of law by the agency of the State prose cuting offenders against any of the numerous laws enacted for the purposes of a well regulated society. Simple and ostensibly minor incidents at times lead to widespread disturbances affecting public safety and tranquillity. Reference may be made to the case reported as Sodhi Shamsher Singh vs State of Pepsu(2). In that case certain persons were 1. [1960] 2 C.S.R.821. A.I.R.1954 S.C. 276. 7 52 detained under an order under section 3 ( 1 ) of the , on grounds which, in substance, were that one of them had published certain pamphlets whose circulation, in the opinion of the Government, tended to encourage the Sikhs to resort to acts of lawlessness and plunge the Hindus into a feeling of utter frustration and discouragement and consequently to make them take the law into their hands for the redress of their grievances. Section 3(1) of the , reads : "The Central Government or the State Government may (a) if satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to (i) the defence of India, the relations of India with foreign powers, or the security of India, or (ii) the security of the State or the maintenance of public order, or (iii). (b) . , make an order directing that such person be detained." This Court used the expression 'maintenance of law and ordee in place of 'maintenance of public order ' used in section 3 ( 1 ) (a) (ii) at three places in paras 4 and 5 of the judgment. I do not refer to these to show that the Court has construed the expression 'maintenance of public order ' as 'maintenance of law and ordee ' but to reinforce my view that the expression 'maintenance of law and order ' is generally used for 'maintenance of public safety and tranquillity ' which is covered by the expression 'public ordee. When this Court used this expression in place of 'maintenance of public order ' I cannot conclude, as urged by the petitioner, that the District Magistrate 's using the expression 'maintenance of law and order ' in place of 'maintenance of public ordee is any indication of the fact that he had not applied his mind to the requirements of the provisions of r. 30(1) or had not actually come to the conclusion that it was necessary to detain Dr. Lohia with a view to prevent him from acting in any manner prejudicial to the maintenance of public order. If the expression 'maintenance of law and order ' in the im pugned order be not construed as referring to 'maintenance of public order ' the impugned order cannot be said to be invalid in 753 view of it being made with a double objective, i.e., with the object of preventing Dr. Lohia from acting prejudicially to the public safety and from acting prejudicially to the maintenance of law and order. If the District Magistrate was satisfied, as the impugned order and the affidavit of the District Magistrate show that he was satisfied that it was necessary to detain Dr. Lohia with a view to preventing him from acting prejudicially to public safety, that itself would have justified his passing the impugned order. His satisfaction with respect to any of the purposes mentioned in r. 30 (1) which would justify his ordering the detention of a person is sufficient for the validity of the order. There is no room for considering that he might not have passed the impugned order merely with one object in view, the object being to prevent Dr. Lohia from acting prejudicially to public safety. The entire circumstances in which the order has been made and which I have referred to earlier, point to that. The question before us is not really at par with the question ' that arose in Romesh Thappar vs State of Madras(1). In that case the provisions impugned were those of a statute whose language authorised the passing of orders which could be constitutional in certain circumstances and unconstitutional in others. In such a context, it was said that where a law purports to authorize the imposition of restrictions on a fundamental right in language wide enough to cover restrictions both within and without the limits of constitutionally permissible legislative action affecting such right, it is not possible to uphold it even so far as it may be applied within the constitutional limits, as it is not severable; so long as the possibility of its being applied for purpoes not sanctioned by the Constitution cannot be ruled out, it must be held to be wholly unconstitutional and void. It was so held as, otherwise, the orders passed for purposes not sanctioned by the Consti tution would have been in accordance with the law held valid. The validity of the orders passed under a valid law the Defence of India Act and the rules have to be assumed to be valid depends on their being made by the appropriate authority in accordance with the law empowering it to pass the orders. The question before us is also not at par with the question which often arises in construing the validity of detention orders passed under the for the reason that some of the grounds for the satisfaction of the appropriate authority were irrelevant or non existent. The presence of such grounds raised the question whether the remaining good grounds would 1. ; 2. C & I./65 5 7 54 have led the authority to the requisite subjective satisfaction for ordering detention. In the present case, however, the question is different. The question is whether the District Magistrate would have made the order of detention on his satisfaction merely to the effect that it was necessary to detain Dr. Lohia with a view to prevent him from acting in a manner prejudicial to public safety. It is not that his satisfaction is based on two grounds, one of which is irrelevant or non existent. Even in such cases, this Court has held in Dwarka Das State of J & K(1): "The principle underlying all these decisions is this. Where power is vested in a statutory authority to deprive the liberty of a subject on its subjective satisfaction with reference to specified matters, if that satisfaction is stated to be based on a number of grounds or for a variety of reasons, all taken together, and if some out of them are found to be non existent or irrelevant, the very exercise of that power is bad. That is so because the matter being one for subjective satisfaction, it must be properly based on all the reasons on which it purports to be based. If some out ' of them are found to be non existent or irrelevant, the Court cannot predicate what the subjective satisfaction of the said authority would have been on the exclusion of those grounds or reasons. To uphold the validity of such an order in spite of the invalidity of some of the reasons or grounds would be to substitute the objective standards of the Court for the subjective satisfaction of the statutory authority. In applying these principles, however, the Court must be satisfied that the vague or irrelevant grounds are such as, if excluded, might reasonably have affected the subjective satisfaction of the appropriate authority. It is not merely because some ground or reason of a compara tively unessential nature is defective that such an order based on subjective satisfaction can be held to be invalid. " As stated earlier, there does not appear to be any reason why the District Magistrate would not have passed the order of detention against Dr. Lohia on his satisfaction that it was necessary to prevent him from acting prejudicially to public safety. On such 1. ; ,168. 755 satisfaction, it was incumbent on him to pass the order and he must have passed it. I am therefore of opinion that the District Magistrate made the impugned detention order on his being satisfied that it was necessary to do so with a view to prevent Dr. Lohia from acting in a manner prejudicial to public safety and maintenance of public order and that the impugned order is valid. Consequently, Dr. Lohia cannot move this Court for the enforcement of His rights under articles 21 and 22 of the Constitution in view of the President 's Order under article 359(1) of the Constitution. I would dismiss this petition. Mudholkar, J I agree that the petition of Dr. Ram Manohar Lohia under article 32 of the Constitution be granted and would briefly indicate my reasons for granting it. At the outset I shall consider an objection of Mr. section P. Varma on behalf of the State as to the tenability of the petition. The objection is two fold. In the first place, according to him, in view of the Proclamation made by the President under article 359 this Court has no jurisdiction to entertain it. In the second place his contention is that the order of detention made against the petitioner being one under the Defence of India Rules, he cannot challenge the validity of his detention thereunder in any court. In support of these contentions Mr. Varma relies on the decision of this Court in Mohan Choudhury vs Chief Commissioner, Tripura (1). In that case this Court has, while holding that the right of a person whose detention has been ordered under the Defence of India Rules to move any court for the enforcement of his rights under article 21 of the Constitution is suspended. during the continuance of the emeregency declared by the President by a Proclamation under article 352, held that the powers conferred on this Court by article 32 of the Constitution are not suspended. It is true that where a person has been detained under the Defence of India Rules he cannot move this Court under article 32 for the enforcement of his right under article 21 and so there will be no occasion for this Court to exercise its powers under that article in such a case. But what would be the position in a case where an order for detention purporting to be made under the Defence of India Rules was itself one which was beyond the scope of the Rules ? For, before an entry into the portals of this Court can be denied to detenu he I must be shown an order under r. 30(1) of the Defence of India Rules made by a competent authority stating that it is satisfied 1. ; 7 56 that the detenu is likely to indulge in activities which will be prejudicial to one or more of the matters referred to in the rule. If the detenu contends that the order, though it purports to be under r. 30(1) of the Rules, was not competently made, this Court has the detenu contends that the order. though it purports to be under order if the Court finds that it was not competently made or was ambiguous it must exercise its powers under article 32 of the Constitution, entertain his petition thereunder and make an appropriate order. In this case the District Magistrate, Patna purported to make an order under r. 3 0 ( 1 ) of the Defence of India Rules. The State has placed on record copies of two orders : one is said to have been recorded by the District Magistrate on his file and another which was served on Dr. Lohia. We are not concerned with the former because the operative order must be the one served on the detenu. The District Magistrate may well keep the former in the drawer of his table or alter it as often as he likes. It cannot, therefore, be regarded as anything more than a draft order. The order which finally emerged from him and was served on the detenu would thus be the only one which matters. The grounds for detention given in the latter order are that Dr. Lohia 's being at large is prejudicial to public safety and maintenance of law and order. Under r. 30(1) an order of detention of a person can be made "with a view to preventing him from acting in any manner prejudicial to the defence of India and civil defence, public safety, the maintenance of public order, India 's relations with foreign powers, the maintenance of peaceful conditions in any part of India, the efficient conduct of military operations or the maintenance of supplies and services essential to the life of the community". I find it difficult to accept Dr. Lohia 's argument that the appropriate authority must entertain an apprehension that the person to be detained is likely to participate in every one of the activities referred to in the rule. To accept it would be, apart from making a depar ture from the rules of grammar, (for doing which no valid grounds exist), making not only the rule in question but also section 3 of the Defence of India Act where similar language is used almost ineffective. What has, however, to be considered is his other argument. The question posed by the argument is whether an authority competent to make an order under the aforesaid provision can make such an order on the ground that the authority feels it necessary to prevent a person from acting in any manner prejudicial to the maintenance of law and order. The expression "law and ordee ' does not find any place in the rule and is not synonymous with "public order '. It s to me that "law and order" is a comprehensive expression 757 in which would be included not merely public order, but matters such as public peace, tranquillity, orderliness in a locality or a local area and perhaps some other matters. "Public order" is something distinct from order or orderliness in a local area. Under r. 30(1) no power is conferred upon that authority to detain a person on the ground that it is necessary so to do in order to prevent that person from acting in a manner prejudicial to the main tenance of order in a local area. What is it that the District Magistrate, Patna had in mind when he ordered the detention of the petitioner ? Was the apprehension entertained by the District Magistrate that Dr. Lohia, if left at large, was likely to do some thing which will imperil the maintenance of public order generally or was it that he apprehended that Dr. Lohia 's activities may cause disturbances in a particular locality? There is thus an ambiguity on the face of the order and, therefore, the order must be held to be bad. No doubt, the order also refers to the apprehension felt by the District Magistrate about Dr. Lohia 's acting in a manner prejudicial to public safety. But then the question arises, what is it that weighed with the District Magistrate, the apprehension regarding public safety or an apprehension regarding the maintenance of law and order ? Again, would the District Magistrate have made the order solely on the ground that he felt apprehension re garding the maintenance of public safety because of the activities in which he thought Dr. Lohia might indulge ? It could well be that upon the material before him the District Magistrate would have refrained from making an order under r. 30 solely upon the first ground. Or on the other hand he would have made the order solely upon that ground. His order, however, which is the only material on the basis of which we can properly consider the matter gives no indication that the District Magistrate would have been prepared to make it only upon the ground relating to public safety. In the circumstances I agree with my brethren Sarkar and Hidayatullah that the order of detention cannot be sustained. I have not referred to any decisions because they have already been dealt with fully in the judgments of my learned brethren. In the result, therefore, I allow the petition and direct that Dr. Lohia be get at liberty. ORDER In view of the majority opinion, we allow the Petition and order that the petitioner be set at liberty.

IN-Abs

Rule 30(1)(b) of the Defence of India Rules, 1962, provided that a State Government might, if it was satisfied with respect to a person that with a view to preventing him from acting in a manner prejudicial, inter alia to "public safety and maintenance of public order" it is necessary to do so, order him to be detained. A Disrict Magistrate to whom the power of the Government of the State of Bihar had been delegated under section 40(2) of the Defence of India Act, 1962, ordered the detention of the petitioner under the rule. The order stated that the District Magistrate was satisfied, that with a view to prevent the petitioner from acting in any manner prejudicial to the "public safety and the maintenance of law and order," it was necessary to detain him. Prior to the making of the order the District Magis trate had, however, recorded a note stating that having read the report of the Police Superintendent that the petitioner 's being at large was prejudicial to "public safety and maintenance of public order", he was satisfied that the petitioner should be detained under the rule. The petitioner moved this Court under article 32 of the Constitution for a writ of habeas corpus directing his release from detention, contending that : (i) though an order of detention to prevent acts prejudicial to public order may be justifiable an order to prevent acts prejudicial to law and order would not be justified by the rule; (ii) the order mentioned a notification which did not contain the necessary delegation; (iii) the District Magis trate acted beyond his jurisdiction by considering the danger not only in his district but in the entire State; and (iv) all the conditions mentioned in the rule must be cumulatively applied before the order of detention could be made. The respondent State raised a preliminary objection,that the President of India had made an Order under article 359(1) that the right of a person to move any court for the enforcement of the rights conferred by articles 21 and 22 shall remain suspended for the period during which the proclamation of emergency under article 352 was in force, if such person had been deprived of any such rights under the Defence of India Act or any rule made thereunder, and that therefore, this Court was prevented from entertaining the petition. HELD : (Per Full Court) : (i) The petition was maintainable. Per Sarkar, J. : The order of the President does not form a bar to all applications for release from detention under the Act or the Rules. Where a person was detained in violation of the mandatory provisions of the Defence of India Act his right to move the Court was not suspended. Since the petitioner contended that the order of detention was not justified by the Act or Rules and was therefore against the provisions of the Act, the petitioner was entitled to be heard. [716 G; 717 A B] 710 Per Hidayatullah and Bachawat, JJ. : The net result of the President 's Order is to stop all claims to enforce rights arising from laws other than the Defence of India Act and the Rules, and the provisions of article 22 at variance with the Defence of India Act and the Rules are of no avail. But the deprivation must be in good faith under the Defence of India Act or any rule or order made thereunder. The President 's Order does not say that even if a person is proceeded against in breach of the Defence of India Act or the Rules or mala fide he cannot move the Court to complain that the Act and the Rules under colour of which some action was taken, do not warrant it. It follows, therefore. that this Court acting under article 32 on a petition for the issue of a writ of habeas corpus must not allow breaches of the Defence of India Act or the Rules to go unquestioned, as article 359 and the President 's Order were not intended to condone an illegitimate enforcement of the Defence of India Act. [731 B, E, F; 733 B C] Per Raghubar Dayal, J. : This Court can investigate whether the District Mazistrate exercised the power under r. 30 honestly and bona fide, or not, that is, whether he ordered detention on being satisfied as required by r. 30. [748 H] Per Mudholkar, J. : Before an entry into the portals of this Court could be denied to a detenu, he must be shown an order under r. 30(1) of the Defence of India Rules made by a competent authority stating that it was satisfied that the detenu was likely to indulge in activities which would be prejudicial to one or more of the matters referred to in the rule. If the detenu contends that the order, though it purports to be under r. 30(1), was not competently made, this Court has the duty to enquire into the matter. Upon an examination of the order, if the Court finds that it was not competently made or was ambiguous, it must exercise its power under article 32, entertain the petition thereunder and make an appropriate order. [755 H; 756 A B] Makhan Singh vs State of Punjab, [1964] 4 S.C.R. 797 followed. (ii) Per Sarkar, Mdayatullah, Mudholkar and Bachawat JJ. : The petitioner should be set at liberty. Per Sarkar J. : The order detaining the petitioner would not be in. terms of the rule unless it could be said that the expression "law and order" means the same thing as "Public order". What was meant by maintenance of public order was the prevention of disorder of a grave nature, a disorder which the authorities thought was necessary to prevent in view of the emergent situation created by external aggression; whereas, the expression "maintenance of law and order" may mean prevention of disorder of comparatively lesser gravity and of local significance only. [718 B, D, E] Courts are only entitled to look at the face of the order, because the satisfaction which justifies the order under the rule is the subjective satisfaction of the detaining authority. If on its face an order of detention is in terms of the rule, ordinarily, a court is bound to stay its hands and uphold the order. When an order is on the face of it not in terms of the rule, a court cannot enter into an investigation whether the order of detention was :In fact in terms of the rule. So the State cannot be heard to say of prove that an order was in fact made to prevent acts prejudicial to public order though the order does not say so. It is not a case where the order is only evidence of the detention having been made under the rule. The order is conclusive as to the state of the mind of the person who made it and no evidence is admissible to prove that state of mind. Extraneous evidence such as the note made by the District Magistrate was not admissible lo prove that the rule had been complied with. [718 G H; 718 B D 720 G; 722 B C] 711 is not taking too technical a view, but is a matter of substance. If a man can be deprived of his liberty under a rule by the simple process of the making of an order, he can only be so deprived if the order is in terms of the rule. If for the purpose of justifying the detention such com pliance by itself is enough, a non compliance must have a contrary effect A more reference in the detention order to the rule is not sufficient to show that by "law and order" what was meant was public order". [719 F G: 720 A C] The order no doubt mentions another ground of detention, namely, prevention of acts prejudicial to public safety, and in so far as it did so, it was clearly within the rule. But the order has notwithstanding this to be held illegal, though it mentioned a ground on which a legal order of detention could have been based, because, it could not be said in what manner and to what extent the valid and invalid grounds operated an the mind of the authority concerned and contributed to the creation of subjective satisfaction. [722 E; G 11] ShShibban Lal Saksena vs State of U.P. ; , followed. Per Hidayatullah and Bachawat, JJ. : The satisfaction of the detaining authority cannot be subjected to objective tests and courts are not to exercise appellate powers over such authorities and an order proper on its face, passed by a competent authority in good faith, would be a complete answer to a petition for a writ of habeas corpus. But when from the order itself circumstances appear which raise a doubt whether the officer concerned had not misconceived his own powers, there is need to pause and enquire. The enquiry then 'Is, not with a view to investigate the sufficiency of the materials but into the officer 's notions of his power. If the order passed by him showed that he thought his powers were more extensive than they actually were, the order might fail to be a good order. No doubt. what matters is the substance; but the form discloses the approach of the detaining authority to the serious question and the error in the form raises the enquiry about the substance. When the liberty of the citizen is put within the reach of authority and the scrutiny by courts is barred, the action must comply not only with the substantive requirements of law but also with those forms which alone can indicate that the substance has been committed with. [739 H; 740 B C, E; 741 C; F] The District Magistrate acted to "maintain law and order" and his order could not be read differently even if there was an affidavit the other way. If he thought in terms of "public order" he should have said so in his order, or explained how the error arose. A mere reference to his earlier note was not sufficient and the two expressions cannot be reconciled by raising an air of similitude between them. The contravention of law always affects order but before it can be said to affect public order, it must affect the community or the public at large. One has to imagine three concentric circles, the largest representing "law and order", the next representing "public order" and the smallest representing "security of State". An act may affect "law and order " but not "public order," just as an act may affect "public order" but not "security of the State". Therefore, by using the expression "maintenance of law and order" the District Magesstrate was widening his own field of action and was adding a clause to the Defence of India Rules. [740 E F, H; 746 B E; 747 D, E] The order on its face shows two reasons, but it was not certain that the District Magistrate was influenced by one consideration and not both, because, it was not oven to the Court to enquire into the material on which the District Magistrate acted, or to examine the reason ,; to see whether his action fell within the other topic. namely. public safety. [746 F G] 712 Per Mudholkar J. : The use of the expression "maintenance of law and order" in the impugned order makes it ambiguous on its face and therefore the order must be held to be had. No doubt the order also refers to public safety. But then the questions arise : What is it that weighed with the District Magistrate, the apprehension regarding public safety or an apprehension regarding maintenance of law and order? Was the apprehension entertained by the District Magistrate that the petitioner, if left at large, was likely to do something which will imperil the maintenance of public order generally, or was it that he apprehended that the petitioner 's activities may cause disturbances in a particular locality ? His order, which was the only material which could be considered, gave no indication on those questions. The expression "law and order" does not find any place in the rule and is not synonymous with "public order". "Law and order" is a comprehensive expression in which would be included not merely public order but matters such as public peace, tranquility, orderliness in a locality or a local area and perhaps other matters. [756 H; 757 A, C, D, F] Per Raghubar Dayal J. (dissenting) : The District Magistrate made the impugned order on his being satisfied that it was necessary to do so with a view to prevent the petitioner from acting in a manner prejudicial to public safety and maintenance of public order. The impugned order was therefore valid and consequently, the petitioner could not move this Court for the enforcement of his rights under articles 21 and 22 in view of the President 's Order under article 359(1). [755 B C] The detaining authority s free to establish that any defect in the detention order is of form only and not of substance it being satisfied of the necessity to detain the person for a purpose mentioned in r. 30, though the purpose has been inaccurately stated in the detention order. The existence of satisfaction does not depend on what is stated in the order and can be established by the District Magistrate by his affidavit. His omission to refer to "maintenance of public order" does not mean that he was not so satisfied, especially when his note refers to the petitioner being at large to be prejudicial to public safety and the maintenance of public order. The petitioner 's affidavit and rejoinder show that the District Magistrate was satisfied of the necessity of detaining the petitioner to prevent him from acting in a manner prejudicial to the public order, because of the setting of events that happened on that date. "Maintenance of law and order" may be an expression of wider import than "public order", but in the context in which it was used in the detention order and in view of its use generally, it should be construed to mean maintenance of law and order in regard to maintenance of public tranquility. [749 C D; 750 C D; 751 C, F G] Sodhi Shamsher Singh vs State of Pepsu, A.I.R. 1954 S.C. 276, referred to. Even if the expression "maintenance of law and order" in the impugned order be not construed as referring to "maintenance of public order" the impugned order cannot be said to be invalid in view of its being made with a double objective, that is, with the object of preventing the petitioner from acting prejudicially to the public safety and the maintenance of law and order. His satisfaction with respect to any of the purposes mentioned in r. 30(1) which would justify his ordering the detention of a person is sufficient for the validity of the order. There is no room for considering that be might not have passed the order merely with one object in view, the object being to prevent him from acting prejudicially to public safety. It is not a case where his satisfaction was based on two grounds one of which is irrelevant or non existent. There does not appear to be any reason why the District Magistrate would not have passed the order of 713 detention against the petitioner on the satisfaction that it was necessary to prevent him from acting prejudicially to public safety. [752 H; 753 B D; 754 A Di (iii) Per Sarkar, Hidayatullah, Raghubar Dayal and Bachawat, JJ. The delegation was valid. Per Sarkar J. : In spite of the mistake in the order as to the Notification delegating the power, evidence could be given to show that the delegation had in fact been made, because, the mistake did not vitiate the order. To admit such evidence would not be going behind the face of the order, because, what is necessary to appear on the face of the order is the satisfaction of the Authority of the necessity for detention for any of the reasons mentioned in r. 30(1) (b), and not his authority to make the order. [721 D, F G] Per Hidayatullah, Raghubar Dayal and Bachawat JJ. : There was only a clerical error in mentioning the wrong notification and being a venial fault did not vitiate the order of detention. Also, section 40(2) does not require the imposition of any conditions but only permits it. [737 F; 738 A; 741 G; 748 D] (iv) Per Hidayatullah, Raghubar Dayal and Bachawat, JJ. : There was nothing wrong in the District Magistrate taking a broad view of the petitioner 's activities so as to weigh the possible harm if he was not detained. Such a viewing of the activities of a person before passing the order against him does not necessarily spell out extra territoriality, but is really designed to assess properly the potentiality of danger which is the main object of the rule lo prevent. [737 G H; 748 D] (v) Per Hidayatullah, Raghubar Dayal, Mudhilkar and Bachawat, JJ. It is not necessary that the appropriate authority should entertain an apprehension that the person to be detained is likely to participate in every one of the activities referred to in the rule. D; 756 F]

Appeal No. 131 of 1966. Appeal by special leave from the Award dated, the September 10, 1965 of the Labour Court, Delhi, in I.D. No. 23 of 1965. M. C. Setavad, B. P. Maheshwari and M. section Narasimhan, for the appellant. , Madan Mohan, for the respondents. The Judgment of the Court was delivered by Shah, J. The appellant is engaged in carrying on the business of regulating forward trade in groundnut oil and mustard seed, and is recognised as an Exchange under the provisions of the Forward Contract Act, 1952. On June 1, 1964 the Government of India issued an order prohibiting trading in diverse commodities including groundnut oil and mustard seed, and in consequence thereof no further business could, be carried on through. the appellant Exchange. On July 17, 1965 the appellant served notices of retrenchment upon 30 out of its 37 employees and paid them salary for the period of notice and retrenchment compensation under section 25F of the 14 of 1947. The workmen then raised an industrial dispute. Conciliation proceedings to solve the dispute having failed, the Delhi Administration referred to the Labour Court the dispute whether retrenchment of the workmen by the appellant was unjustified and illegal. The workmen pleaded that retrenchment "on the ground of the ban imposed on forward trading in groundnut oil and mustard seed was mala fide" and that in retaining seven workmen the appellant did not follow, without any adequate ground, "the first come last go" rule, and on that account all the workmen were entitled to be reinstated with full wages from the date of determination of employment and with continuity of service. The appellant denied that in retrenching the workmen the management had acted mala fide, or that retrenchment amounted to an unfair labour practice. The appellant further submitted that retrenchment of the workmen was not liable to be challenged, because some junior members of the staff were retained, since the Company had recorded in the resolution its reasons for departing from the rule "first come, last go", and had "adhered to the principles contained in section 25F of the Industrial, Disputes Act as far as possible". At the hearing of the reference before the Labour Court, Delhi, counsel for the workmen conceded that the appellant was justified in retrenching its employees and that the number of employees required to carry on the work after the imposition of a ban against the business of the appellant could not exceed the number retained by the appellant. Counsel however contended that since the appellant failed in effecting retrenchment of the workmen 76 to observe the principle of "first come, last go", the order in its entirety was illegal. The Labour Court accepted the contention of the workmen and held that departure from a principle which was part of the law relating to industrial employment rendered the retrenchment of all workmen unjustified and improper and on that account retrenchment of clerks and peons who were affected by the departure from the rule was "illegal and mala fide". In the view of the Labour Court, workmen Nos. 1 to 14 and 16 to 23 in Ext. W 1 the List of Seniority were so affected. The Labour Court ordered that as the appellant required only four clerks in cluding the Accountant R. N. Seth, the Accountant and three senior clerks Shiv Das Sharma, Kishan Lal Grover and Surinder Singh be retained, and that the senior clerks named be reinstated with full "back wages", subject to adjustment of compensation money paid to them against their salary. The Court also directed that clerks Nos. 4 to 14 be paid, in addition to the retrenchment compensation received by them "50 per cent of the wages as compensation for the period they remained in unemployment up till the date when the award became enforceable", but they may not be reinstated, and that peons Tara Shanker and Om Prakash be reinstated with full wages and peons Nos. 18 to 23 in Ext. W 1 be paid in addition to the retrenchment compensation, "50 per cent of the wages they would have been entitled to. " With special leave, the Company has appealed to this Court. It is an accepted principle of industrial law that in ordering retrenchment ordinarily the management should commence with the latest recruit, and progressively retrench employees higher up in the list of seniority. But the rule is not immutable, and for valid reasons may be departed from. It was observed by this Court in Swadesamitran Ltd. vs Their Workmen(1) that if a case for retrenchment is made out, it would normally be for the employer to decide which of the employees should be retrenched; but there can. be no doubt that the ordinary industrial rule of retrenchment is "first come, last go", and where other things are equal, this rule has to be followed by the employer in effecting retrenchment. The question then is whether in departing from the rule, the management had acted mala fide, or that its action amounted to an unfair labour practice. The Tribunal has to determine in each case whether the management has in ordering retrenchment acted fairly and properly and not with any ulterior motive: it cannot assume from mere departure from the rule that the management was actuated by improper motives or that the management had acted in a manner amounting to an unfair labour practice. Nor has the Tribunal authority to sit in appeal over the decision of the management if for valid and justifiable reasons the management has departed from the rule that the senior employees may be retrenched before his junior in employment (1) 77 The management of the appellant has recorded a resolution which sets out the reasons for retention of the employees Ram Lal Sethi, Jagdish Pershad, Kidar Nath Thukral, Om Prakash Juneja, Jai Narain, Budhpal Singh and Laljimal. About Ram Lal Sethi the Company has stated that he was looking "after the accounts" and income tax cases of the Company and he was the only Accountant in the service of the Company and the senior most employee in the Accounts Section. The Labour Court has upheld his retention, and nothing more need be said about him. Jagdish Pershad was, it was stated, looking "after the share work, collection of building rent and court work and the realisation of rents" and that he was "in charge of the share work for the last many years". The Labour Court was of the view that a clerk employed in general office duties may be styled as a general assistant, and that the posts of clerks are interchangeable and since clerks are not trained to handle any Particular kind of work, the reasons given by the management for retaining this and other clerks cannot be accepted. However there was not in the employment of the Company any other clerk who could competently handle "share work" and attend to "court work". Clerical work ordinarily does not require specialisation and clerks may be transferred from one department to another without detriment to the business. But if a clerk has been working in a branch of the business and he is shown to possess special aptitude for a particular duty, performance of which requires application and experience, the management may in the interests of the business while retrenching others retain him even if he is junior to others. The rule of "first come, last go" is intended to secure an equitable treatment to the employees when, having regard to the exigencies of the business, it is necessary to retrench some employees. But in the application of the rule the interests of the business cannot be overlooked. The rule has to be applied where other things are equal. The management of the business must act fairly to the employees, where however the management bona fide retains staff possessing special aptitude in the interests of the business, it cannot be assumed to have acted unfairly merely because the rule "first come, last go" is not observed. If retention of a clerical employee is regarded as necessary by the management in the interests of the business, that opinion cannot be discarded merely on the ground that the clerk concerned is not the seniormost. There is nothing on the record to show that there was, among the senior employees, a clerk possessing the aptitude which Jagdish Pershad possessed. Kidar Nath Thakural was doing "typing work" and he was retained because he was the only typist with the Company. Our attention has not been invited to any evidence that there were other typists who were senior to him and they had been retrenched. A typist is undoubtedly a clerk in a business concern but that does not mean that every clerk, unless specially trained, can become a competent typist. Om Prakash Juneja was 78 retained because he was looking after the records of the Company and was "fully conversant as to where different type of records" were "lying", and that this employee was doing the work satisfactorily. A record keeper 's work in a business cannot be performed efficiently without special training or long experience. It would be difficult to hold that in retrenching employees, if the management retains an efficient record keeper in preference to a senior clerk who has no training or experience in record keeping, the management acts mala fide or improperly, or perpetrates an unfair labour practice. The Labour Court was of the view that retention of junior clerks in service could not be sustained on the ground that they had gained experience in a particular branch of clerical work. To accept that ground of preference, observed the Labour Court, was to destroy the rule "first come, last go" itself, since clerks are not specially trained to handle only a particular kind of work, and their work is easily convertible and one can replace another without dislocation in the department. For ordinary clerical work this is undoubtedly true, but even among the clerical staff if a degree of specialisation is necessary for discharging clerical duties efficiently retention of a junior clerk on the ground that the duty performed by him requires experience, and aptitude, will not expose the management to a charge of mala fide, or perpetration of an unfair labour practice. It was submitted than in J. K. Iran and Steel Company Ltd. vs Its workmen(1) this Court has hold that in the matter of retrenchment of clerical staff, departure from the rule "first come, last go" may not be recognised when it is sought to be justified on the ground that the workman retained has experience of a particular branch of the clerical work, and reliance was placed upon the following observations of Subba Rao, J. "But if the preferential treatment given to juniors ignores the well recognized principle in the industrial law that the "first come, last go" without any acceptable " or sound reasoning, a tribunal or an adjudicator will be well justified to hold that the action of the management is not bona fide. In regard to the clerks, what is the ground of preference given by the management? It is said that junior clerks, who were retained, have experience in a particular branch of clerical work. To accept this ground of preference without more is to destroy the principle itself. It may be that the clerks entrusted with such works may continue to do the same work till a readjustment of the work is made. There is no particular or scientific skill required in one class of work rather than in another. Clerks are not specially trained to handle (1) 79 only a particular kind of work. Their work is easily convertible and one can replace another without any dislocation in the department. " But the judgment does not enunciate a different principle. Ordinarily it is for the management to ascertain who on retrenchment should be retained in the interests of the business and the Industrial Tribunal will not interfere with the decision of the management, unless preferential treatment is actuated by mala fides. Where those retrenched and those retained are doing substantially the same kind of work and no special skill or aptitude is required for doing the work which the retained clerk is doing, preference given to the retained clerk on the ground that he has some ex perience in the branch may justifiably raise an inference of mala fides. Apparently in J.K. Iron and Steel Company 's case,(1) the work required to be done by the clerks retained needed no special aptitude, and the clerks retrenched could as well do the work which was done by the clerk retained. It was in those circumstances that the Court held that mere experience in a particular branch requiring no special aptitude was not sufficient to justify departure from the rule "first come, last go". In the present case the four clerks retained had, beside ex perience, special skill and aptitude in the particular branch of the business of the appellant they were attending to, and the management had retained them because of that skill or aptitude. The Labour Court inferred mala fides merely because the management departed from the rule "first come, last go". Whether the management in departing from the rule has acted mala fide, must depend upon the circumstances of the case : it cannot be inferred merely from departure from the rule. We may turn to the cases of the three peons, Jai Narain, Budhpal Singh Laljimal. Retention of Jai Narain has been upheld by the Labour Court and, nothing more need be said about him. The other two peons are Budhpal Singh and Laljimal who were working as chowkidars. They are said to be "the senior most chowkidars", and there is no evidence to show that there were in the employment of the Company other persons who could have worked as chowkidars. Peons Budhpal Singh and Laljimal were retained because they were the "senior most chowkidars". Retention of the "senior most chowkidars" would not be interfered with by the Tribunal in the absence of clear proof of mala fides. It cannot be assumed without more that every peon can do the work of a chowkidar. The management may ordinarily require the chowkidar to possess good physique and ability to maintain watch over the building and its assets. There is no evidence that the two peons Tara Shanker and Om Prakash had ever worked as chowkidars or were suitable for work as chowkidars. The order (1) 80 of reinstatement of Tara Shanker and Om Prakash will stand vacated. The second part of the order directing that clerks from Nos. 4 to 14 and peons from Nos. 18 to 23 in the seniority list, shall be entitled in addition to the retrenchment compensation already paid to them 50 per cent of the wages as compensation for the period they remained unemployed is wholly indefensible. These employees had been properly retrenched: that was conceded before the Labour Court. It was also conceded that for carrying on the business of the appellant after imposition of the ban by the Central Government, not more than seven employees were required. If the management was entitled to retrench 30 workmen and did so after paying wages for the period of notice and retrench ment compensation, we fail to appreciate the grounds on which an order for payment of 50 per cent of the wages in addition to retrenchment compensation may be made. Retrenchment compensation is paid as solatium for termination of service resulting in unemployment and if that compensation be paid there can be no ground for awarding compensation in addition to statutory retrenchment compensation. If the Industrial Tribunal comes to the conclusion that an order of retrenchment was not properly made and the Tribunal directs reinstatement, an order for payment of remuneration for the period during which the employee remained unemployed, or a part thereof may appropriately be made. That is because the employee who had been retrenched for no fault of his had been improperly kept out of employment, and was prevented from earning his wages. But where retrenchment has been properly made and that order has not been set aside, we are not aware of any principle which may justify an order directing payment of compensation to employees properly retrenched in addition to the retrenchment compensation statutorily payable. The appeal is therefore allowed and the award made by the Labour Court is substituted by the following award: "That retrenchment of the workmen was not unjustified or illegal and the workmen are not entitled to any relief". In the circumstances of the case, there will be no order as to costs. Appeal allowed.

IN-Abs

The respondents (workmen of the appellant) raised on indus trial dispute and pleaded before the Labour Court that the appellant 's action in retrenching some of its employees was mala fide, as the appellant did not follow the "first come. last go" rule. The appellant justified its action on the ground that the appellant had recorded valid reasons for departing from the rule. The reasons were that, one of the employees retained was the only person capable of looking after the appellant 's share work and court work, another was the only typist with the appellant, a third was the record keeper who alone knew where the different types of records were kept, and the other two were peons who were retained as chowkidars because, there was no other person who could do that work. The Labour Court accepted the respondents ' contention, ordered the reinstatement of those employees who were affected by the departure from the rule, and directed that those employees who were properly retrenched should be paid in addition to the retrenchment compensation under section 25F of the , which had been paid by the appellant 50 % of their wages as compensation till the date when the award, became enforceable. In appeal to this Court. HELD:(i) The Labour Court was in error in inferring mala )ides merely because the management departed from the rule of "first come, last go. " Where other things are equal, the ordinary industrial rule has to be followed by the employer, but the rule is not immutable. It is for the management to ascertain who, on retrenchment, should be retained in the interests of the business, and the industrial tribunal will not interfere with the decision of the management, unless preferential treatment is actuated by mala fides. Preference given to the retained employees on the ground of mere experience may justify an inference of mala fides; but in the present case, the employees retained had, beside experience, special skill, or aptitude in the Particular branch of the business of the appellant they were attending to, and the management had retained them because of that skill, or aptitude. [76 E F 79B E]. Swadesamitran Ltd. V. Their Workmen, ; and J.K. Iron and Steel Company Ltd. vs its Workmen. , referred to. (ii) Where retrenchment has been properly made and that order has not been set aside, there is no justification for directing payment of compensation to employees Properly retrenched in addition to the retrenchment compensation statutorily payable. [8O E].

Appeal No. 257 of 1964. Appeal by special leave from the judgment and order dated February 19, 1963 of the Government of India, Ministry of Mines and Fuel, New Delhi on an application for review under rule 54 of the Mineral Concession Rules 1960. section N. Andley, Rameshwar Nath, P. L. Vohra and Mahinder Narain, for the appellant. C. K. Daphtary, Attorney General, R. Ganapathy lyer and B. R. G. K. Achar, for respondent No. 1. R. N. Sachthey, for respondent No. 2. The Judgment of the Court was delivered by Hidayatullah, J. The appellant Messrs. Nandram Hunatram of Calcutta, a firm consisting of four partners including one Kishan Lal Aggarwal, held a mining lease for coal in respect of Handidhua Colliery for a period of 30 years commencing on April 6, 1959. Under Part VII of the lease, which contained the covenants of the lessee, the firm had undertaken to commence mining operations within one year from the date of the execution of the lease and then to continue the work of searching and winning minerals without voluntary intermission in a skillful and workman like manner. The firm had appointed one M. L. Goel as the Manager and Kishan Lal Aggarwal as the occupier of the colliery. It appears (and in fact it is not denied) that the partners fell out among themselves and as none of them was willing to spend money on the colliery, work deteriorated and came to a standstill in May 1962. Goel reported to the State Government that the wages of the labourers had not been paid for weeks, that work had stopped at the colliery and that even the essential services were not being maintained owing to non payment of wages. He wrote to the firm and Government early in the first week of May, bringing to their notice that the colliery was in danger of being flooded if the essential services stopped working. On May 9, 1962 the essential services stopped working as their wages had not been paid for several weeks. The colliery began to get flooded when the pumps stopped and it was apprehended that within the next few hours the pumps would be drowned and the colliery lost. Government, however, stepped in and made a promise to the essential workmen that their wages would be paid and this saved the colliery. On May 14, the Chief Inspector of Mines was informed by Kishan Lal Aggarwal that he was restrained by the other 106 Partners of the firm from making payment for running expenses of the colliery and that he was not in a position to perform his duties as an occupier. He accordingly resigned his office. Goel also resigned and on May 16, 1962 the Sub divisional Officer, Talchar informed Government that the situation had become very alarming and that some action was absolutely necessary. Government thereupon gave a notice on May 19, 1962 asking the firm to remedy the defect within sixty days of the receipt of the notice failing which Government threatened to take over the colliery from the firm. As the firm did nothing to remove the defects and did not request for extension of time, Government took over the colliery and terminated the lease. The firm thereupon filed an application for revision before the Central Government under Rule 54 of the Mineral Concession Rules 1960. The Central Government asked for the comments of the State Government on the application and invited the firm to make its own comments upon the reply of the State Government. Taking the entire matter into consideration the Central Government by order, February 19, 1963, rejected the application for revision. The present appeal is against the order of the Central Government by special leave of this Court. It was admitted in the application for revision and it is not denied before us that the partners were quarrelling among themselves and the work at the colliery had therefore stopped. It is admitted that the wages of the labourers were not paid for about five weeks before Government sent its notice on May 19, 1,962. It is further admitted that the essential services had also stopped working and that but for the timely action of the Government, the colliery would have been flooded in a matter of hours and probably rendered unworkable till dewatered. With this background in mind we have to consider the objections of the firm to the order of the Central Government in the first instance and of the State Government in the final analysis. Clause (3) of Part VII of the lease is one of the covenants by the lessee and under it the lessee undertook to continue work, without voluntary intermission, in a skilful and workman like manner. Under cls. (i) to (x) of Rule 41 of the Mineral Concession Rules, 1949 and under Rule 27(5) of the Mineral Concession Rules, 1960 power is conferred on the State Government to require the lessee by notice to remove a breach within 60 days of the receipt of notice and in default to determine the lease and forfeit the whole or part of the security in deposit. Under Rule 27(1)(f) the lessee is also required to conduct operations in a proper, skilful and workmanlike manner. It is abvious that there was a breach by the lessee of the covenants and the Mineral Concession Rules when the firm stopped working the colliery. Even if the firm did not order the stoppage of the work at the colliery it is clear from the complaints 107 of Goel and Kishan Lal Aggarwal that no payment was being made to the labourers and they stopped work. On record there are many telegrams and letters sent by the Workers ' Association to Government complaining of the failure of the firm to pay their wages for weeks. It is thus clear that action was absolutely necessary to save the colliery from being ruined. It is contended, however, that the wages were paid in full on the 17th of July but that obviously cannot do away with voluntary intermission which had already taken place for a few weeks. The firm in its representation to the Central Government said that it had plans to raise as much as 240,000 tons of coal per year but their performance shows that in April, 1962 they had raised less than 2,000 tons and nothing in May, June and July. In these circumstances, there is no merit whatever in the submission of the firm that the action by the State Government was arbitrary and high handed. It is plain that the firm did not fulfil its obligations under the lease and, whatever the reason, it was guilty of voluntary intermission in the working of the colliery and of endangering it by neglect. This entitled the State Government to step in and determine the lease under the terms of the lease and the provisions of the Mineral Concession Rules. It is, however, argued before us that the Central Government did not give a hearing to the firm and also did not give any reasons in its order dismissing the application for revision. Reliance is placed upon two recent decisions of this Court which, following the earlier decision reported in Harinagar Sugar Mills Ltd. vs Shyam Sundar Jhunjhunwala(1) have laid down that Government should give reasons when it performs quasi judicial functions such as hearin appeals and revisions. The two cases are Madhya Pradesh Industries Ltd. vs Union of India and Ors.(2) and Aluminium Corporation of India Ltd. vs Union of India and Ors(3) In Harinagar Sugar Mills(1) the order was reversed on the ground that reasons for the decision should have appeared. In the Aluminium case there was dispute as to how much scrap was remelted and Government gave its decision on a report received behind the back of the aggrieved party again without stating why a part of the assessee 's case was rejected. In the Madhya Pradesh Industries case it was pointed out that an order affirming an earlier decision need not fail because it does not repeat the same reasons over again. The Mineral Concession Rules make it incumbent on the Central Government to obtain the comments of the State Government upon the application for revision and cast a duty on the Central Government to afford an opportunity to the applicant to make representations in respect of the comments of the State Government. This procedure was correctly followed and the Central Government thus had a detailed discussion of the pros and cons of the case before it. The facts in the case were quite clear and spoke (1) ; , (2) ; (3) C.A. No.635 of 1964 decided on September 23,1965. 108 for themselves. The belated attempt to pay the back wages of the workmen did not undo the voluntary intermission for a significantly long period and did not wipe off the dereliction on the part of the firm by which the existence of the colliery was gravely endangered. The documents on the record quite clearly establish that the colliery was being flooded as the essential services had stopped functioning and but for the timely intervention of the State Government the colliery would have been lost. In these circumstances, it is quite clear that the action of the State Government was not only right but proper and this is hardly a case in which any action other than rejecting the application for revision was called for and a detailed order was really not required because after all the Central Government was merely approving of the action taken in the case by the State Government, which stood completely vindicated. The order of the Central Government is clearly sustainable on the ma terial and it is not said that anything has been withheld from us. The action of the State Government far from being arbitrary or capricious was perhaps the only one to take and all that the Central Government has done is to approve of it. The appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellant firm held mining lease of a colliery on the condition to continue the work, without voluntary intermission, in a skillful and workman like manner. The partners fell out amongst, themselves, the work of the colliery stopped, wages of the labourers were not paid, the essential services stopped working, and the colliery began to get flooded. The State Government stepped in and made a promise to the essential workmen that their wages would be paid and this saved the colliery. The State Government gave a notice asking the firm to remedy the defect within sixty days failing which it would take over the colliery. As the firm did nothing to remove the defects and did not request for extension of time, the State Government took over the colliery and terminated the lease. The firm filed a revision before the Central Government. The Central Govern ment asked for the comments of the State Government and invited the firm to make its own comment upon the reply of the State Government. Taking the entire matter into consideration, the Central Government rejected the revision. In appeal to this Court, the firm contended that the action by the State Government was arbitrary and highhanded and that the Central Government did not give a hearing to the firm and also did not give any reasons in its order dismissing the revision. HELD:The action of the State Government far from being arbi trary or capricious was not only right but proper. This$ was hardly a case in which any act ion other than rejecting the application for revision was called for and a detailed order was really not required because after all the Central Government was merely approving the action taken in the case by the State Government, which stood completely vindicated. [108 B C] The Mineral Concession Rules make it incumbent on the Central Government to obtain the comments of the State Government upon the application for revision and cast a duty on the Central Government to afford an opportunity to the applicant to make representations in respect of the comments of the State Government. This procedure was correctly followed and the Central Government thus had a detailed discussion of the pros and cons of the case before it. [107 G]. Harinagar Sugar Mills Ltd. vs Shyam Sundar Jhunjhunwala, [ ; , Madhya Pradesh Industries Ltd. vs Union of India. [1966] J.S.C.R. 466 and Aluminium Corporation of India Ltd. vs Union of India and Ors., C.A. No. 635/64, dated 22 1965] referred to. 105 The firm did not fulfil its obligations under the lease and, whatever the reason, it was guilty of voluntary intermission in the working of the colliery and of endangering it by neglect. This entitled the State Government to step in and determine the lease under the terms of the lease and the provisions of the Mineral Concession Rules. [107 C D].

iminal Appeal No. 37 of 1964. Appeal from the judgment and order dated November 26, 1963 of the Allahabad High Court in Government Appeal No. 782 of 1962. section P. Sinha, G. L. Sanghi, Ganpat Rai, E. C. Agarwala, section section Khanduja for P. C. Agarwala, for the appellant. Atiquor Rehman and O. P. Rana, for the respondent. Antiquor Rehman and O.P. Rana,for the respondent. 69 The Judgment of the Court was delivered by Shah, J. The appellant was charged before a Magistrate, 1st Class, at Varanasi with being, on November 25, 1960, in possession of counterfeit labels which could be used to pass off his "tobacco tins" as the goods of M /s Nandoo Ram Khedan Lal bearing 'Titli" (butterfly) trade mark, and with being in possession for ale of "tobacco tins" bearing counterfeit trade marks of the genuine "Titli" brand trade mark of M/s Nandoo Ram Khedan Lal. The Trial Magistrate convicted the appellant and sentenced him to suffer simple imprisonment for three months for offences under section 78 read with section 77 and under section 79 of the 43 of 1958, and directed the two sentences to run consecutively. In appeal to the Court of Session, Varanasi, the order passed by the Trial Magistrate was set aside and the appellant was acquitted principally on the ground that the prosecution was barred because it was not instituted within the period prescribed by section 92 of the Act. The High Court of Judicature at Allahabad however set aside the order of acquittal and restored the conviction, but reduced the sentence on each of the charges to a fine of Rs. 1,000/ . With certificate granted by the High Court under article 134 of the Constitution, this appeal has been preferred. M/s Nandoo Ram Khedan Lal who will hereinafter be called "the complainants" carry on in the town of Varanasi, business in "chewing tobacco". They were marketing their product for the last many years under a trade mark styled "Titli" (butterfly). The label on the containers of "chewing tobacco" shows figures of three butterflies on yellow green background and the legend "Titli" in Devnagari and English characters. The appellant who carried on business also in "chewing tobacco" commenced market his goods in the name of "Titli" (partridge). The label on the containers had figures of four butterflies on leaf green background, and the legend "Titli" in Devnagari and English characters. The colour schemes of the butterflies in the complainants ' label and of the butterflies in the appellants label were substantially similar. The complainants gave information to the police in November 1960 that the appellant had infringed their trade mark by marketing his goods under a trade mark calculated to deceive the purchasers into believing that they were purchasing the product of the complainants. The police submitted a charge sheet against the appellant for offences under section 78 read with section 77 and, section 79 of the . The Trial Magistrate observed that there was ' close resemblance between the label used by the complainants and the label used by the. appellant, and that a vast mejority of users of such tobacco being illiterate were likely to be "carried" 'away by ' a pictorial ' device of "Titli" 70 (butterfly)" since they were incapable of reading and understanding the "descriptions on the label in Devanagri and in English". With this view the Sessions Judge and the High Court agreed. Before us, no substantial argument has been advanced which would justify us in taking a different view on this question. It was however contended for the appellant that the case against him must still fail because the prosecution was barred by section 92 of the , and also because there was such acquiescence on the part of the complainants as would justify an inference that they had assented to the appellant using the trade mark under which his product was marketed. To appreciate these two contentions, it is necessary to refer to certain facts. Some time before 1955 the appellant had started marketing his goods under the trade mark "Titli": there is however no evidence about the general get up of the label on the containers of "chewing tobacco" marketed by him at that time. On January 6, 1955 the complainants wrote a letter to the appellant claiming that they were the sole proprietors of "Titli" brand, that "Titli" was their registered trade mark, and the appellant had "with criminal intention started making illegal and unlawful use of that trade mark" and had copied their trade mark and was using it on similar but inferior "chewing tobacco" and was passing off his goods in the market as the product of the complainants; and on those allegations the complainants called upon the appellant to desist from selling or disposing of any of the goods with labels resembling to the complainants ' trade mark and thereby deceiving the public into purchasing the appellant 's product when the public desires to purchase the complainants ' product and making several other incidental requisitions. In reply, the appellant denied that the complainants were the sole proprietors of "Titli" trade mark and that in any event the appellant had not used the trade mark "Titli" on any goods manufactured by him. The appellant also claimed that he had been marketing his goods in the name of "Titli" for many years and that the complainants were seeking to pass off their product as that of the appellant. After this correspondence no steps were taken by the complainants against the appellant till November 1960. The appellant was on information lodged by the complainants prosecuted for offences under section 78 read with section 77 and section 79 of the . The appellant submitted that whereas the complainants had on their own admission learnt about infringement of their trade mark in 1955, criminal proceedings started in November 1960 were barred under section 92 of the . It may be noticed however that the offences charged against the appellant 71 were alleged to have been committed on November 25, 1960, an& the charge sheet was lodged in the Court of the Magistrate, 1st Class, on March 22, 1961. Section 92 of the , insofar as it is material, provides: "No prosecution for an offence under this Act. . . . . shall be commenced after the expiration of three years next after the commission of the offence charged, or two years after the discovery thereof by the prosecutor, whichever expiration first happens." In substance the appellant in relaying upon the bar of section 92 seeks to substitute for the words "after the discovery" the words " after the first discovery", and for the words "after the commission of the offence charged" the words "after the commission of the first infringement of trade mark". The Legislature has deliberately not used those expressions, and there is no warrant for substituting them in the section and thereby substantially modifying the section. Counsel for the appellant however submitted that in inter preting section 15 of the Merchandise Marks Act 4 of 1889, which is similar to section 92 of Act 43 of 1958, the Madras High Court had in Ruppell vs Ponnusami Jevan and Another(1) held that a prosecution under section 15 of the Merchandise Marks Act 4 of 1889 commenced after the expiration of the period prescribed by the Legislature from the date when the infringement was first discovered, is barred and that this Court had in Dau Dayal vs State of Uttar Pradesh(1) affirmed that view. In Ruppell 's case(1) the accused was charged with committing an offence punishable under section 15 of the , on a complaint that the accused had infringed the complainant 's trade mark. It appeared at the trial that the complainant had discovered in 1893 that goods were sold by the accused marked with a trade mark which was similar to his trade mark, and the complainant had called upon the accused to discontinue user of the counterfeit trade mark and to render an account of sales made by him. In 1898 the complainant prosecuted the accused for infringing his trade mark. The High Court of Madras held that as the complainant did not show that he believed the use of the alleged counterfeit trade mark had been discontinued after the first discovery and protest in 1893, prosecution of the accused in 1898 under section 15 of the , was barred. This view was followed by the Bombay High Court in Abdulsatar Khan Kamruddin Khan vs Ratanlal Kishenlal,(3): The Court observed in that case that under section 15 of the , if the offence of infringement of a trade or property mark is a continuing one, and if no discontinuance is proved, time runs from the first (1) I.L.R. (3) I.L.R. (2 ) ; 72 instance of infringement or from the first discovery of the infringement. Abdulsatar Khan 's case(1) was however overruled by a full bench of the Bombay High Court in Emperor vs Chhotalal Amarchand.(2) In that case the Court dissenting from the judgment of the Madras High Court in Ruppell 's case(1) and overruling the decision in Abdulsatar Khan 's case(1) held that under section 15 of the , starting point of limitation in all cases is the date of the offence charged. In Dau Dayal 's case,(1) Venkatarama Aiyar, J., incorporated substantially the whole of the judgment in Ruppell 's case: (3) but in Dau Dayal 's case(1) the matter in dispute was entirely different. In that case the accused was prosecuted for offences punishable under sections 420, 482, 483 & 486 I.P. Code on the allegation that he was in possession of Bidis which bore counterfeit trade marks. A complaint was filed against the accused on March 26, 1954, and after investigation by the police, a charge sheet was filed in the Court of the Magistrate on September 30, 1954. The accused contended that the offence was discovered on April 26, 1954, and since process was issued by the Magistrate on July 22, 1955, i.e. more than one year after discovery of the offence he could not, because of section 15 of the Merchandise Marks Act, 1889, be prosecuted. This Court rejected the plea raised by the accused. An excerpt from the judgment in Ruppell 's case(1) was incorporated only to indicate the general tenor of section 15, and not with a view to express approval of all that was observed therein. We are however in this case not called upon to consider whe ther Ruppell 's case(1) was correctly decided. That case was decided on the interpretation of section 15 of the Merchandise Marks Act, 1889. Suffice it to say that the Legislature has in enacting the 43 of 1958 made a substantial departure from the language used in section 15 of Act 4 of 1889. For the sake of convenience the material parts of the two sections may be set out in juxtaposition: Section 15 of Act 4 of 1889 No such prosecution. . shall be commenced after the expiration of three years next after the commission of the offence, or one year after the first discovery thereof by the prosecutor, whichever expiration first happens. (1) I.L.R. I.L.R. Section 92 of Act 43 of 1958 No prosecution for an offence under this Act. . shall be commenced after the expiration of three years next after the commission of the offence charged, or two years after the discovery thereof by the prosecutor, whichever expiration first happens. (2) I.L.R. (4) A.T.R. 73 The Legislature in enacting section 92 of Act 43 of 1958 has clearly made departure from section 15 of Act 4 of 1889 in important respects. Whereas under section 15 prosecution had to be commenced within three years next after the commission of the offence or within one year after the first discovery thereof by the prosecutor, under section 92 the prosecution must be commenced before the expiration of three years next after the commission of the offence charged, or two years after the discovery by the prosecutor of the offence charged, whichever expiration first happens. Under section 92 it is plain the period commences to run from the date of the commission of the offence charged or from the date of discovery by the prosecutor of the offence charged. The argument which could be raised under section 15 and was approved in Ruppell 's case(1) that the Legislature intended to provide that the period shall commence from the first discovery thereof by the prosecutor is plainly not open to the offender infringing the provisions of the under section 92. The period has to be computed for the purpose of the first part of the section from the date of the commission of the offence charged, and under the second part from the date of discovery of the offence charged, and not from the first discovery of infringement of trade mark by the prosecutor. The plea that the complainants had assented to the use of the trade mark by the appellant, and on that account the latter could not be said to have falsified a trade mark or to have falsely applied the trade mark, is without substance. Section 77, it is true, provides that a person shall be deemed to falsify a trade mark who either (a) without the assent of the proprietor of the trade mark makes that trade mark or a deceptively similar mark; or (b) falsifies any genuine trade mark, whether by alteration, addition, effacement or otherwise. If there is assent of the proprietor to the use by the accused of a trade mark which is deceptively similar, there would be no falsification or false application of the trade mark: but protest against infringement of the complainants ' trade mark cannot be regarded as assent to the use or application of the false trade mark. The High Court has on a review of the evidence held that there was no acquiescence by the complainants from which assent may be inferred, and we see no reason to differ from that finding. The appeal therefore fails and is dismissed. Appeal dismissed.

IN-Abs

In 1955 the complainants protested to the appellant that he was infringing their trade mark but no further action was taken by them at that time. In November 1960, the appellant was found in possession of labels and tobacco tins carrying marks deceptively similar to the complainants ' trade mark. After investigation the police lodged in March 1961 a charge sheet against the appellant in respect of alleged offences under section 78 read ' with section 77 and P. 79 of the . The trial Magistrate convicted the appellant who was however acquitted by the Sessions Judge principally on the ground that the prosecution was barred as it was not instituted within the period prescribed by section 92 of the Act. In appeal against the order of acquittal the High Court convicted him but granted him a certificate under Art, 134 of the Constitution. HELD:The period under section 92 of the commences to run from the date of the commission of the offences charged or from the date of discovery by the prosecutor of the offence charged. The period does not have to be reckoned from the first discovery of infringement of trade mark by the prosecutor. In this respect section 92 of the Act of 1958 is materially different from section 15 of the Merchandise Marks Act 4 of 1889. [73A D] Ruppell vs Ponnusami Tavan and Anr., I.L.R. and Dau Dayal vs State of Uttar Pradesh, ; , distinguished. Abdulsatar Khan Kamruddin Khan vs Ratanlal Kishenalal, I.L.R. and Emperior vs Chhotalal Amarchand, I.L.R. , referred to. There was nothing to substantiate the appellant 's plea based on section 77 of the Act that the complainants had acquiesced in his use of the deceptive trade mark.

Appeal No. 274 of 1964. Appeal from the judgment and decree dated November 3, 1960 of the Madras High Court in C.C.C. Appeal No. 61 of 1957. A. K. Sen, V. Bhagat and D. N. Gupta, for the appellant. section T. Desai, Kesawlal and R. Ganapathy Iyer, for the respondent. The Judgment of the Court was delivered by Subba Rao, J. The appellant, Ellerman Bucknall Steamship Company Ltd., hereinafter called the shipowners, are a limited liability company incorporated under the law in the United Kingdom carrying on business as common carriers by sea. They own a ship named "CITY OF LUCKNOW". Messrs. Best & Co., Ltd., having their office at Madras, are the local agents of the shipowners. Sha Misrimal Bherajee, the respondent herein, hereinafter called the buyer, entered into two contracts with the British Mercantile Company Limited, New York, herein after called the seller, for the purchase of Fresh Monsanto Polystyrene Injection Moulding Power (not reground) in granueles manufactured by Monsanto Chemical of New York. In respect of the first contract, the purchaser placed two indents dated December 26, 1950, and December 27, 1950, for the said stuff of value of Rs. 13,500/ and Rs. 6,750/ respectively. The buyer entered into a second contract with the seller for the purchase of 24 drums of the same material of the value of Rs. 16,000/ under an indent dated January 23, 1951. In respect of the first contract and indents the 94 buyer opened and confirmed an irrevocable Letter of Credit No. 4748 dated December 28, 1950, for U.S. $4535 plus war risk with the Eastern Bank Limited. In regard to the second contract he opened another irrevocable Letter of Credit No. 5012 dated January 31, 1951 for U.S. $3,330. As the said Bank had no branch of its own at New York, it arranged with the Marine Midland Trust Company of New York for payment of the bills that might be presented by the seller in New York. Pursuant to the said contracts, the seller delivered to the shipowners certain consignments in reused fibre drums. The bills of lading issued by the shipowners described the drums simply as drums. After taking a letter of indemnity to cover against any loss, the shipowners issued clean bills of lading. The seller negotiated the bills of lading with the Marine Midland Trust Company, New York and obtained payment of U.S. $6,998.75 under the letters of credit. Thereafter, the bills of lading were forwarded to the Eastern Bank Limited, Madras, and the buyer paid to the said Bank a sum of Rs. 33,012 5 9 against the said letters of credit. When the shipment arrived it was discovered that the goods sought to be delivered did not answer the description given in the documents. Indeed ', the drums contained only coal dust and factory shavings. The buyer took appropriate proceedings against the seller in the American, courts and realized a sum of Rs. 13,604 9 0. Thereafter, he instituted the present suit in the City Civil Court, Madras, for the re covery of a sum of Rs. 23,760 15 6 against the Bank as well as the shipowners. To that suit the Bank was made the 1st defendant and the shipowners, the 2nd defendant. Broadly stated, the basis of the claim against the Bank was that, though under the letters of credit the Bank had the authority to pay only against clean bills of lading, it paid against unclean bills of lading. The cause of action against the shipowners was that they made a misrepresentation that the bills of lading were clean whereas in fact they were not so, with the result, acting on that misrepresentation, the agent of the Bank paid against the said bills of lading which it would not have done had it known the real facts. The learned City Civil Judge held that the bills of lading were clean ones but in respect of one of the letters of credit the Bank should not have accepted the shipping documents which related only to a part of the goods contracted for. On that finding the learned Judge held that the Bank was liable to refund the amount paid only under one of the letters of credit. As against the shipowners he came to the conclusion that even if the bills were not clean, the Bank would nevertheless have paid the amount, as the terms of the letters of credit were comprehensive enough to authorize such payments. In the result, he dismissed the suit against the shipowners but decreed it in part against the Bank. The Bank and the shipowners preferred appeals to the High Court against the said decree insofar as it went against each of them. 95 The appeals were heard by a Division Bench of the Madras High Court. The learned Judges of the High Court came to the conclusion that the shipowners with the knowledge that the bills of lading would be negotiated gave, at the request of the seller, clean bills of lading while as a matter of fact only unclean bills of lading should have been given. They further held that the purchaser was damnified, as on the basis of the misrepresentation found in the bills of lading the Bank paid the amount against the shipping documents which it would not have done if it had known that the bills of lading were unclean. In the result, they gave a decree for the entire suit claim against the shipowners. They allowed C.C.C.A. No. 61 of 1957 against the shipowners but dismissed it against the Bank. C.C.C.A. No. 54 of 1957, the appeal filed by the Bank, was allowed. The shipowners have preferred the present appeal against the decree given by the High Court against them. The argument of Mr. A. K. Sen, learned counsel for the appellant, may broadly be placed under the following three heads: (1) While the respondent based his cause of action on a breach of contract, the High Court gave the relief founded on deceit; (2) under common law or contract the appellant had no duty or obligation to make a statement in the bills of lading that the drums were old ones and, therefore, the non mention of that fact could not have misled the Bank into paying against the shipping documents under the letters of credit; and (3) the bills of lading were clean ones, for the oldness or newness of drums had no real impact on the contents thereof, for both, were equally suitable containers of the articles to be supplied. Mr. section T. Desai. learned counsel for the respondent, while made a faint attempt to sustain the decree of the High Court on the basis of breach of contract, seriously sought to support it on the doctrine of deceit. He argued that there was a fraudulent misrepresentation by the appellant in collusion with the seller to the effect that the bills of lading were clean while in fact they were not and that, acting on that misrepresentation, the Bank, through its agent at New York, paid the amount to the seller under the letters of credit against the shipping documents, which it would not have done if such a misrepresentation had not been made. He countered the contentions of the learned counsel for the appellant that the High Court gave a decree on a cause of action different from that on which the plaint was based. The first contention turns upon the pleadings as well as on the conduct of the parties during the trial and the appeal. A perusal of the plaint discloses that the 2nd defendant was sought to be made liable both in contract and in tort. Paragraph 9 of the plaint reads thus: "if the first defendants state that they acted on the terms of the bills of lading and are therefore protected, the plaintiffs 96 also charge that in any event the second defendants are liable, for issuing the bills of lading without disclosing the true state of facts and for inserting statements in the bills of lading which are now admitted to be untrue. The plaintiffs also charge that the defendants are precluded from denying the correctness of the statement in the bills of lading as regards the apparent good order and condition as mentioned in the bills, of lading. The plaintiffs charge that the second defendants and the shippers acted collusively with a view to enable if possible the shippers to obtain moneys against goods which were not the goods agreed to be sold and which were not consigned according to the contract. The very fact that the second defendants have obtained an indemnity for issuing the bills of lading without disclosing the real state of facts would show their consciousness that they were not right in issuing the bills of lading in the terms they did and whatever their rights as against the shippers may be on the indemnity, the plaintiffs are not concerned with the same, but the second defendants are liable to the plaintiffs to make good the loss resulting by reason of a representation acted on by which the plaintiffs have been damnified". This passage in the plaint contains all the necessary allegations to sustain a claim in tort. It is clear, therefore, that the claim of the buyer against the shipowners was also based upon the misrepre. sentation made by the latter in the bills of lading. In the written statement the appellant denied the allegations in para 9 of the plaint and stated that there was no secret arrangement between them and the seller in regard to the goods or the containers. The shipowners also denied that they inserted any untrue statement in the bills of lading acting in collusion with the seller to enable the latter to obtain money against the bills of lading. Issue 6 framed by the learned City Civil Judge reads: "Did the second defendant act bona fide throughout in issuing the bills of lading and in taking an indemnity from the shippers?". The judgment of the learned City Civil Judge discloses that the question of misrepresentation by collusion was argued and the learned Judge held that the Bank was not misled, as under the letters of credit it had to pay the amount against the bills of lading, whether clean or unclean. Before the High Court also the question of misrepresentation by the shipowners was expressly raised and was accepted by it. We cannot, therefore, agree with the contention of the learned counsel for the appellant that the High Court had made out a new case which was not raised in the plaint: indeed, the claim on the basis of misrepresentation was made in the plaint, denied by the appellant in the written statement and argued in both the courts below. There are, therefore, no merits in the first contention. 97 On the question of the appellant 's liability to the buyer in contract, we are satisfied that there is no basis for it. Indeed, learned counsel for the respondent did not seriously press the point, though he did not give it up altogether. A bill of lading serves three purposes, viz., (i) it is receipt for the goods shipped containing the terms on which they have been received; (ii) it is evidence of the contract for carriage of goods , and (iii) it is a document of title for the goods specified therein. The contract of the shipowners in the bill of lading is that they will de.liver the goods at their destination "in the like good order and condition" in which they were when shipped. In terms of the contract the shipowners delivered the goods to the buyer in the drums. The consignee incurred damages not because of any defect in the drums but because the seller sent goods different from those he had agreed to sell to him. Therefore, the shipowners were not liable for any damages to the purchaser on the basis of breach of any of the terms of the contract. No further elaboration on this point is called for, as finally this point was not seriously pressed by the learned counsel for the respondent. Now we shall consider the main point raised in the appeal, namely, the liability of the appellant in tort. Before we advert to the question of law it would be convenient to notice the relevant facts. Exhibit A 1 dated December 26, 1950, the indent placed by the buyer with the seller in respect of Fresh Monsanto Polystyrene Injection Moulding Powder of value of Rs. 13,500/ . The packing was to be in new fibre drums each containing 250 lbs. Exhibit A 2 is another indent dated December 27, 1950, placed by the buyer with the seller. The quantity required thereunder was of the value of Rs. 6,750/ and the packing was to be in new fibre drums each containing 250 lbs. Exhibit A 5 is the third indent dated January 23, 1951, for the same goods worth Rs. 16,500/ with similar terms. The buyer opened two letters of credit, Exs. B 1 and B 2, with the Eastern Bank Limited, Madras, for U.S. $ 7,625. Exhibits B 28 and B 29 are the letters written by the Eastern Bank Limited, Madras, to the Marine Midland Trust Company, New York, to open letters of credit for payment of the bills that might be presented by the seller. Exhibit B 1 reads: "We hereby authorise and request you and/or your Agents and/or Representatives at New York to open a confirmed and irrevocable bank credit in favour of Messrs. British Mercantile Company Limited etc., and to make payment or payments thereunder on our behalf. . against documents purport ing to be invoices, shipping specifications, Bills of Lading and Policies and/or Certificates of Insurance covering Marine and War Risks. . We agree that this credit is subject to U.S.A. regulations and practice." 98 Exhibit B 2 is also a similar letter of credit. Clause 3 of exhibit 28 reads: " Clean on Board" Bills of Lading in complete sets of at least two signed copies to be made out to the order of the Eastern Bank Limited. or to order blank endorsed and marked by the shipping company 'Freight paid '. " Exhibit B 29 also contains similar recitals. It will be seen that though the words "clean on board" bills of lading are not found in exhibit B 1 and B 2, but in the directions given to the Marine Midland Trust Company, New York, the said words are clearly found. The following relevant recitals are found in a sample of the bills of lading: "Received in apparent good order and condition from British Mercantile Company, Limited, City of Lucknow, to be transported by the good Vessel City of Lucknow to sail from the Port of New York for the East Indies. . . . . Total 21 packages, said to weigh 9,920 lbs. said to be marked and numbered as below (weight, gauge, measurement, contents, conditions, quality and value unknown, statements of same herein being made solely on shipper 's declaration and this bill of lading not to be deemed any evidence thereof) to be delivered as provided hereunder (liability as carrier to end without notice) in like good order and condition at Madras or so near thereto as the vessel may safely get unto order of the Mercantile Bank of India, Limited, or to his or their Assigns. . . . . . " The bill of lading gives the number of packages as 21 drums and under the column "description of goods" it states "Polystyrene, Powder". The Mate 's receipt given to the seller on the arrival of the goods at the wharf for being carried by S.S. City of Lucknow describes them is being packed in refused drums. The seller gave an indemnity bond to the shipowners and the material part of it reads: "We shall be obliged by your granting us Clean Bills of Lading for the under mentioned goods, Mate 's receipt being claused Reused Drums and in consideration of your so doing we undertake to pay on demand all freight and/or General and particular Average and/or charges there may be thereon, to indemnify you and each of you against all claims and/or demands which may be made against you or any of you in respect of the undermentioned goods and to hold you harmless from any and all consequences that may arise by your granting such clean B/L and acting thereon including losses, damages, costs or any other expenses which you or any of you may sustain or incur by reason of the premises or in any way relating thereto. " 99 After obtaining the said indemnity bond, the shipowners issued the bill of lading wherein instead of "reused drums" only "drums" was mentioned. It will be seen from the said documents that according to the indents the seller had to pack the goods in new fibre drums. that the Bank opened letters of credit for payment against bills of lading, that the Marine Midland Trust Company of New York, the agent of the Eastern Bank Limited, Madras, opened letters of credit whereunder payments could be made only against clean bills of lading, that in the Mate 's receipt given to the seller on the arrival of the goods at the wharf for being carried by S.S. City of Lucknow the drums were described as reused drums and that thereafter, after giving indemnity against any loss to the shipowners, in the bill of lading the drums were not described as reused drums but only as drums. The learned City Civil Judge on the said documents gave the following findings: .lm0 Thus, if the Bills of Lading were unclean certainly the banks would not have paid the money to the shippers. In fact it was for the very purpose of enabling the shippers to obtain monies from the banks that they wanted clean Bills of Lading and were prepared to give letters of indemnity to the shipping company. With such description in the Bills of Lading it is extremely doubtful whether even the under writers would have insured the goods as required under the letters of credit. If the shippers had not produced either clean Bills of Lading or Certificates of Insurance as required under the letters of credit then certainly the shippers could not have realised the money from the bank. Thus the second defendants have certainly helped the shippers in this matter by suppressing the real condition of the goods from the Bills of Lading. " The High Court, agreeing with that finding, held "the shipowner with the knowledge that the bills of lading would be negotiated, gave at the request of the seller clean bills of lading, while as a matter of fact only unclean bills of lading should have been given". The question is whether on the said facts and the findings given by the courts below the purchaser could maintain an action for deceit against the shipowners. "Deceit is a false statement of a fact made by a person knowingly or recklessly with the intent that it shall be acted upon by another who does act upon it and thereby suffers damage"; see "A Text book of the Law of Tort" by Winfield; 5th Edn., at 6. 379. In order to make the shipowners liable for deceit, the first ingredient to be satisfied is that they knowingly issued a clean bill of lading, when it should not have been given, with intent that on that basis payment would be made to the holder of the bill under the letters of credit. In order to come to a correct conclusion whether the ingredients of the definition of "deceit" have been satisfied in the present case, it is necessary to know the exact scope of the following three terms: "letters of credit", "bill of lading", and "clean bill 100 of lading". The said three expressions are evolved in the law merchant to facilitate international trade. The origin and importance of letters of credit in the international commerce has been stated by Denning, L. J., in Pa via & Co., A.P.A. vs, Thurmann Neilsen(1) as follows: "The sale of goods across the world is now usually arranged by means of confirmed credits. The buyer requests his banker to open a credit in favour of the seller and in pursuance of that request the banker, or his foreign agent, issues a confirmed credit in favour of the seller. This credit is a promise by the banker to pay money to the seller in return for the shipping documents. Then the seller, when he presents the docu ments, gets paid the contract price. The conditions of the credit must be strictly fulfilled, otherwise the seller would not be entitled to draw on it." But when issuing banker has no branch in the relevant country where the beneficiary operates, the services of an intermediary banker may be requisitioned. The intermediary banker may be asked to advise the beneficiary of the credit or may be asked to add his confirmatory undertaking to it. In the latter event the beneficiary has the promise of both the bankers. As letters of credit are issued or opened on conditions on which the request is made, the banker can only negotiate the shipping documents if the conditions are strictly complied with. If, for instance, the mandate of the buyer is that the banker shall pay on a clean bill of lading, the banker can only honour a clean bill and not an unclean one. When a purchaser specifically directs the banker to pay against a clean bill of lading, the condition for payment is an obvious one. But, when a credit calls for bills of lading without any qualification, in normal circumstances it means clean bills of lading: see British Imex Industries Ltd. vs Midland Bank Ltd.(2). A clean bill of lading is defined in Halsbury 's Laws of Eng land, 3rd Edn., Vol. 2, at p. 218, as "one which does not contain any reservation as to the apparent good order and condition of the goods or the packing". Carver in his book "British Shipping Laws", Vol. 2, Part 1, in para. 82, explains the expression "good order and condition" thus: "The general statement in the bill of lading that the goods have been shipped "in good order and condition" amounts (if it is unqualified) to an admission by the shipowner that, so far as he and his agents had the opportunity of judging, the goods were so shipped. If there is no clause or notation in the bill of lading modifying or qualifying the statement that the goods were "shipped in good order and condition" the bill is known as a clean bill of lading. " Decisions have held that the "condition" refers to external and apparent condition, and quality, to some thing which is usually not (1) , at 88. (2) , a 551. 101 apparent at all events to an unskilled person: see Compania Naviera Vasconzada vs Churchill & Sim(1). The words like "quality and measure unknown" found in Compania Naviera Vasconzada vs Churchil & Sim(1) "weght, contents and value unknown" in The Peter der Grosse(1); "weight, quality, condition and measure unknown" in The Tromp(3) were held to be not qualifying words. In The Restitution Steamship Co., Ltd., vs Sir John Pirie and Co.(1) it was held "if you insert in the margin of a bill of lading weights, quantities, or anything that is not contained in the bill of lading itself, that is not a clean bill of lading". If such words found a place in the body of a bill of lading, they would not have the effect of making the bill an unclean one, we do not see how their mention in the margin would make a difference. But we need not express our final opinion thereon, as in the present case the words are found in the body of the bill itself. But it is said that the omission of the adjective "new" qualifying the word "drums" or indeed the addition of the adjective "old" to qualifying the same would not necessarily make the bill any the less a clean bill, if old drums were suitable vehicles for conveying the articles supplied therein. The newness or the oldness of the container, the argument proceeded, was not decisive of its suitability, for in the main it depended upon its condition and contents. This argument as a proposition of law appears to be sound. In The Tromp(3) potatoes, to the knowledge of the defendants ' master who signed the bill of lading, were shipped in wet bags and in a damaged condition. The court held that as in the bill of lading the potatoes were described as shipped in good order and condition, which rep resented the external condition of the bags, the defendants were estopped from denying that the bags were dry when shipped. But it would be noticed that the packing in that case was defective and that was the main cause for the rotting of the potatoes and, therefore, the bill of lading was not a clean one. In Silver vs Ocean Steamship Co., Ltd.(1), damage was caused to frozen eggs as the can wherein they were packed were gashed, perforated or punctured and the eggs were insufficiently packed. So the court held that having given a clean bill of lading the shipowner was estopped from proving that the cans were not in apparent good order and condition. In Brown Jenkinson & Co., Ltd. vs Percy Dalton (London) Ltd.(1) orange juice was shipped in barrels. Some of the barrels were old and frail and some were leaking. Yet the shipowners gave a clean bill of lading. They were estopped from denying that the barrels were in apparent good order and condition. These decisions establish that good order and condition of packages depends upon the suitability of the packages for the (1)L.R. (2) L.R.[1876]lp.414. (3)L.R. [1921] p. 337. (4) (5)L.R.[1930]1 K.B.416. (6) 102 particular goods or articles packed therein and other relevant circumstances of each case. What is the real scope and legal effect of the statement in the bill of lading that the goods were shipped in good order and condition? We have already noticed that a bill of lading with such a statement, which does not contain any further reservation or qualification, is known as a clean bill of lading. The said words are affirmation of a fact. It is an admission creating an estoppel as between the shipowners and an endorsee, who on the faith of that admission has become endorsee for value of the bill of lading. The shipowners are estopped from denying that the goods and the packages were not in good order and condition. The estoppel applies only where the bad condition is discernible on a reasonable examination of the containers, having regard to their contents. Any qualification of the said affirmation must only refer to the external and apparent condition of the containers: see The Skarp(1), Silver vs Ocean Steamship Co., Ltd.(") Companies Naviera Nazconzada vs Churchill & Sim(1), and The Tromp(4). It is not necessary to consider the said decisions in detail as the principle is well settled. Now let us look at the relevant facts of the present case. It was one of the terms of the contract between the seller and the buyer that the goods should be packed in new fibre drums. The standard of good order and condition of the packages was agreed upon by the parties to the contract. The shipowners knew that condition as the Mate 's receipt disclosed the same. If the drums had been mentioned as old in the bill of lading, the said bill would not have been a clean bill. Though the apparent condition of the drums was old, the shipowners made an assertion that they were not old drums, i.e., they gave a clean bill. This representation was obviously intended, in collusion with the seller, to enable him to operate upon the credit with the Bank. This collusion is also apparent from the indemnity bond they took from the seller to guard themselves against the consequences of the said representation. All the elements of deceit are present. The decision in Brown Jenkinson & Co., Ltd. vs Percy Dalton (London) Ltd.(1) is apposite. There, the defendants had a quantity of orange juice which they wish to ship to Hamburg. The plaintiffs, as agents of the owners of the vessel on which the orange juice was to be shipped, informed the defendants that the barrels containing the orange juice were old and frail and that some of them were leaking and that a claused bill of lading should be granted. The defendants required a clean bill of lading, and the shipowners, at the defendants ' request and on a promise that the defendants would give to them an indemnity, signed bills of lading (1)L.R.[1935]134. (2) (3) (4) (5) 103 stating that the barrels were "shipped in apparent good order and condition". The defendants, pursuant to their promise, entered into an indemnity whereby they undertook unconditionally to indemnify the master and the owners of the vessel against all losses which might arise from the issue of clean bills of lading in respect of the goods. The barrels when delivered at Hamburg, were leaking and the shipowners had to make good the loss. The plaintiffs sued the defendants under the indemnity, the benefit of which had been assigned to them. The defendants refused to pay, alleging that the contract of indemnity was illegal, because it had as its object the making by the shipowners of a fraudulent misrepresentation. The court held that the shipowners by making in the bill of lading a representation of fact that they knew to be false with intent that it should be acted upon were committing the tort of deceit, and that the defendants ' promise to indemnify the shipowners against loss resulting from the making of that representation was accordingly unenforceable. The only difference on facts between that case and the present one is that in that case the barrels were not only old and frail but also some of them were leaking. But there, as here, the shipowners made a representation of fact which they knew to be false with intent that it should be acted upon. If so, it follows that the High Court was right in holding that the appellant was liable in damages for the loss incurred by the respondent. Learned counsel for the appellant sought to raise three fur ther points, namely, (i) the shipowners were not bound by the representation made by the ship 's mate; (ii) the bill of lading was governed by the American law and not by common law; and (iii) the plaintiff buyer, having obtained a decree against the seller in the American court, could not maintain the present suit for damages. The first point was not raised till now and, therefore, we can. not permit the learned counsel to raise it for the first time before us. The second point, namely, what is the American law? is a question of fact. We have not got sufficient material on the record to know what the American law on the subject is. We cannot, therefore, permit the appellant to raise this point either. The third point is also one not pressed in the courts below and, therefore, does not call for our decision. In the result, the appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The respondent entered into two contracts with the B Company (sellers) of New York to purchase certain chemicals and in pursuance of the contracts placed three indents for the material in December 1950 and January 1951. The indents specified that the materials were to be packed in new fibre drums. The respondent thereafter opened and confirmed irrevocable letters of credit to be negotiated by his bankers ' agents in New York. These agents were authorised to make payment to the sellers against "clean on board" bills of lading. When the sellers shipped the, goods by one of the appellant 's vessels, the Mate 's receipt given to the sellers on the arrival of the goods at the wharf described them as being packed in refused drums. The sellers then approached the appellant with a request to grant them a clean bill of lading as against the reference in the Mate 's receipt to refused drums. Upon the sellers furnishing the appellant with an indemnity bond against any claims etc., the appellant issued them a clean bill of lading which described the drums simply as drums. The sellers then negotiated the bills of lading against the letters of credit and obtained payment of the contract price. When the shipment arrived in India it was discovered that the drums contained only coal dust and not the chemicals ordered. The respondent took appropriate proceedings against the sellers in the American Courts and recovered part of his loss. He then instituted the present suit against the bank and the appellant. The Trial Court dismissed the claim against the appellant but decreed the suit in part against the bank. However, the High Court, on appeal, held that the appellant, with the knowledge that the bills of lading would be negotiated, gave at the request of the seller, clean bills of lading though only unclean bills of lading should have been given. It therefore held the shipowners responsible for the loss caused to the respondents and allowed a separate appeal filed by the bank. On appeal to this Court it was contended on behalf of the appellants that while respondent had based his cause of action on a breach of contract, the High Court had given relief founded on deceit. that under common law or contract the appellant had no duty or obligation to make a statement in the bills of lading that the drums were old ones; and that the bills of lading were clean ones, for the oldness or newness of drums had no real impact on the contents thereof, as both were equally suitable containers for the materials to be supplied. 93 HELD:(i) There was no merit in the contention that the High Court gave relief founded on deceit whereas the respondents cause of action was based on a breach of contract. It was clear from the pleadings that a claim on the basis of misrepresentation was made in the plaint, denied by the appellant in the written statement and argued in the Courts below. [96 G H] (ii)The High Court was right in holding that the appellant was liable in damages for the loss incurred by the respondent. It was one of the terms of the contract between the seller and the buyer that the goods should be placed in new fibre drums. The standard of good order and condition of the packages was agreed upon by the parties to the contract. The shipowners knew that condition as disclosed by the Mate 's receipt. If the drums had been mentioned as old in the bill of lading, that bill would not have been a clean bill. Though the apparent condition of the drums was old, the shipowners made an assertion that they were not old drums, i.e., they gave a clean bill. This representation was obviously intended, in collusion with the sellers, to enable them to operate upon the credit with the Bank. This collusion was also apparent from the indemnity bond they took from the sellers to guard themselves against the consequences of the said representation. All the elements of deceit were therefore present. [102 D F] Case law reviewed.

Appeal No. 203 of 1964. Appeal from the judgment and decree dated January 29, 1963 of the Rajasthan High Court in Civil Regular First Appeal No. 29 of 1956. Sarjoo Prasad and T. Satyanarayana, for appellant. R. Ganapapathy Iyer and B.R.G.K. Achar, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought by certificate against the judgment and decree of the Rajasthan High Court dated January 29, 1963. The appellant firm Bansidhar Premsukhdas brought a suit which is the subject matter of this appeal against the State of Rajasthan on March 31, 1953 for the recovery of Rs. 86,646/3/ in the Court of District Judge, Bharatpur. The case of the appellant was that the former State of Bharatpur with a view to increase the trade and commerce in the said State decided to establish a Mandi at Bharatpur where at the material time a T.B. Hospital was located, It decided to sell plots for certain fixed amounts and, therefore, issued a notification on May 18, 1946 offering the plots by public advertisement for sale on certain terms and conditions. The notifification exhibit 4 was published in Bharatpur Rajpatra and one of the concessions proposed to be granted was embodied in cl. 3 of the notification which stated: "If any commodity is imported from outside into the Mandi and is sold for consumption within the State, or if any commodity received in the Mandi from within the State and is exported in both cases, a reduction of 25% in the customs duty prevailing at the time of the import and export of such commodities will be allowed. This concession shall not be available in case of vegetable Ghee. " The notification contained other terms and conditions relating to auction sale such as the prices for different kinds of plots available and the maximum number of plots which a person could purchase. A committee for supervising the auction was also formed and the notification laid down the procedure for the sale of plots and certain other conditions such as deposit of one fourth sale money at the 83 time of auction etc. The appellant purchased plots Nos. 8 and 9 for Rs. 4,600 at a public auction and two sale deeds (sanad nilam) were issued to the appellant on October 10, 1946. The Government of Bharatpur and after its merger, the Government of United State of Matsya and thereafter the present Rajasthan State carried out the promise contained in cl. 3 of the Bharatpur notification and allowed reduction of 25 per cent in the customs duty, but on January 16, 1951 the Rajasthan Government issued notification No. F.4(18) SR/49 which reads as follows: "Now therefore Government of Rajasthan is hereby pleased to direct that with an immediate effect all free Mandies and Zones including the area comprising the former Kishangarh State and the Bhim District of the former Rajasthan State shall be abolished and that in consequence all the Customs concession hitherto enjoyed by or applicable to these Mandies or Zones shall cease to have force and duties of customs shall be levied and collected in such Mandies or Zones in accordance with the revised tariff, amended from time to time. " The appellant and other traders thereupon made representation to the Rajasthan Government on January 29, 1951 and pending the disposal of the representation the Customs authorities agreed to keep the amount of 25 per cent by way of 'Amanat '. The State of Rajasthan ultimately decided on May 25, 1951 that the reduction in the customs duty could not be conceded. On March 31, 1953 the appellant filed the present suit in the Court of the District Judge of Bharatpur for the recovery of the excess amount of customs duty paid to the Rajasthan Government. The main defence of the State Government was that item No. 3 of the Bharatpur notification was a matter of concession and could not be claimed as of right and the Rajasthan State as successor State was not bound by the contracts of the former State and the applicability of the concessions had also become impracticable on the formation of Rajasthan. The District Judge of Bharatpur, by his judgment dated March 31, 1956, held that item No. 3 of Bharatpur notification was a term of sale between the parties and the Rajasthan State was bound by it and the succeeding States have recognised the concessions granted to the appellant and therefore the suit of the appellant should be decreed. The State of Rajasthan took the matter in appeal to the Rajasthan Nigh Court which allowed the appeal and dismissed the suit holding that item No. 3 of the Bharatpur notification was not a part of the contract of sale, and even if it was held to be a part of the contract, the successor State of Rajasthan did not recognise it and was not, therefore, bound by it. 84 The first question involved in this appeal is whether cl. 3 of the Bharatpur notification exhibit 4, was a term of the contract of sale between the appellant and the State of Bharatpur. It Was argued on behalf of the appellant that exhibit 4 which is the notification dated May 18, 1946 regarding the sale of plots by the Bharatpur State was an offer of purchase of plots on terms and conditions made in that notification. It was contended that the offer was made to the public as a whole and after it was accepted by the appellant a valid contract came into existence. The opposite view point was presented on behalf of the respondent. It was submitted that the concession granted in cl. 3 did not relate to, nor did it form a part of the contract of sale of the plots of the Mandi. It was pointed out that the concession of 25 per cent reduction in customs duty will not merely enure to the benefit of the purchaser of the plots but also enure to the benefit of the person trading in the shop. The benefits were generally offered for trade and business in the Mandi and cannot be considered as an offer of benefit only to the prospective purchasers of the plots. The commodities for which the concession was granted might be in the hands of purchasers and builders of plots, their tenants and licensees or other dealers. It was therefore not possible to hold that the State Government offered the tax concessions as a reciprocal promise in connection with the contracts of sale with the appellant and the latter had no justification for treating the benefits offered as consideration in return for the purchase of the plots and the construction of shop buildings. It is also pointed out by learned Counsel on behalf of the respondent that there are certain conditions in the Bharatpur notification exhibit 4, which can. not, in the nature of things, be treated as terms of the sale. Reference was made, in this connection, to cls. 5, 6, 7, 10 and 11. In our opinion, there is much force in the argument advanced on behalf of the respondent but it is not necessary to express any concluded opinion on this aspect of the case. We shall assume in favour of the appellant that cl. 3 of the Bharatpur notification, exhibit 4, was a term of the contract of sale of plots 8 and 9 of the Mandi. Even upon that assumption the suit of the appellant must fail, for we shall presently show that there was no recognition of the contractual right by the succeeding State of Rajasthan, and in the absence of such recognition the contract between the former State of Bharatpur and the appellant cannot be legally enforced. We shall proceed, therefore, to consider the next question, namely, whether the term of the contract was binding upon the successor State of Rajasthan on the assumption that cl. 3 of the Bharatpur notification, exhibit 4, was an integral term of the contract between the appellant and the Government of Bharatpur State. It is not correct to say as a matter of law that the successor State automatically inherits the rights and obligations of the merged State. There is no question of suborgation the successor State is not 85 subrogated ipso jure to the contracts with the merged State. The true legal position is that the contract of the predecessor State terminates with the change of sovereignty unless the contract is ratified by the succeeding sovereign State. It is now well established in law that the contractual liability of a former State is binding on a succeeding sovereign State only if it recognises that contractual liability. The season is that the taking over of sovereign powers by a State in respect of territory which was not till then a part of it is an. act of State" and the municipal courts recognised by the new sovereign have the power and jurisdiction to investigate and ascertain only such rights as the new sovereign has chosen to recognise or acknowledge; and such recognition may be express or may be implied from circumstances. In other words, accession of one State to another is an "act of State. and the subjects of the former State may claim protection of only such rights as the new sovereign recognises as enforceable by the subjects of the former State in his municipal courts. In The Secretary of State in Council of India vs Kamachee Boye Saheba(1) the jurisdiction of the courts in India to adjudicate upon the validity of the seizure by the East India Company of the territory of Rajah of Tanjore as an escheat, on the ground that the dignity of the Raj was extinct for want of a male heir, and that the property of the late Rajah lapsed to the British Government, fell to be determined. The Judicial Committee held that as the seizure was made by the British Government, acting as a sovereign power, through its delegate, the East India, Company, it was an act of State and the Municipal Court had no jurisdiction to inquire into the propriety of the action. At page 529 of the Report Lord Kingsdown observed: "The transactions of independent States between each other are governed by other laws than those which Municipal Courts administer: Such Courts have neither the means of deciding what is right, nor the power of enforcing any decision which they may make. " In another case Vajesingji Joravarsingji vs Secretary of State for India in Council(1) the Judicial Committee observed as follows: ". when a territory is acquired by a sovereign State for the first time that is an act of State, It matters not how the acquisition has been brought about. It may be by conquest, it may be by cession following on treaty, it may be by occupation of territory hitherto unoccupied by a recognized ruler. In all cases the result is the same. Any inhabitant of the territory can make good in the municipal courts established by the new sovereign only such rights as that sovereign has, through his officers, recognised. Such rights as he had under the rule of precedes (1) Moore 's I.A. 476. (2) 51 I. A. 357. 86 sors avail him nothing. Nay more even if in a treaty of cession it is stipulated that certain inhabitants should enjoy certain rights, that does not give a title to those inhabitants to enforce these stipulations in the municipal courts. The right to enforce remains only with the high contracting parties. " In Secretary of State vs Sardar Rustom Khan and Others(1) a question arose whether the rights of a grantee of certain proprietary rights in lands from the then Khan of Kalat, ceased to be enforceable since the agreement between the Khan and the Agent to the Governor General in Baluchistan under which the Khan had granted to the British Government a perpetual lease of a part of the Kalat territory, at a quit rent, and had ceded in perpetuity with full and exclusive revenue civil and criminal jurisdiction and all other forms of administration. In delivering the opinion of the Judicial Committee, Lord Atkin observed as follows: "In this case the Government of India had the right to recognise or not recognise the existing titles to land. In the case of the lands in suit they decided not to recognize them, and it follows that the plaintiffs have no recourse against the Government in the Municipal Courts. " The principle that cession of territory by one State to another is an act of State and the subjects of the former State may enforce only those rights which the new sovereign recognises has been accepted by this Court in M/s. Dalmia Dadri Cement Co. Ltd. vs The Commissioner of Income tax(2). The State of Saurashtra vs Jamadar Mohamat Abdulla and others(1). Maharaja Shree Umaid Mills Ltd. vs Union of India (4), and State of Gujarat vs Vora Fiddali Badruddin Mithibarwala(5). On behalf of the appellant it was contended that there was an implied recognition by the Rajasthan State of the contractual liability since the exemptions were continued upto January 13, 1951 and were revoked with effect from that date by the notification No. F.4(18)SR/49. We are unable to accept this argument as correct. Before the process of integration began, each Covenanting State was a separate geographical unit for customs purposes and had its own customs laws and barrier. After the formation of the Matsya Union on March 18, 1948 there was a promulgation of the Matsya Customs Ordinance by the Raj Pramukh on September 21, 1948. The United State of Rajasthan was constituted on May 15, 1949 when there was merger of Matsya Union in the United State of Rajasthan. On August 9, 1949 the Raj Pramukh promulgated the Rajasthan (Regulation of Customs Duties) Ordinance (1) 68 I.A. 100. (2) [1959] S.C.R. 729. (3) (4) [1963] Supp. 2 S.C.R. 515. (5) ; 87 No. 16 of 1949. Section 3 of this Ordinance abolished duties on the transport of goods within the territory of Rajasthan. Sectio n Section 3 reads as follows: "3. No duty leviable on internal transport With effect from such date as may be notified by the Government in the Rajasthan Gazette, no duties of Customs shall be levied and collected in respect of any goods transported within Rajasthan, notwithstanding anything to the contrary in any law, or rule, instrument of usage having the force of law, in any part of Rajasthan; and any such law, rule instrument or usage shall be deemed to be repealed to that extent: Provided that the Government may, by notification in the Rajasthan Gazette (a) Impose a duty of customs on the transport of goods from or to any part of Rajasthan to or from such other part thereof at such rate or rates and with effect from such date as may be specified in the notification, or (b) direct that, in respect of the transport of goods of such description and from or to such part of Rajasthan as may be specified in the notification, a sum of money equal to the amount of the duty leviable on the export on such goods shall be deposited with the appropriate Customs Officer of the place from where the goods are intended to be transported. " section 4 is the charging section with regard to import and export duties. Section 4(1) states: "4. Duties on export and import: (1) Until a revised tariff is introduced under sub section (2) Customs duties on the export or on the import of goods shall be levied and collected in accordance with the tariff for the time being in force in the place from or into which goods leviable with a duty of Customs have been exported or imported, as the case may be. " sub section (2) of section 4 provides: "The Government may, by notification in the Rajasthan Gazette, issue a revised tariff specifying the goods or class of goods in respect of which, and the rate at which, duties of Customs shall be levied and collected with effect from such date as may be specified in the notification on the export or on the import of such goods or class of goods." eventually on August 15, 1949 a uniform revised tariff was made applicable to the whole of Rajasthan. Section 6 provided that the existing law in force of the covenanting States shall regulate the GI 8 88 collection of such duties and other ancillary duties in relation thereto, unless altered, modified or repealed by a competent legislative authority of Rajasthan and thus saved existing law with regard to the procedure and ancillary matters. It is manifest on examination of the provisions of this Ordinance that there was a repeal of all Customs laws of the Covenanting States in so far as they provided for the levy and collection of duties in the particular territorial limits of the Covenanting States and the Ordinance introduced a new law imposing duty on export and import into Rajasthan State as a whole. Further, after the issue of a revised tariff the old tariffs under the various laws of the Covenanting States also stood repealed. There is no express provision in the Ordinance saving the previous contractual rights with regard to customs duty. In the absence of any such express provision it must be held that all existing contracts were repudiated and cancelled. The enjoyment of the concession by the appellant after the formation of the Rajasthan State is clearly referable to the law under which customs concessions could be granted and recognised. This is borne out by the notification dated January 16, 1951 which appeared in the Rajasthan Raj Patra, which itself refers to sections 10 and 33 of the Matsya Customs Ordinance No. 14 of 1948 by which customs concessions were revoked. We are, therefore, of the opinion that the High Court has rightly taken the view, upon an analysis of the evidence adduced in the case, that there was no recognition of the contractual liability by the succeeding State of Rajasthan. We shall however ,assume in faboure of the appellant that the State of Rajasthan recognised the contractual right of the appellant with regard to the exemption of tax. Even upon that assumption the suit of the appellant must fail, for the contractual liability must be taken to have been superseded by the enactment of the Rajasthan Regulation 'of Customs Duties) Ordinance No. 16 of 1949 promulgated by the Raj Pramukh on August 9,1949. Before we deal with this question it is desirable to indicate the constitutional developments which resulted in the inclusion of the former Bharatpur State into the Part B State of Rajasthan, which came into existence on January 26, 1950. The former Bharatpur State remained a separate entity till March 18, 1948, though it had acceded to the Dominion of India after August 15, 1947 with respect to three subjects, namely, communications, defence and external affairs. In 1948, however, the process of merger in Rajasthan began and the first merger that took place was of the former States of Alwar, Bharatpur, Dholpur and Karauli, which formed the Matsya Union as from March 18, 1948 by a Covenant entered on February 28, 1948. After the formation of the Matsya Union the Raj Pramukh promulgated the Matsya Customs Ordinance 1948 on September 21, 1948. Section 2 of that Ordinance repealed the levy of 89 customs duty in force in all the Covenanting States and applied the provisions of the new Ordinance to the whole of the United State of Matsya. Section 10 of the Ordinance provided for the charge of customs duty on goods or class of goods to be notified in the State Gazette from time to time. Section 33 of the Ordinance similarly granted power to the State Government to exempt any goods or class of goods imported or exported from the United State of Matsya from payment of customs duty leviable thereon. Then came another union of certain other Rulers in Rajasthan in March 1948 by which these Rulers united under the Ruler of Udaipur to form what later came to be known as the Former State of Rajasthan. In March 1949, the United State of Rajasthan was formed by Covenant entered into by fourteen Rulers of Rajasthan, including those who had formed the Former State of Rajasthan, and this State came into existence from April 7, 1949. There was a merger of the Matsya Union in the State of Rajasthan on May 15, 1949 and thus the former Bharatpur State came to be included in the United State of Rajasthan through the Matsya Union. As we have already stated, the Raj Pramukh promulgated the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949 on August 9, 1949. It is well established that Parliament or State Legislatures are competent to enact a law altering the terms and conditions of a previous contract or of a grant under which the liability of the Government of India or of the State Governments arises. The legislative competence of Parliament or of the State Legislatures can only be circumscribed by express prohibition contained in the Constitution itself and unless and until there is any provision in the Constitution expressly prohibiting legislation on the subject either absolutely or conditionally, there is no fetter of imitation on the plenary powers which the Legislature is endowed with for legislating on the topics enumerated in the relevant Lists. this view is borne out by the decision of the Judicial Committee in Thakur Jagannath Baksh Singh vs The United Provinces(1) in which a similar complaint was made by the taluqdars of Oudh against the United Provinces Tenancy Act (U.P. Act 17 of 1939). It was held by the Judicial Committee that the Crown cannot deprive itself of its legislative authority by the mere fact that in the exercise of its prerogative it makes a grant of land within the territory over which such legislative authority exists, and no court can annul the enactment of a legislative body acting within the legitimate scope of its sovereign competence. If therefore, it be found that the subject matter of a Crown grant is within the competence of a Provincial legislature nothing can prevent that legislature from legislating about it unless the Constitution Act itself expressly prohibits legislation on the subject either absolutely or conditionally. accordingly, in the absence of any such express prohibition, the (1) [1946] F.C.R. III.] I 8(a) 90 United Provinces Tenancy Act, 1939, which in consolidating and amending the law relating to agricultural tenancies and other matters connected therewith in Agra and Oudh, dealt with matters within the exclusive legislative competence of the Provincial legislature under item 21 of List 11 of the 7th Sch. to the Government of India Act, 1935, was intra vires the Provincial legislature notwithstanding that admittedly some of its provisions cut down the absolute rights claimed by the appellant taluqdar to be comprised in the grant of his estate as evidenced by the sanad granted by the Crown to his predecessor. The same principle has been reiterated by this Court in Maharaj Umeg Singh and others vs The State of Bombay and others(1). It was pointed out that in view of article 246 of the Constitution, no curtailment of legislative competence can be spelt out of the terms of clause 5 of the Letters of Guarantee given by the Dominion Government to the Rulers of "States" subsequent to the agreements of Merger, which guaranteed, inter alia, the continuance of Jagirs in the merged 'States '. This principle also underlies the recent decision of this Court in Maharaja Shree Umaid Mills Ltd. vs Union of India(2) in which it was pointed out that there is nothing in article 295 of the Constitution which prohibits Parliament from enacting a law altering the terms. and conditions of a contract or of a grant under which the liability of the Government of India arises. It was further held that there was nothing in article 295 prohibiting Parliament from enacting a law as to excise duty or income tax in territories which became Part B States, and which were formerly Indian States, and such a prohibition cannot be read into article 295 by virtue of some contract that might have been made by the then Ruler of an Indian State with any person. As we have already indicated, there is nothing in the provisions of the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949 which preserves the alleged contractual rights of the appel lant, and in the absence of any express language in the Ordinance preserving such alleged contractual rights, it must be held that the general, law enacted in the Ordinance supersedes the previous contract of the appellant with the State of Bharatpur. Lastly, it was argued on behalf of the appellant that the notification dated January 16, 1951 revoking the tax concessions was in violation of article 306 of the Constitution which provides as follows: "Notwithstanding anything in the foregoing provisions of this Part or in any other provisions of this Constitution, any State specified in Part B of the First Schedule which before the commencement of this Consti tution was levying any tax or duty on the import of goods into the State from other States or on the export of goods (1) [1963] Supp. 2 S.C.R. 515. 91 from the State to other States may, if an agreement in that behalf has been entered into between the Government of India and the Government of that State, continue to levy and collect such tax or duty subject to the terms of such agreement and for such period not exceeding ten years from the commencement of this Constitution as may be specified in the agreement. The argument is based on the assumption that the appellant was enjoying concessions under section 40 of the Customs Circular No. 15 and continued to enjoy the concessions in the State of Matsya under section 34 of the Matsya Customs Ordinance No. 14 of 1948, and subsequently in the State of Rajasthan under section 6 of the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949. It is the admitted position that the agreement entered between the Government of India and the United State of Rajasthan on February 25, 1950 incorporated certain recommendations of the Federal Finance Enquiry Committee Report 1948 49. The agreement having been executed and the condition under article 306 having been satisfied in this case, the continuance of the customs duty is in conformity with the provisions of this Article. In any case, the claim of the appellant is not based on any provision of Bharatpur law but upon a contractual liability of Bharatpur State and to a case of this description the provisions of article 306 cannot be attracted. For the reasons expressed, we hold that the judgment of the High Court is right and this appeal must be dismissed with costs. Appeal dismissed.

IN-Abs

The former State of Bharatpur sold some plots for establishing a Mandi, and the appellant was one of the purchasers. Under the terms of the sale, a person trading in the Mandi would get a reduction of 25 % in the customs duty payable, if the commodities were imported into or exported out of the State through the Mandi. The Government of Bharatpur and after its merger the Government of the United State of Matsya, and thereafter, the present Rajasthan State (respondent herein) allowed the reduction to the appellant, who was also a trader. In 1951, the respondent revoked the concession. The appellant filed a suit for the recovery of the excess amount of customs duty paid on the basis that there was a valid contractual liability to grant the concession. The suit was dismissed by the High Court on appeal. In appeal to this Court, HELD:(i) The appellant 's suit must fail because there was no recognition of the contractual right to the succeeding State of Rajasthan. The contractual liability of a former State is binding on a succeeding sovereign State only if it recognises that contractual liability. The enjoyment of the concession by the appellant after the formation of the Rajasthan State did not show any implied recognition of the contractual liability by the respondent, because, the concession is referable to section 33 of the Matsya Customs Ordinance of 1948 under which the concession could be granted and recognised. [85B 88C D] Case law referred to. (ii) Even upon the assumption that there was an implied re cognition by the respondent of the contractual liability, the suit must fail, for the contractual liability must be taken to have been super. seded by the enactment of the Rajasthan (Regulation of Customs Duties) Ordinance No. 16 of 1949. [88 E F]. Parliament and State Legislatures are, subject to any prohibition in the Constitution, competent to enact laws altering the terms and conditions of a previous contract or of a grant under which the liability of the Government of India or of the State Governments arises. There is nothing in the provisions of the Ordinance which preserves the alleged contractual rights of the appellant, and in the absence of any express language in the Ordinance preserving such rights. it must be held that the general law enacted in the Ordinance supersedes the previous contract of the appellant with the State of Bharatpur. [90 D F] Maharaj Umeg Singh vs The State of Bombay. [1955] 2 S.C.R. 164 and Maharaja Shree Umaid Mills Ltd. vs Union of lndia, [1963] Supp. 2 S.C.R. 515, followed. 82 (iii)The levy of Customs duty is in conformity with article 306 of the Constitution. [91 D]

Appeal No. 891 of 1963. Appeal by special leave from the judgment and decree dated June 26, 1959 of the Assam High Court in Letter Patent Appeal No. 1 of 1959. N. C. Chatterjee and D. N. Mukherjee, for the appellants. Sarjoo Prasad and K. P. Gupta for respondents. The Judgment of the Court was delivered by Shah, J. Biswambar Roy predecessor interest of the appellants was Granted on February 20, 1928, a lease for ten 115 years 1335 B.S. to 1344 B.S. at an annual rental of Rs. 75/ in respect of a plot of land, part of Dag No. 3615 in the town of Silchar, District Cachar in the State of Assam. Biswambar Roy constructed on the land, buildings, some for residential use, and others as warehouses. On the expiry of the period of the original lease, Biswambar Roy obtained a fresh lease in respect of a part of the land for ten years Baisakh 1345 B.S. to Chaitra a 1354 B.S. at an annual rental of Rs. 70/ under an instrument dated February 22, 1938. The respondents purchased the interest of the landlords the land and instituted on August 3, 1951 an action in the Court of the Sadar Munsiff, Silchar against Biswambar Roy for a decree for vacant possession of the land. The suit was decreed by the Munsiff. Biswambar Roy appealed to the Subordinate Judge, Silchar. During the pendency of the appeal, the Non agricultural Urban Areas Tenancy Act 12 of 1955 enacted by the Assam Legislature was brought into force. Biswambar Roy claimed protection from eviction under section 3 of Act 12 of 1955. The Subordinate Judge held that Biswambar Roy had acquired under section 5(1)(a) of the Act the rights of a permanent tenant, since he had constructed within the period prescribed permanent structures for residential or business purposes. He accordingly reversed the decree passed by the Trial Court and dismissed the suit. Against that decree, an appeal was preferred to the High Court of Assam. Deka, J., held that Biswambar Roy could not claim the protection of section 5(1) (a) of the Act, since he had let out to tenants the buildings constructed on the land. In the view of the learned Judge, by the use of the expression "for residential or business purposes" in section 5(1)(a) it is intended that buildings constructed by the tenant should be utilized by the tenant himself for his own residence or for carrying on business and that it is not the intention of the Legislature that third persons should be protected by section 5 from eviction from those structures. An appeal under the Letters Patent from that judgment was heard by C. P. Sinha, C. J., and Mehrotra, J. The learned Judges differed. Sinha, C. J., was of the view that permanent structures constructed by Biswambar Roy conformed to the descripticon "residential or business purposes" and Biswambar Roy became under Act 12 of 1955 a permanent tenant thereof and was not liable to be evicted except for non payment of rent. With that view Mehrotra, J., did not agree. He held that a tenant who obtains land on lease for erecting a structure thereon not for his own residential or business purposes but for letting out to others does not build "a permanent structure on the land of, the tenancy for residential or business purposes". and may not claim protec tion under section 5(1)(a). Since there was no majority concurring in the judgment agreeing or reversing the decree appealed from, under section 98(2) of the Code of Civil Procedure the appeal was ordered to be dismissed. Against the decree passed by the High Court, with special leave, this appeal is preferred. 116 This Court has held that section 5 of Assam Act 12 of 1955 has retrospective operation: Refiquennessa vs Lal Bahadur Chetri & Others,(1) and the only question to be determined in this appeal is whether a tenant qualifies for protection under section 5 of the Act only after building permanent structures on the land of the tenancy if he occupies them for his own residential or business purposes. The material part of the section reads: "(1) Notwith tanding anything in any contract or in any law for the time being in force (a) Where under the terms of a contract entered into between a landlord and his tenant whether before or after the commencement of this Act, a tenant is entitled to build, and has in pursuance of such terms actually built within the period of five years from the date of such contract, a permanent structure on the land of the tenancy for residential or business purposes, or where a tenant not being so entitled to build, has actually built any such structure on the land of the tenancy for any of the purposes aforesaid with the knowledge and acquiescence of the landlord, the tenant shall not be ejected by the landlord from the tenancy except on the ground of non payment of rent;" Protection under the first part of section 5(1)(a) may be claimed by a tenant if three conditions co exist: (i) under the terms of the contract of tenancy the tenant is entitled to build on the land of the tenancy; (ii) that pursuant to such liberty, he has actually built, within the period of five years from the date of the contract a permanent structure on the land of the tenancy; and (iii) that the permanent structure is for residential or business purposes. The first two conditions are fulfilled in this case. But the learned Judges of the High Court disagreed on the fulfillment of the third condition: they differed as to the true meaning of the expression" a permanent structure. . for residential or business purposes". In the view of Sinha, C. J., under the Act the character of the structure is determinative and not personal use by the ten. ant. Mehrotra, J., held that the permanent structure must be for residential or business purposes of the tenant. We are unable to agree with the view taken by Mehrotra, J., because the Legislature has not, in conferring rights of permanent tenancy, either expressly or by implication enacted any such qualification as is suggested by the learned Judge. The section merely requires that the permanent structure must be one adapted for residential or business purposes. If the structure is not adapted to such purposes, the protection of section 5(1)(a) will not be available. To read the expression "permanent (1) ; 117 structure on the land of the tenancy for residential or business purposes" as meaning permanent structure on the land of the tenancy constructed by the tenant for his own residential or business purposes is to add words which are not found in the section. It was urged on behalf of the landlords that it could not have been the intention of the Legislature to confer by section 5(1)(a) protection upon sub tenants. It was said that a sub tenant is not a tenant within the meaning of section 3(g) of the Act, and he cannot claim protection from eviction under section 5(1)(a). In our judgment, the argument is wholly misconceived. Protection is conferred in terms by section 5 upon the tenant of the land and not upon the tenant of the buildings constructed upon the land. It is not necessary in this case to consider whether by virtue of the definition of "tenant" in section 3(g) of the Act which includes a person who derives his title from a tenant, a sub tenant of the land is entitled to protection of section 5(1)(a). In the present case, the tenant of the land has claimed protection. By merely letting the premises constructed on the land obtained by him on lease, the tenant does not cease to be in possession of the land. The relation between the landlord and the tenant of the land continues to subsist until it is lawfully determined. Possession of the land obtained by the tenant remains his even after he has let out the building constructed by him, and a building constructed by the tenant for use as residential or business purposes does not cease to be one for residential or business purposes, when it is let out. We therefore agree with the view taken by Sinha, C. J., that the protection of section 5(1)(a) extends to a tenant who has constructed on the land obtained on lease permanent structures which are adapted for use for residential or business purposes and by letting out the structures the tenant does not forfeit the protection conferred by the statute. The appeal is therefore allowed and the decree passed by the High Court vacated and the plaintiffs ' suit dismissed. The appellants who are the representatives of the tenant will be entitled to their costs in this Court. There will be no order as to costs in the High Court. Appeal allowed.

IN-Abs

Certain structures for residential and business purposes were raised by a tenant of land in the term of Silchar in Assam. The landlord secured a decree for ejectment against the tenant. During the pendency of the appeal the Non Agricultural Urban Areas Tenancy Act, Assam Act 12 of 1955 was brought into force. The tenant claimed protection from eviction under section The Subordinate Judge held that the tenant had acquired units section 5(1) (a) of the Act the right of a permanent tenant since he had constructed within the pres cribed period structures for residential or business purposes. He accordingly dismissed the suit. The High Court in further appeal held that the protection under section 5(1)(a) was not available to the tenant since he had let out to tenants the buildings constructed on the land. The tenant, by special leave, appealed to this Court. HELD:(i) The section merely requires that the permanent structure must be one adapted for residential or business purposes. If the structure is not adapted to such purposes. the protection of section 5 (1) (a) will not be available. To read the expression "permanent structure on the land of the tenancy for residential or business purposes" as meaning permanent structure on the land of the tenancy constructed by the tenant for his own residential or business purposes is to add words which are not found in the section. [116 H]. (ii) Protection is conferred in terms by section 5 upon the tenant of the land and not upon the tenant of the buildings constructed upon the land. By letting out the structures the tenant of land does not lose the protection given by the statute. [117 C].

Appeal No. 959 of 1964. Appeal by special leave from the judgment and decree dated March 16, 1963 of the Madhya Pradesh High Court in Second Appeal No. 86 of 1962. section V. Gupte, Solicitor General, Rameshwar Nath, section N. Andley P. L. Vohra and Mahinder Narain, for the appellant. A. K. Sen and R. Gopalakrishnan, for respondent No. 1. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment of the Madhya Pradesh High Court and arises in the following circumstances. The appellant brought a suit for redemption of certain mortgaged property. A preliminary decree was passed in the suit on February 3, 1954. It specified the amount due as principal and the amount due as interest upto a certain date. It also provided that future interest was to be paid at three per cent per annum on a certain sum from that date till the date of realisation. Parties were to bear their own costs. Further the decree provided for payment of the amount due on or before July 15, 1964 or within such time as might be extended. It also provided that if payment was made within the time limited under O.XXXIV r. 7(1)(c) of the Code of Civil Procedure, final decree would be passed. In the alternative it was provided that if the deposit was not made, the respondent would be entitled to apply for passing of a final decree praying that the right of the appellant to redeem the mortgaged property be debarred. There were appeals by both parties from this preliminary decree to the High Court. In the meantime the appellant had prayed for extension of time and the trial court had extended time for making payment upto August 15, 1954. About the same time, the appellant applied to the High Court praying that the order requiring him to deposit the decretal amount by August 15, 1954 be stayed till the disposal of the appeal by the High Court. On this application, the High Court passed an order on July 26, 1954. This order provided that if the appellant gave an undertaking to pay nine per cent per annum interest instead of three per cent per annum during the period of stay, the order of the trial court directing the appellant to deposit the decretal amount by August 15, 1954 would be stayed. Thereupon the appellant gave an undertaking to the trial court on August 7, 1954 that he would pay nine per cent per annum simple interest instead of three per cent per annum during the period 111 of stay. In consequence the order of stay passed by the High Court came into force and no deposit was made by August 15, 1954. On October 16, 1958, the High Court dismissed both the appeals and the preliminary decree stood confirmed. On March 20, 1959, the appellant applied to the trial court for permission to deposit the sum of Rs. 42,204/5/ . On March 27, 1959, the trial court permitter the appellant to deposit the amount but made it clear that this did not amount to, any extension of time for making the deposit, and the question whether the deposit was made within time would be decided after hearing both parties. Notice was also issued to the respondent on the same date. On March 28, 1959, the appellant deposited the amount. On April 8, 1959 the respondent appeared and objected that the amount due was not Rs. 42,204/5/ but Rs. 46,882/6/6 and therefore the deposit was short by a sum over Rs. 4,000/ . Thereupon the appellant deposited a further sum of Rs. 4,590/ on April 9,1959 and prayed for a final decree in his favour. The trial court held on April 18, 1959 that the deposit was made beyond time and therefore directed that a final decree for foreclosure in favour of the respondent be drawn up. The appellant then went in appeal to the District Judge. The Additional District Judge who heard the appeal rejected the memorandum of appeal as insufficiently stamped The appellant then filed a revision before the High Court. The High Court allowed the revision on July 22, 1961 and remanded the appeal to the Additional District Judge for decision on the merits. On March 23, 1962, the Additional District Judge allowed the appeal holding on the basis of O.XXXIV, r. 8 that as the amount had been paid before the final decree was passed, it was within time. Consequently the Additional District Judge ordered that a final decree be drawn up in favour of the appellant. It may be noticed that it was also contended before the Additional District Judge that the amount deposited was short by Rs. 88/ 1/ . The Additional District Judge pointed out that this was not made a ground of attack in the trial court. In any case be held that the amount which had to be deposited was as required by the preliminary decree and that the same had certainly been deposited. We may add that it is not in dispute between the ' parties that if the amount to be deposited is to be in accordance with the preliminary decree, the appellant has deposited that amount, rather more. The shortage has occurred because for the period of stay the High Court had ordered the payment of an extra six per cent per annum interest and it is with respect to that interest that the shortage has occurred. The respondent then went in second appeal to the High Court. The High Court agreed with the Additional District Judge. and held that in view of O.XXXIV r. 8(1) the deposit made on April 9, 1959 before the final decree was passed on April 18, 1959 was within time, even though the money might have been deposited 112 after the time fixed under O.XXXIV r.7. But the High Court also took the view that the mortgagor appellant had to deposit the entire amount due on the date of the deposit and as there was a shortage of Rs. 88/1/ , the entire amount had not been deposited and in consequence no final decree could be passed in favour of the appellant. In the result the High Court set aside the order of the Additional District Judge and restored the order of the trial court passing a decree for foreclosure in favour of the respondent. Thereupon the appellant obtained special leave from this Court, and that is how the matter has come before us. The only question raised on behalf of the appellant is that he had deposited the amount which was strictly due under the preliminary decree and something more. The shortage was only on account of the sum due as a result of the stay order passed by the High Court by which he was required to pay six per cent per annum more as interest for the duration of the stay. It is urged that this amount could not be taken into account in considering the question whether the appellant bad deposited ' the entire amount due under the preliminary decree. We are of opinion that there_ is force in this contention and the appeal must succeed. Under O.XXXIV, r. 8(1) the mortgagor can deposit all amounts due under O.XXXIV r. 7(1) before the final decree debarring him from all rights to redeem is passed. Order XXXIV r. 7(1) lays down what a preliminary decree should contain and we are in the present case concerned with cls. (b) and (c) thereof. In this case the preliminary decree had declared the amount due upto a certain date towards principal and interest and had also provide for three per cent per annum interest on a certain sum from that date and had directed as required by cl. (c) of O. XXXIV r. 7(1) that if the mortgagor plaintiff paid in court the amount found before a certain date a final decree in his favour would be passed. The preliminary decree also laid down that if payment was not made within the time fixed a final decree for foreclosure in favour of the defendant mortgagee would be passed. Now under O.XXXIV r. 7(1)(c)(i) and (ii) what the appellant had to deposit was the amount found under the preliminary decree and also "the amount adjudged due in respect of subsequent costs, charges, expenses and interests" It is not in dispute, as we have already indicated that the appellant paid the amount found due under the preliminary decree and also the subsequent interest as provided in the decree. Only there was a shortage in the extra amount he had undertaken to pay as extra interest at the rate of six per cent per ' annum for the period of stay. The question is whether this amount can be said to be within the words "the amount adjudged due in respect of subsequent costs, charges, expenses and interests". We are of opinion that this extra amount which was to be paid on account of the undertaking of the appellant for the purpose of stay cannot come within the words "in respect of subsequent costs, charges, 113 expenses and interests". It is not in dispute that the High Court dismissed the appeal of the appellant in 1958 and confirmed the preliminary decree and that the amount due on account of the undertaking to pay extra interest at the rate of six per cent per annum for the period of stay was not included by the High Court in the preliminary decree. This amount arose out of an independent order of stay and though the appellant was bound to pay it in view of his undertaking, it was not made a part of the amount due under the preliminary decree. Nor can it be said that it was due in respect of subsequent costs, charges, expenses and interests. Besides, such subsequent costs, charges, expenses and interests have to be adjudged before the mortgagor is asked to deposit the amount and it is not in dispute that no adjudgement as to any subsequent costs, charges, expenses and interests was made. So in order that a final decree may be passed in favour of the appellant, he had to carry out the terms of the preliminary decree and it is not in dispute that he had carried out the terms of that decree, and he had to pay nothing account of subsequent charges, costs, expenses and interests, for nothing was adjudged in respect of these. Nor as we have said already can the amount due as extra, interest on the basis of the undertaking given by the appellant for the period of stay be considered to be of the nature of subsequent costs, charges, expenses and interests mentioned in O.XXXIV r. 7(1)(c)(i) and (ii). It is however urged that on this view there would be no way to enforce the appellant 's undertaking to pay extra interest for the period of stay. We do not think so. It would in our opinion be in order for the court to insist before it passed the final decree that the appellant honours his undertaking. But that is not to say that this amount due under an independent order of the High Court in connection with stay became part of the amount due under the preliminary decree or could be considered to be "subsequent costs. charges, expenses and interests". We may add that the shortage in question was made good by the appellant soon after the order of the Additional District Judge and long before the judgment of the High Court. As we have come to the conclusion that this amount due on account of the undertaking given by the appellant in the matter of stay cannot be taken to be part of the amount due under the preliminary decree, it must be held that the appellant was entitled to a final decree in his favour. We therefore allow the appeal, set aside the order of the High Court and restore the order of the Additional District Judge. The respondent will be entitled to withdraw the amount deposited by the appellant including the amount deposited on April 21, 1962 on the conditions in that order. In the circumstances however we pass no order as to costs throughout. Appeal allowed.

IN-Abs

A preliminary decree was passed in the appellant 's suit for redemption of a mortgage. The decree specified the amounts due as principal and interest, provided for payment of future interest at 3 % from the date of decree till date of realisation, and payment of the amount due by a certain date. It also provided that, if payment was made by that date, a final decree would be passed in favour of the appellant, but that, if the payment was not so made, the respondent would be entitled to apply for a final decree for foreclosure. The appellant appealed against the preliminary decree to the High Court and applied for stay of the order requiring him to deposit the decretal amount within the date fixed by the trial court, and the High Court granted stay on his undertaking to pay 9 % interest instead of 3 %, during the period of stay. Subsequently, the High Court dismissled the appeal and confirmed the preliminary decree, but, the additional amount due for the period of stay on account of the undertaking, was not included by the High Court in the preliminary decree. The appellant then applied for a final decree in his favour, after depositing a sum which was more than the amount to be deposited when calculated according to the preliminary decree, but was less than the amount when circulated according to the condition imposed by the High Court in its stay order. The trial Court however directed that a final decree for foreclosure in favour of the respondent be drawn up. On appeal, the lower appellate court ordered that a final decree be drawn up in favour of the appellant. In second appeal, the High Court took the view that the appellant had to deposit the entire amount due on the date of the deposit, as per its direction in the stay order, and as there, was a shortage on the date of deposit though the shortage was made up after the judgment of the lower appellate court only a final decree for foreclosure could be passed in the respondent 's favour. In appeal to this Court, HELD:The appellant was entitled to a final decree. In order that a final decree may be passed in favour of the appellant, he had to carry out before a final decree is passed, the terms of the preliminary decree and to pay "the amount adjudged due in respect of the subsequent costs, charges, expenses and interests" under O.XXXIV, r. 7(1) (e) (i) and (ii) of the Civil Procedure Code. The appellant had carried out the terms of that decree by the deposit made by him and he had nothing to pay on account of Subsequent charges, costs, expenses and interest, because, the extra interest of 6% was not made a part of the decree, and it could not come within the words "in respect of subsequent costs, charges, expenses and interests. " as it arose out of an independent order of the High Court 110 and was only payable on account of the undertaking for purposes of stay. Further, such subsequent costs. charges, expenses and interest have to be adjudged before the mortgagor is asked to deposit the amount. As regards the appellant 's undertaking in the stay matter the court could insist on his honouring it before the final decree is passed. [112 F 113 C].

s Nos. 98, 99, 100 and 101 of 1950. 139 Appeals from the orders of the High Court of Judicature at Patna (Manohar Lall and Imam JJ.) in Miscellaneous Ap peals Nos. 108 to 111 of 1948. Shambhu Barmeswar Prasad and Ramanugrah Prasad for the appellants. H.J. Umrigar for the respondents. January 12. The Judgment of the Court was delivered by CHANDRASEKHARA AIYAR J. The decision of these four ap peals, which are connected with each other and which have arisen out of orders made by the High Court of Patna in four Miscellaneous Appeals, depends on the interpretation of section 7 of the Bihar Moneylenders (Regulation of Transac tions) Act, 1939. The facts which have led to the appeals are found brief ly stated in the petition filed by the present appellants in the 3rd Court of Sub Judge, Patna, and may be re stated here for convenient reference : "The father of the petitioners borrowed Rs. 40,000 from the guru (ancestor) of the decree holder under mortgage bond, dated 11 1 1893. Out of Rs. 40,370 7 6 interest and compound interest up to 4 1 1910, Rs. 32,370 7 6 was paid in cash and for the balance Rs. 8,000 interest and Rs. 40,000 principal, i,e., for Rs, 48,000 a Mortgage Suit No. 14 of 1910 was filed in1st Court of the Sub Judge, Patna, and in lieu of the claim and cost of the said suit two fresh mortgage bonds were executed on 11 7 1910, viz., one for Rs. 40,000 and the other for Rs. 9,488 and the latter bond was satisfied by payment of Rs. 15,835 in cash. With respect to the above bond of Rs. 40,000, dated 11 7 1910 the petitioners paid Rs. 38,530 13 6. Mort , gage Suit No. 110 of 1927 was brought in the 3rd Court of the Sub Judge, Patna, and a decree for Rs. 58,012 2.0 was passed on 9 7 1929. Out of this Rs. 5,000 was paid in cash and for the balance of Rs. 53,012 12 0 one mortgage bond dated 6 10 1931 was executed for Rs. 42,000 and on the same date two 140 hand notes were executed, viz., one for Rs. 5,000 and one for Rs. 6012 2 0. One Suit No. 14 of 1933 for both the hand notes was brought in 3rd Court of the Sub Judge and a decree for Rs. 15,008 2 0 was passed on 28 2 1935. This decree is under execution. " When the decree holder sought to execute the money decree by attachment and sale of the judgmentdebtors ' properties stating that they were subject to a mortgage lien of Rs. 62,272 13 0 under the mortgage bond dated 6 10 1931, the two judgment debtors, who are brothers, filed objec tions under sections 11 and 16 of the earlier Bihar Money lenders Act III of 1938 and section 47 of the Civil Procedure Code. The petitions (two by each of them) were filed separately by the brothers. They urged that on a proper calculation under section 11 no lien was subsisting on the properties owing to payments made towards the mort gage debt amounting to Rs. 92,394 2 0. The Subordinate Judge held that this plea of the judgment debtors could not be entertained in the Miscellaneous case before him relating to the execution and all that could be done was to notify the mortgage encumbrance without deciding anything as to the correctness of the amount claimed to be due under it; and this conclusion was partly based on the fact that section 16 of the Act had been declared by the High Court void. Ap peals taken to the High Court were dismissed. The judgment debtors thereupon preferred an appeal to the Feder al Court, contending that sections 7 and 13 of the new Act (corresponding to sections 7 and 11 of the old Act)were applicable and that it was the duty of the court to estimate the value of the property after making the necessary calcu lations under section 7 with reference to the lien. The decision of the Federal Court is reported in Ramnandan Prasad Narain Singh and Another vs Kulpati Shri Mahanth Goshwarni Madhwanand Ramji(1). The case was remitted back to the High (1) 141 Court, giving liberty to the appellants to file an applica tion under section 13. In answer to a fresh application for execution dated 2 7 1042, the two brothers filed the same objections as before. Miscellaneous Cases Nos. 45 and 46 of 1942 related to sections 7 and 13 of the Bihar Money lenders Act and Miscellaneous Cases Nos. 50 and 52 of 1042 related to the objections under section 47 of the Code of Civil Procedure. The Subordinate Judge held that the amount of the loan should be taken as the amount mentioned in the mortgage deed of 1931 and not the amount advanced in 1893 and that a sum of Rs. 70,840 was still due on the bond. He determined the market value of the several properties given as security, adopting 16 times the net income as the basis. Appeals to the High Court were numbered as M.A. 108 to 111 of 1943 and they were heard by Manohar Lall and Imam JJ. They modified the order of the lower Court in certain re spects. Even according to them the amount of the loan was what was mentioned in the mortgage bond of 6 10 1931, but as a sum of Rs. 11,855 3 0 had been repaid expressly towards the principal amount after the date of the bond, that amount became reduced to Rs. 28,150. Adding an equal sum by way of interest which according to them was the maximum amount, permitted to be allowed under section 7 of the Act, the total liability was stated to be Rs. 56,300 and a charge was declared on the property for this amount. They also directed that the valuation of the property should be fixed at twenty times the net income and not sixteen times. It is from this order that the present appeals have been preferred. Two points were urged on behalf of the appellants, namely (a) that the decree holder was barred by construc tive res judicata from contending that the construction placed upon section 7 by the judgmentdebtors was wrong; and (b) that in applying section 7, we must consider the origi nal amount of loan of Rs. 40,000 given in the year 1893 and allow the claim 142 of interest only for that maximum sum, after taking into account all sums paid by the appellants and their predeces sors towards interest since 1893. The first point is entirely without substance. When the decree holder contended that section 11 of the Bihar Money lenders Act, 1938, was declared void and ultra vires and that therefore section 7 of the new Act which corresponded to section 11 was also inapplicable, the judgment debtors pleaded that they were entitled to the benefit of section 7 of the new Act. The Federal Court held in Ramnandan Prasad Narain Singh and Another vs Kulpati Shri Mahanth Goshwami Madhwanand Ramji(1) that the judgment debtors (present appellants) were entitled to claim the benefit of the provi sions of the new Act when the executing court proceeded under section 13 to determine the value of the properties to be sold. The correct interpretation of section 7 was not in question between the parties. To say that the appellants were entitled to take advantage of the provisions of section 7 is entirely different from the contention that the inter pretation sought to be put by them on section 7 was the right one. The Federal Court was not dealing with any question of interpretation at all. It is impossible to see where the doctrine of constructive res judicata comes in, so as to be of help to the appellants. The second question raised on their behalf relates to the true meaning of section 7 of the Bihar Moneylenders (Regulation of Transactions) Act VII of 1939, which is in these terms: "7. Notwithstanding anything to the contrary con tained in any other law or in anything having the force of law or in any agreement, no Court shall, in any suit brought by a money lender before or after the commencement of this Act in respect of a loan advanced before or after the com mencement of this Act or in any appeal or proceedings in revision arising out of such suit, pass a decree for an amount of interest for the period preceding the institution of the suit, (1) 143 which together with any amount already realised as interest through the court or otherwise, is greater than the amount of loan advanced, or, if the loan is based on a document, the amount of loan mentioned in, or evidenced by, such document. " In the present case, the original loan of Rs. 40,000 was advanced as early as 11 1 1893. The appellants j contend that for the purposes of calculating the interest to be decreed prior to the date of the suit the loan advanced must be taken to be the original sum and that if an account is taken of all the sums received by the creditor as interest from that date up to the date of the suit, there would be nothing due for interest. On the other hand, the decree holder urges that having regard to the latter part of the section, the loan must be taken to be the amount mentioned in the mortgage bond dated 8 10 1931, namely Rs. 42,000. Whichever method of calculation is adopted, it must be remembered that it has to be made not for the purposes of passing any decree on the mortgage loan, but for estimating under section 13 of the Act the value of the properties to be brought to sale in execution of the money decree against the appellants. As pointed out by Sir Maurice Gwyer C.J. in Surendra Prasad Narain Singh vs Sri Gajadhar Prasad Sahu Trust Estate and Otherse), "Section 7 of the Act of 1937 is no doubt extremely obscure and illdrawn. " The true intention of the framers of the Act is somewhat difficult to gather. But the Patna High Court has been consistently placing upon the section an interpretation which is opposed to the contention of the appellant in these proceedings. The point came up expressly for decision in Singhesh war Singh and Others vs Madni Prasad Singh Others(2) where a mortgage bond was executed on 31 8 1922 for a sum of Rs. 2,000 which was the balance of the principal and inter est due under a mortgage bond of the 11th of October, 1912, for (1) (2)A.T.R. 1940 Pat. 65. 19 144 Rs. 1,391. The judgment debtors raised the plea that the court should go back to the earlier bond of 1912 and that as a sum of Rs. 1,512 had been paid as and by way of interest towards that bond, no decree could be passed against them for more than the principal sum of Rs. 1,391. The learned Judges rejected this contention and took the amount stated in the document of 1922, namely Rs. 2,000, as the loan and they held that the plaintiffs were entitled to get a decree for interest for a sum not larger than Rs. 2,000 as no payment had been proved to have been made after the execution of the bond. The same view was taken in Lal Singh vs Ramnarain Ram and Others(1) and the plain tiffs were awarded a decree on the basis that the loan was to be taken as Rs. 2,909 8 0 which was the amount for which the hand note sued upon was executed and not Rs. 1,000 which was the original amount advanced upon an earlier hand note of the year 1924. The case reported in Madho Prasad Singh vs Mukutdhari Singh and Others(2) lays down the same position. The Full Bench decision in Deo Nandan Prasad vs Ram Prasad (3) rei terates the same view, pointing out the distinction between sections 7 and 8 of the Act and stating that while under section 8 we can go to the original loan in spite of a later document, under section 7, the loan must relate to the document on which the suit is based, that is, the final document and not the original one. In each one of these cases, the question of the true meaning of section 7 was pointedly considered. This construction no doubt enables a creditor to circumvent the beneficent provisions of the Act by taking a document for the interest due and adding it to the principal amount. Gwyer C.J. points out this difficulty at page 59 in the case Surendra Prasad Narain Singh vs Sri Gajadhar Prasad Sahu Trust Estate and Others(4). If the interpretation does not carry out the intentions of the framers of the Act by reason of unhappy or ambiguous phrasing, it is for the Legis lature to intervene. But far from doing so, it has (1) , Patna 618. (2) (1941) 193 I.C.661. (4) [1940] F.C.R.39. 145 acquiesced, during all these years in the construction which the Patna High Court has been placing upon the section from the very next year after the enactment of the statute. Having regard to the great obscurity in the language em ployed in the relevant provisions and the inaction of the Legislature, it is, in our opinion, legitimate to infer that the view expressed by the Patna High Court is in accord with the intention of the Legislature. The appeals fail and are dismissed with costs, only one set in all of them together. Appeals dismissed. Agent for the respondent ': R.C. Prasad.

IN-Abs

Where a fresh document is executed for the amount remaining due on account of principal and interest under a loan ad vanced prior document, and a suit is brought for recovery of the amount due under the later document with interest due thereunder, "the amount of loan mentioned in, or evidenced by, such document" for the purposes of section 7 of the Bihar Money Lenders Regulations and Transactions) Act, 1939, is the amount mentioned, or evidenced by, the later document and not that mentioned in the original document which was renewed; and the court can pass a decree for an amount of interest for the period preceding the institution of the suit, which together with any amount realised as interest after the date of the later document, is not greater than the amount of loan mentioned in the later document. The maximum amount that can be so decreed is not the amount which together with the interest realised from the date of the original loan does not exceed the original loan. Singheswar Singh and Other 's vs Nadni Prasad Singh and Others (A.I.R. 1940 Pat. 65), Lal Singh vs Ramnarain Ram and Others (,A.I.R 1942 Pat 138), Madho Prasad Singh vs Mu kutdheri Singh and Others , Deo Nandan Prosad vs Ram Prasad (I.L.R 23 Pat. 618), Ram Nandan Prasad Narain Singh vs Kulpati Shri Mahanth Goshwami Madhwanand Ramji ([1940] F.C.R. 1), Surendra Prasad Narain Singh vs Sri Gajadhar Prasad Sahu Trust Estate and Others ([1940] F.C.R. 39) referred to.

Appeal No. 239 of 1953. Appeal by special leave from the Order and Judgment dated the 5th September, 1953, of the Election Tribunal, Cuttack, in Election Case No. 5 of 1952. section B. Jathar for the appellant. section P. Sinha (R. Patnaik, with him) for the respondent. February 4. The Judgment of Mahajan C.J. Mukherjea, Das and Ghulam Hasan JJ. was delivered ' by Das J. Vivian Bose J. delivered a separate judgment. DAS J. The question here is whether an election to a State Legislative Assembly is invalidated when the 118 914 member 's nomination was either proposed or seconded, or both, by a Government servant or servants. The appellant was a minister in the State of Orissa. He was nominated as a candidate for the Orissa Legislative Assembly and was later declared to have been elected. One of his rivals was the 1st respondent who filed an election petition challenging the election on a number of grounds, among them, the following. The appellant had filed about two dozen nomination papers. In five of them the proposer was a Government servant and in four the seconder. The 1st respondent stated that this was the first step in a scheme to get the assistance of Government officers in furtherance of the appellant 's election and to "use and utilse" them "for the purposes of the election. " There were also other allegations Which we need not consider here. The appellant made counter allegations against the 1st respondent, whom he had defeated, but they do not concern us either. The Election Tribunal framed twelve issues and examined 101 witnesses, but when it came to make its order it proceeded to decide only two issues instead of deciding the whole case. It held that as the proposers and seconders referred to above were admittedly Government servants that constituted a major corrupt practice and so invalidated the election under section 123 (8) of the Representation of the People Act, 1951 (No. XLIII of 1951). The other of the two decided issues does not concern this appeal. The appellant thereupon petitioned the High Court for a writ of certiorari Under article 226 of the Constitution. The High Court refused to interfere. The learned Judges held that there was no want of jurisdiction in the tribunal and that the tribunal 's view of the law was a possible and reasonable one , accordingly, as the High Court was not a court of appeal from the tribunal, they were not called upon to decide the question as a court of appeal. The appellant was granted special leave to appeal by this court against the order Of the Election Tribunal. 915 A question of 'great public importance affecting Government servants is involved and we deem it right to examine the question under our special jurisdiction under article 136. The only sections we are called upon to consider are sections 33 (2) and 123 (8). The former provides that "Any person whose name is registered in the electoral roll of the constituency and who is not subject to any disqualification mentioned in section 16 of the Representation of the People Act, 1950 (XLIII of 1950) may subscribe as proposer or seconder as man nomination papers. as there are vacancies to be filled. According to the latter "The obtaining or procuring or abetting. by a candidate or his agent or, by any other person with the 'connivance of a candidate or his agent, any assistance for the furtherance of the prospects of the candidate 's election from any person serving under the Government of India or the Government of any State other than the giving of vote by such person" shall be deemed to be a major corrupt practice for the purposes of the Act. A corrupt practice of this kind entails disqualification for membership (section 140). Section 33 (2) is general and confers the privilege of proposing or seconding a candidate for election on every person who is registered in the electoral roll provided be is not disqualified under section 16 of the Act of 1950. That section excludes three classes of persons but not Government servants, unless of course they happen to fall within those classes. Therefore, so far as section 33 (2) is concerned, a Government servant is entitled to nominate or second a candidate for election unless he happens to fall in one of the three excluded categories. The question is whether section 123 (8) takes away from Government servants that which section 33 (2) gives to them. We do not think it does. Viewing the question as a plain matter of construetion, we find that when section 33(2) was framed those 916 who passed it had in mind the desirability of excluding certain classes of persons from its scope and they chose to limit those classes to three. Therefore, in the absence of express provision to the contrary elsewhere, or unless it follows by necessary implication, the section must be construed to mean that those not. expressly excluded are intended to be included. As Government servants are not in the excluded categories it follows that so far as this section is concerned they are not disqualified from proposing and seconding a candidate 's nomination. Now, does section 123 (8) contain express provision to the contrary or can such provision be inferred by necessary implication? It is usual, when one section of an Act takes away what another confers, to use a non obstante clause and say that "notwithstanding anything contained in section so and so, this or that will happen", otherwise, if both sections are clear, there is a head on clash. It is the duty of courts to avoid that and, whenever it is possible to do so, to construe provisions which appear to conflict so that they harmonise. What exactly does section 123 (8) forbid? It is the obtaining or procuring etc., of "any assistance. . other than the giving of vote by such person. " Therefore, it is permissible for a candidate to canvass Government servants for their votes and if a Government servant chooses to reveal his hand it would be permissible for the candidate to disclose the fact and use it in furtherance of his election, for the law imposes no secrecy on the intentions of those who, of their own free will, choose to say how they intend to vote. They cannot be compelled to disclose the fact and any improper attempt to obtain such information would be a corrupt practice, but equally, they are not completed to keep the fact secret if they do not wish to do so; nor is the candidate. If therefore the law permits this, we find it difficult to see how in the same breath it can be said to have taken away the right expressly conferred by section 33(2). The policy of the law is to keep Government servants aloof from politics and also to protect them from being imposed on, by those with 917 influence or in positions of authority and power, and to prevent the machinery of Government from being used in furtherance of a candidate 's return. But at the same time it is not the policy of the law to disenfranchise them or to denude them altogether of their rights as ordinary citizens of the land. The balance between the two has, in our opinion, been struck in the manner indicated above. But though it is permissible for a candidate to go that far, he cannot go further and if the procurement of Government servants to propose and second a nomination is part of a plan to procure their assistance for the furtherance of the candidate 's prospects in other ways than by vote, then section 123(8) is attracted, for in that case, the plan, and its fulfillment, must be viewed as a connected whole and the acts of proposing or seconding which are innocent in themselves cannot be separated from the rest. Our conclusion on the preliminary issue may also be supported on another ground. The major corrupt practice referred to in clause (8) of section 123 consists in obtaining or procuring or abetting or attempt to obtain or procure by a candidate or his agent etc. , any assistance for the furtherance of the prospects of the candidate 's election from any person serving under the Government of India or the Government of any State other than the giving of vote by such person. In order, therefore, to bring a case within the mischief of that clause the assistance must be for the furtherance of the prospects of the candidate 's election. Section 79(b) defines a candidate as meaning " a person who has been or claims to have been nominated as a candidate at any election, and any such person shall be deemed to have been a candidate as from the time when, with the election in prospect, he began to hold himself out as a prospective candidate. " Unless, therefore, a case falls within the latter half of the definition a person becomes a candidate under the first part of the definition only when he has been duly nominated as a candidate and the furtherance of 918 the prospects of a candidate 's election must, therefore, in such a case commence from after that stage. Although evidence was adduced on both sides, there has been no finding so far on questions of fact which may or may not bring the case within the second part of the definition. In the absence of such a finding the case must be regarded, for the purpose of the preliminary issue, as governed by the first part of the definition and as such the proposing and seconding by a Government servant cannot be regarded as "assistance for the furtherance of the prospects of the candidate 's election." In this view of the matter also, the judgment of the Election Tribunal cannot be sustained. We set aside the order of the tribunal and remit the case to the Election Commission with directions to it to reconstitute the tribunal which tried this case and to direct the tribunal to give its findings on all the issues raised and to make a fresh order. Our power to make such an order was not questioned but it was said that when the legislature states that the orders of a tribunal under an Act like the one here shall be conclusive and final (section 105), then we should not interfere. It is sufficient to say that the powers conferred on us by article 136 of the Constitution and on the High Courts under article 226 cannot be taken away or whittled down by the legislature. So long as these powers remain, our discretion and that of the High Courts is unfettered. We wish to record our disapproval of the way in which this tribunal shirked its work and tried to take a short cut. It is essential that these tribunals should do their work in full. They are ad hoc bodies to which remands cannot easily be made as in ordinary courts of law. Their duty under section 99 is, " where any charge is made in the petition of any corrupt or illegal practice having been committed at the election" to record " a finding whether any corrupt or illegal practice has or has not been proved to have been committed. and the,nature of that corrupt or illegal practice. " 919 Also, " to give the names of all persons, if any, who have been proved at the trial to have been guilty of any corrupt or illegal practice and the nature of that practice. " Their duty does not end by declaring an election to be void or not because section 99 provides that in addition to that " at the time of making an order under section 98the tribunal shall also make an order etc. . " A number of allegations were made in the petition about corruption and illegal practices, undue influence and bribery. It was the duty of the tribunal not only to enquire into those allegations, as it did, but also to complete the enquiry by recording findings about those allegations and either condemn or clear the candidate of the charges made. We make no order about costs. Bose J. I agree on all but one point. I have some doubt about the reason given by my learned brother which is based on the definition ' of "candidate" in the Act. I prefer not to express any opinion that one point. Case remanded. Agent for respondent No. 1 A. D. Mathur.

IN-Abs

(1) The unfettered discretionary powers conferred on the Supreme Court and the High Courts by articles 136 and 226 of the Constitution respectively cannot be taken away or whittled down by the legislature and therefore section 105 of the Representation of the People Act, 1951, which provides that every order of the tribunal under the Act shall be final and conclusive did not affect such powers. (2) In view of the provisions of section 16 of the Representation of the People Act, 1950, and the provisions of sections 33 (2) and 123 (8) of the Representation of the People Act, 1951, an election to a State Legislative Assembly is not invalidated when the elected member is either nominated or seconded or both by a Government servant or servants. (3) The Supreme Court recorded its disapproval of the way in which the Election Tribunal shirked its duty and tried to take a short cut in deciding only two of the twelve issues framed and thus acted against the provisions of section 99 of the Act.

Appeal No. 225 of 1964. Appeal by special leave from the judgment and decree dated July 25, 1961 of the Kerala High Court in S.A. No. 852 of 1957. L/S5SCI 11 136 A. G. Pudissery, for the appellant. M. R. K. Pillai, for the respondents. The Judgment of the Court was delivered by Bachawat, J. In 1921, the plaintiff executed in favour of the defendant an otti kuzhikanam deed in respect of the suit property. By this deed, the plaintiff sold to the defendant the building standing on the property for 350 fanams and also transferred to him for 350 fanams the right to possess and enjoy the property for 12 years in kuzhikanam right with liberty to plant coconut trees thereon, expressly reserving for the plaintiff the right to enjoy the fruit bearing trees then standing on the property ' The deed provided that after the expiry of 12 years the defendant would on demand demolish and take away the building and surrender possession of the land on receipt of 350 fanams and the agreed compensation for the coconut trees planted by him. The plaintiff instituted a suit for redemption of the property. During the pendency of the litigation, the plaintiff and the defendant died, and their legal representatives were substituted in their place. On May 31, 1951, the Principal District Munsif Quilon decreed the suit. On appeal, the District Court of Quilon affirmed this decree. The present appellant, who is one of the legal representatives of the original defendant, filed a second appeal in the High Court of Kerala. During the pendency of this appeal, the Kerala Agrarian Relations Act, 1960 (Act IV of 1961) came into force. Before the High Court, the appellant claimed fixity of tenure and protection from eviction on the ground that he was a kuzhikanamdar or alternatively, the holder of a kudiyiruppu, and, therefore, a tenant within the meaning of section 2(50) (i)(e) read with section 2(22) and section 2(50)(i)(j) read with section 2(21) of Act IV of 1961. The High Court negatived this contention, and dismissed the appeal. The appellant now appeals to this Court by special leave. During the pendency of this appeal, Act IV of 1961 was repealed and the Kerala Land Reforms Act, 1963 (Act 1 of 1964) came into force. The appellant now claims fixity of tenure and protection from eviction on the ground that he is a, kuzhi kanamdar within the meaning of section 2(57)(d) read with section 2(28), or alternatively, the holder of a kudiyiruppu within the meaning of section 2(57)(h) read with section 2(26) of Act 1 of 1964. In the High Court, the appellant also claimed protection from eviction on the ground that he was a 'kudikidappukaran ', but this contention was negatived by the High Court and is no longer pressed. Section 13 of Act 1 of 1964 gives to every tenant fixity of tenure in respect of his holding, and forbids resumption of the holding except as provided in sections 14 to 22. Section 2(57) defines 'tenant '. By sections 2(57)(d) and (h), a tenant includes a kuzhikanamdar and the holder of a kudiyiruppu. The appellant does not contend that he is a tenant as defined in the main part of section 2(57). 137 He, however, contends that he is a tenant as defined in section 2(57)(d) and section 2(57)(h). The deed of 1921 was styled 'otti kuzhikanam deed '. In Malabar, the word "otti" in the context of the deed designates a possessory mortgage. According to Wilson 's Glossary of Judicial and Revenue Terms, "kurikanam" means "compensation allowed for the value of trees planted, or other improvements made by the tenant or mortgagee on relinquishing possession; a lease or mortgage on such conditions." Under a kuzhikanam mortgage or lease in Malabar, the grantee normally acquires the right to hold the property for 12 years for the purpose of planting fruit bearing trees thereon and to claim compensation for the value of the trees planted on relinquishing possession. Had there been no special definition of the expression "kuzhikanam" in Act 1 of 1964, we would have been inclined to hold that the grantee under the deed of 1921 was a kuzhikanamdar. But section 2(28) of Act 1 of 1964 provides that in this Act unless the context otherwise requires, "kuzhi kanam" means and includes a transfer of garden lands or of other lands or of both, with the fruit bearing trees, if any, standing thereon at the time of the transfer, for the enjoyment of those trees and for the purpose of planting such fruit bearing trees thereon but shall not include a usufructuary mortgage as defined in the . " This definition of kuzhikanam is both inclusive and exhaustive. Unless the context requires otherwise, the expression "kuzhikanam in the Act can have only the meaning given in section 2(28). There is nothing in the context of section 2(57) and section 13, which requires a different meaning for this expression. "Kuzhikanam" as defined in section 2(28) means a transfer (1) of garden lands or of other lands or of both, (2) with the fruit bearing trees, if any, standing thereon at the time of the transfer, (3) for the enjoyment of those trees and (4) for the purpose of planting such fruitbearing trees thereon. It does not include a usufructuary mortgage as defined in the , but it is not the case of the plaintiff that the deed of 1921 created such a usufructuary mortgaee. Now the deed of 1921, while effecting a transfer of land for the purpose of planting coconut trees thereon, expressly reserved for the grantor the right to enjoy the fruit bearing trees then standing on the land and did not transfer those trees to the ,grantee. On behalf of the appellant, it was argued that the words "with the fruit bearing trees, if any, standing thereon at the time of the transfer, for the enjoyment of those trees" are not essential parts of the definition of 'kuzhikanam ' in section 2(28), and that we should hold that a transfer of land for the purpose of planting fruit bearing trees thereon is kuzhikanam, though there is no transfer of the fruit bearing trees standing on the land at the time of the transfer and though the transfer is not for the enjoyment of those trees. We are unable to accept this contention. We think that a transfer of land without the fruit bearing trees then standing on it and Dot carrying with it the right to enjoy those trees is not a L/S5SCI 11(a) 138 kuzhikanam as defined in section 2(28). The force of the words "if any" in the definition is that if there are any fruit bearing trees on the land at the time of the transfer, the trees also must be transferred for their enjoyment by the transferee. The contention that the deed of 1921 granted kuzhikanam rights as defined in section 2(28) of Act 1 of 1964 is rejected. The appellant next contends that he is the holder of kudiyi ruppu. Section 2(26) of Act 1 of 1964 which defines 'kudiyiruppu ' reads: " kudiyiruppu" means a holding or part of a holding consisting of the site of any residential building, the site or sites of other buildings appurtenant thereto, such other lands as are necessary for the convenient enjoyment of such residential building and easements attached thereto, but does not include a kudikidappu. " I here is no material on the record to show that the building on the land is a residential building. Moreover, it does not appear that the land is necessary for the convenient enjoyment of the building. The contention that the appellant is the holder of kudiyiruppu is rejected. The appeal fails and is dismissed. There will be no order as to costs. Appeal dismissed.

IN-Abs

By a deed styled `otti Kuzhikanam deed ', the predecessor of the respondent sold a building standing on a property to the predecessor of the appellant and also transferred to him the right to possess and enjoy the property for 12 years in Kuzhikanam right with liberty to plant coconut trees thereon. The deed expressly reserved the right for the respondent to enjoy the fruit bearing trees then standing on the properties. and provided that after expiry of 12 years the appellant would on demand demolish and take away the building and surrender possession of the land on receipt of a certain amount and he agreed compensation for the coconut trees planted by him. The respondent instituted a suit for redemption of the property, which was decreed. On appeals, the decree was affirmed by the District Court and High Court. In appeal to this Court the appellant claimed fixity of tenure and protection from eviction on the ground that he was (i) a Kuzhikanamdar under section 2(57)(d) and section 2(28), or alternatively.(ii) the holder of a kudiyiruppu under section 2(57) (h) and section 2(26) of the Kerala Land Reforms Act. HELD: (i) The deed did not grant Kuzhikanam rights to the appellant. "Kuzhikanam" as defined in section 2(28) means a transfer (1) of garden lands or of other lands or of both, (2) with the fruit bearing trees, if any standing thereon at the time of the ' transfer, (3) for the enjoyment of those trees and (4) for the purpose of planting such fruit bearing trees thereon. It does not include a usufructuary mortgage as de fined in the but it was not the case of the respondent that the deed created such a usufructuary mortgage. [137 E F] A transfer of land without the fruit bearing trees then standing on it and not carrying with it the right to enjoy those trees was not a kuzhikanam as defined in section 2(28). The force of the words "if any" in the definition of "kuzhikanam" in section 2(28) is that if there are any fruit bearing trees on the land at the time of the transfer, the trees also must be transferred for their enjoyment by the transferee. [137 H 138 B] (ii)The appellant was not the holder of Kudiyiruppu within the meaning of section 2(26) of the Act. There was no material on the record to show that the building on the land was a residential building. Moreover, it did not appear that the land was necessary for the convenient enjoyment of the building. [138 D]

Appeal No. 230 of 1964. Appeal by special leave from the judgment and order dated January 11, 1961 of the Madras High Court in section C. Petition No. 165 of 1960. R. Ganapathy Iyer and R. Thiagarajan, for the appellant. A. V. Rangam, for the respondent. The Judgment of the Court was delivered by Shelat, J. This appeal by special leave is against the order,, of the High Court of Madras dated January 11, 1961 refusing the certificate under article 133(1)(a) and (b) of the Constitution. 155 The authorities appointed under the Hindu Religious and Charitable Endowments Act, Madras Act 11 of 1927 having held that the premises No. 29 South Masi Street, Madurai, wherein the idol of Sri Srinivasaparumal and certain other idols were located constituted a temple within the meaning of the said Act, the appellant filed an application in the District Court for a declaration that the said premises were private property and for an order setting aside the said decision. The said application was by an order of the High Court converted into a suit. The main question in the suit was whether the said premises could be said to be a temple as defined by Madras Act 19 of 1951. The District Judge, Madurai, decreed the suit in favour of the appellant holding that the aforesaid premises did not constitute a temple and set aside the decision of the said authorities. On appeal, the High Court reversed the said judgment and decree and found that the premises in question constituted a temple. The appellant thereupon filed a petition for leave to appeal to this Court and submitted that the value of the subject matter of dispute in the District Court as also in appeal in the High Court was more than Rs. 20,000/ and that the judgment of the High Court having reversed the judgment and decree of the Trial Court he was entitled to leave under article 133(1)(a) and (b). The High Court dismissed that application on the following grounds: (a) that the subject matter of the dispute, whether it was a private or a public temple could have no market value and therefore was incapable of valuation; (b) that cl. (b) of article 133(1) could not apply as the judgment and decree passed by it did not involve directly or indirectly a claim or question res pecting property of the value of Rs. 20,000/ or more and (c) that the appeal did not involve any substantial question of law. For the time being we are concerned with grounds (a) and (b) and not with ground (c) is the contention raised by Mr. Ganapathy Iyer for the appellant was that the refusal to grant leave by the High Court under either of the clauses (a) and (b) of article 133(1) was not correct. The point for consideration is whether the High Court was right in holding that the property in question whether as a private or a public temple was incapable of valuation as it could have in either case no market value. It may be observed that the appellant claimed that the property belonged to the Thoguluva family and he was in management thereof for and on behalf of the family. The suit in the first instance was filed by him in the form of an application, being O.P. No. 37 of 1950 under section 84(2) of Madras Act 11 of 1927. Under that Act only a fixed court fee was payable. That being so, the appellant did not have to pay court fees as it would in the case of an ordinary suit on a valuation made by him therefor. The application was subsequently converted into a suit by an order of the High Court. He was therefore entitled 156 to contend at the time of the leave application that the property in dispute was of the value of not less than Rs. 20,000/ . It does not appear to be in dispute that the site of the Mandapam and the structure standing thereon was originally the property of one Kuppaiyan and his undivided sons. The appellant 's case was that in execution of the decree in Suit No. 650 of 1882 passed against the said Kuppaiyan the property was sold by public auction and purchased by Thoguluva Thirumalayyan, the appellant 's ancestor, for a sum of Rs. 1,060/ . The original mandapam was thereafter improved upon and some additional structures e.g., shops and other constructions were added, the expenses for such repairs and additions having been met by the descendants of the said Thoguluva Thirumalayyan, and therefore the property belonged to and was an alienable private property of the family. On the other hand, the case of the respondents in their written statement was that the property was a public temple for public religious worship and that the allegation of the plaintiff that it was a private property capable of alienation was "false and misleading." The case of the appellant was accepted by the Trial Court but was rejected by the High Court and the High Court held that the property was a public temple within the meaning of Madras Act 19 of 195 1. The dispute between the parties was thus centred round the question whether the property was the private alienable property of the said family or was a public temple as held by the High Court. There was evidence that the shops subsequently constructed as aforesaid were let out to tenants for a number of years and property taxes were levied thereon by the Madhurai Municipality, presumably on their rateable value. We may also mention here that in his application to this Court for directing an inquiry into the value of the property under 0. 45, r. 1 of the Code of Civil Procedure the appellant has stated that he has in his possession municipal receipts showing the property tax paid to the Madurai Municipality. According to the appellant, property tax for the half year ending September 30, 1950 was Rs. 94 0 6 and for the half year ending March 31, 1961 it was Rs. 130.36nP. According to him the half yearly tax would be equivalent to one month 's rent and on that basis the annual rental value would come to Rs. 1,126 6 0 in 1950 and to Rs. 1,672.32nP in 1961. If that be so, capitalising that value at twenty times the annual rental value, the value of the property would come to more than Rs. 20,000/ . The refusal of the High Court to grant leave was based on the observation that whether the property is a private or a public temple, it was incapable of valuation. But as observed earlier the appellant 's case was that the subject matter of dispute in the suit was the private property of the said family and that it was alienable property and therefore capable of a valid transfer. That being 157 the dispute between the parties, the High Court was not right in assuming that whether the property was a private or a public temple, it was incapable of valuation. The subject matter of the dispute has to be ascertained with reference to the claim made by the plaintiff in his plaint and since according to the plaint, the property is the private property of the said family capable of alienation, the High Court ought to have valued the property accordingly though according to the respondents the property was inalienable and was a public temple. The High Court was thus wrong in proceeding on the aforesaid assumption. We would therefore allow the appeal, set aside the order passed by the High Court and remand the case to the High Court to decide the application for leave in accordance with the observations made in this judgment. The High Court may either hold the inquiry itself or remit the case to the Trial Court to hold such inquiry and report to it. Accordingly, the appeal is allowed and the High Court 's order is set aside. The respondents will pay to the appellant the costs of this appeal. Appeal allowed.

IN-Abs

The appellant sought a declaration that certain premises belonged to his family as private property and did not constitute a temple within the meaning of the Madras Hindu Religious and Charitable Endowments Act (19 of 1951). The District Court decreed the suit but the High Court found that the property in question was a temple. The appellant then filed a petition for leave to appeal to this Court under article 133(1) (a) and (b) of the Constitution and submitted that the property was more than Rs. 20000 in value. The High Court dismissed the application on the ground, inter alia, that the subject matter of the dispute whether as a private or a public temple was incapable of valuation as it could have in either case no market value. The appellant by special leave came to this Court. HELD:The High Court was not right in assuming that whether the property was a private or a public temple, it was incapable of valuation. The subject matter of the dispute had to be ascertained with reference to the claim made by the plaintiff in his plaint and since according to the plaint the property was the private property of the appellant 's family capable of alienation, the High Court ought to have valued the property accordingly. [157 A, B]

ON: Appeal No. 209 of 1964. Appeal by special leave from the Judgment and order dated January 31, 1964 of the Bombay High Court in Criminal Revision Application No. 913 of 1963. J. C. Dalal, E. E. Jhirad and O. P. Rana, for the appellant. section C. Patwardhan B. Dutta, J. B. Dadachanjl, O. C. Mathur and Ravinder Narain, for respondent No. 1. The Judgment of the Court was delivered by Shah, J. The appellant, Mrs. Menezes, is the owner of a 123 124 house in Bombay, and the wife of the first respondent Yusuf Khan is a tenant of a part of the first floor in that house. On January 17, 1963 one Robert a servant of the appellant, called the wife of the first respondent a thief and 'Halkat '. On the next day the first respondent slapped the face of Robert. This was followed by a heated exchange of abusive words between the first respondent and the appellant 's husband. The first respondent was annoyed and threw at the appellant 's husband a "file" of papers. The file did not hit the appellant 's husband, but it hit the elbow of the appellant causing a "scratch". The appellant lodged information at the Bandra police station complaining that the first respondent had committed house trespass in order to the committing of an offence punishable with imprisonment, had thrown a shoe at her, had slapped the face of her servant Robert, and had also caused her a "bleeding incised wound on the forearm". The version of the appellant was a gross exaggeration of the incident. The Officer in charge of the police station was persuaded to enter upon an investigation on this information, which by charging the respondent with the offence of trespass was made to appear as if a cognizable offence was committed. The Sub Inspector found that the appellant had suffered a mere scratch on her elbow. The appellant and Robert declined to go to a public hospital for examination or treatment, and were, it is claimed, examined by a private medical practitioner, who certified that the appellant bad suffered a "bleeding incised wound, skin deep, size 1" in length on the right forearm", and that Robert had "a swelling about 1 1/2 " in diameter, roundish, soft and tender", but no bruises. The offence was petty, but was given undue importance. The case was transferred from the Court of the Presidency Magistrate, Bandra, to the Court of the Presidency Magistrate VI Court, Mazagaon, Bombay, and was entrusted to a special prosecutor on behalf of the State. The Trial Magistrate held that the story that the first respondent had trespassed into the house of the appellant was false and the charge of trespass was made only with a view to persuade the police officer to investigate it as a cognizable offence. The story of the appellant that the first respondent had hurled a shoe at her was also disbelieved. The Trial Magistrate held that simple injuries were caused to Robert and to the appellant and for causing those injuries he convicted the first respondent of the offence under section 323 I.P. Code and sentenced him to pay a fine of Rs. 10 on each of the two counts. Against the order of conviction, a revisional application was preferred to the High Court of Judicature at Bombay. The appellant was no longer concerned with the proceedings in the High Court, but since there were some negotiations for compounding the offence, the appellant was impleaded as a party to the proceeding before the High Court. The High Court was of the view that the appellant had grossly exaggerated her story, that the evidence of the medical practitioner who claimed to have examined the appellant and Robert and to have 125 certified the injuries" did "not inspire confidence", that the husband of the appellant had addressed provocative and insulting abuses, and that in a state of excitement the respondent hurled a "file of papers" at the appellant 's husband which missed him and caused a "scratch" on the appellant 's forearm. The injuries caused to the appellant and to Robert were in the view of the High Court "trivial" and the case was one in which the injury intended to be caused was so slight that a person of ordinary sense and temper would not complain of the harm caused thereby. The High Court accordingly set aside the conviction and acquitted the first respondent. Before us it was urged that the High Court had no power to act under section 95 I.P. Code, since by the act of the respondent bodily hurt was intentionally caused. It was argued that section 95 applies only in those cases where the act which causes harm is actually caused to the complainant section 95 cannot be invoked. In section 95 I.P. Code includes financial loss, loss of reputation, mental worry or even apprehension of injury, but when physical, injury is actually caused to the complainant section 95 cannot be invoked. In ' our view there is no substance in these contentions. Section 95 provides: "Nothing is and offence by reason that it causes, or that it is intended to cause, or that it is known to be likely to cause, any harm, if that harm is so slight that no person of ordinary sense and temper would complain of such harm. " It is true that the object of framing section 95 was to exclude from the operation of the Penal Code those cases which from the imperfection of language may fall within the letter of the law, but are not within its spirit and are considered, and for the most part dealt with by the Courts, as innocent. It cannot however be said that harm caused by doing an act with intent to cause harm or with the knowledge that harm may be caused thereby, will not fall within the terms of section 95. The argument is belied by the plain terms of section 95. The section applies if the act causes harm or is intended to cause harm or is known to be likely to cause harm, provided the harm is so slight that no person of ordinary sense and temper would complain of such harm. The expression "harm" has not been defined in the 'Indian Penal Code: in its dictionary meaning it connotes hurt, injury; damage; impairment, moral wrong or evil. There is no warrant for the contention raised that the expression "harm" in section 95 does not include physical injury. The expression "harm" is used in many sections of the Indian Penal Code. In sections 81, 87, 88, 89, 91, 92, 100, 104 and 106 the expression can only mean physical injury. In section 93 it means an injurious mental reaction. In section 415 it means injury to a person in body, mind, reputation or property. In sections 469 126 and 499 harm, it is plain from the context, is to the reputation of the aggrieved party. There is nothing in section 95 which warrants a restricted meaning which counsel for the appellant contends should be attributed to that word. Section 95 is a general exception, and if that expression has in many other sections dealing with the general exceptions a wide connotation as inclusive of physical injury, there is no reason to suppose that the Legislature intended to use the expression "harm" in section 95 in a restricted sense. The next question is whether, having regard to the circum stances, the harm caused to the appellant and to her servant Robert was so slight that no person of ordinary sense and temper would complain of such harm. Section 95 is intended to prevent penalisation of negligible wrongs or of offences of trivial character. Whether an act which amounts to an offence is trivial would undoubtedly depend upon the nature of the injury, the position of the parties, the knowledge or intention with which the offending act is done, and other related circumstances. There can be no absolute standard or degree of harm which may be regarded as so slight that a person of ordinary sense and temper would not complain of the harm. It cannot be judged solely by the measure of physical or other injury the act causes. A soldier assaulting his colonel, a, policeman assaulting his Superintendent, or a pupil beating his teacher, commit offences, the heniousness of which cannot be determined merely by the actual injury suffered by the officer or the teacher, for the assault would be wholly subversive of dis cipline. An assault by one child on another, or even by a grown up person on another, which causes injury may still be regarded as so slight, having regard to the way and station of life of the parties, relation between them, situation in which the parties are placed, and other circumstances in which harm is caused. that the victim ordinarily may not complain of the harm. The complainant 's husband had, it appears, beaten the first respondent 's child for some rude behaviour and Robert the appellant 's servant was undoubtedly rude to the respondent 's wife and instead of showing contrition he said that he would repeat his rude words. At the time of the incident in question, the appellant 's husband and the first respondent exchanged vulgar abuses. Apparently the respondent was annoyed and threw a "file" of papers which caused a mere scratch to the appellant. It is true that the servant Robert was given a slap on the face by the first respondent. But the High Court was of the view that the harm caused both to the appellant and to Robert was "trivial", and that the evidence justified the conclusion that the injury was so slight that a person of ordinary sense and temper placed in the circumstances in which the appellant and Robert were placed may not reasonably have complained for that harm. Even granting that a different view may be taken of the evidence, we do not think that we would 127 justified in an appeal under article 136 of the Constitution in discreeing with the order of the High Court. We therefore maintain the order of acquittal passed by the High Court. This court had at the time when special leave was granted directed that Rs. 1,500 be deposited by the appellant by way of costs of the respondents. The State of Maharashtra has not appeared before us in this appeal. In the circumstances, we direct that Rs. 750 be paid to the first respondent and the balance be returned to the appellant. Appeal dismissed.

IN-Abs

In the course of an altercation between neighbours the first respondent slapped the appellant 's servant and threw a file of papers at the appellant 's husband which missed him but hit the appellant on the elbow, causing a scratch. On a prosecution being launched the Presidency Magistrate convicted the first respondent under section 323 of the Indian Penal Code. The High Court however held that the offending act came within the General Exception in section 95 of the Indian Penal Code as it was trivial. In appeal to this Court the appellant contended that: (1) Section 95 applies only when the act of the accused is accidental and not deliberate; (2) the section cannot be invoked if the harm caused consists of physical injury. HELD:(i) It cannot be said that harm caused by doing an act with intent to cause harm or with the knowledge that harm may be caused thereby will not fall within the terms of section 95. The section applies if the act causes harm or is intended to cause harm or is known to be likely to cause harm, provided the harm is so slight that no person of ordinary sense or temper would complain of such harm. [125 F] (ii) There is nothing in section 95 to justify the contention that the word 'harm ' as used in that section does not include physical injury. Section 95 is a general exception and that word has in many other sections dealing with general exceptions a wide connotation inclusive of physical injury. There is no reason to suppose that the Legislature intended to use the expression 'harm ' in section 95 in a restricted sense. [126 A B] (iii)Whether, an offence is trivial must depend on the nature of the injury, the position of the parties, the knowledge or intention with which the offending act is done, and other related matters.[126 CD]

s by special leave from the judgments and orders dated November 27, 1961 of the Gujarat High Court in Special Civil Applications Nos. 704 and 707 of 1961. 140 Arun Naginlal Surti, B. Datta and J. B. Dadachanji, for the appellants. A. K. Sen, M. section K. Sastri and B. R. G. K. Achar, for the respondents. The Judgment of the Court was delivered by Ramaswami, J. These four consolidated appeals are brought, by special leave, against the order of the High Court of Gujarat dated November 27, 1961 summarily dismissing four Special Civil Applications Nos. 704 to 707 of 1961 which had been filed by the appellants under article 227 of the Constitution of India for quashing the order of the Gujarat Revenue Tribunal dated July 18, 1961. The appellants had applied for compensation to the Jagir Abolition Officer, Baroda under section 13 of the Bombay Merged Territories & Areas (Jagirs Abolition) Act, 1953, hereinafter referred to as the 'Jagirs Abolition Act ', in respect of their proprietary jagirs. Against the award of compensation made by the Jagir Abolition Officer the appellants preferred appeals under section 16 of the Jagirs Abolition Act. Although these appeals were filed before the Revenue, Tribunal at Bombay, the appeals were transferred, on the bifurcation of Bombay State, to the Gujarat Revenue Tribunal at Ahmedabad, hereinafter called the 'Tribunal '. All these appeals were ultimately dismissed by the Tribunal for non prosecution on account of non appearance of the advocate of the appellants. Against the dismissal of the appeals for non prosecution the appellants filed applications for restoration before the Tribunal on May 6, 1961. The appellants contended that since the orders passed dismissing the appeals were received by them on April 9 and April 20, 1961, the restitution applications filed on May 6, 1961 were within 30 days of the receipt of the order of dismissal and hence the applications for restoration were made in time under Regulation 21 of the Bombay Revenue Tribunal Regulations. The appellants also prayed that the applications for restoration should be allowed as they were prevented for sufficient cause from appearing at the hearing of the appeals. The Tribunal rejected the applications holding that they were barred under article 168 of the Limitation Act read with Regulation 55 and 0.41, rr. 17 and 19 of the Civil Procedure Code. The view taken by the Tribunal was that the applications for restoration should have been made within 30 days from the date of the order of dismissal. As the orders of dismissal was made on February 1, 2 and 3, 1961 and the applications for restoration were made only on May 6, 1961, the Tribunal held that they were time barred. Aggrieved by the order of dismissal of the restoration applications the appellants moved the High Court of Gujarat under article 227 of the Constitution of India but their applications were dismissed in Iimine. The first question for consideration is whether the orders of the Tribunal dated February 1, 2 and 3, 1961 are illegal and ultra 141 vires because the Tribunal dismissed the appeals for non prosecution and there was no decision of the appeals on merits. It was contended that it was obligatory on the part of the Tribunal to decide the appeals on merits and record its decision in view of section 17 of the Jagirs Abolition Act which states as follows: "17. (1) The Bombay Revenue Tribunal shall, after giving notice to the appellant and the State Government, decide the appeal and record its decision. (2)In deciding an appeal under this Act the Bombay Revenue Tribunal shall exercise all the powers which a court has and shall follow the same procedure which a Court follows in deciding appeals from the decree or order of an original Court under the Code of Civil Procedure, 1908. " in our opinion, the contention put forward by the appellants is well founded and must be accepted as correct. Section 13 of the Jagirs Abolition Act provides that any jagirdar entitled to compensation under section 11 or 12 shall, on or before the 31st day of July 1958 apply in writing to the Collector for determining the amount of compensation payable to him under the said section. Section 13(2) states that on receipt of an application under sub section (1), the Collector shall, after making formal enquiry in the manner provided by the Code, make an award determining the amount of compensation. Section 14 of the Jagirs Abolition Act states as follows: "14. (1) If any person other than a jagirdar is aggrieved by the provisions of this Act as abolishing, extinguishing or modifying any of his rights to, or interest in property and if compensation for such abolition, extinguishment or modification has not been provided for in the provisions of this Act, such person may apply to the Collector for compensation. (2) The application under sub section (1) shall be made to the Collector in the prescribed form on or before the 31st day of July 1958. The Collector shall, after holding a formal inquiry in the manner provided by the Code, make an award determining the compen sation in the manner and according to the method provided for in sub section (1) of section 23 and section 24 of the Land Acquisition Act, 1894. " Section 15 states that "every award made under section 13 or 14 shall be in the form prescribed in section 26 of the Land Acquisition Act, 1894 and the provisions of the said Act shall, so far as may be, apply to the making of such award". Section 16 provides 142 for an appeal against the Collector 's award and is to the following effect: "16. An appeal shall lie against an award of the Collector to the Bombay Revenue Tribunal constituted under the Bombay Revenue Tribunal Act, 1957 notwithstanding anything contained in the said Act. " Section 20 provides for the finality of the award and of the decision of the Revenue Tribunal and reads as follows: "20. The award made by the Collector subject to an appeal to the Bombay Revenue Tribunal and the decision of the Bombay Revenue Tribunal on the appeal shall be final and conclusive and shall not be questioned in any suit or proceeding in any Court. " On a consideration of the language of section 17(1) of the Jagirs Abolition Act and in the context of section 20 of the Jagirs Abolition Act we are of the opinion that it is obligatory on the part of the Tribunal to decide an appeal on merits even though there is default in the appearance of the appellants and to record its decision regarding the merits of the appeal. If an appeal is dismissed for want of prosecution it cannot be said that the Tribunal has 'decided the appeal ' and 'recorded its decision ' within the meaning of section 17 of the Jagirs Abolition Act. It cannot be supposed that the legislature intended by the word 'decide ' in section 17(1) to mean 'dispose of the appeal or to put an end to the appeal '. It is important to notice that section 20 of the Jagirs Abolition Act makes a decision of the Tribunal in appeal as final and conclusive and not to be questioned in any suit or proceeding in any Court. In the context of section 20 and in view of the express language of section 17(1) of the Jagirs Abolition Act we are of opinion that the Tribunal has no power to dismiss an appeal for non prosecution but it is obligatory on its part to decide the appeal on merits and to record its decision even though there is default on the part of the appellant to appear in the appeal. The second question of law for consideration in this case is whether, on a proper construction of Regulations 19, 20 and 21 of the Bombay Revenue Tribunal Regulations, 1958, the Tribunal was right in taking the view that the applications for restoration made by the appellants were barred by limitation. Section 14 of the Bombay Revenue Tribunal Act (Bombay Act No. XXXI of 1958) deals with the practice and procedure to be followed by the Gujarat Revenue Tribunal. Section 14 states: "14. (1) Subject to the provisions of this Act and to the previous approval of the State Government, the President may make regulations for regulating the practice and procedure of the tribunal, including the award of costs by the Tribunal, the levy of any process fee, the right of audience before the Tribunal, the sittings of the members either singly, or in 143 benches constituted by the President or such member as is authorised by him from amongst the members of the Tribunal, the disposal by the Tribunal, or a bench thereof, of any proceedings before it notwithstanding that in the course thereof there has been a change in the persons sitting as members of the Tribunal or bench; and generally for the effective exercise of its powers and discharge of its functions under this Act. Where any members sit singly or where any benches are constituted, such member or bench shall exercise and discharge all the powers and functions of the Tribunal. (2) The regulations made under this section shall be published in the Official Gazette. " Regulation 19 deals with procedure to be followed by the Tribunal in case of non appearance of parties. Regulation 19 is to the following effect: "19. (1) If on the date fixed for hearing or any other subsequent day to which the hearing may be adjourned, the appellant or applicant does not appear either in person or through his agent or lawyer when the appeal or application is called for hearing, the Tribu nal may dismiss the appeal or application or may decide it on merits, after hearing the respondent or his agent or lawyer, if present. (2) If on the date fixed for hearing or on any other subsequent day to which the hearing may be adjourned, the respondent or opponent, as the case may be, does not appear in person or through his agent or lawyer when the appeal or application is called for hearing the Tribunal may decide the same on merits, after hearing the appellant or applicant or his agent or lawyer. . . . " Regulation 20 provides for restoration of an appeal or application and reads as follows: "20. If any of the parties was absent on the date of the hearing, either preliminary or final, and the appeal or application was heard and declared ex parte, the party concerned may apply for restoration of the appeal or application, as the case may be, and if the party satisfies the Tribunal that he had no notice of the date of the bearing or that be was prevented by sufficient cause from appearing when the appeal or application was called for hearing, the Tribunal may restore the appeal or application to its file, provided that where the other party had appeared in the appeal or application such party shall be given notice and an opportunity of being heard before the order for resto ration of the appeal or application is made. " 144 Regulation 21 is to the following effect: (1) An application for restoration of an appeal or application made under regulation 20 shall be filed within thirty days from the date of the receipt of the order or dismissal of the appeal or application and shall be accompanied by (a) a certified copy of the Tribunal 's order; (b) the decision or order (either in original or a certified copy thereof) in respect of which appeal or application sought to be restored is made; (c) if the decision or order referred to in clause (b) is itself made in appeal against any decision or order, then also such latter decision or order either in original or a certified copy thereof; and (d) as many copies of the restoration application as there are respondents or opponents. . . . . . . . .". Regulation 55 states that in any matter not provided for in the Regulations the Tribunal shall follow the procedure, as far as it is applicable, laid down in the Code of Civil Procedure, 1908. From the scheme of the Regulations it is apparent that under Regulation 19(1) it is open to the Tribunal to dismiss an appeal for non prosecution in a case where the appellant does not appear either in person or through his agent or lawyer. It is also open to the Tribunal in such a case to hear the respondent to the appeal and decide it on merits. Regulation 19(2) contemplates a case where the respondent fails to appear and even so it is open to the Tribunal to hear the appellant and then decide the case on merits. Regulation 20 which provides for restoration of the appeal is a, consequential regulation to Regulation 19. One of the conditions for invoking the provisions of restoration under Regulation 20 is that "the appeal 'or application was heard and decided ex parte". On behalf of the respondent it is contended by Mr. Asoke Sen that Regulation 20 only applies to cases contemplated by the latter part of Regulation 19(1) and 19(2) and not to cases of dismissal for want of prosecution under the first part of Regulation 19(1). We are unable to accept this submission as correct. In our opinion, the language of Regulation 20, on its true interpretation, applies not only to a case where the appeal has been decided on merits but also to a case where the appeal has been dismissed for want of prosecution under Regulation 19(1). The reason is that in Regulation 19(1) and 19(2) the legislative authority uses the words "decide it on merits" but in Regulation 20 the expression used is "decided ex parte" and we see no reason, either in the language or context of Regulation 20, why it should not include in its scope and ambit an application for restoration of an appeal dismissed for non prosecution as also an application for restoration of appeal decided 145 on merits under Regulation 19(1). If the view that we have taken as to the interpretation of Regulation 20 is correct, it follows that Regulation 21 applies to the present case and the period of limitation prescribed by that Regulation being 30 days from the date of receipt of the order of dismissal of the appeal, the applications of restoration made by the appellants in all the four cases were well within the period of limitation prescribed by Regulation 21. It follows, therefore, that the Tribunal committed an error of law in dismissing the applications of restoration made by the appellants in all the four appeals. For these reasons we allow these appeals, set aside the order of the Gujarat High Court dismissing Special Civil Applications 704 to 707 of 1961 and hold that the order of the Gujarat Revenue Tribunal dismissing the restoration applications Nos. GRT.D. 10 to 13 of 1961 dated July 18, 1961 is defective in law and must be set aside. We also hold that the orders of the Gujarat Revenue Tribunal dismissing Appeals Nos. REV.A. 27. 28, 29 and 30 of 1960 are ultra vires and illegal and must be set aside and order that these four appeals should go back to the Gujarat Revenue Tribunal for being reheard and dealt with in accordance with law. The parties will bear their own costs up to this stage. Appeals allowed.

IN-Abs

The appellants had applied for compensation to the Jagir Abolition Officer under section 13 of the Bombay Merged Territories and Areas (Jagir Abolition) Act, 1953 in respect of their proprietary jagirs. Against the orders of the said officer they preferred appeals to the Revenue Tribunal which were dismissed for non prosecution. The appellants thereupon filed applications for restoration of the appeals within 30 days of the receipt of the orders of dismissal of the appeals. These applications were dismissed as time barred, the Tribunal taking the view that time was to be calculated from the date of the order. The appellants ' applications under article 227 of the Constitution to the High Court failed and they came by way of special leave, to this Court. It was contended on behalf of the appellant that (i)the Tribunal even while deciding ex parte had to decide on merits and that (ii) the applications for restoration were filed within the time prescribed in Regulation 21 made under the Bombay Revenue Tribunal Act, 1958 which applied to the case. HELD:(i) In the context of section 20 and ;in view of the express language of section 17(1) of the Jagirs Abolition Act the Tribunal had no power to dismiss the appeals in question for non prosecution, but it was obligatory on its part of decide the appeals on merits and to record is decision even though there was default on the part of the appellant to appear in the appeal. [142 E F] (ii) The Tribunal also committed an error of law in dismissing as time barred the applications for restoration of the appeals made by the appellants. In Regulation 21 made under Bombay Revenue Tribunal Act, 1958 the time prescribed for such applications is thirty days from the date of receipt of the Tribunal 's order dismissing the appeal, and the appellants had filed their applications within the said period. [145 A, B] Regulation 21 lays down the procedure for dealing with applications for restoration made under Regulation 20 and the latter Regulation includes within its scope all appeals 'decided ex parte ' whether on merits or otherwise. It could not therefore be said that Regulation 21 did not apply to the case. [144 H]

Appeals Nos. 926 and 927 of 1965. Appeals from the judgment and decree dated November 25, 1962 of the Madhya Pradesh High Court (Indore Bench) at Indore, in First Appeals Nos. 19 and 23 of 1957 respectively. 166 section V. Gupte, Solicitor General, Rameshwar Nath, section N. Andley, P. L. Vohra and Mahinder Narain, for the appellant. section P. Sinha, Ganapat Rai, E. C. Agarwala and P. C. Agarwala, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought by certificate on behalf of the defendant from the judgment of the High Court of Madhya Pradesh, Indore Bench, dated November 20, 1962 in First Appeals Nos. 19 and 23 of 1957. The plaintiffs, Rup Chand and Hukam Chand instituted Civil Suit No. 8 of section 1999 in the Court of District Judge, Ujjain, against the defendant Vithal Das and three others, for partition of houses and for rendition of accounts. Two of the defendants, Bheronlal and Indermal died in the course of the suit and the suit was continued against Vithal Das. The plaintiffs alleged that the immovable property constituting Blocks Nos. 206 and 207 in Freeganj, Ujjain was purchased with the capital of the partnership firm in which the plaintiffs and the defendant were, at one time, partners and by two documents dated July 2, 1937 and July 16, 1937, the properties continued to remain in the ownership of the partnership firm, though the firm had been dissolved in the year 1937. The plaintiffs claimed that the properties were managed by the defendant on behalf of the plaintiffs and the defendant realised rents from the tenants on their behalf and plaintiffs were, therefore entitled to receive half the amount realised as rent and the defendant was liable to render accounts thereof. The plaintiffs also claimed parti tion of the joint properties, or in the alternative, the sale of the property by auction and after deducting the cost of auction, half of the sale proceeds. The defendant contested the suit on the ground that at the time of the execution of the document dated July 2, 1937 there were only three blocks in partnership which were at that time open land. The defendant claimed that Block 'No. 206 and the building constructed thereon was not a partnership property. It was further alleged that the defendant had invested Rs. 10.000 in the three blocks of land which were held in partnership for constructing a building. The trial court accepted the plaintiffs ' case and granted a decree for partition of the blocks and for an account of income realised in respect of the property situated on block No. 207. As regards block No. 206 and the property standing thereon the trial court directed the defendant either to remove the construction or accept his share of money spent by the defendant over it and created a charge over the property in respect of the amount so held payable. Both the parties preferred appeals in the High Court of Madhya Pradesh against the judgment of the trial court which partially allowed the appeals and remanded the case to the trial Court. The High Court held that the plaintiffs were entitled to claim half share in both the properties built on blocks Nos, 206 and 207 and the defendant was liable to account 167 for the income of the properties on block No. 207 from the date of dissolution i.e., from July 2, 1937 and of block No. 206 from the year 1939. The High Court also held that the plaintiffs were liable to pay half the costs spent by the defendant in constructing the building on block No. 206. After the order of remand the trial Court appointed a Commissioner for examining accounts of rent realised by the defendant. After considering the report of the Commissioner, the trial Court determined the total amount of rent of both the blocks Nos. 206 and 207 at Rs. 41,829/3/7 and the half share of the plaintiffs was determined at Rs. 20,914/4/9. The trial Court also awarded interest to the plaintiffs on the half share of the income to the extent of Rs. 6,676/7/3 calculated upto April 11, 1957. The total amount thus due to the plaintiffs was determined at Rs. 27,591 /1/ . Out of this amount the trial court allowed sum of Rs. 9,755/7/3 on account of the half costs of ' construction and interest thereon and expenses incurred for house tax, water tax, legal expenses and repairs. The net amount thus awarded to the plaintiffs was Rs. 17,670/9/9. As regards the partition of blocks Nos. 206 and 207, the trial court held that in view of the method of construction of the blocks it was not possible to make partition in equal shares and therefore the trial court directed that the two blocks should be auctioned in separate lots and the parties should be at liberty to bid at the auction and the parties would have equal rights to the amount of the auction. Aggrieved by the judgment of the trial court both the parties preferred appeals to the High Court of Madhya pradesh, namely, First Appeals Nors. 19 and 23 of 1957. The defendant 's appeal was registered as Civil First Appeal No. 19 of 1957 and the plaintiffs ' appeal was registered as Civil First Appeal No. 23 of 1957. Both, the appeals were heard and disposed of by a common judgment by the High Court which modified the trial court 's finding, as to the income of blocks 206 and 207 to the extent of Rs. 803/ '5/3 by reducing the income of the two blocks by that figure. 'The total income was thus reduced from Rs. 41,829/3/7 to Rs. 41 015,/14/4 with the corresponding,reduction in the amount of interest. The High Court affirm the finding of the trial court that tile defendant was liable to pity interest on the half share of the rental income on the ground that the relationship between the parties was in the nature of a truest under section 90 of the Trusts Act (Act 11 of 1882). The plaintiffs ' appeal No. 23 of 1957 was allowed to the extent of Rs. 4,942/9/after adjustment, the plaintiffs ' claim was decreed for Rs. 22,103/ . The first question for consideration in these appeals is whether the High Court was right in granted interest to the plaintiffs on their share of rental income to the extent of Rs. 6,676 / 7 / 3 for the period prior to the institution of the suit. It was argued by the Solicitor Geiieral on behalf of the appellant that the High Court was in error in appellant that the relationship between the prince was governed by section 90 of the Trusts Act and the plaintiffs were therefore entitled to interest on their share of rent under the provi LIS5SCI 13 168 sions of section 23 of that Act. In our opinion, the contention put forward by the Solicitor General is well founded and must be accepted as correct. It is well established that interest may be awarded for the period prior to the date of the institution of the suit if there is an agreement for the payment of interest at fixed rate or if interest is payable by the usage of trade having the force of law, or under the provisions of any substantive law as for instance section 80 of Negotiable Instruments Act or section 23 of the Trusts Act. It is admitted in the present case that the two agreements between the parties dated July 2, 1937 and July 16, 1937 did not provide for payment of interest on the rental realised by the defendant on the joint properties. Nor is interest payable by virtue of any provision of the law governing the case. Under the Interest Act, 1839, the Court may allow interest to the plaintiff if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument. But it is conceded that the position in the present case is different. It was suggested by Mr. section P. Sinha on behalf of the respondents that interest may be awarded under the Interest Act which contains a provision that "interest shall be payable in all cases in which it is now payable by law". But this provision only applies to cases in which the Court of Equity exercises jurisdiction to allow interest. The legal position has been explained by the Judicial Committee in Bengal Nagpur Rly. Co. Ltd. vs Ruttanji Ramji(1) at p. 72 as follows: "As observed by Lord Tomlin in Maine and New Brunswick Electrical Power Co. vs Hart, , at p. 640; (AIR 1939 PC 185 at p. 188), 'In order to invoke a rule of equity It is necessary in the first instance to establish the existence of a state of circumstances which attracts the equitable jurisdiction, as, for example, the non performance of a contract of which equity can give specific performance '. " The decision of the Judicial Committee in Bengal Nagpur Rly. Co. Ltd. vs Ruttanji Ramji(1) was relied upon by this Court in Thawardas Pherumal vs Union of India(1) in rejecting a claim for interest. In that case, a contractor entered into a contract with the Dominion of India for the supply of bricks. A clause in the contract required all disputes arising out of or relating to the contract to be referred to arbitration. The dispute having arisen, the matter was referred to arbitration and the arbitrator gave an award in the contractor 's favour. The Union of India which has succeeded to the rights and obligations of the Dominion, contested the award on various grounds one of which was the liability to pay interest on the amount awarded. It was held by this Court that the interest awarded to the contractor could not, in law, be awarded and the arbitrator is not a Court within the meaning of the Interest Act, 1839 and. in any event, interest could only be awarded if there was (1) 65 I.A. 66. (2) 169 a debt or a sum certain payable at a certain time or otherwise by virtue of some written contract and there must have been a demand in writing stating that interest will be demanded from the date of the demand. The same view has been expressed by this Court in two later cases Union of India vs Rallia Ram(1) and Union of India vs Watkins Mayor and Co.(2). It was, however, pointed out for the respondents that the defendant was in possession of the entire properties as co owner after the dissolution of the partnership by the document dated July 16, 1937. It was argued that the defendant was realising rents of all the properties and he was in the position of a constructive trustee under section 95 of the Trust Act and was liable therefore to pay interest on the plaintiffs ' share of rent under section 23 read with section 95 of the Act. We do not consider there is any justification for this argument. Section 90 of the Act states: "Where a tenant for life, co owner, mortgagee or other qualified owner of any property, by availing himself of his position as such, gains an advantage in derogation of the rights of the other persons interested in the property, or where any such owner, as representing all persons interested in such property, gains any advantage, he must hold, for the benefit of all persons so interested, the advantage so gained, but subject to payment by such persons of their due shares of the expenses properly incurred, and to an indemnity by the same persons against liabilities properly contracted, in gaining such advantage." Section 95 provides as follows: " The person holding property in accordance with any of the preceding sections of this Chapter must, so far as may be, perform the same duties and is subject, so far as may be, to the same liabilities and disabilities, as if he were a trustee of the property for the person for whose benefit he holds it: Provided that (a) where he rightfully cultivates the property or employs it in trade or business, he is entitled to reasonable remuneration for his trouble, skill and loss of time in such cultivation or employment , and (b) where he holds the property by virtue of a contract with a person for whose benefit he holds it, or with any one through whom such person claims, he may, without the permission of the Court, buy or become lessee or mortgagee of the property or any part there of. " Section 23 reads as follows: "Where the trustee commits a breach of trust, he is liable to make good the loss which the trust property or the beneficiary has thereby sustained, unless the beneficiary has by (1) A.I.R. 1963 S.C. 1636. (2) A.I.R. 1966 S.C. 275. 170 fraud induced the trustee to commit the breach, or the beneficiary, being competent to contract, has himself, without coercion or undue influence having been brought to bear on him, concurred in the breach, or subsequently acquiesced therein, with full knowledge of the facts of the case and of his rights as against the trustee. A trustee committing a breach of trust is not liable to pay interest except in the following cases: (a) where he has actually received interest; (b) where the breach consists in unreasonable delay in paying trust money to the beneficiary; (c) where the trustee ought to have received interest, but has not done so; (d) where he may be fairly presumed to have received interest. He is liable, in case (a), to account for the interest actually received, and, in cases (b), (c) and (d) to account for simple interest at the rate of six per cent. per annum, unless the Court otherwise directs. . . " We do not agree with the contention of the respondents that section 90 of the Trusts Act applies to this case. A co owner in possession of all the joint properties does not become a trustee by the mere fact of his collection of the full amount of rent from the tenants. If the co owner is to be clothed with the status of a trustee it must be shown that he has gained some advantage in derogation of the other co owners interested in the property and that he gained such an advantage by availing himself of his position as co owner. In the present case, there is no allegation made by the plaintiffs that the defendant has gained any advantage in derogation of the rights of the plaintiffs, nor is there any finding of the lower courts that the defendant gained any advantage by availing himself of his position as co owner. We shall, however, assume in favour of the respondents that the defendant is in the position of a constructive trustee in view of the provisions of section 90 of the Trusts Act. Even upon that assumption we are of opinion that the defendant is not liable to pay interest to the plaintiffs for their share of the rent of the properties. The reason is that the trustee is liable to pay interest only if he commits a breach of trust under section 23 of the Trusts Act. There is also the restriction contained in section 23 of the Trusts Act, namely, that a trustee committing a breach of trust is not liable to. pay interest except in the cases mentioned in that section. It was argued by Mr. section P. Sinha for the respondents that the defendant was liable to pay interest under section 23(b) of the Trusts Act because there was unreasonable delay in paying the trust money to the beneficiary. We are unable to accept this argument as correct. In 171 our opinion, section 23(b) contemplates cases where there is an obligation on the part of the trustee to pay the trust money to the beneficiary at fixed intervals or on demand. In our opinion, there is no question of breach of trust on the part of the, defendant in the present case and the provisions of section 23(b) of the Trusts Act are not attracted. The view that we have expressed is borne out by several authorities. In Blogg vs Johnson(1), Lord Chelmsford, L.C. stated that "the Court will not charge an executor who has been guilty of delay in accounting, with interest on arrears of income unpaid by him". In that, case, X was entitled to a life income from the estate of her husband, and died in 1861. A bill was filed by her executor, in 1862, against the executor of her husband 's will, who had been his partner in business, for an account of income due to her estate; in 1863 accounts were directed. In 1866 a certificate was made, finding that a large sum was due from the husband 's executor. It was held by Lord Chelmsford, L.C. that he was not chargeable with interest before the date of the certificate. Again, in Silkstone and Haigh Moor Coal Co. vs Edey(2), it was held by the Chancery Court that upon the setting aside of a sale by a trustee of trust property to himself, and the reconveyable of the property to the beneficiaries, it is not the practice of the Court to charge the trustee with interest on the rents and profits received by him since the date of the sale. Interest was, however, charged on arrears in some cases as in Malland vs Gray(1) and Guildrey vs Stevens(1), but these cases fall within the range of another principle of equity that where an executor or a trustee unnecessarily detains money in his hand which he ought either to have invested or to have paid over to the person entitled to it, he will have to pay interest for it. As Lord Chelmsford, L.C. observed in Blogg vs Johnson(1) at p. 228: "Where money is thus improperly retained, it appears to me to be immaterial how the sum has arisen, whether from a legacy, or a distributive share, or a residue, or the arrears of income. In the latter case, the claim for interest is not made on account of the arrears, but for the improper keeping back or a sum of money, from whatever source derived, which the executor or trustee ought to have paid over. " We have already given reasons for holding that the provisions of section 23(b) of the Trusts Act do not apply to the present case and the plaintiffs are not entitled to claim any interest on arrears of rent and the High Court has fallen into an error in granting such interest. The next contention raised on behalf of the appellant is that the Commissioner examined the accounts and submitted his report from July 2, 1937 to December 31, 1954 and the High Court was not justified in granting a decree to the plaintiffs for the subsequent (1) 1867 2 Ch. A. 225. (3) E.R. 744. (2) (4) 172 period from January 1, 1955 to April 11, 1957 on the basis of the figures found from the Commissioner 's report. It was argued that the High Court had no basis for assuming that the same rental income was received by the defendant for the period from January 1, 1955 to April 11, 1957 as for the prior period. In our opinion, there is great force in this argument and we should, in the normal course, remand the case to the High Court for a finding as to the accounts of the subsequent period. Mr. Sinha, however, pointed out that the litigation commenced in 1942 and has already been pro tracted too ]on . We do not, therefore, wish to remand the case to the High Court for further inquiry. Having examined the evidence on the record of this case, we consider that, in the circumstances, a sum of Rs. 2,400/ (instead of Rs. 3,100/ ) for the period from January 1, 1955 to April 11, 1957 should be granted to the plaintiffs as their share of profits. We direct that the interest may be granted to the plaintiffs at the rate of 6 per cent p.a. from November 20, 1962 which is the date of the final decree on the amount found due to the plaintiffs. Two other points were raised by the Solicitor General in the course of argument. It was pointed out, in the first place, that First Appeal No. 23 of 1957 filed by the plaintiffs in the High Court was barred by limitation and the High Court should have dismissed the appeal on that ground. It was argued that the trial courts judgment was delivered on April 11, 1957 and the appeal to the High Court was filed on July 22, 1957. A certified copy of the judgment was delivered to the plaintiffs on May 4, 1957 but the endorsement on the certified copy with regard to the date was fraudulently made. An application was made by the defendant to the High Court on November 20, 1961 drawing the attention of the High Court with regard to the endorsement on the certified copy of the judgment. There is, however, no reference in the judgment of the High Court on the question of limitation and it should, therefore, be taken that the point was not pressed on behalf of the defendant at the time of the hearing of the appeal by the High Court. It is, therefore, not possible for us to entertain the argument of the appellant at the present stage, in the absence of any finding of the High Court. The other objection put forward by the Solidtor General is that the High Court has not taken into account vacancies in the computation of the rental income due to the plaintiffs. It was said that the High Court was wrong in holding that the defendant was liable as a trustee for the rents he ought to have realised even though there was no letting of the building. The Solicitor General may be right in his argument that the defendant cannot be held liable as a constructive trustee for the rent he has not realised from the tenants and for the premises which were not let out to tenants and which had been lying vacant, but the ground upon which the High Court has made the defendant liable is different. The High Court has taken the view that the defendant has 173 not kept proper accounts of the income of the rents realised from the shops. In the absence of proper accounts it is not possible to accept the case of the defendant regarding the vacancies. In our opinion, the finding of the High Court on this point is not vitiated by any error of law and the argument of the Solicitor General must be rejected on this aspect of the case. For the reasons already expressed, we hold that these appeals should be partly allowed with proportionate costs and the decree of the High Court dated November 20, 1962 should be modified to the extent indicated in this judgment. Appeals allowed in part.

IN-Abs

The plaintiffs instituted a suit for partition of immovable property constituting two blocks and for rendition of accounts. They claimed that the property was purchased with the capital of the partnership firm in which the plaintiffs and the defendant were Partners and that by two documents dated July 2, 1937 and July 16, 1937, the properties continued to remain in the ownership of the partnership firm, though the firm was dissolved in 1937. The defendant contested the suit on various grounds and also alleged that he had invested Rs. 10,000/ for constructing a building on the land in one of the blocks. The trial Court granted the plaintiffs a decree for most of the reliefs sought. The High Court, in appeal, held that the plaintiffs were entitled to claim half share in the properties and that the defendant was liable to account for the income from the date of dissolution i.e. July 2, 1937 in the case of one block and from 1939 in the case of the other block and furthermore that the plaintiffs were liable to pay half the amount spent by the defendant in constructing the building on one of the blocks. Upon a remand of the case to the trial Court a Commissioner was appointed to examine the accounts of rent realized by the defendant and on the basis of his report, the trial court granted the plaintiffs a decree for the amount payable to them as their half share, together with interest upto April 1957 and after deducting the plaintiffs ' share of the expenditure incurred by the defendant on the building. In further appeals to the High Court by both the parties the decision of the trial court was substantially confirmed. In the appeal to this Court by the defendant, it was contended, inter alia, on his behalf that the trial court and the High Court had erroneously decided that the defendant was liable to pay interest for the period prior to the institution of the suit on the half share of the rental income on the ground that the relationship between the par ties was in the nature of a trust under Section 90 of the Trusts Act, 1882. On the other hand the contentions for the respondents were that interest prior to the date of institution of the suit could be paid to them under the Interest Act, 1839: that the defendant was in possession of the entire properties as as Owner after the dissolution of the partnership by the document dated July 16, 1937 and that as he 165 was realizing rents of the properties, he was in the position. of a constructive trustee under section 95 of the Trusts Act and was liable therefore to pay interest on the plaintiffs ' share of rent under section 23 read with section 95 of the Act; and that he was in any event liable to pay interest under section 23(b) of the Trusts Act because there was unreason able delay in paying the trust money to the beneficiary. HELD: Interest was only payable to the plaintiffs at the rate of 6% per annum from the date of the final decree on the amount found due to the plaintiffs. It is well established that interest may be awarded for the period prior to the date of the institution of the suit if there is an agreement for the payment of interest at fixed rate or if interest is payable by the usage of trade having the force of law, or under the provisions of any substantive law as for instance under section 80 of Negotiable Instruments Act or section 23 of the Trusts Act. It was admitted in the present case that the two agreements between the parties dated July 2,1937 and July 16,1937 did not provide for payment of interest on the rental reilised by the, defendant on the joint properties. Nor was interest payable under any provision of law governing the case. Under the Interest Act, 1839, the court may allow interest if the amount claimed is a sum certain which is payable at a certain time by virtue of a written instrument but it was conceded that was not the position in the present case. The provision in section 1 of the Interest Act that "interest shall be payable in all cases in which it is now payable by law," applied only to cases in which the Court of Equity exercised jurisdiction to allow interest. [168 B D]. Bengal Nagpur Railway Co. Ltd. vs Ruttanji Ramji 65 I.A. 66, Thawardas Pharumal vs Union of India, Union of India vs Rallia Ram, ; and Union of India vs Watkins Mayor & Co. A.I.R. 1966 section C. 275, referred to. There was no force in the contention that section 90 of the Trusts Act applied to this case. A co owner in possession of all the joint properties does not become a trustee by the mere fact of his collection of the full amount of rent from the tenants. If the co owner is to be clothed with the status of a trustee, itmust be shown that he has gained some advance in derogation ofthe other co owners interested in the property and that he gained such advantage by availing himself of his position as co owner. In the present case, there was no allegation or finding by the trial court that the defendant had gained any such advantage. [17O E] Even assuming that the defendant was in the position of a constructive trustee, he would be liable to pay interest under section 23 only if he committed a breach of trust and in the present case there was no question of any such breach on his part. Furthermore, he was not liable to pay interest under section 23(b) as that provision contemplates cases where there is an obligation on the part of the trustee to pay the trust money to the beneficiary at fixed intervals or on demand. [170 F]. Blogg vs Johnson., [1867] 2 Ch. A 225, Silkstone and Haigh Moor Coal Co. vs Edey, ; Malland V. Gray and Guildrey vs Stevens , referred to.

il Appeal No. 255 of 1964.] Appeal by special leave from the judgment and order dated November 14, 1960 of the Madhya Pradesh High Court in Misc. Petition No. 273 of 1959. B. Sen, R. P. Kapur and 1. N. Shroff, for the appellants. section P. Sinha, and section Shaukat Hussain, for the respondent. The Judgment of the Court was delivered by Shah, J. Under a contract dated October 14. 1956, the respondent was granted a right to the forest produce from Coupe No. 9, Lendara in the Saiura Borgain Reserved Forest in the Kanker Forest Division of Bastar District of Madhya Pradesh, for the period October 14, 1956 to March 31, 1958. The Divisional Forest Officer held an enquiry in respect of certain breaches committed by the respondent of the terms of the contract, and by order dated January 30, 1958 directed the respondent in exercise of the authority under r. 15(1) of the Forest Contract Rules framed by the Government of Cenytral Provinces & Berar, to pay Rs. 8,500 as compensation assessed by him for damage done in the reserved 159 forest and Rs. 500 as penalty under r. 30(1) of the Forest Contract Rules. An appeal against the order to the Conservator of Forests, and a revision petition to the Chief Conservator of Forests, Madhya Pradesh, were unsuccessful. The respondent then moved the High Court of Madhya Pradesh by a petition under article 226 of the Constitution for a writ quashing the order dated January 30, 1958 directing payment of compensation and penalty and restraining enforcement of the order. The High Court granted the petition and restrained the State and the forest authorities from recovering Rs. 9,000, ordered on January 30, 1958, from the respondent. In this appeal, the appellants contended in the first instance that the High Court was in error in holding that by r. 15 of the Forest Contract Rules the Divisional Forest Officer was not authorized to direct the contractor to pay compensation for damage done by him or his agents or servants, because the coupe was not in "a reserved forest". Such a case, it was said, was never pleaded by the contractor in his petition, and the High Court in granting relief to the respondent made out a case which the appellants had no opportunity to meet. In support of their case that the coupe is a part of the reserved forest, the appellants have annexed to their petition for special leave a "true copy" of a notification issued under section 20 of the , as applied to the Central Provinces, declaring that the State forests of the Bastar District in Tahsil Kanker Sainmura Borgaon specified in the Schedule shall be reserved forests. We agree with the appellants that the High Court has without any plea or evidence assumed that compensation under r. 15(1) could not be directed to be paid by the contractor for damage done in the coupe, for which he was given a contract, because the coupe was not included in a. reserved forest. The plea which appealed to the High Court was not raised in the petition, nor in the objections to the Divisional Forest Officer in reply to the notice to show cause, nor in the memorandum of appeal before the Conservator of Forests, nor in the petition invoking the revisional jurisdiction of the Chief Conservator of Forests. The High Court assumed that because the forest authorities charged the contractor with "illegal fellings in the coupe" granted to him, the "fellings could not be in a reserved forest". For this assumption there is no warrant. The High Court was therefore in error in setting up the ground that the impugned order was not authorised by the terms of r. 15(1). But the appeal filed by the appellants must still fail on the grounds to be presently set out. The following are the relevant terms of the contract: "1. The Governor hereby agrees to sell to the forest contractor, and the forest contractor agrees to purchase the forest produce described in the First Schedule hereunder 160 . .situated in the area specified in the said Schedule. . on the conditions hereinafter stated. " The First Schedule describes the area of the forestand sets out the forest produce sold under the contract. The forest contractor shall be subject to the Forest Contract Rules as amended from time to time (a copy of which has been furnished to the forest contractor, the receipt of which the forest contractor hereby acknowledges) and the Rules shall be deemed to De part of this contract in so far as they are applicable thereto: Provided that the said Rules shall be deemed to be modified to tile extent and in the manner laid down in the Second Schedule hereunder." "7. The forest contractor hereby binds himself to perform all acts and duties required, and to abstain by himself and his servants or agents from performing any act forbidden by the , by the Forest Contract Rules and by this contract. In the event of any doubt or dispute arising between the parties as to the interpretation of any of the conditions of this contract or as to the performance or breach thereof, the matter shall be referred to the Chief Conservator of Forests, Madhya Pradesh, Nagpur, whose decision shall be final and binding on the parties hereto." By cl. 6 of the contract, the Forest Contract Rules framed by the local Government are made part of the contract. The material clauses of the Rules read as follows: "2. All contracts whereby Government sells forest produces to a purchaser shall be subject to the following rules, in so far as they are applicable, and these rules, in so far as they are applicable, shall be deemed to be binding on every forest contractor not only as rules made under the Forest Act, but also as conditions of his forest contract: Provided that the forest officer executing a forest contract shall have power to vary these rules by express provision in such contract, and where these rules are in conflict with such an express provision, such express provision shall prevail:Provided further "15(1) A forest contractor shall be responsible for any damage that may be done in a reserved forest by himself or his servants and agents. The compensation for such damage shall be assessed by the Divisional Forest Officer, whose decision shall be deemed to be that of an arbitrator and shall be 161 final and binding on the parties, except to the extent that it shall be subject to an appeal to the Conservator of Forests. Explanation. . (2) Any sum assessed as damages under this rule shall be recoverable as arrears of land revenue. . . "30(1) Where the forest contractor commits a breach of any of the conditions of his contract but it is not proposed to terminate his contract on account thereof, the whole penalty provided for in rule 28 shall not be recovered from him, but the Divisional Forest Officer shall have power to recover a portion thereof, not exceeding five hundred rupees, in accordance with the provisions of section 85 of the Act. (2) An order of the Divisional Forest Officer under this rule shall be subject to appeal to the Conservator of Forests if the amount levied exceeds two hundred rupees, but shall otherwise be final. (3)The payment of a sum assessed under this rule shall absolve the forest contractor from all further liabilities under his contract in respect of such breach, except his liability under rule 15 for damage done in a reserved forest. " On behalf of the respondent it was urged before the High Court, as also before this Court, that where a dispute arose between the Divisional Forest Officer and the contractor, whether the contractor, his servants or agents had caused damage in a reserved forest, the question could be decided in the manner appointed in cl. 9 of the contract alone, i.e., by arbitration of the officer denominated, and not by the Divisional Forest Officer. In dealing with the validity of the order imposing penalty upon the contractor the High Court upheld that argument. Rule 15 in the first instance declares that the forest contractor shall be responsible for any damage done either by himself, or his servants or agents: it then proceeds to state that compensation shall be assessed by the Divisional Forest Officer whose decision shall be deemed to be that of an arbitrator subject to an appeal to the Conservator of Forests. The rule does not confer upon the Divisional Forest Officer authority to determine, when a dispute is raised, whether damage has been caused in a reserved forest by the contractor, his agents or his servants. The rule only declares that for damage that may be done, by the contractor, his servants or agents, in the forest, the contractor shall be liable: the rule also invites the Divisional Forest Officer with authority to determine the amount of compensation payable by the contractor, but not to determine whether the contractor, his servants or his agents have committed breach of the contract. Clause 9 of the contract confers authority upon the Chief Conservator of Forests to adjudicate upon disputes, inter alia, as to the performance or breach of the contractor. I read with the Schedule to the contract "the contractor had to fell or uproot 162 trees marked with a geru band or to fell trees on coupes and section lines which bear a marking hammer impression on the stump buttends and all Karra over 9" at B.H. whether marked or not". It was the case of the Divisional Forest Officer that the contractor had, contrary to the terms of the contract, cut trees not marked with the geru band. Plainly, the Divisional Forest Officer claimed that the contractor had committed a breach of the terms of the contract, and when the contractor denied the breach, a dispute arose between the parties as to the performance or breach of the terms of the contract, and it had to be referred to the Chief Conservator of Forests. It is conceded, and in our judgment counsel is right in so conceding, that the expression "shall be referred to" means "shall be referred to the Officer denominated" as an arbitrator to decide the dispute. It was argued however that by virtue of cl. 6 of the contract, the Forest Contract Rules were made part of the contract, and the Divisional Forest Officer was invested with authority not only to determine the amount of compensation which may be payable by the contractor for damage done in a reserved forest, but also to determine whether the contractor or his agents or servants had been responsible for causing the damage. This, for reasons already stated, we are unable to accept. There is no inconsistency between cl. 9 of the contract and r. 15. It is unnecessary, therefore, to consider whether in case of inconsistency, the terms of the contract expressly setting out a certain covenant may supersede the terms of the rule. Under r. 15 the liability for damage done in a reserved forest is declared against the contractor. He is also declared liable to pay compensation as may be assessed by the Divisional Forest Officer. But the Divisional Forest Officer is not invested with authority to determine whether the damage was done by the contractor, his agents or servants. That is a matter which must be determined in a reference under cl. 9 of the contract. It was urged by the appellants that it could not have been intended by the rule making authority, who had also prescribed the form as part of the rules in which the contract was required to be executed, to set Lip a complicated and clumsy procedure for determination of a dispute about the breach of contract, if the language of the rules were ambiguous, this may be a relevant consideration. When a dispute arises between the contractor and the forest authorities relating to the performance or breach of the contract, there has, under the terms of cl. 9, to be a reference to the Officer denominated in the contract. After liability is determined, there may have to be an assessment by the Divisional Forest Officer of compensation payable by the contractor to the State. 163 That would necessitate another inquiry. The procedure is apparently clumsy and likely to be dilatory. But we are unable to ignore the plain terms of the contract and the rules, and to hold that in respect of the determination of responsibility for damage done in a reserved forest, there need be no reference under cl. 9 of the terms of the contract. It was then urged that in any event a decision was in fact given by the Chief Conservator of Forests in this case, and that decision complied with the requirements of cl. 9 of the contract. But as already stated, the Divisional Forest Officer passed an order holding the respondent liable to pay compensation for damage done in a reserved forest and assessing the compensation at Rs. 8,500 and penalty at Rs. 500. That order was confirmed in appeal by the Conservator of Forests, and in exercise of his revisional jurisdiction the Chief Conservator of Forests upheld the order of the Conservator of Forests. The Chief Conservator of Forests did not even purport to act as an arbitrator: he recorded no evidence, and expressly held that the Divisional Forest Officer was not obliged to refer the case for arbitration under cl. 9 of the contract, The trial was not of a proceeding in arbitration, but of a proceeding in exercise of supervisory or revisional jurisdiction. If in truth the dispute had to be referred for adjudication to the Chief Conservator of Forests, his decision that he found no reason to interfere with the "findings of the Divisional Forest Officer" who was one of the parties to the dispute, cannot conceivably be regarded as an award between two contesting parties. It must therefore be held that the order passed by the Divisional Forest Officer imposing liability for compensation for damage done by illegal fellings cannot be sustained. The second part of the order imposing penalty under r. 30(1) also suffers from the same infirmity. It is true that under the rule the Divisional Forest Officer had power to impose penalty in a sum not exceeding Rs. 500. But exercise of that power is conditioned by the existence of a breach by the forest contractor of any of the terms of the contract. Where a, dispute arises whether there has been a breach of any of the terms of the contract, it is, for reasons already stated, to be determined by the Chief Conservator of Forests. That has admittedly not been done. The order imposing penalty under r. 30(1) must also be set aside. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

IN-Abs

Under r. 15(1) of the Central Provinces and Berar Forest Contract Rules a forest contractor is responsible for any damage done in a reserved forest by himself or his servants or agents and compensation for such damage is to be assessed by the Divisional Forest Officer. The respondent was, under a contract, granted a right to the forest produce. By cl. 9 of the Contract any doubt or dispute arising between the parties as to the performance or breach of any of the conditions of the contract had to be referred to the Chief Conservator of Forests for decision. The Divisional Forest Officer, acting under r. 15(1), held that the contractor committed a breach of the contract and assessed the compensation for damages. HELD:Rule 15(1) does not invest the Divisional Forest Officer with authority to determine whether the contractor, his servants or his agents have committed a breach of the contract. When a dispute arises between the contractor and the forest authorities relating to the performance or breach of the contract, there has to be, under the terms of cl. 9, a reference to the officer denominated in the contract. After liability is determined, there may have to be an assessment, by the Divisional Forest Officer,, of compensation payable by the contractor to the State, There is no inconsistency between cl. 9 of the Contract and r. 15 [161 F H; 162 E F].

Appeal No. 374 of 1965. Appeal by special leave from the judgment and decree dated August 9, 1963 of the Madras High Court in L.P.A. No. 45 of 1962. A. V. Narayanaswami Iyer and section Venkatakrishnan, for the appellant. A. K. Sen, N. Natesan and R. Ganpathy Iyer for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment and decree of the Madras High Court dated August 9, 1963 in Letters Patent Appeal No. 45 of 1962. 119 The suit which is the subject matter of this appeal was filed by the Tirunagar Panchayat, hereinafter called the 'Panchayat ', against the Madurai Co operative House Construction Society (hereinafter called the 'Society ') in the District Munsif 's Court of Tirumangalam. The Tirunagar Colony has been formed by the Society. The Colony consists of about 300 houses and its total population exceeds 1,500. At its inception the colony was within the jurisdiction of the Tirupparakundram Panchayat. On February 21, 1955 the Tirunagar colony was excluded from Tirupparankundram Pan chayat and was declared as a separate village and was constituted as a separate Panchayat known as Tirunagar Panchayat. In the formation of the colony the Society has laid out and set apart and formed public roads, parks, play grounds and other public common places. There was a change in the Board of Directors of the. defendant Society and as a consequence of this change the Society passed a resolution on July 23, 1956 cancelling its previous resolution handing over the roads, streets and scavenging arrangements to the Panchayat. The Panchayat therefore filed a suit O.S. 38 of 1957, in the District Munsif 's Court of Tirumengalam for an injunction restraining the Society and its servants from obstructing and interfering with its lawful exercise of statutory duties relating to the roads and streets in Tirunagar and cleaning of latrines, public and private, lighting the houses and roads and making arrangements for the civic needs of the village of Tirunagar. The Society contested the suit on the ground that the constitution of the Panchayat was illegal as the provisions of the Madras Village Panchayats Act (Madras Act 10 of 1950), hereinafter to be called the 'Act ', had not been complied with. The Society also contended that the public cannot use the roads or streets as a matter of right, that the entire colony was a closed one and no outsider except the members of the Society had the right to enter the colony and that the Parks, central oval, play grounds and open spaces were the exclusive properties of the Society. The contentions of the Society were all over ruled by the trial court and a permanent injunction was granted to the plaintiff Panchayat, as prayed for. The decision of the trial court was affirmed by the Subordinate Judge of Madurai in A.S. 92 of 1958. The Society took the matter in Second Appeal to the High Court. The appeal was partly allowed by Ramakrishnan,J. who held that the streets and roads in Tirunagar colony alone would vest in the Panchayat and that the injunction passed by the lower appellate court should be confined only to streets and roads in the colony and should not be extended to any other place like the parks, oval park, play grounds, schools, library or club and such other amenities which the Society had provided for the residents of the colony. The decision of Ramakrishnan, J. was affirmed by the High Court in Letters Patent Appeal and the injunction granted by the lower courts was accordingly Confined to roads and streets and the cleaning of public and private latrines, and the decree of the lower courts was set aside so far as the injunction related to the parks. play grounds, bus stand and other public places. 120 The question presented for determination in this appeal is whether there is a statutory vesting in the panchayat of the parks, play grounds, schools, libraries and other public places which the Society provided for its members and whether the Panchayat is entitled to a permanent injunction restraining the Society and its servants in the manner decreed by the trial court. On behalf of the appellant reference was made to sections 56 and 58 of the Act relating to vesting of the property in the Panchayat. Section 56 of the Act reads as follows: "56. (1) All public roads in any village (other than district roads and roads which are classified by the Government as national or State highways), shall vest in the panchayat together with all payments, stones and other materials thereof, all works, materials and other things provided therefore, all sewers, drains, drawings works tunnels and culverts, whether made at the cost of the panchayat fund or otherwise, in, alongside or under such roads, and all works, materials and things appertaining thereto. Section 58 is to the following effect: "Any property or income which by custom belongs to, or has been administered for the benefit of, the villagers in common, or the holders in common of village land generally or of lands of a particular description or of lands under a particular source of irrigation shall vest in the panchayat and be administered by it for the benefit of the villagers or holders aforesaid. " The rules framed under the Co operative Societies Act for the formation of House Building Societies required that when an area is set apart for a residential colony provisions for schools, markets, theatres, hospitals, clubs, religious places etc. should be made in the layout. Reference was made, on behalf of the appellant, to the layout plan exhibit A 44 for the Tirunagar Housing colony. There is evidence in this case that the Government had assigned to the House Building Society free of cost an area of about 5 acres for the proposed public amenities like schools, markets etc. It was submitted on behalf of the appellant that the parks, play grounds, hospitals, schools etc. of the Tirunagar Housing Colony would vest in the Panchayat under section 58 of the Act. We do not consider that there is any justification for this argument. Under section 56 of the Act all 'public roads ' in any village shall vest in the Panchayat together with all, pavements, stones and other materials thereof, all sewers, drains, drainage works, tunnels and culverts, whether made at the cost of the panchayat fund or otherwise. Under section 2(20) of the Act a ` public road ' means "any street, road, square, court, alley, passage, cart track, footpath or riding path, over which the public have a 121 right of way". Section 58 of the Act provides for vesting of the communal property in the panchayat. By this section the legislature has provided that any property or income which by custom belongs to the villagers in common, or the holders in common of village land generally or of lands of a particular description shall vest in the panchayat. The legislature has further provided in this section that any property or income which by custom has been administered for the benefit of the villagers in common or the holders in common of village land generally or of lands of a particular description shall vest in the panchayat and be administered by it for the benefit of the villagers or the holders aforesaid. In enacting section 58 of the Act the legislature has made a provision for vesting of two kinds of property or income: (1) property or income which by custom belongs to the villagers in common or the holders in common of village land generally or of lands of a particular description, and (2) property or income which has been administered by custom for the benefit of the villagers in common or the holders in common of village land generally or of lands of a particular description. Having regard to the grammatical structure and the context, we are of opinion that the expression "by custom" qualifies not only the property or income which belongs to the villagers but also property and income which has been administered for the benefit of the villagers in common. It is manifest that section 58 provides for the vesting of such property and income to which the villagers have acquired title as a matter of custom or which has been administered for the benefit of the villagers as a matter of custom. It was argued on behalf of the appellant that if parks or play grounds or markets had been. dedicated to the public the Panchayat would acquire title to such properties under section 58 of the Act. We do not think that dedication is a relevant circumstance in considering the scope and meaning of section 58 of the Act. In the enactment of this section the legislature did riot contemplate that parks, play grounds, schools or temple or hospital dedicated to the public should vest in the panchayat merely by the fact of such dedication. What is required by section 58 for the ' purpose of vesting is the proof of custom by which the villagers in common acquire title to any property or income. Vesting of rights takes place under section 58 if there is proof of customary right of administration of any property or income for the benefit of the villagers in common. Unless therefore there is proof of customary right, the Panchayat cannot claim title to the property or income ad ministered for the benefit of the villagers in common. For example, the Society may have established a library or a social club or a school for the benefit of its members Again, a private individual may have created a trust for the provision of amenities like parks, play grounds and hospitals for the residents of the village. In a case of this description the legal ownership of the Society or of the trustees will not vest in the Panchayat because of the provisions of section 58 of the Act. It cannot be supposed that such a startling and unjust result was contemplated by the, 122 legislature in enacting section 58. We are accordingly of the opinion that the scope of section 58 of the Act must be confined to communal property and income of the panchayat which by custom belongs to the villagers in common or has been administered for their benefit as a matter of custom, and the scope of that section cannot be extended to include parks, play grounds, hospitals, libraries and schools provided by the Society for the benefit of the members of the Tirunagar colony. For these reasons we hold that the judgment and decree of the High Court in Letters Patent Appeal No. 45 of 1962 is correct and this appeal must be dismissed with costs. Appeal dismissed.

IN-Abs

The respondent Society formed a housing colony, laid out public roads and set apart public common places for parks. play grounds, schools, library, hospital and club for the benefit of the members of the colony. The respondent passed a resolution for handing over the roads and the other common places to the appellant Panchayat, but later, passed another resolution cancelling it. The appellant, thereupon, filed a suit for an injunction restraining the respondent from obstructing the appellant in the exercise of its statutory duties in relation to the roads and other common places. The High Court, on appeal, held that the streets and the roads in the colony alone would vest in the appellant under the Madras Village Panchayats Act, 1950 and that, an injunction could be granted only with respect to them, but not, with respect to the other amenities which the respondent had provided for the residents of the colony. In appeal to this Court, it was contended that the amenities excluded would also vest in the appellant under section 58 of the Act, especially because they had been dedicated to the public. HELD:The scope of the section must be confined to communal property and income of the Panchayat which, by custom, belong to the villagers in common, or, has been administered for their benefit as a matter of custom. Therefore, the section cannot be extended to amenities such as parks, play grounds etc. provided by the respondent for the benefit of the members of the colony; and dedication is not a relevant circumstance in considering its scope and meaning. [121 E F; 122 A B].

minal Appeal No. 113 of 1963. Appeals by special leave from the judgment and order dated April 19, 1963, of the Bombay High Court in Criminal Appeal No. 988 of 1962. V.B. Ganatra and I. N. Shroff, for the appellant (Cr. A. No. 57 of 1963). Frank Anthony, E. C. Agarwala and P. C. Agrawal, for the appellant (in Cr. A. No. 113 of 1963). S.G. Patwardhan and B. R. G. K. Achar, for the respondent State (in both the appeals). The Judgment of the Court was delivered by Mudholkar, J. This appeal and Criminal appeal No. 113/63 arise out of a joint trial of the appellant Mangaldas and the two appellants Daryanomal and Kodumal in Crl. A. 113 of 1963 for the contravention of section 7(v) of The (hereinafter referred to as the Act) in which they were convicted and sentenced tinder section 16(1) (a) of the Act. The appellants Mangaldas and Daryanomal were each sentenced under section 16 ( 1 ) (a) (ii) of the Act to undergo rigorous imprisonment for six months and to pay a fine of Rs. 500 while the other appellant was sentenced under sub cl (1) to undergo imprisonment until the rising of the Court and to pay a fine of Rs. 200. On appeal they were all acquitted by the Additional Sessions Judge, Nasik. The State preferred an appeal before the High Court of Bombay which allowed it and restored the sentences passed on Mangaldas. and Daryanomal by the Judicial Magistrate but imposed only a fine of Rs. 200 on Kodumal. They have come up to this Court by special leave. The admitted facts are these. Mangaldas is a wholesale dealer, Commission agent, exporter, supplier and manufacturer of various kinds of spices doing business at Bombay. Dayanomal is engaged 896 in grocery business at Nasik while Kodumal is his servant. On November 7, 1960 Daryanomal purchased from Mangaldas a bag of haldi (turmeric powder) weighing 75 kg. which was despatched by the latter through a public carrier. It was received on behalf of Daryanomal at 11.45 A.M. on November 18, 1960 by Kodumal at the octroi post of Nasik Municipality. After he paid the octroi duty to the Nasik Municipality and took delivery of the bag the Food Inspector Burud purchased from him 12 oz. of turmeric powder contained in that bag for the purpose of analysis. The procedure in this regard which is laid down in section 11 of the Act was :followed by Burud. A portion of the turmeric powder was sent to the Public Analyst at Poona, whose report exhibit 16, shows that the turmeric powder was adulterated food within the meaning of section 2 (1) of the Act. Thereupon Burud, after obtaining the sanction of the Officer of Health of the Municipality, filed (a complaint against the appellants in the court of the Judicial Magistrate for offences under section 16(1) (a) read with section 7(v) of the Act. At the trial Kodumal admitted that he had taken delivery of the bag at the octroi post and sold 12 oz. of turmeric powder to the Food Inspector and that he had also received a notice from him under section 11 of the Act. It was contended at the trial on behalf of Daryanomal that actually no delivery had been taken but that point was not pressed before the High Court. While Mangaldas admitted that he had sold and despatched the bag containing turmeric powder he contended that what was sent was not turmeric powder used for human consumption but was "Bhandara" which is used for religious purposes or for applying to the forehead. This contention was rejected by the Judicial Magistrate as well as by the High Court but was not considered by the Additional Sessions Judge. It was sought to be challenged before us by Mr. Ganatra on his behalf but as the finding of the High Court on the point is upon a question of fact we did not permit him to challenge it. We will take Mangaldas 's case first. Mr. Ganatra had made an application on his behalf for raising a number of new points, including some alleged to raise constitutional questions. At the hearing, however, he did not seek to urge any question involving the interpretation of the Constitution. The new points which he 'Sought to urge were: (1) that the appellant was not questioned regarding the report of the Public Analyst; (2) the joint trial of Mangaldas with the other two appellants was illegal; and (3) that the sanction was not valid. 897 As regards the first of these points his contention is that he had raised it before the High Court also though it has not referred to in its judgment. The High Court has stated clearly that all the points raised in argument before it were considered by it. In the face of this statement we cannot allow the point to be urged before US. As regards the second point it is sufficient to say that it was not raised before the Magistrate. Section 537(b) of the Code of Criminal Procedure provides that no judgment, conviction or sentence can be held to be vitiated by reason of misjoinder of parties unless prejudice has resulted to the accused thereby. For determining whether failure of justice has resulted the Court is required by the Explanation to section 537 to have regard to the fact that the objection had not been raised at the trial. Unless it is so raised it would be legitimate to presume that the accused apprehended no prejudice. The point thus fails. As regards the alleged invalidity of sanction it is sufficient to point out that the contention was not raised in the High Court or earlier. We, therefore, decline to consider it. Mr. Ganatra urged that the trial court had no jurisdiction to try the appellant as the appellant had not committed any offence within its jurisdiction. With regard to this point the High Court has held that Mangaldas had distributed the commodity within the jurisdiction of the Magistrate and, therefore, the Magistrate had jurisdiction to try him. Apart from that we may point out that under section 182 of the Code of Criminal Procedure where it is uncertain in which of the local areas an offence was committed or where the offence is committed partly in one local area and partly in another or where an offence is a continuing one and continues to be committed in more local areas than one or where it consists of several acts done in different local areas, it may be inquired into or tried by a Court having jurisdiction over any of such local areas. Since Mangaldas actually sent the bag from Bombay to Nasik he could be said to have committed the offence partly in Bombay from where it was despatched and partly in Nasik to which place it had been consigned. Apart from that, the mere fact that pro ceedings were taken in a wrong place would not vitiate the trial unless it appears that this has occasioned a failure of justice (see section 531, Cr. P. C.). Mr. Ganatra, however, says that there was failure of justice in this case because had Mangaldas been prosecuted at Bombay, one of the samples taken from the bag of turmeric powder would have been sent to the Public Analyst at Bombay and not to the Public Analyst at Poona. We are wholly 898 unable to appreciate how this could make any difference whatsoever. Apart from that since the samples were actually taken at Nasik the one meant for analysis had, according to an administrative order of the Government, to be sent to the Public Analyst at Poona. Therefore, even if Mangaldas had been tried at Bombay tile report of the Public Analyst at Poona could be put in evidence. There is nothing in the Act which prevents that from being done. In view of the fact that the finding of the Judicial Magistrate and the High Court that the turmeric powder had been adulterated was based solely on the report of the Public Analyst, Mr. Ganatra raised three contentions before us. One is that such evidence is not by itself sufficient for the conviction of an accused person; the second is that the Public Analyst was not called as a witness in the case and the third is that unless notice is given to an accused person under section 11 of the Act after a sample had been taken of the allegedly adulterated commodity the report of the Public Analyst concerning that commodity is not admissible against him. In support of the contention that the conviction could not be based solely upon the report of the Public Analyst that the turmeric power was adulterated. Mr. Ganatra relied upon the decisions in State vs Bhausa Hanmatsa Patwar(1) and City Corporation Trivandrum vs Antony (2) . The first of these is a case under the Bombay Prohibition Act, 1949 (Bombay XXV of 1949). In that case a large quantity of angurasava, partly contained in two barrels and partly in three boxes containing 109 bottles was recovered from the house of the accused person. Samples taken from the barrels and boxes were sent for analysis to the Chemical Analyser and to the Principal, Podar Medical College, Bombay. The report of the former showed that three out of the four samples contained alcohol in varying degrees. Thereupon the accused was Prosecuted for offence , under sections 65, 66(b) and 83(1) of the Bombay Prohibition Act. His defence was that he manufactured a medical preparation called angurasava which contained Ayurvedic ingredients which generated alcohol. According to him, therefore, what was seized from him was outside the orbit of the Bombay Prohibition Act. Partly relying upon the certificate issued by the Principal of Podar Medical College, the trying Magistrate acquitted the accused holding that the Prosecution failed to discharge the onus of proof that angurasava was prohibited liquor. On appeal by the State of Maharashtra before the High Court reliance was placed upon the certificates issued by the Chemical Analyser as well as by the Principal, Podar Medical College. The certificate of (1) [ (2) I.L.R. [1962] 1 Kerala 430. 899 the former showed that three out of the four samples contained "2.2 and 6 per cent v/v of ethyl alcohol respectively and they contain yeast. No alkaloidal ingredient or metallic poison was detected in them. The certificate of the Principal of the Podar Medical College is as follows "Formula supplied is found to be similar to that given in the Ayurvedic Books. There are no easy methods to find out the herbal drugs dissolved in a liquid. It is not possible for us, to find out the herbal drugs used in the above liquids. The colour and smell of the samples supplied is not identical with the colour and smell of fermented Ayurvedic preparation like, Assam and Arishta. Hence it is very difficult to give any definite opinion in the matter. " On behalf of the accused it was urged that by virtue of sub section (ii) of section 24(a) of the Prohibition Act, the provisions of sections 12 and 13 thereof do not apply to any medicinal preparation containing alcohol which is unfit for use as intoxicating liquor. Section 12 of the Act prohibits the manufacture and possession of liquor and section 16 prohibits the possession of materials for the manufacture of liquor. It was, however, contended on behalf of the State that once it is established that what was seized from the possession of the accused contains alcohol the burden of proving that what was seized, falls under section 24(a) was on the accused person. The High Court, however, held that the burden of establishing that a particular article does not fall under section 24(a) rests on the prosecution. In so far as the certificate of the Chemical Analyser was concerned the High Court observed as follows : "It is beyond controversy that, normally, in order that a certificate could be received in evidence, the person who has issued the certificate must be called and examined as a witness before the Court. A certificate is nothing more than a mere opinion of the person who purports to have issued the certificate, and opinion is not evidence until the person who has given the particular opinion is brought before the Court and is subjected to the test of cross examination. " It will thus be clear that the High Court did not hold that the certificate was by itself insufficient in law to. sustain the conviction and indeed it could not well have said so in view of the provisions of section 510, Cr. What the High Court seems to have felt was that in circumstances like those present in the case 900 before it, a court may be justified in not acting upon a certificate of the Chemical Analyser unless that person was examined as a witness in the case. Sub section (1) of section 510 permits the use of the certificate of a Chemical Examiner as evidence in any enquiry or trial or other proceeding under the Code and sub section (2) thereof empowers the court to summon and examine the Chemical Examiner if it thinks fit and requires it to examine him as a witness upon an application either by the prosecution or the accused in this regard. It would, therefore, not be correct to say that where the provisions of sub section (2) of section 5 1 0 have not been availed of, the report of a Chemical Examiner is rendered inadmissible or is even to be treated as having no weight. Whatever that may be, we are concerned in this case not with the report of a Chemical Examiner but with that of a Public Analyst. In so far as the report of the Public Analyst is concerned we have the provisions of section 13 of the Act. Sub section (5) of that Section provides as follows : "Any document purporting to be a report signed by a public analyst, unless it has been superseded under sub section (3), or any document purporting to be a certificate signed by the Director of the Central Food Laboratory, may be used as evidence of the facts stated therein in any proceeding under this Act or under sections 272 to 276 of the Indian Penal Code : Provided that any document purporting to be a certificate signed by the Director of the Central Food Laboratory shall be final and conclusive evidence of the facts stated therein. " This provision clearly makes the report admissible in evidence. What value is to be attached to such report must necessarily be for the Court of fact which has to consider it. Sub section (2) of section 13 gives an opportunity to the accused vendor or the complainant on payment of the prescribed fee to make an application to the court for sending a sample of the allegedly adulterated commodity taken under section 1 1 of the Act to the Director of Central Food Laboratory for a certificate. The certificate issued by the Director would then supersede the report given by the Public Analyst. This certificate is not only made admissible in evidence under subs. (5) but is given finality of the facts contained therein by the proviso to that sub section. It is true that the certificate of the Public Analyst is not made conclusive but this only means that the court of fact is to act on the certificate or not, as it thinks fit. 901 Sub section (5) of section 13 of the Act came for consideration in Antony 's case(1) upon which the State relied. There the question was whether a sample of buffalo 's milk taken by the Food Inspector was adulterated or not. The Public Analyst to whom it was sent submitted the following report : "I further certify that I have analysed the aforementioned sample and declare the result of my analysis to be as follows : Solids not fat 9.00 per cent. Fat 5.4 per cent. Pressing point (Hortvet 's method) 0.49 degree C and am of the opinion that the said sample contains not less than seven per cent (7%) of added water as calculated from the freezing point (Hortvet 's method) and is therefore adulterated." The Magistrate who tried the accused persons acquitted them on the ground that it was not established that the milk was adulterated. Before the High Court it was contended that the certificate was sufficient to prove that water had been added to the milk and reliance was placed upon the provisions of section 13(5) of the Act. The learned Judge who heard the appeal observed that this provision only says that the certificate may be used as evidence but does not say anything as to the weight to be attached to the report. 'Me learned Judge then proceeded to point out what according to him should be the contents of such report and said: "In this case the court is not told what the Hortvet 's test is, what is the freezing point of pure milk and how the calculation has been made to find out whether water has been added. I cannot, therefore, say that the Magistrate was bound to be satisfied on a certificate of this kind, which contains only a reference to some test and a finding that water has been added. The prosecution could have examined the Analyst as a witness on their side. The learned Magistrate also could very well have summoned and examined the Public Analyst, but whatever that might be, I am not prepared to say that the finding of the Magistrate that the case has not been satisfactorily proved is one which could not reasonably have been reached by the learned Magistrate and (1) I.L.R. [1962] 1 Kerala 430. 902 that the acquittal is wrong and calls for interferences" (p. 436) All that we would like to say is that it should not have been difficult for the learned Judge to satisfy himself by reference to standard books as to what 'Hortvet 's method is and what the freezing point of milk is. We fail to see the necessity of stating in the report as to how the calculations have been made by the Public Analyst. Apart from that it is clear that this decision does not support the contention of learned counsel that a court of fact could not legally act solely on the basis of the report of, the Public Analyst. As regards the failure to examine the Public Analyst as a witness in the case no blame can be laid on the prosecution. The report of the Public Analyst was there nd if either the court or the appellant wanted him to be examined as a witness appropriate steps would have been taken. The prosecution cannot fail solely on the ground that the Public Analyst had not been called in the case. Mr. Ganatra then contended that the report does not contain adequate data. We have seen the report for ourselves and quite apart from the fact that it was not challenged by any of the appellants as inadequate when it was put into evidence, we are satisfied that it contains the Necessary data in support of the conclusion that the sample of turmeric powder examined by him showed adulteration. The report sets out the result of the analysis and of the tests performed in the public health laboratory. Two out of the three tests and the microscopic examination revealed adulteration of the turmeric powder. The microscopic examination showed the presence of pollen stalks. This could well be regarded as adequate to satisfy the mind of a Judge or Magistrate dealing with the facts. Mr. Ganatra then said that the report shows that the analysis was not made by the Public Analyst himself but by someone else. What the report says is "I further certify that the have caused to be analysed the aforementioned sample and declare the result of the analysis to be as follows. " This would show that what was done was done under the supervision of the Public Analyst and that should be regarded as quite sufficient. Now as to the necessity of notice under section 11 of the Act. Mr. Ganatra said that the report is admissible only against a person to whom notice is given tinder section 11 (1) (a) by the Food Inspector, that the object of talking the sample was to have it analysed. The law requires notice to be given only to the person from whom the sample is taken and to none else. The object of 903 this provision is clearly to apprise the person from whom the sample is taken of the intention of the Food Inspector so that he may know that he will have the right to obtain from the Food Inspector a part of the commodity taken by way of sample by the Food Inspector. This is with a view to prevent a plea from being raised that the sample sent to the analyst was of a commodity different from the one from which the Food Inspector has taken a sample. What bearing this provision has on the admissibility of the evidence of the Public Analyst is difficult to appreciate. Once the report of the Analyst is placed on record at the trial it is admissible against all the accused persons. What it shows in the present case is that the commodity of which Kodumal had taken possession contained turmeric powder which was adulterated. Therefore, since it is admitted and also established that the bag of turmeric powder from which sample was taken had been despatched by the appellant Mangaldas, the report of the Public Analyst could be properly used against him in regard to the quality or composition of the commodity. Mr. Ganatra then said that it was necessary to establish that the appellant had the mens rea to commit the offence. In support of his contention Mr. Ganatra pointed out that section 19(1) of the Act deprives only the vendor of the right to contend that he was ignorant of the nature, substance or quality of the food sold by him and not a person in Mangaldas 's position. According to him, the word vendor here means the person from whom the sample was actually taken by the Food Inspector. We cannot accept the contention. The word "Vendor", though not defined in the Act, would obviously mean the person who had sold the article of food which is alleged to be adulterated. Mangaldas having sold the bag to Daryanomal, was the original vendor and, therefore, though the sample was taken from Kodumal he will equally be barred from saying that he was not aware of the nature, substance or quality of the turmeric powder in question. Moreover, it is curious that a person who sought to get out by saying that what he had actually sent was not an article of food but something else should now want to say that he did not know that though it was an article of food it was adulterated. We may now refer to two decisions upon which learned counsel relied in support of his contention. The first is Municipal Board, Bareilly vs Ram Gopal(1). There the question was whether a shopkeeper who allowed the owner of adulterated ghee to sell on his premises was entitled to say in defence that he was ignorant of, (1) 42 Crr. L.J. 243. up./65 12 904 the quality of ghee which its owner was offering for sale. It was held by the Allahabad High Court that he was so entitled. We fail to appreciate how this case is of any assistance in the matter before us. For, here, the turmeric powder admittedly once belonged to Mangaldas and was in fact sold by him to Daryanomal. At one stage, therefore, Mangaldas was the vendor of the turmeric powder and, therefore, falls squarely within the provisions of section 13 (1) of the Act. The second case is Ravula Hariprasada Rao vs The State(1). What was held in that case is that unless a statute either clearly or by necessary implication rules out mens rea as a constituent part of the crime, a person should not be found guilty of an offence against the criminal law unless he has got a guilty mind. The proposition there stated is well established. Here section 19(1) of the Act clearly deprives the vendor of the defence of merely alleging that he was ignorant of the nature, substance or quality of the article of food sold by him and this places upon him the burden of showing that he had no mens rea to commit an offence under section 17(1) of the Act. In a recent case State of Maharashtra vs Mayer Hans George(2) this Court had to consider the necessity of proving mens rea in regard to an offence under section 23 (1) (a) of the Foreign Exchange Regulation Act (7 of 1947) read with a notification dated November 8, 1962 of the Reserve Bank of India. The majority of Judges constituting the Bench held that on the language of section 8 (1 ) read with section 24 (1) of the above Act, the burden was upon the accused of proving that he had the requisite permission of the Reserve Bank of India to bring gold into India and that there was no scope for the invocation of the rule that besides the mere act of voluntarily bringing gold into India any further mental condition or mens rea is postulated as necessary to constitute an offence referred to in section 23(1 A) of the above Act. We are, therefore, unable to accept the contention of learned counsel. The only other point which falls for consideration is the one raised by Mr. Anthony in the other appeal. Mr. Ganatra did not address any separate argument on this point but he adopted what was said by Mr. Anthony. That point is whether the transaction in question i.e., taking of a sample by a Food Inspector under section 11 amounts to a "sale" and, therefore, whether the person connected with the transaction could be said to have infringed section 7(v) of the Act. Mr. Anthony 's contention is that for a transaction to be a sale it must be consensus sale. Where a person is required by the Food Inspector to sell to him a sample of a commodity there is an element of compulsion and, therefore, it cannot be (1) ; (2) ; 905 regarded as sale. In support of the contention he has placed reliance upon the decision in Food Inspector vs Parameswaran(1) Raman Nayar J., who decided the case has observed therein: "As a sale is voluntary transaction and (sic) a seizure or compulsory acquisition in exercise of statutory power is not a sale within the ordinary sense of that word. Nor does the definition of 'sale in section 2(xiii) as including a sale of good for analysis make it one, for, the first requisite even under the definition is that there must be a sale. The definition apparently by way of abundant caution, merely states that the word 'sale ' means all manner of sales of food, whether for cash or on credit or by way of exchange and whether by wholesale or retail, for human consumption or use, or for analysis; and all that the definition means in relation to the question we are considering is that a We of food is nonetheless a sale, by reason of the fact that it was not for consumption or use, but only for analysis. In my view when a food inspector obtains a sample under section 10 of the Act there is no sale. of course, it is possible for a Food Inspector just like any other human being to effect a purchase in the ordinary course, and the transaction would be a sale notwithstanding that the purchaser is a Food Inspector and that his purpose is to have the article analysed with a view to prosecution. But, if he obtains the article not by a voluntary exchange for a price but in exercise of his statutory power under section 10 of the Act the transaction is not a sale notwithstanding that in obedience to sub section (3) of section 10 its cost and I think the sub section advisedly uses the long phrase, 'its cost calculated at the rate at which the article is usually sold to the public ' instead of the word ' price is paid to the person from whom the sample is taken. " In Sarjoo Prasad vs The State of Uttar Pradesh (2); M. V. Joshi vs M. U. Shimpi(3) and The State of Uttar Pradesh vs Kartar Singh (4) this Court has treated a transaction of the kind we have here as a sale. No doubt, no argument was addressed in any of these cases before this Court similar to the one advanced by Mr. Anthony in this case and as advanced in Parameswaran 's case(1). (1) (2) ; (3) (4) A.T.R. 906 A view contrary to the one taken in Parameswaran 's case(1) was taken in State vs Amritlal Bhogilal(1) and Public Prosecutor vs Dada Rail Ebrahim Helari(3). In both these cases the sale was to a sanitary inspector who had purchased the commodity from the vendor for the purpose of analysis. It was contended in these cases that the transaction was not of a voluntary nature and, therefore, did not amount to a sale. This contention was rejected. In Amritlal Bhogilal 's case(1) the learned Judges held: "There is also no reason why in such a case the article should not be held to have been sold to the inspector within the meaning of section 4 (1) (a). He has paid for the article purchased by him like any other customer. Moreover, section 11 itself uses the words "purchase ' and ' sell ' in regard to the inspectors obtaining an article for the purpose of analysis and paying the price for it. It is, therefore, clear that the Legislature wanted such a transaction to be regarded as a sale for the purposes of the Act." (p. 463) The learned Judges in taking this view relied upon several reported decisions of that Court. In Dada Haji Ebrahim Helari 's case(3) which was under the Madras Prevention of Adulteration Act, (3 of 1918) Ramaswami J., dissented from the view taken by Horwill J., in In re Ballamkonda Kankayya(4) and following the decisions in Public Prosecutor vs Narayan Singh(5) and Public Prosecutor vs Ramachandrayya(6) held the transaction by which a sample of an article of food was obtained by a sanitary inspector from the vendor amounts to a sale even though that man was bound to give the sample on tender of the price thereof. But Mr. Anthony contends that a contract must be consensual and that this implies that both the parties to it must act voluntarily. No doubt a contract comes into existence by the acceptance of a proposal made by one person to another by that other person. That other person is not bound to accept the proposal but it may not necessarily follow that where that other person had no choice but to accept the proposal the transaction would never amount to a contract. Apart from this we need not, however, consider this argument because throughout the case was argued on the footing that the transaction was a 'sale '. That was evidently because here we have a special definition of "sale" in 2(xiii) of the Act which specifically includes within its ambit a (1) (2) L.L.R. (3) A.I.R. 1953 Mad. (4) A.I.R. 1942 Mad. (5) 1944 M.W.N. Crl. (6) 1948 MW.N. Cri. 907 sale for analysis. It is, therefore, difficult to appreciate the reasons which led Raman Nayar J., to hold that a transaction like the present does not amount to a sale. We are, therefore, unable to accept that view. In the result we uphold the conviction and sentence passed on each of the appellants and dismiss these appeals. Appeals dismissed.

IN-Abs

The three appellants were a wholesale dealer in spices, a dealer in groceries, and his servant respectively. The second appellant purchased a bag of turmeric powder from the first and the third appellant took delivery of it on behalf of the second appellant, his master. Immediately after it was taken delivery of, the food inspector purchased from the third appellant some turmeric powder contained in that bag for the purpose of analysis, and after issuing notice to the third appellant as required by section 1 1 of the , sent a portion of the powder purchased to the public analyst, who gave a report that it was adulterated food. The three appellants were then prosecuted under sections 6(1) (a) read with section 7(v) of the Act and convicted by the Magistrate. The conviction was confirmed by the High Court. In the appeal to this Court it was contended that, (i) the report of the public analyst, by itself was not sufficient to sustain the conviction, and the public analyst should have been called as a witness, (ii) the report of the public analyst could not be used as evidence against a person who was not given notice under section 11 of the Act, (iii) the first appellant could not be convicted without establishing that he had the mens rea, and (iv) the taking of the sample under section 10 by a food inspector, was not a "sale" within the meaning of section 2(xiii) and therefore section 7(v) of the Act was not infringed. HELD : (i) Section 13(5) of the Act, makes the report of the public analyst admissible in evidence and a Court of fact is free to act on it or not, as it thinks fit. The Court could therefore legally act solely on the basis of the report and the prosecution Could not fail on the ground that the public analyst was not called as a witness. If the appellant wanted the analyst to be examined, it was for the appellant to take appropriate steps. C D] (ii)The law requires notice under section 11 to be given only to the person from whom the sample was taken and none else. If that formality had been complied with and the report of the analyst is placed on record at the trial, it would be admissible against all the accused persons. [902 H ; 903 C] (iii)The word "vendor" in section 19(1) means the person who had add the article of food which was alleged to be adulterated. At one stage, the first appellant was the vendor of the turmeric powder. Since the section deprives the vendor of adulterated food of the defence of merely alleging that he was ignorant of the nature, substance or quality of the article of food sold by him the burden of showing that he had no mens rea to commit the offence would be upon the first appellant. [904 B D] State of Maharashtra vs Mayer Hans George, ; followed. 895 (iv)The definition of "sale" in section 2(xiii) of the Act, specificallY includes within its ambit a &,de for analysis. The transaction in the instant can would amount to sale inspite of the fact that where a person is required by the food inspector to sell him a sample of a commodity, there is an element of compulsion under section 10 of the Act. L906 H] Sarjo Prasad vs State of U.P., ; , M. Y. Joshi vs M. U. Shimpi, ; and State of Uttar Pradesh vs Kartar Singh, ; , referred to. Food Inspector vs Parameswaran, [1962] 1 Cr. L.J. 652, overruled.

No. 47 of 1966. Petition.under article 32 of the Constitution of India for the enforcemont of fundamental rights. The petitioner appeared in person. 210 Niren De, Additional Solicitor General, N. section Bindra, R. H. Dhebar and B.R.G.K. Achar, for the respondent. R. V. section Matti, for the intervener. The Judgment of the Court was delivered by Sarkar, CJ. The petitioner, Puran Lal Lakhanpal, was arrested and detained under cl. (b) of sub r. (1) of Rule 301 of the Defence of India Rules. 1962 by an order passed on December 10, 1965 and directed to be detained in Central Jail, Tehar, New Delhi. The order stated that: "WHEREAS the Central Government is satisfied that with a view to preventing Shri P.L. Lakhanpal. son of late Shri Diwan Chand Sharma. . from acting in a manner prejudicial to the Defence of India and Civil Defence, public safety and the maintenance of public order, it is necessary that he should be detained; NOW, THEREFORE. . . the Central Government hereby directs that the said Shri P. L. Lakhanpal be detained. " He has moved this Court under article 32 of the Constitution by a petition presented on December 24, 1965 for a writ of habeas corpus directing his release. He challenges the legality of the detention order on various grounds which we now proceed to consider. The first ground is that r. 30(1)(b) is ultra vires section 3(2)(15)(1) of the Defence of India Act under which the Rules were made. Sub s.(1) of section 3 contains the general power to make rules for certain purposes. Sub section (2) states that the rules made may provide for and many empower any authority to make orders providing for all or any of the following matters, namely: "(15) notwithstanding anything in any other law for the time being in force. . . . (i) the apprehension and detention in custody of any person whom the authority empowered. . suspects, on grounds appearing to that authority to be reasonable . . . . acting, being about to act or being likely to act in a manner prejudicial to the defence of India and civil defence, the security of the State, the public safety or interest,the maintenance of public order. . or with respect to whom that authority is satisfied that his apprehension and detention are necessary for the purpose of preventing him from acting in any such prejudicial manner." 211 Rule 30(1)(b) is in these terms: "The Central Government. . . if it is satisfied with respect to any particular person that with a view to preventing him from acting in any manner prejudicial to the defence of India and civil defence, the public safety, the maintenance of public order. . . may make an order (b) directing that he be detained. " It will be noticed that the rule does not say that the satisfaction mentioned in it shall be on grounds appearing to the authority concerned to be reasonable. It is said that by omitting these words the rule has gone outside the section which mentions them, and is, therefore, ultra vires. This contention is untenable. It overlooks the fact that the latter part of the section states that the rules made under it may also provide for the apprehension and detention of a person "with respect to whom that authority is satisfied that his apprehension and detention are necessary" for certain purposes; this part does not contain any requirement as to satisfaction on reasonable grounds. This part of the section is independent of the earlier part under which the apprehension and detention can be directed only when the authority suspects on certain grounds appearing to it to be reasonable that a person is about to act in a certain manner. It is of some significance to point out that the second part of the section is preceded by the word 'or '. That puts it beyond doubt that the rules made under it may provide for detention in two alternative cases, for the first of which only it is necessary that the authority should entertain a suspicion on grounds appearing to it to be reasonable. That requirement is absent in the case of a rule made under the second part of the section. Rule 30(1)(b) cannot be said to be ultra vires the section for the reason that it does not state that the satisfaction of the authority making the order of detention has to be on grounds appearing to it to be reasonable. The rule requires only that the detaining authority must be satisfied that the detention is necessary for the purposes mentioned and that is what the latter part of the section under which it was made also says. The rule has clearly been made in terms of the section authorising it. It was next said that the Proclamation of Emergency made by the President under article 352 of the Constitution which prevented the Act from being illegal, was not in terms of the article as it did not state that the President was satisfied that a grave emergency existed. It is true that the Proclamation did not do that. It stated: " In exercise of the powers conferred by clause (1) of article 352 of the Constitution, I Sarvapalli Radhakrishnan, President of India, by this Proclamation declare that a grave emergency exists whereby the security of India is threatened by external aggression. " 212 We, however, find nothing in the Article which requires the Proclamation to state the satisfaction of the President about the emergency. Article 352(1) reads, "If the President is satisfied that a grave emergency exists whereby the security of India or of any part of the territory thereof is threatened, whether by war or external aggression or internal disturbance, he may, by Proclamation, make a declaration to that effect. " The Article requires only a declaration of emergency threatening the security of India by one of the causes mentioned. The words "to that effect" can have no other meaning. The power to make the declaration can no doubt be exercised only when the President is satisfied about the emergency, but we do not see that the Article requires the condition precedent for the exercise of the power, that is, the President 's satisfaction, to be stated in the declaration. The declaration shows that the President must have satisfied himself about the existence of the emergency for in these matters the rule that official acts are presumed to have been properly performed applies and there is nothing proved by the petitioner to displace that presumption. We were referred to certain other provisions, viz., article 311(2)(c) of the Constitution and r. 30(1)(b) of the Rules and it was contended that these provisions require the satisfaction to be stated. It is unnecessary to decide whether they so require. Even if they did, the requirement of the statement of the President 's satisfaction in the present case has to be decided on the terms of article 352 alone. We have said that this Article does not contain any such requirement. It is of interest to point out here that the petitioner stated in his petition that he extended his full support to the Government on the Proclamation of Emergency. Obviously he could not have done so if he had any doubt about the legality of the Proclamation. Then it was said that the Proclamation should have stated the direction from which the external aggression which it mentioned was apprehended. We find nothing in the Article to require the Proclamation to state this. The Proclamation was issued on October 26, 1962 when, it is well known, India 's integrity was threatened by China. It was also stated that the continuance of Emergency which was declared over three years ago is a fraud on the Constitution. We were told that the President in his address to the Parliament in February this year did not state that the Emergency continued to exist. The President 's address has not been produced, and we do not know what it contained. However that may be, article 352 itself by cl. (2) provides that a Proclamation issued under cl. (1) may be revoked by a subsequent Proclamation and shall cease to operate at the expiration of two months unless before the expiration of that period it has been approved by resolutions of both Houses of Parliament. This clause also states that the Proclamation shall be laid before each House of Parliament. It has not 213 been stated that the Houses of Parliament did not approve of the Proclamation within the period of two months. It would appear, therefore, that the only way a Proclamation ceases to have effect is by one of the events mentioned in this clause. None of them has happened. Nothing contained in an address by the President to the Houses of Parliament can operate to terminate the Proclamation. In this connection it was also said that 'external aggression ' means armed aggression and as for some time past there was no armed, aggression against the territory of India, the continuance of the Proclamation was unjustified. This contention must also fail, on the ground which we have just mentioned. Another challenge to the legality of the detention was that the petitioner had not been allowed to make any representation against his detention. Our attention was drawn in this connection to section 3(2) (15)(iv) of the Act and r. 30 A of the Rules and also to r. 23, of the Defence of India (Delhi Detenues) Rules, 1964. The two first mentioned provisions do not, in our opinion, give a right to make a representation. Their effect is to provide a review of the detention order by the authorities and in the manner mentioned. The last one states that a detenue will be allowed to interview a legal practitioner for the purpose of drafting his representation against his detention. It has not been stated in the petition that the petitioner was pre vented from making any representation or denied the opportunity to consult a legal practitioner. All hat is said is that he had not been furnished particulars of his writing s and materials on which the satisfaction of the Central Government mentioned in the order was based and that had prevented him from making a representation to the Government against his detention. This contention seems to us unwarranted. There is nothing to show that the detention order had been based on petitioner 's writings, nor has our attention been drawn to any provision which requires the detaining authority to supply the materials on which they had formed their satisfaction about the necessity of the detention. Then it was said that the order of detention violated section 44 of the Act and section 3(2)(4)(b), (6), (7)(a)(b)(c) and (d) and rr. 41, 42, 44, 45 and 46 of the Rules. The substance of the contention is that the petitioner was the editor of and ran a newspaper and that action against him could only be taken under the sections and rules earlier mentioned and not under r. 30(1)(b). This contention seems to us to be entirely groundless. The provisions referred to no doubt deal with newspapers and the manner of controlling them but they in no way lead to the conclusion that a newspaper editor may not, if the occasion arises, be detained under r. 30(1)(b). The fact that newspapers and men connected with them may be dealt with in a certain manner does not prevent detention of such persons under r. 30(1)(b). It was also said that r. 30(1)(b) requires that the part of India which is to be prejudicially affected by the acts of the detenue has to be mentioned in the order. This is an idle contention. The 214 rule no doubt says that the detention may be ordered to prevent a person from acting in a manner prejudicial to the maintenance of peaceful conditions in any part of India, but it also says that the detention can be ordered for preventing a person from acting in a manner prejudicial to the defence of India, civil defence and public safety and maintenance of public order with regard to which there is no requirement provided that they should be confined to any part of India or that part should be mentioned in the order of detention. The order in this case was made on these grounds. The petition furnishes no material for saying that the terms of section 44 have been violated. There is nothing to show that the detention interfered with the petitioner 's avocation in life in a manner not justified by that section. The last ground taken was that the detention order was mala fide because the Home Minister had not sworn an affidavit to say that he was satisfied about the necessity for the detention. There is a bald allegation in the petition that the detaining authority had not applied its mind to the matter before making the order of detention. This part of the petition was verified as true to the petitioner 's knowledge. This verification was plainly false and, therefore, the allegation in the petition required no answer. However, that may be, a Deputy Secretary to the Home Ministry of the Government of India has sworn an affidavit stating as true to his knowledge that the materials in connection with the activities of the petitioner were placed before the Union Home Minister and, on a consideration of those materials, the Minister was satisfied that the detention order was necessary. The result is that this petition fails and it is accordingly dismissed. Petition dismissed.

IN-Abs

The petitioner, the editor of a newspaper, was detained under r. 30(1)(b) of the Defence of India Rules, 1962. He filed a petition under article 32 of the Constitution for a writ of habeas corpus challenging the legality of the detention order on various grounds. Dismissing the petition, HELD:Rule 30 (1) (b) cannot be said to be ultra vires of section 3 (2) (15)(i) of the Defence of India Act for the reason that it does not state that the satisfaction of the authority making the order of detention has to be on grounds appearing to it to be reasonable. The rule requires only that the detaining authority must be satisfied that the detention is necessary for the purposes mentioned and that is what the latter part of the section under which it was made also says. This part does not contain any requirement as to satisfaction on reasonable grounds. The rule has clearly been made in terms of the section authorising it. [211 F] Article 352 of the Constitution does not require the proclamation to state the satisfaction of the President about the Emergency. The Article requires only a declaration of emergency threatening the security of India by one of the causes mentioned. The words "to that effect" can have no other meaning. A proclamation ceases to have effect only by one of the events mentioned in cl. 2 of article 352 of the Constitution.[212 C] Section 3(2)(15)(iv) of the Defence of India Act and r. 30 A of the Defence of India Rules, does not give a right to make a representation. Their effect is to provide a review of the detention order by the authorities and in the manner mentioned. Rule 23 of the Defence of India (Delhi Detenus) Rules, 1964, states that a detente will be allowed to interview a legal practitioner for the Purpose of drafting his representation against his detention. [213 C D]. The fact that newspapers and men connected with them may be dealt with under other provisions of the Art and Rules does not prevent detention of such persons under r. 30(1)(b) of the Defence of India Rules. [213 H] The order need not mention the part of India which was to be Prejudicially affected by the acts of the detenue.

Civil Appeals Nos. 334, 335 and 338 of 1965. Appeals by Special Leave from the judgment and orders dated January 1, 1963, November 7, 1962 and November 4, 1963 of the Madras High Court in Tax Case No. 170 of 1961 Civil Revision Petition No. 105 of 1961 and Tax Case No. 153 of 1963 respectively. Bishan Narain and A. V. Rangam, for the appellants (in C.As. Nos. 334 and 335 of 1965). A.V. Rangam, for the appellant (in C.A. No. 338/1965). K.R. Chaudhuri, for the respondent (in C. A. No 334/1965). N. D. Karkhanis, O.C. Mathur, J.B. Dadachanji and Ravinder Narain,for the respondents (in C.As. Nos. 335 and 338/1965). The Judgment of the Court was delivered by Shah, J. This is a group of appeals filed by the State of Madras against orders passed by the High Court of Judicature at Madras which raises the following common question as to applicability of concessional rate of sales tax to transactions of inter State sale and taxable under the : "When a purchasing dealer in one State furnishes in Form 'C ' prescribed under the Central Sales Tax (Registration & Turnover) Rules, 1957, to the selling dealer in another State a declaration, certifying that the goods ordered, purchased or supplied are covered by the certificate of registration obtained by the purchasing dealer in Form 'B ' prescribed under r. 5(1) of the Central Sales Tax (Registration & Turnover) Rules, 1957, and that the goods are intended for resale, or for use in manufacture of goods for sale, or for use in the execution of contracts, or for packing of goods for resale, and that, declaration is produced by the selling dealer, is it open to the Sales Tax authority under the Central Sales ax Act to deny to the selling dealer the benefit of concessional rates under section 8(1) of the . 200 on the view that the certificate in Form 'C ' mentions more purposes than one for which the goods are intended to be used, or that the goods are incapable of being used for the purpose for which they are declared to be purchased, or that the goods are applied for some other purpose not mentioned in the certi ficate in Form 'C '?" We may briefly set out the facts which give rise to two out of the appeals: Civil Appeals Nos. 334 & 335 of 1965. Civil Appeal No. 334 of 1965. M/s Radio & Electricals Ltd., respondents in this appeal on business in the State of Madras in electrical equipment and are registered as dealers under the . The Bombay State Electricity Board, Saurashtra Division, which is engaged in the production of electric energy purchased transformers and other goods of the total value of Rs. 1,42,020/ from M/s. Radio & Electricals Ltd. and the latter claimed in proceeding for assessment for Central sales tax for the year 1957 58 that they were liable to pay tax at the rate of 1 per cent on the turnover under section 8(1) of the . The Deputy Commercial Tax Officer rejected the claim on the ground that the Bombay State Electricity Board was not a dealer engaged in selling goods and merely because they held a registration certificate, the goods sold to the Board could not be admitted to the concessional rate of tax under section 8(1) of the Act. The Appeal late Assistant Commissioner of Commercial Taxes confirmed the order on the ground that transformers and other goods purchased by the Electricity Board for use in the production of electrical energy were not intended, to be used in the manufacture of goods for sale within the meaning of section 8(3) (b) of the Central Sales Tax, ' Act, because electricity was not at the material time "goods" within the meaning of the Act. The order passed by the Appellate Assistant Commissioner was confirmed by the Sales Tax Appellate Tribunal, Madras. The High Court, following an earlier judgment in Deputy Commissioner of Commercial Taxes, Madras Division, vs Manohar Brothers(1) modified the order holding that if the selling dealer within the State produces a certificate in Form 'C ' setting out one or more of the purposes in section 8(3)(b) of the Act, and if the Sales Tax authorities on behalf of the State do not deny that the purchasing dealer is a registered dealer, the selling dealer will not be denied the concessional rate of tax under the Act, even if it transpires that the purchasing dealer has utilised the goods for purposes other than those mentioned in the certificate of registration. The High Court then held that out of the certificates in Form 'C ' produced by the selling dealer, certificates in respect of a turnover of Rs. 42,080/ set out the purpose as "manufacture of electrical energy" and since this was not one of the purposes mentioned in section 8(3)(b) of the Act as it stood at the relevant time, the Sales Tax authority was right in denying the benefit of the rate under section 8 (1) to the assessee, but with regard to a turnover of (1) 13 S.T.C. 686. 201 Rs. 47,340/ the Sales Tax authority was bound to accept the certificates in Form 'C ' produced by the assessee even though the certificates contained all the purposes mentioned in the prescribed form, and no purpose was struck out. The facts which give rise to Civil Appeal No. 335 are these; M/s Stanes Motors (South India) Ltd. respondents in this appeal are dealers in automobiles, tractors and spare parts. For the year 1957 58 they claimed benefit of concessional rates under section 8(1) on a turnover of Rs. 1,38,572/12/ resulting from sale of tractors supplied to certain "tea factories" in the State of Kerala. The purchasing dealers who were four "tea factories" registered as dealers under the Act delivered to the respondents certificates in Form 'C ' declaring that the tractors purchased by them were in. tended for use in the manufacture of tea for sale. In the view of the Tax Officer benefit of the concessional rate could not be claimed in respect of those sales, since the tractors were not for resale and the tractors "were not directly relatable to the manufacturing process". In appeal, the order passed by the Tax Officer was confirmed by the Appellate Assistant Commissioner. He held that the tractors which were used for transporting tea leaves from the plantations to the factories cannot be said to be used in the manufacture of goods for sale. In appeal to the Sales Tax Appellate Tribunal, it was held that the respondents were entitled to the concessional rate in respect of sales to two out of the four factories, which held certificates of registration in Form 'B ' specifying "machinery" as one of the items under section 8(3)(b). The High Court of Madras confirmed the order passed by the Tribunal in exercise of its revisional jurisdiction. Counsel for the State of Madras contends that the Commercial Tax Officer is invested with authority under the Act to scrutinise the transactions in respect of which the claim to concessional rate of tax is made, and he is competent to ascertain not only whether the certificate in Form 'C ' is genuine, but whether the certificate is valid in law, whether the purchasing dealer holds a valid certificate of registration in Form 'B ', whether the goods specified in the purchasing dealer 's certificate can be used for the purpose mentioned in the certificate in Form 'C ', and whether the goods were applied for the purpose for which they were purchased. Counsel also submitted that a certificate in Form 'C ' which specifies more purposes than one for which the goods are intended to be used by the purchasing dealer is invalid. We may in the first instance set out the relevant Provisions of the Act and the Rules. The 74 of 1956 was enacted by the Parliament to formulate principles for determining when a sale or purchase of goods takes place in the course of inter. State trade or commerce or outside a State or in the course of import into or export from India. By Ch. 11 principles for determining when a sale or purchase of goods takes place in the course of 202 inter State trade or commerce or outside a State or in the course of import or export are enacted. Chapter III deals with inter State sales tax. By section 6 liability is imposed upon every dealer to pay tax under the Act on all sales effected by him in the course of interState trade or commerce during any year. Section 7 provides for registration of dealers. Section 8, as originally enacted, provided: "(1) Every dealer who, in the course of inter State trade or commerce sells to a registered dealer goods of the description referred to in sub section (3) shall be liable to pay tax under this Act, which shall be one per cent of his turnover: Provided that, if under, the sales tax law of the appropriate State, the sale or purchase of any goods by a dealer is exempt from tax generally and not in specified cases or in specified circumstances or is subject to tax (by whatever name called) at a rate or rates which is or are lower than the rate specified in sub section (1), the tax payable under this Act on the turnover in relation to the sale of such goods in the course of inter State trade or commerce shall be nil or shall be calculated at the lower rate, as the case may be. (2). . . . (3) The goods referred to in sub section (1) (a) in the case of declared goods, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him; and (b) in any other case, are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or for use by him in the manufacture of goods for sale or for use by him in the execution of any contract; and in either case include the containers or other materials used for the packing of goods of the class or classes of goods so specified. Explanation . (4) The provisions of sub section (1) shall not apply to any sale in the course of inter State trade or commerce unless the dealer selling the goods furnishes to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered, dealer to whom the goods are sold, containing the prescribed particulars con a prescribed form obtained from the prescribed authority. (5) (With effect from October 1, 1958, by Act 31 of 1958, section 8 was extensively amended, but we are, in these appeals, not concerned with the statute as amended). 203 Section 10 provides for penalties. The section at the material time provided: "If any person (a) fails to get himself registered as required by section 7; or (b) being a registered dealer, falsely represents when purchasing any class of goods that goods of such class are covered by his certificate of registration , or (c) not being a registered dealer, falsely represents when purchasing goods in the course of inter State trade or commerce that he is a registered dealer; or (d) after purchasing any goods for any of the purposes specified in clause (b) of sub section (3) of section 8 fails, without reasonable excuse, to make use of the goods for any such purpose; (e) has in his possession any form prescribed for the purpose of sub section (4) of section 8 which has not been obtained by him or by his principal or by his agent in accordance with the provisions of this Act or any rules made thereunder; he shall be punishable with simple imprisonment. Section 14 deals with declared goods in respect of which by section 8(1) read with section 8(3)(a) the concessional rate of tax applies when the goods are purchased as being intended for resale. Reading section 8(1) with section 8(3)(b), it is clear that the Legislature intended to grant the benefit of concessional rates of tax under the Act to registered dealers, provided that the goods sold were of the class or classes specified in the certificate of registration of the purchasing dealer and the goods were intended to be used for resale by him or, for use in the manufacture of goods for sale, or for use in the execution of contracts, or for packing of goods for resale. In exercise of the power under section 13 the Central Government made rules called "The Central Sales Tax (Registration & Turnover) Rules, 1957". Rules 3 to 8 provide for registration and issue of certificate of registration. Rule 5(1) provides that when the notified authority is satisfied, after making such enquiry as it thinks necessary, that the particulars contained in the application are correct and complete, it shall register the dealer and grant him a certificate of registration in Form 'B ' and also a copy of such certificate for every place of business within the State other than the principal place of business mentioned therein. The material part of Form 'B ' is as follows: This is to certify that. . . .whose principal place of business within the State of. . . is situated at . . . . 204 has been registered as a dealer under section 7(1)/7(2) of the . The business is: wholly mainly partly partly partly The class(es) of goods specified for the purpose of sub section (1) of section 8 of the said Act is /are as follows and the sales of these goods in the course of inter State trade to the dealer shall be taxable at the rate specified in that subsection subject to the provisions of sub section (4) of the said section: (a) For resale, (b) For use in manufacture, (c) For use in the execution of contracts. The dealer 's year for the purpose of accounts runs from. . day of . . to the . .It. . . " Rules 9 & 10 deal with cancellation of registration, and Rules 1 1 & 12 deal with determination of turnover. By r. 12 the declaration referred to in sub section (3) of section 8 of the Act has to be in Form 'C ' consisting of three sections a counterfoil, a duplicate and the original. The duplicate section of the Form (which in terms is identical with the original section) is as follows: "Form 'C ' Form of Declaration (See rule 12). (to be used at the time of making purchases from out of State sellers). Name of issuing State. . . . . Issued to holder of Registration Certificate No. . Serial No. . . To . . . . . . (Seller) . . . Certified that the goods **Ordered for in our purchase order No. dt. *Purchased from you as per bill/cash memostated below. Supplied under your chalan No. . .dated. . are for **resale **use in manufacture of goods for sale/use in the execution of contracts/packing of goods for resale. 205 and are. covered by my/ our registration certificate No. .dated issued under the . (Name of the purchasing dealer in full). . . . . . (Signature and status of the person sigming the declaration). *Particulars of Bill/Cash Memo Dated. .No. .Amount. **Strike out whichever is not applicable. (Note To be retained by the selling dealer)". The Scheme of the Rule read with the Act is that the pur chasing dealer as well as the selling dealer must register themselves under the . If declared goods are specified in the certificate of registration of the purchasing dealer and if it be certified that the goods are intended for resale by him, the sale is subject to concessional rate of tax under section 8(1). In respect of sales of other classes of goods specified in the certificate of registration of the purchasing dealer, if the goods are purchased either for resale by him, or for use in manufacture of goods for sale, or for use in the execution of contracts, the concessional rate of tax is available, provided the selling dealer obtains from the purchasing dealer the declaration in the prescribed form duly filled in and signed by the latter containing the particulars that the goods are ordered, purchased or supplied under a certain specific order, bill or cash memo or chalan, for all or any of the purposes mentioned and that the goods are covered by the registration certificate of the purchaser described therein and issued under the Act. If the certificate is defective in that it does not set out all the details, or that it contains false particulars about the order, bill, cash memo or chalan, or about the number and date of the registration certificate and specifications of goods covered by the certificate of the purchasing dealer, the transaction will not be admitted to concessional rates. Now in certain certificates in Form 'C ' furnished by the purchasing dealer in this group of appeals all the alternatives in the printed form were retained, and in others one or more but not all the alternatives were retained. Counsel for the State of Madras urged that a certificate in Form 'C ' is defective unless it specifies, only one purpose for which the goods purchased are intended to be used. But that contention is not borne out by the Act and the Rules. Goods may be sold to a purchasing dealer under a, single order, bill, cash memo or chalan, one part to be used for resale, another to be used in the execution of contracts, and the rest ill manufacture of goods for sale, but it is not enacted that separate certificates should be issued each relating to the quantity intended to be used for a specified purpose. A purchasing dealer may again be carrying on business as a, manufacturer, as a building, installation or repair contractor, and as a dealer in goods, and if he purchases goods specified in his certificate, but without making up his 206 mind about the precise purpose for which the goods will be used, provided it is one of the purposes, he will still be complying with the statutory requirements if he declared in Form 'C ' that the goods are purchased for more than one purpose. The Act and the Rules do not impose an obligation upon the purchasing dealer to declare that goods purchased by him are intended to be used for one purpose only, even though under his certificate of registration he is entitled to purchase goods of the classes mentioned in section 8(3)(b) for more purposes than one. When the purchasing dealer furnishes a certificate in Form 'C ' without striking out any of the four alternatives, it is a representation that the goods purchased are intended to be used for all or any of the purposes, and the certificate complies with the requirements of the Act and the Rules. The Sales Tax authority is, of course, competent to scrutinise the certificate to find out whether the certificate is genuine. He may also, in appropriate cases, when he has reasonable grounds to believe that the goods purchased are not covered by the registration certificate of the purchasing dealer, make an enquiry about the contents of the certificate of registration of the purchasing dealer. But it is not for the Tax Officer to hold an enquiry whether the goods specified in the certificate of registration of the purchaser can be used by him for any of the purposes mentioned by him in Form 'C ', or that the goods purchased have in fact not been used for the purpose declared in the certificate. The authority issuing the certificate under r. 5(1), as expressly stated in the rule, has, before issuing a registration certificate, to be satisfied after making such enquiry as it thinks necessary that the particulars contained in the application are correct and complete. The enquiry would obviously be made in the light of the nature of the business and goods which are likely to be needed either for resale, or for use in the manufacture of goods for sale, or for use in the execution of contracts. Satisfaction which is contemplated by r. 5 is objective, and may be arrived at upon a quasijudicial enquiry. This Court has in several cases had occasion to consider the legality of orders of the notified authority refusing to grant certificates of registration in Form 'B ' in respect of cer tain classes of goods which it was claimed by the tax payer were necessary for the purpose of his business and were therefore requested to be specified in the certificate of registration: e.g. Indian Copper Corporation Ltd. vs Commissioner of Commercial Taxes, Bihar & Others(1) and J. K. Cotton Spinning & Weaving Co. Ltd., vs The Sales Tax Officer, Kanpur & Another(1). On the plain words used in section 7 and the Rules, it is contemplated that the certificate of registration may only be issued after an objective satisfaction by the notified authority that the specified goods are likely to be needed for the purpose of the business of the registered dealer, and that satisfaction is open to challenge in an appropriate proceeding before the High Court and even before this Court. Correctness or (1) S.T.O. 259. (2) , 16 S.T.C. 563. 207 propriety of satisfaction of the notified authority in issuing the certificate in Form 'B ' that the goods are likely to be required for the purpose of the business would not however be again open to challenge before another taxing authority in proceedings for assessment of tax. If therefore goods are specified in the certificate of registration in Form 'B ' it is not open, when a claim is made in respect of the purchases of those goods for the application of concessional rate of tax, to the Sales Tax Officer to deny to the selling dealer of those goods the benefit on the ground that the goods specified cannot be used by the purchasing dealer for the purpose of his busi ness. It is open to the Tax Officer to ascertain whether the goods in respect of which a claim for concessional rate is made are specified in the certificate of registration, but if the class of goods is included in the certificate of registration in Form 'B ' he cannot say that the class of goods should not have been specified. The Act, seeks to impose tax on transactions, amongst others, of sale and purchase in inter State trade and commerce. Though the tax under the Act is levied primarily from the seller, the burden is ultimately passed on the consumers of goods because it enters into the price paid by them. Parliament with a view to reduce the burden on the consumer arising out of multiple taxation has, in respect of sales of declared goods which have special importance in inter State trade or commerce, and other classes of goods which are purchased at an intermediate stage in the stream of trade or commerce, prescribed low rates of taxation, when transactions take place in the course of inter State trade or commerce. Indisputably the seller can have in these transactions no control over the purchaser. He has to rely upon the representations made to him. He must satisfy himself that the purchaser is a registered dealer, and the goods purchased are specified in his certificates but his duty extends no further. If he is satisfied on these two matters, on a representation made to him in the manner prescribed by the Rules. and the representation is recorded in the certificate in Form 'C ' the selling dealer is under no further obligation to see to the application of the goods for the purpose for which it was represented that the goods were intended to be used. If the purchasing dealer misapplies the goods he incurs a penalty under section 10. That penalty is incurred by the purchasing dealer and cannot be visited upon the selling dealer. The selling dealer is under the Act authorised to collect from the purchasing dealer the amount payable by him as tax on the transaction, and he can collect that amount only in the light of the declaration mentioned in the certificate in Form 'C '. He cannot hold an enquiry whether the notified authority who issued the certificate of registration acted properly, or ascertain whether the purchaser, notwithstanding the declaration, was likely to use the goods for a purpose other than the purpose mentioned in the certificate in Form 'C '. There is nothing in the Act or the Rules 208 that for infraction of the law committed by the purchasing dealer by misapplication of the goods after he purchased them, or for any fraudulent misrepresentation by him, penalty may be visited upon the selling dealer. Counsel for the appellant contended that the view expressed by the High Court in the judgments under appeal was in any case erroneous, because they held that a 'C ' Form certificate produced by the selling dealer is conclusive of the right to the concessional rate of tax, and that no enquiry whatever may be made by the assessing authority. He invited our attention to the following passage from the judgment which is under appeal in Civil Appeal No. 335 of 1965: " We are of the opinion that whether or not the goods were in fact used for the stated purposes or even usable for such a purpose, so long as the purchasing dealer has furnished the required declaration to the selling dealer, the selling dealer becomes under law entitled to the benefit of section 8(1) of the Act. It is no function of the selling dealer to enter into a judicial examination of whether the goods are in fact used or usable for the manufacture or processing of goods for sale by the purchasing dealer. The purchasing dealer declares that they are required for such a purpose and are further so specified in his form of registration granted by the sales tax authorities. It is not the function of the selling dealer to enquire whether the requirement of the purchasing dealer is bona fide or even is or is not within the certificate. of registration of that dealer. " It is implicit in the context in which these observations occur that if the purchasing dealer holds a valid certificate specifying the goods which are to be purchased, and furnishes the required declaration to the selling dealer, the selling dealer becomes on production of the certificate entitled to the benefit of section 8(1). It is of course open to the sales tax authority to satisfy himself that the goods which are purchased by the purchasing dealer under certificate in Form 'C ' are specified in the purchasing dealer 's certificate in Form 'B '. Observation of the High Court that the selling dealer may not enquire whether the requirement is not within the certificate of re gistration of the purchasing dealer is not accurate. But whether the goods specified in the registration certificate in From 'B ' can be used for the purpose is not for the selling dealer to determine. That is a matter which has already been determined by the notified authority issuing the certificate of registration. Appeal No. 334 therefore fails and is dismissed with costs. In Appeals Nos. 335 & 338 the respondent is the same assessee, and common questions for different periods are raised. These appeals also fail and are dismissed with costs. One hearing fee. Appeals dismissed.

IN-Abs

The assessees carried on business in the State of Madras and were registered dealers under the . In proceedings for assessment for central sales tax for the year 1957 58 the assessees claimed that they were liable to pay tax at the concessional rate of tax on the turnover under sec. 8(1) of the Act where sales were made by them to registered purchasing dealers who furnished declaration in Form 'C". The common question considered in these appeals was: When a purchasing dealer in one State furnishes in Form 'C ' prescribed under the Central Sales Tax (Registration & Turnover) Rules, 1957, to the selling dealer in another State a declaration, certifying that the goods ordered, purchased or supplied are covered by the certificate of registration obtained by the purchasing dealer in Form 'B ' prescribed under r. 5(1) of the Central Sales Tax (Regis tration & Turnover) Rule. ,, 1957, and that the goods are intended for resale, or for use in manufacture of goods for sale, or for use in the execution of contracts, or for packing of goods for resale, and that declaration is produced by the selling dealer, is it open to the Sales Tax authority under the to deny to the selling dealer the benefit of concessional rates under section 8(1) of the , on the view that the certificate in Form 'C ' mentions more purposes than one for which the goods are intended to be used, or that the goods are incapable of being used for the purpose for which they are declared to be purchased, or that the goods are applied for some other purpose not mentioned in the certificate in Form 'C '? HELD: The Act and the Rules do not impose an obligation upon the purchasing dealer to declare that goods purchased by him are intended to be used for one purpose only, even though under his certificate of registration in Form 'B ' he is entitled to purchase goods of the classes mentioned in section 8(3) (b) for more purposes than one. When the purchasing dealer furnishes a certificate in Form C without striking out any of the four alternatives, it is a representation that the goods purchased are intended to be usedfor all or any of the purposes, and the certificate complies with the requirements of the Act and the Rules. The Sales Tax Officer may scrutinise the certificate to find out whether it is genuine and may also examine the registration certificate of the purchasing dealer. to see if the goods are covered by it. But it is not for him to hold an enquiry whether the goods specified in the certificate of registration of the purchaser can be used by the purchasing dealer for any of the purpose mentioned in Form 'C '. or whether they should have been specified in the registration certificate or even that the goods purchased have in fact not been used for the purpose declared in the certificate. [2O6 B D] 199 It is contemplated in sec. 7 and the Rules that the certificate of registration may only be issued after an objective satisfaction by the notified authority that the specified goods are likely to be needed for the purpose of business of the registered dealer, and that satisfaction is open to challenge in an appropriate proceeding before the High Court and even before this Court. Correctness or propriety of satisfaction of the notified authority in issuing the certificate in Form 'E ' that the goods are likely to be required for the purpose of the business would not however be again open to challenge before another taxing authority in proceedings for assessment of tax. [206 G 207 B]. Indian Copper Corporation Ltd. vs Commissioner of Commercial Taxes, Bihar & Others 16 S.T.C. 259 and J.K. Cotton Spinning Another 16 S.T.C. 563, referred to.

Appeal No. 72 of 1952. Appeal under articles 132 (1) and 133 (1) (b) of the Constitution of India from the Judgment and Order dated the 27th April, 1951, of the High Court of Judicature at Madras (Rajamannar C.J. and Satyanarayana Rao J.) in Civil Miscellaneous Petition No. 4697 of 1951. M.K. Nambiyar (U. Sethumadhava Rao, with him) for the appellant. M. Seshachalapathi for the respondent. V.K.T. Chari, Advocate General of Madras (Porus A. Mehta and V.V. Raghavan, with him) for fife Intervener (State of Madras). February 10. The Judgment of the Court was delivered by DAs J. This is an appeal arising out ' of a judgment delivered on the 27th April, 1951, by a Bench o15 the Madras High Court in C.M.P. No. 4697 of 1951 filed under article 226015 the Constitution for the issue of a writ of certiorari or other appropriate writ to call 780 for the records and quash the order of the Government passed under section 4(1) of the Madras Act XLIII of 1949 declaring the undertaking of the appellant company to vest in the Government. The appellant company was formed and registered under the Indian Companies Act in 1924 with the object, inter alia, of generating and supplying electrical ,energy to the public in Rajahmundry. In 1949 the Madras Legislature passed the Madras Electricity Supply Undertakings (Acquisition) Act, 1949. The Act received the assent of the Governor General on the 18th January, 1950, and was published in the Official Gazette on the 24th January, 1950. Upon the Constitution of India coming into force on the 26th January, 1950, the Act was submitted to the President for his certification and on the 12th April, 1950, the President certified that the Act should not be called in question m any court on the ground that it contravened the provisions of clause (2) of article 31 or it contravened the provisions of sub section (2) of section 299 of the Government of India Act, 1935. By an order in writing made on the 2nd September, 1950, the Government of Madras acting under section 4(1) of the Act declared that the undertaking of the appellant company should vest in the Government on the date specified therein. Under the proviso to section 4(1) the Government from time to time postponed the date of vesting and the 2nd April, 1951, was the last extended date fixed for such vesting. On the 29th March, 1951, the appellant company filed C.M.P. No. 4697 of 1951, under article 226 for quashing the order of the Government. Shortly stated the contentions of the. appellant before the High Court were that the Act was ultra vires in that (1) it was beyond the legislative competency of the Madras Legislature to enact it, (2) it was not enacted to subserve any public purpose, and (3) the compensation provided for was illusory. The High Court repelled each and all of the aforesaid contentions of the appellant company. It held that the legislation was with respect to electricity under entry 31 of the 781 concurrent list in the seventh Schedule to the Government of India Act, 1935, and was not a legislation with respect to corporations under entry 33 in list I as contended by the appellant and that, therefore, the Madras Legislature was competent to enact it. It further held that the Act having received the certificate of the President the challenge based on an alleged absence of public purpose or the illusory nature of the compensation was shut out and could not be raised. The High Court, however, held that certain sections and rule 19(2) of the Rules framed under the Act were invalid and subject thereto dismissed the application of the appellant company. The High Court granted leave to the appellant company to appeal before this court. The appeal has now come up for heating before us. Learned counsel appearing in support of the appeal has not pressed before us the contention raised in the High Court as to the absence of public purpose or the illusory nature of the compensation provided by the Act. He has confined his submissions to the question of the legislative competency of the Madras Legislature to enact this piece of legislation. In the High Court the contest centered round the question whether the Act was a law with respect to electricity under entry 31 of the concurrent list or with respect to corporations under entry 33 in list I. The High Court held that the Act was, in pith and substance, a law with respect to electricity and was, therefore, within the legislative competency of the Provincial Legislature. In his arguments before us learned counsel contended that the act is in substance and effect one for the acquisition of an electrical undertaking and, as such, is ultra vires because (a) the acquisition of an electrical undertaking was not a legislative item in any of the three lists in the seventh schedule to the Government of India Act, 1935, and (b) in so far as it relates to the acquisition of an electrical undertaking of a corporation it is a law with respect to corporations under entry 33 in list I. 782 In our opinion this appeal can be disposed of on the first of the two grounds mentioned above. Turning to the Act it will be noticed that the long title of the Act is "an Act to make provision for the acquisition of undertakings in the Province of Madras supplying electricity. " The preamble recites the expediency of making Provision "for the acquisition of undertakings in the Province of Madras engaged in supplying electricity. " Section 1 gives the short title, extent and commencement of the Act. Section 2 is a definition section. Section 3 provides that the Act shall apply to all undertakings of licensees including certain undertakings therein mentioned. Section 4 empowers the Government to take over any undertaking by making an order in writing declaring that such undertaking shall vest in the Government on a specified date. Section 5 provides for compensation payable to a licensee who is not a local authority. The section gives an option to the licensee to claim compensation on one of three bases therein specified. Section 6 deals with compensation payable where the licensee is a local authority. Section 7 specifies the properties or assets which will vest according aS compensation is claimed under one basis or another. Section 8 provides for the appointment of a sole representative to act as the sole and accredited representative of the licensee in connection with the handing over of the undertaking and performing on behalf of the licensee the functions thereinafter specified. The choice of basis of compensation is to be made within one month under section 9 and such choice once intimated to the Government is not to be open to revision except with the concurrence of the Government. Section 10 authorises the Government, in case the licensee has disposed of any of the assets otherwise than in the normal course of events causing loss to the Government as succeeding owners, to deduct from the compensation payable to the licensee an amount which they consider to be the loss sustained by them. Section 11 prescribes the various deductions which the Government shall be entitled to make from the compensation payable under the Act. The manner of 783 payment or deposit of compensation is laid down in section 12. Section 13 permits the Government to repay all loans, debentures, mortgages and the like outstanding on the vesting date at any time before the time fixed for repayment. Section 14 is the arbitration section. Section 15 provides for the termination of the managing agency. Section 16 authorises the Government to terminate the services of any person on the staff of the licensee immediately before the vesting 'date. Section 17 requires all licensees to prepare and hand over to the Government a complete inventory of all the assets. Section 18 gives power of entry to the Government or any officer authorised by the Government upon any land or premises in the possession of the licensee. Section 19 prescribes penalties for various defaults therein specified. Section 20 makes certain officers of a company liable for the offence committed by the company. Section 21 gives protection against suit or prosecution for anything done in good faith under any rule or order made under the Act. Section 22 confers rule making power on the Government. Section 23 provides that the provisions of certain Acts in so far as they are inconsistent with the provisions of this Act shall have no effect. Section 24 gives power to the Government to do anything which appears to them necessary for the purpose of removing any difficulty. From the above summary it will be noticed that the Act does not purport to make any provision for the granting of licenses or maintenance of works for generating or transmitting energy or for supplying electrical energy as one would expect to find in a law dealing with electricity nor does the Act purport to make any provision for the incorporation, regulation or winding up of trading corporations. On the contrary, it is abundantly clear from the long title, the preamble and the sections that it is, in pith and substance, nothing but an Act to provide for the acquisition of electrical undertakings. Section 299 (2) of the Government of India Act, 1935, provided that neither the Federal nor a Provincial Legislature would have power to make any law authorising the compulsory acquisition for public purposes 784 of any land or any commercial or industrial undertaking or any interest in or in any company owning any commercial or industrial undertaking unless the law provided for the payment of compensation for the property acquired. Compulsory acquisition of property is undoubtedly an important sovereign right of the State but this right has to be exercised under a law. The legislative power of the State was distributed by sections 99 and 100 amongst the Federal Legislature and the Provincial Legislatures in the manner provided ' in the several lists set forth in the Seventh Schedule to the Act. Section 100 read with entry 9 in list II authorised the Provincial Legislature to make a law with respect to compulsory acquisition of land. There was no entry in any of the three lists relating to compulsory acquisition of any commercial or industrial undertaking, although section 299 (2) clearly contemplated a law authorising compulsory acquisition for public purposes of a commercial or industrial undertaking. The acquisition of a commercial or industrial undertaking not being the subject matter of any entry in any of the three legislative lists, neither the Federal Legislature nor the Provincial Legislature could enact a law with respect to compulsory acquisition of a commercial or industrial undertaking. Under section 104, however, the Governor General, in his individual discretion, could, by public notification, empower either the Federal Legislature or a Provincial Legislature to enact a law with respect to any matter not enumerated in any of the lists in the seventh schedule to the Act. It is, therefore, clear that although Parliament expressly entrusted the Provincial Legislature with power to make a law with respect to compulsory acquisition of land it did not straightaway grant any power, either to the Federal Legislature or the Provincial Legislature, to make a law with respect to compulsory acquisition of a commercial or industrial undertaking but left it to the discretion of the Governor General to empower either of the Legislatures to enact such a law. There is no suggestion that the Governor General had, in exercise of his discretionary powers under section 104, authorised the Madras 785 Legislature to enact the impugned Act and, therefore, the Act was, prima facie, beyond the legislative competency of the Madras Legislature. The learned Advocate General of Madras urges that there was implicit in every entry in the legislative lists in the Seventh Schedule to the Government of India Act, 1935, an inherent power to make a law with respect to a matter ancillary or incidental to the subject matter of each entry. His argument is that each entry in the list carried with it an inherent power to provide for the compulsory acquisition of any property, land or any commercial or industrial undertaking, while making a law under such entry. It is quite true that the powers of each Legislature to make laws with respect to the different subjects assigned to it by the, appropriate list were to be regarded as wide and plenary and also covering matters incidental or ancillary to such subject matter, but it is, nevertheless, clear from the provision of the Act that the power to make a law for compulsory acquisition was, under entry 9 in list II, given only to Provincial Legislatures and that such power of the Provincial Legislatures was, under that entry, limited to making a law for the compulsory acquisition of land only and that unless the Governor General made an .order under section 104 of the Act the Provincial Legislatures had no power to make a law for the compulsory acquisition of any property other than land ,and that the Federal Legislature had no power to make any law with respect to the compulsory acquisition of any property at all. If the argument of the learned Advocate General were correct then entry 9 in list II 'was wholly unnecessary for under entry 21 in list II the Provincial Legislatures could make a law for the compulsory acquisition of land. A similar argument was repelled by this court in the State of Bihar vs Maharajadhiraja Sir Kameshwar Singh( ). The matter is placed beyond any doubt or dispute by the provisions of section 127 of the Government of India Act, 1935, which provided that the Federal might, if it ,deemed it necessary to acquire any land situate in a (1) 786 Province for any purpose connected with a matter with respect to which the Federal Legislature had power to make laws, require the Province to acquire the land on behalf and at the expense of the Federation. If power ' inhered in the Federal Legislature to make a law for the acquisition of any property for any purpose connected with a matter with respect to which it had ' power to make laws then section 127 would not have ' been necessary at all. The absence of any entry empowering any Legislature to make laws with respect to compulsory acquisition of a commercial or industrial undertaking and the provisions of section 127 to, which reference has just been made make it abundantly clear that the contentions urged by the learned ' Advocate General cannot possibly be sustained. In our opinion, therefore, it must be held that the Madras Legislature had no legislative competency to enact the impugned law. This is sufficient to dispose of this appeal and it is not necessary to express any opinion, on the other points raised in the court below. The result, therefore, is that this appeal must be ' allowed with costs both in the High Court as well as in this court. Appeal allowed. Agent for the intervener: R.H. Dhebar.

IN-Abs

The Madras Electricity Supply Undertakings (Acquisition) Act (Madras Act XLIII of 1949) was beyond the legislative competency of the Madras Legislature because there was no entry in ,any of the three Lists of the Seventh Schedule of the Government of India Act, 1935, relating to compulsory acquisition of any commercial or industrial undertaking although section 299 (2) clearly contemplated a law authorising compulsory acquisition for public purposes of a commercial or industrial undertaking. State of Bihar vs Maharajadhiraja Sir Kameshwar Singh ([1952] S.C.R. 889) referred to.

Appeal No. 426 of 1964. Appeal by special leave from the judgment and order dated February 22, 1962 of the Punjab High Court (Circuit Bench) at Delhi in Civil Revision No. 311 D of 1958. S.P. Sinha and Inder Sen Sawhney, for the appellant, K. K. Jain and Bishambar Lal, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgment of the Punjab High Court dated February 22, 1962 in Civil Revision No. 331 D of 1958 whereby the High Court upheld and confirmed the judgment of the Appellate Court and set aside the judgment of the trial court staying proceedings in the suit. The Uttar Pradesh Co operative Federation Limited (herein after referred to as the 'Society ') was registered under the Cooperative Societies Act No. II of 1912 at Lucknow and was carrying on the business of plying public carriers on Kanpur Delhi route. The Society had been granted, for this purpose, permits by the Uttar Pradesh Government and Delhi Administration for seven vehicles. In March, 1954, the Society entered into an agreement with the plaintiffs M/s Sunder Brothers through Bimal Kumar Jain and Dhan Kumar Jain by which they were appointed as Managing Agents for carrying on the business as public carriers. The terms of the Managing Agency agreement were embodied in a letter dated March 2, 1954 written by the Secretary of the Society. Clause 28 of the agreement reads as follows: "That in the event of there being any dispute regarding the terms and conditions of this agreement and your appointment hereunder as Managing Agents of the aforesaid business or any matter arising from and relating thereto or the subject matter thereof, such dispute shall be decided by arbitration as provided under Co operative Societies Act II of 1912 and you undertake and agree to be bound by the provisions for arbitration in the said Act". The agreement was to last for a period of three years but on July 5, 1954 the Society terminated the agreement by its letter dated July 5, 1954, The plaintiffs therefore brought a suit on August 217 18, 1954 in the Court of the Subordinate Judge, First Class, Delhi praying for a declaration that the termination of the Managing Agency agreement by the Society was illegal and the plaintiffs were entitled to continue the business of Managing Agents in accordance with the terms and conditions of the agreement. The plaintiffs prayed for a mandatory injunction restraining the defendant Society from terminating the agreement. The Society made an application under section 34 of the Indian before the Subordinate Judge, Delhi, for an order for staying the suit. It was claimed by the Society that the suit was not main tainable, because under section 51 of the Co operative Societies Act the dispute was to be adjudicated upon by the Registrar of Co operative Societies. In the alternative it was alleged that by agreement between the parties the dispute was to be referred to arbitration in accordance with the Co operative Societies Act and consequently proceedings should be stayed. The trial court stayed the proceedings but on the appeal of the plaintiffs the order of the trial court was set aside and the application of the Society under section 34 of the Indian was dismissed. The Society moved the Punjab High Court in revision but the revision application was dismissed and the order of the lower appellate court was confirmed. It is necessary at this stage to set out the relevant provisions of the Indian (Act 10 of 1940). Section 34 of this Act states: "34. Where any party to an arbitration agreement or any person claiming under him commences any legal proceedings against any other party to the agreement or any person claiming under him in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings, and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the applicant was, at the time when the proceedings were commenced, and still remains, ready and willing to do all things necessary to the proper conduct of the arbitration, such authority may make an order staying the proceedings". Section 46 provides as follows: "46. The provisions of this Act, except sub section (1) of section 6 and sections 7, 12, 36 and 37, shall apply to every arbitration under any other enactment for the time being in force, as if the arbitration were pursuant to an 5301 16(a) 218 arbitration agreement as if that other enactment were an arbitration agreement, except in so far as this Act is in. consistent with that other enactment or with any rules, made thereunder". Section 47 reads as follows: "47. Subject to the provisions of section 46, and save in so far as is otherwise provided by any law for the time being in force, the provisions of this Act shall apply to all arbitrations and to all proceedings thereunder: Provided that an arbitration award otherwise obtained may with the consent of all the parties interested be taken into consideration as a compromise or adjustment of a suit by any Court before which the suit is pending". There was some controversy in the lower courts as to whether the arbitration under cl. 28 of the agreement was a statutory arbitration and whether section 46 of the Indian was applicable to the case. It was argued by Mr. Sinha on behalf of the appellant Society that no statutory arbitration is created by cl. 28 of the agreement but the parties had merely agreed to act in accordance with the provisions of the Co operative Societies Act (Act 11 of 1912) and the Rules made thereunder. It was contended that the parties had merely incorporated the statutory provisions by reference in their agreement and section 47 of the Indian will, therefore, be applicable to the case. This legal position was not controverted by Mr. K. K. Jain appearing on behalf of the respondent. The only question in debate was whether the lower court rightly exercised their jurisdiction under section 34 of the Indian in not granting the stay of the proceedings of the suit. If the arbitration agreement is not to be treated as a statutory arbitration under section 46 of the but an arbitration agreement under section 47 of the Act, then the procedure to be followed for the arbitration under that agreement will be that provided under the Co operative Societies Act and the Rules framed thereunder. Under section 47 of the Indian the arbitration will be governed only by such rules of the Co operative Societies Act and rules framed thereunder as are not inconsistent with the provisions of the Indian . In this con nection it is necessary to refer to Rules 115, 116 and 117 of the Co operative Societies Rules framed under section 43 of the Co operative Societies Act. Rule 115 states as follows: "Any dispute touching the business of a registered society (i) between members or past members of a society or persons claiming through a member or past member, (ii) or between a member or a past member or persons so claiming and the society or its committee or 219 any officer of the society, (iii) between the society or its committee and any officer of the society, and (iv) between two or more registered societies, shall be decided either by the Registrar or by arbitration and shall for that purpose be referred in writing to the Registrar". Rule 116 provides: "The Registrar on receipt of a reference shall either decide the dispute himself, or refer it for decision to an arbitrator or to two joint arbitrators appointed by him or to three arbitrators, of whom one shall be nominated, by each of the parties to the dispute and the third by the Registrar who shall also appoint one of the arbitrators to act as chairman". Rule 117 states: "In case it is decided to appoint three arbitrators (i) The Registrar shall issue a notice calling on each of the parties to nominate one person as its nominee within 15 days of the receipt of the notice. (ii) if a party consists of more than one person, such persons shall jointly make only one nomination. (iii) if more than one person is nominated by a party the Registrar shall appoint either one of the nominees or some other person of his own choice as the nominee of that party, (iv) if a party fails to nominate an arbitrator within the appointed time or if its nomination is not valid the Registrar may himself make the nomination, (v) if one of the arbitrators fails to attend or refuses to work as an arbitrator, the remaining arbitrators may decide the dispute. If two of the arbitrators fail to attend or refuse to work as arbitrators and the claim is not admitted the remaining arbitrator shall refer the case to the Registrar who may authorise him to give an award or appoint one or more arbitrators to proceed, with the reference or he may decide the case himseff". It has been observed by the High Court that it would be a difficult task for the arbitrator to investigate as to which of the rules made under the Co operative Societies Act are consistent with and which of those rules are not consistent with the provisions of the Indian and therefore it was, a fit case in which discretion of the court under section 34 of the Indian should be exercised in not staying the proceedings of the suit. In our opinion, the reasoning of the High Court has much substance. 220 There is also another reason why there should not be a stay of the proceedings under section 34 of the Indian . The suit was filed in 1954 and, though 12 years have elapsed, nothing has been, done in the suit and it will not be in the interest of speedy disposal of the suit between the parties if the proceedings in the suit are further stayed and the parties are referred to arbitration. There is also another ground why the proceedings in the suit should not be stayed in the present case. If Rules 11.5 and 116 of the Co operative Societies Rules are applicable then the reference of the dispute has to be made to the Registrar of the Co operative Societies who may either decide the dispute himself or refer the dispute to an arbitrator or two joint arbitrators appointed by him or to three arbitrators, of whom one shall be nominated by each of the parties to the dispute and the third by the Registrar who shall also appoint one of the arbitrators to act as Chairman. It is alleged by the respondent that the Registrar of Co operative Societies is ex officio President of the Society and it was with his approval that the agreement in dispute was terminated. It was also pointed out that the Registrar was the chief controlling and supervising officer of the Society under its bye laws. It was submitted for the respondent that the Registrar may not, therefore, act fairly in the matter and it is improper that he should be an arbitrator in the dispute between the parties. In our opinion, there is much validity in this argument. The legal position is that an order of stay of suit under section 34 of the Indian will not be granted if it can be shown that there is good ground for apprehending that the arbitrator will not act fairly in the matter or that it is for some reason improper that he should arbitrate in the dispute between the parties. It is, of course, the normal duty of the Court to hold the parties to the contract and to make them present their disputes to the forum of their choice but an order to stay the legal proceedings in a Court of law will not be granted if it is shown that there is good ground for apprehending that the arbitrator will not act fairly in the matter or that it is for some reason improper that he should arbitrate in the dispute. Reference may be made, in this connection, to the decision of the House of Lords in Bristol Corporation vs John And & Co.(1). This case was concerned with an application for stay of proceedings under section 4 of the English which is similar to section 34 of the Indian . Upon the settlement of the final account there arose a bona fide dispute of a substantial character between the contractor and the engineer, who was the arbitrator under the contract, involving a probable conflict of evidence between, them. The House of Lords held, affirming the decision of the (1)[1913] A,C. 241. 221 Court of appeal, that the fact that the engineer, without any fault of his own, must necessarily be placed in the position of a Judge and a witness is a sufficient reason why the matter should not be referred in accordance with the contract. At pp. 247 248 of the report Lord Atkinson stated as follows: "Whether it be wise or unwise, prudent or the contrary, he has stipulated that a person who is a servant of the person with whom he contracts shall be the judge to decide upon matters upon which necessarily that arbitrator has himself formed opinions. But though the contractor is bound by that contract, still he has a right to demand that, notwithstanding those preformed views of the engineer, that gentleman shall listen to argument and determine the matter submitted to him as fairly as he can as an honest man; and if it be shown in fact that there is any reasonable prospect that he will be so biased as to be likely not to decide fairly upon those matters, then the contractor is allowed to escape from his bargain and to have the matters in dispute tried by one of the ordinary tribunals of the land. But I think he has more than that right. If, without any fault of his own, the engineer has put himself in such a position that it is not fitting or decorous or proper that he should act as arbitrator in any one or more of those disputes, the contractor has the right to appeal to a Court of law and they are entitled to say, in answer to an application to the Court to exercise the discretion which the 4th section of the vests in them, "We are not satisfied that there is not some reason for not submitting these questions to the arbitrator". In the present case the question is, has that taken place"? Lord Moulton after tracing the growth of the law of arbitration made the following observations in his speech: "But, My Lords, it must be remembered that these arbitration clauses must be taken to have been inserted with due regard to the existing law of the land, and the law of the land applicable to them is, as I have said, that it does not prevent the parties coming to the Court, but only gives to the Court the power to refuse its assistance in proper cases. Therefore to say that if we refuse to stay an action we are not carrying out the bargain between the parties does not fairly describe the position. We are carrying out the bargain between the parties, because that bargain to substitute for the Courts of the land a domestic tribunal was a bargain into which was written, by reason of the existing legislation, the condition that it should only be enforced if the Court thought it a proper case for its being so enforced". 222 Lord ;Parker, after pointing out that section 4 of the ' gave a discretionary power to the Court to be exercised after it was ' satisfied that there was no sufficient reason why the matter should not be referred in accordance with the submission, expressed the ' following views: "In making up its mind on this point the Court must of course give due consideration to the contract between the parties, but it should, I think, always be remembered that the parties may have agreed to the submission precisely because of the discretionary power vested in the Court under the . They may, very well, for instance, have said to themselves, 'If in any particular case it would be unfair to allow the arbitration we are agreeing to proceed we shall have the protection of the Court". It is manifest that the strict principle of sanctity of contract is subject to the discretion of the Court under section 34 of the Indian , for there must be read in every such agreement an implied term or condition that it would be enforceable only if the Court, having due regard to the other surrounding circumstances, thinks fit in its discretion to enforce it. It is obvious that a party may be released from the bargain if he can show that the selected arbitrator is likely to show bias or by sufficient reason to suspect that he will act unfairly or that he has been guilty of continued unreasonable conduct. As we have already stated, the respondent has alleged in the present case that the Registrar, Co operative Societies has approved the termination of the contract of Managing Agency with the plaintiff and the Registrar was the chairman of the defen dant Society. We are accordingly of the opinion that the High Court properly exercised its discretion under section 34 of the Indian in not granting a stay of the proceedings in the suit. It is well established that where the discretion vested in the Court under section 34 of the Indian has been exercised by the lower court the appellate court should be slow to interfere with the exercise of that discretion. In dealing with the matter raised before it at the appellate stage the appellate court would normally not be justified in interfering with the exercise of the discretion under appeal solely on the ground that if it had considered the matter at the trial stage it may have come to a contrary conclusion. If the discretion has been exercised by the trial court reasonably and in a judicial manner the fact that the appellate court would have taken a different view may not justify interference with the trial court 's exercise of discretion. As is often said, it is ordinarily not open to the appellate court to substitute its own exercise of discretion for that of the trial Judge; but if it appears to the, appellate court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts then it would certainly be open to the appellate court 223 to interfere with the trial court 's exercise of discretion. This principle is well established; but, as has been observed by Viscount Simon, L. C., in Charles Osenton & Co. vs Johnston(1): "The law as to the reversal by a court of appeal of an order made by a Judge below in the exercise of his discretion is well established, and any difficulty that arises is due only to the application of well settled principles in an individual case". For these reasons we hold that the appellant has made out no case for our interference with the order of the High Court refusing stay of the proceedings in the suit under section 34 of the Indian . The appeal accordingly fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The appellant society carried on business as public carriers on the Kanpur Delhi route. By an agreement in 1954 they appointed the respondents as their Managing Agents for a period of 3 years. But much before the expiry of that period they terminated the agreement. Disputes arising between the parties were under the agreement, to be decided by arbitration as provided in the Co operative Societies Act II of 1912. According to the relevant provisions of the said Act disputes were to be decided by the Registrar of Co operative Societies or by an arbitrator or arbitrators appointed by him. The respondents however filed a suit against the Society asking for a declaration that the termination of the agreement by the society was illegal and for a mandatory injunction restraining the society from terminating the agreement. The Society thereupon filed an application under section 34 of the Indian Arbitration Act praying for a stay of the aforesaid suit on the ground that the respondents had agreed to arbitration as provided in the Co operative Societies Act. The trial Court stayed the suit but the appellate Court set aside the trial Court 's order and dismissed the application under section 34. The High Court upheld the appellate Court 's order whereupon, by special leave, the society appealed to this Court. HELD:(i) The High Court rightly refused to stay the suit. It rightly observed that it would be a difficult task for the arbitrator to investigate as to which of the rules made under the Co operative Societies Act are consistent with and which of those rules are not consistent with the provisions of the Indian Arbitration Act. The suit, moreover, was filed as far back as 1954 and its stay would not be in the interests of its speedy disposal. [219 G 220 B] (ii)It is, of course, the normal duty of the court to hold the parties to the contract and to make them present their disputes to the forum of their choice, but the strict principle of sanctity of contract is subject to the discretion of the Court under section 34 of the Indian Arbitration Act. A party may be released from the bargain if he can show that the selected arbitrator is likely to show bias or there is sufficient reason to suspect that he will act unfairly or that he has been guilty of unreasonable conduct. [222 D] In the present case the respondent had alleged that the Registrar Co operative Societies had approved the termination of the contract of Managing Agency with the plaintiff and the Registrar was the Chairman of the Defendant Society. In the circumstances the High Court Trust be held to have Properly exercised its discretion under section 34 of the Indian Arbitration Act in not granting a stay of the proceedings in the suit. [222 E]. 216 Bristol Corporation vs John Aird & Co. , referred to. (iii)If it appears to the, appellate Court that in exercising its discretion the trial court has acted unreasonably or capriciously or has ignored relevant facts then it would certainly be open to the Appellate Court to interfere with the trial court 's exercise of discretion, [222 H] Charlies Osenton & Co. vs Johnston, , referred to.

Appeal No. 386 of 1964. Appeal by special leave from the judgment and order dated January 10, 1962 of the Gujarat High Court in Civil Revision Application No. 158 of 1960. section V. Gupte, Solicitor General, section H. Sheth and M. V. Goswami, for the appellants. G. L. Sanghi and A. G. Ratnaparkhi, for respondent No. 1. The Judgment of the Court was delivered by Subba Rao, J. This appeal by special, leave is directed against the order of the Gujarat High Court in Civil Revision Application No. 158 of 1960 confirming that of the District Judge, Kaira, holding that the 1st respondent herein was a debtor and directing the Civil Judge, Kapadvanj, to adjust the debt under the provisions of the Bombay Agricultural Debtors Relief Act. The relevant facts may be briefly stated. The father of the first respondent owned three pieces of land bearing Survey Nos. 93, 102/3 and 125/1 in village Chikhlod, Taluka Kapadwanj, District Kaira in the State of Gujarat. On June 9, 1933, he sold the same by an oral vardi to respondent No. 2 for a sum of Rs. 2,701 / but continued to be in possession thereof. On April 7, 1934, the 2nd respondent sold the said lands to the 1st appellant by an oral vardi for Rs. 2,521 / and the 1st appellant got possession thereof on the said date. In a partition that was effected in the joint family of the 1st appellant, survey No. 93 went to the share of the 2nd appellant and the remaining two lands fell to the share of the 1st appellant. The appellants have been in possession of the said lands from April 7, 1934. On August 3, 1945, the 1st respondent filed an application before the Debt Adjustment Board under section 17, read with section 18 and section 45 of the Bombay Agricultural Debtors Relief Act, 1939. To that application only the 2nd respondent was made a party. His case was that his father had money dealings with the 2nd respondent and in consideration of past debts his father had sold the said lands to the 2nd respondent in 1933 by way of an oral sale with a condition of reconveyance of the said lands to the vendor and, therefore, the said debt was liable to be adjusted under the provisions of the said Act. The 2nd respondent denied that he had any money dealings with the father of the 1st respondent and stated that the lands were not in his possession. On December 4, 1945, the respondent made an application before the Debt Adjustment Board for adding the appellants as respondents to the petition. It appears from the record that only the 1st appellant was made a party respondent to 148 that application. On April 29, 1947, the said Board held that the sales in favour of the 2nd respondent and the appellants were invalid and directed the 2nd respondent to render the accounts. Against that order, the 2nd respondent preferred an appeal to the District Judge at Nadiad. On May 27, 1947, Bombay Agricultural Debtors Relief Act 28 of 1947, hereinafter called the new Act, came into force and under section 56(2) thereof the Bombay Agricultural Debtors Relief Act, 1939, hereinafter called the repealed Act was repealed. On April 14, 1949 the learned District Judge, Kaira, set aside the order of the Board and remanded the case to the court of the Civil Judge (Junior Division) at Kapadwanj with a direction to decide afresh the question of the nature of the said transaction in accordance with law. It was remanded to the said Civil Judge as under the new Act the Debt Adjustment Board was dissolved and its jurisdiction was vested on the Civil Judge. On April 24, 1950, the 1st respondent made an application before the Civil Judge for adding the 2nd appellant as a party respondent and that petition was allowed on August 21, 1950. On September 29, 1953, the Civil Judge dismissed the petition as not maintainable; but on appeal the District Judge, Kaira, allowed the appeal and remanded the matter to the Civil Judge for disposal according to law. The appellants and the 2nd respondent preferred a revision to the High Court, but that was summarily rejected. After the remand, the Civil Judge held that the transaction was not a mortgage and the appellants had acquired title to the lands by adverse possession. Against that order the 1st respondent preferred an appeal to the District Judge, who, by his order dated October 16, 1958, held that the mortgage subsisted and that the appellants had not acquired title to the said lands by adverse possession. In hat view, he remanded the case to the Civil Judge for adjustment of the debts. On revision the High Court of Gujarat accepted the finding of the learned District Judge and dismissed the revision. Hence the present appeal. The learned Solicitor General, appearing for the appellants, raised before us the following four points: (1) Under the repealed Act the Board would have jurisdiction to entertain an application for adjustment of debts, if 'it was filed within 18 months from the date of the appointment of the Board under section 4 of the said Act, i.c., on or before October 31, 1945, and, as no such application was filed either against the 1st appellant or against the 2nd appellant before that date, the order of the Board adding the 1st appellant on December 4, 1945, and the order of the Civil Judge adding the 2nd appellant on August 21, 1950 were without jurisdiction and, therefore, void; as the said orders were without jurisdiction, the appellants had acquired a vested interest in the property and the new Act does not affect the said right. (2) The appellant had acquired a right to the said lands by adverse possession. (3) The application to the 149 Board to investigate the nature of the transaction was not competent. And (4) The benefit under section 55(6)(b) of the Transfer of Property Act is available only to a buyer under a valid transaction and not to a buyer under a transaction which is void at the very inception. At the outset it may be mentioned that the 4th point was sought to be raised before the High Court for the first time and the High Court refused to go into that matter. We cannot, therefore, allow the appellants to raise that point before us. The third point was also not raised before the High Court and we do not see any justification for allowing the appellants to press the same before us. We shall, therefore, confine our judgment to the first two points raised. To appreciate the rival contentions of the parties it will be convenient to read at this stage the relevant provisions of both the repealed and new Acts. The Bombay Agricultural Debtors Relief Act, 1939. Section 17. (1) Within eighteen months from the date on which a Board is established under section 4, any debtor may make an application to the Board for the adjustment of his debts under this Act as hereinafter provided: . (3) An application under this section shall be made to the Board established for any local area if the debtor or any of the debtors who is a party to the application ordinarily resides in such area, or to the Board estab lished for the class of debtors, if the debtor or any of the debtors who is a party to the application belongs to the said class. Section 7. (1) Subject to the provisions of this Act and any rules, the Board shall have the same powers as are vested in civil courts under the Code of Civil Procedure, 1908, when trying a suit and in particular in respect of the following matters: (a) joining any necessary or proper parties. The Bombay Agricultral Debtors Relief Act, 1947. Section 4. (1) Any debtor ordinarily residing in any local area for which a Board was established under section 4 of the repealed Act on or after the 1st February 1947, or his creditor may make an application before the 1st August 1947 to the Court for the adjustment of his debts. 150 Section 46. Save as otherwise expressly provided in this Act, the provisions of the Code of Civil Procedure, 1908, shall apply to all proceedings under this Chapter. *Provided that the Court may in a proper case and on such terms as may appear to it to be just, exercise its powers to add or strike out parties under rule 10 of Order 1 of the said Code in any proceeding pending before it under section 4 or 24, notwithstanding the fact that such addition, or striking out of parties is to be made after the date specified in section 4 or 24, as the case may be, has elapsed. (*This proviso was added by Bombay Act 37 of 1950, section 9). Section 56. (2) The Bombay Agricultural Debtors Relief Act, 1939, is repealed. All Boards established under section 4 of the repealed Act shall be dissolved: Provided that (a)all proceedings pending before any such Board at the date when this Act comes into force shall be continued and disposed of by the Court under this Act as if an application under section 4 had been made to the Court in respect therefor; (b) all awards made, confirmed or modified under the repealed Act shall be deemed to have been made, confirmed or modified under this Act as if this Act was in force at the date when the said awards were made, confirmed or modified, as the case may be; . . (c) all appeals pending before any Court under the repealed Act against the decision, order or award of such Board shall be continued and disposed of as if the said appeals were filed under the provisions of this Act; and (d)all appeals which could have been filed under the repealed Act against any decision, order or award of such Board but which could not be filed only by reason of the fact that the said 'Act was repealed by this Act shall when filed before a competent court be deemed to have been filed under the provisions of this Act and shall be disposed of accordingly. The impact of the provisions of the new Act on those of the repealed Act in the context of the present enquiry may be stated thus: Under the repealed Act an application could be filed before the appropriate Board for the adjustment of a debt within the time prescribed under section 17 thereof. Under section 7 thereof the 151 Board had the power to join any necessary or proper parties. The said power was coterminus with that of a civil court under the Code of Civil Procedure. Order 1, r. 10, of the Code of Civil Procedure enables the court in a suitable case to strike out or add parties; and under sub section (5) thereof, subject to the provisions of section 22 of the Indian Limitation Act, 1877, the proceedings as against any person added as defendant shall be deemed to have begun only on the service of the summons. Under the repealed Act therefore, if a party was added, the proceedings as against him should be deemed to have been taken only on the service of summons. If a party was added subsequent to the period prescribed under section 17 of the repealed Act, it could be objected that the proceedings against the party so added was beyond the period prescribed under section 17. But nonetheless if he was added as a necessary party to a petition filed in time, though the said order might be improper, it could not be said that the court acted without jurisdiction. If it was an illegal order, it could be set aside by an appropriate order in appeal. Under section 56(2) of the new Act the 1939 Act was repealed and all the Boards established under the repealed Act were dissolved. The three provisos to sub section (2) of section 56 of the new Act prescribed for the continuity of the proceedings initiated under the repealed Act. Under the first proviso, all proceedings pending before any such Board shall be continued before the court as if an application under section 4 of the said Act had been made to the court. This proviso introduces a fiction; and under that fiction, if an application filed before the Board under section 17 of the repealed Act was pending at the time the new Act came into force, it shall be continued as if it were an application filed under section 4 of the new Act. Under the third proviso, which deals with pending appeals, appeals pending before any court under the repealed Act shall be continued and disposed of as if they were appeals under the new Act. This proviso also introduces a fiction, namely, the appeal should be deemed to be an appeal under the new Act. The expression "under the Act" means under the provisions of the Act. This expression emphasizes the fact that pending appeals shall be deemed to be appeals under the (new) Act and, therefore, shall be disposed of by applying the provisions thereof. The fourth proviso deals with appeals to be filed against the orders under the 'repealed Act; under the said, proviso those appeals when presented after the new Act came into force shall be deemed to be appeals from the decision or orders or awards of courts under the new Act and shall be disposed of accordingly. In short, the old Act was repealed and the proceedings, original or appellate, are all deemed to be proceedings under the new Act and they should be disposed of in accordance with the substantive and procedural sections of the new Act. If that be the interpretation of section 56 (2) of the new, Act, to such a proceeding section 46 is immediately attracted. Under L/S5SCI 12 152 section 46 of the new Act, the court is empowered in a suitable case to add parties under Order 1, rule 10, of the Code of Civil Procedure, notwithstanding the fact that the addition of parties is made after the dates specified in section 4 or 24, as the case may be, have expired. By reason of the aforesaid fiction, a proceeding taken under the repealed Act is deemed to be a proceeding under the new Act and, therefore, a party may be added after the prescribed period. To summarize: After the new Act was passed there are two types of proceedings, namely, (i) proceedings initiated under the repealed Act but pending at the time the new Act came into force; and (ii) proceedings taken under the new Act. Both the proceedings will have to be disposed of under the provisions of the new Act, that is to say, both the substantive and the procedural sections of the new Act would equally apply to both classes of proceedings. Some of the decisions cited at the Bar have a direct bearing on the question raised before us. A division Bench of the Bombay High Court in Vishwanath Mahadev Adhikari vs Krishnaji Ramchandra Bodas(1) construed the scope of the three provisos to section 56(2) of the new Act. It was contended before the said Bench that proviso 2 had no retrospective effect and the appeals which were pending should be disposed of according to the repealed Act and not according to the new Act. Chagla, C. J., adverting to that argument. speaking for the Court, observed thus: "Further, in our opinion, the language used in proviso 2 is fairly clear and explicit and makes this proviso retrospective in its effect. What the Legislature says is that the appeals shall be continued and disposed of as if they were appeals under this Act, which clearly means that all the provisions of this Act shall apply to the appeals which are pending. The appeal Court is asked to treat the appeals as if the new Act was in force and not the old Act, and in disposing of those appeals the appeal Court has to consider the substantive law as well as the procedural law brought into force by Act XXVIII (28) of 1947. " Another division Bench of that Court in Hiraman Ratan vs Purshottam Deorao(2) expressed the same view. Therein it held that the language of the provisos to section 56(2) of the new Act clearly gave retrospective effect to all the provisions of the new Act including the substantive provisions and not merely to the procedural provisions thereof. In Basavanappa Shivappa V. Neelappa Adiveppa(3), Gajendragadkar, J., construed section 46 of the new Act and held that parties could be added in a proper case without considerations of delay. (1) A.T.R. , 391. (2) A.I.R. 1953 Bom. (3) A.I.R. 1956 Bom. 153 The views expressed in these decisions accord with those expressed by us earlier. With this legal position in mind, let us look at the facts of the present case. The application was filed by the 1st respondent against the 2nd respondent under section 17 of the repealed Act before the prescribed time, i.e., October 31, 1945. The 1st appellant was added by the Board itself on December 4, 1945; and the 2nd appellant was added by the Civil Judge on August 21, 1950. As the appeal against the order of the Board was pending at the time the new Act came into force, under proviso (c) to section 56(2) of the new Act that appeal had to be disposed of under the provisions of the new Act and after remand the application had likewise to be disposed of under the provisions of the new Act. At that time the civil Court had ample jurisdiction to add the appellants as parties irrespective of the time limit prescribed under the repealed Act. If so, it cannot be said that the Civil Judge acted without jurisdiction in disposing of the petition as if it was filed under the new Act. There are, therefore, no merits in the first contention. There are no merits in the second contention either. Some relevant facts may be recapitulated. The father of the 1st respondent sold the lands to the 2nd respondent on June 9, 1933. The 2nd respondent sold the same to the 1st appellant on April 7, 1934, and he was put in possession on the same day. From June 9, 1933 to April 7, 1934 the father of the 1st respondent was in possession. The application for adjustment of the debt was made on August 3, 1945. From April 7, 1934 to August 3, 1945 the appellants were in possession of the disputed lands and the said period of occupation of the lands by the appellants was less than 12 years. But it was contended that the 1st respondent was in possession of the lands as a tenant of the 1st appellant between June 9, 1933 to April 7, 1934 and, therefore, the said period should be tacked on to the period of adverse possession by the appellants. But the High Court found, agreeing with the District Judge, that the appellants failed to prove that the 1st respondent was in possession of the lands as a tenant during that period. If so, it follows that the appellants had not acquired any title to the suit property by adverse possession. In the result, the appeal is dismissed with costs. Appeal dismissed.

IN-Abs

The father of the first respondent sold his lands to the second respondent but continued to be in possession. The second respondent sold them to the appellants who were put in possession in 1934. In August 1945, the first respondent filed a petition against the second respondent, before the Debt Adjustment Board, under Ss. 17, 18 and 45 of the Bombay Agricultural Debtors Relief Act, 1939, within the time prescribed by section 17, alleging that the transaction with the second respondent was a mortgage and that the debt was liable to be adjusted under the Act. The first appellant was impleaded as a party to the petition in December 1945, beyond the time specified in section 17. No appeal was filed against that order, and in 1947, the Board disposed of the petition for adjustment of debt by directing the second respondent to render accounts. He appealed and, pending the appeal, the 1939 Art was repealed by the Bombay Agricultural Debtors Relief Act of 1947. In 1949, the appellate Court set aside the Board 's order and remanded the case to the Civil Judge, for deciding the nature of the transaction, because, under the 1947 Act, the Board was dissolved and its jurisdiction was vested in the Civil Judge. In 1950, the first respondent 's application to the Civil Judge for impleading the second respondent also as a party to the petition for adjustment of the debt, was allowed, and thereafter, the matter was disposed of on merits. On the questions: (i) Whether the orders impleading the appellants were without jurisdiction. and (ii) whether the appellants had acquired title to the lands by adverse possession, HELD: (i) The orders were not without jurisdiction. Under the repealed Act, if a party was added beyond the period prescribed under section 17 of the Act, if he was added as a necessary party to a petition filed in time, the said order might be improper but not without jurisdiction. [151 C D] Under section 56 of the 1947 Act, original and appellate proceedings initiated under the repealed Act but pending at the time the 1947 Act came into force will have to be disposed of in accordance with the substantive and procedural sections of the 1947 Act. Under section 46 of the 1947 Act, the court is empowered. in a suitable case, to add Parties under 0.1, r. 10, Civil Procedure Code, and they may be added irrespective of the time limit prescribed under the repealed Act, or the time specified in Ss. 4 and 24 of the 1947 Act. [152 A C] Case law referred to. (ii) The appellants had not acquired any title by adverse Possession, as the petition for adjustment of debt was filed within 12 years from the date of their occupation of the suit lands.

minal Appeals Nos. 102 & 103 of 1965. Appeals by special leave from the judgments and orders dated October 12, 1964 of the Kerala High Court in Criminal Appeal No. 80 of 1964, and Criminal Appeal No. 70 and Referred Trial No. 13 of 1964 respectively. Jai Gopal Sethi, C. L. Sareen and R. L. Kohli, for the appellant (in Cr. A. No. 102/65). Harbans Singh, for the appellant (in Cr. A. No. 103/65). A. section R. Chari, V. Narayana Menon and M. R. K. Pillai, for the respondent (in both the appeals). The Judgment of the Court was delivered by Hidayatullah, J. This judgment will also govern the disposal of Criminal Appeal No. 102 of 1965 (Rajwant Singh vs The State of Kerala). The appellants in these two appeals have been convicted under sections 302/34, 364, 392, 394 and 447 of the Indian Penal Code. Unni (appellant in this appeal) has been sentenced to death and Rajwant Singh (appellant in the other appeal) has been sentenced to imprisonment for life. No separate sentences under the other sections have been imposed on Unni but Rajwant Singh has been sentenced to four years ' rigorous imprisonment under sections 392 and 394, Indian Penal Code, with a direction that the sentences shall run concurrently with the sentence of imprisonment for life. The High Court of Kerala has dismissed their appeals and confirmed the sentence of death on Unni. They now appeal by special leave of this Court. These appellants were tried with three others, of whom two were acquitted. One Taylor was also convicted of the same offences and was sentenced in the aggregate to imprisonment for life. He has not appealed to this Court. We are not concerned with them. The case relates to the death of one Lt. Commander Menianha of the Naval Base, I.N.S. Vendurthy, Willingdon Island, Cochin Harbour, on the night of March 30, 1963. Unni was attached as a rating to this Naval Base and at the time of the offence was on leave,. Taylor, who has not appealed was an ex sailor and Rajwant Singh was attached to I.N.S. Vikrant. The case of the prosecution was that these persons conspired together to burgle the safe of the Base Supply Office on the eve of the pay day, when a large sum of money was usually kept there for distribution on the pay day. They collected various articles such as a Naval Officer 's dress, a bottle of chloroform, a hacksaw with spare blades, adhesive plaster, cotton wool and ropes. On the night in question they decoyed the Lt. Commander from his house on the pretext that he was wanted at the Naval Base, and in a lonely place caught hold of him. They covered his mouth 233 with the adhesive plaster and tied a handkerchief over the plaster and plugged his nostrils with cotton wool soaked in chloroform. They tied his hands and legs with rope and deposited him in a shallow drain with his own shirt put under his head as a pillow. They then went up to the sentry, who was induced to part with his rifle to one of the accused who had dressed himself as an officer, and attacked him. The sentry would have received the same treatment as his Lt. Commander but he raised a hue and cry and attracted the attention of the watchman. Fearing detection the assailants released the sentry and took to their heels. The sentry after escaping informed the Officer on duty at the Base and stated that he had recognised Rajwant Singh as one of his assailants. Next morning the dead body of the Lt. Commander was discovered in the drain where he had been left by the assailants. Investigation followed and five persons were placed on trial before the Session Judge, Ernakulam Division, who convicted three and sentenced them as stated above and acquitted the other two. The appeals of these persons before the High Court failed. In these appeals the complicity of the appellants in the offence is not challenged but it is argued that the evidence for the prosecution does not establish the offence of murder but of causing grievous hurt or of culpable homicide not amounting to murder. It is also contended that section 34 of the Indian Penal Code could not be used against any of the accused. Unni has also contended that the sentence of death was not proper as the case against him was indistinguishable from that of the other two. We shall deal. with these arguments. Our attention has been drawn to the inquest and postmortem reports to establish what was actually done to the Lt. Commander. From these, it is established that the legs of the victim were tied with rope and his arms were tied behind his back. A large adhesive plaster was stuck over his mouth and completely sealed it. A handkerchief was next tied firmly over the adhesive plaster to secure it in position. The nostrils were plugged with cotton soaked in chloroform. Counsel for the appellants submit that all this shows that the assailants did not intend to kill the Lt. Commander but to render him unconscious. It is admitted that the closing of the mouth with the adhesive plaster and the handkerchief was complete and that it must have been impossible for the Lt. Commander to breathe through his mouth. The description, however, shows that the nostrils were also plugged with cotton wool soaked in chloroform. This was clearly stated in the inquest report and also in the postmortem report and was established not only by the witnesses proving the inquest report but also by the doctor who performed the autopsy. In addition the prosecution has exhibited and proved numerous photographs of the dead body from various angles and these things are clearly seen in the L/S5SCI 17 (a) 234 photographs. According to the doctor death was due to asphyxiation. In addition to the other evidence establishing the connection of Unni and Rajwant Singh with this crime there is a confession by Rajwant Singh before the Sub Magistrate, Cochin in which he graphically describes the part played by him and Unni. Rajwant Singh also stated that they only wanted the Lt. Commander and the sentry to remain unconscious while they rifted the safe and took away the money. It is contended that we must accept the confession as a whole and must hold on its basis that the intention was not to kill, and that the offence of murder is therefore not established. As this is the most important point in the case we shall consider it first. This point was argued by Mr. J. G. Sethi on behalf of Rajwant Singh and his arguments were adopted by Mr. Harbans Singh on behalf of Unni. Mr. Sethi argued that the offence was one of causing grievous hurt or at the worst of culpable homicide not amounting to murder and punishable under section 304 (second part) of the Indian Penal Code. It is quite plain that the acts of the appellants resulted in the death of the victim and the offence cannot be placed lower than culpable homicide because the appellants must have known that what they were doing was likely to kW. The short question, therefore, is whether the offence was murder or culpable homicide. Mr. Sethi submits that of the three clauses of section 299. which define the offence of culpable homicide, the first deals with intentional killing and the second with injuries which are intentionally caused and are likely to cause death. He submits that these two clauses form the basis of the offence of murder and culpable homicide punishable under he first part of section 304 and the third clause, which involves the causing of death with the knowledge that by his act the offender is likely to cause death, is the foundation of offence of culpable homicide not amounting to murder punish able under the second part of section 304. He submits that the appellants did not intend causing the death of the Lt. Commander but took action to keep him immobilised and silent while they rifled the safe. To achieve their purpose they tied the victim and closed his mouth and plugged the nostrils with cotton soaked in chloroform. Each of these acts denoted a desire to keep the Lt. Commander out of the way for the time being but not to kill him. Nor can the acts be described as done with the intention of causing such bodily injury as was likely to kill. At the most, says he, it can be said that the death was caused with the knowledge on the part of the appellants that by their acts they were likely to cause death and that brings the matter within section 304 II, I.P.C. 235 The argument requires close examination. Two offences in volve the killing of a person. They are the offence of culpable homicide and the more henious offence of murder. What distinguishes these two offences is the presence of a special mens rea which consists of four mental attitudes in the presence of any of which the lesser offence becomes greater. These four mental attitudes are stated in section 300, I.P.C. as distinguishing murder from culpable homicide Unless the offence can be said to involve at least one such mental attitude it cannot be murder. We shall consider the acts of the appellants in relation to each of the clauses of section 300. The first clause says that culpable homicide is murder if the act by which death is caused is done with the intention of causing death. An intention to kill a person brings the matter so clearly within the general principle of mens rea as to cause no difficulty. Once the intention to kill is proved, the offence is murder unless one of the exceptions applies in which case the offence is reduced to culpable homicide not amounting to murder. As there is no question of any of the exceptions they need not be mentioned. But it is plain that the appellants did not contemplate killing the Lt. Commander. No part of their preparations shows an intention to kill. Had they so desired, they had ample time and opportunity to effectuate that purpose without going to the trouble of using cotton soaked in chloroform to stuff the nostrils. They had only to hold his nose closed for a few minutes. The confession to which we have referred also shows that the news of the death of the Lt. Commander came to them with as much surprise as shock. In these circumstances, the first clause of section 300 cannot apply. The second clause deals with acts done with the intention of causing such bodily injury as the offender knows to be likely to cause the death of the person to whom harm is caused. The mental attitude here is two fold. There is first the intention to cause bodily harm and next there is the subjective knowledge that death will be the likely consequence of the intended injury. English Common Law made no clear distinction between intention and recklessness but in our law the foresight of the death must be present. The mental attitude is thus made of two elements (a) causing an intentional injury and (b) which injury the offender has the foresight to know would cause death. Here the injury or harm was intended. The appellants intended tying up the victim, closing his mouth by sticking adhesive plaster and plugging his nose with cotton wool soaked in chloroform. They intended that the Lt. Commander should be rendered unconscious for some time but they did not intend to do more harm than this. Can it be said that they had the subjective knowledge of the fatal consequences of the bodily harm they were causing? We think that on the facts the answer cannot be in the affirmative. To say that the act satisfied the test of subjective knowledge would be really 236 tantamount to saying that the appellants intended to commit the murder of the Lt. Commander which, as said already, was not the case. The third clause discards the test of subjective knowledge. It deals with acts done with the intention of causing bodily injury to a person and the bodily injury intended to be inflicted is sufficient in the ordinary course of nature to cause death. In this clause the result of the intentionally caused injury must be viewed objectively. If the injury that the offender intends causing and does cause is sufficient to cause death in the ordinary way of nature the offence is murder whether the offender intended causing death or not and whether the offender had a subjective knowledge of the consequences or not. As was laid down in Virsa Singh vs The State of Punjab(1) for the application of this clause it must be first established that an injury is caused, next it must be established objectively what the nature of that injury in the ordinary course of nature is. If the injury is found to be sufficient to cause death one test is satisfied. Then it must be proved that there was an intention to inflict that very injury and not some other injury and that it was not accidental or unintentional. If this is also held against the offender the offence of murder is established. Applying these tests to the acts of the appellants we have to see first what bodily injury has been established. The bodily injury consisted of tying up the hands and feet of the victim, closing the mouth with adhesive plaster and plugging the nostrils with cotton soaked in chloroform. All these acts were deliberate acts which had been preplanned and they, therefore, satisfy the subjective test involved in the clause. The next question is whether these acts considered objectively were sufficient in the ordinary course of nature to cause death. In our judgment they were. The victim could only possibly breathe through the nostrils but they were also closed with cotton wool and in addition an asphyxiating agent was infused in the cotton. All in all it would have been a miracle if the victim had escaped. Death of the victim took place as a direct result of the acts of his assailants. Mr. Sethi suggested that the victim must have struggled to free himself and had rolled into the drain and this must have pushed up the cotton further into the nostrils. This is not correct. The victim was placed in the drain by his assailants because his folded shirt was placed under his head and had obviously fainted by that time. No one seems to have been aware of his presence; otherwise discovery would have taken place earlier. This leads to the only conclusion that there was no change in the circumstances in which the victim was left by the assailants. The bodily injury proved fatal in the ordinary course of nature. The ordinary course (1)[1968] S.C.R. 1495. 237 of nature was neither interrupted nor interfered with by any intervening act of another and whatever happened was the result of the acts of the assailants, and their acts alone. Mr. Sethi argues that the sufficiency of the injury to cause death in the ordinary course of nature is something which must be proved and cannot be inferred from the fact that death has in fact taken place. This is true of some cases. If a blow is given by reason of which death ensues, it may be necessary to prove whether it was necessarily fatal or in the language of the Code sufficient in the ordinary course of nature to cause death. In such a case it may not be open to argue backwards from the death to the blow, to hold that the sufficiency is established because death did result. As death can take place from other causes the sufficiency is required to be proved by other and separate evidence. There are, however, cases and cases. Where the victim is either helpless or rendered helpless and the offender does some act which leads to death in the ordinary course and death takes place from the act of the offender and nothing else, it is hardly necessary to prove more than the acts themselves and the causal connection between the acts and the end result. Mr. Sethi contends that the concentration of chloroform, the quantity actually used and its effect on the victim ought to have been proved. Alternatively he argues that the quantity of the cotton wool used to plug the nostrils and the manner of plugging should have been established before a finding can be given that the bodily injury was sufficient in the ordinary course of nature to cause death. This would, of course, have been necessary if it could at all be thought that not the acts of the assailants but some other intervening circumstance might have led to the death of the victim. But there was none. There was no interference by anyone else. Death was due to asphyxiation whether caused by the mechanical obstruction of the nostrils or by chloroform as an asphyxiating agent, or both. Whichever way one looks at it, the injury which caused the death was the one inflicted by the assailants. The sufficiency of the injury was objectively established by the nature and quality of the acts taken with the consequence which was intimately related to the acts. There was no need to establish more than this in the case. As was pointed out in Anda vs State of Rajasthan(1) "the emphasis in clause thirdly is on the sufficiency of the injury in the ordinary course of nature to cause death. The sufficiency is the high probability of death in the ordinary way of nature and when this exists and death ensues, and if the causing of the injury is intended, the offence is murder". In this case the acts of the appellants were covered by the third clause in section 300. As we are satisfied that this case falls within clause thirdly we need hardly consider whether it falls also within the fourth clause or not. That clause comprehends, generally, the commission of (1) A.I. R. at 151. 238 imminently dangerous acts which must in all probability cause death. To tie a man so that he cannot help himself, to close his mouth completely and plug his nostrils with cotton wool soaked in chloroform is an act imminently dangerous to life, and it may well be said to satisfy the requirements of the last clause also, although that clause is ordinarily applicable to cases in which there is no intention to kill any one in particular. We need not, however, discuss the point in this case. We accordingly hold that the offence was murder. All the acts were done after deliberation by the appellants. They were of a type which required more than one person to perpetrate. What was done had already been discussed and the execution of the plan was carried out as contemplated. That there was a common intention admits of no doubt and as clause 3 of section 300 views the consequence of the act objectively all those who shared the common intention of causing the bodily injury which was sufficient to cause death in the ordinary course of nature must be held responsible for the resulting offence. Even if the consequence was different from what was actually intended, those who abetted (and the appellants were either offenders principally or abetters) would be equally responsible under section 113 of the Indian Penal Code provided they knew that the act which they were abetting was likely to cause that effect. On the argument of the appellants that section 304 11 applies, it is obvious that the above provision must be attracted. In our judgment the appellants were rightly adjudged guilty under section 302/34, Indian Penal Code. As regards the sentence of death passed on Unni, we see no reason to interfere. He was the master mind behind the whole affair and the sentence of death was, therefore, appropriate. We see no force in either appeal. They will be dismissed. Appeals dismissed.

IN-Abs

The appellants were convicted of murder under section 302 read with section 34 I.P.C. on the allegation that they had laid their victim in a drain after closing his mouth with adhesive tape and plugging his nose with cotton wool soaked in chloroform, as a result of which death was caused. They appealed to this Court by special leave. It was contended on their behalf: (i) that their offence did not amount to murder but only to culpable homicide under the second part of section 304, (ii) that it could not be inferred from the mere fact of death that the injury caused by the appellants was sufficient in the ordinary course of nature to cause death; this had to be proved by further evidence and (iii) that the ingredients of section 34 I.P.C. were not satisfied. HELD : (i) What distinguishes the offences of murder and culpable homicide is the presence of a special, mens rea which consists of four mental attitudes in the presence of any of which the lesser offence becomes the greater. These four mental attitudes are stated in the four clauses of section 300 I.P.C. [235 B] (ii)The first clause of section 300 says that culpable homicide is murder if the act by which death is caused is done with the intention of causing death. An intention to kill a person brings the matter so clearly within the general principle of mens rea as to cause no difficulty. Once the intention to kill is proved, the offence is murder unless one of the exceptions applies, in which case the offence is reduced to culpable hominid not amounting to murder. On the facts of the present case an intention to cause death was not proved against the appellants and the clause therefore did not apply. [235 C] (iii)The second clause of the section deals with acts done with the intention of causing such bodily injury as the offender knows to be likely to cause the death of the person to whom harm is caused. The mental attitude here is two fold. There is first the intention to cause bodily harm and next there is the subjective knowledge that death will be the likely consequence. English Common Law made no clear distinction between intention and recklessness but in our law the foresight of the death must be Present. The mental attitude is thus made of two elements (a) causing an intentional injury and (b) which injury the offender has the foresight to know would cause death. The Present case could not fall under this clause either. because, it could not be said that the appellants who only wanted to make their victim unconscious had the Subjective knowledge of the fatal consequences of the boil harm they were causing. (iv) The appellants were however guilty of murder under the third clause of section 300. [237 G H) The third clause discards the test of subjective knowledge. It deals with acts done with the intention of causing bodily injury to a person and the bodily injury intended to be inflicted is sufficient in the ordinary course of nature to cause death. In this clause the result of the intentionally caused injury must be viewed objectively. If the injury that the offender intends causing and does cause is sufficient to cause death in the ordinary way of nature the offence is murder whether the offender intended causing death or not and whether the offender had a subjective knowledge of the consequences or not. [236 B] For the application of this clause it must be first established that an injury is caused, next it must be established objectively what the nature of that injury in the ordinary course of nature is. If the injury is found to be sufficient to cause death one test is satisfied. Then it must be proved that there was an intention to inflict that very injury and not some other injury and that it was not accidental or unintentional. [236 C D] Virsa Singh vs State of Punjab ; , referred to. The bodily injury caused by the appellants was deliberate and preplanned and the subjective test involved in the clause was therefore satisfied. The other test namely whether the injury was sufficient in the ordinary course of nature to cause death was also satisfied in the case as in the circumstances it would have been a miracle if the victim had escaped. Death of the victim took place as a direct result of the acts of his assailants. [236 E F] (v)The fourth clause of section 300 comprehends generally, the commission of imminently dangerous acts which must in all probability cause death. What the appellants did may well be said to satisfy the requirements of this clause also, although it is ordinarily applicable to cases in which there is no intention to kill anybody in particular. (Obiter). [238 A] (vi)The sufficiency of an injury to cause death in the ordinary course of nature in the terms of el. 3 need not in every case be required to be proved by separate evidence in that regard. Where the victim is either helpless or rendered helpless and the offender does some act which leads to death in the ordinary course and death takes place from the act of the offender and nothing else it is hardly necessary to prove more than the acts themselves and the causal connection between the acts and the end result. The sufficiency of the injury in the present case was objectively established by the nature and quality of the acts taken with the consequence which was intimately related to the acts. There was no need to establish more than this in the case. [237 B G] Anda vs 9tate of Rajasthan, A.I.R. 1965 S.C. 148 referred to. (vii)All the acts were done after deliberation by the appellants. They were of a type which required more than one person to perpetrate. That there was a common intention admits of no doubt and as clause 3 of section 300 views the consequence of the act objectively all those who shared the common intention of causing the bodily injury which was sufficient to cause death in the ordinary course of nature must be held responsible for the resulting offence. [238 C] 232

Appeals Nos. 1062 and 1063 of 1966. Appeals by special leave from the judgment and order dated February 15, 1965 of the Calcutta High Court in matters Nos. 231 ,in,] 232 of 1964. R. M. Hazarnavis, K. D. Karkhanis, R. H. Dhebar and R. N. Sachthey, for the appellant. A. K. Sen, T. A. Rancachandran, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the respondent. The judgment of the Court was delivered by Wanchoo, J. These two appeals by special leave arise out of two applications by the appellant to the Income tax Appellate 175 Tribunal for reference to the High Court of a question of law, which was formulated as follows: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the reassessment proceedings under section 17(b) of the Wealth Tax Act were not validly initiated and in setting aside the same. " The facts which led to the applications for reference are briefly these. The respondent submitted wealth tax returns for the years 1957 58 and 1958 59. For the year 1957 58 the respondent claimed that an amount of Rs. 51 lakhs and odd being provision for taxation and another amount of Rs. 37 lakhs and odd being provision for contingencies, being ascertained liability, should be allowed as deduction from the total wealth. For the year 1958 59, the respondent claimed Rs. 31 lakhs and odd being provision for contingencies as ascertained liability as deduction from the total wealth. Assessment for the year 1957 58 was completed on December 30, 1957 and the Wealth tax Officer accepted the contention of the respondent and allowed the claim for deduction. Subsequently the Commissioner of Wealth tax by his order dated December 29, 1958 passed under section 25(2) of the Wealth Tax Act, No. XXXVII of 1957, (hereinafter referred to as the Act) disallowed the deduction of Rs. 51 lakhs and odd being the provision for taxation for the assessment year 1957 58. The order of the Wealth tax Officer allowing deduction for contingencies for the assessment year 1957 58 however stood. The assessment for the year 1958 59 was completed on December 9, 1958 and deduction was allowed for contingencies only. It may be added that we are not concerned in the present appeals so far as deduction for provision for taxa tion is concerned. On March 22, 1960, the Wealth tax Officer completed the assessment of the respondent for the year 1959 60 and disallowed the claim for deduction of the provision for contingencies. On June 2, 1960, the Wealth tax Officer issued two notices under section 17(b) of the Act for reassessment of net wealth for the years 1957 58 and 1958 59. On September 24, 1961 orders of reassessment under section 16(3) read with section 17(b) of the Act were passed in respect of the assessment years 1957 58 and 1958 59 and by these orders the amounts which had been formerly allowed as deduction with respect to contingencies were included in the total wealth of the respondent. The respondent then went in appeal against the two reassessment orders and the Appellate Assistant Commissioner sustained the decision of the Wealth tax Officer with respect to the reassessments in question. The case of the respondent was that the Wealth tax Officer had no information on the basis of which he could proceed to reassess the net wealth of the respondent and in this connection reliance was placed on the words "in consequence of any information in his possession" appearing in section 17(b) of the Act. 176 The respondent then went in appeal to the Appellate Tribunal and his contention there was that the issue of notices under section 17(b) of the Act was invalid as it was based on a mere change of opinion on the part of the Wealth tax Officer, as at that time there was no information in the possession of the Wealth tax Officer which could lead him to believe that the net wealth chargeable to tax had escaped assessment. It was contended that such information must be information which came into possession of the Wealth tax Officer subsequent to the making of the original assessment and that the information must lead him to believe that income chargeable to tax had escaped assessment. The Tribunal accepted this contention of the respondent. It may be pointed out that the assessment made by the Wealth tax Officer for the year 1959 60 was taken in appeal to the Appellate Assistant Commissioner by the respondent and the respondent 's appeal was dismissed in November 1960. The Tribunal pointed out that if the Wealth tax Officer had waited till after the decision of the Appellate Assistant Commissioner about the assessment for the year 1959 60 and then issued notices there would have been sufficient information for the purpose of section 17(b) with the Wealth tax Officer to authorise him to issue notice thereunder , but as the Wealth tax Officer issued the notices in June 1960 before that appeal was decided, it was only a case of change 'of opinion by the Wealth tax Officer which did not justify issue of notices under section 17(b). The Tribunal also pointed out that the departmental representative was specifically asked what the information was upon which the Wealth tax Officer came to the conclusion that taxable wealth had escaped assessment. The departmental representative was unable to point to any specific information which came into the possession of the Wealth tax Officer and which could lead him to issue the notices in question. The Tribunal therefore held that the reassessment proceedings under section 17(b) for the years 1957 58 and 1958 59 were not validly initiated and set them aside. Thereupon the appellant applied to the Tribunal for making references under section 27(1) of the Act. The Tribunal rejected the applications. The appellant then applied to the High Court under section 27(3) of the Act for direction to the Tribunal to state a case. The High Court however rejected the applications summarily. Thereupon the appellant applied to this Court for special leave which was granted; and that is how the matter has come before us. The main contention that has been urged on behalf of the appellant before us is that there is divergence of opinion among the High Courts on the question as to what constitutes "information" for the purpose of section 34(1)(b) of the Indian Income tax Act. No. IT of 1922, (hereinafter referred to as the Income tax Act). That section is in pari materia with section 17(b) of the Act and therefore a question of law did arise which should have been referred to the 177 High Court for its decision on the question raised by the appellant. Reliance in this connection is placed on the decision of this Court in Maharajkumar Kamal Singh vs Commissioner of Income tax Bihar(1) where this Court held that "the word 'information ' in section 34(1)(b) included information as to the true and correct state of the law, and so would cover information as to relevant judicial decisions". A further question was raised in that case, namely, "whether it would be open to the Income tax Officer to take action under section 34(1) on the ground that he thinks that his original decision in making the order of assessment was wrong without any fresh information from an external source or whether the successor of the Income tax Officer can act under section 34 on the ground that the order of assessment passed by his predecessor was erroneous". That question was not decided by this Court in that case, though this Court pointed out that in construing the scope and effect of section 34, the High Courts had expressed divergent views on the point. It is urged on behalf of the appellant that the precise question left undecided by this Court in Maharajkumar Kamalsingh 's case(1) arises in the present case, and as there are divergent views taken by the High Courts on that question, a question of law did arise on the order of the Appellate Tribunal and therefore the Tribunal should have made a reference. In Commissioner of Income tax Bombay vs Sir Mohomed Yusuf Ismail(1) it was held by the Bombay High Court as far back as 1943 that under section 34 a mere change of opinion on the same facts or on a question of law or the mere discovery of a mistake of law is not sufficient information within the meaning of section 34 and that in order to take action under section 34 there must be some information as a fact which leads the Income tax Officer to discover that income has escaped or has been under assessed. The same view was taken in a later case by the Nagpur High Court in Income tax Appellate Tribunal Bombay vs B. P. Byramji & Co.(1) where it was again emphasised that a mere change of opinion by the Income tax Officer is no ground for taking action under section 34, Further in Bhimraj Pannalal vs Commissioner of Income tax Bihar(1) it was held by the Patna High Court that "an order of assessment made after investigation by a particular officer should Jr not at his sweet will and pleasure be allowed to be revised merely because he changed his opinion and that there must exist something either suppressed by the assessee or a fact or a point of law which was inadvertently or otherwise omitted to be considered by the Income tax Officer, before he can proceed to act under section 34; and a mere change of opinion on the same facts and law is not covered by that section." (1) [1959] supp. 1 S.C.R. 10: (2) (1944) 12 T.T.R. section (3) (4) 178 The appellant on the other hand relies on some recent deci sions which show that there is some divergence of opinion in the High Courts on this question. In Salem Provident Fund Society Limited vs Commissioner of Income tax Madras(1) the Madras High Court held that "information for the purpose of section 34 need not be wholly extraneous to the record of the original assessment. A mistake apparent on the face of the order of assessment would itself constitute 'information '; whether someone else gave that information to the Income tax Officer or whether he informed himself was immaterial. " In Commissioner of Income tax vs Rathinasabhapathy Muda liar(1) the Madras High Court again held that "the discovery of the Income tax Officer after he had made the assessments that he had committed an error in not including the minor 's income in the father 's assessment was 'information ' obtained after the assessment, and even though all the facts were in the original records, the case was covered by section 34(1)(b) of the Income tax Act and the reassessment was not invalid, and this was not a case of mere change of opinion on the same facts but a case of getting information that income had escaped assessment. " In Canara Industrial and Banking Syndicate Limited vs Com missioner of Income tax, Mysore,(1) the Mysore High Court held that "if income had escaped assessment owing to the failure of the Income tax Officer to understand the true implication of a notification, and the Income tax Officer later on finds that on a correct interpretation of the notification the income was liable to be assessed, he can take proceedings under section 34 for assessment of such income; the word 'information ' in section 34 is wide enough to apply to such a case." The last case to which reference is made is Asghar Ali Mohammad Ali vs Commissioner of Income tax(1) wherein the Allahabad High Court held that "the word 'information ' used in the provision covers all kinds of information received from any person whatsoever or in any manner whatsoever; all that is required is that the Income tax Officer should learn something i.e. he should know something which he did not know previously. " It was further held that "if there is information leading to the belief that income has escaped assessment, the mere fact that this information has resulted in a change of opinion will not make section 34 inapplicable. A change of opinion is not sufficient for initiating proceedings under section 34, only when such change of opinion is the result of a different method of reasoning, and not based on 'information ' (1) (2) (3) (4) 179 It does appear that some High Courts at any rate are taking the view that a change of opinion by the Income tax Officer in certain circumstances will be sufficient for the purpose of section 34(1) (b) and will justify the issue of a notice thereunder. It may be added that after the decision of this Court in Maharajkumar Kamal Sigh 's case(1) it is now settled that "information in section 34(1)(b) included information as to the true and correct state of law, and so would cover information as to relevant judicial decisions" and that such information for the purpose of section 34(1)(b) of the Income tax Act need not be confined only to cases where the Income tax Officer discovers as a fact that income has escaped assessment. To that extent the decision of the Bombay High Court in Sir Mohanmed Yusuf Ismail(1) has been overruled. That is why the Appellate Tribunal stated in its decision that if the notices in the present case had been issued after the decision of the Appellate Assistant Commissioner in the appeal from the assessment for the year 1959 60, there would have been information in possession of the Wealth tax Officer to justify him in issuing notices under section 17(b) of the Act. But in the present case the Wealth tax Officer issued notices before that decision was known to him and the question is whether in the circumstances, in view of the later decisions of the High Courts to which we have referred, a question of law arose or not. The language of section 17(b) of the Act is in pari materia with the language of section 34(1)(b) of the Income tax Act and therefore the decisions under section 34(1)(b) of the latter Act would be relevant in construing the scope and effect of section 17(b) of the Act. There does appear to be divergence of opinion among the High Courts as to the meaning of the word "information" in section 34(1)(b) of the Income tax Act, and in view of that divergence we are of opinion that a question of law did arise in the present case as to the interpretation of the word "information" in section 17(b) of the Act and should have been referred by the Tribunal. We therefore allow the appeals, set aside the order of the High Court and direct the Tribunal to state a case referring the question of law arising in these cases in the form suggested by the appellant. The Tribunal will be free to decide whether to refer the matter to the High Court under section 27(1) or to this Court under section 27 (3A) of the Act. Costs of this Court will abide the result of the reference. Appeals allowed. (1) [1959] Supp. 1 S.C.R. 10.

IN-Abs

Orders of reassessment under section 16(3) read with section 17(b) of the Wealth Tax Act were, passed by the Wealth Tax Officer in respect of two assessment years, and by those orders, amounts which had been formerly allowed as deduction were included in the total wealth of the respondent. The orders were set aside by the Tribunal on the ground that the reassessment was based on a mere change or opinion on the part of the Officer, because, there was no "information" in his Possession, as required by section 17(b), which could lead him to believe that chargeable wealth of the respondent had escaped assessment. The appellant 's applications to the Tribunal and the High Court, for a reference to the High Court, were dismissed. In appeal to this Court, HELD: The Tribunal should be directed to make a reference either to the High Court under section 27(1) or to this Court under section 27 (3A) of the Wealth Tax Act. [179 G]. There is a divergence of opinion among the High Courts as to the meaning of the word "information" in. section 34(1) (b) of the Income tax Act, and some High Courts have taken the view that a change of opinion by the Income tax Officer, in certain circumstances, will justify the issue of notice under section 34 (1)(b) of the Income tax Act. Since that section is in pari materia with section 17(b) of the Wealth Tax Act, a question of law did irises a,; to the interpretation of the word "information" in section 17(b) of the Wealth Tax Act and it should have been referred by the Tribunal to the High Court. [179 E]

Appeal No. 1046 of 1963. Appeal from the judgment and decree dated November 17, 1959 of the Bombay High Court in First Appeal No. 484 of 1957 from Original Decree. section T. Desai, and J. B. Dadachanji, for the appellant. Sarjoo Prasad, B. P. Singh and Naunit Lal, for respondents Nos.1 and 2. Ganpat Rai, for respondent No. 4. SARKAR, C. J. delivered a separate Opinion. The Judgment of MUDHOLKAR and BACHAWAT JJ. was delivered by BACHAWAT, J. Sarkar C.J. This appeal arises but of a suit filed by the respondent Vijay Kumar against the appellant on February 9, 1954 to enforce a mortgage. The plaint stated that the appellant executed the mortgage on December 13, 1934 in favour of Tarabai, the proprietor of the firm of Narayandas Chunilal, and that the amount secured on it became due on December 13, 1943. Vijay Kumar claimed that he was adopted by Tarabai on July 16, 1948 as a son to her deceased husband Motilal Hirakhanwala and became entitled to enforce the mortgage as her sole heir on her death on April 23, 1952. After setting out the particulars of the mortgage, Vijay Kumar asked for a decree for foreclosure. In his written statement the appellant admitted the mortgage but denied that Vijay Kumar had been adopted by Tarabai and stated that she had died leaving as her heirs three daughters, Rajkumari, Premkumari and Mahabalkumari, the mother of Vijay Kumar Besides denying Vijay Kumar 's right to enforce the mortgage. the appellant took various other defenses to the action to which it is unnecessary for the purpose of this appeal to refer. 190 The learned District Judge who heard the suit, held that the adoption of Vijay Kumar had not been established and on that ground alone he dismissed it, having rejected the other defenses raised by the appellant. Vijay Kumar appealed against that judgment to the High Court of Hyderabad but that appeal was, on a subsequent reorganisation of States, transferred to the High Court of Bombay. Thereafter on November 3, 1958, Vijay Kumar made an application in the appeal for an order adding his mother Mahabalkumari as a co plaintiff with him as she was willing to be so added, and her sisters Rajkumari and Premkumari "who were not available for joining in the suit as plaintiffs", as defendants. He also sought permission to add a new paragraph to the plaint, in which after reiterating his right to enforce the mortgage as the adopted son of Motilal and Tarabai, he stated. "In case, however, the plaintiff 's adoption is held not to be proved or not to be valid, the estate of Motilal and Tarabai Hirakhanwala and of M/s Narayandas Chunilal will vest in Tarabai 's three daughters, viz., Rajkumari, Premkumari and Mahabalkumari". The prayers in the plaint were also sought to be amended by asking that the decree sought might be passed in favour of Vijaykumar and Mahabalkumari. The appellant opposed this application but it was allowed by the High Court. The records of the appeal were, thereafter, reconstituted by adding Mahabalkumari as an appellant and Rajkumari and Premkumari as respondents and amending the plaint a,. sought. Premkumari filed a written statement denying the adoption of Vijay Kumar and his right to enforce the mortgage. Rajkumari never appeared in the proceedings arising out of the suit. The appeal was thereafter heard by the High Court and allowed. The High Court refused to go into the question of adoption and passed a preliminary mortgage decree for foreclosure in favour of Mahabalkumari, Rajkumari and Premkumari and further directed that the suit as brought by Vijay Kumar would stand dismissed. The present appeal has been brought by the original defendant against this judgment of the High Court under a certificate granted by it. I think that Mr. section T. Desai for the appellant was right when he said that the order adding parties could not be supported. The High Court purported to make the order under sub r. (1) of 0. 1, r. (10) of the Code of Civil Procedure. We were not called upon by counsel to consider any other provision. That sub rule, however, cannot justify the order, for it only permits addition of a plaintiff and does not provide for the addition of a defendant while the order directs addition of both a plaintiff and two defendants. Was it then properly made in solar as it added a plaintiff ? I do not think so. The addition of Mahabalkumari as a plaintiff could not be made under the sub rule unless it was necessary for the determination of the real matter in dispute. Now, adding her 191 as a plaintiff would have availed nothing unless Rajkumari and Premkumari were also added as defendants, and that could not be done under the sub rule. No decree could have been passed in her favour alone if the case of adoption failed, for she would then be entitled to the mortgagee 's right along with her sisters. The addition of Mahabalkumari as plaintiff only would have been futile; it would not have helped in the decision of any matter in dispute. Now, sub r. (2) of 0. 1, r. (10) permits the addition of both plaintiffs and defendants in certain circumstances. The order however was not sought to be justified under that provision and there was good reason for it. It was conceded and in my opinion rightly that in view of section 22 of the Limitation Act. the suit as regards the parties added under this sub rule had to be deemed to have been instituted when they were added. This was also the view expressed by the High Court. Now it is not in dispute that a suit filed on the date when the three sisters were added, to enforce the mortgage would have been barred. We may add that there is authority for the view that even the addition of defendants alone may attract the bar of limitation: see Ramdoyal vs Junmenjoy(1). Guravayya vs Dattairayaa(2). I think that the addition of Rajkumari and Premkumari as defendants was of the kind considered in these cases. Therefore, it would have been futile to add any of the parties under this sub rule. In view of the bar of limitation, such addition would not have resulted in any decree being passed and, therefore, the addition should not have been ordered. I am, however, not to be understood as holding that apart from the difficulty created by section 22 the order could have been properly passed under the sub rule. I have the gravest doubts if it could. It is unnecessary to discuss the matter further. The High Court, relying on Ravji vs Mahadev,(3) expressed the view that when a party is added under sub r. (1) of 0. 1, r. (10), section 22 of the Limitation Act does not apply and no bar of limitation arises. No other reason was given by the High Court or suggested by counsel in this Court to avoid the bar of limitation imposed by section 22. If the bar operated, no addition of parties could, of course, be made. As I am of opinion that the order could not be justified by the terms of that sub rule, it is not really, necessary for me to consider this question of limitation. I wish however to observe that, as at present advised, I am not at all sure that section 22 does not apply to an addition of parties under sub r. (1) of r. (10) of 0. 1. There is no principle to support such a view. Nor do I think that Ravji 's case(1) clearly expresses it. All that is held and that too in the judgment of one of the learned Judges only was that when in a suit by a benamidar the real owner is (1) Cal. (2) (1904) I.L.E. (3) Bom. 192 added, it was really the original suit that was continued. Obviously, the learned Judge thought that he was dealing with a case where there was no real addition of parties. It would seem that is not the case where an order under the sub rule is made. That would be a case like that of a correction of a misdescription of a party for which a resort to the sub rule would not be necessary: Purshotam Umedbhai & Co. vs Manilal & Sons.(1). Then again Ravji 's case(1) does not seem to have been approved in later Bombay cases: see e.g. Krishnaji, vs Hanmaraddi(2). Further Ravi 's case(1) would not support the order in hand if my reading of it is correct. The present is not a case of a continuation of the Original suit. Here parties were added to press their own rights which are in conflict with and antagonistic to those which were being pressed in the suit as originally framed. I do not consider it necessary to pursue this matter further on the present occasion. It was then said that in the present case there was no sub stantial addition of parties as the original suit was in the capacity of a proprietor of the firm of Narayandas Chunilal and all that was done was to add persons who might be the real proprietors. This was said in order to get out of the bar of limitation by showing that it was the original suit that was continued in spite of the addition of parties. There seems to be authority for the view that when a suit is filed in a representative capacity, if it turns out to) be doubtful whether that capacity existed or had continued, the proper representative or the owner, as the case may be, might be added even after the date when the suit would be barred. I will assume that these cases lay down the law correctly, but they do not, in my view, afford any assistance in the present case. First, a suit by a person claiming to be the sole owner of the properties of a business carried on in a firm name, as Vijay Kumar 's suit was, is not a suit in a representative capacity; he represents no one but himself. A firm is not a legal entity which could or had to be represented by any one else. As is well known, a firm means only the partners taken together. There is no such thing as the capacity of a proprietor of a firm; the capacity of a proprietor of a firm is only the proprietor 's individual capacity. Secondly, no authority has been brought to our notice which shows that if parties are added with a claim which is antagonistic to the claim of the original plaintiff in the suit, as has happened here, that would still be a case where the original suit should be deemed to have been continued. It may be that if the suit had initially been filed in the form in which it stood after the amendment, it would have been a good suit, as to which however I do not say anything on the present occasion. If it were so, that would have been under the other (1) [1961] I S.C.R. 982. (2) Bom. (3) (1963)I.L.R. 193 provisions of the Code permitting joinder of parties and perhaps also of causes of action when instituting a suit, none of which was or could be pressed for our consideration. These provisions are "merely permissive and relate to what the plaintiff might do if he is so minded": Sri Mahant Prayaga Doss vs The Board of Commissioners for Hindu Religious Endowments, Madras.(1) That is not the case where addition of parties is sought under 0. 1, r. (10), sub rr. (1) and (2); such additions can only be made under the provisions of these sub rules only. For these reasons, I think that the order adding parties is insupportable. If that order goes, as it should, the decree which is in favour of the added parties cannot stand, for they are then strangers to the suit. As there is no decree in favour of Vijay Kumar and as in fact the suit considered as brought by him has been dismissed by both the courts below by the High Court with the tacit approval and there is no appeal by him, this appeal must be allowed. In this view of the matter, I do not feel called upon to deal with the other grounds advanced by Mr. Desai. I would allow the appeal and set aside the judgment of the High Court and restore that of the trial Court. The appellant will not get the costs in any of the courts below or this Court. Bachawat, J. On December 13, 1934 the appellant executed a mortgage in favour of one Tarabai, widow of Motilal Harakhanwala. Tarabai had three daughters, Mahabalkumari, Rajkumari and Premkumari. On July 16, 1948, Tarabai is said to have adopted Vijay Kumar as a son to her deceased husband. Vijay Kumar is the natural son of Mababalkumari. On April 23. 1952, Tarabai died. On February 10, 1954, Vijya Kumar claiming to be the adopted son and heir of Tarabai, instituted a suit for foreclosure of the mortgage executed in her favour. The appellant contested the suit. On December 30, 1955, the District Judge, Aurangabad dismissed the suit, holding that Vijay Kumar was not the adopted son and heir of Tarabai. Vijav Kumar preferred an appeal to the former High Court of Hyderabad. After the reorganisation of States, the appeal was transferred to the Bombay High Court. On an application made by Vijay Kumar on November 3, 1958, the High Court on November 4, 1958 made an order for addition of Mahabalkumari as plaintiff and Rajkumari and Premkumari as defendants to the suit and for consequential amendments of the plaint. After the addition of the parties, the appeal came up for final disposal before the High Court. At the hearing of the appeal, the respondents submitted that the question whether Vijay Kumar was the adopted son of Tarabai should not be decided in this litigation and a decree should be passed in favour of the added parties on the footing that they were the heirs of Tarabai. The High Court accepted this submission, set aside the finding of the trial Court on the question of the adoption of (1) Mad.41. 194 Vijay Kumar, dismissed the suit as brought by him and directed the trial Court to pass the usual preliminary decree in favour of Mahabalkumari, Rajkumari and Premkumari. The High Court held that the mortgage money fell due on February 9, 1943 and the suit being instituted within 12 years from this date, was not barred by limitation. The appellant now appeals to this Court on a certificate granted by the High Court. The main question in this appeal is whether the claim of Mahabalkumari, Rajkumari and Premkumari to enforce the mortgage is barred by limitation. The mortgage deed dated December 13, 1934 provided that the mortgage money would be payable in annual installments within a period of nine Fasli years, and in the event of non payment of five installments, the mortgagee would be entitled to recover the entire mortgage money. The appellant did not pay any of the installments. The High Court rightly held that the deed gave the mortgagee an option to enforce the mortgage in the event of non payment of five instalments. It was open to the mortgagee not to exercise this option. As the mortgagee did not exercise the option, the mortgage money fell due on the expiry of nine years, that is to say, on February 9, 1943, and limitation commenced to run from this date. On December 13, 1934 when the mortgage was executed and on February 9, 1943 when the mortgage money fell due, the Hyderabad Limitation Act was in force. By article 133 of the Hyderabad Limitation Act, the period of limitation for a suit by a mortgagee for foreclosure was thirty years from the date when the money secured by the mortgage became due. But as from April 1, 1951, the Hyderabad Limitation Act was repealed and the Indian Limitation Act, 1908 was extended to the State of Hyderabad by the Part B States (Laws) Act (Act III of 1951), Prima facie, the Indian Limitation Act, 1908 which was in force on the date of the institution of the suit was the law of limitation applicable to the suit. On behalf of the respondents, it was argued that by reason of the proviso to section 6 of the Part B States (Laws) Act, 1951, article 133 of the Hyderabad Limitation Act continued to apply to the suit. There is no substance in this contention. The respondents had no vested right in the law of procedure for enforcement of the mortgage. They did not acquire under article 133 of the Hyderabad Limitation Act any right or privilege as contemplated by the proviso to section 6 of the Part B States (Laws) Act, 1951. No doubt, article 132 of the Indian Limitation Act, 1908 abridged the period of limitation for the enforcement of the mortgage. But this abridgment did not impair or take away any vested right. Section 30 of the Indian Limitation Act, 1908 inserted by the Part B States (Laws) Act, 1951 made suitable provision safeguarding vested rights in cases where the period prescribed was shorter than that prescribed by the corresponding law previously in force in the Part B State. 195 It was argued on behalf of the respondents that article 147 of the Indian Limitation Act applied to the suit. We are unable to accept this contention. In Vasudeva Mudaliar vs K. section Shriniwas Pillai,(1) the Privy Council held that article 147 applied only to an English mortgage as defined in the Transfer of Property Act before its amendment in 1929, as, in respect of such a mortgage only, the mortgagee could sue for "foreclosure or sale. " That decision has never been questioned and we see no ground for differing from it. The deed dated December 13, 1934 created an anomalous mortgage and conferred a right of foreclosure only upon the mortgagee. The mortgagee had no right to sue for sale in the alternative. The present suit was for foreclosure only, and was governed by article 132 and not article 147. The suit would be barred by limitation if it were instituted on November 4, 1958 when Mahabalkumari, Rajkumari and Premkumari were added as parties to the suit. The question is whether the suit should be regarded as having been instituted on November 4, 1958 having regard to section 22(1) of the Indian Limitation Act, 1908. Section 22(1) reads: "Where, after the institution of a suit, a new plaintiff or defendant is substituted or added, the suit shall, as regards him, be deemed to have been instituted when he was so made a party. " Admittedly, the name of the original plaintiff is not a mis description of the names of Tarabai 's daughters. This is also not a case where a wrong defendant has been sued as representing the estate of a deceased person and subsequently the real representative is added as a defendant. Nor is this a case where a wrong plaintiff has sued in a representative capacity and the person whom he intended to represent was subsequently added as a plaintiff. This is a case where the original plaintiff sued in his own right and on his own behalf. No doubt, Vijay Kumar claimed the right to enforce the mortgage as the legal representa tive of Tarabai. But he made this claim on his own behalf and not as representing the daughters of Tarabai. Mahabalkumari must be regarded as a new plaintiff and Rajkumari and Premkumari must be regarded as new defendents and by reason of section 22(1) the suit must as regards them be deemed to have been instituted when they were made parties. In Moyappa Chetty vs Supramanian Chetty(2), the Privy Council had occasion to consider the similar provisions of section 22 of the Straits Settlements Ordinance No. 6 of 1896, which read: "When, after the institution of a suit, a new plaintiff or defendant is substituted or added, the suit shall as (1) L.R 34 I.A. 186 (2) (1)1916) LR, 43 1 A. 113,121. 196 regards him be deemed to have been instituted when he was so made a party. " Construing this section, Lord Parker of Waddington observed: "Their Lordships are of opinion that section 22 contemplates cases in which a suit is defective by reason of the person or one of the persons in whom the right of suit is vested not being before the Court. Section 133 of the Civil Procedure Code provides against the defence of a suit on this ground and enables the proper party to be added or substituted. If A is the right person to sue, it would be clearly wrong to allow him, for the sake of avoiding the Limitation Ordinance, to take advantage of a suit improperly instituted by B." Similarly, in this case the daughters of Tarabai cannot, for the purpose of avoiding the Limitation Act, take advantage of the suit improperly instituted by Vijay Kumar. In Subodini Devi vs Cumar Ganoda Kant Roy, Bahadur(1), the Calcutta High Court held that there was a difference between substituting a new person as plaintiff under section 27 of the Code of Civil Procedure, 1882 and the addition of a new person as defendant under section 32 of the Code and that the change of parties as plaintiffs did not affect the question of limitation. This decision was followed by Parsons, J. in Ravji vs Mahadev(2). But the learned Judges deciding those cases did not refer to section 22 of the Indian Limitation Act, 1877 and they a, ')pear to have completely overlooked that section. Section 22 males no distinction between sub r. (1) and sub r. (2) of 0. 1, r. 10. The section in express terms applies whenever a new plaintiff or a new defendant is substituted after the institution of a suit. The Court has power to add a new plaintiff at any stage of the suit, and in the absence of a statutory provision like section 22 the suit would be regarded as having been commenced by the new plaintiff at the time when it was first instituted. But the policy of section 22 is to prevent this result, and the effect of the section is that the suit must be regarded as having been instituted by the new plaintiff when he is made a party, see Ramsebuk vs Ramlall Koondoo(3). The rigorous of this law has been mitigated by the proviso to section 21 (1) of the Indian , which enables the Court on being satisfied that the omission to include a new plaintiff or a new defendant was due to a mistake made in good faith, to direct that the suit as regards such plaintiff or defendant shall be deemed to have been instituted on any earlier date. Unfortunately, the proviso to section 21(1) of the Indian has no application to this case, and we have no (1) (1887) I.J,. R. 14 caL. 400. (2) (1897) I.L.R. (3) (1881) I.T,. R. , 823 824. 197 power to direct that the suit should be deemed to have instituted On a date earlier than November 4, 1958. It follows that as regards Mahabalkumari, Rajkumari and Premkumari the suit must be regarded as instituted on November 4, 1958. As far as they are concerned, the suit is barred by limitation and no decree can be passed in their favour. The decree passed by the High Court in their favour cannot be sustained and must be set aside. We think that the High Court had power to join Mahabalkumari as a party plaintiff under 0. 1, r. 10 of the Code of Civil Procedure and to join Rajkumari and Premkumari as defendants under 0. 1, r. 10(2) and to allow consequential amendments of the plaint under 0. 6, r. 17. But having regard to the bar of limitation, the added parties are not entitled to obtain any relief. So far as Vijay Kumar is concerned, the suit as brought by him was dismissed by the High Court. There is no appeal by him. On his behalf, it was not contended that we should exercise in his favour our powers under 0. 41, r. 33 of the Code of Civil Procedure, or that we should set aside the decree of dismissal of the suit against him and remand the case to the High Court for decision of the question whether he is the adopted son and heir of Tarabai. Even if such prayer were made, on the facts of this case we would not be inclined to exercise our powers under 0. 41, r. 33 and to set aside the decree of the High Court as to the dismissal of the suit against him. In the result, the appeal is allowed, the decree passed by the High Court in favour of respondents Nos. 2,3 and 4, Mahabalkumari, Rajkumari and Premkumari, is set aside and the decree of the trial Court dismissing the suit is restored. The suit is dismissed. We direct that the parties will pay and bear their own costs in this Court and in the Courts below. Appeal allowed.

IN-Abs

The appellant executed a mortgage in 1934 in favour of the proprietrix of a firm in the State of Hyderabad. The mortgage amount became due in 1943. The first respondent, who was the daughter 's son of the mortgagee, claiming to be her adopted son. filed a suit for foreclosure of the mortgage, in 1954, after the death of the mortgagee. The trial Court dismissed the suit on the ground that the adop tion was not established. The first respondent appealed to the High Court and, pending the appeal, applied for adding his natural mother as a co plaintiff and her two sisters as defendants as they were not willing to join as plaintiffs, and sought consequential amendments in the plaint. The High Court granted the application under 0. 1, r. 10(1), Civil Procedure Code, on 4th November, 1958 and thereafter, disposed of the appeal by passing a preliminary decree for foreclosure in favour of the added parties. The High Court did not go into the question of adoption but dismissed the first respondent 's suit. HELD: (Per Sarkar, C.J.): The order adding parties cannot be supported under either sub r.(1) of sub r. (2) of 0. 1, r. 10. Sub r. (1) provided for addition of plaintiffs and could not therefore justify the addition of defendants. In the case of addition of parties under sub r. (2), the provisions of section 22 of the Limitation Act admittedly apply and under it in the present case, a suit by the added parties, on the date they were added, would have been barred. It would have been futile, therefore, to make an order under sub r. [190 G H; 191 D E] Ravji vs Mahadev 's case (I.L.R. doubted. There is no reason to think that section 22 of the Limitation Act does not apply to O.1, r. 10, sub r. [191 G] A person suing as the proprietor of a firm does not sue in a representative capacity. He sues in his personal capacity. [192 E F] Per Mudholkar and Bachawat JJ: The High Court bad power to join the co plaintiff under 0. 1, r. 10(1) and to join her sisters as defendants under 0. 1, r. (2), and to allow onsequential amendments of the plaint under 0. VI, r. 17, but, as regards the added parties, by reason of section 22(1) of the Indian Limitation Act, 1908. the suit must be regarded as instituted on the date on which they were added and was therefore barred by limitation. [197 C] In 1951, the Hyderabad Limitation Act was repealed and the Indian Limitation Act was extended to the State. The Indian Act abridged the period of limitation for the enforcement of the mortgage, 189 but did not impair or take away any vested right. Therefore, on the date of the institution of the suit, the law of limitation applicable was the Indian Act. [194 E F] The respondent, as the original plaintiff, sued in his own right and on his own behalf. Therefore, the parties added must be regarded as a new plaintiff and new defendant respectively. Section 22 of the Limitation Act in express terms applies whenever a new plaintiff or a new defendant is substituted under 0. 1, r. 10(1) or (2). The effect of the section is that the suit must be deemed to have been instituted by the new plaintiff when he was made a party. [196 E G] Ravji vs Mahadev, Bom. 672, disapproved. Since the suit in the instant case was for foreclosure only it was governed by article 132 of the Limitation Act and must be regarded as instituted in November 1958, beyond 12 years from the date when the mortgage money was due. [195 C] Vasudeva Mudaliar vs K. section Shriniwas Pillai I.L.R, 34 I.A. 186, applied.

Appeal No. 193 of 1964. Appeal from the judgment and decree dated May 13, 1960 of the Patna High Court in Appeal from Original Decree No. 132 of 1955 and order dated February 15, 1962 in M. J. C. No. 2 of 196 1. Sarjoo Prasad, section C. Sinha and B. P. Jha, for the appellants. section T. Desai and R. C. Prasad, for the respondents. The Judgment of the Court was delivered by Mudholkar, J. This is an appeal by certificate from a judg ment of the Patna High Court reversing that of the trial court dismissing the plaintiffs ' suit for partition and separate possession of their half share in a house and for payment of compensation from May 2, 1947 to September 11, 1951 at the rate of Rs. 200/p.m. with interest and for payment of compensation at the same rate from the date of suit till the recovery of possession of their, share in the house. The facts which are not disputed before us are these: The property in dispute which is situate within the limits of the municipality of Bhagalpur was purchased jointly by five persons, Juri Mal, Gajanand, Ramasahai Sah, Jahuri Sah and Ramgali Sah. The first two of these are father and son (and were members of a joint Hindu family). Both of them are dead. Plaintiffs 1 to 4 are the sons and plaintiff 6 is the widow of Gajanand and plaintiff No. 5 is the widow of Jurimal. Jurimal, Gajanand (constituted a joint Hindu family) and plaintiffs 1 to 4 constituted a joint Hindu family. Ramsahai, Jahauri Sah and Ramgali were brothers and were members of a joint Hindu family. Jahuri Sah is defendant No. and Ramgali Sah is defendant No. 2. They, along with the remaining defendants, are members of a joint Hindu family of which Jahauri Sah is the karta. The property in question was purchased by the two joint families, each family having half interest therein. The date of the transaction was June 26, 1942. At the time of the purchase of the property it was in the possession of Mohanlal Marwari as a tenant. He was evicted therefrom by a decree of the court and hereafter it was let out to Government, the compensation having been settled at Rs. 100/ per mensem. The Government vacated he house after some time whereafter the defendants occupied the 120(a) 282 house excepting a portion thereof which was in the occupation of Isri Sah and Shib Charan Sah as tenants paying a monthly rent of Rs. 30 Half of this rent was being realised by each family. According to the plaintiffs when the defendants entered into possession of the property they agreed to pay Rs. 200/ per mensem as compensation to the plaintiffs ' family with respect to their half share in the property. They, however, did not pay any compensation to the plaintiffs despite the agreement. On these allegations the plaintiffs instituted their suit. In the plaint they stated that Gajanand had another son named Shankarlal but he was given in adoption to Sreelal, P. W. 6 and he was, therefore, not joined as party to the suit. The defendants denied the claim and stated that the suit was barred by the provisions of the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947 (Bihar Act 3 of 1947) (hereafter referred to as the Act) as well ' as by the rule of estopping. They also raised the plea that under the contract entered into between the two families Rs. 501 p.m. was payable as compensation and not Rs. 200/ p.m. as alleged by the plaintiffs. According to them the suit was barred by the rule of estoppel. They contended that the claim for compensation for a period prior to the expiry of 3 years from the date of suit was barred by time. They also raised some other contentions in the written statement but it is unnecessary to refer to them inasmuch as we must confine ourselves to the points urged before us by Mr. Sarjoo Prasad on their behalf. The points are: (1) that the suit for partition and separate possession was not maintainable , and (2) that the contract under which the plaintiffs claimed compensation is not enforceable. The, suit is said to be not maintainable because (a) one of the co owners of the property was not joined as a party to the suit and, (b) also because it was barred by the Act. The contract for payment of compensation was said to be not. enforceable as there was no ouster of the plaintiffs by the defendants. The trial court held that the provisions of the Act applied and by virtue of those provisions the plaintiffs were not entitled to a decree for eviction of the defendants nor were they entitled to a decree for, compensation and that the adoption of Shankarlal not having been proved the suit as constituted was not maintainable. On this point, the High Court arrived at different conclu sions. The view, taken by the High Court was that the provisions of the Act did not apply to this cage, that the defendants not having specifically denied the fact of adoption and no issues thereon having been raised the trial court erred in holding that the adoption was not proved and that non joinder of Shankarlal was not an impediment to the institution of the suit. Further 283 according to the High Court the contract to pay compensation at the rate of Rs. 200/ p.m. was duly established and that as it was competent to a civil court to enforce the contract the suit for recovery of arrears of compensation was maintainable. The High Court accepted the defendants ' contention that the claim for arrears must be limited to a period of three years prior to the institution of the suit. It allowed interest on the arrears at 6% p.a. and decreed the claim of the plaintiffs for partition and for arrears of compensation. The plaintiffs then moved the High Court under section 151 read with O.XX, r. 18, Code of Civil Procedure for granting them appropriate relief with respect to their claim for compensation, for use and occupation of the house from the date of suit till delivery of possession of their share after passing the final decree. The High Court allowed this application and directed that the plaintiffs shall also be entitled to compensation from the date of institution of the suit until recovery of physical possession of their share after partition or until the expiry of three years from the date of its decree, whichever event first occurs. It also made an appropriate order regarding costs. Aggrieved by this decree of the High Court as amended by its subsequent order upon the plaintiffs ' application under section 151 read with O.XX, r. 18, C.P.C. the defendants have come up to this Court. In our opinion the High Court was right in holding that the Act is inapplicable to this case. The plaintiffs and defendants were admittedly co owners of the property. As the property had not been partitioned it was open to either or both the parties to occupy it. The defendants occupied the property except a small portion which was in possession of the tenants. The plaintiffs acquiesced in it because of an agreement between the parties that the defendants would pay Rs. 200/ p.m. as compensation to them. The defendants did not dispute that there was an agreement about payment of compensation between the parties but their plea was that the amount agreed to was Rs. 501 p.m. and not Rs. 200/ p.m. Their contention in this behalf was rejected by the High Court which accepted the plaintiffs ' contention that the amount was Rs. 200/ p.m. This part of the High Court 's judgment is not challenged before us by Mr. Sarjoo Prasad. He, however, challenged the finding of the High Court that the claim to compensation was enforceable. But before we deal with this matter it would be appropriate to deal with the reasons given by him in support of the contention that the suit was not maintainable. He reiterated the argument urged before the trial court based upon the non joinder of Shankarlal as a party to the suit. According to him, as Shankarlal 's adoption his not been established by the plaintiffs he was also a co owner of the property 284 and his non joinder as a party to the suit rendered the suit incompetent. The High Court has pointed out that the plaintiffs have clearly stated in para 1 of the plaint that Shankarlal had been, given in adoption to Sreelal. In neither of the two written statements filed on behalf of the defendants has this assertion of fact by the plaintiffs been specifically denied. Instead, What is stated in both these written statements is that the defendants have no knowledge of the allegations made in para 1 of the plaint. Bearing in mind that O.VIII, r. 5, C.P.C. provides that every allegation of fact in the plaint, if not denied specifically or by necessary implication or stated to be not admitted in the pleading of the defendant shall be taken to be admitted, to say that a defendant has no knowledge of a fact pleaded by the plaintiff is not tantamount to a denial of the existence of that fact, not even an implied denial. No specific issue on the question of adoption was, therefore, raised. In the circumstances the High Court was right in saying that there was no occasion for the parties to lead any envidence on the point. However, Sreelal who was examined as a witness on behalf of the plaintiffs has spoken about the fact of adoption and his statement can at least be regarded as prima facie evidence of adoption. It is true that he admits the existence of a deed of adoption and of its non production in the court. This admission, however, would not render oral evidence inadmissible because it is not by virtue of a deed of adoption that a change of status of a person can be effected. A deed of adoption merely records the fact that an adoption had taken place and nothing more. Such a deed cannot be likened to a document which by its sheer force brings a transaction into existence. It is no more than a piece of evidence and the failure of a party to produce such a document in a suit does not render oral evidence in proof of adoption inadmissible. We, therefore, agree with the High Court that the plaintiffs ' suit for partition of their half share in the property was not incompetent because Shankarlal was not made a party thereto. We will now deal with the other ground urged by Mr. Sarjoo Prasad in support of his contention that the suit is not maintainable. Under sub section (2) of section II of the Act as it stood on the date of the suit a claim for eviction of a tenant or a claim for recovery of possession of a building and claim for rent thereof had to be made before the Rent Controller alone and consequently the jurisdiction of the civil court for the enforcement of such claims was ousted. But, for the provisions of this section to apply, the relationship between the plaintiff and the defendant should be that of a landlord and tenant. If they are co owners of the property and the property is held by them as tenants in common no question of relationship of landlord and tenant comes into being as between them. The common case of the parties is that they are in fact co owners of the property and the respective 285 shares of the two families have not been demarcated. They, therefore, continue to be tenants in common. It is true that the entire property (save a small portion which was in possession of tenants) is in the actual occupation of the defendants which means that they are in occupation not only of their share in the property but also of the plaintiffs ' share. That fact, however, would not make them tenants of the plaintiffs. Under the law each tenantin common is entitled to the possession of the entire property, that is, to every part of it though its right to possession is limited to the extent of the share in the property. The mere fact that the defendants agreed to pay compensation to the plaintiffs for their occupation of the entire property (ignoring the portion in possession of the tenants) would not bring into existence a relationship of landlord and tenant. By this agreement, the parties never intended to constitute a relationship of landlord and tenant between the defendants and their co owners. The provisions of the Act are, therefore, inapplicable. The second ground urged by Mr. Sarjoo Prasad, therefore, fails. What we have to consider then is whether the contract for payment of compensation is not enforceable. It is no doubt true that under the law every co owner of undivided property is entitled to enjoy the whole of the property and is not liable to pay compensation to the other co owners who have not chosen to enjoy the property. It is also true that liability to pay compensation arises against a co owner who deliberately excludes the other co .owners from the enjoyment of the property. It does not, however, follow that the liability to pay compensation arises only in such a case and no other. Co owners are legally competent to come to any kind of arrangement for the enjoyment of their un divided property and are free to lay down any terms concerning the enjoyment of the property. There is no principle of law which would exclude them from providing in the agreement that those of them as are in actual occupation and enjoyment of the property shall pay to the other co owners compensation. No authority was cited by learned counsel in support of his contention that ouster of a co owner is a sine qua non for enabling him to claim com pensation from the co owner who is in occupation and enjoy ment of common property. We, therefore, reject the contention. In the circumstances, therefore, we dismiss the appeal with costs. Appeal dismissed.

IN-Abs

Two Hindu undivided families one of them being represented by the appellants and the other by the respondents were co owners of a house which was Purchased by them jointly. The appellants occupied a major portion of the house on an agreed compensation being payable by them to the respondents in respect of the latter 's share occupied by them. On the compensation not being paid as agreed, the respondents filed a suit for its recovery, as well as for partition. In the plaint one S was mentioned as having been adopted out of the plaintiff family and for that reason he was not impleaded. The appellants resisted the suit on the grounds that: (i) S had not been impleaded although a co owner, (ii) the suit was barred by the Bihar Building (Lease, Rent and Eviction) Control Act, 1947 (Bihar Act 3 of 1947), and (iii) the contract for payment of compensation was not enforceable as there was no ouster of the plaintiffs by the respondents. The trial court decided in favour of the appellants but the High Court held against them. They came to this Court by special leave. HELD: (i) The suit was not incompetent because S was not made a party thereto. The fact of adoption was stated in the plaint and had not been specifically denied by the appellants in their written statements. No specific issue on the question of adoption was raised and it could not be therefore argued that S 's adoption had not been established. [284 A B, F] Oral evidence of the fact of adoption did not become inadmissible merely because the existence of a deed of adoption was admitted. A deed of adoption merely records the fact that an adoption had taken place and nothing more. Such a deed cannot be likened to a document which by its sheer force brings a transaction into existence. [284 D E] (ii) The mere fact that the defendants agreed to pay compensation to the Plaintiffs for their occupation of the plaintiff 's share would not bring into existence a relationship of landlord and tenant. By this agreement the parties never intended to Constitute a relationship of landlord and tenant between the defendants and their co owners. Bihar Act 3 of 1947 was therefore inapplicable and the suit could not be said to be barred under its provisions, [285 C] 281 (iii) Co owners are legally competent to come to any kind of agreement for the enjoyment of their undivided property and are free to lay down any terms covering the enjoyment of the property. Ouster of a co owner is not a sine qua non for enabling him to claim compensation from the co owner who is in occupation and enjoyment of common property. [285 E F]

Appeal No. 265 of 1964. Appeal from the judgment and order dated August 7, 1962 of the Andhra Pradesh High Court in Appeal Suit No. 312 of 57. F. Babula Reddy, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the appellants. P. Rama Reddy and A. V. V. Nair, for respondent No. 1. T.V. R. Tatachari, for respondent No. 2. In the village of Varagali, in the district of Nellore, there is a temple in which is enshrined the idol of Sri Kodandaramaswami. The temple was built in the middle of the last century by one Burla Rangareddi who managed the affairs of the temple and its properties during his life time. After his death his son, Venkata Subbareddi is in management. By a deed dated August 19 1898 Venkata Subbareddi relinquished his interest in ' the properties in favour of one Vemareddi Rangareddi whose family members are defendants 1 to 5. The plaintiff filed a petition before the Assistant Commissioner , for Hindu Religious Endowments, Nellore, alleging mismanagement of the temple and its properties by the first defendant. Notice was issued to the 1st defendant to show cause why the temple properties ghould not be leased out in public auction and the first, defendant contested the application alleging that the properties were not the properties of the temple but they belonged to his family. After enquiry, the Assistant Commissioner submitted a report to the Hindu Religious Endowments Board, Madras, recommending that a scheme of 'Management may be framed for the administration of the. temple and its properties. The Board thereafter commenced I proceedings for settling a scheme and issued notice to the 1st defendant to state his objections. The 1st defendant reiterated his plea that the temple was not a public temple. The Board held an enquiry and by its order dated October section 1949 held that the temple was a public one. On January 18, 1950 the 1 st defendant filed O.P. No. 3 of 1950 on the file of the District Judge; Nellore (1) for setting aside the order of the Board 'dated 272 October 5, 1949 declaring the temple of Sri Kodandaramaswamiwari as a temple defined in section 6, cl. 17 of the Act, (2) for a declaration that the temple was a private temple and (3) for a declaration that the properties set out in the schedule annexed to the petition were the personal properties of his family and they did not constitute the temple properties. Originally, the Commissioner. Hindu Religious Endowment Board, Madras was impleaded as the sole respondent in the petition. The present plaintiff later on got himself impleaded as the 2nd respondent therein. Both the respondent$ contested the petition on the ground that the temple was a public temple and that the properties mentioned in the schedule were the properties of the temple and not the personal properties of the 1st defendant. For reasons which are not apparent on the record the petition was not disposed of for a number of years. In the meantime Madras Act II of 1927 was repealed and the Hindu Religious and Charitable Endowments Act of 1951 was enacted. Then came the formation of the State of Andhra Pradesh. By reason of these changes the Commissioner of Hindu Religious Endowments in the State of Andhra Pradesh was impleaded as the 1st respondent to the petition. Thereafter, there was a compromise between the petitioners 1 to 5 on the one, hand and the Commissioner, the 1st respondent on the other. The District Judge, Nellore recorded the compromise and passed a decree in terms thereof by his order dated October 28, 1954, The material clauses of the compromise decree, exhibit B 11 are as follows '. That Sri kodandaramaswami temple, Varagali, be and hereby is declared as a temple as defined in section 6. clause 17 of the Hindu Religious and Charitable Endowments Act; 2. That petitioners 1 to 4 be and hereby are, declared as the present hereditary trustees of the said temple. That the properties set out in schedule A filed herewith be and hereby are, declared as the person proper. ties of the family of the petitioners subject to a charge as slow below; 4. That petitioners 1 to 4 their heirs, successors administrators and assignees do pay to the said temple for its maintenance 12 1/2 putties of good Mologolukulu paddy 6001 every year by the 31st of March; 5. That the said 121 putties of good Mologolukulu paddy and Rs. 600/ due every year be a charge on the lands mentioned in Schedule A given hereunder; 6. That the petitioners 1 to 4 and their heirs and assignees be liable to pay 12 1/2 putties of Molo 273 golukulu paddy and Rs. 600 every year whether the lands yield any income or not. That the H. R. & C. E. Commissioner be. entitled to associate non hereditary trustees not exceeding two. .whenever they consider that such appointment is necessary and in the interests of the management. That the Managing trustee shall be one of the four hereditary trustees or their successors in title only and not the non hereditary trustees; 15. That the right of the 2nd respondent to agitate the matter by separate proceedings will be unaffected by the terms of this compromise to which he is not a party. " It is apparent from the terms of the compromise decree that the temple was declared to be a public temple as defined in section 6, cl,. 17 of the Hindu Religious and Charitable Endowments Act and that the properties set out in Sch. A annexed to the compromise petition were declared, to, be the personal properties of defendants 1 to. section The, decree created a liability on their part to deliver to the temple for its maintenance 121 putties of paddy and pay Rs. 600/ cash every year. The Present suit was instituted on October 3 1. 1955 for a declaration that the provision in the compromise. decree that the lands mentioned in the schedule were the personal properties of defendants 1 to 5 and not the absolute properties of the temple, was not valid. and binding on the temple. Defendants 1 to 5 objected, to the suit on the ground that it was not open to the plaintiff to seek a declaration that a Part of the decree was not binding but the plaintiff should have directed his attack against the ,entirety of the decree. The trial court dismissed the suit on the ground that the suit was defective and that section 93 of. the Hindu Religious and, Charitable Endowments Act of 1951 was a bar to the institution of the suit. Against the decree of the trial court the plaintiff preferred an appeal A S, 312 of 1957 to the High Court of Andhra Pradesh. plaintiff also filed C.M.P. no; 6422 of 1962 praying for amendment of the plaint the effect that the compromise decree in O. P. No. 3 of 1950 was not valid and binding on the temple. After hearing defendants 1 to.5 the High Court allowed the amendment sought for: by the plaintiff and held that the amendment cured the defect with regard to the prayer for a declaration to have the compromise decree set aside partially. The High Court further held that section 93 of the Hindu. Religious and Charitable Endowments Act was not a bar to the suit and ' section 42 of the Specific Relief Act ' was not exhaustive and the suit was therefore maintainable. In the result, the High Court "owed the appeal and remanded the suit to the trial court for disposing the same on the remaining issues. 274 It was contended, in the first place, on behalf of the appellants that declaratory suits are governed exclusively by section 42 of the and if the requirements of that section are not fulfilled no relief can be granted in a suit for a mere declaration. It was submitted that the plaintiff must satisfy the court, in such a suit, that he is entitled either to any legal character or to any right in any property. It was argued for the appellants that the plaintiff has brought the suit as a mere worshiper of the temple and that he has no legal or equitable right to the properties of the temple which constitute the subject matter of the suit. It was pointed out that the plaintiff has not asked for a declaration of his legal character as a worshiper of the temple but he has asked for the setting aside of the compromise decree in O. P. No. 3 of 1950 with regard to the nature of the temple properties. It was contended that in a suit of this description the conditions of section 42 of the are not satisfied and the suit is, therefore, not maintainable. The first question to be considered in this appeal is whether the suit is barred by the provisions of section 42 of the which states: "42. Any person entitled to any legal character, or to any right as to any property, may institute a suit against any person denying, or interested to deny, his title to such character or right, and the Court may in its discretion 'make therein a declaration that he is so entitled, and the plaintiff need not in such suit ask for any further relief: Provided that no Court shall make any such declaration where the plaintiff, being able to seek further relief than a mere declaration of title, omits to do so. Explanation A trustee of property is a 'person interested to deny ' a title adverse to the title of some one who is not in existence, and for whom, if in existence, he would be a trustee. " The legal development of the declaratory action is important. Formerly it was the practice in the Court of Chancery not to make declaratory orders unaccompanied by any other relief. But in exceptional cases the Court of Chancery allowed the subject to sue the Crown through the Attorney General and gave declaratory judgments in favour of the subject even in cases where it could not give full effect to its declaration. In 1852 the Court of Chancery Procedure Act was enacted and it was provided by section 50 of that Act that no suit should be open to objection on the ground that a merely declaratory decree or order was sought thereby, and it would be lawful for the court to make binding declarations of right without granting consequential relief. By section 19 of Act VI of 1854, section 50 of the Chancery Procedure Act was transplanted to India and made applicable to the Supreme Courts. With regard to courts other than the courts established by Charters the procedure was codified in India for the first time by the Civil Procedure Code, 275 1859, where the form of remedy under section 19 of Act VI of 1854 was incorporated as section 15 of that Act which stood as follows: "No suit shall be open to objection on the ground that a merely declaratory decree or order is sought thereby, and it shall be lawful for the civil Courts to make binding declarations of right without granting consequential relief. " In 1862 the provisions of the Civil Procedure Code of 1859 were extended to the courts established by Charters when the Supreme Courts were abolished and the present High Courts were established. In 1877 the Civil Procedure Code, 1859 was repealed and the Civil Procedure Code of 1877 was enacted. The provision regarding declaratory relief was transferred to section 42 of the which was passed in the same year. This section which is said to be a reproduction of the Scottish action of declaratory, has altered and to some extent widened the provisions of section 15 of the old Code of 1859. It was argued on behalf of the appellants that, in the present case, the plaintiff was suing as a worshiper of the temple and that he was not suing as a person entitled to any legal character, or to any right as to any property and so the suit was barred by the provisions of section 42 of the . Upon this argument we think that there is both principle and authority for holding that the present suit is not governed by section 42 of the . In Fischer vs Secretary of State for India in Council, (1) Lord Macnaghten said of this section: "Now, in the first place it is at least open to doubt whether the present suit is within the purview of section 42 of the . There can be no doubt as to the origin and purpose of that section. It was intended to introduce the provisions of section 50 of the Chancery Procedure Act of 1852 (15 & 16 Vict. c. 86) as interpreted by judicial decision. Before the Act of 1852 it was not the practice of the Court in ordinary suits to make a declaration of right except as introductory to relief which it proceeded to administer. But the present suit is one to which no objection could have been taken before the Act of 1852. It is in substance a suit to have the true construction of a statute declared and to have an act done in contravention of the statute rightly understood pronounced void and of no effect. That is not the sort of declaratory decree which the framers of the Act had in their mind. " In Pratab Singh vs Bhabuti Singh,(1) the appellants sued for a declaration that a compromise of certain preemption suits and decrees passed thereunder made on their behalf when they were (1) 26 I.A. 16. (2) 40 I.A. 182. 276 minors were not binding on them, having been obtained by fraud and in proceedings in which they were practically unrepresented. The Subordinate Judge having decreed the suit on appeal the memo bers of the Court of the Judicial Commissioner differed upon the question whether the declaration sought should be refused as a matter of discretion under section 42 of the . Before the Judicial Committee it was contended for the, respondent that the suit having been filed for the purpose of obtaining a declaratory decree only was bad in form inasmuch as it did not pray that the decree should be set aside; but that, assuming that it was rightly framed in asking only for a declaratory decree, the Court had a discretion as to the granting or refusing such a declaration. The Judicial Committee observed that section 42 of the did not apply to the case and that it was not a question of exercising a discretion under that section; and they gave to the appellant a decree setting aside the decree complained of and declaring that the agreement of compromise and the decree complained of were not binding upon the appellants or either of them and that they were entitled to such rights as they had before the suit was dismissed on December 15, 1899. It appears to us that a decree of the character which has been sought by the plaintiff in this case is not one as to which the additional powers conferred by the Act of 1852 were required I by the Court of Chancery. The injury complained of was that the Court has, by recording the compromise in O.P. No. 3 of 1950, deprived the deity of its present title to certain trust properties. The relieve which the plaintiff seeks is for a declaration that the compromise decree was null and void and if such a declaration is granted the deity will be restored to its present rights in the trust properties. A declaration of this character, namely, that the compromise decree is not binding upon the deity is in itself a substantial relief and has immediate coercive effect. A declaration of this kind was the subject matter of appeal in Fischer vs Secretary of State for India in commercil(1) and falls outside the purview of section 42 of the and will be governed by the general provisions of the Civil Procedure Code like section 9 or 0. 7, r. 7. On behalf of the respondents reliance was placed on the decision of the Judicial Committee in Sheoparsan Singh vs Ramnandan Prasad Singh(1). In that case, the plaintiffs had prayed for a declaration that a will, probate of which had been granted was not genuine and the Judicial Committee pointed, out that under section 42 a plaintiff has to be entitled to a legal character or to a rig It, as to property and that the plaintiffs could not predicate this of themselves as they described themselves in the plaint as entitled to the estate in case of an intestacy, whereas, as things stood, there was no intestacy, since the will had been affirmed by a Court exercising 26 I.A. Cal. 694 (P.C.) 277 appropriate jurisdiction. The suit was, indeed, nothing more than an attempt to evade or annul the adjudication in the testamentary suit. The suit was held to fail at the very outset because the plaintiffs were not clothed with a legal character or title which would authorise them to ask for the declaratory decree sought by their plaint. There is no reference in this case to the previous decision of the Judicial Committee in Fischer vs Secretary of State for India in Council(1). In our opinion, the decision of the Judicial Committee in Sheoparsan Singh vs Ramnandan Prasad Singh(1) should be explained on the ground that the will which was sought to be avoided had been affirmed by a Court exercising appropriate jurisdiction and as the propriety of that decision could not be impeached in subsequent proceedings, the plaintiffs could not sue, not being reversions. The legal position is also well established that the worshipper of a Hindu temple is entitled, in certain circumstances, to bring a suit for declaration that the alienation of the temple properties by the de jure Shebait is invalid and not binding upon the temple. if a Shebait has improperly alienated trust property a suit can be brought by any person interested for a declaration that such alienation is not binding upon the deity but no decree for recovery of possession can be made in such a suit unless the plaintiff in the suit has the present right to the possession. Worshippers of temples are in the position of cestuui que trustent or beneficiaries in a spiritual sense (See Vidhyapurna Thirthaswami vs Vidhyanidhi Thirthanswami (3). Since the worshippers do. not exercise the deity 's power of suing to protect its own interests, they are not entitled to recover possession of the property improperly alienated by the Shebait, but they can be granted a declaratory decree that the alienation is not binding on the deity (See for example, Kalyana Venkataramana Ayyangar vs Kasturiranga Ayyangar(4) and Chidambaranatha Thambiran vs Nallasiva Mudaliar)(5). It has also been decided by the Judicial Committee in Abdur Rahim vs Mahomed Barkat Ali(3) that a suit for a declaration that property belongs to a wakf can be maintained by Mahomedans interested in the wakf without the sanction of the Advocate General, and a declaration can be given in such a suit that the plaintiff is not bound by the compromise decree relating to wakf properties. In our opinion, section 42 of the is not exhaustive of the cases in which a declaratory decree may be made and the courts have power to grant such a decree independently of the requirements of the section. It follows, therefore, in the present case that the suit of the plaintiff for a declaration that the compromise decree is not binding on the deity is maintainable as falling outside the purview of section 42 of the . (1) 20 I.A. 16. (2) I.L.R.43 Cal. 694 (P.C) (3) I.L.R.27Mad.435, Mad. 212. (5) I.L.R. (6) 55 I.A. 96. 278 The next question presented for determination in this case is whether the compromise decree is invalid for the reason that the Commissioner did not represent the deity. High Court has taken the view that the Commissioner could not represent the deity because section 20 of the Hindu Religious & Charitable Endowments Act provided only that the administration of all the endowments shall be under the superintendence and control of the Commissioner. Mr. Babula Reddy took us through all the provisions of the Act but he was not able to satisfy us that the Commissioner had authority to represent the deity in the judicial proceedings. It is true that under section 20 of the Act the Commissioner is vested with the power of superintendence and control over the temple but that does not mean that he has authority to represent the deity. ;in proceedings before the District Judge under section 84(2) of the Act. As a matter of law the only person who can represent the deity or who can bring a suit on behalf of the deity is the Shebait, and although a deity is a juridical person capable of holding property, it is only in an ideal sense that property is so held. The possession, and management of the property with the right to sue in respect thereof are, in the normal course, vested in the Shebait, but where, however, the Shebait is negligent or where the Shebait himself is the guilty party against whom the deity needs relief it is open to the worshippers or other persons interested in the religious endowment to file suits for the protection of the trust properties. It is open. in such a case, to the deity to file a suit through some person as next, friend for recovery of possession of the property improperly alienated or for other relief. Such a next friend may be a person who is a worshipper of the deity or as a prospective Shebait is legally interested in the endowment. In a case where the Shebait has denied: the right of the deity to the dedicated properties, it is obviously desirable that the deity should file the suit through a disinterested next friend, nominated by the court. The principle is clearly stated in Pramath Nath vs Pradymna Kumar.(1) That was a suit between con tending shebaits about the location of the deity, and the Judicial Committee held that the will of the idol on that question must be respected, and inasmuch as the idol was not represented otherwise than by shebaits, it ought to appear through a disinterested next friend appointed by the Court. In , the present case no such action was taken by the District Court in O. P. No. 3 of 1950 and as there was no representation of the deity in that judicial proceeding it is manifest that the compromise decree cannot be binding upon the deity. It was also contended by Mr. P. Rama Reddy on behalf of respondent No.: I that the compromise decree was beyond the, scope of the proceedings in O.P. No. 3 of 1950 and was, therefore, in. valid. In our opinion, this argument is well founded and must prevail. The proceeding was brought under section 84(2) of the old Act (Act II of 1927) for setting aside the order of the Board dated October 5, 1949 declaring the temple of Sri Kodandaramaswami as a temple (1) I.L.R. C.) 279 defined in section 6. 17 of the Act and for a declaration that the temple was a private temple. After the passing of the new Act, namely Madras Act 19 of 1951, there was an amendment of the original petition and the amended petition included a prayer for a further declaration that the properties in dispute are the personal properties of the petitioner 's family and not the properties of the temple. Such a declaration was outside the purview of section 84(2) of Madras Act 11 of 1927 and could not have been granted. We are, therefore, of the opinion that the contention of respondent No. is correct and that he is entitled to a declaratory decree that the compromise decree in O.P. No. 3 of 1950 was not valid and was not binding upon Sri Kodandaramaswami temple. We have gone into the question of the validity of the compromise decree because both the parties to the appeal invited us to decide the question and said that there was no use in court remanding the matter to the trial court on this question and the matter will be unduly protracted. For the reasons expressed, we hold that the decree passed by the trial court should be set aside and the plaintiff respondent No. I should be granted a declaratory decree that the compromise decree in O.P. No. 3 of 1950 on the file of the District Court Nellore is not valid and binding on Sri Kodandaramaswami temple. Subject to this modification, we dismiss this appeal. The parties will bear their own costs throughout. Appeal dismissed.

IN-Abs

The appellants filed an original petition in the District Court under section 84(2) of the Madras Hindu Religious Endowments Act, 1927 for setting aside an order of the Endowments Board that a temple was a public temple and for a declaration that it was a private temPle. The Commissioner of the Endowments 'Board and: a worshippewere the contesting respondents to the petition. Pending its dispo sat the 1927 Act was repealed by the Hindu Religious and Charles ble Endowments Act of 1951. After the passing of the new Act the petition was amended by the addition of a prayer for a further dec laration that the properties in dispute were the personal property of the appellants ' family. Thereafter, a compromise decree between the appellants and the Commissioner wag passed. by which it was declared that the temple was a public temple, that the properties were the personal properties of the appellants but that the appeal ants were liable to make annual payments in cash and kind to the temple for its maintenance. 'The worshipper, who was not a part, to the compromise decree, filed the present suit for a declaration that the Compromise decree was not binding on the temple. On the questions whether: (i) the suit was not barred by the provisions of section 42 of the , and (ii) the compromise decree was invalid. HELD: (i) Section 42 of the is not exhaustive of the cases in which a declaratory decree may be made an courts have power to grant such a decree independently of the requirements of the section. The relief sought for in the present case ,was for a declaration that the compromise decree was null and voice Such a declaration is in itself a substantial relief and has imme diate coercive effect and the deity would be restored to its right in the trust properties. The suit fell outside the purview of section 4 and would be governed by the general provisions of the Civil Procedure Code and was therefore maintainable even though the worshiper was not suing as a person entitled to any legal character or the any, right as to any property as required by section 42 of the . [276 E; 277 F G] Case law referred to. (ii) The compromise decree was not valid and binding on the, temple, because, the deity was not a party to it through any representative. 271 Though under section 20 of the 1927 Act the Commissioner was ves ted with the power of superintendence and control over the temple, it does not mean that he has authority to represent the deity in proceedings before the District Judge under section 84(2) of the Act. Further, the compromise decree was beyond the scope of the proceedings, because, a declaration that the properties in dispute were the 'Personal. properties of the appellants ' family and not of the temple, was outside the purview of section 84(2). [278 A B, F, H]

minal Appeal No. 158 of 1965. Appeal from the judgment and order dated September 15, 1965 of the Bihar High Court in Criminal Revision No. 1326 of 1963. R. H. Dhebar, V. D. Mahajan and B. R. G. K. Achar, for the appellant. N. C. Chatterjee, Suprakash Bannerjee and Sukumar Ghose, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. The question of law presented for determina tion in this appeal is whether the respondent section K. Roy is the ,owner of a coal mine ' within the meaning of section 2(b) and 2(e) of the Coal Mines Provident Fund and Bonus Schemes Act, 1948 (Act 46 of 1948), hereinafter called the 'Act '. The respondent was prosecuted under para 70 of the Coal Mines Provident Fund Scheme (hereinafter called the 'Scheme ') 'for violation of cls. (a), (d) and (f) of paragraph 70 read with paragraphs 33A, 38, 42 and 69A of the Scheme. An Inspector appointed under the Act filed a complaint against the respondent alleging that he was the owner of the Bhowra Coke Plant and that he had contravened certain provisions of the Scheme. It was alleged that the respondent had failed 'to pay the contribution for the Provident, Fund, both employer 's and employees ' from April, 1960 to November, 1960 and had failed to submit returns in Form "H" with corresponding declaration in Form "A" and the statement in Form 'P ' as provided under the Regulations. The respondent was held guilty by the trying Magistrate and was sentenced to pay a fine of Rs. 500 and, in default, to undergo 3 months ' simple imprisonment under paragraph 70(a). The respondent went in appeal to the Sessions Judge, who dismissed the appeal and confirmed the sentence imposed by the Magistrate. The respondent filed a Revision Application in the Patna High Court which allowed the Revision Application and set aside the conviction and sentence imposed on the respondent holding that the Coke Plant owned by the respondent was not a Coal Mine within the meaning of the Scheme and that the Coke plant was not subject to the provisions of the Scheme and the respondent was not the owner of the mine within the meaning of the Act and the Scheme. The facts found or admitted in this case are: (1) The Bhowra Coke Plant originally belonged to the Bhowra Group of collieries owned by the Eastern Coal Company, but subsequently in or about the years 1945 to 1947 the Coke Plant was transferred by sale to the respondent, (2) The group of Bhowra Collieries was subsequently sold to the Bhowra Kankanee Collieries Limited, (3) The respondent is the owner of the Coke Plant and the lessee of the 261 land on which it stands on payment of certain royalty by way of the ground rent for the land, the lessor, at the relevant time, being the Bhowra Kankanee Collieries Limited owning the coal mine and coal field area, where the Bhowra Coal Mines are and the Coke Plant is situated, (4) The Coke Plant is not only adjacent to the coal mine but is also situated on the surface land, which forms part of the coal fields which and beneath which the coal mine is worked by the Bhowra Kankanee Collieries Ltd., (5) The respondent does not carry on the work of any coal mine therein, he does not excavate any coal by carrying on any operation for the purpose of obtaining coal, (6) The Coke Plant is a bye product coke plant in which hard coke as well as some other bye products are manufactured. The question to be considered is whether, in this state of facts, the respondent is the owner of a coal mine within the meaning of the Act and the Scheme. Under section 2(e) of the Act the expression "Employer" means "the owner of a coal mine as defined in clause (g) of section 3 of the Indian Mines Act, 1923". The Indian Mines Act, 1923 has been repealed and substituted by the (Act 35 of 1952). In the latter Act the word "owner" has been defined in cl. (1) of section 2. By virtue of section 8 of the General Clauses Act, the definition of the word "Employer" in cl. (e) of section 2 of the Act should be construed with reference to the definition of the word "owner" in cl. (1) of section 2 of Act 35 of 1952, which repealed the earlier Act and reenacted it (See also the decision of this Court in State of Uttar Pradesh vs M.P. Singh etc.(1).) According to section 2(1) of Act 35 of 1952 the word "owner", when used in relation to a mine, means " any person who is the immediate proprietor or lessee or occupier of the mine or of any part thereof and in the case of a mine the business whereof is being carried on by a liquidator or receiver, such liquidator or receiver. . . The expression "coal mine" is separately defined in cl. (b) of section 2 of the Act which reads as follows: " 2. (b) 'Coal mine ' means any excavation where any operation for the purpose of obtaining coal has been or is being carried on, and includes all works, machinery, tramways and sidings, whether above or below ground, in or adjacent to or belonging to a coal mine: Provided that it shall not include any part of the coal mine on which a manufacturing process is being carried on unless such process is a process for coke making or the dressing of minerals . " As a matter of construction it must be held that all works, machinery, tramways and sidings, whether above or below ground, in or adjacent to a coal mine will come within the scope and ambit of (1) ; 262 the definition only when they belong to the coal mine. In other words, the word "or" occurring before the expression "belonging to a coal mine" in the main definition has to be read to mean " and". Any other interpretation would lead to an anomalous and startling consequence. Any works, machinery, tramways and sidings which do not appertain to the coal mine in the sense of ownership cannot come within the meaning of the expression "coal mine" as given in the first part of cl. (b) of section 2 of the Act. They would come by way of subsidiary works, machinery or the like if they appertain to and belong to the coal mine in the sense of carrying on excavation work by doing the operation for the purpose of obtaining coal. Suppose, for example, in a coal field area, the lessee from the Government is working a mine, but the tramways and sidings have been set up by a railway company only for the purpose of transport of coal. It cannot be imagined that the owner of the tramways or railway siding is the owner of the coal mine within the meaning of the Act, for the legislature could not have intended that the work of transport of coal will, in itself, constitute the working of a coal mine within the meaning of the Act ' In our opinion, the expression "belonging to a coal mine" is the controlling expression governing all aspects of the activities of the coal mine within the definition of section 2(b) and all subsidiary things such as works, machinery, tramways and sidings are brought within the definition of the "coal mine" only if they appertain to the coal mine, that is to say, if they are under the same ownership. We are, therefore, of the opinion that in order to carry out the legislative intention it is necessary to substitute the conjunction " and" for the conjunction "or" in the definition of a "coal mine" in section 2(b) of the Act. It is legitimate, in this connection, to refer to the expanded definition of the word "coal mine" in section 2(b) of the Coal Mines Provident Fund and Bonus Schemes (Amendment) Act, 1965 (Act 45 of 1965) which reads as follows: "(2) for clause (b), the following clause shall be substituted, namely: (b) 'coal mine ' means any excavation where any operation for the purpose of searching for or obtaining coal has been or is being carried on, and includes (i) all borings and bore holes , (ii) all shafts, in or adjacent to and belong to a coal mine, whether in the course of being sunk or not; (iii) all levels and inclined planes in the course of being driven: 263 (v) all conveyors or aerial rope ways provided for bringing into or removal from a coal mine of coil or other articles or for the removal of refuse there from; (vi)all adits, levels, planes, machinery, works, railways, tramways and sidings, in or adjacent to and belonging to a coal mine; (vii).all Workshops situated within the precincts of a coal mine 'and under the same management and Used for purposes connected with that coal mine or a number of coal mines under the same management; (ix). all power stations for supplying electricity for the purpose of working the coal mine or a number of coal mines under the same management; (x) any premises for the time being used for depositing refuse from a coal mine, or in which any operation in connection with such refuse is being carried on, being premises exclusively occupied by the employer of the coal mine; (xiii). .any premises in or adjacent to and belonging to a coal mine, on which any plant or other machinery connected with a coal mine is situated or on which any process ancillary to the work of a coal mine is being carried on;" It should be noticed that in sub cl. (vi) it has been provided that the word "coal mine" includes all adits, levels, planes, machinery, works, railways, tramways and sidings in or adjacent to and belonging to a coal mine. Similarly, in cl. (vii) it includes "all workshops situated within the precincts or a coal mine and under the same management and used for purposes connected with that coal mine or a number of coal mines under the same management". Again, cl. (ii) of the amended section 2(b) states that the word "coal mine" includes "all shafts, in or adjacent to and belonging to a coal mine, whether in the course of being sunk or not". Similarly, cl. (xiii) of section 2(b) provides that the word "coal mine" includes "any premises in or adjacent to and belonging to a coal mine, on which any plant or other machinery connected with a coal mine is situated or on which any process ancillary to the work of a coal mine is being carried on". In our opinion, the change in the language of section 2(b) of the earlier Act brought about by the amending Act (Act 45 of 1965) was not meant to bring about a change Sup5CI 19 264 of law in this respect but was meant to fix a proper interpretation upon the earlier Act. It is a well recognised principle in dealing with matters of construction that subsequent legislation may be looked at in orderer to see what is the proper interpretation to be put upon the earlier Act where the earlier Act is obscure or ambiguous or readily capable of more than one interpretation. (See Ormond Investment Co. Ltd. Betts(1). For the reasons expressed, we hold that the respondent is not the owner of a coal mine within the meaning of section 2(b) of the Act and the High Court has rightly acquitted the respondent of the offence alleged against him under the Scheme. We accordingly dismiss this appeal. Appeal dismissed. at p. 166.

IN-Abs

The respondent owned a coke plant which originally belonged to a group of collieries but was later transferred to him. It was situated adjacent to a coal mine on the surface land which formed part of the coal fields beneath which the coal mine was worked. The respondent did not mine or excavate coal himself nor carry on any operation for the purpose of obtaining coal. His coke plant was a bye product Plant in which hard coke as well as some other byeproducts were manufactured. The respondent was prosecuted under para 70 of the Coal Mines Provident Fund Scheme issued under the Coal Mines Provident Fund and Bonus Schemes Act, 1948 (Act 46 of 1948) on a complaint that as an owner of a coal mine and an employer within the meaning of the Scheme, he had failed to pay certain contributions to the Provident Fund. Although he was convicted by the trying Magistrate and his appeal to the Sessions Judge dismissed, the High Court allowed a Revision Application and set aside the conviction. The question for consideration in the appeal to this Court was whether the respondent was an owner of a coal mine within the meaning of section 2 of the and therefore an employer as defined by Section 2(e) of Act 46 of 1948. The expression "coal mine" in Section 2(b) of the means "any excavation where any operation for the purpose of obtaining coal has been carried on and includes all works, machinery, tramways and sidings, whether above or below ground, in or adjacent to or belonging to a coal mine HELD: The respondent was not the owner of a coal mine within the meaning of Section 2(b) of the and the High Court had rightly acquitted him. [264 C]. The expression "belonging to a coal mine" is the controlling expression governing all aspects of the activities of the coal mine within the definition of section 2(b) and all subsidiary things such as works, machinery, tramways, and sidings are brought within the definition of the "coal mine" only if they appertain to the coal mine, that is to. say, if they are under the. same ownership. In order to carry out the legislative intention it is therefore necessary to substitute the conjunction "and" for the Conjunction "or" in the definition of a "coal mine" in section 2(b) of the Act. [262 D E]. Section 2(b) of the Coal Mines Provident Fund and Bonus Schemes (Amendment) Act, 1965 and Ormond Investment Co. Li mited vs Betts: , 156; referred to. 260

iminal Appeal No. 113 of 1965. Appeal from the judgment and order dated October 26, 1964 of the Allahabad High Court in Criminal Revision No. 803 of 1963. J. P. Goyal, for the appellants. O. P. Rana and Atiqur Rehman, for respondent No.1. section K. Mehta and K. L. Mehta, for respondent No., 2. B. R. L. lyengar and B. R. G. K. Achar, for the Intervener. The Judgment of the Court was delivered by Mudholkar, J. The only point which falls to be decided in this appeal by certificate granted by the High Court at Allahabad is whether the District Judge has jurisdiction under section 24 of the Code of Civil Procedure to transfer a reference made by a Magistrate to a particular civil court under section 146 of the Code of Criminal Procedure to another civil court. It arises this way. Proceedings under section 145, Cr. P.C. were initiated by a Magistrate on the basis of a report of a police officer to the effect that a dispute likely to cause a breach of the peace exists concerning a plot of land situate within the jurisdiction of the Magistrate between the parties mentioned in the report and praying for appropriate action under section 145 of the Code of Criminal Procedure. The learned Magistrate upon being satisfied about the possibility of a breach of the peace made a preliminary order under section 145, Cr. P.C., attached the property to which the dispute related and called upon the parties to adduce evidence in respect of their respective claims. In due course he recorded the evidence but he was unable to make up his mind as to which of the parties was in possession on the date of the preliminary order and within two months thereof. He, therefore, referred the case under section 146(1) of the Cr. P. C. to a civil court for decision, as to which of the parties was in possession at the material point of time and in the meanwhile directed that the attachment of the Property shall continue. The reference went to the court of the Munson within whose territorial jurisdiction the property was situate. But thereafter one of the parties Brij Gopal Binani, respondent No. 2 before us, made an application to the District Judge under section 24, C.P.C. for transfer of the case to some other. court. The, ground given was that in the execution case out of which proceedings under section 145, Cr. P.C. had arisen, the same Munsiff had. made an order against him depriving him of costs. The Munsiff having no objection to the transfer the District Judge ' transferred the case to the court of another Munsiff. The opposite parties, that. is, the appellants before us Ram Chandra Aggarwal and Kedar Prasad Aggarwal acquiesced in the order of transfer and did not raise any question as to the jurisdiction of the, transferee court to hear and decide the reference. Eventually evidence was led by both sides ' and a finding given by the transferee court. This finding was in favour 395 of the second respondent. After receiving the finding the I Magistrate heard the parties and held that it was the second respondent who was in possession at the relevant date and passed an order under section 145(6), Cr. P.C. pursuant thereto. A revision application was preferred by the appellants before the court of Sessions in which the objection was taken for the first time that the decision of the civil court was a nullity because it had no territorial jurisdic tion over the subject matter of the dispute. It was further contended that the District Judge had no jurisdiction to transfer the case and that consequently the ultimate order made by the learned Magistrate was a nullity. The learned Additional Sessions Judge who heard the revision application rejected these contentions on the ground that they were not raised earlier. The appellants then took the matter to the High Court in revision. The appellants rested their revision application on the sole ground that section 24, C.P.C. was not available in respect of a reference under section 146(1) Cr. P.C. and that, therefore, the proceedings subsequent to the transfer of the reference from the court of one Munsiff to that of another are a nullity. The High Court permitted the point to be urged. The attack was based upon two grounds: that the reference under section 146(1), Cr. P.C. was to a persona designata and that the provisions of section 24, C.P.C. were not available with respect to it. The second ground was that the proceeding before the civil court was not a civil proceeding within the meaning of section 141, C.P.C. The High Court negatived both the grounds on which the contention was based. On behalf of the appellants Mr. Goyal has reiterated both the contentions. In fairness to Mr. Goyal it must be said that his attack on the order of the District Judge transferring the case under section 24, C.P.C. was based more on the ground that the reference under section 146(1) Cr. P.C. is not a civil proceeding than on the ground that the reference was to a persona designata. However, as he did not wish to abandon the other point we must deal with it even though Mr. B. R. L. Iyengar who appears for the State conceded that a reference under section 146(1) is to a constituted court and not to a persona designata. In BalakrishnaUdayar vs Vasudeva Aiyar(1) Lord Atkinson has pointed out teh difference between a persona designata and a legal tribunal. The difference is in this that the "determinations of a persona designata are not to be treated as judgments of a legal tribunal". In the central Talkies Ltd. vs Dwarka Prasad(2) this 'Court has accepted the meaning given to the expression persona designata in Osborn 's Concise Law Dictionary. 4th edn. p. 263 as eta person who is pointed out or described as an individual, as opposed to a person ascertained as a member of a class, or as filling a particular characters Section 146(1) Cr. P.C. empowers a Magis 396 trate to refer the question as to whether any, and if so, which of the parties was in possession of the subject matter of dispute at. the relevant point of time to a civil court of competent jurisdiction. The power is not to refer the matter to the presiding Judge of a particular civil court but to a court. When a special or local law provides for an adjudication to be made by a constituted court that is, by a court not created by a special or local law but to an existing court it in fact enlarges the ordinary jurisdiction of such a court. Thus where a special or local statute refers to a constituted court as a court and does not refer to the presiding officer of that court the reference cannot be said to be to a persona designata. This question is well settled. It is, therefore, unnecessary to say anything more on this part of the case except that cases dealing with the point have been well summarised in the recent decision in Chatur Mohan vs Ram Behari Dixit.(1). Now, as to the argument based on the ground that the pro ceeding before the civil court is not a civil proceeding, Mr. Goyal 's contention is that since the proceeding before the criminal court under section 145 is a criminal proceeding any matter arising out of it, including a reference to a civil court, does not lose its initial character of a criminal proceeding. In support of his contention he has placed strong reliance upon the observations of Jagdish Sahai J., in Sri Sheonath Prasad vs City Magistrate, Varanasi. (2) In that case the learned Judge was called upon to consider the meaning of the expression "civil court of competent jurisdiction" occurring in section 146(1) of the Code of Criminal Procedure. It was contended before him that the competency of the court is to be determined not merely with respect to the territorial jurisdiction of the court but also with respect to its pecuniary jurisdiction. The question arose because it was contended before him that the finding on a question of possession was recorded by a civil court which though it had territorial jurisdiction over the subject matter of the dispute the value of the subject matter was in excess of the pecuniary jurisdiction of the court. In the course of his judgment the learned Judge has observed: "that a proceeding even on reference made to a civil court retains its old moorings and does not change its character from a criminal proceeding to a civil proceeding and does not become a proceeding in the suit. " Then he went on to point out that the criminal court still retains its jurisdiction because it could withdraw the reference from the civil court at any. time and also because the ultimate decision with the respect to the dispute between the parties was to be made by the Magistrate and not by the civil court. All this, according to the learned Judge, would show that the proceeding even: before the civil court would not be a civil proceeding.and the idea of pecuniary jurisdiction of a court being foreign to the Code of Criminal Procedure it was not necessary to (1) 1964 All. L. J. 256. (2) A.I.R. 1959 All. 467. 397 ascertain whether the court to which a reference was made under section 146(1) Cr. P.C. had pecuniary jurisdiction over the subject matter of the dispute or not. This ' decision ignores the vast 'body of authority which is to the effect that when a legal right is in dispute and the ordinary courts of the country are seized of such dispute the courts are governed by the ordinary rules of procedure applicable to them. Two of the decisions are Adaikappa Chettiar vs Chandrasekharca Theyar(1) and Maung Ba Thaw vs Ma Pin(1) and also a decision of this Court which proceeds upon the same view. Thus in South Asia Industries (P) Ltd. vs section B. Sarup Singh(1) it was held that where a statute confers a right of appeal from the order of a tribunal to the High Court without any limitation thereon 'the appeal to the High Court will be regulated by the practice and procedure obtaining in the High Court. We would also like to refer to the decision of this Court in Naravan Row vs Ishwarlal(1) in which it was held that there is no reason for restricting the expression "civil proceeding" only to those proceedings which arise out of civil suits or proceedings which are tried as civil suits. Though this decision was concerned with the meaning of the words "civil proceeding" used in article 133(1)(c) of the Constitution the reasoning behind it sufficiently repels the extreme contention of Mr., Goyal that a proceeding stemming from a criminal matter must always bear the stamp of a criminal proceeding. Then, according to Mr. Goyal, when a magistrate refers a question as to which: party was in possession at the relevant date what be does is to delegate that duty, initially resting upon him, to the civil court. In performing that duty the civil court would, therefore, be acting as a criminal court just as the magistrate would be doing where he has to decide the question himself. The two Privy Council decisions we have referred to sufficiently answer this contention. No doubt, the Magistrate, while discharging his function under the Code of Criminal Procedure under section 145(1), would be exercising his criminal jurisdiction because that is the only kind of jurisdiction which the Code confers upon the magistrates but when the magistrate refers the question to a civil court he does not confer a part of his criminal jurisdiction upon the civil court. There is no provision under which he can clothe a. court or a tribunal which is not specified in the Criminal Procedure Code with criminal jurisdiction We are, therefore, unable to accept the contention of Goyal. Mr. Iyengar tried to put the matter in a somewhat different way. In the first place. according to him , if we hold that the proceeding before the civil court is a, civil proceeding then all the rules of procedure contained in the Civil Procedure Code,. including those relating to appeals or revision would apply to the proceeding. (1) 74 I.A. 264. (2) 61 I.A. 158. (3)[1966].2 S.C.R. 756. (4) A.I.R. 1956 S.C.1818 398 he points out, would be contrary to the provisions of section 146(1 P) of Code of Criminal Procedure which bar an appeal,review or revision from any finding of the civil court. From this he wants us to infer that the proceeding does not take the character of a civil proceeding even though it takes place before a civil court. We are not, impressed by this argument. If sub section (1 D) had: , not been enacted (and this is really a new provision) an appeal or revision application would have been maintainable. Now that it is there, the only effect of it is that neither an appeal nor a revision is any longer maintainable. This consequence ensues because of the express provision and not because the proceeding, before the civil court is not a civil proceeding. The next contention and it was the one pressed strenuously by him was that a proceeding upon a reference under section 146(1) entertained by a civil court not being an original proceeding the provisions of section 141, C.P.C. are not attracted and that, therefore. those provisions of the Civil Procedure Code which relate to suits are not applicable to a proceeding undertaken by a civil court upon a reference to it under section 146(1) of the Code of Criminal Procedure. A number of cases dealing with this point were brought to our notice either by him or by Mr. Goyal. It seems to us, however, that those cases are not relevant for deciding the point which is before us. In passing, however, we may mention the fact that a full bench of the Allahabad High Court has held in Maha Ram vs Harbans(1) that the civil court to which an issue on the quest ion of proprietary rights has been submitted by a revenue court under section 271 of the Agra Tenancy Act, 1926 has jurisdiction to refer,the issue to arbitration under paragraph I of Schedule II of the C.P C. This decision is based upon the view that by virtue of section 141, C.P.C. the provisions relating to arbitration contained in the second schedule to the Code of Civil Procedure before the repeal of that schedule applied to a proceeding of this kind. Similarly recently this Court has held in Munshi Ram vs Banwarilal(2) that under section 41 of the Arbitration Act and also under section 141, C.P.C. it was competent to the court before which an award made by an arbitration tribunal is filed for passing a decree in terms thereof to permit Parties to compromise their dispute under O. XXIII, r. 3, C.P.C. Though there is no discussion, this Court has acted upon the view that the expression" 'civil proceeding" in section 141 is not necessarily confined to an original proceeding like a suit or an application for appointment of a gurdian etc. but that it applies also to a proceeding which is not an original proceeding. Thus, though we say that it is not an original to consider in this case whether. the proceeding before the civil court is a civil proceeding as contemplated by section 141 or not there is good authority for saying that it is a civil Proceeding. All that we are concerned with in this case is whether (1) I.L.R. [1941] All.193 (2) I.L.R. 1962 S.C.903. 399 the provisions. of section 24(1)(b) of the Code of Civil Procedure are available with respect to a proceeding arising out of a reference ,,under section 146(1), Cr. The relevant portion of section 24 may, therefore be set out. It reads thus: "On the application of any of the parties and after notice to the parties and after hearing such of them as desired to be heard, or of its own motion without such notice, the High Court or the District Court may at any stage (a) (b) withdraw any suit, appeal or other proceeding pending in any Court subordinate to it, and (ii) transfer the same for trial or disposal to any Court subordinate to it and competent to try or dispose of the same; or III. . . . . It plainly speaks of "other proceeding pending in any court subordinate to it" and not only to the civil proceeding pending before a subordinate court. The decisions of the Privy Council and one decision of this Court which we have earlier quoted would warrant the application of the provisions of the Code of Civil Procedure generally to a proceeding before a civil court arising out of a reference to it by a Magistrate under section 146(1) of the Code of Crimi nal Procedure. The expression "proceeding" used in this section is not a term of art which has acquired a definite meaning. What its meaning is when it occurs in a particular statute or a provision of a statute will have to be ascertained by looking at the relevant statute. Looking to the context in which the word has been used in section 24(1)(b) of the Code of Civil Procedure it would appear to us to be something going on in a court in relation to the adjudication of a dispute other than a suit or an appeal. Bearing in mind that the term "proceeding" indicates something in which business. is conducted according to a prescribed mode it would be only right to give it, as used in the aforesaid provision, a comprehensive meaning so as to include within it all matters coming up for judicial adjudication and not to confine it to a civil proceeding alone. In a recent case Kochadai Naidu vs Nagavasami Naidu(1) Ramachandra lyer J., (as he then was) was called upon to consider the very question which arises before us. The learned Judge held (1) I.L.R. 400 that a proceeding before a civil court arising out of a reference to it under section 146(1), Cr. P.C. can be transferred by the High Court or District Court under section 24, C.P.C. because it is in any case a proceedings. He has also considered this question from the angle of the nature of the proceeding and expressed the view that the proceeding was a civil proceeding to which the procedure for suits could, with the aid of section 141, C.P.C. be applied. If indeed the term "proceeding" in section 24 is not confined to a civil proceeding there is no need whatsoever of taking the aid of section 141, C.P.C. Upon this view we dismiss the appeal. Appeal dismissed.

IN-Abs

Under section 146(1) Criminal Procedure Code, a Magistrate referred to a Civil Court of competent jurisdiction the question as to which of the parties was, at the relevant point of time, in possession of the subject matter of dispute in a proceeding under section 145 Cr. Under section 24, Civil Procedure Code, the District Judge transferred the reference to another Civil Court. It was contended that the District Judge acted without jurisdiction because (i) the reference was to a persona designata, and (ii) the provisions of C.P.C. did not apply to the proceeding as it was not a proceeding in a court of Civil jurisdiction within the meaning of section 141, C.P.C. HELD: (i) Where a special or local statute refers to a constituted court as a court and does not refer to the presiding officer of the court, the reference cannot be said to be to a persona designata. The power under.s. 146(1) is not to refer the matter to the presiding Judge of a Civil Court, but to a court. [396A C]. (ii)The provisions of the Civil Procedure Code apply generally to a proceeding before a civil court arising out of a reference made by,,& Magistrate under section 146(1) Cr. P.C. F399 E F] Adaikappa Chettiar vs Chandrasekhara Thevar, 74 I.A. 264, Mamg Ba Thaw vs Ma Pin, 61 I.A. 158 and South Asia Industries (P) Ltd. vs section B. Sarup Singh, [1965] 2 S.C.R. 756 applied. Section 24 C.P.C. refers to "other proceeding in any court sub ordinate to it" and not to a civil proceeding pending before a subordinate court. The term "proceeding" is comprehensive enough to include all matters coming up for judicial adjudication and is not confined to civil proceedings alone, and therefore, there is no need to invoke section 141, V.P.C. [399 F H] Obiter: The proceeding before the civil court is a civil proceeding as contemplated by section 141 C.P.C. [398 F H] A proceeding stemming from a criminal matter does not always bear the stamp of a criminal proceeding. [397 D E] Sri Sheonath Prasad vs City Magistrate, Varanasi, A.I.R. 1959 All. 467, disapproved. The Magistrate when he refers the question to a civil court, does not confer a part of his criminal jurisdiction upon the civil court. Under section 146(1D), Cr.P.C., neither an appeal nor a revision lies against the finding of the civil court in the reference, because of the express provision and not because the Proceeding before the civil court is not a civil proceeding. [398 A C] 394

iminal Appeal No. 20 of 1965. Appeal from the Judgment and order dated July 9, 1964 of the Madhya Pradesh High Court in Criminal Revision No. 166 of 1963. 241 B.Sen and 1. N. Shroff, for the appellant. B.D. Sharma, for the respondents. A.V. Rangam, for Intervener No. 1. V.A. Seyid Muhammad, Advocate General, Kerala, B. R. L. Iyengar, A. G. Pudessery and M. R. K. K. Pillai for Intervener No. 2. B. R. G. K. Achar, for intervener No. 3 The Judgment of SARKAR C.J. and MUDHOLKAR J. was delivered by SARKAR C.J. The Judgment of BACHAWAT and SHELAT JJ. was delivered by BACHAWAT J. HIDAYATULLAH J. delivered a dissenting Opinion. Sarkar, C.J. On a complaint of trespass the police registered a case against the respondents under section 447 of the Penal Code. The respondents were later arrested by the police and released on the execution of surety bonds whereby the sureties undertook to produce them as required by the police. The case against the respondents was thereafter put up before the Nyaya Panchayat, a court established under the Madhya Bharat Panchayat Act, 1949. In , 'hat court, fresh bonds were executed by sureties on behalf of the respondents to ensure their presence during the trial. The Nyaya Panchayat, after trial, convicted and sentenced the respondents to a fine of Rs. 75 each. The conviction was upheld by the Additional Sessions Judge, Barwani. The respondents then moved the High Court of Madhya Pradesh in revision which set aside the conviction. Hence the present appeal. Section 63 of the Panchayat Act provides that no legal prac titioner shall appear on behalf of or shall plead for or defend any party in any dispute, case or proceeding pending before the Nyaya Panchayat. The High Court observed that in view of the provisions of article 22(1) of the Constitution, the section was void in respect of persons who were arrested. As the respondents had been arrested, it set aside their conviction. The question in this appeal is, whether the section violated article 22(1). That provision has to be considered along with article 21 of the Constitution and both are set out below: "article 21.No person shall be deprived of his life or personal liberty except according to procedure established by law. article 22(1).No person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice. It seems to us fairly clear that a person arrested has the constitutional right to consult a legal practitioner concerning 242 his arrest. It is also clear that a person arrested has the constitutional right to be defended by a legal practitioner. But, against what is he to be defended? We think that the right to be defended by a legal practitioner would include a right to take steps through a legal practitioner for release from the arrest. Now, section 63 of the Act puts no ban on either of these rights. It cannot be said to be invalid as denying these rights. We may add that the Act is not concerned with arrest and gives no power to arrest. But, is the right to be defended by a legal practitioner conferred only on a person arrested? We do not think so. In our opinion, the right to be defended by a legal practitioner extends also to a case of defence in a trial which may result in the loss of personal liberty. On the other hand, in our view, where a person is subjected to a trial under a law which does not provide for an order resulting in the loss of his personal liberty, he is not entitled to the constitutional right to defend himself at the trial by a legal practitioner. The reason is that articles 21 and 22 of the Constitution are concerned only with giving protection to personal liberty. That is strongly indicated by the language used in these Articles and by the context in which they occur in the Constitution. That also appears to be the view which has been taken by this Court. Thus in State of Bombay vs Atma Ram Sridhar Vaidya(1) Das, J. (as he then was) observed: ". . . the implication of that article (article 2 1) was that a person could be deprived of his life or personal liberty provided such deprivation was brought about in accordance with procedure enacted by the appropriate Legislature. Having so provided in article 21, the framers of our Constitution proceeded to Jay down certain procedural requirements which, as a matter of constitutional necessity, must be adopted and included in any procedure that may be enacted by the Legislature and in accordance with which a person may be deprived of his life or personal liberty. Those requirements are set forth in article 22 of the Constitution." It would follow that the requirement laid down in article 22(1) is not a constitutional necessity in any enactment which does not affect life or personal liberty. Now we find that the Act expressly provides that the Nyaya Panchayat cannot inflict a sentence of imprisonment, not even one in default of payment of fine which it is authorised to impose. We also find that the Act does not give any power of arrest. The case against the respondents was one in which in the first instance a summons and not a war. ant could issue and therefore no arrest was inevitably necessary. The arrest, if any that could (1). [1915]1 S.O.R. 167,204.243 be made if a warrant came to be issued, would have been under the Code of Criminal Procedure and not the Panchayat Act. The Act, does not lay down any procedure or law entailing or justifying an order depriving a person of his personal liberty. For such a law the procedural requirement in article 22(1) is not a constitutional necessity. The Act does not violate article 22(1) and cannot be held to be invalid on that ground. It is true that in this case the respondents had been arrested but they had been arrested not under the Act but under section 54(1) of the Code of Criminal Procedure, the offence being cognizable. A cognizable offence when tried by any of the courts created by the Code is punishable with imprisonment. But the Code by section 340 entitles an accused person to be defended by a lawyer. We are however not concerned in this case with a trial by a court created by the Code. The question in this appeal is, whether the Panchayat Act is invalid. The Act does not deprive any arrested person of his constitutional right to take steps against the arrest or to defend himself in a trial which might occasion the loss of his personal liberty. It takes away no constitutional right at all. Can the fact that the respondents were arrested under an other law and thereafter tried under the Act give them the constitutional right to be defended at the trial by a legal practitioner? We do not think so. We think it clear that it cannot be said that the fact of arrest gives the arrested man the constitutional right to defend himself in all actions brought against him. Take the case of these respondents. Suppose that after the arrest an action was started against them for recovery of damages for wrongful trespass. Could they say that in view of article 22(1) they had a constitutional right to appear by a legal practitioner in that action? Could they say that if the law under which the trial was held denied the right to be represented by a legal practitioner. it was invalid as offending article 22(1)? We suppose the answer must plainly be in the negative. It would follow that it is not the fact of the arrest itself that gives the right to be defended by a lawyer in all matters. We may put the matter from a different point of view. Assume a case in which a law creating an offence provides that on conviction a person shall be sentenced to a certain term of imprisonment but states that it shall not be necessary to arrest the person accused of that offence before he is put up for his trial. We should suppose that in such a case the person would be entitled to the constitutional right of being defended at the trial by a legal practitioner and any provision that denies that right to him would be void as violating article 22(1). We think this would be in consonance with the decision of this Court in Atma Ram Sridhar Vaidya 's case(1). We do not think that the Constitu (1) ; 244 tion could have intended that a person who ran the risk of loss of personal liberty as a result of a trial, would not have the right to defend himself by a legal practitioner at the trial because he had not been arrested. There would be no principle to support such a view. Likewise, we do not think that the Constitution makers intended that a person arrested would have the right to be defended by a legal practitioner at a trial which would not result in the deprivation of his personal liberty. He, of course, had the right to seek relief against the arrest through a legal practitioner. We would interpret the words "nor shall he" in article 22 as not being confined to a person who has been presently arrested but also as including a person who though not arrested runs the risk of loss of personal liberty. It seems to us that we would thereby be carrying out the spirit of the Constitution. The question before us is, whether the Nyaya Panchayat Act is void as offending article 22(1) because it contains section 63. In our view, it is not void because it does not give any power to deprive anyone of his personal liberty either by way of arrest before the trial or by way of a sentence of imprisonment as a result of the trial. It would appear that the High Court took the same view when it said that the section was void "in the case of persons arrested". In our opinion, the High Court was in error. The validity of an Act cannot depend on the facts of a case but on its terms. The fact that the respondents were arrested under another statute, cannot, in our opinion make the Act void. A question was mooted at the Bar that since at the trial the respondents were not under arrest having been released on execution of bonds, they were no longer entitled to the constitutional right conferred by article 22(1). As at present advised, we are not inclined to accede to this view. We consider it unnecessary to pursue this matter further in the present case. For the reasons earlier stated, in our view, the Act is per fectly valid. No question therefore arises of the conviction being bad on the ground that the Act was invalid. In our view, the High Court was in error in setting aside the conviction. We would, therefore, allow the appeal, set aside the judg ment of the High Court and restore that of the courts below it. Hidayatullah, J. In my opinion this appeal should fail. The short question in this appeal is whether section 63 of the Madhya Bharat Panchayat Act is inapplicable to criminal trials owing to its inconsistency with article 22(1) of the Constitution. The Panchayat Act was passed on June 17, 1949 and under its provisions the Nyaya Panchayats are empowered to try certain offences including the offence of criminal trespass punishable under section 447, Indian Penal Code. The Act, however, places a limitation on the powers of these courts by enacting that they can impose a sentence 245 of fine but not imprisonment. The respondents were arrested by the Police without a warrant from a Magistrate, for an alleged offence under section 447, Indian Penal Code and were released on bail. After investigation the case was sent for trial before the Nyaya Panchayat, Barwani. Fresh bail bonds were obtained from them by the Nyaya Panchayat. The respondents were fined Rs. 75 each but no sentence of imprisonment in lieu of fine was imposed on them. The respondents were not defended by a lawyer at the trial pre sumably because of section 63 of the Act which reads: "No legal practitioner shall appear on behalf of or shall plead for or defend any party in any dispute, case or proceedings pending before the Nyaya Panchayat". The respondents filed an application for revision before the Additional Sessions Judge, Barwani but were unsuccessful. They then filed a second application for revision in the High Court of Madhya Pradesh and inter alia contended that the trial was vitiated because they were deprived of their right to be defended by counsel guaranteed under article 22(1) of the Constitution. They also submitted that section 63 of the Act was rendered void by reason of article 13 in view of its inconsistency with this guaranteed right. A learned single Judge of the High Court referred the second point for con sideration by a larger Bench but the Divisional Court declined to consider it because, in its opinion, the decision of this Court in the State of Punjab vs Ajaib Singh and Anr.(1) had distinctly laid down that article 22(1) was not applicable to persons held in custody or bail under an order of a court and, therefore, the point did not arise for decision. The case was remitted to the learned single Judge who, by the order under appeal, July 9, 1964 allowed the application for revision holding that the trial was vitiated as the respondents were deprived of their fundamental right to be defended by a counsel of their choice. He accordingly set aside their conviction but did not record an acquittal. The question thus arises whether section 63 of the Panchayat Act (in the setting of the powers of the Nyaya Panchayat) can be said to offend article 22(1) and for that reason to be void in so far as it takes away the right of a person who is arrested to be defended by a legal practitioner of his choice in a trial before the Nyaya Panchayat. My brother Bachawat has held the section to be inapplicable to criminal trials before the Panchayat courts. He has, however, set aside the order of the High Court on the ground that the respondents did not seek to exercise their right at the trial and cannot, therefore, be said to have been deprived of it. I agree with him on the first point but in view of the importance of the question which affects some other statutes and involves a very valuable right, I consider it necessary to express my views upon it. Article 22 is in Part III of the Constitution in a sub chapter headed "Right to Freedom". It is one of three articles immediately following article 19. Under article 19 certain fundamental rights are protected subject to restrictions which may be imposed on those Tights by law. Those restrictions are specified in relation to each of the guaranteed right in the article itself. We are not concerned with the rights or the restrictions because they do not touch the present matter. Article 20 which comes next consists of three clauses which are somewhat inadequately described by the marginal note "Protection in respect of conviction for offences". The first clause gives protection against retroactive penal laws. the second against double jeopardy and the third against testimonial compulsion. We are again not concerned with any of these rights. The next article is a general declaration relating to protection of life and personal liberty. It reads: "21.Protection of life and personal liberty.No person shall be deprived of his life or personal liberty except according to procedure established by law." It will be noticed that there is no mention here of any particular,nor of the articles that follow. Article 22, with which we are concerned, deals with several matters which are compendiously described in the marginal note as "Protection against arrest and detention in certain cases". It consists of seven clauses of which cls. (4) to (7) deal with preventive detention and the special requirements of such cases. They need not be considered here. Clause (3) excludes the operation of the first two clauses in respect of alien enemies and persons detained under any law providing for preventive detention. They do not touch our case. This leaves cls.(1) and, (2) which may be quoted here: "22.Protection against arrest and detention in certain cases.No person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice. Every person who is arrested and detained in custody shall be produced before the nearest magistrate within a period of twenty four hours of such arrest excluding the time necessary for the journey from the place of arrest to the court of the magistrate and no such person shall be detained in custody beyond the said period without the authority of a magistrate. Articles 21 and 22 in a sense go together but, in my opinion, they cannot be treated as interrelated or interdependent. Article 21 prohibits arbitrary deprivation of life and personal liberty by laying down that these two possessions can only be taken away in accordance with procedure established by law. No authority ill India (legislative, executive or judicial) can deprive a person of his life or personal liberty unless it can justify its action under a procedure established by law. Article 21 does not indicate what that law must be nor does article 22 say this. Article 22, no doubt, advances in a way the purpose of article 21, when it specifies some guaranteed rights available to persons arrested or detained and lays down the manner in which persons detained preventively must ,be dealt with, But the force of the declaration in article 21 is much greater than that because it makes law as the sole basis of State action to deprive a person of his life and personal liberty. We are not concerned in this case with arbitrary deprivation of life and personal liberty. The respondents were considered to have committed an offence of criminal trespass and were arrested and tried by procedure established by law. The only defect in that procedure was that they were unable to get assistance of counsel because of a provision of law which they claim to be void by reason of article 22(1). 1 proceed to examine the question. Article 22(1) is in two parts and it gives to persons arrested it two fold protection. The first is that an arrested person shall not be detained in custody without being told the grounds of such an arrest and the other is that he shall be entitled to consult and to be defended by a legal practitioner of his choice. article 22(2) gives a third protection and it is that every person arrested and detained in custody must be produced before the nearest Magistrate within 24 hours excluding the time necessary for the journey from the place of arrest to the court of the Magistrate. In Ajaib Singh 's case(1) it was held that by "arrest" in the article is meant physical restraint put on a person as a result of an allegation or accusation that he has committed a crime or an offence of a quasi criminal nature or that he has acted in a manner which is prejudicial to the State or public interest. It was further held that as arrests under warrants issued by courts almost always indicate the reasons for the arrest and require the person executing the warrant to produce the person arrested Wore the court, such arrests are outside article 22(1) and (2). It was thus held that the article was designed to give protection against the act of the executive or other non judicial authority. That case arose under the (65 of 1949) under which persons abducted from Pakistan were rescued. Such persons were taken in custody and delivered to the custody of an officer in charge of a camp for the purpose of return to Pakistan. In deciding that this (1) ; , 248 was not the kind of arrest contemplated by article 22 the court examined what meaning could be given to the word arrest. But the Bench guarded itself by observing as follows: ". . . it is not, however, our purpose, nor do we consider it desirable, to attempt a precise and meticulous enunciation of the scope and ambit of this fundamental right or to enumerate exhaustively the cases that come within its protection ". The case cannot be treated as having laid down the law finally or exhaustively. Similarly, in State of Uttar Pradesh vs Abdul Sammad and Anr.(1) involving arrest and deportation of a person it was held by majority that it was not necessary to produce such a person before the Magistrate if he was produced before the High Court and the High Court remitted the person back to the same custody. Mr. Justice Subba Rao dissented with this view. Abdul Samad 's case(1) was also not exhaustive because the majority observed: "In view of the very limited question before us we do not feel called upon to deal with the scope of article 22(1) 22(2) or of the two clauses read together in relation to the taking into custody of a person for the purpose of executing a lawful order of deportation. . " I consider that there is room for further deliberation on the point. I do not see how we can differentiate between arrests of different kinds. Arrest is arrest, whatever the reason. In so far as the first part of article 22(1) is concerned it enacts a very simple safeguard for persons arrested. It merely says that an arrested person must be told the grounds of his arrest. In other words, a person 's personal liberty cannot be curtailed by arrest without in forming him, as soon as is possible, why he is arrested. Where the arrest is by warrant, the warrant itself must tell him, where it is by an order, the order must tell him and where there is no warrant or order the person making the arrest must give that information. However the arrest is made, this must be done and that is all that the first part of article 22(1) lays down. I find nothing in article 22(1) to limit this requirement to arrests of any particular kind. A warrant of a court and an order of any authority must show on their face the reason for arrest. Where there is no such warrant or order, the person making the arrest must inform the person the reason of his arrest. In other words, article 22(1) means what it says in its first part. I now come to the latter part of article 22(1). Here again, the language is extremely clear. The words "nor shall be denied the right to consult, and to be defended by, a legal practitioner of his choice" refer to a person who is arrested. This is the sense of the (1)[162] Supp. 3 S.C.R. 915.249 matter and the grammatical construction of the words. It is contended by Mr. B. Sen that the article only affords a person to get released from arrest and the word 'defended ' means that the person who is arrested has a right to consult a legal practitioner of his choice and to take his aid to get out of the arrest. He contends that if a person has already been released on bail either by the authority making the arrest or by an order of the court, the purpose of the article is served and occasion for the exercise of the guaranteed right is over. He argued, therefore, that in the present case the section cannot be characterized as unconstitutional because the respondents were not under arrest during their trial Lind they were not in danger of losing their personal liberty in any way since the Nyaya Panchayat had no power to impose a sentence of imprisonment. I do not agree. As I have stated already a person who is arrested gets three rights which are guaranteed. The first is that he must be told why he is arrested. This requirement cannot be dispensed with by taking bail from him. The need to tell him why he is arrested, remains still. The next is that the person arrested must not be detained in custody more than 24 hours without being produced before a Magistrate. This requirement is dispensed with when the person arrested is admitted to bail. Otherwise it remains. The third is that he gets a right to consult and to be defended by a legal practitioner of his choice. This is of course, so while the arrest continues but there are no words to show that the right is lost no sooner than lie is released on bail. The word 'defended ' clearly includes the exercise of the right so long as the effect of the arrest continues. Before his release on bail the person defends himself against his arrest and the charge for which he is arrested and after his release on bail, against the charge he is to answer and, for answering which, the bail requires him to remain present, The narrow meaning of the word "defended" cannot be accepted. The framers of our Constitution must have been aware of the long struggle that took place in England before the right to be represented by counsel and to be told the grounds of arrest was established. No doubt the Crown was then concerned with traitors and other law breakers and in a desire to put them down denied them these privileges. The system then was inquisitorial as against the accusatorial which we have adopted. Although the trial was open (which was better than the continental trial behind doors), defence as late as 1640 meant in the words of Sir Thomas Smith(1), a mixture of formality and informality which consisted of an altercation between the accused and the prosecutor and his witness. The prisoner was not told what charge he had to meet because lie was not informed why he was arrested and no copy of the indictment was handed to him(1). He was closely questioned by the examining (1) De Repubica Anglorum Bk.11 c. 23 quoted by Holdsworth, History of English Law Vol.IX, p. 225.(2) Stephen: History of Criminal Law Vol.P.325, 330 31.250 Magistrate and then by the Judge at the trial and the prosecuting counsel. Thus it was that Throckmorton, as an accused, was first subjected to lengthy cross examination and had to argue even points of law in which at least he got the better of the Judge and the King 's counsel and secured a verdict of not guilty from the jury. It is, of course, a matter of history, which is well known, that the jury were themselves punished(1). Sir Walter Raleigh was also denied assistance of counsel and was cross examined by Popham C.J. without being warned or confronted with witnesses whose statements were used against him(1). College had legal advice but he fared no better because at the trial his papers containing instructions for his defence were taken away from him on the ground; that this would be tantamount to getting assistance from counsel(1). By an Act of 1695 only persons accused of high treason were given assistance of counsel and by 6 and 7 William IV, c. 114 (in the year 1837) the Prisoners ' Counsel Act gave persons accused of felony the right to be defended by counsel. This history of English law makes it clear that the right to be defended by counsel and to be informed the reason for arrest is not an empty declaration coming to an end with release on bail. Nearer to our times we have the example of the United States of America. Right to counsel is considered so fundamental to a criminal trial that the Supreme Court of the United States ruled that there was a mistrial when Clarence Gideon could not afford a counsel and the State did not furnish one to him. Clarence Gideon was not charged with anything more serious than "the crime of breaking and entering with the intent to commit a misdemeanor, to wit, petty larceny". In the American Constitution there is no provision that an accused has a right to counsel but the Supreme Court stretched the due process clause to cover such a case. It is significant that at the retrial, with counsel, Gideon was acquitted of the charge on which he was first convicted. No doubt this was considered by the, Supreme Court of America from the point of legal aid to persons accused of crime and our laws view legal aid differently. Under our jurisdiction providing counsel to an accused who cannot afford one (,except in capital cases) is not a right. Our law in respect of legal aid is similar to that declared by the Lord Chief Justice of England in Reg.vs Howes(1) who pointed out that the right to be defended by counsel is (in all save murder and treason cases) one ultimately for the discretion of the court to confer or deny. North C.J.after examining the papers said "forthat which contains the names of the witnesses,that you have again for other matters, the instructions in point of law, if they had been written in the first person, in your own name, that we might believe it was your writing, it would have been something; but when it is written in the second person, you should do so and so, by which it appears to be written by another person, it is an ill precedent permit such things; that were to give you counsel in an indirect way, which the law gives you not directly". As we are not concerned with legal aid I need not say more but it is at least clear that when our Constitution lays down in absolute terms a right to be defended by one 's own counsel it cannot be taken away by ordinary law and it is not sufficient to say that the accused who was so deprived of this right, did not stand in danger of losing his personal liberty. If he was exposed to penalty, he had a right to be defended by counsel. If this were not so then instead of providing for punishment of imprisonment, penal laws might provide for unlimited fines and it would be easy to leave the man free but a pauper, and, that too without a right to be defended by counsel(1). If this proposition were accepted as true we might be in the Middle Ages. The Criminal Procedure Code allows the right to be defended by counsel but that is not a guaranteed right. The framers of the Constitution have well thought of this right and by including the prescription in the Constitution have put it beyond the power of any authority to alter it without the Constitution being altered. A law which provides differently must necessarily be obnoxious to the guarantee of the Constitution. There is nothing in the words of the Constitution which permits any authority to alter this condition even on grounds of public interest as is the case with the guaranteed rights in article 19. Nor can we by a niggling argument lessen the force of the declaration so explicit in its terms or whittle down its meaning by a specious attempt at supposed harmony between rights which are not interdependent. There are three rights and each stands by itself. The first is the right to be told the reason of the arrest as soon as an arrest is made, the second is the right to be produced before a Magistrate within twenty four hours and the third is the right to be defended by a lawyer of one 's choice. In addition there is the declaration that no person shall be deprived of his personal liberty except by procedure established by law. The declaration is general and insists on legality of the action. The rights given by article 22(1) and (2) are absolute in themselves and do not depend on other laws. There is no force in the submission that if there is only a punishment of fine and there is no danger to personal liberty the protection of article 22(1) is not available. Personal liberty is invaded by arrest and continues to be restrained during the period a person is on bail and it matters not whether there is or is not a possibility of imprisonment. A person arrested and put on his defence against a criminal charge, which may result in penalty, is entitled to the right to defend himself with the aid of counsel and any law that takes away this right offend s against the Constitution. In my judgment, therefore, section 63 of the Panchayat Act being inconsistent with article 22(1) ,came void on the inauguration of the Constitution in so far as it took away the right of an arrested person to be defended by a legal practitioner,of his choice. My brother Bachawat has reached the same conclusion but has reversed the order of the High Court and restored the conviction and penalty on the ground that no request was made at the trial for permission to be defended by counsel. I find it difficult to accept this result. It is true that the contention raised in the High Court has the appearance of an after thought because no complaint was made before the Sessions Judge. But it is nevertheless a question of a fundamental right. Since a request to bring in counsel would have been doomed to failure, I feel I should not hold that the respondents go by default. As this objection is taken in the criminal case itself, albeit at a late stage, and not by a belated collateral proceeding, I would allow the High Court order to stand. After all the prosecution will be free to start the case again, if it is so desired, and the accused will have the opportunity to defend themselves with the assistance of counsel if they so care. I would, therefore, dismiss the appeal. Bachawat, J On or about November 15, 1962, on receipt of a first information report charging the respondents with an offence under section 447 of the Indian Penal Code, the Station Officer. Barwani registered the offence and arrested the respondents. The arrests were made without warrants issued by a magistrate. Subsequently, the respondents were released by the Station Officer on execution of bail bonds with sureties for appearance in the Court of Nyaya Panchayat, Barwani and other courts. On November 20, 1962, the Station Officer submitted to the Nyaya Panchayat, Bar wani a charge sheet against all the respondents. On the same day, the respondents appeared before the Nyaya Panchayat, and executed fresh bonds with sureties for appearance before the Nyaya Panchayat. The case was heard on several days, and on January 31, 1963, the Nyaya Panchayat convicted all the respondents under section 447 and sentenced each of them to pay a fine of Rs. 75 / . On April 9, 1963, the Additional Sessions Judge, Barwani dismissed a revision application filed by the respondents. The respondents filed a revision petition before the High Court of Madhya Pradesh, Indore Bench, and contended for the first time that section 63 of the Madhya Bharat Panchayat Act, 1949 is violative of article 22(1) of the Constitution and their trials and convictions were illegal. The High Court accepted these contentions, and by its order dated July 9 1964 declared that section 63 is void to the extent that it denied the res pondents the right to be defended by a legal practitioner of their choice in the trial before the Nyaya Panchayat, quashed the convictions and sentences and directed that they be dealt with in accordance with law. The State of Madhya Pradesh now appeals to this Court on a certificate granted by the High Court. Mr. B. Sen appeared on behalf of the appellant. Mr. Sharma who was appointed as amicus curiae by an order of this Court, argued the case of the respondents. In view of the constitutional 253 questions raised in this case, notices were issued to the Advocates General of all the States. Mr. lengar appeared on behalf of the Advocate General of Kerala, and he stated that there was no provision similar to section 63 of the Madhya Bharat Panchayat Act in the State of Kerala. Mr. Rangam appeared on behalf of the Advocate, General of Madras, and he drew our attention to section 76(5) of the Madras Village Courts Act (Act 1 of 1887). The Madhya Bharat Panchayat Act was passed on June 17, 1949. By section 75 of the Act, the Nyaya Panchayat is empowered to try certain offences committed within its jurisdiction including offences under section 447. The Nyaya Panchayat has power to impose a fine not exceeding Rs. 100/ , but it has no power to inflict a substantive sentence of imprisonment nor a sentence of imprisonment in default of payment of fine. Section 79 provides that if at any time it appears to the Nyaya Panchayat (a) that it has no jurisdiction to try any case before it or (b) that the offence is one for which it cannot award adequate punishment or (c) that the complaint is such or that it is so complicated that it should be tried by a Court of Justice, the Nyaya Panchayat shall return the complaint to the complainant directing him to file it before a Sub Divisional Magistrate having jurisdiction to try the case. section 89, the decision of the Nyaya Panchayat in its criminal jurisdiction is final and not appealable except that it is subject to revision by the Sessions Judge. Section 87 provides that subject to the provisions of section 63 any party may appear before a Nyaya Panchayat by a duly authorised 1, preventative. Section 63 provides: "No legal practitioner shall appear on behalf of or shall plead for or defend any party in any dispute, case or proceedings pending before the Nyaya Panchayat. " The question is whether this section infringes article 22 of the Constitution. The second part of article 22(1) reads: nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice." Mr. Sen submitted that "he" means a person who is arrested and detained, and as the respondents were not detained at the time of the trial before the Nyaya Panchayat, the constitutional guarantee is not available to them. Alternatively, he submitted that "he" means "any parson". He argued that in the case of The State of Punjab vs Ajaib Singh and another(1), this Court has restricted the constitutional guarantee embodied in the first part of article 22(1) to persons arrested otherwise than under a warrant issued by a Court, and he submitted that this restricted interpretation should not be given to the second part, the two parts should be read independently of each other and the protection of the second part should be extended to all persons. But he also submitted that in the context of article 21 the right given by the second part of cl.(1) of article 22 (1)[1053] S.C.R. 254.254 should be limited to trials in which any person is deprived of his life or personal liberty or is in jeopardy of being so deprived. He pointed out that the Nyaya Panchayat has no power to inflict a sentence of imprisonment and be, therefore, submitted that the constitutional guarantee embodied in the second part of article 22(1) did not apply to a trial before a Nyaya Panchayat. It will thus appear that Mr. Sen asked us on the one hand to give a liberal interpretation to the second part of article 22(1) by applying it to all persons, whether arrested or not and whether arrested under or without a warrant issued by a Court, and, on the other hand, he asked us to give it a restricted interpretation by limiting its operation to a trial in which the accused is in jeopardy of being deprived of life or liberty. Mr. lengar submitted that "he" means "any person who is arrested". He argued that the second part of article 22(1) is an injunction on the arresting and detaining authority not to prevent consultation and defence by a legal practitioner, and it gives no right to be defended at a trial. Mr. Rangam adopted the arguments of Mr. lengar. Mr. Sharma submitted that "he" means any person who is arrested and that any person who is arrested has the right to be defended at the trial for the offer for which he is arrested. Our duty is to listen to the clear words of the Constitution, understand its message and then interpret it. Article 22(1) reads: "No person who is arrested shall be detained in custody without being informed, as soon as may be, of the grounds for such arrest. . . Every person is prima facie entitled to his personal liberty. If any person is arrested, he is entitled to know forthwith why he is being deprived of his liberty, so that he may take immediate steps to regain his freedom. Article 22(1) then continues: " nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice. " Who is this "he" in the second part of article 22(1)? The pronoun "he" must refer to the last antecedent. "He" therefore means "any person who is arrested". He has the right to consult his lawyer and to be defended by him, so that he may guard himself against the accusation for which he is arrested. Both parts of cl. (1) of article 22 thus come into play as soon as any person is arrested. Clause (2) of article 22 then goes on to give every person who is arrested and detained the right to be produced before a magistrate within 24 hours and the right to freedom from detention beyond the said period without the authority of a magistrate. Das, J, therefore, observed in A. K. Gopalan vs The State(1): "Clauses (1) and (2) of article 22 lay down the procedure that has to be followed when a man is arrested. They ensure four things: (a) right to be informed regarding grounds of arrest, (b) right to consult, and to be defended by, a legal practitioner of his choice, (c) right to be produced before a magistrate within 24 hours and (d) freedom from detention beyond the said period except by order of the magistrate." Clauses (1) and (2) of article 22 safeguard the rights of the person arrested. The arrest of any person on a criminal charge is a step in an intended criminal proceeding against him. Save where the magistrate dispenses with his personal attendance and permits him to appear by a pleader, the first step in a criminal proceeding is to bring the accused before the magistrate. The trial before the magistrate proceeds "when the accused appears or is brought before him. " The attendance of the accused before the magistrate is secured by summons or by arrest under or without a warrant. Upon arrest, he may either be released on bail or be remanded into custody. If he is released on bail, the bail bond ensures his attendance at the trial. Summonses, warrants, arrests without warrant and bail bonds are all machinery for securing the attendance of the accused before the Court. The arrest of the accused on a criminal charge has thus an intimate connection with his eventual trial on the charge. It is at the trial in the criminal Court that the accused defends or is defended by counsel. Section 340 of the Code of Criminal Procedure, therefore, provides that any person accused of any offence before a criminal Court may, of right, be defended by a pleader. In this background, the right of defence by a legal practitioner given by article 22(1) must extend to defence in a trial in a criminal Court. Article 21 guarantees that no person shall be deprived of his life or personal liberty except according to procedure established by law. Article 22 guarantees the minimum rights which any person who is arrested shall enjoy. In support of his contention that the right of defence of the arrested person given by cl.(1) of article 22, should be restricted to trial of offences in which the accused is in jeopardy of being deprived of his life or liberty, Mr. Sen relied upon the observations of Das, J. in State of Bombay vs Atma Ram Sr.dhar Vaidya(1) that article 22 sets forth certain procedural requirements which, as a matter of constitutional necessity, must be adopted and included in any procedure that may be enacted by the legislature and it accordance with which a person may be deprived of his life or personal liberty. He also relied upon the following ob servations of Das, J. in A. K. Gopalan vs The State(1) at p. 325 "Clauses (1) and (2) of Article 22 lay down the procedure that has to be followed when a man is arrested. " For the purposes of this case, let us give these observations their full effect. When any person is arrested, he is deprived of his liberty, the procedure third down in cl.(1) of article 22 must then be followed, and he must be allowed the right to be defended by counsel of his choice. No law which permits deprivation of his personal liberty by arrest can deny him this right. Why should this right be limited to a trial in, which he may be sentenced to death or to a term of imprisonment? Why should this right be denied to him in a trial in which he is in jeopardy of being convicted and sentenced to a heavy fine? The clear words of article 22 furnish no basis for this limitation. On this branch of his argument, Mr. Sell submitted that "he" in the second part of cl.(1) should be read as "any person" in order that this part of cl.(1) may not suffer from the restricted interpretation of "arrest" given in Ajaib Singh 's case(1). It is impossible to accept this argument. The narrow interpretation of the expression "arrest" given in that case is not a ground for giving an unnatural meaning to the expression "he". The context of cl.(1) suggests that "he" refers to any person who is arrested. But let us assume that it is possible to give a more liberal interpretation to "he" and the operation of the second part of the clause should be extended to "any person". Even on this view, we find no warrant for giving a restricted interpretation to the second part of the clause by reference to article 21 and for saying that the right to be defended by counsel is limited to a trial in which the arrested person is in jeopardy of being sentenced to death or to a term of imprisonment. It has been suggested that the right of defence by counsel given by article 22(1) does not extend to a trial of an offence before the Nyaya Panchayat because the Madhya Bharat Panchayat Act, 1949 does not authorise any arrest and, as a matter of fact. the respondents were arrested by the police in the exercise of its powers under section 54 of the Code of Criminal Procedure. We are unable to accept this suggestion. Suppose a statute sets tip a special criminal Court for the trial of certain offences, and it gives no power to the police to arrest any person. Nevertheless, the police has under its general powers under the Code of Criminal Procedure authority to arrest any person concerned in any cogniscible offence. If in the exercise of these powers the police arrests some person on the accusation of a crime for which he is liable to be tried before the special criminal Court, the arrested person has the constitutional right to be defended by counsel at the trial before the special criminal Court in respect of the offence for which he was arrested. It has also been suggested that the trial of an offence before the Nyaya Panchayat is akin to an action for recovery of money and as an arrested person has no constitutional right to be defended by counsel in the action for recovery of money, so, also he has no such right in a trial of all offence before the Nyaya Panchayat We are unable to accept this line of reasoning. A person arrested on the accusation of a crime has the constitutional right to be defended by counsel at a subsequent trial of the crime for which he is arrested. He cannot, therefore claim this right in a subsequent action against him for recovery of money, but he can claim this right in a subsequent trial of the offence before the Nyaya Panchayat. As soon as the respondents were arrested without warrants issued by a Court, they acquired the rights guaranteed by cl.(1) of article 22. It is true that they were subsequently released on bail and at the time of the trial before the Nyaya Panchayat they were not being detained. But the right attaching to them on their arrest continued though they were not under detention at the time of the trial. The right was not lost because they were released on bail. The respondents were arrested otherwise than under a warrant issued by a Court on the accusation that they had committed crimes. Their arrests, therefore, satisfy the test laid down in Ajaib Singh 's case(1), and are within the purview of cl.(1) of article 22. We express no opinion on the question whether the test of an arrest laid down in that case is exhaustive. We may now briefly notice a few decisions under other Pan chayat Acts. In Lal Bachan Singh vs Suraj.Bali(2), the Allababad High Court held that a provision of the U. P. Panchayat Raj Act (26 of 1947) under which no counsel was permitted to appear in the Court of the Panchayati Adalat did not infringe any right of an accused who had not been arrested. In Gurdial Singh vs The State(1), the Punjab High Court held that a provision of the Punjab Gram Panchayat Act (4 of 1953) under which the accused was not allowed to be defended by counsel of his choice did not infringe any right under article 22. In Digambar Aruk vs Nanda Aruk(4), the Orissa High Court held that no 'tight of the accused was infringed by section 94 of the Orissa Gram Panchayat Act (15 of 1948), which prohibited any legal practitioner from appearing before an Adalti Panchayat, having power to award a sentence of imprisonment in lieu of fine. The reports of the two last cases do not set out full facts. Presumably, in both cases the accused were not arrested at all, and if so, there could be no infringement of any right under article 22. We do not approve of these decisions if and so far as they might have held that the right of an arrested person to be defended by a legal practitioner of his choice before the Panchayati Adalat was not infringed by the provisions precluding such defence. We, therefore, hold that section 63 of the Madhya Bharat Pan chayat Act, 1949 is violative of article 22(1) and is void to the extent it denies any person who is arrested the right to be defended by a legal practitioner of his choice in any trial of the crime for which he is arrested. Most of the safeguards embodied in cls.(1) and (2) of article 22 are to be found in the Code of Criminal Procedure. But the Constitution makes the fundamental change that the rights guaranteed by cls.(1) and (2) of article 22 are no longer at the mercy of the legislature. No legislature can enact a law which is repugnant to the Constitution. A pre Constitution law which is inconsistent with the provisions of article 22 is, to the extent of such inconsistency, void. The next question is whether the trial and convictions were illegal. During the trial, the respondents never claimed that they should be defended by counsel. Had they wanted the assistance of counsel, the Nyaya Panchayat might have under section 79(c) returned the complaint for being filed before a magistrate. They were happy and content to be tried before the Nyaya Panchayat without the assistance of counsel. There was no occasion for enforcing the provisions of section 63 against them. Even if section 63 were repealed or struck down before the trial, they would not have engaged any counsel for their defence. The existence of section 63 on the statute book did not cause them any prejudice. In the circumstances, the High Court ought not to have quashed the trial and convictions. In the result, we declare that section 63 of the Madhya Bharat Panchayat Act is violative of article 22(1) of the Constitution, and is void to the extent that it denies any person who is arrested, the right to be defended by a legal practitioner of his choice in any trial of the crime for which he is arrested. Subject to this declaration, the appeal is allowed, the order of the High Court is set aside and the convictions and sentences passed by the Nyaya Panchayat, Barwani are restored. ORDER In view of the majority, the Appeal is allowed, the judgment of the High Court is set aside and that of the Courts below is restored.

IN-Abs

The respondents were arrested by the police for the offence of trespass and were released on bail. They were tried and sentenced to pay a fine by the Nyaya Panchayat, a court established under the Madhya Bharat Panchayat Act, 1949, with powers to impose only a sentence of fine. The conviction was set aside by the High Court on the ground that section 63 of the Act, which provides that no legal practi tioner shall appear on behalf of any party in a proceeding before the Nyaya Panchayat, violated article 22(1) of the Constitution and was therefore void. HELD:(Per Sarkar C.J., and Mudholkar, J.): The High Court was in error in setting aside the conviction. Under article 22(1) a person arrested has the constitutional right to consult a legal practitioner concerning his arrest; and, a person who has been arrested as well as one who though not arrested runs the risk of loss of personal liberty as a result of a trial, have the constitutional right to be defended by an advocate of their choice. But in a trial under a law which does not provide for an order resulting in the loss of his personal liberty, he is not entitled to the constitutional right, because, the Article is concerned only with giving protection to personal liberty. [241 H 242 C, 244 B C]. The Act does not give any power to deprive any one of his personal liberty either by way of arrest before the trial or by way of sentence of imprisonment as a result of the trial; nor does it deprive an arrested person of his constitutional right to take steps against the arrest or to defend himself at a trial which might occasion the loss of his personal liberty. The fact that the respondents were arrested under another statute, namely, the Criminal Procedure Code cannot make either the section or the Act void. [242 G H; 243 C D; 244 D E] State of Bombay vs Atma Ram Sridhar Vaidya, [1951] S.C.R. 167. 204, followed. QUAERE:. Whether respondents were not entitled to the constitutional right because, at the trial they were on bail. [244 E] Per Bachawat and Shelat JJ. : Section 63 of the Act is violative of article 22(1) and is void to the extent that it denies any person who is arrested the right to be defended by a legal practitioner of his choice in any trial for the crime for which he is arrested. but, the order of the High Court, quashing the conviction, should be set 240 aside, because, the respondents did not claim that they should be defended at the trial by counsel, and the circumstances of the case, the existence of section 63 on the statute book did not cause them any prejudice. [257 G; 258 B C] As soon as the respondents were arrested without warrants issued by a court, they acquired the rights guaranteed by article 22(1), and they continued to have those rights though they were released on bail at the time of trial. The rights include the right to be defended even in a trial in which they were in jeopardy of only being sentenced to a fine. because, the pronoun "he" in the second part of article 22(1) refers to "any person who is arrested ' . If in the exercise of the general powers under the Criminal Procedure Code, the police arrest a person on the accusation of a crime for which he is liable to be tried before a Special Criminal Court, the arrested person has the constitutional right to be defended by counsel at the trial before the Special Criminal Court in respect of the offence for which he was arrested. Even if the word "he" means "any person" there is no warrant for giving a restricted interpretation and limiting the right to be defended by counsel to a trial in which the arrested person is in jeopardy of being sentenced to death or to a term of imprisonment. [256 A D, F G; 257 A B] State of Punjab vs Ajaib Singh, ; , referred to. QUAERE:Whether the tests of an arrest" laid down in Ajaib Singh 's case are exhaustive. [257 C]. Per Hidayatullah J. (dissenting): The appeal should be dismissed. Under article 22, a person who is arrested for whatever reason, gets three independent rights. The first is the right to be told the reasons for the arrest as soon as an arrest is made, the second is the right to be produced before a Magistrate within 24 hours and the third is the right to be defended by an advocate of his choice. When the Constitution lays down in absolute terms a right to be defended by one 's own counsel, it cannot be taken away by ordinary law, and. it is not sufficient to say that the accused who was so deprived, of the right, did not stand in danger of losing his personal liberty. The words "nor shall he be denied the right to consult, and to be defended by, a legal practitioner of his choice," in article 22(1), refer to a person who is arrested. Personal liberty is invaded by arrest and continues to be restrained during the, period a person is on bail and, it is not sufficient to say that the accused who was so deprived prisonment. Before his release on bail he defends himself against his arrest and the charge for which he is arrested, and after his release on bail, against the charge he is to answer and for answering which, the bail requires him to be present. Therefore. section 63 of the Act, being inconsistent with the Article, is void. Though the contention was raised for the first time in the High Court, since it is a question of fundamental right it must be upheld. [248 H; 249 D F; 251 A B, F H; 252 B]. State of Punjab vs Aiaib Singh. ; and State of Uttar Pradesh vs Abdul Samad [1962]. S.C.R. 915. referred to.

: Civil Appeal No. 33 of 1953. Appeal by special leave from the Judgment and Order dated the 16th May, 1951, of the High Court of Judicature at Patna in Miscellaneous Judicial Case No. 126 of 1950, arising out of the Order dated the 17th May, 1949, of the Income tax Appellate Tribunal, Calcutta Bench, Calcutta, in I.T.A. No. 147 of 1948 49. sukumar Mitra (section N. Mukherjee with him) for the appellant. C.K. Daphtary,. Solicitor General for India (Porus A. Mehta, with him) for the respondent 1954. February 9. The Judgment of the Court was delivered by DAS J. This is an appeal by special leave from the judgment of the Patna High Court delivered on a reference made by the Income tax Appellate Tribunal under section 66(1) of the Indian Income tax Act. The tribunal referred the following two questions for the opinion of the High Court: 769 1. On the facts and in the circumstances of this case is the surplus of Rs. 13,05,144 arising out of the sale of the plant and machinery of the sugar factory chargeable under section 10 (2) (vii) ? 2. Was the profit of Rs. 15,882 on the sale of stores of the factory taxable under the Income tax Act in the circumstances of this case ? The reference came up for hearing before a Division Bench consisting of Shearer and Sarjoo Prasad JJ. and after a prolonged hearing the learned Judges delivered separate judgments on the27th February. 1951, giving divergent answers to the questions, Shearer J. answering both the questions in the negative and Sarjoo Prasad J. giving an affirmative answer to both of them. The matter thereupon was placed before a third Judge, Ramaswami J. who, after a fresh hearing delivered his judgment on the 16th May, 1951, agreeing with Sarjoo Prasad J. on the first question and with Shearer J. on the second question. The result was that the High Court by a majority decision answered the first question in the affirmative, i.e., against the assessee, and the second question in the negative, i,e. in favour of the assessee. The assessee applied to the High Court for leave to appeal to this court against the High Court 's decision on the first question. The High Court having declined to grant the necessary certificate the assessee applied for and obtained the special leave of this court to prefer the present appeal. The department has not preferred any appeal against the High Court 's decision on the second question and nothing further need be said about that question. The controversy arose in course of the proceedings for the assessment of Pursa Ltd. to income tax for the assessment year 1945 46, the relevant accounting year covering the period between the 1st October, 1943, to 30th September, 1944. Pursa Ltd., was a company incorporated in 1905 under the Indian Companies Act but all its shareholders and directors were residents in the United Kingdom. The business of the 770 company was that of growers of sugarcane, manufacturers of sugar and dealers in sugar. It is common ground that the crushing season for the manufacture of sugar is from December to April of each year. It appears that towards the end of 1942 an attempt was made to sell the entire business of the company but such attempt did not succeed. It appears from the case filed by the respondent in tiffs appeal that in the middle of 1943 the directors of the company commenced negotiations for the sale of the factory and other assets of the company with the ultimate object of winding up the company. From the correspondence, affidavit and other materials placed before the tribunal and referred to by Sarjoo Prasad J. in his judgment it appears that on the 9th August, 1943, an inventory was prepared and a firm offer was received from Dalmia lain & Company Ltd., for the purchase of the factory and stores as on that date. This offer was on the 16th August, 1943, communicated by cable to the directors in England. On the 20th August, 1943, the directors, asked the local managers in India to proceed with the matter in anticipation of the sanction of the shareholders which the directors expected to obtain at an extraordinary general meeting to be held very shortly. That meeting, however, was held on the 8th October, 1943, i.e., 8 days after the accounting year had started. , At that meeting the firm offer of Dalmia lain & Company Ltd. was accepted and a concluded agreement for sale came into existence. Thereafter instructions were given to the solicitors to draw up the necessary documents. On the 7th December, 1943, a written memorandum of agreement was executed whereby the company agreed to sell and demise to Dalmia Jain & Company Ltd., free from all mortgages and charges at and for the price of rupees twenty eight lacs all the lands, buildings, machinery and plant and all vats, reservoirs, cisterns, pumps, machinery, engines, boilers, plant, implements, utensils, tramways, furniture, stores, articles and things as on the ninth day of August, one thousand nine hundred and forty three (subject to subsequent use and consumption in the ordinary course 771 of business) used in connection with the said sugar factory, but excepting stocks of manufactured sugar and stocks of grain in godown on the ninth day of August, one thousand nine hundred and forty three and all stores and other articles bought or received by the company after the date. Dalmia Jain & Company Ltd., paid the sum of rupees twenty eight lacs on the same day and on the 10th December, 1943, they got possession of the factory. On the date of the aforesaid sale, the company possessed sugar stock valued at rupees six lacs which was excluded from the sale. This stock of sugar the company continued to sell up to June, 1944. It is said that the said stock of sugar was excluded because at the time it was not possible to know at what date such a sale would be concluded and the sugar produced in 1943 had to be sold by and through the exclusive selling agents of the company under a contract entered into with them. It is, however, not disputed that between the 9th August, 1943, when the firm offer was obtained and the 10th December, 1943, when possession of the factory was made over to Dalmia Jain & Company Ltd., the company never used the machinery and plant for the purpose of manufacturing sugar or for any other purpose except that of keeping them in trim and running order. Indeed, throughout the accounting period the machinery and plant were not used by the company. The company went into voluntary liquidation on the 20th June, 1945. The reason for the delay in putting the company into liquidation is said to have been caused by considerable legal difficulties with regard to the transfer of certain mokarari lands belonging to the company. The liquidators appointed by the shareholders of the company represented the company in the matter of proceedings for assessment of the company for the assessment year 1945 46. In the course of these assessment proceedings the Income tax Officer on the 21st February, 1947, wrote a letter to the liquidators asking for elucidation on certain points. Amongst other things, the Income tax Officer wanted to know the liquidators ' objection why the company 's activities during the previous 772 year might not be treated as amounting to a realisation of assets on impending liquidation rather than to the carrying on of business within the meaning of the Income tax Act. To this letter an answer was sent by the liquidators . on the 19th March, 1947, pointing out that the company had gone into liquidation on the 20th June, 1945, and that in view of the date of liquidation the liquidators could not agree that the company was not carrying on business during the year ended 30th September, 1944, and they further pointed out that the various debits contained in the sugar factory accounts were those incurred in carrying on the company 's business. By his letter dated the 17th May, 1947, the Income tax Officer claimed that large profits which had been made by the company on the sale of their machinery and plant were taxable under the second proviso to section 10 (2)(vii)of the Income tax Act and called upon the liquidators to retain sufficient funds and assets in their hands to meet the heavy tax liabilities that might eventually arise and also to warn the shareholders accordingly. He also asked for certain information which, however, the liquidators did not furnish. The liquidators, in their letter in reply dated the 22nd May, 1947, did not agree that the profits were taxable, for the profits to which reference had been made were not profits arising from a business carried on by the company but were profits arising from the company ceasing to carry on business. The Income tax Officer, however, by his order dated the 21st June, 1947, held that the profits of the sale of machinery and plant were liable to assessment under section 10 (2)(vii)of the Act and added a sum of Rs. 13,05,144 to the profits. The Appellate Assistant Commissioner of Income tax having dismissed the liquidators ' appeal on the 30th January, 1947, the liquidators went up on further appeal to the Income tax Appellate Tribunal. By its order dated the 17th May, 1949, the tribunal dismissed that appeal. Upon an application under section 66(1) of the Act the tribunal stated a case to the High Court referring the two. questions herein before 773 set out. The subsequent history of the matter has already been mentioned and needs no reiteration. The relevant portion of section 10 of the Income tax Act as amended by Act VI of 1939was as follows : "10 (1) The tax shall be payable by anassessee under the head "Profits and gains of business, profession or vocation" in respect of the profits or gains of any business, profession or vocation carried on by him. (2) Such profits or gains shall be computed after making the following allowances, namely : (i) . . . . . . . (ii) . . . . . . . (iii) . . . . . . . (iv) in respect of insurance against risk of damage or destruction of buildings, machinery, plaint, furniture, stocks or stores, used for the purposes of the business, profession or vocation, the amount of any premium paid; (v) in respect of current repairs to 'such buildings, machinery, plant, or furniture, the amount paid on account thereof; (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: (vii) in respect of any machinery or plant which has been sold or discarded, the amount by which the written down value of the machinery or plant exceeds the. amount for which the machinery or plant is actually sold or its scrap value: Provided that such amount is actually written off in the books of the assessee: Provided further that where the amount for which any such machinery or plant is sold exceeds the written down value, the excess shall be deemed to be profits of the previous year in which the sale took place; . . . . . . . . . . . . . . . ." 774 It is necessary to bear in mind the meaning and import of the provisions of section 10 (2)(vii)in so far as they apply to the present case. Under section 10 tax is payable by an assessee "in respect of the profits or gains of any business, profession or vocation carried on by him." "Business" is defined by section 2, sub section (4) as "including any trade, commerce or manufacture, or any adventure or concern in the nature of trade, commerce or manufacture. " As pointed out by the Judicial Committee in Shaw Wallace & Co. 's case(1) the fundamental idea underlying each of these words is the continuous exercise of an activity and the same central idea is implicit in the words "carried on by him" occurring in section 10 (1)and those critical words are an essential constituent of that which is to produce the taxable income. Therefore, it is clear that the tax is payable only in respect of the profits or gains of the business which is carried on by the assessee. Sub section (2)permits allowances to be made before the taxable profits are ascertained. Proviso (2)to clause (vii) of that sub section on which the income tax authorities have relied makes the excess of sale proceeds over the written down value of "any such machinery or plant" to be deemed to be profits of the previous year in which the sale took place. Any such machinery or plant in the proviso clearly refers to the machinery or plant in respect of which the allowance is to be given under that clause. Although the word "such" was not used in the body of clause (vii), the scheme of sub section (2) which is apparent from the other clauses of allowances e.g., (iv), (v) and (vi), clearly indicates that the machinery or plant referred to in clause (vii) must be the same as those mentioned in the earlier clauses, i.e., such machinery or plant as were "used for the purposes of the business, profession or vacation." Indeed, the position has been made clear and placed beyond any doubt by the subsequent amendment of 1946 which added the word "such" in clause (vii). The words"used for the purposes of the business" obviously [1] L. R, 59 I.A. 206 at p. 213. 775 mean used for the purpose of enabling the owner to carry on the business and earn profits in the business. In other words, the machinery or plant must be used for the purpose of that business which is actually carried on and the profits of which are assessable under section 10 (1). The word "used" has been read in some of the pool cases in a wide sense so as to include a passive as well as active user. It is not necessary, for the purposes of the present appeal, to express any opinion on that point on which the High Courts have expressed different views. It is, however, clear that in order to attract the operation clauses (v), (vi) and (vii) the machinery and plant must be such as were used, in whatever sense that word is taken, at least for a part of the accounting year. If the machinery and plant have not at all been used at any time during the accounting year no allowance can be claimed under clause (vii) in respect them and the second proviso also does not come into operation. In its statement of the case, after referring to its decision that the profits on the sale of machinery and plant were assessable under section 10 (2)(vii), the tribunal proceeded to state: "This decision was based on two considerations. First, that as admitted by the applicant company the company had been carrying on its business up to the date of the sale of the machinery, namely, 7th December, 1943. 'The tribunal was of the opinion that as the applicant company had not ceased to carry on its business till the date of the sale of the machinery, it must be held that the sale of the 'machinery was a part of the applicant company 's carrying on of the business. The second reason for the decision of the tribunal was that the applicant company did not sell its sugar stocks amounting to over Rs.6,00,000, on 7th December, 1943. The applicant company s plea that the sugar stocks could not be sold as the applicant company had sole agents for the sale of sugar, was not accepted by the tribunal. The ' Income tax Appellate Tribunal found that sugar continued to be sold for more than 6 months 776 after the sale of the machinery and substantial expenses on establishment and general charges continued to be incurred. From this the Income tax Appellate Tribunal concluded that the sugar stocks had not been sold on 7th December; 1943, purposely in order to sell these to the best advantage later on. This, the Income tax Appellate Tribunal held, showed that the applicant company carried on business even subsequent to the sate of machinery on '7th December, 1943." Although the High Court will not disturb or go behind the finding of fact of the tribunal, it is now well settled that where it is competent for a tribunal to make findings in fact which are excluded from review, the appeal court has always jurisdiction to intervene if it appears either that the tribunal has misunderstood the statutory language because the proper construction of the statutory language is a matter of law or that the tribunal has made a finding for which there is no evidence or which is inconsistent with the evidence and contradictory of it. [See Lord Normand in Commissioners of Inland Revenue vs Fraser(1)]. It appears to us that the tribunal misdirected itself in law as to the meaning and import of the relevant provisions of section 10 of the Act. ]t completely overlooked the fact which is plainly in evidence on the record that the machinery and plant which were sold had not at all been used for the purposes of the business carried on in the accounting year and consequently the second proviso to section 10 (2) (vii) could have no application to the sale proceeds of such machinery and plant. In fact the entire decision of the tribunal was vitiated by its failure to keep in view the true meaning and scope of section 10 (2) (vii) and cannot, therefore, be supported. It further appears to us that in the statement of the case the tribunal was not merely stating something in the nature of a primary fact but was also drawing a conclusion which is to a certain extent contrary to the primary finding. As is stated clearly in the statement of the case, the decision of the tribunal was based on (1) at p. 501. 777 two considerations. The first consideration was rounded on an admission by the liquidators that the company had been carrying on its business up to the date of the sale of the machinery on the 7th December, 1943. This admission is quite consistent with the case that the company was only selling its stock of sugar and not doing any business of manufacture of sugar. Indeed, the manufacturing process does not begin until December of each year and the memorandum of agreement was made on the 7th December, 1943, and possession was delivered to the purchaser on the 10th December, 1943. It is nobody 's case and it has not been found that the company had manufactured any sugar during the whole of the accounting year. Therefore, this finding that the company carried on its business up to the 7th December, 1943, certainly does not indicate that the company was also carrying on any business of 'growing sugarcane or manufacturing sugar by the use of the machinery or plant in question. The second finding that the company carried on business even after the sale of the machinery and the plant clearly indicates that that business had nothing to do with the machinery or plant. Both the findings, therefore, are inconclusive. The matter, however, does not rest there. It appears to us that the findings of fact, taken literally, cannot support the decision of the tribunal. If, as held by the tribunal, "the sale of the machinery was a part of the applicant company 's carrying on of the business" then the sale must be regarded as an ordinary operation of such business and consequently the profits arising out of such ordinary business operation would be assessable under the provisions of section 10 (1) and it would not be necessary to have recourse to the statutory fiction created by the second proviso to clause (vii)under which the excess of the sale proceeds over the written down value is to be deemed to be profits of the business. If the profits on the sale of the machinery and plant are to be made assessable under the second proviso, as has ' been done by the tribunal, then it must be conceded that these deemed profits were not in reality the profits of the business carried on by the (2) 24 Tax Cases 498 at p. 501. 13 95 section C.I./59 778 company and, therefore, the sale transaction which brought in these profits was not in fact part of the company 's business, which conclusion again will be inconsistent with the finding of fact if the business is not understood as limited only to the selling of sugar. For reasons stated above, it appears to us that having misdirected itself in law as to the scope and effect of the relevant portions of section 10 of the Act the tribunal did not approach the facts from a proper angle and, further, that its findings cannot, in the circumstances of this case, be given such sanctity as would exclude the same from review by the High Court or this court. Turning to the facts to be gathered from the records it is quite clear that the intention of the company was to discontinue its business and the sale of the machinery and plant was a step in the process of the winding up of its business. The sale of the machinery and plant was not an operation in furtherance of the business carried on by the company but was a realisation of its assets in the process of gradual winding up of its business which eventually culminated in the voluntary liquidation of the company. Even if the sale of the stock of sugar be regarded as carrying on of business by the company and not a realisation of its assets with a view to winding up, the machinery or plant not being used during the accounting year at all and in any event not having had any connection with the carrying on of that limited business during the accounting year, section 10 (2) (vii) can have no application to the sale of any such machinery or plant. In this view of the matter, the answer to the first question should be in the negative and we answer accordingly. The result is that this appeal is allowed and the respondent shall pay the costs of the appellants both in this court and in the High Court. Appeal allowed. Agent for the appellant:B. N. Ghose.

IN-Abs

The fundamental idea underlying the words used in the definition of "business" in section 2(4) of the Income tax Act the continuous exercise of an activity and the same central idea is implicit in the words "carried on by him" occurring in 10(1) and those critical words are an essential constituent that which is to be produce the taxable income, and therefore the 768 tax is payable only in respect of the profits or gains of the business which is carried on by the assessee. That under clause (vii) of section 10(2) the machinery and plant must be such as were used at least for a part of the accounting year. As the machinery and plant of the sugar factory which were sold had not at all been used for the purpose of business during the accounting year, the second proviso to s.10. (2) (vii) could have no application and the assessees were not liable. Although the High Court will not disturb or go behind a finding of fact of the Tribunal, it is well settled that where it is competent for a Tribunal to make findings of fact which are excluded from review, the appeal court has always jurisdiction to intervene if it appears either that the Tribunal has misunderstood the statutory language because the proper construction of the statutory language is a matter of law or that the Tribunal has made a finding for which there is no evidence or which is inconsistent with the evidence and contradictory of it. Commissioner of Income tax vs Shaw Wallace and Company (L.R. 59 I.A. 206), and Commissioners o/Inland Revenue vs Fraser (24 Tax Cases 498) referred to.

Appeals Nos, 731 732 of 1964. Appeals by special leave from the order dated January 29, 1963 of the Commissioner of Income tax, Bombay City 1, in No. 1/RP/BBY/40 and 41 of 1961. N. A. Palkhivala, T. A. Ramachandran, section P. Mehta and O, C. Mathur, for the appellant. Sarjoo Prasad, R. Ganapathy Iyer and R. N. Sachthey, for the respondent. The Judgment Of SARKAR, C.J. and MUDHOLKAR, J. was delivered by SARKAR, C.J. BACHAWAT, I. delivered a dissenting opinion. Sarkar. The assessee was an advocate of the High Court of Bombay and was practicing his profession there till March 1, 1957 when he was elevated to the Bench of that Court. He then ceased to carry on his profession and has not resumed it since. As an advocate he had been assessed to income tax on his professional income, his accounting years for the assessments being the calendar years, When he was raised to the Bench, various fees for professional work done by him were outstanding. In the years 1958 and 1959 during no part of which he had carried on any profession, he received certain moneys on account of these outstanding fees. 297 His accounts had always been kept on the cash basis. The question is. whether be is liable to pay income tax on those receipts. We shall first make a few general observations. Section 6 of the Income tax Act, 1922 specifies six sources or heads of income which are chargeable to tax. In order to be chargeable, an income has to be brought under one of these six heads. section 6 also provides that the chargeability to tax shall be in the manner provided in sections 7 to 12B of the Act. Each of these sections lays down the rules for computing income for the purpose of chargeability to tax under one or other of the heads mentioned in section 6. An income falling under any head can only be charged to tax if it is so chargeable under the corresponding computing section. The fourth head of income in section 6 is "Profits and gains of business, profession or vocation" and the fifth head "income from other sources". The fifth head is the residuary head embracing all sources of income other than those specifically mentioned in the section under the other heads. Then we observe that the several heads of income mentioned in section 6 are mutually exclusive; a particular income can come only under one of them: The United Commercial Bank vs The Commissioner of Income Tax(2). We now turn to the present case. The receipts in the present case are the outstanding dues of professional work done. They were clearly the fruits of the assessee 's professional activity. They were the profits and gains of a profession. They would fall under the fourth head, viz., "Profits and gains of business, profession or vocation". They were not, however, chargeable to tax under that head because under the corresponding computing section, that is, section 10, an income received by an assessee who kept his accounts on the cash basis in an accounting year in which the profession had not been carried on at all is not chargeable and the income in the present case was so received. This is reasonably clear and not in dispute: see Commissioner of Income Tax vs Express Newspapers Ltd.(1). Can the receipts then be income falling under the residuary head of income and charged to tax as such? The Commissioner of Income tax from whose decision the present appeal has been taken by the assessee, held that it was chargeable under that head. He came to that conclusion on what he thought were the general principles and also on the authority of a certain observation of Chagla, J. in Re. B. M. Kamdar(3). The observation of Chagla, J. does not seem to us to be of much assistance for the decision in that case was not based on it nor is it supported by reasons. We find ourselves unable to agree with the learned Judge. We may add that apart from the observation in Kamdar 's case(1), there does not appear to be any direct authority supporting the view of the Commissioner. (1) ; (2) (3) I.T.R. 10. 298 As to the general principles, we first observe that as the heads of income are mutually exclusive, if the receipts can be brought under the fourth head, they cannot be brought under the residuary head. It is said by the Revenue that as the receipts cannot be brought to tax under the fourth head they cannot fall under that head and must therefore fall under the residuary head. This argument assumes, in our view, without justification, that an income falling under one head has to be put under another head if it is not chargeable under the computing section corresponding to the former head. If the contention of the revenue is right, the position would appear to be that professional income of an assessee who keeps his account on the cash basis would fall under the fourth head if it was received in a year in which the profession was being carried on, but it would take a different character and fall under the residuary head if received in a year in which the profession was not being carried on. We are unable to agree that this is a natural reading of the provisions regarding the heads of income in the Act. Whether an income falls under one head or another has to be decided according to the common notions of practical men for the Act does not provide any guidance in the matter. The question under which head an income comes cannot depend on when it was received. If it was the fruit of professional activity, it has always to be brought under the fourth head irrespective of the time when it was received. There is neither authority nor principle for the proposition that an income arising from a particular head ceases to arise from that head because it is received at a certain time. The time of the receipt of the income has nothing to do with the question under which particular head of income it should be assessed. It is then said that the receipts had to be included in the total income stated in section 4 and since they do not fall under the exceptions mentioned in that section, they must be liable to tax and, therefore, they must be considered as income under the residuary head as they could not otherwise be brought to tax. This contention seems to us to be ill founded. While it is true that under section 4 the receipts are liable to be included in the total income and they do not come under any of the exceptions, the contention is based on the assumption that whatever is included in total income under section 4 must be liable to tax. We find no warranty for this assumption. Section 4 does not say that whatever is included in total income must be brought to tax. It does not refer at ill to chargeability to tax. Section 3 states that "Tax. shall be charged . . in accordance with, and subject to the provisions, of this Act in respect of the total income". This section does not, in our opinion, provide that the entire total income shall be chargeable to tax. It says that the chargeability of an income to tax has to be in accordance with, and subject to the provisions of the Act. The income has therefore to be brought under one of the heads In section 6 and can be charged to tax only if it is so chargeable under 299 the computing section corresponding to that head. Income which comes under the fourth head, that is, professional income, can be brought to tax only if it can be so done under the rules of computation laid down in section 10. If it cannot be so brought to tax, it will escape taxation even if it be included in total income under section 4. Furthermore, the expression "total income" in section 3 has to be understood as it is defined in section 2(15). Under that definition. total income means "total amount of income, profits and gains referred to in sub section (1) of section 4 computed in the manner laid down in this Act", that is, computed for the purpose of chargeability under one of the sections from section 7 to section 12 B. The receipts in the present case, as we have shown, can only be computed for chargeability to tax, if at all, under section 10 as income under the fourth head. If they cannot be brought to tax by computation under that section, they would not be included in "total income" as that word is understood in the Act for the purpose of chargeability. That all income included in total income is not chargeable to tax may be illustrated by referring to income from the source mentioned in the third head in section 6, namely, "Income from property". The corresponding computing section is section 9 which says that tax shall be payable on income under this head in respect of bona fide annual value of property. It is conceivable that income actually received from the property in a year may exceed the notional figure. The excess would certainly be liable to be included in total income under section 4. It however, cannot be brought to tax as income under the head "other sources", see Saliently House Estate, Ltd. vs Fry(1). It is an income which cannot be taxed at all though it is included in total income as defined in section 4. In Probhat Chandra Barua vs King Emperor(1) it was no doubt said that section 12 which is the computing section in respect of the residuary head of income, was clear and emphatic and expressly framed so as to make the head of "Other sources" describe a true residuary group embracing within it all sources of income, profits and gains, provided the Act applies to them, that is, provided they are liable to be included in total income under section 4 which deals with income to which the Act applies. We are in full agreement with that observation but we do not think that it affords any support to the contention that all income liable to be included within total, income under section 4 must be brought to tax. The observation must be read keeping in mind the undisputed principle that a source of income cannot be brought under the residuary head if it comes under any of the specific heads, for the Judicial Committee could not have overlooked that principle. If we do that, it will be clear that all that the Judicial Committee said was that all sources of income which do not come under any of the other heads of income can be brought under the residuary head. The words used are "embracing. all sources of income" and not all income. It did not say that an (1) ; (2) 57 I.A. 228. 300 income liable to be included in the total income is chargeable to tax as income under the residuary head if it is not chargeable tinder a specific head under which it normally falls. In Probhat Chandra Barva 's case(1) the Judicial Committee was not concerned with that aspect of the matter; the only question before it was, whether zamindari and certain other income fell under the third head of income from property, as the word 'property ' was understood in the Act. Another aspect of Probhat Chandra Barua 's case(1) requires a mention. The question that there arose, as we have just now said, was, whether the Income tax Act did not impose a tax on the income of a zamindar derived from his zamindari and certain other properties. It was said on behalf of the assessee that the zamindari and the other income being income from property fell under the third head and could be brought to tax only under the corresponding computing section, section 9. It was pointed out that the income could not be charged to tax under that section because it dealt only with income from house property which the income concerned was not. It was then said that the income could not be taxed under the residuary head because it was really income from property and could be taxed only as such. The Judicial Committee did not accept this contention. It took the view that the word 'property ' in the third head "Income from property" had to be interpreted as restricted only to that kind of property which is described in the computing section, section 9 and as that section deals only with house property the income from zamindari and other properties did not fall under the head "Income from property". It, therefore, found no difficulty in holding that the zamindari income was income from the residuary source. We find no support in this case for the view that an income which is admittedly under a specific head can be brought to tax under the residuary head if it cannot be so brought under the cornputing section corresponding to that head. That case only held that zamindari income was not income which fell under the head "Income from property" and that it could never so fall. It provides ,no warranty for the contention that an income from one source may, in certain circumstances, be treated as income from a different source, which is the contention of the Revenue in the present case. We think it right also to observe that if the receipts in the present case could be treated as income from the residuary source, the position would be most anomalous. We have earlier said that if that were so, the placing of an income under this head would depend on the act of the assessee, it would depend on the time when the assessee chose to receive it. That we conceive is not it situation which the Act contemplates. But there is another and stronger reason to show that the Act did not contemplate it. Suppose the assessee had kept his accounts on the mercantile basis. (1) 57 I.A. 228. 301 He would then have been charged to tax on these receipts in the year when the income accrued which must have been a year when he was carrying on his profession as an advocate. It could not then have been said that the receipts should be taken under the head "other sources". If we are to accept the contention of the Revenue, we have to hold that the method of book keeping followed by an assessee would decide under which head a particular income will go. If the Revenue is right, the income of the assessee would go under the fourth head if the method of accounting was mercantile and it would go under the fifth head if the accounting was the cash basis. We are wholly unable to take the view that such can be the position under the Act. The heads of income must be decided from the nature of the income by applying practical notions and not by reference to an assessee 's treatment of income: see Commissioner of Income tax vs Cocanada Radhaswami Bank Ltd.(1). It now remains to see whether section 12 justifies a view contrary to that which we have taken. It lays down the rules for computation of income under the head "Other sources". It says that tax under the head "Income from other sources" shall be payable in respect of income of every kind which may be included in the total income if not included under any of the preceding heads. It seems to us clear that the words "if not included under any of the preceding heads" which refer to the heads considered in sections 7 to 10 refer to income and not to a head of income. section 12, therefore, deals with income which is not included under any of the preceding heads. If the income is so included, it falls outside section 12. Whether an income is included under any of the preceding heads would depend on what kind of income it was. It follows that if the income Is profits and gains of profession, it cannot come under section 12. Section 12 does not say that an income which escapes taxation under a preceding head will be computed under it for chargeability to tax. It only says and this is most important that 'an income shall be chargeable to tax under the head "other sources" if it does not come under any other head of income mentioned in the Act. Section 12 therefore does not assist the contention of the Revenue that professional income which cannot be brought to tax under section 10 may be so brought under section 12. For these reasons we have come to the conclusion that the receipts were not chargeable to tax either under the head of professional income or under the residuary head, It was not said that the receipts might be brought to tax under any other head. In our opinion, therefore, the receipts were not chargeable to tax at all. We accordingly allow these appeals with costs. (1) 3 S.C.R. 619. 302 Bachwat, J. These appeals raise the question whether the professional income of an assessee whose accounts are kept on a cash basis, received by him during his life time after the discontinuance of the profession and after the close of the accounting year in which the profession is discontinued, is assessable to income tax either under section 10 or under section 12 of the Indian Income tax Act, 1922. The assessee was practising as an advocate in the High Court of Bombay till March 1, 1957 when he was appointed a Judge of the High Court at Bombay. His method of accounting was cash, and his accounting year was the Calendar year. The relevant orders of the Income tax Officer suggest that his accounting year was the financial year ending on March 3 1, but it is now the common case of both the assessee and the Revenue that the accounting year was the Calendar year. In the assessment year, 1958 59, the assessee was assessed to income tax in respect of the entire professional income received by him, during the Calendar year including the income received after March 1, 1957. It is not disputed that the assessee was liable to pay tax in respect of the income received by him between March 1, 1957 and December 31, 1957. During the Calendar years, 1958 and 1959, the assessee re ceived the sums of Rs. 30,570 and Rs. 15,240 respectively on account of professional fees for work done by him before March 1, 1957. In the returns for the assessment years, 1959 60 and 196061, the assessee included the aforesaid two sums as his income from profession. By his orders dated May 30, 1960 and October 26, 1960, the Income tax Officer subjected the aforesaid two sums to tax treating them as receipts of fees for professional services rendered in the earlier years and as part of the total income of the assessee. On April 4, 1961, the assessee filed two revision petitions before the Commissioner of Income tax, Bombay City 1, under section 33 A contending that the aforesaid two sums were no part of his total income of the relevant accounting years and were included in his returns through an error and asking for their exclusion from his assessable income for the relevant assessment years. By a common order dated January 29, 1963, the Commissioner of Income tax held that the two sums were assessable on general principles and also on the authority of the decision in Re. B. M. Kamdar(1), and rejected the revision petitions. From this order, the assessee now appeals to this Court by special leave. The first question is whether the two sums were assessable to tax under section 10 of the Indian Income tax Act, 1922. Section 10(1) provides: "The tax shall be payable by an assessee under the head Profits and gains of business, profession or vocation ' in respect of the profits and gains of any business, profession or vocation carried on by him." (1) 303 Section 10 applies to the profits and gains of any business, profession or vocation carried on by the assessee. Considering that the subject matter of charge is income of the previous year, the expression "carried on by him" must mean "carried on by him at any time during the previous year." To attract section 10(1), it is not essential that the assessee should have carried on the profession throughout the entire previous year or at the time when be realised the outstanding professional fees; it is sufficient that he carried on the profession at any time during the accounting year in which he realised his fees, see in re. Kamdar(1). On the other hand, the section does not apply to the profits and gains of any profession which was not carried on by the assessee at any time during the previous year. Our attention was drawn to several decisions of this Court dealing with section 10(2)(viii) and the second proviso to section 10(2)(vii). In Commissioner of Income tax vs Express Newspapers Ltd(1) and Commissioner of Income tax vs Ajax Products Ltd.(1), this Court held that one of the essential conditions of the applicability of the second proviso to section 10(2)(vii) is that during the entire previous year or a part of it the business shall have been carried on by the assessee. In the Express Newspapers Ltd. case(1), at page 259, Subba Rao, J. said: "Under section 10(1), as we have already pointed out, the necessary condition for the application of the section is that the assessee should have carried on the business for some part of the accounting year. " These observations support the conclusion that the profits and gains of a business or profession are not chargeable under section 10(1), if the assessee did not carry on the business or profession during any part of the previous year. In the instant case, the assessee discontinued his profession as soon as he became a Judge of the Bombay High Court. He could not carry on the profession after he became a Judge. It is not possible to hold that he continued to carry on the profession merely because he continued to realise his outstanding fees. It follows that the assessee did not carry on his profession as an advocate at any time during the Calendar years, 1958 and 1959. The receipts of the outstanding professional fees during 1958 and 1959 were not profits and gains of a profession carried on by the assessee during those years, and were not assessable to tax under section 10(1). Section 13 provides that except where the proviso to that section is applicable, the income for the purposes of section 10 must be computed in accordance with the method of accounting regularly employed. by the assessee. Section 13 is mandatory. In the instant (1) (2) , (3) ; 304 case, as the assessee employed the cash method of accounting and as the proviso to section 133 did not apply, his professional income during 1957 and the previous accounting years had to be computed on the cash basis. The Revenue had no option in the matter. Had the assessee adopted the mercantile method of accounting. the entire income of the assessee arising from his profession before March 1, 1957 would have been included in his assessable income for those years, and no portion of it would have escaped assessment under section 10. But as the assessee adopted the cash method of accounting, the outstanding fees could not be included in the assessment for those years. The question is whether this income now escapes taxation altogether. There is no doubt that by the method of accounting employed by the assessee, he has chosen to treat the receipts in question as income of the accounting years, 1958 and 1959. The Revenue claims that the income was assessable to tax under section 12. On behalf of the assessee, Mr. Palkhiwala submitted that (1) the income from the defunct source of profession, though not assessable under section 10, continued to fall under the head covered by section 10 and the residuary head under section 12 was not attracted, (2) section 12 covers residual heads and not residual receipts, and (3) that if section 12 were applied to this income, the assessee would suffer injustice because the deductions properly allowable under section 10 in respect of the income could not be allowed. On the other ban(], Mr. Sarjoo Prasad appearing on behalf of the Revenue submitted that the receipts in question were part of the total income of the assessee for the relevant accounting years chargeable under section 3 read with sections 2(15) and 4. and as the income was not exempt from tax and as it did not fall under section 10 or any other head, it must be assessed to tax under section 12. In support of his contention, Mr. Sarjoo Prasad relied upon the opinion of Chagla, J. in re. Kamdar(1) at p. 58. By section 3 read with sections 2(15) and 4, income tax is charged for every year in accordance with and subject to the provisions of the Act in respect of the total income of any previous year of the assessee computed in the manner laid down in the Act, including all income, profits and gains from whatever source derived. which accrue or arise or are received or are deemed to accrue, arise or to be received as provided by section 4(1) and which are not exempted under section 4(3). The crucial words in section 4 are "from whatever source derived". The nature of the source does not affect the chargeability of the income. Section 6 sets out the heads of income chargeable to tax. The several heads are dealt with specifically in sections 7, 8, 9, 10 and 12. Income is classified under different heads for the purpose of computing the net income under each head after making suitable deductions. Income, profits and gains from what ever source derived, included in the total income fall under one (1) 305 head or the other, If any part of the total income does not fall under the specific heads under sections 7, 8, 9 and 10, it must fall under the residuary head under section 12. Section 12(1) provides: "The tax shall be payable by an assessee under the head Income from other sources ' in respect of income, profits and gains of every kind which may be included in his total income (if not included under any of the preceding heads). " Income, profits and gains of every kind are covered by section 12, provided two conditions are satisfied, viz., (1) they are not included under any of the preceding heads and (2) they may be included in the total income of an assessee. Any income chargeable under a specific head can be charged only under that head and no part of that income can be charged again under section 12. But any part of the total income of the assessee not assessable under a specific head is assessable under the residuary head covered by section 12. Referring to similar words in section 12(1), as it stood before its amendment in 1939, Lord Russell observed in Probhat Chandra Barua vs The King Emperor(1): "These words appear to their Lordships clear and emphatic, and expressly framed so as to make the sixth head mentioned in section 6 describe a true residuary group embracing within it all the sources of income, profits and gains provided the Act applies to them i.e., provided that they accrue or arise or are received in British India or are deemed to accrue or arise or to be received in British India, as provided by section 4, sub section (1), and are not exempted by virtue of section 4, sub section " Referring to the words "income, profits and gains" in section 12, Lord Russell said in Gopal Saran Narain Shigh vs Income tax Commissioner(1): "The word 'income ' is not limited by the words 'profits ' and 'gains '. Anything which can properly be described as income is taxable under the Act unless specially exempted. " And Sarkar, J. said in Sultan Brothers vs Commissioner of Incometax(1): "Section 12 is the residuary section covering income, profits and gains of every kind not assessable under any of the heads specified earlier. " Section 6 gives the short label of each head, but the actual contents of the several heads are to be found in sections 7, 8, 9, 10 and 12. Take the head "(iii) Income from property" in section 6. Section 9 shows that only income from buildings or lands appurtenant thereto, of which the assessee is the owner, falls under this head. Income from other properties, e.g., land not appurtenant to (1) [1930] L.B. 57 I.A. 228,239. (2) [1915] L.R. 62 I.A. 207,213. (3) , 357: 306 building is outside the purview of this head and fall s under section 12. Again. take the head "(iv) Profits and gains of business, profession or vocation. " Section 10 on its proper construction applies only to the profits and gains of a business, profession or vocation carried on by the assessee during any part of the previous year. Profits and gains of business, profession or vocation of the assessee which was not carried on by him during any part of the previous year being outside the purview of section 10 must necessarily fall under section 1 2. Mr. Palkhiwala conceded that the receipts in question were the income of the assessee. He also admitted that the income was not exempt from tax under sub section (3) of section 4. The income was received by the assessee in the taxable territories during the relevant previous years. The receipts are, therefore, liable to be included in the total income. We have found that this income cannot be included under section 10. It is common case that it cannot be included under any other head. It follows that the income must fall under the residuary head specified in section 12. Section 12 dealing with the residuary head is framed in general terms and in computing the income under this head, requires deduction of any expenditure (not being in the nature of capital expenditure) incurred solely for the purpose of making or earning such income. As the income in the present case falls under section 12, the allowance for the necessary expenditure must necessarily be given under this head and not under section 10. There is no question of the assessee suffering an injustice by not being given the allowances under section 10. He cannot be given the allowances under section 10, as the income does not fall under that section. Counsel rightly submitted that section 12 covers residual heads and not residual receipts. In this connection, he relied upon Salisbury House Estates Ltd. vs Fry(1). That case decided that the various Schedules of the English Income tax Act, 1918 are mutually exclusive, Sch. A must be applied to the class of income falling under it and no pay of this income is chargeable under Sch. This decision received the approval of this Court in United Commercial Bank Ltd. vs The Commissioner of Income tax(2). On the principle of this decision, if a particular income is taxable as income from property under section 9, any residual receipt from the property in excess of the annual value assessed under section 9 cannot be assessed again as residual income under section 12. This principle has no application to the case before us. The relevant professional income of the assessee is not taxable under section 10 or under any other specific head, and it must, therefore, be taxed tinder section 12. This is not a case where the revenue has taxed or can tax the incomeunder section 10 and again seeks to tax the income under section 12. Mr. Palkhiwala next referred us to several English decisions in support of his contention that the receipts of the professional (1) ; (2) ; 307 income after the discontinuance of the profession are not assess a ble to income tax. Rowlatt, J. in Bennett vs Ogston(1) said: "When a trader or a follower of a profession or vocation dies or goes out of business because Mr. Needham is quite right in saying the same observations apply here and there remain to be collected sums owing for goods supplied during the existence of the business or for services rendered by the professional man during the course of his life or his business, there is no question of assessing those receipts to Income Tax; they are the receipts of: the business while it lasted, they are arrears of that business, they represent money which was earned during the life of the business and are taken to be covered by the assessment made during the life of the business, whether that assessment was made on the basis of bookings or on the basis of receipts." These bservations received the approval of the House of Lords in Purchase vs Stainer 's Executors(1) and Carson vs Cheyney 's Executors(1). In ' the last two cases, the Court held that the professional earnings of a deceased individual realised by his executor were not liable to income tax either under Case II or under Cases III and VI of Schedule D of the English Income tax Act, 1918. in Cheyney 's case(1), the professional earner had died in one of the assessment years and part of his earnings had been realised by his executor during the same assessment year. It is remarkable, however, that in Cheyney 's case(1) at p. 265 Lord Reid said: "In my opinion, the ground of judgment in this House in Stainer 's case was that payments which are the fruit of professional activity are only taxable under Case 11 and cannot be taxed under Case III, even when it is no longer possible when they fall due to tax them under Case II, and when looked at by themselves and without regard to their source they would fall within Case Ill. I am not sure that I fully appreciate the reasons for the decision, but I have no doubt that is what was decided, and I am bound by that decision whether I agree with it or not. " The rule in Stainer 's case(1), rests on shaky foundations and has been subjected to criticism even in England. The rule is subject to exceptions in England, and as pointed out by Jenkins, L. J. in Stainer 's case(1) is subject to the application of Rule 18 of the General Rules. The Indian Income tax Act, 1922 is not pair material, the scheme is in many respects different from the scheme of the English Act, and I think that the rule in Stainer 's case(1) is not applicable to the Indian Act. In England, the tax is on the I current year 's income, the Revenue has the option to assess the (1) ,378. (3) (2) 308 income on the accrual basis, and even if it chooses to make an assessment on the cash basis, the entire accrued income might be considered to be covered by the assessment. But under the Indian law, the tax is on the previous year 's income, the Revenue has no option to assess the income from a business or profession on the accrual basis if the accounts of the as are regularly kept on the, cash basis, and the assessment on the cash basis cannot cover the receipts in the subsequent years. Moreover, it is impossible to say under the Indian law that all receipts of outstanding professional fees after the retirement of the assessee from profession escape taxation. Beyond doubt, the receipt of the professional fees in the accounting year during which the assessee carried on the profession is assessable under section 10, though at the time of the receipt he has retired from the profession. The decision in The Commissioner of Income tax, Bombay City 1, Bombay vs Amarchand N. Shroff(1) is entirely distinguish able. In that case, this Court held that the income of a deceased solicitor received by his heirs subsequent to the previous year in which he died was not liable to be assessed to income tax under a. 24B as his income in the hands of his heirs, and apart from section 24B, no assesment can be made in respect of a person after his death. In the instant case, the assessee is alive,. and no question of assessment under section 24B arises, Neither side relied on section 25(1), and, in my opinion, rightly. That sub section gives an option to the Revenue to make an assessment in the year of the discontinuance of the business or profession on the basis of the income of the period between the end of the previous year and the date of the discontinuance in addition to the assessment, if any, made on the basis of the income of the, previous year, The sub section does not preclude the Revenue from making an assessment on the professional income under any other section of the Act. Our attention was drawn to section 176(4) of the Income tax Act, 1961, which provides: "Where any profession is discontinued in any year on account of the cessation of the profession by, or the retirement or death of, the person carrying on the profession, any sum received after the discontinuance shall be deemed to be the income of the recipient and charged to tax accordingly "in the year of receipt, if such sum would have been included in the total income of the aforesaid person had it been received before such discontinuance. " (2) [1963] Supp. I S.C.R. 690. 309 The note on cl. 178 of the Income tax Bill, 1961 suggests that this sub section was passed with a view to give effect to the following recommendations of the Direct Taxes Administration Enquiry Committee in paragraph 7.81 (11) of its Report: "There is no provision in the law at present to assess the income, received after the cessation of practice or retirement or death of the assessees carrying on a profession, like, Solicitors. Advocates, Doctors, Consulting Surveyors. Engineers etc. The law should be amended in such a way that even on the assessee 's cessation of his vocation or retirement from the profession or death income received after such cessation, retirement or death would be taxed. " The Report does not purport to base, its opinion on any judicial decision. The assumption in this Report that there is no provision in the Indian Income tax Act to assess the entire income received after the retirement or death of professional men cannot be wholly correct, because, beyond doubt, the income received after the retirement in an accounting year during any part of which the assessee practiced his profession is assessable under section 10 and the income received after his death by his legal representative during the previous year in which he practised his profession is assessable in the hands of the legal representative under section 24B. Moreover, the Report is silent on the question of the assessment of the outstanding profits of business realised by a trader after the discontinuance of his business. In this case, we are concerned with the interpretation of the Indian Income tax Act, 1922, and the question is whether we can take into account the provision of the later Act in interpreting the earlier Act. In Craies on Statute Law, 6th Edn, p. 146, the law is stated thus: "Except as a parliamentary exposition, subsequent Acts are not to be relied on as an aid to the construction of prior unambiguous Acts. A later statute may not be referred to interpret the clear terms of an earlier Act which the later act does not amend, even although both Acts are to be construed as one, unless the later Act expressly interprets the earlier Act; but if the earlier Act is ambiguous, the later Act may throw light on it, as where a particular construction of the earlier Act will render the later incorporated Act in. effectual. " This passage is fully supported by the decision of the House of Lords in Kirkness vs John Hudson & Co.(1). In Hariprasad Shivshankar Shukla vs A. D. Divikar(2), this Court gave effect to the (1) [1955] 2 All. R.R. 845. (2) [1957] S.C.R. 121,140. 310 plain meaning of an unamended Act, though on the interpretation given by it a later amendment would become largely unnecessary, and quoted with approval the following passage in the opinion of Lord Atkinson in Ormond Investment Co. Limited vs Betts(1): "An Act of Parliament does not alter the law by merely betraying an erroneous opinion of it. " I do not find any ambiguity in the clear terms of sections 2(15), 3,4,6,10, 12 and 13 of the Indian Income tax Act, 1922 and the later Act cannot be used as an aid to their construction. On the construction of the Indian Income tax Act, 1922, 1 hold that the profession income of an assessee whose accounts were kept on a cash basis received by him during his lifetime after the discontinuance of the profession and after the close of the accounting year in which the profession was discontinued, is assessable to income tax under section 12 of the Act. In the result, the appeals are dismissed. There will be no order as to costs. ORDER In accordance with the Judgment of the majority the appeals are allowed with costs. (1) ,164.

IN-Abs

The appellant an advocate who maintained his accounts on the cash system gave up practice when he was elevated to the Bench in 1957. Certain outstanding professional dues were however received by him in the accounting years 1958 and 1959. These receipts were shown by him as income in his return for the assessment years 1959 60 and 1960 61 and were assessed by the Income tax Officer. The appellant then went in revision to the Commissioner of Income tax contending that the said receipts were not income and had been wrongly taxed. The Commissioner having decided against him the appellant came to this Court under article 136 of the Constitution. HELD: (i) The receipts in the present case were clearly the fruits of the assessee 's professional activity and fell under the fourth head of section 6 of the Indian Income tax Act 1922. They were however not chargeable to tax under that head because under the corresponding computing section that is. section 10. an income received by the assessee who kept his accounts on the cash basis in an accounting year in which the profession had not been carried on at all is not chargeable. [297 D F] Commissioner of Income Tax vs Express Newspapers Ltd., , relied on. (ii) The income could not be taxed under section 12 either. Section 12 deals with income which is not included under any other preceding heads covered by sections 7 to 10. If the income is so included, it falls outside section 12. It follows that if, as in the present case, the income is profits and gains of profession it cannot come under section 12. [301 E] The heads of income in section 6 are mutually exclusive and it would be incorrect to say that as the receipts could not be brought to tax under the fourth head they could not fall under that head and must therefore fall under the residuary head 'other sources '. There is no justification for the assumption that an income falling under one head has to be put under another head if it escapes taxation under the computing section corresponding to the former head. [298 A; 300 E F] The character of the income cannot change merely because the assessee received it at a certain time or adopted a certain sYstem of accounting. [301 B] Section 4 does not say that whatever is included in total income must be brought to tax. The income has to be brought under one of the heads mentioned is section 6 and can be charged to tax only if it is so chargeable under the computing section corresponding to L/S5SCI 296 that head. Income which falls under the fourth head can be brought to tax only if it can be so done under the rules of computation laid down in section 10. [298 G 299 B] In re: B, M. Kamdar, , not approved. The United Commercial Bank vs The Commissioner of Income Tax, ; , Salisbury House Estate Ltd., vs Fry. 15 Tax Cases 266 and Commissioner of In tax vs Cocanada Padhaswami Bank Ltd., , relied on. Probh At Chandra Barua vs King Emperor, 57 I.A. 228, distinguished, Per Bachawat J. (dissenting) The receipts in question were chargeable under section 12. Any income Chargeable under a specific head can be charged only under that head, and no part of that income can be charged again under section 12. But any part of a total income of the assessee not me*sable under a specific head is assessable under the residuary head covered by section 12, [305 C] The income in question was not exempt under section 4(3). The receipts were liable to be included in total income under section 4. This income could not be included under section 10 owing to the method of accounting adopted by the assessee. Nor did it fall under any other head. It followed that the income must fall under the residuary head specified in section 12, This was not a case where the Revenue had taxed or could tax the income under s, 10 and again sought to tax the income under a. 12. [306 C. G H]

Appeal No. 303 of 1963. Appeal from the judgment and order dated September 5, 1960 of the Orissa High Court in Appeal under Orissa High Court Order No. 4 of 1956. N. C. Chatterjee, Ranadey Chaudhuri, G. section Chatterjee and section C. Majumdar, for the appellant. C. K. Daphtary, Attorney General, N. D. Karkhanis and R. N. Sachthey, for respondent No. 1. The Judgment of the Court was delivered by Bachawat, J. On November 29, 1947, the Indian Chemical Products, Ltd., a limited company, was incorporated having its registered offices in Baripada, Mayurbhanj and in the town of Calcutta. Its authorised capital is Rs. 25 lakhs divided into 25,000 shares of Rs. 100 each. The company has seven share holders. The Maharaja of Mayurbhanj subscribed and paid for 7,500 shares. The remaining six shareholders hold 150 shares only. All the shareholders are signatories to the memorandum of association of the company. The State of Orissa claims that by reason of the constitutional changes since the declaration of independence, all the shares held by the Maharaja of Mayurbhanj have now vested in it by operation of law. The State also based its claim to the shares on a formal instrument of transfer executed by the Maharaja. On March 16, 1950, the Government of Orissa lodged the share scrip and the transfer deed with the company, and requested it to make the necessary changes in the share register. The Government as also the Maharaja, through his agent, the Imperial Bank of India, repeatedly requested the company to register the Secretary to the Government of Orissa,, Finance Department as the holder of the shares in place of the Maharaja. There was protracted correspondence in the matter for over three L/S5SCI 26(a) 382 years and eventually on May 16, 1953, the board of directors of the company refused to register the transfer. On December, 1, 1953, Sri section K. Mandal, attorney for the State of Orissa, requested the company to record the name of the State as the owner of the shares in the share register, but the company declined to do so. On February 9, 1955, the State of Orissa filed ' an application under section 38 of the Indian Companies Act, 1913 in the High Court of Orissa asking for rectification of the share register by inserting its name as the holder of the shares in place of the Maharaja. The company and the Maharaja were impleaded as respondents. The application was contested by the company only. On November 22, .1956, Ray, J. allowed the application. On September 13, 1957, he passed a supplemental order directing the filing of the notice of rectification with the Registrar within a fortnight. On September 5, 1960, a Division Bench of the High Court dismissed the appeal preferred by the company. The company now appeals to this Court on a certificate granted by the High Court. Both courts concurrently held that (1) the title to the shares vested in the State of Orissa by operation of law; (2) the, refusal of the board of directors to register the transfer was mala fide; (3) the State of Orissa was entitled to rectification of the share register and a proper case for the exercise of the Court 's jurisdiction under section 38 of the Indian Companies Act, 1913 had been made out; (4) the petition was not liable to be dismissed on the ground that the State had asked the company to register the name of the Secretary to the Government of Orissa, as the shareholder in place of the Maharaja. The appellate Court also held that under the articles of association of the company the board of directors had no power to refuse registration of a transfer where the transfer was by operation of law. The appellant challenges the correctness of these findings. The courts below concurrently found that the 7,500 shares were held by the Maharaja in his capacity as ruler of the State of Mayurbhanj. This finding is amply supported by the documentary evidence on the record and is no longer challenged. The State of Mayurbhanj was one of the feudatory States of Orissa under the suzerainty of the British Crown. As from August 15, 1947, with the declaration of independence the paramountly of the British Crown lapsed. Thereafter, steps were taken for the integration of the State with the Dominion of India. On October 17, 1948, the Maharaja of Mayurbhanj signed an agreement for the merger of the State with the Dominion. By article 1 of this agreement, the Maharaja completely ceded to the Dominion his sovereignty over the State of Mayurbhanj as from November 9, 1948. Article 4 of the agreement allowed the Maharaja to retain the ownership of his private properties only as distinct from the State properties. On and from November 9, 1948, as a necessary 383 consequence of the cesser of sovereignty all the public properties of the State including the 7,500 shares in the company vested in the Dominion. By operation of law in consequence of the change of sovereignty, all the public properties of the State which were vested in the Maharaja as the sovereign ruler devolved on the Dominion as the succeeding sovereign. As from January 1, 1949, the Government of India in exercise of its powers under section 3(2) of the Extra Provincial Jurisdiction Act (47 of 1947) delegated to the Government of Orissa the power to administer the territories of the merged State. On August 1, 1949, the States Merger (Governors ' Provinces) Order, 1949 came into force, and in consequence of section 5(1) of the Order, all property vested in the Dominion Government for purposes of governance of the merged State became from that date vested in the Government of Orissa, unless the purposes for which the property was held were central purposes. By a certificate dated November 10, 1953, the Government of India declared that the 7,500 shares were not held for central purposes. Under the Constitution which came into force on January 26, 1950, the territories of the merged State were included in the State of Orissa. By reason of these successive constitutional changes, the shares became vested in the State of Orissa. The State is now the legal owner of the shares and the directors of the company are bound to enter its name in the register of members, unless there is one restrictive provision in the articles authorising them to refuse the registration. The company contends that under its articles, the directors have the power to refuse the registration. It relies on article 11, which reads: "The Board of Directors shall have full right to refuse to register the transfer of any share or shares to any person without showing any cause or sending any notice to the transferee or transferor, The Board may refuse to register any transfer of shares on which the Company has lien. " Article 1 A attracts the regulations in Table A of the First Schedule to the Indian Companies Act, 1913 so far as they are applicable to private companies and are not inconsistent with the articles. The regulations in Table A make a distinction between transfer and transmission of shares. In respect of a transfer, they require that the instrument of. transfer shall be executed both by the transferor and the transferee. A transmission by operation of law in not such I transfer. In In re. Bentham Mills Spinning Company(1), James, L.J. said "In Table A the word 'transmission ' 384 is put in contradistinction to the word 'transfer '. One means a transfer by the act of the parties, the other means transmission by devolution of law. " Article 11 refers to transfers. A devolution of title by operation of law is not within its purview. Being a restrictive provision, the article must be strictly construed. In the instant case, the title to the shares vested in the State of Orissa by operation of law, and the State did not require an instrument of transfer from the Maharaja to complete its title. , Article 11 does not confer upon the board of directors a power to refuse recognition of such a devolution of title. We may add that we express no opinion on the question whether such an article applies to an involuntary transfer of shares by a Court sale having regard to the provisions of O.21, r. 80 of the Code 'of Civil Procedure with regard to the execution of necessary documents of transfer. Clause 22 of the regulations in Table A read with article 1 A confers power upon the board of directors to decline registration of transmission of title in consequence of the death or insolvency of a member. In the instant case, there is no transmission of title in consequence of death or insolvency, and clause 22 has no application. Under the articles, the directors had therefore no power to refuse registration of the devolution of title on the State of Orissa by operation of law in consequence of the constitutional changes. Though the State of Orissa had acquired title to the shares by operation of law, by way of abundant caution it obtained a deed of transfer and lodged it with the company together with the share scrip. The transfer deed was duly stamped and complied with all the formalities required by law. The claim of the State of Orissa based upon the transfer deed was within the purview of article 11. Even with regard to this claim, the Courts below concurrently held that the board of directors acted mala fide in refusing to register the transfer. This finding is amply supported by the materials on the record. In spite of the fact that the State had filed with the company a certificate of the Collector of Stamp Revenue. West Bengal, that no stamp duty was payable on the transfer, the company raised the objection that the transfer deed must be stamped. To avoid this objection, the Government stamped the deed and again lodged it with the company. For over three years, the directors delayed registration of the transfer on frivolous pretexts. On May 16, 1953, the directors without assigning any reason declined to register the transfer. Before the High Court, the company asserted that the registration was refused because the Maharaja of Mayurbhanj was under an obligation to execute an agreement conferring valuable rights on the company and the State of Orissa had failed to honour this obligation. Reliance was, placed on cl. 6 of the company 's memorandum of association, which stated that the company and the Maharaja proposed to 385 enter into an agreement and a copy of the proposed agreement was annexed. Clause 6 shows that there was a proposal between the parties to enter into an agreement, but there was no concluded agreement between them, nor was there any binding obligation on the Maharaja to execute an agreement. The directors could not use their power of declining to register the transfer under article 11 for the purpose of forcing the State of Orissa to enter into the proposed agreement. Actually, the reason given at the trial was an afterthought. The Imperial Bank of India representing the Maharaja was pressing for registration of the transfer. By its letter dated March 17, 1953, the company assured the Bank that the registration would be effected shortly. Nevertheless, on May 16, 1953 the directors capriciously refused to register the transfer. The power under article 11 to refuse registration of the trans fer is a discretionary power. The directors must exercise this power reasonably and in good faith. The Court can control their discretion if they act capriciously or in bad faith. The directors cannot refuse to register the transfer because the transferee will not enter into an agreement which the directors conceive it to be for the interests of the company. We cannot accept the contention that the petition was liable to be dismissed because the State of Orissa had asked for registration in the name of the Secretary, Finance Department. No such objection was taken by the company, although it had taken numerous other objections. Moreover, by letter dated December 1, 1953, Shri section K. Mandal, the attorney for the State of Orissa, had definitely called upon the company to record the name of the State as the owner of the shares in the share register. In spite of this letter, the company refused to make the necessary registration. The Maharaja of Mayurbhanj has ceased to be the owner of the shares. The State of Orissa, is now their owner, and has the legal right to be a member of the company and is entitled to say that the company should recognise its membership and make an entry on the register of the fact of its becoming a member and its predecessor in title having ceased to be a member. The name of the State of Orissa has, without sufficient reason, been omitted from the register and there is default in not entering on the register the fact of the Maharaja having ceased to be a member. The Court 's jurisdiction under section 38 is, therefore, attracted. The High Court rightly ordered the rectification in the exercise of its summary powers under section 38. The jurisdiction created by section 38 is very beneficial and should be liberally exercised. We see no reason why the Court should deny the applicant relief under section 38. The directors of the appellant company on the most frivolous of objections have prevented the State of Orissa from becoming a 386 member for the last 16 years. It is a matter of regret that justice has been obstructed so long. There is no merit in this appeal. The appeal is dismissed with costs. The appellant company do forthwith carry out the order of rectification passed by the Courts below in case the order has not been carried out yet. Appeal dismissed.

IN-Abs

As a result of constitutional changes following the Indian Independence Act, 1947, the ownership of the public properties of the Maharaja of the Mayurbhanj including certain shares in the appellant company passed to the State of Orissa. Although the State had acquired title to these shares by operation of law, it also obtained from the Maharaja by way of abundant caution, a deed transferring these shares to it. In 1950, the State Government lodged the share scrip and transfer deed with the company and requested it to make the necessary changes in the share register. Despite repeated requests. however, the directors of the company refused to do so. In 1955 the State filed an application under section 38 of the Indian Companies Act, 1913 in the High Court of Orissa, asking for rectification of the share register by inserting its name as the holder of the share in place of the Maharaja. The High Court allowed the application and passed a supplemental order directing the filing of the notice of rectification with the Registrar within a fortnight. The company 's appeal before the Division Bench failed, whereupon it appealed to this Court by special leave. It was urged on behalf of the appellant company, inter alia, that under article 11 of its Articles of Association as well as under cl. 22 of Table A read with article 1 A the directors has power to refuse registration of the transfer. HELD: (i) In Table A which was attracted by article 1 A of the company 's Articles of Association, the word transmission is put in contradistinction to the word 'transfer '. One means a transfer by the act of the parties, the other a transmission by devolution of law. article If refers to transfers. A devolution of title by operation of law is not within its purview. Being a restrictive provision the article must be strictly construed. In the instant case, the title to the shares vested in the State of Orissa by operation of law and the State did not require an instrument of transfer from the Maharaja to complete its title. Article 11 does not confer upon the Board of directors a power to refuse recognition of such a devolution of title. r383G 384C]. In re Bentham Mills Spinning Company, , referred to. (ii)Clause 22 of the regulations in Table A read with article 1 A confers power on the Board of directors to decline registration of transmission of title in consequence of the death or insolvency of a 381 member. In the instant case, there was no transmission of title in consequence of death or insolvency and clause 22 had, therefore no application, [384 D] (iii)In so far as the claim of the State was based on the transfer deed it fell within the purview of article 11. But the refusal of the board of directors to register the transfer under that article was mala fide. The power under that article was a discretionary power. The directors must exercise that power reasonably and in good faith. The Court can control this discretion if they act capriciously or in bad faith. [384 E F; 385 C D] (iv)The name of the State of Orissa had without sufficient reason, been omitted from the register, and there was default in not entering on the register the fact of the Maharaja having ceased to be a member. The Court 's jurisdiction under section 38 was, there fore, attracted. The High Court rightly ordered the rectification in the exercise of its summary powers under section 38. The jurisdiction created by section 38 is very beneficial and should be liberally exercised. [385G]

iminal Appeal No. 69 of 1966. Appeal by special leave from the judgment and order dated December 9, 1965 of the Madras High Court in Criminal Revision Case No. 1261 of 1964 and Criminal Revision Petition No. 1235 of 1964. R. Thiagarajan, for the appellants. Purshottam Trikamdas and T. V. R. Tatachari, for the respondent. 374 The Judgment of the Court was delivered by Ramaswami, J. The 2nd petitioner Kuppuswami lodged a a complaint with Yercaud Police on October 12, 1963 alleging that the respondent, M. section P. Rajesh and other persons had formed an unlawful assembly and committed offences of house trespass, mischief and causing hurt at 10 p.m. on October 11, 1963. The complaint was the subject matter of investigation by the police who did not present a charge sheet against respondent, M. section P. Rajesh but filed a charge sheet against 4 other persons under sections 323, 325 and 448, Indian Penal Code in C.C. No. 3097/1963 in the Court of Sub Magistrat 3, Salem. The case was tried by the Sub Magistrate who ultimately acquitted all the accused by his judgment dated December 13, 1963. In the course of evidence, at that trial the 1st petitioner was examined as P.W. 1 and 2nd petitioner as P.W. 2 and it is alleged by the respondent that the petitioner gave false evidence to the effect that the respondent was also among the trespassers and assailants and that he was armed with a gun which another accused took from him. After the conclusion of the trial the respondent filed a petition in the court of the Magistrate under section 476(1), Criminal Procedure Code alleging that on October 11, 1962 he along with certain other Directors had attended a meeting of the Board of Directors of Chembra Peak Estate Ltd. from 4.30 p.m. to 5.15 p.m. at Bangalore and that he was not at Yercaud on October 11, 1963, and prayed for the prosecution of the petitioners for giving false evidence under section 193, Indian Penal Code. The respondent produced a, copy of the Draft Minutes of the Board meeting and also cited certain witnesses in support of his case. After considering the matter, the Sub Magistrate of Salem held that he was satisfied that the respondent could not have been present at the alleged occurrence on October 11, 1963 at Yercaud and that P.W.s 1 and 2 deliberately committed perjury and implicated Mr. Rajesh as among the assailants. The Sub Magistrate thought that in the interest of justice the petitioners should be prosecuted under section 193, Indian Penal Code and accordingly filed a complaint against the petitioners under section 193, Indian Penal Code in the Court of District Magistrate (Judicial), Salem. The petitioners contended, that the complaint was not maintainable in law because the trying Magistrate had not followed the procedure under section 479 A, Criminal Procedure Code and it was therefore not open to the Magistrate to take recourse to the provisions of section 476, Criminal Procedure Code. By his order dated February 10, 1964 the District Magistrate discharged the petitioners holding that the complaint was not sustainable in view of the decision of this Court in Shafer Hussain Bholu vs State of Maharashtra(1). Thereupon the respondent filed Criminal. R.C. No. 1261 of 1964 in the Madras High Court against the order of the District Magistrate (Judicial), Salem. By his 375 judgment dated December 9, 1965 Anantanarayanan, J. set aside the orders of the District Magistrate (Judicial) and directed that the case should be taken up by the District Magistrate and the trial proceeded with in accordance with law. This appeal is brought, by special leave, from the order of the Madras High Court dated December 9, 1965 in Crl. R.C. No. 1261 of 1964. The question of law arising in this case is what is the true meaning and scope of section 476, Criminal Procedure Code in the context of section 479 A(1) and (6), Criminal Procedure Code with regard to a prosecution authorised by a Court in respect of an offence of prejury committed before it in the course of the trial? Chapter XXXV of the Code of Criminal Procedure prescribes the procedure to be followed for prosecution of offenders in case of certain offences affecting the administration of justice. Section 4/6 sets out the procedure for prosecution of offenders for offences enumerated in section 195(1)(b) and (c) of the Code of Criminal Procedure. If a Civil, Revenue or Criminal Court is of opinion, that it is expedient in. the interests of justice that an enquiry should be made into any offence referred to in section 195(1)(b) or (c) which appears to have been committed in or in relation to a proceeding in that Court, such Court may, after such preliminary inquiry, if any, as it thinks necessary, record a finding to that effect and make a complaint thereof in writing and forward the same to a Magistrate of the first class having jurisdiction. Section 476 A authorises a superior Court to make a complaint where a Subordinate Court has omitted to do so in respect of offences and in the circumstances mentioned in section 476(1). Section 476 B provides for a right of appeal against the order making or refusing to make a, complaint. Sections, 478 and 479 deal with the procedure which may be followed in certain grave cases. Section 479 A which was added by the Code of Criminal Procedure (Amendment) Act 26 of 1955 by the first sub section (in so far as it is material) provides as follows. "479 A. (1) Notwithstanding anything contained in sections 476 to 479 inclusive, when any Civil, Revenue or Criminal Court is of opinion that any person appearing before it as a witness has intentionally given false evidence in any stage of the judicial proceeding or has intentionally fabricated false evidence for the purpose of being used in any stage of the judicial proceeding, and that, for the eradication of the evils of perjury and fabrication of false evidence and in the interests of justice, it is expedient that such witness should be prosecuted for the offence which appears to have been committed by him, the Court shall, at the time of the delivery of the judgment or final order disposing of such proceeding, record a finding to that effect stating its reasons therefor and 37 6 may, if it so thinks fit, after giving the witness an opportunity of being heard, make a complaint thereof in writing signed by the presiding officer of the Court setting forth the evidence which, in the opinion of the Court, is false or fabricated and forward the same to a, Magistrate of the first class having jurisdiction, and may. . . . " Sub section (6) of this section enacts as follows: "(6) No proceedings shall be taken under sections 476 to 479 inclusive for the prosecution of a person for giving or fabricating false evidence, if in respect of such a person proceedings may be taken under this section. The scheme of section 479 A is to enact a special procedure for the more expeditious and effective manner of dealing with certain cases of perjury and fabrication of false evidence by witnesses in the course of judicial proceedings. There is, however, a necessary condition for the application of section 479 A, Criminal Procedure Code. The condition is that the Court before it delivers its judgment or at any rate at the time of delivering the judgment must form an opinion that a particular witness or witnesses, is, or, are giving false evidence, if the court could not form any opinion about the falsity of the evidence of the witness appearing before it, then certainly the court cannot at the time of delivering its judgment, record any finding about the same. It is manifest that a court can come to a conclusion that a witness is false only when there are materials placed before it to justify that opinion. If no materials are placed before the court to enable the court to form an opinion that a witness is giving false evidence, then certainly it could not form that opinion. In the present case, the respondent produced material before the trial court on December 23, 1963 after the conclusion of the trial that the petitioners had given false evidence in the case and the respondent produced the necessary documents along with an application for proceeding against the petitioners under section 476, Criminal Procedure Code. Till those documents were produced there was no opportunity or occasion for the magistrate to form an opinion about the falsity of the evidence adduced by the petitioners. It is, therefore, manifest that at the time when the judgment was delivered the magistrate had no material before him to form an opinion that the petitioners had given false evidence. It is only after the respondent had made his application on December 23, 1963 and brought the necessary material to the notice of the court that the falsity of the evidence of the petitioners became apparent and the magistrate was in a position to form an opinion about the falsity of the evidence given by the petitioners. It is, therefore, clear that section 479 A will not be applicable on the facts of this case, and if the provisions of section 479 A will not apply on the facts of this case it follows that the bar contemplated by cl. (6) of that section will not be applicable. The reason is that cl. (6) can be invoked only in cases in which 377 s.479 A(1) will be applicable. The crucial words of cl. (6) are "if in respect of such a person proceedings may be taken under this section". It is clear that the bar under section 479 A (6) refers not to the legal character of the offence per se but to the possibility of action under section 479 A upon the facts and circumstances of the particular case. If, for instance, material is made available to the court after the judgment had been pronounced, rendering it clearly beyond doubt that a person had committed perjury during the trial and that material was simply unavailable to the Court before or at the time of judgment, it is very difficult to see how the court could have acted under section 479 A, Criminal Procedure Code at all. It cannot be supposed that the legislature contemplated that such a case of perjury, however, gross should go unpunished in such circumstances. It appears to us that the true interpre tation of the language of cl. (6) of section 479 A is that it does not operate as a bar to the prosecution for perjury in a case of this description. Take, for instance, the trial of 'A ' for the murder of 'B ' in the Sessions Court where 'C ', 'D ' and 'E ' gave evidence that they actually saw 'A ' committing the murder of 'B '. Suppose at the conclusion of the trial and after delivery of judgment by the Sessions Court 'B ' is found alive and there is incontestable evidence to show that 'A ' was falsely charged for the murder of 'B '. Is it to be contemplated that in such a case there is no re medy available to the Court to prosecute C, D, and E for perjury under the provisions of section 476, Criminal Procedure Code, though action cannot be taken, in the circumstances of the case, under section 479 A, Criminal Procedure Code? In our opinion, such a startling consequence was not contemplated by Parliament and the bar of cl. (6) of section 479 A was intended only to apply to cases of perjury and fabrication of false evidence in which the trying Magistrate could have acted under section 479 A(1). In other words, the bar of cl. (6) will not apply to a, case where perjury is detected not merely with reference to the evidence adduced at the trial but with reference to the evidence adduced in some other distinct proceeding, not then brought before the court or because there is some other material subsequently produced after the conclusion of the trial and delivery of judgment which renders the prosecution for perjury essential in the interests of justice. Applying the principle in the present case we are of opinion that the prosecution of the petitioners under the provisions of section 476, Criminal Procedure Code by the Magistrate after the conclusion of the trial is legally valid and is not affected by the bar of cl. (6) of section 479 A, Criminal Procedure Code. On behalf of the appellants Mr. Thiagarajan referred to the decision of this Court in Shabir Hussein Bholu vs State of Maharashtra(1). But the Principle of that decision does not afford any assistance to the appellants in this case. It appears that the (1) [1963] Supp. 1 S.C.R. 501. 378 appellant in that care appeared as a witness in a jury trial for murder. Before the Court he, gave a statement contradictory to the ,one he had given before the committing court. After the conclusion of the trial and delivery of judgment the Sessions Judge passed a separate order for prosecution of the appellant for intentionally giving false evidence under section 193, Indian Penal Code. It was held by this Court that the provisions of section 479 A had not been complied with and. no cognizance could be taken of the offence. Two conditions were laid down for the exercise of the powers under section 479 A, (i) the court must form an opinion that the person has committed one of the two categories of offences referred to in section 479 A, and (ii) the Court must come to the conclusion that for the eradication of the evils of perjury etc. and in the interests of justice it is expedient that the person be prosecuted. This opinion and conclusion must be arrived at the time of the delivery of the judgment or final order in the trial , the court cannot later on resort to section 476 and make a complaint against the witnesses. The provisions of section 479 A were held applicable to the case and the fact that the trial was with the aid of a jury did not preclude the Sessions Judge from recording the findings required by section 479 A. While considering whether action should be taken under section 479 A it was open to the Sessions Judge to say whether the evidence tendered at the trial was true or false. It is manifest that the material in that case was produced before the Sessions Court for coming to the conclusion that the appellant had committed perjury and so the procedure contemplated In section 479 A(1) was applicable and since the Sessions Judge did not proceed under that section, though he could have done so, the bar contemplated by cl. (6) of section 479 A operated and no action could have been taken under section 476, Criminal Procedure Code. The ratio of that decision is not applicable to the present case because the material facts are different. It is necessary to add that in Shabir Hussein Bholu vs State of Maharashtra(1) this Court observed that if the Judge is unable to come to a conclusion that the statement made at the trial is false then provisions of section 479 A (1) would not be applicable. At page 512 of the Report it was observed by this Court as follows: "But, for considering the applicability of section 479 A(1) what hag to be borne in mind is that in a jury trial it is possible for the Judge to come a conclusion that the statement made at the trial is false. If he comes to that conclusion then, as rightly observed in Badullah 's case (A.I.R. 1961 All. 397), he has no option but to proceed under section 479 A(1`), Cr. P.C. The question then is whether he could act under this provision if he is unable to form an opinion one way or the other as to whether the evidence tendered at the trial is false or the evidence before the committing Magistrate is false. What would be the position in such a case? If the proceed [1963] Supp. 1. S.O.R. 501. 379 ings before the committing Magistrate must be held to be entirely separate proceedings then we agree with the Allahabad High Court that section 479 A.(1) would not apply. " There is divergence of opinion among the various High Courts on the question of law presented for determination in this case. In Jai Bir Singh vs Malkhan Singh and another(1), it was held by Sahai, J. that the bar of section 479 A(6) applies to all cases of perjury, viz., (1) those where the perjury or the fabrication of false evidence has been detected by the court when the judgment is pronounced, and (2) cases where the perjury or fabrication of false evidence does not come to light till after the judgment has been pronounced and it was not open to the Court to proceed under section 476, Criminal Procedure Code for prosecution in the latter class of cases. The same view has been taken by the Punjab High Court in Parshotam Lal L. Vir Bhan vs Madan Lal Bishambar Das(2) and the Rajasthan High Court in Amolak vs State(1). A contrary view has been expressed by the Madras High Court in C. P. Kasi Thevar vs Chinniah Konar(4) and In re. Gnanainuthu(5). For the reasons already expressed we are of opinion that the decision of the Madras Court in C.P. Kasi Thevar vs Chinniah Konar(4) and In re. Gnanamuthu(5) represents the correct law on the point. For these reasons we hold that there is no merit in this appeal which is accordingly dismissed. Appeal dismissed. A.I.R. 1958 All. (2) A.I.R. 1959 Punjab 145. (3) A.I.R. (1) A.I.R. 1960 Mad. 77. (5) A.I.R. 1964 Mad.

IN-Abs

At a trial, the appellants gave evidence against the respondent. After the Conclusion of the trial the respondent filed a petition in the court of the Magistrate under section 476(1) Criminal Procedure Code, praying for the prosecution of the appellants for giving false evidence under section 193 Indian Penal Code, and adduced evidence in sup port of his contention. The Magistrate thought that in the interest of justice the, appellants should be prosecuted and accordingly filed a complaint. The appellants contended that the complaint was not maintainable because the trying Magistrate had not followed the procedure under section 479 A, Criminal Procedure Code and it was therefore not open to the Magistrate to take recourse to the provisions of section 476. HELD: The prosecution of the appellants under the provisions of section 476 Criminal Procedure Code by the Magistrate after the conclusion of the trial was legally valid and wag not affected by the bar of cl. (6) of section 479 A. Criminal Procedure Code. [377G] The bar of cl. (6) will not apply to a case where perjury is detected not merely with reference to the evidence adduced at the trial but with reference to the evidence adduced in some other distinct proceeding not then brought before the court or because there is some other material subsequently produced after the conclusion of the trial and delivery of judgment which renders the prosecution for perjury essential in the interests of justice. [377 F] Shabir Hussein Bholu, vs State of Maharashtra, [1963] Supp. I S.C.R. 501, explained and distinguished. C.P. Kasi Thevar vs Chinniah Konar, A.I.R. 1960 'Mad. 77 and In re Gnanamuthu A.I.R. 1964 Mad. 446, approved. Jai Bir Singh vs Malkhan Singh. A.I.R. 1958 All. 364, Parsotam Lal Vir Bhan vs Madan Lal Bashambar Das, A.I.R. 1959 Punj. 145 and Amolak vs State. A.I.R. 1961 Rai. 220, disapproved.

l Appeals Nos. 1133 and 11 34 of 1965. Appeal by special leave from the judgment and order dated November 18, 1964 of the Mysore High Court in T. R. C. No. 4 of 11964. R. Venkataram and R. Gopalakrishnan, for the appellant. S.V. Gupte, Solicitor General, R. Ganapathy Iyer, R. H. Dhebar and R. N. Sachthey, for the respondent. The Judgment Of WANCHOO and SIKRI JJ. was delivered by SIKRI J. SHAH J. delivered a dissenting Opinion. Sikri, J. These appeals by special leave are directed against the judgment of the Mysore High Court in a reference under section 27(1) of the Wealth Tax Act (27 of 1957) hereinafter referred to as the Act answering the question "whether the sums of 421 Rs. 4,30,684 and Rs. 4,13,353 being the value of the shares transferred by the assessee to the Sandur Ruler 's Family (Second) Trust could be included in the net wealth of the assessee for the assessment years 1958 59 and 1959 60 under the provisions of Section 4(1)(a) (iii) of the Wealth Tax Act" in favour of the Revenue. The question arose in the following circumstances: The ap pellant. His Highness Yeshwant Rao Ghorpade, hereinafter referred to as the assessee, held 12,750 shares in Sandur Manganese & Iron Ores Ltd. on March 31, 1957. On August 24, 1957, he created two Trusts, one may be called the Charitable Trust and the other the Sandur Rulers Family (Second) Trust may hereinafter be referred to as the Second Trust. The assessee transferred some shares to the Second Trust under conditions contained in the Trust Deed. The Wealth Tax Officer and the Appellate Assistant Commissioner, in computing the net wealth of the assessee on March 31, 1958, and March 31, 1959, the valuation dates respectively for the assessment years 1958 59 and 1959 60, included the value of these shares held by the Trustees under the Second Trust. On appeal, the Appellate Tribunal reversed the decisions of the authorities below and came to the conclusion that the value of the shares could not be taken into consideration in computing the net wealth of the assessee. The Tribunal, however, at the instance of the Department referred the question of law already set out above for the opinion of the High Court. The High Court, as mentioned earlier, answered the question against the assessee. The assessee having obtained special leave, the appeals are now before us. The short question that arises is whether the shares in question held by the Trustees under the Second Trust are held for the benefit of the three minor children mentioned in the Second Trust deed. The answer to this question depends, first, on the interpretation of the words "for the benefit of. . minor child" in section 4(1) (a)(iii) of the Act, and secondly, on whether on the true interpretation of the Second Trust, these assets are held for the benefit of the minor children. Section 4(1)(a)(iii) reads as follows: "4. (1) In computing the net wealth of an individual, there shall be included, as belonging to him. (a)the value of assets which on the valuation date Eire held. (iii)by a person or association of persons to whom such assets have been transferred by the individual otherwise than for adequate consideration for the benefit of the individual or his wife or minor child or". The learned Solicitor General, Mr. Gupte, on behalf of the Revenue, contends that the word "benefit" in this section means A the immediate or deferred benefit. He says that the amendment of the section made by the Wealth Tax (Amendment) Act, 1964 (46 of 1964), which came into force on April 1, 1965, is in 422 effect declaratory. Section 4 of the Amending Act substituted a new clause for the clause set out above. The new clause is: "(iii) by a person or association of persons to whom such assets have been transferred by the individual otherwise than for adequate consideration for the immediate or deferred benefit of the individual, his or her spouse or minor child (not being a married daughter ) or both, or". We are unable to regard the new amendment as declaratory. The amendment makes a deliberate change and the addition of the words "the immediate or deferred benefit" before the words "of the individual", apart from other changes, cannot be called a mere declaratory legislation, and we must construe the word 'benefit ' apart from the amendments made by Act 46 of 1964. It seems to us that the word 'benefit ' in the context means for the immediate benefit of the individual or his wife or minor child. If a property is transferred to Trustees to hold in trust for the life of A and then for B. we cannot hold that the property is held for the benefit of B, during the life time of A. As will appear later, under the Second Trust, the Trustees hold the trust property for the benefit of the Charitable Trust for a number of years before they start holding it for the benefit of the minor children. It is difficult to say that while the property is being held for the benefit of the Charitable Trust, it is also being held for the benefit of the minor children. Coming to the second point, namely, whether the trust pro perty is held for the benefit of the minor children within section 4(1)(a) (iii), it is necessary to carefully consider the terms of the Second Trust Deed, because the High Court has differed from the interpretation placed upon it by the Income Tax Appellate Tribunal. It is common ground that the Trust Deed must be considered as a whole. The preamble to the deed reads as follows: "This Deed of Settlement and Trust is made this 24th day of August 1957 between His Highness Maharaj Shri Yeshwant Rao Hindu Rao Ghorpade, Ruler of Sandur, now residing at Sandur House, Palace Road, Bangalore, hereinafter called the SETTLOR, of the one part, and His Highness Maharaj Shri Yeshwant Rao Hindu Rao Ghorpade, Ruler of Sandur, and Captain Sardar Dattaji Rao Chander Rao Ranavare, both of whom are hereinafter collectively called the TRUSTEES, of the other part: Whereas the SETTLOR is absolutely entitled to the shares, set out and described in Schedules A, B and C hereto as sole and absolute owner thereof; Whereas the SETTLOR had been and is desirous of making a settlement on his two minor sons namely, 423 Rajkumar Shri Shivarao Yeshwantrao Ghorpade, aged 16 years and Rajkumar Shri Venkatrao Yeshwantrao Ghorpade, aged 6 years hereinafter referred to as the First and the Second Beneficiary and on his minor daughter Rajkumari Shri Vijayadevi Yeshwantrao Ghor pade, aged 10 years, hereinafter referred to as the Third Beneficiary, out of natural love and affection towards them of the shares set out in Schedules A, B and C hereto respectively, and with a view to make provision for them; Whereas the SETTLOR intends and desires to give to his aforesaid minor sons and minor daughter, from time to time, further shares or other assets, with the intention that such further shares or other assets be given, should be held in Trust for the said minor sons and minor daughter in the manner in which they have respectively taken the shares set out and described in Schedules A, B and C hereto, as if the further shares or other assets had formed part of the said Schedules. " It is not necessary to set out the last para in the preamble. The learned Solicitor General attaches importance to the recitals in the preamble, but, in our view, the recitals do not assist us in any manner. There is no doubt that the intention of the settlor was to make a settlement on his minor children, but the whole question which arises in this case is whether the settlement made by him is for the benefit of the minor children within section 4(1)(a)(iii). The word "settlement ' is neutral, and the question is what has been settled on the minor children. But there is no doubt that the assessee out of natural love and affection for his minor children created the Trust in question, and that the minor children are the beneficiaries under the Trust. Clauses 1, 2 and 3 of the Trust Deed grant, transfer and convey the shares mentioned in the Schedules. A, B and C to the Trustees. Clause 1 deals with the shares settled for the ultimate benefit of the first beneficiary; clause 2 deals with the shares settled for the ultimate benefit of the second beneficiary, and clause 3 deals with the shares settled for the ultimate benefit of the third beneficiary. These clauses are couched in the same language and it is only necessary to set out clause 1, which is in the following terms: The Settlor doth hereby grant, transfer and convey upto the Trustees the shares set out and described in Schedule A hereto, to have and to hold the same in Trust, both as to the corpus and income therefrom, for a period of two years from the date of this Indenture for the benefit of Shri Yeshwantrao Maharaj Charitable Trust and on the expiry of the said period of two years, to have and to hold the shares set out and described in Schedule A 424 nereto in Trust both as to the corpus and income received after the expiry of the aforesaid period of two years from the date of this Indenture, for the benefit of Rajkumar Shri Shivarao Yeshwantrao Ghorpade, the First Beneficiary herein, as the full absolute and beneficial owner thereof, but subject to the terms and conditions hereinafter set forth. Clause I thus purports to vest the shares in the Trustees and directs, first, that they shall hold the same in trust, both as to corpus and income therefrom, for a period of two years from August 24, 1957, for the benefit of the Charitable Trust, and secondly, that on the expiry of the said period of two years to hold the shares in trust, both as to corpus and income received after the expiry of the aforesaid period of two years from August 24, 1957 for the benefit of the first beneficiary. It seems to us clear from reading this clause in isolation from the other clauses. which will be referred to later, that for the first two years the beneficiary is the Charitable Trust and not the RaJkumar, the first beneficiary. For the first two years there is an express direction that the corpus and the income should be held for the benefit of the Charitable Trust. There was some discussion as to why both the corpus and income are mentioned. The word "income" has been defined in clause 31 of the Deed as follows: "In these presents, the expression 'income ' with reference to any Beneficiary shall mean the income derived from the shares set out and described in the Schedule appropriate to such beneficiary and any income that may be derived from the investment of such income including any income that may be derived from any further shares or other assets that may be transferred either by the Settlor or by any other persons for the benefit of any such beneficiary, including bonus shares, if any. " It appears to us that in view of this definition it was perhaps necessary to mention the word "income" in Clause 1 because the idea of the settlor was that income accruing in the first year should be invested and further returns secured from it. But it is manifest that the Rajkumar, the first beneficiary, had no interest whatsoever in the income accruing during the first two years from the trust properties. It is true that clause I does not direct that the income during the first two years should be handed over to the charitable Trust, but this is made clear in clause 21, which we shall presently consider. The next relevant clause is clause 9 which reads as under: "This Settlement and Trust is hereby declared to be irrevocable and shall take effect immediately and all trusts, settlements and interests granted or created by these presents shall vest in the respective Beneficiaries immediately." 425 Mr. Gupte relied on this clause to show that the interest of the minor children was a vested interest and not a contingent interest. Assuming that it is so, it still does not assist us in answering the question which we have posed above. Assuming the interest to be vested we still have to consider whether the Trustees hold the shares for the benefit of the minor children as on the valuation dates, i.e., March 31, 1958 and March 31, 1959. Clause 21 to which reference was made a short while ago, and the provisos thereto, are as follows. We may mention that the High Court thought that the provisos were irrelevant but in our view they throw a great deal of light on the question before US. The Trustees may, in their absolute discretion, accumulate the income accruing under this settlement to the benefit of Shri Yeshwantrao Maharaj Charitable Trust for a period of two years from the date of this Indenture as respects the shares set out and described in Schedule A hereto and for a period of twelve years from the date of this Indenture as respects the shares set out and 'des cribed in Schedule B hereto and for a period of eight years from the date of this Indenture as respects the shares set out and described in Schedule C hereto. Provided that: (a)The Trustees may, at any time and from time to time, during the aforesaid period of two years from the date of this Indenture, pay to the Trustees of, Shri Yeshwantrao Maharaj Charitable Trust the whole or any part of the income accruing under this settlement in res pect of shares set out and described in Schedule A hereto, during the said period of two years as the Trustees may, from time to time, deem fit and on the expiry of the said period of two years, the Trustees shall pay over to the Trustees of the said Shri Yeshwantrao Maharaj Charitable Trust t he whole or the balance of the said in come as the case may be, and thereupon the Trustees shall stand discharged of all their obligations to the aforesaid Charitable Trust and thereafter the said Chantable ' Trust shall. have no right or claim whatsoever either to the income or the corpus of the said shares set out and described in Schedule A hereto. " Provisos (b) and (c) are in similar terms and deal with the shares set out in Schedule B and Schedule C, respectively, the only difference being about the period during which the income accruing could be paid to the Charitable Trust and the period after which the Trustees 'were under an obligation to pay to the Charitable Trust the whole or the balance of the said income. It seems to us quite clear from clause 21 that the intention of the settlor was that the income from the shares mentioned in 426 Schedule A should be either paid over to the Charitable Trust during the period of two years, or if it is not paid over during the two years, it should be paid over to the Charitable Trust on the expiry of the said two years. Now reading clause 1 and clause 21 with proviso (a) it seems to us that it is the charitable trust which is entitled to the income of the shares in Schedule A during the first two years. Reading clause 2 and clause 21 with proviso (b) it is equally clear that it is the charitable trust which is entitled to the income from the shares set out in Schedule B for a period of 12 years. Further it is manifest that reading clause 3 and clause 21 with proviso (c) it is the charitable trust which is entitled to the income from the shares set out in Schedule C during the first eight years. During these periods the first, second and third beneficiary had no interest whatsoever in that income. The learned Solicitor General says that this may be so if we only consider clauses upto 21, but if we consider clauses 22, 23. 24, 25 and 26, they override the intention manifested until now. Clauses 22, 23 and 24 enable the Trustees to accumulate the income accruing under the settlement to the first, second and the third beneficiary respectively till July 31, 1975. We may only set out clause 22 which deals with the first beneficiary. Clause 22 reads as follows: "The Trustees may in their absolute discretion accumulate the income accruing under this Settlement and Trust to the First Beneficiary herein until the 31st July 1975 and on the aforesaid date shall make over to him all the Trust funds in the possession of the Trustees as may belong to the said Beneficiary. " In our view, clause 22 enables the Trustees to accumulate only the income accruing to the first beneficiary, does not say what income accrues to the first beneficiary. For that we have to look to the other clauses. It is only under the latter part of clause 1 of the Trust Deed that income accrues to the first beneficiary. Clause 25 deals with the eventuality of the first, second or the third beneficiary dying before July 31. It does not really throw much light on the question. The next clause 26, Is important, and Mr. Gupte strongly relies on this clause. This clause reads as follows: "Notwithstanding anything contained in clause 21 to 25 supra, the Trustees shall have full power during the currency of this Settlement and Trust to expend from out of the income accruing under this Settlement to each of the Beneficiaries herein such amount as the Trustees may in their discretion deem fit for, the maintenance, education. health, marriage and advancement of each of the Beneficiaries herein. " 427 Mr. Gupte says that this clause shows that all the previous clauses are a smoke screen to enable the Trustees to spend the money for the benefit of the beneficiaries even during the aforementioned periods of 2, 12 and 8 years, and he says that the non obstante clause overrides everything contained in clauses 21 to 25. There is no doubt that clause 21 is mentioned in the non obstante clause, but we agree with Mr. Venkataraman, the learned counsel for the assessee, that the mention of clause 21 seems to be a typographical mistake, for the meaning of the clause is quite clear that the Trustees cannot under this clause expend from out of the income accruing under the settlement to the charitable trust for their power to spend is limited to the income accruing under the settlement to each of the beneficiaries, and as we have mentioned before while dealing with clause 21, the only income that accrues to the three beneficiaries under the settlement is after it ceases to be accumulated for or given to the Charitable Trust. If we were to accept Mr. Gupte 's argument we would have to omit the words "to each of the Beneficiaries herein" occurring in the clause. Mr. Gupte contends that the word 'beneficiary ' would include the Charitable Trust. We are unable to agree because the latter portion of the clause deals with education, marriage, etc., and these can have reference only to the first, second and the third beneficiary, ie., his minor children. Mr. Gupte urges that it would be natural on the part of the settlor to provide for the maintenance, education, health, marriage and advancement of each of the beneficiaries during their minority, and it would be unnatural to attribute intention to him to leave them without any means of sustenance during their minority. There is no force in this contention. The settlor may well have thought that he would look after the minor children during ,heir minority, and what he wanted to provide was for their expenses after they had attained the age of about 18. It would be recalled that the effect of the earlier provisions is that income starts accruing under the settlement to each of the minor children when they reached the age of about 18. We are accordingly of the opinion that clause 26 does not cut down the interest which had been settled on the Charitable Trust. We may mention that in this connection Mr. Venkataraman drew our attention to the rule of construction laid down by this Court in Sahabzada Mohammed Kamgar Shah vs Jagdish Chandra Deo Dhabal Deo (1) and Ramkishore Lal vs Kamal Narain. (2) In the latter case Das Gupta, J., speaking for the Court, observed as follows: "Sometimes it happens in the case of documents as regards disposition of properties, whether they are testamentary or non testamentary instruments, that there is a clear conflict between what is said in one part of the docu ment and in another. A familiar instance of this is where in an earlier part of the document some property is given (1) ; ,611. (2) [1963] Supp. 2 section C.R. 417, 425. 423 absolutely to one person but later on other directions about the same property are given which conflict with and take away from the absolute title given in the earlier portion. What is to be done where this happens? It is well settled that in case of such a conflict the earlier disposition of absolute title should prevail and the later directions of disposition should be disregarded as unsuccessful attempts to restrict the title already given. (See Sahabzada Mohd. Kamgar Shah vs Jagdish Chandra Deo Dhabal Deo(1) It is clear, however, that an attempt should always be made to read the two parts of the document harmoniously, if possible. It is only when this is not possible, e.g., where an absolute title is given is in clear and unambiguous terms and the later provisions trench on the same, that the later provisions have to be held to be void. " In our opinion these observations would apply to the facts of this case if it is held that there is conflict between clauses 1 and 21 on the one hand and clause 26 on the other. But, in our view, all these clauses can be read harmoniously by holding that the mention of clause 21 in clause 26 is a typographical mistake, and clause 26 deals only with the income which accrues to the first, second and third beneficiary after the interest of the Charitable Trust has ceased. In conclusion we hold that considering the document as a whole the shares were not held for the benefit of the three minor children as on March 31, 1958 and March 31, 1959. Accordingly the answer to the question referred by the Appellate Tribunal and set out above must be against the Revenue. The appeals are accordingly allowed, judgment of the High Court set aside and the question referred to the High Court answered in the negative. The assessee will be entitled to costs here and in the High Court. One hearing fee. Shah, J. The High Court of Mysore answered the following question referred under section 27(1) of the Wealth Tax Act 27 of 1957 in the affirmative: "Whether the sums of Rs. 4,30,684 and Rs. 4,13,353 being the value of the shares transferred by the assessee to the Sandur. Ruler 's Family (Second) Trust could be in cluded in the net wealth of the assessee for the assessment years 1958 59 and 1959 60 under the provisions of section 4(1)(a)(iii) of the Wealth Tax Act?" The Wealth Tax Bill was moved before the Parliament on May 15, 1957, and was enacted as law after receiving the assent of the President. on September 12, 1957. The two trust deeds which fall to be construed in these appeals were executed on August 24, 1957. The object of the settlor of the two deeds of trust was to (1) ; ,611. 429 evade the charge of wealth tax on the properties covered thereby. It was so found by the High Court, and that was not denied before us. But it is open to a taxpayer to so order his affairs that incidence of tax may lawfully be avoided. Attempts at evading incidence of taxation though not commendable are not illegal. In each case the Court must take the taxing statute as it stands, subject to all its imperfections: If a transaction does not fairly fall within the letter of the law, the Court will not 'Seek to put a strained construction to bring it within the law. The Court will not also stretch a point in favour of the taxpayer to enable him to get by his astuteness the benefit which other taxpayers do not obtain. The two trust deeds were executed on August 24, 1957. One is a trust deed styed "Shri Yeshwant Rao Maharaj Charitable Trust" hereinafter called 'the Charitable Trust ' and the other is styled "The Sandur Ruler 's Family (Second) Trust" hereinafter called 'the Family Trust '. Of both these Trusts, Yeshwant Rao Ghorpade, Ruler of Sandur, is the settlor and the trustees are the settlor and Captain Sardar Dattaji Rao Chender Rao Ranavare. Under the Charitable Trust the income and all the assets of the Trust funds are liable to be utilised for advancement of knowledge, education, health, safety or any other object of general public utility or beneficial to mankind. The settlor is to be the Chairman of the Board of Trustees during his lifetime and he has power to fill up the vacancy in the office of a trustee. In case of his death, the Ruler of Sandur for the time being, is entitled to fill the vacancy of the office of trustee. Under this deed no property is settled for the Trust. By cl. 3 the assets and the funds of the Trust are to be such sums as the Founder Trustees may contribute or in any manner provide to the Trust, such sums or assets as may be contributed, gifted or donated by any person or company to the Trust, all interest or income arising out of the said sums and assets, all assets, that may be purchased or acquired from out of the said funds or otherwise acquired for. the Trust, all investments and realisations therefrom out of the said funds, and assets, and all sums and assets which have by any means become the property of the Trust. By cl. 4 the trustees are authorised to accept any donation or other sums of money or other assets from any person or company subject to any special conditions as may be agreed upon, but not so as to be inconsistent with the intent and purposes of the Trust. Simultaneously with the Charitable Trust, the Family Trust was executed. Initially the settlement was to operate in respect of 30 ordinary shares of the Sandur Manganese and Iron Ores (Private) Ltd., ten shares described in Sch. A to be held in trust for the benefit of Rajkumar Shivarao, the First Beneficiary, ten shares described in Sch. B to be held in trust for the benefit of Rajkumar Venkatrao, the Second Beneficiary and the remaining ten shares described in Sch. C to be held in trust for the benefit of Rajkumari Vijayadevi, the Third Beneficiary. By paragraph 2 of the preamble it is declared that the settlor was desirous of making a settlement "on his 430 two minor sons, namely Rajkumar Shri Shivarao Yeshwantrao Ghorpade, aged 16 years, and Rajkumar Shri Venkatrao Yeshwantrao Ghorpade, aged 6 years and on his minor daughter Rajkumari Shri Vijayadevi Yeshwantrao Ghorpade, aged 10 years out of natural love and affection towards them and with a view to make provision for them", and by the third paragraph of the preamble it was declared that the settlor intended and desired to give to his minor sons and daughter from time to time further shares or other assets, with the intention that such further shares or other assets should be held in trust for the minor sons and daughter to be taken by them as set out and described in Schedules A, B & C. as if such shares or other assets had formed part of the said Schedules. The primary intention disclosed by the preamble of the deed of trust was that the settlor settled properties described in Schedules A, B & C and declared his intention to settle other properties in future with the object of making provision for his three named children. The quantum of the estate settled must undoubtedly be determined by the habendum clause, but the preamble may in case of ambiguity be resorted to for ascertaining the object of the deed and the intention of the executant. By the first clause the settlor conveyed to the trustees the shares described in Sch. A, and to hold the same in trust "both as to the corpus and income therefrom for a period of two years from the date of this Indenture for the benefit of" the Charitable Trust "and con the expiry of the said period of two years, to have and to hold the shares set out and described in Sche dule A in Trust both as to the corpus and income received after the expiry of the period of two years for the benefit of" the First Beneficiary "as the full, absolute and beneficial owner thereof, but subject to the terms and conditions hereinafter setforth". Similarly the shares described in Sch. B were conveyed for twelve years for the benefit of the Charitable Trust and thereafter for the benefit of the Second Beneficiary, and by cl. 3 the settlor conveyed the shares described in Sch. C for a period of eight years for thebenefit of the Charitable Trust and thereafter to the Third Beneficiary By cl. 4 it is declared that other shares or assets given to all or any of the beneficiaries and transferred to the trustees will be held in trust for all or any of the beneficiaries as may in accordance with the settlement and trust be specified, and subject to the same limitations, interests and conditions as relate to the shares specified in Schedules A, B & C, as if those other shares or assets so transferred had formed part of the Schedule A, B & C as may be specified by the settlor or such other person. Clause 31 of the deed of trust dens tie expression "income" with reference to any beneficiary as meaning income derived from the shares set but and described in the Schedule appropriate to such beneficiary and any income that may be derived from the investment of such income including any income that may be derived from any further shares or other assets that may be transferred for the benefit of any such beneficiary. 431 The scheme of cls. 1, 2, 3 & 4 of the Family Trust may first be examined. The shares initially settled and any other shares or assets subsequently settled for the benefit of the beneficiaries or any of them are by cl. 4 to be dealt with as if they formed part of the three Schedules. The Charitable Trust is to obtain the benefit of the property in Schs. A, B & C both as to the corpus and income,, approximately for the periods during which the three beneficiaries do not attain their respective ages of eighteen years, and income therefrom is to be held for the benefit of the Charitable Trust and on the expiry of the periods mentioned, the shares and the assets are to be held in trust both as to the corpus and income therefrom for the benefit of the First, Second or the Third Beneficiary. The scheme devised by the settlor is that during the minority of each beneficiary the property in Schedules A, B & C qua each beneficiary is to remain vested in the trustees for the benefit of the Charitable Trust, and after expiry of the period specified the corpus and income is to be held for the full, absolute and beneficial ownership of the respective beneficiaries. By cls. 6, 7 & 8 provision is made for appointment of trustees. It may suffice to mention that the settlor during his lifetime is to be the trustee and has in case of vacancy power to appoint new trustee by writing or by will, and by cl. 10 the custody of the Trust assets and every portion thereof is to remain with the settlor and the trustees have full power to alter the investments in their absolute discretion. Clause 9 reads as follows: "This Settlement and Trust is hereby declared to be irrevocable and shall take effect immediately and all trusts, settlements and interests granted or created by these presents shall vest in the respective beneficiaries immediately. " It is not clear whether in cl. 9 the charity is intended to be designated as a beneficiary. From the Schedules and cls. 1, 2 & 3 it appears that the beneficiaries were to be the three children of the settlor. Even granting that charity was intended to be a beneficiary within the meaning of cl. 9, the instrument vests the interests granted or created in the respective beneficiaries immediately on execution, and therefore the interest which endures to the three children of the settlor under the instrument vests in them immediately. By cl. 21 it is directed that the trustees may, in their absolute discretion. accumulate the income accruing under the settlement for the benefit of the Charitable Trust for a period of two years from the date of the indenture as respects the shares set out and described in Sch. A, for a period of twelve years as respects the shares set out and described in Sch. B and for a period of eight years as respects the shares set out and described in Sch. The direction is not obligatory, but permissive. By the first proviso the trustees are authorised to pay at any time, and from time to time, during the period of two years, to the trustees of the charity the whole or any part of the income accruing under the settlement in respect of shares 432 set out in Sch. A. and on the expiry of the said period the trustees are enjoined to pay over to the trustees of the charity the whole or the balance of the income as the case may be, and thereupon the trustees stand discharged of all their obligations to the charity. Similar provision is made by provisos (b) & (c) with regard to payment of income from the shares during the period (A twelve years in respect of shares set out in Sch. B and during the period of eight years in respect of shares described in Sch. C. Prima facie this may indicate that the income to be received from the shares is to be applied for the benefit of charity in respect of the shares set out in Schedules A, B & C during the specified periods and that the children of the settlor are not to have any interest in that income. By cls. 22, 23 and 24 an absolute discretion is conferred upon the trustees to accumulate the income until July 31, 1975 in respect of the shares mentioned in each of the Schedules and on the expiry of that period to make over to the Trust funds as may belong to the beneficiaries. This is clearly intended to maintain the control of the settlor over the properties settled in trust till July 31, 1975. By cl. 25 it is directed that the trustees shall have control over the trust funds and the income, even if any of the beneficiary dies before July 31, 1975. Clause 26 provides: "Nothwithstanding anything contained in clauses 21 to 25, supra, the Trustees shall have full power during the currency of this Settlement and Trust to expend from out of the income accruing under this Settlement to each of the Beneficiaries herein such amount as the Trustees may in their discretion deem fit for the maintenance, education, health, marriage and advancement of each of the Beneficiaries herein. " Clause 26 confers upon the trustees full power during the currency of the settlement and trust to expend the income accruing under the settlement to each of the beneficiaries therein for the maintenance, education, health, marriage and advancement of the beneficiaries. This power is exercisable notwithstanding any provision to the contrary made in cls. 21 to 25. It may be recalled that cl. 21 confers upon the trustees power either to use the income accruing under the trust for the benefit of Trust during the period prescribed, or to accumulate the income and deliver it on the expiry of the periods specified to the trustees of the Charitable Trust. But by cl. 26 the trustees under this trust are competent to expend the income not for charity, nor to pay it over to the trustees of the Charitable Trust, but for maintenance, education, health, marriage and advancement of the beneficiaries. The relevant provisions of the Wealth Tax Act may now be surmmarised. By section 3 wealth tax is charged for every financial year commencing on and from April 1, 1957, on the net wealth on the 433 corresponding valuation date, on every individual, Hindu undivided family. and company. By section 4, net wealth is to include certain assets. Clause (1)(a)(iii) of section 4 provides that: "In computing the net wealth of an individual, there shall be included, as belonging to him (a) the value of assets which on the valuation date are held. (iii)by a person or association of persons to whom such assets have been transferred by the individual otherwise than for adequate consideration for the benefit of the individual or his wife or his minor child. " Section 5 provides for exemptions of certain assets in the computation of net wealth. It provides insofar as it is material that: "Wealth tax shall not be payable by an assessee in respect of the following assets and such assets shall not be included in the net wealth of the assessee (i)any property held by him under trust or other legal obligation for any public purpose of a charitable or religious nature in India." Under the instrument of Family Trust the assets included in the Schedules A, B & C were on the valuation date held by an association of persons and those assets were transferred by the settlor otherwise than for adequate consideration ' But says the settlor, on the valuation date the assets were not held for the benefit of himself, his wife or minor children, since, they were held both as to corpus and income for the benefit of charity during the minority of his children. If on a true interpretation of the deed this plea be correct, the assets are not liable to be included in the net wealth of the settlor for the levy of wealth tax. I agree with counsel for the settlor that the amendment made in section 4(1) (a) (iii) by Act 46 of 1964 which sought to include in the computation of net wealth, assets transferred for "the immediate or deferred benefit of the individual, his or her spouse, or minor child" is not declaratory of preexisting law. Under the clause as originally enacted, assets transferred for the immediate benefit of the individual, his wife or minor children alone may be included in the net wealth of the individual, and the liability of the settlor must be determined under the provision as it stood enacted in 1957. The question then is: Are the assets transferred by the settlor under the Family Trust instrument for the immediate benefit of his minor children? That question can only be answered on a determination of the total effect of the instrument in the light of the diverse clauses. By the Family Trust the primary intention of the settlor as disclosed in the preamble is to make provision for his children, and 434 for that purpose property is set apart by the Schedules read with cls. 1, 2 & 3. By cl. 4 it is contemplated that other property will also be settled for the benefit of the children of the settlor. By cl. 9 the interest created under the deed vests immediately in the beneficiaries and by cl. 26 notwithstanding the provisions made in cls. 21 to 25 directing application of the income from property set out in Schedules A, B & C for limited periods in favour of charity, the trustees have the power during the currency of the settlement to expend from out of the income accruing under the settlement to each of the beneficiaries such amount as the trustees may in their discretion deem fit for their maintenance, education, health, marriage and advancement of each of the beneficiaries therein. If by this clause power is conferred upon the trustees to direct the income of the property in Schdules A, B & C for the benefit of the children even during the periods specified in cls. 1, 2 & 3 the assets are unquestionably transferred for the immediate benefit of the children. But it was urged that the inclusion of figure "21" in cl 26 is the result of a typographical error and it should have read as cl. 22. But even cl. 25 refers to the application of the income for limited periods in the event of death of any of the beneficiaries and thereafter for the heirs of the beneficiary, and that is not said to be an efforts typographical or otherwise. Again the argument that reference to cl. 21 was due to an error was never raised before the High Court: if there was any substance in that agreement, the settlor would have executed a deed of rectification correcting the error after setting out the circumstances in which that error came to be made. It was urged that the power which the trustees could exercise is to expend the income accruing under the settlement for each of the beneficiaries under the Trust, and since no income accrued to the beneficiaries during the periods for which the income was to be applied or accumulated for the benefit of charity, reference to cl. 21 in cl. 26 had no meaning. It is implicit in this submission that the settlor intended that the income arising from the Trust property was to be utilized after the children attained the age of majority for their maintenance, education, health, marriage and advancement and not during their minority. The children stood in greater need of provision for maintenance, education, health and advancement during their minority than after they attain their majority, but it is said contrary to the plain terms of cl. 26 that the interest was intended to be given to them after they attained the age of majority, and not during their minority. In the deed of settlement charity is not directly mentioned as one of the beneficiaries, and the income is directed to be given for limited periods to charity and thereafter to the beneficiaries named therein. Clause 26 in terms confers power upon the trustees to expend from out of the income accruing under the settlement to each of the beneficiaries, such amounts for the maintenance, education, health, marriage and advancement of the beneficiaries or any of 435 them as the Trustees deem fit, and there is nothing in that clause which implies that this power is to be exercised after expiry of the periods specified in cls. 1, 2 & 3. The expression "beneficiary" in cl. 26 clearly refers not to charity, but to the three children of the settler, because the trustees are invested with power to expend from out of the income accruing under the settlement for the maintenance. education, health, marriage and advancement of each of the beneficiaries therein. Reading cls. 9 & 26 together it appears that the settlor intended that the trustees shall have power, notwithstanding other provisions in the deed of Trust, that the income of the property settled may be applied during the currency of the settlement for the benefit of the beneficiaries named therein, and in the event of death of any of the beneficiaries, for the benefit of his or her heirs. There was therefore a vested interest immediately arising on the execution of the instrument, and the children of the settlor were the real beneficiaries. In seeking to evade the application of the Wealth Tax Act, clumsy and inconsistent directions are made in the Family Trust: the trustees are initially directed to apply the income accruing from the shares for certain specified periods to charity, and if the income is not so applied during the periods the accumulated income is directed to be handed over to charity, but the direction is immediately followed by the clause that the trustees may apply the income, notwithstanding the provision relating to the application of the income in favour of charity, for the benefit of the minor children of the settlor. The High Court has held that the case fell clearly within section 4(1) (a) (iii) of the Wealth Tax Act and during the periods specified in cls. 1, 2 & 3 the property mentioned in Schedules A, B & C was liable to be included in the computation of wealth tax of the appellant, and in my view the High Court is right in so holding. The appeals fail and are dismissed with costs. ORDER In accordance with the opinion of the majority, the appeals are allowed with costs here and in the High Court. One hearing fee.

IN-Abs

In August 1957 the appellant created two Trusts by two sepa rate deeds, one of which was a charitable trust and the other a family trust. He then transferred certain shares to the family trust the scheme of which was that during the minority of each of three children of the appellant the property in Schedules A, B and C to the deed qua each beneficiary was to remain vested in the trustees for the benefit of the charitable trust, and after the expiry of the period specified in each case, the corpus and income was to be herd for the beneficial, ownership of the three children. By Clause 9 of the family trust deed, it was provided that the interests granted or created in the respective beneficiaries shall vest in them immediately upon execution of the deed; Clause 21 conferred upon the trustees power either to use the income accruing under the trust for the benefit of the charitable trust during the period prescribed in each case upto the time that each of the three children attained majority or to accumulate the income and deliver it on the expiry of the periods specified to the trustees of the charitable trust. Clause 26 provided that notwithstanding anything. contained in Clauses 21 to 25 the trustees could expend the income accruing under the settlement to each of the beneficiaries therein for the maintenance, education, health, marriage and. advancement of the beneficiaries. In computing the nett wealth of the assesses under the Wealth Tax Act 1957, as on March 31, 1958 and March 31, 1959, the valuation dates respectively for the assessment years 1958 59 and 1959 60, the Wealth Tax Officer and the Appellate Assistant Commissioner included the value of the shares held by the trustees under the family trust, on the ground that these shares were held by them for the benefit of the minor children within the meaning of Section 4(1)(a) (iii) of the Act. On appeal the Appellate Tribunal reversed this decision but. upon a reference, the High Court decided the issue against the assessee. In the appeal to this court, it was contended on behalf of the Revenue that the word "benefit" in the Section meant immediate or deferred benefit and the amendment of Section 4(1)(a)(iii) by Act 46 of 1964 whereby the words "immediate or deferred" were introduced before the word "benefit" in the Section, was in effect only declaratory; and that in any event it was clear from the recitals in the preamble and the other terms of the family trust deed that the intention of the appellant was to make a settlement for the benefit of his minor children within the meaning of the Section prior to its amendment. 420 HELD: (per Wanchoo and Sikri, JJ.). Considering the terms of the family trust deed as a whole, the shares transferred to the trustees were not held for the benefit of the three minor children as on March 31, 1958 and March 31, 1959 within the meaning of section 4(1)(a) (iii)and could not therefore be included in the nett wealth of the as e. [426E] By the terms of the deed, it, war. the charitable trust which was entitled to the income of the shares in Schedules A, B and C during the years before the minor children attained majority; upto that time the children had no interest whatsoever in that income. It could not therefore be said that the settlement was for the immediate benefit of the minor children. [426B C] Although the non obstante clause 26 purported to override the provisions of Clauses 21 to 25, the inclusion of Clause 21 appeared to be a typographical error. In any event even assuming that there was a conflict between Clauses 21 and 26, the earlier disposition under Clause 21 would Prevail over the later directions contained in Clause 26. Sahabzada Mohammed Kamgar Shah vs Jagdish Chandra Deo Dhabal Deo ; , 611. and Ramkishore Lai vs Kamal Narain (1963) Supp. 2 S.C.R. 417, 425; referred to. [427B C] (per Shah J. dissenting): The primary intention of the appellant as disclosed in the preamble of the family trust deed was to make provision for his children; from the terms of the trust deed and particularly from reading Clauses 9 & 26 together, it was clear that there was a vested interest immediately arising in favour of the children on the execution of the instrument, and that they were the real beneficiaries. The High Court had therefore rightly held that the shares transferred to the family Trust were for the immediate benefit of the settlor 's minor children within the meaning of Section 4(1)(a)(iii) and were liable to be included in the computation of wealth of the appellant. [435C E] (By the Court): The words "immediate or deferred" introduced into Section 4(1) (a)(iii) by Act 1946 of 1964 were not merely declaratory. The amendment made a deliberate change. The word 'benefit ' must therefore be construed apart from the amendments and in the context meant "for the immediate benefit of the individual or his wife or minor child". [422C, D]

Appeal No. 205 of 1964. Appeal by special leave from the judgment and decree dated November 30, 1961 of the Orissa High Court in First Appeal No. 63 of 1957. A. K. Sen and P. K. Chatterjee, for the appellant. Niren de, Addl. Solicitor General, Dipak Datta Chaudhuri and R. N. Sachthey, for respondent No. 2. The Judgment of the Court was delivered by Raghubar Dayal, J. This appeal, by special leave, is against the judgment and decree of the Orissa High Court, confirming the judgment and decree of the Additional Subordinate Judge, Puri dismissing the suit instituted by Mahant Gadadhar Ramanuj Das, represented after his death by Mahant Srinivas Ramanuj Das, for the setting aside of the decision of the Commissioner of Endowments dated July 20, 1946, under section 64(1) of the Orissa Hindu Religious Endowments Act, 1939 (Act 4 of 1939), hereinafter called the Act, and for a declaration that the Act did not apply to the properties described in Schedules Ka, Kha and Ga of the plaint. The allegations in the plaint are as, follows. The premises on which the residential quarters of the plaintiff existed was said to 438 be popularly known as (i) Srinivas Kote; (ii) Rajagopal Math; and (iii) Emar Math, according to. the names of the different ancestors of the plaintiff, Srinivasachari, Rajagopalachari and Embarachari. It was alleged that these premises, though known as Emar Math, was not a 'math ' as defined in the Act. Embarachari and his ancestors were alleged to be grahasts. His successors to the Emar Math were celibate. Srinivasachari was the grand father of Embarachari. It is alleged that he acquired a portion of the present site of the plaintiff 's residential quarters and built his residence there and installed therein his family deity Sri Raghunathji for his own spiritual benefit and the spiritual benefit of his family members and that Embarachari acquired a large Plot of land adjacent to Srinivas Math as an absolute gift and constructed buildings thereon. The buildings therefore became popularly known as Emar Math, although Embarachari was a married man and was living there with his wife and children with the private deity Sri Raghunathji. The plaintiff alleged that the properties described in Schedule Ka of the plaint were his personal properties, those in Schedule Ka 1 as acquired through absolute gifts to the plaintiff or his ancestors and those in Ka 2 as gifted to or purchased by the plaintiff or his predecessors and that they were wrongly recorded in the settlement papers in the name of the plaintiff as marfatdar of Lord Jagannath. The properties in Schedule Kha are alleged to be Amrit Manohi properties of Lord Jagannath held by the plaintiff as marfatdar and to have been acquired either by purchase or 'krayadan ' or by way of gift subject to the charge of some offering to Lord Jagannath. The properties in Schedule Ga were alleged to be owned and possessed by the plaintiff as marfatdar of various private deities. It was alleged that none of the properties in these schedules was however dedicated to the public and that the public had no interest in or right to any of the properties. The properties therefore did not constitute 'Public religious endowments ' within the meaning of the Act which, accordingly, could not apply to them. The Commissioner of Hindu Religious Endowments, Orissa, hereinafter called the Commissioner. demanded contribution under section 49 of the Act and took steps to enforce certain other provisions of the Act against the plaintiff and the properties in suit. This led the plaintiff to formally ask for a decision under section 64(1) of the Act. The Commissioner decided against him on July 20, 1946 and held that the Emar Math was a 'math ' as defined in the Act and that the properties constituted a 'religious endowment ' to which the Act applied. Thereafter the plaintiff instituted this suit and prayed for the setting aside of the decision of the Commissioner and for a declaration that the Act did not apply to the properties in suit. 439 The Commissioner, defendant No. 2, contested the suit asserting that the properties in suit were public debonair properties and were public endowments to which the Act applied. It was further contended that the premises of Emar Math was a 'math ' as defined in the Act and the public had a right to go there and had been actually going there from time immemorial. The trial Court accepted the contentions of the defendant Commissioner and dismissed the suit. The High Court, on appeal by the plaintiff, agreed with the findings of the trial Court and accordingly dismissed the appeal. Two main contentions have been raised before us. One is that the Emar Math in suit is not a public math and that therefore the Act does not apply to it. The other is that the properties in Schedule Ka were the personal property of the appellant plaintiff and that the properties in schedules Kha and Ga were private debottar properties of the plaintiff. Before dealing with the contentions, we may refer to the object and the relevant provisions of the Act. The Act was enacted for the better administration and gover nance of certain Hindu Religious Endowments. Section 2, sub section(a), states that the Act applies, save as thereinafter provided, to all Hindu public religious endowments which, according to the Explanation to that sub section, do not include Jain religious endowments. 'Math ' is defined in sub section(7) of section 6 as: " ' math ' means an institution for the promotion of the Hindu religion presided over by a person whose duty is to engage himself in spiritual service or who exercises or claims to exercise spiritual headships over a body of disciples and succession to whose office devolves in accordance with the directions of the founder of the institution or is regulated by usage; and includes places of religious worship other than a temple and also places of instruction or places for the maintenance of vidyarthies or places for rendering charitable or religious services in general which are or may be appurtenant to such institution. " Sub section(10) of section 6 defines the expression 'person having interest ' to mean, in the case of a math, a disciple of the math or a person of the religious persuasion to which the math belongs. Sub section(12) of section 6 defines 'religious endowment ' or 'endowment ' as meaning: "all property belonging to, or given or endowed for 'the support of maths or temples or for the performance of any service or charity connected therewith whether or not such maths or temples be in ruins or the worship in connection with them is discontinued either temporarily or permanently and includes the premises of maths or temples." 440 The explanation thereto reads: "Where an endowment has been made or property given for the support of an institution which is partly of a religious and partly of a secular character or for the performance of any service or charity connected therewith, or where an endowment made or property given is appropriated partly to religious and partly to secular uses, such endowment or property or the income therefrom shall be deemed to be a religious endowment and its administration shall be governed by the provisions of this Act." According to sub section (13) of section 6, 'temple ' is defined as follows: " 'temple ' means 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 and also includes any cultural institution or mandab or library connected with such a place of public religious worship. " General superintendence of all religious endowments vested in the Commissioner under section 11 of the Act. Clause (b) of sub section (1) of section 12 requires the Commissioner to maintain a register for every math or temple and all title deeds and other documents relating thereto. Sub section(2) provides that the register shall be prepared, verified and signed by the trustee of the math or temple or by his authorised agent and submitted by him to the Commissioner within such period after the commencement of the Act as the Commissioner may fix. Sub section (3) authorises the Commissioner to make such enquiry as he may consider necessary and to direct that the register be approved with such alterations, omissions or additions as he thinks fit to order. Section 13 requires the annual verification of the entries in this register. Section 46 reads: "The trustee of a math or temple may, out of the funds of the endowments in his charge, after satisfying adequately the purposes of the endowments, incur expenditure on arrangements for securing the health, safety or convenience of disciples, pilg rims or worshippers resorting to such math or temple: Provided that the Commissioner may, for reasons to be setforth in writing, restrict and place under such control as he may think fit the exercise by the trustee of his discretion under this section. " Section 49 provides that every math or temple and every specific endowment attached to a math or temple shall pay annually contributions at specified rates for meeting the expenses of the Commissioner when the annual income exceeds a specified amount. 441 Under section 51(1), the amount of contributions payable by a math under section 49 was to be assessed on and notified to the trustee of the math, temple or specified endowment concerned in the prescribed manner. Section 64 reads: "(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 decisions; but subject to the result of such suit, the order of the Commissioner shall be final. " Before we deal with the contention about the Emar Math being not a public math, we may first consider what the Commis sioner had to do under section 64(1) of the Act. The Commissioner had to decide under that sub section whether the Emar Math was a math as defined in the Act. He held that it was and we have to see whether he was right in so doing. An institution comes within such a definition if it satisfies three conditions: (i) that the institution be for the promotion of the Hindu religion; (ii) that it be presided over by a person whose duty is to engage himself in spiritual service or who exercises or claims to exercise spiritual headship over a body of disciples; and (iii) that the office of such person devolves in accordance with the directions of the founder of the institution or is regulated by usage. There is ample evidence on the record to show that the Emar Math was presided over by the Mahant, that the Mahant exercised spiritual headship over the disciples, and that the succession to the office of the Mahant was regulated by the usage of the institution. There could be no question that such an institution must have been for the promotion of the Hindu religion. It was for such an object that one would have a body of disciples. It is in evidence that the Mahant used to preach and had a large number of disciples who were attracted by the high reputation the Mahant enjoyed. It is said that Embarachari was regarded with great respect in his times and that it was on account of such respect that the gift of the land evidenced by the Deed, Exhibit 110, executed sometime is 1767, was made in his favour. It is not disputed for the appellant that the institution is a math. What is disputed is that it is not a public math as required by the Act. The premises of the Emar Math constituted a religious endowment, which includes the premises of maths or temples. 442 Further, if the premises of the Emar Math had been used both for secular purposes and for religious purposes, it, according to the explanation to sub section This makes it clear that the premises of the Math is not only deemed to be a religious endowment, but is deemed to be a Hindu public religious endowment to which the Act applies, as the provisions of the Act govern its administration. It follows that an institution which comes within the definition of 'math ' under the Act, ipso facto comes within the expression 'Hindu public religious endowment ' and therefore becomes subject to the provisions of the Act. In this connection, reference may be made to the definition of 'temple '. While the definition of 'temple ' requires that the place would be a temple if it be used as a place of public religious worship, there is no requirement that an institution to be a math must be a public institution for the promotion of the Hindu religion. The use of the word 'public ' was not necessary in connection with an institution for the promotion of the Hindu religion as any institution for such promotion of the Hindu religion must be of a public nature; the object being to promote Hindu religion, there would be no point in shutting the benefit of the institution to anyone among the Hindus. The beneficiaries of a math are the members of the fraternity to which the math belongs and the persons of the faith to which the spiritual head of the math belongs, and constitute therefore at least a section of the public. Maths, in general, consequently, are public maths. We say nothing as to whether there can be a private math or not. Mukherje a states at p. 390, in his 'Law of Endowment ', 1st Edition: "By private math should be meant those institutions where the head or superior holds the property not on behalf of an indeterminate class of persons or a section of the public but for a determinate body of individuals, viz., the family or descendants of the grantor. " In the present case, there is no evidence as to who actually founded the Math by granting the property to the spiritual preceptor. However, there is no evidence, whoever the founder be, that any particular family is the only body of persons who is interested in the Math. The spiritual family of the preceptor consisting of his disciples and the disciples in succession, cannot be deemed to be such a private family for whose benefit 443 the Math is founded and on that account the Math be called a private Math. The body of disciples and the disciples ' disciples etc., is a very unascertainable body. The Emar Math is therefore not such a private math. Much has been said on either side with respect to the onus in connection with the Math being public or not. Onus loses its importance when the parties have led evidence sufficient to determine the matter ' in dispute. The High Court agreed with the trial Court that the onus was on the plaintiff appellant to establish that the institution was the private property of the Mahant. It is said in para 10 of its judgment that the initial burden of showing that the Commissioner 's decision was wrong was on the plaintiff and that apart from the appellant 's position as plaintiff he had a heavy burden to establish affirmatively that the institution was the private property of the Mahant. Reliance is placed on several cases of which reference may be made to Parma Nand vs Nihal Chand(1) in which the Privy Council approved of the view of the High Court that it was for the defendants to prove that the plaintiff who was admittedly in possession of the property held it on a trust created for a public purpose of a charitable and religious nature. Narain Das then instituted the suit which ultimately went to the Privy Council. Section 5(3), the Charitable and Religious Trusts Act, 1920 (Act 14 of 1920) provides for the stay of proceedings before the Judge under section 3 of that Act, in order that the person denying the public nature of the trust may institute a suit for a declaration that the property was not trust property. There was no decision of any binding nature by the Court or by any authority which was to be avoided by the plaintiff instituting a suit for a declaration that the property was not trust property. In the present case the suit was instituted in pursuance of section 64(2) of the Act which provides that any person affected by a decision under its sub section (1) may, within one year, institute a suit in the Court to modify or set aside such decision and that, subject to the result of such a suit, the order of the Commissioner shall be final. The plaintiff appellant instituted this suit for the setting aside of the order of the Commissioner under sub section (1) of section 64 holding the institution to be a 'math ' as defined in the Act and the property belonging to it endowed properties. This order of the Commissioner is final, subject to the result of the suit. The plaintiff has to get over it to avoid that decision. The onus is therefore initially on the plaintiff to show that the (1) L.R. 65 I.A. 252. 444 order of the Commissioner is wrong and this he can only show by establishing prima facie that the Math is not a math as defined in the Act and that the various properties were not endowed properties. Learned counsel for the parties have argued on the basis that The Act applies to public maths. It is urged for the appellant that it is not proved to be a public math, while the respondent contends to the contrary. Undoubtedly, the Math had been in existence for over two centuries. Oral evidence about the founding of the Math could not be possible after such a long period. The mahant of the Math has not come in the witness box. The Courts below have held the Math to be a public math on the basis of several considerations. These are that the Mahants had been celibate and therefore not likely to have personal ownership in the property including even the dakshinas or cash offered to them, by disciples or other devotees. Religious books, viz. the Bhagavad Gita and the Ramayan, are recited daily in the temple of Raghunathji. There was also the image of Ramanuj, the founder of the cult. This image is carried in procession for five days around the compound of the main temple of Lord Jagannath at Puri. This could be to provide darshan to the devotees of the Vaishnav faith. Some ascetics called babajis reside at the math and are fed by the math authorities. The buildings of the math are many, much beyond the requirements of the Mahant and the few resident disciples. The Mahants of this Math have the privilege of rendering service to Lord Jagannath both in the temple and in the Gundicha Mandir. They also manage the Amrit Manchi properties the proceeds from which are utilised for offering bhog to Lord Jagannath and the Maha Prasad therefrom is distributed to the poor pilgrims and the Vaishnav visitors. Apart from these considerations, certain documents relied upon by the High Court tend to favour the finding that Emar Math is a public math and that the various properties, though ostensibly acquired by the Mahants, were really acquired for the Math. The first document of importance in this respect is Exhibit 110 of 1767. It is a deed of gift by a private person in favour of Sadhu Emar Gosain, the Adhikari of Ramanuj Kote Math. P.W. 2 states that Ramanuj Kote belongs to Emar Math area. The plaint alleges that the premises in suit had been known by different names. The gift deed states that the donee will enjoy the property gifted in perpetuity. The idea of perpetuity is further emphasised when it is said in the gift deed: "Your Chelas, Sishyas and Anusisllyas shall all enjoy this property for ever in perpetuity until the sun and moon last." This stipulation shows that it was not a gift personally to Emar, that the gift was for the benefit of chelas, sishyas and anusisllyas and that it was in favour of persons indeterminate in number. The 445 fact that the chelas are distinguished from sishyas and anusisllyas shows that the chela is the nominee of the Guru for the purpose of succession and that though the chela would succeed to the Gaddi, he would hold the properties not for personal enjoyment but for the benefit of sishyas and their sishyas indicating that the property was trust property. Further, the land donated by this document admittedly is a portion of the site on which the Math stands. The gift of such land could be for no other object but for the purpose of the construction of the Math and therefore a gift to the Math, though it would normally be in the name of the Mahant, the head of the Math. Another document of importance in this connection is the Will, Exhibit 140, executed by Mahant Mohan Dass in 1857 in favour of his disciple who was the subsequent Mahant by the name Mahant Raghunandan Das. This Will, besides speaking of the careful training given to Raghunandan Das making him fit to succeed to the gaddi, states : "After me the said Raghunandan as my successor in the Mahantai Gaddi shall become the Mahant, Malik and Gadanashin and shall continue to exercise ownership and possession in respect of all the properties as he is doing now and shall enjoy as the rightful owner and Malik of all the movable properties of and connected with this Math both within this part of the country and outside (Desh Bideshare) and shall continue to manage the rendering and supplying of the fixed Sheba Puja offerings and Bhog etc. of Shri Jagannath Mohaprabhu in accordance with the traditional customs and shall give food and shelter, as he is doing now, to Bhaishnab guests and other persons arriving in the Math (Abhyagata) etc., and committing no laches in this and remaining in observance of his own religion, shall manage all affairs". The last expression with respect to giving of food and shelter to Vaishnay guests and other persons arriving in the Math etc. indicates that visitors. belonging to the Ramanuj Sampraday, used to visit the Math when on a pilgrimage to the Lord Jagannath Temple and the Mathadhish of Emar Math used to give shelter and food to them and the will enjoined the nominee to continue that practice. Such a practice shows that the beneficiaries of the Math properties were again indeterminate in number. The gift being to the Math. though ostensibly in the name of the Mahant, the Mahant held the properties as a trustee for the indeterminate class of beneficiaries, viz., sishyas, anusishyas and visitors. This stamps the Math with the public character. It is significant to note that there is not a word in this document to the effect that Mahant Mohan Das possessed any private property and that such private property was to go to Raghunandan Das who was to succeed him on the gaddi or to somebody else, The only conclusion from such an omission can be that Mahant 446 Mohan Das did not consider any, property, to be his own personal property. Whatever he possessed and over which he exercised ownership was considered to be the property of the Math or properties connected with the Math and that his successor was to exercise ownership and possession over all such properties. We therefore hold that the Emar Math is a math as defined in the Act and that it is a public math. The history of the Emar Math, according to the passage in the Puri Gazetteer, fits in with our finding. The High Court has relied on what has been stated in the Puri Gazetteer of O 'Malley of 1908, at pp. 112 113. The relevant portion of the passage relied on is the following: "No account of Jagannath worship would be complete without some account of the maths in Puri. Maths are monastic houses originally founded with the object of feeding travellers, beggars, and ascetics, of giving religious in struction to chelas or disciples, and generally of encouraging a religious life. The heads of these religious houses who are called Mahants or Mathadharis are elected from among the chelas, and are assisted in the management of their properties by Adhikaris who may be described as their business managers. They are generally celibates but in certain maths married men may hold the office. Mahants are the gurus or spiritual guides of many people who present the maths with presents of money and endowments in land. Thus, the Sriramdas or Dakshinaparswa Math received rich endowments from the Mahrattas its abbot having been the guru of the Mahratta Governor; While the Mahant of Emar Math in the eighteenth century who had the reputation of being a very holy ascetic, similarly got large offerings from his followers. Both Saiva and Vaishnava Maths exist in Puri. The lands of the latter are known as Amruta Manchi (literally nectar food), because they were given with the intention that the proceeds thereof should be spent in offering bhoga before Jagannath and that the Mahaprasad thus obtained should be distributed among pilgrims, beggars and ascetics; they are distinct from the Amruta Manchi lands of the temple itself which are under the superintendence of the Raja. In 1848 Babu Brij Kishore Ghose roughly estimated the annual income of 28 maths from land alone at Rs. 1,45,400 and this income must have increased largely during the last sixty years. There are over 70 maths in Puri Town. The Chief Saiva maths are located in the sandy tract near Swargadwar viz., Sankaracharya math with a fine library of old manuscripts and Sabkarananda math which has a branch at Bhubaneshwar. Most of the maths are naturally 447 Vaishnava. The richest of the latter are Emar, Sriramdasa and Raghavadasa the inmates of which are Ramats or followers of Ramananda. " It is urged for the appellant that what is stated in the Gazetteer cannot be treated as evidence. These statements in the Gazetteer are not relied on as evidence of title but as providing historical material and the practice followed by the Math and its head. The Gazetteer can be consulted on matters of public history. The next question relates to the nature of the properties in suit. The oral evidence about the foundation of the Math or about the various acquisitions of property by purchase or by gift is nil. Whatever a witness has deposed has not been on the basis of his personal knowledge. This is natural when the Math was founded about two hundred years ago and when most of the acquisitions had taken place long ago. The best person to speak, though not from personal knowledge, could have been the Mahant himself. He can base his knowledge on the documents about the history of the Math and the acquisition of the properties. Such documents must naturally be in the custody of the Mahant. The Mahant has not come in the witness box. All the documents have not been produced. Some documents which could have thrown some light on the question under determination have not been produced. It is true that the defendant respondent also did not call upon the plaintiff appellant to produce the documents whose existence was admitted by one or the other witness of the plaintiff and that therefore, strictly speaking no inference adverse to the plaintiff can be drawn from his non producing the list of documents. The Court may not be in a position to conclude from such omission that those documents would have directly established the case for the respondent. But it can take into consideration in weighing the evidence or any direct inferences from established facts that the documents might have favored the respondent 's case. The documents relied upon for the appellant relate to acquisition of properties by purchase or gift and are in the name of the Mahant of the Math. Such documents being in the name of the Mahant alone, do not necessarily lead to the conclusion that the properties were acquired or received in donation by the Mahant in ],is personal capacity for his personal use and possession. An inference that they were acquired by the Mahant for the Math is equally possible and in fact is to be preferred to what appears on the face of the documents. The onus of proof being on the appellant, it was possible for him to establish his case from the documents available to him. But he has chosen not to place at the disposal of the Court all the relevant documents. It is significant to note that not a single document has been produced by the plaintiff 448 which specifically mentioned the purchase or the gift to be by or to the Math itself. It is difficult to believe that the Math acquired no property during the long period of its existence. The Mahant as the head of the institution acts for the Math and is its real representative. All the dealings for and on behalf of the Math must be conducted by the Mahant and it should be no wonder if the Mahant acting for the Math acts ostensibly in his own name. Though the documents relating to purchase of properties have been produced, no evidence was led to show that they were purchased from the personal assets of the Mahant. Presumably if there was such evidence, it would have been produced. The only possible inference which can be drawn is that they were purchased from the assets of the Math. Reference may be made to Sitaram Days Banasi vs H.R.E. Board Madras(1) and to Raghbir Lala vs Mohammad Said(1). In the former case, Varadachariar, J. said: "From the few sale deeds filed in the case, it no doubt appears that some of those properties were purchased in the name of the prior Mahant; but it being admitted that he was an ascetic and celibate and the head of the institution, the probabilities are that they were purchased with the funds of the institution. " and in the latter it was said: "No doubt if a question arises whether particular property acquired by a given individual was acquired on his own behalf or on behalf of some other person or institution with whom or with which he was connected the circumstance that the individual so acquiring property was a professed ascetic may have importance. " Reference may also be made in this connection to the Order, Exhibit 136, of the Maharaja of Puri, to Dewan Bhramarbar Ray. The order states : "The Maharaja hereby grants this Sananda taking Rs. 3,000 that he has granted the following 145 Batis and 15 Manas of land, that the income of this land will be utilised in Bhog of Lord Jagannath and distributed among the coming Baishnabas. The 19th day of Mass, Anka 2. 1. Rahang, Ph. Alisa 117 Batis and 15 Manas. Out of Bania Kera 10 Batis. Chabiskud, Ph. Tinikud 18 Batis. " Of the three properties mentioned in this order, the first one belongs to Schedule Ka 1, the second to Schedule Kha and the third to Schedule Ka 2, attached to the plaint. The property in Schedule Ka 1 is the property which is said to have been acquired by the plaintiff and his ancestors. The property in Schedule Ka 2 is the property said to be acquired by the plaintiff 's (1)I.L.R. (2) A.I.R. 1943 P.C. 79. 449 ancestors for personal services to Lord Jagannath while the properties in Schedule Kha are said to be acquired subject to a charge of offering Bhog to Lord Jagannath. The order makes no distinction in the nature of the objects for which the three properties are given. In fact it shows that the income from all the three properties was to be utilised in offering Bhog to Lord Jagannath, and for distributing the prasad among the Vaishnavas who would visit the place. There is nothing in this order that any of the properties was for the personal enjoyment and possession of the Mahant alone. It is not possible to hold that the properties covered by the same grant should fall in different categories as is the case, according to the schedules attached to the plaint. Apart from (these general considerations, the documentary evidence on record does not support the case of the plaintiff with respect to the properties in schedule Ka 1 and Ka 2. It may also be mentioned at this stage that there is no document on record with respect to the properties in schedules Kha and Ga. We have already referred to document Exhibit 110, the gift deed with respect to the land which forms part of the site of the Math. Exhibit 112 refers to certain land given to the Adhikari of Emar 'Math for building a temple for the God. The document states that the drain for the gruel from the temple of Lord Jagannath used to pass over this land and that this drain had to be shifted. It is difficult to believe that the land which was being used in connection with a public temple would have been given for the purpose of personal enjoyment by the Mahant or for the purpose of constructing a private temple. The land mentioned in Exhibit 115 and Exhibit 1.16 were acquired by the Mahant on payment of certain amounts. He was further required to pay certain amount towards the 'Kotha Bhoga ' of Lord Jagannath. Exhibit 117 relates to a land purchased by the Mahant. He was required to pay certain amount towards Chamar Seba of Lord Jagannath. Exhibit 118 mentions that certain land which the Mahant had purchased was being assigned to his Math in order that he might enjoy it for all times to come. This clearly brings out that the land purchased by the Mahant from some person was made over to the Math. He was exempted from payment of all sorts of extra taxes or other similar duties. Exemption from revenue and taxes appears to have been granted because it was understood that the lands were of the ownership of the Math and not the personal properties of the Mahant. 450 Exhibit 1 19 sanctions certain purchases by Mahant Samujamatra and states that he will enjoy the same for all time to come on dedication of all sorts of requirements for Gundichaghar Chali (House of Lord Jagannath). No other demand towards Kotha should be made on him. This again clearly indicates that the property was dedicated for meeting the expenses of Gundichaghar Chali and was exempted from any other demand towards the Kotha presumably the Kotha Bhog of Sri Lord referred to in Exhibits 115 and 116. This property is included in Schedule Ka 2. They had to offer seva to Lord Jagannath in different forms, e.g., offering Bhog and getting back Maha Prasad, Chamar Seva ie., fanning of the Lord etc. For Bhog or other services which required expenses, the saints were in need of funds and naturally the devotees of the saints would make gifts to them to enable them to perform these services with respect to the lands purchased by them was therefore merely to provide them with funds necessary for rendering services to Lord Jagannath, on behalf of the Math and also to meeting the necessary expenses in running of the Maths which would include expenses on the maintenance of the buildings, feeding of the Mahant and the disciples and such other persons who came to reside at the Math and also for distributing food to the poor. The documents referred to above make this amply clear and thus show that the properties to which they relate do not belong to the Mahant personally but really belonged to the Math. Some properties have been shown to be purchased by the chelas of the Mahants previous to their occupying the gaddi of the Mahant, that is to say, such properties were purchased when they were mere chelas and not mahants. It is therefore submitted for the appellants that these properties could not be held to be math properties now. It is true that the presumption that the properties that were obtained during the period when they were not Mahants cannot be presumed to be properties purchased or acquired for the Math. But the fact remains that when they themselves became Mahants such self acquired properties did not appear to have been treated in any separate manner. Proceeds from such properties were mixed up with the proceeds of the other property. Letters, Exhibits C & D, by Mahant Gadadhar Das to the Commissioner speak of the entire mingling of the accounts of the private and Math properties. Courts below did not rightly believe such statements. Further, it 451 may be noted that it appears from the sale deed, Exhibit 77, executed in favour of Gadadhar Ramanuj Das, Chela of Mahant Raghunandan Ramanuj Das in 1909, that the founder owed a sum of Rs. 400/ to the Mahant Guru of Gadadhar and that this sum was adjusted towards the purchase price of the property conveyed under this deed. Mahant Mohan Das, by his will Exhibit 140, permitted his Chela Raghunandan, who was nominated to succeed him to get his own name gradually mutated in respect of the lands and zamindaris standing in the name of the Mahant. It follows therefore that the mere fact that certain properties were ostensibly purchased by the chelas does not necessarily mean that those properties were either acquired as their personal properties ' or that they continued to be their personal properties after they succeeded to the gaddi. He has not produced the consolidated budget which is prepared. That could have indicated whether the income and expenditure over the property in suit was treated as of the Math or not. Accounts showing the sources of money from which the properties were acquired have not been produced. These omissions, together with statements in letters Exhibits C & D, are sufficient to support the findings of the Courts below that even these properties had been treated as Math properties. We are therefore of opinion that the properties mentioned in Schedules Ka 1 and Ka 2, alleged to be the personal properties of the Mahant, are not his personal properties but are properties of the Math. We may now consider the properties in schedule Kha said to be the Amrut Manohi properties of Lord Jagannath and held by the plaintiff as marfatdar. The plaintiff alleges that these properties were acquired either by purchase or 'krayadan ' or by way of gift subject to a charge of some offering to Lord Jagannath which depended upon the individual judgment and discretion of the plaintiff, and that the public had no concern with the enjoyment or management of the usufruct thereof. The Gazetteer makes a reference to such properties and states: "Both Saiva and Vaishnava Maths exist in Puri. The lands of the latter are known as Amruta Manohi (literally nectar food), because they were given with the intention that the proceeds thereof should be spent in offering bhoga before Jagannath and that the Mahaprasad thus obtained should be distributed among pilgrims, beggars and ascetics , they are distinct from the Amruta Manohi lands of the Temple itself which are under the superintendence of the Raja".

IN-Abs

The Commissioner of Hindu Religious Endowments, Orissa, de manded contribution under section 49 of the Hindu Religious Endowments Act and took steps to enforce certain other provisions of the Act against the appellants and certain properties. These properties, the appellant.% claimed, were not math as defined in the Act and the public had no free access to its premises and had no right of entry or worship of the deity installed therein. The Commissioner held that the properties were math as defined in the Act and that the properties constituted a 'religious endowment ' to which the Act applied. Thereafter, the appellants instituted a suit and prayed for setting aside of the decision of the Commissioner and for a declaration that the Act did not apply to the properties in suit. The trial Court dismissed the suit, which on appeal was confirmed by the High Court. In appeal by special leave. HELD: The appeal must be dismissed. (1)An institution comes within the definition of 'Math ' if it satisfies three conditions (i) that the institution be for the promotion of. the Hindu religion; (ii)that it be presided over by a person whose duty is to engage himself in spiritual service or who exercises or claims to exercise spiritual head ship over a body of disciples; and (iii) that the office of such person devolves in accordance with the directions of the founder of the institution or is regulated by usage. [441E] There was ample evidence on the record to show that the property was presided over by the Mahant, that the Mahant exercised spiritual headship over the disciples, and that the succession to the office of the Mahant was regulated by the usage of the institution. There could be no question that such an institution must have been for the promotion of the Hindu religion. [441F] Religious endowment includes the premises of the Math. If the Premises of the property had been used both for secular purposes and for religious purposes, it according to the explanation to sub section (12) of section 6, shall be deemed to be a religious endowment and its administration shall be governed by the provisions of the Act. This makes it clear that the premises of the math is not only deemed to be a religious endowment, but is deemed to be a Hindu Public religious en dowment to which the Act applies, as the provisions of the Act govern its administration. It follows that an institution which comes within the definition of math under the Act, ipso facto, comes within the expression 'Hindu public religious endowment ' and therefore become subject to the provisions of the Act. [441H 442B] 437 The definition of 'temple ' requires that the place would be a temple if it be used as a place of public religious worship. There is no requirement that an institution to be a math must be a public institution for the promotion of the Hindu religion. The use of the word 'public ' was not necessary in connection with an institution for such promotion of the Hindu religion as any institution for such promotion of the Hindu religion must be of a public nature. the object being to promote Hindu religion, there would be no point in shutting the benefit of the institution to anyone among the Hindus. [442C D] The distinction between a public trust and a private trust is, broadly speaking, that in a public trust the beneficiaries of the trust are the people in general or some section of the people, while in the case of a private trust the beneficiaries are an ascertained body of persons. The beneficiaries of a math are the members of the fraternity to which the math belongs and the persons of the faith to which the spiritual head of the math belongs, and constitute, therefore, at least a section of the public. Maths, in general, consequently, are public maths. [442E F] [QUAERE: Whether there can be a private math or not?] (2)The onus was initially on the appellant plaintiff to show that the order of the Commissioner was wrong and this he could only show by establishing prima facie that the Math was not a math as defined in the Act and that the various properties were not endowed properties. [443H] (3) The gazetteer could le consulted on matters of public history. [447B] (4) The documentary evidence on the record did not support the case of the appellant, but showed that the Properties were those of the math.

iminal Appeals Nos. 121 and 122 of 1966. Appeals by special leave from the judgment and order dated March 14, 1966 of the Mysore High Court in Criminal Revision Petitions Nos. 120 and 123 of 1966 respectively. M.K. Ramamurthi, R. K. Garg and section C. Agarwala, for the appellants (in both the appeals). R.Gopalakrishnan and B. R. G. K. Achar, for the respon dents (in both the appeals). The Judgment of the Court was delivered by RAMASWAMI J. The appellants Pampapathy and Shekarappa were tried in the Court of Sessions at Chitradurga for offences under sections 147, 148, 307, 323, 302 read with section 149 and section 325 read 478 with section 149 of the Indian Penal Co& and convicted of all the offences other than under section 307 and section 302 read with section 149, Indian Penal Code. The case of the prosecution was that the appellants, along with others, some of whom were dismissed workers of Devangiri Cotton Mills and Shri Ganeshar Textiles Mills and some of whom were office bearers and members of the Devangiri Cotton Mills Employees ' Association and Shri Ganeshar Textiles Mills Workers Union, conspired with the common object of committing murder and other offences with a view to strengthen their Associations and to weaken the rival Unions which had the sympathy of the Mill Managements. It was alleged that they intended to create fear in the mind of the Management of the Mills in order to gain their object of getting more bonus and get the dismissed workers reinstated. It was stated that they formed themselves into an unlawful assembly, armed themselves with deadly weapons, and attacked the deceased Heggappa and other loyal workers on the night of March 19, 1964 causing the death of Heggappa and injuries to 4 persons. The Sessions Judge, by his judgment dated December 7, 1964 convicted both the appellants for offences under sections 147, 148, 322 .324 and 325 read with section 149, Indian Penal Code. The appellants preferred appeals to the Mysore High Court and on admission of the appeals they were directed to be released on bail. On March 7, 1966, the State made two applications under sections 498(2) and 561A, Criminal Procedure Code for cancellation of the bail granted to the two appellants. In support of the two petitions an affidavit was filed by the Deputy Superintendent of Police, Devangiri Division Sri K. Srinivasa Alwa, stating that the two appellants were misusing their liberty ever since they were enlarged on bail by doing acts of violence, creating trouble by instigating the labour unions of Devangiri Cotton Mills and Shankara Textile Mills to paralyse the smooth working of the Mills. It was alleged that they bad constituted themselves as ring leaders of the Employees ' Association and were engaged in taking part in unlawful assemblies at different times and committed offences against the peaceful workers of the Mill. The appellants filed a counteraf fidavit denying that they were acting in a manner likely to cause breach of peace or endanger the lives of the workers. On March 14, 1966 the Mysore High Court allowed the applications of the State and ordered that the bail granted to the appellants should be cancelled and they should be rearrested and committed to jailcustody. These appeals are brought, by special leave, from the order of the Mysore High Court dated March 14, 1966 in Criminal Petitions Nos. 120 and 123 of 1966. The question of law arising for determination in these appeals is whether, in the case of a person convicted of a bailable offence where bail has been granted to him under section 426 of the Criminal 479 Procedure Code, it can be cancelled in a proper case by the High Court in exercise of its inherent power under section 561A of the Crimitial Procedure Code? It is necessary at the outset to reproduce the relevant provisions of the Criminal Procedure Code. Section 426 relates to the suspension of the sentence or order of the trial court pending appeal and the release of the appellant on bail. The section reads as follows: "426. (1) Pending any appeal by a convicted person, the Appellate Court may, for reasons to be recorded by it in writing, order that the execution of the sentence or order appealed against be suspended and, also, if he is in confinement, that he be released on bail or on his own bond. (2)The power conferred by this section on an Appellate Court may be exercised also by the High Court in the case of any appeal by a convicted person to a Court subordinate thereto. (2 A) When any person other than a person con victed of a non bailable offence is sentenced to imprisonment by a Court, and an appeal lies from that sentence, the Court may, if the convicted person satisfies the Court that he intends to present an appeal, order that he be released on bail for a period sufficient in the opinion of the Court to enable him to present the appeal and obtain the orders of the Appellate Court under sub section (1) and the sentence of imprisonment shall, so long as he is so released on bail, be deemed to be suspended. (2 B) Where a High Court is satisfied that convicted person has been granted spec ial leave to appeal to the Supreme Court against any sentence which the High Court has imposed or maintained, the High Court may, if it so thinks fit, order that pending the appeal the sentence or order appealed against be suspended, and also, if such person is in confinement, that he be released on bail. (3)When the appellant is ultimately sentenced to imprisonment, or imprisonment for life, the time during which he is so released shall be excluded in computing the term for which he is so sentenced." Section 496 deals with persons accused of bailable offences. It provides that "when a person charged with the commission of a bailable offence is arrested or detained without warrant by an I officer in charge of a police station or is brought before a court and is prepared at any time, while in the custody of such officer or at any stage of the proceedings before such court, to give bail, 480 such person shall be released on bail". Section 497 deals with the question of granting bail in the case of non bailable offences. It reads as follows: "497. (1) When any person accused of or suspected of the commission of any non bailable offence is arrested or detained without warrant by an officer in charge of a police station, or appears or is brought before a Court, he may be released on bail, but he shall not be so released if there appear reasonable grounds for believing that he has been guilty of an offence punishable with death or imprisonment for life : Provided that the Court may direct that any person under the age of sixteen years or any woman or any sick or infirm person accused of such an offence be released on bail. (2)if it appears to such officer or Court at any stage of the investigation, inquiry, or trial, as the case may be, that there are not reasonable grounds for believing that the accused has committed a non bailable offence, but that there are sufficient grounds for further inquiry. into his guilt, the accused shall, pending such inquiry, be released on bail, or, at the discretion of such officer or Court, on the execution by him of a bond with out sureties for his appearance as hereinafter provided. (3) (3 A) (4) (5)A High Court or Court of Session and, in the case of a person released by itself, any other Court may cause any person who has been released under this section to be arrested and may commit him to custody." Section 498(1) confers on the High Court or the Court of Session power to direct admission to bail or reduction of bail in all cases where bail is admissible under sections 496 and 497 whether in such cases there be an appeal against conviction or not. Sub section (2) of section 498 empowers the High Court or the Court of Session to cause any person who has been admitted to bail under sub section (1) to be arrested and committed to custody. Section 561A was added to the Code in 1923 and it reads as follows: "561 A. Nothing in this Code shall be deemed to limit or affect the inherent power of the High Court to make such orders as may be necessary to give effect to any order under this Code, or to prevent abuse of the process of any Court or otherwise to secure the ends of justice. " 481 It was argued by Mr. Ramamurthy on behalf of the appellants that after the High Court had once made an order suspending the sentence and granting bail to the appellants under section 426, Criminal Procedure Code it had no power to cancel that order subsequently and recommit the appellants to jail custody. It was submitted that there was no express power granted to the appellate court to cancel its order regarding the suspension of sentence pending the appeal and the order of release of the appellants on bail. It was pointed out that under section 497(5) the legislature has specifically conferred power on specified courts to cancel the bail granted to a person accused of a non bailable offence. It was also pointed out by learned Counsel that under section 498(2) the legislature has conferred power on the High Court and the Court of Session to cancel the bail granted to an accused person under section 498(1) and ordering him to be arrested and committed to jailcustody. The argument put forward on behalf of the appellants is that if the legislature intended to confer such a power on the appellate court under section 426 it would have been very easy for it to add an appropriate sub section and make an express provision for such a power. The omission to make such an express provision is, according to Mr. Ramamurthy, not a result of inadvertence but it is deliberate, and if that is so it will not be permissible to take recourse to the provisions of section 561A to clothe the appellate court with power to cancel the bail in a case falling under section 426, Criminal Procedure Code. It was argued by Mr. Ramamurthy that even if the appellants committed acts of violence during the period they were enlarged on bail and repeated the very offence for which they had been convicted the bail bond could not be cancelled but the further conduct of the accused may justify another prosecution tinder the Indian Penal Code and that it would not justify the rearrest of the appellants. In our opinion, there is no justification for the argument put for ward on behalf of the appellants. It is true that in section 498 and sections 497(5) and 498 the legislature has made express provision for the cancellation of a bail bond in the case of accused persons released on bail during the course of the trial but no such express provision has been made by the legislature in the case of a con. evicted person whose sentence has been suspended under section 426 and there has been an order of release of the appellant on bail. There is obviously a lacuna but the omission of the legislature to make a specific provision in that behalf is clearly due to oversight or inadvertence and cannot be regarded as deliberate. If the contention of the appellants is sound it will lead to fantastic results. The argument is that once an order of suspension of sentence is made under section 426 by the appellate court and the appellant is ordered to be released on bail. the subsequent conduct of the appellant. howsoever reprehensible it may be. cannot justify the appellate court in revoking the order of bail and ordering the rearrest of the appellant. The appellant may commit further acts of violence , he may perpetrate once again the very same offences 482 for which he has been convicted; he may even threaten and criminally intimidate the prosecution counsel who may be in charge of the case in the appellate court '. he may attempt to abscond to a foreign country to escape the trial; or he may commit acts of violence in revenge against the police and prosecution witnesses who have deposed against him in the trial court, but the appellate court will have no power to cancel the suspension of sentence and the order of bail made under section 426. Criminal Procedure Code. Such a situation could not have been in the contemplation of the legislature and, in our opinion, the omission to make an express provision in that behalf is manifestly due to oversight or inadvertence. In a situation of this description the High Court is not helpless and in a proper case it may take recourse to the inherent power conferred upon it under section 561A of the Criminal Procedure Code. The inherent power of the High Court mentioned in section 561A. Criminal Procedure Code can be exercised only for either of the three purposes specifically mentioned in the section. The inherent power cannot be invoked in respect of any matter covered by the specific provisions of the Code. It cannot also be invoked if its exercise would be inconsistent with any of the specific provisions of the Code. It is only if the matter in question is not covered by any specific provisions of the Code that section 561A can come into operation. No legislative enactment dealing with procedure can provide for all cases that can possibly arise and it is an established principle that the Courts should have inherent powers, apart from the express provision of law, which are necessary to their existence and for the proper discharge of the duties imposed upon them by law. This doctrine finds expression in section 561A which does not confer any new powers on the High Court but merely recognises and preserves the inherent powers previously possessed by it. We are, therefore, of the opinion that in a proper case the High Court has inherent power under section 561 A. Criminal Procedure Code to cancel the order of suspension of sentence and grant of bail to the appellant made under section 426. Criminal Procedure Code and to order that the appellant be rearrested and committed to jail custody. We should like to add that, even before section 498(2) was enacted, there was a consensus of judicial opinion in favour of the view that, if the accused person is released on bail under section 498(1), his bail bond could be cancelled and he could be ordered to be arrested and committed to custody under the provisions of section 561A of the Code (Mirza Mohammad Ibrahim vs Emperor(1). Seoti vs Rex(1), Bachchu Lal vs State(1), Munshi Singh vs State(1) and The Crown Prosecutor, Madras vs Krishnan(1)). These decisions proceed upon the view that the exercise of inherent power (1) A.T.R. 1932 All.534. (2) A.I.R. 1948 All.366. (3) A. I.R. 1951 All.836 (5) I.L.R. (4) A.I.R. 1962 All. 39. 483 to cancel bail under section 561A was not regarded as inconsistent with the provisions of section 498(1) of the Code. It is true that all these decisions referred to cases of persons charged with non bailable offences; but it is significant that the provisions of section 497(5) did not apply to these cases and the appropriate orders were passed under the purported exercise of the inherent power under section 561A. In the course of argument Mr. Ramamurthy strongly relied upon the decision of the Judicial Committee in Lala Jairam Das vs King Emperor(1). It was contended on behalf of the appellants that the High Court has no power to grant bail to a convicted person under section 498 of the Criminal Procedure Code and therefore the provisions of section 498(2) cannot be invoked to the present case. This argument is undoubtedly correct and is supported by the decision of the Judicial Committee. It was further contended by Mr. Ramamurthy on the basis of this decision that Ch. XXXIX of the Code together with section 426 was intended to contain a complete and exhaustive statement of the powers of a High Court to grant bail, and excludes the existence of any additional inherent power in a High Court relating to the subject of bail. But the actual decision of the Judicial Committee has no application to the facts of the present case. The question before the Judicial Committee was whether the Code of Criminal Procedure confers any power on a High Court in India to grant bail to a person who has been convicted and sentenced to imprisonment and to whom the Judicial Committee has given special leave to appeal against his conviction or sentence. It was held by the Judicial Committee that the High Courts had no such power under the Criminal Procedure Code and could not grant bail to a person who has been convicted and sentenced to imprisonment and to whom the Judical Committee has given special leave to appeal against his conviction and sentence. The question presented for determination in the present case, namely, whether inherent power of the High Court could be exercised for cancellation of bail, was not the subject matter of consideration before the Judicial Committee and that question did not obviously arise in the case before them. The ratio decidendi of the decision of the Judicial Committee is therefore different and has no application to the present case. We accordingly reject the argument by Mr. Ramamurthy on this aspect of the case. We pass on to consider the next contention of the appellants, viz., the case does not fall under section 561A of the Criminal Procedure Code and that it is not a proper case in which the High Court should cancel bail even though it has power under section 561A to do so. We are unable to accept the argument of Mr. Ramamurthy as correct. An affidavit was filed before the High Court on behalf of the State by the Deputy Superintendent of Police. Devangiri Division in which it was stated that the appellants were (1)72 I.A. 120. 484 misusing the liberty granted to them ever since they had been enlarged on bail by committing acts of violence, creating trouble by instigating the labour unions of Devanagiri Cotton Mills and other mills in Devanagiri with a view to paralyse the smooth working of the Mills. It was also alleged that the appellants had constituted themselves as ring leaders of the Employees ' Association and were taking part in unlawful assemblies at different times and had committed offences against the peaceful workers of the Mill. OnDecember 31, 1965 Crime No. 360 of 1965 was registeredagainst the appellants for commission of the offencesunder sections 143, 448 and 324, Indian Penal Code. On February 11, 1966 Crime No. 53 of 1966 was registered,in which one of the appellants was alleged to have committed offences under sections 341 and 323, Indian Penal Code. On February 12, 1966 yet another Crime No. 54 of 1966 was re gistered against the appellants for the commission of the offence under sections 143, 147, 341, 323 and 324, Indian Penal Code. The allegation against the appellants therefore was that they were misusing the liberty granted to them by the appellate court and were indulging in acts of violence. It is true that counter affidavits were filed by the appellants denying the allegations made by the State but the High Court apparently took the view that the allegations against the appellants on behalf of the State were well founded and the bail granted to them by the High Court should be cancelled. In our opinion, the allegations made against the appellants would prima facie indicate abuse of the process of the Court and the provisions of section 561A are attracted to the case and the High Court was entitled to cancel the bail of the appellants under the provisions of that section. In our opinion, Mr. Ramamurthy has failed to make good his submission on this aspect of the case. For these reasons we hold that there is no merit in these appeals which are accordingly dismissed. Appeal dismissed.

IN-Abs

The appellants were released on bail by the High Court under section 426 Cr. P.C., pending disposal of their appeal in the High Court. On an application by the State that the appellants were misusing their liberty and committing acts of violence, the bail was cancelled by the High Court in the exercise of its inherent powers under section 561 A, Cr. P. Code. On the question whether the High Court had such power, HELD: The inherent power of the High Court under section 561 A, Ct. P.C., can be exercised either for giving effect to any order under the Criminal Procedure Code or to prevent abuse of the process of a court or otherwise to secure the ends of justice; but such power cannot be invoked in respect of any matter covered by a specific provision or inconsistent with any specific provision of the Criminal Procedure Code. Under sections 497 and 498, Cr. P.C., the Legislature has made express provision for the cancellation of bail in certain cases, but there is no express provision when an appellant is released on bail under s, 426 Cr. The omission must be due to inadvertence and cannot be regarded as deliberate, otherwise the subsequent conduct of the appellant, however reprehensible it may be, will not justify the High Court in canceling the order of bail. Since the allegations against the appellant prima facie indicate abuse of the Process of the Court, section 561 A is attracted to the case and the High Court was entitled to cancel the bail. [481 F H; 482 D, F] Lala Jairam Das vs King Emperor, L.R. 72 I.A. 120, explained.

iminal Appeal No. 97 of 1964. Appeal by special leave from the judgment and order dated January 29, 1964 of the Madhya Pradesh High Court (Gwalior Bench) in Criminal Revision No. 5 of 1963. I. N. Shroff, for the appellant. R. L. Anand and section N. Anand, for the respondents. 474 The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the Madhya Pradesh High Court (Gwalior Bench) in a Criminal Revision filed by M/s. Azad Bharat Finance Company, one of the respondents in this appeal. The revision arose out of the following facts. On May 3, 1961, truck No. M.P.E. 1548, while it was parked at the bus station, Guna, was searched by the Excise Sub Inspector and he found contraband opium weighing about three seers in it. Five persons were challaned for the alleged illegal possession of contraband opium and for its transport, under sections 9A and 9B of the Opitum Act (1 of 1878) as modified by the Opium (Madhya Bharat Amendment) Act, 1955, hereinafter referred to as the Madhya Bharat Act. Harbhajan Singh, one of the accused, is alleged to have absconded, and, therefore, he was tried separately later on. The Additional District Magistrate, Guna, convicted three persons and acquitted one person. Regarding the truck, he ordered that the final orders regarding the disposal of the truck would be passed later, on the conclusion of the trial of Harbhajan Singh. It may be Mentioned that Harbhajan Singh had taken this truck. under a hire purchase agreement from M/s. Azad Bharat Finance Co. and he Was not present in or near the truck when the contraband opium was taken possession of by the Excise Officer. On May 28, 1962, M/s. Azad Bharat Finance Co, applied in the Court of Shri M. C. Bohre, in which the trial of Harbhajan Singh was going on. for the release of the truck. On September 7. 1962. Harbhajan Singh was acquitted by the Magistrate but he ordered that the truck be confiscated to the State. The Magistrate was of the opinion that section 11 of the Madhya Bharat Act showed ,Clearly that the truck in which the opium was carried had to be forfeited in all circumstances. He observed: "By the use of the word "shall" this Court was ,compelled that the truck be seized, may be there was the hand of the owner in it or not and neither there is any provision that the truck owner had the knowledge or not of the opium being carried. " Both Harbhajan Singh and M/s. Azad Bharat Finance Co. filed revisions in the Court of the Sessions Judge. The Sessions Judge also held that the word "shall" in section 11(d) was mandatory and not directory. He observed: "Though it is correct that the truck was not used for carrying opium with the knowledge or connivance of the owner but section 11 (d) as applicable in this state does not give discretion to the Court in not ordering the confiscation of the conveyance used for carrying contraband opium. " 475 M/s. Azad Bharat Finance Co. filed a revision in the High Court. The High Court held as follows: "The word "shall" occurring in Sec. 11 of the M.P. Opium Act means "may" and that it confers discretion on the court to confiscate the conveyance provided it belongs to the offender. But where it is not so, and, the owner of the truck has neither authorised the offender to transport opium, nor is there any reason to believe that the owner knew that his vehicle was likely to be used for transporting contraband opium, the conveyance should not be confiscated because confiscation in such circumstances would be tantamount to punishing one, who has not committed any offence under the Opium Act. " The learned counsel for the appellant, Mr. Shroff, contends that the Opium (Madhya Bharat Amendment) Act, 1955 (15 of 1955) which amended the Opium Act, 1878, deliberately employed a different phraseology with the intention of making it obligatory on a Court to confiscate a vehicle in which contraband opium had been transported. He points out that in the Opium Act, 1878, in section 11, the. relevant words Ate as follows: " section 11 Confiscation of opium. In any case in which an offence under section 9 has been committed, The vessels, packages and covering in which any opium liable to confiscation under this section is found, and the other contents (if any) of the vessel or package in which such opium may be concealed, and the animals and conveyances used in carrying it, shall likewise be liable to confiscation. " He stresses the words "liable to confiscation" which according to him and certain authorities clearly give a discretion to the Court whether to confiscate the vehicle or not. In the Madhya Bharat Amendment Act the section providing for confiscation is as follows: "section 11. In any case in which an offence under Sections 9, 9A, 9B, 9C, 9D, 9E, 9F and 9G has been committed, the property detailed herein below shall be confiscated: (d)the receptacles, packages and coverings in which any opium liable to confiscation under this Section is found, and the other contents (if any) of the receptacle or package in which such opium may be concealed, and the animals, carts, vessels, rafts and conveyances used in carrying it. " In our opinion, the High Court was correct in reading section 11 of the Madhya Bharat Act as permissive and not obligatory. It is well settled that the use of the word "shall" does not always 476 mean that the enactment is obligatory or mandatory, it depends upon the context in which the word "shall" occurs and the other circumstances. Three considerations are relevant in construing section 1 1. First, it is not denied by Mr. Shroff that it would be unjust to confiscate the truck of a person if he has no knowledge whatsoever that the truck was being used for transporting opium. Suppose a person steals a truck and then uses it for transporting contraband opium. According to Mr. Shroff, the truck would have to be confiscated. It is well recognised that if a statute leads to absurdity, hardship or injustice, presumably not intended, a construction may be put upon it which modifies the meaning of the words, and even the structure of the sentence. (Vide Tirath Singh vs Bachittar Singh)(1). Secondly, it is a penal statute and it should, if possible, be construed in such a way that a person who has not committed or abetted any offence should not be visited with a penalty. Thirdly, if the meaning suggested by Mr. Shroff is given, s.11 (d) of the Madhya Bharat Act may have to be struck down as imposing unreasonable restrictions under article 19 of the Constitution. Bearing all these considerations in mind, we consider that section II of the Madhya Bharat Act is not obligatory and it is for the Court to consider in each case whether the vehicle in which the contraband opium is found or is being transported should be confiscated or not, having regard to all the circumstances of the case '. Mr. Shroff then contends that if the matter is discretionary. the High Court should not have interfered in the discretion exercised by the learned Sessions Judge. But apart from the question that this point was not raised before the High Court, both the Magistrate and the Sessions Judge ordered confiscation of the truck on the ground that they had no option in the matter. Mr. Shroff then raises the point that M/s. Azad Bharat Finance Co. was a third party in the case and was not entitled to apply for setting aside the order of confiscation or request for the, return of the truck. This point was not raised before the High Court and, therefore, cannot be allowed to be raised at this stage. In the result the appeal fails and is dismissed. Appeal dismissed. (1) ; at 464.

IN-Abs

H took a truck on hire from the respondent company. The truck was found to contain contraband opium and H was tried for offences under sections 9A and 9B of the Opium Act (10 of 1878) as modified by the Opium (Madhya Bharat Amendment) Act 1955. The company made an application for the release of the truck but the magistrate while acquitting H on the ground that he had no knowledge that the truck was carrying opium, confiscated the truck under section 11 of the Madhya Bharat Act. He took the view that the use of the word 'shall ' in that section gave him no option but to confiscate the truck. The Sessions Judge took the same view but the High Court held that the word 'shall in the context of the section was not mandatory and in the circumtances of the case the truck should not have been confiscated. The State appealed to this by special, leave. HELD: The word 'shall ' is not always mandatory; it depends upon the context in which the word occurs and the other circumstances [475H] Three considerations are relevant in construing section 11. First it would be unjust to confiscate the truck of a person if he has no knowledge whatsoever that the track was being used for transporting the opium. Secondly it is a penal '. statute and it should if possible be construed in such a way that a person who has not committed or abetted any offence should not be visited with a penalty. Thirdly, if confiscation was obligatory under the section, the section may have to be struck down as imposing an unreasonable restrictions under article 19 of the Constitution. [476 A D] Section 11 of the Madhya Bharat Act is not therefore to be construed as obligatory and it is for the court to consider in each case whether the articles in which the contraband opium is found or is being transported should be confiscated or not having regard to all the circumstances of the case. [476 D E] Tirath Singh vs Bachittar Singh, ; , referred to.

il Appeal No. 1102 of 1966. Appeal from the judgment and order dated December 27, 1965 of the Jammu and Kashmir High Court in W. P. No. 67 of 1965. C.K. Daphtary, Attorney General, section V. Gupte, Solicitor General, Jaswant Singh, Advocate General for the State of J. & K. H. R. Khanna; section Javali, Ravinder Narain, for the appellants. B. Sen, I. N. Shroff, M. K. Banerjee, B. N. Kirpal, R. K. Kaul, R. N. Kaul, P. L. Handu, Lalit Bhasin and T. R. Bhasin, for respondent No. 1. The Judgment of the Court was delivered by Sarkar C.J. This is an appeal by the State of Jammu and Kashmir, G. M. Sadiq, Chief Minister of that State and D. P.Dhar its Home Minister. The appeal is contested by respondent 403 No. 1, Bakshi Ghulam Mohammad. The other respondent, N., Rajagopala Ayyangar, a retired Judge of this Court, has not appeared in this Court or in the court below. These are the parties to the proceedings before us. After the accession of the State of Jammu and Kashmir to India in 1947, a responsible Government was set up there under the Prime Ministership of Shiekh Mohammad Abdulla. Bakshi Ghulam Muhammad was the Deputy Prime Minister in that Government and G. M. Sadiq was also in the Cabinet. In 1953 Sheikh Mohammad Abdulla was dismissed from office and a new Government was formed with Bakshi Ghulam Mohammad as the Prime Minister and G. M. Sadiq and D. P. Dhar were included in the Cabinet. On January 26, 1957, a new Constitution was framed for Jammu & Kashmir. In the first elections held under the Constitution, a party called the National Conference got the majority of votes. Bakshi Ghulam Mohammad and Sadiq were members of this party. A Ministry was then formed with Bakshi Ghulam Mohammad as the Prime Minister. It appears that G. M. Sadiq left the party sometime after 1957 and rejoined it along with D. P. Dhar in December 1960 and they were taken into the Cabinet. The next General Elections were held in 1962. Again, the National Conference Party came into power. In the Government that was formed, Bakshi Ghulam Mohammad became the Prime Minister and G. M. Sadiq and D. P. Dhar were taken in the Ministry. In September 1963, Bakshi Ghulam Mohammad resigned from the Ministry under what is called the Kamraj Plan and Shamsudd in became the Prime Minister in his place. It will be noticed that Bakshi Ghulam Mohammad was the Deputy Prime Minister of the State from 1947 to 1953 and its Prime Minister from 1953 to 1963. So he held these offices, one after the other, for a total period of about sixteen years. In February 1964, Shamsuddin left office and a new Govern ment was formed with G. M. Sadiq as the Prime Minister. It is said that shortly thereafter, political rivalry between him and Bakshi Ghulam Mohammad started. In August 1964, a notice was issued fixing a session of the Legislature of the State in the following September. According to Bakshi Ghulam Mohammad, thereafter, some of the legislators wanted to bring in vote of no confidence against G. M.Sadiqs Ministry and by September 21, 1964 the no confidence motion had obtained the support of the majority of. members of the Assembly. On September 22, 1964, at 5 o 'clock in the morning, Bakshi Ghulam Mohammad and some of his supporters were arrested under the Defence of India Rules. At 8.30 a.m. on the same day the notice of the motion of no confi dence with the signatures of some members was handed over to the Secretary of the Legislative Assembly. G. M. Sadiq challenges the genuineness of the, signatures on the notice of the motion and also denies that it had the support of, a majority: of the Assembly , At 9 a.m. the Legislative Assembly which was to meet on that day,. 404 was prorogued by the Speaker under the directions of the Sadar i Riyasat, the constitutional head of the State. Sometime in November 1964, a petition for a writ of habeas corpus for the release of Bakshi Ghulam Mohammad was presented to the High Court of Jammu and Kashmir. On December 15, 1964, before the petition could be heard and decided, Bakshi Ghulam Mohammad was released from arrest by the State Government. On January 30, 1965, a Notification was issued by the State Government appointing a Commission of Inquiry constituted by N. Rajagopala Ayyangar to enquire into (1) the nature and extent of the assets and pecuniary resources of Bakshi Ghulam Mohammad and the members of his family and other relatives mentioned in the first Schedule to the Order, in October 1947 and in October 1963; and (ii) whether during this period, Bakshi Ghulam Mohammad and the others mentioned in the Schedule had obtained any assets and pecuniary resources or advantages by Bakshi Ghulam Mohammad abusing the official positions held by him or by the aforesaid people set out in the first Schedule by exploiting that position with his knowledge, consent and connivance. The Notification provided that in making the inquiry under head (ii) the Commission would examine only the allegations set out in the second Schedule to it. It is this Noti fication that has given rise to the present proceedings. The Commission held certain sittings between February 1965 and August 1965 in which Bakshi Ghulam Mohammad took part. On September 1, 1965, Bakshi Ghulam Mohammad moved the High Court of Jammu and Kashmir under sections 103 and 104 of the Constitution of Jammu and Kashmir, which correspond to articles 226 and 227 of the Indian Constitution, for a writ striking down the Notification and quashing the proceedings of the Commission taken till then and for certain other reliefs to which it is not necessary to refer. The petition was heard by a Bench of three learned Judges of the High Court. The High Court allowed the petition, set aside the Notification and quashed the proceedings of the Commission. This appeal is against the judgment of the High Court. In the High Court, eight grounds had been advanced in support of the petition, three of which were rejected but the rest were accepted, some unanimously and some by the majority of the learned Judges. They have however not all been pressed in this Court. The Notification had been issued under the Jammu & Kashmir Commission of Inquiry Act, 1962. The first point taken was that the Notification was not justified by the Act because under the Jammu & Kashmir Constitution, a Minister was responsible for his acts only to the Legislature and no action could be taken against him except for criminal and tortuous acts in the ordinary courts of law, unless the Legislature by a resolution demanded it. The substance of this contention is that an inquiry cannot be directed under the Act into the actions of a Minister except at the instance of the Legislature, it cannot be directed by an order of the Government. This contention is based on section 37 of the Jammu 405 & Kashmir Constitution. That section states that the Council of Ministers shall be collectively responsible to the Legislative Assembly. It is contended that this implies that in no other way is a Minister responsible for anything that he does when in office. It is also said that is the convention in Britain and it has been adopted in the State of Jammu & Kashmir. We confess to a certain amount of difficulty in appreciating this argument. The point about the British convention need not detain us. It has not been shown that any such convention, even if it exists in England, as to which we say nothing, has been adopted in the State of Jammu & Kashmir. The Jammu & Kashmir Constitution is a written document and we can only be guided by its provisions. It is said that section 37 indicates that the British convention was adopted by the State of Jammu & Kashmir. We are unable to agree with this view. Section 37 talks of collective responsibility of Ministers to the Legislative Assembly. That only means that the Council of Ministers will have to stand or fall to other, every member being responsible for the action of any Other. The emphasis is on collective responsibility as distinguished from individual responsibility. The only way that a legislature can effectively enforce this responsibility of the Council of Ministers to it is by voting it out of office. Furthermore, this responsibility is of the Council of Ministers. Bakshi Ghulam Mohammad did not, at the date of the Notification, belong to that Council. He did not on that date owe any responsibility to the Legislature under section 37. That section has no application to this case Again section 3 of the Inquiry Act states, "The Government may and shall if a resolution in this behalf is passed by the Jammu & Kashmir State Legislative Assembly or the Jammu & Kashmir Legislative Council by notification appoint a Commission of Inquiry". It ,would, therefore, appear that the Act gave power to the Government to set up a Commission and also to both the Houses of the Legislature to require a Commission to be set up. It is important to note that even the Legislative Council has a right to get a Com mission appointed though section 37 of the Constitution does not say anything about the responsibility of the Ministers to that Council. The Act was passed by the State Legislature consisting of both the Houses. It would show that the Legislature did not consider that there was any convention or anything in section 37 which prevented a Commission of Inquiry being set up under the Act at the instance of the Government or the Legislative Council. The High Court had rejected this contention and we think that it did so rightly. The next point urged in support of the petition was that the Act permitted a Commission to be set up for making an inquiry into a definite matter of public importance and the matters which the Commission had been set tip to inquire into were not such. This contention found favour with all the learned Judges of the High Court. We are, however, unable to accept it. It is true that 406 a Commission can be set up only to inquire into a definite matter of public importance. But we think that the matters into which the Commission was asked to inquire were such matters. The first inquiry was as to the assets possessed by Bakshi Ghulam Mohammad and the other persons mentioned in the Notification, in October 1947 and in October 1963 and the second was whether during this period being the sixteen years when he held office as Prime Minister and Deputy Prime Minister, he and the other persons named had obtained any assets or pecuniary advantage by abuse of his official position or by that position being exploited by the others with his consent, knowledge or connivance, this inquiry being confined only to the instances set out in the second Schedule to the Notification. That Schedule contains 38 instances, the first of which, in substance, repeats the second head of inquiry earlier mentioned. The other items refer to individual instances of people being made to part with property under pressure brought upon them by abuse of official position and of public money being misappropriated. At the end of this Schedule, there is a note ' stating that the gravamen of the charge was that Bakshi Ghulam Mohammad abused his official position and the other persons named, exploited that position with his consent, knowledge or connivance in committing the acts whereby they acquired vast wealth. The inquiry was, therefore, into the assets possessed by Bakshi Ghulam Mohammad and the persons named, respectively in October 1947 and in October 1963 and to find out whether they had during this period acquired wealth by the several acts mentioned in the second Schedule by abuse or exploitation of Bakshi Ghulam Mohammad 's official position. The first question is, whether these are matters of public importance. Two of the learned Judges held that they were not and the third took the contrary view. This was put on two grounds. First, it was said that these matters were not of public importance because they had to be so at the date of the Notification and they, were not so on that date as Bakshi Ghulam Mohammad did not then hold any office in the Government. It was next said that there was no evidence of public agitation in respect of the conduct complained of and this showed that they were not matters of public importance. We do not think that either of these grounds leads to the view that the matters were not of public importance. As regards the first, it is difficult to imagine how a Commission can be set up by a Council of Ministers to inquire into the acts of its head, the Prime Minister, while he is in office. It certainly would be a most unusual thing to happen. If the rest of the Council of Ministers resolves to have any inquiry, the Prime Minister can be expected to ask for their resignation. In any case, he would himself go out. If he takes the first course, then no Commission would be set up for the Ministers wanting the inquiry Would have gone. If he went out himself, then the Commission would be set up to inquire into the acts of a person who was no longer in office and 407 for that reason, if the learned Judges of the High Court were right, into matters which were not of public importance. The result would be that the acts of a Prime Minister could never be inquired into under the Act. We find it extremely difficult to accept that view. These learned Judges of the High Court expressed the view that the acts of Bakshi Ghulam Mohammad would have been acts of public importance if he was in office but they ceased to be so as he was out of office when the Notification was issued. In taking this view, they appear to have based themselves on the observation made by this Court in Ram Krishan Dalmia vs Shri Justice section R. Tendolkar(1) that "the conduct of an individual may assume such a dangerous proportion and may so prejudicially affect or threaten to affect the public well being as to make such conduct a definite matter of public importance, urgently calling for a full inquiry". The learned Judges felt that since Bakshi Ghulam Mohammad was out of office, he had become innocuous; apparently, it was felt that he could no longer threaten the public wellbeing by his acts and so was outside the observation in Dalmia 's case. We are clear in our mind that this is a misreading of this Court 's observation. This Court, as the learned Judges themselves noticed, was not laying down an exhaustive definition of matters of public importance. What is to be inquired into in any case are necessarily past acts and it is because they have already affected the public well being or their effect might do so, that they became matters of public importance. It is irrelevant whether the person who committed those acts is still in power to be able to repeat them. The inquiry need not necessarily be into his capacity to do again what he has already done and it may well be into what he has done. The fact that Bakshi Ghulam Mohammad is no longer in office does not affect he question whether his acts already done constitute matters of public importance. If once it is admitted, as it was done before us, that if he had been in office his acts would have been matters of public importance, that would be acknowledging that his acts were of this character. His resignation from office cannot change that character. A Minister, of course, holds a public office. His acts are necessarily public acts if they arise out of his office. If they are grave enough, they would be matters of public importance. When it is alleged that a Minister has acquired vast wealth for himself, his relations and friends, as is done here, by abuse of his official position, there can be no question that the matter is of public importance. It was said that the object of inquiry was to collect material for the prosecution of Bakshi Ghulam Mohammad and, therefore, the matters to be required into were not of public importance. This contention is, in our view, fallacious. It is of public importance that public men failing in their duty should be called upon (1) ; 5SCI 28 408 to face the consequences. It is certainly a matter of importance to the public that lapses on the part of the Ministers should be exposed. The cleanliness of public life in which the public should be vitally interested, must be a matter of public importance. The people are entitled to know whether they have entrusted their affairs to an unworthy man. It is said that the Notification did not mention anything about the steps to be taken to prevent recurrence of the lapses in future. But that it could not do. Before the facts were found steps could not be thought of, for the steps had to suit the facts. The inquiry proposed in this case will, in the course of finding out the lapses alleged, find out the process as to how they occurred and it is only after the process is known that steps can be devised to meet them. It was also contended that the inquiry was into allegations of misconduct against Bakshi Ghulam Mohammad and an inquiry into allegations was not contemplated by the Inquiry Act. We are wholly unable to agree. An inquiry usually is into a question. That question may arise on allegations made. Dabnia 's case(1) dealt with an inquiry ordered at least in part into allegations made against people in charge of a big mercantile enterprise. Allegations may very well raise questions of great public importance. Suppose it is alleged that people in a city are suffering from ill health and that is due to the contaminated water supplied by the city admi nistration. It cannot be said that these allegations about the existence of poor health and its causes are not matters of grave public importance. They would be so even if it was found that the people 's health was not poor and the water was not contaminated. It cannot also be said that allegations can never be definite. They can be as definite as any existing concrete matter. It must depend on what the allegation is. Then as to the question whether the allegations against Bakshi Ghulam Mohammad were not matters of public importance because there was no public agitation over them. The Notification itself and the affidavits filed in this case on behalf of the appellants in fact state that there had been allegations made by the public against Bakshi Ghulam Mohammad that he had amassed a large fortune by the misuse of his office. But it was said that there was no proof that the allegations had actually been made. Whether there was proof would depend on whether the statements in the Notification and the affidavits were accepted or not. We are, however, unable to agree that a matter cannot be of public importance unless there was public agitation over it. Public may not be aware of the gravity of the situation. They may not know the facts. Some members of the public may be aware of individual cases but the entire public may not know all of them. There may have been influences working to prevent public agitation. Again, whe (1)[1959] S.C.R. 279. 409 ther a matter is of public importance or not has to be decided essentially from its intrinsic nature. If a matter is intrinsically of public importance, it does not cease to be so because the public did not agitate over it. Take this case. Suppose the Government sets up a Commission to inquire into the mineral wealth in our country. The public are not likely to agitate over this matter for they would not know about the mineral wealth at all. Can it be said that the inquiry does not relate to a matter of public importance because they did not agitate over it? The answer must plainly be in the negative. This would be so whether there were in fact minerals or not. Considering the allegations contained in the Notification by themselves, we think for the reasons earlier mentioned, that they constitute matters of public importance even if there was no public agitation over them. It was said that G. M. Sadiq, D. P. Dhar and various other people had praised the administration of Bakshi Ghulam Mohammad. That they no doubt did. But these were speeches made in support of party politics. They might again have been made without knowledge of full facts. They cannot, in any event, turn a matter of public importance into one not of that character. It was then pointed out that the Notification only mentioned that the matters were of public importance but did not say that they were definite matters of public importance. The Act, as we have earlier pointed out, requires that the matters to be inquired into shall be definite matters of public importance. But this omission of the word "definite" in the Notification does not, in our opinion, make any difference. A Court can decide whether the matters to be inquired into are definite matters of public importance. 'Definite ' in this connection means something which is not vague. One of the learned Judges of the High Court held that the matters set out in the second Schedule were vague as some of the instances did not give any date or year. He also said that the note at the end of the second Schedule., to which we have earlier referred, added to the vagueness. We are unable to accede to this view. What the learned Judge had in mind was apparently the particulars of the acts. In most cases, the acts are identifiable from the particulars given in the second Schedule in respect of them. Further, it is obvious that they had to be identified at the hearing and could not be proved nor any notice taken of them unless that was done. It does not appear to have been contended before the Commission that there was any matter not so identifiable. Neither do we think that the note drawing attention to the gravamen of the charges at the end of the second schedule indicates any indefiniteness. In most of the allegations it had been expressly stated that the act was done by the misuse of Bakshi Ghulam Mohammad 's official position and by his permitting others to exploit that it is this which made the matters, matters of public importance and it was for greater safety that the note was appended so that no 5SCI 28(a) 410 doubt was left as to the gravamen of the charge in each of the allegations made. The next point against the validity of the Notification was based on section IO of the Act which is in these terms: "10. (1) If at any stage of the inquiry the Commission considers it necessary to inquire into the conduct of any person or is of opinion that the reputation of any person is likely to be prejudicially effected by the inquiry, the Commission shall give to that person a, reasonable opportunity of being heard in the inquiry and producing evidence in his defence; Provided that nothing in this sub section shall apply when the credit of a witness is being impeached. (2)The Government, every person referred to in sub section (1) and with the permission of the Commission, any other person whose evidence is recorded by the Commission: (a) may cross examine any person appearing before the Commission other than a person produced by it or him as a witness, (b) may address the Commission. (3) It was contended that it showed that an inquiry may be made under the Act into the conduct of a person only incidentally, that is to say, it can be made only when that becomes necessary in connection with an inquiry into something else. It was, therefore, contended that the present inquiry which was directly into the conduct of Bakshi Ghulam Mohammad was outside the scope of the Act. It was also said that section 10 gives a statutory form to the rules of natural justice and provides for the application of such rules only in the case when a person 's conduct comes up for inquiry by the Commission incidentally. It was then said that the Act could not have contemplated an inquiry directly into the conduct of an individual since it did not provide specifically that he should have the right to be heard, the right to cross examine and the right to lead evidence which were given by section 10 to the person whose conduct came to be inquired into incidentally. We are unable to accept this view of section 10. Section 3 which permits a Commission of Inquiry to be appointed is wide enough to cover an inquiry into the conduct of any individual. It could not be a natu ral reading of the Act to cut down the scope of section 3 by an implication drawn from section 10. We also think that this argument is illfounded for we are unable to agree that section 10 does not apply to a person whose conduct comes up directly for inquiry before a Commission set up under section 3. We find nothing in the words of section 10 to justify that view. If a Commission is set up to inquire directly into the conduct of a person, the Commission must find 411 it necessary to inquire into that conduct and such a person would therefore, be one covered by section 10. It would be strange indeed if the Act provided for rights of a person whose conduct incidentally came to be enquired into but did not do so in the case of persons whose conduct has directly to be inquired into under the order setting up the Commission. It would be equally strange if the Act contemplated the conduct of a person being inquired into incidentally and not directly. What can be done indirectly should obviously have been considered capable of being done directly. We find no justification for accepting the reading of the Act which learned counsel for Bakshi Ghulam Mohammad suggests. The next attack on the Notification was that it had been issued mala fide. One of the learned Judges of the High Court expressly rejected this contention and the others also seem to have been of the same view for they did not accept it. We find no reason to accept it either. In that view of the matter, we consider it unnecessary to discuss this aspect of the case in great detail. We have set out the broad events of the case and it is on them that the case of mala fide is based. It is not in dispute that for some time past there was political rivalry between Bakshi Ghulam Mohammad and G. M. Sadiq. It was also said that there was personal animosity because G. M. Sadiq wanted to advance the interest of his relatives and followers by ousting persons belonging to Bakshi Ghulam Mohammad 's group in various fields. This allegation of personal animosity cannot be said to have been established. It is really on the political rivalry and the events happening since September 21, 1964 that the allegation of male fide is founded. It was said that the steps taken since the arrest of Bakshi Ghulam Mohammad down to the setting up of the Commission of Inquiry were all taken with the intention of driving him out of the political life so that G. M. Sadiq would have no rival as a political leader. First, as to the arrest. The case of Bakshi Ghulam Mohammad was that the arrest was mala fide. On the other side, it was said that since about July 1964 various allegations of abuse of power by Bakshi Ghulam Mohammad some of which formed the subject matter of inquiry, had come to the notice of the Government and thereupon investigations were started by the Criminal Investigation Department at the instance of the Government. In order to stop the investigation Bakshi Ghulam Mohammad and his followers started dowdyism and other form of breaches of law and order endangering public safety and maintenance of public order. It was pointed out that the situation in Kashmir had not been easy for some time past due to the hostile intentions of Pakistan and China and breach of law and order added to the seriousness of the position. It was said that for these reasons Bakshi Ghulam Mohammad had to be arrested and detained under the Defence of India Rules. it was said on behalf of Bakshi Ghulam Mohammad that prior to the arrest, a no confidence motion had been sponsored and had actually gathered in volume and the arrest was made to stultify 412 it. What support the no confidence motion had we do not know. It would appear however that the Criminal Investigation Department had been making inquiries against Bakshi Ghulam Mohammad 's acts for some time past and the situation in Kashmir was inflammable. In those circumstances, it cannot be said that Bakshi Ghulam Mohammad 's arrest was mala fide. He was no doubt released from arrest after a petition had been moved for his release and before the petition was heard. It was said that he was released because the Government found that the petition was bound to succeed. We have no material before us on which we can say that the petition was bound to succeed. On behalf of G. M. Sadiq and D. P. Dhar it was said that he was released because of ill health. This does not appear to have been denied. It was also said on behalf of G. M. Sadiq that the investigation having been completed there was no cause for Bakshi Ghulam Mohammad to instigate breaches of law and order and therefore it was not necessary to keep him in detention any longer. On the evidence before us, we are unable to say that the case made by G. M. Sadiq cannot be accepted. As to the prorogation of the Assembly, it is said by the appellants that it was necessary because it was apprehended that if the Assembly met, there might have been trouble inside the House created by Bakshi Ghufam Mohammad 's followers who resented the arrest. On the materials before us, we are unable to say that this apprehension was pretended. It was also said by the appellants that the prorogation had been decided upon before the arrest of Bakshi Ghulam Mohammad but the order could not be passed because the Sadar i Riyasat was out of Srinagar from before September 15, 1964 when both the arrest and prorogation had been decided upon and did not return there till some time on September 21, 1964. The fact that the Sadar i Riyasat returned on that date is not denied. As we have said, the arrest and the prorogation took place on the next day, that is, September 22, 1964. Bakshi Ghulam Mohammad was released on December 15, 1964 and the Notification challenged was issued on January 30, 1965. On these facts, we are unable to hold that Bakshi Ghulam Mohammad has been able to establish that the inquiry had been set up mala fide owing to political rivalry. It has been said on behalf of the appellants that there could be no political rivalry because, as appears from Bakshi Ghulam Mohammad 's own affidavit, he had declared his intention to retire from politics. On behalf of Bakshi Ghulam Mohammad it was stated that G. M. Sadiq had made a statement that he would be released after a Commission of Inquiry was set up and this would show that the detention was mala fide and that would indicate that the Notification had also been issued mala fide. That statement is not before us. On behalf of G. M. Sadiq it was said that such a statement had not been made and what had been said was that he would be released after the completion of investigation by the Criminal Investigation Department as thereafter, there 413 will be no occasion for Bakshi Ghulam Mohammad to disturb the public peace and safety. It was also said that it had been mentioned that after the completion of the investigation, the Commission of Inquiry would be set up. This is not denied. It however does not make the arrest mala fide. It was further said by Bakshi Ghulam Mohammad that the statement showed that the Commission was set up to prevent him from disturbing public safety and law and order and that, therefore, it was outside the scope of the Inquiry Act. This was denied on behalf of G. M. Sadiq. In the absence of the statement, it is impossible for us to say which is the correct version. Another point taken was that the affidavits filed on behalf of the appellants showed that the Government were satisfied about the correctness of the allegations into which the inquiry was directed. It was contended that since the inquiry is for finding facts, if the Government were already satisfied about them, there was no need for further inquiry. This contention has no force at all. What the affidavit really said was that the Government were prima facie satisfied. They had to be so before they could honestly set up the Commission to make the inquiry. It was said on behalf of G. M. Sadiq that before setting up the Commission the Government had investigated into the facts through the Criminal Investigation Department and if the Government 's intention was mala fide, they could have started criminal proceedings and ruined the political life of Bakshi Ghulam Mohammad just as well thereby and kept him busy and out of politics for a long time. It was pointed out that this might have resulted in serious consequences for Bakshi Ghulam Mohammad which the Commission of Inquiry would not. It was also pointed out that the Commissioner appointed was a retired Judge of the Supreme Court of India. All this, it was said, would indicate that the action had not been prompted by malice. We cannot say that these contentions of the appellants have no force. The next ground of attack on the Notification was based on article 14. It was said that most of the matters into which the Commission had been directed to inquire formed the subject matters of Cabinet decisions. It was pointed out that since such matters are confidential and no one is allowed to divulge in what way the members of the Cabinet voted on them, it must be held that they were all equally responsible for the acts sanctioned. That being so, it was contended that by picking Bakshi Ghulam Mohammad out of the entire Cabinet for the purpose of the Inquiry the Government had discriminated against him in a hostile way. It was contended that the Notification must be set aside on that ground. We find this contention untenable. The inquiry is in respect of wealth acquired by Bakshi Ghulam Mohammad and his friends and relatives by misuse of his official position. It would be strange if all the members of the Cabinet voluntarily abused their office for putting money into the pockets of Bakshi Ghulam Mohammad and his friends. Let us, however, assume that all the 414 members of the Cabinet assisted Bakshi Ghulam Mohammad in doing this. It is however not said that other members had acquired wealth by these acts. He was, therefore, in a class by himself. This classification has further a rational connection with the setting up of the Commission, for the object is to find out whether the wealth had been acquired by Bakshi Ghulam Mohammad by the abuse of official position. It remains now to deal with the last point. This was directed against the proceedings of the Commission. It was said that the proceedings had been conducted in a manner contrary to the rules of natural justice and to statutory provisions. Two specific complaints were made. The first was that the Commission had not allowed Bakshi Ghulam Mohammad to inspect all the documents before he was called upon to answer the allegations made against him. The second was that the Commission had refused him permission to cross examine persons who had filed affidavits supporting the allegations made against him. We have now to set out the procedure followed by the Commission. It first called upon the Government to file affidavits in support of the allegations in the second schedule to the Notification and to produce the documents which supported them. It then asked Bakshi Ghulam Mohammad to file his affidavit in answer. Thereafter the Commission decided whether any prima facie case had been made for Bakshi Ghulam Mohammad to meet and in that process rejected some of the allegations. Bakshi Ghulam Mohammad was told that there was no case, which be had to meet in respect of them. Out of the remaining allegations, a group was selected for final consideration and it was decided that the rest would be taken up gradually thereafter. In connection with that group of cases, counsel for Bakshi Ghulam Mohammad wanted to cross examine all the persons who had filed affidavits supporting the Government 's allegations in the cases included in that group. The Commissioner ordered that he would not give permission to cross examine all the deponents of affidavits but would decide each case separately. It was after this that the petition for the writ was presented. The question of inspection is no longer a live question. It is true that when Bakshi Ghulam Mohammad was directed to file his affidavits he had not been given inspection of ' all the documents and files which the Government proposed to use to support their case. On behalf of Bakshi Ghulam Mohammad it was said that this was a denial of the rules of natural justice. It is not necessary to consider this question because it is admitted that since then inspection of the entire lot of files and documents has been given. At the final hearing of the allegations, therefore, Bakshi Ghulam Mohammad would no longer be at any disadvantage. The next point is as to the right of cross examination. This claim was first based on the rules of natural justice. It was said 415 that these rules require that Bakshi Ghulam Mohammad should have been given a right to cross examine all those persons who had sworn affidavits supporting the allegations against him. We are not aware of any such rule of natural justice. No authority has been cited in support of it. Our attention was drawn to Meenglas Tea Estates vs Their Workmen(1), but there all that was said was that when evidence is given viva voce against a person be must have the opportunity to hear it and to put the witnesses questions in cross examination. That is not our case. Furthermore, in Meenglas Tea Estate case(1) the Court was not dealing With a fact finding body as we are. Rules of natural justice require that a party against whom an allegation is being inquired into should be given a hearing. Bakshi Ghulam Mohammad was certainly given that It was said that the right to the hearing included a right to cross examine. We are unable to agree that is so. The right must depend upon the circumstances of each case and must also depend on the statute under which the allegations are being inquired into. This Court has held in Nagendra Nath Bora vs Commissioner of Hills Division and Appeals, Assam(1) that "the rules of natural justice vary with the varying constitution of statutory bodies and the rules prescribed by the Act under which they function; and the question whether or not any rules of natural justice had been contravened, should be decided not under any preconceived notions, but in the light of the statutory rules and provisions. " We have to remember that we are dealing with a statute which permits a Commission of Inquiry to be set up for fact finding purposes. The report of the Commission has no force proportion vigorous. This aspect of the matter is important in deciding the rules of natural justice reasonably applicable in the proceedings of the Commission of Inquiry under the Act. 'Then we find that section 10 to which we have earlier referred, gives a right to be heard but only a restricted right of cross exaniination. The latter right is confined only to the witnesses called to depose against the person demanding the right. So the Act did not contemplate a right of hearing to include a right to crossexamine. It will be natural to think that the statute did not intend that in other cases a party appearing before the Commission should have any further right of cross examination. We, therefore. think that no case has been made out by Bakshi Ghulam Mohammad that the rules of natural justice require that lie should have a right to cross examine all the persons who had sworn affidavits supporting the allegations made against him. We will now deal with the claim to the right to cross examine based on statutory provision. That claim is based on section 4(c) of the Act. The relevant part of the section is as follows: "The Commission shall have the power of a Civil Court. while trying a suit under the Code of Civil Proce (1) ; (2) ; 416 dure Svt. 1977, in respect of the following matters, namely: (a) summoning and ao enforce the attendance yof an person and examining him on oath; (b) (c) receiving evidence on affidavits" ' It is not in dispute that the Code of Civil Procedure of Jammu and Kashmir State referred to in this section is in the same terms as the Indian Code of Civil Procedure. Order 19 r. I. of the Indian Code reads as follows: "Any Court may at any time for sufficient reason order that any particular fact or facts may be proved by affidavit, or that the affidavit of any witness may be read at the hearing, on such conditions as the Court thinks reasonable: Provided that where it appears to the Court that either party bona fide desires the production of a witness for cross examination, and that such witness can be produced, an order shall not be made authorising the evi dence of such witness to be given by affidavit. " The contention is that the powers of the Commission therefore to order a fact to be proved by affidavit are subject to the proviso that power cannot be exercised when a party desires the production of the persons swearing the affidavits for cross examining them. The contention was accepted by the High Court. We take a different view of the matter. We first observe that the inquiry before the Commission is a fact finding inquiry. Then we note that section 10 which, in our opinion, applies to a person whose conduct comes up for inquiry by the Commission directly, has a right to cross examine only those persons who give viva voce evidence before the Commission against him. If section 4(c) conferred a right to cross examine every one who swore an affidavit as to the facts involved in the inquiry, then section 10(2) would become superfluous. An interpretation producing such a result cannot be right. It also seems to us that O. 19 r. I has to be read with O. 18 r. 4 which states that the evidence of the witnesses in attendance shall be taken orally in open court. It would appear, therefore, that O. 19 r. I. is intended as a sort of exception to the provisions contained in O. 18 r. 4. The Act contains no provision similar to O. 18 r. 4. Therefore, when section 4(c) of the Act gave the Commission the power of receiving evidence on affidavits, it gave that as an independent power and not by way of an exception to the general rule of taking evidence viva voce in open court. It would be natural in such circumstances to think that what the Act gave was only the power 417 to take evidence by affidavit and did not intend it to be subject to the proviso contained in O. 19 r. I. If it were not so, then the result really would be to require all evidence before the Commission to be given orally in open court. If that was intended, it would have been expressly provided for in the Act. We should here refer to Khandesh Spinning etc. Co. Ltd. vs Rashtriya Girni Kamgar Sangh(1) where this Court dealing with a somewhat similar section like section 4(c) observed that facts might be proved by an affidavit subject to O. 19 r. (1). The observations appear to have been obiter dicta. In any case that case was dealing with a statute different from the one before us. The observation there made cannot be of much assistance in interpreting the Jammu and Kashmir Inquiry Act. The number of witnesses swearing affidavits on the side of the Government may often be very large. In fact, in this case the number of witnesses swearing affidavits on the side of the Government is, it appears, in the region of four hundred. The statute could not have intended that all of them had to be examined in open court and subjected to cross examination, for then, the proceedings of the Commission would be interminable. We feel no doubt that the Act contemplated a quick disposal of the business before the Commission, for, otherwise. the object behind it might have been defeated. While on this topic, we would impress upon the Commission the desirability of speedy disposal of the inquiry. For these reasons, in our view, section 4(c) of the Act does not confer a right on a party appearing before the Commission to require a witness giving evidence by an affidavit to be produced for his cross examination. The Commission would, of course, permit cross examination in a case where it thinks that necessary. The view that we take should not put any party in any difficulty. He can always file affidavits of his own denying the allegations made in affidavits filed on behalf of the other party. If the evidence on both sides is tendered by affidavits, no one should be at any special disadvantage. We have also to remember that section 9 of the Act gives the Commission power to regulate its own procedure subject to any rules made under the Act. We find that the rules provide that evidence may be given by affidavits and the Commission may after reading it, if it finds it necessary to do so, record the evidence of the deponents of the affidavits and also of others; see ff. 6, 7 and 8. Rule 10 reproduces the restricted right of cross examination given by section 10. Rule 11 says that in all matters not provided by the rules, the Commission may decide its own procedure. One of the matters covered by the rules is cross examination of witnesses. So the rules contemplate cross examination as a matter of procedure and the Commission is free to decide what cross examination it will allow provided that in doing so it cannot go behind the rules relating to cross examination. Section 9 of the Act has to be read in the light of these rules. All this. we think, supports (1)[1060] 2 S.C.R. 841. 418 the interpretation we have put on section 4(c). We also feel that the procedure before a body like the Commission has necessarily to be flexible. We, therefore, reject the last contention. In our view, for these reasons, the judgment of the High Court cannot be supported. We accordingly set it aside. The appeal is allowed. Appeal allowed.

IN-Abs

The first respondent became a member of the Council of Ministers of the State of Jammu and Kashmir in 1947 and was the Prime Minister of the State from 1953 'to January 1963, when he resigned. Thereafter a Notification was issued by the State Government under section 3 of the Jammu and Kashmir Commission of Inquiry Act 1962 setting up a Commission to inquire into the wealth, acquired by the first respondent and certain specified members of his family during his period of office; the Commission was also to inquire whether in acquiring this wealth there was any abuse of his official position by the first respondent or the said relatives. The Commissioner so appointed held certain sittings between February 1965 and August 1965 in which the first respondent took part. In September 1965 he filed a writ petition before the High Court of Jammu and Kashmir and the High Court, allowing the said petition, set aside the Notification instituting the inquiry and quashed the proceedings of the Commission. The State appealed to the Court. HELD: (i) Section 37 of the Constitution of Jammu and Kashmir talks of the collective responsibility of Ministers to the Legislative Assembly. That, only means that the Council of Ministers will have to stand or. fall together, every member being responsible for the action of any other. The section does not mean that a Minister is responsible for his acts only to the Legislature and no action can be taken against him except for criminal or tortuous acts, in the ordinary course of law, unless the Legislature by a resolution demanded it. No British convention to this effect, if any, can be said to have been adopted by section 37. Furthermore, the responsibility to the Legislature is of the Council of Ministers, and not of those who have, like the first respondent ceased to be Ministers. [405C E]. (ii)Section 3 of the Commission of Inquiry Act expressly gives power to Government as well as to both the Houses of Legislature to initiate action instituting an inquiry. When enacting it the Legislature obviously did not consider that there was any convention or anything in section 37 which prevented a Commission of Inquiry being set up under the Act at the instance of the Government or the Legislative Council. [405F G], (iii)The acts of a Minister while in office do not cease to be matters of public importance after he ceases to hold office; their character cannot change. When it is alleged that a Minister has acquired vast wealth for himself and his friends by abuse of his official ' position, there can be no question that the matter is of public 402 importance. It does not cease to be of public importance merely because what is proposed is to inquire into allegations and not into the steps to be taken to prevent lapses in the future. Nor can absence of public agitation show that the facts to be inquired into are not of, public importance. [407E G; 408 G] Ram Krishan Dalmia vs Shri Justice section R. Tendolkar, ; , referred to. (iv) It is incorrect to say that) allegations mentioned are not definiteor that an inquiry into them is not contemplated by the Inquiry Act. [409 E F] (v) It cannot be inferred from the provisions of section 10 of the Act that a Commission of Inquiry can inquire into the conduct of a person only incidentally, when the main inquiry is in respect of something else. What can be done indirectly should obviously have been considered capabe of being done directly. [411B] (vi)On the facts of the case the inquiry could not be said to be mala fide. [412F] (vii)The. doctrine of Cabinet responsibility does not mean that if an inquiry was made against one of the members of the Cabinet that would be discrimination under article 14. The respondent was in a class, by himself and the classification was justified. [414A B] (viii)The rule of natural justice only requires that a hearing should be given. When the Commission refused permission to the first respondent to cross examine all the witnesses who had filed affidavits against him no rule of natural justice was violated. [415G] Meenglas Tea Estate V. Their Workmen, [1964]2 S.C.R. 165 and Nagendra Nath Bora vs Commissioner of Hills Division & Appeals, ,Assam ; (ix)Section 10 of the Act gives a right to cross examine only these persons who give viva voce evidence before the Commissioner. [416F] (x)Section 4(c) of the Act does not confer a right on a party appearing before the Commission to require a witness giving evidence by affidavit to be produced for his cross examination. The Commission would, of course, permit cross examination in a case where it thinks that necessary. [417E]

CIVIL APPEALS Nos. 170 to 176 and 178 to 183 of 1953. Appeals from the Judgment and Order dated the 22nd August, 1952, of the High Court of Judicature at Madras in Civil Miscellaneous Petitions Nos. 13386, 13388,13390, 7812, 12003, 13188, 13262, 7822, 13123, 13347, 13341, 12997, 12494 of 1950 and Order dated 8th September, 1952, in C.M.P. No. 13936 of 1950. K. section Krishnaswamy lyengar (K. g. Champakesa lyengar, with him) for the appellants. V. K.T. Chari, Advocate General of Madras (R. Ganapathy lyer and V.V. Raghavan, with him) for the respondent (State of Madras) in Civil Appeals Nos. 170 to 176 and 178 to 181. M. Seshachalapathi for the respondent (State of Andhra) in Civil Appeals Nos. 182 and 183. February 5. The Judgment of the Court was delivered by MUKHERJEA J. I2 95 S.C. I./59 762 MUKHERJEA J. These consolidated appeals, numbering fourteen in all, are directed against a common judgment of a Division Bench of the Madras High Court dated the 23rd of August, 1952, by which the learned Judges dismissed the petitions of the different appellants made under article 226 of the Constitution. The appellants are landholders of Madras, holding zamindaries within that State, and in their applications under article 226 of the Constitution they prayed for writs in the nature of mandamus, directing the State of Madras to forbear from notifying and taking over possession of the estates held by them and also to cancel the notifications already issued, in exercise of its powers under the Madras Estates (Abolition and Conversion into Ryotwari) Act, (Act XXVI of 1948). This Act, the constitutional validity of which has been assailed by the appellants, was passed by the Provincial Legislature of Madras functioning under the Government of India Act, 1935, and it received the assent the Governor General of India on the 2nd of April, 1949. The avowed object of the Act is to abolish the zamindary system by repealing the Madras Permanent Settlement Regulation of 1802, to acquire the rights landholders in the permanently settled and other ,estates and to introduce the Ryotwari system in all such estates. After the advent of the Constitution, the Act was reserved for certification of the President and it was certified on the 12th of April, 1950. In the petitions presented by the appellants, a large number of grounds were put forward by way of attacking the validity of the legislation which was characterised as confiscatory in its character and subversive of the fundamental right of property, which the petitioners had in the zamindaries held by them under the Permanent Settlement Regulation. Pending the disposal of these petitions, the Constitution (First Amendment) Act of 1951 was passed on 1st of June, 1951, and this amendment introduced two new articles namely, article 31 A and 31 B in the Constitution, apparently with a view to protect the 'various laws enacted for acquisition of estates from being challenged under the relevant articles of Part III of the 763 Constitution. Article 31 B specifically refers to a number of statutes mentioned in the ninth Schedule to the Constitution and it declares expressly that none of them shall be deemed to be void on the ground that they contravened any of the fundamental rights, notwithstanding the decision of a court or tribunal to the contrary. It is not disputed that Madras Act XXVI of 1948 is one of the statutes included in this schedule. It may be remembered that an attempt was made to impeach the validity of the Constitution (First Amendment) Act itself before this court in the case of Shankari Prasad Singh Deo vs Union of India (1). The attempt failed and after the pronouncement of this court in Shankari Prasad 's case, the grounds upon which the writ petitions of the appellants were sought to be supported became for the most part unavailing. It appears that at the time of the final hearing of the applications the arguments actually advanced on behalf of the petitioners were aimed not at invalidating the enactment as a whole, but only some of its provisions, firstly on the ground that there was no public purpose behind the acquisition of some of the items of property mentioned therein and secondly, that the provisions for compensation in certain aspects were colourable exercise of legislative powers and constituted a fraud upon the Constitution Act of 1935. These arguments were sought to be supported entirely on the authority of the majority decision of this court in the case of The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh (2) to the extent that it pronounced two of the provisions of the Bihar Land Reforms Act. 1950 a legislation similar in type to the Madras Act 1948 to be unconstitutional. These contentions did not find favour with the learned Judges of the High Court who heard the petitions and holding that the principles enunciated by the majority of this court in the Bihar case referred to above were not applicable to the impugned provisions of the Madras Act, they dismissed all the petitions. Certificates, however, were granted by the High Court to the petitioners (1) ; (2) 764 under article 132(1) of the Constitution and it is on the strength of these certificates that the appeals have ' come before us. Mr. Ayyangar, appearing in support of these appeals, has taken his stand solely upon the doctrine of ' 'colourable legislation ' as enunciated by the majority of this court in the Bihar case referred to above. He has very properly not attempted to make any point as to the absence of a public purpose in regard to any of the items of acquisition, since it is clear that according to the majority view of this court, as explained in Narayan Deo vs State of Orissa (1), the existence of a public purpose is not a justiciable issue in case of an enactment which having fulfilled the requirements of clause (4) of article 31 of the Constitution enjoys the protection afforded by it. The contentions of Mr. Ayyangar, in substance, are that the provisions of 'section 27(i) as well as of section 30 of the impugned Act are colourable legislative provisions which have been enacted in fraud of the Constitution Act of 1935. It appears that in determining the amount of compensation, that is to be paid under the Act, in respect of an acquired estate, it is necessary, first of all, to ascertain what has been described as the 'basic annual sum ' in regard to that estate. The ' basic annual sum comprises several items or parts which have been set out in section 27 and the subsequent sections of the Act, and it is upon the amount of the basis annual sum determined in accordance with the provisions of these sections that the total amount of compensation money payable to a proprietor is made to depend. Mr. Ayyangar contends that section 27(i) of the Act, which lays down that in computing the basic annual sum only one third of the gross annual Ryotwari demand of specified kinds is to be taken into account, is a colourable provision which, ignores altogether the actual income derived from the property and introduces an artificial and an arbitrary standard for determining the income or profits which has absolutely no relation to facts. Similarly, in computing the net miscellaneous revenue, which is an (x) [1945] S.C.R. A.I.R. x953 8. G. 375 at P. 380. 765 element in the computation of the basic annual sum, what is to be taken into account under section 30 is not the average of net annual income which the proprietors themselves derived from the sources, mentioned in the Act, when they were in possession of the estates, but which the Government might derive from them in future years after the date of notification. 'Thus if on account of mismanagement or for other reasons the Government does not derive any income from these sources, the proprietor would not have any compensation under this head at all. It is argued that these are mere devices or contrivances aimed at , confiscation of private property and they neither lay down nor are based upon any principle of compensation. Whatever the merits of these contentions might be, it appears to us that there is an initial and an insuperable difficulty in the way of the learned counsel 's invoking the authority of the majority decision of this court in the case of The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh(1) to the circumstances of 'the present case. The Bihar Land Reforms Act, 'which was the subject matter of decision in that case, was a legislation which was pending at the time when the Constitution came into force. It was reserved for consideration of the President and received his assent in due course and consequently under clause (4)of article 31 of the Constitution it was immune from judicial scrutiny on the ground that the compensation provided by it was inadequate or unjust. With regard 'to two of the provisions of the Act, however, which were embodied in sections 4 (b) and 23(f) of 'the Act, it was held by the majority of this court that they were void as they really did not come within entry 42 of List III of Schedule VII of the Constitution, under which they purported to have been enacted. Entry 42 of List III speaks of "principles on which compensation for property acquired or requisitioned for the purposes of the Union or of a State or for any other public purpose is to be determined, and the form and the manner in which such compensation is (1) [1952] s.c. R. 889. 766 to be given. " It was pointed out that entry 42 was undoubtedly the description of a legislative head and in deciding the competency of a legislation under this entry, the court was not concerned with the justice or propriety of the principles upon which the determination of the compensation was to be made or the form or manner in which it was to be given. But even then, the legislation must rest upon some principle of giving compensation and not of denying or withholding it, and a legislation could not be supported which was based upon something which was non existent or was unrelated to facts and consequently could not have a conceivable bearing on any principle of compensation. The initial difficulty in the way of invoking this doctrine in the present case lies in the fact that the legislation, which is impugned here, was passed by the Madras Provincial Legislature functioning under the Government of India Act, 1935, and ' there was no entry in any of the lists attached to the Act of 1935 corresponding to entry 42 in List I1I of the Indian Constitution. The only entry relevant to. this point in the Act of 1935 was entry9 of List I1 which spoke merely of 'compulsory acquisition of land '; and it is clear that a duty to pay compensation or of ' laying down any principle regarding it was not inherent in the language of that entry. The guarantee for payment of compensation, so far as the Constitution Act of 1935 is concerned, was contained in section 299 clause (2) which was worded as follows: "Neither the Federal Legislature nor a Provincial Legislature shall have power to make any law ' authorising the compulsory acquisition for public purposes of any land, or any commercial or industrial ' undertaking . . unless the law provides for the payment of compensation for the property acquired and either fixes the amount of the compensation, or specifies the principles on which, and the manner in which it is to be determined. " The appellants could have very well relied upon this guarantee if a bar had not been created in their way by the provision of article 31(6) of the Constitution. That clause of article 31 stands of follows: 767 "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 is not disputed that the Madras Act XXVI of 1948 does fulfil all the requirements mentioned above. Consequently, it is not possible for us to allow the appellants to raise the contentions which the learned counsel on their behalf wants to raise. The result is that the appeals would stand dismissed, but in the circumstances of this case we shall make no order as costs. Appeals dismissed.

IN-Abs

The Madras Estates (Abolition and Conversion into Ryotwari) Act, (Act XXVI of 1948) was passed by the Provincial Legislature of Madras functioning under the Government of India Act, 1935 and it received the assent of the Governor*General of India on the 2nd of April, 1949. After the advent of the Constitution, the Act was reserved for the certification of the President and it was certified on the 12th of April, 1950: Held, that in view of the provisions of article 31(6) of the Constitution the validity of the Act could not be challenged on the ground that it contravened the provisions of section 299(2) of the Government of India Act, 1935. Shankari Prasad Singh Deo vs Union of India ([1952] S.C.R. 89), The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh ([1952] S.C.R. 889) and Narayan Deo vs The State of Orissa ([1954] S.C.R. 1) referred to.

il Appeal Nos. 1108 to 1110 of 1964. Appeals by special leave from the judgment and order dated August 1, 1962 of the Calcutta High Court in Income tax Reference Nos. 20 and 21 of 1959. A.K. Sen, section C. Mazumdar and J. Datta Gupta, for the appellants. R.M. Hazarnavis, R. Ganapathy Iyer and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Sikri, J. These appeals by special leave are directed against the judgment of the High Court of Calcutta in two cases referred to it by the Income Tax Appellate Tribunal, Calcutta Bench, under section 66(1) of the Indian Income tax Act (XI of 1922) hereinafter called the Act). One of the references (Income Tax Reference No. 20 of 1959) was made at the instance of M/s Fatehchand Murlidhar, and the other (Income Tax Reference No. 21 of 1959) was made at the instance of Shri Murlidhar Himatsingka. In the former reference the question referred was "whether on the facts and in the circumstances of the case, the income of Murlidhar Himatsingka for his share in the firm of Messrs. Basantlal Ghanshyamdas for the assessment years 1952 53 and 1953 54 was rightly excluded from the income of the applicant firm". In the latter reference the question referred was "whether on the facts and circumstances of the case the income of Murlidhar Himatsingha for his share in the firm of Messrs. Basantlal Ghanshyamdas for the assessment year 1955 56 was rightly included in his personal assessment for that year". The facts and circumstances out of which these references were made are common because the real question raised by these references is whether the income of Murlidhar Himatsingka, from the firm of M/s Basantlal Ghanshyamdas, in which he was a partner, should be included in his personal assessment or in the assessment of the firm of Fatehchand Murlidhar, to which Murlidhar Himatsingka had purported to assign the profits and losses from M/s Basantlal Ghanshyamdas. It is sufficient to take the facts from the statement of the case in Income Tax Reference No. 21 of 1959, made at the instance of Murlidhar Himatsingka. Murli dhar Himatsingka was carrying on business in shellac, jute, hessian etc. under the name and style of "Fatehchand Murlidhar" at 14/ 1, Clive Row and 71, Burtolla Street, Calcutta. He was also a partner in the registered firm, Messrs Basantlal Ghanshyamdas having /2/8 share. On December 21, 1949, a deed of partnership was executed by the said Murlidhar Himatsingka and his two sons, Madanlal Himatsingka and Radhaballav Himatsingka and a grandson named Mahabir Prasad Himatsingka. The deed recited that Murlidhar Himatsingka had become too old and infirm 455 to look after the various businesses and that Madanlal and Radha Ballav were already practically managing the business and that they had signified their intention to become the partners of the said firm "Fatehchand Murlidhar" and had agreed to contribute capital, Rupees ten thousand, Rupees five thousand and Rupees five thousand respectively. The parties further agreed to become and be partners in the business mentioned in the deed. Clause 5 of this deed is important for our purpose and reads as follows: "The profits and losses for the share of the said Murlidhar Himatsingka as partner in the said partnership firm of Basantlal Ghanshyamdas shall belong to the present partnership and shall be divided and borne by the parties hereto in accordance with the shares as specified hereafter, but the capital with its assets and liabilities will belong exclusively to Murlidhar Himatsingka the party hereto of the First Part and the Parties hereto of the Second, Third and Fourth parts shall have no lien or claim upon the said share capital or assets of the party hereto of the first part in the business of the said Messrs Basantlal Ghanshyamdas". Clause 10 provides: "The Profits and losses (if any) of the partnership including the shares of the profits and losses of the said partnership firm of Basantlal Ghanshyamdas aforesaid shall be divided and borne by and between the parties in the following manner: Party hereto of the First Part Six annas (Murlidhar Himatsingka). Party hereto of the Second Part Four annas (Madanlal Himatsingka). Party hereto of the Third Part Three annas (Radhaballav Himatsingka). Party hereto of the Fourth Part Three annas (Mahabirprasad Himatsingka). Clause 11 provides that "all partnership moneys and securities for money shall as and when received be paid into and deposited to the credit of the partnership account". In clause 13 it is provided that "the party hereto of the First Part shall have the sole control and direction of the partnership business and his opinion shall prevail if there be any dispute between the parties hereto". Clause 16 provides that "the net profits of the partnership after payment of all outgoings interest on capital or loans and subject to the creation and maintenance of any reserve or other fund shall belong to the parties and the losses, if any, shall also be borne and paid by the parties in proportion to their shares as stated in Clause 10 hereof". For the assessment year 1955 56 the Income Tax Officer included the income from the share in the registered firm of 456 Basantlal Ghanshyamdas in the individual assessment of Murlidhar Himatsingka, Murlidhar Himatsingka appealed to the Appellate Assistant Commissioner. Referring to section 23(5)(a) of the Act. he held that as Murlidhar Himatsingka was a partner in the registered firm of Basantlal Ghanshyamdas, his share had to be assessed in his hands. He further held that the agreement was merely an arrangement which came into force after the profits were earned and not before they were earned. He held that this agreement being a subsequent disposition of profits, after they had been earned, had to be disregarded. Murlidhar Himatsingka appealed to the Income Tax Appellate Tribunal. The Appellate Tribunal heard this appeal together with the two appeals filed by M/s Fatehchand Murlidhar. The Appellate Tribunal, agreeing with the views of the Appellate Assistant Commissioner, dismissed the appeal. The High Court held that it was a case of diversion of in come by Murlidhar Himatsingka after it had accrued to him and it was not a diversion at the source by any overriding interest. In the result, the High Court answered the questions in the affirmative in both the references. Murlidhar Himatsingka and M/s Fatehchand Murlidhar having obtained special leave, the appeals are now before us. The learned counsel for the appellants, Mr. A. K. Sen, con tends that a partner 's share is property capable of being assigned, mortgaged, charged and dealt with as any other property, and where a partner sells his share to a stranger, though that stranger does not become a partner yet the vendor partner holds the property as trustee for the purchaser and consequently the income received by the partner is not his income but the income of the purchaser. He says that similarly if a partner assigns part of his share the same result follows. He further contends that in this case, by the agreement dated December 21, 1949, Murlidhar Himatsingka had entered into a sub partnership with his two sons and a grandson in respect of his share in the firm Basantlal Ghanshyamdas, and it is the sub partnership that is entitled to the income from the firm Basantlal Ghanshyamdas and not Murlidhar Himatsingka who must be taken to be acting on behalf of the firm Fatehchand Murlidhar. Mr. Sen further urges that the Indian Income Tax Act taxes real income and not notional income and the real income in this case belonged not to Murlidhar but to M/s Fatehchand Murlidhar. Mr. Hazarnavis, on the other hand, contends that this agree ment is a mere device for dividing income which had accrued to Murlidhar Himatsingka among his sons and grandson. In the alternative he contends that the Indian Income Tax Act does not contemplate the application of section 23(5)(a) twice. He says that the firm of Basantlal Ghanshyamdas was a registered firm and the 457 Income Tax Officer was bound. under section 23(5)(a), to assess Murlidhar in respect of the income received from this firm , he could not carry this income to the assessment of another registered firm, namely, Fatehchand Murlidhar, and then apply section 23(5)(a). The first point that arises is whether the agreement dated December 21, 1949, has succeeded in diverting the income from Murlidhu 's share in M/s Basantlal Ghanshyamdas to M/s Fatehchand Murlidhar before it reached Murlidhar. What is the effect of the agreement? In our opinion the agreement dated December 21, 1949, constituted a sub partnership in respect of Murlidhar 's share in M/s Basantlal Ghanshyamdas. The High Court in this connection observed: "At best it could be called a sub partnership entered into by Murlidhar with strangers in respect of his share of the partnership". In arriving at this conclusion we attach importance to the fact that losses were also to be shared and the right to receive profits and pay losses became an asset of the firm, Fatehchand Murlidhar. In Commissioner of lncome tax, Bombay vs Sitaldas Tirath. das,(1) Hidayatullah, J., speaking for the Court, laid down the following test for determining questions like the one posed above. After reviewing a number of authorities, he observed: "In our opinion, the true test is whether the amount sought to be deducted, in truth, never reached the assessee as his income. Obligations, no doubt, there are in every case, but it is the nature of the obligation which is the decisive fact. There is a difference between an amount which a person is obliged to apply out of his income and an amount which by the nature of the obligation cannot be said to be a part of the income of the assessee. Where by the obligation income is diverted before it reaches the assessee, it is deductible; but where the income is required to be applied to discharge an obligation after such income reaches the assessee, the same consequence, in law, does not follow. It is the first kind of payment which can truly be excused and not the second. The second payment is merely an obligation to pay another a portion of one 's own income, which has been received and is since applied. The first is a case in which the income never reaches the assessee, who even if he were to collect it, does so, not as part of his income but for and on behalf of the person to whom it is payable '. 458 This test clearly shows that it is not every obligation to apply income in a particular way that results in the diversion of income before it reaches the assessee. In its judgment in the above case (Sitaldas Tirathdas vs Commissioner of Income tax, Bombay(1) the High Court of Bombay had observed: "It is not essential that there should be a charge, it is quite sufficient if there is a legally enforceable claim". These observations must be treated as unsound. The test laid down by this Court is quite clear, though like some other tests it is not easy of application in all cases. The other cases cited before us, namely, K. A. Ramachar vs Commissioner of Income tax, Madras(1) and Provat Kumar Mitter vs Commissioner of Income tax, West Bengal(1) do not assist us in disposing of this case because the facts are not similar. Only two cases, one of the Bombay High Court and the other of the Calcutta High Court, have close resemblance to the facts of this case and we may now consider them. In Ratilal B. Daftri vs Commissioner of Income tax, Bombay(1) the assessee who was one of the sixteen partners in a registered partnership had contributed Rs. 25,000/ out of the capital of the partnership, Rs. 3,45,000/ . In order to contribute this capital of Rs. 25,000/ he had entered into an agreement with four others on the same date on which the registered partnership deed was executed, which provided for contribution of diverse sums by the four others and it was further provided in this agreement that the five parties would share the profits and losses in proportion to their individual contribution. It was also mentioned that the terms and conditions mentioned in the registered partnership were to be applicable and binding on them. The Bombay High Court held that the assessee was liable to be assessed only in respect of his share of the profits of the registered partnership. In coming to this conclusion, the High Court relied on two other decisions of the same Court, namely, Motilal Manekchand vs Commissioner of Income tax(1) and Sitaldas Tirathdas vs Commissioner of Income tax(1) As pointed out by the learned counsel for the respondent, Mr. Hazarnavis, Sitaldas Tirathdas vs Commissioner of Income tax(1) was reversed by this Court in Commissioner of Income tax vs Sitaldas Tirathdas(4) Hidayatullah, J., at p. 374 of his judgment reversing the judgment of the Bombay High Court, had also referred to Motilal Manekchand vs Commissioner of Income tax (5) but did not expressly dissent from this case. In our opinion the case of Ratilal B. Daftari vs Commis sioner of Income tax, Bombay(1) was rightly decided, although the reasoning given by the learned Judges of the High Court has to some extent not been accepted by Hidayatullah, J., in Commissioner of Income tax vs Sitaldas Tirathdas(3). We say so far the follow. (1) ,394. (2) (3) , (4) 36 I.T.B. Is. (5) (6) 459 ing reasons. Lindley on Partnership, 12th Edition, page 99, deals with sub partnerships as follows: "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. An agreement to share profits only constitutes a partnership between the parties to the agreement. If, therefore, 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 what is called a sub partnership, that is to say, it makes the parties to it partners inter se; but it in no way affects the other members of the principal firm". He further states: "Since the decision of the House of Lords in Cox vs Hickman ; , a sub partner could not before the Partnership Act, 1890, be held liable to the creditors of the principal firm by reason only of his participation in the profits thereof, and there is nothing in that Act to alter the law in this respect". Sub partnerships have been recognised in India and registration accorded to them under the Indian Income Tax Act. (See Commissioner of Income tax, Punjab vs Laxmi Trading Company)(1) The question then arises is whether the interest of the sub partnership in the profits received from the main partnernship is of such a nature as diverts the income from the original partner to the sub partnership. Suppose that A is carrying on a business as a sole proprietor and he takes another person B as a partner. There is no doubt that the income derived by A after the date of the partnership cannot be treated as his income; it must be treated as the income of the partnership consisting of A and B. What difference does it make in principle where A is not carrying on a business as a sole proprietor but as one of the partners in a firm? There is no doubt that there is this difference that the partners of the sub partnership do not become partners of the original partnership. This is because the Law of Partnership does not permit a partner, unless there is an agreement to the contrary, to bring strangers into the firm as partners. But as far as the partner himself is concerned, after the deed of agreement of subpartnership, he cannot treat the income as his own. Prior to the case of Cox vs Hickman(1), sub partners were even liable to the creditors of the original partnership. Be that as it may, and whether he is treated as an assignee within, section 29 of the Indian Partnership Act, as some cases do, a sub partner has definite enforceable rights to claim a share in the profits accrued to or received by the partner. (1)24 I.T.B. 173. (2) ; 460 The decision of this Court in Charandas Haridas vs Commissioner of Income tax (1) seems to support, at least by inference, this conclusion. In that case the facts were as follows. Charandas Haridas was the karta of a Hindu undivided family consisting of his wife, his three minor sons and himself. He was a partner in six managing agency firms and the share of the managing agency commission received by him as such partner was being assessed as the income of the family. By a memorandum executed by the co parceners of the family a partial portion of the income from the managing agency was brought about. The memorandum stated: "We have decided that. . in respect of the commission which accrues from 1st January, 1946 and received after that date each of us becomes absolute owner of his one fifth share and therefore from that date. these commissions cease to be the joint property of our family '. This Court held that the document effectively divided the income and the income could no longer be treated as that of the Hindu undivided family. This case shows that although the karta continued to be a partner in the managing agency firm, yet the character in which he received the income vis a vis the Hindu undivided family had changed and the Court gave effect to the change of his position. Previously he was acting as a karta on behalf of the Hindu undivided family in the managing agency firm , later he became a partner on behalf of the members of the family. It seems to us that when a sub partnership is entered into the partner changes his character vis a vis the sub partners and the Income Tax authorities, although other partners in the original partner. ship are not affected by the changes that may have taken place. In our view the Calcutta High Court decision relied on by the High Court and the learned counsel for the respondent (Mahaliram Santhalia vs Commissioner of Income tax(1) was wrongly decided. The facts in that case were these. Mahal ' Santhalia was a partner in the firm M/s Benares Steel Rolling Nills. He was also a partner in another firm named M/s Radhakissen Santhalia. By agreement dated April 3, 1944, between the partners of M/s Radhakissen Santhalia, it was provided that the partnership income from M/s Benares Steel Rolling Mills would belong not to Mahaliram Santhalia individually but to the firm of M/s Radhakissen Santhalia. The High Court of Calcutta held that the agreement amounted only to voluntary disposition by Mahaliram Santhalia of his income and there was no diversion of income to the firm M/s Radhakissen Santhalia before it became (1) ; (2) 33 I.T.& 261. 461 Mahaliram Santhalia 's income. The High Court observed at p. 272: "If. as Mr. Mitra conceded, Mahaliram was rightly taken as a partner of the Benares Steel Rolling Mills in personal capacity and if a one fourth share of the income was rightly allocated to him, any agreement bet ween him and his three partners of the firm of Radhakissen Santhalia, under which the income was to be treated as the income of the whole firm, could only be an agreement by which Mahaliram Santhalia was allowing what was really his income to be treated as the income of the firm or, in other words, as agreement by which he was applying or distributing an income which he had already himself earned and received. Such application ,or distribution would be a voluntary act of Mahaliram Santhalia in respect of a sum which it was conceded, had rightly been included in his own total, income and, therefore was his own income. If the moment the share of the income from the Benares Steel Rolling Miffs was allocated to Mahaliram Santhalia, it became his income and liable to be included in his own total income for the purpose of his personal assessment, an agreement by him with other persons regarding the rights to that income could only be a voluntary disposition of his income by him. No question of a diversion by superior tide could possibly arise. " With respect, we are unable to agree with most of this reasoning. In our view, in the case of a sub partnership the sub partnership creates a superior title and diverts the income before it becomes the income of the partner. In other words, the partner in the main firm receives the income not only on his behalf but on behalf of the partners in the sub partnership. The Calcutta High Court also seems to be, in our opinion, erroneously impressed by the argument that "It is impossible to see how, after a proportionate share of the income had thus been included in the total income of a partner for the purposes of his personal assessment, it could then go anywhere else or could be further divided between such partners and other parties. " We will deal with this aspect while dealing with the second point raised by the learned counsel for the revenue. Mr. Hazarnavis, in this connection, drew our attention to the following passage in K. A. Ramachar vs Commissioner of Income tax, Madras(1): "This, in our opinion, is neither in accordance with the law of partnership nor with the facts as we have found on the record. Under the law of partnership, it is the partner and the partner alone who is entitled to (1)42 I.T.B. 25, 29. 462 the profits. A stranger, even if he were an assignee, has and can have no direct claim to the profits. By the deeds in question, the assessee merely allowed a payment to his wife and daughters to constitute a valid discharge in favour of the firm; but what was paid was, in law, a portion of his profits, or, in other words, his income". This passage was also relied on by the High Court. In our opinion, these observations have to be read in the context of the facts found in that case. In that case it was neither urged nor found that a sub partnership came into existence between the assessee who was a partner in a firm and his wife, married daughter and minor daughter. It was a pure case of assignment of profits (and not losses) by the partner during the period of eight years. Further the fact that a sub partner can have no direct claim, to the profits vis a vis the other partners of the firm and that it is the partner alone who is entitled to profits vis a vis the other partners does not show that the changed character of the partner should not be taken into consideration for income tax purposes. This Court held in Commissioner of Income tax, Gujarat vs Abdul Rahim(1) that registration of the firm could not be refused on the ground that a partner was a benamidar and that a benamidar is a mere trustee of the real owner and he has no beneficial interest in the profits of the business of the real owner. Under the law of partnership it is the benamidar who would be entitled to receive the profits from the other partners but for income tax purposes it does not mean that it is the benamidar who alone can be assessed in respect of the income received by him. In conclusion we hold that the High Court was in error in holding that there was no question of an overriding ogligation in this case and that the income remained the income of Murlidhar Himatsingka in spite of the sub partnership created by him under the agreement dated December 21, 1949. The second contention raised by Mr. Hazarnavis was not debated in the High Court, but in our opinion, there is no substance in this contention. We have already mentioned that a benamidar can be a partner in a firm. Now if Mr. Hazarnavis 's contention is right, under section 25(5)(a) of the Act it is only he who could be assessed, but there is no warrant for this proposition. In Commissioner of Income tax, West Bengal vs Kalu Babu Lal Chand(2) this Court mentioned with approval Kaniram Hazarimull vs Commissioner of Income tax(1) where income from a partnership received by a karta was held to be assessable in the hands of Hindu Undivided famlly. This Court observed at p. 12 as follows: "If for the purpose of contribution of his share of the capital in the firm the karta brought in monies out (1) (2) (3) 463 of the till of the Hindu undivided family, then he must be regarded as having entered into the partnernship for the benefit of the Hindu undivided family and as between him and the other members of his family he would be accountable for all profits received b y him as his share out of the partnership profits and such profits would be assessable as income in the hands of the Hindu undivided family. Reference may be made to the cases of Kaniram Hazarimull vs Commissioner of Income tax(1) and Dhanwatav vs Commissioner of Income tax(1) in support of this view". The object of section 23(5)(a) is not to assess the firm itself but to apportion the income among the various partners. After the income has been apportioned, the Income Tax Officer has to find whether it is the partner who is assessable or whether the income should be taken to be the real income of some other person. If it is the real income of another firm, it is that firm which is liable to be assessed under section 23(5)(a) of the Act. This view was taken by the Bombay High Court in Ratilal B., Daftri vs Commissioner of Income tax(1). The Bombay High Court observed at p. 24 as follows: "The principle asserted in that case is that even in the case of a partner in a registered firm, when the question arises as to his individual assessment, what is to be considered is not the income allocated to his share by employing the machinery of section 23(5)(a), but his real income, and that real income is what remains after deducting the amounts which may be said to have been diverted and never constituted his real income and such amounts will have to be excluded before his real income is reached". In conclusion we hold that there is nothing in section 23(5)(a) that prevents the income from the firm Basantlal Ghanshyamdas being treated as the income of M/s Fatehchand Murlidhar and section 23(5) (a) being applied again. In the result we accept the appeals, set aside the judgment of the High Court and answer the questions in the negative. The appellants will be entitled to costs here and in the High Court. , One hearing fee. Appeals allowed. (1)27 I.T.R. 294. (2) (3)36 I.T.R. 18.

IN-Abs

The assessee was a partner in a registered firm. In 1949 he entered into a partnership with persons who were strangers to the registered firm and a deed of partnership was executed between them. It recited that the profits and losses for the share of the assessee in the registered firm should belong to the new firm and be divided and borne by the partners of the new firm in accordance with the shares specified in the deed. On the question whether the income of the assessee from the registered firm for the years 1952 53, 1953 54 and 1955 56, should be included in his individual assessment, HELD: The income should be included in the assessment of the new firm and not in the personal assessment of the assessee, (i)The new partnership constituted a sub partnership in respect of the assessee 's share in the registered firm. (In the case of a subpartnership, it creates a superior title and diverts the income before it becomes the income of the partner, that is, the partner in the main firm receives the income not only on his own behalf but on behalf of the partners in the sub partnership,. The fact that a sub partner can have no direct claim to the profits vis a vis the other partners of the main firm and that it is the partner alone who is entitled to the profits vis a vis the other partners in the main firm, does not show that the changed character of the partner should not be taken into consideration for income tax purposes. [461E F; 462C] (ii)The object of section 23(5)(a) is not to assess the firm itself but to apportion the income among the various partners. After the income has been apportioned, the Income tax Officer has to find whether it is the partner who is assessable or whether the income should be taken to be the real income of some other person. If it is the real income of another firm, it is that firm which is liable to be assessed under the section. There is nothing in the section that prevents the income of the assessee from the registered firm being treated as the income of the sub partnership and the section being applied again. [463C, F] Charandas Haridas vs Commissioner of Income Tax, ; , and Commissioner of Income Tax, Bombay vs Sitaldas Tirathdas , followed. Commissioner of Income Tax, Punjab vs Laxmi Trading Co. and Ratilal B. Daftari vs Commissioner of Income Tax: , Bombay, , referred to. Mahaliram Santhalia vs Commissioner of Income Tax 33 I.T.R. 261, overruled.

Appeal No. 756 of 1964. Appeal from the judgment and decree dated November 19, 1957 of the Patna High Court in Appeal from Original Decree No. 258 of 1848. Sarjoo Prasad, D. P. Singh, R. K. Garg, section C. Agarwal and M.K Ramamurthi, for the appellants. D. Goburdhun, for the respondent. The Judgment of the Court was delivered by Shah J. This appeal with certificate under article 133 (1)(a) of the Constitution arises out of suit No. 17 of 1942 of the file of Subordinate Judge, Purnea, filed by Bijendra Narain son of Ishwari Narain against Mode Narain, Hari Narain and Rajballav Narain, sons of Bidya Narain, and others for a decree for partition and separate possession of a half share in the properties described in schedules A, B & C to the plaint. The suit was decreed by the 95 Trial Court and in appeal to the High Court of Judicature at Patna the decree was confirmed with a slight modification. The defendants in the suit have appealed to this Court. One Mankishun had four sons: Talebar, Indra Narain, Chandra Narain and Shyam Narain. Talebar had two sons Hanuman and Raghu Nandan. Hanuman died leaving him surviving no lineal descendant and Raghu Nandan adopted Udit Narain grandson of his uncle Shyam Narain. In 1923 Udit Narain and the sons of Shyam Narain instituted suit No. 27 of 1923 in the court of the Subordinate Judge, Purnea, impleading as defendants the descendants of Indra Narain and Chandra Narain as parties thereto for partition and separate possession of a half share in the properties of the joint family. Bijendra Narain, son of Ishwari Narain who was at the date of the suit a minor was impleaded as the 8th defendant, by his guardian ad litem Bidya Narain his uncle, who was impleaded as the 4th defendant, Mode Narain, Hari Narain and Rajballav Narain, sons of Bidya Narain, were impleaded as defendants 5, 6 & 7. A preliminary decree was passed in the suit on July, 1924 by consent of parties. By paragraph (a) of the decree the adoption of Udit Narain as a son by Raghu Nandan was admitted and it was agreed that Udit Narain was entitled in the property in suit to a fourth share as adopted son of Raghu Nandan, and a twelfth share as heir of his natural father Shyam Narain. The decree further provided. " (b) That the parties agree that the family estate is still joint and that the entire family estate except those that have already been partitioned as detailed below in schedule D will be partitioned by metes and bounds (according) to the shares as defined above (c) That the parties agree that a preliminary decree be passed declaring the shares of the parties as follows: Plaint No. 1 Four annas share Plaintiffs Nos. 1 3 One anna four piece share Plaintiffs Nos. 4 & 5 One anna four piece share Plaintiffs Nos. 6, 7 & 8 One anna four piece share Defendants I & 2 Two annas share Defendant No. 3 Two annas share Defendants Nos. 4, 5, 6 & 8 Two annas share Defendant No. 8 Two annas share (1) That the parties agree that at the time of partition by the arbitrators one allotment should be made for defendants Nos. 1 to 3 's four annas share, and one allotment should be made for defendants 4 to 8 's four annas share, i.e. three allotments will be made as aforesaid. " 96 Then followed schedules setting out detailed descriptions of the properties. A decree final was made on February 15, 1937 and the properties of the family were divided in three lots: the first lot representing an eight anna share of Udit Narain and the sons of Shyam Narain, the second representing a four anna share of the branch of Indra Narain, and the third a four anna share of defendants 4 to 8 of the branch of Chandra Narain. Bijendra Narain attained the age of majority in 1934, and on July 10, 1942 commenced the present action for partition of a half share in the properties which were in the possession of Bidya Narain, his sons and grandsons alleging that he, Bijendra Narain came to learn in 1938 that taking advantage of his minority and inexperience his uncle Bidya Narain and the sons of Bidya Narain had purchased in their own names many properties with the aid of joint family funds and had acquired certain other properties in the name of Bashisht Narain (twentyfourth defendant in the suit), who was daughter 's son of Bidya Narain that in September, 1941 certain respectable residents of the village consented to lend their good offices to settle the dispute and to act as panchas, that at the meeting before the panchas, Bidya Narain and his sons admitted that the properties held by them including the properties acquired in their names and of Bashisht Narain were joint family estates, but they later demurred to give to the plaintiff a separate share, and hence the suit. Sons of Bidya Narain and Bashishta Narain were the principal contesting defendants. They submitted 'that by the decree in suit No. 27 of 1923 the joint family status between the plaintiff Bijendra Narain and Bidya Narain had come to an end, that since the decree passed in the earlier suit the parties had been holding the properties as tenants in common and not as joint tenants, that the members of the branch of Bidhya Narain were living and carrying on their business separately, and the share of the plaintiff Bijendra Narain was looked after and managed by his mother and his maternal uncle Rudra Narain, that the private properties, of the plaintiff Bijendra Narain and the defendants had also been ascertained by the compromise petition in suit No. 27 of 1923, that the defendants had been in exclusive possession of the properties purchased in their names since the date of acquisition, and that the plaintiff Bijendra Narain was never in possession of those properties. Bashisht Narain the 24th defendant submitted that the properties purchased in his name were obtained with the aid of his own funds and that he had "no concern with the other defendants". The trial Judge held that by the decree in suit No. 27 of 1923 there was no severance of status between the plaintiff Bijendra Narain on the one hand and Bidya Narain and his sons on the other and that the properties in suit had at all material times 97 remained joint and Bijendra Narain was on that account entitled to a decree for partition and separate possession of a half share in the immovable properties in Sch. In regard to the movable properties described in Sch. B to the plaint, the learned Judge directed that the Commissioner appointed by the Court do ascertain the properties and divide the same in equal shares and do award one half to the plaintiff Bijendra Narain and the other half to the defendants. The learned Judge negatived the contention of the 24th defendant that the properties in his possession did not belong to the joint family. He directed that an account be taken of the assets and liabilities of the family since the date of demand for partition by the plaintiff Bijendra Narain in 1941. In appeal, the High Court agreed with the view of the Trial Court on all the questions in dispute, and confirmed the decree, subject to a modification about the direction for determination of movable properties described in Sch. B and ordered that the case be remanded for determining the existence or otherwise of the properties mentioned in Sch. B. It is common ground that the estate held by the four sons of Man Kishun was till the date of institution of suit No. 27 of 1923 joint family estate. By the institution of the suit there was undoubtedly severance of status between the plaintiffs of that suit on the one hand and the defendants on the other, but counsel for the appellants contended that by the specification of shares in the preliminary decree, there was severance of status not only between the descendants of Indra Narain and the descendants of Chandra Narain but also between Bijendra Narain plaintiff in this suit and Bidya Narain. In support of this plea he relied upon specification in the decree of the share of Bijendra Narain. On behalf of Bijendra Narain it is contended that by this mode of specification of shares there was no severance of the joint family status, since the terms of cl. (1) of the decree clearly provided that the division of the property was to be made in three shares one for the plaintiffs in suit No. 27 of 1923, another for the descendants of Indra Narain, and the third for the descendants of Chandra Narain. In a Hindu undivided family governed by the Mitakshara law, no individual member of that family, while it remains un divided, can predicate that he has a certain definite share in the property of the family. The rights of the coparceners are defined when there is partition. Partition consists in defining the shares of the coparceners in the joint property; actual division of the property by metes and bounds is not necessary to constitute partition. Once the shares are defined, whether by agreement between the parties or otherwise, partition is complete. The parties may thereafter choose to divide the property by metes and bounds, or may continue to live together and enjoy the property in common 98 as before. If they live together, the mode of enjoyment alone remains joint, but not the tenure of the property. Partition may ordinarily be effected by institution of a suit, by submitting the dispute as to division of the properties to arbitrator 's, by a demand for a share in the properties, or by conduct which evinces an intention to sever the joint family: it may also be effected by agreement to divide the property. But in each case the conduct must evidence unequivocally intention to sever the joint family status. Merely because one member of a family severs his relation, there is no presumption that there is severance between the other members; the question whether there is severance between the other members is one of fact to be determined on a review of all the attendant circumstances. In the present case, Udit Narain, adopted son of Raghu Nandan and the sons of Shyam Narain claimed collectively a half share in the property of the joint family and instituted a suit for that purpose. By that demand, there was severance between the branches of Talebar, and Shyam Narain from the joint family and because of the specification of shares, and a direction of allotment of shares in separate lots to the descendants of Indra Narain and Chandra Narain, severance between those two branches may also be inferred, But severance between the members of the branches inter se may not in the absence of expression of unequivocal intention be inferred. There is no evidence of expression of any such intention by Bidya Narain and his sons to divide themselves from Bijendra Narain: they made no such claim in the suit. It is true that a compromise preliminary decree was passed in the suit. But Bijendra Narain was a minor at the date of that decree and was represented in the suit by his uncle Bidya Narain. There could evidently be no agreement between Bidya Narain acting in his own personal capacity and acting as a guardian ad litem of Bijendra Narain to sever the joint family status. Specification by the decree of the shares of Bidya Narain and his sons on the one hand and of Bijendra Narain on the other, does not by itself constitute severance of Bidya Narain and his sons from Bijendra Narain. The specification of shares must be read in the context of cl. (1) of the decree which directed division of the estate in three lots only. The Judicial Committee of the Privy Council observed in Palani Ammal vs Muthuvenkatacharla Moniagar & others(1) that: "In coming to a conclusion that the members of a Mitakshara joint family have or have not separated, there are some principles of law which should be borne in mind when the fact of a separation is denied. A Mitakshara (1) L.R. 52 I. A. 83. 99 family is presumed in law to be a joint family until it is proved that the members have separated. That the coparceners in a joint family can by agreement amongst themselves separate and cease to be a joint family, and on separation are entitled to partition the joint family property amongst themselves, is now well established law. But the mere fact that the shares of the coparceners have been ascertained does not by itself necessarily lead to an inference that the family had separated. There may be reasons other than a contemplated immediate separation for ascertaining what the shares of the coparceners on a separation would be. " Counsel for the appellants submitted that the last two observations made by the Judicial Committee were unnecessary for the purpose of the decision of the case and did not correctly state the law. Whether the observations were strictly germane to the decision of the case before the Judicial Committee is immaterial, since in our judgment they enunciate a correct statement of the law relating to the principles to be borne in mind in determining when the fact of severance is denied. It is from the intention to sever followed by conduct which seeks to effectuate that intention, that partition results; mere specification of shares without evidence of intention to sever does not result in partition. By cl. (c) of the preliminary decree the shares of the various parties were specified, but by cl. (1) a division by metes and bounds was directed between the branches of Telebar and Shyam Narain on the one hand, of Indra Narain on the second and Chandra Narain on the third. Clause (1) did not evidence an intention to bring about severance between the members of the four branches; it is inconsistent with such intention. Certain other pieces of evidence on which reliance was placed by counsel for the appellants in support of his claim that there was under the preliminary decree severance of the joint family status may also be referred to. Girdhar Narain, 'grandson of Indra Narain was appointed, in suit No. 27 of 1923, receiver of the properties and he continued to hold that office till 1936. Girdhar Narain said that he was maintaining accounts during the period of his management as receiver, and that out of the surplus which remained with him he paid to Bijendra Narain in 1944 Rs. 1,500 for his two anna share. It was claimed that this was strong evidence indicating that Bijendra Narain 's share was not only specified but was also separated from that of Bidya Narain and his sons. It is difficult to believe that a receiver of property could be discharged before he submitted his accounts and handed into court the collections made by him, and that Girdhar Narain was permitted to retain the surplus collections with him for eight 100 years after he ceased to be the receiver of the estate. But assuming that the statement was true, the circumstance that he paid the plaintiff Bijendra Narain a share in the surplus collections equivalent to his share in the joint family property, after this suit was instituted in 1942, does not evidence severance by the preliminary decree in suit No. 27 of 1923. Reliance was also placed upon certain recitals in Ext. 29 (c)a certified copy of the preliminary decree in suit No. 27 of 1923 produced by the appellants. Under the heading "Bithnouli Khemchand Khewat Several Khasra Nos. are set out in the remarks column there is a recital "purchased from Ajab Lall Jha and others by virtue of Kewala" dated the 23rd Phagun 1329 M.S. in the name of Mode Narain Chaudhry. Properties purchased in the name of defendants Nos. 5 and 6, are their private and separate properties. The rest of properties are held by each of the defendants 4 to 8 in equal shares. " It was urged that this recital also evidenced severance between Bijendra Narain and Bidya Narain of the joint family status by the preliminary decree. But the trial court held that the recital commencing from "Properties purchased" to equal shares is an interpolation and with that view the High Court agreed. It appears that there are several certified copies of the preliminary decree on the record, and in some of these certified copies the recital on which reliance was placed is not found incorporated. The Trial Court on a review of the evidence came to the conclusion that this recital which is said to be made in the handwriting of Mode Narain who is a party to this litigation could not be relied upon since it was not found in the certified copies of the same decree furnished on earlier occasions. Before the Trial Court, it appears Exts. 29 & 29(b) the certified copies of the same decree Ext. 29 obtained by Narendra Narayan Chaoudhary (defendant No. 12. in the suit) Ext. 29(b) obtained by the Darbhanga Raj on September 19, 1934 and May 24, 1940 respectively, were produced, and they did not contain the recital. It is true that there are certain omissions in the certified copy exhibit 29(b) obtained by the Darbhanga Raj. That may be an infirmity in that certified copy, but Ext. 29 (at least in the parts which arc material on the point under consideration) appears to be a complete copy. No explanation was sought to be given before the Trial Court and the High Court as to why the portion relied upon was not found in Ext. It is admitted that the recital relied upon is in the handwriting of Mode Narain, and Mode Narain has not chosen to enter the witness box and to explain the circumstances in which that writing was made. It was urged by counsel for the appellants that the plaintiff should have pleaded in the plaint that the certified copy of the decree which incorporated the recital relied upon by the appellants was a fabrication, and since no such plea was raised, the appellants were prejudiced by trial of that question. It was the case of Bijendra 101 Narain, the plaintiff, that the came to know after the plaint was filed that there had been interpolations in the original decree. This he claimed to have learnt when he obtained a certified copy on October 5, 1942, after the suit was filed. In any event, we are unable to agree with counsel for the appellants that where the plaintiff sets up a case that a document relied upon by the defendants in support of their case is a fabrication, it is necessary for him either by his original plaint or by amendment therein to formally plead that the document is a fabrication and that unless he does so he is not entitled to ask the Court to try that plea. The Trial Court had to try the issue of severance of the joint family status by the decree in suit No. 27 of 1923. Whether partition had taken place had to be determined on evidence produced at the trial. Whether evidence in support of a party 's case is reliable may be raised by the other party without incorporating the contention relating thereto in his pleading. If the rule suggested by counsel for the appellants were to be followed, trial of suits would be highly inconvenient, if not impossible, because at every stage where a party contends that the evidence relied upon by the other side is unreliable he would in the first instance be required to amend his pleading and to set up that case. The Code of Civil Procedure does not contemplate any such procedure and in practice it would, if insisted upon, be extremely cumbersome and would lead to great delay and in some cases to serious injustice. The Trial Court, as we have already observed, on a consideration of the entire evidence and the subsequent conduct of the parties came to the conclusion that there was no severance of Bijendra Narain from his uncle Bidya Narain and with that view the High Court agreed. It is true that the High Court did not enter upon a reappraisal of the evidence, but it generally approved of the reasons adduced by the Trial Court in support of its conclusion. We are unable to hold that the learned Judges of the High Court did not, as is contended before us, consider the evidence. It is not the duty of the appellate court when it agrees with the view of the Trial Court on the evidence either to restate the effect of the evidence or to reiterate the reasons given by the Trial Court. Expression of general agreement with reasons given by the Court decision of which is under appeal would ordinarily suffice. We may advert to the issue whether the properties which stood in the name of the 24th defendant belonged to the joint family of the parties. As found by the Court of First Instance and affirmed by the High Court many items of property were acquired in the name of the twentyfourth defendant by Bidya Narain. Some of these properties were acquired by purchases at court auctions. The Trial Court has held that these properties were acquired with the aid of joint family funds by Bidya Narain and his sons, and with that view the High Court agreed. Counsel for the appellants concedes 102 that on the findings recorded by the High Court, in the properties which were acquired by private treaty the plaintiff Bijendra Narain has established his claim to a share, but he contends that a share in the properties which had been purchased at court auctions cannot be given to Bijendra Narain because of section 66 of the Code of Civil Procedure. Section 66(1) of the Code of Civil Procedure provides: "No suit shall be maintained against any person claiming title under a purchase certified by the Court in such manner as may be prescribed on the ground that the purchase was made on behalf of the plaintiff or on behalf of some one through whom the plaintiff claims." Transactions which are called 'benami ' rea lawful and are not prohibited. When it is alleged that a person in whose name the property is purchased or entered in the public record is not the real owner, the Court may, if the claim is proved, grant relief upholding the claim of the real owner. But section 66(1) seeks to oust the jurisdiction of the Court to give effect to real as against benami title. The object of the clause is to prevent claims before the civil court that the certified purchaser purchased the property benami for another person. Thereby the jurisdiction of the civil court to give effect to the real as against the nominal title is restricted and the section must be strictly construed. Where a person alleges that a property purchased at a court auction was purchased on his behalf or on behalf of some one through whom he claims, the suit is clearly barred. But the suit filed by Bijendra Narain is not of that nature. By paragraph 13 of the plaint it was averred that "the defendant No. I and his brothers and their father admitted before the panchas that all the properties held by the parties (the group of the plaintiff and the defendants 1st party) including those acquired in the names of the defendants 1,3,6 and Bidya Narain Choudhary as also those acquired in the name of the defendant 24, who is the son of the sister of the defendants 1,2 and 6, were the joint properties of the plaintiff and themselves, and they also admitted that the plaintiff 's share in all the properties was half and it was suggested that a fist of all the joint properties should be drawn up for the purpose of partition and accounts and it should be looked", and by paragraph 19 the plaintiff Bijendra Narain claimed a share in the properties including the properties standing in the name of the 24th defendant. It was not alleged by Bijendra Narain that any property was purchased by the 24th defendant on his behalf or on behalf of another person through whom he, Bijendra Narain claimed. Bijendra Narain claimed that all properties standing in the name of Bidya Narain and his sons and also of Hashistha Narain (dependent No. 24) were joint family properties, and that properties were acquired in the name of the 24th defendant by Bidya Narain and his sons with 103 a view to defeat his claim. He did not set up the case that the 24th defendant acquired the properties for him, nor did he plead that the properties were acquired for some person through whom he was claiming. His claim was that the properties belonged to the joint family, because they were purchased by Bidya Narain and his sons with the aid of joint family funds in the name of the 24th defendant. Such a claim does not fall within the terms of section 66(1). The judg ment of this court Addanki Venkatasubbaiah vs Chilakamarthi Kotaiah(1) does not assist the case of the appellants. The decision of the case turned on the true interpretation of section 66(2). It was found in Addanki Venkatasubbaiah 's case by the Trial Court and by a single Judge of the High Court of Madras that the property in dispute was purchased at a court auction by the defendant as agent for the plaintiff and with the funds belonging to the plaintiff, but it was purchased in the defendant 's name without the consent of the plaintiff 's father who was the real purchaser. The case fell squarely within the terms of sub section (2) of section 66. A Full Bench of the High Court of Madras on a reference made in an appeal under the Letters Patent held that such a suit was not maintainable. This Court pointed out that on the facts proved, there was no doubt that the auction purchaser had acted as agent of the plaintiff and had taken advantage of the fact that the plaintiff 's mother placed confidence in him and had entrusted to him the management of the plaintiff 's estate and the suit could not be dismissed under section 66(1), for it was expressly covered by the terms of section 66(2) which provides that nothing in sub section (1) shall bar a suit to obtain a declaration that the name of any purchaser certified as mentioned in cl. (1) was inserted in the certificate fraudulently or without the consent of the real purchaser. The contention raised by the appellants must therefore fail. Finally, it was urged that since defendants Mode Narain and Rajballav Narain had died during the pendency of the proceedings,, the High Court was incompetent to pass a decree for account against their estates. Rajballav who was defendant No. 6 died during the pendency of the suit in the Trial Court and Mode Narain who was, defendant No. 1 in the suit died during the pendency of the appeal in the High Court. But a claim for rendition of account is not a personal claim. It is not extinguished because the party who claims an account, or the party who is called upon to account dies. The maxim "actio personalis moritur cum persona" a personal action dies with the person has a limited application. It operates in a limited class of actions ex delicto such as actions for damages for defamation, assault or other personal injuries not causing the death of the party, and in other actions where after the death of the party the relief granted could not be enjoyed or granting it would be nugatory. An action for account is not an action for damages, (1) C.A. No. 120 of 1964 decided on August 12, 1965. 104 ex delicto, and does not fall within the enumerated classes. Nor is it such that the relief claimed being personal could not be enjoyed after death, or granting it would be nugatory. Death of the person liable to render an account for property received by him does not therefore affect the liability of his estate. It may be noticed that this question was not raised in the Trial Court and in the High Court. It was merely contended that because the plaintiff Bijendra Narain was receiving income of the lands of his share no decree for accounts could be made. The High Court rejected the contention that no account would be directed in favour of the plaintiff on that account. They pointed out that the mere fact that the plaintiff was in possession of some portion of properties of the joint family since 1941 cannot possibly absolve the defendants, who were in charge of the management of the properties, from rendering accounts of their dealings with the joint family estate. The plaintiff was since September 1941 severed from the joint family in estate and also in mess and residence, and he was entitled to claim an account from the defendants from September 1941, but not for past dealings. The fact that the plaintiff is in possession of some of the properties will, of course, have to be taken into account in finally adjusting the account. The appeal fails and is dismissed with costs. G.C. Appeal dismissed.

IN-Abs

The appellants and the respondent were collaterals and belonged to the same branch of a Hindu undivided family. The said family had four branches. Two branches filed in 1923 a joint suit for partition of the family estate impleading the other two branches as defendants. In 1924 the court passed a preliminary decree in which not only tile shares of the branches but also the shares inter se of the members of the branches were separately shown. The two branches to which the plaintiffs belonged were jointly allotted a share of eight annas while the other two branches to one of which the appellants and the respondent belonged were given four annas each. The shares of the appellants and the respondent were mentioned as two annas each. In 1936 the respondent came of age and in 1942 he filed a suit claiming partition of his share from that of the appellants. He alleged that the appellants taking advantage of his minority had purchased properties out of family funds in their own names as well as benami, and that these properties were also liable to be partitioned. The appellants denied that the said properties were purchased from family funds. They further contended that the respondent was holding his share of the property separately and that the family property of the branch already stood partitioned as a result of specification of shares in the preliminary decree of 1924. The trial court decreed the respondent 's suit. The High Court confirmed the decree with some modifications. The appellants came to this Court with certificate, The main contention on behalf of the appellants were : (i) that the specification of shares of the appellants and the respondent in the preliminary decree resulted in partition between them and (ii) that the suit in respect of alleged benami property was barred by section 66(1) of the Code of Civil Procedure. HELD: Specification by the decree of the shares of the appellants on the one hand and of the respondent on the other did not by itself constitute severance of the appellants from the respondent. [98 F G] Partition may ordinarily be effected by institution of a suit, by submitting the dispute as to division of the properties to arbitrators, by a demand for a share in the properties, or by conduct which evinces an intention to sever the joint family; it may also be effected by agreement to divide the property. But in each case the conduct must evidence unequivocally intention to sever the joint family status. Merely because one member of the family severs his relation, there is no presumption that there is severance between the other members : The question whether there is severance between the other members is one of fact to be determined on a review of all the attendant circumstances. [98 B] 94 Palani Ammal vs Muthuvenkatacharla Moniagar & Ors. L.R. 52 I.A. 83, relied on. In the present case the partition suit of 1923 and the preliminary decree therein making three allotments of the property led to severance of status of the plaintiffs as well as the other two branches of the larger family. But severance between the members of the branches inter se may not in the absence of expression of unequivocal intention be inferred. There was no evidence of expression of any such intention either by the appellants or the respondent. (ii) The respondent 's claim was that the properties belonged to the joint family, because they were purchased by the appellants with the aid of joint family funds benami in the name of a third party. Such a claim does not fall within the terms of section 66(1). [103 B] Addanki Venkatasubbaiah vs Chilakamerthi Kotaiah, C.A. No. 120 of 1964 dated 12 8 1965, relied on. (iii) It was not necessary for the respondent to mention in his plaint that the recital in the preliminary decree showing severance of status between the appellants and the respondent was an interpolation. The question whether evidence in support of a party 's case is reliable may be raised by the other party without incorporating the contention relating thereto in his pleading. [101 B D] (iv) It is not the duty of the appellate court when it agrees with the view of the trial court on the evidence either to restate the effect of the evidence or to reiterate the reasons given by the trial court. EXpression of general agreement with reasons given by the court decision of which is under appeal would ordinarily suffice. [101 F G] (v) A claim for rendition of account is not a personal claim. It is not extinguished because the party who claims an account or the party who is called upon to account dies. The maxim "actio personal moritur cum persona" does not apply to such cases. [103 G]

Appeals Nos. 19 & 20 of 1963. Appeals from the judgment and decree dated July 31, 1959 of the Patna High Court in Appeals from Original Decree Nos. 30 and 40 of 1953 respectively. section T. Desai and R. C. Prasad for appellant. Sarjoo Prasad and D. Goburdhan, for the respondents Nos.1 to 4 [In C. A. No. 19 of 1963]. Sarjoo Prasad and K. K. Sinha, for respondents Nos. 5 7 and 9 [In C. A. No. 19 of 1963] and 1 3 and 5 [In C. A. No. 20 of 1963]. 2 The Judgment of the Court was delivered by Bachawat, J. One Ramyad Singh was a member of a joint family and has eight annas interest in the joint family properties. He was a Hindu governed by the Mitakshara school of Hindu law. He died issueless, leaving his widow, Mst. Bhagwano Kunwar. The date of his death is in dispute. After his death, Bhagwano Kunwar filed the present suit for partition of the joint family properties claiming eight annas share therein. She contended that Ramyad Singh died in 1939 after the passing of the Hindu Women 's Rights to Property Act, 1937, and she was entitled to maintain the suit for partition. The defendants contended that Ramyad Singh died ill 1936 before the passing of the Act and she was entitled to maintenance only. The trial Court accepted the plaintiff 's contention aid decreed the suit. The defendants filed two separate appeals to the High Court. On December 15, 1958, Bhagwano Kunwar died. The High Court passed orders substituting one Ram Gulam Singh in her place. Later, the High Court recalled these orders, as it was conceded that Ram Gulam Singh was not her legal representative. By a deed dated March 14, 1958, Bhagwano Kunwar had sold lands measuring 1 bigha 5 kathas to the appellant. The High Court allowed the appellant 's application for substitution under 0.22 r. 10 of the Code of Civil Procedure and proceeded to hear the appeals. The High Court accepted the defendants ' contention, reversed the decree passed by the Subordinate Judge, and dismissed the suit. The appellant has now filed these appeals under certificates granted by the High Court. The main point in controversy is, did Ramyad Singh die in 1936 or did he die in 1939? If he died in 1936, Bhagwano Kunwar was not entitled to maintain the suit for partition and the suit was liable to be dismissed. But if he died in 1939, she was entitled to eight annas share in the joint estate and was entitled to maintain the suit for partition under the Hindu Women 's Rights to Property Act, 1937 read with the Bihar Hindu Women 's Rights to Property ,(Extension to Agricultural Land) Act, 1942. Moreover, it is ,conceded by counsel for the respondents that in that event after 1956 she held her eight annas share in the joint estate as full owner by virtue of section 14 of the , and on the strength ,of the sale deed dated March 14, 1958 executed by Mst. Bhagwano Kunwar the appellant was entitled to continue the suit for partition .after her death. There is conflicting oral evidence with regard to the date of ,death of Ramyad Singh. The appellant relied strongly upon an admission made by the main contesting defendants, Janki Singh and Kailashpati Singh, in a plaint signed and verified by them and filed in Title Suit No. 3 of 1948. In that plaint, Janki Singh and Kailashpati Singh claimed partition of the joint family properties, implead 3 ing Bhagwano Kunwar as defendant No. 8 and other members of the joint family as defendants Nos. 1 to 7. In this plaint, Janki Singh and Kailashpati Singh stated: "2. That the properties described in Schedule 1 to 2 in the plaint belong to the joint family. As the said Babu Ramyad Singh died in 1939 the defendant No. 8 also became entitled to life interest in the properties of the joint family. The defendant No. 8 surrendered her life estate to the plaintiffs and the defendants Nos. 1 to 7 and she gave up her possession of the joint family properties. The plaintiffs and the defendants Nos. 1 to 7 have been coming in joint possession of the properties under partition. That the defendant No. 8 is also made a defendant in this suit as she is entitled to maintenance," The plaint contained a clear admission that Ramyad Singh died in 1939. The High Court ruled that Bhagwano Kunwar could not rely on this admission. The High Court said that she could not rely upon the statement that Ramyad Singh died in 1939, as she was not prepared to admit the correctness of the statement that she had surrendered her estate and was entitled to maintenance only. We are unable to accept this line of reasoning. It is true that Bhagwano Kunwar relied only upon the statement that Ramyad Singh died in 1939 and was not prepared to accept the statement that she had surrendered her share to the other members and was entitled to maintenance only. But she tendered the entire plaint, and she did not object to the admissibility or proof of any of the statements made therein. All the statements in the plaint are,. therefore, admissible as evidence. The Court is, however, not bound to accept all the statements as correct. The Court may accept some of the statements and reject the rest. In the presented suit, it is common case that Bhagwano Kunwar did not surrender her share in the estate. We must, therefore, reject the statement with regard to the alleged surrender and the consequential allegation that she was entitled to maintenance only. The statement in the plaint as to the date of death of Ramyad Singh must be read as an admission in favour of Bhagwano Kunwar. The High Court also observed that an admission in a pleading can be used only for the purpose of the suit in which the pleading was filed. The observations of Beaumont, C.J. in Ramabai Shriniwas vs Bombay Government(l) lend some countenance to this view. But those observations were commented upon and explained by the Bombay High Court in D. section Mohite vs section I Mohite(2). An admission by a party in a plaint signed and verified by him in a prior suit is an admission within the meaning of section 17 of the Indian (1) A.I.R. 196O Bom. (2) A.I.R. 1941 Bom. 4 Evidence Act, 1872, and may be proved against him in other litigations. The High Court also relied on the English law of evidence. In Phipson on Evidence, 10th Edn, article 741, the English law is thus summarised: "Pleadings, although admissible in other actions, to show the institution of the suit and the nature of the case put forward, are regarded merely as the suggestion of counsel, and are not receivable against a party as admissions, unless sworn, signed, or otherwise adopted by the party himself." Thus, even under the English law, a statement in a pleading sworn, signed or otherwise adopted by a party is admissible against him in other actions. In Marianski vs Cairns(1), the House of Lords decided that an admission in a pleading signed by a party was evidence against him in another suit not only with regard to a different subject matter but also against a different opponent. Moreover, we are not concerned with the technicalities of the English law. Section 17 of the makes no dis tinction between an admission made by a party in a pleading and other admissions. Under the Indian law, an admission made by a party in a plaint signed and verified by him may be used as evidence against him in other suits. In other suits, this admission cannot be regarded as conclusive, and it is open to the party to show that it is not true. The explanation of Janki Singh and Kailashpati Singh that the plaint was drafted by their lawyer Ramanand Singh at the instance of the panchas including one Ramanand and they signed and verified the plaint without understanding its contents cannot be accepted. There is positive evidence on the record that the plaint was drafted at the instance of Janki Singh and was filed under his instructions. The plaint was signed not only by Janki Singh and Kailashpati Singh but also by their lawyer, Ramanand Singh. Neither Ramanand Singh nor the panch Ramanand was called as a witness. Even in this litigation, Ramanand Singh was acting as a lawyer on behalf of some of the defendants. Kailashpati Singh is a Homeopathic medical practitioner and knows English. The plaint was read over to Janki Singh. Both Janki Singh and Kailashpati Singh signed the plaint after understanding its contents and verified all the statements made in it as true to their knowledge. They then well knew that Ramyad Singh had died in 1939 after the passing of the Hindu Women 's Rights to Property Act. It is not shown that the admission in the plaint as to the date of death of Ramyad Singh is not true or that it was made under some error or misapprehension. This admission must be regarded as a strong (1) 5 piece of evidence in this suit with regard to the date of death of Ramyad Singh. Bhagwano Kunwar and her witnesses, Ram Gulam Singh, Ram Saroop Singh and Sheo Saroop Singh gave evidence in Sep tember, 1952. They all swore that Ramyad Singh died 13 years ago. In agreement with the trial Judge, we accept their testimony. Learned counsel commented on the testimony of Sheo Saroop Singh, who had said that the last earthquake took place 15 to 16 years ago and Ramyad Singh died 2 years 8 months thereafter. The last earthquake took place on January 15, 1934, and counsel, therefore, argued that Ramyad Singh could not have died in 1939. Clearly, there is some confusion in the evidence of Sheo Saroop Singh. He gave evidence in September, 1952, and his statement that the earthquake took place 15 to 16 years ago could not be correct and his further statement that Ramyad Singh died 2 years 8 months after the earthquake was not accurate. He swore positively that Ramyad Singh died 13 years ago. Bhagwano Kunwar said that there were receipts to show that Ramyad Singh died 13 years ago. On her behalf rent receipts for 1339, 1341, 1342, 1343, 1345, 1348, 1356 and 1359 faslis were tendered. The rent receipts are in respect of certain lands held by her as a tenant. The first four rent receipts show that Lip to 1343 fasli corresponding to 1936 the rent used to be paid by her through Ramyad Singh. Payment of the rent for 1345 fasli was made in 1346 fasli corresponding to 1939 through Janki. The rent for the subsequent years was paid through Janki and other persons. The High Court thought that the rent receipts showed that Ramyad Singh died in 1936 and because of his death, rent was subsequently paid through other persons. But the rent receipt for 1344 fasli is not forthcoming, and it is not known who paid the rent for 1344 fasli (1937). Moreover, assuming that Ramyad Singh did not pay rent in 1937 and 1938, it does not follow that he must have died in 1936. Kailashpati Singh, Janki Singh and other witnesses called on behalf of the defendants said that Ramyad Singh had died 16 years ago. In agreement with the trial Court, we do not accept their testimony. Janki Singh and Kailashpati Singh gave false explanations with regard to the admission made by them in the plaint in the previous suit. Moreover, for the purpose of defeating the title of Bhagwano Kumar they set up a compromise decree passed in that suit. The trial Court found that the compromise decree was obtained by them by practising fraud on Mst. Bhagwano Kunwar, and this finding is no longer challenged. We, therefore, hold and find that Ramyad Singh died in 1939. It follows that Bhagwano Kunwar was entitled to eight annas share in the joint family estate, and was entitled to maintain the Suit. The trial Court, therefore, rightly decreed the suit. 6 But in view of the death of Bhagwano Kunwar during the pendency of the appeal in the High Court, the decree passed by the trial Court must be modified. The appellant purchased from Bhagwano Kunwar 1 bigha 5 kathas of land under the deed dated March 14, 1958, and he can claim only the rights of an alienee of a specific property from a co owner on a general partition of the undivided properties. All the parties appearing before us conceded that on such a partition the appellant is entitled to allotment and separate possession of the lands purchased by him under the deed dated March 14, 1958. The deed is not printed in the Paper Book. It will be the duty of the trial Court now to ascertain full particulars of the aforesaid lands. The appeals are allowed with costs in this Court and in the High Court. The decree passed by the High Court is set aside. There will be a decree in favour of the appellant allotting to him the lands purchased by him under the deed dated March 14, 1958 and awarding to him separate possession thereof. The trial Court will draw up a suitable decree after ascertaining the particulars of the aforesaid lands. Y. P. Appeals allowed.

IN-Abs

The plaintiff tendered in evidence a plaint in an earlier suit and relied on an admission made by the defendants with regard to a fact in issue in the later suit. The High Court ruled that the plaint was not admissible in evidence on two grounds, viz., (i) the plaintiff could not rely on a state ment in the plaint as an admission, as she was not prepared to accept the correctness of the other statements in the plaint and (ii) an admission in a pleading could be used only for the purposes of the suit in which the pleading was filed. On appeal to this Court. HELD : (1) All the statements in the plaint are admissible in evidence. The plaintiff can rely upon a statement in the plaint with regard to a matter in issue as an admission, though she is not prepared to accept the correctness of the other statements in the plaint. Nor is the Court bound to accept all the statements as correct. The court may accept some of the statements as correct and reject the rest. [3 F] (2) Section 17 of the makes no distinction between a admission made by a party in a pleading and other admissions. An admission made by a party in a plaint signed and verified by him may be used as evidence against him in other suits. In other suits, this admission cannot be regarded as conclusive and it is open to the party to show that it is not true. [4 D] D. section Mohite, vs section I. Mohite, A.I.R. 1960 Bom. 153, Marianski vs Cairns, and Ramabai Shriniwas vs Bombay Government,A.I.R. , referred to,

Appeal No. 469 of 1966. Appeal by special leave from the judgment and decree dated November 25, 1965 of the Bombay High Court in Civil Revision Application No. 1579 of 1962. section G. Patwardhan and M. V. Goswami, for the appellant S.T. Desai and K. L. Hathi, for respondent No.1 The Judgment of the Court was delivered by Bachawat, J. The question arising in this appeal by special leave is whether in a case falling under sub s.(3)(a) of section 12 of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (Act No. 57 of 1947), a tenant can claim protection from eviction by showing his readiness and willingness to pay the arrears of rent before the date of the institution of the suit. The appellant 's husband was a tenant of a flat The rent was in arrears 136 for a period of more than six months. On December 22, 1956, the landlord served a notice on the tenant demanding the rent. The tenant neglected to pay the rent within one month of the notice. On January 11, 1957, he died. On February 4, 1957, the appellant sent the arrears of rent to the landlord by money order, but the landlord refused to accept the payment. On February 5, 1957, the landlord instituted the present suit for eviction of the appellant. The trial Court decreed the suit. The appellant filed a revision application before the Bombay High Court, but this application was dismissed by the High Court. It is to be noticed that the rent was in arrears for a period of more than six months. The tenant neglected to make payment of the arrears of rent within one month of the service of the notice by the landlord under sub section (2) of s.12. The rent was payable by the month, and there was no dispute regarding the amount of the rent. The case was, therefore, precisely covered by sub section (3)(a) of section 12. Nevertheless, the appellant submitted that as she was ready and willing to pay the rent before the institution of the suit, she could claim protection under sub section (1) of section 12. She submitted that the decided cases support this conten tion. In Mohanlal vs Maheshwari Mills Ltd.( '), P. N. Bhagwati, J. held that even in a case falling under sub section (3) (a), a tenant could, by paying or showing his readiness and willingness to pay the arrears of rent before the institution of the suit, claim protection from eviction under sub section A similar opinion was expressed by a Divisional Bench of the Gujarat High Court in Ambalal vs Babaidas(2). The judgment under appeal dissented from the view expressed by the Gujarat High Court. The Bombay High Court held, and, in our opinion, rightly, that in a case falling under sub section (3)(a), the tenant could not claim protection from eviction by showing his readiness and willingness to pay the rent before the institution of the suit. Sub section (1) of section 12 imposes a general restriction on the landlord 's right to recover possession of the premises so long as the tenant pays or is ready and willing to pay the rent and observes and performs the other conditions of the tenancy. Subsection (2) of section 12 imposes the further restriction that no suit for recovery of possession on the ground of non payment of rent shall be instituted by the landlord until the expiration of one month after a notice in writing demanding the rent. Sub section (3)(a) provides for the consequences which will follow where the rent is payable by the month, there is no dispute regarding the amount of rent, the rent is in arrears for a period of six months or more, and the tenant neglects to make payment within one month of the service of the notice under sub s (2). In such a case, the tenant (1) (1962) 3 Gujarat Law Reporter, 574 at pp. 618 to 62). (2) (1962) 3 Gujarat Law Reporter 625, 644. 137 cannot claim any protection under sub section (1), and the Court is bound to pass a decree for eviction. At the material time, sub section (3) (a) of section 12 read : "Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub s (2), the Court may pass a decree for eviction in any such suit for recovery of possession. " The word "may" in this sub section has the effect of "shall". In Bhatya Punjalal Bhagwanddin vs Dave Bhagwatprasad Prabhuprasad(l), this Court held that where the requirements of sub section (3)(a) were satisfied, the Court was bound to pass a decree for eviction. The section has now been suitably amended, and the word "shall" has been substituted for the word "may" by Maharashtra Act No. 14 of 1963. If the conditions of sub section (3)(a) are satisfied, the tenant cannot claim any protection from eviction under the Act. By terdering the arrears of rent after the expiry of one month from the service of the notice under sub section (2), he cannot claim the protection under sub section It is immaterial whether the tender was made before or after the institution of the suit. In a case falling within sub section (3)(a), the tenant must be dealt with under the special provisions of sub section (3)(a), and he cannot claim any protection from eviction under the general provisions of sub section The landlord is vested with the right to recover possession of the premises if the rent is in arrears for a period of six months or more, "the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2)", and the other conditions of sub section (3)(a) are satisfied. This right cannot be defeated by showing that the tenant was ready and willing to pay the arrears of rent after the default, but before the institution of the suit. In effect, the appellant asks us to rewrite the section and to substitute in it the following condition : "the tenant neglects to make payment thereof until the date of the institution of the suit. " It is not possible to rewrite the section in the manner suggested by the appellant. The appellant 's case fell precisely within sub section (3)(a) and she could not obtain immunity from eviction by tendering the rent before the institution of the suit. The appeal is dismissed with costs. V.P.S. Appral dismissed. (1) ; ,330 331.

IN-Abs

The tenant of a flat was in arrears of rent for more than six months. The landlord served a notice on the tenant demanding the rent. The tenant did not pay it within one month of the notice, but tendered it after the expiry of the month. The landlord refused to receive it and filed a suit for eviction under section 12(3) (a) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947. The tenant claimed the protection of section 12(1) of the Act on the ground that she was ready and willing to pay the rent before the institution of the suit. HELD : Under section 12(3) (a), the landlord is vested with the right to recover possession of the premises if the rent is in arrears for six months or more, the tenant neglects to pay it until after the expiry of one month after notice demanding the rent and other conditions of sub s.(3) (a) are saitisfied. This right cannot be defeated by showing that the tenant was ready and willing to pay the rent after the default but before the institution of the suit. In a case falling within sub section (3) (a), the tenant must be dealt with under its special provisions and he cannot claim any protection from eviction under the general provisions of sub section (1): and the court was bound to pass a decree for eviction. [137 E, F] Bhaiya Punjalal Dhagwanddin vs Dave Bhagwat Prosad Prabhuprasad, [19631 3 S.C.R. 312, followed. Mohanlal vs Maheshwari Mills Ltd. and Ambala, vs Babaldas, , overrules.

Appeal No. 981 of 1964. M 14 Sup. C1166 11 154 Appeal from the judgment and decree dated December 22, 1961 of the Patna High Court in Appeal from Original Decree No. 223 of 1957. Bishan Narain and U. P. Singh, for the appellant. Sarjoo Prasad, B. K. Saran, A. B. section Sinha, section K. Mehta and K. L. Mehta for respondent No. 2. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Patna High Court. A suit was brought by the plaintiffs respondents for a declaration, and in the alternative for possession, in respect of certain properties. It was prayed that a deed of gift executed on July 31, 1953 by Mst. Phuljhari Kuer in favour of the appellant Ramrati Kuer was not binding on the plaintiffsrespondents. Phuljhari Kuer was originally a defendant but died during the pendency of the suit. The case of the respondents was that the common ancestor of the parties Ramcharan Singh had three sons, namely, Ramruch, Uttim Narain and Basekhi Singh. After the death of Ramcharan Singh, his three sons separated in status though the properties were not divided by metes and bounds. Uttim Narain died sometime before 1900 leaving a widow Mst. Zira Kuer but no children, and Mst. Zira Kuer in her turn died in 1943. Ramruch had a son Basudeo Narain. According to the respondents, Basudeo Narain died during the life time of his father sometime about the revisional settlement which took place between 1917 1920. As Basudeo Narain was the only son of Ramruch the latter was greatly grieved on his premature death and he left his home about a month after Basudeo Narain 's death and thereafter disappeared from the village. Basudeo Narain had married twice. One of his widows was Mst. Phuljhari Kuer who executed the gift deed of 1953 which was challenged in the suit. The other was Mst. Sakala who died in 1950. Phuljhari had no children while Mst. Sakala had a daughter Ramrati Kuer who is the appellant before us. Thus at the time of his death, Basudeo Narain left two widows and a daughter. The case of the respondents further was that as Basudeo Narain had pre deceased his father, Basekhi Singh inherited the properties of the share of Ramruch and that the two widows and the daughter of Basudeo Narain had no right to the properties except that they were entitled to maintenance. Further on the death of Mst. Zira Kuer, Uttim Narain 's share of the properties also came to Basekhi Singh. On July 31, 1953 however Mst. Phuljhari Kuer was prevailed upon by the appellant 's husband to execute a gift deed in favour of Ramrati Kuer, though she had no right whatsoever to the properties. Consequently the suit out of which the present appeal has arisen was filed on October 5, 1953. Thus the main case of the plaintiffs 155 respondents was that Basudeo Narain died in the life time of his father and his widows and daughter had no right to any property in which he might have had a share along with his father Ramrach with whom he was joint and that on the death of Ramruch the entire share of Ramruch was inherited by Basekhi Singh. It may be mentioned that Basekhi Singh died in 1948 and the suit was filed by his two sons. The appellant contested the suit. The case of the appellant was that there had been no separation during the life time of Uttim Narain and that after the death of Uttim Narain there was a joint family consisting of Ramruch and Basekhi Singh. It was sometime before the revisional settlement that Ramruch and Basekhi Singh separated and each had half share, though many of the properties still remained joint. It was further contended by the appellant that Ramruch died before his son. Therefore Basudeo Narain succeeded to and came into possession of half of the properties of Ramruch 's share and on Basudeo Narain 's death, his two widows came into possession of the same After the death of Mst. Sakala, Mst. Phuljhari remained in sole possession of Basudeo Narain 's properties. She executed the deed of gift of 1953 in favour of the appellant, since then the appellant had been in possession. Further it was stated that the appellant being the only daughter of Basudeo Narain was his legal heir and was entitled as of right to the entire share of Basudeo Narain after the death of Mst. Phuljhari Kuer. It will thus be seen that the main question in dispute in this case was whether Basudeo Narain died before or after the death of his father Ramruch. It is not in dispute that if Basudeo Narain died before Ramruch, the plaintiffs respondents suit must succeed; on the other hand, if Basudeo Narain died after the death of his father Ramruch the suit must fail because Basudeo Narain would succeed to Ramruch and his two widows and daughter would in their turn succeed to him. On a review of the entire evidence and the conduct of the parties for about 30 years after the revisional settlement, the trial court came to the conclusion that Basudeo Narain had died after his father. In that view the trial court dismissed the suit. There was an appeal to the High Court by the plaintiffs respondents and the High Court allowed the appeal. The High Court reconsidered the entire evidence produced by the parties and was of opinion that the oral evidence produced was far from satisfactory and held that if oral evidence was equally balanced or equally worthless the side which got support from unimpeachable or reliable docu mentary evidence should succeed. The High Court then consi dered the documentary evidence and held that most of the documentary evidence was inconclusive one way or the other as to the 156 order in which Basudeo Narain and Ramruch died. But in the opinion of the High Court there was a statement made by Mst. Phuljhari as far back as 1925 in a mortgage suit brought by her and in that suit she categorically said that Ramruch left his home a month after the death of Basudeo Narain and bad not been heard of since. The High Court strongly relied on this statement made by Mst. Phuljhari Kuer in 1925 and held on its basis that Basudeo Narain had predeceased his father. In this view the High Court allowed the appeal and declared the gift deed made by Mst. Phuljhari Kuer invalid. It also held that the appellant could not succeed to the properties which belonged to Ramruch as the last male holder and therefore finally decreed the suit of the plaintiffs respondents. As the judgment was one of reversal, the High Court granted a certificate to the appellant to appeal to this Court; and that is how the matter has corn before us. No reliance has been placed on behalf of the parties oil the oral evidence, and tile estimate of the High Court that the oral evidence on both sides is far from satisfactory is not disputed before us. Learned counsel for the appellant however relies on certain circumstances appearing from the evidence to show that Basudeo Narain must have died after his father. It may be mentioned that there is no evidence as to the actual date or year of death of Basudeo Narain or Ramruch. But it is urged that certain circumstances show that Basudeo Narain must have died after his father Ramruch. We shall consider these circumstances one by one. [After considering the circumstances his Lordship proceeded:] It will thus be seen that none of the circumstances relied on behalf of the appellant is conclusive to show that Basudeo Narain must have died after his father; at the same time it may be conceded that if all these circumstances stood by themselves without any counter balancing documentary evidence on the other side the balance might have tilted in favour of the appellant 's case. But as against all this there is a statement of Mst. Phuljhari Kuer made in 1925 which categorically shows that Basudeo Narain died during the life time of his father and it was thereafter that his father left his village as he was very grieved on the premature death of his son and thereafter he disappeared from the village. If this statement is admissible in evidence and if it can be relied upon, it completely demolishes any inference in favour of the appellant which might otherwise have been drawn from the circumstances to which we have referred above. It is therefore necessary to turn to the circumstances in which this statement was made in 1925 and to consider its admissibility as well as the value to be attached to it. It appears that a suit was brought by Mst. Phuljhari Kuer and Mst. Sakala Kuer widows of Basudeo Narain against Mukhlal 157 Singh and others in 1924. The suit was based on a mortgage bond in favour of Basudeo Narain and the case of the widows was that money had been advanced out of the personal fund of their husband and that was how they were claiming a decree on the basis of the mortgage. The defence was that Basudeo Narain had no personal fund of his own and that money was advanced out of joint family fund and therefore Ramruch and other members of the joint family should have filed the suit or should have been made parties and as that had not been done the suit was not maintainable. Two of the issues in the case were : (i) whether the suit as framed was maintainable, and (ii) whether the plaintiffs in that suit had any cause of action. In that suit Mst. Phuljhari Kuer made a statement and she stated that her husband was :In the service of one Nandan Babu and the money which was advanced was out of his earnings as such servant and that the joint family had no concern with that money. While making a statement in that suit Mst. Phuljhari Kuer stated as follows : "My husband died nine years ago. Ramruch Singh father of Basudeo Narain Singh went away from this place one month after the latter 's death and he has not been heard of since then and is traceless. " It has been urged on behalf of the appellant that it was unnecessary for Mst. Phuljhari Kuer to make such a statement in that suit after she had already stated that the money had come out of the earnings of Basudeo Narain, who was in the service of Nandan Babu, and that this statement was made at the instance of Basekhi Singh in order to establish his right to the property of Ramruch 's branch. It is true that Mst. Phuljhari Kuer had stated that money came out of the earnings of her husband and was his personal property; even so we cannot say that this statement was entirely uncalled for She had to meet the case that the money did not come from the joint family fund and that it was unnecessary therefore to implead other members of the family. It seems to us that to explain why other members of the family and particularly Ramruch was not joined in the suit she stated about the death of her husband and about the disappearance of Ramruch soon after her husband 's death. The appellant tried to prove that this statement was made ,.at the instance of Basekhi Singh. In that connection one witness, namely, Jagdamba Sahai (D.W. 11) was examined and he tried to make out that Mst. Phuljhari Kuer was tutored by her counsel in that case at the instance of Basekhi Singh to make this statement so that Basekhi Singh 's interest in the properties of Ramruch might not be defeated. We have read the statement of Jagdamba Sahai and are in agreement with the High Court that it is impossible to believe that statement. It is enough to say that though Jagdamba Sahai pretended to be the clerk of the counsel he had to 158 admit that he had no card to work as clerk in 1924 and 1925. He bad also to admit that he was sitting outside in the verandah while the talks which he says he heard took place in a room five or six yards away. He also admitted that the counsel and Mst. Phuljhari were not talking loudly and that he heard something and not everything. His evidence is clearly false and we cannot believe that the statement in question was made at the instance of Basekhi Singh. Further if it were true that Basekhi Singh was keen to get this statement in order that his right to the properties left by Ramruch might not be jeopardised, it is strange that be took no steps for about 23 years that he lived after this statement was made to get his name mutated in revenue papers. As we have already indicated there was no trouble in this family so long as Basekhi Singh was alive and in the circumstances we are not prepared to believe that this statement was made at the instance of Basekhi Singh who at any rate took no advantage of it during his lifetime. It is however urged that this statement is not admissible and in any case no value should be attached to it, firstly because it is not proved that Mst. Phuljhari Kuer knew that she was making a statement against her interest, and secondly, because this statement is contradicted by her in her statement in the gift deed of 1953. Under section 32 (3) of the , No. 1 of 1872, a statement of a person who is dead is admissible when the statement is against the pecuniary or proprietary interest of the person making it, or when if true, it would expose him or would have exposed him to a criminal prosecution or to a suit for damages. Now there is no doubt that this statement of Mst. Phuljhari Kuer is against her proprietary interest. Therefore it would be admissible in evidence under section 32 (3) as she is dead. Of course, it would not be an admission so far as the appellant is concerned; but it would certainly be a piece of evidence to be taken into consideration. But it is said that before the statement can be admissible it must be shown that the person making it knew that it was against his pecuniary or proprietary interest. In this connection reliance has been placed on Srimati Savitri Debi vs Raman Bijoy(l) where it has been held that "the principle upon which hearsay evidence is admitted under section 32 (3) is that a man is not likely to make a statement against his own interest unless true, but this sanction does not arise unless the party knows the statement to be against his interest. " This statement of law is based on two earlier English decisions in Tucker vs Oldburry Urban District Council(2) and Ward vs H.S. Pitt.(3) Accepting this to be the correct statement (1) L.R.(1949) LXXVI I.A. 255. (2) (3) 159 of law with respect to admissibility of statements under section 32 (3) of the , we may add that the question whether the statement was made consciously with the knowledge that it was against the interest of the person making it would be a question of fact in each case and would depend in most cases on the circumstances in which the statement was made, except when the statement is categorical in terms as for example, "I owe so much to such and such person. " There can hardly be any direct evidence to show that the person making the statement in fact knew that the statement was against his interest and so in most cases knowledge would have to be inferred from the surrounding circumstances. We have therefore to see whether Mst. Phuljhari Kuer can be said to have known when she made the statement in 1925 that it was against her proprietary interest. There was no dispute in the family at the time when the statement was made. The law at the time was perfectly clear that a predeceased son 's wife had no interest in the property left by her father in law, except of course the right to maintenance. There is no reason to suppose that Mst. Phuljhari did not know that by making such a statement she would become the widow of a predeceased son of her fatherin law and if that was so there is no reason to suppose that she would not know the well established Hindu law that a predeceased son 's widow has no interest in her father in law 's property except for maintenance. In the circumstances once it is held that the statement was not made at the instance of Basekhi Singh it must follow in the absence of proof that Mst. Phuljhari Kuer did not know the effect of what she had stated that she had made the statement consciously knowing what she was stating and also knowing that the effect of her statement that her husband predeceased her father in law, would be against her proprietary interest. We are therefore of opinion that the statement in question was made by Mst. Phuljhari Kuer consciously and not at the instance of Basekbi Singh and she must in the circumstances of the case be presumed to know that that statement was against her proprietary interest, for thereby she became the widow of the predeceased son of her father in law. Then we come to the gift deed executed by Mst. Phuljhari Kuer in favour of the appellant in 1953. It is urged that the statements made by her in this gift deed would be admissible in view of section 158 of the . Section 158 lays down that "whenever any statement, relevant under section 32 or 33, is proved, all matters may be proved either in order to contradict or to corroborate it, or in order to impeach or confirm the credit of the person by whom it was made, which might have been proved if that person had been called as a witness and had denied upon 160 cross examination the truth of the matter suggested. " It is urged that the statements made in the gift deed would be relevent to contradict the statements she made in 1925. We shall assume for present purposes that the statements in the gift deed would be admissible in view of section 158. But two questions arise in that connection. The first is what is the statement made in the gift deed of 1953 and whether it contradicts the earlier statement and the second is the value to be attached to the statement in the gift deed. It is remarkable that in the gift deed it is not stated in so many words that her husband had died after her father in law; all that is stated is that her husband died in a state of separation from his pattidars leaving behind Herself and her co widow Mst Sakala and after his death she and the co widow entered into possession and occupation of the property left by him. Thus there is no categorical statement by her in the gift deed that her husband died after her father in law. What is urged is that her statement that after her husband 's death she came into possession of all the property left by her husband implies that her husband must have died after her father in law. Thus there is no direct contradic tion of the statement made in 1925 in the gift deed of 1953. Secondly as to the value to be attached to what is stated in the gift deed it must be remembered that the statement in 1925 was made when there was no trouble whatsoever in the family and therefore that statement is entitled to great weight. On the other hand the statement made in the gift deed was apparently made at the time when troubles had begun and in any case a person making a gift of property would say how she had title to the property and such a statement would in the circumstances have little value. We are therefore in agreement with the High Court that the statement made in 1925 by Mst. Phuljhari Kuer carries great weight as it was made at a time when there was no trouble. We have no doubt that Mst. Phuljhari was conscious of what she was stating in 1925 and that it was done at her own instance and not at the instance of Basekhi and that she must have known that by that statement she became the widow of a predeceased son and would therefore not be entitled to the property of her father in law. In the circumstances we hold in agreement with the High Court that that statement is admissible and it completely overweighs the circumstances on which the appel lant relies. In this view of the matter we hold that Basudeo Narain died after the death of his father Ramruch and it was one month or so after his death that Ramruch left the village as he was greatly grieved on the premature death of his son and afterwards disappeared. As Ramruch has not been heard of for more than seven years after he disappeared from the village, he must be presumed to be dead and the plaintiffs respondents would in the circumstances be entitled to the property of which he was the last male holder. The appeal therefore must fail except with respect to one item of property to which we shall refer just now. 161 [His lordship then held that in so far as this item of property was concerned the appellant was entitled to half share.] The appeal is hereby dismissed with costs subject to the modification indicated above. Y.P. Appeal dismissed with modification.

IN-Abs

The appellant 's mother executed a gift deed in favour of the appellant claiming that she inherited the property in 1920 on the death of her husband, who had inherited it from her father in law. The respondents claiming title to the property filed a suit challenging the gift deed on the ground that the father in law of the donor (mother) had survived the husband and therefore she could not have inherited the property under the Hindu Law as then prevailing. For this purpose the respondents relied upon a statement, that the father in law had survived the husband, made by the donor in a mortgage suit in 1925, to establish her case. When this statement was made there was no dispute in the faimly. On the questions whether, (i) this statement in the mortgage suit was admissible in evidence and (ii) the statement made by the donor in the gift deed was admissible to contradict the statement she made in the mortgage suit, HELD : (i) This statement in the mortgage suit, which was against proprietary interest of the mother would be admisible in evidence under section 32(3) of the Evidence Act, as she was dead. It could not be an admission. so far the appellant was concerned, butit would certainly be a piece of evidence to be taken into consideration, The admissibility of statements under s.32 (3) of the Evidence Act does not arise unless the party knows the statementto be against his interest. But the question whether the statement was made consciously with the knowledge that it was against the interest of the person making it would be a question of fact in each case and would depend in most cases on the circumstances in which the statement was made. [158 F G; 159 A B] Srimati Savitri Debi Raman Bijoy, L.R. (1949) LXXVI I.A. 255,Tucker vs Oldburry UrbanDistrict Council, L.R. [19121 2 K.B. 317 and Ward vs H. section Pitt , relied on. The statement in question was made by the mother consciously and not at the instance of any one and she must, in the circumstances of the case, be presumed to know that the statement was against her proprietary interest, for thereby she became the widow of the predeceased son of her father in law. [159 G] (ii) Assuming that the statements in the gift dead would be admissible under section 158 of the Evidence Act the statement made in the mortgage suit in 1925 carries greater weight as it was made at a time when there was no dispute in the family. [160 E F]

Appeal No. 467 of 1966. Appeal by special leave from the judgment and decree dated March 4, 1965 of the Punjab High Court (Circuit Bench) at Delhi in Civil Regular Second Appeal No. 125 D of 1964. 168 A.K. Sen, E. C. Agarwal and P. C. Agarwala, for the appellant. Gauri Dayal for the respondents. The Judgment of the Court was delivered by Subba Rao, C. J. This appeal by special leave raises the question of the construction of some of the provisions of the Delhi Rent Control Act, 1958 (Act 59 of 1958), hereinafter called the Act. Appellant 1st defendant is the owner of premises No. 6022, Gali Mandir Wali, Arya Samaj, Delhi. Ram Saran Das, res pondent No. 2 herein, was the tenant of the appellant in respect of the said premises and Ram Kishan Das, respondent No. 1 herein, was a sub tenant. On January 30, 1959 the appellant obtained a decree for ejectment against the 2nd respondent from the court of the Subordinate Judge, Delhi. To that suit the 1st respondent, the sub tenant, was not made a party. When that decree was sought to be executed against the 2nd respondent, the 1st respondent obstructed delivery of possession of the premises on the ground that he, as a sub tenant, had become a tenant under the provisions of the Act. The executing court rejected his claim. Thereafter, on May 22, 1962, the 1st respondent filed a suit in the Court of the Senior Subordinate Judge, Delhi, against the appellant and respondent 2 praying for a decree for a permanent injunction against the appellant and the 2nd respondent restraining the appellant from taking possession of the said premises. The appellant inter alia contended that section 50 of the Act was a bar to the main tainability of the suit in a civil court. It is not necessary to state the other defences, as nothing turns on them in this appeal. The said plea was rejected in the first instance by the learned Subordinate Judge, on appeal by the learned Senior Subordinate Judge and on Second Appeal by the High Court. Hence the appeal. The only question that arises in this appeal is, whether section 50 of the Act is a bar to the maintainability of the suit filed by the 1st respondent against the appellant. The learned counsel for the appellant contended that section 50 of the Act was a bar to the maintainability of the suit, as section 17 of the Act empowered the Rent Controller to decide a dispute in regard to the question whether a person was a sub tenant or not. The learned counsel for the 1st respondent contended that section 17(3) of the Act applied only to a case where a dispute arose during the subsistence of tenancy, that in the instant case the tenancy had come to an end before the Act came into force, that the 1st respondent became a tenant under Sub section (2) of section 18, that a dispute 169 in regard to the question whether he had become a statutory tenant thereunder was not a dispute triable by the Rent Controller and that, therefore section 50 of the Act was not a bar to the maintainability of the suit. Alternatively, the learned counsel for the 1st respondent contended that the 1st respondent had become a tenant under section 20 of the Delhi and Ajmer Rent Control Act, 1952, that there was no provision in the Act conferring exclusive jurisdiction on the Rent Controller in respect of the said right vested in him before the Act and that, therefore, the suit for a declaration of the said pre existing right was maintainable in the civil court. The solution to the rival contentions depends on the true construction of the relevant provisions of the Act. Under section 50 of the Act, no civil court shall entertain any suit in respect of a matter which the Controller is empowered by or under the Act to decide. If the Controller, in exercise of the power conferred on him under the Act, can decide the dispute in respect of the claim of the 1st respondent to a statutory tenancy, there cannot by any doubt that his suit is not maintainable in a civil court. section 17(3) of the Act on which reliance is placed for invoking the aid of section 50 reads: "Where in any case mentioned in sub section (2), the landlord contests that the premises were not lawfully sublet, and an application is made to the Collector in this behalf, either by the landlord or by the sub tenant, within two months of the date of the receipt of the notice of subletting by the landlord or the issue of the notice by the tenant or the sub tenant, as the case may be, the Controller shall decide the dispute." Under this sub section, the Controller is empowered to decide a dispute between the landlord and his sub tenant in respect of any case mentioned in sub section (2) of section 17. Sub section (2) of section 17 of the Act says : "Where, before the commencement of this Act, any premises have been lawfully sub let either in whole or in part by the tenant, the tenant or the sub tenant to whom the premises have been sub let may, in the prescribed manner, give notice to the landlord of the creation of the subtenancy within six months of the commencement of this Act, and notify the termination of such sub tenancy within one month of such termination." To invoke this sub section three conditions shall be complied with, namely, (i) the premises shall have been lawfully sub let by the tenant, (ii) the sub letting shall have been before the commence Sup. Cl/66 12 170 ment of the Act, and (iii) such tenant or sub tenant shall have given a notice to the landlord of the creation of the sub tenancy within six months of the commencement of the Act and notified the termination of such sub tenancy within one month of such termination. The dispute referred to in sub. section (3) of section 17 is in regard to such sub tenancy. It is manifest from the provisions of sub section (2) that the said provision applies only during the period ,of subsistence of the tenancy created before the commencement of the Act. But, if the tenancy itself ceased to exist before the corn mencement of the Act, the said sub section has no application. If the tripartite relationship of landlord, tenant and sub tenant had ceased to exist before the commencement of the Act, no question of giving notice prescribed thereunder would arise. If subs. (2) does Dot apply to such a case, a dispute raised between them cannot be raised before the Controller under sub section (3) of section 17 of of the Act. If that be the construction of sub section (2) and (3) of section 17 of the Act, section 18(1) thereof would not equally help the appellant. Under sub section (1) of section 18 where an order for eviction ill respect of ' any premises is made under section 14 against a tenant but not against a sub tenant referred to in section 17 and a notice of the subtenancy has been given to the landlord, the sub tenant shall, with effect from the date of the order, be deemed to become a tenant holding directly under the landlord in respect of the premises in his occupation on the same terms and conditions on which the tenant would have held from the landlord, if the tenancy had continued. This section also applies to a case of subsisting tenancy after the Act came into force. The reference to section 14 presupposes that an eviction order has been made against the tenant after the Act came into force. The sub tenant mentioned therein is the sub tenant referred to in section 17 and in respect of whose sub tenancy a notice has been given to the landlord, that is to say, a sub tenant of a tenant during the subsistence of ' his tenancy. In such a case the sub tenant becomes a statutory tenant. This section cannot have any application to a case where the tenancy ceased to exist before the commencement of the Act. Sub section (2) of section 18 reads: "Where, before the commencement of this Act, the interest of a tenant in respect of any premises has been determined without determining the interest of any sub tenant to whom the premises either in whole or in part had been lawfully sub let, the sub tenant shall, with effect from the date of the commencement or this Act, be deemed to have become a tenant holding directly under the landlord on the same terms and conditions on which the tenant would have held from the landlord, if the tenancy had continued. " 171 This sub section applies to a case where the interest of a tenant had been determined before the commencement of the Act, but the interest of the sub tenant was allowed to subsist. In such a case, the sub tenant shall with effect from the date of the commencement of the Act be deemed to have become, by a statutory fiction, a tenant under the landlord. This situation could arise before the commencement of the Act either because of a statute, contract or a decree. Any dispute raised by such a sub tenant does not fall under sub section (3) of section 17 of the Act, for, as we have said, the said sub section applies only to a case where a dispute arises during the subsistence of the main tenancy after the Act came into force. If so, as there is no other provision in the Act under which a dispute in respect of such a sub tenancy could be decided by the Controller, section 50 cannot have a bearing on the maintain ability of a suit filed in respect of such a sub tenancy. If that be the construction of the relevant provisions of the Act, the 1st respondent is not hit by the provisions of section 50 of the Act. The landlord by obtaining a decree for eviction against the 2nd respondent put an end to the tenancy before the commencement of the Act. The Sub tenancy of the 1st respondent was not determined by the decree, is lie was neither a party to the suit nor his rights were put in issue therein. He can, therefore, claim to be a tenant under section 18(2) of the Act. As section 50 does not apply to him, he can file a Suit in a. civil Court for a declaration of his right thereunder. The same result will flow if we look at the matter from a different aspect. Under section 20 of the Delhi and Ajmer Reiit Control Act, 1962, on the eviction of the tenant, the sub tenant would be deemed to have become a tenant of the landlord. The appellant obtained a decree for eviction against the 2nd respondent on January 30, 1959. The Act came into force subsequently. He had therefore acquired a vested right under the Act of 1952. No provision of the Act has been pointed Out to us which took way that right. There was also no provision under the Act empowering the Controler to decide a dispute raised in regard to the said right vested in the 1st respondent. If so, it follows that section 50 of the Act cannot be a bar to the suit filed by the 1st respondent for a declaration of his said right. The view expressed by us finds support in the unreported judgment of Mehar Singh, J. of the Punjab High Court, Circuit BeBench at Delhi in Smt. Viran Wati Devi and another vs Jaswant Rai and mother(1). There, the learned Judge, after considering the provisions of sub sections (2) and (3) of section 17 of the Act, observed "It ippeai s to me obvious on a plain reading of those two sub sections of section 17 that the procedure provided (1)Civil Revision No. 558 D of 1961 (Decided oil 15 2 t962). 172 by those sub sections is available to a tenant and his sub tenant, during the subsistence of the tenancy and the sub tenancy, but where the tenancy has ceased to exist or the sub tenancy has ceased to exist those sub sections are apparently not attracted and resort cannot be had to their provisions." The learned counsel for the appellant relied upon a decision of this Court in Mohd. Mahmood vs Tikam Das(1) in support of his contention. That case arose under the provisions of the Madhya Pradesh Accommodation Control Act, 1961. The provisions of that Act, though not in pari materia with the provisions of the Act now in question, are similar to those of the Act in many respects. There, the landlord terminated the tenancy before the said Act came into force, filed a suit for ejectment and obtained a decree for eviction on June 23, 1962, after the said Act came into force. The said Act came into force on December 40, 1961. On June 25 and 26, 1962, the appellants served notices on the landlord under section 15(2) of the said Act claiming that as the tenant had sub let the premises to them before the Act had come into force with the consent of the landlord, they had become his direct tenants under section 16(2) of the said Act and on June 28, 1962, the appellants filed a suit against both the landlord and the tenant in a civil court praying for a declaration that they had, in the circumstances, become direct tenants of the premises under the landlord. On June 30, 1962, the landlord sent a reply to the notices sent by the appellants in which he denied that the sub letting by the tenant had been with his consent or was lawful. Here it may be mentioned that section 15(2) of that Act corresponds to section 17(2) of the Act and sub section (3) of section 15 of that Act corresponds to sub section (3) of section 17 of the Act. Section 45(1) of that Act, which bars a suit in a civil court is analogous to section 50(1) of the Act. If the dispute was one that could be decided by the Rent Controlling Authority under section 15(3) of that Act, the suit in respect of the dispute would not be maintainable by reason of section 45(1) of the said Act. Under sub section (3) of section 15 of that Act, a sub tenant could make an application to the Rent Controlling Authority for deciding a dispute within two months of the date of issue of notice by him. Instead of filing such an application, the tenants filed a suit in the civil court within the said time prescribed. On those facts, this Court held by reason of section 45(1) of that Act, the suit was not maintainable. But in so holding this Court left open the question whether such a suit could be filed in a civil court after the period of limitation prescribed under section 15(3) of that Act had expired. This Court observed: "Another question mooted was that the two months mentioned in sub section (3) only provided a special period of (1) ; ,131. 173 limitation for the application mentioned in it and the provision of the period did not mean that a Rent Controlling Authority had power to decide the matter only if an application had been made within that period, so that if no such application had been made, after the expiry of the period a civil court would have jurisdiction to decide a dispute as to whether a sub letting was lawful. The point is that the real effect of section 15(3) was to deprive the civil court of the jurisdiction to decide that dispute for all time. We do not feel called upon to decide these questions. They do not arise in the present case and it was not said that these questions affect the question of the competence of the civil court to try the present suit. The suit was filed within the period of two months during which admittedly the Rent Controlling Authorities had jurisdiction to decide the dispute on which it was based. Whatever may be the jurisdiction of a civil court on other facts, in the present case it clearly had no jurisdiction to entertain the appellants ' suit. " The decision of this Court, therefore, has a limited scope. It has only held that during the prescribed period under section 15(3) of the said Act, no suit would lie in a civil court. In the present case, the suit was filed in the civil court beyond the period prescribed. In the result, the appeal fails and is dismissed with costs. V.P.S. Appeal dismissed.

IN-Abs

The landlord of the premises in dispute, obtained a decree for ejectment against his tenant before the commencement of the Delhi Rent Control Act, 1958. The sub tenant was not a party to that suit and the sub tenancy was not determined by that decree. In 1962, the subtenant filed a suit against the landlord claiming to have become a statutory tenant of the premises. The landlord contended that under section 50 of the Act, no civil court shall entertain any suit in respect of a matter which the Controller is empowered by or under the Act to decide, and that as section 17(3) of the Act empowered the Controller to decide a dispute in regard to the question whether a person was a sub tenant or not, the ,suit was not maintainable. HELD : Section 50 was not a bar to the suit. The provision of the Act applicable to a case where the interest of a tenant had been determined before the commencement of the Act, but the interest of the sub tenant was allowed to subsist is section 18(2). Under this sub section the sub tenant shall, with effect from the date of the commencement of the Act, be deemed to have become, by a statutory fiction, a tenant under the landlord. There is no provision in the Act under which a dispute in respect of such a sub tenancy could be decided by the Controller. Any dispute raised by such a sub tenant does not fall under section 17(3), for, section 17(3) applies only to a case where a dispute arises during the subsistence of the main tenancy after the Act came into force, and where the dispute was raised within two months of the issue of the notice of sub letting, by the tenant or sub tenant. [171 A C] Mohd. Mamood vs Tikam Das, ; , explained. Moreover, under section 20 of the Delhi and Ajmer Rent Control Act, 1952, on the eviction of the tenant, the sub tenant would be deemed to have become a tenant of the landlord. There is no provision in the Delhi Rent Control Act, 1958, which took away that vested right or empowered the Controller to decide a dispute raised in regard to it. Section 50, therefore could not have any bearing on the maintainability of the suit. [171 E G]

Appeal No. 556 of 1964. Appeal from the judgment and order dated March, 24, 1961 of the Assam and Nagaland High Court in M. A. (F) No. 29 of 1956. B. Sen and D. N. Mukherjee for the appellant. section G. Patwardhan and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Assam High Court and arises in the following circums tances. The appellant had obtained a money decree against Thakur Prosad Joyaswal and others in 1947. As the decree remained unsatisfied it was transferred from Calcutta to Gauhati for execution. On May 2, 1953, an application was made for execution in the court at Gauhati by attachment under 0. XXI, r. 46 of the Code of Civil Procedure of certain movable property of the judgment debtors which was said to be in the possession of the Sub Divisional Officer, Military Engineering Service, Pandu. Consequently an order was issued under O.XXI r. 46 (1)(c)(iii) prohibiting the Sub Divisional Officer from parting with 208 the property of the judgment debtors. It may be mentioned that the Sub Divisional Officer is subordinate to the Garrison Engineer, Shillong. Though certain applications were put in on behalf of the Sub Divisional Officer before the court, it was only on February 1, 1954 that the Acting Garrison Engineer, Shillong stated before the court that the movable property in question (i.e. 41 R.S. joists) had been sold and delivered as far back as November 22, 1951 to Messrs. Ghunilal Kanhaiyalal of Palasbari. This objection was considered by the execution court and it held on September 25, 1964 that this belated statement that the property in question had been sold as far back as November 22, 1951 could not be believed. The execution court therefore dismissed the objection and ordered execution to proceed. Thereafter orders were issued for the production of the joists but they were not produced. Thereupon the appellant applied that the Union of India should be considered to be the principal judgment debtor and execution should be levied against the Union of India. The Union of India objected to this and on April 21, 1956 the objection of the Union of India was dismissed and the execution court held that the Union of India be treated as the principal judgment debtor and be made liable to the extent of the proceeds of the attached joists. Later on the same day, a further legal argument was raised on behalf of the Union of India to the effect that as there was no surety bond the Union of India could not be treated as the principal judgment debtor. This objection was heard and finally the court ordered on April 28, 1956 that even though there was no surety bond executed on behalf of the Union ,of India it was liable as a surety. Thereupon the Union of India appealed to the High Court against the order of April 28, 1956. The High Court allowed the appeal and set aside the order ,of the execution court holding that no action could be taken against the Union of India under section 145 of the Code of Civil Procedure upon which the execution court had apparently relied. Thereupon the appellant asked for and obtained a certificate from the High Court, and that is how the matter has come before us. We are of opinion that there is no force in this appeal. Order XXI r. 46(i) provides that in the case of other movable property not in the possession of the judgment debtor, except property deposited in or in the custody of any court, the attachment shall be made by a written order prohibiting the person in possession of the same from giving it over to the judgment debtor. The necessary prohibitory order had been issued by the execution court in this case with respect to 41 joists and had been received by the Sub Divisional Officer. Such a prohibitory order is sufficient for the purpose of attachment, though the 20 9 property mentioned therein is not actually taken in possession by the Court. After attachment has been made in the manner provided by r. 46 the next step that the court has to take is to order sale of the property attached. Then comes O.XXI r. 79 which provides that where the property sold is movable property of which actual seizure has been made, it shall be delivered to the purchaser [see r. 79(1)]. But where the property sold is movable property in the possession of some person other than the judgment debtor, the delivery thereof to the purchaser shall be made by giving notice to the person in possession prohibiting him from delivering possession of the property to any person except the purchaser [see r. 79 (2)]. In the present case there was no actual seizure of the property but attachment had been made under O.XXI r. 46 (1). The proper procedure for the court to follow was to sell the property under O.XXI r. 64 and then pass an order under O.XXI r. 79 (2) for its delivery in the manner provided therein. The court however went on asking the Sub Divisional Officer to produce the property and when it was not produced it proceeded under section 145 of the Code. We agree with the High Court that section 145 has no application in the present case. Section 145 runs thus : "Where any person has become liable as surety (a) for the performance of any decree or any part thereof, or (b) for the restitution of any property taken in execution of a decree, or (c) for the payment of any money, or for the fulfilment of any condition imposed on any person, under an order of the court in any suit or in any proceeding consequent thereon, the decree or order may be executed against him, to the extent to which he has rendered himself personally liable in the manner therein provided for the execution of the decrees and such person shall, for the purposes of appeal be deemed a party within the meaning of section 47: Provided that such notice as the court in each case thinks sufficient has been given to the surety. " A bare perusal of section 145 shows that it applies when a person has become liable as surety. Now the mere fact that an attachment was made of 41 joists said to be lying with the Sub Divisional Officer by the issue of the prohibitory order under O.XXI r. 46 does not make the Sub Divisional Officer or the Union of India a surety for the performance of the decree which was in execution. There was no surety bond taken from the Sub Divisional Officer and the joists 2 1 0 were not actually seized by the court and handed over to the Sub Divisional Officer as suparddar on the basis of a surety bond. If that had been done some question may have arisen whether the Sub Divisional Officer did become a surety for the performance of the decree or part thereof. But where merely a prohibitory order is issued under 0. XXI r. 46(1) and attachment is made in that manner, there can be no question of the person to whom the prohibitory order is issued becoming a surety for the performance of the decree. We therefore agree with the High Court that section 145 of the Code was not applicable to this case and the execution court was completely wrong in holding that the Sub Divisional Officer became a surety simply because attachment had been made in the manner provided in O.XXI r. 46 (1),. The appeal fails and is hereby dismissed with costs to the Union of India. V.P.S. Appeal dismissed.

IN-Abs

The appellant, who was the decree holder, applied for the execution of the decree. The Sub Divisional Officer, Military Engineering Service, was in possession of some movable property of the judgment debtor. The Court ordered attachment under 0. XXI, r. 46(1), Civil Procedure Code by prohibiting the Sub divisional Officer from handing over the property to the judgment debtor. Thereafter, in stead of following the proper price(lure which was to sell the property under O.XXI, r. 64 and then pass an order for its delivery under O.XXI, r. 79(2), the Court ordered the Sub divisional Officer to produce the property, and, when it was not produced, proceeded under section 145 of the Code treating the Union of India as the principal judgment debtor. HELD: Section 145 of the Code was not applicable to the cage. That section only applies when a person becomes liable as a surety and the execution Court was wrong in holding that the Sub divisional Officer became a surety simply because attachment had been made by the prohibitory order under O.XXI, r. 46(1). [209 H, 210 B C]

Appeal No. 501 of 1964. Appeal by special leave from the judgment and order dated February 27, 1961 of the Andhra Pradesh High Court in section p. A. No. 137 of 1959. R. Ganapath Iyer, for the appellant. P. Ram Reddy and T. V R. Tatachari, for respondent No. 1. The Judgment of the Court was delivered by Subba Rao, C. J. This appeal by special leave raises the question, whether the land described as "Vantari Muttah" in Talluru village was included in the assets of Jaggampetta A and D Zamindari estates, in Peddapuram taluk, East Godavari District, Andhra Pradesh, at the time of the Permanent Settlement. The undisputed facts may be briefly narrated. The said Muttah comprises an area of 50 puttis, i.e. about 400 acres, and five tanks are situate therein. The said Muttah was granted to the predecessor in interest of the appellants and respondents 2 to 5 long before the Permanent Settlement in consideration of payment of Kuttubadi of a sum of Rs. 620/ . At the time of Inam Settlement, it was not enfranchised by the Government. After the Madras Estates (Abolition and Conversion into Ryotwari) Act XXV] of 1948 was passed, on September 22, 1952, by a notification issued thereunder, the Government took over the Jagganpeta Estate. In April 1953, when the appellants and respondents 2 to 5 183 tried to effect repairs to the tanks, the village munsif of Talluru tinder instructions from the 1 st respondent, obstructed them from doing so. Thereupon, the appellants filed O. section No. 269 of 1953 in the Court of the District Munsif, Peddapuram, against the State of Andhra and others for a declaration that the 1st respondent, had no right to the said tanks and for an injunction restraining it and its subordinates from interfering with their rights in the said tanks. The 1st respondent resisted the suit inter alia on two grounds, namely, (i) the entire Vantari Muttah was included in the assets of the said estate of Jaggampeta at the time of the Permanent Settlement, and (ii) in any view, Linder the grant, the predecessor in interest of the appellants and respondents 2 to 5 was given only the land and not the tanks therein. The learned District Munsif upheld the claim of the appellants to the said tanks and decreed the suit. On appeal, the learned Subordinate Judge Kakinada, held that the said land was included in the assets of the Zamindari at the time of the Permanent Settlement and, on that finding, he dismissed the Suit. On further appeal, Kumarayya, J. of the Andhra Pradesh High Court agreed with the learned District Munsif. But, on Letters Patent appeal, a Division Bench of the HighCourt,consisting of ChandraReddy,C.J.and ChandrasekharaSastry,J.,agreed with the learned Subordinate Judge. The result was that the Suit of the appellants was dismissed with costs throughout. Hence the present appeal. On the pleadings, two questions arose for consideration, namely, (i) whether the Muttah was included in the assets of the Zamindari at the time of the Permanent Settlement, and (ii) even if the said Muttah was excluded from the assets of the Zamindari, whether the original grant comprised the tanks. The second point need not detain us, for, though Kumarayya, 1. held on the said point in favour of the appellants, the Division Bench did not express any opinion thereon, in view of its decision on the first point. As we are agreeing with the Division Bench on the first point, it is not necessary for us to express our opinion on the second point. Apropos the first point, Mr. R. Ganapathy Iyer, learned counsel for the appellants, contended that the said Muttah was granted to the prodecessor in interest of the appellants and respondents 2 to 5 long before the Permanent Settlement by the then Zamindar for public services, Subject to a payment of favourable sent, that, subsequently, the services were discontinued, but the grant was continued subject to the payment of favourable rent, that at the time of the Permanent Settlement the said Muttah was excluded from the assets of the Zamindari and that, therefore, the and Muttah was outside the scope of the notification issue by the Government under Madras Act XXVI of 1948. 184 Mr P. Ram Reddy, learned counsel for the 1st respondent, the State of Andhra Pradesh, argued that the grant was subject to the payment of the full I assessment, that the said assessment was paid partly in cash and partly by personal services to the Zamindar, that: at the time of the Permanent Settlement the said Muttah was included in the assets of the Zamindari and that, as it was a part of the Zamindari, the Government, even at the time of the Inam Settlement, did not take any steps to enfranchise the same. Before we advert to the evidence, it will be convenient to notice briefly, at this stage, the relevant law on the subject. Under section 3(b) of the Estates Abolition Act, the entire estate, including inter alia the tanks, shall stand transferred to the Government and vest in it free of all encumbrances. This section would be attracted only if the suit land was part of an estate as defined under the Act. It cannot be disputed that if the land was included in the assets of the estate at the time of the Permanent Settlement, it would be a part of the estate. Section 4 of Regulation XXV of 1802 enabled the Government to exclude from the said assets certain items. Under the relevant part of the said section, the Government was empowered to exclude from the assets of the Zamindari at the time of the Permanent Settlement "lands exempt from the payment of public revenue and of all other lands paying only favourable quit rents". Besides these two categories of grants of lands, namely, lands exempt from payment of public revenue and lands paying only favourable quit rents, there was another category of lands which were granted subject to the payment of favourable quit rents and also subject to the performance of certain services. The said services might be public or private services, i.e., services to the community or services to the grantor. The third category of land was the subject matter of decision in Mahaboob Sarafarajawant Sri Raja Parthasarathy Appa Rao Bahadur Zamindari Garu vs The Secretary of State(1). Where lands in a zamindari were pre settlement inams granted on condition of rendering personal service to the zamindar and paying a favourable quit rent, the Madras High Court held that as the grant was for services purely personal to the zamindar, prima facie the inams formed part of the assets of the zamindari. The reason for this rule of presumption was stated by Sankaran Nair, J. thus : According to these cases, therefore, when lands were held on condition that the holders were to render certain services which were purely personal to the Zamindar and in which the Government were not interested, i.e., when such services had nothing to do with police or magisterial duties, or did not concern the community or the villagers, (1) (1913) I.L.R. Madras 620, 632. 185 then the Government were entitled to include in the zamindari assets for setting the peshkash the income from the lands allowed in lieu of such services which were not allowed for in the settlement; there is therefore no presumption they did not do so or treated the land as free from payment. " If the services were purely personal to the zamindari, there was no reason why the Government would not have included the land in the assets of the zamindari for the purpose for fixing the peshkash. The same result was arrived at by a different process. Under section 4 of Regulation XXV of 1802, lands paying only favourable quit rents might be excluded from the assets of the zamindari. If the grantee paid part of the assessment in cash and part in the shape of personal services to the zamindari, it cannot be said that he held the lands paying only favourable quit rent to the zamindar. The aspect was brought out with clarity by Venkatasubba Rao, J., in Secretary of State vs Rajah Vasireddy(1). Therein, the learned Judge said thus : "In the case of personal service inams, was there any reason at the time of the permanent settlement for treating them as "lands exempt from the payment of public revenue ?" The zamindar was receiving income from such lands, though not of course in the shape of cash rent but in the shape of services; for the rendering of services was one mode of paying the rent. It was reasonable therefore, to treat them at the settlement as revenue paying lands. " The legal position may therefore put thus; Under section 4 of Regulation XXV of 1802 the Government was empowered to exclude income from lakhiraj lands, i.e., lands exempt from payment of public revenue and of all lands paying only favourable quit rents, from the assets of the zamindari at the time of the permanent settlement. If the lands fall squarely within the said two categories, there is a presumption that they were excluded from the asse 's of the zamindari. But if the grant of land was subject to performance of personal services to the zamindar or subject to the payment of favourable rents and also performance of personal service to the zamindar, there is no such presumption. Indeed, the presumption is that in such a case the income from the land was not excluded from the assets of the zamindari. The reason for the rule is that in one case the personal services are equated with the full assessment and in the other the favourable rent together with the personal services is equated with full assessment. If the zamindar in one shape or another was getting the full assessment on the lands, there was no reason why the Government would have fore (1) A.I.R. 1929 Madras 676, 682. CI/66 13 186 gone its revenue by excluding such lands from the assets of the zamindari. With this background, let us look at the documentary evidence adduced in the case. The relevant grant is not produced. The permanent settlement accounts are not before us. The sanad is not placed on the evidence. Indeed, no document of a date prior to the permanent settlement is exhibited. The question falls to be decided only on the basis of the documents that came into existence subsequent to the permanent settlement. A 3 is a Kaifat dated April 22,1818 pertaining to 'manyams ' in the village of Jaggampadu. The relevant part of the document reads : "Thimmaraju Maharajulungaru got debited in the accounts of the said village, and granted towards maintenance of Malireddy Gopalu for his service. He (Raja) fixed three hundred and fifty varahas and continued it so in the same manner receiving service from him. Afterwards Ammannagaru settled that cash has to be paid to the aforesaid 'diwanam ' (estate) and that the remaining shall be enjoyed as long as the service is done to the abovementioned people. In that manner it was enjoyed till last year. For the current year it was done as 'Amani ' (Government supervision). " This document shows that the grantee and his heirs were to enjoy the land so long as service was done to the Raja. The expression "abovementioned people" can only refer to the Raja '. The service, therefore, was only personal service to the Raja. A 4 is an order of the District Collector of Rajahmundry to the Estate Amin or Jaggampeta. This letter is dated September 5, 1829. This document shows that the agent of the Raja complained to the Collector that the Vantarlu of Thalluri village were granted lands assessed to a kist of Rs. 2140, that for their service the late Raja granted remission of Rs. 620, that they were paying every year the balance amount to the Raja, that after the death of the late Raja they did not present themselves to the minor Raja but were doing service to some other zamindar and that, therefore, an order might be issued directing them to pay to the then Raja the entire assessment. On the basis of that request, the Collector directed the Amin to make the necessary enquiries. This document clearly shows that the Zamindar 's agent asserted as early as 1928 that the Vantarlu were given remis 187 sion by the zamindar only for doing personal services to him. The complaint made by the agent that the Vantarlu, instead of doing services to the minor Raja and attending on him, were doing services to another zamindar is a clear indication that the services mentioned in that order were the personal services to the Raja. Reliance was placed on the statement in the said order "did not even give a reply to the message sent to them during the time of the dacoities and disturbances occurred recently, asking them to be present before him" and contended that the services mentioned therein were the services for the purpose of putting down dacoities and disturbances, which were services to the community. The said statement only describes when the notice was sent and not the nature of the services. Even if it described the nature of the services, their personal attendance on the Raja during the troubled times could not make them any the less personal services to him. It was also said that the fact that the Collector 's interference was sought was indicative of the public nature of the services. The Collector in those days was a person of power and prestige in a district and there was nothing unusual in a zamindar seeking his help in the matter of collecting his dues from recalcitrant serviceholders. exhibit A 5 is an order dated December 11, 1829 issued by the Collector of Rajahmundry to the Amin of Jaggampeta estate in pursuance of a petition filed by the Manager of the estate. Assertions similar to those found in exhibit A 4 were made by the Manager of the Estate in the petition filed by him to the Collector which is referred to in exhibit A 5. exhibit A 7 is a petition dated April 24, 1830 filed by the Vantarlu of Thalluru village to the Enquiry Collector, Rajahmundry. In. that petition it was admitted that the Raja granted a land to them assessed to a kist of 310 varahas for their living, that they were doing services to the Samastanam, that after the death of the Raja, his widow told them that she would adopt a boy and that during his minority their services were not required but in view of their past services to her ancestors she would allow them to enjoy the land only on payment of half the assessment. After narrating all the subsequent events, the petitioners went on to say : "From the time when Lakshminarasayya got the 'nimebadi ' done in that manner, we the sharers by obtaining the goodwill of Sri Raja Vatchavayi Venkatapathigaru, got the present and were paying 155 varahs to the estate and were in enjoyment of 50 putties of land assessed to a kist of Rs. 3101 as 'vasathi '. This petition also supports the case of the Government that the Vantarlu were doing personal services to the zamindar and that it was the zamindar who gave a remission of assessment in lieu of their services. The fact that Lakshminarasayya dispensed with 188 the services of the Vantarlu during the minority of the adopted son shows that the services were only personal to the zamindar, for, if they were public services, the fact that the zamindar was a minor would be irrelevant. The learned counsel for the appellants contended on the basis of this document that whatever might be the conditions of the grant at the time of its origin before the permanent settlement, the zamindar put an end to the services and confirmed the grant subject to the payment of favourable quit rent and, therefore, the grant squarely fell within the scope of section 4. of the said Regulation (XXV of 1802). But this document contains only an assertion on the part of the Vantarlu : and even if that assertion be true, it would only show that Lakshminarasayya did not dispense with the services for good but only exempted the Vantarlu from doing the services till the minor zamindar attained majority. exhibit A 16 dated November 9, dated February 27, 1832 and exhibit A 18 dated March 8, 1833 are similar orders issued by the Collector to the Amin of Jaggampeta. They contain recitals similar to those contained in Exs. A 3, A 4 and A 5. exhibit A 10 is an order dated July 7, 1831 issued by the Collector to the Amin of Jaggampeta. Therein, when the Manager of the estate resumed the land and gave it to another on the ground that the Vantarlu were not paying the assessments, the Collector directed that they should be put back in possession of the said land. But, in doing so, the Collector did not say that the Zamindar had no right to resume the land but only observed that it did not do any credit to the estate to dispossess Muttadars of the land and grant it to some one else. This document does not throw much light on the question raised before us. Lastly, we have the fact that the Government did not take any steps to enfranchise the land. For the default of the Government, no doubt the appellants cannot be made to suffer. But that circumstance probablises the contention of the Government that the Muttah was not included in the assets of the zamindari, for, if included it is not likely that the Government would not have enfranchised it and imposed assessment thereon. Strong reliance was placed on the expressions "Vantarlu" and "manyam" found in some of the documents and an argument was made that the said expressions indicated that the services were public services. The expression "manyam" is found in exhibit In Wilson 's Glossary "manyam" is defined thus : "Land in the south of India, held either at a low assessment, or altogether free, in consideration of services done to the state or community, as in the case of the officers. 189 and servants of a village. . the term is also laxly applied to any free grant or perquisite held in hereditary right by members of a village community. " The expression "manyam" does not, therefore, necessarily mean a grant for public services. It is also used in a loose sense to indicate an inam. That apart, the word "manyam" is only found in a Kaifiat of 1818 and in no other ducument it finds a place. Be that as it may, such an ambiguous expression in a solitary document which came into existence in 1818 cannot outweigh the other evidence which we have considered in detail. Nor does the expression "Vantarlu" indicate public servants. It means "foot servants"; it may also be used to denote a sepoy. Whatever may be its meaning, the name is not decisive of the nature of the service. A foot servant or a sepoy could certainly do personal service to a zamindar : he might look after his safety. The following facts emerge from a consideration of the docu mentary evidence. The grant was a pre settlement grant. The land was granted to the Vantarlu subject to the payment of favourable rent and also subject to the performance of personal services to the zamindar. The Government, either before the permanent settlement or subsequent thereto, never claimed a right to resume the same. Indeed, it was the zamindar who was giving remissions to the Vantarlu whenever their services were not required. There is a presumption that such a land was not excluded from the assets of the zamindari and the evidence adduced in the case not only does not rebut that presumption but also, to some extent, supports it. We, therefore, agree with the Division Bench of the High Court holding that the Vantari Muttah of the appellants was part of the Jaggampeta estate and was, therefore, covered by the notification issued by the Government under the Estates Abolition Act, 1948. In the result, the appeal fails and is dismissed with costs of the first respondent. G.C. Appeal dismissed.

IN-Abs

The appellants and respondents 2 to 5 were owners of Jaggamapeta estate in the East Godavari District of Andhra Pradesh. The Vantari Muttah ', a piece of land about 400 acres in area, was granted to their predecessor in interest in return for services as vantarlu ' or 'foot set,#ants ' long before the permanent settlement. After the passing of the Madras Estates, (Abolition and Conversion into Ryotwari) Act XXVI of 1948 dispute arose whether the land formed part of the Jaggampeta estate for if it did not, the Act would not apply to it. After various stages of litigation a Division Bench of the High Court decided against the apellants. They came to this Court with special leave. it was contended on behalf of the appellants that the said Muttah was granted to their predecessor in interesi before the permanent settlement by the then Zamindar for public services subject to a payment of favourable rent, that, subsequently, the services were discontinued,but the grant was continued subject to the payment of favourable rent, that at the time of the permanent settlement the said Mutta was excluded from the assets of the Zamindari and that therefore the said Muttah. was outside the scope of the notification issued by the Government under Madras Act XXVI of 1948. On behalf of the respondent State it was urged that the grant was subject to the payment of the full asses men,, that the said assessment was paid partly in cash and partly by personal services to the, Zamindar, that at the time of the Permanent Settlement the said Muttah was included in the assets of the Zamindari and that as it was a part of the Zamindari the Government at the time of the Inam Settlement did not take any steps to enfranchise the same. HELD:(i) Under section 4 of the Regulation XXV of 1802 the Government was empowered to exclude income from lakhiraj lands i.e. lands exempt from payment of public revenue and of all lands paying only favouable quit rents, from the assets of the Zamindari at the time of the Permanent Settlement. If the lands fall squarely within the mid two categories, there is a presumption that they we re excluded from the assets of the Zamindari. But if the grant of land was subject to performance of personal services to the Zamindar or subject to the payment of favourable rents and also performance of personal services to the Zamindar, there is no such presumption. Indeed the presumption is that in such a case the income from the land was not excluded from the assets of the Zamindari. The reason for the rule is that in one case the personal service are equated with the, full assessment and in the other 182 the favourable rent together with the personal services is equated with full assessment. If the Zamindar in one shape or another was getting the full assessment on the lands there was no reason why the Government would have foregone its revenue by excluding such lands from the assets of the Zamindari. [185 F] Mahaboob Sarafarajewant Sri Raja Parthasarathy Appa Rao Bahadur Zamindari Garu vs The Secretary of State, Mad. 620 and Secretary of State, vs Rejah Vasiredy, A.I.R. 1929 Mad. 676, referred to. (ii) The grant in the present case was a pre settlement grant. The land was granted to the Vantarlu subject to the payment of favourable rent and also subject to the performance of personal services to the Zamindar. The Government either before the permanent settlement or subsequent thereto never claimed a right to resume the same. Indeed it was the Zamindar who was giving remissions to the Vantarlu Whenever their services were not required. There is a presumption that such I land was not excluded from the assets of the Zamindari and the evidence adduced in the case not only did not rebut that presumption but also to some extent supported it. The Division Bench of the High Court was therefore right in holding that the Vantari Muttah was part of the estate of the appellants and respondents 2 to 5 and was therefore, covered by the notification issued by the Government under the Estates Abolition Act, 1948. [189 D]

Appeal No. 359 of 1964. Appeal by special leave from the judgment and decree dated September 29, 1961 of the Madhya Pradesh High Court in First Appeal No. 123 of 1958. B. Sen J.P. Dube and I.N. Shroff, for the appellant B. C. Misra and section section Shukla, for the respondent. The Judgment of the Court was delivered by Shah, J. This is an appeal with special leave against the decree passed by the High Court of Madhya Pradesh in appeal No. 123 of 1958 confirming the decree of the Additional District Judge, Hoshangabad, decreeing the plaintiff 's suit. The State of Madhya Pradesh has appealed to this Court. At an auction held on July 20, 1954 by the Divisional Forest Officer, Hoshangabad Division, for sale of "felled trees" in Coupe No. 66 Dhekna, Range Seoni, one Jagatram was declared the highest bidder and the trees were sold to him for Rs. 12,100. The amount of the bid was payable in four instalments of Rs. 3,025 each: the first instalment to be paid immediately on acceptance of the bid, the second on December 1, 1954, the third on February 1, 1955 and the fourth on May 1, 1955. Jagatram executed a contract in favour of the Governor of Madhya Pradesh in which were incorporated the terms and conditions of the sale. The following are the material terms of the contract: "2. The quantity of the said forest produce to be sold under this contract shall be the quantity which may exist at the time of executing this indenture or may come into existence thereafter in the contract area all of which forest contractor by collect and remove from it in accordance with the conditions herein contained during the period from the date the forest contractor furnishes the necessary coupe boundary certificate after inspection of the contract area to the 30th day of June, 1955 3. The forest contractor shall commence his work of collecting and removing the said forest produce within one month after furnishing the necessary certificate mentioned in clause 2 above 5. The said forest produce shall be removed by the forest contractor from the contract area by the routes specified in the following table and shall be presented by him for examination at one or other of the depots specified in that table: (Table Omitted) 6. The Forest contractor shall be subject to the Forest Contract Rules as amended from time to time up C. I.166 4 268 and the Rules shall be deemed to be part of this contract in so far as they are applicable thereto : . . " Jagatram paid the first instalment due under the contract on July 28, 1954, and subscribed his signature to the terms of the contract. Nathuram and Kaluram stood sureties for him and executed the following bond: "Whereas the Governor in order to secure the due performance of conditions of the above contract demanded security from the forest contractor, I (1) Nathuram son of Kashiram resident of Chaterkheda (2) Kaluram son of Jhandusingh resident of PipaliyaKalan, by occupation Agriculturists, surety on behalf of the forest contractor, undertake to discharge the liability of the forest contractor in case of any act, omission, negligence or default on the part; of the forest contractor for any sum which may become payable by the forest contractor to the Governor by or under the conditions of the above contract. I also agree that any sum which may be payable by me to the Governor under the terms of this bond shall be recoverable in the same manner as an arrear of land revenue. " Jagatram removed almost the entire quantity of trees sold to him, but since he did not pay the remaining three instalments of the price, the State of Madhya Pradesh took proceedings to recover from Kaluram the amount due by Jagatram as arrears of land revenue. Kaluram then commenced an action against the State of Madhya Pradesh for a declaration that he was not liable to pay the arrears of forest dues recoverable from Jagatram and for an injunction restraining the State from realising or from continuing the recovery proceedings with regard to those forest dues from him. The principal ground in support of the claim was that the forest authorities gave time to Jagatram and omitted to take steps which their duty to the surety required them to take i.e., prompt seizure and sale of the trees after the second instalment had fallen due, and since on that account his eventual remedy against Jagatram was impaired, he Kaluram stood discharged from liability as surety. The Trial Court held that the forest officers were negligent in allowing the contractor Jagatram to remove the trees sold, and on that account the security of the surety was impaired, and the surety stood discharged for the whole amount recoverable from the contractor. The High Court of Madhya Pradesh confirmed the decree of the Trial Court. 269 By virtue of cl. 6 of the terms of the contract, the relevant Forest Contract Rules were to be treated as part of the contract between Jagatram and the State. By r. 2 it was provided that all contracts whereby the Government sells forest produce to a purchaser shall be subject to the rules, insofar as they are applicable, and that those rules ' shall be deemed to be binding on every forest contractor not only as rules made under the Forest Act, but also as conditions ' of his forest contract. By r. 6 the forest contractor is required to carry with him an "accessory licence" entitling him and his servants and agents to go upon the land specified in the contract and to do all acts necessary for the proper extraction of the forest produce purchased under the contract. Rule 8 provides: "Where the consideration payable to Government under a forest contract is payable in instalments and the Divisional Forest Officer at any time before the last instalment is paid, considers that the value of the forest produce removed by the contractor exceeds the amount of the instalments already paid, the Divisional Forest Officer may stop further removal until the contractor has paid such further sum as may, in his opinion, be sufficient to cover such excess: Provided that, if in the opinion of any Forest Officer not below the rank of a Range Officer, it is necessary to take immediate action to prevent a breach of this rule, such Forest Officer (i) may by notice in writing serve on the contractor or his agent, if any, stating the grounds for the direction, require the contractor or his agent to stop further removal of the forest produce from the contract area; and By r. 12 a forest contractor is prohibited from removing any forest produce from the contract area, unless it is accompanied by a pass in the prescribed form signed by the contractor or his authorized agent. By r. 13 the forest contractor is required to remove forest produce only by the route or routes specified by rules under the Act, or by his forest contract, and to take all forest produce removed by him to such depots or places as may be similarly prescribed, for check and examination. Rule 16 requires the forest contractor to keep accounts of the quantity of forest produce removed by him from the contract area, and that such accounts shall be open to inspection at any time by the Divisional Forest Officer or by any forest subordinate duly authorized in that behalf. Rule 29(1) provides that a forest contract may be, terminated by the Office empowered to execute it on behalf of the Government, if the Forest 270 contractor makes default in the payment of the consideration for his contract or of any instalment thereof, or commits a breach of any of the other conditions of his contract. By sub r. (2) of r. 29 it is provided that such termination shall be notified to the forest contractor by a written notice and thereupon all the contractor 's rights under the contract including all accessory licences shall cease and all the forest produce remaining within the contract area or at the depots specified under r. 13 shall become the absolute property of Government. Rule 33(1) provides that all forest produce removed from a contract area in accordance with the rules and duly checked and passed at the depots established under r. 13 shall be at the absolute disposal of the forest contractor. By cl. (2) of r. 33 it is provided that the forest contractor may assign any forest produce not so removed, but such assignment shall not be valid unless it is made with the previous sanction in writing of the forest officer who executed the contract. It is also necessary to refer to sections 82 & 83 of the Indian Forest Act 16 of 1927. By section 82 it is provided that all money payable to the Government under the Act or under any rule made under the Act, or on account of the price of any forest produce, or of expenses incurred in the execution of the Act in. respect of such produce, may, if not paid when due, be recovered as if it were an arrear of land revenue. Section 83 provides: "(1) When any such money is payable for or in respect of any forest produce, the amount thereof shall be deemed to be a first charge on such produce, and such produce may be taken possession of by a Forest officer until such amount has been paid. (2) If such amount is not paid when due, the Forest Officer may sell such produce by public auction, and the proceeds of the sale shall be applied first in discharging such amount. (3). . . . " Beside the contractual right which is conferred upon the State by r. 8 to stop removal of goods in value exceeding the amount already paid by the contractor, where the consideration is payable in instalments the statute has imposed a charge upon the goods sold, inter alia, for the price thereof, and has authorised the Forest Officer to take possession of the goods until such amount is paid. If the amount is not paid when due, the Forest Officer may sell the produce by public auction. The State Government has therefore under the terms of the contract and by virtue of the statute, even though the property in the goods has passed to the contractor, the right to stop removal of the goods and take possession thereof till the amount due is paid and to sell the goods if the amount is not 271 paid when due; the State has also the power to prohibit removal, of the goods when the value of the forest produce removed by the contractor exceeds the amount of instalments already paid, to check and examine the goods, and to terminate the contract in case of default in payment of the amount due and to take possession of the goods either in the contract area or in the depots of the contractor. The contract between Jagatram and the State was in respect of "felled trees" and the area and denomination of the coupe were set out. The trees agreed to be sold being in a deliverable state, by virtue of section 20 of the Sale of Goods Act, the property in the goods sold passed on the production of the "coupe boundary certificate". It is true that because of the diverse covenants contained in the contract and the provisions of the Rules which formed part of the contract, certain restrictions were imposed upon the contractor. Rule 8 authorised the forest authorities to stop removal of the foods sold if it was found that the contractor had removed goods of value exceeding the amount of instalments already paid. Again the contractor was required to take the goods to the depots and to get the same checked and examined. But on that ground it cannot be said that the contractor did not become the owner of the goods when the "coupe boundary certificate" was produced. The " coupe boundary certificate" is not on the record, and we are unable to hold that any goods were removed or permitted to be removed without the production of the coupe boundary certificate. That is not the case of the State and we will not be justified in so assuming. The terms of rr. 29 & 33 also abundantly support the view that on the production of the "coupe boundary certificate" the contractor becomes the owner of the goods. Under cl. (2) of r. 29 when a contract is terminated for reasons mentioned in cl. (1) all forest produce remaining within the contract area or at the depots specified under r. 13 becomes the absolute property of the Government. it is implicit in the rule that till the eventuality contemplated by r. 29(1), property in the forest produce is in the contractor. The terms of r. 33(2) which authorize the forest contractor to assign any forest produce also support that inference. The right to assign the forest produce not removed from the contract area predicates title to the forest produce. The argument of the State that the property in the goods had not passed to the forest contractor till they were removed, and on that account the statutory charge under section 83 of the Forest Act did not attach to the goods sold, has therefore no force. As soon as the contract was entered into and the coupe boundary certificate was produced and we assume in this case that it was so produced, the property in the goods passed to Jagatram. But for the contract price there was a first charge on such produce in favour of the State of Madhya Pradesh under section 83(1). The Divisional Forest Officer had authority to stop removal of those goods until 272 the amount of instalments payable by the contractor was paid and even to sell the goods for recovery of the amount which had fallen due. The forest authorities however allowed Jagatram to remove the goods sold before the instalments due on December 1, 1954 and thereafter were paid. Kaluram by executing the surety bond had undertaken to discharge the liability arising out of any act, omission, negligence or default of the forest contractor. The surety Kaluram contends that because the State lost or parted with the security he stood discharged. By section 140 of the , where a guaranteed debt has become due, or default of the principal debtor to perform a guaranteed duty has taken place, the surety, upon payment or performance of all that he is liable for, is invested with all the rights which the creditor had against the principal debtor; and by section 141 it is provided : "A surety is entitled to the benefit of every security which the creditor has against the principal debtor at the time when the contract of suretyship is entered into, whether the surety knows of the existence of such security or not; and, if the creditor loses, or, without consent of the surety, parts with such security, the surety is discharged to the extent of the value of the security. " The State had as already observed, a first charge over the goods: the State was also entitled to prevent the goods from being removed without payment of the amount of instalments due. The expression "security" in section 141 is not used in any technical sense: it includes all rights which the creditor had against the property at the date of the contract. The surety is entitled on payment of the debt or performance of all that he is liable for, to the benefit of the rights of the creditor against the principal debtor which arise out of the transaction which gives rise to the right or liability: he is therefore on payment of the amount due by the principal debtor entitled to be put in the same position in which the creditor stood in relation to the principal debtor. If the creditor has lost or has parted with the security without the consent of the surety, the latter is, by the express provision contained in section 141, discharged to the extent of the value of the security lost or parted with. The State had a charge over the goods sold as well as the right to remain in possession tilt payment of the instalments. When the goods were removed by Jagatram that security was lost and to the extent of the value of the security lost the surety stood discharged. In the present case the State has not produced the accounts furnished under r. 16 by the contractor relating to the quantity of goods removed by Jagatram. We must in the circumstances hold that the entire quantity contracted to be sold to Jagatram had been removed, and the surety is, because the State has parted with the security 273 which it held, discharged from liability to pay the amount payable under the terms of the contract. In Wulff and Billing vs Jay,(1) Hannen, J., stated the law thus: ". . I take it to be established that the defendant became surety upon the faith of there being some real and substantial security pledged, as well as his own credit, to the plaintiff; and he was entitled, therefore, to the benefit of that real and substantial security in the event of his being called on to fulfill his duty as a surety, and to pay the debt for which he had so become surety. He will, however, be discharged from his liability as surety if the creditors have put it out of their power to hand over to the surety the means of recouping himself by the security given by the principal. That doctrine is very clearly expressed in the notes in Rees vs Barrington 2 White & Tudor 's L.C., 4th Edn. at p. 1002 'As a surety, on payment of the debt, is entitled to all the securities of the creditor, whether he is aware of their existence or not, even though they were given after the contract of suretyship, if the creditor who has had, or ought to have had, them in his full po ssession or power, loses them or permits them to get into the possession of the debtor, or does not make them effectual by giving proper notice, the surety to the extent of such security will be discharged. A surety, moreover, will be released if the creditor, by reason of what he has done '. cannot, on payment by the surety, give him the securities in exactly the same condition as they formerly stood in his hands. ' " Subject to certain variations, which are not material for the matter under discussion, section 141 of the Contract Act incorporates the rule of English law relating to the discharge from liability of a surety when the creditor parts with or loses the security held by him. The Forest Officers of the State of Madhya Pradesh parted with the goods before receiving payment of the amount due by the contractor Jagatram. Thereby the charge in favour of the State was seriously impaired and the statutory power to sell the goods for non payment of the amount remaining due became, for all practical purposes, ineffective. Again under the terms of the contract the Forest authorities had the right to prevent removal of goods sold until the price was paid: that right was also lost. The right conferred by section 83 of the Forest Act and under the terms of the contract to prevent removal and right to sell goods for non payment of the price, coupled with the charge on the goods constituted the security of the State, and that security was lost because the Forest Officers permitted removal of the goods by the contractor. (1) 274 It was urged however on behalf of the State that mere inaction on the part of the forest authorities does not amount to parting with the security. But the terms of the statute do not apply only to cases in which by positive action on the part of the creditor the security is parted with. Even if the security is lost by the creditor, the surety is discharged. In any event the facts in the present case make it abundantly clear that it was on account of the conduct of the forest authorities that the security was lost,. The goods sold were under the control of the Forest Officers, when they were in the coupe and even when they were in the depot of the contractor. The goods could be removed on the production of a pass from the coupe, and even after the goods were removed, unless they were examined and checked they were not at the disposal of the contractor. It is not pleaded by the State that the trees sold were not checked and examined at the depot of the contractor. Knowing that the goods were removed without payment of the instalments, if the Forest authorities checked and examined the goods and took no action for recovery of the amount payable, and did not enforce the charge, it would be difficult to say that there was mere inaction on the part of the forest authorities. We therefore agree with the High Court that the surety Kalu ram stood discharged from liability to pay the amount undertaken by him under the terms of the surety bond because the forest authorities of the State had parted with the security which they possessed for recovery of the amount due from the contractor. The appeal fails and is dismissed with costs. G.C. Appeal dismissed.

IN-Abs

At an auction held by the Divisional Forest Officer Hoshangabad Division for sale of 'felled trees ', one J was declared the highest bidder. The amount of the bid was payable in four installments. According to the contract the Forest Contract Rules were binding on the contractor, and the contractor could be prevented from removing the forest produce in case he made default in payment of the instalments due. One K had stood surety for J along with another surety. J paid the first instalment due under the contract but without making the subsequent payments was allowed to remove the whole forest produce contracted to be gold from the contract area. The State of Madhya Pradesh thereafter took proceedings to recover from K as arrears of land revenue the amount due from J. K commenced an auction for a declaration that he was not liable to pay the dues recoverable from J and for an injunction against the State. He contended that since the Forest Department had allowed J to remove the forest produce the security was lost and he stood discharged. The trial Court and the High Court both held in K 's favour. The State of Madhya Pradesh appealed to this, Court by special leave. HELD : (i) The expression "security" in section 141 of the Indian Contract Act is not used in any technical sense : it includes all rights which the creditor has against the property at the date of the contract. The Surety is entitled on payment of the debt or performance of all that he is liable for to the benefit of the rights of the creditor against the principal debtor which arise out of the transaction which given rise to the right or liability: be is therefore on payment of the amount due by the principal debtor entitled to be put in the same position in which the creditor stood in relation to the principal debtor. If the creditor has lost or parted with the security without the consent of the surety, the latter is by the express provision contained in section 141, discharged to the extent of the value of the security lost or parted with. [272 E G] Wulff and Billing vs Jay, , referred to. (ii) The Forest Officer parted with the forest produce before receiving payment of the amount due by the contractor ' Thereby the charge in favour of the State was seriously impaired and the statutory power to sell the produce for nonpayment of the amount remaining due became, for all practical purposes, ineffective. Again, under the terms of the contract the Forest authorities had the right to prevent removal of the produce sold until the price was paid : that right was also lost. The right conferred by section 83 of the Forest Act and under the terms of the contract to prevent removal and right to sell the produce for non payment of the price, coupled with charge on the produce constituted the security of the State and that security was lost because the Forest Officers permitted removal of the produce by the contractor. [273 G H] Accordingly the surety stood discharged from liability to pay the amount undertaken by him under the terms of the surety bond.

Appeal No. 605 of 1964. Appeal by special leave from the judgment and decree dated April 12, 1963 of the Andhra Pradesh High Ccurt in S.A. No. 124 of 1959. 281 P. Ram Reddy and A. V. V. Nair, for the appellant. H. R. Gokhale, section P. R. Vital Rao, K. Rajendra Chaudhari and K. R. Chaudhuri, for the respondent. The Judgment of the Court was delivered by Subba Rao, C.J. This appeal by special leave raises the question whether a suit would lie at the instance of the present trustees of a temple for rendition of accounts of the management of the temple by the ex trustees. The appellant is Sri Vedagiri Lakshmi Narasimha Swami temple situated at Narasimhuly konda, Nellore taluk, in the State of Andhra Pradesh, represented by its trustees. The respondent and two others were non hereditary trustees of the said temple and functioned as such for a term of five years ending with January 1951. The respondent was the managing trustee during that period. The new trustees were appointed by order of the Hindu Religious Endowments Board dated January 21, 1951 ; but they were able to obtain possession of the temple only on July 21, 1952. They, representing the temple, filed O.S. No. 246 of 1953 in the Court of the Subordinate Judge, Nellore against the respondent and others for the following three reliefs : (1) to direct all or such of the defendants as may be found liable to render a true and proper account of their management of the temple and its properties since the date of their functioning as trustees and to pay over to the new trustees such amounts as may be found due ; (2) to assess the amount due to the temple as a result, of the various acts of malfeasance, misfeasance and nonfeasance of the defendants 1 to 3 in respect of their management, and to direct them to pay the same to the new trustees ; and (3) to direct the defendants 1 to 3 to deliver to the new trustees all documents, accounts, registers, section 38 register, jewels and movable properties, after rendering a true account thereof and failing such delivery, to pass a decree against the defendants for their value, or pass such decree against them for such damages as the temple had sustained. In the plaint, the new trustees alleged that the defendants were guilty of acts of misfeasance, malfeasance and nonfeasance and also of gross negligence. The defendants, inter alia, apart from denying the said allegations made against them, pleaded that the suit was not maintainable in a civil court in view of the provisions of section 87 of the Madras Hindu Religious and Charitable Endowments Act, 1951 (Act 19 of 1951), hereinafter called the Act. The learned Subordinate Judge, by his judgment dated August 12, 1953, held that the suit was maintainable. He also found that defendants 1 to 3 were liable to render an account of their management during the period of their trusteeship and to pay damages for the loss suffered by the temple on account of theinr 282 acts of misfeasance, malfeasance and nonfeasance. In the result, he passed a preliminary decree in favour of the new trustees directing the respondent and defendants 2, 5 and 6 the legal representatives of defendant 3, to render a true and proper account of their management of the temple and its properties for the period commencing from the beginning of 1946 to the date when the plaintiffs took possession of the temple in July 1952 and to pay such amounts as may be found due from them on taking accounts. The 1st defendant, the ex managing trustee of the temple, preferred an appeal against the said decree to the court of the District Judge, Nellore. To that appeal, the plaintiffs were made respondents. Pending the appeal, the plaint was amended and the words "of pass such decree against them for such damages as the temple has sustained thereby" were deleted from prayer 3 of the plaint. The learned advocate for the plaintiffs made an endorsement on the plaint and the appeal memo stated as follows : "Plaintiffs have given up prayer in respect of the damages as endorsed by the learned advocate on behalf of the plaintiffs on the plaint on 20 8 1958. " The learned District Judge also recorded in his judgment that the appellant (respondent herein) did not press his appeal in respect of the claim for damages given up by the plaintiffs. Prima facie this amendment related only to the prayer to deliver to the new trustees the documents and other movable properties and did not affect the other prayers for rendition of accounts on the ground of malfeasance, misfeasance and nonfeasance of the defendants. The learned District Judge understood the finding given by the learned Subordinate Judge as follows : "Setting out all these things in detail in paras 13 and 14 of his judgment, the learned Subordinate Judge came to the conclusion that it was sufficient to say that there is liability to account in respect of the management on the part of the ex trustees, i.e., defendants 1 and 3, and that they are liable to pay to temple whatever damages it has suffered on account of their acts of misfeasance, malfeasance and nonfeasance." After considering the relevant evidence and the case law on the subject, he came to the following conclusion : " I have no hesitation to hold that the plaintiffs have established liability for ex trustees to render account of their management to deliver possession of the other property yet to be delivered and also the records men tioned in the plaint. " The learned District Judge, therefore, agreed with the learned Subordinate Judge that the defendants had to render accounts 283 of their management of the temple and to pay to the temple damages suffered by it on account of their acts of misfeasance, malfeasance and nonfeasance. In the result the decree of the learned Subordinate Judge was confirmed. But, on Second Appeal, Jaganmohan Reddy, J., of the Andhra Pradesh High Court, held that the suit for accounts was not maintainable. The reasoning of the learned Judge is found in the following observations : "It is true that a suit for back accounting on the authority of the decisions cited above does not lie and unfortunately in this case though the frame of the suit was for recovery of damages for negligence of the trustees in not taking leases, in not filing rent suits, in not collecting rents and generally for other acts of negligence, that plea was given up by the respondents, probably because they were not in a position to establish these facts. The learned advocate for the respondents admits that this plea was given up by the clients and in the circumstances the only relief that the respondents claim against the appellant now is one for general accounting relating to the management or administration of the trust property and applying the principle laid down by the two judgments of this Court in Venkataratnam vs Narasimha Rao (1) and Sri Saraveswaraswami Vari temple vs Veerabhadrayya (2), 1 cannot but hold that suit will not he and in this view, the appeal is allowed and the judgments and the decrees of the courts below are set aside." Though, prima facie, as we have said earlier, we are inclined to hold that what was given up by the appellant was only a part of the third relief, in view of the unambiguous admission made by the learned advocate for the appellant and recorded in the judgment of the High Court, we have no option but to hold that the appellant had given up the plea of wilful default against the defendants and confined the relief only to a rendition of accounts by them in respect of their management of the temple during their tenure and to pay the amount that might be found due to the appellant. Mr. P. Ram Reddy, learned counsel for the appellant temple, raised before us three points : (1) The suit was for damages for gross negligence and the learned Judge did not appreciate the correct scope of the concession made by the learned advocate appearing for the temple before him. (2) Section 93 of the Act is not a bar to a suit by the present trustees against the ex trustees for rendition of accounts of their management of the temple (1) M15Sup. CI/66 5 (2) 284 properties and recovery of the amounts due from them. (3) The learned Judge went wrong in holding that a suit for back accounting would not lie. On the first point we have already expressed our opinion earlier that, in view of the unambiguous concession made by the learned advocate for the appellant before the High Court, we must hold that the suit, after the amendment of the plaint, was confined only to rendition of accounts, not on account of wilful default or negligence, but only for rendition of accounts by the ex trustees of their management and to pay the amounts due to the present trustees. The question, therefore, is whether the present trustees can demand a rendition of accounts from the ex trustees in respect of their management without alleging against them any acts of negligence or wilful default and, if so, whether section 93 of the Act was a bar to the maintainability of a suit for the relief of rendition of accounts in a civil court. It is common place that no trustee can get a discharge unless he renders accounts of his management. This liability is irrespective of any question of negligence or wilful default. In the present case, the ex trustees admittedly did not give an account of their management though they put the plaintiffs in possession of the properties in the year 1952 and that too after adopting a course of obstructive attitude. They are, therefore, liable to render accounts of their management to the present trustees. The decisions relied upon by the learned Judge to not sup port the view that an ex trustee need not render accounts in the absence of allegations of negligence or wilful default. In V. K. Kelu Achan vs C.S. Sivarama Pattar (1) one of the questions raised was whether the 1st defendant therein, who was a karnavan of a tarwad and also the manager of temple properties, should be made to give a general rendition of accounts of his management from 1900. It was found in that case that the 1st defendant was not personally responsible for any loss to the temple, that no relief for rendition of accounts was asked for against him and that he was not the person who was maintaining the accounts. on those facts, the High Court refused to give a decree against the 1st respondent for back accounting. In the course of the judgment the following observations were made : "It is a general principle also that back accounting will not be decreed except on proof of dishonesty and malversation, and we have not found any such proof here against the present trustee. " These observations do not circumscribe the scope of the court 's discretion, but only lay down a guide for its exercise. They must (1) A.I.R. 1928 Madras 879, 887. 285 be read in the context of the facts found in that case. Nor the decision in The Madura etc. Devasthanams vs Doraiswami Nayudu(1) lays down any such wide proposition. There, the executive officer of a temple sought to recover from its ex trustee a certain amount by way of damages on foot of gross negligence. It was found that the trustee was not guilty of any wilful default and that he was justified in acting upon the vouchers and accounts furnished by the law department of the Devasthanam and also that it was not established that any items were really due to the temple. On those facts the suit was dismissed. Briefly stated, that was a suit for rendition of account on the ground of wilful default in the course of management of the temple affairs and, as no wilful default had been established, the suit for accounts was dismissed. , It is not an authority for the position that unless wilful default is established an ex trustee need not account to the present trustee and to pay to him the amount due under the said accounts. In the case of rendition of accounts by an ex trustee to a present trustee, it will necessarily relate to back accounting, for no question of accounting in future arises in his case. The question that invariably arises in such a context is as to what period he shall be made liable to render accounts. That depends upon the facts of each case. Sir Thomas Flumer, M. R., said in Attorney General vs Exetor Mayor (2) : "It has, I think, been properly stated on both sides, that there is no fixed limit of time in directing an account against a trustee of a charity,. . It does not, however, follow that the relief will be given after a great length of time, it being the constant course of Courts of Equity to discourage stale demands ; even in cases of fraud, in which, if recent, there would have been no doubt, lapse of time has induced the Courts to refuse their interference. In cases of charities, this principle has often been acted on. When there has been a long period, during which a party has, under an innocent mistake, misapplied, a fund, from the leaches and neglect of others, that is, from no one of the public setting him right, and when the accounts have in consequence become entangled, the Court, under its general discretion, considering the enormous expense of the enquiries, the great hardships of calling upon representatives to refund what families have spent, acting on the notion of its being their property, has been in the habit, while giving the relief, of fixing a period to the account. " These observations were followed by a Division Bench of the Madras High Court in Sanyasayya vs Murthamma (3). Where (1) (2) ; (3) A.I.R. 1919 Madras 943. 286 a suit was filed for an account for the year 1884 and the 1st defendant was asked to account for the management of his father and grand father, the learned Judges of the Madras High Court fixed the period of accounting at 12 years. The said observations were also followed by the Andhra High Court in Hariharabrahmam vs Janakiramiah (1) and, having regard to the circumstances in that case, the said High Court directed accounts to be taken for a period of six years prior to 1938. In the present case the learned subordinate Judge and the learned District Judge, in exercise of their discretion, having regard to the circumstances of the case, directed the respondent to render accounts of his management from the beginning of the year 1946 to the date when then plaintiffs took possession of the temple in July 1952. We do not see any justification to interfere with the discretion of the courts in that regard. The next question is whether section 93 of the Act is a bar to the maintainability of the suit. The said section reads : "No suit or other legal proceeding in respect of the administration or management of a religious institution or any other matter or dispute for determining or deciding which provision is made in this Act shall be instituted in any Court of law, except under, and in conformity with, the provisions of this Act." The learned counsel for the appellant contended that in order to invoke this section the following conditions shall be complied with: (1) The suit shall be in respect of the administration or management of a religious institution ; (2) it shall be in respect of any other matter in dispute ; and (3) for determining or deciding such a suit or other legal proceeding there shall be a provision in the Act ; if there is such a provision, such a suit or proceeding could not be instituted in any court of law except under, and in conformity with, the provisions of the Act. The further argument was that the administration or management referred to in section 93 related to section 58 of the Act, and the other matters of dispute related to section 57 thereof, and that, as the suit for rendition of accounts did not fall either under section 57 or under section 58 of the Act, the present suit for such a relief was outside the scope of section 93 of the Act. Mr. Gokhale, learned counsel for the respondent, contended that Ch. VII of the Act provided for rendition of accounts and a machinery for determining or deciding disputes in respect thereof, and that, therefore, no suit or other legal proceeding could be taken in any court except under and in conformity with the provisions of that Chapter. (1) A.I.R. 1955 Andhra 18. 287 Under section 9 of the Code of Civil Procedure, the courts shall have jurisdiction to try all suits of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred. It is a well settled principle that a party seeking to oust the jurisdiction of an ordinary civil court shall establish the right to do so. Section 93 of the Act does not impose a total bar on the maintainability of a suit in a civil court. It states that a suit of the nature mentioned therein can be instituted only in conformity with the provisions of the Act; that is to say, a suit or other legal proceeding in respect of matters not covered by the section can be instituted in the ordinary way. It therefore imposes certain statutory res trictions on suits or other legal proceedings relating to matters mentioned therein. Now, what are those matters ? They are : (1) administration or management of religious institutions ; and (2) any other matter or dispute for determining or deciding which provision, is made in the Act. The clause "determining or deciding which a provision is made in this Act", on a reasonable construction, cannot be made to qualify "the administration or management" but must be confined only to any other matter or dispute. Even so, the expression "administration or management" cannot be construed widely so as to take in any matter however remotely connected with the administration or management. The limitation on the said words is found in the phrase "except under and in conformity with the provisions of this Act. " To state it differently, the said phrase does not impose a total bar on a suit in a civil court but only imposes a restriction on suits or other legal proceedings in respect of matters for which a provision is made in the Act. Any other construction would lead to an incongruity, namely, there will be a vacuum in many areas not covered by the Act and the general remedies would be displaced without replacing them by new remedies. The history of this provision also supports the said interpretation. Sub section (2) of section 92 of the Code of Civil Procedure says : "Save as provided by the , no suit claiming any of the reliefs specified in subsection (1) shall be instituted in respect of any such trust as is therein referred to except in conformity with the provisions of that sub section. " Suits for reliefs mentioned in sub s.(1) of section 92 of the Code of Civil Procedure can only be instituted in special courts and in the manner mentioned therein. Construing the said sub section, a Full Bench of the Madras High Court in Appanna vs Narasinga (1) held that a suit by a trustee of a public religious trust against a co trustee for accounts did not fall within the section, though the relief claimed (1) Madras 113. 288 was the one specified in sub section (1), cl. The reason given was that the relief was sought not in the larger interest of the public but merely for the purpose of vindicating the private rights of one ,of the trustees and of enabling him to discharge the duties and liabilities which were imposed upon him by the trust. Another Full Bench of the Madras High Court in Tirumalai Tirupati Devasthanam ,Committee vs Udiavar Krishnayya Sahnbhaga (1) held that the ,said section did not apply where the general trustees of a public temple sued the trustees of certain offerings given to the deity, for accounts, on the ground that in that suit the right of the public was not sought to be enforced but only the personal rights of the trustees qua the trustees. These decisions indicate that section 92 of the Code of Civil Procedure does not impose a general embargo on filing of a suit in a civil court, but only directs that suits of the nature mentioned in sub s.(1) thereof shall not be instituted in a civil court except in conformity with the provisions of the said 'sub section. If a suit does not fall within the ambit of section 92(1) of the Code of Civil Pro cedure, it is not hit also by sub s.(2) thereof. When the Madras Hindu (2 of 1927) was passed, in respect of the endowments covered by that Act, section 73 of that Act replaced section 92 of the Code of Civil Procedure. Sub section (4) ,thereof, which was added by Madras Act X of 1946 read : "No suit or other legal proceeding claiming any relief provided in this Act in respect of such administration or management shall be instituted except under and in conformity with the provisions of this Act." The expression "except under and in conformity with the provisions of this Act" in the said sub section is also found in section 93 of the Act. The scope of the said sub section came under judicial scrutiny in Manjeshwar Srimad Anantheswar Temple vs Vaikunta Bhakta (2) Therein Horwill, J., summarised the legal position reached in respect of the construction of that section thus : "It will be seen therefore that from 54 Mad. 1011 (Vythilinga Pandarasannadhi vs Temple Committee, Tinnevelly) onwards there was a considerable body of opinion that the general scope of section 73, Hindu , is the same as section 92, Civil P.C., that the last paragraph of s . 73 of the Act is meant to refer only to the classes of cases referred to in section 73(1) and other sections of the Act, and that suits which do not fall within the scope of these sections can be tried under the general law. I have not come across any case in which these opinions were dissented from or contrary opinions expressed," (1) A.I.R. 1943 Madras 466. (2) A.I.R. 1943 Madras 228, 230. 289 Sub section (4), which corresponds to section 93 of the Act, was held not to impose a total bar on a civil suit but only confined to suits relating to the classes of cases referred to in section 73(1) and other sections of the Act. Section 93 of the Act enlarges the scope of section 73(4) thereof It bars not only suits or legal proceedings in respect of administration or management of religious institutions but also in respect of any other matter or dispute for determining or deciding which provision is made in the Act. By repeating the phrase "except under and in conformity with the provisions of the Act" which had received authoritative judicial interpretation when it remained in section 73(4) of the earlier Act, the Legislature must be held to have accepted the interpretation put upon the phrase by the courts. It follows that section 93 will apply only to matters for which provision has been made in the Act. It does not bar suits under the general law which do not fall within the scope of any section of the Act. Even so, the learned counsel for the respondent contended that Ch. VII of the Act provided a complete machinery for deciding disputes in regard to accounts and, therefore, no suit for accounting against an ex trustee could be filed in a civil court. This interpretation was accepted by two decisions of the Andhra Pradesh High Court. The decision in Venkataratnam vs Narasimha Rao(1) dealt with a case of a suit filed with the permission of the Advocate General for removing the trustee, for framing a scheme for the management of the trust property, for appointing a new trustee and for accounts and other incidental reliefs. The contesting defendant pleaded inter alia that because of the provisions of the Madras Act 19 of 1951, the suit could not be entertained by the civil court, and that section 93 was a bar to such a suit. The Andhra Pradesh High Court held that section 93 of the Act clearly interdicted the determination of the subject matter of the suit by a civil court. The reasoning of the decision is summarized thus : "Now the suit is entirely based on allegations of breach of trust and every one of the reliefs prayed for in the plaint can flow from appropriate action that officers named in the Act may take. The first relief sought in the present plaint can result from action taken under section 45 of the Act ; the second and third reliefs from action under section 58; the fourth from action under section 60 ; the 6th relief from action under section 57 and the relief numbered and lettered as 6(a) from action under section 87. " The High Court also observed "In our opinion, all these are 'matters or disputes for determining or deciding which provision is made ' in the Act." (1) , 323. 290 On that basis it held that section 93 of the Act was a bar to the maintainability of the suit. It may be mentioned that the observation that the fourth relief could result from action under section 60 appears to be a mistake, for section 60 applies only to a defunct religious insti tution. In Sri Sarveswaraswami Vari Temple vs Rudrapaka Veerabhadrayya(1) Seshachelapati, J., speaking for the court, said thus "It will be seen, as correctly observed by the learned Subordinate Judge, that the section has two limbs. The first limb interdicts suits or other legal proceedings with respect to the administration or management of the re ligious institution. The second limb enacts an embargo on suits and legal proceedings on any other matter in dispute for the determination of which a provision had been made in this Act. " There, the suit was by the present trustees for the recovery of the temple properties from the hereditary archakas. The High Court held that such a suit was not one in respect of the administration or management of the temple and, therefore, it did not attract the embargo entered in the first limb of the section. This decision, therefore, held that unless the suit fell within the classes of suits mentioned in section 93 of the Act, the provisions of the section were not attracted. It leads us to the consideration of the scope of Chapter VII of the Act. If Chapter VII of the Act provides for determining or deciding a dispute in respect of rendition of accounts, section 93 of the Act would be attracted. The heading of the said Chapter is "Budgets, Accounts and Audit". Section 70 provides for the presentation of budgets and the particulars to be mentioned therein. Section 71 enjoins upon a trustee of every institution to keep regular accounts of receipts and disbursements. Section 71(4) prescribes for an audit of the accounts every year. Section 72 directs the auditor to send a report of the results of the audit to the prescribed authorities. Section 73 enumerates the matters in respect of which the auditor has to send his report. Section 74 directs the prescribed authorities to send the said report to the trustees for remedying the defects pointed out therein. The Area Committee, one of the prescribed authorities under section 74(2) of the Act, has to forward to the Commissioner the report of the auditor along with the report of the trustees, if any, and with his remarks. If the Commissioner thinks that the trustee or any other person is guilty of misappropriation or wilful waste of funds of the ninstitu (1) , 251. 291 tion or of gross neglect resulting in a loss to the institution, after making the requisite inquiry, certify the amount so lost and direct the trustee or such person to pay within a specified time such amount personally and not from the funds of the religious institution. On the receipt of such an order, the trustee can apply to a court to modify or set aside the same. Instead of filing an application to the Court, he has an alternative remedy to file an appeal to the Government which shall pass such order as it thinks fit. Under sub section (7) of section 74, an order of surcharge under the section against a trustee shall not bar a suit for accounts against him except in respect of the matter finally dealt with by such order. Sub section (8) thereof provides a machinery for collecting the said amounts from the trustee or other person by way of surcharge. Relying upon the scheme of this Chapter, it is contended that it provides an exhaustive and self contained machinery for scrutinizing the accounts, for orders of surcharge and to recover the amount surcharged from the trustee or other persons and for a suit to set aside such orders or alternatively for an appeal to the Government and that, therefore, no suit for rendition of accounts would lie dehors the provisions of the Act. We find it difficult to accept this argument. Chapter VII only provides for a strict supervision of the financial side of the administration of an institution. The scope of the auditor 's investigation is limited. It is only an effective substitute for the trustee himself furnishing an audited account. It is concerned only with the current management of a trustee. It does not even exonerate a trustee of his liability to render accounts except to a limited extent mentioned in sub section (7) of section 74 ; it only facilitates the rendition of accounts. Under sub section (7) of section 74, an order of surcharge under that section against a trustee shall not bar a suit against him except in matters finally dealt with in such order. This shows by necessary implication that a suit can be filed for accounts against a trustee in other respects. In any view, it has nothing to do with the management of a temple by a previous trustee. It is con tended that under sub section (5) of section 74 the trustee or any other person aggrieved by such order may file a suit in the civil court or prefer an appeal to the Government questioning the order of the Commissioner and, therefore, it is open to any member of the public to file a suit under the Act. "Any person" there only refers to a person mentioned in sub section (3) of section 74, i.e., a person who is guilty of misappropriation or wilful waste of the funds of the institution etc. It obviously refers to a trustee or some other person in management of the institution who is guilty of misappropriation. We, therefore, hold that Chapter VII of the Act has no bearing on the question of liability of an ex trustee to render account to the present trustee of his management. Chapter VII does not provide for 292 determining or deciding a dispute in respect of such rendition of accounts. If so, it follows that section 93 of the Act is not a bar to the maintainability of such a suit. In the result, we set aside the decree of the High Court and restore that of the learned Subordinate Judge. The respondent will pay the costs of the appellant throughout. V.P.S. Appeal allowed.

IN-Abs

The trustees of a tempter filed a suit for rendition of accounts 'against ,the ex trustees, in respect of their management of the temple. The trial court and the first appellate court, in their discretion and having regard to the circumstances of the case, directed the defendants to render accounts for about six years prior to the plaintiffs taking possession of the temple. The High Court held that the defendants were not obliged to render accounts in the absence of allegations of acts of negligence or willful default, and that, section 93 of the Madras Hindu Religious and Charitable Endowments Act, 1951, was a bar to the maintainability of the suit. In appeal to this Court, HELD : (i) No trustee can get a discharge unless he renders account of his management irrespective of any question of negligence or wilful default. The defendants, therefore, were liable to render accounts of their management to the plaintiffs. As regards the period for which they should be made liable to render accounts, it would depend upon the facts of each case, and there was no Justification for interfering with the discretion of the lower courts in that regard. [284 D E; 286 C] Case law referred to. (ii) Section 93 is not a bar to the maintainability of the suit. [292 A] The section only imposes a restriction on suits or other legal proceedings in respect of matters for which a provision has been made in the Act. The legislative history of the section shows that even in regard to suits or other legal proceedings relating to administration or management of religious institutions, restriction is imposed only in respect of matters for which a provision is made in the Act. It does not bar suits under the general law which do not fall within the scope of any of the sections of the Act. Chapter VII of the Act, on which reliance was placed by the defendants as providing a complete machinery for deciding disputes in regard to accounts, has no bearing on the question of the liability of an ex trustee to render account of his management to the present trustee and does not provide for determining or deciding a dispute in respect of such rendition of accounts. C; 291 H; 292 A] Case law referred to.

riminal Appeals Nos. 65 and 66 of 1952, 5 and 19 of 1953 and Petitions Nos. 170 of 1952, 19 and 57 of 1953. Appeals from Orders, dated the 9th April, 1952, of the High Court of Judicature at Bombay in Criminal Applications Nos. 707 and 708 of 1951, from the Judgment and Order, dated the 15th December, 1952, of the High Court of Judicature at Bombay in Criminal Application No. 1310 of 1952; from the Judgment and Order, dated the 29th November, 1952, of the Judicial Commissioners Court Vindhya Pradesh, Rewa, in Criminal Miscellaneous No. 49 of 1952; and Petitions under article 32 of the Constitution of India. J.B. Dadachanji and Z. F. Bootwala for the appellants in Criminal Appeals Nos. 65 and 66 of 1952 and 5 of 1953. C.K. Daphtary Solicitor General for India(G. N. Joshi, with him) for respondents Nos. I and 2 in 121 934 Criminal Appeals Nos. 65 and 66 of 1952 and respondent No. 1 in Criminal Appeal No. 5 of 1953. K.B.Asthana, for the appellant in Criminal Appeal No. 19 of 1953. C.K. Daphtary, Solicitor General for India, (Porus A. Mehta and G. N. J08hi, with him) for the respondent in Criminal Appeal No. 19 of 1953. section P. Sinha (Sri Narain Andley, with him) for the petitioners in petition No. 170 of 1952. Gopalji Mehrotra for respondent No. I in petition No. 170 of 1952. C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with him) for respondent No. 3 in petition No. 170 of 1952. section P. Sinha (section N. Mukherji, with him) for petitioner in petition No. 19 of 1953. Gopalji Mehrotra for respondent No. I in petition No. 19 of 1953. G. N. Joshi for respondent No. 3 in petition No. 19 of 1953. H.J. Umrigar, amicus curiae, for the petitioner in petition No. 57 of 1953. C. K. Daphtary, Solicitor General for India (G. N. J08hi, with him) for the respondents in petition No. 57 of 1953. February 15. The Judgment of Mahajan C.J., Mukherjea, Vivian Bose and Ghulam Hassan JJ. was delivered by Ghulam Hasan J. Das J delivered a seperate judgment. Criminal Appeals Nos. 65 and 66 of 1952. GHULAM HASAN J. This batch of appeals raises a common question of the constitutional validity of section 7 of the Influx from Pakistan (Control) Act (XXIII of 1949). Section 3 of the same Act is also assailed on behalf of some of the appellants but for the purpose of deciding these appeals it will not be necessary to deal with the latter question. Criminal Appeals Nos. 65 and 66 of 1952, which are directed against the judgment and order of the High Court of Judicature at, Bombay in two petitions under article 226 of the Constitution praying for the issue of 935 a writ of mandamus requiring the respondent not to remove them from India on the ground that the impugned section 7 is void may be treated as the leading case which will govern the other appeals. The facts of each of these appeals are slightly different but they proceed upon the common assertion that the appellants are citizens of the Indian Republic. This fact was assumed in the leading case but it is not, disputed that the status of the appellants as Indian citizens in all the cases has not been investigated and determined by any of the courts below against whose decision the appeals have been brought. Having heard the learned counsel appearing in support of the appeals and the learned Solicitor General we have reached the conclusion that section 7 is void in so far as it infringes the right of a citizen of India under article 19(1) (e) of the Constitution. The Act in question received the assent of the Governor General on April 22, 1949, and was published in the Gazette of India Extraordinary on April 23. It is a short Act containing nine sections. It is intituled an Act to " control the admission into, and regulate the movements in, India of persons from Pakistan ". The preamble opens with the words "Whereas it is expedient to control the admission into, and regulate the movements in, India of persons from Pakistan. " Section 2 (b) defines " officer of Government " as any officer of the Central Government and 2 (c) defines "permit" as a "Permit issued or renewed or the period whereof has been extended in accordance with the rules made under this Act. " Section 3 says II No person shall enter India from any place in Pakistan, whether directly or indirectly, unless (a) he is in possession of a permit or (b) being a person not domiciled in India or Pakistan, he is in possession of a valid passport as required by the Indian Passport Act, 1920 (XXXIV of 1920), or (c) he is exempted from the requirement of bein in possession of a permit by or in accordance with the rules made under this Act. " 936 Section 4 empowers the Central Government, by notification in the Official Gazette, to make rules: (a) prescribing the authorities by which and the conditions subject to which permits may be issued or renewed or the period thereof extended, the condition to be satisfied by the applicants for such permits and the forms and classes of such permits; (b) regulating the movements in India of any person who is in possession of a permit; (c) providing for the exemption, either absolutely or on conditions, of any person or class of persons from the requirement of being in possession of a permit or from the operation of any rule made under the section ; and (d). . . . . . . . . . . section 5 is the penal section which says " (a) Whoever enters India in contravention ' of the provisions of section 3, or having entered India contravenes the provisions of any rule made under section 4, or commits a breach of any of the conditions of his permit, shall be punishable with imprisonment for a term which may extend to one year, or with fine which may extend to one thousand rupees, or with both. " Section 6 confers power of arrest upon an,officer of Government. Section 7 is as follows: " Without prejudice to the provisions contained in section 5, the Central Government may, by general or special order, direct the removal from India of any person who has committed, or against whom a reason , able SUSPICION exists that he has committed, an offence under this Act, and thereupon any officer of Government shall have all reasonable powers necessary to enforce such direction. " Section 8 provides for protection to persons acting in good faith and section 9 repeals the Influx from, Pakistan (Control) Ordinance, XXXXIV of 1948. The use of the word 'person ' in section 7, read with the title and preamble of the Act leaves no doubt that. the Act applies to citizens and non citizens alike. So 937 far as a non citizen is concerned, it is not contended before us3 that the executive Government has no authority to direct his removal from India and the only contention raised before us is whether the Central Government has any power to direct the removal of an Indian citizen on either of the grounds mentioned in section 7. Section 7, it is contended, confers upon the Central Government unfettered power to direct the removal from India not only of a person who has committed an offence punishable under section 5 of the Act but also one against whom a reasonable suspicion exists that he has committed such an offence. That an Indian citizen visiting Pakistan for any purpose whatsoever and returning to India may be required to produce D, permit or passport as the case may be before he can be allowed to enter the country, may well be. regarded as a proper restriction upon entry but to say that if he enters the country without a permit or on an invalid permit, or commits a breach of any of the conditions of the permit he may, on conviction for such offence, be ordered to be removed from the country is tantamount to taking away his fundamental right guaranteed under article 19(1) (e), " to reside and settle in any part of the territory of India. " The order is sought to be supported by the learned Solicitor General on the ground that it falls within exception (5) of article 19. The proposition that the order imposes in the interest of the general public a reasonable restriction on the exercise of the. right conferred upon an Indian citizen to reside and settle in any part of the territory of India is hardly statable. It is possible to conceive of an Indian citizen being guilty of serious prejudicial Acts such as espionage and disloyalty to his country in which case he may render himself liable to the gravest penalty which the Government may think fit by law to impose upon him but it would be repugnant to all notions of democracy and opposed to the fundamental rights guaranteed in Part III of the Constitution to order his expulsion from the country, for to hold otherwise would be tantamount to destroying the right of citizenship conferred by Part II of the, Constitution. This 938 result is permissible only by recourse to article 11 of the Constitution. Again it will be noticed that section 7 imposes the penalty of removal not only upon a conviction under section 5 but goes further and brings about the same result even where there is a reasonable suspicion entertained by the Central Government that such an offence has been committed. The question whether an offence has been committed is left entirely to the subjective determination of the Government. The inference of a reasonable suspicion rests upon the arbitrary and unrestrained discretion of the Government, and before a citizen is condemned, all that the Government has to do is to issue an order that a reasonable suspicion exists in their mind that an offence under section 5 has been committed. The section does not provide for the issue of a notice to the person concerned to show cause against the order nor is he afforded any opportunity to clear his conduct of the suspicion entertained against him. This is nothing short of a travesty of the right of citizenship. The learned Solicitor General argued that the provision must be viewed in the back ground of the events which took place at the time of the partition and the unsatisfactory relations existing between India and Pakistan. up to the present day. Even so the penalty imposed upon a citizen by his own Government merely upon a breach of the permit Regulations, however serious it may be and, more, upon a reasonable suspicion only by the executive authority of his having violated the conditions of the permit is utterly disproportionate th the gravity of the offence and is in our opinion indefensible. A law which subjects a citizen to the extreme penalty of a virtual forfeiture of his citizenship upon conviction for a mere breach of the permit Regulations or upon a reasonable suspicion of having committed such a breach can hardly be justified upon the ground that it imposes a reasonable restriction upon the fundamental right to reside and settle in the country in the interest of the public. The Act purports to control admission into and regulate the movements in India of persons entering from Pakistan but section 7 oversteps the limits of control 939 and regulation when it provides for removal of a citizen from his own country. To use the language of this court in Chintaman Rao vs The State of Madhya Pradesh and Ram Krishna vs The State of Madhya Pradesh(1), " The effect of the provisions of the Act, however, has no reasonable relation to the subject in view but is so drastic in scope that it goes much in excess of that object. It may be said that the sentry on guard at any of the check posts on the frontier between the two countries can prevent not only unauthorised entry of a citizen by force but can also throw him out if the person has managed to enter surreptitiously. Exactly what the sentrys ' duties are was not argued before us. They would naturally vary according to the circumstances and the orders which be receives but ordinarily we apprehend that the duty of a sentry at the border would be to prevent as far as lay in his power un authorised entry into India. If any person claims to have the right to enter, the sentry 's duty would be to hand him over to the Commander of the Guard and normally it would be the duty of that Commander to hand him over to the proper authority empowered to determine the right which he claims. In the case of an unauthorised entry, ordinarily the duty of the sentry is to arrest a man and hand him over to the proper authority for punishment and in extreme cases he may have the right to shoot the person who does not halt on his command and explain his presence at the outpost. In normal circumstances we doubt if the sentry would have the right to forcibly expel a man who crosses the border. The learned Chief Justice (Chagla C. J.) took the view that section 7 is consequential to section 3 and held that if section 3 controlling admission by means of a permit is valid, section 7 must be held to be equally valid. This argument is fallacious. In the first place, section 7 is by no means wholly consequential to section 3. The first part no doubt renders the person concerned liable to removal upon conviction under section 5 but further empowers. the Central Government (1) ; 940 to pass the same order independently of these provisions even where there is no conviction and a reasonable suspicion exists that an offence has been committed. Assuming, however, that section 7 is consequential to section 3 it gives no opportunity to the aggrieved person to show cause against his removal. There is no forum provided to which the aggrieved party could have recourse in order to vindi cate his character or meet the grounds upon which it is based. Neither the Act nor the rules framed thereunder. indicate what procedure is to be followed by Government in arriving at the conclusion that a breach of section 3 or of the rules under section 4 has taken place, In Shabbir Hussain vs The State of Uttar Pradesh and Another(1) the Allahabad High Court held that a law allowing the removal from a territory of India of any citizen is in contravention of article 19 (1) (d) and(e) of the Constitution and is void in view of article 13(1). The order which was challenged before them was one passed under section 7 and was set aside. In Criminal Writ No. 147 of 1951 decided on December 11, 1951, a Bench of the Punjab High Court (Weston C. J. and Harnam Singh J.) while setting aside the order under section 7 against a citizen of India who had entered India without a permit and was first convicted and then ordered to be externed observed: "The powers of removal or banishment given by section 7 of the Influx from Pakistan (Control) Act, 1949, connot be invoked against citizens of India. No doubt, she committed an offence under section 3 of that Act which applied to all persons, but that cannot justify her removal even though her entry may have been contrary to the provisions of the Act. " We are not prepared to accede to the contention urged by the Solicitor General that a citizen of India who returns to the country without a permit or without a valid permit commits such a grave offence as to justify his expulsion from the country. The object of the Act is, not to deport Indian nationals (1) A.I.R. 1952 All. 941 committing a breach of the permit or passport Regulations but merely to control admission into and regulate movements in India of persons from Pakistan and therefore there is no substance in the argument that section 7 was intended to achieve the objective of expelling Indian citizens, by and large, if they brought themselves within the mischief of section 3. It was faintly contended that the order of physical, removal from India, in addition to the punishment imposed under section 5 of the Act, amounted to what may be called " double jeopardy " and is in conflict with article 20 (2) of the Constitution. The short answer to this contention is that there is no second prosecution for the same offence and therefore no question of double jeopardy arises. See Maqbool Hussain vs The State of Bombay etc.(1). As a result of the foregoing discussion we declare section 7 to be void under article 13(1) in so far as it conflicts with the fundamental right of a citizen of India under article 19(1) (e) of the Constitution and set it aside. The order will, however, operate only upon proof of the fact that the appellants are citizens of India. The case will, therefore, go back to the High Court for a finding upon this question. It will be open to the High Court to determine this question itself or refer it to the court of District Judge for a finding. Parties will be given full opportunity to file affidavits or give other evidence which they may wish to produce. Criminal Appeal No. 5 of 1953. GHULAM HASAN J. The appellant in this case is a resident of Godhra, District Panchmahals, in the State of Bombay. He went to Pakistan in Marc 1948, and returned to India on May 30, 1949, after obtaining a permit for permanent return to India from the High Commissioner for India. In January, 1950, he was prosecuted under section 5 of Act XXIII of 1949 for having obtained a permit which was not in accordance with the provisions of the Act. The prosecution was withdrawn after 21 years. Subsequently on December 5, 1952, he was served with a notice (1) ; 122 942 ordering him to leave India for Pakistan within 10 days else he would be bodily removed to the Indo Pakistan border. Thereupon the appellant filed a petition under article 226 contending that section 7 was contrary to his fundamental rights under articles 14 and 19 of the Constitution and that the same provided no opportunity to the appellant to put his case before the Government officers, nor was any such opportunity afforded to him. He asserted that he was a citizen of India. The application was summarily dismissed on December 15, 1952, whereupon leave to appeal to this court was granted under article 132(1) of the constitutional. As this appeal also raises the question of the constitutional validity of section 7, it will be governed by the decision which we have arrived at in appeals Nos. 65 and 66 of 1952. Criminal Appeal No. 19 of 1953. GHULAM HASAN J. The appellant, Haji Faqir Ahmad, is a resident of Rewa in Vindhya Pradesh and alleges that he is a citizen of India. He was prosecuted under section 5 of Act XXIII of 1949 on the ground that he entered India from Pakistan without a permit and convicted and sentenced. Thereafter he was by an order passed under section 7 bodily removed out of India. His father applied under article 226 of the Constitution and section 491 of the Code of Criminal Procedure for setting aside the order. The learned Judicial Commissioner dismissed the application summarily holding that section 7 was not ultra Vires the Constitution. Mr. Asthana, who appeared on behalf of the appellant, raised a further question that the order was void under article 14 inasmuch as it discriminated against members of a particular community coming from Pakistan. There is no warrant for this contention. The Act applies to citizens as well as non citizens. It applies to all communities irrespective of caste or creed. It is contended that the Act must be held to be discriminatory not only by virtue of its provisions but because of the discriminatory manner in which those provisions have been applied. This argument is 943 to be mentioned only to be rejected, for there is no material whatsoever placed before us to justify the statement. The case in Yick W o vs Peter Hopkins (1) is wholly inapplicable to the facts of the present case. We accordingly reject the contention. This case will also be governed by the decision in Appeals Nos. 65 and 66 of 1952. Petition No. 170 of 1952. AND Petition No. 19 of 1953. GHULAM HASAN J. These petitions under article 32 of the Constitution raise the constitutional validity of section 7 of the Influx from Pakistan (Control) Act, XXIII of 1949. Mr. section P. Sinha, who appears for the petitioners, withdraws these petitions and undertakes to file two petitions under article 226 of the Constitution within a fortnight from this day before the High Court. When these have been filed, they will automatically be governed by the decision given in Ap peals Nos. 65 and 66 of 1652. No other order is called for. The petitions are allowed to be withdrawn. Petition No. 57 of 1953. GHULAM HASAN J. This a petition under article 32 of the Constitution by Inamullah Khan alias Qamar Jamali for the issue of a writ in the nature of habeas corpus directing that the petitioner, who is illegally arrested and detained be brought before the court and set at liberty and for the issue of a writ of certiorari calling for the said order for arrest and detention and the relevant papers and for setting them aside as being void and in operative. It is further prayed that the State of Bhopal and the Superintendent of Central Jail,, Bhopal, where he was being detained be restrained from putting into effect the said order. The petition was made on March 11, 1953. It is stated that the petitioner is a citizen of India having been born in Bhopal in 1922. He was employed in Bhopal for 5 years immediately preceding (1) ; 944 the commencement of the Constitution of India. He also edited a weekly paper "Tarjuman" from Bhopal. His name appears as. a voter in the voters" list of the Bhopal Legislative Assembly (1951 52), as well as in the electoral roll of the Municipal Board, Bhopal. The was arrested on November 24, 1952 by the Sub Inspector of Police at lbrahimpura, Bhopal, under section 7 of the Influx from Pakistan (Control) Act XXIII of Pakistan. At the time of the arrest the petitioner was being tried under section 448, Indian Penal Code, in the court of 1st Class Magistrate, Bhopal, and was on bail. The petitioner alleges that he never went to Pakistan, nor entered India without a permit and was never tried and convicted under the Influx from Pakistan (Control) Act of 1949. He challenges the order under section 7 as being void under article 19(d) and (e) and articles 21 and 22. The fact that the petitioner is a resident of Bhopal and was employed in the State is not denied on behalf of the State. The affidavit on behalf of the State mentions that the petitioner had gone to Pakistan in may, 1952, and returned in August, 1952, without a permit. He was arrested on November 24, 1952, without any prior notice but was told at the time of the arrest that he was to be removed out of India. The petitioner filed an application through his uncle before the Judicial Commissioner, Bhopal, under article 226 on November 25, 1952, challenging. the order. The Judicial Commissioner granted an interim stay order on the same day. The petition was dismissed on February 23, 1953, and the interim order was vacated on March 10, 1953. It is admitted that an oral request was made to the Judicial Commissioner for leave to appeal to this court and it was prayed that pending the grant of leave the order of stay should continue. Leave was refused on the same day and the stay order was vacated. There is an affidavit by the Chief Secretary of the State admitting that the petitioner on, the same day banded an application to the Superintendent of Jail 945 addressed to this court. The Superintendent of Jail sent it to the Chief Secretary on March 13, 1953. It was put up before him on the 14th when he forwarded it to the Law Department for opinion on March 16. The petition was returned to him on the 19th with the remark that it should be forwarded to the Supreme Court. It was sent to this ' court on ;March 22. On the same day a telephonic communication was sent, by the Registrar of this court through the States Ministry directing that the petitioner should be detained if he was still in India, but it appears that the petitioner had been handed over to the Rajas than Police at Kotah on March 12, 1953, and a reply was received by the Inspector General of Police, Jaipur, that the petitioner had crossed the border on March 18, 1953. The Superintendent of Jail has also filed an affidavit supporting the Chief Secretarpand has admitted that it was wrong on his part not to have sent the, petition submitted by the prisoner immediately to this court and that he in good faith believed that as the order for stay had been vacated by the Judicial Commissioner, he should first send it to the Registrar of that court. It is obvious that the Superintendent was grossly in error and his action in not submitting the petition resulted in the unlawful removal of the petitioner out of the country. He, has made amends by tendering an unqualified apology and nothing further need be said about it. In Ebrahim Wazir Mavat vs The State of Bombay and Others and Noor Mohammad Ali Mohammad vs The State of Bombay and Others (Criminal Appeals Nos. 65 and 66 of 1952) in which we have just delivered judgment we have held that section 7 of the Act is void as against a citizen of India being. , an encroachment on his fundamental right under article 19 (1) (e) of the Constitution. Following that decision we hold that the order of removal of the petitioner is liable to be set aside. Mr. Umrigar, who appeared for the petitioner, pointed out that the Judicial Commissioner has already held that the petitioner is a citizen of India and that it will serve no useful purpose by remanding 946 the case to him for an inquiry into the question. The Solicitor General on behalf of the Union of India has read to us the order of the Judicial Commissioner and admits that this is so. It is, therefore, not necessary to adopt the course that we have taken in the aforesaid a peals involving the validity of section 7. We accordingly hold that the order passed against the petitioner is void and set it aside. Mr. Umrigar requests that the order should be communicated to the petitioner through the High Commissioner for India in Karachi to whom the petitioner sent a representation praying that he should be allowed to return to India. This request is granted. Criminal Appeals Nos. 65 and 66 of 1952, No, 5 of 1953 and No. 19 of 1953 and Petitions No. 170 of 1952, No. 19 of 1953 and No. 57 of 1953. DAs J. I regret I am unable to agree with the judgment just delivered. Four Criminal Appeals namely, Criminal Appeals Nos. 65 and 66 of 1952, No. 5 of 1953 and No. 19 of 1953 and three Criminal Miscellaneous Petitions, namely Petition No. 170 of 1952, No. 19 of 1953 and No. 57 of 1953, were posted for hearing and were heard by us one after another. In each one of those appeals and petitions the appellants or the petitioners, as the case may be, challenged the constitutional validity of the Influx from Pakistan (Control) Act,1949 (Act XXIII of 1949). Learned advocate appearing in support of petitions No. 170 of 1952 and No. 19 of 1953 asked for leave to withdraw them with liberty to file fresh ' petitions in the High Court. Such leave having been given nothing further need be said about those two petitions. The facts of each of the remaining appeals and the remaining petition have been set out in the judgment just delivered,, and need not be repeated. Suffice it to say that the appellants in Appeals Nos. 65 and 66 of 1952 first came to India from Pakistan on temporary permits issued by the High Commissioner for India in Pakistan but stayed on after the expiry of the 947 period and were convicted under section 5 of the Act. Later on they returned ' to Pakistan on a temporary permit issued by the High Commissioner for Pakistan in India and eventually came back to India on a permanent permit issued by the High Commissioner for India in Pakistan. That permanent permit was cancelled on the. allegation that it had been obtained on the strength of a "no objection" certificate which had been obtained by them by the suppression of material facts, namely, that they had previously come. to India on a temporary permit. The appellant in Appeal No. 5 of 1953 came to India from Pakistan on a permanent permit which was subsequently can celled on the allegation that it had been obtained by fraud. The appellant in Appeal No. 19 of 1953 came to India from Pakistan without any permit and was prosecuted and convicted under section 5 of the Act and later on arrested and sent back to Pakistan. The petitioner in Petition No. 57 came to India without any permit at all. On this petitioner as well as on the appellants orders had been made under section 7 of the impugned Act to the effect that unless they left India within the time specified in the respective orders they would be bodily removed from India. These orders were made on the ground that they had entered India in violation of section 3 of the Act and/ or the rules and order made thereunder. Each of these persons claimed that they were citizens of India and complained that the orders made against them violated their fundamental rights under Chapter III of the Constitution of India. It will be recalled that on the 15th August, 1947, there was a partition of India and two Dominions were formed under the Indian, Independence Act, 1947. A grave emergency arose on the partition of India resulting in mass migration of population from one Dominion to the other accompanied by riots, arson, murder, rape and loot. Intense bitterness and hatred were generated in the minds of the people of one Dominion against those of the other Dominion. Even in one Dominion there was suspicion in the 948 minds of the members of one community against those of the other. In those circumstances the uncontrolled and indiscriminate entry of persons, Hindu or Muslim, from Pakistan into India was naturally regarded as fraught with the possibility of espionage and sabotage the prevention of which was essential for the security of the Dominion of India. Further an uncontrolled entry of large numbers of people was calculated to place and in fact placed a tremendous strain on the economy of India and on the law and order situation in the country. It was in order to prevent such result that it was necessary to exercise some control over such influx of persons from Pakistan into India. Accordingly, the Influx from West Pakistan (Control) Ordinance (XVII of 1949) was promulgated on the 19th July 1948, by the Governor General in exercise of the powers conferred on him by section 42 of the Government of India Act, 1935. The preamble to that Ordinance recited that an emergency had arisen which made it necessary to control the admission into and regulate the movements in India of persons from Pakistan. Thereafter the Influx from Pakistan (Control) Ordinance (XXXIV of 1948) was issued on the 10th November, 1948, replacing the earlier Ordinance. This Ordinance applied to persons entering into India from both West Pakistan and East Pakistan. It substantially reproduced all the sections of the previous Ordinance . Finally, on the 22nd April, 1949, the Influx from Pakistan (Control) Act (XXIII of 1949) replaced the second Ordinance. Sections 3 and 7 of this Act substantially reproduced the provisions of sections 3 and 7 of the Ordinance. The Permit System Rules of 1948 were replaced on the 20th May, 1949, by the Permit System Rules of 1949. This Act, however, was repealed on the 15th October, 1952, by Act LXVI of 1952. Section 3 of this repealing Act, however, expressly preserved the application of section 6 of the . Although the Influx from Pakistan (Control) Act, 1949 has been repealed and the number of persons who, like the appellants and the petitioners before us. are affected by that Act is small, nevertheless the matter has to 949 be scrutinised closely, for our decision may conceivably affect the passport regulations which have replaced the permit system. The contention advanced in these appeals and the petition is that sections 3 and 7 of the Act have, since the commencement of the Constitution, become void in that they violate the fundamental rights guaranteed by articles 14 and 19(1) (d) and (e) of the Constitution. The provisions of these two sections, which have been sufficiently set out in the judgment just delivered, will at once show that they applied to all persons coming from Pakistan,, whether they were citizens or noncitizens and irrespective of the community to which they belonged or the religion which they professed. It will also appear that, as regards citizens, they did not touch all citizens but affected only such of them as came from Pakistan, whether they were Hindus, Muslims or Christians. It is, therefore, quite clear that the Act applied to a small well defined class of persons who were grouped together on an obviously reasonable basis of classification as explained in the previous decisions of this court. In this view of the matter no question of unconstitutional discrimination can arise at all and, indeed, the plea based on the equal protection clause of the Constitution has not been seriously pressed. The main contest has centred round the question whether these two sections offend against the provisions of article 19(1)(d) and (e) of the Constitution. The learned Solicitor General appearing for the respondents contends that those sections are protected by article 19(5) as being reasonable restrictions on the exercise of the rights guaranteed by sub clauses (d) and (e) of clause (1) of that article. In State of Madras vs V. G. Row (1) Patanjali Sastri C.J. observed: " 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. (1) at p. 607. 123 950 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. In evaluating such elusive factors and forming their own conception of what is reasonable, in all the circumstances of a given case, it is inevitable that the social philosophy and the scale of values of the judges participating in the decision should play an important part, and the limit to their interference with legislative judgment I in such cases can only be dictated by their sense of responsibility and self restraint and the sobering reflection that the Constitution is meant not only for people of their way of thinking but for all, and that the majority of the elected representatives, of the people have, ' in authorising the imposition of the restrictions, considered them to be reasonable." The impugned sections have, therefore, to be examined in the light of the above observations. I find nothing unconstitutional about section 3 of the impugned Act It does not debar the entry of any person absolutely. It only requires that a person entering India from any place in Pakistan must be in possession of a permit or a valid passport or be exempted from such requirements. Passport regulations obtain in every civilized country including even those the constitutions whereof confer similar fundamental rights on their citizens, e.g., Switzerland (articles 43 45), Wiener Germany (article III), Czechoslovakia (article 108), Jugoslavia (article 10), Danzig (article 75) and Albania (section 202). Such regula tions serve to check up the persons who enter the territories of the State and are necessary for the safety of the State. Seeing that such regulations obtain everywhere and have a definite utility for the protection of the general public by securing the safety of the State, I have no manner of doubt in my mind that such restrictions as are. contemplated by section 3 must be regarded as reasonable restrictions permissible under 951 clause (5) of article 19 of the Constitution. Indeed, the objection of section 3 has not been seriously pressed before us. The main objection urged by learned counsel appearing in support of these appeals and petitions was directed to the question of the validity of section 7. In the ' first place, it is clear that no objection can be taken to section 7 in so far as it affected persons who were 'not citizens of India, for article 19 guarantees certain fundamental rights to the citizens of India only. In the next place, this section did not affect all citizens but touched only a well defined small class of citizens, namely, those who went to Pakistan and intended to return to India. The question is whether qua these citizens section 7 can also be regarded as a reasonable restriction within the meaning of clause (5) of article 19. The High Court of Bombay has held, and in my opinion quite correctly, that the provisions of section 7 cannot but be regarded as consequential to the provisions of section 3. Suppose at the check post a person from Pakistan, whether a, citizen or not, tried to cross the border without a permit. Surely, the officer at the check post would have been well within the law to prevent a violation of section 3 of the Act and with that end in view to prevent that person, who had no permit, from crossing the border and entering India. I have no doubt that the officer might also have prevented a person from Pakistan from crossing the border if he suspected that the permit produced by the person was forged or otherwise irregular and left him to take up the matter with the higher authorities from Pakistan. Suppose the man who sought to enter India without a permit or with a permit which was suspected to spurious forcibly crossed the border and took a step or two on our side of the line, the Indian officer would certainty have been entitled to throw him back to the other side of the line. Surely, such a person could not be permitted to take advantage of his own wrong and could not be heard to say that, in such circumstances, he had, by his wrong doing, acquired a better right than the person 952 who had not the temerity to violate the provisions of section 3. If this is so then, logically, I can see no difference if the man ran into the Indian territory for some distance and the Indian officer ran after him, overtook him and took him back to the check post and pushed him out of our side of the line. It is, futile,, in such a situation, to expect or to say that the officer should have held a judicial enquiry and come to a judicial decision after hearing an argument as to the validity of the permit or as to the status of the permit holder or the fundamental rights of a, citizen Of India to move freely in India and to settle anywhere he liked in India. The truth and substance of the matter are that in acting in the way indicated above the officer simply performed an executive act and prevented a person who held no permit or held a permit which appeared to the officer to be spurious from entering India from Pakistan in violation of section 3 of the Act. To throw out such a person was not. to inflict any punishment on him or to do him any greater injury than what was imposed on or done to a person who, not having a permit, was stopped at the check post and not allowed to enter India at all. The man thus thrown out was placed under no greater disability than the man who had initially been prevented from entering India at the check post barrier. In both cases such a person might, while staying in Pakistan, have taken steps to obtain a permanent permit upon proof of his status as an Indian citizen and if such permit was illegally withheld from him he might have through some agent in India taken proceedings in Indian courts ' for appropriate reliefs. To my mind the position of the person who,entered India on a temporary permit but who, in violation of the rules or order made under the Act stayed on after the period of the permit expired, was, as from that date, logically the same as that of the person who entered India without a permit. To arrest such a person, after the expiry of the period of the temporary permit, with a view to sending him back back to where he came from and to actually send him back there did not involve or 953 constitute a judicial act at all but Was a rough and ready executive act for enforcing and giving effect to the provisions of section 3 of the Act. To arrest and send such a person back to Pakistan was not to inflict a punishment but was only to restore the status quo and to put him back to the position he would have been in but for his illegal act. In my opinion the act, authorized by section 7 was in essence.a purely executive act for implementing the provisions of section 3. Without such a provision it would have been impossible for the State to control the admission into India of persons from Pakistan and to prevent the concomitant dangers referred to above. The act authorised by the section being an executive act, discretion had perforce to bib left to the executive Government which, by reason of the information available to it" was in a much better position than the courts to know and judge the antecedents of such a person and his ultimate purpose. ' Suppose an Indian, citizen, no matter whether he was a Hindu or a Muslim, had entered India from Pakistan without a permit and suppose he was, upon confidential reports which: could not be safely disclosed, suspected to be engaged in espionage in the interests of Pakistan, would it have been safe enough in those hectic days to have only prosecuted him under section 5 and inflicted on him a fine of rupees one thousand or a term of imprisonment not exceeding a year and then to have left him free, after the term of imprisonment was over, to surreptitiously carry on his nefarious activities of espionage and sabotage against our State while embarking upon a protracted judicial enquiry to ascertain the truth or* otherwise of his claim to Indian citizenship ? It cannot ,be overlooked that there are. long common borders between Pakistan and India both on the west and on the east. The Kashmir situation had also aggravated the emergency brought about by the partition of India. Having regard to all, the circumstances, the tension, bitterness and hatred between the two countries that were generated at,the time of the partition and all which must enter into the judicial verdict, the provisions of section 7 appear to me to have been eminently reasonable restrictions imposed in the interests of the 954 general public upon the exercise by Indian ' citizen coming from Pakistan without a permit of the rights conferred by article 19(1)(d) and (e) of the Constitution. The Indian citizen who was thrown out for not having the proper permit or who was suspected to have violated the provisions of the Act was placed in no worse position than an Indian citizen who, not having a permit, had not been permitted to enter into India at all. They were by no means without remedy. They could from the other side of the border take steps under the rules to obtain valid permanent permits upon proof of their citizenship of India and if such permits were. illegally withheld from them they could move the appropriate High Court under article 226 or even this court under article 32 while they were outside India and might, on proof of their citizenship, have got appropriate writs or orders directing the State or its officers to issue suitable permits and to desist from otherwise preventing them from entering India or interfering with their movement while in India. It is said that if such a person would have been entitled to a permit on proof of his status as an Indian citizen then why should he have Been thrown out at all unless and until he failed to establish his claim to Indian citizenship ? There occur to my mind several answers to this question. In the first place, it would have been putting a premium on wrong doing. In the second place, the person would have been left free to carry on his secret activities, if any, while judicial proceedings would have been going on for ascertaining his status. In the third place, if the person could not be thrown out before his status had been judicially determined there would have been no incentive on his part to take proceedings in court to establish his status and it would have thrown upon the State the duty of initiating proceedings and of discharging the onus of proving the negative fact, of his not being a citizen of India. In view of all the circumstances prevailing at the time the law was enacted and remained in force and in view of the considerations herein before alluded to I have no ' doubt in ray mind except What 955 arises out of my respect for the opinions of my Lord and other learned brothers that the provisions of section 7 were necessary and reasonable and fell within clause (5) of article 19. In my judgment the four appeals as well as Petition No. 57 of 1952 should be dismissed. Appeals allowed, cases remanded. Agents for the appellants and petitioners: section section Shukla, R. A. Govind, Sardar Bahadur and P. K. Chatterji. Agents for the respondents: G. H. Rajadhyaksha and C. P.Lal.

IN-Abs

Held, (Per MEHR CHAND MAHAJAN 0. J., MUKEMRJFA, ViviAN BosE and GHULAM HASAN JJ. ; section R. DAs J. dissenting) that section 7 of the Influx from Pakistan (Control) Act, 1949 is void under article 13(1) in so far as it conflicts with the fundamental eight of a citizen of India under art.19(1) (a) of the Constitution and the order of physical removal of the citizen from in Is therefore liable to beset aside. Per DAB J. In view of the circumstances the provisions of section 7 of the Act were reasonable restrictions within the meaning of el. 5 of article 19 of the constitution imposed in the interests of the general public upon the exercise by Indian citizen coming from Pakistan without a permit of, the rights conferred by article 19(1)(d) and (e) of the Constitution.

Civil Appeal No. 807 of 1964. Appeal by special leave from the judgment and order dated December 10, 1962 of the Gujarat High Court in Sales tax Reference No. 8 of 1961. R. Ganapathy Iyer and B. R. G. K. Achar, for the appellant. I. N. Shroff, 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 Gujarat High Court in a Sales Tax Reference made to it by the Gujarat Sales Tax Tribunal. Two questions were referred by the said Tribunal to the High Court "1. Whether in the facts and circumstances of the case, the purchase of the raw cotton by the applicant Mill 670 could be said to have been intended for use in the production of cotton seeds for sale within the meaning of clause (ii) of rule 6 of the Bombay Sales Tax (Exemption, Set off and Composition) Rules, 1954; 2. Whether the applicant Mill is entitled under rule 12(1) to a refund of the purchase tax paid by it. " The facts set out in the statement of the case by the Tribunal are briefly as follows : The respondent is a manufacturer of cotton textile, particularly of coarse and medium variety cloth. During the assessment period from April 1, 1955 to March 31, 1956, it purchased unginned cotton worth Rs. 5,93,266/ from unregistered dealers and paid purchase tax of Rs. 5,932/ under section 10(a) of the Bombay Sales Tax Act, 1953. The cotton was ginned and pressed by the respondent, the ginned cotton was used in the manufacture of cotton textiles while the cotton seeds were sold by it. During the course of assessment proceedings the respondent applied for refund of purchase tax paid on the unginned cotton under the Bombay Sales Tax (Exemption, Set off and Composition) Rules, 1954, (hereinafter referred to as the Rules). The Sales Tax Officer refused to allow any refund on the ground that the conditions of r. 12 ( 1 ) read with r. 6 (ii) of the Rules had not been fulfilled. The Assistant Collector of Sales Tax on appeal confirmed the order of the Sales Tax Officer on the ground that "rule 6(ii) is not applicable when subsidiary or incidental product alone is sold and the main product is used in the manufacture of other goods. Looking the working of the aforesaid Rule, all the products of the unprocessed goods should be sold. " The respondent filed a revision before the Deputy Commissioner of Sales Tax, who also upheld the order of the Sales Tax Officer. The respondent then filed a revision before the Gujarat Sales Tax Tribunal. The Tribunal rejected the revision on the ground that "the purpose underlying the applicant 's purchases was primarily the production of ginned cotton for manufacture. The cotton seeds which form the bye product of the ginning process would no doubt have to be sold because the Mill has no use for them. But that does not mean that the purpose for which unginned cotton was purchased was the sale of cotton seeds. It is not reasonable to suppose that a textile mill purchases unginned cotton for the purpose of selling the cotton seeds. " At the instance of the respondent, as already stated, the Tribunal referred the case to the High Court. The High Court answered question 671 No. 2 in the affirmative, but did not answer question No. 1 on the ground that the answer to the question was not relevant for the purpose of determining the matter in controversy. Mr. Ganapathy Iyer, the learned counsel for the appellant, contends before us that the Sales Tax authorities were right in refusing to allow a refund,to the respondent and that the High Court erred in answering the second question in favour of the respondent. In order to appreciate the contentions of the parties,it is necessary to set out ff. 6 and 12 and the Schedule to the Rules. Classes of sales on which general sales tax shall not be payable. The general sales tax leviable under section 9 shall not be payable in respect of the following classes of sales (i) . . . (ii) Sales of any goods falling under any entry specified in column 1 of the Schedule hereto to a dealer who holds a licence under section 12 who furnishes to the selling dealer a certificate in Form (4) declaring that the goods sold to him are intended to be used by him in producing any goods falling under the corresponding entry in column 2 of the said Schedule for sale SCHEDULE Goods from which the goods specified Goods produced in Goods produced column 2 are produced 1 2 . 1.Cotton in pod; unginned or unpressed cotton Unginned cotton; ginned or pressed cotton; cotton seeds. x x x x .lm15 12. Refund and remission of purchase tax in certain cases. (1) Where a dealer who has purchased any goods specified in clauses (i) or (ii) of rule 6 shows to the satisfaction of the Collector that they have been used by him for the purpose specified in the said clause, the Collector shall on application for refund made by the 672 dealer in the manner specified in rule 25 of the Bombay Sales Tax (Procedure) Rules, 1954, refund to such dealer the amount of purchase tax paid by him in respect of such purchase; or where the amount of purchase tax payable under clause (a) of section 10 in respect of such purchase has not yet been p aid, the Collector shall by order remit the amount so payable." Mr. Ganapathy Iyer contends that when r. 12 speaks of the purpose specified in cl. (ii) of r. 6, it means the purpose of "producing any goods falling under the corresponding entry in column 2 of the said Schedule for sale. " In other words, he says that the purpose must be producing unginned cotton, ginned or pressed cotton or cotton seeds for sale, and if any of these goods are produced but not sold then r. 12 does not apply. Mr. Shroff, on the other hand, contends that the words "purpose specified in the said clause" only mean the purpose of producing any goods falling under the corresponding entry in column 2 of the Schedule, and he wants us to omit from consideration the words "for sale". We agree with Mr. Ganapathy Iyer that the purpose must be the purpose of producing goods unginned cotton, ginned or pressed cotton, cotton seeds for sale, and the words "for sale" must be given effect to. But even if this contention of Mr. Ganapathy Iyer is accepted the respondent would still, in our opinion, be entitled to refund under r. 12(1). Rule 6 speaks of the intention at the time of the purchase, but r. 12 does not incorporate that intention by referring to the purpose specified in cl. 6(ii). The intention at the time of the purchase is irrelevant for the purpose of r. 12. In r. 6(ii) intention was relevant because the purchasing dealer had to furnish to the selling dealer a certificate in Form (4) declaring that the goods sold to him were intended to be used by him for producing any of the goods falling under the corresponding entry in Column 2 of the said schedule for sale. But when the respondent paid the purchase tax on unginned cotton under section 10(a) of the Act, he paid it because he purchased the same from persons who were not registered dealers, and there was no question of furnishing any certificate at that stage. As the High Court observed "what is necessary is that goods should have been actually used for the purpose specified viz., the production of any of the goods aforementioned for sale. " These conditions have been satisfied in this case because unginned cotton was used for the purpose of producing one of the goods specified in column 2, namely, cotton 673 seeds. Consequently, the respondent is entitled to a refund under r. 12 and the High Court was right in answering the second question in the, affirmative. We also agree with the High Court that in view of its answer to question No. 2 it is not necessary to answer question No. 1. In the result the appeal fails and is dismissed with costs here and in the High Court. Appeal dismissed.

IN-Abs

The respondent, a manufacturer of cotton Textiles, purchased unginned cotton and paid purchase tax thereon. The cotton was ginned and pressed by the respondent, the ginned cotton was used in the manufacture of cotton textile while the cotton seeds were sold by it. The respondent claimed refund of purchase tax paid on the unginned cotton under the Bombay Sales Tax (Exemption, Set off and Composition) Rules, 1954 which was disallowed by the Sales Tax authorities on the ground that r. 6(ii) was not applicable when subsidiary or incidental product alone was ,,old and the main product was used in the manufacture of the goods and looking at the working of the aforesaid Rule, all the products of the unprocessed goods should be sold. In reference, the High Court allowed the refund of the purchase tax under r. 12(i). HELD : The respondent was entitled to refund under r. 12(i). What is necessary under rule 12(i) is that the goods should have been actually used for the purpose specified viz., the production of any of the goods aforementioned for sale. These conditions have been satisfied in this case because unginned cotton was used for the purpose of producing one of the goods specified in column 2 for sale, namely, cotton seeds. [672 H]

Appeal No. 1222 of 1966. Appeal from the judgment and order dated March 14 1966 Appeal of the Punjab High Court (Circuit Bench), at Delhi in Civil Writ No. 832 D of 1965. section V. Gupte, Solicitor General, N. section Bindra, R. H. Dhebar and B. R. G. K. Achar, for the appellant. M. C. Setalvad, B. C. Dutt, Santosh Chatterjee, B. Partha sarathy, 0. C. Mathur, and Ravinder Narain, for respondent No. 1. B. C. Dutt, Santosh Chatterjee, Anand Prakash, 0. C. Mathur and Ravinder Narain, for respondent No. 2. The Judgment of the Court was delivered by Subba Rao, C. J. This appeal by certificate raises the question of the constitutional validity of the Metal Corporation of India ,(Acquisition of Undertaking) Act (No. XLIV of 1965), hereinafter called the Act. The relevant facts lie in a small compass. The 1st respondent, The Metal Corporation of India Limited, hereinafter called the ,Corporation, was a limited company constituted under the Indian Companies Act, having for its objects, inter alia, the development of zinc and lead mines at Zawar in the State of Rajasthan and the construction of a zinc smelter and other connected works for producing electrolytic zinc and by products. The Government was ,satisfied that it was necessary to acquire the said Corporation in public interest and on October 22, 1965, the President of India 257 promulgated an Ordinance (No. 6 of 1965) providing for the acquisition of the Corporation by the Central Government. Pursuant to the said Ordinance, on or about October 23, 1965, the Central Government took over the possession, control and administration of the said Corporation. The Corporation, the 1st respondent and its Managing Director, the 2nd respondent filed a Writ Petition under article 226 of the Constitution in the High Court of Judicature for the State of Punjab, Circuit Bench at New Delhi, being Petition No. 631 D of 1965, challenging the validity of the said Ordinance. In the meantime, the Parliament passed the Act on the same terms as contained in Ordinance No. 6 of 1965: it received the assent of the President of India on December 12, 1965. The respondent filed another writ petition in the said High Court, being Writ Petition No. 832 D of 1965, for a declaration that the Act was ultra vires the Constitution. The said High Court held that the Ordinance and the Act contravened the relevant provisions of article 31 of the Constitution and, therefore, were constitutionally void. The present appeal is preferred against the said judgment of the High Court. It will be convenient at this stage to read the relevant provisions of the Act. The preamble and the relevant provisions of the Act read: "Preamble. An Act to provide for the acquisition of the undertaking of the Metal Corporation of India Limited for the purpose of enabling the Central Government in the public interest to exploit, to the fullest extent possible, zinc and lead deposits in and around the Zawar area in the State of Rajasthan and to utilise those minerals in such manner as to subserve the common good Section 3. On the commencement of this Act, the undertaking of the company shall, by virtue of this Act, be transferred to, and vest in, the Central Government. Section 10. (1) The Central Government shall pay compensation to the company for the acquisition of the undertaking of the company and such compensation shall be determined in accordance with the principles specified in the Schedule and in the manner hereinafter set out, that is to say, (2) Notwithstanding that separate valuations are calculated under the principles specified in the Schedule in respect of the several matters referred to therein, the 258 amount of compensation to be given shall be deemed to be a single compensation to be given for the undertaking as a whole. (3) THE SCHEDULE Principles for determining compensation for acquisition of the undertaking. Paragraph I. The compensation to be paid by the Central Government to the company in respect of the acquisition of the undertaking thereof shall be an amount equal to the sum total of the value of the properties and assets of the company on the date of commencement of this Act calculated in accordance with the provisions of paragraph II less the sum total of the liabilities and obligations of the company as on the said date calculated in accordance with the provisions of paragraph 111. Paragraph II. (a) The market value of any land or buildings; (b) the actual cost incurred by the company in acquiring any plant, machinery or other equipment which has not been worked or used and is in good condition and the written down value (determined in accordance with the provisions of the Income tax Act, 1961 (XLIII of 1961), of any other plant, machinery or equipment; (c) the market value of any shares, securities or other investments held by the company; (d) the total amount of the premium paid by the company in respect of all leasehold properties reduced in the case of each such premium by an amount which bears to such premium the same proportion as the expired term of the lease in respect of which such premium shall have been paid bears to the total term of the lease; (e) the amount of debts due to the company, whether secured or unsecured, to the extent to which they are reasonably considered to be recoverable. (f) the amount of cash held by the company, whether in deposit with a bank or otherwise; (g) the value of all tangible assets and properties other than those failing within any of the preceding clauses. Paragraph III. The total amount of liabilities and obligations incurred by the company in connection with 259 the formation, management and administration of the undertaking and subsisting immediately before the commencement of this Act. " The gist of the said provisions may be given thus. The Act was made to acquire in public interest the undertaking of the Corporation, On the commencement of the Act, the undertaking was transferred and vested in the Central Government. Under section 10 of the Act, the Government shall pay compensation to the undertaking as a whole: but, in the absence of an agreement between the Government and the Corporation, the compensation payable to the Corporation has to be ascertained under the principles specified in the Schedule in respect of the several matters referred to therein. Paragraph 1 of the Schedule lays down the manner in which the compensation to be paid to the Corporation for the acquisition of the undertaking is to be ascertained. The said compensation shall be an amount equal to the sum total of the value of the properties and assets of the Corporation on the date of the commencement of the Act calculated in accordance with the provisions of paragraph It less the liabilities on the said date calculated in accordance with the provisions of paragraph III of the Schedule. Broadly, the said paragraph lays down the principles for ascertaining the value of lands, buildings, machinery and equipment, amounts due to the undertaking and other tangible assets and properties. The different clauses of the paragraph adopt different principles for valuation. But what is important for the present purpose is the principle embodied in cl. (b) of para II. It is in two parts: the first provides for the valuation of plant, machinery or other equipment which has not been worked or used and is in good condition, and the second provides for the valuation of any other plant, machinery or equipment. The former has to be valued at the actual cost incurred by the Corporation in acquiring the same and the latter at the writtendown value determined in accordance with the provisions of the Indian Income tax Act, 1961. The High Court held, on a construction of the said provisions, that the principle contained in cl. (b) of paragraph 11 of the Schedule to the Act in respect of machinery etc. "cannot be called relevant to the determination of 'just equivalent ', as it takes no notice of the notorious fact that prices have been steadily rising during the past several years, particularly of imported machinery and plant". It also held, "that depreciation rule does not even pretend to determine the actual depreciation in a particular case and it is obvious that such depreciation has no real relationship with the actual value of any machinery at any particular point of time". On that reasoning, it came to the conclusion, having regard to the decision of this Court in Vajravelu vs Special Deputy Collector(1) that the said provision in respect of machinery did. (1) ; 260 not lay down a principle for fixing compensation i. e., a just equivalent to the machinery acquired. The reasoning of the High Court was attacked by the learned Additional Solicitor General on the ground that it did not appreciate the true scope of the said decision of this Court and that, in any view, it went wrong in applying the principle of the said decision to the provisions of the Act. He contended that the Act laid down the broad principle that compensation shall be paid for the entire undertaking as a unit, but provided different modes for the ascertainment of the value of different parts thereof in such a way that the deficiency in the valuation of one part was offset by the liberal valuation of the other part. In that view, he contended, the Act embodied a principle relevant to the ascertainment of compensation for the undertaking acquired and, therefore, the product worked out under the said principle pertained only to the realm ,of adequacy which was beyond the ken of judicial review. He added that compensation in article 31 of the Constitution meant that cornpensation which was regarded as just in the context of public acquisitions and that test was satisfied in the present case. Mr. M. C. Setalvad, learned counsel for the respondents, contended that though under the Act compensation was to be given to the undertaking as one unit, the Act laid down principles for arriving at the valuation of the parts to arrive at the valuation of the whole and that, therefore, every such principle should stand the test laid down by this Court. So judged, the argument proceeded, both the principles laid down in cl. (b) of para 11 of the Schedule had no nexus to the ascertainment of compensation for the machinery acquired, for in the case of unused machinery, its cost price was the guide and in the case of used machinery its written down value was the criterion and that both the methods were arbitrary. We find it difficult to appreciate the arguments of the learned Solicitor General. It is true that under section 10 of the Act the Central ,Government shall pay compensation for the acquisition of the undertaking to the Corporation and the said compensation arrived at in the manner prescribed in the Schedule to the Act shall be ,deemed to be a single compensation to be given to the undertaking as a whole. But it will be noticed that though a single compensation for the undertaking is given, the said compensation shall be deter mined in accordance with the principles specified in the Schedule. Under the Schedule, the compensation for the entire undertaking shall be the amount equal to the sum total of the value of the properties and assets of the Corporation calculated in accordance with the provisions of para II of the Schedule. Under the said para 11, different principles are laid down for ascertaining the value of different parts of the undertaking. If all the said principles laid ,down in para 11 of the Schedule do not provide for the just equivalent 261 of all the parts of the undertaking mentioned therein, the sum total also cannot obviously be a just equivalent of the undertaking. So too, if some of them do not provide for a just equivalent and others do so, the sum total cannot equally be a just equivalent to the undertaking. In the case of the undertaking in question, the machinery is the most valuable part of the undertaking. Apropos the unused machinery in good condition, how can the price for which the said machinery was purchased years ago possibly represent its price at the time of its acquisition? A simple illustration will disclose the irrelevance of the principle. Suppose in 1950 a machinery was purchased for Rs. 100 and, for some reasons, the same has not been used in the working of the undertaking but has been maintained in good condition. That machinery has not become obsolescent and still can be used effectively. If purchased in open market it will cost the owner Rs. 1,000. A compensation of Rs. 100 for that machinery cannot be said to be a just equivalent of it. It is common knowledge that there has been an upward spiral in prices of the machinery in recent years. The cost price of a machinery purchased about ten years ago is a consideration not relevant for fixing compensation for its acquisition in 1965. The principle must be such as to enable the ascertainment of its price at or about the time of its acquisition. Nor the doctrine of written down value accepted in the Income tax law can afford any guide for ascertaining the compensation for the used machinery acquired under the Act. Under the general scheme of the Income tax Act, the income is to be charged regardless of the diminution in the value of the capital. But the rigor of this hard principle is mitigated by the Act granting allowances in respect of depreciation in the value of certain assets such as machinery, buildings, plant, furniture etc. These allowances are worked out on a notional basis for giving relief to the income tax assessee. This artificial rule of depreciation evolved for income tax purposes has no relation to the value of the said assets. To illustrate: a machinery was purchased in the year 1950 for Rs. 1,000. The aggregate of all the depreciation allowances made year after year for ten years may exhaust the sum of Rs. 1,000 with the result, after the tenth year, the assessee will not be entitled to any depreciation. From this it cannot be said that after the tenth year the machinery has no value. Indeed, a machinery purchased for Rs, 1,000 in 1950, because of subsequent rise in. prices may be sold in 1965 for Rs. 10,000. But the application of the principle laid down in cl. (b) of para 11 of the Schedule to the Act in regard to used machinery gives the owner no compensation at all. Yet, the Government takes the machinery worth Rs. 10,000 gratis. This illustration exposes the extreme arbitrariness of the principle. It is, therefore, manifest that the two principles of valuation embodied in cl. (b) of para II of the Schedule to the Act are not relevant to the fixing of compensation for the machinery at. the time of its acquisition under the Act. The argument, of the 262 learned Additional Solicitor General that the working out of all the principles in respect of different parts of the undertaking would result in a product which would fairly represent, in the context of public acquisitions, the "just equivalent" to the undertaking acquired is purely based on a surmise for, it is not shown that the working out of any one or more of the principles would give a higher compensation to some parts of the undertaking so that the excess paid under one head would offset the deficiency under another head. Nor can the doctrine of inherent worth of a machinery has any relevance in the matter of giving compensation for its acquisition at a particular point of time, for the simple reason that the worth of an article depends upon the market conditions obtaining at the time of its acquisition. It is impossible to predicate, irrespective of such conditions, that a particular machinery has a fixed value. for all times. Four decisions of this Court laid down the principles applicable to the present case. Indeed, but for the said decisions, we would have posted this case before a Constitution Bench of five Judges. But, as this appeal involves only the application of the construction put upon article 31 of the Constitution by this Court in the said decisions, we did not resort to that course. The first of them is The State of West Bengal vs Mrs. Bela Banerjee (1). There, the validity of the West Bengal Land Development and Planning Act, 1948 was under scrutiny. Section 8 thereof provided that compensation to be awarded for compulsory acquisition to owners of land was not to exceed the market value as on December 31, 1946. This Court held that the said Act was ultra vires the Constitution and void under article 32(2) thereof. In that context, Patanjali Sastri, C.J., observed: "Turning now to the provisions relating to compensation under the impugned Act, it will be seen that the latter part of the proviso to section 8 limits the amount of compensation so as not to exceed the market value of the land on December 31, 1946, no matter when the land is acquired. Considering that the impugned Act is a permanent enactment and lands may be acquired under it many years after it came into force, the fixing of the market value on December 31, 1946, as the ceiling on compensation, without reference. to the value of the land at the time of the acquisition is arbitrary and cannot be regarded as due compliance in letter and spirit with the requirement of article 31(2). " The above decision was followed by this Court in State of Madras vs D. Namasivaya Mudaliar(2). There the respondents were owners of certain lands which were to be compulsorily acquired under (1) ; , 564. (2) ; , 945 2 63 Madras Lignite (Acquisition of Land) Act, 1953. The Act came into force on August 20, 1953, before article 31 of the Constitution was amended by the Constitution (Fourth Amendment) Act, 1955. By the said Act compensation for the acquisition of lignite bearing bands under the Land Acquisition Act was to be assessed on the market value of the land prevailing on August 28, 1947, and not on he date on which the notification was issued under section 4(1) of the and Acquisition Act. It also provided that in awarding compensation, the value of non agricultural improvements commenced since April 28, 1.947 would not be taken into consideration. This Court held that the said Act was bad, because it contravened article 31(2) of the Constitution, as it stood before the Constitution (Fourth Amendment) Act, 1955. This Court, speaking through Shah, J., observed: "Assuming that in appropriate cases, fixation of a date anterior to the publication of the notification under section 4(1) for ascertainment of market value of the land to be acquired, may not always be regarded as a violation of the constitutional guarantee, in the absence of evidence that compensation assessed on the basis of market value on such anterior date, awards to the expropriated owner a just monetary value of his property at the date on which his interest is extinguished, the provisions of the Act arbitrarily fixing compensation based on the market value at a date many years before the notification under section 4(1) was issued, cannot be regarded as valid." Then the learned Judge proceeded to state: "To deny to the owner of the land compensation at rates which justly indemnify him for his loss by awarding him compensation at rates prevailing ten years before the date on which the notification under section 4(1) was issued amounts in the circumstances to a flagrant infringement of the fundamental right of the owner of the land under article 31(2) as it stood when the Act was enacted. " These two decisions turned upon the construction of article 31(2) of the Constitution before the Constitution (Fourth Amendment) Act, 1955. These cases laid down two propositions: (1) "Compensation" under article 31(2) of the Constitution means a "just equivalent" of what the owner has been deprived of ; and (2) the value of land at an anterior date is presumed to be no compensation within the meaning of the said Article. After the Constitution (Fourth Amendment) Act, 1955, this Court had to construe in two decisions he amended provision of article 31(2) vis a vis the expression "compensation" found therein. The first decision is that in Vajravelu 264 vs Special Deputy Collector(1). There, this Court observed at p. 625 626: "A scrutiny of the amended Article discloses that it accepted the meaning of the expressions "compensation" and "principles" as defined by this Court in Mrs. Bela Banerjee 's case(2)." .lm0 And it held that, if the compensation is illusory or if the principles prescribed are irrelevant to the value of the property at or about the time of its acquisition, it can be said that the Legislature committed a fraud on power and, therefore, the law is bad. One of the illustrations given at p. 627 is relevant to the present enquiry and that is as follows : if a law lays down principles which are not relevant ' to the property acquired or to the value of the property at or about the time it is acquired, it may be said that they are not principles contemplated by article 31(2) of the Constitution. If a law says. . that though it (house) is acquired in 1960 its value in 1930 should be given. . the principles do not pertain to the domain of adequacy but are principles unconnected to the value of the property acquired. " Applying these principles, this Court in Jeejeebhoy vs Assistant Collector(3), held that the fixation of an anterior date for the ascertainment of the value of the property acquired without reference to any relevant considerations which necessitated the fixing of an earlier date for the purpose of ascertaining the real value is arbitrary. On that ground this Court held that the Land Acquisition (Bombay Amendment) Act, 1948, did not provide for payment of just equivalent of what the owner was deprived of, as it provided for the ascertainment of compensation on the basis of the value of lands acquired as on January 1, 1948 and not as on the date on which the section 4 notification under the 1894 Act was issued. The relevant aspect of the legal position evolved by the said decisions may be stated thus: Under article 31(2) of the Constitution, no property shall be compulsorily acquired except under a law which provides for compensation for the property acquired and either fixes the amount of compensation or specifies the principles on which and the manner in which compensation is to be determined and given. The second limb of the provision says that no such law shall be called in question in any court on the ground that the compensation provided by the law is not adequate. If the two concepts, namely, "compensation" and the jurisdiction of the court are kept apart, the meaning of the provisions is clear. The law to (1)[1965] 1 S.C.R. 614. (2) ; (3) 6. 265 justify itself has to provide for the payment of a "just equivalent" to the land acquired or lay down principles which will lead to that result. If the principles laid down are relevant to the fixation of compensation and are not arbitrary, the adequacy of the resultant product cannot be questioned in a court of law. The validity of the principles, judged by the above tests, falls within judicial scrutiny, and if they stand the tests, the adequacy of the product falls outside its jurisdiction. Judged by the said tests, it is manifest that the two principles laid down in cl. (b) of Para 11 of the Schedule to the Act, namely, (i) compensation equated to the cost price in the case of unused machinery in good condition, and (ii) written down value as understood in the Income tax law as the value of used machinery, are irrelevant to the fixation of the value of the said machinery as on the date of acquisition. It follows that the impugned Act has not provided for "compensation" within the meaning of article 31(2) of the Constitution and, therefore, it is void. The mere fact that in regard to some parts of the undertakings the principles provide for compensation does not affect the real question, for, machinery is the major part of the undertaking and,, as the entire undertaking is acquired as a unit, the constitutional invalidity of cl. (b) of Para 11 of the Schedule to the Act affects the totality of the compensation payable to the entire undertaking. In the context of compensation for the entire undertaking, the clauses of Para 11 of the Schedule to the Act are not severable. In the result, the Act, not having provided for compensation, is unconstitutional and the conclusion arrived at by the High Court is, correct. appeal fails and is dismissed with costs. V.P.S. Appeal dismissed.

IN-Abs

The Metal Corporation of India (Acquisition of Undertaking) Act, 1965, was enacted for acquiring in the public interest, the undertaking of the Metal Corporation of India. The Act provided that the Corp oration was to vest in the Central Government on the commencement of the Act; and that in the absence of an agreement between the Government and the Corporation, the compensation payable to the Corporation was to be an amount equal to the sum total of the value of the properties and assets of the Corporation on the date of the commencement of the Act calculated in accordance with the provisions of Paragraph 11 of the Schedule to the Act, less the liabilities on the said date, calculated in accordance with the provisions of Paragraph III of the Schedule. One of the clauses laying down principles of compensation, viz., clause (b) of para 11 is in two parts. The first part provides for the valuation of plant, machinery or other equipment which has not been worked or used and is in good condition, and the second part provides for the valuation of any other plant, machinery or equipment. The former have to be valued at the actual curt incurred by the Corporation in acquiring them 'and the latter, at the writtendown value determined in accordance with the provisions of the Income of the constitutional validity of the Act. HELD : The Act contravened article 31(2) of the Constitution and was therefore void. [265 C] Under article 31(2), no property shaft be compulsorily acquired except under a law which provides for compensation and either fixes the amount of compensation or specifies the principles on which and the manner in which the compensation is to be determined and given. If the compensation is illusory or if the principles prescribed are irrelevant to the value of the property at or about the time of its acquisition, the law is bad. The law, to justify itself, has to provide for the payment of a "just equivalent" to the property acquired, or lay down principles which are not arbitrary but which are relevant to the fixation of compensation. It is only when the principles stand this test, that the adequacy of the resultant compensation falls outside judicial scrutiny under the second limb of article 31(2). In the instant case, the two principles laid down in cl. (b) of Para 11 of the Schedule are irrelevant to the fixation of the value of the machinery as on the date of acquisition. In the case of unused machinery, if it was Purchased in 1950 for Rs. 100 and, for some reason, had not been used in the working of the Undertaking but had been maintained in good condition, it may cost Rs. 1000 in 1965. A compensation of Rs. 100 for that machinery could not be said to be a "just equivalent" of it. Similarly, in the case of used machinery, if it was purchased in 1950 for Rs. 1000, 256 the aggregate of all the depreciation allowances made year after year may exhaust the sum of Rs. 1000 in ten years, with the result that, under the Income tax Act, the assessee will not be entitled to any depreciation after the tenth year. It could not, however, be said that after the tenth year, the machinery had no value and that the owner was not to be given any compensation. Indeed, such a machinery, because of subsequent rise in prices, may be sold in 1965 for Rs. 10,000. Further the constitutional invalidity of cl. (b) of Para II of the Schedule affect& the totality of the compensation payable; for, machinery is the major part of the undertaking, the entire Undertaking is acquired as a unit, and, in the context of compensation for the entire Undertaking, the clauses of Para H of the Schedule to the Act are not severable. Therefore, the mere fact that in regard to some parts of the Undertaking, the principles laid down in Para H provide for compensation does no affect the question, especially when it has not been shown that the working out of any one or more of the principles would give a higher compensation to some parts of the Undertaking so that the excess paid under one head would offset the deficiency under another head. [261 F H; 262 B; 264 B C, F H; 265 A El Vajravelu vs Special Deputy Collector, ; and Jeejeebhoy vs Assistant Collector, ; , followed.

Appeal No. 618 of 1964. Appeal from the judgment and decree dated November 29, 1960 of the Madras High Court in Appeal Suit No. 207 of 1957. Sarjoo Prasad and M. section Narasimhan, for the appellants. section V. Gupte, Solicit6r General and A. G. Ratnaparkhi, for respondents Nos. 1 and 2. R. Ganapathy Iyer, for respondent No. 3. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal on a certificate granted by the Madras High Court and arises in the following circumstances. One Rangaswami Chettiar was a man of considerable property and used to live in Poolathur village. He first married one Bappini and had a son by her. But both the son and Bappani died. He therefore married Ammathayee, who was defendant No. 2 in the suit and is appellant No. I before us. He had a son and two daughters by her. But unfortunately all the three children died. Thereafter Rangaswami Chettiar married Lakshmiammal in 1943. She was the first defendant in the suit. It appears that no child was born to Lakshmiammal for about three years and therefore Rangaswami Chettiar married a fourth time. His fourth wife was the sister of his second wife named Supputhayee. In February 1949 Lakshmiammal gave birth to a son. There is dispute as to the question whether Lakshmiammal had left her husband about 1945 or so because of frequent quarrels between the two. Anyhow the fourth wife had also no children. In June 1953 Rangaswami Chettiar fell ill. He was first treated as an out patient in Batlagundu hospital and later admitted as an in patient. On June 16, 1953 he executed a registered deed of gift in favour of his second wife Ammathayee of certain immovable joint family property. Lakshmiammal when she came to know of this gift published a notice in a newspaper accusing the second and fourth wife of trying to deprive her and her minor son of their due share in the joint family property by having the gift deed executed and claimed that the gift deed was not valid. On September 4, 1953, Rangaswami Chettiar sent a notice in reply to the notice published by Lakshmiammal. Ili that notice Rangaswami Chettiar accused Lakshmiammal of having left Wm a year and a half after the marriage after quarrelling with him. He also accused her of living a life of promiscuity thereafter. Finally 355 he said in the notice that the son born to Lakshmiammal in Feb ruary 1949 was not his son. Lakshmiammal gave a reply to this notice of Rangasmami Chettiar on September 15, 1953, in which she maintained that the child was Rangaswami Chettiar 'section She also claimed that Rangaswami Chettiar 's mind had been poisoned against her by his two other wives. She denied that she had any connection with any other man besides Rangaswami Chettiar. In, December 1963 Rangaswami Chettiar died. The present suit was filed a year later on January 3, 1955 on behalf of the minor son. He claimed half share in the joint family properties left by Rangaswami Chettiar. To this suit the three widows who between them have half share were defendants Nos. 1, 2 and 3. Three other defendants were made parties to the suit to whom we shall refer later as they are not concerned with the main controversy between the plaintiff and the two step mothers (i. e. second and third defendants). The main defence of the two step mothers, who are now appel lants before us, was that the, plaintiff though born to Lakshmiammal was not the son of Rangaswami Chettiar and was therefore not entitled to any share in his properties. Further Ammathayee pleaded that the gift deed in her favour was valid and that even if the plaintiff was the son of Rangaswami Chettiar he would be entitled to half share of the properties other than those gifted to her by R angaswami Chettiar before his death. There were other issues in the suit, but we are not concerned with them in the present appeal. On the main question, namely whether the plaintiff was the son of Rangaswami Chettiar, the trial court found in his favour. Further on the question whether the gift deed in favour of Ammathayee was valid, the trial court was of opinion that it was not competent for Rangaswami Chettiar to make a gift of immovable joint family property to his wife. The trial court therefore held the gift to be invalid and gave the plaintiff a decree for his half share in the pro perty left by Rangaswami Chettiar, including the properties gifted to Ammathayee before his death. Thereupon the two step mothers went in appeal along with two other defendants and contested the finding of the trial court on both these issues. The High Court however upheld both the findings. On a consideration of the evidence, the High Court came. to the conclusion that the heavy burden that lay on those who disputed the paternity of the plaintiff respondent in view of section 112 of the , No. 1 of 1872, had not been discharged in this case and it had not been proved that Rangaswami Chettiar had no access to Lakshmiammal on or about the time when the plaintiff respondent could have been conceived. On the question of the gift deed, the High Court held that Hindu law did not permit a husband to gift joint family immovable property to his wife in 3 56 the circumstances in which the gift was made in this case. The High Court therefore dismissed the appeal so far as the stepmothers of the plaintiff respondent were concerned. The High Court however allowed the appeal of defendants Nos. 4 and 5 who were the brothers of the two step mothers of the plaintiffrespondent and set aside the decree of the trial court with respect to them by which they were made accountable. There was also a crossobjection before the High Court with respect to certain properties which were in the possession of the sixth defendant. That crossobjection was dismissed on the ground that the plaintiff respondent had failed to prove that those properties were joint family properties left by Rangaswami Chettiar. Thereafter the two widows who are the appellants before us applied for and obtained a certificate to appeal to this Court as the decree of the High Court was that of variance, and that is how the matter has come before us. The two main questions which have been argued before us are (i) whether the plaintiff respondent was the son of Rangaswami Chettiar, and (ii) whether the deed of gift was valid. So far as the first question is concerned, there is a concurrent finding of the trial court as well as of the High Court that the plaintiffrespondent is the son of Rangaswami Chettiar. Ordinarily therefore this Court would not interfere with this concurrent finding of fact. But it is urged that the High Court did not accept the evidence on this point in the same measure as the trial court did, and that there are circumstances which should have led the High Court (when it did not accept the evidence in full) to hold that the plaintiffrespondent was not the son of Rangaswami Chettiar. It is also urged that the High Court was in error in holding on the basis of section 112 of the Evidence Act that the paternity of the plaintiff respon,dent had been proved. We are of opinion that there is no force in this contention. The main evidence on behalf of the plaintiffrespondent was that of his mother, Lakshmiammal. On the other hand the appellants relied on the notice sent by Rangaswami Chattiar to Lakshmiammal denying the paternity of the plaintiff respondent, and it is urged that a notice of this kind is very strong evidence rebutting the presumption that the plaintiff respondent is the son of Rangaswami Chettiar, and this is particularly so in the present case because Rangaswami Chettiar was keen on having a son and had married four times for that purpose. He would not have thus denied the paternity of the son ]born to his third wife in the circumstances if that was true. The High Court was not oblivious of the force of these circumstances. But the evidence of Lakshmiammal was that she never quarrelled with her husband and that her husband married again because she did not give birth to a 357 child for about three years, and the fourth marriage of Rangaswami Chettiar took place with her consent. She also said that she had not left the house of Rangaswami Chettiar and that the plaintiffrespondent was Rangaswami Chettiar 's son. She further said that her co wives became jealous after the birth of the plaintiffrespondent to her and that is why they influenced Rangaswami Chettiar against her. This evidence was relied upon by the trial court and the High Court has not disbelieved it. It is also in evidence that Lakshmiammal was living in her father 's house in the same village as Rangaswami Chettiar, even according to the appellants ' witnesses and that Lakshmiammal 's father 's house was only a furlong away from Rangaswami Chettiar 's house. It was in these circumstances that the High Court had to consider the question whether the heavy burden which lies on a person denying the paternity of a child born during wedlock had been discharged. It is true that Rangaswami Chettiar had given the notice to Lakshmiammal in which he denied the paternity of the plaintiff respondent; but that notice stands in no better position than would have been the statement of Rangaswami Chettiar even if he was alive when this suit was fought out in the trial court. Section 112 is in these terms "The fact that any person was born during the continuance of a valid marriage between his mother and any man, or within two hundred and eighty days after its dissolution, the mother remaining unmarried, shall be conclusive proof that he is the legitimate son of that man, unless it can be shown that the parties to the marriage had no access to each other at any time when he could have been begotten. " It raises inter alia a conclusive presumption that a child born during the continuance of a valid marriage between his mother and any man is the legitimate son of that man, and this conclusive presumption can only be rebutted if it is shown that the parties to the marriage had no access to each other at any time when he could have been begotten. The appellants therefore had to prove, as Rangaswami Chettiar would have had to prove even if he was alive when the suit was fought out in the trial court, that he had no access to Lakshmiammal at any time when the plaintiff respondent could have been begotten. We have already said that even accord ing to the appellants Lakshmiammal was only living one furlong away in her father 's house from where Rangaswami Chettiar was living. In these circumstances the evidence produced in the present suit falls far short of proving that Rangaswami Chettiar had no access to Lakshmiammal at any time when the plaintiff respondent could have been begotten. We have therefore no hesitation in agreeing with the High Court, particularly taking into account the evidence of Lakshmiammal which has not been disbelieved by the High Court, that the appellants had completely failed to prove non 358 access of Rangaswami Chettiar to Lakshmiammal at any time when the plaintiff respondent could have been begotten. In these circumstances there is no reason for us to interfere with the concurrent finding of fact as to the paternity of the plaintiff respondent and we hold that he is the legitimate son of Rangaswami Chettiar. This brings us to the question of the validity of the gift deed ill favour of Ammathayee. The gift deed begins with the following recital: "As you happened to be my second wife and in accordance with the promise made to you by my father, K. K. Ramasami Chettiar at the time of my marriage with you, and according to the directions given to me also to execute a document in your favour and also in consi deration of the affection you are having for me, and your obedient nature" and then follow the words making the gift of certain immovable properties in her favour. According to the donee appellant, the value of this immovable property was about one tenth of the entire property left by Rangaswami Chettiar. The argument on behalf of the donee appellant is that the gift was valid as it was of a reasonable portion of the immovable property, firstly because it was made by a husband in favour of a wife out of love and affection, and secondly because it was made by her husband to carry out the pious obligation that lay on him to fulfil the wishes of his father to make some provision for Ammathayee, which his father had indicated at the time of her marriage. Hindu law on the question of gifts of ancestral property is well settled. So far as movable ancestral property is concerned, a gift out of affection may be made to a wife, to a daughter and even to a son, provided the gift is within reasonable limits. A gift for example of the whole or almost the whole of the ancestral movable property cannot be upheld as a gift through affection: (see Mulla 's Hindu Law, 13th Edn. p. 252, para 225). But so far as immovable ancestral property is concerned the power of gift is much more circumscribed than in the case of movable ancestral property. A Hindu father or any other managing member has power to make a gift of ancestral immovable property within reasonable limits for "pious purposes", (see Mulla 's Hindu Law, 13th Edn. para 226 p. 252). Now what is generally understood by "pious purposes" is gift for charitable and/or religious purposes. But this Court has extended the meaning of "pious purposes" to cases where a Hindu father makes a gift within reasonable limits of immovable ancestral property to his daughter in fulfilment of an antenuptial promise made on the occasion of the settlement of the terms of her 359 marriage, and the same can also be done by the mother in case the father is dead: [see Kamala Devi vs Bachu Lal Gupta. (1)] In Guramma Bhratar Chanbassappa Deshmukh vs Malappa,(2) it was observed by this Court that "the Hindu law texts conferred a right upon a daughter or a sister, as the case may be, to have a share in the family property at the time of partition. The right was lost by efflux of time. But it became crystallized into a moral obligation. The father or his representative can make a valid gift by way of reasonable provision for the maintenance of the daughter, regard being had to the financial and other relevant circumstances of the family. By custom or by convenience, such gifts are made at the time of marriage, but the right of the father or his representative to make such a gift is not confined to the marriage occasion . . Marriage is only a customary occasion for such a gift. But the moral obligation can be discharged at any time, either during the life time of the father or thereafter." But we have not been referred to a single case where a gift by a husband to his wife of immovable ancestral property if made, has been upheld. We see no reason to extend the scope of the words "pious purposes" beyond what has already been done in the two decisions of this Court to which reference has been made. The contention of the donee appellant that the gift in her favour by her husband of ancestral immovable property made out of affection should be upheld must therefore fail, for no such gift is permitted under Hindu Law insofar as immovable ancestral property is concerned. As to the contention that Rangaswami Chettiar was merely carrying out his father 's wishes when he made this gift in favour of his wife and that act of his was a matter of pious obligation laid on him by his father, we are of opinion that no gift of ancestral immovable property can be made on such a ground. Even the father in law, if he had desired to make a gift at the time of the marriage of his daughter in law, would not be competent to do so insofar as immovable ancestral property is concerned. No case in support of the proposition that a father in law can make a gift of ancestral immovable property in favour of his daughter in law at the time of her marriage has been cited. There is in our opinion no authority to support such a proposition in Hindu law. As already observed, a Hindu father or any other managing member has power to make a gift within reasonable limits of ancestral immovable property for pious purposes, and we cannot see how a gift by the father in law to the daughter in law at the time of marriage can by any stretch of reasoning be called a pious purpose, whatever may be the position of a gift by the father or his representative to a daughter at the time of her marriage. One can understand such a gift being made to a daughter when she is leaving the (1) ; (2) ; 360 family of her father. As it is the duty of the father or his representative to marry the daughter, such a gift may be and has been held by this Court to be for a pious purpose. But we see no pious purpose for such a gift by a father in law in favour of his daughter in law at the time of marriage. As a matter of fact the daughterin law becomes a member of the family of her father in law after marriage and she would be entitled after marriage in her own right to the ancestral immovable property in certain circumstances, and clearly therefore her case stands on a very different footing from the case of a daughter who is being married and to whom a reasonable gift of ancestral immovable property can be made as held by this Court. Learned counsel for the donee appellant further refers to the fact that gifts made in token of love by her father in law to a daughter in law are permitted and become her stridhan property. That is so. But that does not mean that a father in law is entitled to make a gift of ancestral immovable property to a daughter inlaw so as to convert it into her stridhan. Generally such gifts are of movable property. But even if gifts of immovable property in such circumstances are possible,the two provisions must be read harmoniously. If therefore Hindu law does not permit a father inlaw to make a gift of ancestral immovable property to his daughterin law, he cannot make such a gift for purposes of stridhan. Further if gifts by the father in law to the daughter in law which become stridhan include gifts of immovable property, they can only refer to such immovable property as is not ancestral immovable property, for that is the only way in which the two provisions can be reconciled. We have therefore no difficulty in holding that there is no warrant in Hindu law in support of the proposition that a father in4aw can make a gift of ancestral immovable property to a daughter in law at the time of her marriage. If that is so, we cannot see how what the father in law himself could not do could be made into a pious obligation on the son as is claimed in this case, for that would be permitting indirectly what is not permitted under Hindu law directly. Further in any case gifts of ancestral immovable property can only be for pious purposes, and we doubt whether carrying out the directions of the father in law and making a gift in consequence can be said to be a gift for a pious purpose, specially when the fatherin law himself could not make such a gift. We are therefore of opinion that this gift cannot be upheld on the ground that Rangaswami Chettiar had merely carried out the wishes of his father indicated on the occasion of the marriage of Ammathayee. The appeal therefore fails and is hereby dismissed with costs to to the plaintiff respondent. Before we part with this appeal, we should like to refer briefly to the case of Natarajan Chettiar who was defendant No. 6 in the 361 trial court and is respondent No. 3 before us. He was made a party with respect to certain properties in schedule D to the plaint. His case was that the properties in schedule D were not liable to be partitioned. This contention of his was upheld by the trial court. That is why the decree does not provide for partition of D schedule properties. It was therefore unnecessary for the appellants to make him a party to the present appeal unless the appellants claimed some relief against him. Learned counsel for the appellants has stated that no relief is being claimed against Natarajan Chettiar respondent No. 3. The appeal therefore must fail as against Natarajan Chettiar who will get his costs from the appellants but no hearing fee. Further among the properties to be divided where a gold chain (item 6) and certain promissory notes (items Nos. 2 to 4) of schedule B. The trial court held that there was no proof that these items existed. In the decree however this has not been made quite clear. We therefore direct that the trial court will correct the decree to bring it into line with its finding on these items. G. C. Appeal dismissed.

IN-Abs

R was a man of considerable property. He married four times. The third wife bore him a son. When R made a gift of some joint family property to his second wife the third wife gave a notice that the gift was not valid. R, in his reply to the notice alleged, that she had deserted him and that the son born of her was not his. These allegations were denied by the third wife. After the death of R a suit was instituted by the said son claiming a half share of the property left by R. The two living step mothers, namely, the second and fourth wives of R contested the suit. The questions were whether the plaintiff was the son of R and whether the gift deed was valid. The trial court held on both points in favour of the plaintiff and the High Court also decided against the two step mothers who thereupon appealed to this Court. The appellants contended that (1) the courts below had wrongly held the Plaintiff respondent to be the legitimate son of R (2) R,s gift of ancestral immovable property was valid because it was a gift for 'pious purposes. HELD: (i) Section 112 of the Evidence Act raises, inter alia, a conclusive presumption that a child born during the continuance of a valid marriage between his mother and any man is the legitimate son of the man, and this conclusive presumption can only be rebutted if it is shown that the parties to the marriage had no access to each other at any time when he could have been begotten. The appellants had completely failed to prove the non access of R to his third wife at any time when the plaintiff respondent could have been begotten. In these circumstances there was no reason to interfere with the concurrent finding of the courts below that the plaintiff respondent was the legitimate son of R. [357 E F] (ii) The contention of the donee appellant that the gift in her favour by her husband of ancestral immovable property made out of affection should be upheld must fail because no such gift is permitted under Hindu Law insofar as immovable ancestral property is concerned. The scope of the expression 'pious purposes ' cannot be extended to include such gifts. [359 D] Kamala Devi vs Bachu Lai Gupta, ; and Guramma Bharatar Chanbassappa Deshmukh vs Malappa, ; , referred to. (iii) Nor can the proposition be accepted that a father in law can make a gift of ancestral immovable property in favour of his daughter in law at the time of her marriage. The case of a daughter in law who would become entitled to property in the father in law 's family in her own right stands on a very different footing from the case of daughter who is being married and to whom a reasonable gift of ancestral immovable property can be made. [360 A B] The rule of Hindu law that gifts made in token of love by a fatherin law to his daughter in law are permitted and become the stridhan pro 354 perty must be taken to refer to gifts of movable properties and such immovable properties as are not joint family properties. [360 C E] Ws gift of immovable ancestral property to his second wife could not therefore be considered to be valid even if it was in purported compliance with the wishes of his father at the time of her marriage. [360 G H]

Appeal No. 843 of 1966. Appeal by special leave from the judgment and order dated February 25, 1965 of the Madhya Pradesh High Court in Misc. petition No. 72 of 1965. G. N. Dikshit, K. L. More and R. N. Dixit, for the appellant. Niren De, Addl. Solicitor General, R. Ganapathy layer and R. H. Dhebar and B. R. G. K. Achar, for respondents Nos. 1 4. section section Shukla, for respondent No. 5. The Judgment of the Court was delivered by Mitter, J. This is an appeal by special leave from a judgment and order dated February 25, 1965 of the Madhya Pradesh High Court at Jabalpur in Miscellaneous Petition No. 72 of 1965. The High Court summarily dismissed the petition under article 226 of the Constitution praying for a writ of certiorari for quashing a notification issued in pursuance of sub sec. (1) of section 10 of the in respect of the delimitation of certain Parliamentary and Assembly constituencies in the State of Madhya Pradesh. The petition was rejected on the short ground that under article 329(a) of the Constitution the said notification could not be questioned in any court. Article 329 which is relevant for our purpose reads: "Notwithstanding anything in this Constitution (a)the validity of any law relating to the delimitation of constituencies or the allotment of seats to such constituencies, made or purporting to be made under article 327 or article 328, shall not be called in question in any court;" Before us it was contended that the notification referred to is not law and secondly it was not made under article 327 of the Constitution. The facts are shortly as follows: The petitioner is a resident of Ujjain and a citizen of India. He had been a voter in all the previous general elections and still claims to be a voter in Daulatganj, Ward No. 5, in the Electoral Roll of Ujjain. He claims 402 to have a right to contest the election to any Assembly or Parliamentary constituency in the State of Madhya Pradesh. The impugned notification which was published in the Gazette of India Extraordinary on July 24, 1964 shows Ujjain as a Constituency ,reserved for the scheduled castes. It was made in pursuance of sub section (1) to section 10 of the and recites that proposals of the Delimitation Commission for the delimitation of Parliamentary and Assembly constituencies in the State of Madhya Pradesh had been published on October 15, 1963 in the Gazette of India and in the official gazette of the State of Madhya Pradesh and that after considering all objections and suggestions the Commission determined that the territorial constituencies into which the State of Madhya Pradesh shall be divided for the purpose of elections to the House of the People and the extent of each such constituency shall be as shown in Table. A. Respondent No. 1 to the petition was the Delimitation Com mission, respondent No. 2 was its Chairman and respondents Nos. 3 and 4 were its members. The petition alleges many acts of omission and commission on the part of the Commission and its Chairman, but we are not here concerned with all that. If we come to the conclusion that the High Court was not justified in rejecting the petition on the short ground noted above, we shall have to send the case back to the High Court for trial on merits. According to the petitioner, Ujjain city has been from the inception of the Constitution of India a general constituency and by the fact of the city being converted into a reserved constituency his right to be a candidate for Parliament from this constituency has been taken away. In order to appreciate the working of the Delimitation Com mission and the purpose which it serves reference must be made to the following Articles of the Constitution. Article 82 provides that "Upon the completion of each census, the allocation of seats in the House of the People to the States and the division of each State into territorial constituencies shall be readjusted by such authority and in such manner as Parliament may by law determine: Provided that such readjustment shall not affect representation in the House of the People until the dissolution of the then existing House. " This Article is a verbatim copy of clause (3) of article 81 of the Constitution before its amendment in 1956. 403 Article 327 of the Constitution provides that 'Subject to the provisions of this Constitution, Parliament may from time to time by law make provision with respect to all matters relating to, or in connection with, elections to either House of Parliament or to the House or either House of the Legislature of a State including the preparation of electoral rolls, the delimitation of consti tuencies and all other matters necessary for securing the due constitution of such House or Houses. " It was argued before us that the , was not passed by Parliament under article 327, but under article 82 and as such courts of law are not precluded from entertaining the question as to the validity of a notification under the because of the opening words of article 329. Article '82, however, merely envisages that upon the completion of each census the allocation of seats in the House of the People and the division of each State ' into territorial constituencies may have to be readjusted. It is article 327 which enjoins upon Parliament to make provision by law from time to time with respect to all matters relating to or in connection with elections to either House of Parliament . delimitation of constituencies and all other matters necessary for securing the due constitution of such House or Houses. The preamble to the shows that it is an Act to provide for the readjustment of the allocation of seats in the House of the People to the States, the total number of seats in the Legislative Assembly of each State, the division of each State into territorial constituencies for elections to the House of the People and Legislative Assemblies of the States and for matters connected therewith Article 82 only foreshadows that readjustment may be necessary upon completion of each census, but Art ' 327 gives power to Parliament to make elaborate provision for such readjustment including delimitation of constituencies and all other matters connected therewith as also elections to either House of Parliament. Section 3 of the (hereinafter referred to the Act) enjoins upon the Central Government to constitute a Commission to be called the Delimitation Commission as soon as may be after the commencement of the Act. Section 4 of the Act provides that it is the duty of the Commission to readjust on the basis of the latest census figures the allocation of seats in the House of the People to the several States. and the division of each State into territorial, constituencies for the purpose of elections to the House of the People. Section 8 of the Act makes it obligatory on the Commission to , 'determine by order, on the basis of the latest census figures, and .having regard to the provisions of articles 81, 170, 330 and 332, the 404 number of seats in the House of the People to be allocated to each State and the number of seats, if any, to be reserved for the Scheduled Castes and for the Scheduled Tribes of the State as also the total number of seats to be assigned to the Legislative Assembly of each State and the number of seats, if any, to be reserved for the Scheduled Castes and for the Scheduled Tribes of the State. The delimitation of the constituencies is provided for in section 9, sub section (1) of the Act which reads: "The Commission shall, in the manner herein provided, then distribute the seats in the House of the People allocated to each State and the seats assigned to the Legislative Assembly of each State to single member territorial constituencies and delimit them on the basis of the latest census figures, having regard to the provisions of the Constitution and to the following provisions, namely: (a) all constituencies shall, as far as practicable, be geographically compact areas, and in delimiting them regard shall be had to physical features, existing boundaries of administrative units, facilities of communication and public convenience; (b) every assembly constituency shall be so delimited as to fall wholly within one parliamentary constituency; (c) constituencies in which seats are reserved for the Scheduled Castes shall be distributed in different parts of the State and located, as far as practicable, in those areas where the proportion of their population to the total is comparatively large; and (d) constituencies in which seats are reserved for the scheduled Tribes shall, as far as practicable, be located in areas where the proportion of their population to the total is the largest. " Under sub s.(2) of the section the Commission shall publish its proposals for the delimitation of the constituencies together with the dissenting proposals, if any, of an associate member, specify a date on or after which the proposals will be further considered and consider all objections and suggestions which may have been received by it before the day so specified. Thereafter its duty is by one or more orders to determine the delimitation of Parlia mentary constituencies and the delimitation of assembly constituencies of each State. Publicity is to be given to the orders of the Commission under section 10(1) of the Act. Sub section (1) prescribes that each of its orders made under section 8 or section 9 is to be published in the Gazette of India and the official gazettes of the States con 405 cerned. Sub section (3) provides that as soon as may be after such publication every such order shall be laid before the House of the People and the Legislative Assemblies of the States concerned. The legal effect of the orders is given in sub sections (2) and (4) of ' section 10 of the Act. Under sub section (2) "upon publication in the Gazette of India, every such order shall have the force of law and shall not be called in question in any court". Under sub section (4) (omitting the irrelevant portion) the readjustment of representation of the several territorial constituencies in the House of the People or in the Legislative Assembly of a State and the delimitation of those constituencies provided for in any such order shall apply in relation to every election to the House or to the Assembly, as the case may be, held after the publication in the Gazette of India of that order and shall so apply in supersession of the provisions relating to such representation and delimitation contained in the Representation of the People Act, 1950, and the Delimitation of ' Parliamentary and Assembly Constituencies Order, 1961. It will be noted from the above that it was the intention of the, legislature that every order under sections 8 and 9 after publication is to have the force of law ' and not to be made the subject matter of controversy in any court. In other words, Parliament by enacting section 10(2) wanted to make it clear that orders passed under sections 8 and 9 were to be treated as having the binding force of law and not mere administrative directions. This is further reinforced by sub s.of s.10 according to which the readjustment of representations of the several territorial constituencies in the House of the People and the delimitation of those constituencies provided for in any such order (i.e. under section 8 or section 9) was to apply in relation to every election to the House held after the publication of the order in the Gazette of India and these provisions contained in the order were to supersede all provisions relating to such representation and delimitation contained in the Representation of the People Act,, 1950 and the Delimitation of Parliamentary and Assembly Constituencies Order, 1961. In effect, this means the complete effacement of all provisions of this nature which were in force before the passing of the orders under sections 8 and 9 and only such orders were to hold the field. Therefore although the impugned notification was not a statute passed by Parliament, it was a law relating to the delimitation of constituencies or the allotment of seats to such constituencies made under article 327 of the Constitution. Our attention was drawn to Bill No. 98 or 1962 for providing; for readjustment of allocation of seats in the House of the People to the States, the total number of seats in the Legislative Assembly of each State, the division of each State into territorial constituencies for elections to the House of the People and Legislative 406 Assemblies of the States and for matters connected therewith and the statement of objects and reasons therefor as appearing in the Gazette of India Extraordinary, Part II, Section 2 of the year 1962 which mentions articles 82 and 170(3) of the Constitution. The said statement further shows that as the 1961 census, had been completed a readjustment of the several matters earlier mentioned was necessary inasmuch as there had been a change in the popula tion figures from the 1951 census. This, however, does not mean that the was a law made under article 82. Article 82, as already noted, merely envisaged that readjustment might be necessary after each census and that the same should be effected by Parliament as it may deem fit, but it is article 327 which casts a duty on Parliament specifically to make provision with respect to all matters relating to or in connection with elections to either House of Parliament etc. the delimitation of constituencies and all other necessary matters for securing the due constitution of such House or Houses. With regard to section 10 (2) of the Act it was argued by counsel for the appellant that the order under section 9 was to have the force of law, but such order was not itself a law. To support this contention our attention was drawn to a judgment of the Supreme .,Court of Canada in His Majesty the King vs William Singer(1). There sub section (2) of section 3 of the War Measures Act of 1914 provided, that all orders and regulations made under this section shall have the force of law and shall be enforced in such manner and by such courts, officers and authorities as the Governor in Council may person be and may be varied, extended or revoked by any subsequent order or regulation. By section 4 of the Act the Governor in Council was empowered to prescribe the penalties that may be imposed for violating the orders and regulations under this, Act and also to prescribe whether such penalties shall be imposed upon summary conviction or upon indictment. Purporting to act under the provisions of the War Measures Act the Governor in Council made an order to the effect that no retail druggist shall sell or supply straight, Codeine, whether in powder, tablet or liquid form, or preparations containing any quantity of any of the narcotic drugs mentioned in Parts 1 and 11 of the Schedule to the Opium and Narcotic Drug Act, mixed with medicinal or other ingredients, except upon the written order or prescription therefor signed and dated by a physician, veterinary surgeon or dentist. The order further provided that any person found in possession of Codeine or preparation containing narcotic drugs mentioned in Parts 1 and 11 of the Schedule to the Opium and Narcotic Drug Act mixed with other medicinal or other in gradients, save and except under the authority of a licence from the Minister of Pensions and National Health shall be liable to the penalties provided upon (1) [1941] Canada Law Reports, 111. 407 Summary conviction under the provisions of section 4 of the Opium, and Narcotic Drug Act. The opinion and narcotic Drug Act which was a Dominion ' statute contained a schedule wherein narcotic drugs were enumerated, but which up to the date of the order in question did not contain Codeine. Under the provisions of that order a charge was laid against the respondent, a retail,druggist, that he did without lawful. excuse disobey an Act of the Parliament of Canada for which No. penalty or other mode of punishment was expressly provided,. to wit; Paragraph two of regulations dated 11th day of September, 1939, of the War Measures Act, by wilfully selling Codeine, a narcotic drug mentioned in Part Two of the Schedule to the Opium and Narcotic Drug Act without first having had and ob tained a written order or prescription therefor signed and dated by a physician, contrary to sec. 164, Criminal Code of Canada. Section 164 of the Criminal Code enacted specifically that the offence must consist in wilfully doing any act which was forbidden or omitting to do any act which was, required to be done by an Act of the Parliament of Canada. In his judgment Rinfret, J. observed: (page 114): "It is an Act of the Parliament of Canada which the guilty person must have disobeyed without lawful excuse." His Lordship agreed with the Trial Judge and with the majority of the Court of Appeal that in the premises section 164 of the Criminal ' Code had no application and said: "Of course, the War Measures Act enacts that the orders and regulations made under it "shall have the force of law. It cannot be otherwise. They are made to be obeyed and,. as a consequence, they must have the force of law. But that is quite a different thing from saying that they will be deemed to be an Act of Parliament. " Taschereau,J. put the matter rather tersely (see at p. 124): "An order in Council is passed by the Executive Council, and an Act of Parliament is enacted by the House of Commons and by the Senate of Canada. Both are entirely different, and unless there is a provision in the law stating that the Orders in Council shall be considered as forming part of the law itself, or that any offence against the regulations shall be a violation of the Act, it cannot be said that the violation of an Order in Council is a violation of an Act of Parliament within the meaning of section 164 of the Criminal Code. " The observations from the judgment of Taschereau, J. point out he difference between something which has the force of law as. 408 distinguished from an Act of Parliament itself. The Order in ,Council in the Canadian case, although it had the force of law, was not a provision contained in an Act of Parliament and therefore although there was a violation of the Order in Council there was no violation of any section of an Act of the Parliament of the Dominion of Canada. Counsel for the appellant also drew our attention to the judgment of this Court in Sangram Singh vs Election Tribunal, Kotah, Bhurey Lal Baya.(1) There the Court had to consider the effect of section 105 of the Representation of the People Act, 1951 (Act XLIII of 1951) which provided that "every Order of the Tribunal made under this Act shall be final and conclusive". The contention there put forward was that this provision put an order of the Tribunal beyond question either by the High Court under article 226 of the Constitution or by the Supreme Court in appeal therefrom. It Was further submitted that the intention of the Legislature was that the decisions of the Tribunals were to be final on all matters whether of fact or of law, are they could not be said to commit an error of law when acting within the ambit of their jurisdiction. They decided what the law was. This submission was turned ,down by this Court and it was observed after referring to Hari Vishnu vs Ahmed Ishaque(2) that"the Court laid down in general terms that the jurisdiction under article 226 having been conferred by the Constitution, limitations cannot be placed on it, except by the Constitution itself." In this case we are not faced with that difficulty because the ,Constitution itself Provides under article 329(a) that any law relating to the delimitation of constituencies etc. made or purporting to be made under article 327 shall not be called in question in any court. 'Therefore an order under section 8 or 9 and published under section 10(1) would not be saved merely because of the use of the expression " shall not be called in question in any court". But if by the publication of the order in the Gazette of India it is to be treated as law made under article 327, article 329 would prevent any investigation by any court of law. In dismissing the petition under article 226 of the Constitution the High Court of Madhya Pradesh relied exclusively on the decision of this Court in N.P. Punnuswami vs Returning Officer, Namakkal Constituency and others(3) which proceeded on the basis of certain ,concessions made. There the appellant was a person who had filed a nomination paper for election to the Madras Legislative Assembly from the Namakkal constituency which was rejected. 'The appellant thereupon moved the High Court under article 226 (1) [1955] 2 S.C.R. p. 1 at pp. 6 and 7. (2) [1955] 1 S.C.R. 1104. (3) ; 409 of the Constitution praying for a writ of certiorai to quash the order of the Returning Officer rejecting his nomination paper and to direct the said officer to include his name in the list of valid nominations to be published. The High Court dismissed the application on the ground that it had no jurisdiction to interfere with the order of the Returning Officer by reason of article 329 (b) of the Constitution. The Court pointed out (at p. 225): "A notable difference in the language used in articles 327 and 328 on the one hand, and article 329 on the other, is that while the first two articles begin with the words "subject to the provisions of this Constitution", the last article begins with the words "notwithstanding anything in this Constitution". It was conceded at the Bar that the effect of this difference in language is that whereas any law made by Parliament under article 327, or by the State Legislatures under article 328, cannot exclude the jurisdiction of the High Court under article 226 of the Constitution, that jurisdiction is excluded in regard to matters provided for in article 329. " Reference was also made by counsel to certain other concessions which appear at pp. 233 and 237 of the report. It will be noted, however, that the decision in that case did not proceed on the concessions made. The Court examined at some length the scheme of Part XV of the Constitution and the Representation of the People Act, 1951 which was passed by the Parliament under article 327 of the Constitution to make detailed provision in regard to all matters and all stages connected with elections to the various Legislatures in the country. It was there argued that since the Representation of the People Act was enacted subject to the provisions of the Constitution, it could not bar the jurisdiction of the High Court to issue writs under article 226 of the Constitution. This was turned down by the Court observing: "This argument, however, is completely shut out by reading the Act along with article 329(b). It will be noticed that the language used in that Article and in section 80 of the Act is almost identical, with this difference only that the Article is preceded by the words "notwithstanding anything in this Constitution". (p. 232) The Court went on to observe at p. 233: "It may be pointed out that article 329 (b) must be read as complimentary to lause (a) of that Article Clause (a) bars the jurisdiction of the courts with regard to such law as may be made under articles 327 and 328 relating to the delimitation of constituencies or the allot ment of seats to such constituencies. If Part XV of the 410 constitution is a code by itself, i.e., it creates rights and provides for their enforcement by a special tribunal to the exclusion of all courts including the High Court, there can be no reason for assuming that the Constitution left one small part of the election process to be made the subject matter of contest before the High Courts and thereby upset the time schedule of the elections. The more reasonable view seems to be that article 329 covers all "electoral matters". An examination of sections 8 and 9 of the Act shows that the matters therein dealt with were not to be subject to the scrutiny of any court 'of law. Section 8, which deals with the readjustment of the number of seats, shows that the Commission must proceed on the ' basis of the latest census figures and by order determine having regard to the provisions of articles 81, 170, 330 and 332, the number of seats in the House of the People to be allocated to each State and the number of seats, if any, to be reserved for the Scheduled Castes and for the Scheduled Tribes of the State. Similarly, it was the duty of the Commission under section 9 to distribute the seats in the House of the People allocated to each State and the seats assigned to the Legislative Assembly of each State to single member, territorial constituencies and delimit them on the basis of the latest census figures having regard to the provisions of the Constitution and to the factors enumerated in cls. (a) to (d) of sub section Sub section, (2) of section 9 shows that the work done under sub section (1) was not to be final, but that the Commission (a) had to publish its proposals under sub section (1) together with the dissenting proposals, if any, of an associate member, (b) to specify a date after which the proposals could be further considered by it, (c) to consider, all objections and suggestions which may have been received before the date so specified, and for the purpose of such consideration, to hold public sittings at such place or places as it thought fit ' It is only then that the Commission could by one or more order ' determine the delimitation of Parliamentary constituencies as also of Assembly constituencies of each State. In our view, therefore, the objection to the delimitation of constituencies could only be entertained by the Commission before the date specified. Once the orders made by the Commission under sections 8 and 9 were published in the Gazette of India and in the official gazettes of the States concerned, these matters could no longer be reagitated in a court of law. There seems to be very good 'reason behind such a provision. If the orders made under sections 8 and 9 were not to be treated as final, the effect would be that any voter, if he so wished, could hold up an election indefinitely by questioning the delimitation of the constituencies from court to court., Section 10(2) of the Act clearly demonstrates the intention of the ' Legislature that the orders under sections 8 and 9 published under 411 section 10 (1) were to be treated as law which was not to be questioned in any court. It is true that an order under s.8 or 9 published under s.10(1) is not part of an Act of Parliament, but its effect is to be the same. The situation here bears some comparison with what obtained in Harishankar Bagla and another vs The State of Madhya Pradesh.(1)There section 3 of the Essential Supplies (Temporary Powers) Act, 1946, provided that the Central Government, so far as it appeared to it to be necessary or expedient for maintaining or increasing supplies of any essential commodity, or for securing their equitable distribution and availability at fair prices, might by order provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein. Under section 4 it was open to the Central Government by notified order to direct that the power to make orders under section 3 shall, in relation to Such matters and subject to such conditions, if any, as may be specified in the direction, be exercisable also by such officer or authority subordinate to the Central Government or such State Government or such officer or authority subordinate to a State Government as may be specified in the direction". Section 6 of the Act read as follows: "Any order made under section 3 shall have effect notwithstanding anything inconsistent therewith contained in any enactment other than this Act or any instrument having effect by virtue of any enactment other than this Act." Under powers conferred by section 3 the Central Government pro mulgated on September 10, 1948, Cotton Textiles (Control of Movement) Order, 1948. Section 3 of the said order provided that no person shall transport or cause to be transported by rail, road, air, sea or inland navigation any cloth, yarn or apparel except under and in accordance with a general permit notified in the Gazette of India by the Textile Commissioner or a special transport permit issued by the Textile Commissioner. The appellant Harishankar Bagla and his wife were arrested at Itarsi by the Railway Police for contravention of section 7 of the Essential Supplies (Temporary Powers) Act, 1946 read with cl. (3) of the Cotton Textiles (Control of Movement) Order, 1948 having been found in possession of new cotton cloth weighing over six maunds which was being taken by them from Bombay to Kanpur without any permit. The State of Madhya Pradesh contended before this Court that the judgment of the High Court that section 6 of the Act was unconstitutional was not justified. This contention was upheld by this Court and it was observed: "By enacting section 6 Parliament itself has declared that an order made under section 3 shall have effect notwithstanding any (1) M15Sup CI/67 13 412 inconsistency in this order with any enactment other than this Act. This is not a declaration made by the delegate but the Legislature itself has declared its will that way in section 6 . The power of the delegate is only to make an order under section 3 . Once the delegate has made that order its power is exhausted. Section 6 then steps in wherein the Parliament has declared that as soon as such an order comes into being that will have effect notwithstanding any inconsistency therewith contained in any enactment other than this Act. " Similarly it may be said here that once the Delimitation Commission has made orders under sections 8 and 9 and they have been published under section 10(1), the orders are to have the same effect as if they were law made by Parliament itself. Reference was also made by counsel for the respondent to the judgment of this Court in Kailash Nath and another vs State of U.P. and others.(1) There under section 4 of the U.P. Sales Tax Act the State Government was empowered either to exempt certain kinds of transactions from the payment of sales tax completely, or to allow a rebate of a portion of the tax payable. In pursuance of that, the Uttar Pradesh Government issued a notification that with effect from December 1, 1949 the provisions of section 3 of the Act (relating to the levy of sales tax) shall not apply to the sales of cotton cloth or yarn manufactured in Uttar Pradesh, made on or after December 1, 1949 with a view to export such cloth or yarn outside the territories of India on the condition that the cloth or yarn is actually exported and proof of such actual export is furnished. It was held by this Court that "this notification having been made in accordance with the power conferred by the statute has statutory force and validity and, therefore, the exemption is as if it is contained in the parent Act itself. " In Jayantilal Amrit Lal Shodhan vs F. N. Rana and others(2) the question for consideration by this Court was the effect of a notification of the President of India under article 258(1) of the Constitution. The President of India by a notification dated July 24, 1959, under article 258(1) of the Constitution entrusted with the consent of the Government of Bombay to the Commissioners of Divisions in the State of Bombay the functions of the Central Government in relation to the acquisition of land for the purposes of the Union. Two new States were constituted by the Bombay Reorganisation Act (XI of 1960) and the Baroda Division was allotted to the State of Gujarat. In exercise of the powers entrusted by the notification issued by the President on July 24, 1959, the Commissioner of the Baroda Division notified under s, 4(1) of the Land Acquisition Act (1 of 1894) the appellant 's land as being needed for a public purpose, A.I.R. 1957 S.C. 790. (2) [1964] 5 S.C.R. p. 294. 413 and authorised the Special Land Acquisition Officer, Ahmedabad, to perform the functions of the Collector under the Act. The Special Acquisition Officer after considering the objections raised by the appellant submitted this report to the Commissioner who issued a declaration under section 6(1) of the Act. The appellant then moved the High Court of Gujarat under articles 226 and 227 of the Constitution for a writ, but his petition was dismissed. His case inter alia was that the President 's notification under article 258 (1) was ineffective after the partition since the consent of the Government of the newly formed State of Gujarat to the entrustment of functions to its officer had not been obtained as required by, Art.258 (1). Article 258 (1) of the Constitution reads: "Notwithstanding anything in this Constitution the President may, with the consent of the Government of a State, entrust either conditionally or unconditionally to that Government or to its officers functions in relation to any matter to which the executive power of the Union extends". One of the contentions put forward before this Court was that the power exercised by the President was executive in character and the functions which might be entrusted to a State Government under article 258(1) were executive and as such entrustment of such executive authority was not law within the meaning of section 87 of the Bombay Reorganisation Act which made provisions for maintaining the territorial extent of the laws even after the appointed day. On this basis, it was argued that the Commissioners of the new State of Gujarat after May 1, 1960 were incompetent by virtue of the Presidential notification to exercise the functions of the Union under the Land Acquisition Act. It was observed by the majority Judges of this Court at p. 308: "The question which must be considered is whether the notification issued by the President is law within the meaning of section 87 read with section 2 (d) of the Bombay Reorgani sation Act, 11 of 1960." After analysing the three stages of the constitutional process leading to the ultimate exercise of function of the Union Government the Court observed (at p. 309): "By article 53 the executive power of the Union is vested in the President and is exercisable by him either directly or through officers subordinate to him in accordance with the Constitution and the executive power of the Union by article 73 extends subject to the provisions of the Constitution: (a) to the matters with respect to which Parliament has power to make laws; and 414 (b) to the exercise of such rights, authority and jurisdiction as are exercisable by the Government of India by virtue of any treaty or agreements: Provided that the executive power referred to in sub cl. (a) shall not, save as expressly provided in the Constitution or in any law made by Parliament, extend in any State to matters with respect to which the Legislature of the State has power to make laws. Prima facie, the executive power of the Union extends to all matters with respect to which Parliament has power to make laws and in respect of matters to which the power of the Parliament extends". The Court then went on to consider the nature of the power exercised by the President under article 258(1). It noted that by item 42 List III the subject of acquisition of property fell within the Concurrent List and the Union Parliament had power to legislate in respect of acquisition of property for the purposes of the Union and by article 73(1)(a) the executive power of the Union extended to the acquisition of property for the Union. It was observed that "by article 298 of the Constitution the executive power of the Union extends to the carrying on of any trade or business and to the acquisition, holding and disposal of property and the making of contracts for any purposes. The expression "acquisition, holding and disposal of property" would, in our judgment, include com pulsory acquisition of property. That is a provision in the Constitution which within the meaning of the proviso to article 73(1) expressly provides that the Parliament may acquire property for the Union and consequently executive power of the Union in relation to compulsory acquisition of property is saved thereby, power of the State to acquire land notwithstanding. " Reference was made also by the majority of Judges to the case of Edward Mills Co. Ltd. vs State of Ajmer(1) where it was held that an order made under section 94(3) of the Government of India Act, 1935 was, notwithstanding the repeal of the Government of India Act, 1935, by article 395 of the Constitution, law in force. Finally, it held by the majority of Judges (p. 315): "We see no distinction in principle between the notification which was issued by the Governor General in Edward Mills ' case, and the notification with which we are dealing in this case. This is not to say that every order issued by an executive authority has the force of law. If the order is purely administrative, or is not issued in exercise of any statutory authority it may not have the force of law. But where a general order is issued even by an executive (1) [955] 415 authority which confers power exercisable under a statute, and which thereby in substance modifies or adds to the statute, such conferment of powers must be regarded as having the force of law. " In this case it must be held that the order under sections 8 and 9 published under section 10 (1) of the were to make a complete set of rules which would govern the re adjustment of number of seats and the delimitation of constituencies. In this case the powers given by the and the work of the Commission would be wholly nugatory unless the Commission as a result of its deliberations and public sittings were in a position to re adjust the number of seats in the House of the People or the total number of seats to be assigned to the Legislative Assembly with reservation for the Scheduled Castes and Scheduled Tribes and the delimitation of constituencies. It was the will of Parliament that the Commission could by order publish its proposals which were to be given effect to in the subsequent election and as such its order as published in the notifica tion of the Gazette of India or the Gazette of the State was to be treated as law on the subject. In the instant case the provision of section 10 (4) of the Act puts orders under sections 8 and 9 as published under section 10 (1) in the same street as a law made by Parliament itself which, as we have already said, could only be done under article 327, and consequently the objection that the notification was not to be treated as law cannot be given effect to. In the result the appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed.

IN-Abs

By a notification of the Delimitation Commission dated July 24, 1964 issued in terms of section 10(1) of the , Ujjain City, which had been a general constituency, was notified as reserved for the Scheduled Castes. The appellant who was a resident of Ujjain and a citizen of India, Mad a petition under article 226 praying for a writ of certiorari for quashing the notification on the ground that he had a right to be candidate for parliament from the Ujjain City constituency which had been taken away. The petition was rejected by the High Court on the short ground that the notification could not be questioned in any court because under article 329(a) of the Constitution the validity of any law relating to the delimitation of constituencies or the allotment of seats to such constituencies, made or purporting to be made under article 327 or article 328, could not be called in question in any court. In appeal to this Court it was contended on behalf of the appellant that the impugned notification, which was an order under section 9 and published in accordance with the provisions of section 10(1) of the Act, was not a law within the meaning of section 329; that in any event under section 10(2) such an order was to have the force of law but was not itself a law; and that the notification was not made under article 327 but article 82 of the Constitution. HELD : dismissing the appeal, The impugned notification was a law relating to the delimitation of constituencies or the allotment of seats to such constituencies made under article 327 of the Constitution. An examination of sections 8 and 9 of the Act showed that the matters therein dealt with were not to be subject to the scrutiny of any court of law. Section 10(2) clearly demonstrates the intention of the legislature that the orders under sections 8 and 9 published under section 10(1) were to be treated as law which was not to be questioned in any court. There was very good reason behind such a provision. If the orders made under sections 8 and 9 were not to be treated as final, the result would be that any voter, if he so wished, could hold up an election indefinitely by questioning the delimitation of the constituencies from court to court. [410 B C, G, H] Although an order under section 8 or section 9 published under section 10(1) is not part of an Act of Parliament, its effect is to be the same. Section 10(4) puts such an order in the same position as a law made by the Parliament itself which could only be made by it under article 327. [415 E] 401 Case law referred to. Article 82 merely envisages that upon the completion of each census the allocation of seats in the House of the People and the division of each State into territorial constituencies may have to, be readjusted. It is article 327 which enjoins upon Parliament to make provision by law from time to time with respect to all matters relating to or in connection with elections to either House of Parliament, delimitation of constituencies and all other matters necessary for securing the due constitution of such House or Houses. [406 C]

Appeals Nos. 653 to 655 of 1964. Appeals from the judgment and decree dated November 1, 1962 of the Allahabad High Court in Special Appeals Nos. 267 and 292 of 1957. C. K. Daphtary, Attorney General, Shanti Bhushan, AdvocateGeneral, U.P. and 0. P. Rana, for the appellants (in C.As. Nos. 653 and 654 of 1964) and the respondents (in C.A. No. 655 of 1964). A. K. Sen, B. R. L. Iyengar, V. P. Misra, section K. Mehta and K.L. Mehta, for the respondent (in C.As. Nos. 653 and 654 of 1964) and the appellant (in C. A. No. 655 of 1964). 363 The Judgment of the Court was delivered by Sikri, J. These appeals by certificates granted by the High Court of Judicature at Allahabad raise one principal question: Whether the amendment of the definition of the word "estate" in clause (8) of section 3 of the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 (hereinafter referred to as the Reforms Act) made by section 2 of the Uttar Pradesh Zamindari Abolition and Land Reforms (Amendment) Act, 1963, hereinafter called the impugned Act, is within the definition of the word "estate" in article 31A(2) of the Constitution? These appeals arise out of a petition filed by Raja Anand Brahma Shah of Agori Barhar Raj under article 226 of the Constitution. The State of Uttar Pradesh had issued a notification No. 3549/1/A 499 dated June 30 1953, extending the provisions of Reforms Act, 1950, to apply to the areas to the South of Kaimur Range. It then issued another notification No. 3949/(1) A 4991949 dated July 1953, directing the vesting of all "estates" situated to the south of Kaimur including the Pargana Agori, owned by the petitioner. The Pargana Agori is comprised of 123 villages. At the time the petition was filed and the judgment of the Single Judge, dated November 8, 1957, was delivered, section 3(8) of the Reforms Act stood as follows . " 'Estate ' means the area included under an entry in any of the registers prepared and maintained under clause (a), (b), (c) or (d) of section 32 of the United Provinces Land Revenue Act, 1901, or in the registers maintained under clause (e) of the said section in so far as it relates to a permanent tenure holder and includes share in or of an estate. " The case of the petitioner in short was that Pargana Agor was not an estate within section 3(8) of the Reforms Act because nor ecords were prepared and maintained under the provisions of section 32 of the Land Revenue Act, 1901, in respect of Pargana Agori, and the records alleged to have been prepared between 1840 to 1843 under the Bengal Regulations were unauthorised and the Government itself did not approve these records at any time. The learned Single Judge, keeping in view the definition in section 3(8) of the Reforms Act, came to the conclusion that the whole of 81 villages, including the cultivated. area, the forest, the hill and everything else would vest in the State of Uttar Pradesh. He held that the Raja 's name alone was entered in the khewats of 64 villages, and in the khewats of 17 villages although the names of under proprietors were written, the Raja was the proprietor of the entire villages because the Raja 's name was mentioned as "Malik Ala". With respect to the remaining 42 villages he held that only the areas mentioned in the khewats of the different villages and not the forests and hills attached to them Sup. C.I/66 10 364 fell within section 3(8). In the result he allowed the petition in part and issued a writ of mandamus directing the respondents not to take possession nor to interfere with the possession of the petitioner over the hills and jungle appertaining to the said 42 villages as distinguished from the areas mentioned in the khewats of these villages at the time the vesting order was issued. He dismissed the rest of the claim. The petitioner and the State of Uttar Pradesh both filed appeals, the petitioner claiming that the petition should be allowed in entirety, the State claiming that the petition should be dismissed. During the pendency of the appeals (U. P. Act XIV of 1958) substituted the following new section 3(8) in the Reforms Act, with retrospective effect from July, 1952: "3(8) "Estate" means and shall be deemed to have always meant the area under one entry in any of the registers described in clause (a), (b), (c) or (d) and, in so far as, it relates to a permanent tenure holder in any register described in clause (e) of section 32 of the U. P. Land Revenue Act, 1901, as it stood immediately prior to the coming into force of this Act, or, subject to the restriction mentioned with respect to the register described in clause(e) in any of the registers maintained under section 33 of the said Act or in a similar register described in or prepared or maintained under any other Act, Rule, Regulation or Order relating to the preparation or maintenance of record of rights in force at any time and includes share in or of an "estate '. Explanation : The Act, Rule, Regulation or order referred to in this clause shall include Act, Rule, Regulation or order made or promulgated by the erstwhile Indian State whose territories were merged or absorbed in the State of Uttar Pradesh prior to the date of vesting notified under section 4 of this Act. " In the light of this definition the Division Bench came to the conclusion that only the areas expressly mentioned in the Khewats vested in the State. It accordingly dismissed the appeals filed by the State and partly allowed the appeal of the petitioner. The State filed two petitions for leave to appeal, one against the judgment in Special Appeal No. 267/1957 and the other against the judgment in Special Appeal No. 292/1957. The Raja filed a petition for leave to appeal against the judgment in Special Appeal No. 267/1957. The High Court granted three certificates on August 16, 1963, and three appeals are now before us, all arising out of the one petition under article 226 filed by the petitioner Raja. On January 1, 1964, the English translation of the impugned Act (U. P. Act No. 1 of 1964) was published, it having received assent 365 of the President on December 31, 1963. The relevant portion of the impugned Act reads as follows: "Section 2. In the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950 (hereinafter called the principal Act), in clause (8) of Section 3, the following proviso shall, with effect from the first day of July, 1952, be added before the explanation, and the notifications issued under the principal Act (including sections 2 and 4 thereof) or the U. P. Land Reforms (Amendment) Act, 1954 (including section I thereof) or the U. P. Land Reforms (Amendment) Act, 1956 (including section I thereof) or the U. P. Land Reforms (Amendment) Act, 1958 (including section I thereof) shall, notwithstanding any judgment, decree, determination or order of any Court be so construed as if the said proviso had, since the said date, formed part of the principal Act, as also of the definition of the word 'estate ' as given in the Uttar Pradesh Zamindari abolition and Land Reforms (Amendment) Act, 1958: Provided that in Mirzapur District each of the areas bounded as given in Schedule VII shall, notwithstanding anything contained in the foregoing definition, be deemed to be an estate. After Schedule VI of the principal Act, the following new Schedule shall be added and be deemed to have been so added with effect from the first day of July, 1952. Schedule VII [See proviso to clause (8) of section 3] 1. The area known as Pargana Agori in district Mirzapur bounded in the North by the Kaimur Range confining with the villages Padaunian (also known as Parhwanian), Chingauri, Guraul (also known as Gurwal) Karaundia, Barauli, Dumkari Khirhata, Gadman, Khajraul (also known as Khajuraul) Dugauli, Baragaon, Jurauli, Jurauli Kulani, Rajpur, Raipura, Senduri, Raghunathpur, Bahawar, Basauli, Baghuwari, Lodhi, Raunp, Musahi, Churk and Urauli (also known as Arauli) of Pargana Barhar and villages Biranchuwa, Makri Bari, Pokhraundh, Lauwa, Cherui, Baghma, Markundi of Pargana Bijaigarh of district Mirzapur as far as the Western boundary of village Sasnai of Pargana Bijaigarh which then forms the boundary between Parganas Agori and Bijaigarh upto the point opposite the junction of the rivers Kanhar and Son and thence onward the River Son, forms its northern boundary. 366 in the east and south east by the territory of the State of Bihar; in the South by Tehsil Dudhi of District Mirzapur; in the South West and West by the territory of Madhya Pradesh (erstwhile Rewa State); but excluding village Kishun Chak, which is a separate estate within Pargana Agori and is bounded on the North, East and South by village Kon Khas and in the West by village Mohiuddinpur of District Mirzapur. " The learned counsel for the State has raised three points before us in the two appeals filed by the State: (1) In view of the impugned Act, Pargana Agori is an "estate within the Reforms Act; (2) The High Court was in error in holding that on account of the mention of a wrong area in the khewat the entry cannot be said to be in respect of the entire area; (3) Naksha Pattidaris prepared by Rai Manak Chand in 1843 in connection with settlement operations constituted record of rights. On the first point M On the first point Mr. A. K. Sen, the learned counsel for the Raja, contends that the impugned Act cannot be saved under article 31A because it has not been passed for agrarian reforms and, secondly, that the impugned Act includes an area within the definition of "estate" in the Reforms Act which is not an "estate" within article 31A(2). He says that the validity of the acquisition under the Reforms Act must be judged in the light of article 31 and article 19. article 31A(2) as enacted by Constitution (Seventeenth Amend ment) Act, 1964, reads as follows: "31A(2) In this article (a) the expression 'estate ' shall in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area and shall also include (i) any jagir, inam or muafi or other similar grant and in the States of Madras and Kerala any janmam right; (ii) any land held under ryotwari settlement; (iii) any land held or let for purposes of agriculture or for purposes ancillary thereto, including waste land, forest land for pasture or sites of buildings and other 367 structures occupied by cultivators of land, agricultural labourers and village artisans; (b) the expression 'right ' in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder, raivat, under raivat or other intermediary and any rights or privileges in respect of land revenue. " It is apparent from the definition that as far as the first part of clause (a) is concerned, we have to look to the meaning given to the expression "estate" or its local equivalent in an existing law relating to tenures. We cannot have recourse to the meaning given in a law which is not existing law. Existing law is defined in article 366(10) thus: " 'Existing law ' means any law, ordinance, order, bye law, rule or regulation passed or made before the commencement of this Constitution by any Legislature, authority or person having power to make such a law, Ordinance, order, bye law, rule or regulation;" Therefore, if the State desires to invoke article 31A and rely on the definition contained in the first part of clause (a) it must show that the area sought to be acquired is an "estate" within the definition contained in a law relating to land tenures passed before the commencement of the Constitution. The relevant definition for our purposes is contained in section 4(4) of the U.P. Land Revenuie Act 1901. It is not necessary to decide whether Pargana Agor ails within the definition of "Mahal" as we have come to the conclusion that Pargana Agori is a Jagir or Inam or a grant of a similar nature within clause (a) (i) of article 31A(2). But before giving our reasons for this conclusion we will dispose of the contention of the learned counsel that Pargana Agori is an estate within cl. (a) (iii) of that Article. According to the learned counsel for the State any waste land or forest land would fall within clause (a)(iii) He says that it is not necessary that it should be held or let for purposes of agriculture or for purposes ancillary thereto. In other words, he would rewrite clause (a)(iii) as follows: Clause (a) (iii) (A) any land held or let for purposes of agriculture or for purposes ancillary thereto, (B) any waste land, forest land for pasture, (C) sites of building and other structures occupied by cultivators of land, agricultural labourers and village artisan. 368 We are unable to read clause (a)(iii) in this way. It seems to us that if this was the intention, cl. (a)(iii) would have been split up and waste land, forest land and land for pasture would have figured separately in a separate clause. There are vast areas of forest land and waste land in India and it is not to be expected that these would be included in the definition indirectly by expanding the word "land". If this was the intention at least the word "including" would have been omitted and substituted by "any". Further the whole object of article 31A is to carry out agrarian reforms and it 'is difficult to see how agrarian reforms can be furthered by the acquisition of every parcel of forest land or waste land. In our opinion the word "including" is intended to clarify or explain the concept of land held or let for purposes ancillary to agriculture. The idea seems to be to remove any doubts on the point whether waste land or forest land could be held to be capable of being held or let for purposes ancillary to agriculture. We must, therefore, hold that forest land or waste land in the area in dispute cannot be deemed to be an estate within cl.(a)(iii) unless it was held or let for purposes ancillary to agriculture. There is no dispute that the cultivated portion of Pargana Agori would fall within clause (a)(iii). The next point is whether Pargana Agori is a Jagir, Inam or other similar grant within article 31A(2)(a)(i). The learned counsel for the State relies on the following facts. About the year 1744 A. D. Shambu Shah the then Raja of Agori was dispossessed of his domains by Raja Balwant Singh and he brought the estate to his own use. It appears from Robert 's report that Raja Balwant Singh and his successor Chet Singh remained in possession for about 40 years. During the insurrection of Chet Singh, Adil Shah, grandson of Shambu Shah, attended on Warren Hastings and made himself so useful that the Governor General gave him a sanad restoring him the Zamindari of Agori Barhar (vide Sherring Hindu Tribes Caste Vol. 1, pages 182 183)reproducedin Baijnath Prasad Singh vs Taj Bali Singh(1) He helped the British in the military operations against Chet Singh thus: "Meanwhile the information of Chet Singh 's flight reached the Governor General at Chunar and a strong force was sent under Major Popham to take possession of Latifpur and then to reduce Bijaigarh. The GovernorGeneral, after visiting Patita, returned to Ramnagar on September 28th, and after restoring confidence by the issue of proclamations of amnesty, formally installed Mahip Narayan Singh, the daughter 's son of Balwant Singh, as (1) A.I.R. 1917 All. 369 successor to Chet Singh. Major Popham and his forces reached Latifpur without opposition and having garrisoned the place with two companies of sepoys under Captain Palmer, proceeded towards Bijaigarh, which he reached after a difficult and trying march. A survey of the height of the fort immediately dispelled all idea of capturing it by escalade. But the Raja of Agori, who had been expelled by Balwant Singh and was now seeking restoration to his ancestral domains, pointed out that the adjoining hill of Lowa Koh commanded the fort and was undefended. Accordingly a battery was at. once thrown up on Lowa Koh, as also on another hill to the north of the fort. On the following day fire was opened from these batteries and resulted in the speedy silencing of the guns of the enemy, which were very ineffectively served." (vide District Gazetteer of Mirzapur page 237) The sanad is dated October 9, 1781, and the translation reads as follows: "Be it known to Azzat Asar (respected) Adal Singh, Zamindar Pargana Agori. That on the basis of his application it has been learnt that the Zamindari of the aforesaid Pargana is his ancient hereditary property and that some years ago Raja Balwant Singh forcibly dispossessed him therefrom and himself took possession thereof Therefore, in view of Bargadam Haqeeq, he should be restored to his own rights so that he may carry on the settling and management of the aforesaid Pargana under the authority of the Amil and Rafat Wa Awali Martabat Raja Mahip Narain Bahadur (?). It be considered as very urgent and be complied with accordingly. Dated the 20th of Shawalul Mukarram, 1195 Hijri Qudsi, corresponding to the 9th of October, 1781, A. D. Qalmi. " Another translation appears in Baijnath Prasad Singh vs Tej Bali Singh:(1) "Be it known to Adil Shah, respectable zamindar of Pergana Agori, that on a petition having been made, it is known that the zamindari in the pargana aforesaid is his old ancestral property. Several years ago Raja Balwant Singh forcibly dispossessed him and brought it to his use. Therefore, in lieu of former rights he should remain in proprietary possession of his share as heretofore. He should make arrangements as regards the cultivation of the land and population of the pargana aforesaid in accordance with the directions of the Revenue Officer (1) A.I.R. 1917 All. 370 and Raja Mohit Narain Bahadur of high rank. He is insisted on doing as directed above." On October 15, 1781, a sanad was granted to the petitioner 's ancestor Adil Shah granting him an Ultmagah Jagir of Rs. 8,001/from Fasli year 1189. Adil Shah obtained possession of the Pargana with the assistance of the British troops. On November 4, 1803, a sanad was granted to the petitioner 's ancestors granting a Jagir of Rs. 8,001/ per annum. Mr. A. K. Sen contends that the sanad was set aside by resolution of the Governor General in Council dated April 1788 (see paragraph 16 of the G.O. No. 3824 of August 30, 1845 printed on page 97 of the Thomason Despatches). He relies on this statement contained in the judgment of the High Court in Writ Petition No. 454/1955 dated November 2, 1962. But this statement refers to the sanad dated October 15, 1781, and not to the sanad dated October 9, 1781, or the later sanad dated November 4, 1803. It appears from the District Gazetteer (page 255) that as soon as Adil Shah obtained possession of the zamindari, Adil Shah really forfeited his claim to the assigned villages, the revenue of which was Rs. 8001/ and as possession had been obtained at the time of the general settlement in 1788 the Governor General in Council ordered the assignment to be resumed. Adil Shah died in 1794 and the New Raja became involved in monetary difficulties. Mr. Barton, the then Collector, made certain proposals and they were accepted at Calcutta and orders were issued to him to revise the assessment of Agori Barhar in such a way as to give the Raja a net profit of Rs. 8,001/ per annum or to allot him, in lieu thereof, a certain number of villages assessed to that amount. Accordingly the revision of certain revenue paying villages took place, and in addition to the villages assigned by Mr. Duncan, certain others assessed to a sum of Rs. 4,000/ were made over to the Raja. This arrangement brought taluqas Agori and Singrauli into the Raja 's possesssion, with the result that he became in 1804 both zamindar and jagirdar, or assignee of the Government demand, in taluqas Kon and Agori, Singrauli and 28 villages in Barhar. Paras 11 to 15 of Robert 's report dated January 1, 1847, are to the same effect. It seems to us clear from the above facts that Pargana Agori is still held under the sanad dated October 9, 1781, and the sanad dated November 4, 1803. The second sanad is a grant of land revenue. That is definitely a Jagir. The learned counsel for the State contends that the fact that Adil Shah asserted a prior title may have been one of the reasons for the restoration of the zamindari, but it was in essence a new grant made on political considerations. He further points out 371 that conditions are also laid down in the Sanad. Adil Shah was enjoined to make arrangements regarding cultivation and population of the pargana and had to obey the directions of the revenue officer and Raja Mohit Narain ]Bahadur in this behalf. As stated by this Court in Thakur Amar Singhji vs State of Rajasthan(1) "we do not find any sufficient ground for putting a restricted meaning on the word 'Jagir ' in article 31A. At the time of the enactment of that Article the word had nearly acquired both in popular usage and legislative practice a wide connotation, and it will be in accord with sound canons of interpretation to ascribe that connotation to that word rather than an archaic meaning to be gathered from a study of ancient tenures. " An inam is explained in Wilsons ' Glossary thus "A gift, a benefication in general, a gift by a superior to an inferior. In India, and especially in the south, and amongst the Marathas, the term was especially applied to grants of land held rent free, and in hereditary and perpetual occupation; the tenure came in time to be qualified by the, reservation of a portion of the assessable revenue, or by the exaction of all proceeds exceeding the intended value of the original assignment; the term was also vaguely applied to grants of rent free land, without reference to perpetuity or any specified conditions. The grants are also distinguishable by their origin from the ruling authorities, or from the village communities and are again distinguishable by peculiar reservations, or by their being applicable to different objects. " In our opinion a grant by the British of lands for services. rendered to them would be a grant falling within cl. It seems to us that on the facts of the case the grant was in thenature of a grant similar to a Jagir or inam. The fact that Balwant Singh and Chet Singh held possession of this Pargana for 40 years, cannot be ignored. This shows that to all intents and purposes Adil Shah had lost the pargana and it was in effect a fresh grant in the nature of Jagir or inam for services rendered to the British. Adil Shah 's assertion to title had not been verified. Although it may be one of the reasons for the grant, it is clear that if it had not been for the grant and its enforcement by the British troop&, Adit Shah would not have been able to recover the possession of the Pargana. His title to the pargana would rest on the grant and not. the alleged previous title. If it is held, as we do hold, that the area in dispute is a grant in the nature of Jagir or inam and consequently an estate within (1) ; 372 article 3 1A(2), the impugned Act can claim the protection of article 3 1A. The notifications dated June 30, 1953, and July 1953, must therefore be upheld. Mr. A. K. Sen further urges that the acquisition of the estate was not for the purposes of agrarian reforms because hundreds of square miles of forest are sought to be acquired. But as we have held that the area in dispute is a grant in the nature of Jagir or inam, its acquisition like the acquisition of all Jagirs, inams, or similar grants, was a necessary step in the implementation of the agrarian reforms and was clearly contemplated in article 3 1 A. In this view it is not necessary to decide whether the area in dispute is a Mahal or covered by section 3(8) of the Reforms Act as it existed in 1958 or earlier or any other question which was raised before us. In the result the appeals filed by the State are accepted, the appeal filed by the petitioner Raja is dismissed and the petition under article 226 filed by the Raja is dismissed. In the circumstances of the case there will be no order as to costs.

IN-Abs

The State of Uttar Pradesh issued two notifications in 1953, by one of which the Uttar Pradesh Zamindari Abolition and Land Reforms Act, 1950, was extended to certain areas, in which, Pargana Agori which was owned by the respondent was situate, and by the other, it was directed that all " estates" in the area including the Pargana should vest in the State. The respondent challenged the notifications by a writ petition on the ground that the Pargana was not an estate within section 3 (8) of the Act. While the matter was pending in the High Court, the definition in section 3 (8) was amended by U.P. Act 14 of 1958, and while appeals were pending in this Court, by U.P. Act 1 of 1964, by which, the Pargana was deemed to be an "estate". The amendments had retrospective effect from 1st July 1952. The appellant State contended that Act 1 of 1964 could not be impugned because, the Pargana was an "estate ' either within article 3 1A(2) (a) or (iii). HELD : The forest land or waste land in the Pargana could not be deemed to be an estate within article 3 1A(2) (a) (iii) unless it was held or let for purposes ancillary to agriculture. But the entire Pargana is la grant in the nature of a jagir or inam, having been held by the respondent 's ancestor under sanads granting the land and the land revenue to him for services rendered to the British, and consequently, is an "estate, within article 31A(2) (a) (i) of the Constitution. [368 D, 370 G H; 371 F H] Thakur Amar Singhji vs State of Rajasthan [1955] 2 S.C.R. 303, followed. The acquisition of the Pargana was a necessary step in the implementation of agrarian reforms contemplated by article 31A. Therefore, U.P. Act 1 of 1964 can claim the protection of article 31A, and the two notifications must be upheld. [372 A C}

No. 137 of 1966. Petition under article 32 of the Constitution of India for a writ in the nature of habeas corpus. The petitioner appeared in person. section V. Gupte, Solicitor General. R. H. Dhebar and B.R.G.K. Achar, for the respondents. The Judgment of the Court was delivered by Shelat, J. The petitioner was detained by an order dated December 10, 1965 under Rule 30(i)(b) of the Defence of India Rules, 1962. The order inter alia stated: "Whereas the Central Government is satisfied that with a view to preventing Shri P. L. Lakhanpal . from acting 435 in any manner prejudicial to tile defence of India, and civil defence, public safety and the maintenance of public order, it is necessary that he should be detained." On December 24, 1965 he filed a writ petition under article 32 of the Constitution in this Court for a writ of habeas corpus challenging his detention inter alia on the grounds that Rule 30(i)(b) was ultra vires section 3(2)(15)(i) of the Defence of India Act, 1962, that Rule 23 of the Defence of India (Delhi Detenues) Rules, 1964 gave him a right to make a representation by providing a review of the said detention order and also by providing that a detenu will be allowed to interview a legal practitioner for the purpose of drafting his representation and that his said right was violated by his being prevented from making such a representation, that the said order violated section 44 inasmuch as though he was an editor of a newspaper action against him was not taken as such editor as provided by that section and certain other provisions in the Act resulting in the invalidity of the said order and that the said order was mala fide as the Union Home Minister had failed to file an affidavit swearing as to his satisfaction although the petition contained specific allegations denying such satisfaction. That petition(1) was heard and was dismissed on April 19, 1966 rejecting the aforesaid contentions. On June 11, 1966 the Central Government passed an order continuing the said detention order under r. 3OA(9). But whereas the order of December 10, 1965 directed the petitioner 's detention with a view to preventing him from acting in any manner prejudicial to the defence of India and civil defence, public safety and the maintenance of public order the said order continuing his detention set out only the defence of India and civil defence. Likewise, though the original order described the petitioner as the son of the late Shri Diwan Chand Sharma, editor of the Evening View residing at etc., the order of June 11, 1966 simply described him as the son of the late Shri Diwan Chand Sharma. This difference probably was and had to be made as by reason of his detention he was no longer editing the said newspaper and was no longer residing at the address set out in the original order. In the present petition the petitioner challenges both the orders on the following grounds: (i) that there is no valid order of detention under any of the provisions of the Act or the Rules made thereunder; (ii) that his continued detention under the order of June 1 1, 1966 was in contravention of Rule 23 of the Defence of India (Delhi Detenues) Rules, 1964 inasmuch as he was denied the right of representation by a letter of the Deputy Secretary in the Ministry of ' Home Affairs dated December 27, 1965; (1) W.P. 47 of 1966 decided on April 19, 1966. 436 (iii) that the detention was punitive and not preventive as the principal ground of his detention viz., his writings in his said paper had ceased to be the ground since the said paper had become defunct, the requisite declaration in respect thereof having lapsed; (iv) that the said detention order contravened section 44 of the Act; and (v) that the orders of detention and continuation were illegal as they were mala, fide and made without any application of mind by the Home Minister; consequently there was no satisfaction as required by section 3 and r. 30(i)(b). Contentions 2, 4 and part of Contention 5 in so far as they concern the original order of detention no longer survive as they were disposed of by the decision in W.P. 47 of 1966. The petitioner therefore cannot be permitted to reagitate the same questions, it not being his case that any new circumstances have arisen justifying their reagitation. Contention No. 3 also cannot be sustained because the affidavit clearly shows that the detention was ordered not only because of his writings in the said newspaper but that the said two orders were made after taking into consideration the over all picture of his activities. Annexure D to the petition is the affidavit of B. section Raghavan, Deputy Secretary in the Ministry of Home Affairs, filed in the previous petition. In that affidavit it was clearly stated that the activities of the petitioner "do conclusively prove that the petitioner is a pro Pakistani and anti Indian"; that "there was material before the Union Home Minister about the prejudicial activities of the petitioner and he was satisfied that it was necessary to detail the petitioner" and that "it was the anti national activities of the petitioner that was responsible for his detention. " That affidavit also stated that "the petitioner 's activities were sufficient in themselves to enable the Central Government to come to the conclusion that if the petitioner was not detained he was likely to act in a manner prejudicial to the defence of India, civil defence, public safety and the maintenance of public order. " In the return filed in the present petition also the same officer has once again stated that "he (the petitioner) is a pro Pakistani agitator acting against the integrity and the solidarity of India. The history of the activities of the petitioner shows that he is a pro Pakistani propagandist and seeks to undermine the unity and integrity of India and has close contacts and associations with elements which seek to encourage force and violence in relation to Kashmir. The petitioner has been in constant touch with the representatives of foreign powers in India, inimical towards India. " Para 4 of the return also states that he "is a paid pro Pakistani and anti Indian". It is true that the deponent in his counter affidavit in the previous petition had relied on certain extracts culled out from the petitioner 's writings but those extracts as stated by the deponent were in answer 437 to the petitioner 's claim that he was a journalist and an editor. But assuming that the petitioner 's writings were relied on for the purpose of passing the original order, it is manifest that they were not the only materials on which the order was based and the authorities had taken into consideration the over all picture of all his activities. If that be so the fact that his paper has now become defunct would make no difference and it cannot consequently be held that the order is punitive and not preventive. This leaves the first and part of his fifth contention for consideration. The petitioners argument on the first contention was that the order dated June 11, 1966 being based only on the ground of defence of India and civil defence the other grounds given in the original order must be held to be non existent and that the validity of the original order being dependent upon the satisfaction. of the Central Government it is impossible to predicate whether the said order was not made on the basis of the non existent grounds. Therefore he argued there was no valid satisfaction and the order founded on such invalid satisfaction could not be continued under r. 3OA(9); (2) that even if the Central Government was competent to continue the petitioner 's detention the validity of the order of the 11th June, 1966 not being determinative on the subjective satisfaction but upon a decision of the Government the grounds and the materials on which such decision was made must exist and the Government was therefore bound to establish that there were materials before it upon which its said decision was based. In order to appreciate these contentions it will be necessary to ascertain the true scope of r. 30A and the scheme of the said Rules. Section 3(1) of the Act empowers in generality the Central Government to make such Rules as appear to be necessary or expedient for securing the defence of India and civil defence etc. Sub section 2 provides that such Rules may provide for all or any of the matters therein set out. Clause (15)(i) empowers the Central Government to make rules providing for detention of any person (a) whom the authority empowered by the Rule to detain suspects on grounds appearing to that authority to be reasonable of having acted, acting or being about to act or being likely to act in any manner prejudicial to the defence of India and civil defence etc. , or lb) with respect to whom that authority is satisfied that his detention is necessary for the purpose of preventing him from acting in any such prejudicial manner. Clause 15(i) and the other Rules contemplate and empower, besides the Central Government, other authority to detain, such authority being not below the rank of a District Magistrate. The jurisdiction of such authority is conditioned under the first part on his suspicion and under the second part on his satisfaction that detention is necessary for purposes therein set out. The suspicion, of course has to be on grounds appearing to that authority to be 438 reasonable and the satisfaction under the second part is the satisfaction of that authority that detention is necessary to prevent the person in question from acting in any manner prejudicial to the matters set out therein. Rule 30(1)(b) provides that the Central .or the State Government if it is satisfied with respect to any particular person that it is necessary so to do, may make an order directing that he be detained. In Writ Petition 47 of 1966 filed by the petitioner earlier this Court made a distinction between the first and the second part of section 3(2)(15)(i) and held that Rule 30(1)(b) was made under the second part of that sub clause and that consequently the only thing required was that the authority must be satisfied that detention was necessary for purposes mentioned therein. It is therefore clear that the only condition precedent for the exercise of power thereunder is the satisfaction of the Central or the State Government that it is necessary to detain the person ,concerned to prevent him from acting in a manner prejudicial to the several matters or any one or more of them therein set out. Rule 30A was introduced in the Rules by notification G.S.R. 183 dated December 28, 1962. It defines a detention order as meaning one passed under r. 30(1)(b) and provides for a review in accordance with the provisions therein contained. Sub rule 3 provides that where a detention order is made by the Central or a State Government or an Administrator a review is to be made by the same authority. Under sub rule 4, if a detention order is passed by an officer authorised by a State Government the reviewing authority would consist of two officers specified by that Government. If all order is made by an officer authorised by the Administrator the reviewing authority is the Administrator. Under sub rule 5, if ,a detention order is made by an authorised officer he has to forthwith report the fact to the reviewing authority. Under sub rule 6 on such report the reviewing authority after taking into account all 'the circumstances of the case has to recommend to the State Government either to confirm or cancel the order and thereupon that Government may confirm or cancel the order as it may deem fit. Where the reviewing authority is the Administrator he may either confirm or cancel the order after taking into account all the circumstances of the case. Sub rule 7 provides that every detention order passed by an authorised officer and confirmed by the State Government would be reviewed by the reviewing authority at intervals of not more than six months and in the light of the recommendation of that authority the State Government shall decide whether the order shall be continued or cancelled. A similar provision in respect of an order passed by an officer authorised by an Administrator is contained in sub rule 8. Sub rule 9 with which we are immediately concerned provides that where a detention order is passed by the Central or a State Government such order shall be reviewed at the aforesaid intervals by the Govern ment which made it and upon such review the Government shall 439 decide whether the order should be continued or cancelled. Thus where the detention is continued after the first six months, a review by the prescribed authority is obligatory and a decision of the Central or the State Government or the Administrator as the case may be is the condition precedent for continued detention. Rule 30A thus provides for a review, the procedure therefor, the different reviewing authorities, the period within which such review has to be made and the obligation to decide whether the detention should be continued or cancelled after taking into account all the circumstances of the case. In the present case we are concerned not with a detention order passed by an authorised officer but by the Central Government. In the case of such an order made under rule 30(1)(b) the determinative factor is the satisfaction in regard to a particular person that it is necessary to detain him with a view to prevent him from acting prejudicially to the matters or any one or more of them therein set out. The jurisdiction to detain is not in respect of a mischief already committed but in anticipation that the person concerned may in future act prejudicially. Such satisfaction is exclusively that of the detaining authority and it is inherent in the power that it is and has to be the subjective satisfaction. Presumably an emergency having been declared by the President the legislature granted such a drastic and unique power enabling the Government to act quickly to prevent the person concerned from doing anything deterimental to the said matters. In such a case it must have been presumed by the legislature that a judicial process under normal laws may be either inept or inappropriate. Thus the condition precedent to the exercise of jurisdiction to detain under r. 30(1)(b) is only the subjective satisfaction that it is necessary to detain the person concerned. Rammanohar Lohia vs The State of Bihar).(1) Considering, however, the fact that the notification inducting in the Rules rule 30A providing for a review was issued in December 1962 it would appear that the necessity for ensuring that a person is not improperly detained or is not unnecessarily continued in detention was felt and that must have been the reason why a review was provided for immediately after the detention in the case where an authorised officer has passed the order and in the case of an order passed by the Government, Central or State as the case may be, by that Government at every interval of not more than six months. It may be recalled that in the case of an order by an officer it is incumbent upon him to forthwith report to the reviewing authority whereupon the reviewing authority has to recommend to the State Government whether to confirm or cancel the order. Thus a check on the exercise of power by an authorised officer was considered necessary. Though there is no such immediate review in (1) ; 440 the case of an order passed by the Central or a State Government, ,sub rules 7, 8 and 9 of Rule 30A provide for a review at intervals of not more than six months (a) by the reviewing authority in the case of an order passed by an officer and (b) by the Government in the case of an order passed by the Government. The provision for review is again a check preventing a person being unnecessarily, continued in detention, and whether the reviewing authority is the Government or the officers it is the Government which has to decide whether the detention should be continued or cancelled. ,and such decision is the condition precedent for an order of continuation of detention. The difference in the words used in Rule .30(1)(b) and Rule 30A viz., satisfaction in one case and decision after taking into account all the circumstances of the case in the other cannot be accidental but must be deliberate and purposeful. The phraseology used in Rule 30A is not "in its opinion" or is satisfied" or "has reason to believe" etc., as often used in modern statutes and rules. The question then is: what precisely does the word "decide" in Rule 30A mean ? It is no doubt a popular and not a technical word .According to its dictionary meaning "to decide" means "settle (question, issue, dispute) by giving victory to one side; give judgment (between, for, in favour of, against); bring, come, to a resolution" and "decision" means "settlement, (of question etc). , conclusion, formal judgment, making up one 's mind, resolve, resoluteness, decided character. " As Fazl Ali J. in Province of Bombay vs Advani(1) observed: "The word 'decision ' in common parlance is more or less a neutral expression and it can be used with reference to purely executive acts as well as judicial orders. The mere fact that an executive authority has to dec ide some thing does not make the decision judicial. It is the manner in which the decision has to be arrived at which makes the difference and the real test is: Is there any duty to decide judicially?" In that case the question was whether the decision of the Bombay Government under section 3 of the Bombay Land Requisition Ordinance, 5 of 1947 that a property was required for a public purpose was a quasi judicial act and a writ of certiorari would lie against such a decision. The majority held that it was an administrative act but it is noteworthy that Mukherjea J. who differed along with Mahajan J. (as he then was) was of the view that the question whether a public purpose exists or not had to be determined under that section by the Government of Bombay as there was a lis or a controversy between the interest of the public on the one hand and that of the individual who owned the property on the other, and the deter (1) ; at 642. 441 initiation of the Government was a judicial act such determination being a collateral matter on which the jurisdiction to requisition was founded and not a part of the executive act of requisitioning. We are however not called upon in the present case to decide whether the function of review and the decision which may be made by the Government is a judicial or a quasi judicial function or not. Indeed,the petitioner has not raised any such question whether the order of the 11th June 1966 was a judicial or a quasi judicial one. We do not therefore propose to examine the relevant provisions of the Rules from that point of view. The question raised by the petitioner before us is whether the validity of the decision depends upon the existence of relevant circumstances which would necessitate the continuation of detention and whether such circumstances on which it is founded are demonstrable. As tersely put by Lord Atkin in his famous dissent in Liversidge vs Anderson (1) is the decision one of a case of thinking that a person has a broken ankle and not a case of his really having a broken ankle or as Mahajan J. (as he then was) put it in Advani 's case(2 ) at p. 659 of the Report: "Similarly can it be said that section 4 contemplates merely a vacancy in the mind of the Government, not a vacancy in fact as a real thing. " If the decision is to be founded on a mere subjective satisfaction or opinion it would be in the former category but if it is to be founded on a fact it has to fall in the latter category and in that event it would have to be regarded as one based on an objective test. It follows that where the exercise of power is not conditioned on a mere opinion or satisfaction but on the existence of a set of facts or circumstances that power can be exercised where they exist. The authority in such a case is required to exercise the power in the manner and within the limits authorised by the legislature. The existence of such facts which is the determinant for the exercise of the power is demonstrable. Unlike Rule 30(1)(b) the power to continue the detention after review is not dependent on the satisfaction of the Government. Rule 30A postulates that ordinarily detention should not be for more than six months unless found necessary. It is for that reason that under the Rules when the period of six months expires the Government is enjoined upon to decide whether it should be continued or cancelled. Though the legislature has made the Government the exclusive forum for such a decision, its decision has to be founded on facts and circumstances which make the continuation necessary in order to prevent the detenu acting in a manner prejudicial to the matters set out therein. The substitution of decision instead of satisfaction is a clear indication that the criterion (1) ; (2) ; 442 for continuing the detention is the existence of those facts and circumstances which necessitate it. It is not unreasonable to think that the legislature decided to confer power the exercise of which was made dependent upon the subjective satisfaction at the initial stage but where continuation of detent ion was concerned, it thought that there should be different considerations. At that stage there would be ample time and opportunity for the Government to scrutinise the case fully and ascertain whether facts and circumstances exist demanding continuation and therefore deliberately used the word "decide" instead of the words "is satisfied". Therefore where such circumstances do not exist there would be no necessity for continuation and yet if the Government decides to continue the detention,such a decision would be beyond the scope of Rule 30A and would not be a decision within the meaning of or under that rule. Cases may arise where circumstances exist leading to the authority 's satisfaction that a particular person should be detained but those circumstances may not exist at the time when the review is made. In the latter case it is impossible to say that the Government can still decide to continue the detention nor is it possible to say that it is the Government 's opinion or satisfaction that such facts and circumstances exist which is the criterion. The decision on a review has to be arrived at from the facts and cir cumstances which actually subsisted at the time when the original order was made in the light of subsequent developments and not merely those existing at the time when the order was made. In such a case the decision can be challenged as one not within the scope of or under the rule and therefore unauthorised or as one based on considerations irrelevant to the power. Our attention was however drawn to the decision in Sadhu Singh vs Delhi Administration(1) where Shah J. sitting singly during vacation has held that the order of detention passed by the District Magistrate and its confirmation by the Delhi Administration were acts pre eminently executive, subject to subjective satisfaction and therefore not subject to a judicial review. He, however, added that even then the court 's power is not excluded to investigate into compliance with the procedural safeguards imposed by the statute or into the existence of prescribed conditions precedent to the exercise of power or into a plea that the order was made mala fide or for a collateral purpose. The learned Judge then proceeded to consider the plea that the review under r. 30A(8) was a quasi judicial proceeding and that a review of the facts in the light of subsequent developments, including the change of views, if any, of the detenu since he was detained cannot effectively be made unless he was afforded an opportunity to make his representation and convince the reviewing authority that the facts and circumstances which may have justified the original (1) ; 443 order did not continue to exist or in the context of changed circumstances did not justify the continuation of the detention. In ,repelling this plea, the learned Judge observed: "Making of an order of detention proceeds upon the subjective satisfaction of the prescribed authority in the light of circumstances placed before him or coming to his knowledge, that it is necessary to detain the person concerned with a view to preventing him from acting. If that order is purely executive and not open to review by the Court, a review of those very circumstances on which the order was made in the light of circumstances since the date of that order cannot but be regarded as an executive order. Satisfaction of the authority under r. 30(1) proceeding upon facts and circumstances which justifies him in making an order of detention and the satisfaction upon review of those very facts and circumstances in the light of circumstances which came into existence since the order of detention are the result of an executive determination and are not subject to judicial review. " On this view he held that the review was not a judicial function nor did the statute require the safeguard of a judicial approach or the right of being heard. He also negatived the plea that the word "decide" in r. 3OA(8) meant that there was a lis observing as follows "That only imports that the Administration after reviewing the material circumstances has to decide whether the detention of the detenu should be continued or cancelled. Undoubtedly, in reviewing the order of detention, the Administrator would be taking into account all the relevant circumstances existing at the time when the order was made, the subsequent developments which have a bearing on the detention of the detenu and the representation, if any, made by the detenu. But the rule contemplates review of the detention order and in the exercise of a power to review a condition of a judicial approach is not implied. " Shah J. in this decision was primarily dealing with the question whether the function of review and a decision following it is a judicial function and whether there is a lis between the power of the Government to continue detention on the one hand and the right of the detenu to be released on the other As already stated that question does not arise before us and we refrain from deciding, it. Though he rejected that plea the learned Judge has yet said in explicit terms that the reviewing authority has to consider "the material circumstances " and then has to decide whether the detention should be continued or not. He has also emphasised that M 15 sup. CI/66 15 444 the Administrator while reviewing has to take into account the relevant circumstances" existing at the time when the Original order was made and the subsequent developments having "a bearing on the detention". The decision thus presupposes that the Government or the Administrator, as the case may be, cannot decide to continue the detention without considering all the relevant circumstances which existed at the time of the original order and those which exist at the time when the authority decides to continue the detention. While making the plea that the use of the word 'decide" in r. 30A meant that there is a lis, it does not appear to have been argued that assuming that the power to continue the detention was ministerial the condition precedent to the exercise of that power is not the subjective satisfaction but the decision from the facts and circumstances and that the validity of the exercise of that power is dependent on the existence of facts and circumstances relevant to the purpose set out in r. 30(1) and r. 30A. If they are shown not to exist surely the decision would not be a decision within the meaning of r. 30A and would be amenable on that ground to a challenge. The question then is, is the decision to continue the order of detention one within the scope of r. 30A ? Relying on the omission in the order of June 11, 1966 of the words "public safety and the maintenance of public order" the petitioner contended that it must be held that those two grounds never existed and that since the exercise of power to detain depended on the satisfaction of the Government it cannot be predicated that the omitted grounds did not affect the Government during the process of its satisfaction. He relied on two decisions of this Court, (1) Baradwaj vs State of Delhi(1) and (2) Shibban Lal vs State of U.P.(2) Both the cases were under the , IV of 1950. In Baradwaj 's case(2) the question was not of a ground not existing but of a ground being found to be vague and it was held that even though the rest of the grounds were not vague, the detention was not in accordance with the procedure established by law and was therefore illegal. The decision therefore turned on the question whether under article 22(5) of the Constitution the detenu had an opportunity ,of effectively making a representation. In Shibbanlal 's case(2) the Court held that where the Government itself while confirming the detention in exercise of its power under section II admits that one of the two grounds mentioned in the original order was unsubstantial or non existent, to say that the other ground which still remained was quite sufficient to sustain the order would be to substitute an objective judicial test for the subjective decision of the ,executive authority which was against the legislative policy underlying the statute. In such cases, the position would be the same .,as if one of the two grounds was irrelevant for the purpose of the (1) [1953] S.C.R.708 (2) A.I.R. 1964 S.C.179 445 Act or was wholly illusory and this would vitiate the detention order as a whole. These decisions cannot help the petitioner. In the first place the scheme of the is entirely different from the Act and the Rules before us. Section 3 of that Act confers the power of detention. Section 7 requires the detaining authority to furnish grounds of detention to the detenu to make a representation. Section 8 requires the setting up of Advisory Boards. Section 9 requires reference of the order passed by the authority to such Advisory Board together with the representation, if any, made by the detenu. Under section 10, the Board has to make a report to the Government and the report would be whether there is sufficient cause for detention or not. Under section 11, the Government may confirm the detention order and continue the detention where the report is that there is sufficient cause. But where the Board reports that there is no such sufficient cause, the Government has to revoke the detention order. It is clear from section 9 and the sections following it that the Government has to make the reference to the Board within 30 days from the order and the Board has to find whether there is sufficient cause for detention or not. The review by the Board is thus almost contemporaneous. If therefore the Board finds that certain grounds furnished to the detenu did not in fact exist, it means that they did not exist at the time when the authority made up its mind to pass the order. It is for that reason that the courts have held that since the order is based on subjective satisfaction, it is not possible to say whether or not the grounds found not to have existed affected the process of satisfaction of the autho rity or not and to say that those only which existed had made up the satisfaction would be to substitute the court 's objective test in place of the subjective satisfaction of the detaining authority. The scheme of rules 30(1) and 30A is totally different from that of the . Where an order is made under r. 30(1)(b), its review is at intervals of periods of not more than six months. The object of the review is to decide whether there is a necessity to continue the detention order or not in the light of the facts and circumstances including any development that has taken place in the meantime. If the reviewing authority finds that such a development has taken place in the sense that the reasons which led to the passing of the original order no longer subsist or that some of them do not subsist, that is not to say that those reasons did not exist at the time of passing the original order and therefore the satisfaction was on grounds which did not then exist. It is easy to visualise a case where the authority is satisfied that an order of detention is necessary to prevent a detenu from acting in a manner prejudicial to all the objects set out in r. 30 (1). At the end of six months the reviewing authority on the materials before it may come to a decision that the detention is still necessary as the detenu is likely to act in a manner prejudicial 446 to some but not all the matters. Provided such decision is arrived at within the scope of r. 30A the decision to con tinue the detention order would be sustainable. There is thus no analogy between the provisions of review in the two Acts and therefore decisions on the cannot be availed of by the petitioner. As regards the contention as to mala fides it will be observed that the original order was passed by the Union Home Minister while the order under r. 30A was passed by the Minister of State of Home Affairs. The first part of the contention has already been rejected by this Court in the petitioner 's earlier Writ Petition and therefore cannot be reagitated. The contention in regard to the second part was that since the State Minister himself has not filed an affidavit swearing to his decision and the affidavit on re cord is that of the Deputy Secretary there is nothing to show that the Minister had arrived at a decision that there were facts and circumstances necessitating the continuation of the petitioner 's detention. The reasons given by the petitioner for this contention are in substance the same as those urged in the earlier petition and which were rejected by this Court then. Since no allegation of malice or dishonesty have been made in the petition personally against the Minister it is not possible to say that his omission to file an affidavit in reply by itself would be any ground to sustain the allegation of mala fides or non application of mind. The affidavit by the Deputy Secretary discloses that the decision under r. 30A was arrived at by the Minister after an examination of all the materials before him. The affidavit also discloses the activities of the petitioner and the conclusion arrived at by the Minister that the petitioner had acted and was likely to act in a manner prejudicial to the defence of India and civil defence. So long as that decision was arrived at on materials, since this Court does not sit in appeal against such a decision it would not ordinarily examine the adequacy or the truth of those materials and would not interfere with that decision on the ground that if the Court had examined them it would have come to a different conclusion. It is therefore not possible to agree with the contention that this is a case of a mala fide exercise of power or a case of non application of mind by the authority concerned. For the reasons aforesaid the petition fails and is dismissed. V.P.S. Petition dismissed.

IN-Abs

The petitioner who was the editor of a newspaper was detained by and order of the Central Government under r. 30(1)(b) of the Defence of India Rules, 1962, and the detention was continued by another order of the Central Government passed six months later, under r. 3OA(9). The first order directed the petitioner 's detention with a view to preventing him from acting in any manner prejudicial to the defence of India, civil defence, public safety and the maintenance of public order, but the order continuing the detention set out only the defence of India and civil defence. The petitioner challenged the second order of the following grounds: (i)the detention was punitive and not preventive, because his writings in is paper were the grounds of his original detention but that the paper had since become defunct; (ii) the two additional grounds given in the original order and omitted in the latter order must be held to have been non existent at the time of the original order, and therefore, the original order based on such non existent grounds was illegal, and could not be validly continued under r. 3OA(9); (iii) even if the Government was competent to continue the detention, the validity of the decision of the Government to continue the detention depended upon the existence of relevant circumstances which would necessitate the continuation and such circumstances were demonstrable; and (iv) the Minister who passed the second order should have filed a counter affidavit showing that he applied his mind to the material before he passed the order continuing the detention. HELD : (i) Assuming that the petitioners writings in his paper were relied on for the purpose of passing the original order, they were not the only materials on which the original order and the order continuing the detention were based. The authorities had taken into consideration the over all picture of all his anti Indian and pro Pakistani activities. Therefore, the fact that his paper had since become defunct would make no difference because the jurisdiction to detain is not in respect of a mischief already committed but in anticipation. that the person concerned may in future act prejudicially. [436 H; 437 A B; 439 C D] (ii) The decision to continue the detention order was within the scope of r. 30A and was therefore sustainable. [446 A B] Rule 30 A provides for a review of the order of detention, the procedure therefor,, the different reviewing authorities, the period within which such review has to be made and the obligation to decide whether the detention should be continued or cancelled after taking into account all the circumstances of the case. Sub rule (9) provides that where a detention order is passed, by the Central or a State Government such order shall be reviewed at intervals of not more than six months by the Government which made the order and upon such review decide whether to continue or cancel the order. The object of the review is to decide whether there is a necessity to continue the detention order or not in 434 the fight of the facts and circumstances including any development that has taken place in the meantime. If the reviewing authority finds that such a development has taken place in the sense that the reasons which led to the passing of the original order no longer subsist or that some of them do not subsist that is not to say that those reasons did not exist at the time of passing the original order and that the satisfaction was on grounds which did not then exist. There is no analogy between the provisions of review in the Defence of India Rules and in the and therefore, the decisions on that Act cannot be availed of by the petitioner. [438 H; 439 B; 445 F H; 446 A B] (iii) The words used in r. 30(1) (b) and r. 30A are satisfaction in one case, and decision after taking into account all the circumstances of the case in the other. Unlike r. 30(1)(b), the power to continue the detention after review is not dependent on the solution of the Government. Under r. 30A the Government is enjoined upon to decide whether the detention should be continued or cancelled. The substitution of decision instead of satisfaction is an indication that the criterion for continuing the detent on is the existence of those facts and circumstances which necessitate it. The existence of such facts which is the determinant for the exercise of the power is demonstrable, and if they are shown not to exist the decision would not be a decision within the meaning of r. 30A and would be amenable on that ground to challenge. The counter affidavit of the Deputy Secretary, on record, disclosed the anti national activities of the petitioner and that the decision under r. 30A that the petitioner had acted and was likely to act in a manner prejudicial to the defence of India and civil defence was arrived at by the Minister after an examination of all the materials before him. So long as the decision was arrived at on such materials, since this Court does not sit in appeal against such a decision, it would not ordinarily examine the adequacy or the truth of those materials and would not interfere with the decision on the ground that if the Court had examined them it would have come to a different conclusion. [440 C, 441 F H; 446 F G] Sadhu Singh vs Delhi Administration, ; referred to. (iv) It was not a case of a mala fide exercise of power or a case of non application of mind by the authority concerned. Since no allegation, , of malice or dishonesty have been made in the petition personally against the Minister., his omission to file a counter affidavit, by itself, could not be a ground to sustain the allegation of mala fides or non application of mind. [446 D E]

ppeals Nos.1367 and 1368 of 1966. Appeals from the judgment and order dated April 19, 1966 of the Assam High Court in Civil Rules Nos. 171 and 236 of 1965. Purshottam Trikamdas, A. K. Sen, Naunit Lal and Vineet Kumar,for the appellant (in both the appeals). Sarjoo Prasad, Vinoo Bhagat and section N. Prasad, for respondent No. 4 (in both the appeals). The Judgment of the Court was delivered by Hidayatullah, J. These are two appeals by certificate against a common judgment of the High Court of Assam & Nagaland at Gauhati, dismissing two writ petitions filed by one Ranga Mahammad against D. N. Deka and B. N. Sarma, District & Sessions Judges respectively of Lower and Upper Assam Districts questioning the transfer of the former from Jorhat to Gauhati and the appointment and posting of the latter at Jorhat. The petitioner had asked that the relevant notifications by the Government be quashed on the ground that the High Court alone could make the transfers and, in any event, the High Court had to be consulted and was not consulted before making the orders. The petitions were heard and disposed of by a Divisional Bench consisting of Chief Justice Mehrotra and Mr. Justice section K. Dutta. 456 The Chief Justice held that there was no consultation with regard to the posting of Deka, that the transfer of Deka to Gauhati was irregular as the High Court alone could have ordered it, and that the transfer of B. N. Sarma was for a like reason also irregular. Holding, however, that none of the District Judges could be said to occupy wrongly the office of District & Sessions Judge the High Court declined the writ of quo warranto. The petitions ,were accordingly dismissed but without cost to the State Government. In a separate but concurring judgment Dutta J. passed some scathing remarks on the action of the Government which he described as mala fide and actuated by some ulterior motive. The High Court on being moved by the State Government granted certificates under article 132 of the Constitution on the ground that the judgment involved the interpretation of articles 233 and 235 of the Constitution. By these appeals the State Government seeks the reversal of the opinion of the High Court on the interpretation of articles 233 and 235 of the Constitution. The main contention is that the High Court was, in fact, consulted and, alternatively, that the power to transfer District Judges lies with the State Government and not with the High Court. The State Government also asks for the expunction of the remarks of Mr. Justice Dutta above mentioned. The State of Assam consists of only three Sessions Divisions. They are : The Upper Assam Districts, the Lower Assam Districts and the Cachar Districts with Jorhat, Gauhati and Silchar respectively as the Headquarters of the three District Judges. The Government of Assam with the concurrence of the High Court has made the Assam Judicial Service (Senior) Rules and rule 5 deals with recruitment. In the Senior Judicial Service of the State there are two grades Senior Grade 1 and Senior Grade 11. Grade I has four posts earmarked for Registrar, and three District Judges, and Grade 11 consists of the Additional District Judges. The other posts are filled up by promotion from Grade II of the cadre or Grade I of the Assam Judicial Service (Junior) respectively. On December 6, 1962 the Chief Justice appointed A. Rahman, District Judge, Gauhati, as Registrar and recommended that D. N. Sarma, Additional District & Sessions Judge be promoted and appointed District Judge, Gauhati, and in B. N. Sarma 's 457 place D. C. Sharma should be appointed as Additional District & Sessions Judge. This proposal was accepted by Government. It appears, however, that one Medhi, District Judge, was retiring and there was a vacancy. It also appears from the correspondence which has been placed in our hands that there was some conversation on the telephone between the Chief Justice and the Finance Minister regarding R. C. Choudhury (Joint Secretary Legal Department) whom the Minister suggested for officiation in that vacancy and the Chief Justice expressed his willingness to receive him. Later by a D. O. letter of January 5, 1963 the Chief Justice pointed out that the Rules did not permit this to be done. He observed that not more than one third of the District Judges could be recruited from the Bar and as Choudhury could only be recruited as a member of the Bar there was no vacancy for direct recruitment. The Minister who had accepted the telephone conversation as final and was about to issue the necessary notification replied that as Sharma was to continue for a year, Sharma 's post could be given to Choudhury and suggested reconsideration of the case. The Chief Justice replied that . the question was not of filling Sharma 's vacancy but Medhi 's and that Choudhury could not be transferred from the Legal Department to the Judicial Service because appointments as District & Sessions Judges must be made in accordance with article 233 of the Constitution. He explained that an appointee had to be either a person in the Judicial Service of the Union or the State or an Advocate of 7 years ' standing and that persons from other services could not be transferred and appointed as District Judges. He ended by saying that he could have taken Choudhury as a member of the Bar if the High Court recommended him, but Rule 5(ii) of the Assam Judicial Service (Senior) Rules, which reserved two out of the three posts for promotees, was in the way. He declined to take Choudhury directly from the Legal Department and recommended D. N. Deka 'section name for promotion as District Judge to hold the charge at Jorhat. This letter apparently nettled the Minister for his letter of the 24th January was worded somewhat strongly. It seems that the Minister thought that the Chief Justice was retreating from a position previously accepted by him. He traced the history of the correspondence and the conversations and expressed his amazement at the change of opinion. He pointed out that the intention was not to transfer Choudhury but to give him judicial experience and observed that the constitutional provisions could not be invoked when Choudhury had put in seven years ' practice at the Bar and was qualified. He concluded by saying "I am sorry, that I have to write all this but you will understand that I have no other alternative in view of the embarrassing situation created by your letter. The Chief Justice wrote on February 7, 1963 observing that there 'was no question of adopting any non cooperating or embarrassing attitude and that all the points raised by the Minister could be ,explained satisfactorily. He, however, saw no point in saying more as Choudhury 's name was to be dropped. He enquired why Rahman was not released although it had no connection with the other matter and the appointment of the Registrar was entirely ,a matter for the Chief Justice.Facts He requested that Ralunan be released soon and recommended the appointment of B. N. Sarma as District Judge in his place. He also suggested section C. Barua 's transfer from Cachar to Gauhati. In the vacancy of Medhi he recommended D. N. Deka 's promotion and recommended his transfer to Jorhat. A notification was issued on June 22, 1963 appointing Deka as District Judge with Headquarters at Jorhat. Nothing was done regarding the other recommendations. On September 7, 1963, this is to say, exactly seven months after the ,last letter of the Chief Justice, the Secretary to the Government of Assam wrote to the Registrar that the State Government after careful consideration could not accept the suggestion about the transfer of Barua and proposed the transfer of B. N. Sarma to Jorhat and of Deka to Gauhati immediately as Jorhat was without a District Judge for months. The Registrar, in reply, wrote back to say that the matter had become stale and the High Court would like to reconsider the matter. Some letters were exchanged but they arc not on the file of this Court. To this a final reply was given by the Government on February 19, 1964 informing the High Court that the recommendations were not acceptable except as to Deka 's transfer from Jorhat to Gauhati. One Ranga Mahammad of Gauhati then filed two petitions in the High Court of Assam under articles 226 and 227 of the Con stitution questioning the jurisdiction of Deka, District & Sessions Judge, Jorhat. He averred that the High Court was not consulted regarding Deka 's appointment and posting at Gauhati. By the second petition he questioned the transfer of B. N. Sarma 459 to Jorhat. On rule being issued in the two petitions, Government put in a detailed return pointing out that it had acted within its powers and had also consulted the High Court. The High Court did not accept the submissions of the State Government. The state Government now appeals. Three questions arise and they are : (a) who is to order transfer of a District Judge the State Government or the High Court;(b) is the provision regarding consultation in articles 233 and 235 mandatory or directory and if the former, whether the High Court was not in fact consulted; and (c) should the remarks of Mr. Justice Dutta about the State Government be expunged ? The answer to the first question depends on a true construc tion of articles 233 and 235 of the Constitution. The text of these articles is set out below. * The question we have posed resolves itself into a question of a very different but somewhat limited form,, namely, whether the power to transfer District Judges is included in the 'control ' exercisable by the High Court over District Courts under article 235, or in the power of "appointment of persons to be and the posting and promotion, of district judges" which is to be exercised by the Governor under article 233, albeit in consultation with the High Court. If the sense of the matter be the former, then the High Court and if the latter, the Governor, would possess. that power. The right approach is, therefore, to enquire what is meant by "posting" and whether the term does not mean the initial posting of a District Judge on appointment or promotion to a vacancy in the cadre, permanent or temporary If this be the meaning, as the High Court holds, then the transfer of District Judges already appointed or promoted and posted in the cadre must necessarily be outside the power of the Governor and fall to be made by the High Court as part of the control vested in it by article 235. "233.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) A person not already in the service of the Union or of the State Shall only be eligible to be appointed a district judge if he has been for not less than seven years an advocate or a pleader and is recommended by the High Court for appointment" "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 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. " 460 The history of the articles 233 237 in Chapter VI (Subordinate Courts) of Part VI of the Constitution, was considered elaborately in the State of West Bengal & Anr.vs Nripendranath Bagchi(1) and it was pointed out that the articles were intended to make the High ,Court the sole custodian of control over the judiciary except in so far as exclusive jurisdiction was conferred upon the Governor in regard to the appointment and posting and promotion of District ,Judges. Therefore, unless the transfer of a District Judge can be said to be a "posting" of a District Judge the High Court must ,obviously enjoy the exclusive power. In its ordinary dictionary meaning the word 'to post ' may denote either (a) to station some one at a place, or (b) to assign someone to a post, i.e. a position or a job, especially one to which a person is appointed. See Webster 's New Word Dictionary (1962). The dispute in this case has arisen because the State Government applies the first of the two meanings and the High Court the second. In article 233 the word 'posting ' clearly bears the second meaning. This word occurs in association with the words "appointment ' and 'Promotion ' and takes its colour from them. These words indicate the stage when a person first gets a position or job ,and 'posting ' by association means the assignment of an appointee or promotee to a position in the cadre of district Judges. That a special meaning may be given to a word because of the collocation of words in which it figures, is a well recognised canon of construction. Maxwell ("On Interpretation of Statutes" 11th Edn. p. 321 and the following pages) gives numerous examples of the application of this principle, from which one may be given here. The words 'places of public resort ' assume a very different meaning when coupled with 'roads and streets ' from that which the same words would have if they were coupled with 'houses '. In the same way the word 'posting ' cannot be understood in the sense of 'transfer ' when the idea of appointment and promotion is involved in the combination. In fact this meaning is quite out of place because 'transfer ' operates at a stage beyond appointment and promotion. if 'Posting ' was intended to mean 'transfer ' the draftsman would have hardly chosen to place it between "appointment" and "promotion" and could have easily used the word 'transfer ' itself. It follows, therefore, that under article 233, the Governor is only concerned with the appointment, promotion and posting to the cadre of district Judges but not with the transfer of district Judges already ,appointed or promoted and posted to the cadre. The latter is obviously a matter of control of district Judges which is vested in the High Court. The word 'post ' used twice in the article clearly means the position or job and not the station or place and 'posting ' must obviously mean the assignment to a position or job and not placing in charge of a station or Court. The association of words in article 235 is much clearer but as the word 'posting ' in the earlier article deals with the same subject matter, it was most certainly used in the same sense and this conclusion is thus quite apparent. This is, of course, as it should be. The High Court is in the day to day control of courts and knows the capacity for work of individuals and the requirements of a particular station or Court. The High Court is better suited to make transfers than a Minister. For however well meaning a Minister may be he can never possess the same intimate knowledge of the working of the judiciary as a whole and of individual Judges, as the High Court. He must depend on his department for information. The Chief Justice and his colleagues know these matters and deal with them personally. There is less chance of being influenced by secretaries who may withhold some vital information if they are interested themselves. It is also well known that all stations are not similar in climate and education, medical and other facilities. Some are good stations and some are not so good. There is less chance of success for a person seeking advantage for himself if the Chief Justice and his colleagues, with personal information, deal with the matter, than when a Minister deals with it on notes and information supplied by a secretary. The reason of the rule and the sense of the matter combine to suggest the narrow meaning accepted by us. The policy displayed by the Constitution has been in this direction as has been explained in earlier cases of this Court. The High Court was thus right in its conclusion that the powers of the Governor cease after he has appointed or promoted a person to be a district Judge and assigned him to a post in cadre. Thereafter, transfer of incumbents is a matter within the control of District Courts including the control of persons presiding there as explained in the cited case. As the High Court is the authority to make transfers, there was no question of a consultation on this account. The State Government was not the authority to order the transfers. There was, however, need for consultation before D. N. Deka was promoted and posted as a District Judge. That such a consultation is mandatory has been laid down quite definitely in the recent decision of this Court in Chandra Mohan vs U. P.(1) On this part of the case it is sufficient to say that there was consultation. (1) 462 This brings us to the question whether the remarks of Mr. Justice Dutta should be expunged. There is no doubt that the State Government and the High Court were working together till Choudhury 's name was suggested. This is not the first time when cordiality was ruined because a Secretary 's name was suggested by the Minister and was not acceptable to the High Court. The Assam High Court 's stand has been completely vindicated by Chandra Mohan 's case cited above. In such matters the opinion of the High Court is entitled to the highest regard. We have considered very carefully the question of expunging Mr. Justice Dutta 's remarks, The power to expunge is an extraordinary power and can be exercised only when a clear case is made out. That another Judge in Mr. Justice Dutta 's place would not have made those comments is not the right criterion The question is whether Mr. Justice Dutta can be said to have acted with impropriety. Although we think that Mr. Justice Dutta need not have made the remarks we cannot say that in making them he acted with such impropriety that the extraordinary powers should be exercised. The appeals accordingly fail and are dismissed but there will be no order about costs.

IN-Abs

The respondent, filed petitions under Am. 226 and 227 in the Assam High Court asking that notifications by the State Government of the transfer of one District & Sessions Judge and the appointment and posting of another be quashed on the ground that the High Court alone could make the transfers and. in any event, the High Court was to be consulted and was not consulted before the impugned orders were made. The High Court held that there was no consultation with regard to the posting of one of the District Judges and that his transfer was irregular as the High Court alone could have ordered it; and furthermore that the transfer of the other. District Judge was for a like reason also irregular. Holding, however, that none of the District Judges could be said to occupy wrongly the office of District & Sessions judge, the High Court declined the writ of quo warranto and dismissed the petition, but without costs to the State Govenment. One of the learned Judges of the High Court who comprised the Division Bench that heard the petitions,, in a separate but concurring judgment, passed some scathing remarks on the action of the Government which he described as mala fide and actuated by some ulterior motive. On being moved by the State Government, the High Court granted certificates under article 132 of the Constitution to appeal to the Supreme Court on the ground that the judgment involved the interpretation of articles 233 and 235 of the Constitution. By these appeals the State Government sought a reversal of the opinion of the High Court on the two Articles. Three questions arose for decision in the appeal: (a) who is to order transfer of a District Judge the State Government or the High Court; (b) is the provision regarding consultation in article 233 mandatory or directory and if the former, whether the High Court was not in fact consulted; and (c) whether the remarks complained of about the State Government made by the learned Judge should be expunged. HELD: (i) Under article 233 the Governor is only concerned with the appointment, promotion and posting to the cadre of district Judges but not with the transfer of District Judges already appointed or promoted and posted to the cadre. The latter is a matter of control of District Judges which is vested in the High Court under article 235. [460 G] The word posting means either to station some one at a place or to assign someone to a post, I.e. a position or a job, especially one to which a person is appointed. In article 233 it bears the second meaning. The word occurs in association with the words 'appointment ' and 'promotion ' and takes its colour from them. These words indicate the stage when 454 455 a person first gets a position or job and 'posting 'by association means the assignment of an appointee or promotee to a position in the cadre of District Judges. The word 'posting ' cannot be understood in the sense of 'transfer ' when the idea of appointment and promotion is involved in the combination. This meaning is quite out of place because 'transfer ' operates at a stage beyond appointment and promotion. Transfer, therefore, falls within the control vested in the High Court. [460 C G] State of West Bengal vs Nripendranath Bagcht,[1966] 1 S.C.R. 771, referred to. (ii) As the High Court acting under article 235 and not the State Government is the authority to make transfers, no question can arise of a consultation on this account. In the present case, however, consultation as required by article 233, was necessary before one of the District Judges was promoted and posted as a District Judge. Chandra Mohan vs U.P. , referred to. (iii) The power to expunge is an extraordinary power and can be exercised only when a clear case is made out. Although the opinion of this Court may be that the learned Judge need not have made the remarks complained of, it could not be said that in making them he acted with such impropriety that the extraordinary powers should be exercised. [462 DIP]

Appeals Nos. 557 & 558 of 1965, Appeal by special leave from the judgment and order dated September 19, 1962 of the High Court of Judicature at Madras (in Tax Case No. 87 of 1960). R. Ganapathy lyer, for the appellant. R. M. Hazarnavis and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Shah, J. Sree Meenakshi Mills Ltd. a company incorporated under the Indian Companies Act with its registered office at Madurai carries on business of cotton spinning and weaving. In the premises "of the factory of the Company there are installed 80 handloorns 393 These handlooms were found inadequate to weave the yarn pro duced by the factory and a part of the yarn produced was distributed to weavers outside the factory who were engaged by the Company to weave the yarn into cloth. Under cl. 18 B of the Cotton Cloth and Yarn (Control), Order, 1945, issued by the Government of India, the Textile Commissioner was authorized to direct ally manufacturer or dealer or any class of manufacturers or dealers, inter alia, not to sell or deliver any yarn or cloth of specified description except to such person or persons and subject to such conditions as the Textile Commissioner may specify. On February 7, 1946, the Textile Commissioner issued an order directing the Company not to sell or deliver any yarn manufactured by the Company except to such person or persons as the Textile Commissioner may specify. It was recited in the order that "nothing in this Order shall apply to a sale or delivery made, in pursuance of clause 18 A of the said order, to any dealer in yarn not engaged in the production of cloth on handlooms or powerless". The Company addressed a letter on February 13, 1946 to the Textile Commissioner submitting that the prohibition in general terms was ultra wires the authority conferred by the Cotton Cloth and Yarn (Control) Order. The Company continued notwithstanding the prohibition to deliver yarn to weavers and did so till February 20, 1946. This yarn was seized under the orders of the Textile Commissioner. On February 20,1946, the Provincial Textile Commissioner, purporting to act in exercise of authority conferred upon him by a notification issued by the Government of India, issued an order addressed to the Company that: "You should accordingly confine your delivery to the categories of persons notified below: (a) Licensed yarn dealers (in accordance with the said 18 A of the Control Order). (b) to consumers who purchased yarn directly from you during the basic period 1940 42 (in accordance with my circular letter dated 4th January 1946 referred to above). (c) your handloom factory situated in the premises of your Mill at Madurai (just the quantity of yam required). "Note: Any other delivery of yarn by you which is not covered by a special order or permission of the Textile Control Authorities will accordingly be a contravention of the Textile Commissioner 's order under clause 18 B referred to above." After this order was issued, the Company did not deliver any yarn to weavers. On March 4, 1946 the Company filed a petition for a writ of nandamus in the High Court of Madras under section 45 of the Specific 394 Relief Act praying for an order directing the Provincial Textile Commissioner, Madras to desist from seizing the yarn supplied to the weavers at or around Madurai and Rajapalayam for the purpose of converting the yarn belonging to the Company into cloth; to restore to the Company or to direct the Provincial Textile Commissioner and his subordinates to restore the yam already seized; and to forbear from seizing or to direct the subordinates of the Provincial Textile Commissioner to forbear from seizing the yarn that may be entrusted to the weavers by the Company in the usual course of business according to the practice already obtaining for conversion into cloth. This petition was dismissed by Kunhi Raman, J, and the order of dismissal was confirmed in appeal by the High Court. The matter was then carried in appeal to the Privy Council. The Judicial Committee dismissed the appeal filed by the Company. They held, agreeing with the High Court, that the expression "deliver" in cl. 18 B sub cl. 1(b) of the Cotton Cloth and Yarn (Control) Order, 1945, is used in its ordinary broad sense of handing over possession, as distinct from passing of property, and would include delivery of possession to a bailer. Accordingly, delivery of part of its yarn by the Company to owners of handlooms outside the mill premises for conversion of the yarn into cloth for the Company was in contravention of the order made under cl. 18 B sub. (1) (b). The Judicial Committee also held that a petition under section 45 of the , directing the Provincial Textile Commissioner to desist from seizing the yam supplied to the weavers and to restore to the Company the yarn already seized was incompetent as the acts in respect of which relief was asked for took place outside the limits of the ordinary original civil jurisdiction of the High Court. The Company spent Rs. 20,035/ in prosecuting the proceed ings under section 45 of the and had also to pay Rs. 5,912/ as costs to the Government of the unsuccessful appeal to the Judicial Committee. In its returns of income the Company claimed deduction of the amounts of Rs. 20,035/ and Rs., 5,9121/for the assessment years 1949 50 and 1950 51 respectively as being expenditure wholly and exclusively laid out for the purpose of its business. The claims were rejected by the departmental authorities, and by the Income tax Appellate Tribunal. The Tribunal then referred the following question to the High Court of Judicature at Madras : "Whether the expenses of Rs. 20,035/ incurred in the assessment year 1949 50 and Rs. 5,912/ (relating to the assessment year 1950 5 1) being the cost paid to Government as directed by the Privy Council were expenses incurred in the ordinary course of business and allowable as deductions?" 395 The question as framed is somewhat vague. But it is common ground that the Company claimed deduction under section 10(2) (xv) of the Indian Income tax. Act, 1.922 on the footing that the two amounts represented expenditure laid out wholly and, exclusively by the Company for the purpose of its business. The High Court answered the question in the negative. 'With special leave, the Company has appealed to this Court. The Tribunal has found that after the order dated February 20, 1946 was issued, the Company did not deliver yarn to any weaver. it is recited in the judgment of the Tribunal that a "correct order by the proper authorities was passed" on February 20, 1946 and, thereafter the Company did not distribute any yarn to weavers. The averments made by the Company in the petition under section 45 of the , are somewhat involved, but in substance the claim of the Company was that the Provincial Textile Commissioner was incompetent to pass the order dated February 20, 1946 which placed restrictions on the business of the Company and the order was "likely to cause irreparable and irretrievable injury", and it was prayed that an order do issue under section 45 of the restraining the Provincial Textile Commissioner from enforcing the order and the Textile Commissioner be prohibited by an order from seizing the yarn delivered to the weavers outside the factory and be further ordered to restore the yarn already seized. No clear averment was made in the petition about the date on which the yarn seized had been delivered by the Company to the weavers. This petition failed, because the High Court had no jurisdiction to entertain the petition, and also because the expression "deliver" used in cl. 18 B of the Control Order included handing over of yarn to the weavers outside the premises of the factory for conversion into cloth. But expenditure incurred in prosecuting a civil proceeding relating to the business of an assessee is admissible as expenditure laid out wholly and exclusively for the purpose of the business even if the proceeding is decided against the assessee. It was held by this Court in Commissioner of Income Tax, West Bengal vs H. Hirjee(1) that the deductibility of expenditure under section 10(2) (xv) must depend on the nature and purpose of the legal proceeding in relation to the business whose profits are under computation and cannot be affected by the final outcome of that. proceeding. The proceeding started by the Company was in relation to the business of the Company. The Company was thereby seeking relief against interference by the executive authorities in the conduct of its business in the manner in which it was being carried on previously. It was also seeking to obtain an order for restoration of its goods which were seized. It may be (1) ; : ; M15Sup CI/66 12 396 granted that the Company was, in starting the proceeding, ill advised. However wrongheaded, ill advised, unduly optimistic, or overconfident in his conviction the assessee may appear in the light of the ultimate decision, expenditure in starting and prosecuting the proceeding may not be denied admission as a permissible deduction in computing the taxable income, merely because the proceeding has failed, if otherwise the expenditure is laid out for the purpose of the business wholly and exclusively, i.e. reasonably and honestly incurred to promote the interest of the business. Persistence of the assessee in launching the proceeding and carrying it from Court to Court and incurring expenditure for that purpose again cannot be a ground for disallowing the claim. Under section 10(2)(xv) of the Indian Income tax Act as amended by Act 7 of 1939 expenditure even though not directly related to the earning of income may still be admissible as a deduction. Expenditure on civil litigation commenced or carried on by an assessee for protecting the business is admissible as expenditure under section 10(2) ((xv) provided other conditions are fulfilled, even though the expenditure does not directly relate to the earning of income. Expendi ture incurred not with a view to direct and immediate benefit for purposes of commercial expediency and in order indirectly to facilitate the carrying on of the business is therefore expenditure laid out wholly and exclusively for the purposes of the trade. In Morgan (Inspector of Taxes) vs Tate & Lyle Ltd.(1) the House of Lords held that expenditure incurred by a Company engaged in :sugar refining, in a propaganda campaign to oppose the threatened nationalization of the industry was a sum wholly and exclusively laid out for the purpose of the Company 's trade and was an admissible deduction from its profits for income tax purposes. majority of the House held that the object of the expenditure being to preserve the assets of the Company from seizure and so to enable it to carry on and earn profits, the expenditure was a permissible deduction under r. 3(a) of the Rules applicable to cases (1) & (2) of Sch. D of the Income tax Act, 1918. The object of the petition filed by the Company was to secure a declaration that the order dated February 20, 1946 insofar as it sought to put restrictions upon the right of the Company to carry on its business in the manner in which it was accustomed to do was unauthorized and to prevent enforcement of that order: thereby the Company was seeking to obtain an order from the Court ,enabling the business to be carried on without interference. Expenditure incurred in that behalf would without doubt be expenditure laid out wholly and exclusively for the purpose of the business of the Company. (1) : 397 It was argued however that the any delivered by the Company to the weavers contrary to the prohibitory order dated February 20, 1946 was attached under the order of the Provincial Textile Commissioner, and since the Company violated the prohibitory order, the primary object of the petition for mandamus instituted by the Company was to secure protection against prosecution of the Company and an order for return of the goods in respect of which an offence was committed. Expenditure incurred,in prosecuting that claim was, it was said, not laid out wholly and exclusively for the purpose of the business. Reliance was placed upon the judgment of this Court in H. Hirjee 's case(1) in which it was held that a person who was prosecuted for an offence under section 13 of the Hoarding and Profiteering Ordinance, 1943, on a charge, of selling goods at prices higher than were reasonable, in contravention of the provisions of section 6 thereof, and a part of his stock was seized and taken away, was not entitled to claim deduction under section 10(2)(xv) of the Income tax Act for the sums spent in defending the criminal proceedings against him because the expenditure could not be said to have been laid out and expended wholly and exclusively for the purpose of the business. But the assumption underlying the argument is not true. The Tribunal has in the statement of the case observed in paragraph 2 : "Subsequently, on 20th February 1946, a proper order by the appropriate authority was passed and it is common ground that after that date, at any rate no further distribution of yarn was made by the assessee. In the interim (period) between 7th February 1946 and 20th February 1946, the yarn which was distributed to the handloom weavers was the subject of seizure by the provincial Textile Commissioner and this the assesse sought to resist by filing an application under section 45 of the 1, of 1877 In the view of the Tribunal the Company did not act in violation of the terms of the order dated February 20, 1946; it cannot there fore be said that the Company was seeking to protect itself against a criminal prosecution and the consequences arising from infringement of the order dated February 20, 1946. It is true that in the judgment in appeal from the order refusing mandamus, Leach, C.J. speaking for the Court observed: (see Sree Meenakshi Mills vs Provincial Textile Commissioner, Madras(2): "In spite of the fact that this order in effect prohibited the appellant delivering yarn to owners of handlooms situate outside the mill premises, the appellant continued to deliver yarn to such weavers.", and (1) ; (2) A.I.R. 1947 Mad. 82, 398 the Judicial Committee observed: "Despite. the prohibition the appellant continued to deliver yarn to such owners in order (as already mentioned) that they might turn the yarn into. cloth and bring the article back to the mills. " (See Sree Meenakshi Mills Ltd. vs Provincial Textile Commissioner; Madras(1). But the Tribunal has observed in its order dismissing the appeal filed by the Company that it was "not disputed before" them that, after February 20, 1946 the Company did not distribute any yam. The question referred in this case must be decided not on what was found or observed by the High Court in appeal from order, in the proceedings under section 45 of the or by the Judicial Committee, but upon findings of fact recorded by. the Tribunal. It is unfortunate that the High Court took the facts, not from the statement of the case, but apparently from the judgment. of the Judicial Committee. The High Court assumed that the Company had contravened the law because it delivered yarn to weavers in contravention of the order dated February 20, 1946. But the assumption on which the discussion is founded is erroneous. The High Court also thought that expenditure to fall within the terms of section 10(2)(xv) must be one for the purpose of earning income, and there was no material on the record to show that the expenditure was so incurred. If it is intended thereby to imply that the primary motive in incurring the expenditure admissible to deduction under section 10(2)(xv) must be directly to earn income thereby, we are with respect unable to agree with that view. This Court in Commissioner of Income tax, Kerala vs Malaya lam, Plantations Ltd.(2) observed: "The expression "for the purpose of the business" is wider in scope than the expression "for the purpose of earning profits". It 's range is wide: it may take in not only the day to day running of a business, but also the rationalizationof administration and modernization of its machinery: it may include measures for the preservation of the business or for the protection of its assets and property from expropriation coercive process or assertion of hostile title: it may also comprehend payment of statutory dues and taxes imposed as a precondition to commence or for carrying (1)L.R. 76, I.A. 191, 195. (2)[1964] 7 S.C.R. 693,705:53 I.T.R. 140, 150. 399 on of a business; it may comprehend many other acts incidental to the carrying on of a business. " Expenditure incurred to resist in a civil proceeding the enforcement of a measure legislative or executive, which imposes restrictions on the carrying on of a business, or to obtain a declaration that the measure is invalid would, if other conditions are satisfied, be admissible, in our judgment, under section 10(2)(xv) as a permissible deduction in the computation of taxable income. The appeals are therefore allowed. The question referred is answered in the affirmative. The appellant Company will be entitled to its costs in this Court and the High Court. One hearing fee. y. P. Appeals allowed.

IN-Abs

The assessee mill claimed deduction under section 10(2) (xv) of the Indian Income tax Act of the expenses incurred by it and the costs awarded to Government in respect of unsuccessful writ petition and appeals therefrom. The deduction was disallowed by the departmental authorities, and the question was answered against the assessee by the High Court. In appeals to this Court. HELD: The appeal must be allowed. The proceeding started by the assessee was in relation to the business of the assessee. Expenditure incurred to resist in a civil proceeding the enforcement of a measure legislative or executive, which imposes restrictions on the carrying on of a business or to obtain a declaration that the measure is invalid would. if other conditions are satisfied, be admissible under section 10(2) (xv) as a permissible deduction in the computation of taxable income, even though the expenditure does not directly relate to the earning of income. Expenditure may not be denied admission as a permissible deduction in computing the taxable income merely because the proceeding has failed. Persistence of the assessee in launching the proceeding and carrying it from Court to Court and incurring expenditure for that purpose again cannot be a ground for disallowing the claim. (396 B C; 399 B) Commissioner of Income tax, West Bengal vs H. Hirjee 23 I.T.R 427, Morgan (Inspector of Taxes) vs Tate & Lyle Ltd. : and Commissioner of Income tax, Kerala vs Malayalam Plantations Ltd., (196 HI 7 S.C.R. 693, referred to.

'Appeals Nos.950 957, 1141 1143 and 1703 1712/1966. Appeals by special leave from the judgement and order dated September 9, 1964 of the Assam and Nagaland High Court in Civil Rules Nos. 115, 128, 134, 136, 151, 161, 197 and 160 of 1963. 501 section V. Gupte, Solicitor General and Naunit Lal, for the appellant n C. As. 950 957 of 1966. Naunit Lal, for appellants in C. As. 1141 1143 and 17031712 of 1966. Hareshwar Goswami, K. Rajendra Chaudhury and K. R. Chau dhury, for respondent No. 1 in C. A. No. 950 of 1966. K. R. Chaudhury and K. Rajendra Chaudhury, for respondent No. 1 in C. As. Nos. 952 and 953 of 1966. D. N. Mukherjee, for respondent No. 1 in C. A. No. 1142 and respondents Nos. 2 8, 10, 11, 13 18, 20 22, 24, 26 and 27 in C.A. No. 1143 of 1966. Vineet Kumar, for respondent No. 2 in C. As. 950 957 of 1966. The Judgment of the Court was delivered by Wanchoo, J. These twenty one appeals (eleven by special leave and ten on certificates granted by the High Court) arise from the judgment of the Assam High Court and will be dealt with together, as they raise common questions. We shall therefore set out the facts of one case relating to Kripanath Sarma in C.A. 950. In the year 1947 the Assam Legislature passed an Act known as the Assam Primary Education Act, No. XIII of 1947, in order to provide for development of primary education in the State. That Act was repealed by the Assam Basic Education Act, No. XXVI of 1954 (hereinafter referred to as the 1954 Act) which was passed to provide for development, expansion, management and control of basic education and with a view to introduce gradually universal, free and compulsory basic education in the State. The 1954 Act provided for a State Advisory Board for Basic Education hereinafter referred to as the State Advisory Board). It further made provision for the constitution of Regional Boards for Basic Education known as School Boards for each region in a district. These School Boards were to control basic education in their regions and among the powers conferred on School Boards was the power to appoint and punish basic school teachers and attendance officers. The scheme of the 1954 Act was therefore to entrust the conduct of basic education to School Boards. The State Advisory Board was a central body whose function was to advise the State Government on matters relating to the control and direction of the activities of School Boards, the making of grants to School Boards, the method of recruitment and the conditions of service of basic school teachers and attendance officers, the training of teachers and the making of provision for such training, 502 the curriculum, duration, standard and syllabus of basic education, the preparation, publication and selection of text books, the medical inspection and treatment of children and any other matter which the State Advisory Board considered necessary for carrying out the purposes of that Act fully and effectively or on which the State Government might consult the State Advisory Board. The 1954 Act was repealed by the Assam Elementary Education Act, No. XXX of 1962, (hereinafter referred to as the Act). In the present appeals we are mainly concerned with the Act. Section 3 of the Act provides for the constitution of a State Board for Elementary Education (hereinafter referred to as the State Board) and the State Board was made a corporate body with perpetual succession and a common seal. The functions of the State Board were defined in section 10 which inter alia provides that the State Board shall lay down principles for allocation of grants for carrying out the purposes of the Act to local authorities, lay down procedure and conditions and hold such tests as may be necessary for recruitment of teachers of elementary schools on such terms and conditions of service as may be prescribed, lay down conditions for recognition, expansion and amalgamation of schools and openings of schools, and do any other act which it considers necessary for carrying out the purposes of the Act fully and effectively. Under section 15 the State Board has to perform its duties and carry out its functions in accordance with such rules of business as may be prescribed. The main change in the Act was that the School Boards func tioning under the 1954 Act were abolished and in their place the Deputy Inspectors of Schools, by virtue of their office, were made Assistant Secretaries of the State Board with the same headquarter and jurisdiction as they had as Deputy Inspectors of Schools. They were inter alia authorised to operate the fund placed at their disposal by the State Board, to appoint their office staff, and ill particular by cl. (iii) of section 14 (3) "to appoint teachers in recognised schools on the advice of a Committee constituted by the State Board under section 16 and transfer them as necessary and also grant such leave, other than casual leave, to them as may be admissible. " Section 16 authorised the State Board to constitute Advisory Committees for the purpose of section 14 (3)(iii). The Act was to come into force at once and it actually came into force from October 5, 1962. Section 34(2) of the Act provides that as soon as it came into force all teachers and other employees of schools maintained by School Boards would be taken over by the State Board subject to the condition that the total emoluments of the employees at the time they 503 were taken over would be protected and their seniority would be maintained. Section 38 provides that "all teachers existing or to be appointed in any Elementary School recognised under the Act, except in the case of the A utonomous Districts, shall be deemed to have been employed by the State Board. " Section 54 is the rule making provision and gives power to the State Government to make rules for carrying out the purposes of the Act. Section 55 provides for the repeal of the 1954 Act and sub section (2) thereof provides for savings in the following terms: "Notwithstanding the repeal all authorities constituted, appointments, rules, orders or notifications made under the said Act shall be deemed to be constituted or made under this Act, and continue to function or to be in force until actions under the provisions of this Act are taken. " It will be noticed that the saving clause provides that all authorities constituted under the 1954 Act shall be deemed to. be constituted under the Act and shall continue to function until action under the provisions of the Act is taken. It appears that by virtue of this provision the State Advisory Board continued even after October 5, 1962, as apparently it took sometime to constitute the State Board under the Act. On November 20, 1962, the State Advisory Board passed a resolution, the relevant part of which is in these terms "Subject to the exceptions enumerated below, all teachers who are not matriculates or who have not passed the Teachers ' Test but who are working as teachers in. schools shall be discharged with effect from 31 3 1963. " It is unnecessary to refer to the exceptions, for we are not concerned with them. in pursuance of this resolution, the Secretary to the State Advisory Board wrote a letter to all the Secretaries, School Boards, who were no other than the Deputy Inspectors of Schools and who became Assistant Secretaries of the State Board under section 14 of the Act. This letter began with the following paragraph: "In inviting a reference to the subject indicated above (the subject indicated being removal of non T.T. and undermatric L.P. (Jr. Basic) Teachers and appointment of L.P. (Jr. Basic) Teachers"), "I have the honour to state that henceforward the following principle adopted by the State Advisory Board for Basic Education in its meeting held on 20th November, 6sup, Cl/66 4 504 1962 should be strictly followed. In case of any doubt, this office may be approached for clarification." Then followed a copy of the resolution passed on November 20, 1962. The letter also contained directions as to the policy with regard to appointments in future vacancies with which we are not concerned. It concluded with the following paragraph: "Further, you are requested to submit a statement showing the names of non T.T. or under matric teachers, if any, aft er 31st March, 1963 stating the reasons for their retention. In case there will be none after the said date, please submit a nil report. This report should invariably reach this office by the 20th April 1963 at the latest. " It appears that after March 31, 1963, action began to be taken on these instructions and a letter was issued to Kripanath Sarma on April 9, 1963 , the relevant part of which is in these terms: "Under Departmental Instructions regarding removal of under matric and non T.T. Teachers, service of Shri Kripanath Sarma, H.P. Janigog No. 1, L.P. School is hereby terminated with immediate effect. " We may add that similar letters were addressed to other teachers who are respondents in the present appeal, though they were addressed in some cases in May 1963 and in one case as late as August 1963. In a few cases letters of removal were addressed to some of the respondents in the present appeals as late as September 1963. But it is remarkable that no letter was addressed to anyone before March 3 1, 1963 intimating that his service would be terminated from March 31, 1963. On termination of the services of teachers who are now res pondents in these appeals before us, a number of writ petitions were filed in the High Court challenging the orders of termination. The main point raised in the petitions was that the Secretary, School Board or the Assistant Secretary, State Board under whose signature the letters of termination of service were issued had no autho rity under the Act to terminate the services of the respondents. It was also contended in the alternative that the respondent teachers were holding civil posts under the State and termination of their services was in violation of the provision of article 311(2) of the Constitution. These petitions were opposed on behalf of the State and in some cases by the State Board. Their case was that under section 14 (3)(iii) of the Act, the Deputy Inspectors of Schools who are the Assistant Secretaries of the State Board had the power to terminate the services of teachers. In the alternative, it was contended that even if that was not so, the teachers were employees of the State 505 Board and therefore under the general law it was open to the State Board to terminate their services and that was what was done in effect. Lastly, it was contended that the respondent teachers were not holding civil posts under the State and therefore article 311(2) of the Constitution did not apply in their case. The High Court did not decide whether the respondent teachers were holding civil posts, whether article 311(2) of the Constitution applied to them, and whether there had been a breach of the provisions thereof. It was, however, of opinion that section 14(3)(iii) did not give power to the Assistant Secretary (assuming that the letters terminating services of the respondents were issued under that provision) to terminate services of teachers who had been taken over under section 34(2) of the Act and who had not been appointed under section 14(3)(iii) by the Assistant Secretary. It held therefore that the letters to the respondent teachers terminating their services whether issued in the name of Secretary, School Board or Assistant Secretary, State Board, were beyond his power as he could not terminate the services of these teachers. As to the alternative argument namely, that these teachers were the employees of the State Board and it was the State Board which had terminated their services the High Court held that orders of termination could not be held valid as the State Board which is a statutory body had not acted under the provisions of the Act or the Rules under which a statutory body had to act. In ' consequence the petitions were allowed and the orders terminating the services of the respondents were set aside. Thereupon the appellants came to this Court in some cases on certificates obtained from the High Court and in others on special leave obtained from this Court. The main contention before us on behalf of the appellants is two fold. In the first place it is urged that under section 14(3)(iii) of the Act read with section 18 of the Assam General Clauses Act, No. 11 of 1915, (hereinafter referred to as the 1915 Act), the orders of termination passed by the Secretary, School Board or the Assistant Secretary, State Board were within his power. In the alternative, it is urged that the respondents were in any case employees of the State Board under the Act and their services could be terminated by the State Board and that was in effect what was done and therefore the termination of their services was perfectly valid. We shall first consider whether the Deputy Inspector of Schools,in his capacity as the Assistant Secretary of the State Board, could terminate the services of the respondents in view of section 14(3)(iii) of the Act read with section 18 of the 1915 Act. We have already set out S.14(3)(iii). It gives powers to appoint teachers to the Deputy Inspector of Schools as the Assistant Secretary of the State Board. The argument, based on section 18 of the 1915 Act, is that the power to appoint includes the power to suspend or dismiss and therefore the 506 Assistant Secretary had the power to terminate the services of the respondents. Section 18 of the 1915 Act is in these terms: "Where, by any Act, a power to make any appointment is conferred, then, unless a different intention appears, the authority having power to make the appointment shall also have power to suspend or dismiss any person appointed by it in exercise of that power. The High Court referred to section 16 of the General Clauses Act, No. X of 1897, though strictly speaking it is section 18 of the 1915 Act which has to be applied. The High Court was of the view that as appointments under section 14 by the Assistant Secretary had to be made on the advice of the Advisory Committee, the relevant provision in the General Clauses Act was of no avail to confer a power of dismissal on the Assistant Secretary under section 14(3)(iii), for that only applies unless a different intention appears. The High Court thought that, as the Assistant Secretary did not have complete power to appoint teachers and could only do so on the advice of the Advisory Committee, there was a different intention in section 14(3)(iii), and that was that no dismissal could be made by the Assistant Secretary because he had in reality no complete power to appoint. It is urged that this view of the High Court is incorrect. Now as we read section 14(3)(iii) of the Act, it is obvious that the power of appointment is only in the Assistant Secretary, though that power has to be exercised on the advice of the Committee constituted under section 16 of the Act. Even assuming that the recommendation of the Committee is necessary before appointment is made by the Assistant Secretary, the fact still remains that it is not the Committee which appoints, and the appointment is made only by the Assistant Secretary. Even if the word "advice" in this provision is equated to the word "recommendation", it is still clear that the Committee only recommends and it is the Assistant Secretary who is the appointing authority on the recommendation of the Committee. It may be that the Assistant Secretary cannot make the appointment without the advice or recommendation of the Committee. Even so, in law, the appointing authority is only the Assistant Secretary, though this power is to be exercised on the advice or recommendation of the Committee. In these circumstances, it cannot be said that there is any different intention appearing from the fact that the appointment has to be made on the recommendation or advice of the Committee. The appointing authority would still be the Assistant Secretary and no one else, and there is no reason why, if he is the appointing authority, he cannot dismiss those appointed by him with the aid of section 18 of the 1915Act. We cannot therefore agree with this view of the High Court. But there is another difficulty in the present case which stands in. the way of the Assistant Secretary having the power to dismiss 507 teachers who had been taken over under section 34(2) of the Act and thus had been appointed before the Act came into force. Section 18 of the 1915 Act says that the authority having power to make an appointment shall have the power to suspend or dismiss any person appointed by it in exercise of that power. Therefore the authority which appoint scan only dismiss such persons as have been appointed by it. It cannot dismiss persons appointed by any other authority, for such persons have not been appointed by it in the exercise of its power as appointing authority. In the present case, as we have already pointed out, the office of the Assistant Secretary of the State Board was created for the first time by the Act. Therefore, all those persons who had been appointed before the Act came into force could not possibly be appointed by the Assistant Secretary, for there was no such authority in the earlier enactment repealed by the Act. In the earlier Act the appointing authority was the School Board, for there was no Assistant Secretary of the State Advisory Board thereunder. Therefore a person appointed before the Act came into force by the School Board cannot be said to have been appointed by the Assistant Secretary of the State Board or its predecessor the State Advisory Board, for there was no such authority in the earlier enactment. In the circumstances we are of opinion that the Assistant Secretary could not dismiss teachers appointed before the Act came into force, for there was no such authority existing before that. It is however urged that section 55 provides that all appointments under the 1954 Act shall be deemed to have been made under the Act and therefore the appointments under the 1954 Act by the School Boards must be deemed to have been made by the Assistant Secretary under section 14(3)(iii) of the Act. We are of opinion that this contention cannot be accepted in view of the specific provision contained in the Act under section 34(2) and section 38. Section 34(2) lays down that all teachers and other employees of schools maintained by the School Board would be taken over by the State Board. This being a specific provision relating to teachers, we cannot take recourse to the general deeming provision contained in section 55(2) with respect to appointment of teachers and other employees of schools maintained by School Board. Further section 38 specifically says that all teachers then existing would be deemed to have been employed by the State Board. Reading therefore section 34(2) and section 38 together, the conclusion is inevitable that there is no occasion for the application of the deeming provision in section 55 in the case of these teachers. In the face of these two specific provisions the general deeming provision contained in section 55(2) cannot be used to come to the conclusion that those teachers who were existing from before are to be deemed to have been appointed by the Assistant Secretary under section 14(3)(iii). We are therefore in agreement with the High Court, though for slightly different reasons, that the services of the respondent teachers could not be terminated by the Assistant 508 Secretary of the State Board under section 14(3) (iii) of the Act read with s.18 of the 1915 Act. This brings us to the alternative argument, namely, whether the respondents have been dismissed by the State Board. There is no doubt that reading section 34(2) and section 38 together, the existing teachers were taken over by the State Board and became its employees. Therefore, as their employer, the State Board would have power under the general law of master and servant to terminate their services unless that power was in any way circumscribed by statute. The case of the respondents is not that that power of the State Board is so circumscribed (subject of course to the argument that these employees are protected under article 311 of the Constitution); their case is that the State Board never terminated their services, and that the orders of termination were passed only by the Assistant Secretary who had no authority to do so. On the other hand, it is contended on behalf of the appellants that the services of the respondents were terminated by the State Board, and in this connection reliance is placed on the resolution of November 20, 1962 to which reference has already been made. The question that arises therefore is whether the said resolution can be said to have terminated the service of anyone at all. It certainly begins by saying that "all teachers who are not matriculates or who have not passed the Teachers ' Test but who are working as teachers in schools shall be discharged with effect from 31 3 1963". It is not in dispute that at the time when this resolution was passed there was no list of teachers who were not matriculates or who had not passed the Teachers ' Test before the State Advisory Board . So the resolution in our opinion cannot be read as amounting to terminating anyone 's service and must only be read as laying down principles which would have to be applied for dispensing with the services of certain teachers from March 31,1963 if conditions mentioned in the resolution are satisfied. Legally, a resolution like this cannot be read as an order dismissing persons whose names were not even known to the authority passing it If this resolution really amounted to an order of discharge of particular persons, it should have been communicated to them, for without such communication it would be of no use for the purpose of terminating the services of anybody: (see Bachittar Singh vs The State of Punjab)(1). It is not in dispute that this resolution was not communicated to any teacher as such and obviously it could not be communicated to any teacher who might even be governed by its terms for the State Advisory Board did not know to which particular teachers it might or might not apply. It must therefore be read not as an order terminating the services of anybody but as an (1) [1962] 3 Supp. S.C.R. 713. 509 indication of policy to be pursued for discharge of teachers as from March 31, 1963. That this is so is clear from the letter of December, 15, 1962 to which reference has already been made. This letter was addressed by the Secretary of the State Advisory Board to all the Secretaries of School Boards. It incorporated the resolution of November 20, 1962, and treated it in the opening part of the letter as enunciating for the future the principles to be strictly followed in the matter of removal of non T.T. and under matric L.P. (Jr. Basic) teachers and appointment of L.P. (Jr. Basic) teachers. The very fact that this letter was addressed to the Secretaries of all School Boards and not to any teacher shows that the resolution, of November 20, 1962 did not terminate anyone 's services but merely laid down principles to be followed for termination of services of certain teachers as from March 31, 1963, if the terms of the resolution applied. We cannot therefore read either the resolution of November 20, 1962 or the letter of December 15, 1962 as an order terminating the services of any teacher who may be non T.T. or undermatric. Further we may refer to the last paragraph of this letter which has a significance of its own. It asks the Secretary, School Board to submit a statement showing the names of non T.T. teachers or under matric teachers, if any, after March 31, 1963, stating the reasons for their retention. Clearly neither the resolution nor the letter was therefore terminating the services of anyone, for the last paragraph permitted the Secretaries of School Boards to retain, if necessary, non T.T. teachers or under matric teachers and required them to state the reasons why such retention took place after March 31, 1963. If the resolution of November 20, 1962 or the letter of December 15, 1962 terminated the services of any teacher in terms, such a paragraph as the last paragraph in the letter of December 15, 1962 could not be there. It is also remarkable that services of not a single teacher came to an end on March 31, 1963.The letters intimating to the teachers that their services were terminated began from April 9, 1963 and continued upto some date in September 1963. If the resolution of November 1962 or the letter of December 15, 1962 had terminated the services of all teachers governed by it from March 31, 1963 we fail to understand how letters terminating their services were issued to various respondent teachers on various dates from April to September 1963. It is perfectly clear therefore that the resolution did not terminate the services of any teacher; it merely laid down principles to be applied for terminating services of teachers from March 31, 1963. We should have expected that if the State Advisory Board intended to terminate services of such teachers itself, the names of non T.T. or under matric teachers should have been called for by it before 510 March 31, 1963 and thereafter it should have passed a specific resolution terminating the services of those particular teachers and this resolution should have been communicated to the teachers concerned. If that had been done, it could have been said that the State Board had terminated the services of the teachers concerned. But we cannot possibly read the resolution or the letter as terminating the services of any teacher at all. They merely laid down principles which had to be applied later on by somebody else who was expected to terminate the services of the teachers concerned. Then it is urged that the resolution may be taken to amount to a delegation by the State Board of its authority to terminate services of teachers after laying down principles for such termination. We consider that there is no force in this contention either. The resolution has not a word to show that it was delegating the authority of the State Board for terminating services of teachers to any other authority, (assuming that such a delegation is possible). There is nothing in the resolution to show even if it were to be treated as a delegation by the State Board to terminate services of these teachers, to which authority such delega tion was being made. The fact that a copy of the resolution was addressed to the Secretaries, School Boards by the Secretary, State Board cannot mean that authority was being delegated to the Secretaries of School Boards, even assuming that School Boards could be functioning after October 5, 1962, when the Act makes no provision for any School Board. If delegation was possible, that delegation had to be made by the State Board itself by a resolution and not by the Secretary of the State Board. Nor can we accept the argument that the Assistant Secretaries were carrying out the instructions of the State Board contained in the letter of December 15, 1962, for we can only see in a case of this kind where services of teachers were terminated one of two possibilities, i.e. either the services had to be terminated by the State Board itself, which we have shown did not take place, or the services had to be terminated by somebody else to whom the authority of the State Board was delegated (if such a delegation was possible at all) and that also we have shown is not done. We can see of no third way in which the resolution of November 20, 1962 could be implemented by a subordinate authority, unless that subordinate authority had power itself to terminate the services of teachers. We have already held that the Assistant Secretary had no such authority under section 14(3)(iii) of the Act read with section 18 of the 1915 Act. Therefore, the orders issued in the present case terminating the services of the respondent teachers were invalid, for they were not orders of the State Board terminating 511 the services of the respondents; they must be held to be orders of the Assistant Secretary who had no power to terminate the services of the respondents. The appeals therefore fail and are hereby dismissed with costs, one hearing fee. V.P.S. Appeals dismissed.

IN-Abs

The respondents were Elementary School teachers appointed under the Assam Basic Education Act, 1954. The Act was repealed by the A, %am Elementary Education Act, 1962, which came into force on 5th October, 1962. Under the 1962 Act a State Board was to be constituted, and in the place of the School Boards functioning under the 1954 Act, the Deputy Inspectors of Schools were made Assistant Secretaries of the State Board within their respective jurisdictions. Section 34(2) provide,% that all the Elementary School teachers appointed under the 1954 Act would be taken over by the State Board and section 38 provides that the school teachers shall be deemed to have been employed by the State Board. In November 1962, the State Advisory Board, which was cons tituted under the 1954 Act and which continued to function even after 5th October 1962 (because the State Board under the latter Act was not yet constituted) passed a resolution that all teachers who were not matriculates or who had not passed the Teachers ' test should be discharged with effect from 31st March 1963. In December 1962, the Secretary of the Advisory Board communicated the resolution to the Assistant Secretaries and requested them to submit a statement, before 20th April 1963, showing the names of teachers, who were non matries or who had not passed the test and who were retained after 31st March 1963, stating the reasons for their retention. Between April 1963 and September 1963, the Assistant Secretaries issued letters intimating the respondents that their services were terminated. The respondents thereupon filed writ petitions in the High Court which were allowed. In appeal to this Court. HELD : (i) The Assistant Secretaries had no power to terminate the services of the respondents. Under s.14(3)(iii) of the 1962 Act, the power of appointment of an elementary school teacher is in the Assistant Secretary though the power has to be exercised on the advice of the Committee constituted under section 16. Even if the word "advice" is equated to "recommendation", the Committee only recommends and it is the Assistant Secretary who is the appointing authority. Therefore, if be was the appointing authority he could dismiss those appointed by him with the aid of section 18 of the Assam General Clauses Act, 1915, under which, unless a different intention appears, the power to appoint includes the power to dismiss; and it cannot be said that a different intention appears from the fact that the appointment has to be made on the recommendation or advice of the Committee. But the respondents, in fact had been appointed before the 1962 Act came into force and could not possibly have been appointed by the Assistance Secretaries, for there were no such authorities in the earlier enactment repealed by the 1962 Act. Nor, can the appellant rely on section 500 55(2) of the 1962 Act, under which all appointments made under the 1954 Act shall be deemed to have been made under the 1962 Act, because,, the specific provisions contained in sections 34(2) and 38 lay down that the teachers would be taken over and deemed to have been employed by the State Board. [506 E H; 507 B D; E H] (ii) The services of the respondents could have been terminated by the. State Board, but the orders terminating the services in the present case were not those of the State Board but of the Assistant Secretaries and were therefore invalid. The resolution of the State Advisory Board of November, 1962, and the letter of its Secretary, addressed to the Assistant Secretaries in December, 1962, were not orders terminating the services of any of the respondents because : (i) when the resolution was passed there was no list of teachers who were non matrics or who had not passed the Teachers ' test and legally, such a resolution could not be read as an order dismissing persons whose names were not even known to the authority passing the resolution; (ii) if it really amounted to an order of discharge it should have been communicated to the respondents for without such communication it was of no use; (iii) the services of not a single teacher were in fact terminated on 31st March 1963; (iv) the fact that the resolution was communicated to the Assistant Secretaries and not to any teacher shows that it merely laid down principles to be followed for the termination of services of certain teachers; (v) the letter permitted the Assistant Secretaries to retain, if necessary, teachers who were not matrics or who had not passed the test; and (vi) the letters terminating the services of the respondents were in fact issued after 31st March 1963. [508 E H; 509 C, E, F] (iii) The resolution could not be taken to amount to a delegation to the Assistant Secretaries, by the State Board. , of its authority to terminate the services of teachers after laying down principles for such termination. The resolution ha , not a word to show that it was so delegating assuming that such a delegation was possible. The fact that a copy of the resolution was addressed by the Secretary to the Assistant Secretaries could not mean that the authority was so delegated. If delegation was possible, it could only be made by the State Board itself by a resolution and not by its Secretary. [510 C E] (iv) It could not also be said that the Assistant Secretaries were only carrying out the instructions of the State Board contained in the letter of December 1962. Either the services had to be terminated by the State Board itself, which was not done; or the services had to be terminated by the Assistant Secretaries to whom the authority was delegated (if such a ,delegation was possible), but that also was not done. There was no third way in which the resolution of November 1962 could be implemented by the Assistant Secretaries unless they themselves bad the power to terminate the services; but in the instant case, they had no such authority. 15 1 0 F H]

Appeal No. 945 of 1965. Appeal by special leave from the judgment and order dated December 14, 1962 of the Gujarat High Court in Sales Tax Re ference No. 16 of 1961. N. section Bindra and R. H. Dhebar, for the appellant. M. V. Goswami, for the respondent. The Judgment of the Court was delivered by Bhargava, J. This appeal under special leave granted by this Court arises out of proceedings for assessment of sales tax under the Bombay Sales Tax Act III of 1953. Messrs. Kailash Engineering Co. (hereinafter referred to as "the respondent") was an engineering concern having their workshop at Morvi on the meter gauge section of the Western Railway. They obtained a contract from the Western Railway Administration for construction of III class passenger coaches on certain conditions described as the conditions of tender. Under that contract which was reduced to writing and was described as an agreement, the respondent constructed three coaches and submitted a bill which was properly certified in accordance with the agreement by the Railway Administration on October 4, 1958. The net value of the work done by the respondent was certified at Rs. 1,22,035/ . After receipt of this money, the respondent wrote to the Additional Collector of Sales Tax requesting him under section 27 of the Bombay Sales Tax Act, 1953, to hold that this was a works contract, and that the transaction, in respect of which the respondent received the money, did not amount to a sale, so that no sales tax was payable under that Act. The Additional Collector held that two questions fell for determination before him: (1) Whether the transaction covered by the bill dated 4th October, 1958, is a sale; and (2) if it is a sale, whether any tax is payable in respect of the same. The Additional Collector answered both the questions in the affirmative against the respondent. The appeal before the Gujarat Sales Tax Tribunal failed; and thereupon, the respondent sought a reference to the High Court of Gujarat. The Tribunal referred the following question for the opinion of the High Court: "Whether on a proper construction of the agreement as a whole and its general conditions and specification, the work done and covered by Contract Certificates No. M/60(1)/B PRTN, dated 4th October, 1958, for the perfor 545 mance of the works of building, erecting and furnishing 3 B. G. Coaches over the chassis supplied by the Railway is a works contract not amounting to sale, or whether it is a transaction of sale. " The High Court answered the question in favour of the respondent, holding that the transaction was a works contract carried out by the respondent and did not amount to a sale. Consequently, this appeal has been brought up by the State of Gujarat challenging the correctness of the decision of the High Court. The Tribunal, when dealing with the case, mentioned a few of the terms of the contract entered into between the respondent and the Western Railway Administration, and, though there was a provision in one of the clauses of the agreement that as soon as the plant and materials were brought on the site where the coaches were to be constructed, the ownership in them would vest in the Railway, the Tribunal held that the ownership in those materials never passed to the Railway because of the indication given by another clause which provided that on removal of contractor or on rescission of contract, the Railway Authorities would be entitled to take possession and retain all materials, tools, implements, machinery and buildings. On this basis, the Tribunal held that, from the general conditions of the contract, it appeared that the ownership of the coach bodies only passed to the Railway when completed and handed over to the Railway, so that the contract was for supply of coach bodies. It was on supply of these coach bodies that the respondent received the price of those bodies, and thus received the amount subjected to sales tax as sale consideration for those bodies. The High Court, however, in its judgment, reproduced the preamble of the contract as well as a large number of clauses of it to show that in the contract, at every stage, it was clearly mentioned that the contract was for performance of work of building, erecting and furnishing coach bodies on Broad Gauge underframes which already belonged to the Railway. The terms of the contract showed that as soon as the materials were taken by the respondent to the site of construction of the coaches, the ownership in those materials vested in the Railway and all that the respondent had to do was to carry out the work of erecting and furnishing the coach bodies. When the coach bodies were ready, the property in them vested in the Railway automatically without any further transfer of rights in it to the Railway. In fact, the ownership in the ready coach bodies did not vest in the respondent at all. No doubt, the materials for building the ' coach bodies had to be obtained by the respondent and brought to the site of construction, but the provision that the ownership in those materials would vest in the Railway as soon as those materials were brought to the site clearly indicated that the respondent, in purchasing those materials, was 546 acting more or less in the capacity of an agent for the Railway. While the materials were at site, the effect of vesting of their ownership in the Railway was that if they were destroyed or damaged, the risk had to be borne by the Railway, even though the Railway might have been entitled to reimburse itself, because those materials and goods were in the custody of the respondent on behalf of the Railway. In fact, under clause 29, there was a specific provision for the contingency that the materials or plant may be lost, stolen, injured or destroyed by fire, tempest or otherwise. This special provision was to the effect that the liability of the contractor was not to be diminished in any way, nor was the Railway to be in any way answerable for loss or damage on the happening of such contingency. This special provision had to be made, because the ownership in the materials vested in the Railway, though the contractor was in actual physical possession of the materials and plant in order to carry out the works contract. It was for this reason that a specific provision had to be made that the contractor would be liable to the Railway if any such loss occurred. Taking into account all the terms of the contract as a whole, the High Court came to the finding that the contract between the parties was one entire and indivisible contract for carrying out the works specified in full details in the agreement, and that it did not envisage either the sale of materials by the respondent to the Railway, or of the coach bodies as such. In this connection, learned counsel for the appellant relied on the decision of this Court in Patnaik & Company vs State of Orissa.(1) In that particular case, the contract in question was for the supply of bus bodies, and it was held that when the bus bodies were supplied by the contractor and money received by him, it amounted to a sale. It, however, appears that the facts and circumstances, on the basis of which the Court gave that opinion, do not find place in the case, Three main circumstances were relied upon in that case for holding that the transaction amounted to a sale and not to a works contract. The first circumstance was that the bus bodies were, throughout the contract, spoken of as a unit or as a composite thing to be put on the chassis, and this composite body consisted not only of things actually fixed on the chassis but movable things like seat cushions, and other things which could be very easily detached. In the contract, with which we are concerned, the coach bodies are not separately described as units or components to be supplied by the respondent to the Railway. The language used in the contract everywhere describes the duty of the respondent to be that of constructing, erecting and furnishing coach bodies on the underframes supplied. At no stage does the contract mention that ready coach (1) ; 547 bodies were to be delivered by the respondent to the Railway. In fact, even during the process of construction of the coach bodies, the unfinished bodies in process of erection were treated, under the terms of the contract, as the property of the Railway. The second circumstance found in that case was that if some work was not satisfactorily done and the body builder, on receipt of a written order, did not dismantle or replace the defective work or material at his own cost within seven days, the Controller was entitled to get the balance of the work done by another agency and recover the difference in cost from the body builder; and for this, purpose, the Controller was entitled to take delivery of the unfinished body. In the contract before us, as we have already mentioned in the preceding paragraph, the unfinished bodies of the coaches were from the earliest stage treated as the property of the Railway, and there was no question of ownership of the unfinished body passing to the Railway only after its seizure by it as was the case in the other contract in which the property in the unfinished body did. not pass to the Government till the unfinished body was seized. The third circumstance taken into account in that case was the liability for the loss, if a fire took place and the bus bodies were destroyed or spoiled. In that case, there was a provision for insurance of the chassis, but there was no such provision regarding. insurance of bus bodies, and the Court inferred that till delivery was made, the bus bodies remained the property of the appellant on whom the loss would fall. On the other hand, in the contract with which we are concerned, the terms envisaged the property in the unfinished bodies vesting in the Railway, and since those unfinished bodies were to be in charge of the respondent during construction, a special provision had to be made making the respondent responsible for the loss and throwing upon the respondent the liability to reimburse the Railway for loss by fire, etc. Thus, the terms of the contract in this case are markedly different from those which came up for consideration in that case. Here, we find that all the terms of the contract lead to the only inference that the respondent was not to be the owner of the ready coach bodies and that the property in those bodies vested in the Railway even during the process of construction. This was, therefore, clearly a works contract which did not involve any sale. The decision given by the High Court was correct. The appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed.

IN-Abs

The respondent company, which was an engineering concern with a workshop at Morvi, obtained a contract from the Western Railway Administration for construction of third class coaches. Under the contract the respondent constructed three coaches and submitted a bill which was properly certified on October 4, 1958, in accordance with the agreement as to the work done by the respondent. After the bill had been paid, the respondent wrote to the Additional Collector of Sales tax requesting him under Section 27 of the Bombay Sales tax Act, 1953 to hold that the transaction was a works contract and not a sale, so that no sales tax was payable under the Act. The Additional Collector held however that the transaction was a sale on which tax was payable. Dismissing an appeal from this decision, the Sales tax Tribunal took the view that the general conditions of the contract showed the ownership of the coach bodies only passed to the Rail when they were completed and handed over to the Railway, so that way contract was for supply of coach bodies. Sales tax was therefore payable on the price of these coach bodies. Upon a reference made to it, the High Court held however that the contract clearly mentioned that the contract was for performance of work of building, erecting and furnishing coach bodies on Broad Gauge under frames which already be longed to the Railway. The terms of the contract further showed that as soon as the materials were taken by the respondent to the site of the construction of coaches, the ownership in those materials vested in the Railway and all that the respondent had to do was to carry out the work of erecting and furnishing the coach bodies. When the coach bodies .were ready, the property in them vested in the Railway automatically without any further transfer of rights in it to the Railway. The ownership in the ready coach bodies never vested in the respondent company at all and although materials for their construction had to be obtained by it and brought to the site, in purchasing those materials it was acting more or less in the capacity of an agent !or the Railway. Accordingly the High Court came to the finding that the contract between the parties was one entire and indivisible contract for carrying out the works specifi ed in the agreement and that it did not envisage either the sale of the materials by the respondent to the Railway, or of the coach bodies as such; no sales tax was therefore held leviable on the transaction. On appeal to this Court. HELD : The terms of the contract led to the only inference that the respondent was not to be the owner of the ready coach bodies and that the property in those bodies vested in the Railway even during the process of construction. The transaction was therefore clearly a works contract which did not involve any sale. [547 G] 544 Patnaik & Company vs State of Orissa, ; distinguished.

iminal Appeal No. 42 of 1953. Appeal by Special Leave from the Judgment and Order dated the 5th February, 1953, of the High Court of Judicature at Bombay in Criminal Appeal No. 1149 of 1952 arising out of the Judgment and Order dated the 22nd April, 1952, of the Court of the Presidency Magistrate 19th Court, Bombay, in Case No. 933/P of 1951. B. M. Mistry, J. B. Dadachanji, Rajinder Narain and R. D. Chadda for the appellant. M. C. Setalvad, Attorney General for India (R. Ganapathy Iyer and P. G. Gokhale, with him) for the respondent. February 19, April 28, September 23, and September 24. [The present Criminal Appeal (No. 42 of 1953) came up for hearing in the first instance before a Bench of Hon 'ble Judges composed of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ. who delivered the following Judgments dated 19th February, 1954]. BHAGWATI J. This is an appeal by special leave from a judgment of the High Court of Judicature at Bombay reversing the order of acquittal passed in favour of the appellant by the Court of the Presidency Court, Bombay, and convicting him of an offence under section 66(b) of the Bombay Prohibition Act, 1949, and sentencing him to one month 's ' rigorous imprisonment and a fine of Rs. 500. The appellant, who was the Officiating Regional Transport Officer, Bombay Region, was on the 29th May, 195 1, at about 9.30 P.m., proceeding in his jeep car towards the Colaba Bus Stand when he knocked down three persons, Mrs. Savitribai Motwani, her husband and Miss Parvatibai Abhichandani. The police arrested the appellant and took him to the police station. From the police station he was taken to St. George 's Hospital in order to be examined by the doctor for alleged consumption of liquor. The doctor found his breath smelling of alcohol. He however found the conjunctiva were congested, the pupils were semi dilated and reacting to light. The speech was coherent and he could behave himself and walk along a straight line. The doctor was therefore of opinion that he did not seem to be under the influence of alcohol though he had taken alcohol in some form or the other. The appellant was put up before the Presidency Magistrate for his trial under two offences, one under section 338 of the Indian Penal Code on three counts for causing grievous hurt to the three injured persons by doing a rash and negligent act, i.e., driving his motor car in a rash and negligent manner, and the other under section 66 (b) of the Bombay Prohibition Act. The appellant cross examined the doctor and suggested that he had taken a medicinal preparation, B. G. Phos, and also stated in answer to the Magistrate on the 20th December, 1951, that he had not consumed any liquor but had taken medicinal preparation containing a small percentage of alcohol. He also filed a written statement on the 13th March, 1952, setting out in detail the whole history of his case. He stated there that owing to his ill health he had been recommended to take tonics, specially those containing vitamin B Complex and Phosphates and had regularly taken tonics, such as Wampole 's Phospho Lecitin, B. G. Phos, and Huxley 's Nerve Vigour. He further stated that on the night in question he had at about 9 or 9.15 P.m. after dinner 616 taken a dose of B. G. Phos and was proceeding in his jeep car for a drive via Cuffee Parade and Marine Drive when the accident took place. He produced his driving licence and registration certificate and a copy of the agenda of the Regional Transport Authority 's meeting to be held next day and a carton of B. G. Phos on which it was stated that it contained 17 per cent alcohol according to its formula. The learned Presidency Magistrate acquitted the appellant of both these offences. In regard to the offence under section 66(b) of the Bombay Prohibition Act he observed that the evidence did not go to show conclusively that the appellant had consumed alcohol without a permit, that there were certain medicinal preparations which were allowed to be used by law and there was no satisfactory evidence to show that the appellant had not consumed those tonics but only liquor for which he ought to have a permit. The respondent, the State of Bombay, took two appeals before the High Court against each of these two cases. The High Court confirmed the acquittal in regard to the charge under section 338 of the Indian Penal Code but reversed the order acquitting him of the charge under section 66(b) of the Bombay Prohibition Act. The High Court followed a decision of its own Division Bench in Rangarao Bala Mane vs State(1) where it had been held that "Once it is proved by the prosecution that a person has drunk or consumed liquor without a permit, it is for that person to show that the liquor drunk by him was not prohibited liquor, but was alcohol or liquor which he is permitted by law to take, e.g., medicated alcohol. The prosecution is not to discharge the burden of the accused, and if in answer to a charge of drinking liquor without a permit the accused suggests that the liquor which was drunk by him was not liquor in a prohibited form or was alcohol in a medicated form, he must show it. " The High Court observed that the Magistrate had misdirected himself on a point of law and it was therefore open to it to examine the evidence and come to its own conclusion whether the appellant had shown that he had (1) 617 taken B. G. Phos that night after dinner and that the alcoholic smell which was still found in his mouth as late as 11.30 P.m. when he was examined by the doctor" ' was the smell of the alcoholic con tents of B. G. Phos. It came to the conclusion that the appellant had failed to prove the existence of circumstances from which the Court could come to the conclusion that the liquor which was consumed by the appellant was not prohibited liquor but liquor which was excepted by the Bombay Prohibition Act from its operation and set aside the order of acquittal passed by the learned Presidency Magistrate in his favour convicting him of the offence and sentencing him as above. It was contended on behalf of the appellant before us that the Bombay Prohibition Act, 1949, was impugned after the advent of the Constitution and this Court by its decision in The State of Bombay and Another vs F.N.Balsara(1) inter alia declared the provisions of clause (b) of section 13 to be invalid so far as it affects the consumption or use of liquid medicinal and toilet preparations containing alcohol, that the effect of that declaration was to lift the consumption or use of liquid medicinal and toilet preparations containing alcohol from the prohibition enacted in section 13(b) and that section 66(b) was inoperative and unenforceable so far as such medicinal and toilet preparations containing alcohol were Concerned. It was therefore incumbent on the prosecution, if a charge under section 66(b) was framed against an accused, to prove that the accused had consumed or used an intoxicant in contravention of the provisions of the Act, which provision so far as section 13(b) was concerned was to be read as prohibiting the consumption or use of liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, which were the only categories of validly prohibited liquor. On this interpretation of the effect of the judgment in The State of Bombay and Another vs P. N. Balsara (supra) there was no question whatever of the applicability of section 105 or of section 106 of the (1) ; 618 Evidence Act as was sought to be done by the High Court. It was further ' urged that even if an onus was cast on the accused to prove that he had consumed a liquid medicinal or toilet preparation containing alcohol that onus was lighter in burden than the onus on the prosecution and the moment the accused indicated his defence the onus again shifted on the prosecution to negative such defence. It was urged on the other hand on behalf of the respondent that the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra) was to graft an exception or a proviso to section 13(b) and that the onus and the burden of proving the existence of circumstances bringing his case within the exception or proviso lay on the accused and the Court was to presume the absence of such circumstances. (Vide section 105 of the Evidence Act). It was further urged that the prosecution could not possibly prove that no form of liquid medicinal or toilet preparation containing alcohol was taken by the accused, that the fact of the consumption of such medicinal or toilet preparation containing alcohol was especially within the knowledge of the accused and that therefore the burden of proving such fact was upon him, and that once the prosecution had discharged the onus which lay upon it to prove that the accused had consumed liquor it would be for the accused to show that the liquor which was taken by him was a liquid medicinal or toilet preparation containing alcohol. (Vide section 106 of the Evidence Act). The relevant provisions of the Bombay Prohibition Act, 1949, may be here set out. The Act was passed inter alia to amend and consolidate the law relating to the promotion and enforcement of and carrying into effect the policy of prohibition in the Province of Bombay. Section 2(22) defined 'an "intoxicant" to mean any liquor. . . . Section 2(24) defined "liquor" to include (a) spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol. Chapter III enacted the prohibitions and section 13(b) provided: No person shall. . . . (b) consume or use 619 liquor Section 66(b) is the penal section and provided: "Whoever in contravention of the provisions of this Act, or of any rule, regulation or order made, or of any licence, permit, pass or authorisation issued, thereunder (b) consumes, uses, possesses or transports any intoxicant or hemp shall, on conviction, be punished. " It may be noted that the Act as it stood before the amendment by Bombay Act XXVI of 1952 which came into operation on the 22nd October, 1952, enacted in section 103 the only presumption as to the commission of offences in certain cases which cases had nothing to do with the question before us. This Court in The State of Bombay and Another vs F. N. Balsara (supra) held that the definition of liquor contained in section 2(24) was not ultra vires inasmuch as the word liquor as understood in India at the time of the Government of India Act, 1935, covered not only those alcoholic liquids which are generally used as beverages and produce intoxication but also all liquids containing alcohol. It however considered the restrictions imposed by sections 12 and 13 of, the Act on the possession, sale, use and consumption of liquor not reasonable restrictions on the fundamental right guaranteed by article 19(1) (b) of the Constitution to "acquire, hold and dispose of property" so far as medicinal and toilet preparations containing alcohol were concerned and declared the said sections invalid so far as they prohibited the possession, sale, use and consumption of these articles. The sections were however not wholly declared void on this ground as the earlier categories mentioned in the definition of liquor, viz., spirits of wine, methylated spirits, wine, beer and toddy, were distinctly separable items which were easily severable from the last category, viz., all liquids containing alcohol, and the restrictions on the possession, sale, use and consumption of these earlier categories were not unreasonable restrictions. It therefore declared section 13(b) invalid to the extent of the inconsistency, i.e., so far as it affected the 620 consumption or use of liquid medicinal and toilet preparations containing alcohol. The question that falls to be determined is what was the effect of this declaration The effect of the declaration of a statute as un constitutional has been thus set out by Cooley on Constitutional Limitations, Vol. I, page 382. "Where a Statute is adjudged to be unconstitutional, it is as if it had never been. Rights cannot be built up under it; contracts which depend upon it for their consideration are void; it constitutes a protection to no one who has acted under it and no one can be punished for having refused obedience to it before the decision was made. And what is true of an Act void in toto is true also as to any part of an Act which is found to be unconstitutional and which consequently has to be regarded as having never at any time been Possessed of any legal force. . See also the dictum of Field J. in Norton vs Shelby County(1): "An unconstitutional Act is not law, it confers no rights, it imposes no duties, it affords no protection, it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed. " To the same effect are the passages from Rottschaefer on Constitutional Law, at page 34: "The legal status of a legislative provision in so far as its application involves violation of constitutional provisions, must however be determined in the light of the theory on which Courts ignore it as law in the decision of cases in which its application produces unconstitutional results. That theory implies that the legislative provision never had legal force as applied to cases within that class. " Willoughby on Constitution of the United States, Second Edition, Vol. 1, page 10: "The Court does not annul or repeal the statute if it finds it in conflict with the Constitution. It simply refuses to recognise it, and determines the rights of the (1) ; , 621 parties just as if such statute had no application. The Court may give its reasons for ignoring or disregarding the statute, but the decision affects the parties only, and there is no judgment against the statute. The opinion or reasons of the Court may operate as a precedent for the determination of other similar cases, but it does not strike the statute from the statute book; it does not repeal the statute. The parties to that suit are concluded by the judgment, but no one else is bound. A new litigant may bring a new suit, based on the very same statute, and the former decision can be relied on only as a precedent " "It simply refuses to recognise it and determines the rights of the parties just as if such statute had no application " And Willis on Constitutional Law, at page 89 " A judicial declaration of the unconstitutionality of a statute neither annuls nor repeals the statute but has the effect of ignoring or disregarding it so far as the determination of the rights of private parties is concerned. The courts generally say that the effect of an unconstitutional statute is nothing. It is as though it had never been passed The declaration was a judicial pronouncement and. even though under article 141 of the Constitution the law declared by this Court is binding on all the Courts within the territory of India and is to be the law of the land the effect of that declaration was not to enact a statutory provision or to alter or amend section 13(b) of the Act. No exception or proviso was also grafted in terms on section 13(b). The only effect of the declaration was that the prohibition enacted in section 13(b) was to be enforceable in regard to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol. The prohibition which was enacted in section 13(b) against the consumption or use of liquor could in the light of the declaration made by this Court only refer to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, today and all non medicinal and 80 622 non toilet liquid preparations consisting of or containing alcohol, and that was the only prohibition which could be enforced under section 13(b) and the penal section 66(b). The consumption or use of liquid medicinal or toilet preparations. containing alcohol could not be validly prohibited and any person consuming or using such medicinal or toilet preparations containing alcohol could not be hauled up for having contravened the provisions of the Act. No offence could be committed by the consumption of liquid medicinal or toilet preparations containing alcohol and the provision enacted in section 13(b) read in the light of the definitions of intoxicant and liquor contained in sections 2 (22) and 2(24) of the Act in so far as it prohibited the consumption or use of liquor including liquid medicinal or toilet preparations containing alcohol was rendered inoperative and unenforceable by the declaration to the extent of the inconsistency and liquid medicinal or toilet preparations containing alcohol were lifted out of the category of validly prohibited liquor. Whatever may be the implications or the consequences of the unconstitutionality of section 13(b) to the extent of the inconsistency in other respects, here was the State enforcing the penal provisions of section 66(b) and encroaching upon the liberties of the subject. Penal statutes should be strictly construed and the, State could only penals the consumption or use of validly prohibited liquor which only could constitute an offence under section 66(b). The consumption or use of any intoxicant meaning any liquor in contravention of the provisions of this Act was to be punished and unless and until the prosecution proved that the accused had consumed or used liquor in contravention of the enforceable provi sions of the Act the accused could not be held guilty and punished under section 66(b). The accused could be held guilty only if he had contravened the enforceable provisions of the Act and for the purpose of the present enquiry the only provision of the Act which he could be charged with having contravened was section 13(b), the prohibition contained in which was by reason of the declaration made by this Court enforceable only in regard to the consumption or use of Validly prohibited liquor, i.e., spirits of wine. , methylated spirits, 623 wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol. It was strenuously urged before us on behalf of the respondent that the declaration in effect, though not in terms, enacted an exception or proviso to section 13(b) and that therefore the onus lay upon the appellant to prove the existence of circumstances bringing his case within the exception or proviso. (Vide section 105 of the Evidence Act.) It cannot be disputed that no exception or proviso was in terms enacted by this declaration. It had the effect of rendering the prohibition of consumption or use of liquid medicinal and toilet preparations containing alcohol as having never at any time been possessed of any legal force and so not to be enforceable wherever any accused person was charged with having contravened the provisions of section 13(b) of the Act. The effect of the declaration on the provisions of section 13(b) could be worked out in any of the following modes: No person shall consume or use spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol as are not or which are not or other than or save or except or provided they are not or but shall not include liquid medicinal or toilet preparations containing alcohol or all non medicinal and non toilet liquid preparations consisting of or containing alcohol. When these several interpretations were possible in regard to the effect of the declaration on the provisions of section 13(b), where would be the justification for interpreting the effect of the declaration to be that of grafting an exception o r proviso on section 13(b) so as to attract the operation of the provisions of section 105 of the Evidence Act? It is clear that where several interpretations are possible, the Court should adopt an interpretation favourable to the accused, rather than one which casts an extra or special burden upon him, which if at all should be done by clear and unequivocal provision in that behalf rather than in this indirect manner. (See also In re Kanakasabai Pillai(1) ). It would be more in consonance with the principles of (1) A.I.R. 1940 Mad. 1. 624 criminal jurisprudence to interpret the effect of this declaration to be that the prohibition enacted in section 13(b) where it came to be enforced against any accused person after the declaration should be enforceable as regards the consumption or use of validly prohibited liquor, ?I.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, as above stated. If this is the effect of the declaration made by this Court there is no room for holding that the only duty of the prosecution was to prove that the accused had taken liquor in some form or the other and that the burden lay on the accused to prove that be had taken a liquid medicinal or toilet preparation containing alcohol. When an accused person is charged with having committed an offence it is for the prosecution to prove all the ingredients of the offence with which he has been charged and the ingredients of the offence under section 13(b) as stated above were that he had consumed or used liquor validly prohibited, i.e. spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol. There was no presumption enacted in the Act as it stood which would throw the burden of proof on the accused to show that he had consumed or used liquid medicinal or toilet preparation containing alcohol. There was no exception or proviso enacted either in terms or in effect in section 13(b) which attracted the operation of section 105 of the Evidence Act and cast upon the accused the burden of proving the existence of circumstances bringing his case within such exception or proviso. The mere circumstance that the fact in regard to his consumption or use of liquid medicinal or toilet preparation containing alcohol was specially within the knowledge of the accused also could not shift the burden of proving the ingredients of the offence from the prosecution to the accused, because it is a cardinal principle of criminal jurisprudence as administered in this country that it is for the prosecution and prosecution alone to prove all the ingredients of the offence with which the 625 accused has been charged. The accused is not bound to open his lips or to enter upon his defence unless and until the prosecution has discharged the burden which lies upon it and satisfactorily proved the guilt of the accused. Section 106 of the Evidence Act cannot be construed to mean that the accused has by reason of the circumstance that the facts are especially within his own knowledge to prove that he has not committed the offence. (See Attygalle vs The King(1), also In re Kanakasabai Pillai(2)). It is for the prosecution to prove that he has committed the offence and that burden is not in any manner whatsoever displaced by section 106 of the Evidence Act. The High Court in arriving at its decision in Rangarao Bala Mane vs State (supra) above referred to was impressed with the circumstance that the prosecution could not possibly prove that no form of medicated alcohol was taken by the accused, that there were evidently numerous forms of medicated alcohol and that it was impossible for the prosecution on the very face of things to exclude all those forms. The difficulty was illustrated by the High Court in the manner following: "For instance, if the prosecution were to lead evidence to show that the accused had not taken medicated alcohol in the form of B. G. Phos, the accused would contend that he had taken it in some other form. If the prosecution were to lead evidence that the accused had not taken it in the form of Winedex, the accused would say that he had taken it in the form of Waterbury 's Compound or Hall 's Wine. These are only two instances to show how, it is impossible for the prosecution to exclude all forms of medicated alcohol. " It therefore came to the conclusion that once the prosecution had discharged the onus which was upon it to prove that the accused person had consumed liquor, it would be for the accused to show that the liquor which was taken by him was liquor in the form of medicated alcohol, in other words, not prohibited liquor. The difficulty thus envisaged by the High Court was, in my opinion, imaginary. Where an accused (1) A.I.R. 1936 P.C. 169. (2) A.I.R. 1940 Madras 1. 626 person is suspected of having committed the prohibition offence, it would be for the police to investigate the offence and while investigating the offence, it would be for the police to find out whether the accused has consumed liquor which falls within 'the enforceable prohibition enacted in section 13(b). As there are a number of preparations which come within the category of liquid medicinal and toilet preparations consisting of or containing alcohol, there are a number of preparations which come within the category of non medicinal or non toilet liquid preparations consisting of or containing alcohol and it would be really for the police investigating the alleged offence to find out which out of the latter category of preparations the accused had consumed and bring him to book for the same. The circumstance that the accused person was smelling of alcohol and that he had consumed liquor in some form or the other would not be an unequivocal circumstance pointing to the guilt of the accused. The smell of alcohol could as well be the result of his having consumed medicinal or toilet preparations consisting of or containing alcohol as his having consumed validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol. To hold the accused guilty under these circumstances would be to convict him merely because he was smelling of alcohol and depriving him of the benefit of doubt which an accused person is always entitled to in the event of the facts and circumstances being consistent either with his guilt or his innocence. To adopt the reasoning which appealed to the High Court would further be tantamount to laying down that once an accused person was shown to have consumed liquor in some form or the other the presumption was that he had consumed validly prohibited liquor and the onus would be upon him to rebut that presumption by showing that lie had consumed medicinal or toilet preparation containing alcohol. The difficulty in the way of the prosecution proving its case need not deflect the Court from arriving at a correct conclusion. If these difficulties are genuinely 627 felt it would be for the Legislature to step in and amend the law. It would not be the function of the Court to read something in the provisions of the law ' which is not there or to find out a way of obviating the difficulties in enforcing the law howsoever meritorious the intentions of the Legislature might be. If these difficulties were felt in the matter of enforcing the policy of prohibition by the State of Bombay the only remedy was to effect the necessary amendments when the Bombay Act XXVI of 1952 was enacted on the 22nd October, 1952, after this Court made the declara tion in The State of Bombay and Another vs F. N. Balsara (supra). In my opinion it was not enough for the prosecution in the present case merely to prove that the appellant had taken alcohol in some form or the other. The prosecution ought to have proved that the appellant had in contravention of the provisions of the Act med an intoxicant meaning any liquor which consumer regard to the declaration made by this Court having could only be validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations con sisting of or containing alcohol. The evidence of the doctor only went to show that the appellant had consumed alcohol in some form or the other. That was not enough and I have therefore come to the conclusion that the prosecution failed to prove that the appellant had committed the offence with which he was charged. In view of the conclusion reached above it is un necessary to go into the interesting question which was canvassed before us at some length as to the burden of proof on the prosecution as well as the defence in a criminal trial having regard to the provisions of section 105 of the Evidence Act as also the applicability in India of the principles enunciated in Woolmington vs The Director of Public Prosecutions(1). I would therefore allow the appeal, and quash the conviction and sentence passed upon the appellant by the High Court. (1) ; , 628 JAGANNADHADAS J. I have had the benefit of the judgments of both my learned brothers. perusing But, with great regret, I feel unable to agree with the view taken by my learned brother Justice Bhagwati. Two questions of law have been raised in this case, viz., (1) on whom does the burden of proof lie to make out that the "liquor" consumed by the appellant was or was not medicinal or toilet preparations though contain ing alcohol, and (2) what is the nature and quantum of proof required if the burden is upon the appellant. The answer to question No. 1 depends upon the effect of the decision of this Court in The State, of Bombay and Another vs F. N. Balsara (supra) which, while holding that the definition of liquor in sub section (24) of section 2 of the Bombay Prohibition Act, 1949 (Act XXV of 1949) is valid, has declared that clause (b) of section 13 in so far as it affects the consumption or use of medicinal or toilet preparations containing alcohol, is invalid. My learned brother Justice Bhagwati, while holding that the effect of the declaration was not to alter and amend section 13(b) of the Act, is of the opinion that in the light thereof the prohibition under section 13(b) is to be understood to relate (so far as is relevant for the present purpose) to consumption or use of "non medicinal or non toilet liquid preparation containing alcohol" and that, therefore, the burden lies on the prosecution to make out all the ingredients of the prohibition so understood with the negative thereof On the other hand, my learned brother Justice Venkatarama Ayyar is of the opinion that the effect of the decision in The State of Bombay and Another vs F. N. Balsara (Supra) is not to amend or alter section 13(b) but only to render it partly unenforceable, and hence to provide a defence to the accused, on the ground of unconstitutionality in so far as that section is sought to be applied to medicinal or toilet preparations containing alcohol and that, therefore, the burden of making out the facts required for this plea is on the accused. I agree that no legislative function can be attributed to a judicial decision and that the decision in The State of Bombay and Another vs F. N. Balsara (supra) does not, 629 proprio vigore amend the Act. The effect of a judicial declaration of the unconstitutionality of a statute has been stated at page 10 of Vol. I of Willoughby on the Constitution of the United States, Second Edition, as follows: "The Court does not annul or repeal the statute if it finds it in conflict with the Constitution. It simply refuses to recognize it, and determines the rights of the parties just as if such statute had no application. The Court may give its reasons for ignoring or disregarding the statute, but the decision affects the parties only, and there is no judgment against the statute. The opinion or reasons for the court may operate as a precedent for the determination of other similar cases, but it does not strike the statute from the statute book; it does not repeal. . . the statute. The parties to that suit are concluded by the judgment, but no one else is bound. A new litigant may bring a new suit, based on the very same statute, and the former decision. . can be relied on only as a precedent. " This and other similar passages from other treatises relate, however, to cases where the entire legislation is unconstitutional from the very commencement of the Act, a situation which falls within the scope of article 13(2) of our Constitution. They do not directly cover a situation which falls within article 13(1). In the present case, though the decision in The State of Bombay and Another vs F. N. Balsara (Supra) does not by itself bring about a change in the Act, the declarations made therein are founded on article 13(1) and it is with the effect thereof we are concerned. The question is what is the effect of article 13(1) on a pre existing valid statute, which in respect of a severable part there. of violates fundamental rights. Under article 13(1) such part is "void" from the date of the commencement of the Constitution, while the other part continues to be valid. Two views of the result brought about by this voidness are possible, viz., (1) the said severable part becomes unenforceable, while it remains part of the Act, or (2) the said part goes out of the Act and the Act stands appropriately amended pro tanto. The first is the view which appears to have been adopted 81 630 by my learned brother, Justice Venkatarama Ayyar, an the basis of certain American decisions. I feel inclined to agree with it. This aspect, however, was not fully presented by either side and was only suggested from the Bench in the course of arguments. We have not had the benefit of all the relevant material being placed before us by the learned advocates on either side. The second view was the basis of the arguments before us. It is, therefore, necessary and desirable to deal with this case on that assumption. The question, then, for consideration is what is the notional amendment which must be imported into the Act consistently with the decision in The State of Bombay and Another vs F. N. Balsara (supra). The relevant portions thereof are as follows: (1) The definition of "liquor" in the Act to its full extent continues to be valid, (2) section 13(b) of the Act in so far as it relates to liquid toilet or medicinal preparations containing alcohol is invalid, and (3) this portion of the content of section 13(b) is severable. The argument of the appellant 's learned counsel is that the essence of the valid prohibition under section 13(b) now is the consumption or use of liquor other than liquid medicinal or toilet preparations containing alcohol. Ha urges, therefore, that section 13(b) must be taken to stand amended accordingly. The argument, if I understood it a right, was that the word "liquor" stands amended as "prohibited liquor" or that it must be understood with this limited connotation. I am unable to see how this can be done. The definition of the word "liquor" with its inclusive content remaining intact and valid, that content has to be imported wholesale into the meaning of the word "liquor" in section 13(b) and it appears to me that it is not permissible to read it or understand it in a different sense. So to read it or understand it would be to import a new definition of "prohibited liquor" into the Act and to make the consumption or use of "prohibited liquor", the offence. What, however, the Balsara decision has done is not to authorise the importation of a new definition and the rewriting of section 13(b). It keeps section 13(b) intact 631 but treats the consumption or use of liquid toilet or medicinal preparations containing alcohol as severable and takes such consumption or use out of the ambit of the section itself as the prohibition thereof is un constitutional. This can be done and only done, in my opinion, by grafting an appropriate exception or proviso into section 13(b). My learned brother, Justice Bhagwati, has in his, judgment suggested that, if it is a question of treating section 13(b) as amended,. the amendment can be made in one of many modes and that there is no reason to choose between them and that it is not fair to an accused person to read it in a manner throwing the burden on him, when a more favourable mode is open. The various modes of amendment are indicated in the following suggested reading of section 13(b). "No person shall consume or use spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing 'A ' alcohol as are not or which are not or other than or save or except or provided they are not or but shall include liquid medicinal or toilet preparations containing alcohol, or all non medicinal and non toilet liquid 'B ' preparations consisting of or containing alcohol." (The underlinings and markings are mine). Now, if the relevant portion of the section is recast in the manner above indicated, in any of the alternative modes in the portion marked 'A ' above, I have no doubt that every one of these modes is only an exception or a proviso which falls within the specific terms of section 105 of the Evidence Act, i.e., an exception or proviso "in the law defining the offence. " If, on the other hand, the section is treated as amended by incorporating the portion marked 'B ' omitting the portion marked 'A ', it appears to me, with great respect, that it is to alter the very content of the word ' "liquor" in the section, for which I can find no legal justification. What the decision in The State of Bombay 632 and Another vs F. N. Balsara (supra) authorises is, as I have already explained above, to keep the word "liquor" intact with its full content and sever from the provision taken as alcohol (not merely from the word "liquor") medicinal or toilet preparations. I feel accordingly confirmed in the view that I have taken, viz., that this can only be done by engrafting an exception or a proviso. As regards the other view suggested by my learned brother Justice Bhagwati, that without importing any alteration or amendment in the section itself, the same is to be understood as having reference to what maybe called "prohibited liquor", understanding that word with reference to the decision in The State of Bombay and Another vs F. N. Balsara (supra), here again, with great respect, I feel difficulty in imputing into a specific statutory provision a meaning different from what its plain words, in the light of the definition, indicate. The decision in The State Of Bombay and Another vs F. N. Balsara (supra), if it does not bring about an amendment in the provision does not also provide any mere aid to interpretation. The question is not done of insisting on a merely technical view of the matter. I feel unable to impute to the decision in The State of Bombay and Another vs F. N. Balsara (supra), taken with article 13(1), the effect of rendering section 13(b) unworkable, which certainly was not intended. In this view, therefore, (and on the basis put forward by learned counsel on both sides), the effect of article 13(1) on section 13(b) of the Act in the light of the decision in The State of Bombay and Another vs F. N. Balsara (supra) is that it stands amended pro tanto by means of an appropriate exception or proviso. It follows that section 105 of the Evidence Act would in terms apply to such a situation. Thus in either view of the effect ' of article 13(1) of the Constitution on section 13(b) of the Bombay Act in the light of the judgment in The State of Bombay and Another vs F. N. Balsara (supra) the opinion expressed by the learned Judges of the Bombay High Court that the burden of proof in a case like this lies on the accused is correct. 633 As regards the second question that has been raised namely as to the nature and quantum of the evidence required to discharge this burden of proof, considerable arguments have been advanced before us. Our attention has been drawn to the existence of conflicting decisions in the High Courts on this topic. On the one side there is the decision of the Full Bench of the Allahabad High Court in Prabhoo vs Emperor(1) and on the other, there is a later Special Bench decision of the Bombay High Court in Government of Bombay vs Sakur(2). In my opinion it is unnecessary for us to resolve that conflict in this case, since, on either view, the finding of the appellate Court that the burden has not been discharged on the available material seems to me to be correct. In particular it is to be noticed that the appellant put forward a specific defence in Paragraph 8 of the written statement filed by him into Court in answer to the charge. In support of this defence he has given no proof of any circumstances, which must be within his knowledge, to render the defence reasonably probable even if be may not have been able to prove the same strictly to the hilt. I am, therefore, of the opinion that the conviction of the appellant under section 66(b) of the Bombay Prohibition Act, 1949, is correct. But in the circumstances, it is not necessary to send him back to jail. I would, therefore, reduce the sentence of imprisonment to the period already undergone. In the result, the appeal has to be dismissed subject to this modification. VENKATARAMA AYYAR J. I regret that I am unable to agree with the view taken by my learned brother, Bhagwati J. The facts giving rise to this appeal have been stated in his Judgment which I have had the advantage of reading and it is unnecessary to restate them. The point for decision shortly is whether in a prosecution under section 66(b) of the Bombay Prohibition Act, XXV of 1949, for contravention of section 13(b), the prosecution has to establish not merely that liquor had been taken in some form but that further what was taken was not a medicinal preparation. The (1) I.L.R. 1941 All. (2) 48 Bom. L. R. 746; A.I.R. 1947 Bom. 634 learned Judges of the Bombay High Court held following an earlier decision of that Court in Rangrao Bala Mane vs State (supra) that once the prosecution had established that the accused had taken alcohol in some form it was for him to establish that he had taken a medicinal preparation, both on the ground that it was in the nature of an exception which it was for the party pleading it to establish under section 105 of the Evidence Act and that it was a matter specially within his knowledge and that therefore the burden of proving it lay on him under section 106 of the Evidence ' Act. The appellant challenges the correctness of this deci sion and contends that it is opposed to the decision of this Court in The State of Bombay and Another vs F. N. Balsara (supra). It will be convenient first to refer to the statutory provisions bearing on the question and ascertain what the position is thereunder, and then consider how it is affected by the decision of this Court in The State Of Bombay and Another vs F. N. Balsara (supra). The relevant provisions of the Bombay Prohibition Act are sections 2(24), 13(b) and 66(b). Section 2(24) defines "liquor" as including all liquids consisting of or containing alcohol. Section 13(b) enacts that no person shall use or consume liquor and a contravention of this provision is made punishable under section 66(b). As medicinal preparations containing alcohol are liquor as defined in section 2(24) the consumption thereof will be an offence punishable under the Act and it will be no answer to a prosecution for contravention of section 13(b) that what was consumed was a medicinal preparation and a question of the kind now presented to us therefore could not possibly arise under the Act prior to the Constitution. I may next consider the effect of the decision of this Court in The State of Bombay and Another vs F. N. Balsara (supra) on the legal position under the Act. It was there held inter alia that section 13(b) in so far as it prohibited the consumption of medicinal preparations was an unreasonable restriction on the rights of an owner to hold and enjoy property and was therefore void as being repugnant to article 19 (1) (f) of the 635 Constitution. The appellant contends that the effect of this declaration was to remove medicinal preparations from out of the purview of section 13(b); that ' that section should therefore be read as if it had been amended to the effect that no person shall use or consume liquor other than medicinal preparations or toilets; that in that view no question of the accused having to rely on an exception arose and no question of the burden being thrown on him under section 105; and that as the offence itself consisted in consuming a liquor which was not a medicinal preparation, the burden would lie on the prosecution to establish that what was consumed was a prohibited liquor. On the other hand, the respondent contends that the definition of liquor in section 2(24) includes not only beverages but also medicinal preparations, that the extended definition would apply to section 13(b) as well, that the immunity of medicinal preparations containing alcohol from the operation of the section by reason of the decision in The, State of Bombay and Another vs F. N. Balsara (supra) must in consequence be treated as an exception to it and that the 'section should be read as containing a saving in favour of those preparations, in the nature of an exception or proviso, the burden of establishing which under section 105 of the Evidence Act would be on the accused. I agree with the appellant that section 105 has no application. We are not here concerned with any exception, general or special, under the Penal Code or any other law defining the offence. The exception or proviso, if it may be so called, arises as a result of the decision of this Court and not under any statute and section 105 cannot therefore in terms apply. At the same time it is difficult to see how the decision in The State of Bombay and Another vs F. N. Balsara (Supra) can be considered to effect an amendment of section 13(b) so as to exclude medicinal preparations from out of its ambit. The rival contentions which have been presented to us on the effect of the decision in The State of Bombay and Another vs F. N. Balsara (supra) proceed both of them on the basis that ' section 13(b) has in some manner been amended by it; according to the appellant, the 636 section must be taken to have been amended by excluding medicinal preparations from the word " liquor" according to the respondent, by inserting an exception or proviso to the section in favour of such preparations. That, however, is not the correct position. Decisions of Court do not amend or add to a statute. That is a purely legislative function. They merely interpret the law and declare whether it is valid or not and the result of a declaration that it is not valid is that no effect could be given to it in a Court of law. If therefore section 13(b) cannot be construed as itself amended or modified by reason of the decision in The State of Bombay and Another vs F. N. Balsara (supra), there is no reason to hold that medicinal preparations containing alcohol, which fell within its scope before, have gone out of it after that decision. This argument therefore does not furnish any ground for throwing the burden on the prosecution under section 13( b) to establish not merely that what was consumed was liquor but that it was not a medicinal preparation. The question of burden of proof must therefore be decided not on the basis of a suppositions amendment of the section or addition of an exception or proviso to it but on the language of the section as it stands and with reference to Well established principles of law. Under that section it is an offence to use or consume liquor and that under the definition in section 2(24) includes medicinal preparations containing alcohol. One of the points raised in The State of Bombay and Another vs F. N. Balsara (supra) was that the State Legislature which was competent to legislate on into xicating liquor could not under that head of legislation enact a law in respect of medicinal preparations containing alcohol because the words "intoxicating liquor" meant beverages and not medicines but this contention was negatived by this Court on the ground that the words "intoxicating liquor" had acquired an extended sense as including medicinal preparations containing alcohol and that the Legislature was competent while enacting a law with reference to intoxicating liquors to legislate on medicinal preparations 637 containing alcohol. The definition of "liquor" in section 2(24) in its extended sense having thus been held to be valid, it follows that unless there is something in the particular provision to the contrary, the word "liquor" must wherever it occurs in the statute include medicinal preparations and that is the meaning which it must bear in section 13(b). In The State of Bombay and Another vs F. N. Balsara (supra), it is on the footing that medicinal preparations are included in section 13 that the entire discussion on its validity with reference to article 19(1) (f) proceeds. We therefore start with this that under section 13(b), the Legislature has made it an offence to take alcohol in any form, whether as beverages or as medicinal preparations. That being the position and it having been decided that the section in so far as it relates to medicinal preparations is void as repugnant to article 19(1) (f), the question as to who should prove whether what was consumed was alcohol or medicinal preparation containing alcohol appears to me to admit of a simple answer. There is a strong presumption in favour of the constitutionality of a statute and it is for those who assail it as unconstitutional to establish it. The contention of the appellant is, when analyzed, that section 13(b) is bad in so far as it hits medicinal preparations containing alcohol as it contravenes article 19(1) (f) of the Constitution, and the decision of this Court in The State of Bombay and Another vs F. N. Balsara (supra) is relied on as supporting it. But before the appellant can bring himself within that decision, he must establish that what he consumed was a medicinal preparation. The plea of unconstitutionality is not established unless all the elements necessary to sustain such a plea are established ; and as observed by this Court in Rao Shiv Bahadur Singh vs The State of Vindhya Pradesh(1), "the burden of making out facts requisite for the constitutional invalidity of the convictions" is on the appellant. He has therefore to make out as a fact that what he consumed was a medicinal preparation and as a matter of law, that section 13(b) is bad in so far as it prohibits it. The decision of this Court concludes the (1) ; ,1202. 82 638 question in his favour so 'far as the second point is concerned. But the burden of establishing the first point, that in fact what he consumed was a medicinal preparation, still remains on him. It was argued for the appellant that this Court had declared that section 13(b) was void under article 13(1) of the Constitution in so far as it related to medicinal preparations; that that meant that it was to that extent a nullity and that it should in consequence be read as if it did not include medicinal preparations. The question is, what is the legal effect of a statute being declared unconstitutional. The answer to it depends on two considerations, firstly, does the constitutional prohibition which has been infringed affect the competence of the Legislature to enact the law or does it merely operate as a check on the exercise of a power which is within its competence; and secondly, if it is merely a check, whether it is enacted for the benefit of individuals or whether it is imposed for the benefit of the general public on grounds of public policy. If the statute is beyond the competence of the Legislature, as for example, when a State enacts a law which is within the exclusive competence of the Union, it would be a nullity. That would also be the position when a limitation is imposed on the legislative power in the interests of the public, as, for instance, the provisions in Chapter XIII of the Constitution relating to inter State trade and commerce. But when the law is within the com petence of the Legislature and the unconstitutionality arises by reason of its repugnancy to provisions enacted for the benefit of individuals, it is not a nullity but is merely unenforceable. Such an unconstitutionality can be waived and in that case the law becomes enforceable. In America this principle is well setted. (Vide Cooley on Constitutional Limitations, Volume 1, pages 368 to 371; Willis on Constitutional Law, at pages 524, 531, 542 and 558; Rottschaefer on Constitutional Law, at pages 28 and 29 30). In Shepard vs Barron(1), it was observed that "provisions of a constitutional nature, intended for the protection of the property owner, may be waived by him. " In Pierce vs Somerset Railway(2), (1) ; ; (2) I71 U.S. 64I ; ; 639 the position was thus stated: "A person may by his acts or omission to act waive a right which he might otherwise have under the Constitution of the United States, as well as under a statute." In Pierce Oil Corporation vs Phoenix Refining Co.(1), where a statute was impugned on the ground that it imposed unreasonable restrictions on the rights of a corporation to carry on business and thereby violated the rights guaranteed under the Fourteenth Amendment, the Court observed "There is nothing in the nature of such a constitutional right as is here asserted to prevent its being waived or the right to claim it barred, as other rights may be, by deliberate election or by conduct inconsistent with the assertion of such a right." The position must be the same under our Constitution when a law contravenes a prescription intended for the benefit of individuals. The rights guaranteed under article 19(1) (f) are enacted for the benefit of owners of properties and when a law is found to infringe that provision, it is open to. any person whose rights have been infringed to waive it and when there is waiver there is no legal impediment to the enforcement of the law. It would be otherwise if the statute was a nullity; in which case it can neither be waived nor enforced. If then the law is merely unenforceable and can take effect when waived it cannot be treated as non est and as effaced out of the statute book. It is scarcely necessary to add that the question of waiver is relevant to the present controversy not as bearing on any issue of fact arising for determination in this case but as showing the nature of the right declared under article 19(1) (f) and the effect in law of a statute contravening it. Another point of distinction noticed by American jurists between unconstitutionality arising by reason of lack of legislative competence and that arising by reason of a check imposed on a competent Legislature may also be mentioned. While a statute passed by a Legislature which had no competence cannot acquire validity when the Legislature subsequently acquires competence, a statute which was within the competence of the Legislature at the time of its enactment but (1) 259 U S 125; ; 640 which infringes a constitutional prohibition could be enforced proprio vigore when once the prohibition is removed. The law is thus stated in Willoughby on the Constitution of the United States, Volume 1, at page 11: "The validity of a statute is to be tested by the constitutional power of a legislature at the time of its enactment by that legislature,, and, if thus tested it is beyond the legislative power, it is not rendered valid, without re enactment, if later, by constitutional amendment, the necessary legislative power is granted. However, it has been held that where an act is within the general legislative power of the enacting body, but is rendered unconstitutional by reason of some adventitious circumstance, as for example, when a State legislature is prevented from regulating a matter by reason of the fact that the Federal Congress has already legislated upon that matter, or, by reason of its silence, is to be construed as indicating that there should be no regulation, the act does not need to be re enacted in order to be enforced, if this cause of its unconstitutionality is removed. " The authority cited in support of this observation is the decision in Wilkerson vs Rahrer(1). There the State of Kansas enacted a law in 1889 forbidding the sale of intoxicating liquors in the state. Though it was valid with reference to intra state sales, it was unconstitutional in so far as it related to inter State sales. In 1890 the Congress passed a legislation conferring authority on the States to enact prohibition laws with reference to inter State trade. A prosecution having been instituted under the 1889 Act in respect of sales effected after the Congress legislation of 1890, one of the contentions urged was that as the State law was unconstitutional when it was enacted it was void and it could not be enforced even though the bar had been removed by the Congress legislation of 1890. In repelling this contention the Court observed: " This is not the case of a law enacted in the unauthorized exercise of a power exclusively confided to Congress, but of a law which it was competent for (1) ; ; 35 L. Ed.572. 641 the State to pass, but which could not operate upon articles occupying a certain situation until the passage of the Act of Congress. That Act in terms removed the obstacle, and we perceive no adequate ground for adjudging that a re enactment of the State law was required before it could have the effect upon imported which it had always had upon domestic property. " The position is thus stated by Cooley in his work on Constitutional Law, at page 201 : " A court 's decision merely decides the case that is then under adjudication, and a finding of unconstitu tionality does not destroy the statute but. merely involves a refusal to enforce it. " Rottschaefer, after referring to the conflict of authorities on the point in the States refers to the decision in Wilkerson V. Rahrer(1), as embodying the better view. This question again, it may be noted, does not arise as such for determination in this case and is material only as showing that an infringement of a constitutional ' prohibition which does not affect the competence of a Legislature but is merely a check on its exercise does not render the law a nullity. In view of the principles discussed above, the use of the word "void" in article 13(1) is not decisive on the question as to the precise effect of a law being repugnant to article 19(1) (f). Reference may be made in this connection to the statement of the law in Corpus Juris, Volume 67, page 263 et seq., to which counsel for the respondent invited our attention. It is there pointed out that the word "void" in statutes and decisions might mean either that is "absolutely void" or "relatively void" ; that "that is 'absolutely void which the law or the nature of things forbids to be enforced at all, and that is relatively void ' which the law condemns as a wrong to individuals and refuses to enforce as against them"; that what is absolutely void is incapable of confirmation and ratification; and that what is relatively void could be waived. The true scope of article 13(1) was considered by this Court in Kesavan Madhava Menon vs State Of (I) ; ; 642 Bombay(1). There the point for determination was whether the Constitution was retrospective in its operation. In the course of his judgment Das J. observed: "It should further be seen that article 13(1) does not in terms make the existing laws which are inconsistent with the fundamental rights void ab initio or for all purposes. On the contrary, it provides that all existing laws, in so far as they are inconsistent with the fundamental rights, shall be void to the extent of their inconsistency. They are not void for all purposes but they are void only to the extent they come into conflict with the fundamental rights. . . Article 13(1) cannot be read as obliterating the entire operation of the inconsistent laws, or to wipe them out altogether from the statute book. . . . The effect of article 13(1) is quite different from the effect of the expiry of a temporary statute or the repeal of a statute by a subsequent statute. As already explained, article 13(1) only has the effect of nullifying or rendering all inconsistent existing laws ineffectual or nugatory and devoid of any legal force or binding effect only with respect to the exercise of fundamental rights on and after the date of commencement of the Constitution. " It is true that the question which the Court was considering there was different from the one which we have now to decide in this appeal. But those observations embody a principle which is applicable to the present case as well. In effect, "void" in article 13(1) was construed as meaning, in the language of American jurists, "relatively void. Therefore both on the ground that a judicial determination does not operate as an amendment of the statute and, on the ground that a declaration that the impugned law is void under article 13(1) as repugnant to article 19(1) (f) merely renders it unenforceable, I am of the opinion that the decision in The State of Bombay and Another vs F. N. Balsara (supra) cannot be held to remove medicinal preparations from out of the purview of section 13(b). I therefore agree with the learned Judges (1) ; 643 of the Bombay High Court, though not for the reasons given by them, that the burden of establishing that. what was consumed was a medicinal preparation lies on the appellant. It was next contended that even if the burden lay on the appellant,to prove that he had taken a medicinal preparation, he must be held on the evidence to have discharged it because the doctor who examined him at 11 30 P.m., on the day of the occurrence stated in his evidence that he was coherent in his speech and could walk along a straight line, that the smelling of alcohol could be caused by oxidation and that the condition of the conjunctive in the eyes could result from street dust. It was argued that if the prosecution evidence did not exclude the possibility of the defence being true, then notwithstanding section 105 of the Evidence Act the burden which lay on the posecution of establishing the offence had not been discharged and reliance was placed on the decision in Woolmington vs Director of Public Prosecutions(1), and on Indian authorities wherein it was followed: Emperor vs U.Damapala(2); Parbhoo vs Emperor(1). In opposition to these authorities counsel for the respondent relied on the decision in Government of Bombay vs Sakur(4). The question is whether if the burden lay upon the appellant the conclusion of the learned Judges that it had not been discharged is on the evidence a reasonable one. If it is, this Court cannot interfere with it in an appeal under article 136. It must be noted that the appellant himself led no evidence in support of the plea. If at least the evidence which the prosecution adduced disclosed facts which would lend support to the defence, it might then have been open to the appellant to rely on them without himself having to adduce independent evidence but none such were elicited. The learned Judges in the Court below have approached the case from the correct standpoint and have discussed the entire evidence with a view to find whether on that the (1) ; (2) I.L.R. 14 Rang. (3) I.L.R. 194i All. (4) A.I.R. 1947 Bom. 38; 48 Bom. L.R. 616. 644 defence was reasonably probable. They held that the giving of coherent answers or walking in a straight line would only show that the appellant was not drunk at that time but would not show that he had not consumed liquor. They also remarked that the appellant could have informed both the sub inspector and the doctor who examined him that he had taken medicine in which case the police might have been in a position to find out whether there was a medicine bottle at his residence at that time. If the learned Judges were right in their view that the burden lay on the appellant, their finding that it had not been discharged is not one which is open to attack. It was also contended that the trial magistrate having acquitted the appellant, the presumption of innocence which the law raises in favour of the accused became reinforced and that there were no compelling reasons for the appellate Court to have reversed the order of acquittal. But the judgment of the trial Court was based on the view that the burden was on the prosecution to establish that the accused had not taken a medicinal preparation and when the learned Judges differed from that view, they had to review the evidence afresh and decide whether the appellant had discharged the burden and their finding on the question is not vitiated by any misdirection. In the result the conviction of the appellant under section 66(b) of the Bombay Prohibition Act must be confirmed. As regards the sentence of one month 's imprisonment passed on him, it appears that he has already served 22 days out of it. The justice of the case does not require that he should be again sent to jail. I would, therefore, reduce the sentence of imprisonment to the period already undergone. Subject to this modification, I am of the opinion that this appeal should be dismissed. By THE Court Having regard to the judgments of the majority, the appeal will be dismissed subject to the modification that the sentence imposed upon the appellant will be reduced to that already undergone. Bail bond will be cancelled. Appeal dismissed and sentence reduced. 645 [There was an application for review of the aforesaid Judgments under article 137 of the Constitution and the Hon 'ble Judges of the original Bench (Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ.) passed the following order dated 28th April, 1954, referring the case for the opinion of the Constitution Bench.] The Order of the Court was pronounced by BHAGWATI J. We grant the review and reopen the case to enable us to obtain the opinion of a larger Bench on the constitutional question raised in the judgments previously delivered by us. Under proviso to article 145 of the Constitution, we refer the following question for the opinion of the Constitution Bench of the Court. "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara(1) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, on the ground that it infringes article 19(1) (f) of the Constitution?" On receipt of the opinion the case will be taken up for further consideration. [In pursuance of the above reference under the proviso to article 145(3) of the Constitution their Lordships of the Constitution Bench (Mehr Chand Mahajan C. J., Mukherjea, section R. Das, Vivian Bose and Ghulam Hasan JJ.) gave the following Opinion dated 23rd September, 1954.] MEHR CHAND MAHAJAN C.J. (Mukherjea, Vivian Bose and Ghulam Hasan JJ. concurring) A Bench of this Court hearing an appeal under the provisions of Chapter IV of the Constitution has referred, under article 145(3) of the Constitution, for the opinion of the Constitution Bench the following point: "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara(1) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid (1) 83 646 medicinal or toilet preparations containing alcohol, on ,the ground that it infringes article 19(1) (f) of the Constitution?" The facts giving rise to the reference are these: Shri Pesikaka, the appellant in the case, was at the relevant period, officiating Regional Transport Officer, Bombay Region. On the 29th May, 1951, at about 9 30 P.m., while proceeding in his jeep towards Colaba Bus Stand, he knocked down three persons. He was arrested by the police and taken to the police station and then to St. George 's Hospital. The doctor, found his breath smelling of alcohol, conjunctiva congested, pupils semi dilated and reacting to light, and speech coherent. He could behave himself and walk along a straight line. In the opinion of the doctor the appellant did not seem to be under the influence of alcohol, though he had taken alcohol in some form or other. On these facts. the appellant was prosecuted for having committed offences under section 338, Indian Penal Code (rash driving), as well as under section 66(b) of the Bombay Prohibition Act. In defence it was suggested that he had taken a medicinal preparation, B.G. Phos, and had not consumed any liquor, and that on the night in q question he had taken at about 9 or 9 15 p.m. after dinner a dose of B. G. Phos which contained 17 per cent. of alcohol according to its formula. The learned Presidency Magistrate acquitted the appellant on the finding that the prosecution had failed to establish his guilt under either of the sections under which he was charged. With regard. to the offence under section 66(b) of the Bombay Prohibition Act, it was observed that there were certain medicinal preparations which were allowed to be used by law, and there was no satisfactory evidence to show that the appellant had not consumed those tonics but only liquor for which he ought to have a permit. The State of Bombay appealed against the acquittal order to the High Court. The High Court confirmed the acquittal in regard to the charge under section 338, Indian Penal Code, but reversed the order acquitting him of the charge under section 66(b) of the Bombay Prohibition Act followed a decision of its own ' Division 647 Bench in Rangrao Bala Mane vs The State (supra) where it had been held that once it was proved by the prosecution that a person had drunk or consumed liquor without a permit, it was for that person to show that the liquor drunk by him was not prohibited liquor, but was alcohol or liquor which he was permitted by law to take, e.g., medicated alcohol. On this view of the law, on the merits of the case it was held that the appellant had failed to prove the existence of circum stances from which the Court could come to the conclusion that the liquor which was consumed by the appellant was not prohibited liquor but liquor which was excepted by the Bombay Prohibition Act from its operation. In the result the appellant was sentenced to one month 's rigorous imprisonment and a fine. of Rs. 500. Against this order an appeal was admitted in this Court by special leave and was heard by a Bench of the Court consisting of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ. on the 19th February, 1954. The learned Judges could not reach an una nimous decision and expressed different and divergent opinions. Bhagwati J. wanted to allow the appeal and quash the conviction. He was of the opinion that the onus rested on the prosecution to prove that the liquor consumed by the appellant was prohibited liquor under section 13(b) of the Act and that the prosecution had failed to prove this. This, in the opinion of the learned Judge, was the consequence of the declaration of unconstitutionality of a portion of section 13(b) by this Court in The State of Bombay and Another vs F. N. Balsara (supra). Venkatarama Ayyar dissented from this view. He was of the opinion that the decision in The State of Bombay and Another vs F. N. Balsara (supra) could not be held to have the effect of taking out medicinal preparations from the purview of section 13(b) and that its effect was merely to render that part of the section unenforceable and that the onus rested on the accused to establish the plea of unconstitutionality, and it could not be held established unless all the elements necessary to sustain such a plea were proved and the accused had therefore to make out as a fact that what he had 648 consumed was a medicinal 'preparation. On the merits of the case it was held that the accused had failed to discharge the burden that rested on him. In the result the conviction of the appellant by the High Court was upheld. Jagannadhadas J. agreed in the result reached by Venkatarama Ayyar J. but on different grounds. lie was of the opinion that the only way to give full effect to the judgment in The, State Bombay and Another vs F. N. Balsara (supra) was to engraft an appropriate exception or proviso upon section 13(b) in the light of that decision. He considered that The State of Bombay and Another vs F., N. Balsara (supra) did not import a new definition or re write section 13(b). It kept the section intact but treated the consumption of liquid or medicinal preparations containing alcohol as beyond its ambit and thus engrafted an exception or proviso on to section 13(b). On this view of the effect of Balsara 's decision it was held that the onus rested on the accused to establish that his case fell within the exception and he had failed to discharge that onus. In accordance with the opinion of the majority the conviction of the appellant, under section 66(b) of the Bombay Prohibition Act was confirmed and the appeal was dismissed but the sentence was reduced to that already undergone. On a petition for review being presented, the learned Judges granted the review on the 26th April, 1954, and reopened the case, to enable them to obtain the opinion of the Constitution Bench of this Court on the constitutional question formulated and mentioned above. For a proper appreciation of the question referred to us, it is necessary to set out what this Court decided In The State of Bombay and Another vs F. N. Balsara (supra). In that case the constitutional validity of the Bombay Prohibition Act (XXV of 1949) was challenged on different grounds. This attack substantially failed and the Act was maintained as it was passed, with the exception of 'a few provisions that were declared invalid. Inter alia, clause (b) of section 13 so far as it affected the consumption or use of such medicinal and toilet preparations containing alcohol was held invalid. 640 Section 2(24) of the Act defined a "liquor" to include spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol. Section 13(b) prohibits the use or consumption of liquor without a permit. Section 66(b) which is the penal section provides that "whoever in contravention of the provisions of this Act consumes, uses any intoxicant shall, on conviction, be punished. " The appellant was charged under section 66(b) of the Act for having used or consumed liquor the use of which was prohibited by section 13(b). In The State of Bombay and Another vs F. N. Balsara (supra), the part of the section that brought all liquids containing alcohol within its ambit was declared invalid and the section therefore, though it stood intact as enacted in respect of prohibited liquor up to the date of the coming into force of the Constitution and qua non citizens subsequently, a part of it was declared invalid, and so far as it concerned citizens, qua them that part of the section ceased to have legal effect. The problem now raised is; what is the effect of this partial declaration of the invalidity of section 13(b) on the case of a citizen prosecuted under section 66(b) for committing a breach of the provisions of the section after the coming into force of the Constitution. Our opinion on this question is that the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra), that clause (b) of section 13 of the Bombay Prohibition Act is void under article 13(1) of the Constitution in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, is to render part of section 13(b) of the Bombay Prohibition Act, inoperative, ineffective and ineffectual and thus unenforceable. The part of the section which has been declared void has no legal force so far as citizens are concerned and it cannot be recognized as valid law for determining the rights of citizens. In other words, the ambit of the section stands narrowed down so far as its enforceability against citizens is concerned and no notice can be taken of the part of the section struck down in a prosecution for contravention of the provisions of that section, with 650 the consequence that in prosecutions against citizens of India under section 13(b), the offence of contravention of the section can only be proved if it is established that they have used or consumed liquor or an intoxicant which is prohibited by that part of the section which has been declared valid and enforceable and without reference to its unenforceable part. No notice at all should be taken of that other part as it has no relevance in such an enquiry, having no legal effect. In a criminal case unless the prosecution proves a contravention of a provision that is legally enforceable and valid, it cannot succeed. No onus is cast on the accused to prove that his case falls under that part of the section which has been held unenforceable. The High Court was in error in placing the onus on the accused to prove that he had consumed alcohol that could be consumed without a permit merely on proof that he was smelling of alcohol. In our judgment, that was not the correct approach to the question. The bare circumstance that a citizen accused of an offence under section 66(b) is smelling of alcohol is compatible both with his innocence as well as his guilt. It is a neutral circumstance. The smell of alcohol may be due to the fact that the accused had contravened the enforceable part of section 13(b) of the Prohibition Act. It may well be due also to the tact that he had taken alcohol which fell under the unenforceable and inoperative part of the section. That being so, it is the duty of the prosecution to prove that the alcohol of which he was smelling was such that it came within the category of prohibited alcohols and the onus was not discharged or shifted by merely proving a smell of alcohol. The onus thus cast on the prosecution may be light or heavy according to the circumstances of each case. The intensity of the smell itself may be such that it may negative its being of a permissible variety. Export evidence may prove that consumption in small doses of medicinal or other preparations permitted cannot produce the smell or a state of body or mind amounting to drunkenness. Be that as it may, the question is one of fact to be decided according to the circumstance of each case. It is open to the accused to prove in defence that what he 651 consumed was not prohibited alcohol, but failure of the defence to prove it cannot lead to his conviction unless it is established to the satisfaction of the Judge by the prosecution that the case comes within the enforceable part of section 13(b), contravention of which alone is made an offence under the provisions of section 66 of the Bombay Prohibition Act. Our reasons for this opinion are these. The meaning to be given to the expression "void" in article 13(1) is no longer res integra. It stands concluded by the majority decision in Kesava Madhava Menon vs The State of Bombay(,). The minority view there was that the word "void" had the same meaning as " repeal" and therefore a statute which came into clash with fundamental rights stood obliterated from the statute book altogether, and that such a statute was void ab initio. The majority however held that the word "void" in article 13(1), so far as existing laws were concerned, could not be held to obliterate them from the statute book, and could not make such laws void altogether, because in its opinion, article 13 had not been given any retrospective effect. The majority however held that after the coming into force of the Constitution the effect of article 13(1) on such repug nant laws was that it nullified them, and made them ineffectual and nugatory and devoid of any legal force or binding effect. It was further pointed out in one of the judgments representing the majority view, that the American rule that if a statute is repugnant to the Constitution the statute is void from its birth, has no application to cases concerning obligations incurred or rights accrued in accordance with an existing law that was constitutional in its inception, but that if any law was made after the 26th January, 1950, which was repugnant to the Constitution, then the same rule shall have to be followed in India as followed in America. The result therefore of this pronouncement is that the part of the section of an existing law which is un constitutional is not law, and is null and void. For determining the rights and obligations of citizens the part declared void should be notionally taken to be (I) (1951] S.C.R, 228. 652 obliterated. from the section for all intents and purposes, though it may remain written on the statute book and be a good law when a question arises for determination of rights and obligations incurred prior to 26th January, 1950, and also for the determination of rights of persons who have not been given fundamental rights by the Constitution. Thus, in this situation, there is no scope for introducing terms like "relatively void" coined by American Judges in construing a Constitution which is not drawn up in similar language and the implications of which are not quite familiar in this country. We are also not able to endorse the opinion expressed by our learned brother, Venkatarama Ayyar, that a declaration of unconstitutionality brought about by lack of legislative power stands on a different footing from a declaration of unconstitutionality brought about by reason of abridgement of fundamental rights. We think that it is not a correct proposition that constitutional provisions in Part III of our Constitution merely operate as a check on the exercise of legislative power. It is axiomatic that when the lawmaking power of a State is restricted by a written fundamental law, then any law enacted and opposed to the fundamental law is in excess of the legislative authority and is thus a nullity. Both these declarations of unconstitutionality go to the root of the power itself and there is no real distinction between them. They represent but two aspects of want of legislative power. The legislative power of Parliament and the State Legislatures as conferred by articles 245 and 246 of the Constitution stands curtailed by the fundamental rights chapter of Constitution. A mere reference to the provisions of article 13(2) and articles 245 and 246 is sufficient to indicate that there is no competency in Parliament or a State Legislature to make a law which comes info clash with Part III of the Constitution after the coming into force of the Constitution. Article 13(2) is in these terms : "The State shall not make any law which takes away or abridges; the rights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void. " 653 This is a clear and unequivocal mandate of the funda mental law prohibiting the State from making any laws which come into conflict with Part III of the Constitution. The authority thus conferred by articles 245 and 246 to make laws subject wise in the different Legislatures is qualified by the declaration made in article 13(2). That power can only be exercised subject to the prohibition contained in article 13(2). On the construction of article 13(2) there was no divergence of opinion between the majority and the minority in Kesava Madhava Menon vs The State of Bombay (supra). It was only on the construction of article 13(1) that the difference arose because it was felt that that article could not retrospectively invalidate laws which when made were constitutional according to the Constitution then in force. Again, we are not able to subscribe to the view that in a criminal prosecution it is open to an accused person to waive his constitutional right and get convicted. A reference. to Cooley 's Constitutional Limitations, Vol. I, p. 371, makes the proposition clear. Therein the learned professor says that a party may consent to waive rights of property, but the trial and punishment for public offences are not within the province of individual consent or agreement. In our opinion, the doctrine of waiver enunciated by some American Judges in construing the American Constitution cannot be introduced in our Constitution without a fuller discussion of the matter. No inference in deciding the case should have been raised on the basis of such a theory. The learned Attorney General when questioned about the doctrine did not seem to be very enthusiastic about it. Without finally expressing an opinion on this question we are not for the moment convinced that this theory has any relevancy in construing the fundamental rights conferred by Part III of our Constitution. We think that the rights described as fundamental rights are a necessary consequence of the declaration in the preamble that the people of India have solemnly resolved to constitute India into a sovereign democratic republic and to secure to all its citizens justice, social, economic and political; 84 654 liberty of thought, expression, belief, faith and worship; equality of status and of opportunity. These fundamental rights have not been put in the Constitution merely for individual benefit, though ultimately they come into operation in considering individual rights. They have been put there as a matter of public policy and the doctrine of waiver can have no application to provisions of law which have been enacted as a matter of constitutional policy. Reference to some of the articles, inter alia, articles 15(1), 20, 21 makes the proposition quite plain. A citizen cannot get discrimination by telling the State "You can discriminate", or get convicted by waiving the protection given under articles 20 and 21. The learned Attorney General contended that the correct approach to the question was that there being a strong Presumption in favour of the constitutionality, of a statute, it is for those who assail it as unconstitutional to establish it, and therefore it was for the appellant to establish that the statute was. unconstitutional, and that unless he proved facts requisite for the constitutional invalidity of the conviction he could not succeed. We cannot agree that that is a correct way of judging criminal cases. The constitutional invalidity of a part of section 13(b) of the Bombay Prohibition Act having been declared by this Court, that part of the section ceased to have any legal effect in judging cases of citizens and had to be regarded as null and void in determining whether a citizen was guilty of an offence. Article 141 of the Constitution declares that the law declared by the Supreme Court shall be binding on all Courts within the territory of India. In view of this clear enactment there is no scope in India for the application of the American doctrine enunciated by Willoughby ("The Constitution of the United States" Vol. I, P. 10), wherein the learned author states, "the declaration by a court of unconstitutionality of a statute which is in conflict with the Constitution affects the parties only and there is no judgment against the statute; that the opinion or reasons of the court may operate as a precedent for the determination of other similar cases, but it does 655 not strike the statute from the statute book; the parties to that suit are concluded by the judgment, but no one else is bound; a new litigant may bring a new suit, based on the very same statute, and the former decision cannot be pleaded as an estoppel, but can be relied on only as a precedent. " Once a statute is declared void under article 13(1) or 13(2) by this Court, that declaration has the force of law, and the statute so declared void is no longer law qua persons whose fundamental rights are thus infringed. In America there is no similar statutory provision and that being so, the doctrine enunciated by the learned author can have no application here. In this country once a law has been struck down as unconstitutional law by a Court, no notice can be taken of that law by any Court, and in every case an accused person need not start proving that the law is unconstitutional. The Court is not empowered to look at that part of the law which has been declared as void, and therefore there is no onus resting on the accused person to prove that the law that has already been declared unconstitutional is unconstitutional in that particular case as well. The Court has to take notice only of what the law of the land is, and convict the accused only if he contravenes the law of the land. Our learned brother, Jagannadhadas J., took the view that the only appropriate way of giving effect to the judgment in The State of Bombay and Another vs F. N. Balsara (supra) was by engrafting an exception or proviso to section 13(b) in the light of that decision and that the onus of proving the exception was on the accused person. This, in our judgment, is again not a true approach to the question. As pointed out by the learned Judge himself, the Court has no power to re write the section. It has to be kept intact. The Court therefore has no power to engraft an exception or a proviso on section 13(b) of the Bombay Prohibition Act. Apart from this circumstance it seems plain that unless there is a power to make a law inconsistent with the provisions of Part III of the Constitution, there can be no power to engraft an exception of the nature suggested by our brother. An exception or proviso 656 can only be engrafted for the purpose of excluding from the substantive part of the section certain matters which but for the proviso would be within it. But when there is no power to enact at all what is proposed to be embodied in the exception, there is no power to enact an exception by enacting a law which the Legislature is not competent to make. The State has no power to make a law abridging fundamental rights and therefore there is no power to engraft an exception by taking something out of a law which cannot be enacted. It is therefore difficult to treat what was declared void in The State of Bombay and Another vs F. N. Balsara (supra) as an exception to section 13(b) of the Bombay Prohibition Act and apply the rule enunciated in sec tion 105 of the Evidence Act to the case of the appellant. The only correct approach to the subject is to ignore the part of the section declared void by this Court in The State of Bombay and Another vs F. N. Balsara (supra) and see if the prosecution has succeeded in bringing the offence home to the accused on the part of the section that remains good law. With the observations made above the opinion in this case is returned to the Bench which originally heard the appeal. DAS J. I respectfully beg to differ from the opinion of the majority of this Court just delivered by my Lord the Chief Justice. It is, therefore, incumbent on me to formulate my answer to the question referred to this Constitution Bench and state shortly the reasons in support thereof. It is necessary at the outset to refer to the relevant statutory provisions bearing on the question. The appellant before us was prosecuted on a charge under section 13 read with section 66(b) of the Bombay Prohibition Act, 1949 (Act XXV of 1949). The relevant part of section 66(b) of the Act which is the penal section reads as follows: "66. Whoever in contravention of the provisions of this Act (a). . . . . (b)consumes, uses, possesses or transports any intoxicant or hemp, 657 (c). . . . . . . (d). . . . . . . shall, on conviction, be punished. . . " By section 2 (22) "intoxicant" is defined as meaning "any liquor, intoxicating drug, opium or a any Other substance which the State Government may, by notification in the Official Gazette, declare to be an intoxicant. " Read in the light of this definition consumption, use, etc., of "liquor" is within the mischief of this section. Further, it will be noticed that what is made punishable is not consumption, use, etc. of liquor simpliciter but consumption, use, etc., of liquor "in contravention of the provisions of this Act. " The prosecution, as the charge shows, relied on section 13 as being the provision of the Act in contravention of which the consumption, use, etc., was alleged to have been made by the appellant who was the accused person. That section is to be found in Chapter III beaded "Prohibitions". So far as it is material for our purpose, it runs thus: "13. No person shall (b) consume or use liquor; or (c) By section 2 (24) "liquor" is defined as including "(a) spirits of wine; denatured spirits, wine, beer, toddy and all liquids consisting of or containing alcohol; and (b) any other intoxicating substance which the State Government may, by notification in the Official Gazette, declare to be liquor for the purposes of this Act. " Therefore the prohibition of section 13(b)extends to the consumption or use of each and everyone of the above enumerated items which are included in the definition of "liquor". It follows that whoever consumes or uses any of these enumerated substances contravenes the provisions of section 13(b) and consumption or use of any of these substances in contravention of this provision is an offence punishable under section 66(b). 658 The Bombay Prohibition Act containing the above ,provisions came into force on the 20th May, 1949. It is conceded on all hands that it was a perfectly valid piece of legislation enacted well within its legislative competency by the then Bombay Legislative Assembly. Then came the Constitution of India on the 26th January, 1950. Article 19(1)(f) gives to all citizens the fundamental right to acquire, hold and dispose of property. By sub article(5) however,it is provided that nothing in clause(f) shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of the right conferred by sub clause (f) either in the interests of the general public or for the protection of the interests of any Scheduled Tribe. The Bombay Prohibition Act, 1949, was an existing law. By virtue of sub article (5) the right conferred by sub clause (f) cannot affect the operation of the Act in so far as it imposes reasonable restrictions of the kind mentioned in that sub article. If, however, this existing law imposes restrictions which are unreasonable then it becomes inconsistent with the right guaranteed to the citizens by article 19(1)(f) and consequently under article 13(1) "shall, to the extent of such inconsistency, be void". It is beyond all dispute that it is for the Court to judge whether the restrictions imposed by any existing law or any Part thereof on the fundamental rights of citizens are reasonable or unreasonable in the interest of the general public or for the protection of the interests of any Scheduled Tribe. If the Court holds that the restrictions are unreasonable then the Act or the part thereof which imposes such unreasonable restrictions comes into conflict and becomes inconsistent with the fundamental right con ferred on the citizens by article 19(1)(f) and is by article 13(1). rendered void, not in toto or for all purposes or for all persons but "to the extent of such inconsistency", i.e., to the extent it is inconsistent with the exercise of that fundamental right by the citizens. This is plainly the position, as I see it. Shortly after the commencement of the Constitution the validity of the Bombay Prohibition Act was 659 challenged in its entirety. One F. N. Balsara, claiming to be an Indian citizen prayed to the High Court, at Bombay, infer alia, for a writ of mandamus against the State of Bombay and the Prohibition Commissioner ordering them (i) to forbear from enforcing against him the provisions of the Prohibition Act and (ii) to allow him to exercise his right to possess, consume and use certain articles, namely, whisky, brandy, wine, beer, medicated wine, eau de cologne, lavender water and medicinal preparations containing alcohol. The High Court, agreeing with some of the petitioner 's contentions and disagreeing with others, declared some of the provisions of the Act to be invalid and the rest to be valid. Both the State of Bombay and the petitioner, Balsara, appealed to this Court after obtaining a certificate from the High Court under article 132(1) of the Constitution. The judgment of this Court in those appeals was pronounced on the 25th May, 1951. See The State of Bombay and Another vs F. N. Balsara (supra). So far as it is material for our present purpose this Court held (1) that under entry 31 of List II of the Seventh Schedule to the Government of India Act, 1935, the Provincial Legislatures had the power to make laws with respect to "intoxicating liquors, that is to say, the 'production, manufacture, possession, transport, purchase and sale of intoxicating liquors" and there was, therefore, no legislative incompetency in the Bombay Legislature to enact the Bombay Prohibition Act, 1949; (2) that the word "liquor" as understood in India at the time of the Government of India Act, 1935, covered not only those alcoholic liquids which are generally used as beverages and produce intoxication, but also liquids containing alcohol and, therefore, the definition of "liquor" contained in section 2(24) of the Act was not ultra vires, and (3) that the restrictions imposed by sections 12 and 13 of the Act on the possession, sale, use and consumption of liquor were not reasonable restrictions on the fundamental right guaranteed by article 19(1)(f), so far as medicinal and toilet preparations containing 660 alcohol were concerned and that the said sections were invalid so far as they prohibited the possession, sale, use. and consumption of these articles, but that those sections were not wholly void on this ground as the earlier categories mentioned in the definition of liquor, namely, spirits of wine, methylated spirit, wine, beer and toddy were distinctly separable items which were easily severable from the last category, namely, all liquors containing alcohol and further that the last category of "all liquids consisting of or containing alcohol" were again capable of being split up in several sub categories, e.g., liquid medicinal and toilet preparations containing alcohol and the restrictions on the possession, sale, use and consumption of the earlier categories and all liquids containing alcohol other than medicinal and toilet preparations were not unreasonable. In the result this Court declared certain provisions of the Act invalid. Amongst the provisions declared invalid was section 13(b), but it was so declared only "so far as it affects the consumption or use of such medicinal and toilet preparations containing alcohol." This declaration, no doubt, was made pursuant to article 13(1) of the Constitution. The very foundation of this declaration was that the prohibition imposed by this section against the consumption or use of liquid medicinal or toilet preparations was an unreasonable restriction on the exercise of the fundamental right of citizens to acquire, hold and dispose of property which in that case was liquid medicinal or toilet preparations containing alcohol ' The law thus declared by this Court is, by virtue of article 141 of the Constitution, binding on all Courts within the territory of India. The offence with which the appellant was charged was alleged to have been committed on the 29th May, 1951, that is to say, four days after this Court pronounced its judgment in The State of Bombay and Another vs F. N. Balsara (supra). On the 22nd April, 1952, the learned Presidency Magistrate acquitted the appellant of that charge with the following remark: "The evidence also does not go to show conclusively that the accused had consumed alcohol without a permit There are. certain medicinal preparations which are 661 allowed to be used by law and there must be satisfactory evidence to show that the accused has not consumed those tonics but only liquor for which he ought to have a permit. " The State appealed to the High Court against this order of acquittal. The High Court following its own earlier decision in Rangrao Bala, Mane vs State (supra) reversed the order of the Presidency Magistrate. The appellant came up to this Court in appeal after having obtained special leave from this Court. The appeal came up for hearing before a Division Bench of this Court consisting of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ. Bhagwati J. clearly and, if I may respectfully say so, correctly accepted the position that the declaration made by this Court in The State of Bombay and Another vs F. N. Balsara (supra) "was a judicial pronouncement and that even though under article 141 of the Constitution the law declared by this Court was binding on all Courts in India and is to be the law of the land the effect of that declaration was not to enact a statutory provision or to alter or amend section 13(b) of the Act." Having accepted this position the learned Judge logically and, again I say with respect, correctly repelled the argu ment that the result of the decision in The State of Bombay and Another vs F. N. Balsara (supra) was to introduce, not in terms but in effect, an exception or proviso to section 13(b) and that consequently the onus lay on the appellant to prove the existence of circumstances bringing his case within the exception or proviso as laid down in section 105 of the Evidence Act. The learned Judge, however, observed: "The only effect of the declaration was that the prohibition enacted in section 13(b) was to be enforce. able in regard to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and 85 662 non toilet liquid preparations consisting of or containing alcohol. The prohibition which was enacted in section 13(b) against the consumption or use of liquor could in the light of the declaration made by this Court only refer to the consumption or use of validly prohibited liquor, i.e., spirits of wine, methylated spirits, wine, beer, toddy and all non medicinal and non toilet liquid preparations consisting of or containing alcohol, and that was the only prohibition which could be enforced under the section 13(b) and the penal section 66(b). " The learned Judge proceeded to illustrate how the effect of the declaration could be worked out: "The effect of the declaration on the provisions of section 13(b) could be worked out in any of the following modes: No person shall consume or use spirits of wine, methylated spirits, wine, beer, toddy and all liquids consisting of or containing alcohol as are not or which are not or other than or save or except or provided they are not or but shall not include liquid medicinal or toilet preparations containing alcohol or all non medicinal and non toilet liquid preparations consisting of or containing alcohol. When these several interpretations were possible in regard to the effect of the declaration on the provisions of section,13(b), where would be the justification for interpreting the effect of the declaration to be that of grafting an exception or proviso on section 13(b) so as to attract the operation of the provisions of section 105 of the Evidence Act9 It is clear that where several interpretations are possible, the Court should adopt an interpretation favourable to the accused, rather than one which casts an extra or special burden upon him, which if at all should be done by clear and unequivocal provision in that behalf rather than in this indirect manner. (See also In re Kanakasabai Pillai)(1). " With the utmost respect to the learned Judge, the modes of working out the effect of the declaration indicated by him clearly involve the acceptance of one or other of the different forms of amendment of the section, although according to his views expressed (1) A.I. R. 1940 Mad. I. 663 earlier in his judgment the effect of the declaration was not to alter or amend section 13(b) of the Act. Venkatarama Ayyar J., however, took the view that as the Court had no legislative function and as judicial decisions did not amend or add to a statute but merely interpreted the law and declared whether it was valid or not, the result of a judicial declaration that a statute or any part thereof was not valid was only that no effect could be given to it in a Court of law but that it did not mean that the statute or the part thereof declared void had gone out of the statute book after the Court 's decision. He also held that section 105 of the Evidence Act would not in terms apply as article 19(1)(f) could not be said to form an exception to section 13(b). He rested his decision on the ground that the inclusive definition of "liquor" adopted in section 2(24) of the Act having been held to be within entry 31 in List II of the Seventh Schedule to the Government of India Act, 1935, and, therefore, valid, that meaning should be its connotation in section 13(b) as well and that under the section so read the offence would be established as soon as consumption or use of "liquor" so defined was established and that the plea that what was consumed was medicinal preparation containing alcohol was really a plea that the section, in so far as it prohibits consumption or use of liquid medicinal or toilet preparations containing alcohol, infringed the citizens ' fundamental right under article 19(1)(f) and was, therefore, unconstitutional as declared by this Court. His view was that it was for those who pleaded unconstitutionality to establish all the elements which would go to establish that plea. Jagannadhadas J. felt inclined to agree with the view of Venkatarama Ayyar J. but as that aspect of the matter had not been fully argued he passed on to the argument canvassed before them, namely, that the part of the section declared invalid went out of the Act and the Act stood appropriately amended pro tanto. This, according to the learned Judge, involved, that the word "liquor" stood amended as "prohibited liquor" or that it was to be understood with this limited connotation. This argument he could not accept. His view was that what the decision in The, State of Bombay and Another vs 664 F. N. Balsara (supra) had done was not to authorise ,the importation of a new definition or to rewrite the section but, leaving the section intact, to treat the consumption or use of liquid medicinal or toilet preparations containing alcohol as taken out of the ambit of the section itself as the prohibition thereof was unconstitutional. This, according to the learned Judge, could only be done by grafting an appropriate exception or proviso into section 13(b). The result of the hearing before that Bench was that Bhagwati J. held that the appeal should be allowed but Jagannadhadas and Venkatarama Ayyar JJ. were for dismissing the appeal. An application for review was, however, made on the ground that the judgments of the learned Judges involved a decision on constitutional matters which that Bench had no jurisdiction to decide but which could only be dealt with by a Constitution Bench. By an order made on the 26th April, 1954, under the proviso to sub article (3) of article 145 that Bench accordingly referred the following question for the opinion of the Constitution Bench, namely: "What is the effect of the declaration in The State of Bombay and Another vs F. N. Balsara (supra) that clause (b) of section 13 of the Bombay Prohibition Act, 1949, is void, under article 13(1) of the Constitution, in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, on the ground that it infringes article 19(1)(f) of the Constitution?" The effect of a judicial declaration of a statute as unconstitutional has been stated by Field J. in Norton vs Shelby County(1) to be that the statute is no law and that, in legal contemplation, it is to be treated as inoperative as though it had never been passed. Cooley, in his Constitutional Limitations, Volume 1, page 382, has adopted this dictum of Field J. and expressed the view that where a statute is adjudged to be unconstitutional it is as if it had never been. I am unable to accept the proposition so widely stated. Even American text book writers have felt that the statement of (1) ; ; 665 Field J. needs to be somewhat qualified. (See, Willoughby on the Constitution of the United States, Volume 1, page 11 and Willis on Constitutional Law, page 890). The dictum, it will be observed, related to a statute which was made after the commencement of the Constitution and which was in violation of the provisions of the Constitution. It cannot obviously apply to a case where a statute which was enacted before the commencement of the Constitution is declared to have become unconstitutional and void. In such a situation it cannot be said that the judicial declaration means that such a statute is void for all purposes including past transactions that took place before the commencement of the Constitution. The Bombay Act was an existing law and the declaration in The State of Bombay and Another vs F. N. Balsara (supra) cannot and does not affect anything done under the Act prior to the commencement of the Constitution. It will be further noticed that the decision in The State of Bombay and Another vs F. N. Balsara (supra) does not declare the entire Act or even the entire section 13(b) to be void. It only declares void a part of section 13(b), that is to say only that part of it which prohibits a citizen from consuming or using only liquid medicinal or toilet preparations containing alcohol. The section, in its entirety, is still enforceable against all noncitizens. Even as against citizens the prohibition of the section with respect to the consumption or use of the earlier categories of liquor, namely, "spirits of wine, denatured spirits, wine, beer, toddy" ' is fully operative. Moreover, even the prohibition against consumption or use of the last category of liquor, namely, "all liquids consisting of or containing alcohol" remains operative even as against citizens except in so far as it prohibits them from consuming or using liquid medicinal or toilet preparations containing alcohol. In such a situation the passages from Cooley on Constitutional Limitations and the dictum of Field J. can have no application. This is put beyond controversy by the decision of this Court in Keshava Madhava Menon vs The State of Bombay (supra). The Bombay Act being an existing law, the declaration made by 666 this Court in The State of Bombay and Another vs F. N. Balsara (supra) must be taken to have been made under article 13(1). The article does not in terms make the existing laws which are inconsistent with the fundamental rights void ab initio or for all purposes. The declaration in The State of Bombay and Another vs F. N. Balsara (supra), as I understand it, is that the prohibition contained in section 13(b) against the consumption or use of one particular variety of liquid Consisting of or containing alcohol, namely, liquid medicinal or toilet preparations containing alcohol imposes an unreasonable restriction on the exercise of a citizen 's fundamental right under article 19(1) (f) and is, therefore, unconstitutional and as such void to that extent. The result of it is that the prohibi tion of that part of section 13(b) will be ineffective against and inapplicable to a citizen who consumes or uses liquid medicinal or toilet preparations containing alcohol. No part of the section is obliterated or scratched out from the statute book or in any way altered or amended, for that is not the function of the Court. The judicial declaration that a art of the section is unconstitutional and void only nullifies that offending Part in the sense that it renders that part ineffective against and inapplicable to a citizen who consumes or uses liquid medicinal or toilet preparations containing alcohol in exercise of his fundamental right. In other words, when a citizen is charged with an offence under section 66(b) read with section 13(b) he will be entitled to say "I am a citizen of India. I have consumed or used liquid medicinal or toilet preparations containing alcohol. I am entitled to do so under article 19(1) (f). The Supreme Court has in The State, of Bombay and Another vs F. N. Balsara (supra) declared the law, namely, that in such cir cumstances the prohibition of section 13(b) is void as against me with respect to such consumption or use of liquid medicinal or toilet preparations containing alcohol " This plea, if substantiated, will be a complete answer to the charge. In short, the judicial declaration serves to provide a defence to a citizen who has consumed or used liquid medicinal or toilet preparations 667 containing alcohol. Test the matter in this way. Suppose after the declaration a person is charged with an offence under section 66(b) read with section 13(b) and in such a case the prosecution proves that the accused has taken alcohol in some form or other, as is the evidence of the doctor in the present case. What is to happen if nothing further is proved by either party ? Surely, in such a situation a conviction must follow. If the accused person desires to avail himself of the benefit of the declaration in The State of Bombay and Another vs F. N. Balsara (supra), surely he must prove first of all that he is a citizen. The onus of this clearly lies on the accused. The next question is whether that is the only onus that lies on the accused. To my mind he has to allege and prove not only that he is a citizen but that he has consumed or used liquid medicinal or toilet preparations containing alcohol and it is only on such proof that he can claim the benefit of the declaration of law made in The State of Bombay and Another vs F. N. Balsara (supra) and establish his defence. The very basis of that declaration is that a citizen has the fundamental right to consume or use liquid medicinal or toilet preparations containing alcohol and section 13(b) in so far as it prohibits such consumption or use imposes an unreasonable restriction on his fundamental right under article 19(1) (f). In other words, the on us is on him to establish the situation or circumstances in which that part of the section which has been declared to be void should not be applicable to him. If he establishes the fact that he is a citizen and that he has consumed or used such liquid, then the declaration in The State of Bombay and Another vs F. N. Balsara (supra) will establish the law, namely, that the prohibition of section 13(b) and the penalty under section 66(b) are not applicable to him being inconsistent with his fundamental right. To say that after the judicial pronouncement the section should be read qua a citizen as if liquid medicinal or toilet preparations are not there or that the ambit of the offence has narrowed down to a prohibition against the consumption or use of only the earlier categories of liquor set forth in the definition is, to my mind, 868 tantamount to saying, covertly if not openly , that the judicial pronouncement has to that extent amended the section. To say that after the declaration the offence has become limited to the consumption or use of prohibited liquor is to alter or amend the definition of liquor although it has been held to be valid. I repeat that it is not within the competence of a Court to alter or amend a statute and that the effect of the declaration made by this Court in The State of Bombay and Another vs F. N. Balsara (supra) is not to lift or take away or add anything out of or to the section at all. What it does is to declare, as a matter of law, that in a certain situation, namely, when liquid medicinal or toilet preparations containing alcohol are consumed or used, a certain part of section 13(b), that is to say, that part of it which prohibits the consumption or use of liquid medicinal or toilet preparations containing alcohol, shall be void qua a particular class of persons, namely, citizens. In other words, the declaration in The State Of Bombay and Another vs F. N. Balsara (supra) serves to provide a defence only to a citizen who has consumed or used liquid medicinal or toilet preparations. It is for the accused person, who seeks to ward off the applicability of the section to him by having resort to the declaration made in The State of Bombay and Another vs F. N. Balsara (supra), to establish the situations or circumstances on which that declaration is founded. In short a person who challenges the validity of the section on the ground of its unconstitutionality has the advantage of the declaration as a matter of law but the facts on which that declaration is based have nevertheless to be established in each particular case where the declaration is sought to be availed of. I answer the question referred to us accordingly. It has been strenuously urged before us, as before the Division Bench, that such a view as to the effect of this Court 's declaration will run counter to the well established principle of criminal jurisprudence that the onus of establishing the charge is always on the prosecution, for it will throw the burden of proof on the accused person. This argument has considerably impressed Bhagwati J. and has also weighed with my 669 learned colleagues on the present Bench. It is, however, not unusual in certain classes of cases or in certain circumstances to throw the onus of proof of a defence on the accused person. Section 105 of the Evidence Act is an instance in point. Section 114, ill. (a) of the same Act is another provision to which reference may be made. Section 103 of this very Bombay Prohibition Act raises a very strong presumption of guilt and throws the burden on the accused to prove his innocence in certain cases. Take section 96 of the Indian, Penal Code which says " Nothing is an offence which is done in the exercise of the right of private defence. " Nobody will contend that this section requires the prosecution to prove that the acts constituting the offence charged against the accused were not done in the exercise of the right of private defence. It is obvious that this section serves to provide the accused person with a defence and if the accused person can prove that he did the acts complained of in defence of his person or property and if the acts were reasonable in the circumstances of the case he establishes his defence. It is not necessary to multiply instances. It seems to me that the declaration in The State of Bombay and Another vs F. N. Balsara (supra) gives a citizen who has consumed or used liquid medicinal or toilet preparations containing alcohol a defence to a charge under section 66(b) read with section 13(b) of the Bombay Prohibition Act, but it is for the accused person to prove the facts on which that declaration of law is founded. I see no hardship whatever in this, for the requisite facts are within his special knowledge. To adopt the contrary view will be to ignore the sound principle well established in law that a judicial declaration of invalidity does not repeal, alter or amend a statute. As I hold that the declaration does not operate as an amendment of the section, I must logically hold, 'with respect to the view of Jagannadhadas J. that the declaration cannot be treated as having grafted an exception or proviso to section 13(b). 86 670 In coming to the conclusion that I have, I have in a large measure found myself in agreement with the views of Venkatarama Ayyar J. on that part of the ' case. 1, however, desire to guard myself against being understood to agree with the rest of the observations to be found in his judgment, particularly those relating to waiver of unconstitutionality, the fundamental rights being a mere check on legislative power or the effect of the declaration under article 13(1) being "relatively void. " On those topics prefer to express no opinion on this occasion. BY THE COURT. The reference is answered in accordance with the opinion of the majority. [After the opinion of the Constitution Bench the following Order, dated 24th September, 1954, was pronounced by a Bench composed of Bhagwati, Jagannadhadas and Venkatarama Ayyar JJ. who had originally heard the appeal.] The Order of the Court was pronounced by BHAGWATI J. We have received the opinion expressed by the Constitution Bench. According to that opinion, which is expressed in the majority judgment, the onus lay on the prosecution to prove that the alcohol of which the accused was smelling was such that it came within the category of prohibited alcohols. We have heard the learned Attorney General on the question whether that onus has been discharged and he has frankly conceded that on the material placed before us it cannot be urged that that onus has been discharged by the prosecution. The result, therefore, is that the conviction of the appellant will be quashed and the fine, if paid, will be refunded. Conviction set aside.

IN-Abs

Held (Per MEHR CHAND MAHAJAN C. J., MUKHERJEA, VIVIAN BOSE and GHULAM HASAN JJ., section R. DAS J. dissenting) that the effect of the declaration in the case of The State of Bombay and Another vs F. N. Balsara(1) that clause (b) of section 13 of the Bombay Prohibition Act (XXV of 1949) is void under article 13(1) of the Constitution in so far as it affects the consumption or use of liquid medicinal or toilet preparations containing alcohol, is to render part of section 13(b) of the Bombay Prohibition Act inoperative, ineffective and ineffectual and thus unenforceable. In view of the constitutional invalidity of a part of section 13(b) of the Bombay Prohibition Act having been declared void by the Supreme Court, that part of the section ceased to have legal effect in judging cases of citizens and must be regarded as null and void in determining whether a citizen was guilty of an offence. The clear enactment of article 141 of the Constitution leaves no scope in India for the application of the American doctrine that "the declaration by a court of unconstitutionality of a statute which is in conflict with the Constitution affects the parties only and there is no judgment against the statute and it does not strike the statute from the statute book. " In India, on the other hand, once a law has been struck down as unconstitutional by the Supreme Court, no notice can be taken of it by any Court because after it is declared as unconstitutional it is no longer law and is null and void. The bare circumstance that a citizen accused of an offence under section 66(b) of the Bombay Prohibition Act is smelling of alcohol is compatible both with his innocence as well as his guilt. The smell of alcohol may be due to the fact that the accused had contravened the enforceable part of section 13(b) of the Bombay Prohibition Act or it may well be due to the fact that he had taken alcohol which fell under the unenforceable and inoperative part of the section. Therefore the onus was laid on the prosecution to prove that the (I) ; 79 614 alcohol of which he was smelling came under the category of prohibited alcohol within the meaning of the enforceable part of section 13(b). Per section R. DAS J. : The declaration in the case of The State of Bombay and Another vs F. N. Balsara gives a citizen who has consumed or used liquid medicinal or toilet preparations a defence to a charge under section 66(b) read with section 13(b) of the Bombay Prohibition Act and it is for the accused person to prove the facts on which that declaration of law is based. The State of Bombay and Another vs F. N. Balsara ([1951] S.C.R. 682) explained. Kesava Madhava Menon vs The State of Bombay ([1951] S.C.R. 228) followed. rangarao Bala Maize vs The State ([19511 54 Bom. L. R. 325), In re Kanakasabai Pillai (A.I.R. 1940 Mad. 1) and Norton vs Shelby County ; referred to.

vil Appeal No. 636 of 1964. Appeal from the judgment and decree dated September 1, 1959 of the Madras High Court in O. section Appeal No. 104 of 1955. T. V. R. Tatachari, for the appellants. R. Thiagarajan, Jayaram and M. R. K. Iyer, for respondents, Nos. 1 and 9. 722 The Judgment of the Court was delivered by Mitter, J. This is an appeal from a judgment of the High .Court at Madras on a certificate granted by it. The main question in this appeal relates to the rate of interest payable in respect of four mortgages executed in between March 20, 1936 and January 2, 1938. Both the learned trial Judge, Ramaswami J. of the Madras High Court and the Bench of two Judges in appeal were of the view that the provision for interest in the impugned mortgages should be reduced; but whereas the learned trial Judge reduced the rate of interest from 15 pet cent compoundable every quarter to 15 per cent compoundable with yearly rests, the Judges in appeal after taking all the circumstances into consideration held that 10 per cent compound interest with yearly rests would not be excessive and they reduced the rate accordingly. They also scaled down the rate of interest to 6 per cent from the date of the institution of the suit. The creditor has come up before this Court in appeal and his substantial complaint is that the rate of interest should not have been cut down by the Division Bench of the Madras High Court. The power of the court to reduce interest in a case like this is derived from section 3 of the Usurious Loans (Madras Amendment) Act VIII of 1937. Sub section (1) of that section gives the court the power to give relief in various ways if it has reason to believe that the transaction as between the parties thereto was substantially unfair. One of such reliefs is the reopening of the transaction and relieving the debtor of all liability in respect of any excessive interest. Explanation I to the section lays down that "if the interest is excessive, the court shall presume that the transaction was substantially unfair; but such presumption may be rebutted by a number of special circumstances justifying the rate of interest. " Sub section (2) of section 3 provides by clause (a) that the word "excessive" in the section means in excess of that which the court deems to be reasonable having regard to the risk incurred as it appeared or must be taken to have appeared, to the creditor at the date of the loan. Under clause (b) of the said sub section the court has also to take into account any amounts charged or paid etc. and if compound interest is charged, the period at which it is calculated and the total advantage which may reasonably be taken to have been expected from the transaction. Clause (c) of sub section 2 provides that in considering the question of risk, the court shall take into account the presence or absence of security and the value thereof, the financial condition of the debtor and the result of any previous transactions of the debtor, by way of loan, so far as the same were known, or must be taken to have been known, to the creditor. Clause (d) of the said sub section enjoins upon the court to consider also all circumstances materially affecting the relations 723 the parties at the time of the loan or tending to show that the transaction was unfair, including the necessities or supposed necessities of the debtor at the time of the loan so far as the same were known, or must be taken to have been known, to the creditor. In effect the provisions of the section which are relevant for the purpose of this appeal are as follows: (a)If the Court has reason to believe that the transaction was unfair it will exercise the powers given by subsection, (1). (b)The court shall presume the transaction to be sub stantially unfair if the interest is excessive, such pre sumption being a rebuttable one by the special circumstances of the case; (c)In order to find out whether the interest is excessive the court must examine the circumstances of the case in the light of the risk incurred or the risk as would be apparent to the creditor at the date of the loan, and then judge whether compound interest at the rate prescribed and with therests provided for was justifiable keeping also in view thesecurity given by the mortgagor, the value of such securityand the condition of the debtor including the result of any previous transaction. The net result of the above seems to be that the Court must go back to the date of the original transaction and form an opinion as to the rate of interest which would be reasonable after considering (a) the value of the security offered; (b) the financial condition of the debtor including the result of any prior transaction; (c) the known or probable risks in getting repayment, (d) whether compound interest was provided for and if so the frequency of the period of calculation of interest for being added to the principal amount of the loan. The facts of the case may now be briefly stated. The original mortgagor Dhanakoti Ammal had succeeded to the properties of her father along with her sisters under a will executed by him on the basis that the properties were his self acquired properties. Her brother Alavandar filed a suit in the year 1919 through a next friend claiming that the properties were not the self acquired properties of his father and as such not capable of bequest under a will. This suit was dismissed as also the appeal therefrom to 724 the Madras High Court preferred in 1922. By the year 1936 when the first mortgage in favour of Srinivasavaradachariar, the appellant, before us, was executed, Dhanakoti Ammal was involved in debts. The most important item of her properties was a market on the outskirts of the city of Madras which had become dilapidated and the Corporation of Madras was refusing to renew the licence unless it was put in good order. She had further borrowed a sum of money repayable with interest at 20 per cent compoundable monthly. Her brother Alavandar who was due to attain majority very soon threatened to file another suit impeaching the decree in the earlier suit. As a matter of fact, the first two mortgages were executed in 1936 before Alavandar had filed his suit and the last mortgage was executed in January 1938. Dhanakoti Ammal got more and more involved in debt and was adjudicated an insolvent in 0. P. 148 of 1949. Her properties got vested in the Official Assignee of Madras. The Official Assignee brought the properties to sale which were ultimately purchased by Dr. Gopala Menon for Rs. 5,0001 . Dr. Gopala Menon tried to come to an arrangement with Srinivasavaradachariar but nothing came out of it and the suit out of which this appeal has arisen was filed in the year 1950. Other aliences were involved in the suit but we are not concerned with them. According to the learned trial Judge the risks which the creditor ran in advancing the money were considerable in that the adequacy of the security was questionable in view of the threat of suit by Dhanakoti Ammal 's brother and the condition of the property in an undeveloped area of Kodambakkam. The learned trial Judge could not find anything unfair in the transaction, but nevertheless he thought that the rate of interest should be scaled down to 15 per cent compoundable at the end of each. The learned Judges of the Division Bench of the Madras High Court found that the amount advanced under the old mortgages came to nearly Rs. 48,000/ that there was already a prior mortgage in respect of which nearly Rs. 8,000/ was due and the value of the security though not very ample could not be said to be markedly inadequate and there was a shadow on the title of the mortgagor by reason of the threat of suit by her brother. On a consideration of the entire evidence bearing on the point revealing the circumstances in which the loan transaction came into existence the appellate bench held that 15 per cent compound interest calculated with quarterly rests was certainly excessive. Taking note of several decisions of the Madras High Court to which we shall presently refer, the learned Judges thought that the rate of interest to be allowed was 10 per cent compound interest with yearly rests. It is difficult to predicate of any rate of interest as being excessive divorced from the circumstances of the case unless the rate 725 fixed is so high as to be suggestive of an unfair transaction on the face of things. It is not for us to speculate as to why the Legislature of the State of Madras proceeded in such a round about way in making amendments to the Usurious Loans Act of 1918 for the purpose of giving relief to borrowers when it is well known that at or about the time of the Madras amendment the Legislatures of other States in India had fixed certain rates as being the maximum beyond which the courts of law were not competent to go. So far as we are aware difference was made in the treatment of unsecured loans and secured loans and even in the case of the former the rate allowed was not to exceed 12 per cent simple in most of the States. With regard to the rate of interest allowed by the Madras High Court after 1937 we find that in Venkatarao vs Venkataratnam(l) a bench consisting of Govinda Menon and Ramaswami JJ. observed, "that anything above 12 per cent per annum simple interest is excessive, considering the nature of transaction in this State. " There the suit was on a mortgage which provided for payment of interest at 12 1/2 per cent per mensem with annual rests. In Sri Balasaraswati vs A. Parameswara Aiyar(2) a Division Bench consisting of Rajamannar C. J. and Panchapekesa Ayyar J. observed, "in normal cases where the security is ample to cover the loan and there is no danger at all to the principal and interest the court will hold more than 12 per cent simple interest to be excessive, as held in A.I.R. 1952 Madras 872 and by us in A.S. 348 and 361 of 1948". According to the learned Judges "Where the security is not sound, 10 per cent compound interest can be allowed as in In the result the learned Judges only allowed simple interest at 12 per cent per annum. In the instant cases the learned Judges in appeal also referred to a judgment, of Subba Rao J. (as he then was) in C. section 163 of 1949 as containing an observation that the dictum in Venkatarao vs Venkatratnam(l) that "anything above 12 per cent simple interest was excessive would not be taken as a principle of law applicable to all cases irrespective of the circumstances obtaining at the time of the transaction". That transaction also related to Dhanakoti Ammal the original debtor in this case and Subba Rao J. (as he then was) reduced the rate of interest from 15 per cent compound interest to 12 per cent per annum simple. We have not had the benefit of reading the judgment of his Lordship, but we take it that the result of it is as indicated in the judgment in appeal before us. It appears to us therefore that in the opinion of a number of Judges of the Madras High Court who were cognizant of the state of affairs prevailing in the State interest beyond the rate of 12%. per annum simple would be considered excessive by court of law where the security was not inadequate and the risk run by the creditor was not abnormal. There can be no dispute that (1) A.I.R. 1952 Madras 872. (2) A.I.R. 1957 Madras 122, 129. 726 interest payable at the rate of 10 per cent compoundable annually over a number of years would be more in the interest of the creditor than 12 per cent per annum simple for the same period. In our opinion the learned Judges of the Division Bench of the Madras High Court were right in holding that 10 per cent compound interest with yearly rests would meet the justice of the case. The security was not inadequate and the threat of suit by Alavandar in view of the fact that his earlier suit which had been taken in appeal to the Madras High Court and subsequently lost, was never regarded seriously. This is corroborated by the fact that even after the institution of that suit in 1937 the appellant before us advanced further sums of money to Dhanakoti Ammal at the same rate of interest as before; if he had thought that his security was put in jeopardy by the institution of the suit he would have been careful not to advance any further amounts and would in any case have insisted on the rate of interest being higher than that provided for in the earlier mortgages. In our opinion the Division Bench of the Madras High Court made a correct assessment of the situation and their pronouncement with regard to the rate of interest prior to the date of the suit ought not to be disturbed. We also find no reason to interfere with the scaling down of the rate of interest to 6 per cent from the date of the filing of the suit. Although the reasons are not indicated, it seems fairly plain that their Lordships were using their discretion as regards interest pendente lite. We cannot overlook the fact that the mortgages were executed as far back as 1936 and 1938 and that the creditor who had waited till 1950 for the institution of the suit would, in any event, get interest substantially exceeding the principal amount of the loans. In this view of things we are not prepared to interfere with the exercise of the discretion exercised by the learned Judges of the Madras High Court even though they have given no reasons for the reduction of rate of interest pendente lite. In the result the appeal fails and is dismissed with costs. G. C. Appeal dismissed.

IN-Abs

The first appellant advanced monies to D against mortgages of her property. D was adjudicated an insolvent in 1949 and her properties got vested in the Official Assignee of Madras. The Official Assignee brought the properties to sale which were ultimately purchased by the first respondent. The Trial Court decreed the appellants ' suit for enforcement of the mortgages against the property and awarded interest at the rate of 15 per cent compoundable with yearly rests. In appeal the Division Bench of the High Court found that in the circumstances of the case a rate of 10, per cent compound interest with yearly rests was just. With certificate the appellants came to this Court. Section 3 of the Usurious Loans (Madras Amendment) Act, 1937 fell for consideration. HELD : The net result of the various clauses of section 3 to be that the court must go back to the date of the original transaction and form an opinion as to the rate of interest which would be reasonable after considering (a) the value of the security offered; (b) the financial condition of the debtors including the result of any earlier transaction; (c) the known and probable risks in getting repayment; (d) whether compound interest was provided for and if so the frequency of the Period of calculation of interest for being added to the principal amount of the loan. [725 E G] In the circumstances of the case the Division Bench rightly held that 10 per cent compound interest with yearly rests would meet the justice of the case. The security was not inadequate and the threat of a suit by the brother of the mortgagor was not serious. [726 A B] Venkatarao vs Venkatratnam, A.I.R. 1952 Madras 872 and Sri Balasaraswati vs A. Parameswara Aiyar, A.I.R. 1957 Mad. 122 referred to. There was also no reason to interfere with the scaling down of the rate of interest to 6 per cent from the date of filing of the suit. Although the reasons were not indicated it was fairly clear that the High Court was, using its discretion as regards interest pendente lite. [726 E]

Appeals Nos. 702 and 768 of 1964. Appeals by certificate/special leave from the judgment and decree dated June 7, 1962 of the Jammu and Kashmir High Court in Civil First Appeals Nos. I of 1957 and 15 of 1961 respectively. Naunit Lal, for the appellant (in both appeals). K. R. Chaudhuri, for the respondent (in C. A. No. 768/64). 793 The Judgment of the Court was delivered by Wanchoo J. These are two connected appeals on certificates granted by the Jammu and Kashmir High Court and raise a common question of law. We shall therefore give the facts of one appeal (No. 702) in order to appreciate the question of law which calls for decision. Sultan Mohd. Matawali Khan (hereinafter referred to as Sultan Mohd.), Ilaqadar of Kathai was the predecessor in interest of the respondents. He had borrowed a sum of Rs. 40,000/ from the apperant bank on the basis of a promissory note on November 5, 1941. Before the bank advanced the loan, the Government of the then State of Jammu and Kashmir was approached and it was arranged that the debt would be liquidated through Government. For that purpose, an order was issued by the Government that land revenue of certain villages from the jagir of Sultan Mohd. amounting to Rs. 5076/9/6 would be collected by Government and the amount credited in the treasury to the credit of the bank tin the sum of Rs. 40,000/ along with interest due thereon was liquidated. It was in consequence of this arrangement that the bank advanced the sum of Rs. 40,000/ to Sultan Mohd. After the loan had been taken and the pro note executed the bank opened an account in the name of Sultan Mohd. which started with a debit of Rs. 40,000 on November 5, 1941. Thereafter whatever sum became due to the bank as interest and incidental charges was debited to the account of Sultan Mohd. and the amount received from Government was credited to the account. This went on till 1953 when the jagir of Sultan Mohd. was resumed. The account of Sultan Mohd. with the bank showed a debit of Rs. 2,995/12/ on June 3, 1953. On June 4, 1953, the bank filed the suit out of which this appeal has arisen against the respondents as legal representatives of Sultan Mohd. for a sum of Rs. 31,025/1 1/ . To "plain the large discrepancy between the amount shown due in the account and the amount for which the suit was filed, the bank stated that a sum of Rs. 28,029/15/ had been erroneously credited to the account of Sultan Mohd. Consequently the erroneous entries with respect to this credit were corrected and after such correction the amount due came to be Rs. 31,025/1 I/ , for which the suit was filed. The suit was resisted by the respondents on various grounds, but in the present appeals we are concerned only with one ground, namely, that it was not open to the bank to reverse the credit entries in the account of Sultan Mohd. after they had been made in the manner in which it was done at the instance of the Accountant General of the State of Jammu and Kashmir. Therefore, the bank would be only entitled to recover Rs. 2,995/12/ , which was the amount shown as due from Sultan Mohd. in the account on June 3, 1953. Sup C.I./66 6 794 The main question that arose in the trial court therefore was whether the bank was entitled to reverse the entries with respect to Rs. 28,029/15/ in the manner in which that was done. The facts with respect to what happened in connection with this sum are not now in dispute and may be briefly narrated. The procedure which was followed, after money was realised by Government from the villages mentioned in the Council Order of October 28, 1941, was that after deducting the collection charges, the amount used to be credited in the State 's accounts and thereafter transferred by Government to the bank for credit to the account of Sultan Mohd. The transfer used to be made by hundis or treasury bills and on receipt of necessary hundis or treasury bills the bank used to credit the amount shown in them to the account of Sultan Mohd. It appears however that for about five years what happened was that hundis or treasury bills used to be sent to the bank both by the treasury and by the Accountant General with the result that for this period double the amount realised by Government was credited to the account of Sultan Mohd. on the basis of the hundis or treasury bills sent to the bank. In consequence, there was an over payment by Government to the bank to the tune of Rs. 28,029/15/ and this over payment was credited to the account of Sultan Mohd. in the bank. This mistake was realised by the Accountant General after about five years and thereupon the Accountant General asked the bank to reverse the entry and debit this amount to the account of Sultan Mohd. Apparently, the bank was unwilling to do so and it appears that the bank was then threatened that if the bank did not do so the amount would be realised from the subsidy given to the bank by Government. The bank thereupon reversed the entries and debited this amount to the account of Sultan Mohd., with the result that the figure of Rs. 2,995/12/ shown as debit balance against Sultan Mohd. was increased by this sum. The trial court held that the amount was paid twice over by mistake and therefore the bank was entitled to reverse the entries at the instance of the Accountant General without reference to Sultan Mohd. It therefore decreed the suit in full. The respondents then went in appeal to the High Court and contended that the entries could not be reversed in this manner by the bank without the consent of Sultan Mohd. The High Court accepted this contention and rejected the argument on behalf of the appellant that the bank was justified under section 72 of the Indian Contract Act, No. 9 of 1872, to reverse the entries. The High Court therefore allowed the appeal and disallowed the claim of the bank for Rs. 28,029/15/ and decreed the suit for the balance (namely, Rs. 2,995/12/ ). Thereupon the appellant obtained certificates from the High Court in both cases, and that is how the matter has come before us. 796 of the third person, who is a constituent of the bank, the money becomes the money of the constituent, and it is not open to the bank in such circumstances to reverse the entry of credit made in the account of the constituent and in effect pay back the money to the person who had deposited it even though might if have been deposited by mistake. As soon as the money is credited into the account of the constituent, even though the person paying in may have paid it by mistake, it becomes the money of the constituent, and the bank cannot pay it back to the person who paid it to the account of the constituent on his representation that it was paid by mistake, without obtaining the consent of the constituent. As we have already said the legal position is that for the purpose of payment, Government was the agent of Sultan Mohd. and whatever money was paid to be credited to the account of Sultan Mohd even though it was paid through Government, became his money and it could not be paid out of his account which is in substance the effect of reversing the entries without his consent. Section 72 could certainty have been availed of by Government against Sultan Mohd and the Government could have sued Sultan Mohd for return of the money which had been paid by mistake into his account. But the Government could not ask the bank to reverse the entries and thus in effect ask it to pay out the money from the account of Sultan Mohd into which it had been deposited and the bank could not do so without taking the consent of Sultan Mohd. Further though Government was the agent of Sultan Mohd for the purpose of payment of the money for liquidating the debt, the Government had no further authority on his behalf to ask the bank to pay back any sum once it had been credited into his account by Government. That could only be done on the authority of Sultan Mohd. and there was no authority in this case for paying back the sum paid in by mistake to Government, for the reversal of the entries in substance amounted to this. It has been urged that on this view the bank would not be able to correct any mistake in the account of any constituent. 'Mat is not so. If, for example, a bank credits a cheque in favour of A by mistake into the account of B, the bank can always correct that mistake, for it had received the money on behalf of A. Similarly if the bank receives (say Rs. 5,000/ on behalf of A from some person, but by mistake enters Rs. 50,000/ in as account, the bank can always correct that entry and mention the correct sum received. But the present case is very different from corrections of such mistakes. Here the bank had received certain moneys on behalf of Sultan Mohd. through treasury bills or hundis. There is no dispute that money was received for credit to the account of Sultan Mohd. and was correctly credited to that account. There was therefore nothing which the bank could correct, for the bank had 795 The only question in these circumstances is whether the bank was justified in reversing the entries and debiting the account of Sultan Mohd with this sum. Now the legal position so far as this payment is concerned was this. The bank had advanced the money to Sultan Mohd. and an account was opened in his name on November 5, 1941 with a debit entry of Rs. 40,000/ . Into this account the bank went on debiting interest and incidental charges due to it from Sultan Mohd. It also credited this account with the amounts received from Government through hundis or treasury bills. Clearly therefore though the amounts to be credited to the account of Sultan Mohd. used to come by treasury bills or hundis from Government they were amounts received by the bank on behalf of Sultan Mohd. to be credited to his account, and the Government was agent of Sultan Mohd. for the purpose of depositing the income from villages, management of which was taken over by Government under the Council Order, in order to liquidate the loan taken by Sultan Mohd. from the bank. The bank when it reversed the entries made no reference to Sultan Mohd. and did not take his consent thereto. In these circumstances the contention of the respondents is that it was not open to the bank to reverse the entries and thus saddle Sultan Mohd. with the liability for this sum after it had been credited into his account on the basis of hundis or treasury bills received by the bank from Government. We are of opinion that this contention of the respondents is correct, and the High Court was right in the view it took of the legal position. It is true that on the facts shown there was double payment for a certain period due to mistake on the part of Government. The question however is whether it was open to the bank to reverse the entries in the manner it did without reference to Sultan Mohd. It has not been and cannot be disputed that it is not open to the bank to debit the account of a constituent like Sultan Mohd. with any sum without the, authority of the constituent. What is however contended on behalf of the appellant is that Govern ment paid the sum twice over by mistake and it was entitled to ask the bank to return the money paid by mistake and reliance in this connection is placed on section 72 of the Contract Act. There is no, doubt that section 72 of the Contract Act provides that a person to whom money has been paid or anything delivered by mistake or under coercion must repay or return it. That section in our opinion will only apply when we are dealing with a case of two persons one paying the money and the other receiving the money on behalf of the person paying it. In such a case if the payment is made by mistake the person receiving the money must return it. But section 72 in our opinion has no application to a case where money is paid by a person to a bank with instructions that it should be deposited in the account of a third person who is a constituent of the bank. 'As soon as the money is so deposited in the account 797 made no mistake in making the entries. The bank in our opinion in not concerned with any mistake made by the Accountant General or the treasury in sending the amounts to the bank for the credit of the same to the account of Sultan Mohd. If the Accountant General or the treasury had made any such mistake it was open to them to recover the amount paid in by mistake from Sultan Mohd. But the bank could not reverse the entries and thus pay out money from the account of Sultan Mohd. without his authority. It is obvious that the bank hesitated to reverse the entries and only did it on the threat that the amount would be deducted from the subsidy paid to the bank by the Government. We have no doubt that the High Court was right that in such circumstances where the amount had been paid even though by mistake into the account of a constituent of the bank it was not open to the bank to reverse the entries at the instance of the person paying in the money into the constituent 's account on the ground that the payer had made a mistake. We agree with the High Court that section 72 has no application to the facts of this case. Learned counsel 'for the appellant has referred us to Imperial Bank of Canada vs Bank of Hamilton (1) in this connection. We are of opinion that that case has no application to the present cases, for the facts therein were different. The payment had been made by one bank to another bank by mistake; there is nothing to show that the money had been paid into a constituent 's account and thereafter any entry had been reversed in that case. We are therefore of opinion that the appeals must fail. They are hereby dismissed. As the respondents in C.A. 702 did not appear, we pass no order as to costs in that appeal.

IN-Abs

S took a loan from the appellant bank on the strength of an arrange merit whereby the State Government of Jammu and Kashmir would repay it in instalments out of the land revenue to be collected by it from S 's lands. Such payments on behalf of the Government were mistakenly made each year both by the Accountant General and by the Treasury so that the amount credited by the bank in S 's account represented an over payment by the State. When the Accountant General realised the mistake he asked the bank to reverse the relevant entries in S 's account so as to cancel the over payment, which the bank after initial objection, did. Thereafter, on the basis of the reversed entries the bank filed a suit for the recovery of its debt. It was objected by the respondents (successors in interest to S) that it was not open to the bank to reverse the credit entries in the account of S after they had been made in the manner it was done. The trial Court held that the amount was paid twice over by mistake and therefore the bank was entitled to reverse the entries at the instance of the Ac countant General without reference to section The High Court however, in appeal, rejected the argument on behalf of the bank that section 72 of the Indian Contract Act allowed it to reverse the entries. In appeal to this Court, HELD : Section 72 of the Indian Contract Act will only apply when it is a case of two persons one paying the money and the other receiving the money on behalf of the person paying it. The section has no application where money is paid by a person to a bank with instructions that it should be deposited in the account of a third person who is a constituent of the bank. [795 G] In the present case, for the purpose of payment, Government was the agent of S and whatever money was paid to be credited to the account of S,, even though it was paid through Government, became his money and it could not be paid out of his account which was in substance the effect of reversing the entries, without his consent. [796 C] Imperial Bank of Canada vs Bank of Hamilton, , distinguished.

Appeal No. 127 of 1966 Appeal from the judgment and order dated December 11, 1962 of the Calcutta High Court in Income tax Reference No. 47 of 1962. section T. Desai, A. N. Kirpal and R. N. Sachthey, for the appellant. A. K. Sen and B. P. Maheshwari, for the respondent. The Judgment of the Court was delivered by Bhargava, J. This appeal arises out of proceedings for registration of the firm, Juggilal Kamalapat, Calcutta, under section 26A ,of the Income Tax Act (hereinafter referred to as "the Act") for the assessment year 1943 44. Prior to this assessment year, the three Singhania brothers, Sir Padampat Singhania, Kamiapat Singhania and Lakshmipat Singhania, were carrying on a hosiery business in the name of Messrs. Juggilal Kamalapat with Head Office at Kanpur and a branch at Calcutta. On November 29, 1939, these three brothers executed a deed of partnership, by which one Jhabbarmal Saraf was taken in as a partner, and under this deed, all the four partners had equal shares. On October 27, .1941, the three brothers executed a trust deed known as the Kamla Town Trust, the principal object of which was the welfare of the employees of Juggilal Kamalapat Cotton Spinning and Weaving Mills Ltd. Under this deed, the three brothers became the first trustees. On December 2, 1942, a Deed of Relinquishment was executed by the three brothers, relinquishing their rights and claims to all the properties and assets of the firm, Juggilal Kamalapat, in favour of Jhabbarmal Saraf and of themselves in the capacity of the three first trustees of the Kamla Town Trust. This relinquishment deed purported to recognise an earlier oral relinquishment which was stated as having been operative with 786 effect from March 26, 1942. On December 1, 1942, a Partnership Deed was executed between Jhabbarinal Saraf and the three trustees, by which they purported to constitute a partnership firm taking effect from March 27, 1942, the two partners in the firm being Jhabbarmal Saraf and the Kamla Town Trust represented by these three trustees. The shares of the two partners in this partnership were: Kamla Town Trust . As. /12/ , and Jhabbarmal Saraf. As. The firm, Juggilal Kamalapat, which had been carrying on the business of hosiery, owned both movable and immovable properties at Belur near Calcutta. The immovable properties consisted of lands and buildings constructed for the use of the factory for manufacturing hosiery, and they were shown in their balance sheet as properties belonging to the firm. The firm had also been showing expenses incurred for maintaining or making additions or alterations to these buildings in their accounts and had been claiming depreciation in respect of them. It was in these circumstances that the new partnership, purporting to consist of the Kamla Town Trust and Jhabbarmal Saraf, applied for registration under section 26A of the Act for the assessment year 1943 44. The Income tax Officer rejected this claim and, in doing so, also took notice of the fact that a sum of Rs. 50,000/ had been introduced into this partnership firm by the Trust. The reason given by the Income tax Officer for not accepting the registration need not be mentioned here, because that reason was not accepted by the Tribunal and was not urged before the High Court or before this Court on behalf of the Commissioner. On appeal, the Appellate Assistant Commissioner upheld the order of the Income tax Officer for reasons given by him which were different from those given by the Income tax Officer. Those reasons are again immaterial because those reasons were not accepted by the Tribunal or the High Court and have not been relied upon before us. The Income tax Appellate Tribunal upheld the order rejecting the application for registration under section 26A on the main ground that the Relinquishment Deed dated 2nd December 1942, being an unregistered document, could not legally transfer rights and title to the immovables owned by the firm in favour of the Kamla Town Trust, and that the transfer of the immovable properties being thus legally ineffective and they being not separable from the other business assets, the entire business of the firm was not legally transferred in favour of the Kamla Town Trust. Two other reasons were also given that the constitution of the new firm was not notified to any of the Banks with which the old firm was dealing, and the new partnership was not got registered with the Registrar of Firms till May, 1946. On these facts, at the request of the respondent firm, Juggilal Kamalapat, the following question was referred by the Tribunal or opinion to the Calcutta High Court: 787 "Whether on the above facts and in the circumstances of this case, the partnership, as evidenced by the Deed of 1 st December 1942, legally came into existence and as such should be registered?" When this reference came up before the High Court on two different occasions, the High Court sent back the case for submission of further statements of the case to the Tribunal, because the High Court felt that facts, necessary to hold whether the respondent firm claiming registration was a genuine firm or not, had not been properly found by the Tribunal in its appellate order. On the first occasion, when submitting the supplementary statement of the case, the Tribunal purported to submit two different questions in lieu of the question which had been already submitted for opinion to the High Court. The two questions thus newly suggested were: "(1) Whether in the facts and circumstances of this case, can the non registration of Relinquishment Deed invalidate the transfer of the business assets to the new partnership ?, and (2)Can the registration application be rejected merely on the ground that the business assets were not legally transferred to the new partnership ?" The High Court disposed of the reference by giving the following answer: "Regard being had to the admissions made on behalf of the department, the facts and circumstances mentioned in paragraph 6 of the statement of case dated 13th March 1952 do not show that there was any legal flaw in the consti tution of the partnership firm as evidenced by the deed of 1st December, 1942. Upon such evidence, it must be concluded that it did come into existence and there is no impediment to its registration under Section 26A of the Income tax Act. It is made clear that the question itself postulates the facts and circumstances and therefore, the conclusion is based upon them. In view of the facts in this case, there will be no order as to costs. " This appeal has been brought up by the Commissioner of Income tax against this answer returned by the High Court on certificate under section 66A(2) of the Act. It appears from the judgment delivered by the High Court that when the reference came up before it, an argument was raised on behalf of the Commissioner of Income tax that the Tribunal had recorded a finding of fact that the firm seeking registration, consisting of the Kamla Town Trust and Jhabbarmal Saraf, was not a genuine firm and that this should be the answer returned by the 788 High Court to the Tribunal. It was in view of this point raised before the High Court that the High Court considered it necessary to remand the case twice to the Tribunal to ask for supplementary .statements of the case under section 66(4) of the Act. At the final hearing, however, the High Court held that it could not be accepted that the Tribunal had, as a question of fact, recorded the finding that this firm seeking registration was not genuine and had never come into existence, and, thereupon, proceeded to deal with the question referred as a question of law so as to determine whether the firm had come into existence as a legally valid firm. In this appeal before us, again, it was urged by Mr. section T. Desai on behalf of the Commissioner that the High Court was wrong in holding that it was not bound to return the answer to the Tribunal that the partnership seeking registration was not genuine in fact. In our opinion, the question sought to be raised on behalf of the Commissioner should not have been allowed to be raised by the High Court even at the earliest stage, and that it was the error .committed by the High Court in entertaining this question that has resulted in unnecessary proceedings and consequent delay. When the case first came up before the High Court, the question that was referred in the statement of the case was, as we have mentioned above, whether the partnership legally came into existence and, as such, should be registered. The existence of a firm could be challenged on two alternative grounds. One was that, in fact, on the evidence, it could not be held that such a firm had at all been constituted and had come into existence. The other was that even though it purported to come into existence as a fact, it could not claim to be a valid partnership because of some legal defect, or, in other words, whether its existence was valid in law. On the face of it, the question that was referred to the High Court for opinion was the second question and not the first one. The first question, in fact, could not have been referred to the High Court at all for opinion, because that would be a pure question of fact on which the decision of the Tribunal would be final and no reference to the High Court would lie under section 66. A reference to the High Court lies only on a question of law. The High Court, when requested to answer the question referred in the first statement of the case, should, therefore, have confined itself to the legal aspect of the existence of the partnership and should not have entered at all into the question whether the partnership had come into existence in fact or not. The Tribunal which had passed the appellate order in these proceedings consisted of two Members, and the first statement of the case was submitted by those very Members. It is clear that they themselves, when making the reference to the High Court, were of the view that they had not anywhere recorded a finding that the firm had not come into existence in fact, because, if they had come ,to such a finding, no question of law could possibly have been 789 referred by them to the High Court. The existence in law of a firm, which does not exist in fact, could not possibly be found by the High Court on the question referred. Consequently, we must reject the submission made on behalf of the Commissioner that, in this case, the High Court should have gone into the question of existence of the respondent firm as a question of fact; and in this appeal also, we must proceed on the basis that the respondent firm did in fact come into existence, and that all that the High Court was called upon to decide was whether it also came into existence It appears to us that, in this case, the submissions that were made on behalf of the Commissioner before the High Court and which have been made before us have ignored the effect of the important relevant documents and have unnecessarily placed too much reliance on the Deed of Relinquishment. The Tribunal found that a Kamla Town Trust had been constituted of which the three Singhania Brothers were the Trustees. The Tribunal also found that a deed of partnership was executed so as to constitute the firm Juggilal Kamalapat, consisting of two partners, the Kamala Town Trust, represented by the three trustees, and Jhabbarmal Saraf. Their shares in the profits and losses were also specified in the deed of partnership. There was the further finding by the Income Tax Officer that the Kamla Town Trust, which entered into the partnership, actually introduced a sum of Rs. 50,000/ as its capital ill this partnership firm. On these facts by themselves, it should have been held that a valid partnership had come into existence. So far as the deed of relinquishment is concerned, learned counsel appearing on behalf of the Commissioner has not been able to show to us any provision of law, or any decision of a Court laying down that a deed of relinquishment executed by partners of a firm in respect of their share and interest in a firm required registration, in case the firm owned immovable properties. In this connection, learned counsel for the respondent firm brought to our notice a recent decision of this Court in Addanki Narayanappa and Another vs Bhaskara Krishnappa (dead) and thereafter his heirs, and Others(1) where the question that came up for consideration was whether the interest of a partner in partnership assets comprising of movable as well as immovable property should be treated as movable or immovable property for the purposes of section 17(1) of the . The Court upheld the view of the Full Bench of the Andhra Pradesh High Court in Addanki Narayanappa & Anr. vs Bhaskara Krishtappa & Ors. () Mudholkar, J., speaking for this Court held: "It seems to us that looking to the scheme of the Indian Act, no other view can reasonably be taken. The whole concept of partnership is to embark upon a (1) ; (2) I.L.R. 1959 A.P.p. 387 790 joint venture and for that purpose to bring in as capital money or even property including immovable property. Once that is done, whatever is brought in would cease to be the exclusive property of the person who brought it in. It would be the trading asset of the partnership in which all the partners would have interest in proportion to their share in the joint venture of the business of partnership. The person who brought it in would, therefore, not be able to claim or exercise any exclusive right over any property which he has brought in, much less over any other partnership property. He would not be able to exercise his right even to the extent of his share in the business of the partnership. As already stated, his right during the subsistence of the partnership is to get his share of profits from time to time as may be agreed upon among the partners and after the dissolution of the partnership or with his retirement from partnership of the value of his share in the net partnership assets as on the date of dissolution or retirement after a deduction of liabilities ,ties and prior charges. " On this basis, the ultimate decision was that a deed, evidencing the transfer of an interest of a partner in partnership assets, does not require registration even though the partnership assets are comprised of movable as well as immovable property. A Full Bench of the Lahore High Court in Ajudhia Pershad Ram Pershad vs Sham Sunder and Others( ') held that the interest in a partnership of a partner is to be regarded as movable property when it is sought to be dealt with under 0 . 21 r. 49, Civil Procedure Code, notwithstanding that at the time when it is charged or sold, the partnership assets include immovable property. The Deed of Relinquishment, in this case, was in respect of the individual interest of the three Singhania Brothers in the assets of the partnership firm in favour of the Kamla Town Trust, and consequently, did not require registration, even though the assets of the partnership firm included immovable property, and was valid without registration. As a result of this deed, all the assets of the partnership vested in the new partners of the firm. In the alternative, we think that, even if it had been accepted that this deed of relinquishment required registration, that would not lead to the conclusion that the partnership seeking registration was not valid and had not come into existence in law. The deed of relinquishment could, at best, be held to be invalid in so far as it affected the immovable properties included in the assets of the firm; but to the extent that it purported to transfer movable assets of the firm, the document would remain valid. The deed could clearly be divided into two separate parts, one relating to immovable properties, and the other to movable assets; and the part of the deed dealing with movable assets could not be held invalid for want (1) I.L.R 28 Lab. 791 of registration. A deed of relinquishment is in the nature of a deed of gift, where the various properties dealt with are always separable, and the invalidity of the deed of gift in respect of one item cannot affect its validity in respect of another. This view was expressed by the Madras High Court in Perumal Ammal vs Perumal Naicker & Anr.(1) A deed of relinquishment, or a deed of gift, differs from a deed of partition in which it is not possible to hold that the partition is valid in respect of some properties and not in respect of others, because rights of persons being partitioned are adjusted with reference to the properties subject to partition as a whole. In the case before us, therefore, the deed of relinquishment was valid at least in respect of movable properties, and the partnership seeking registration, thus, became owner of all the movable assets of the,partnership in addition to having contributed a sum of Rs. 50,0001 as capital investment in it. The Kamla Town Trust and Jhabbarmal Saraf constituted the partnership under a deed of partnership, which was properly executed, and in these circumstances, the partnership that came into existence was clearly valid in law. There is, therefore, no force in this appeal and it is dismissed with costs. V.P.S. Appeal dismissed. (1) I.L.R 44 Mad.

IN-Abs

Three brothers and J entered into a partnership business. The firm owned both movable and immovable properties. Later, the three brothers created a Trust, with themselves as the first three trustees. They also executed an unregistered deed of relinquishment by which they relinquished their rights in and claims to all the properties and assets of the firm, in favour of J. and of themselves in the capacity of trustees. A new partnership firm was constituted between J. and the Trust by means of a partnership deed which specified the shares of the two partners in the profits and losses. The Trust introduced a sum. of Rs. 50,000 as its capital in the new firm. For the assessment year 1943 44 the new firm applied for registration under section 26A of the Indian Income tax Act, 1922 but the Income tax Officer, Appellate Assistant Commissioner 'and the Appellate Tribunal rejected the application. The Tribunal relied mainly on the ground that the deed of relinquishment being unregistered could not legally transfer the rights and the title to the immovable properties owned by the original firm, to the Trust and that as the immovable properties were not separable from the other business assets there was no legal transfer of any portion of the business assets of the original firm in favour of the Trust. On a reference to the High Court, as to whether the new partnership legally came into existence and, as such, should be registered, it was contended on behalf of the Commissioner that the Tribunal had recorded a finding of fact that the firm seeking registration was not a genuine one and had never come into existence. The High Court, after calling for further statements, held that the Tribunal had not recorded any such finding of fact, that the firm did in fact come into existence, and that there was no impediment to its registration. in appeal to this Court, HELD : (i) The existence of a firm could be challenged on two alternative grounds; (a) that a firm had not come into existence at all, and (b) that though it came into existence in fact, its existence was not valid in law. In the present case it was only the second question that was referred to the High Court. The first could not at all be referred to the High Court as it would be a pure question of fact; and if the Appellate Tribunal had in fact recorded a finding of fact that the firm had not come into existence, the question of law referred to the High Court, would not arise at all. Therefore, the new firm did in fact come into existence. [788 E H] (ii)The new partnership between the Trust and J. was constituted under a deed which was property executed, was valid in law, and so the firm should be registered. [791 C D] 785 The deed of relinquishment was in respect of the individual interests of the three brothers in the assets of the original firm, in favour of the Trust, and consequently, did not require registration, even though the assets of that firm included immovable property. The deed was therefore valid without registration. [790 F] Addanki Narayanappa vs Bhakara Krishnappa, ; followed. Even if the deed of relinquishment required registration, it could only be invalid insofar as it affected immovable properties, but to the extent that it purported to transfer movable assets of the original firm, it would be valid. A deed of relinquishment is in the nature of a deed of gift where the various properties dealt with are separable. In the present case, therefore, the deed of relinquishment was valid at least in respect of movable properties, and the partnership seeking registration thus became owner of all the movable assets of the first partnership in addition to the Rs. 50,000 contributed as a capital investment by the Trust. [790 G; 791 A, C]

l Appeal No. 11 29 of 1965. Appeal from the judgment and order dated April 15, 16, 17, 1963 of the Bombay High Court in Wealth Tax Reference No. 2 of 1961. R.J. Kolah, N. D. Karkhanis and 0. C. Mathur, for the appellant. B. Sen, R. Ganapathy Iyer and R. N. Sachthey, for the res pondent. 769 The Judgment of the Court was delivered by Shah, J. For the assessment year 1957 58 the appellant Company claimed in proceedings for assessment of wealth tax that the following four amounts be deducted in the computation of its net wealth: (1)Rs. 29,44,421 in, respect of income tax liability relating to the assessment year 1957 58. This amount included Rs. 2,95,869 representing the last instalment of advance tax under section 18A in respect of which a notice of demand had been issued. (2)Rs. 3,70,083 in respect of business profits tax liability. (3) Rs. 20,23,500 in respect of proposed dividend. (4) Rs. 25,02,675 "on account of accrued liability for gratuity to workmen and staff as per the award of Industrial Court and Labour Appellate Tribunal. " The claim was rejected by the Wealth tax Officer. The Appellate Assistant Commissioner accepted the claim of the appellant Company in respect of the last instalment of the advance tax for which a notice of demand had been issued, and rejected the claim in respect of the rest. The Income tax Appellate Tribunal upheld the claim of the appellant Company in respect of the 1st, 2nd and the 4th items and rejected the claim in respect of the 3rd item. At the instance of the Commissioner, the following four questions were referred to the High Court of Judicature at Bombay under section 27(1) of the Wealth tax Act 27 of 1957: "(1) Whether on the facts and circumstances of this case the last instalment of advance tax in the sum of Rs. 2,95,869 paid by the assessee after the valuation date in accordance with the notice of demand dated 20 10 1956 is an admissible deduction under Sections 7(2) and 2(m) of the Wealth tax Act for the purpose of computation of the net wealth of the assessee for the assessment year 1957 58 ? (2)Whether on the facts and circumstances of the case in computing the net wealth of the assessee under Section 7(2) read with Section 2(m) of the Wealth tax Act the liability for income tax and business profits tax could be allowed as a deduction? (3) Whether on the facts and circumstances of the case the liability in the sum of Rs. 25,02,675 which arose as a result of the awards dated 28 10 1948, 28 11 1956 and 17 10 1954 before the valuation date or any part thereof is allowable as a deduction in determining the net wealth of the assessee under Section 7(2) read with Section 2(m) of the Wealth tax Act ? (4)Whether on the facts and circumstances of the case of the sum of Rs. 20,23,500 being the provision made for dividends and shown as a liability in the balance sheet of the assessee company could be allowed as a deduction in computing the net wealth of the assessee company?" At the hearing before the High Court, the fourth question was not pressed by the appellant Company. The High Court answered the first question in the affirmative, the second question in the affirmative insofar as it related to the estimated liability of business profits tax subject to verification by the Wealth tax Officer, and in the negative insofar as it related to the estimated liability of income tax. The third question was answered in the negative. In this appeal the Company challenges the correctness of the answers to the second part of the second question and the third question. The second question insofar as it relates to estimated liability for payment of income tax needs no detailed consideration, for the answer thereto will be governed by the judgment of this Court in Kesoram Industries and Cotton Mills Ltd. vs Commissioner of Wealth tax (Central, Calcutta( '). It was held by this Court in that case that liability to pay income tax was a present liability though the tax became payable after it was quantified in accordance with ascertainable data: there was therefore a perfected debt at any rate on the last day of the accounting year and not a contingent liability, and the amount of the provision for payment of income tax in respect of the year of account was a "debt owed" within the meaning of section 2(m) on the valuation date and was as such deductible in computing the net wealth. The view expressed by the High Court on the second question insofar as it relates to provision for income tax cannot therefore be sustained and that part of the question should be answered in the affirmative. There remains the third question. Counsel for the Company had conceded before the High Court that the liability to pay gratuity to the employees whose services were not terminated in the relevant year of account was merely contingent, since it arose on the happening of certain events such as death, physical incapacity, voluntary retirement, or resignation, and was on that account not a debt within the meaning of section 2(m) of the Act. But it was contended before the High Court that the present value of the liability for payment of gratuity was a permissible deduction in valuing the assets of the business of the assessee under section 7(2)(a) of the Act. The (1)[1966] 2 S.C.R. 688 : ; 772 2. On voluntary retirement or resignation of an employee After 15 years ' continuous service in the company 15 months ' salary. On termination of his service by the Company (a)After 10 years ' continuous service but less than 15 years ' service in the company 3/4th of one month 's salary for each year of service. (b)After 15 years ' continuous service in the company 5 months ' salary. A gratuity will not be paid to any employee who is dismissed for dishonesty or misconduct. " The right to obtain gratuity under the awards arises only when there is determination of employment and not before. The liability does not exist hi praesenti: it is contingent upon the determination of employment. This Court pointed out in Kesoram Industries & Cotton Mills ' case( ') at p. 703: 'debt is a sum of money which is now payable or will become payable in future by reason of a present obligation: debitum in praesenti, solvendum in futuro. ' The said decisions also accept the legal position that :a liability depending upon a contingency is not a debt in praesenti or infuturo till the contingency happened. But if there is a debt the fact that the amount is to be ascertained does not make it any the less a debt if the liability is certain and what remains is only the quantification of the amount. In short, a debt owed within the meaning of section 2(m) of the Wealth tax Act can be defined as a liability to pay in praesenti or in futuro an ascertainable sum of money. " Observations made by the High Court of Gujarat in Commis sioner of Wealth tax, Gujarat vs Ajit Mills Ltd.,(2) that deduction for an amount claimed on account of liability for gratuity for workers and employees based on awards of the labour courts and agreements will be admissible deductions in the computation of the net wealth are plainly obiter, and in our judgment are not correct. The decision of the House of Lords in Southern Railway of Peru Ltd. vs Owen (Inspector of Taxes) (3) that the assessee company (1) ; (3) ; : (2) 771 High Court rejected that contention. Counsel for the Company has in this appeal contended that no such concession as is recorded in the judgment of the High Court was made, and in any event, the concession being on a question of law was not binding upon the appellant Company. Section 2(m) at the material time provided: .lm15 " net wealth ' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than, (i)debts which under Section 6 are not to be taken into account; (ii)debts which are secured on, or which have been incurred in relation to any property in respect of which wealth tax is not chargeable under this Act; " By section 3 the wealth tax is charged for every financial year commencing on and from the first day of April, 1957 on the net wealth on the, corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule. Broadly speaking net wealth is the difference on the valuation date between the aggregate value computed in accordance with the provisions of the Act of the assets belonging to the assessee and the aggregate value of all the debts owed by the assessee. If there is no debt owed on the valuation date, it can obviously not be deducted in determining the net wealth which is liable to tax under the Wealth tax Act. Apart from the concession made by counsel for the Company there is little doubt on the plain terms of the awards that the liability to pay gratuity to the employees of the appellant Company on determination of employment is a mere contingent liability which arises only when the employment of the employee is determined by death, incapacity, retirement or resignation. The relevant terms of the awards dated October 28, 1948, November 28, 1956 and October 17, 1954 are as follows: "Gratuity should be paid. . on the following, scale: 1.On the death of an employee, while in service of the company or on his becoming physically or mentally incapacitated for further service one month 's salary for each year of service . . . 773 was entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately be payable as it had the benefit of the employees ' services during that year, provided the present value of the future payments could be fairly estimated, were a permissible deduction in the computation of income tax, have in our judgment no relevance in this case. In Southern Railway of Peru Ltd 's case( ') under the legislation of Peru a Company operating a railway was bound to pay its employees compensation on the termination of their services. The right to receive compensation arose on dismissal or on termination of the employment by the employer by proper notice, or on such termination by the death of the employee or on the expiry of the term of ' the employment. The compensation was an amount equivalent to one month 's salary at the rate in force at the date of determination for every year of service. The company claimed in the computation of taxable income, under the Income tax Act, 1918, to be entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately 'be thrown on it, calculating what sum would be required to be paid to each employee if he retired without forfeiture at the close of the year and setting aside the aggregate of what was required in so far is the year had contributed to the aggregate. It was held that the company was not entitled to make the deductions, but the company was entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately be payable as it had the benefit of the employees ' services during that year, provided the present value of the future payments could be fairly estimated. The question arose under the English Income tax Act of 1918. Lord MacDermott observed at p. 345: say that, in computing his taxable profits for a particular year, a trader, who is under a definite obligation to pay his employees for their services in that year ail immediate payment and also a future payment in some subsequent year, may properly deduct, not only the immediate payment, but the present value of the future payment, provided such present value can be satisfactorily determined or fairly estimated. " Similar observations were made in the judgment of Lord Radcliff. But the House in that case was concerned to determine the deductibility of the present value of a liability which may arise in future in the computation of taxable profits for the relevant year under the Income tax Act. The same considerations cannot, however, apply to a case under the Wealth tax Act, where the liability to pay wealth tax is charged upon the net wealth of an assessee. ; 774 In Commissioner of wealth tax, Gujarat vs New Rajpur Mills Ltd.( ') the assessee company claimed to deduct gratuity payable to employees under an agreement entered into with the labour associations before the valuation date. The Court in that case observed that the liability was not a debt owed by the assessee on the valuation date since the gratuity was not payable on the valuation date, but was payable only on fulfilment of the ,contingencies set out in those agreements. But the Court proceeded to observe that since contingent liabilities can be taken into account while computing the net wealth of the asseessee under section 7(2)(a) ,the liability for payment of gratuity under such agreements would 'have to be estimated and the estimated value of the contingent liability would be a permissible deduction in computing the net wealth of the assessee. In our view the first observation of the Court :is correct, but the second is not. We will presently set out the reasons for that view. The alternative plea that under section 7(2)(a) of the Act the appellant Company is entitled to claim deduction even if it cannot do so ,under section 2(m) has, in our judgment, no force. Section 7 deals with the manner of valuation of assets. It provides insofar as it is material: "(1) The value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth tax Officer it would fetch if sold in the open market on the valuation date. (2)Notwithstanding anything contained in subsection (1), (a)where the assessee is carrying on a business for which accounts are maintained by him regularly the Wealth tax Officer may, instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustments therein as the circumstances of the case may require;" Section 7 falls in Ch. II which deals with the charge of wealth tax and assets subject to such charge: it is intended to provide machinery for determination of the value of assets. It was observed in the minority judgment in Kesoram Industries & Cotton Mills ' case(2) at p.717 : "By the first sub section the Wealth tax Officer is authorised to estimate, for the purpose of determining the (1) (2) ; : ; 775 value of any asset, the price which it would fetch, if sold in the open market on the valuation date. But this rule in the case of a running business may often be inconvenient and may not yield a true estimate of the net value of the total assets of the business. The legislature has therefore pro vided in sub section (2)(a) that where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth tax Officer may determine the net value of the assets of the business as a whole, having re gard to the balance sheet of such business as on the valua tion date and make such adjustments therein as the circum stances of the case may require. But the power conferred upon the tax officer by section7(2) is to arrive at a valuation of the assets, and not to arrive at the net wealth of the assessee. Section 7(2) merely provides machinery in certain special cases for valuation of assets, and it is from the aggregate valuation of assets that the net wealth chargeable to tax may be ascertained. The power conferred upon the tax officer to make adjustments as the circumstances of the case may require is also for the purpose of arriving at the true valueof the assets of the business. Sub section (2)(a) of section 7 contemplates the determination of the net value of the assets having regard to the balance sheet and after making such adjustment as the circumstances of the case may require. It does not contemplate determination of the net wealth, because net wealth can only be determined from the net value of the assets by making appropriate deductions for debts owed by the assessee. The argument raised by counsel for the assessee is that substantially section 7(2) is a definition section, which extends, for the purposes of the Act, the definition of the 'net wealth ' of assessees carrying on business. There is no warrant for this argument in the language used in section 7(2). Counsel was unable to suggest any rational explana tion why, if what he contends was the intention, Parliament should have adopted this somewhat roundabout way of incorporating a definition of net wealth in a section dealing with valuation of assets. " The majority of the Court did not express any opinion on this question. From the terms of section 2(m) it appears clear that the tax officer must first determine the aggregate value of all the assets belonging to the assessee on the valuation date, and then determine the aggregate value of all the debts owed by the assessee on the valuation date. Excess of the aggregate value of the assets over the debts is the net wealth. The aggregate value of the assets must be 776 computed in accordance with the provisions of section 7. But in the aggregation of the value of all the debts owed by the assessee on the valuation date, section 7 has no operation. In holding in New Rajpur Mills ' case() that a contingent liability can be taken into account while computing the net wealth of the assessee under section 7(2) (a), in our judgment, the true function of section 7(2)(a) of the Wealth tax Act was not appreciated. Section 7 does not deal with the computation of net wealth. It deals with the computation of the aggregate value of the assets. Under section 7 the Wealth tax Officer is competent, where the assessee is carrying on business of which accounts are maintained regularly, to determine the net value of the assets of the business as a whole. But in doing so he determines the value of the assets of the business as a whole, and not the net wealth of the business. The appeal therefore is partially allowed. Insofar as the claim relates to deduction of estimated income tax for the assessment year, the answer wilt be in favour of the appellant company, and in so far as the claim relates to deduction of gratuity payable to the employees of the company, the answer will be in the negative. There will be no order as to costs in this appeal. V.P.S. Appeal allowed in part.

IN-Abs

In the computation of the net wealth of the appellant company under section 2(m) of the Wealth Tax Act 1957, two deductions were claimed the company : (i) the amount of estimated income tax for the assessment year and (ii) the amount of gratuity payable by the company to its employees under certain industrial awards. HELD : The first claim was allowable but not the second. [776 D] Under section 2(m) of the Act, the Wealth Tax Officer must first determine the aggregate value of all the assets belonging to the assessee on the valuation date, and then determine the aggregate value of all the debts owed by the assessee on the valuation date. Excess of the aggregate value of the assets over the debts is the net wealth. But on the terms of the awards the liability to pay gratuity did not exist in present : it was contingent upon the determination of employment by death, incapacity, retirement or resignation of the employee, and not before. Therefore, it was not a debt owned by the assessee on the valuation date. [772 C D; 775 H] Nor could the appellant company claim the deduction under section 7(2)(a) of the Act. The aggregate, value of the assets must be computed in accordance with the provisions of section 7. But in the aggregation of the value of all the debts owned by the assessee on the valuation date, section 7 has not operation. Section 7 does not deal with the computation of net wealth but only with the determination of the not value of the assets as a whole. [776 A C] Kesoram Industries and Cotton Mills Lid. vs Commissioner of Wealth Tax (Central) (Calcutta), ; , followed. Observations Contra in Commissioner of Wealth Tax, Gujarat vs Ajit Mills Ltd. and Commissioner of Wealth Tax Gujarat vs New Rajpur Mills , disapproved. Southern Railway of Peru vs Owen (Inspector of Taxes) ; , explained.

Appeal No. 674 of 1965. Ml 7 Sup. C. I/66 761 762 Appeal by special leave from the judgment and order dated March 14, 1962 of the Madras High Court in T. C. No. 209 of 1959. B. Sen and R. N. Sachthey, for the appellant. A. K. Sen, and R. Ganapathy Iyer, for the respondent. The respondent is a public limited company incorporated under the Indian Companies, Act, 1913 in the year 1939 and was carrying on the business of manufacture of absorbent cotton wool. In March 1955, the Board of Directors resolved to establish a new spinning unit under the name of Sudarsanan Spinning Mills for which a licence was obtained from the Government of India under the Industries (Development and Regulation) Act, 1951 in August 1955. The respondent placed orders for purchase of necessary spinning machinery and plant in the months of January and February, 1956. The construction of factory buildings was taken in hand in March, 1956, and these constructions were completed by December, 1957. The erection of the spinning machinery and the plant in the buildings was completed in several stages commencing from June, 1957. A licence from the Inspector of Factories for working the factory was obtained in June, 1958. The statement of the case further mentioned that the time given to complete the project was extended by the Government up to 17th March, 1959. The respondent was assessed to wealth tax for the assessment year 1957 58, and in that year the respondent claimed that, in computing the wealth on the valuation date which was 30th September, 1956, an amount of Rs. 1,43,727 should be deducted as being the amount laid out in setting up this new unit. The Wealth Tax Officer disallowed the claim on the ground that the unit was set up prior to the date on which the Wealth Tax Act (hereinafter referred to as "the Act") came into force, i.e., 1st April 1957. On the same basis, the Appellate Assistant Commissioner and the Income tax Appellate Tribunal upheld that order. Thereupon, at the request of the respondent, the following question of law was referred for opinion of the High Court of Madras: "Whether the aforesaid asset of Rs. 1,43,727 is exempt under section 5(1)(xxi) read with the second proviso thereunder of the Wealth tax Act?" The High Court answered the question in favour of the respondent, and consequently, this appeal has been brought up to this Court by the Commissioner of Wealth Tax, Madras, by special leave. The question that fell for determination depended on the interpretation of section 5(1)(xxi) of the Act read with the second proviso to that clause which are reproduced below: 763 .lm15 "5(1)(xxi) that portion of the net wealth of a company established with the object of carrying on an industrial undertaking in India within the meaning of the Explanation to clause (d) of section 45, as is employed by it in a new and separate unit set up after the commencement of this Act by way of substantial expansion of its undertaking: Provided that (a) (b) Provided further that this exemption shall apply to any such company only for a period of five successive assessment years commencing with the assessment year next following the date on which the company commences operations for the establishment of such unit. " It has been urged before us by learned counsel for the Commissioner that the main provision of clause (xxi) should be interpreted in conjunction with the second proviso so as to give a harmonious construction to both parts of the provision with which we are concerned. Relying on this principle, he urged that we should hold that a new and separate unit is set up only when the company commences operations for the establishment of such unit. He relied on the principle stated by Maxwell in his book 'On Inter pretation of Statutes ' 11th Edn. at P. 155 that there is no rule that the first or enacting part is to be construed without reference to the proviso. "The proper course is to apply the broad general rule of construction, which is that a section or enactment must be construed as a whole, each portion throwing light, if need be, on the rest." "The true principle undoubtedly is that the sound interpretation and meaning of the statute, on a view of the enacting clause, saving clause, and proviso, taken and construed together is to prevail. " The view taken by the High Court was challenged on the ground that the High Court had interpreted the principal clause without giving full effect to the language of the proviso. The High Court held that unless a factory is erected and the plants and machinery installed therein, it cannot be said to have been set up. The resolution of the Board of Directors, the orders placed for purchasing machinery, licence obtained from the Government for constructing the machinery, are merely initial stages towards setting up, however necessary and essential they may be to further the achievement of the end. It is not, however, the actual functioning of the factory or its going into production that can alone be called setting up of the factory. The setting up is perhaps a stage anterior to the commencement of the factory. Thereafter, 764 the High Court referred to a decision of the Bombay High Court in Western India Vegetable Products, Limited vs Commissioner of Income tax, Bombay City,( ') and on its basis, concluded that the proper meaning to be assigned to the expression "set up" in section 5(1)(xxi) would be "ready to commence business. " We are unable to agree with the learned counsel for the Commissioner that in arriving at this view, the High Court committed any error. A unit cannot be said to have been set up unless it is ready to discharge the function for which it is being set up. It is only when the unit has been put into such a shape that it can start functioning as a business or a manufacturing Organisation that it can be said that the unit has been set up. The expression used in the proviso, under which the period for which the exemption is available is to be deter mined, is not the same as used in the principal clause. In the proviso, the period of five successive years of exemption has to commence with the assessment year next following the date on which the company commences operations for the establishment of the unit. Operations for the establishment of a unit, from the very nature of that expression, can only signify steps that have to be taken to establish the unit. The word "set up" in the principal clause, in our opinion, is equivalent to the word "established", but operations for establishment cannot be equated with the establishment of the unit itself or its setting up. The applicability of the proviso has, therefore, to be decided by finding out when the company commenced operations for establishment of the unit, which operations must be antecedent to the actual date on which the company is held to have been set up for purposes of the principal clause. This is also the meaning that the Bombay High Court derived in the case of Western India Vegetable Products Ltd.(,) where that Court was concerned with the interpretation of the expression "set up" as used in section 2(l1) of the Income tax Act. That Court held: "It seems to us that the expression 'settling up ' means, as is defined in the Oxford English Dictionary, 'to place on foot" or 'to establish ', and is contradistinction to 'commence. ' The distinction is this that when a business is established and is ready to commence business, then it can be said of that business that it is set up. But before it is ready to commence business it is not set tip. " This view was expressed when that Court was considering the difference between the meaning of the expression "setting up a business" and " commencing of a business. " In the case before us, the proviso does not even refer to commencement of the unit. The criterion for determining the period of exemption is based on the commencement of the operations for the establishment of the unit. These operations for establishment of the unit cannot be simultaneous with the setting up of the unit, as urged on behalf of the Commis sioner, but must precede the actual setting up of the unit. In fact, (1)26 I.T.R 15 1. 765 it is the operations for establishment of a unit which ultimately culminate in the setting up of the unit. On this interpretation, it is clear that in this case, the claim put forward by the respondent for exemption has been rightly held to be allowable by the High Court. In the statement of the case and in its appellate judgment, the Tribunal did not specifically record any finding as to the date when the unit was ready to go into business and to start production. In the appellate order, it was mentioned that according to the respondent, the unit was set up only when the Inspector of Factories issued a licence to the respondent for working the factory, which was in June, 1958. In the, statement of the case, the facts recited show that the construction of the factory buildings was completed by December, 1957 and the erection of the spinning machinery and plant was completed in several stages commencing from June, 1957. On these facts, the High Court, and we consider rightly, proceeded on the basis that the unit was completed and became ready to go into business only after 1st April, 1957, when the Act had already come into force. Consequently, the condition laid down in the principal clause of section 5(1)(xxi) was satisfied, and the company became entitled to exemption in respect of the value of the assets used up in setting up this unit. Learned counsel for the Commissioner, however, challenged the right of the respondent to claim this exemption on another ground, viz., that the exemption was claimed in respect of money laid out in a period which was not covered by the period envisaged in the second proviso. It was urged that if it be held that the unit was set up after the Act had come into force on the 1 st April, 1957, it must also be held that the operations for the establishment of the unit had been commenced by the company almost simultaneously with the unit having been set up, and that date would, therefore, be a date subsequent to the assessment year 1957 58 in which year the exemption was claimed. This is a question which we do not think can be legitimately raised on behalf of the Commissioner at this stage. The only contention before the Tribunal on behalf of the Commissioner was that the operations for the establishment of the unit had been commenced by the respondent before the Act came into force, and that it should be held that the unit was also set ;up at the same time when those operations were commenced. There was no contention at any stage that the operations for the establishment of the unit were commenced at a subsequent stage. In fact, it was only for the purpose of urging that the principal clause was not applicable to the case of the respondent that the position was taken up on behalf of the Commissioner that the operations for establishment of the unit had been commenced before 1st April, 1957, and the unit must be held to have been set up at the same time 766 when those operations were commenced. That submission, as we have indicated above, has no force. In any case, the judgments passed by all the Wealth tax Authorities show that it was at no stage in dispute that the operations for establishment of the unit had been commenced by the respondent prior to 1 st April, 1957. Para 5 of the statement of the case mentions that the the wealth tax officer disallowed the claim on the ground that unit was set up prior to 1st April, 1957. The Appellate Assistant Commissioner also in his judgment said: "In this view of the matter, the appellant set up the undertaking even prior to 1st April, 1957 as operations were carried out prior to that date for the establishment of the undertaking. The operations consisted of the seeking of permission from the Government to install the unit, and placing of orders with manufacturers of machinery and advancing of moneys towards the purchase of machinery. " The Tribunal also disallowed the claim on the basis that the respondent commenced operations for setting up the unit earlier than 1st April, 1957. It does not appear to be necessary for us to express any opinion as to the particular stage at which it can be said that a company commences operations for the establishment of a unit. In the present case, the Tribunal proceeded on the basis that, whatever be the exact date of commencement of the operations for establishment of this unit by the respondent, it was certainly before 1st April, 1957; and we consider that that fact, by itself, is sufficient to entitle the respondent to claim the exemption. The Commissioner cannot, at this stage, be allowed to raise a new question and ask this Court to decide that the date of commencement of the operations for establishment of the unit by the respondent was different from that accepted by the Tribunal. That question was not raised and dealt with by the Tribunal. It is not even a question that might have been raised before the Tribunal and the Tribunal might have failed to deal with, nor is it a question which may not have been raised before the Tribunal and, yet, was dealt with by it. On the principle laid down by this Court in Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co., Ltd.,( ') such a question could not be canvassed before the High Court and cannot be allowed to be raised in this Court. The question referred to the High Court had to be answered on the basis that the respondent did commence operations for establishing this unit before 1st April, 1957; and the further finding of fact recorded by the Tribunal is that a sum of Rs. 1,43,727/ had been invested in setting up the unit by 30th September, 1956, which was the valuation date for the assessment year 1957 58. The very first assessment year after the commencement of the operations for establishment of the unit was this assessment year 1957 58, In the Wealth Tax Act, assessment (1) ; I.T.R. 589. 767 year has been defined to mean the year for which tax is chargeable under section 3 of that Act. Since the Act came into force on the 1st April, 1957, the financial year 1957 58 was the first assessment year for which tax became chargeable, and consequently, for purposes of the second proviso to section 5(1)(xxi), the assessment year following the commencement of operations for establishment of the unit in the case of any company which commenced the operations any time before the 1st April, 1957, will be the assessment year 1957 58. Prior to the year 1957 58, there was no assessment year as defined under the Act, and consequently, the first assessment year for which exemption could be claimed was this assessment year 1957 58. The respondent which had commenced operations for establishment of its new unit prior to 1st April, 1957, was rightly allowed exemption in respect of the amount that had been invested by it upto the relevant valuation date. The answer returned by the High Court was, therefore, correct. The appeal fails and is Appeal dismissed. dismissed with costs.

IN-Abs

The respondent Company was assessed to wealth tax for the assessment year 1957 58 and the respondent claimed deduction of an amount laid out for setting up a new unit. The licence for setting up the new unit was granted in 1955; the construction of the factory building was completed by December 1957; the erection of the machinery and plant was completed in several stages commencing from June 1957; the licence for working the factory was obtained in June 1958; and time given to complete the project also was extended by Government up to March 17, 1959. The Wealth Tax Officer disallowed the claim on the ground that the unit was, set up prior to the date on which the Wealth Tax Act came into force, ie., April 1, 1957. This order was upheld in appeals. But in reference, the High Court answered the question in favour of the assessee, for, it proceeded on the basis that the unit was completed and became ready to go into business after the Act had come into force. HELD : The assessee was entitled to the claim as it satisfied the condition laid down in cl. (xxi) of section 5(1) of the Act. The criterion for determining the period of exemption is based on the commencement of the operations for establishment of the unit. These operations for establishment of the unit cannot be simultaneous with the setting up of the unit, but must precede the actual setting up of the unit. [1764 G H] The word "set up" in clause (xxi) of section 5(1) of the Act, is equivalent to the word "established" but operations for establishment cannot be equated with the establishment of the unit itself or its setting up. The applicability of the, proviso has, therefore, to be decided by finding out when the company commenced operations for establishment of the unit, which operations must be antecedent to the actual date on which the company is held to have been set up for purposes of the principal clause.[1764 D E] Western India Vegetable Products, Limited vs Commissioner of Income tax, Bombay City, referred to. In the present case, the Tribunal proceeded on the basis that whatever be the exact date of commencement of the operations for establishment of Ibis unit,, it was certainly before April 1, 1957 and that fact by itself is sufficient to entitle the assessee to claim the exemption. The Commissioner cannot be allowed to raise a new question and ask this Court to decide that the date of commencement of the operation for establishment of the unit by the respondent was different from that accepted by the Tribunal. That question was not raised and dealt with by the Tribunal, [766 E] Commissioner of Income tax, Bombay vs Scindia Steam Navigation Co., Ltd., ; relied on.

Appeal No. 690 of 1965. Appeal from the judgment and order dated June 22, 1964 of the Gujarat High Court in Income tax Reference No. 10 of 1963. B.Sen, T. A. Ramachandran and R. N. Sachthey, for the appellant. section T. Desai and I N. Shroff, for the respondent. The Judgment of the Court was delivered by Shah, J. By a resolution dated August, 23, 1952, it was resolved to wind up the respondent company and to appoint a liquidator for that purpose. The paid up capital of the assesses was Rs. 25 lakhs, and on the date of commencement of winding up it had an accumulated profit of Rs. 5,34,041. From time to time the liquidator ,distributed the assets in his hands among the shareholders. The following table sets out the distributions made by the liquidator: Assessment Year Distribution Date of Amount distribution distributed Rs. Rs. 1953 54 60 09 9 1952 15,00,000 Do 90 25 9 1952 2,25,000 1954 55 60 10 11 1952 1,50,000 Do 30 6 5 1953 75,000 Do 30 23 2 1953 75,000 1955 56 80 10 11 1953 2,00,000 Out of the distribution made on September 9, 1952, the Income tax Officer brought, in the assessment year 1953 54, to tax Rs. 52,400 779 as "dividend" within the meaning of section 2(6A)(c) of the Income tax Act, 1922, as it then stood. On July 24, 1957, the liquidator distributed Rs. 30/ per share among the shareholders. The Income tax Officer in the course of assessment for the year 1958 59 sought to bring the entire amount of Rs. 75,000/ distributed to tax as "dividend" within the meaning of s.2(6A)(c) of the Income tax Act as amended by the Finance Act, 1956. The objections raised by the liquidator were rejected and the amount was brought to tax. The Appellate Assistant Commissioner confirmed the order of the Income tax Officer. In appeal to the Tribunal on behalf of the assessee, it was urged that the entire accumulated profit was exhausted when Rs. 17,25,000/ were distributed in the year 1952 and thereafter there were no accumulated profits in the hands of the liquidator which could be distributed: and that in any event whenever distribution is made of the assets in the hands of the liquidator, accumulated profits and the capital must be deemed to be distributed in the same proportion in which the accumulated profits and the capital stood at the date of liquidation. The Tribunal rejected the first contention and did not consider the second. The Tribunal referred the following question to the High Court of Judicature at Bombay under section 66(1) of the Income tax Act, 1922: "Whether on the facts and in the circumstances of the case the sum of Rs. 75,000/ or any part thereof could be treated as dividend under section 2(6A)(c) of the Indian Income tax Act, 1922?" The reference was transferred after reorganisation of the State under the Bombay State Reorganisation Act, 1960, to the High Court of Gujarat for hearing and disposal. The reference was heard before a Bench consisting of Shelat, C. J. and Bhagwati J., The two learned Judges differed, and the case was referred to Bakshi, J. Bakshi, J., agreed with Bhagwati, J., and answered the question referred to in the negative. To appreciate the arguments advanced at the Bar, it is necessary to notice the changes which were made from time to time in section 2(6A)(c) of the Indian Income tax Act, 1922, and the reasons for enacting and amending that clause. Clause (6A) which defines 'dividend ' was inserted In the Indian Income tax Act by Act 7 of 1939. As originally enacted, it provided insofar as it is material for the purpose of this appeal: ' " 'dividend ' includes: (a) (b) 780 .lm15 (c) any distribution made to the shareholders of a company out of accumulated profits of the company on the liquidation of the company: "Provided that only the accumulated profits so distributed which arose during the six previous years of the company preceding the date of liquidation shall be so included;" By section 3 of the Finance Act, 1955, the proviso to cl. (c) was deleted and by section 3 of the Finance Act, 1956, with effect from April 1, 1956, the following clause (c) was substituted: "(c) 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 capitalised or not;" By section 17(2) of the Indian Companies Act, 1913, Reg. 97 of Table A was one of the obligatory regulations which had to be adopted in terms identical with or to the same effect in the Articles of Association of every Company. Regulation 97 provided that "No dividend shall be paid, otherwise than out of profits of the year or any other undistributed profits. " Distribution of the profits of the year or of accumulated profits was therefore "dividend" within ' the meaning of the Companies Act, 1913, and also of the Income tax Act,1922. By Act 7 of 1939 an inclusive definition of 'dividend ' was devised, so as to include therein heads of distribution by a Company which may not normally be regarded as dividend: and one such head was in cl. The reason for insertion of the clause was that on winding up of a company the distinction between the assets and undistributed profits disappears. It is well settled that a Company as a going concern distributing profits of the year or accumulated profits is regarded as distributing dividend among the shareholders, but if the company is wound up before distributing its accumulated profits, any distribution of profits by the liquidator is not regarded under the Companies Act as dividend. In Commisssioners of lnland Revenue vs George Burrell, Pollock, M. R., observed: " . it is a misapprehension, after the liquidator has assumed his duties, to continue the distinction between surplus profits and capital. Lord Macnaghten in Birch vs Cropper (14 App. 525, 546), the case which finally determined the rights inter se of the preference and ordinary shareholders in the Bridgewater Canal, said: 'I think it rather leads to confusion to speak of the assets which are the subject of this application as 'surplus assets ' as if they were an accretion or addition to the capital of the company capable of being distinguished from it and open to different (1) ,63. 781 considerations. They are part and parcel of the property of the company part and parcel of the joint stock or common fund which at the date of the winding up represented the capital of the company. The amounts distributed to the shareholders by a liquidator are therefore distributed as capital of the company, since the liquidator has no power to distribute dividend, and the sums received by the shareholders cannot be disintegrated into capital and profits, by examining the accounts of the Company when it was a going concern. The scheme of the Indian Companies Act closely followed the English Companies Act and the view expressed in George Burrell 's case( ') applied to distributions made by liquidators, and those distributions were not liable to be taxed as dividend. The Parliament with a view to avoid escapement of tax devised a special definition of the word 'dividend ' and incorporated it by Act 7 of 1939 as section 2(6A)(c). The effect of the provision was to assimilate the distribution of accumulated profits by a liquidator to a similar distribution by a company as a going concern, but subject to the limitation that while in the latter the profits distributed will be dividend whatever the length of the period for which they were accumulated, in the former such profits may be dividend only insofar as they come out of profits accumulated within six years prior to liquidation. It also appeared from the language used that profits of the current year during which the Company was ordered or resolved to be wound up could not be included in the expression "dividend": see Sheth Haridas Achratlal vs Commissioner of Income tax, Bombay North, Kutch and Saurashtra, Baroda(2). By the Finance Act, 1955, the proviso to cl. (c) was deleted and in consequence thereof the limitation relating 'to the period during which the profits were accumulated ceased to apply in the determination whether the amount distributed by the liquidator was dividend. Even after the amendment by the Finance Act, 1955, the language of the clause was found to be somewhat inapt and the Legislature by the Finance Act 1956 recast cl. The Tribunal was of the view that "if earlier any distribution has been made, but such distribution or part of such distribution has not been considered as dividend, then, any subsequent distribution, if it is capable of being considered as dividend must be so held to be so." Shelat C. J., opined that section 2(6A)(c) is not a charging section which levies tax on a particular fund from out of which a limited fund is carved out by the proviso. The learned Chief Justice observed: "The legislative intent is clear, namely, to treat that portion of the amount distributed by the liquidator as chargeable as (1) L.R. (1924] 2 K.B. 52, 63. (2) 782 dividend which the Income tax Department can trace to accumulated profits of the last six years and that portion only. and therefore it is in respect of that limited fund only that the Department is permitted to go behind the liquidation proceedings and to disintegrate the assets lying with the liquidator". The reasoning underlying these observations of the learned Chief Justice is that in the process of disintegration of an amount distributed, only the share which is brought to tax is dividend and the rest continues to bear the character of capital. Bhagwati, J., observed "that what the Legislature intended to achieve by enacting section 2(6A)(c) was to bring within the ambit of taxation the fund constituted of what were accumulated profits at the date of liquidation when it reaches the hands of the shareholders in liquidation. If a distribution in liquidation comes out of the source of accumulated profits and whether it comes out of that source or not is not a question dependent on section 2(6A)(c) section 2(6A)(c) declares that though under law, apart from the section, it would be capital and, therefore, not chargeable, it shall be regarded as dividend and taxed as such in the hands of the shareholders. " Bakshi, J., substantially agreed with Bhagwati, J., and held that since the Tribunal had not disintegrated Rs. 75,000/ distributed, for ascertaining whether any part of it came out of the accumulated profits, no part of Rs. 75,000/ could be regarded as dividend. The Tribunal was therefore of the view that in a distribution by a liquidator in any year, only that amount which is brought to tax as dividend may be deemed to come out of the accumulated profits on disintegration of the two components, and that process will go on till the accumulated profit account in a notional sense is exhausted. On this view the amount distributed is disintegrated, as if it came out of two funds nationally distinct to the extent to which any part bears tax, it is to be regarded as coming out of the accumulated profits, and the rest out of the capital. Shelat, C. J., expressed substantially the same view. Bhagwati & Bakshi, JJ., were of the view that since the enactment of section 2(6A)(c), in the hands of the liquidator, accumulated profits and capital may be deemed separate funds, and in the case of each distribution the source from which the amount is withdrawn should be determined. If the source from which the amount is distributed is capital, the distribution is not taxable, if it is accumulated profit, it is taxable. The language used by the Legislature in section 2(6A)(c) as amended by the Finance Act, 1956, is fairly clear. There is in the hands of the liquidator only one fund. When a distribution is made out of the fund, for the purpose of determining tax liability, and only for that purpose, the amount distributed is disintegrated into its compo nents capital and accumulated profits as they existed immediately 783 before the commencement of liquidation. In any distribution made to the shareholders of a company by the liquidator, that part which is attributable to the accumulated profits of the company immediately before its liquidation, whether such profits have been capitalised or not, would be treated as dividend and liable to tax under the Act. The provision was intended to supersede the application of the principle of George Burrell 's case( '), that is to enact that even though on a winding up of a company the distinction between the assets and the accumulated profits disappears, the taxing authority may disintegrate the amount distributed into its component parts and determine the share attributable to accumulated profits. The amount distributed would therefore be deemed to be received by the shareholders partly as accumulated profits and the rest as capital, the proportion being the same which the accumulated profits bore to the capital in the accounts of the company at the commencement of winding up, and that part of the receipt which is attributable to the accumulated profits would be taxable. The Income tax Officer has therefore in the first instance to determine the accumulated profits in the hands of the Company whether capitalised or not, and the rest of the capital immediately before the liquidation: he has then to determine the ratio between such capital and the undistributed profits and to apply the ratio to the amount distributed to determine the component attributable to accumulated profits. There is in section 2(6A)(c) no warrant for the view that in the course of liquidation the accumulated profits exist as a separate fund even in a notional sense. Each distribution is of a consolidated amount which re presents both capital and accumulated profits. There is also nothing in the clause which supports the view that whatever is brought to tax by the taxing authorities in a given year is dividend, and the rest represents the assets of the company. The fund in the hands of the liquidator is one: when the fund or a part of it is distributed, the distribution is deemed to take place in the same proportion in which the capital and accumulated profits stood in the accounts of the company immediately before the winding up. We discharge the answer recorded by the High Court, and record the answer that "that part of Rs. 75,000/ which bears the same ratio to Rs. 75,000/ which the accumulated profits at the date of liquidation bore to the total assets of the company immediately before liquidation is dividend". In the present case the Tribunal has not determined what part of Rs. 75,000/ represents accumulated profits. But on the view we have taken of the true meaning of section 2(6A)(c) of the Act, the Tribunal was bound to do so. The appeal is therefore partially allowed. There will be no Appeal allowed in part. order as to costs. G. C. (1) L.R. (1924] 2 K.B. 52.

IN-Abs

By a resolution dated August 23, 1952 it was resolved to wind up the respondent company and to appoint a liquidator for that purpose. The paid up capital of the assessee was Rs. 25 lakhs, and on the date of commencement of winding up it had an accumulated profit of Rs. 5,34,041, From time, to time the liquidator distributed the assets in his hands among, the shareholders. Out of Rs. 15 lakhs distributed on September 9, 1952 the Income tax Officer brought, in the assessment year 1953 54, to tax Rs. 52,400 as 'dividend ' within the meaning of section 2 (6A) (c) of the Income tax Act 1922 as it then stood. By virtue of an amendment of the said clause as effected by the Finance Act 1956 dividend was to include 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 capitalised or no, On July 24, 1957, the liquidator distributed Rs. 75,000 among the shareholders. The Income tax Officer in the course of assessment for the year 1958 59 sought to bring the entire amount so distributed to tax as 'dividend ' The Appellate Assistant Commissioner confirmed the order of the Income tax Officer. In appeal to the Tribunal it was urged on behalf of the assessee that when Rs. 15 lakhs were distributed on September 3, 1952 and Rs. 2 lakhs 25 thousand on September, 25, 1952 the entire accumulated profit was exhausted and thereafter there were no accumulated profits which could be distributed, and that in any event whenever distribution is made of the assets in the hands of the liquidator, accumulated profits and the capital must be deemed to be distributed in the same proportion in which the accumulated profits and the capital stood on the date of the liquidation. The Tribunal rejected the first contention and did not consider the second. In reference the High Court held that since the Tribunal had not disintegrated Rs.75,000 distributed for ascertaining whether any part of it came out of theaccumulated profits, no part of Rs. 75,000 could be regarded as dividend. The Revenue appealed. HELD : The language used by the Legislature in section 2 (6A) (c) as amended by the Finance Act 1956, is fairly clear. 'Mere is in the bands of the liquidator only one fund. When a distribution is made out of the fund, for the purpose of determining tax liability, and only for that purpose the amount distributed is disintegrated into its components capital and accumulated profits as they existed immediately before the commencement of liquidation. In any distribution made to the shareholders of a company by the liquidator, that part which is attributable to the accumu lated profits of the company immediately before its liquidation, whether such profits have been capitalised or not, would be treated as dividend and liable to tax under the Act. The amount distributed would therefore be deemed to be received by the shareholders partly as accumulated pro M17Stup. CI/66 5 778 fits and the rest as capital, the proportion being the same which the accumulated profits bore to the capital in the accounts of the company at the commencement of winding up, and that part of the receipt which is attributable to the accumulated profits would be taxable. The Income tax Officer has therefore in the first instance to determine the accumulated profits in the hands of the company whether capitalised or not, and the remaining capital immediately before the liquidation : he has to determine the ratio between such capital and the undistributed profits, and then to apply the ratio to the amount distributed to determine the component attributable to accumulated profits. [782 H; 783 C] In the present case therefore the Income tax authorities had to determine what part of the sum of Rs. 75,000 distributed among the shareholders represented accumulated profits. Only that part of Rs. 75,000 which bore the same ratio to Rs. 75000 which the accumulated profits at the liquidation bore to the total assets of the company immediately before liquidation was dividend. [783 G] Commissioners of Inland Revenue vs George Burrell, L.R. , referred to.

Appeal No. 235 of 1963 Appeal by special leave from the judgment and order dated August 26, 1963 of the Kerala High Court in Income tax Referred Case No. 29 of 1962. G.B. Pai, T. A. Ramachandran and O. C. Mathur, for the appellant. A. V. Viswanatha Sastri, N. D. Karkhanis, R. H. Dhebar and R. N. Sachthey, for the respondent. 322 The Judgment of the Court was delivered by Shah, J. In computing the total earned income of the appellant Company for the calendar year 1959, the Income tax Officer, Trivandrum, disallowed a claim for deduction of Rs. 80,255/ in respect of liability for payment of tax under the Wealth Tax Act 27 of 1957 incurred by the Company for the calendar years 1957 and 1958. The order was confirmed by the Appellate Assistant Commissioner and by the Appellate Tribunal. On the following question referred by the Wealth Tax Appellate Tribunal, "Whether on the facts and circumstances of the case, the assessee Company is entitled to a deduction of Rs. 12,873/ being the wealth tax paid during the account year ended 29 2 1960. against the profits and gains of its business for the assessment year 1960 61 under Sec. 10 (2)(xv) of the Indian Income tax Act ?" the High Court of Kerala recorded an answer in the negative. The Company has appealed to this Court with special leave. The Company claims that wealth tax paid by it represented expenditure laid out wholly and exclusively for the purpose of its business, and on that account is a permissible allowance under section 10(2)(xv) of the Income tax Act. In determining the admissibility of this claim, it is necessary to ascertain the true character of the liability for payment of tax under the Wealth Tax Act. Tax is charged under section 3 of the Wealth Tax Act, 1957, for every financial year in respect of the net wealth of every individual, Hindu undivided family and Company at the rate or rates specified in the Schedule to the Act; and 'net wealth ' under the Act means the amount by which the aggregate value computed in accordance with the provisions of the Act of all the assets belonging to the assessee on the valuation date is in excess of the aggregate value of all the debts owed by the assessee on that date other than the debts specified. The tax under the Act is payable by all individuals, Hindu undivided families ,and Companies on the value of taxable assets belonging to the taxpayer: it is charged on the net value of the assets, and not on the business or trading activity carried on by the taxpayer. The rates of tax for companies as well as individuals and Hindu undivided families are prescribed by the Second Schedule. The slabs on which the rate of tax is nil are not uniform in the case of different taxable entities and a special exemption is given to a Company which has incurred in any year loss computed in accordance with sections 8, 9, 1 0 and 12 of the Income tax Act without referring to depreciation allowances and development rebates and without taking into account the losses brought forward from the earlier years, and which has not declared any dividend on its equity capital in respect of that year. It is also provided by r. 5 of the Schedule that where the profits of a company in respect of any year, before deducting any 32 3 of the allowances referred to in the second paragraph of Part 11, are less than the amount of wealth tax payable by it in respect of the relevant assessment year, the wealth tax payable by the company for such assessment year shall be limited to the amount of such profits provided that the company has not declared any dividend on its equity capital in respect of that year. But by relating the quantum of liability of a company to wealth tax in these special cases to the profits earned, the character of the tax is not altered. It is and remains a tax charged upon the net wealth, and it is not made a tax related to or incidental to the carrying on of a business. The rules in the Schedule merely extend the exemption which is primarily declared in favour of a Company of which the net wealth does not exceed Rs. 5 lakhs, to a company which has in the previous year made a loss, and grant a partial exemption if the company has made profits which are inadequate to meet the wealth tax liability at the prescribed rate. In computing the profits or gains of an assessee who carried on business, certain allowances are permitted under section 10(2) from the business profits, and one such head is: "(xv) any expenditure not being an allowance of the nature described in any of the clauses (i) to (xiv) inclusive, and not being in the nature of capital expenditure for personal expenses of the assessee laid out or expended wholly and exclusively for the purpose of such business, profession or vocation." An allowance permissible under cl. (xv) in the computation of taxable income is therefore expenditure incurred in the year of account in respect of a business carried on by the assessee: the expenditure must not be in the nature of capital expenditure or personal expenses of the assessee and it must have been laid out or expended wholly and exclusively for the purpose of the business. The argument for the Company in this case turns upon the meaning of the expression "for the purpose of such business." On behalf of the Company it is urged that for the purpose of its business, it holds assets and by the use of those assets profits are earned and therefore tax paid in respect of those assets is expenditure laid out for the purpose of the business. Whether an item of expenditure falls within that description has of necessity to be determined having regard to the nature of the business, the nature of the expenditure and the relation between the business and the expenditure. In adjudicating upon the claim that an outgoing is a permissible deduction under section 10(2)(xv) of the Income tax Act, the primary question is whether in the light of accepted commercial practice, trading principles and the relation between the business and the outgoing,the outgoing can be said to arise out of the carrying on of the business and to be incidental to that business. In the context of a variety of 324 trading transactions and the relation between the transactions and the expenditure claimed as a permissible deduction, in the decisions of the courts under the Indian Income tax Act and of the courts in the United Kingdom under the English taxing statutes, different tests are suggested. Those tests, though adequate for the specific problem under discussion, cannot be regarded as exhaustive or necessarily applicable to other problems. When Rowlatt, J., in The Commissioners of Inland Revenue vs The Anglo Brewing Company Ltd.(1) said that the expression "for the purpose of the trade" meant for the purpose of keeping the trade going, and of making it pay, he was making that statement in relation to the facts of the case, and he did not intend to suggest a universal test. Similarly when because of the special nature of the business, expenditure incurred for payment of rates, taxes and duties was held a permissible allowance in the computation of taxable income, it was not intended and could not be intended to be laid down that expenditure incurred for payment of rates, taxes or duties in respect of another business would be regarded necessarily as a permissible allowance. Illustrations of this class are to be found in Smith vs Lion Brewery Company Ltd.(2) Usher 's Wiltshire Brewery Ltd. vs Bruce(3) and Harrods (Buenos Aires) Ltd. vs Taylor Gooby.(4) In the Lion Brewery Company 's case(2) a Brewery Company who were owners or lessees of licensed premises acquired as part of their business as brewers and as a necessary incident to profitable exploitation were held entitled to the allowance in the computation of their income under Sch. D of Compensation Fund Charges imposed under the Licensing Act upon their tenants and which the tenants after paying recouped themselves by deduction from the rents payable to the Company. In Usher 's Wiltshire Brewery Ltd. 's case(3) the claim of a Brewery Company as owners or lessees of licensed premises acquired in the course of and for the purpose of their business as brewers and as a necessary incident to the more profitable conduct of their business of certain expenses in connection with those licensed houses was allow ed in the computation of their profits. In Harrods (Buenos Aires) Ltd 's case(4) Harrods (Buenos Aires)Ltd a company incorporated in the United Kingdom carried on business of a retail store in Argentina and was liable to pay a tax known as "substitute tax" which was levied on joint stock companies incorporated in Argentina and on companies incorporated outside but which carried on business in Argentina through an "empresa estable" (a "commercial establishment"). In proceedings for assessment of income tax of the business the claim of the Company to deduct the "substitute tax" paid to the Argentina Government was accepted, for it was an expenditure without paying which the assessee Company could not carry on its business at all. In all the three cases the expenditure was directly related to the business Organisation of the taxpayer. (1) (2)) (3) 325 But every item of expenditure merely because it is connected with the trade may not necessarily be treated as a permissible deduction. A fairly reliable approach for determining what may be regarded normally as expenditure laid out or expended wholly and exclusively for the purpose of the business was suggested in Strong and Company of Romsey Ltd. vs Woodifield.(1) That was a case of a Brewery Company owning a licensed house in which it carried on the business of inn keepers. The Company had to pay damages to a customer who was, when sleeping in the inn, injured by a falling chimney, the fall of the chimney being due to the negligence of the Company 's servants. The Company was held disentitled to deduct the expenditure in computing its profits for income tax purposes. Lord Loreburne, L. C., observed, in disallowing the claim as a permissible expenditure under the head expenditure laid out wholly and exclusively for the purpose of the business: "A deduction cannot be allowed on account of loss not connected with or arising out of such trade. That is one indication. And no sum can be deducted unless it be money wholly and exclusively laid out or expended for the purposes of such trade. That is another indication . connected with the trade, it must always be allowed as a deduction: for it may be only remotely connected with the trade or it may be connected with something else quite as much as or even more than with the trade. I think only such losses can be deducted as are connected with it in the sense that they are really incidental to the trade itself. They cannot be deducted if they are mainly incidental to some other vocation, or fall on the trader in some character other than that of trader. " In the same case Lord Davey observed: "These words. . appear tome to mean for the purpose of enabling a person to carry on and earn profits in the trade, etc. I think the disbursements permitted are such as are made for that purpose. It is not enough that the disbursement is made in the course of, or arises out of, or is connected with, the trade or is made out of the profits of the trade. " In Badridas Daga vs Commissioner of Income tax,(2) Venkatarama Aiyar, J., observed that whether the expenditure is admissible or not will depend upon whether it can be said to arise out of the carrying on of the business and be incidental to it, and this was reaffirmed by this Court in a later judgment in Commissioner of Income tax, Bombay vs Abdullabhai Abdulkadar.(3) (1) ; (2) ; I.T.R. 10 (3) ; 326 In a recent judgment of this Court Commissioner of Income tax, Kerala vs Malayalam Plantations Ltd.(1) certain amounts paid as estate duty under section 84 of the , by a resident company incorporated outside India on the death of shareholders not domiciled in India, were sought to be deducted under section 10(2) (xv) as expenditure laid out or expended wholly and exclusively for the purposes of the business. Subba Rao, J., speaking for the Court observed at p. 705: "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 rationalization 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 title; it may also comprehend payment 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. However wide the meaning of the expression may be, its limits are implicit in it. The purpose shall be for the purpose of the business, that is to say, the expenditure incurred shall be for the carrying on of the business and the assessee shall incur it in his capacity as a person carrying on the business. " The position may therefore be summarised thus: the nature of the expenditure or outgoing must be adjudged in the light of accepted commercial practice and trading principles. The expenditure must be incidental to the business and must be necessitated or justified by commercial expediency. It must be directly and intimately connected with the business and be laid out by the taxpayer in his character as a trader. To be a permissible deduction, there must be a direct and intimate connection between the expenditure and the business ie. between the expenditure and the character of the assessee as a trader, and not as owner of assets, even if they are assets of the business. In the light of the principles the amount of tax paid on the net wealth of an assessee under the Wealth Tax Act is not a permissible deduction under section 10(2)(xv) of the Indian Income tax Act in his assessment to income tax, for tax is imposed under the Wealth Tax Act on the owner of assets and not on any commercial activity. The charge of the tax is the same, whether the assets are" part of or (1) (1964] 7 S.C.R. 693=53 I.T.R. 140. 327 used in the trading Organisation of the owner or are merely owned by him. The assets of the taxpayer incorporated or not become chargeable to tax because they are owned by him, and not because they are used by him in the business. The appeal therefore fails and is dismissed with costs. Appeal dismissed.

IN-Abs

In computing the total earned income of the appellant company for the calendar year 1959, the Income Tax Officer disallowed a claim for deduction of Rs. 80,255 in respect of liability for payment of tax under the Wealth Tax Act, 27 of 1957 incurred by the company. The order of the Income Tax Officer was confirmed in appeal by the Appellate Assistant Commissioner, the Tribunal and, on a reference, by the High Court. It was contended by the appellant company that since the company held the assets on which tax was levied for the purpose of its business and profits were earned by the use of those assets, tax paid in respect of those assets was expenditure laid out wholly and exclusively for the purpose of the business and on that account was a permissible allowance under section 10(2)(xv) of the Income tax Act, 1922, HELD:The amount of tax paid on the net wealth of an assesses under Wealth Tax Act is not a permissible deduction under section 10(2) (xv) of the Income tax Act, for tax is imposed under the Wealth Tax Act on the owner of the assets and not on any commercial activity. The charge of tax is the same, whether the asset are part of or used in the trading organization of the owner or are merely owned by him. [326 G H] For expenditure to be regarded as being for the purpose of the assessee 's business within the meaning of section 10 (2) (xv), the nature of the expenditure of outgoing must be adjudged in the light of accepted commercial practice and trading principles. The expenditure must be incidental to the business and must be necessitated or justified by commercial expediency. It must be directly and intimately connected with the business and be laid out by the tax payer in his character as a trader. To be a permissible deduction, there must be a direct and intimate connection between the expenditure and the business i.e. between the expenditure and the character of the assessee as a trader, and not as owner of assets, even if they are assets of the business. [326 F] Case law discussed.

Appeal No. 751 of 1965. Appeal from the judgment and order dated December 18, 1962 of the Madras High Court in Tax Case No. 143 of 1960. A.K. Sen, K. Parasarn, K. Rajender Chaudhuri and K. R Chaudhuri, for the appellant. B.Sen, T. A. Ramachandran, section P. Nayyar for R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by certificate, against the judgment of the Madras High Court dated December 18, 1962 in T.C. No. 143 of 1960. The appellant (hereinafter called the 'assessee ') was a firm called O.RM.M.SP. Firm which was registered under section 26(A) of the Income tax Act, 1922 (hereinafter called the '1922 Act '). Prior to the constitution of the firm, the partners were members of a Hindu undivided family. The family which consisted of Meyyappa Chettiar and his two brothers carried on money lending business in India and in the former Federated Malaya States and it was assessed under the Indian Income tax Act, 1918 (hereinafter called the '1918 Act '). There was a disruption of the joint family status on June 2, 1938, and thereafter the members of the family continued the business as partners. In the course of the assessment for the year 1939 40 it was claimed by Meyyappa Chettiar, one of the members of the family that having regard to the severance of joint family status, the income of the family from April 13, 1938 to June 2, 1938 was not liable to be taxed by reason of the provisions of section 25(3) & (4). The Income tax Officer accepted the fact of partition amongst the members of the family, but rejected the contention that the family was not liable to pay tax on the profits for the said period. The High Court ultimately called for a reference on the following question: "Whether the income of the family from 13th April 1938 to 2nd June 1938 is not liable to be taxed by virtue of Section 25(3) of the Indian Income tax Act" After receipt of the reference the High Court held that there was no discontinuance of the business within the meaning of section 25(3). The view taken by the High Court was that when a Hindu undivided 907 family carrying on a business, which was taxed under the 1918 Act, became disrupted and the members continued the business there. after as partners, there could be no discontinuance but only succession by the firm of the business of the family. It was held in that case that it was the assesse firm which took over the business of the Hindu undivided family. The firm was dissolved on March 2, 1952. In the assessment for the year 1952 53 the assessee applied for relief under section 25(3) of the 1922 Act. The claim was rejected by the Income tax Officer on March 7, 1956. The assessee preferred an appeal to the Appellate Assistant Commissioner who dismissed the appeal holding that in the case of business carried on in foreign territory the business as such is not assessed under section 3 of the 1918 Act but only receipt of the income in British India is assessed and it cannot therefore be held that the foreign business of the appellant was charged to tax under the 1918 Act. The assessee took the matter in further appeal to the appellate Tribunal which considered that the assessee was entitled to relief under section 25 (3) of the 1922 Act except for the income received from the house properties in Malaya. The appellate Tribunal accordingly allowed the appeal of the assessee in part. Both the assessee and the Department applied to the appellate Tribunal for reference of the questions of law to the High Court. The appellate Tribunal allowed the applications and stated a case to the High Court on the following questions of law: "(i) Whether the assessee is entitled to both the parts of the relief contemplated under section 25(3) of the Act in respect of foreign business at Penang, Ipoh and Kambar ? (ii)Whether the applicant is also entitled to relief under section 25 (3) of the Act with regard to rental income from house properties owned by the foreign firm which was discontinued in the year of assessment. " The appellate Tribunal also referred another question for the opinion of the High Court but it is not the subject matter of the present appeal. The High Court held that the assessee was not entitled to relief under section 25(3) of the 1922 Act and accordingly answered both the questions in favour of the Department. The view taken by the High Court was that the foreign business of the assessee cannot be deemed to have been charged under the provisions of the 1918 Act because the assessee was only taxed on remittances received from the profits of the foreign business and there was no tax on the foreign business itself under the 1918 Act. The High Court accordingly reached the conclusion that the assessee was not entitled to relief under section 25 (3) of the 1922 Act. 908 Section 25 (3) of the 1922 Act is to the following effect: "25. (3) Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918 (VII of 1918), is discontinued, then, unless there has been a succession by virtue of which the provisions of sub section (4) have been rendered applicable no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of such discontinuance, and the assessee may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, 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 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. " Under this section exemption from liability to pay tax in respect of the income, profits and gains may be claimed by an assessee if the business is one in respect of which tax was charged at any time under the 1918 Act, and the business is discontinued there being no succession by virtue of which the provisions of subsection (4) of section 25 have been rendered applicable. Section 25(3) however, applies even if the person assessed under the 1918 Act was different from the person who claims relief under that section provided the former was the predecessor in interest of such person in relation to the business. The reason for enacting section 25(3) was that under the 1918 Act, income tax was levied by virtue of section 14(2) of the 1918. Act, on the income of the year of assessment. Tax was, therefore, levied in the financial year 1921 22 on the income of that year. By the 1922 Act the basis of taxation was altered and by section 3 of that Act, charge for tax was imposed upon the income of the previous year. When the 1922 Act was brought into force on April 1, 1922, two assessments in respect of the same income for the year 1921 22 had to be made. The income for 1921 22 was accordingly charged to tax twice; it was charged under the 1918 Act and it was also charged to tax under section 3 of the 1922 Act read with the appropriate Finance Act, resulting in double taxation in respect of the income for that year. But with a view to make the number of assessments equal, to the number of years during which the business was carried on, the legislature enacted the exemption prescribed by section 25(3). This benefit was however restricted only to the income, profits and gains of business, profession or vocation on which tax had been charged under the provisions of the 1918 Act. By enacting section 25(3) the legislature intended to exempt the income, profits and 909 gains resulting from the activity styled business, profession or vocation from tax when the business, profession or vocation is discontinued if tax was charged in respect thereof under the 1918 Act. The first question to be considered in this appeal is whether the assessee is entitled to both parts of relief contemplated under section 25(3) of the 1922 Act in respect of the foreign business at Penang, lpoh and Kambar. The controversy between the parties turns on the question whether the foreign business of the assessee was at any time charged under the provisions of the 1918 Act. It has been found by the appellate Tribunal that the assessee was taxed on remittances received from and out of the profits of the foreign business. The finding of the Appellate Assistant Commissioner is stated in these terms: "The entire profits of the foreign business came to be assessed in the hands of the appellant under the 1918 Act, not because it was a business income but because such income had been remitted into British India. Therefore, in fact also it is not the foreign profits of a business that has been charged to tax but only the remittance which in the particular case was not less than the profits of the year. " We have therefore to proceed on the footing that the assessee received the entire profits of the foreign business in British India and the entire profits were assessed to income tax in the hands of the assessee under the 1918 Act. It is necessary, at this stage, to set out the relevant provisions of the 1918 Act. Section 3, the charging section stated as follows: "3. (1) Save as hereinafter provided, this Act shall apply to all income from whatever source it is derived, if it accrues or arises or is received in British India, or is, under the provisions of this Act, deemed to accrue or arise or to be received in British India. Section 5 mentioned the classes of income chargeable to income tax and reads as follows: "5. Save as otherwise provided by this Act, the following classes of income shall be chargeable to income tax in the manner hereinafter appearing, namely (i) Salaries. (ii) Interest on securities. (iii)Income derived from house property. (iv) Income derived from business. 910 (v) Professional earnings. (vi) Income derived from other sources. " Section 9 of the 1918 Act enumerated the permissible deductions in the computation of the profits of the business. The question for determination is whether the foreign business of the assessee was at any time charged under the provisions of section 3 of the 1918 Act. It has been found in this case that the entire income of the foreign business was remitted to the assessee and tax imposed on that income under the 1918 Act. We are of the opinion that in the context of these facts the foreign business of the assessee must be held to be charged under the provisions of the 1918 Act within the meaning of section 25(3) of the 1922 Act. It is manifest that by section 3 of the 1918 Act the charge was made on the receipt of income in British India and as the income received by the assessee was derived from the foreign business and was in relation to the foreign business it must be taken that there was an assessment to tax on the foreign business within the meaning of section 25(3) of the 1922 Act. In other words, the tax under the 1918 Act was charged upon the assessee in respect of his activity styled ,foreign business ' and in relation to it and it must hence be taken, upon the facts found by the appellate Tribunal in this case, that the foreign business of the assessee was charged under the 1918 Act within the meaning of section 25(3) of the 1922 Act. The High Court has taken the view that the foreign business of the assessee was not charged under the 1918 Act because what was taxed was the remittances received by the assessee from the foreign business and not the foreign business itself. In taking this view, the High Court has followed its previous decision in Commissioner of Income tax, Madras vs section V.R.M. Palaniappa Chettiar and Others(1) in which it was held that the words "on which" in section 25(4) of the 1922 Act cannot be interpreted as meaning "with reference to which" and that in order to claim and avail the benefit under section 25(4) the tax clearly should be charged on the business as such under the 1918 Act. At page 173 of the Report Satyanarayana Rao, J. stated as follows: "The relief under sub clause (4) is permissible only if the tax on the business was charged under the provisions of the Indian Income tax Act, 1918. If the foreign business at Muor was not and could not have been charged under the Act and the share in the profits of the family from that foreign business was charged under section 3 only on the receipt in British India, can it be said that the charge so made was a charge of a tax on the foreign business. The income received by the joint family could not have been charged under the head 'income derived from business ' but only as a receipt under section 3. The argument, however, on behalf 1 911 of the assessee by his learned Advocate Mr. Rajah Iyer was that the words "on which tax was at any time charged" should be construed as meaning "with reference to which tax was at any time charged. " In other words, the conten tion is that the income derived by the assessee was in relation to a business and therefore the assessment of the income must be treated as an assessment of the business. No doubt, under the provisions of the Income tax Act, the tax is payable by an assessee but the assessment of the tax is on the basis of various heads of income derived by the assessee one of which is business. It cannot, therefore, be said that because tax was payable by the assessee on the profits rec eived from a business in a foreign territory such assessment is an assessment of the business. " In our opinion, the view adopted by the High Court in Commissioner of Income tax, Madras vs section V.R.M. Palaniappa Chettiar and Others( ) must be taken to be impliedly over ruled by the recent decision of this Court in Commissioner of Income tax. Bombay City 1 vs Chugandas & Co.(2) in which the question was whether the interest on securities formed part of the assessee 's business income for the purpose of the exemption from tax under section 25(3) of the 1922 Act. It was held by this Court that the assessee was entitled to exemption under section 25(3) in respect of interest on securities as well, and there was no reason to restrict the condition of the applicability of the exemption under section 25(3) only to income on which the tax was payable under the head "Profits and gains of business, profession or vocation". It was further observed in that case that tax is charged under the Income tax Acts on specific units, such as, individuals, Hindu undivided families, companies, local authorities, firms and associations of persons etc. and business, profession or vocation is not a unit of assessment. When, therefore, section 25(3) enacts that tax was charged at any time on any business, it is intended that the tax was at any time charged on the owner of any business. If that condition be fulfilled in respect of the income of the business under the 1918 Act, the owner or his successor in interest in relation to the business, will be entitled to get the benefit of the exemption under it if the business is discontinued. We are accordingly of the opinion that the High Court was in error in holding that the foreign business of the assessee was not charged under the provisions of the 1918 Act. The first question must therefore be answered in favour of the assessee and it must be held that the assessee is entitled to both parts of relief contemplated under section 25(3) of the 1922 Act in respect of the foreign business at Penang, lpoh and Kambar. (1) (2) 912 The second question of law arising in this appeal is whether the assessee was entitled to relief under section 25(3) of the 1922 Act with regard to the rental income from house properties owned by the foreign firm which was discontinued in the year of account. A similar question was the subject matter of consideration in Commissioner of Income tax, Bombay City , vs Chugandas and Company(1) which has already been referred to. In that case, the assessee firm, a dealer in securities holding securities as its stock in trade, had been charged to tax under the 1918 Act, in respect of business. It received Rs. 4,13,992 and Rs. 1,01,229 as interest on securities in the years 1946 and 1947 respectively. The firm discontinued its business on June 30, 1947. The question at issue was whether the interest on securities formed part of the assessee 's business income for the purpose of the exemption from tax under section 25(3) of the 1922 Act. It was held by this Court that the assessee was entitled to exemption under section 25(3) in respect of interest on securities as well. It was pointed out that there was no reason to restrict the condition of the applicability of the exemption under section 25(3) only to income on which the tax was payable under the head "Profits and gains of business, profession or volcation". The exemption under section 25(3) is general. It was explained by this Court that the heads of income described in section 6 of the 1922 Act, and further elaborated for the purposes of computation in sections 7 to IO and 12, 12A, 12AA and 12B, are intended merely to indicate the classes of income. The heads do not exhaustively delimit sources from which income arises. Business income is broken up under different heads only for the purpose of computation of the total income. By that breaking up the income does not cease to be the income of the business, the different heads of income being only the classification prescribed by the Incometax Act for computation. The ratio of this decision applies to the present case and it must accordingly be held that the assessee is entitled to relief under section 25(3) of the 1922 Act with regard to the rental income from the house properties owned by the foreign firm which was discontinued in the year of account. For these reasons the judgment of the Madras High Court is set aside and this appeal must be allowed with costs. R.K.P.S. (1) ; Appeal allowed.

IN-Abs

Prior to the constitution of the assessee firm, its partners were members of a Hindu undivided family which carried on money lending business in India and in Malaya and which was assessed to tax under the Income Tax Act, 1918. There was a partition in the family on June 2, 1938, and thereafter its members continued the business as partners in the assessee firm. The firm was dissolved on March 2, 1952. In the assessment for the year 1952 53, the assessee applied for relief under section 25(3) of the Income Tax Act., 1922. This claim was rejected by the Income Tax Officer and an appeal to the Appellate Assistant Commissioner was dismissed on the view that in the case of business carried on in foreign territory, the business as such was not assessed under section 3 of the 1918 Act and only income received in India was so assessed; consequently, no relief could be claimed under section 25(3) of the 1922 Act. A further appeal to the Appellate Tribunal was partly allowed as the Tribunal considered that the assessee was entitled to relief under section 25(3) except in respect of the income received by the assessee firm from certain house properties in Malaya. The High Court, upon a reference, disagreed with the Tribunal and held in favour of the department. On appeal to this Court, HELD : (1) The High Court was in error in holding that the foreign business of the assessee was not charged under the provisions of the 1918 Act. The assessee was therefore entitled to relief under section 25(3). When section 25(3) refers to tax charged on any business, it is intended to refer to tax charged on the owner of any business. If tax is shown to have been charged in respect of the income of the business under the 1918 Act, the owner or successor in interest in relation 'to the business will be entitled to get the benefit of the exemption under section 25(3) if the business is discontinued. In the context of the finding by the lower courts that the entire income of the foreign business was remitted to the assessee and tax imposed on that income under the 1918 Act, the foreign business of the assessee must be held to have been charged under the provisions of the 1918 Act within the meaning of section 25(3) of the 1922 Act. [911 F H] (ii)The assessee was also entitled to relief under section 25(3) on the rental income from the house properties owned by the foreign firm which was discontinued in the year of account. M17Sup C.I./66 12 906 Business income is broken up under different heads only for the purpose of computation of the total income. By that breaking up the income does not cease to be the income of the business. [912 E F] Commissioner of Income tax, Madras vs S.V.R.M. Palaniappa Chettiar A Others. , disapproved, Commissioner of Income tax, Bombay city 1 vs Chugandas & Co., ; , referred to.

Appeal No. 733 of 1964. Appeal by special leave from the judgment and decree dated August 1,1960 of the Assam and Nagaland High Court in F.A. No. 33 of 1955. Naunit Lal, for the appellants. R. Gopalakrishnan, for the respondents. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment of and decree of the Assam High Court and arises in the following circumstances. The Gauhati Bank Limited (hereinafter referred to as the bank) brought a suit against the appellants for the recovery of Rs. 40,000/ . Its case was that appellant No. 1 had been dealing with the bank for the needs and business of the family consisting of himself and the other appellants as karta of the family, and in that connection he had an open, mutual and current account with the bank. In that connection moneys were borrowed from the bank and moneys were also paid into the bank and a current account had been opened in the name of appellant No.1. On March 1, 1947, a sum of Rs. 15,956/7/ was due to the bank from the appellants. In order to pay off that amount, a mortgage deed was executed by the appellants in favour of the bank for Rs. 15,956/7/ , and some land, a house, a fixed deposit and three policies were given as security thereunder. The mortgage deed also provided that the bank would advance money up to Rs. 16,000/to the appellants as and when they required it. Interest would be payable at Rs. 6/ per cent per annum with monthly rests. It was also provided that the entire amount due including any further advances taken upto the limit of Rs. 16,000/ and interest would be realised from the securities in certain order which was mentioned in the mortgage deed. It was further provided that if the entire amount due could not be recovered from the property given in security, it would be recoverable personally from the appellants. The case of the bank was that after the execution of this mortgage deed, a further sum of Rs. 10,000/ was borrowed by the appellants from the bank, on March 19, 1947. Thereafter two amounts were paid into the bank, one on May 14,1948 and the other on November 900 24, 1949. Nothing was paid thereafter and eventually on October 31, 1952 the amount due to the bank was Rs. 39,496/8/ . The suit was filed on April, 9, 1953 for the sum of Rs. 40,000/ , and the usual prayer for sale of the mortgaged properties was made. The suit was resisted by the appellants and a number of defences were taken on their behalf. One of the defences with which we are now concerned was that the allegation of the bank that any money was taken as loan after March 1,1947 was in correct. Another defence was that the allegation that on November 24, 1949, Rs. 100/ were repaid was untrue. Further the appellants contended generally that the accounts of the bank were not kept correctly and in regular course of business and were fraudulent and were therefore not relevant and not admissible in evidence. Two main questions arose on the pleadings, namely (i) what was the amount due to the bank from the appellants, and (ii) whether the suit was within limitation. Seven issues were framed by the trial court of which issue No. 3 related to the amount due to the bank from the appellants and issue No.4 related to the question ,of limitation. Other issues related to other points to which no reference is necessary to be made now, for we are not concerned with them. Issue No. 3 relating to the total amount due to the bank appears to have been overlooked by the trial court, though when dealing with the seventh issue relating to relief to which the bank was entitled, the trial court said that the bank was entitled to Rs. 15,956/7/ , which were due on March 1, 1947 and Rs. 16,000/ which were to be further advanced under the mortgage deed of 1947, thus holding that Rs.32,000/ were due to the bank excluding interest. The way the trial court dealt with this matter clearly shows that it did not understand what it had to find on the issue relating to the total amount due to the bank. It seems to have treated the amount of Rs. 16,000/ (which was the limit of the advance to be made to the appellants) as if it was an actual advance made to them on March 1, 1947, even though the case of the bank was that that amount was not actually advanced. The copy of accounts filed by the bank showed that Rs. 10,000/were advanced out of this limit of Rs. 16,000/ . Further on the question of limitation, the trial court held that the suit was within time in view of the payment of Rs. 100/ on November 24, 1949. It therefore decreed the suit after making a small deduction because interest had been calculated at Rs. 9/ per cent per annum instead of Rs. 6/ per cent per annum which was provided in the mortgage deed. The appellants then went in appeal to the High Court. The mortgage deed of March 1, 1947 was not disputed in the High Court, and the two main questions raised in the High Court were, namely 901 (i)that the sum of Rs. 10,000/ said to have been advanced on March 19, 1947 had not been proved to have been advanced in view of the fact that no evidence was produced besides the copy of the accounts to substantiate it, and in this connection reliance was placed on section 34 of the , No. 1 of 1872, and (ii) that the amount of Rs. 100/ had not been paid on November 24, 1949 and therefore the suit was barred by limitation. The High Court seems to have held that the advance of Rs. 10,000/ had been proved on the basis of the copy of the account produced by the bank and the reason given for this was that there was no specific challenge to the correctness of any of the entries in the account, particularly to the specific entry relating to Rs. 10,000/ The contention as to limitation was also rejected by the High Court, and the appeal was dismissed. Thereupon the appellants obtained special leave, and that is how the matter has come up before us. The main question urged before us is that there is no evidence besides the certified copy of the account to prove that a sum of Rs. 10,000/ was advanced to the appellants and therefore in view of section 34 of the Evidence Act the appellants cannot be saddled with liability for that amount. Section 34 is in these terms: "Entries in books of account, regularly kept in the course of business, are relevant whenever they refer to a matter into which the court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability. " It is clear from a bare perusal of the section that no person can be charged with liability merely on the basis of entries in books of account, even where such books of account are kept in the regular course of business. There has to be further evidence to prove payment of the money which may appear in the books of account in order that a person may be charged with liability thereunder, except where the person to be charged accepts the correctness of the books of account and does not challenge them. In the present case, however, the appellants did not accept the correctness of the books of account. We have already indicated that they went to the. length of saying that the accounts were not correctly kept, and were fraudulent. They also said that no money had been taken by them after March, 1, 1947. This being their pleading, the trial court rightly framed the third issue relating to the total amount due from the appellants to the bank. But unfortunately it overlooked to go into that issue specifically and we have already indicated how it made a mistake in arriving at the amount due when considering the issue relating to relief. In any case as the appellants had not admitted the correctness of the accounts filed by the bank, particularly after March 1, 1947, the bank had to prove payment of Rs. 10,000/ on March 19,1947 if it wanted to charge the appellants, 902 with liability for that amount, But all that the bank did was to produce a certified copy of account under section 4 of the Bankers ' Books Evidence Act, No. XVIII of 1891. Section 4 of that Act reads thus "Subject to the provisions of this Act, a certified copy of anyentry in a banker 's book shall in all legal proceedingsbe received as prima facie evidence of the existence ofsuch entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not further or otherwise". It will be clear that section 4 gives a special privilege to banks and allows certified copies of their accounts to be produced by them and those certified copies become prima facie evidence of the existence of the original entries in the accounts and are admitted as evidence of matters, transactions and accounts therein, but such admission is only where, and to the same extent as, the original entry itself would be admissible by law and not further or otherwise. Original entries alone under section 34 of the Evidence Act would not be sufficient to charge any person with liability and as such copies produced under section 4 of the Bankers ' Books Evidence Act obviously cannot charge any person with liability. Therefore, where the entries are not admitted it is the duty of the bank if it relies on such entries to charge any person with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. But no person can be charged with liability on the basis of mere entries whether the entries produced are the original entries or copies under section 4 of the Banker 's Books Evidence Act. We cannot 'agree with the High Court that the mere fact that the appellants did not specifically mention the sum of Rs. 10,000/ as not having been advanced to them in their written statement would make any difference on the facts of the present case. We have already pointed out that the appellants did not admit the correctness of the accounts produced specially after March 1, 1947. We have also pointed out that it was stated on their behalf that nothing was borrowed after March 1, 1947. The main appellant in whose name the account was, appeared as a witness and stated that so far as he remembered he only borrowed Rs. 8,000/ from the bank and nothing thereafter. He also stated that he did not remember to have borrowed any sum from the bank after the execution of the mortgage deed. In the face of this pleading of the appellants and the statement of one of them, the bank had to prove that the sum of Rs. 10,000/ was in fact advanced on March, 19,1947 and could not rely on mere entries in the books of account for that purpose. This is clear from the provision in section 34 of the Evidence 903 Act. No attempt was made on behalf of the bank to prove by any evidence whatsoever that a sum of Rs. 10,000/ was advanced on March 19, 1947. The entry in the account books in that connection is to the effect: "To amount paid to Gauhati branch as per D/advice, dated 6th March, 1947". If this amount of Rs. 10,000/was paid by the bank on the order of the appellants or any one of them that order should have been produced in support of the entry, and then the entry would have been helpful to the bank as a corroborative piece of evidence. But the bank did nothing of the kind. The only witness produced on behalf of the bank was an officer who had nothing to do with the Tezpur branch where the transactions were entered into. We are therefore of opinion that in view of section 34 of the Evidence Act the appellants cannot be saddled with liability for the sum of Rs. 10,000/ said to have been advanced on March, 19,1947 on the basis of a mere entry in the amount. Section 34 says that such entry alone shall not be sufficient evidence, and so some indepen dent evidence had to be given by the bank to show that this sum was advanced. What would be the nature of such independent evidence would certainly depend upon the facts of each case; but there can be no doubt that some independent evidence to show that advance had been made has to be given. Further, as in this, case the dispute was with respect to one entry of Rs. 10,000/ it should not have been difficult for the bank to produce evidence with respect thereto. We cannot therefore agree with the High Court that the advance of Rs. 10,000/ on March 19, 1947 has been proved in this case. It is urged on behalf of the bank that we might give opportunity now to the bank to prove that the money was in fact paid. We are of opinion that it is too late now after 13, years to give a further opportunity to the bank to prove what should have been proved by it in the very beginning in view of the denial of liability for anything after March 1,1947 in the written statement of the appellants. In this view of the matter, the appeal must be allowed with respect to this sum of Rs. 10,000/ Then we come to the question of limitation. The suit is clearly within time insofar as the liability for sale under the mortgage deed is concerned as it was filed within 12 years of the execution of the mortgage (see article 138 of the Limitation Act of 1908). As to the personal liability under this deed, that is beyond time as the suit was filed more than six years after the execution of the mortgage (see article 116 ibid). Nor does the entry of payment of Rs. 100/in the accounts help the bank in this behalf. That entry is of no value under section 19 or section 20 of the Limitation Act for neither a writing signed by the appellants nor an acknowledgement of payment in the handwriting of the appellants or in a writing signed by them has been proved. Nor does article 85 of the Limitation Act of 1908 help the bank. Assuming this Is a case of an open, current and mutual 904 account, the last payment was made in November 1949. Article 85 gives limitation of three years from the close of the year in which the last item admitted or proved is entered in the accounts (such year to be computed as in the account). The account in this case shows that the year was calendar year. The mutuality in this case came to an end in 1949 for we find from the account that thereafter there are only entries of interest due to the bank upto October 31, 1952. So the bank would get three years from the end of 1949 under article 85 and as the suit was filed on April 9, 1953, this entry will be of no help to the bank. We are therefore of opinion that the bank cannot get a decree fixing personal liability on the appellants and all that it is entitled to is a decree for sale of the mortgaged property. We therefore partly allow the appeal and declare that the amount due to the bank on April 9, 1953, the date of the suit, would be Rs. 15,956/7/ plus compound interest at the rate of Rs. 6/ per cent per annum with monthly rests up to that date minus the two sums, namely, Rs. 1,498/10/3 and Rs. 100/ shown as paid on May 14, 1948 and November 24, 1949, and thereafter Rs. 6/ per cent per annum simple interest will run. The trial court will modify the preliminary decree passed by it accordingly and give the appellants three months ' time after the preliminary decree has been so modified to pay the amount failing which the bank would be entitled to pray for a final decree for sale of the properties mortgaged. 'Mere will be no personal decree. The bank will get proportionate costs in the two courts below. As the defence of the appellants has failed on the main question, they will bear their own costs throughout. G.C. Appeal allowed in part.

IN-Abs

The appellants through their karta had an open mutual and current account with the respondent bank. They borrowed from the bank and also paid monies into it. On March 1, 1947 a sum of Rs. 15,956/7 was due to the bankfrom the appellants. In order to pay off that amount a mortgage deedwas executed by the appellants in favour of the bank. Under that deedfurther amounts up to a limit of Rs. 16,000 could be advanced to the appellants against the security mentioned therein. According to the bank, under the said provision of the deed a further sum of Rs. 10,000 was advanced to the appellants on March19, 1947.On April 9, 1953 the bank filed a suit for the recovery ofsums due to it from the appellants and the suit was claimed to be withinthe period of limitation on the allegation that on November 24, 1949, the appellants had repaid a sum of Rs. 100 to the bank. The appellants denied that they had borrowed Rs. 10,000 as alleged or that they had repaid Rs. 100. The trial court decreed the suit of the bank and the High Court upheld the decree. The appellants then came to this Court by special leave. The questions that fell for determination were (i) whether by producing a copy of the entry relating to the loan of Rs. 10,000 in these account books the bank had proved the said loan, (ii) whether the suit was within time. HELD : (i) In view of section 34 of the Evidence Act the appellants could not be saddled with liability for the sum of Rs. 10,000 said to have been advanced to them on March 19. 1947 on the basis of a mere entry in the account. Section 34 says that such entry alone shall not be suffi cient evidence and so some independent evidence had to be given by the bank to show that this sum was advanced. Such evidence not having been given the claim could not be upheld. [903 C] (ii)Section 4 of the Bankers ' Books Evidence Act (18 of 1891) certainly gives a special privilege to banks and allows certified copies of their accounts to be produced by them and those certified copies become prima facie evidence of the existence of the original entries in the accounts and are admitted as evidence of matters, transactions, and accounts therein. But such admission is only where and to the extent as the original entry itself would be admissible by law and not further or otherwise. Original entries alone under section 34 of the Evidence Act would not be sufficient to charge any person with liability and as such, copies produced under section 4 of the Bankers ' Books Evidence Act could not charge any person with liability. [902 C E] (iii)The suit was clearly within time insofar as the liability for sale under the mortgage deed was concerned as it was filed within 12 years of the execution of the mortgage as allowed by article 138 of the Limitation Act of 1908. [903 G] 899 As to the personal liability under the deed that was beyond time as the suit was filed more than six years after the execution of the mortgage allowed by article 116. The entry of the payment of Rs. 100 in the accounts also did, not help the bank in this behalf. That entry was of no value under section 19 or section 20 of the Limitation Act for neither a writing signed by the appellants nor an acknowledgement of payment in the handwriting of the appellants or in a writing signed by them had been proved. Nor did article 85 help the bank in fixing personal, responsibility on the appellants as the time of three years allowed by that Article had ended before the filing of the suit. [903 G H]

Appeal No. 1109 of 1966. Appeal by special leave from the judgment and order dated December 17, 1964 of the Punjab High Court (Circuit Bench) at Delhi in Civil Revision No. 159 D of 1963. M. C. Setalvad, Veda Vyasa and K. K. Jain. for the appellants. section G. Patwardhan, K. L. Hathi and R. H. Dhebar, for the respondent. 844 The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment of the Punjab High Court and arises in the following circumstances. The appellant entered into a contract with the Union of India, respondent herein, for construction of certain highway bridges. In connection with the execution of the contract, some disputes arose between the parties and were referred to the joint arbitration of Sri B. K. Guha and Sri N. P. Gurjar. As there was difference of opinion between the two arbitrators, the matter was referred to an umpire, namely, Sri Dildar Hussain, retired Chief Engineer, Hyderabad. The umpire recorded evidence of the parties and gave his award on May 27, 1961. It appears that the award was made in duplicate and one copy was sent to each party. On August 4, 1961, the appellant made a petition before the Subordinate Judge First Class, Delhi under sections 14 and 17 of the , No. 10 of 1940, (hereinafter referred to as the Act). it was prayed that the umpire be directed by the court to cause the award or a signed copy thereof together with any depositions and documents which might have been taken and proved before him to be filed in court (section 14). It was further prayed that a judgment be passed in terms of the award (section 17). It appears that on this petition the court issued notice to the umpire to file the award and the arbitration proceedings. On September 13, 1961, the umpire wrote to the court that he was forwarding along with that letter the award in the case duly signed and certified by him. On November 1, 1961, an objection was taken on behalf of the respondent that the award said to have been filed by the umpire had not been validly and legally filed under section 14 and as such no proceedings in pursuance of the said filing could be taken in court. This objection was considered as a preliminary objection by the Subordinate Judge. He came to the conclusion that the document filed in court was neither the original award nor a signed copy thereof, and as such the court could not take any action on that document. He therefore allowed the objection and dismissed the application under section 17 for passing a judgment in terms of the award. The appellant then went in revision to the High Court. The High Court dismissed the revision application holding that the document filed in court was admittedly not the original award and that it was clear from a perusal of the document itself that it was not a signed copy thereof. Certain alternative arguments were submitted to the High Court which were rejected and the revision application thus failed. Thereupon the appellant obtained special leave, and that is how the matter has come up before us. The main question that has been argued on behalf of the ap pellant is that the document in question is a signed copy of the 845 award within the meaning of those words in section 14(2) and therefore further proceedings should have been taken under section 17 of the Act. Now the relevant part of section 14 (2) reads thus : "(2) The arbitrators or umpire shall, at the request of any party to the arbitration agreement or any person claiming under such party or if so directed by the court. cause the award or a signed copy of it, together with any depositions and documents which may have been taken and proved before them, to be filed in court. . ." Therefore when a notice is issued by a court to the arbitrators or umpire it is their duty to file in court either the award in original or a signed copy thereof as directed by the court. It is not in dispute that in the present case the original award has not been filed. The dispute is whether the document filed is a signed copy of the award. The main contention on behalf of the appellant is that the document is a signed copy of the award within the meaning of those words in section 14(2), and thus should have been acted upon by the court. On the other hand, it is contended on behalf of the respondent that what has been filed is a certified copy of the award and not a signed copy thereof, and therefore it cannot be acted upon. The High Court has accepted the contention of the respondent and all that it has said in that behalf is that it is clear from a perusal of the award that it is not a signed copy of the award but it is certified as correct copy of the award dated the 27th May, 1961. Unfortunately, the High Court has not considered what exactly the words "signed copy of the award" mean, and it is to this problem that we must now turn. Now the word "copy" as such is not defined in the Indian Evidence Act, of 1872. But we get an idea of what a copy is from the provisions of section 63 of the Evidence Act. That section inter alia defines what secondary evidence means and includes namely (i) certified copies as provided, in section 76 of the Evidence Act, (ii) copies made from the original by mechanical processes which in themselves insure the accuracy of the copy, and copies compared with such copies, and (iii) copies made from or compared with the original. Obviously, therefore a copy means a document prepared from the original which is an accurate or true copy of the original. In Webster 's New World Dictionary, the word "copy" means "a thing made just like another ; full reproduction or transcription". What the word "copy" in section 14(2) therefore requires is that it must be a full reproduction of the original and that it should be accurate or true. When a document is an accurate or true and full reproduction of the original it would be a copy. In the present case it is not in dispute that what was produced by Sri Dildar Hussain was a true or accurate and full reproduction of the original. It was therefore a copy of the original, and the 846 only question that remains is whether it was signed, for if it was signed, it would be a signed copy. This brings us to the meaning of the word "sign" as used in the expression "signed copy". In Webster 's New World Dictionary, the word "sign" means "to write one 's name on, as in acknowledging authorship, authorising action etc. " To write one 's name is signature. Section 3(56) of the General Clauses Act, No. 10 of 1897, has not defined the word "sign" but has extended its meaning with reference to a person who is unable to write his name to include "mark" with its grammatical variations and cognate expressions. This provision indicates that signing means writing one 's name on some document or paper. In Mohesh Lal vs Busunt Kumaree(1), a question arose as to what "signature" meant in connection with section 20 of the Limitation Act, No. IX of 1871. It was observed that "where a party to a contract signs his name in any part of it in such a way as to acknowledge that he is the party contracting, that is a sufficient signature". It was further observed that the document must be signed in such a way as to make it appear that the person signing it is the author of it, and if that appears it does not matter what the form of the instrument is, or in what part of it the signature occurs. or?,, We accept these observations and are of the opinion that so long as there is the signature of the arbitrator or umpire on the copy of the award filed in court and it shows that the person signing authenticated the accuracy or correctness of the copy of the document would be a signed copy of the award. It would in such circumstances be immaterial whether the arbitrator or umpire put down the words "certified to be true copy" before signing the copy of the award. If anything, the addition of these words (namely, certified to be true copy) would be the clearest indication of the authentication of the copy as a true copy of the award, which is what section 14(2) requires, so long as the authentication is under the signature of the arbitrator or the umpire himself. In the present case, the document was sent by the umpire along with a letter forwarding it to the court. In the letter it was stated that he was sending the award only signed and certified by him. Then turning to the document we find that it begins with the words "now I hereby reproduce a true copy of the said award which is as follows" and this is signed by Sri Dildar Hussain, the umpire. Then follows the copy of the award, at the end we find the words "certified as correct copy of the award dated the 27th May, 1961 ". Underneath appears the signature of Sri Dildar Hussain, the umpire. Clearly therefore the document filed is a true or accurate and full reproduction of the original award and it bears the signature of the umpire, Sri Dildar Hussain, and thus is a signed copy of the award. (1)(1881)1.L.R.6Cal.340. 847 The fact that the umpire wrote the words "certified as correct copy of the award dated the 27th May, 1961" above his signatures does not in our opinion make any difference and the document it still a signed copy of the award. If anything, these words show that document filed is a true copy of the award and as it bears the signature of the umpire, it is a signed copy thereof. It may be added that the words "now I hereby reproduce a true copy of the said award which is as follows" which appear at the beginning of the document and which are signed by the umpire Sri Dildar Hussain also in our opinion are sufficient to show that what was produced in court was a signed copy of the award as required by section 14(2). In this view of the matter, it is unnecessary to consider the alternative argument raised on behalf of the appellant. We therefore allow the appeal and set aside the orders of the courts below and, holding that a signed copy of the award has been filed as required by section 14(2), direct that further proceedings will be taken in the matter as required by law by the Subordinate Judge in whose court the signed copy of the award was filed. Costs of this Court will abide the final result.

IN-Abs

The appellant entered into a contract with the, Union of India for the construction of certain railway bridges. On disputes arising the matter went to arbitration and then to an umpire. After the umpire had made his award the appellant filed an application under section 14 of the Indian , praying that the umpire be directed to file the award or a signed Copy thereof in the terms of section 14(2). The umpire filed in the Court a copy at the top of which he wrote : "now I hereby reproduce a true copy of the said award which is as follows. " At the end of the copy of the award he wrote : "Certified as correct copy of the award dated 27th May 1961. " Under this the umpire 's signature appeared. It was objected by the Union of India before the court that the copy of the award so filed was not a "signed copy" of the award as required by section 14(2) but only a "certified copy". The objection was upheld by the court and the appellants application for passing a judgment in terms of the award was dismissed. A revision petition before the High Court failed. The appellant then came to this Court by special leave. HELD : When a document is an accurate or true, and full reproduction of the original it would be a copy. In the present case what was produced by the umpire was a true accurate and full reproduction of the original. It was therefore a copy of the original. [845 H] It was also a signed copy because it bore the signature of the umpire. A document must be signed in such a way as to make it appear that the person signing it is the author of it, and if that appears it does not matter what the form of an instrument is, or in what part of it the signature occurs. The fact that the umpire wrote the words "certified as correct copy of the award dated the 27th May 1961" above his signature did not make any difference and the document was still a signed copy of the award. If anything these words showed that the document filed was a true copy of the award. [846 D, H; 847 A B] Mohesh Lal vs Busunt Kumaree, I.L.R. (1881) VI Cal. 340, relied on.

Appeals Nos. 1 and 2 of 1949. Appeals from the Judgment and Decree dated the 22nd December, 1942, of the High Court of Judicature at Patna in First Appeals Nos. 10 and 1 1 of 1939 arising out of the Judgment and Decree dated the 23rd November, 1936, of the Court of the Subordinate Judge of Berhampore in Original Suit No. 11 of 1935. D.V. Narasinga Rao and M. section K. Sastri for the appellant. section L. Chhibber and R. 0. Prasad for respondents Nos. 1 4, 6 9, 11 and 12. 1954. March 9. The Judgment of the Court was delivered by VENKATARAMA AYYAR J. These appeals arise out of a suit instituted by the respondents to enforce a mortgage deed, Exhibit A, dated 5th April, 1923, executed by the defendant in favour of one Radha Prasad Bhagat. The subject matter of the mortgage is an estate called the Bodogodo Zemin situated in 921 what was the District of Ganjam in the Province of Madras and now comprised in the State of Orissa, and governed by the provisions of the Madras Impartible Estates Act 11 of 1904. The mortgage is for ' Rs. 1,25,000 and the deed recites that a sum of Rs. 12,500 was advanced to the mortgagor on a promissory note executed on 30th March, 1923, that the balance of Rs. 1,12,500 was paid to him in cash, and that the entire amount was borrowed for meeting the expenses of the marriage of his second daughter with the eldest son of the Rajah of Talcher. The marriage, in fact, took place on 27th April, 1923. Though the deed recites that Rs. 1, 12,500 was paid in cash, the case of the plaintiffs is that it was, in fact, paid on 14th April, 1923, on the authority of the defendant to his manager, one Mr. Henry Tapp, after the mortgage bond was registered, which was on 10th April, 1923. In 1926 and 1927 the defendant made several payments towards the mortgage, in all aggregating to Rs. 42,000. The mortgagee died on 18th November, 1933, and thereafter his legal representatives filed the suit, out of which these appeals arise, for recovery of the balance due under the mortgage by sale of the hypothecated property. The defendant resisted the suit on several grounds. He pleaded that the mortgage was supported by consideration only to the extent of Rs. 25,000, and that it had become discharged by the payments made in 1926 and 1927. He also contended that the mortgage bond was not duly attested or validly, registered, and that it was therefore void and unenforceable. The Subordinate Judge of Berhampur who heard the suit held that no consideration passed for the promissory note for Rs. 12,500 dated 30th March, 1923, Exhibit J, and that it was really a salami; but that the balance of Rs. 1, 1 2,500 was paid to Mr. Tapp under the authority of the defendant. He also held that the mortgage bond was duly attested and validly registered, and a decree was passed in accordance with these findings Both the parties took up the matter in appeal to the High Court of Patna. ' The plaintiffs filed A. section 119 922 No. 10 of 1937 claiming that Exhibit J was supported by consideration, and the defendant filed A. section No. 11 of '1937 pleading that the alleged payment of Rs. 1,12,500 to Mr. Tapp was unauthorised, and that the mortgage bond was void, as it was neither duly attested nor properly registered. The High Court concurred with the Subordinate Judge in finding that Rs. 1,12,500 was paid to Mr. Tapp under the authority of the defendant, and that the bond was duly attested and registered. But as regards ' the promissory note, Exhibit J, it held differing from the Subordinate Judge that it was also supported by consideration. Against this decision, the defendant appeals. and repeats all the contentions urged by him in the courts below. * * * * [The court held on a consideration Of the evidence that the mortgage bond was supported by consideration and that it was duly attested.] The last contention of the appellant was that the deed was not validly registered in accordance with the provisions of sections 32 and 33 of the , and that it was therefore void. Section 32 enacts that, " Except in the cases mentioned in sections 31, 88 and 89 every document to be registered under this Act shall be presented. . . (a) by some person executing or claiming under the same,. . or (b)by the representative or assign of such person, or (c)by the agent of such person, representative or assign,duly authorised by power of attorney executed and authenticated in manner hereinafter mentioned. " Section 33, so far as is material for the present purpose, runs as follows: 33(1) " For the purposes of section 32, the following powers of attorney shall alone be recognized, namely : (a)if the principal at the time of executing the power of attorney resides in any part of (the Provinces) in which this Act is for the time being in force, a 923 power of attorney executed before and authenticated by the Registrar or Sub Registrar within whose district or sub district the principal resides;. Provided that the following persons shall not be required to attend at any registration office or court for the purpose of executing any such power of attorney as is mentioned in clauses (a) and (b) of this section, namely : (i)persons who by reason of bodily infirmity are unable without risk or serious inconvenience so to attend ; (ii)persons who are in jail under civil or criminal process and (iii)persons exempt by law from personal appearance in court. (2)In the case of every such person the Registrar or Sub Registrar or Magistrate, as the case may be, if satisfied that the power of attorney has been voluntarily executed by the person purporting to be the principal, may attest the same without requiring his personal attendance at the office or court aforesaid. (3)To obtain evidence as to the voluntary nature of the execution, the Registrar or Sub Registrar or Magistrate may either himself go to the house of the person purporting to be the principal, or to the jail in which he is confined, and examine him, or issue a commission for his examination. The substance of these provisions is that a. document must be presented for registration either by a party to it or his legal representative or assign or by his agent holding a power of attorney executed and authenticated in accordance with section 33 of the Act. In Jambu Prasad vs Muhammad Aftar Ali Khan(1), it was observed by the Judicial Committee approving of the decision in Ishri Prasad vs Baijnath(2) that, " . the terms of sections 32 and 33 of Act III of 1877 are imperative, and that a presentation of a document for registration by an agent. . who has not been duly authorized in accordance with those (1) 42 I.A. 22. (2) I.L.R. 28 All. 924 sections, does not give to the Registering Officer the indispensable foundation of his authority to register ,the document. " Where, therefore, a document is presented for registration by a person other than a party to it or his legal representative or assign or by a person who is not an agent authorized in the manner prescribed in section 33, such presentation is wholly inoperative, and the registration of such a document is void. In the. present case, Exhibit A was presented for registration by Mr. Tapp as the agent of the defendant under a power of attorney executed by him, Exhibit B, and the question is whether that power satisfies the requirements of section 33. Exhibit B was executed by the defendant before the Registrar at the residence of the Chief of Hindol at Cuttack and was authenticated by him. It was argued for the appellant that the authentication was invalid on three grounds: (1) that the defendant was not residing at Cuttack at the time of the execution of Exhibit B, and consequently the Registrar at Cuttack had no jurisdiction 'to ' authenticate the deed under section 33 (1) (a); (2) that Exhibit B was presented for registration by one Sundaram who described himself as the personal assistant of the defendant, but was, in fact, a person not authorised to present the document as required by section 32, and therefore the authentication of the power based on such presentation was void; and (3) that the authentication of the power under the proviso to section 33 (1) at the residence of the defendant was bad, as he was, in fact not suffering from any bodily infirmity at that time, and that in consequence the registration of Exhibit A pursuant thereto was void. With reference to the first contention that the defendant was not residing at Cuttack at the date of Exhibit B, and that consequently the Registrar of that place had no jurisdiction to register it under section 33 (1) (a), the finding of the courts below is that the defendant had been residing at Cuttack for a week prior to the date of Exhibit B, and that was sufficient for the purposes of section 33 (1) (a). In 925 Sharat Chandra Basu vs Bijay Chand Mahtab(1) the Privy Council observed: " The expression 'resides ', as used in section 33, is not defined in the statute; but there is no reason for assuming that it contemplates only permanent residence and excludes temporary residence. " It must therefore be taken as settled that even temporary residence at a place is sufficient to clothe the Registrar of that place with jurisdiction under section 33 (1) (a). It was argued for the appellant that his permanent place of residence was at Bodogodo, that he owned no house at Cuttack, that the house where Exhibit B was registered belonged to his brother in law, the Chief of Hindol, and that he stayed there only for the purpose of registering the power, and that on these facts, it could not be held that there was residence even of a temporary character at Cuttack. The fact that the house did not belong to the appellant is not material for this purpose; because residence only connotes that a person eats, drinks and sleeps at that place, and not that he owns it. Whether the stay of the appellant at Cuttack was of a casual nature, or whether it amounted to residence must depend on all the circumstances proved, and is essentially a question of fact. The appellant described himself in Exhibit B as temporarily residing at Cuttack, and there is no reason why his words should not be accepted as indicating the true position. Then there is the endorsement of the Registrar on Exhibit B, and that runs as follows: " Having visited and examined at hi8 residence the principal Sri Sri Sri Kishore Chandra Singh Deo, son of Durga Mahtab Singh Deo, of at present Hindol House . by profession Zamindar, who is personally known to me, I am satisfied that this power of attorney has been voluntarily executed by him and I accordingly authenticate it under section 33 of Act XVI of 1908. " In Sharat Chandra Basu vs Bijay Chand Mahtab(1) the endorsement on the power of attorney was as follows (1) 64 I.A. 77 926 Executed in my presence at the Hazaribagh Registration Office on August 8, 1916, by Sharat Chandra Basu, son of Nalinaksha Basu of Burd wan, at present of Hazaribagh in Hazaribagh, who is personally known to me and I accordingly authenticate it under section 33, Act XVI of 1908. . In accepting this endorsement as evidence of residence, the Privy Council observed: " It is true that he (tile principal) ordinarily resiided at Burdwan, but the endorsement of the SubRegistrar on the document expressly states that he was living, at that time, at Hazaribagh. The endorsement also shows that he was Personally known to the Sub Registrar, and it is not likely that a mistake would be made about his place of residence. " The endorsement in the present case is even more positive, in that it refers expressly to the residence of the executant. It is also not correct to ' say that the defendant came to Cuttack only for the purpose of executing the power, Exhibit B. He came there to complete the negotiations for raising a loan from Radha Prasad, and the execution of the power was only one and not a major incident in the business for which he came to Cuttack. As already mentioned, he also borrowed a sum of Rs. 12,500 under Exhibit J on 30th March, 1923, while at Cuttack. It is also in evidence that the defendant 's son was studying at Cuttack at that time, and was residing in the house of the Chief of Hindol. Under the circumstances there were ample materials to support the finding of the courts below that the appellant was residing at Cuttack at the time of Exhibit B, and that must be affirmed. It was next contended that as Exhibit B was preseated for registration by one Sundar am, who was neither a party to it nor an agent holding a power of attorney duly registered or authenticated, and as such presentation was void under section 32, the registration of Exhibit A under the authority contained in Exhibit B must also be held to be void. The answer to this contention is that section 32 would apply only if a power of attorney is presented for registration, and not when 927 it is produced merely for authentication, in which case, the only requirements that have to be complied with are the set out in section 33. The endorsements in Exhibit B show that the Registrar examined the principal at his residence and satisfied himself that he had executed it voluntarily. Then there was the authentication which was made expressly under section 33, and then the defendant signed in the presence of the Registrar. The defendant also admits in his evidence that the Registrar questioned him about the execution of the power, and then authenticated it, and that he thereafter signed before him. If the matter had stood there would have been no question but that Exhibit B was validly authenticated under section 33. But then, there is an earlier endorsement on Exhibit B that it was," presented for registration at 1 1 A.M. on the 5th day of April, 1923, at the Sadar Sub Registrar 's Office, Cuttack; by P. Sundaram. " The contention of the appellant based on this endorsement is that as Exhibit B was presented for registration, section 32 applied, and as Sundaram was not authorised to present it was inoperative. But the endorsement in question is clearly based on a misapprehension of the true position. Exhibit B was obviously produced before the Registrar along with the application for attendance at the residence for authentication and not for the purpose of registration. Rule 148 of the Bihar and Orissa Registration Manual provides both for regis tration and for authentication of a power of attorney, and prescribes separate endorsements for them. It also requires that they should be separately charged. Rule 157 provides that any person can present a document for authentication. Exhibit B was, in fact, not registered but only authenticated. ' It contains only an endorsement of authentication, and the charges collected were only for authentication. The endorsement therefore that Exhibit B was presented for registration is clearly a mistake, and must be ignored. Moreover, even if there had been a presentation of Exhibit B for registration and that was unauthorised, that does not detract from the validity of the subsequent authentication before the Registrar, which was an 928 independent act complete in itself and valid under section 33. In Bharat Indu vs Hamid Ali Khan(1), apower of attorney executed by a mortgagor was presented for registration by his servant but actually the Registrar registered it at the residence of the principal under section 33. In a suit to enforce the mortgage, the contention was raised that the registration of the mortgage deed was bad, as the power of attorney in pursuance of which it was registered was presented for registration by a person not authorised. In overruling this contention, the Privy Council observed that even though the presentation of the power for registration by the servant of the principal was bad, when it was subsequently registered at the residence of the executant in accordance with section 33 it should be deemed to have been presented by him to the Registrar, and that in that view the registration would be valid. On the same reasoning, exhibit B should be deemed to have been presented for authentication by the defendant when the Registrar attended at his residence, and the requirements of section 33 were fully satisfied. This objection must, therefore, be rejected. It was finally contended that the defendant was, in fact, not suffering from any bodily infirmity at, the time of Exhibit B, that the authentication of the power by the Registrar at the residence under the proviso to section 33 (1) was therefore bad, and that the registration of Exhibit A pursuant thereto was void; and reference was made to the evidence in the case that the defendant was not ill at the time. But there is the fact that the Registrar did, in fact, attend at the residence and authenticate the document, and that could have been only on the application of the defendant. In evidence the defendant stated: "Perhaps an application was filed by me for private attendance of the Sub Registrar at Cuttack. I do not remember what reasons were given for SubRegistrar 's private attendance." (1) 47 I.A. 177. 929 No application has been produced in court, and it must be presumed that when the Registrar authenticated Exhibit B under section 33 of the Act, he did so on an application setting out the proper ground, and ' that he satisfied himself that ground did exist. Whether he was right in his conclusion that the defendant was suffering from bodily infirmity is not a matter which can be gone into in a court of law. It is a matter exclusively within his jurisdiction, and any error which he might have committed would not affect his jurisdiction to register the document. In Ma Pwa May vs Chettiar Firm(1) Lord Atkin observed: "In seeking to apply this section (section 87), it is important to distinguish between defects in the procedure of the Registrar and lack of jurisdiction. Where the Registrar has no jurisdiction to register, as where a person not entitled to do so presents for registration, or where there is lack of territorial jurisdiction, or where the presentation is out of time, the section is inoperative: see Mujibunnissa vs Abdul Rahim(2). On the other hand, if the registrar having a jurisdiction has made a mistake in the exercise of it, the section (section 33) takes effect. " A decision of the Registrar that an applicant was suffering from bodily infirmity for the purposes of section 33 (1), proviso, clause (1), relates to a mere matter of procedure not affecting his jurisdiction, and even if erroneous, would not affect the validity of the registration. Moreover, there is the fact already mentioned that when the Registrar came to the residence for authenticating Exhibit B, the defendant signed it once again before him, and that would, in any case, be sufficient. There is no substance in this contention and it must be overruled. In the result, the appeals fail and are dismissed. As for costs, it must be mentioned that the defendant died while the appeals were pending, and that it is his legal (1) (1929) 56 I.A. 379. (2) (1901) 28 I.A. 15. 120 930 representatives who are prosecuting them. The property mortgaged is an estate governed by the Madras impartable Estates Act 11 of 1904. The plaintiffs alleged in their plaint that the mortgage was binding on the estate under section 4 of the Act. Issue 6 was framed with reference to this allegation, and the finding of the trial court was that it was not binding on the estate. But on appeal, the High Court held that the question could not be gone into in a suit laid against the mortgagor. It accordingly discharged the finding, and left the question open to be determined in other and appropriate proceedings. In view of this, we direct that the parties do bear their own costs in this court. Appeals dismissed.

IN-Abs

The word "resides" in section 33(1)(a) of the Indian , is not defined in the statute. It contemplates not only permanent residence but also temporary residence. Residence only connotes that a person eats, drinks and sleeps at that place and it is not necessary that he should own it. For purposes of section 32(c) of the Act, a power of attorney needs, in view of the provisions of section 33 of the Act, no registration but is only required to be executed before and authenticated by the Registrar. Hance an endorsement mistakenly made on such power of attorney that it was presented for registration must be ignored and does not affect the validity of subsequent authentication by the Registrar which was an independent act complete initself and valid under section 33. A decision of the Registrar under section 33(1) proviso (1) of the Indian that an applicant is suffering from bodily infirmity and is unable to attend the Registration Office or court without risk or serious inconvenience relates to a matter of more procedure and even if erroneous does not affect his jurisdiction. The finding is on a matter which is within his exclusive jurisdiction, and cannot be questioned in a court of law. Jambu Prasad vs Mahammad Aftar Ali Khan (42 I.A. 22), Sharat Chandar Basu v Bijay Chand kahtab (64 I.A. 77), Ma Pwa May vs Chettiar Firm (56 I.A. 379) and Mujiibunnnissa vs Abdul Rahim (28 I.A. 15) referred to.

Appeals Nos. 979 and 980 of 1965. Appeals by special leave from the judgment and orders dated November 12, 1962 and January 1, 1964 of the Madras High Court 951 in Tax Case Nos. 19 of 1961 and S.C. Petition No,. 142 of 1963 respectively. section Swaminathan and R. Gopalakrishnan, for the appellant (in, both the appeals). P. Ram Reddy and A. V. Rangam, for the respondent (in both the appeals). The Judgment of the Court was delivered by Shah, J. section S.Rajalinga Raja hereinafter called 'the appellant ' owns acardamom plantation on a fifty acre estate. For the assessment year 1957 58 he submitted a return under the Madras Plantations Agricultural Income tax Act 5 of 1955 disclosing a net income of Rs. 5,250/ from the plantation. On enquiry the Agricultural Income tax Officer learnt that the appellant had sold stocks of cardamom of the value of Rs. 58,375 9 9 between April 1, 1956 and March 31, 1957. The appellant explained that those sales represented not the produce of the year of account, but accumulated stocks of the past 3 to 4 years. That explanation was rejected by the Agricultural Income tax Officer and after allowing expenditure estimated at the rate of Rs. 120/ per acre, the balance was brought to, tax, and a penalty of Rs. 3,000/ was levied under section 20(1) (c) of the Act. The order was confirmed in appeal to the Appellate Assistant Commissioner, both as to the levy of tax and penalty. But the Appellate Tribunal was of the view that the average production of cardamom per acre was 40 lbs. and that if the stocks of cardamom, sold in the year of assessment be attributed to production of the year, the yield would approximately be 134 lbs. per acre. Holding that. an estimate of 40 lbs. per acre would be a "fair estimate" and that an average expenditure of Rs. 145/ per acre should be allowed, the Tribunal directed that the assessment be modified, and the order imposing penalty be set aside. The State of Madras then applied to the High Court of Madras in revision. The High Court was of the view that a part of the stock of cardamom sold in the year, though not the whole, was probably accumulated stock out of previous year 's production, but since the appellant did not lay before the taxing authorities reliable evidence, his explanation was rightly rejected. The High Court also rejected the contention of the appellant that the income from sales of ' cardamom stock of previous years was not taxable in the year of ' account because it had been subjected to tax in those previous. years under orders compounding the tax under section 65 of the Act. The High Court accordingly allowed the petition and restored the assessment made by the Department. With special leave, the 1 appellant has appealed to this Court. It is claimed by the appellant in the first instance that under the Act, agricultural produce itself is income and becomes charged to, 952 tax under the Madras Plantations Agricultural Income tax Act 1955, when it is received, and not when it is sold, used or consumed. Relying upon this premise it was urged that even on the view expressed by them the learned Judges of the High Court ought to have directed determination of the produce which was actually derived from agriculture in the year of. account, and ought to have brought to tax only that quantity and excluded the value of the rest from taxation under the Act. Section 3 of the Act imposes the charge of tax upon the total agricultural income of the previous year of every person, and by section 4 the total agricultural income of any previous year of any person comprises all agricultural income derived from a plantation within the State and received within or without the State. 'Agricultural income ' is defined (insofar as the definition is relevant in these appeals) as meaning: "(1) any rent or revenue derived from a plantation; (2) any in ,am , derived from such plantation in the State :by (i) agriculture; o (ii) the performance by a cultivator or receiver of rent in kind of any process ordinarily employed by a cultivator or receiver of rent in kind to render the produce raised or received by him fit to be taken to market; or (iii) the sale by a cultivator or receiver of rent in kind of the produce raised or received by him, in respect of which no process has been performed other than a process of the nature described in paragraph (ii): Explanation 1. Explanation 2. (3) Prima facie, section 3 of the Act read with the definition of 'agricultural income ' charges to tax the monetary return either as rent or revenue or agricultural produce from the plantation. The expression "income" in its normal connotation does not mean mere production or receipt of a commodity which may be converted into money. Income arises when the commodity is disposed of by sale, consumption or use in the manufacture or other processes carried on by the assessee qua that commodity. There is no reason to think that the expression "income" in the Act has any other connotation. A tax on income whether agricultural or non agricultural is, unless the Act provides otherwise, a tax on monetary return actual ,or notional. Section 4 of the Act supports that view, for in the 953 total agricultural income is comprised all agricultural income. derived from a plantation in the State. It is not necessary, however, for income to accrue that there must be a sale of a commodity: consumption or use of a commodity in the business of the assessee from which the assessee obtains benefit of the commodity may be deemed to give rise to income. Therefore, merely because the produce of his plantation was received in the earlier years, assuming that the appellant 's case is true, income derived from sale of that produce in the year of account is not exempt from tax under the Act, in that year. Counsel for the appellant strongly relied upon a judgment of this Court in Dooars Tea Co. Ltd., vs Commissioner of Agricultural ' Income tax, West Bengal(1) a case decided under the Bengal Agricultural Income tax Act 4 of 1944. It was held in interpreting the definition of section 2(1) (b) of the Bengal Agricultural Income tax Act, 1944, which is in substantially the same language as the definition under the Act that it was not predicated of the agricultural ' income that it must be sold and profit or gain received from such sale before it can be included in the definition of agricultural income. In Dooars Tea Co. Ltd. case (1), the appellant grew bamboos, thatching grass and fuel by agricultural operations and utilized the products for the purpose of its tea business. The claim of the Income tax authorities to tax the value of the produce was resisted on the plea that the produce was not sold. In rejecting that plea, the Court observed at p. 13: "In terms the clause [section 2(1) (b)] takes in income derived from agricultural land by agriculture; and as we have already pointed out giving the material words their plain grammatical meaning there is no doubt that agricultural produce constitutes income under this clause. Is there anything in the context which requires the introduction of the concept of sale in interpreting this clause as suggested by the appellant? In our opinion this question must be answered in the negative. Not only is there no indication in the context which would justify the importing of the concept of sale in the relevant clause, but as we have just indicated the indication provided by clauses (ii) and (iii) is all to the contrary. What this clause seems clearly to have in view is agricultural produce itself which has been used by the assessee. " But these observations do not, in our judgment, imply that agricultural produce when received by a person carrying on agricultural operations becomes income in his hands. The Court in that case was concerned to deal with a limited question whether a (1) ; ; 7Sup. C.I./66 16 954 person who has raised agricultural produce instead of selling it uses that produce for his own business, can he be said to have earned agricultural income? The Court in that case held that he would be deemed to be earning income. The decision is authority for the proposition that for agricultural income to arise, it is not predicated that the agricultural produce must be sold: user of agricultural produce for the purpose of the business of the assessee may give rise to agricultural income. The decision in State of Kerala and Anr vs Bhavani Tea Produce Co. Ltd.(1) on which reliance was placed by counsel for the appellant has, in our judgment, no relevance whatever in this case. In Bhavani Tea Produce Company 's case (1) the assessee was required under section 25 of the , to deliver the coffee produced by it to the Coffee Board and the question which fell to be determined was whether such delivery constituted sale by operation of law as a result of which the assessee ceased to be the owner of the coffee, the moment it handed over the produce to the Coffee Board. This Court held that under the relevant provisions of the Act as soon as the producer of coffee handed over the produce to the Coffee Board, it ceased to be the owner and income accrued to him at that point of time. That case does not lay down the proposition that income accrues to a producer of agricultural produce before the date of disposal, use or sale. The second argument raised by the appellant has also no substance. For the years 1955 56 and 1956 57 the appellant did not submit returns of income, but applied to compound the tax under section 65 of the Act, and paid the tax determined at the rates specified in Part 11 of the Act. Therefrom it cannot be inferred that the produce which was sold by him in the year of account to which these appeals relate had suffered tax in the earlier years. It has to be proved that the crop sold by the appellant related to the years in respect of which he had applied to compound the tax; and on that part of the case there is no evidence. The appeals therefore fail and are dismissed with costs. There will be one hearing fee. V. I P.S. Appeals dismissed.

IN-Abs

The appellant owned a cardamom plantation. For the assessment year 1957 58, he submitted a return under the Madras Plantations Agricultural Income tax Act, 1955. The Agricultural Income tax Officer did not accept the return, and 'added to the income the value of stocks of cardamom sold in the accounting year. The High Court in revision, confirmed the assessment made by the Department. In appeal to this Court, it was contended that: (1) the agricultural produce itself was income and became charged to tax under the Act when it was received and not when it was sold, used or consumed, and therefore, the High Court ought to have directed determination of the produce which was actually derived from agriculture in the year of account and ought to have brought to tax only that quantity and excluded the value of the rest of the produce received in earlier years, from taxation; and (2) from the fact that the appellant applied to compound the tax for the earlier years, it must be inferred that the produce which was sold by him in the year of account had already suffered tax in the earlier years. HELD : (1) Merely because the produce of the plantation was received in the earlier years, income derived from sale of that produce in the year of account was not exempt from tax under the Act in that year. [953 B] Section 3 of the Act read with the definition of "agricultural income" charges to tax the monetary return either as rent or revenue or agricultural produce from the plantation. The expression "income" in its normal con notation does not mean mere production or receipt of a commodity which may be converted into money. Income arises when the commodity is disposed of by sale, consumption or use in the manufacture or other processes carried on by the assessee qua that commodity. It is not necessary, however, for income to accrue that there must be a sale of a commodity : consumption or use of a commodity in the business of the assessee from which the assessee obtains benefit of the commodity may be deemed to give rise to income. [952 G H; 953 A B] Dooars Tea Co. Ltd. vs Commissioner of Agricultural Income tax, West Bengal; , , referred to. (2) It had to be proved by evidence that the crop sold related to the years in respect of which the assessee had applied to compound the tax, but there was no such evidence. [954 F]

Appeal Nos. 858 to 861 of 1964. Appeals by special leave from the judgment and order of the Andhra Pradesh High Court in Second Appeals Nos. 720 and 724 to 726 of 1957. C.B. Agarwala and T. V. R. Tatachari, for the appellants (in all the appeals). P. Ram Reddy and K. R. Sharma for the respondent (in all the appeals. ) The Judgment of the Court was delivered by Shelat, J. All these four appeals by special leave raise a common question regarding interpretation of section 11(1) of the Madras Commercial Crops Market Act, XX of 1933 and Rule 28 of the Rules made thereunder and therefore can be disposed of by a common judgment. The Act was originally enacted by the Madras Legislature. It was a law in force immediately before the constitution of the State of Andhra Pradesh and governed the territories now forming part of that State. By virtue of Andhra Pradesh Act of 1953 and the Adaptation of Laws Order passed on November 1, 1953 by the State Government of Andhra Pradesh it became applicable to the newly formed State of Andhra Pradesh. By a Notification dated June 27, 1949 the then Government of Madras, in exercise of the power conferred on it by section 2(1)(a), declared coconuts and copra to be commercial crops. Under section 4 of the Act, the State Government also declared the District of East Godavari as the "notified area" for purposes of the Act in respect of coconuts and copra. By a further notification dated December 5, 1950 issued under section 4(a) of the Act it established a Market Com 976 mittee at Rajahmundry for the said notified area. The said Market Committee levied the following fees, viz., (1) a licence fee under section 5(1) of the Act read with Rule 28(3); (2) a licence fee for storage, wharfage etc., under section 5(3) read with Rule 28(3); (3), a registration fee under section 18 read with Rule 37; (4) a fee on the said goods bought and sold within the notified area and under section II (1) read with Rule 28(1); and (5) a fee under the same section on consign ments of coconut oil. Contesting the levy of fees under items 2 to 5 as being illegal on the ground that they sold coconuts and copra to customers outside the notified area and in some cases outside the State, the appellants filed various suits in the court of the District Munsif, Amalapuram for refund of the said fees collected by the said Committee at different times. The Market Committee resisted the said suits claiming that the aforesaid provisions conferred power upon it to levy the said fees and that the said levy was valid and legal. The said suits were tried together and the District Munsif by his judgment dated October 17, 1955, inter alia, held that the levy under section 11(1) read with Rule 28(1) though called a "fee" was really a "tax", that the said provisions empowered the Committee to impose the said tax only when the said goods were bought and sold within the notified area, that the sales effected by the appellants were to customers outside the said area and in some cases outside the State, that the Committee had no power to levy and collect the said fees ' and therefore the appellants were entitled to refund of the said fees and accordingly passed decrees in all the suits. In appeals by the Committee, the Subordinate Judge, Amalapuram, held that though the appellants purchased the said goods within the notified area they exported them to their customers outside the notified area and outside the State and relying upon the decision in Kutti Koya vs State of Madras() he held that though section II (1) called the said levy as fee it was in substance a tax and that such a tax being oil sales completed at the places of their customers outside the State offended article 286 of the Constitution and was therefore illegal. The Subordinate Judge, except for deleting the relief granted in respect of licence fee under section 5(3) of the Act, dismissed the appeals and confirmed the judgment and decree of the Trial Court. The Market Committee thereupon filed Second Appeals in the High Court of Andhra Pradesh. Before the High Court the controversy centered round the question of fee under section 11 (1) only. By its common judgment dated November 8, 1961 the High Court relying upon the judgment of a Division Bench of that Court in Satyanarayana and Venkataraju Firm vs Godavari Market Committee(2) held that the word "fee" in section II (1) was in fact a fee and not a tax, The Division Bench also held that the said goods were pur (1) A.I.R., 1954 Mad. 621. (2) A.I.R. 1959 Andh. Pradesh 398. 977 chased by the appellants from producers or petty dealers within the notified area and then sold by them to customers outside the said area or the State, that the transactions which were the subjected matter of the levy under section 11(1) were transactions consisting of purchase of the said goods by the appellants and the corresponding sales to them by the producers and petty dealers and not the subsequent sales effected by them to their customers outside the notified area or the State, that therefore the transactions on which the said fee was levied were effected and completed inside the notified area and fell within the expression "bought and sold" in section 11 (1) and therefore the Market Committee rightly levied the said fee on those. transactions. In the result, the Division Bench allowed the appeals and dismissed the appellants ' suits. It is this judgment and decree against which these appeals are directed. The preamble of the Act states that the Act was passed for making provisions for better regulation of buying and selling of and the establishment of markets for commercial crops. As stated in M.C.V.S. Arunachala Nadar vs The State of Madras(1), the Act was the result of long exploratory investigation by experts in the field, conceived and enacted to regulate the buying and selling of Commmercial crops to provide suitable and regulated markets, to eliminate middlemen and bring face to face the producer and the buyer so that they meet on equal terms thereby eradicating or at any rate reducing the scope for exploitation of the producers. It therefore provided a machinery for regulating trade by providing a common place where facilities would be furnished by way of space, buildings and storage accommodation, and where market practices would be regularised and market charges clearly defined and unwarranted ones prohibited, where correct weighment would be ensured by licensed weighmen and all weights would be checked and stamped, where payment on hand would be ensured, where provision would be made for settlement of disputes, where daily prevailing prices would be made available to the grower and reliable market information provided regarding arrivals, stocks, prices etc., and where quality standards would be fixed when necessary and contract forms standardized for purchase and sale. The result of the implementation of the Act would be thus to give reasonable facilities to the growers of commercial crops ensuring proper price for their commodities. Section 4(a) (1) provides for the formation of a market com mittee for enforcing the provisions of the Act and the Rules and bylaws framed thereunder. Sub section (2) lays down that the Committee shall establish in the notified area such number of markets providing such facilities, as the State Government may from time to time direct, for purchase and sale of commercial crops. Section 5 (1) [1959] Suppl. 1 S.C.R. 92. 978 prohibits any person to set up, establish or use, continue or .allow to be continued any place within the notified area for the purchase or sale of commercial crops except under a licence and in accordance with the conditions thereof. The Market Committee, however, can exempt from the provisions of this sub section any person who carries on the business of purchasing or selling any .,commercial crop in quantities not exceeding those prescribed by the Rules. It also exempts from the provisions of this section a person selling a commercial crop which has been grown by him or a co operative society selling a commercial crop which has been grown by any of its members and also a person purchasing for his private use a commercial crop in quantities not exceeding those prescribed by the rules. Section 6 provides that every market committee shall consist of such number of members not exceeding twelve as may be fixed by the State Government and provides for representatives of licencees under section 5 and buyers, sellers and buyers and sellers registered under the Rules prescribed in that behalf. Section II (1) with which we are concerned in these appeals reads: "The Market Committee shall, subject to such rules as may be made in this behalf, levy fees on the notified commercial crop or crops bought and sold in the notified area at such rates as it may determine. " The Explanation to sub section (1) provides that all notified commercial crops leaving a notified area shall, unless the contrary is proved, be presumed to be bought and sold within such area. Sub section 2 provides that the fee chargeable under sub section(1) shall be paid by the purchaser of the commercial crop concerned provided that where such a purchaser cannot be identified the fee shall be paid by the seller. Section 12 provides that all monies received by a market committee shall be paid into a fund and all expenditure incurred by the market committee shall be defrayed out of the said fund. The expenditure which the committee can incur is for purposes set out in section 13 which incidentally reflect the object and purpose of the Act. Section 18 empowers the State Government to make rules including rules for licence fee under section, 5, the registration fee and the prohibition of buying and selling ,of commercial crops in the notified area by persons not so registered and the fee to be levied on commercial crops bought and sold in the notified area. Rule 28 lays down the maximum fee leviable on commercial crops under section 11 (I) as also the maximum fee payable for licences and registration. Rule 28 A provides that the fees referred to in sub rule (1), that is, "fees" under section 11 (1), shall not be levied more than once on a commercial crop in a notified area. These provisions clearly show the policy of safe_guarding the interests of the producers and of guaranteeing to them 979 reasonable return for the crops they would bring to sell without being exploited. Mr. Agarwala raised the following contentions: (1) that the fee charged by the Market Committee under s.11(1) was on sales effected by the appellants with their customers, some of whom were admittedly outside the notified area and the rest outside the State; (2) that that was the footing on which the parties proceeded with the suits but that case was given up in the High Court and the High Court was in error in permitting the Committee to shift its case and argue that the fee was levied not on those sales but on transactions of purchase entered into by the appellants with the producers and other petty dealers. It is true that in para 3 of their plaint the appellants averred that their business activities consisted of buying coconuts and copra in East Godavari District and selling them to customers outside the notified area and even the State and that those sales were completed at the respective places of those customers. The appellants ' case therefore was that in respect of these sales with customers some of whom were outside the notified area and the rest outside the State, the levy of fee was in the former case beyond the ken of section II (1) and in the latter case repugnant to article 286 of the Constitution. The written statement of the respondent committee denied these allegations. The Committee asserted that both the purchases and sales took place in the notified area and that though the fee levied by it was on sales by the appellants and though delivery of the said goods thereunder took place outside the notified area the sales in respect thereof were made within the notified area and therefore the question of the levy under section 11 (1) being repugnant to article 286 of the Constitution did not arise. Besides these pleadings Mr. Agarwala drew our attention to certain notices of demand and circulars issued by the Committee in which it was stated that the said fee was being levied on goods exported outside East Godavari District and that the traders were liable to pay it both on coconuts exported to outsiders and also consumed internally. That presumably was stated because if the goods were "bought and sold" within the notified area, even if they were subsequently exported outside, section 11(1) would apply. The practice followed by the appellants and not denied by the Committee was that they used to despatch these goods by rail to their customers. Railway receipts and hundies were then sent to their bankers at the destination and railway receipts were delivered to the customers on their honouring the hundies Thus the goods were delivered outside the notified area and the sales effected by the appellants to their customers were also completed at places outside the notified area and in some cases outside the State. On these facts the District Munsif held that property in the goods having passed at destination, sales took place outside the 980 notified area and therefore the fee charged by the Committee was illegal as section 11(1) permitted such a levy only on goods bought and sold within the notified area. On appeal by the Committee, the Subordinate Judge held that the said fee was a tax, that it was a tax on sales outside the notified area and the State and was not therefore warranted under section 11 (1) and was repugnant to article 286. It seems that in both the courts, the real issue was lost sight of, viz., whether the goods in respect of which the fee under section 1 1 (I) was levied were goods "bought and sold" within the notified area as envisaged by the section. In the High Court however the questions convassed were (1) whethe r the fee provided in section 11 (1) was a fee or a tax and (2) even if it was a fee whether the Committee had the power to levy it in respect of goods sold by the appellants outside the notified area. As already stated the Trial Judge and the Subordinate Judge had proceeded on the footing that the said fee was levied on sales entered into by the appellants with their customers who undoubtedly were outside the notified area. But the real question that ought to have been dealt with by the Trial, Judge and on appeal by the Subordinate Judge was not whether the appellant 's sales were to customers outside the notified area or the State but whether the fee which was levied was valid. The question of the validity of the levy entailed another question, viz., whether the levy was on transactions effected by the appellants before they sold those goods to their customers. Were the appellants entitled to a refund of the fees levied on them under section II (1) ?, was the principal question in the suits. To decide that question it was necessary for the court to go into the question whether the fee was charged on the sales by the appellants or on the transactions made between them and those from whom they purchased the goods in question. Since neither the Trial Court nor the Subordinate Judge had gone into that question, it was necessary for the High Court to go into it not only to do justice to the parties but also because that was the real issue arising in the suits and was the crux of the litigation. There was therefore no question of the High Court allowing the respondent Committee to make out a new case. The question from the very inception was whether the Committee was competent to levy the fee in question under section 11(1). To answer that question the court necessarily had to enquire on which transactions could the said fee be levied under section 11(1) and whether it was rightly levied by the Com mittee. The High Court answered these questions by holding that it was levied, on the transactions effected by the appellants with those from whom they bought the said goods, that section 11(1) dealt with those transactions and was not therefore concerned with the subsequent sales entered into by the appellants with their customers outside the notified area. Since, according to the High Court, those transactions were admittedly effected within the noti 981 fied area the levy was valid and warranted under section 1 1 (1). In our view the High Court approached the question from a correct angle and therefore there was no question of its having allowed the Committee to change its case or make out a new case. That being the position, the next question is whether the Committee could levy fee under section II (1) on the transactions effected by the appellants before they sold those goods to their customers. Mr. Agarwala 's contention was that the fee levied under section 11(1) could only be in respect of goods "bought and sold" and not in respect of transactions where goods were only "bought" or only "sold". According to him it is only when a person bought goods and sold those identical goods within the notified area that the fee under section 11(1) could be levied. According to him, the transactions effected by the appellants consisted in their purchasing the said goods; they stopped at the stage of goods "bought". Therefore, the other ingredient for a valid levy of the fee not being present the fee levied in the present case was not in accordance with the requirements of section 11 (1) and was unwarranted. This contention raises the question as to the meaning of the words "bought and sold" in section 11(1). At first sight they would appear to be susceptible of three meanings; viz., (1) that they mean duality of transactions where the same person buys goods and sells those identical goods in the notified area; (2) that they mean "bought" or "sold" the conjunctive "and" meaning in the context of the sub section the disjunctive "or" and (3) that they apply to a transaction of purchase as the concept of purchase includes a corresponding sale. When a person buys an article from another person, that, other person at the same time sells him that article and it is in that sense that section 11(1) uses the words "bought and sold. " The incidence of the fee under section 11(1) is on the goods thus "bought and sold". This last interpretation was favoured by the High Court of Madras in Louis Dreyfus & Co. vs South Arcot Groundnut Market Committee(1) which has been accepted by the High Court in the present case. If the construction commended to us for acceptance by Mr. Agarwala were to be correct, viz., that the appellant 's transactions stopped at the stage of goods "bought", they would not be transactions in respect of goods "bought and sold". If the fee was levied on sales effected by the appellants with their customers its levy would not be valid under section 1 1 (1) and would also be repugnant to article ' 286 where goods were delivered outside the State. But it is a well settled rule of construction that the court should endeavour as far as possible to construe a statute in such a manner that the construction results in validity rather than its invalidity and gives effect to the (1) 982 manifest intention of the legislature enacting that statute. The object in passing the Act was to prevent the mischief of exploitation of producers of commercial crops such as coconuts and copra and to see that such producers got a fair price for their goods. The mischief to prevent which the Act was enacted was the exploitation of these producers by middlemen and those buying goods from them and therefore the Act provided facilities such as market place, place for storage, correct weighment etc., so that the producers and his purchasers come face to face in a regulated and controlled market and a fair price was obtained by them. If the construction suggested by Mr. Agarwala were to be accepted and the section were to be construed as being applicable to those transactions only which have a dual aspect, that is, buying by a dealer from a producer and the dealer selling those identical goods within the notified area, the object of the Act would be defeated, for in a large number of cases the transactions would halt at the stage of buying and the Committee in those cases would have no power to levy the fee on them. Why is a buyer or a seller or a buyer and seller required to be registered and why does the Act prevent those who have not registered themselves from effecting transactions in commercial crops unless the object was to regulate and control transactions in those commodities at all stages and in a manner preventing the exploitation of the producer ? The legislature had thus principally the producer in mind who should have a proper market where he can bring his goods for sale and where he can secure a fair deal and a fair price. The Act thus aims at transactions which such a producer would enter into with those who buy from him. The words "bought and sold" used in section 11(1) aim at those transactions where under a dealer buys from a producer who brings to the market his goods for sale. The transactions aimed at must be viewed in the sense in which the legislature intended it to be viewed, that is, as one transaction resulting in buying on the one hand and selling on the other. Such a construction is commendable because it is not only in consonance with the words used in section 11(1) but is consistent with the object of the Act as expressed through its various provisions. The construction on the other hand canvassed by the appellants is defeative of the purpose of the Act and should, unless we are compelled to accept it, be avoided. The construction which we are inclined to accept acquired some support from the fact that section II makes the purchaser and not the seller primarily responsible for payment of the fee and it is only when the purchaser cannot be identified that the seller is made liable. Mr. Agarwala at first also urged that the fee under section 11 (1) amounted to a tax and that it was in fact a sales tax. But at the last moment he stated that he did not wish to press that contention and requested us not to express any opinion thereon. Since the contention is not pressed we need not express any opinion on that ques 983 tion and confine ourselves to the question as to the interpretation of the words "bought and sold" in that section. In our view the construction placed by, the High Court on section 11(1) was a correct construction and therefore the respondent committee had rightly charged the appellants with said fee. The appeals therefore fail and are dismissed with costs. One hearing fee.

IN-Abs

By a notification in June 1949, the State Government, in exercise of a power under section 2(1)(a) of the Madras Commerical Crops Market Act, 1933, declared coconuts and copra to be 'commercial crops ' within the meaning of the Act. The respondent Market Committee IL vied in respect of the declared commerical crops, a fee on the goods 'bought and sold ' within the notified area under section 11(1) of the Act, read with Rule 28(1) of the Rules made under the Act. The appellants filed various suits contesting the levy on the ground that they sold coconuts and copra to customers outside the notified area and in some cases outside the State; consequently, they sought refund of the fees collected by the respondent committee. The suits filed were tried together and the trial Judge held that the levy, though called a "fee", was really a "tax", and that the Committee was only empowered to impose such tax when the goods were bought and sold within the notified area. He therefore passed decrees in all the suits .for refund of the fees collected. The first appeal by the respondent Committee was dismissed by the Sub Judge who further held that the fee in substance being a tax, such tax on sales completed outside the State would also offend article 286 of the Constitution. However, a second appeal to the High Court was allowed on the view that the transactions which were the subject matter of the levy under Section 11(1) were transactions consisting of the purchase of the goods by the appellants and the corresponding sales to them by the producers and not the subsequent sales effected by the appellants to their cus tomers outside the notified area or the States; therefore the transactions on which the said fee was levied were effected and completed inside the notified area and fell within the expression "bought and sold" in section 11(1). In the appeal before this court it was contended on behalf of the appellants that the transactions effected by them consisted in their purchasing the goods and stopped at the stage of goods "bought" so that no fee could be levied in the absence of the other ingredient, i.e., sale within the notified area. HELD : The construction placed on section II (1) by the High Court was correct and the respondent Committee had therefore rightly charged the fee. [983 B] 975 The words "bought and sold" used in section 11(1) aim at those transactions where under a dealer buys from a producer who brings to the market his goods for sale. The transaction aimed at must be viewed in the sense in which the legislature intended it to be viewed, that is, as one transaction resulting in buying on the one hand and selling on the other. Such a construction is commendable because it is not only in consonance with the words used in section 11 (1) but is consistent with the object of the Act as expressed through its various provisions,, i.e., to prevent the mischief of exploitation of producers of commercial crops such as coconuts and copra and to see that such producers got a fair price for their goods. [982 A B, E F] Kutti Koya vs State of Madras A.I.R. 1954 Mad. 621; Satyanarayana and Venkataraju Firm vs Godavari Market Committee A.I.R. 1959 Andh. Pra. 398; M.C.V.S. Arunachala Nadar vs The State of Madras [1959] Suppl. 1 S.C.R. 92; Louis Drevfus & Co. vs South Arcot Groundnut Market Committee ; referred to.

Appeal No. 661 of 1963. Appeal by special leave from the judgment and order dated August 17, 1959 of the Calcutta High Court in Civil Rule No. 274 of 1958. N. C. Chatterjee and Sukumar Ghose, for the appellant. Sarjoo Prasad and section C. Mazumdar, for the respondent. delivered by Sikri J. This appeal by special leave is directed against the judgment of the High Court of Calcutta in an application under section 115 of the Code of Civil Procedure and under article 227 of the Constitution filed by the tenant, Shri Surendra Nath Bibra, now appellant before us. Stephen Court Limited, respondent before us, hereinafter referred to as the plaintiff, filed a suit in the Court of Small Causes, Calcutta, for the recovery of rent from September 1956 to November,1956, at the rate of Rs. 350/ per mensem, and interest, against the appellant, hereinafter referred to as the defendant, alleging that the defendant was a monthly tenant by virtue of a lease dated 459 April 30, 1956, under the plaintiff, in respect of flat No. 17 at promises No. 18A, Park Street, known as Stephen Court in the town of Calcutta, and that the defendant had not paid the rent from September to November, 1956. The defendant, inter alia, Pleaded that relying on the representation and assurance of the plaintiff that three bed rooms, two bath rooms etc. would be available to the defendant in flat No. 17 he executed a lease on April 30, 1956, for a period of 21 years, but the plaintiff put him in possession only of two bed rooms and not three, and according to him, in the circumstances he was entitled to suspend the rent altogether. The Small Cause Court Judge, Mr. Mandal, found that the defendant had not been put into possession of one of the three bed rooms. Purporting to follow Katyayani Debi vs Udoy Kumar Das (1) and Abhoya Charan Sen vs Hem Chandra Pal (2) he held that the defendant was entitled to suspend payment of rent to the plaintiff. The plaintiff then preferred an application under section 38 of the Presidency Small Cause Courts Act against the dismissal of its suit. The Full Bench of the Small Causes Court, following Ram Lal Dutt Sarkar vs Dhirendra Nath. Roy,(3) held that the plaintiff 's claim for arrears of rent must succeed in spite of the fact that the landlord had failed to give possession of one out of the three bed rooms of the demised premises. The Bench, however, made it clear that the "non applicability of the principle of suspension of rent in the present suit for recovery of arrears of rent for a parti cular period will not necessarily debar the tenant from claiming other appropriate reliefs against the failure of the landlord to put him In possession of the entire demised premises by way of apportionment of rent or damages. ' Accordingly, it decreed the suit. The defendant then filed an application under section 115, Civil Procedure Code, and article 227 of the Constitution. In the application the defendant prayed that the suit be dismissed. In the alternative, the defendant alleged that the plaintiff was at best entitled only to a proportionate rent. The High Court dismissed the application and the defendant having obtained special leave, the matter is now before us. Mr. N. C. Chatterjee, the learned counsel for the defendant,. contends that the decision in Ram Lal Dutt 's (4) case which the High Court and the Full Bench of the Small Causes Court had followed was distinguishable because in that case the tenancy was. an agricultural tenancy and the tenant in that case had raised the point after the lapse of a number of years. He says that the doctrine of suspension of rent should be applied to the facts of this case because the plaintiff had deliberately not given possession (1) 30 C.W.N. (P.C.) 1 (2) (3) 70 I.A. 18. 460 of one bed room. In the alternative he contends that the Fun Bench of the Small Causes Court and the High Court should have made an order for apportionment of rent. We are unable to agree with Mr. Chatterjee that the decision of the Privy Council in Ram Lal Dutt 's (1) case can be distinguished on the ground urged by him. It is no doubt true that the Privy Council was concerned with an agricultural tenancy but the Privy Council decided the appeal on a matter of principle, the principle being that the doctrine enunciated, in Neak vs Mackenzie (2 ) should not be regarded as a rule of justice, equity and good conscience in India in all circumstances. It is interesting to note that the subject matter of the lease in Neak vs Mackenzie (2) was a dwelling house and land attached to it, and it was eight acres of the land which was attached to the house that the tenant had been kept out ,of possession. Be that as it may, in our opinion, the doctrine laid down in Neale vs Mackengie (2) is too inflexible and cannot be applied to all cases. As observed by Sir George Rankin, the ,doctrine cannot be justified as a dependable rule to be adhered to notwithstanding hard cases. On the one hand it does not seem ,equitable that when a tenant enjoys a substantial portion of the property of the landlord, leased to him, without much inconvenience, he should not pay any compensation for the use of the property , in other words, to borrow the language of Sir George Ranking that he should enjoy a windfall. On the other hand it is unfair that if a tenant is not given possession of a substantial portion of the property, he should be asked to pay any compensation for the use of the property while he is taking appropriate measures for specific performance of the contract. It seems to us that it will depend on the circumstances of each case, whether a tenant would be entitled to suspend payment of the rent or whether he should be held liable to pay proportionate part of the rent. On the facts of this case we are of the opinion that the tenant is not entitled to suspend the payment of rent but he must pay a proportionate part of the rent. We may make it clear that like the Privy Council in Ram Lal Dutt 's (1) case we are not deciding that the doctrine of suspension ,of rent should or should not "be applied at all to cases of eviction ,of the lessee by the lessor from a part of the land, and if so, whether it is limited to rents reserved as a lump sum, and whether it is a rigid or discretionary rule these questions will call for careful review when they are presented by the facts of a particular case. " In view of this we need not consider cases like Hakim Sardar Bahadur vs Parkash Singh (3); Jatindra Kumar Seal vs Raimohan Bai (4); and Nilkantha Pati vs Kshitish Chandra Satati.(5) (1) 70 I.A. 18. (2) ; (3) A.I.R. (1962) Pun. (4) A.I.R. [1961] An. 52. (5) 1. 461 The High Court rejected the plea of apportionment of rent on the ground that the defendant had not taken a specific plea to this effect in the written statement. The second ground given by the High Court was that it would be unreasonable to thrust a relief on the defendant unless he himself chooses one or more of the alternative reliefs available to him. Further, no prayer was 3 made before the High Court to amend the written statement to include this relief. In our opinion, the Full Bench of the Small Causes Court should have remanded the case for calculation of the proportionate rent for the portion of the premises taken possession of by the defendant. In our view, the High Court has taken too technical a view. It would be inequitable to allow the plaintiff to recover the full rent when he has not delivered possession of the whole of the premises in question. Mr. Sarjoo Prasad, the learned counsel for the plaintiff, urges that the defendant had paid rent voluntarily for four months this fact also is relied on by the High Court and therefore we should not remand the case. But we find that three months ' rent was paid in advance as security deposit, and hence there is no force in the contention. Mr. Sarjoo Prasad finally contends that as this appeal arises from an application under section 115 of Civil Procedure Code and article 227 of the Constitution, we should not interfere with the decision of the Full Bench of the Small Causes Court even though it be erroneous. A similar point was raised before the High Court and although the High Court found some substance in the point it chose to go into the merits of the case and not dismiss the application on this ground. It must be remembered that the application was also under article 227 of the Constitution, and although ordinarily article 227 should be used sparingly, on the facts of this case we are satisfied that the High Court was right in not throwing out the application on this ground. In the result the appeal succeeds. We set aside the orders of the High Court and of the Full Bench of the Small Causes Court and of the Judge Small Causes Court, and remand the case to the Court of Small Causes, Calcutta, with ' the direction that it will dispose of the suit in the light of this judgment. The parties would be at liberty to lead evidence before the Court of Small Causes on the question of apportionment of rent. In the circumstances of the case there would be no order as to costs. Appeal allowed.

IN-Abs

The appellant executed a lease for a period of 21 years, in respect of the respondents flat consisting of 3 bedrooms, at a monthly rent of Rs. 350. As the respondent delivered possession of only 2 bed rooms, the appellant suspended the payment of rent altogether. The respondent thereupon filed a suit for recovery of rent in the Court of Small Causes but it was dismissed. In an application under section 38 of the Presidency Small Causes Court Act the Full Bench of the Small Causes Court decreed the suit, and the decree was confirmed in the appellant 's revision petition to the High Court under section 115 of the Civil Procedure Code and article 227 of the Constitution. In appeal to this Court, HELD : The appellant must pay a proportionate part of the rent, because, it would be inequitable to allow the respondent, on the one hand, to recover the full rent when he had not delivered possession of the whole of the premises, and on the other, to allow the appellant to enjoy a substantial portion of the property of the landlord without much inconvenience as a windfall. It will depend on the circumstances of each case whether a tenant would be entitled to suspend payment of the rent fully or whether he should be held liable to pay the proportionate part of the rent. [460 D F] Ramn Lal Dutt Sarkar vs Dhirendra Nath Roy, [1943] 70 I.A. 18 applied.

Appeal No. 708 to 1964. Appeal by special leave from the judgment and order dated April 3, 1962 of the Punjab High Court in Civil Writ No. 394 of 1962. Bhawani Lal and Mohan Lal Agarwal, for the appellant Gopal Singh, for respondent No. 3. The Judgment of the Court was delivered by Subba Rao, C.J. This appeal by special leave raises the question of the true scope of the expression "selected area" within the meaning of section 5 B of the Punjab Security of Land Tenures Act, 1953, (Act No. 10 of 1953), as amended by Act No. 46 of 1957, hereinafter called the Act. The facts are not in dispute and they are as follows: The appellant is a tenant under respondent No. 3 since the year 1950 in respect of 49 bighas of land. As he was in continuous occupation of the said land for a period of 6 years, he applied under section 18 of the Act and r. 23 of the Rules made thereunder in the prescribed form to the Assistant Collector, 1st Grade, Fazilka, for the purchase of the said land. The Assistant Collector held it does not appear that the 3rd respondent questioned the right of the appellant to purchase the said land that the appellant was entitled to purchase the land and determined the price payable by the appellant to the 3rd respondent in a sum of Rs. 20,630/ and ordered that the said amount was payable in 10 equal six monthly instalments. On appeal to the Collector, Ferozepure, the order of the Assistant Collector was confirmed. On a revision petition filed by the 3rd respondent before the Additional Commissioner, Jullunder, the said Commissioner took the view that the said area was selected by the 928 3rd respondent under section 5 B of the Act and, therefore, the appellant had no right to purchase the same under section 18 of the Act. On that view, he submitted the case to the Financial Commissioner, Punjab, who, agreeing with the view expressed by the Additional Commissioner, Jullunder, held that the 3rd respondent did not reserve the said area under section 5(1) of the Act and, therefore, he was entitled to select the same under section 5 B of the Act and that the appellant had no right to purchase the same, under section 18 thereof. In the result, he accepted the revision. The appellant filed a petition under article 226 of the Constitution in the High Court of Punjab at Chandigarh for quashing the order of the Financial Commissioner, Punjab, but the said petition was dismissed in limine. Hence the present appeal. The scope of this appeal should necessarily be confined to the ambit of the writ petition in the High Court. It is, therefore, necessary for the appellant to establish that the order of the Financial Commissioner was without jurisdiction or was vitiated by an error of law apparent on the record. As there was no question of want of jurisdiction in the Financial Commissioner to dispose of the revision, it was contended that the said order was vitiated by two errors of law on the face of the record: firstly, it was argued that the Commissioner committed an obvious error in holding that the 3rd respondent had not reserved the said land under section 5(1) of the Act when as a matter of fact he had done so; and secondly, it was said that a landlord who did not reserve any area under section 5(1) of the Act but selected the area under section 5 B of the Act, could not evict the tenant under section 9(a) of the Act and, therefore, the tenant had the right under section 18 to purchase the said land in his possession for the prescribed period. The first question, therefore, is whether the 3rd respondent reserved the disputed land under section 5(1) of the Act. The material parts of the relevant provisions of the Act and the Rules made thereunder read thus: Section 2(4): "Reserved area" means the area lawfully reserved under the Punjab Tenants (Security of Tenures) Act, 1950 (Act XXII of 1950), as amended by President 's Act of 1951," hereinafter referred to as the "1950 Act" or under this Act. Section 5(1) : Any reservation before the commencement of this Act shall cease to have effect and subject to the provisions of sections 3 and 4 any land owner who owns land in excess of the permissible area may reserve out of the entire land held by him in the State of Punjab as landowner, any parcel or parcels not exceeding the permissible area by intimating his selection in the prescribed form and manner to the Patwari of the estate in which the land reser 929 ved is situate or to such other authority as may be prescribed. The land under this sub section can only be reserved by the land owner by intimating his selection in the prescribed form and ' manner to the Patwari of the estate concerned. Rule 3 Intimation for reservation A land owner having land in excess of the permissible area and intending to make a reservation in pursuance of the provisions of sections 3, 4 or sub section (1) of section 5 of the Act shall notify, in duplicate, his reservation to the Patwari of the Estate in which the land is situated in the form in Annexure 'B ' to these rules. Rule 5. The reservation by the landowner shall be deemed to have been effected as soon as the application is received by the Patwari subject to the verification of all details as hereinafter provided. Rule 6 Procedure for dealing with reservation forms. The Patwari shall after verifying all the particulars given in the forms, 'retain one copy and forward the other copy to the Tehsildar with his report as to the correctness of the particulars referred to. . It will be seen from the said provisions that a valid reservation can only be made by the land owner under section 5(1) of the Act, read with the rules made thereunder, when the particulars contained in the application sent by him to the Patwari were verified by the latter. In this case the land owner sent an application to the Patwari in the prescribed form, but there is nothing on the record to show that the Patwari verified the correctness of the said particulars. The Financial Commissioner in his order observed: "Having examined the case carefully, I find that the Exhibit P.X. on which the learned Advocate for the respondent has relied is really no proper form as was required under section 5 of the Punjab Security of Land Tenures Act. On the other hand, it is only a mere report. The proper forms in this case were filed in only in accordance with the provisions of section 5 B and they are on the file. " It has not been shown that the finding is vitiated by any error of law; indeed, as we have indicated earlier, there is no report by the Patwari verifying the particulars given by the appellant. The second contention turns upon the relevant provisions of the Act. It would be convenient at the outset to collect the said provisions at one place. 930 .lm15 Section 2(3): "Permissible area" in relation to a landowner or a tenant, means thirty standard acres and where such thirty standard acres on being converted into ordinary acres exceed sixty acres, such sixty acres: Section 4: "Reserved area" means the area lawfully reserved under the Punjab Tenants (Security of Tenures) Act, 1950 (Act XXII of 1950), as amended by the President 's Act of 1951, hereinafter referred to as the "1950 Act" or under this Act. Section 2 (5 A): "Surplus area" means the area other than the reserved area, and, where, no area has been reserved, the area in excess of the permissible area selected under section 5 B or the area which is deemed to be surplus area under sub section (1) of section 5 C and includes the area in excess of the permissible area selected under section 19 B; but it will not include a tenant 's permissible area; Section 5. (1) Any reservation before the commencement of this Act shall cease to have effect and subject to the provisions of sections 3 and 4 any land owner who owns land in excess of the permissible area may reserve out of the entire land held by him in the State of Punjab as land owner, any parcel or parcels not exceeding the permissible area by intimating his selection in the prescribed form and manner to the Patwari of the estate in which the land reserved is situate or to such other authority as may be prescribed: Section 5 B. (1) A land owner who has not exercised his right of reservation under this Act, may select his permissible area and intimate the selection to the pres cribed authority within the period specified in section 5 A and in such form and manner as may be prescribed: Provided that a land owner who is required to furnish a declaration under section 5 A shall intimate his selection along with that declaration. Section 9. (1) Notwithstanding anything contained in any other law for the time being in force, no land owner shall be competent to eject a tenant except when such tenant: (1) is a tenant on the area reserved under this Act or is a tenant of a small land owner. 931 Section 18(1) Notwithstanding anything to the contrary contained in any law, usage or contract, a tenant of a land owner other than a small land owner (1) who has been in continuous occupation of the land comprised in his tenancy for a minimum period of six years, or The gist of the provisions may be stated thus: "Permissible area" is defined and the landlord is empowered to demarcate a reserved area for his self cultivation out of the permissible area and intimate his selection in the prescribed manner to the Patwari of the estate. The area other than the reserved area is defined as is surplus area". No land owner is competent to eject a tenant unless he is a tenant in the reserved area and if he has made one or other of the defaults mentioned in section 9 of the Act. The State Government shall be competent to utilize the surplus area in the re settlement of the tenants ejected. The tenant who has been in continuous occupation of the land comprised in his tenancy for a minimum period of 6 years shall be entitled to purchase from the land owner the land so held by him but not included in the reserved area. But, for one reason or other, some of the landowners did not make the reservation in the manner prescribed under section 5 of the Act and the rules made thereunder. Presumably to give relief to such land owners section 5 B which was inserted by the 1957 Act, enabled them to intimate the selection to the prescribed authority within the period prescribed therein, i.e., within a period of six months from the commencement of the Amending Act. If the area selected under section 5 B could be equated with the reserved area, the land owner could evict the tenant from that area for the purpose of his self cultivation. In that event, it would not be a surplus land which could be allotted for the evicted tenants; and it could not also be purchased by the tenants at their option. We are not concerned in this case with small holders. On this analysis the short question that falls to be decided is whether a reserved area can be equated with an area selected by the landowner under section 5 B of the Act. To answer the said question it is necessary to know briefly the scope and purpose of the Act. The purpose of the Act has been neatly summarized by the Financial Commissioner of Punjab in Karam Singh vs Angrez Singh() thus: "The main purpose of that Act seems to be to (i) provide a "permissible area" of 30 standard acres to a land owner/tenant, which he can retain for self cultivation. (1) 932 (ii) provide security of tenure to tenants by reducing their liability to ejectment as specified in section 9, (iii) ascertain surplus areas and ensure re settlement of ejected tenants on those areas, (iv) fix maximum rent payable by tenants, and (v) confer rights on tenants to pre empt and purchase their tenancies in certain circumstances. These purposes must be borne in mind in construing the relevant provisions of the Act. The two concepts on which the entire Act revolves are the "permissible area" and the "surplus area". Out of the permissible area the landowner is empowered to reserve land not exceeding the said area and the balance is defined as the surplus area. This reservation is to enable the landowner to sustain himself by self cultivation. The object of the surplus area is to confer rights in respect thereof on the tenants. This two fold object of the Act cannot be achieved unless the land lord has reserved some land in the manner prescribed under section 5 of the Act. But, for one reason or other, if the reservation was not made by the land owner, section 5 B gives him another opportunity to do so. But it is said that if that be the intention of the Act, there was no reason why the same phraseology used in section 5(1) was not used in section 5 B. Though "reserved area" has been defined, there is no definition of 'selected area '. This indicates that the Legislature did not introduce a new concept of "selected area" in the Act. Even a comparison of sections 5 and 5 B shows that the process of reservation and selection are almost the same. Under section 5(1) the land owner, after making the reservation, intimates his selection in the prescribed form to the Patwari. It is, therefore, manifest that the reservation is made by the process of selection. So too, under section 5 B, a land owner, who has not exercised the right of reservation under the Act, may select his reserved area and intimate his selection. The wording of section 5 B indicates that the selection therein is a selection similar to that in section 5(1) and the selection in section 5 B is because of default made in reserving by selection under section 5(1). In terms section 5 B gives the land owner another chance, because he has not exercised his right of reservation earlier under section 5(1). The expressions "reservation" and "selection" involve the same process and indeed, to some extent, they are convertible, for one can reserve land by selection and another can select land by reservation. The argument based on section 9 is also without force. It is true that under section 9(1) (1) a tenant of the area reserved under the Act can be evicted and there is no other clause enabling the land owner to evict a tenant from the selected area. It is said that " reserved area" is defined and that "selected area" does not fall under that definition and that, therefore, the effect of section 9 is that a tenant in the selected area cannot be evicted. But, it may be 933 noticed that under section 9(1) (1) the expression "reserved area" is not used, but instead the expression "the area reserved under the Act" is mentioned. As we have said earlier, the land selected by the land owner out of the permissible area can legitimately be described as the area reserved under the Act. If that be the interpretation of section 5(1), section 5 B and section 9(1), it follows that under section 18 the tenants cannot claim to purchase the land from the land owner for it is included in the reserved area of the land owner. If the contrary interpretation be accepted, it defeats the purpose of the Act. Tenants could be induced and they would be permitted to purchase permissible area to the grave detriment of the land owners. The entire concept of surplus area would be eroded. When asked what purpose sections 5 B(1) and 5 B(2) would serve, the learned counsel said that in the case of selected area the landowner can enjoy the land through the tenant for six years. That would be an insignificant benefit for the landowner and it could not have possibly been the reason for introducing voluntary and compulsory selection of land out of the permissible area under section 5(1) and 5(2) of the Act. It is true that under section 5(1), the landowner has to include in his reserved area certain specified categories of land, but under section 5 B, his selection is not subject to any such restrictions. It may be that one of the objects of the amendment was to enlarge the discretion of the land owner in the matter of reservation or it may be that in the matter of selection the landowner has to conform to the provisions of section 5(1). We leave open that question for future decision. Our view is consistent with that accepted by Financial Commissioner, Punjab, in Karam Singh vs Angrez Singh(1) and the Division Bench of the Punjab High Court in Angrez Singh vs Financial Commissioner, Punjab Chandigarh(2). We have gone through the two judgments and we are satisfied that the opinion expressed therein is correct. In the result, the appeal fails and is dismissed with costs. G.C. Appeal dismissed. (1) (2) 64 punj. L. R. 736.

IN-Abs

The appellant was a tenant of the 3rd respondent since 1950 in respect of 49 bighas of land situated in the Punjab. He applied for the purchase of those lands under section 18 of the Punjab Security of Land Tenures Act, 1953, and rule 23 of the Rules made thereunder. The Assistant Collector allowed his application and on appeal the Collector confirmed the order. The Additional Commissioner and the Financial Commissioner however took the view that the 3rd respondent had not 'reserved ' the land under section 5(1) of the Act but had 'selected ' it under section 5 B and therefore the appellant had no right to purchase the land under section 18. The appellant 's writ petition against the Financial Commissioner 's order was dismissed in limine and he came to this Court by special leave. It was contended on behalf of the appellant that (i) the Financial Commissioner had committed an error of law in holding that the 3rd respondent had not reserved the land under section 5(1) when in fact he bad not done so; and (ii) a landlord who did not 'reserve ' any area under section 5(1) of the Act but 'selected ' the area under section 5 B of the Act could not evict the tenant under section 9(1) of the Act and therefore the tenant had the right under section 18 to purchase the said land in his possession for the prescribed period. HELD : (i) A valid reservation can only be made by the landowner under section 5(1) of the Act, read with the rules made thereunder, when the particulars contained in the application sent by him to the Patwari were verified by the latter. In the present case the landowner sent an applica tion to the Patwari in the prescribed form, but there was nothing on the record to show that the Patwari verified the correctness of the said particulars. In view of this it could not be said that the Financial Commissioner 's finding that there was no reservation under section 5(1) was vitiated by an error of law. [929 E] (ii) The purpose of the Act must be borne in mind in Construing the relevant provisions of the Act. The two concepts on which the entire Act revolves are the 'permissible area ' and the 'surplus area '. Out of the permissible area the landowner is empowered to reserve land not exceeding the said area and the balance is defined as surplus area. This reservation is to enable the land owner to sustain himself by self cultivation. The object of the surplus area is to confer rights in respect thereof on the tenants. This twofold object of the Act cannot be achieved unless the landlord has reserved some land in the manner prescribed by section 5 of the Act. But for one reason or another, if the reservation has not been made by the land owner, section 5 B gives him another opportunity to do so. [932 C D] Though 'reserved area ' has been defined there is no definition of 'selected area '. This indicates that the Legislature did not introduce a new concept of 'selected area ' in the Act. Even a comparison of sections 5 and 5 B 927 shows that the process of reservation and selection are almost the same. Under section 5(1) reservation is made by selection of the land and under section 5 B the landowner selects his reserved area. The expressions 'reservation ' and 'selection ' involve the same process and indeed to some extent they are convertible for one can reserve land by selection and select land by reservation. [932 E.G] It is true that under section 9(1) (1) a tenant of the area reserved under the Act can be evicted and there is no other clause enabling the landowner to evict a tenant from the selected area. But under section 9(1)(1) the expression used is 'the area reserved under the Act, and not 'reserved area '. The land selected by the landowner out 'of the permissible area can legitimately be described as the area reserved under the Act. If that be the interpretation of section 5(1), section 5 B and section 9(1), it follows that under section 18 the tenants cannot claim to purchase the land from the landowner for it is included in the reserved area of the landowner. [932 H; 933 A] Karam Singh vs Angrez Singh, and Angrej Singh vs Financial Commissioner, Punjab, Chandigarh, , approved.

Appeal No. 2314 of 1966. Appeal from the judgment and order dated October 7, 1966 of the Punjab High Court in Circuit Bench at Delhi in Civil Writ Petition No. 790 D of 1966. M. C. Setalvad, Ravinder Narain, J. B. Dadachanji, for the appellants. section V. Gupte, Solicitor General, R. Ganapathy. Iyer, R. N. Sachthey, and R. H. Dhebar, for the respondent. The Judgment of the Court was delivered by Shah, J. The Punjab Reorganisation Act, 1966 hereinafter called 'the Act ' was enacted with the object of reorganising the State of Punjab. By the Act which came into force on November 1, 1966, the eastern hilly areas of the old State were transferred to the Union territory of Himachal Pradesh; the territory known as Chandigarh in Kharar tahsil was constituted into a Union territory; and the remaining territory was divided between the new State of Punjab and the Haryana State. The old State of Punjab had a bi cameral Legislature with 154 members in the Legislative Assembly and 51 members in the Legislative Council. Under section 13 of the Act as from November 1, 1966, the Legislative Assembly of the new State of Punjab consists of 87 members. and the Haryana Legislative Assembly consists of 54 members. The new State of Punjab has also a bi cameral Legislature. Out of the original membership of 51. 16 members whose names are set out in the Seventh Schedule to the Act ceased to be members of the Legislative Council, and the remaining members continued to be members of the Legislative Council of the new State of Punjab. Out of the 16 members who ceased to be members of the Legislative Council, 14 members, it is claimed by the appellants, belong to the Haryana area and 2 to the Himachal Pradesh Union territory. The Act was challenged as "illegal and ultra vires of the Constitution" on diverse grounds in a writ petition filed by the two appellants in the High Court of Punjab. The High Court rejected the petition. 111 In this Court two contentions were urged in support of the appeal: (1) Constitution of the Legislative Assembly of Haryana by section 1 3(1) of the , violates the mandatory provisions of article 170(1) of the Constitution; and (2) By enacting that. 8 members of the Legislative Council who are residents of the Union territory of Chandigarh shall continue to sit in the Legislative Council in the new State of Punjab, and by enacting that the members elected to the Legislative Council from the Haryana area shall be unseated, there is denial of equality. By section 24 of the Act it is provided that the total number of seats in the Legislative Assembly of Haryana "to be constituted at any time after the appointed day i.e. November 1, 1966 to be filled by persons chosen by direct election from territorial constituencies, shall be eighty one. " It is clear that section 13(1) which allocates fifty four sitting members out of the members elected to the Legislative Assembly of the old State of Punjab to the Haryana area Legislative Assembly on November 1, 1966, is a temporary provision. Constitution of the Legislative Assembly of Haryana on November 1, 1966, is, it is contended, violative of article 170 of the Constitution. In terms article 170 enacts that a Legislative Assembly shall be constituted by members chosen by direct elections from territorial constituencies, and that the Assembly shall consist of not more than five hundred and not less than sixty members. But article 170 is not the only provision having a bearing on the constitution of a Legislative Assembly. By article 2 the Parliament may by law admit into the Union or establish new States on such terms and conditions as it thinks fit; and article 3 provides that the Parliament may by law (a) form a new State by separation of territory from any State or by uniting two or more States or parts of States or by uniting any territory to a part of any State; (b) increase the area of any State; (c) diminish the area of any State; (d) alter the boundaries of any State; (e) alter the name of any State. Any law referred to in article 2 or article 3 shall, it is provided by article 4(1), contain such provision for the amendment of the First Schedule and the Fourth Schedule as may be necessary to give effect to the 112 provisions of the law and may also contain such supplemental, incidental and consequential provisions (including Provisions as to representation in Parliament and in the Legislature or Legislatures ,of the State or States affected by such law) as Parliament may deem necessary. BY cl. (2) of article 4 it is provided: "No such law as aforesaid shall be deemed to be an amendment of this Constitution for the purposes of articles 368. " The law referred to in articles 2 & 3 may therefore alter or amend the First Schedule to the Constitution which sets out the names of the States and description of territories thereof 'and the Fourth Schedule allotting seats to the States in the Council of States in the Union Parliament. The law so made may also make supplemental, incidental and consequential provisions which would include provisions relating to the setting up of the legislative, executive and judicial organs of the State essential to the effective State administration under the Constitution, expenditure and distribution of revenue, apportionment of assets and liabilities, provisions as to services, application and adaptation of laws, transfer of proceedings and other related matters. On the plain words of article 4, there is no warrant for the contention advanced by counsel for the appellants that the supplemental, incidental and consequential provisions, which by virtue of article 4 the Parliament is competent to make, must be supplemental, incidental or consequential to the amendment of the First or the Fourth Schedule. The argument that if it be assumed that the Parliament is invested with this wide power it may conceivably exercise power to abolish the legislative and judicial organs of the State altogether is also without substance. We do not think that any such power is contemplated by article 4. Power with which the Parliament is invested by articles 2 and 3, is power to admit, establish, or form new States which conform to the democratic pattern envisaged by the Constitution; and the power which the Parliament may exercise by law is supplemental, incidental or consequential to the admission, establishment or for mation of a State as contemplated by the Constitution, and is not power to override the constitutional scheme. No State can therefore be formed, admitted or set up by law under article 4 by the Parliament which has not effective legislative, executive and judicial organs. Power to reduce the total number of members of the Legis lative Assembly below the minimum prescribed by article 170(1) is, in our judgment, implicit in the authority to make laws under article 4. Such a provision is undoubtedly an amendment of the Constitution, but by the express provision contained in cl. (2) of article 4, no such law Which amends the First and the Fourth Schedule or which makes supplemental, incidental and consequential provisions is to be 113 deemed an amendment of the Constitution for the purposes of Art.368. Our attention was invited to article 371A(2)(h) of, the Constitution which makes an express provision in derogation to article 170(1) relating to the constitution of a Legislative Assembly for the State of Nagaland, and fixes"notwithstanding anything in this Constitution for a period of ten years from the date of the formation of the State of Nagaland or for such further period as the Governor may, on the recommendations of the regional Coun cil, by public notification specify in this behalf" the membership of the Legislative Assembly at 46. Power of the Parliament to make amendments in the Constitution by express enactment so 'as to reduce the number of members of a Legislative Assembly below the minimum prescribed having regard to the exigency of a special case may not be denied. But the Constitution also contemplates by article 4 that in the enactment of laws for giving effect to the admission, establishment or formation of new States, or alteration of areas and the boundaries of those States, power to modify provisions of the Constitution in order to tide over a temporary difficulty may be exercised by the Parliament. The High Court was, therefore, right in holding that section 13(1) was not invalid merely because it departed from, the minimum prescribed as the total membership of the Legislative Assembly for a State. Sections 20 & 22 of the Act deal with the constitution of the Legislative Council. By section 20 the Legislative Council of the new State of Punjab is to consist of 40 representatives and the Third Schedule to the Representation of the People Act, 1950, is to stand modified accordingly. By section 22 it is provided: "(1) On the appointed day, the sitting members of the Legislative Council of Punjab specified in the Seventh Schedule shall cease to be members of that Council. (2) On and from the appointed day, all sitting members of the Legislative Council of Punjab, other than those referred to in subsection (1), shall continue to be members of that Council. By the Seventh Schedule, 16 members, of whom it is claimed 14 are from the territory which is now in Haryana State, have been untreated. It was claimed by the appellants in their petition before the High Court that those 14 members of the Old Punjab Legislative Council "would cease to be members of the new Council" from November 1, 1966, whereas 8 members belonging to the newly constituted area of the Union territory of Chandigarh still continue to be members of the new Punjab Legislative Council, and that such discriminatory treatment of members from the Haryana region 114 amounted to denial of equality. In the affidavit on behalf of the Union of India it was submittedthat because Chandigarh is to be the capital of the existing Stateof Punjab and will continue to be the seat of new Government of the Punjab, the members from Chandigarh were admitted as members of the Legislative Council of the new State of Punjab,that the provision was consequential and incidental to the main provision constituting the State of Punjab, and that in theevent, the appellants were not persons aggrieved by the so called discriminatory treatment. By article 171(3) of the Constitution membership of the Legis lative Council is not from territorial constituencies: it is by nomination, indirect election or by election from teachers ' and graduates '. constituencies. Of the total number of members of the Legislative Council of a State, one third are to be elected by electorates consisting of members of municipalities, district boards and such other local authorities in the State, one twelfth are to be elected by electorates consisting of persons residing in the State who have been for at least three years graduates of any university in India ox possess equivalent qualifications, one twelfth are to be elected by electorates consisting of persons who have been engaged in teaching in educational institutions within the State, one third are, to be elected by the members of the Legislative Assembly of the State from amongst persons who are not members of the Assembly, and "the remainder" are to be nominated by the Governor in accordance with the provisions of cl. 5. These constituencies are not territorial constituencies. On the reorganisation of the old State of Punjab, adjustments had to be made in the membership of the Legislative Council. No such adjustment as would strictly conform to the requirements of article 171(3) could however be made without fresh elections. The Parliament therefore adopted an ad hoc test, and unseated members who were residents in the territory of Haryana and Himachal Pradesh. It is true, as admitted in the affidavit on behalf of the Union of India, that members belonging to the Union territory of Chandigarh will be members of the new Punjab Legislative Council, and members from the Haryana State territory will be unseated. Whether in unseating the members from Haryana area and allowing the members from the Chandigarh area to continue, a valid classification is made on the ground that Chandigarh is the capital of the two States need not detain us, because we are of the view that no discrimination by unseating members from the Haryana area can be deemed to be practised against the appellants of which they can complain. The appellants were not sitting members of the Legislative Council of the old State of Punjab and no personal right of the appellants is infringed by unseating the members whose names are set out in the Seventh Schedule. Again the new State of Punjab is a bi cameral Legislature. The new State of Haryana is uni cameral. It is not claimed,, 115 and cannot be claimed, that a resident of the State of Haryana is,. merely because of that character, entitled to sit in the Punjab Legislative Council. By allowing the members from the Chandigarh area to continue to remain members of the Legislative Council of the new State of Punjab, no right of the residents of Haryana is therefore violated.

IN-Abs

The , carved out of the old State of Punjab two new States, Punjab and Haryana, transferred some areas to Himachal Pradesh and constituted Chandigarh, a territory of the old State, into a Union territory. The old State had a bicameral Legislature and so also has the new State of Punjab; but that of Haryana is to be unicameral. Under the Act the Legislative Assembly of Haryana is to consist of only 54 members; members of the Legislative Council of the old State belonging to Haryana area are unseated, while those members residing in the Union Territory of Chandigarh continue to be members of the Legislative Council of that new State of Punjab. The appellants, none of whom was a sitting member of the Legislative Council of the old State, challenged the legality of the Act in a writ petition, which the High Court rejected. In appeal to this Court, the appellants contended that (i) Constitution of the Legislative Assembly of Haryana by section 13(1) of the Act which departs from the minimum membership prescribed to the State Legislative Assembly violates the mandatory provisions of the Art 170(1) of the Constitution; and (ii) by enacting that members of the Legislative Council of the old State residing in the Union Territory of Chandigarh shall continue to sit in the Legislative Council in the new State of Punjab and by enacting that the members elected to the Legislative Council from the Haryana area shall be unseated, there was denial of equality. HELD : The appeal must be dismissed. (i) Power to reduce the total number of members of the Legislative Assembly below the minimum prescribed by article 170(1) is implicit in the authority to make laws under article 4 of Constitution. Such a provision is undoubtedly an amendment of the Constitution, but by the express provision provided in article 4(2),no such law which amends the First and the Fourth Schedule or which makes supplemental, incidental and consequential provision is to be deemed an amendment of the Constitution for, purposes of article 368. The Constitution also contemplates by article 4 that in the enactment of laws for giving effect to the admission, establishment or formation of new States or alteration of areas and the boundaries of those States power to modify provisions of the Constitution in order to tide, over a temporary difficulty may be exercised by the Parliament. [112,H] 1 13 C D] (ii) Parliament could not make adjustments as would strictly conform to the requirements of article 171(3) without fresh elections. It, therefore, adopted an ad hoe test and unseated members of the Council who were 110 residents of the Haryana area. There was, however, no discrimination in unseating members from the Haryana Area of which appellants could complain. The appellants were not the sitting members of the Legislative Council of the old State and no personal right of the appellants was in fringed by unseating those members. A resident of the State of Haryana merely because of that character, cannot claim to sit in the Punjab Legislative Council. By allowing the members from the Chandigarh area to continue to remain members of the new State of Punjab no right of the residents of Haryana was violated. [114 E H; 115 A]

Appeal No. 1039 of 1963. Appeal by special leave from the judgment and order dated June 24, 1959 of the Madhya Pradesh High Court in Civil Second Appeal No. 8 of 1957. N. N. Keswani and Urmilla Kapur, for the appellant. B. Sen, C. L. Sanghi and A. G. Ratnaparkhi, for the respondents. The Judgment of the Court as delivered by: Subba Rao, J. This appeal by special leave raises mainly the question whether a civil court had jurisdiction to entertain the 618 suit filed by the respondents for the recovery of possession of the plaint schedule land and mesne profits ' The relevant facts may be briefly stated: The respondents, claiming to be the khatedars of an extent of 57.07 acres of land in Mauza Bhanpur, Tahsil Huzur, Western District Bhopal, filed a suit against the appellant on the ground that the latter was in illegal possession thereof. The appellant contested the suit mainly on the ground that he was the khatedar of the said land and that he was in possession thereof in that capacity. He also pleaded that his title to the property was declared by the Tahsildar in an application for ejectment filed by him against the respondents under the Bhopal State Land Revenue Act, 1932 (Act No. IV of 1932), hereinafter called the Act, and that the said decision would be a bar to the maintainability of the suit in a civil court. The learned Subordinate Judge, Bhopal, held that the res pondents were the khatedars of the suit land and that they had been in possession thereof in that capacity. He held that the suit was maintainable in a civil court. On appeal, the Additional District Judge agreed with the findings arrived at by the trial court. On second appeal to the Madhya Pradesh High Court, Shiv Dayal, J., of that Court, after admitting certain notifications as evidence, came to the same conclusion both on the question of title and on the question of jurisdiction. In the result he dismissed the second appeal. Hence the present appeal by special leave. Mr. Keswani, learned counsel for the appellant, raised before us a number of points; but his arguments may conveniently be crystallized into the following points: (1) whether the decision of the revenue court on the question of title to the suit land bars the jurisdiction of the civil court; (2) whether the concurrent finding given by the lower courts on the question of title was vitiated by an error of law by the courts wrongly throwing the burden of establishing title on the appellant notwithstanding the fact that in the Record of Rights the said land was entered in the name of the appellant; and (3) whether the suit was barred by limitation. The other questions mooted by him were pure questions of fact and, therefore, they need not be noticed. To appreciate the first question it is necessary to notice a few facts. The appellant as khatedar of the land in dispute had filed a suit under section 71 of the Act in the court of the Tahsildar, Tahsil Huzur, Bhopal for the ejectment of the respondents on the ground that they were his shikmi tenants. The said court held that the appellant was the khatedar of the land in dispute and the respon 619 dents were his shikmi tenants. The present contention is that the said decree was given by a court of exclusive jurisdiction and, therefore, the respondents could not reagitate the same subjectmatter in a civil court. Under section 9 of the Code of Civil Procedure, a civil court can entertain a suit of a civil nature except a suit of which its cognizance is either expressly or impliedly barred. It is settled principle that it is for the party who seeks to oust the jurisdiction of a civil court to establish his contention. It is also equally well settled that a statute ousting the jurisdiction of a civil court must be strictly construed. The question is whether a suit based on title of a khatedar and for possession is either expressly or by necessary implication barred by the provisions of the Act. The relevant provisions of the Act may now be read: Section 200 (i) Except as otherwise provided in this Act, or in any other enactment for the time being in force no civil court shall entertain any suit instituted or application made to obtain a decision or order on any matter which the Government or any revenue officer is, by this Act, empowered to determine, decide or dispose of, and in particular and without prejudice to the generality of this provision, no civil court shall exercise jurisdiction over any of the following matters Cls. (a) to (u) No reliance is placed on the matters described in cls. (a) to (u) of ' this section. But it is said that under the other provisions of the Act a revenue officer is empowered to determine, decide or dispose of a question of title of a person to a land as khatedar and, therefore, a suit in a civil court is barred in terms of section 200(1). The first section relied upon in that context is section 71, which reads: "A shikmi may be ejected by order of the Tahsildar if he fails to vacate land on the termination of his lawful possession or does anything in contravention of his agree ment, if any, provided that no ejectment shall take effect before the commencement of the next agricultural year." ' "Shikmi" is defined under the Act to mean a person who holds land from an occupant and is or but for a contract, would be. liable to pay rent for such land to that occupant, but does not include a mortgagee or a person holding land directly from Government. "Occupant" is defined to mean "a person who holds land direct from Government or would do so but the right of collecting land revenue having been assigned or relinquished. " Section 71, therefore, presupposes the existence of a legal relationship of landlord and tenant and enables the occupant to evict his shikmi if he does not comply with one or other of the conditions mentioned therein; it does not comprehend a decision on a question of 620 title. The question of title is a matter foreign to the scope of section 71. If so, a suit in a civil court for a declaration of title and possession by a khatadar against a trespasser falls outside the scope of section 200(1) of the Act. The second limb of the contention turns upon a fasciculus of provisions relating to the preparation of the Record of Rights. The relevant provisions are as follows: Section 89. The Record of rights in each village shall comprise (1). . . . . . . (2) a register, to be called the "register of rights", showing all persons who are holders of land and the nature and extent of their interests and the conditions and liabilities, if any, attaching thereto. Section 92. No entry in the register of rights shall be contrary to the decree or order of a civil court. Section 93. (1) If any dispute arises about any entry to be made in any document of the record of rights, the Tahsildar or other officer preparing the record shall inquire into it summarily and shall pass such order as he thinks fit. (2) Such order, if passed with reference to any entry in the register of rights, shall not be subject to appeal, but no such order shall debar any person from establishing any right to land in a civil court, and the civil court may direct that the entry relating to the land shall be altered in accordance with its decision. (3) Any such order, if passed with reference to a record other than the register of rights shall be subject to appeal but shall not be called in question in a civil court, except in so far as any private right, is infringed and then only by a suit instituted within one year from the date on which the contents of the record were announced under section 88. Section 95. Any entry in the register of rights shall be presumed to be correct until the contrary is proved,. and all other entries in the record of rights, subject to any change which may be ordered in appeal, revision or review only or by a civil court under sub section (3) of section 93, shall be conclusive evidence of the facts to which they relate. On the basis of the said provisions it is argued that under the said provisions the right of a person to hold land shall be entered in the register of rights under section 89(2) of the Act and a dispute in respect thereof shall be decided by the Tahsildar under section 93(1) thereof and 621 that thereafter such an entry shall be rectified only by filing a suit in a civil court in the manner prescribed in section 93(2) of the Act and that, therefore, the Tahsildar, subject to the statutory suit, kw the exclusive jurisdiction to determine or decide the question in regard to the said matter within the meaning of section 200 of the Act. This argument appears to be plausible, but a deeper scrutiny re veals a fallacy. The scope of an entry in regard to the right to hold a land under section 89(2) of the Act and the decision under section 93 thereof is disclosed by section 95. When such an entry is made in the register of rights and is not corrected in the manner prescribed in section 93, under section 95 it shall be presumed to be correct until the contrary is proved. The effect of such an entry, therefore, is only to make it a presumptive piece of evidence in a collateral proceeding: that is to say, in a suit based on title when such an entry is relied upon by one or other of the parties, the court shall presume it to be correct unless the other party rebuts the presumption. Not only section 95 does not by necessary implication bar a suit but also assumes that in such a suit the correctness of such an entry could be questioned subject to the said presumption. Learned counsel for the appellant, in support of his contention, relied upon Gokhul Sahu vs Jodu Nundun Roy(1), and Jatindra Nath Chowdhury vs Azizur Rahaman 'Shanao. Those decisions turned upon provisions which are not in pari materia with those with which we are now concerned. They do not, therefore, throw any light on the construction of the relevant provisions of the Act. It is, therefore, clear that section 200(1) of the Act, read with the said group of sections, does not exclude the jurisdiction of a civil court to entertain a suit based on title. Learned counsel for the appellant then contended that though the patta was granted in favour of the ancestors of the respondents in the year 1929 it was revoked later on, that under the new settlement of 1935 the appellant 's name was recorded in the register of rights, that in subsequent khasras up to 1953 his name continued to be shown as the owner of the suit land and that, therefore, the courts below should have held that the presumption raised by the register of rights in his favour was not rebutted and the plaintiff had failed to prove his title. But a perusal of the judgments of the courts below shows that all the courts, after taking into consideration the entire oral and documentary evidence, came to the conclusion that the respondents had established their title. Indeed, though the High Court rightly pointed out that the finding of fact given by the lower appellate court was conclusive, in view of the insistence of the Advocate in the High Court, it considered the entire documentary and oral evidence over again and came (1) Cal. MIlSup. Cl/66 8 (2) A.I.R. 1923 Cal. 622 to the same conclusion. It also admitted the notifications in respect of the settlement as fresh evidence and, after considering them, held that they did not disclose that the patta issued in favour of the respondents ' ancestors was cancelled. In our view, the High Court should have accepted the finding of the first appellate court and should not have reviewed the evidence over again. The courts in effect held that the said presumption was rebutted by the oral and documentary evidence adduced by the respondents. We are not, therefore, justified in an appeal under article 136 of the Constitution to permit the appellant to canvass the correctness of the said concurrent findings of fact. The last argument raises a question of limitation. If, as we have held, the suit is outside the scope of the Act, the question of limitation turns upon the provisions of the Indian Limitation Act. The suit was originally filed by the respondents for a declaration of their title to the suit property, but as they were dispossessed of the land on March 5, 1953, subsequent to the filing of the suit, the plaint was amended on july 24, 1954, praying for delivery of possession. To such a suit article 142 of the Limitation Act applies. The suit is, therefore, clearly not barred by limitation. In the result, the appeal fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The suit of the appellant as khatedar of the land in dispute, for ejectment of the respondents on the ground that they were shikmi tenants, was decreed by the Tahsildar under section 71 of the Bhopal State Land Revenue Act, 1932. Within 12 years of the date of their dispossession the respondents filed the suit against the appellant in the civil court, claiming to be the khatedars and for possession. The lower courts and the High Court held that the decision of the revenue court did not bar the jurisdiction of the civil court on the question of title to the suit land and decreed the suit. In appeal to this Court, HELD : Section 200(1) of the Act, read with sections 71, 89, 93 and 95, does not exclude the jurisdiction of the civil court to entertain a suit based on title. [621 E F] Section, 200(1) bars the civil court from entertaining a suit with respect to any matter which a revenue officer is empowered by the Act to determine. But the question of title is a matter foreign to the scope of section 71. The Tahsildar is no doubt empowered under section 93 to decide on any dispute about any entry to be made in the Record of rights showing the persons who are holders of land, but, under section 95, the effect of such an entry is only to make it a presumptive piece of evidence in a collateral proceeding such as a suit based on title. Therefore, it is assumed that such a suit could be filed in spite of a decision under section 93. The suit was within time under article 142, Limitation Act, 1908, and since the High Court and the lower courts held that the presumption raised by the entry was rebutted by the oral and documentary evidence adduced by the res pondents, the correctness of the concurrent findings of fact could not be canvassed in the appeal under article 136.

minal Appeal No. 194 of 1966. Appeal by special leave from the judgment and order dated November 9, 1964 of the Punjab High Court in Circuit Bench at Delhi in Criminal Appeal No. 30 D of 1964. H.R. Gokhale, K. K. Raizada and A. G. Ratnaparkhi, for the appellant. Frank Anthony, Ghanshyam Dass, Jitendra Sharma and V. P. Chaudhari, for the respondent. The Judgment of the Court was delivered by Bhargava, J. The respondent, Ghisa Ram, is a Halwai dealing in milk and milk products, including Dahi, and holds a licence for running his shop in Defence Colony in New Delhi. On September 20, 1961, the Food Inspector of the Municipal Corporation of Delhi visited the shop of the respondent and took a sample of curd of cow 's milk for the purpose of testing whether there was any adulteration. The curd was churned and divided into three equal parts. Each part was put in a separate bottle and sealed by the Food Inspector. One of the bottles containing the sample of the curd taken was handed over to the respondent. Out of the two remaining samples with the Food Inspector, one was sent to the Public Analyst who carried out the analysis on October 3, 1961. He then gave a certificate on October 23, 1961, in which he noted that the fat content in the curd was 11.6% and the non fatty solids were 7.3%. The standard prescribed by the Rules framed under the (No. 37 of 1954) (hereinafter referred to as "the Act") for curd of cow 's milk was. that it must contain a minimum of 3.5% fat and 8.5% non fatty solids. Since the analysis showed that the content of non fatty solids was 1.2 % below the prescribed standard, the respondent was prosecuted for committing an offence under section 16 of the Act for contravening section 7 of the Act. The complaint was filed before the Magistrate on behalf of the appellant, Municipal Corporation of Delhi, on May 23, 1962. On October 4, 1963, the respondent applied that the sample, which had been given to him by the Food Inspector, be sent for examination by the Director of the Central Food Laboratory in accordance with the provisions of section 13 (2) of the Act. When the sample was received by the Director, he reported that the sample of curd sent to him had become highly decomposed and no analysis of it was possible. The case against the respondent had, therefore, to be tried in the absence of the report of the Director of the Central Food Laboratory. At the trial, the respondent admitted the taking of the sample of curd from his shop by the Food Inspector, but he pleaded that he had prepared the curd from pure cow 's milk. The counsel for the: 118 challenged the correctness of the analysis of the sample .made by the Public Analyst, and a further plea was taken that the having been denied his right of obtaining the report of ,the Director of the Central Food Laboratory because of the delay by the appellant in launching the prosecution, the respondent could not be validly convicted. This defence was accepted by the Magistrate, and the respondent was acquitted. The appellant filed an appeal against this order of acquittal before the Delhi Bench of the Punjab High Court, but that Court upheld the order of the Magistrate. The appellant has now come up to this Court, by special leave, against that decision of the High Court. In this appeal, the main contention on behalf of the appellant was that, though, under the Act, a certificate of the Director of the Central Food Laboratory has the effect of superseding the report of the Public Analyst, the absence of such a certificate for any reason whatsoever will not affect the value and efficacy of the certificate given by the Public Analyst. The proposition put forward on behalf of the appellant appears to be correct. Under, section 13(3) of the Act, the certificate issued by the Director of the Central Food Laboratory supersedes the report given by the Public Analyst. 'The proviso to sub section (5) of section 13 further lays down that any document purporting to be a certificate signed by the Director of the Central Food Laboratory shall be final and conclusive evidence of the facts stated therein. These provisions of the Act are, however, only attracted when, in fact, an analysis of the sample sent to the Director of the Central Food Laboratory is made by him on the :basis of which he issues a certificate. If, for any reason, no certificate is issued, the report given by the Public Analyst does not cease to be evidence of the facts contained in it and does not become ineffective merely because it could have been superseded by the certificate issued by the Director of the Central Food Laboratory. Further, there being no certificate issued by the Director of the Central Food Laboratory, no question can arise of his certificate becoming final and conclusive evidence of the report contained in it. This aspect, however, does not conclude the matter so far as the question of the validity of the acquittal of the respondent is concerned. There can be no doubt that sub section (2) of section 13 of the Act confers a right on the accused vendor to have the sample given to him examined by the Director of the Central Food Laboratory and to obtain a certificate from him on the basis of the analysis of that sample. It is when the accused exercises this right that a certificate has to be given by the Director of the Central Food Laboratory and that certificate then supersedes the report given by the Public Analyst. If, in any case, the accused does not choose to exercise this right, the case against him can be decided on the basis of the report of the Public Analyst. Difficulty, however, arises in 119 a case where the accused does exercise the right by making a request to the Court to send 'his sample for analysis to the Director of the Central Food Laboratory and the Director is unable to issue a certificate because of some reason, including the reason that the sample of the food article has so deteriorated and become decomposed that no analysis is possible. In the present case, we find *that the decomposition of the sample, which the respondent desired should be analysed by the Director of the Central Food Laboratory, took place because of the long delay that had occurred in sending the sample to the Director ' The sample was taken on September 20, 1961, while it was sent to the Director after October 4, 1963, when the respondent made his application in that behalf. The submission on behalf of the respondent was that the appellant instituted the prosecution of the respondent on May 23, 1962, and consequently, under section 13(2) of the Act, the right accrued to the respondent to have the sample sent for analysis only thereafter. Section 13(2) specifically mentions that the accused vendor may make the application "after the institution of a prosecution under the Act." No right vested in the respondent to have the sample analysed in this case until the prosecution was launched on May 23, 1962. The opinion of one of the experts, Dr. Sat Parkash, given in this case shows that in the case of a food article, like curd, it starts undergoing changes after a week, if kept at room temperature, without a preservative, but remains fit for analysis for another 10 days thereafter. On the other hand, if the sample is kept in a refrigerator, it will preserve its fat and non fatty solid contents for purposes of analysis for a total period of four weeks. If a preservative is added and the sample is kept at room temperature, the percentage of fat and non fatty solids contents for purposes of analysis will be retained for about four months, and in case it is kept in a refrigerator after adding the preservative, the total period which may be available for making analysis, without decomposition, will be six months. In this case, when the Food Inspector handed over the sample to the respondent, the respondent was not expected to keep it in a refrigerator. Consequently, without any preservative, the sample kept with him could have been analysed successfully during the next 17, days, whereas, if a preservative had been added, it could have been analysed successfully during the next four months. It appears to us that when a valuable right is conferred by section 13 (2) of the Act on the vendor to have the sample given to him analysed by the Director of the Central Food Laboratory, it is to be expected that the prosecution will proceed in such a manner that that right will not be denied to him. The right is a valuable one, because the 120 certificate of the Director supersedes the report of the Public Analyst and is treated as conclusive evidence of its contents. Obviously, the right has been given to the vendor in order that, for his, satisfaction and proper defence, he should be able to have the sample kept in his charge analysed by a greater expert whose certificate is to be accepted by Court as conclusive evidence In a case where there is denial of this right on account of the deliberate conduct of the prosecution, we think that the vendor, in his trial, is so seriously prejudiced that it would not be proper to uphold his conviction on the basis of the report of the Public Analyst, even though that report continues to be evidence in the case of the facts contained therein. We are not to be understood as laying down that, in every case where the right of the vendor to have his sample tested by the Director of the Central Food Laboratory is frustrated, the vendor cannot be convicted on the basis of the report of the Public Analyst. We consider that the principle must, however, be applied to cases where the conduct of the prosecution has resulted in the denial to the vendor of any opportunity to exercise this right. Different considerations may arise if the right gets frustrated for reasons for which the prosecution is not responsible. In the present case, the sample was taken on the 20th September, 1961. Ordinarily, it should have been possible for the prosecution to obtain the report of the Public Analyst and institute the prosecution within 17 days of the taking of the sample. It, however, appears that delay took place even in obtaining the report of the Public Analyst, because the Public Analyst actually analysed the sample on 3rd October, 1961 and sent his report on 23rd October, 1961. It may be presumed that some delay in the analysis by the Public Analyst and in his sending his report to the prose cution is bound to occur. Such delay could always be envisaged by the prosecution, and consequently, the elementary precaution of adding a preservative to the sample which was given to the respondent should necessarily have been taken by the Food Inspector. If such a precaution had been taken, the sample with the respondent would have been available for analysis by the Director of the Central Food Laboratory for a period of four months which would have expired about the 20th of January, 1962. The report of the Public Analyst having been sent on 23rd October, 1961 to the prosecution, the prosecution could have been launched well in time to enable the respondent to exercise his right under section 13(2) of the Act without being handicapped by the deterioration of his sample. The prosecution, on the other hand, committed inordinate delay in launching the prosecution when they filed the complaint on 23rd May, 1962, and no explanation is forthcoming why the complaint in Court was filed about seven months after ' the report of the Public Analyst had been issued by him 121 This, is, therefore, clearly a case where the respondent was deprived of the opportunity of exercising his right to have his sample examined by the Director of the Central Food Laboratory by the conduct of the prosecution. In such a case, we think that the respondent is entitled to claim that his conviction is vitiated by this circumstance of denial of this valuable right guaranteed by the Act, as a result of the conduct of the prosecution. Learned counsel for the appellant drew our attention to a decision reported in Suckling vs Parker(1). That case was concerned with similar law in England, but, there, the provision relating to the testing of the sample kept with the vendor was quite different. In England, there was no restriction that the vendor could not have his sample tested until after the prosecution was launched, nor did the subsequent report have the effect of completely superseding the earlier report of the Analyst. In Municipal, Corporation, Gwalior, vs Kishan Swaroop,(2) it was held that, where there was delay in launching the prosecution, it deprived the accused of the valuable right to challenge the report of the Analyst in the manner prescribed by section 13(2) of the Act, and when this right was denied to the accused for no fault of Ms, but wholly due to the inordinate laches of the prosecution, no weight could be given to the report of the Public Analyst. That decision proceeded on the basis of the value of the report of the Public Analyst being affected by the fact that the accused had been deprived of his right to challenge that report by obtaining a certificate from the Director of the Central Food Laboratory. The report of the Public Analyst, as we have said earlier, does not cease to be good evidence merely because a certificate from the Director of the Central Food Laboratory cannot be obtained. The reason why the conviction cannot be sustained is that the accused is prejudiced in his defence and is denied a valuable right of defending himself solely due to the deliberate acts of the prosecution. In these circumstances, the acquittal of the respondent was justified, and the appeal is dismissed. V.P.S. Appeal dismissed (1) [1906]1 K.B.527. (2) AJ.R. 1965 M.P. 180.

IN-Abs

The Food Inspectorof the appellant Municipality took a sample of curd from the respondent 's shop for the purpose of testing whether there was any adulteration. The sample was divided into three equal parts, put in separate bottles and sealed. One bottle was handed over to the respondent and one was sent to the Public Analyst who analysed it and sent his report. On the basis of that report a complaint was filed, seven months after receipt of the report, against the respondent, for an offence under sections 7 and 16 of the . During the trail, the respondent applied to have the sample given to him analysed by the Director of the Central Food Laboratory in accordance with section 13(2) of the Act. The Director reported that the sample had become highly decomposed and could not be analysed. The trial Court acquitted the respondent accepting his contention that he could not be convicted after having been denied his right of obtaining the Director 's certificate by the delay in launching the prosecution. On the question whether he should have been convicted on the basis of the Public Analyst 's report. HELD : A right is conferred by section 13 (2) on the accused vendor to have the sample, given to him by the Food Inspector, analysed by the Director after the prosecution was launched against him. It is a valuable right, because, he could for his proper defence, have that sample analysed by a more competent expert, whose certificate supersedes the report of the Public Analyst under section 13(3), and is to be accepted by the Court as conclusive evidence of its contents under the proviso to section 13(5). However, if for any reason, no certificate is issued by the Director, the report of the Public Analyst does not cease to be evidence of the facts contained in it. But, in a case where there is denial of this right on account of the deliberate conduct of the prosecution, the accused vendor would be seriously prejudiced in his trial, and could not be convicted on 'the report of the Public Analyst, even though that report may be evidence in the case, of the facts stated therein. In the present case, the prosecution should have anticipated that there would be some delay, in the analysis by the Public Analyst and in the sending of his report, and consequently, the elementary precaution of adding a preservative to the sample given to the respondent should have been taken by the Food Inspector. If such a precaution had been taken, the sample given to the respondent would have been available for analysis by the Director, for a period of 'four months; and the prosecution could have been launched, after receiving the Public Analyst 's report, well within time to enable the respondent to exercise his right under section 13(2). The respondent was therefore denied a valuable right in defending himself, due to the inordinate delay in launching the prosecution, ad was prejudiced in his defence. [119 H; 120 A B, F H; 121 A] 117

Appeal No. 242 of 1965. Appeal from the judgment and order dated February 19, 1962 of the Madhya Pradesh High Court in Misc. Petition No. 395 of 1958. A. K. Sen, R. M. Hazarnavis, D. N. Verma, O. P. Malhotra, O. C. Mathur, J. B. Dadachanji and Ravinder Narain, for the appellant. B. Sen and I. N. Shroff, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by certificate, from the judgment of the High Court of Madhya Pradesh dated February 19, 1962 in Miscellaneous Petition No. 395 of 1958. The appellant is a firm carrying on the business of manufac turing and selling bidis. During the period April 1, 1951 to September 6, 1955, the appellant was registered as a "dealer" under the Central Provinces & Berar Sales Tax Act, 1947 (C.P. & Berar Act 21 of 1947) (hereinafter called the 'Act '). For the purposes of manufacture of bidis, the appellant imported from the State of Bombay large quantities of tobacco. During the period from November 7, 1953 to October 26, 1954, the appellant imported from that State tobacco worth Rs. 84,29,580 15 0 and during the period from October 27, 1954 to November 14, 1955 the appellant imported tobacco worth Rs. 1,38,27,630 12 6. In the usual course, the tobacco, after being imported into the State of Madhya Pradesh, was rolled into bidis which were largely exported to other States for sale and consumption in those States. In respect of the imports of tobacco the Sales Tax authorities required the appellant to file returns in Part B of Form IV clause 2 of which stated as follows: M19Sup. CI/66 7 90 "2. Purchase price of goods other than those mentioned in Schedule 11 purchased on declaration under rule 26 as being goods specified in the registration certificate as intended for use as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State but utilised for any other purpose; such as one 's own consumption or for export outside the State for which deduction is claimed under section 27 A or for use in the manufacture of goods exported outside the State for which deduction is claimed under section 27 A, etc. " The appellant filed a return for the quarter from May 3, 1954 to July 29, 1954 showing the amount of Rs. 16,47,567 3 3 as the purchase price of goods purchased on declaration as being goods specified in the registration certificate as intended for use as raw material in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State but utilised for any other purpose. In the return which was filed for the quarter beginning from July 27, 1954 and ending with October 26, 1954, the appellant did not fill in any figure but showed the above item as blank contending that the Sales Tax authorities were not entitled to levy any purchase tax against it in respect of the same. 'Me appellant thereafter moved this Court under article 32 of the Constitution for the issue of a writ of mandamus or any other suitable writ to restrain the respondents from enforcing the provisions of the Act and for other consequential reliefs. In Writ Peti tion No. 67 of 1955 decided on September 20, 1955 M/s Mohanlal Hargovind Das vs The State of Madhya Pradesh(1) this court observed in the course of its judgment as follows: "All the transactions entered into by a registered dealer, however, do not necessarily import a liability to pay tax under the Act because, whenever the question arises in regard to his liability to pay any tax under the Act, such liability would have to be determined in spite of his being a registered dealer with reference, inter alia, to the provisions of Section 27 A of the Act which incorporates within its terms the bans which have been imposed on the powers of the State Legislatures to tax under Article 286(1) (a) and (2) of the Constitution. If, therefore, a dealer who has got himself registered as dealer under the provisions of Section 8(1) of the Act is sought to be made liable in respect of transactions of sale effected by him he could claim exemption from such liability if the transactions of sale or purchase took place in the course of inter State trade or commerce after the 31st March, 1951, except in so far (1) ; 91 as Parliament may by law otherwise provide. In the case before us there was no such provision made by Parliament and the transactions in question were all after the 31st. March, 1951, with the result that the ban imposed by Article 286(2) was in operation and if the transactions took place in the course of inter State trade or commerce not only were Shri Chhaganlal Ugarchand Nipani and Shri Maniklal Chunanlal Baroda exempt from the liability to pay the tax on these transactions but the petitioners also were similarly exempt. No liability, therefore, could be imposed either for Sales Tax or for Purchase Tax within the terms of the Act on these transactions which as above stated took place in the course of inter State trade or commerce." This Court accordingly granted a writ to the following effect: "The respondents will be restrained from enforcing the Central Provinces and Berar Sales Tax Act, 1947, and its provisions against the petitioners and from imposing a tax in respect of the transactions in question and in particular from imposing a tax on the purchase price of goods purchased on the declarations under Rule 26 being goods specified in the registration certificate as intended for use as raw material in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State but utilised for any other purpose under the provisions of Section 4(6) of the Act. " In view of this writ the Assistant Commissioner of Sales Tax, Jabalpur, by his two orders dated September 9, 1956 and September 10, 1956, exempted the appellant from tax on the purchases of tobacco made in the State of Bombay, which, after being imported into the State of Madhya Pradesh, was used as raw material for manufacturing bidis exported to other States. The appellant preferred appeals to the Deputy Commissioner or Sales Tax against the two orders dated September 9, 1956 and September 10, 1956. In the meantime, on March 21, 1956, the Sales Tax Laws Validation Act, 1956 (Act 7 of 1956), which repealed the Sales Tax Validation Ordinance 3 of 1956, had come into force. Thereupon, on December 5, 1958, the Deputy Commissioner of Sales Tax issued two notices to the appellant proposing to levy tax on purchases of tobacco during the period from November 7, 1953 to September 5, 1955 from non resident dealers under section 4(6) of the Act. The appellant filed in the High Court of Madhya Pradesh Miscellaneous Petition No. 395 of 1953 praying for grant of a writ of certiorari to quash the notices dated December 5, 1958 issued by the Deputy Commissioner of Sales Tax and for a writ in the nature 92 of mandamus restraining the respondents from enforcing the provisions of the Act and of the Central Act 7 of 1956 and from imposing any tax on purchases of tobacco and other raw materials from non resident dealers. By its judgment dated February 19, 1962, the High Court of Madhya Pradesh rejected the petition of the appellant. By the Madhya Pradesh Sales Tax (Amendment) Act, 1953 (M.P. Act 20 of 1953) certain amendments were made in the Act. The material provisions of the latter Act, as amended by the former Act, were as follows: "2. (c) "dealer" means any person who whether as principal or agent, carries on in Madhya Pradesh the business of selling or supplying goods, whether for commission, remuneration or otherwise and includes a firm, a partnership. . . "2. (g) "sale" with all its grammatical variations and cognate expressions mean any transfer of property in goods for cash or deferred payment or other valuable consideration, including a transfer of property in goods made in course of the execution of a contract. . and the word 'purchase ' shall be construed accordingly; Explanation (II). (Notwithstanding anything to the contrary in the Indian , but subject to the provision contained in the Explanation to clause (i) of Article 286 of the Constitution) the sale or purchase of any goods shall be deemed for the purposes of this Act, to have taken place in this State wherever the contract of sale or purchase might have been made (a) if the goods were actually in this State at the time when the contract of sale or purchase in respect thereof was made, or (b) in case the contract was for the sale or purchase of future goods by description, then, if the goods are actually produced or found in this State at any time after the contract of sale or purchase in respect thereof was made; Explanation (III). Notwithstanding anything to the contrary in the Indian , the sale of any goods which have actually been delivered in the State of Madhya Pradesh as a direct result of such sale for the purpose of consumption in the said State, shall be deemed, 93 for the purpose of this Act, to have taken place in the said State, irrespective of the fact that the property in the goods has, by reason of such sale passed in another State." "2. (j) 'turnover ' means the aggregate of the amounts of sale prices and parts of sale prices received or receivable by a dealer in respect of the sale or supply of goods or in respect of sales or supply of goods in the carrying out of any contract affected or made during the prescribed period; and the expression 'taxable turnover ' means that part of a dealer 's turnover during such period which remains after deducting therefrom (a) his turnover during that period on (ii)sales to a registered dealer of goods declared by him in the prescribed form as being intended for resale by him by actual delivery in Madhya Pradesh for the purpose of consumption in that State or of goods specified in such dealer 's certificate of registration as being intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State, and of containers and other materials used in the packing of such goods;" "4. (6) Where any goods are purchased by a registered dealer as being intended for resale by him by actual delivery in Madhya Pradesh for the purpose of consumption in that State, or as being goods specified in such dealer 's certificate of registration as intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State and such goods are utilised by him for any other purpose, the price paid by him for such goods shall be included in his turnover and be liable to tax in accordance with the provisions of this Act." "27 A. (a) Notwithstanding anything contained in this Act (a) a tax on the sale or purchase of goods shall not be imposed under this Act (i) where such sale or purchase takes place outside the State of Madhya Pradesh; or (ii)where such sale or purchase takes place in the course of import of the goods into, or export of the goods out of, the territories of India; 94 (b) a tax on the sale or purchase of any goods shall not, after the 31st day of March 1951, be imposed where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may by law otherwise provide. (2) The Explanation to clause (1) of Article 286 of the Constitution shall apply for the interpretation of subclause (i) of clause (a) of sub section (1). " Article 286(1) and (2) of the Constitution, as it stood at the material time, is reproduced below: "286(1) No law of a State shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place: (a) outside the State; or (b) in the course of the import of the goods into, or export of the goods out of, the territory of India. Explanation. For the purposes of sub clause (a), a sale or purchase shall be deemed to have taken place in the State in which the goods have actually been delivered as a direct result of such sale or purchase for the purpose of consumption in that State, notwithstanding the fact that under the general law relating to sale of goods the property in the goods has by reason of such sale or purchase passed in another State. (2)Except in so far as Parliament may by law otherwise provide, no law of a State shall impose, or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce. Provided that the President may by order direct that any tax on the sale or purchase of goods which was being lawfully levied by the Government of any State immediately before the commencement of this Constitution shall, notwithstanding that the imposition of such tax is contrary to the provisions of this clause, continue to be levied until the thirty first day of March, 1951. " In m/s Mohanlal Hargovind Das vs The State of Madhya Pradesh,(1) it was held by this Court that the transaction of purchase of tobacco by the appellant from dealers outside the territory of Madhya Pradesh were transactions in the course of inter State (1) ; 95 trade or commerce and since the ban imposed by article 286(2) was in operation, the appellant was exempt from liability to pay tax on those transactions. On January 30, 1956, the President of India promulgated an Ordinance called 'The Sales Tax Laws Validation Ordinance, 1956 ' (Ordinance No. 3 of 1956) which was repealed and replaced by the Sales Tax Law Validation Act, 1956 (Act 7 of 1956) which came into force on March 21, 1956. Section 2 of this Act states: "Notwithstanding any judgment, decree or order of any Court, no law of a State imposing or authorising the imposition of, a tax on the sale or purchase of any goods where such sale or purchase took place in the course of inter State trade or commerce during the period between the Ist day of April, 1951 and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the course of inter State trade or commerce; and all such taxes levied or collected or purporting to have been validly levied or collected during the aforesaid period shall be deemed always to have been validly levied or collected in accordance with law. Explanation. In this section 'law of a State ' in relation to a State specified in Part C of the First Schedule to the Constitution, means any law made by the Legislative Assembly, if any, of that Sate or extended to that State by a notification issued under Section 2 of the Part C States (Laws) Act, 1950 (30 of 1950)". It was argued by Mr. A. K. Sen on behalf of the appellant, in the first place, that section 27 A of the Act places a restriction on the power of the taxing authorities and so long as it stood unrepealed there was no pre existing law authorising the imposition of tax on sales made in the course of inter State trade or commerce and in consequence the Sales Tax Laws Validation Act, 1956 which merely lifted the ban and did not impose any tax, bad no application to the case of the appellant. To put it differently, the contention of Mr. A. K. Sen was that before advantage could be taken of the Sales Tax Laws Validation Act, 1956 there had to be in existence a State Act imposing tax on such sales and section 27 A of the Act imposed no such tax on the sales. We are unable to accept this argument as correct. An identical question was the subject matter of consideration by this Court in M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh & another(1) and it was held that section 22 of the Madras Sales Tax Act had a positive content and the Explanation in the context of section 22 authorised the State of (1) ; 96 Madras to impose tax on sales falling within its purview. In the course of his judgment Venkatarama Aiyar, J., speaking for the Court, observed: "These considerations will clearly be inapposite in construing a taxing statute like the Madras Act, the object of which is primarily to confer power on the State to levy and collect tax. When we find in such a statute a provision containing a prohibition followed by an Explanation which is positive in its terms, the true interpretation to be put on it is that while the prohibition is intended to prevent taxation of outside sales on the basis of the nexus doctrine, the explanation is intended to authorise taxation of sales falling within its purview, subject of course to the other provisions of the Constitution, such as article 286(2). It should be remembered that unlike the Constitution, the law of a State can speak only within its own territories. It cannot operate either to invest another State with a power which it does not possess, or divest it of a power which it does possess under the Constitution. Its mandates can run only within its own borders. That being the position, what purpose would the Explanation serve in section 22 of the Madras Act, if it merely meant that when goods are delivered under a contract of sale for consumption in the State of Madras, the outside State in which property in the goods passes has no power to tax the sale? That is not the concern of the State of Madras, and indeed, the Legislature of Madras would be incompetent to enact such a law. In its context and setting, therefore, the Explanation to section 22 must mean that it authorises the State of Madras to impose a tax on sales falling within its purview. Thus, while in the context of article 286(1) (a) the Explanation thereto could be construed as purely negative in character though positive in form, it cannot be so construed in its setting in section 22 of the Madras Act, where it must have a positive content. " Section 22 of the Madras Act is couched in a similar language to section 27 A of the Act. In our opinion, the principle of the decision in M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh & another(1) therefore governs the present case. We should also refer to the additional circumstance that in the present case the third Explanation to section 2(g)incorporates into the definition of 'sale ' the Explanation occurring in article 286 in contrast to the Madras Act where there is no such incorporation in the definition.of sale under section 2(h) of that Act. We are accordingly of the opinion that the argument of the appellant must be rejected on this aspect of the case. (1) ; 97 The next question to be considered in this appeal is whether the provisions of section 4(6) of the Act are attracted in the circumstances of the case. It was submitted for the appellant that the section has no application because tobacco was not specified in the certificate of registration granted to the appellant "as intended for use by it as raw material in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State". Section 2(j) of the Act, as it originally stood, was to the following effect : "Sales to a registered dealer of goods specified in such dealer 's certificate of registration as being intended for resale by him, or for use by him in the manufacture of any goods for sale or in the execution of any contract and on sales to a registered dealer of containers and other materials for the packing of such goods;" The section was amended from time to time until, with effect from December 1, 1953 it stood as follows: "Sales to a registered dealer of goods declared by him in the prescribed form as being intended for resale by him by actual delivery in Madhya Pradesh for the purpose of consumption in that State or of goods specified in such dealer 's certificate of registration as being intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State, and of containers and other materials used in the packing of such goods;" Section 4(6) of the Act was also inserted with effect from December 1, 1953 by the Madhya Pradesh Sales Tax (Amendment) Act 1953 (Act 20 of 1953). In consequence of these amend ments it became necessary to amend the certificate of registration granted to the appellant before the amendment of the Act. Therefore, on January 5, 1954, even before the relevant Rule was amended, the appellant applied for substitution of the words "raw materials" for the words "for the purpose of manufacture". In allowing the application the Sales Tax Officer did not comply with the language of Form II but merely specified as raw materials "Tendu leaves, Tobacco, Yarn" The contention of the appellant is that the purchase of tobacco cannot be taxed because it was not "specified in the dealers ' certificate of registration as intended for use by him as raw materials in the manufacture of any goods for the purpose of sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State" as required by section 4(6) of the Act. We are unable to accept the argument of the appellant as correct. It is true that there is a technical omission in the order of the Sales Tax Officer amending the certificate of registration, but the certificate must be fairly construed in the light of the language 98 of section 8 and other relevant provisions of the Act. Before the amendment made by Act XX of 1953 section 8(3) read as follows: "8. (3) If the said authority is satisfied that an application for registration is in order, it shall in accordance with such rules as may be made under this Act, register the applicant and grant him a certificate of registration in the prescribed form which, in the case of a registered dealer who himself manufactures any goods for purposes of sale shall specify the class or classes of goods which are intended to be used by him in the manufacture of such goods." After the amendment the sub section was to the following effect: "8. (3) If the said authority is satisfied that an application for registration is in order, it shall in accordance with such rules as may be made under this Act, register the applicant and grant him a certificate of registration in the prescribed form which, in the case of a registered dealer who manufac tures any goods for purposes of sale by 'actual delivery in Madhya Pradesh for the purpose of consumption in that State shall specify the raw materials which are intended to be used by him in the manufacture of such goods. " In this connection reference may be made to section 2(j) (a) (ii) Which states that a selling dealer is entitled to deduct from his turnover sales to a registered dealer of goods "specified in such dealer 's certificate of registration as being intended for use by him as raw materials in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State". It is manifest that the only legitimate object which the purchasing dealer seeks in having a class of good specified in the certificate of registration as "raw materials" is to purchase the goods tax free in the sense contemplated by the Act. By asking for such specification the dealer represents that he intends to use the goods specified in the manufacture of other goods for the purpose of sale by actual delivery in the State of Madhya Pradesh for the purpose of consumption in that State. In this context reference should be made to declarations made by the appellant to the Bombay dealers printed at page 88 of the Paper Book. In these declarations the appellant stated that it was purchasing tobacco for use as raw materials in the manufacture of goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State and that tobacco was so specified in its certificate of registration. As we have already said, the certificate of registration granted to the .appellant must be construed in the context of section 8 as it stood after ,its amendment and the declarations of the appellant made to the Bombay dealers. If the language of the certificate is so construed 99 in the context of the amended section 8 of the Act and along with the declarations of the appellant, it is manifest that the appellant is liable to pay tax on tobacco imported from Bombay dealers for the relevant periods and that the requirements of section 4 (6) of the Act are satisfied in this case. The view that we have taken is borne out by the decision of this Court in Modi Spinning & Weaving Mills Co. Ltd. vs Commissioner of Sales Tax Punjab, and another(1) in which it was held that the registration certificate was only evidence that the assessee was a registered dealer for purposes of certain commodities to be used in manufacture and any formal defect in the registration certificate was not material. We therefore hold that the technical omission of the Sales Tax Officer to make a specific entry in the certificate will not confer any benefit on the appellant if there is other incontrovertible evidence in the case to show that the appellant did purchase the goods specified in the certificate as raw materials in the manufacture of any goods for the purpose of sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State. We, therefore, hold that Mr. A. K. Sen has not been able to make good his argument on this aspect of the case. For these reasons this appeal fails and must be dismissed with costs. G.C. (1) 16 section T. C. 310. Appeal dismissed.

IN-Abs

The appellant was a firm in Madhya Pradesh and was registered as a dealer ' under the Central Provinces and Berar Sales Tax Act, 1947 as amended by the Madhya Pradesh Sales Tax (Amendment) Act, 1953. During 1951 and 1955 the firm imported tobacco from the State of Bombay on the declaration that it would be used as raw material in the manufacture of goods for sale by actual delivery in Madhya Pradesh for consumption in that State. Tobacco was mentioned as one of the raw materials in the firm 's registration certificate issued under section 8 of the Act. However the goods manufactured by the firm were utilised for a different purposes i.e. for export outside the State. Under section 4(6) of the Act when goods were used for a different purpose other than the one declared and mentioned in the registration certificate the price paid by the dealer for such goods would be included in his taxable turnover. However in a writ petition before the High Court the appellant firm contended that the goods exempt as interstate sales were exempted from levy of sales ,,tax under section 27A of the Act which incorporated the bans in article 286 of ,the Constitution. The writ petition was allowed in September 1955. However in '1956 the Sales tax Validation Ordinance and thereafter the Sales Tax Laws Validation Act were passed. Accordingly the Sales Tax ,Authorities issued notices to the appellant firm proposing to levy purchase ,tax on the tobacco purchased by it from non resident dealers during the period November 7, 1953 to September 5, 1955. The appellant thereupon filed another writ petition before the High Court challenging the levy but it was dismissed. With certificate the appellant came to this "court. It was urged on behalf of the appellant that (i) before advantage could be taken of the Sales Tax Laws Validation Act. 1956 there had to be in existence a State Act imposing tax on inter State.sales and section 27A of the Act imposed no such tax, (ii) section 4(6) had no application because tobacco was not specified in the certificate of registration granted to the appellant as intended for use by it as raw material in the manufacture of any goods for sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State. " HELD : (i) Read with the third explanation to section 2(g)of the Act section 27 A had a positive and not merely a negative content. It gave power to the State of Madhya Pradesh, to impose a tax on a transaction falling 'Within its purview. It was therefore a pre existing law validated by the Sales Tax Laws Validation Act, 1956 and the appellant could be taxed under it in respect,of inter State sales only during the relevant period. [95 H; 96 G H] 89 M.P.V. Sundararamier & Co. vs The State of Andhra Pradesh, ; , relied on. (ii)The declaration made by the appellant to the Bombay dealers was for the purpose of obtaining exemption from purchase tax. The same was the purpose of the mention of tobacco in the registration certificate under section 8. If the language of the certificate were construed in the context of the section 8. of the Act (as amended) and along with the declaration of the appellant, it was manifest that the appellant was liable to pay tax on tobacco imported from Bombay dealers and that the requirements of a. 4(6) were satisfied. The technical omission of the Sales Tax Officer to make a specific entry in the certificate would not confer any benefit on the appellant when there was other incontrovertible evidence to show that the appellant did purchase the goods specified in the certificate as raw materials in the manufacture of any goods for the purpose of sale by actual delivery in Madhya Pradesh for the purpose of consumption in that State. [98 F H; 99 A] Modi Spinning & Weaving Mills Co. Ltd. vs Commissioner of Sales Tax, Punjab & Anr. 16 S.T.C. 310, relied on.

minal Appeal No. 136 of 1966. Appeal by special leave from the judgment and order dated January 18, 1966 of the Madras High Court in Criminal Appeal No. 697 of 1965 and referred trial No. 90 of 1965. B. D. Sharma, for the appellant. V. P. Raman and A. V. Rangam, for the respondent. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by special leave against the judgment of the High Court of Judicature at Madras, January 18, 1962, by which the High Court confirmed the conviction of the appellant Periyasamy under section 302, Indian Penal Code, and the 12 3 sentence of death imposed on him. The facts of the case are as follows: Periyasamy was charged with the murder of his wife Kaveri Ammal on the morning of May 11, 1965, at 6 a.m., at a place in Kirambur where they were residing in what is called a shed. Opposite to this shed was another shed in which Periyasamy 's brother with his wife Pappayee (P. W. 1) was residing. Periyasamy and Kaveri Ammal had been married for a period of two years during which time Kaveri Ammal used to go away frequently to her parents ' place, and the motive suggested is that it used to enrage the appellant Periyasamy. On the morning of the day of occurrence, Pappayee heard the cry "Ayyo, ayyo", and she states that she saw Periyasamy striking his wife with a koduval. Pappayee raised an alarm. Periyasamy thereupon threw the koduval away and retired to his shed and taking hold of a rope climbed a tree. He tied one end of the rope to a limb of the tree and another round his neck and jumped, but meanwhile the neighbours had assembled there and they caught him and cut him down from the tree and laid him on a cot. Periyasamy did not die though there is evidence to show that he had some bruises round his neck. Meanwhile a brother of Periyasamy by name Chinna ran to their father and informed him about the occurrence. The father,. without going to verify what he had heard, went over to the police station House and lodged a report, saying that his younger son had informed him that Periyasamy had cut down his wife with a koduval and attempted to hang himself and that he was making the report. In the last sentence of this report, it was mentioned that Pappayee had witnessed the occurrence. The prosecution examined a number of witnesses but we are concerned only with one, namely, Pappayee, P. W. 1, who is the solitary eye witness in the case. It appears that Pappayee changed her statement in the Court of Session by leaving out the name of Periyasamy as the assailant of Kaveri Ammal. She was, therefore, declared hostile by the court and was allowed to be cross examined under section 145 of the Indian Evidence Act. Her previous statement was also brought on the record of the case. This statement of Pappayee forms the foundation of the case against Periyasamy, corroborated by the other evidence about his conduct and the motive for the commission of the offence. The High Court and the court below have acted upon the statement of Pappayee made in the committal court in preference to the statement she made in the Court of Session, and have based the conviction by accepting her previous version. In this appeal, Mr. B. D. Sharma naturally attacked the evidence of Pappayee from various angles and also, tried to establish that the judgment of the 124 High Court did not satisfy the standards for an appellate judgment as laid down by this Court, particularly in a case dealing with the confirmation of a death sentence. We shall, therefore, examine these contentions in detail. The first contention raised by Mr. Sharma is that the Sessions Judge did not comply with the provisions of section 288 of the Code of Criminal Procedure inasmuch as he did not pass any order transferring the earlier statement to the record of the Sessions trial. We have not been able to find in the original record of the case, which was brought to our notice, any order specifying the transfer of the earlier deposition to the record of the Sessions Court under section 288. It appears, however, that the practice of this Court is to ,contradict a witness with the earlier statement and parts there of, after declaring him hostile and then to use the record of the earlier statement as substantive evidence. It may be stated that it is highly desirable that the court should, before the transfer of the earlier statement to the record of the Sessions case under section 288, indicate in ,a brief order why the earlier deposition was being transferred to the record of the trial. This will make it quite clear to the accused that the earlier statement is likely to be used as substantive evidence against him. If the matter had rested with the use of the earlier statement without this notice to the accused, we would have found it difficult to rely upon the earlier deposition. We find, however, that Periyasamy was questioned with reference to the statement of Pappayee made before the Committing Magistrate which, the Judge informed him, was marked under section 288 of the Code of Criminal Procedure, and he was asked what he had to say about it. Therefore, although the technical requirement of the section, namely, that an order should be passed to indicate that the statement is transferred so as to be read as substantive evidence, was not complied with, there does not appear to be any substantial departure from the requirements of the law. There is also no likelihood of any prejudice to Periyasamy since he was informed. while he was being examined that the statement was being used under section 288, Criminal Procedure Code, and was invited to say what he wished to say in defence. We are, therefore, of the opinion that the High Court and the court below were right in using the statement as substantive evidence which undoubtedly the Code of Criminal Procedure does allow. Mr. Sharma next contended that it has been laid down in a series of cases that when the solitary witness in a case has made ,conflicting statements, it is very risky to rely upon any of the versions and has drawn our attention to a case reported in re Muruga Goundan(1) decided by a Division Bench in which the present Chief Justice of this Court delivered the judgment. We entirely agree. (1) A.I.R 1949 Mad. 125 But there are cases and cases. If the matter rests upon the statement of a witness, who has changed the version and there is nothing further to connect the accused with the offence with which he is charged, there is good ground for acquitting him. We do not think that this is such a case. The facts here go further. Pappayee 's two statements, when they are compared, disclose that the whole of her testimony as given in the court of the Committing Magistrate was again repeated in the Court of Session, except that she left out the name of Periyasamy as the assailant. This appears to have been the result of some pressure upon her. Although she was induced to say in the Court of Session that she had made the earlier statement under pressure of the police and the police threatened to involve her in the murder, we find other clear circumstances from which we can say that the statement made earlier by Pappayee, is definitely to be preferred in the circumstances of this case. We proceed now, to enumerate what those circumstances are. The two sheds are situated opposite to each other and the door of the shed in which Kaveri Ammal was done to death is a kind of matting which Pappayee had stated was then open. This would be so in May, which, being a hot month, makes the people open their doors early in the morning. Therefore, whatever happened inside the shed would be visible to persons living in a shed across the road and Pappayee states in both the statements that she was able to see the occurrence. The fact that she is a close relation must weigh considerably against Periyasamy and we must turn, therefore, to see whether he gave any reasonable explanation why Pappayee should have given the evidence at all against him. His version is that he had gone to fetch some kerosene oil for working a pump and when he came back he found that his wife had been cut to pieces, apparently by some one in his absence. He further added in answer to a question that he was "on talking terms" with Pappayee before he married, suggesting thereby that Pappayee was enraged on being neglected by him after he married Kaveri Ammal. This motive and the explanation about his absence are his explanations to avoid the implications of Pappayee 's incriminating statement. In our opinion, neither of these circumstances is clear enough to make us discard the evidence of Pappayee brought on the record under section 288 of the Code of Criminal Procedure. It seems too much of a coincidence that an unknown murderer lay in wait to kill Kaveri Ammal during the short time her husband was away to buy kerosene oil. Further, it seems difficult to believe that Pappayee was making this statement because she was jilted in some manner by Periyasamy. There is nothing to show that what Periyasamy alleged was at all the truth, and looking to the circumstances of the case, we feel that this is just something which he has thought out in defence without being true. This conclusion is further streng 126 thened by his subsequent conduct on the discovery by him of the murder. What did Periyasamy do? He does not seem to have questioned any one as to how this happened during the short time he was away. On the other hand, he snatched up a rope, tied it to the limb of a tree and tying the other end to his neck jumped down in an attempt to commit suicide. He was fortunate (but not quite so) that some neighbours arrived at the critical moment and saved him from hanging himself. This conduct clearly indicates a feeling of fear or, may be, of remorse. It induced him to attempt to take his own life after he had taken that of his wife. Mr. B. D. Sharma suggested a number of persons who might be the likely assailants of Kaveri Ammal, suggesting the father of Periyasamy or the uncles of the girl and even Pappayee herself. But these suggestions cannot be accepted in the light of the circumstances. If they had been true, the husband would have stood his ground and attempted to see that the right offender was brought to book and not attempted to commit suicide at the first sight of his wife lying murdered at the hands of some one else. Mr. B. D. Sharma argued that the judgment of the High Court had not taken into account all these circumstances. Per haps, the High Court thought that the case was clear enough and did not embark on a detailed judgment. After looking into the record of the appeal case and considering every aspect of the argument which has been advanced before us, we are satisfied that no other conclusion was possible and that the charge had been completely proved against Periyasamy. We, accordingly, order the appeal to be dismissed. R.K.P.S. Appeal dismissed.

IN-Abs

In a prosecution for murder the only eye witness having named the appellant as the assailant in her deposition in the committal court, left out his name in her evidence in the Sessions Court. She was declared hostile and was allowed to be cross examined. The Sessions Judge questioned the appellant with reference to the statement of the witness in the committal proceedings and informed him, that it was marked under section 288, Cr. P.C. He however did not pass an order transferring the earlier deposition to the record of the Sessions Court. Treating the previous statement as substantive evidence and relying upon the other circumstances in the case, the Sessions Court and the High Court on appeal convicted the appellant. On appeal to this Court, HELD : The High Court and the Sessions Court were right in convicting the appellant. Although the technical requirement of section 288, namely, that an order should be passed to indicate that the statement is transferred so as to be read as substantive evidence, was not complied with there was no substantial departure from the requirements of the law and no prejudice was caused to the appellant since he was informed that the statement was being used under section 288. [124 E G] [Desirability of an order indicating why the earlier deposition was being transferred to the record of the trial court, pointed out. [124 C D]

l Appeal Nos. 2135 of 1966. Appeal from the judgment and order dated January 27, 1965 of the Rajasthan High Court in D. D. Election Appeal No. 93 of 1963. R. K. Garg, D. P. Singh and section C Agarwal, for the appellant. B.D. Sharma and L. D. Sharma, for the respondent. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal 'on a certificate granted by the Rajasthan High Court and arises in the following circumstances. There was an election to the Rajasthan Legislative Assembly from the Beawar constituency at the general election in 1962. A number of persons stood for election, two of whom were the appellant and the respondent. The appellant secured the highest number of votes while the respondent came second. The appellant was declared successful at the election and this led to an election petition by the respondent. A number of grounds were taken in the election petition for invalidating the election of the appellant; but in the present appeal we are concerned with one ground and shall refer to that only. That ground was that the appellant had commited a corrupt practice as defined in section 123(4) of the Representation of the People Act, No. 3 of 1951, (hereinafter referred to as the Act). The case of the respondent was that the appellant had published a statement of fact in relation to the respondent 's personal character or conduct and that statement of fact was false, and the appellant either believed it to be false or did not believe it to be true. The statement was reasonably calculated to prejudice the prospects of the respondent 's election. In consequence, the respondent prayed that the election of the appellant be set aside. It is unnecessary to refer to the reply of the appellant to the above contention, for learned counsel for the appellant does not dispute the findings of fact arrived at by the High Court. It will therefore be enough to refer to these findings with respect to the corrupt practice alleged by the respondent. The High Court found that the appellant was responsible for the publication of a poem entitled Mang raha hoon de bhai vote : (I am an applicant and request your vote). This poem was composed by one Avinash Chander of Beawar. It was not disputed before the High Court that the poem in question was aimed at the respondent and he was the target of the attack made therein. The High Court also found that the poem in question was read at an election meeting on February 21, 1962 at which the appellant himself was presiding. Avinash Chander had recited this poem at that meeting. It was also found 129 that the booklet containing the poem was printed at the instance of one Chand Mohammad, who was polling and counting agent of the appellant and who had also paid the author (Avinash Chander) something for it. The appellant had seen the booklet containing this poem sometime before the meeting of February 21, 1962 and had read it. Further the High Court held that the booklet containing the poem was printed with the knowledge and approval of the election agent of the appellant. Finally, the High Court held that the poem was recited at the meeting of February 21, 1962 by Avinash Chander and the appellant was presiding at that meeting and Kalyan Singh, his election agent, was also present in it, and thus there was sufficient publication within the meaning of section 123(4) of the Act, for which the appellant was responsible. The Tribunal had held that the appellant was responsible for the publication of the booklet containing this poem and it contained statements of fact which the appellant either believed to be false or did not believe to be true. These statements of fact were held to be in relation to the personal character or conduct of the respondent and were reasonably calculated to prejudice the prospects of the respondent 's election. In consequence the Tribunal had held the appellant guilty of the corrupt practice within the meaning of section 123(4) and allowed the election petition. The appellant then went in appeal to the High Court and three main points were urged on his behalf there. In the first place, it was contended that there was no statement of fact at all in the poem in question. Secondly, it was contended that even if there was any statement of fact in the poem it should have been proved that Avinash Chander who had recited it either believed it to be false or did not believe it to be true and that no attempt was made to prove this. Lastly, it was contended that the onus to prove that corrupt practice had been committed lay on the respondent and that had not been discharged. The High Court rejected all the three contentions and held that there was one statement of fact in the poem in question. That statement was either believed to be false or was not believed to be true by the appellant. The High Court also held that the belief of Avinash Chander was immaterial and the respondent had discharged the onus that lay on him. In the result the appeal was dismissed. The appellant then applied for and obtained a certificate from the High Court, and that is how the matter has come before us. The same three points which were raised before the High Court have also been raised before us in the appeal. The first question that we shall consider is whether there was a statement of fact at all in the poem in question. The contention on behalf of the appellant is that there was no statement of fact with respect to the character or conduct of the respondent in the poem and that it merely expressed opinions which did not come within the ambit of section 123(4 130 Now there is no doubt that the poem was aimed at the respondent which is made clear by the second stanza which starts with the words "Pakka Pandit Sharma Hoon": (I am pucca Pandit Sharma). It is not in dispute that the respondent was the only Sharma who contested the election. Considering the heading of the poem to which we have already referred it is obvious that the respondent was depicted therein as requesting for votes. In the sixth stanza, the respondent is made to say: sab choron ka sartaj: (I am the greatest of all thieves); and it is this phrase which the High Court has held to be a statement of fact. We are of opinion that this passage states as a fact that the respondent is the greatest of all thieves, though in the poem the statement is put as if it was coming from the mouth of the respondent. The question is whether a statement to the effect that one of the candidates standing for election is the greatest of all thieves is a statement of fact or is a mere expression of opinion about the candidate. It is not in dispute that if it is a statement of fact it is clearly in respect of the personal character or conduct of the candidate concerned. It seems to us that if a candidate is called the greatest 0 all thieves, the person saying so is making a statement of fact. The statement that a person is a thief or the greatest of all thieves cannot in our view be a mere opinion, and we agree with the High Court that when the respondent was called the greatest of all thieves a statement of fact was being made as to his personal character or conduct. It is however urged on behalf of the appellant that there are no details as to the time when the respondent committed thefts or the place where he committed them, and therefore a mere bald statement that the respondent was a thief or the greatest of all thieves could be an expression of opinion only and not a statement of fact. We are unable to accept this. Section 123(4) in our opinion does not require that when a statement of fact is made as to the personal character or conduct of a candidate details which one generally finds (for example) in a charge in a criminal case, must also be there and that in the absence of such details a statement to the effect that a person is (for example) a thief or murderer is a mere expression of opinion. To say that a person is a thief or murderer is a statement of fact and the mere absence of details as to time and place would not turn a statement of fact of this nature into a mere expression of opinion. Learned counsel for the appellant relies on a number of cases in support of his contention that such a bald statement without particulars could not be a statement of fact. The first case to which reference may be made is Ellis vs National Union of Conservative and Constitutional Association.(1) It has not been possible for us to get the report of this case. But in Parker 's Election Agent and 1. 109, Law Times Journal 493; & Times Newspaper, October 3rd, 1900:44 Sol. Journ. 131 Returning Officer, 6th Edition, p. 91, it has been mentioned. There it is stated that "a statement which imputed that the candidate was a traitor, and was one of certain persons who were in correspondence with the enemy shortly before the South African war broke out in 1899" was not held to be a statement of fact and did not come within the mischief of the relevant provision of English law relating to elections. But in Rogers on Elections, Vol. 11, 20th Edition, p. 368, the same case is referred and the facts given there seem to be different. It is stated there that a poster was published stating that Radical members of the House of Commons were in correspondence with the enemy, and this statement was held not to come within the ambit of the law on the ground that it did not state that the plaintiff was in correspondence with the Boers. As the report is not available it is very difficult to judge what exactly was decided in that case. If the facts are as given in Rogers, it seems that there was no statement of fact with respect to the candidate in that case and all that was said was that Radical members of the House of Commons were in correspondence with the Boers, and the candidate happened to be one of the Radical members. If that is so, it was not clearly a statement of fact with respect to the candidate in particular and that case would not be of any assistance to the appellant. The next case to which reference may be made is A. section Radha krishna Ayyar vs Emperor.(1) It was held there that for the purpose of section 171 G of the Indian Penal Code, something must be stated as a fact and not as a general imputation or as a matter of opinion. In that case, a candidate was prosecuted under section 500 of the Indian Penal Code, and he took the plea that he should have been prosecuted under section 171 G of the Indian Penal Code and that this could not be done without the sanction of government, which was not obtained. In that case a defamatory document was published with respect to the candidate. That document contained only one or two statements of fact, but the bulk of it consisted of mere general expression, and it was held that a prosecution under section 500 of the Indian Penal Code was not barred. But one of the statements which was held not to be a statement of fact was this, namely, they are misappropriating government money by committing forgeries. Now it must be remembered that the question there was whether prosecution under section 171 G would lie and the High Court was of the view that it would not and gave its reasons thus: "When it is alleged that a man does many kinds of harm to the poor, that he misappropriates government money, that he commits forgery and so forth, how would it be possible, in the absence of particulars, to prove prima facie that the allegations are false?" Consequently, the High Court held that the offending document on the whole was one to which section 171 G could not be applied. We (1) A.I.R. 1932 Mad. 132 are of opinion that the view taken by the High Court, at any rate, with respect to 'the allegation that the candidate in question was misappropriating government money was not a statement of fact is not correct. The next case to which reference may be made is Narayana swamy Naichker and Others vs D. Devaraja Mudaliar & Others.(1) There also the question was whether a person should be prosecuted under section 500 and not under section 171 G of the Indian Penal Code. This case does not seem to support the appellant, for it was held there that the statement that the candidate had committed fraud in respect of money in the fund office and was removed by the general body or by the department, was a statement of fact. The next case to which reference may be made is Hajee Moham mad Kadir Sheriff vs Rahimatullah Sahib.(2) In that case also the question was whether the prosecution should have been under section 500 or under section 171 G of the Indian Penal Code. The statement there was that the candidate was a leper, and the High Court held that this was not a case which fell within section 171 G but no reasons were given for the view. It seems to us that this case does not help the appellant for the allegation that a person is a leper cannot be said to relate to personal character or conduct of the candidate; it only mentions a physical defect. The last case to which reference may be made is V. P. Shan mugam and Another vs Thangavelu.(3) That also dealt with section 171 G of the Indian Penal Code. In that case, a printed notice was published containing a series of rhetorical questions viz. whether it was true or not that the candidate used to receive money and withdraw from contest in elections. The exact words used are not to be found in the report and the High Court seems to have held that as no particulars were mentioned it would not be a statement of fact. It seems to us however that if an allegation is made that a candidate had withdrawn from context at previous elections after taking money that would be a statement of fact and the view taken by the High Court is not correct. The question whether a particular statement with respect to a candidate at an election is a statement of fact or is a mere expression of opinion would depend on the facts of each case and will have to be judged in the circumstances in which the statement was made and in the context of the writing in which it appears, in case it is part of a writing. But it is not in our opinion correct to say that a statement with respect to a candidate can never be a statement of fact, unless it is accompanied by particulars as to time, place and date which one finds (for example) in a charge sheet in a crimi (1) A.I.R. [1936] Madras 360. (2) A.I.R. 1940, Madras 230. (3) A.I.R. 1958, Madras 240. 133 nal case. Whether in a particular setting a bald statement without particulars would be a mere expression of opinion or would amount to a statement of fact would depend upon the circumstances of each case and the court will have to consider the setting in which the statement was made and the entire writing in the context of which it appears and the nature of the statement itself before it comes to the conclusion that it is a statement of fact or an expression of opinion. Where particulars are given it may not be difficult to come to the conclusion that the statement is a statement of fact; but even a bald statement without particulars may be a statement of fact and not a mere expression of opinion. It seems to us that mere absence of particulars would not necessarily mean that a statement without particulars is always an expression of opinion. Take a case where a candidate is said to be a murderer. The mere fact that the name of the victim or the date when the murder took place or the place where it happened is not mentioned, would not detract from the statement being a statement of fact. At the same time a similar bald statement that a candidate is a murderer in the context in which it appears if it is in writing may not be a statement of fact and may be a mere matter of opinion, as, for, example, where it is said that a candidate is a murderer of all decencies in life. The question whether a bald statement amounts to a statement of fact or a mere expression of opinion would depend on the facts and circum stances of each case and also on the setting in which the statement appears whether it is in writing or oral. In the present case, taking the poem as a whole there can be no doubt that when the respondent was called the greatest of all thieves there was a clear statement of fact that he was a thief or the greatest of all thieves and not a mere expression of opinion. This is the impression that one gets from reading the poem as a whole, and we agree with the High Court that in the setting in which the statement was made in the poem and in the circumstances in which it came to be made, there is no question of the statement being a matter of opinion; it was undoubtedly a statement of fact. We may in this connection refer to Inder Lal vs Lai singh,(1) where this Court held that an allegation to the effect that a candidate was purchaser of the opponents of the Congress by means of money, ,without any particulars as to who was purchased and when, was taken as a statement of fact relating to the personal conduct or character of the candidate. It is true that in that case the question was whether the statement was with respect to personal conduct or character of the candidate and there was no dispute that it was a statement of fact. Even so we are of opinion that that case shows that particulars are not necessary before a bald statement with respect to personal character or conduct of the candidate can be said (1) [1962] Supp. 3 S.C.R. 114. 134 to be a statement of fact. As we have said already, presence of particulars will make it easier to come to the conclusion that it is a statement of fact; but the absence thereof does not necessarily mean that it is always an opinion and can never be a statement of fact. It will all depend, as we have said already, on the facts and circumstances of each case. Then it is said that the Madras Hi Court had already taken a certain view as to the meaning of the words "statement of fact" under the election law as it was before the Act, and as the words in section 123(4) of the Act are more or less similar to the earlier law it should be taken that the legislature had approved of the view taken by the Madras High Court which seems to suggest that particulars are necessary before a statement can be said to be a statement of fact. Reliance in this connection is placed on the following observations of Viscount Buckmaster in Barras vs Aberdeen Steam Trawling and Fishing Co. Ltd.(1) "It has long been a well established principle, to be applied in the consideration of Acts of Parliament that where a word of doubtful meaning has received a clear judicial interpretation, the subsequent statute which incorporates the same word or the same phrase in a similar context, must be construed so that the word or phrase is interpreted according to the meaning that has previously, been assigned to it. " We are of opinion that this principle does not apply in the present. We are here concerned with the meaning of the words "statement of fact". This is not a phrase of doubtful meaning and merely because one High Court took one view it does not follow that when the Act was passed in 1951 the legislature intended that no statement can be a statement of fact unless particulars were mentioned therein. We therefore agree with the High Court that the statement that the respondent was the greatest of all thieves is a statement of fact in the facts and circumstances of this case and in the context in which the words appear in the poem. This takes us to the next point, namely, that it should have been proved that Avinash Chander who recited the poem at the meeting believed the statement to be false or did not believe it to be true and that on this point Avinash Chander was not even questioned though he appeared as a witness. The High Court has held that the belief of Avinash Chander is immaterial, and that it is the belief of the appellant that matters. We are of opinion that this view of the High Court is correct section 123(4) runs thus (1) ; , 411. 135 "(4) The publication by a candidate or his agent or by any other person with the consent of a candidate or his election agent, of any statement of fact which is false, and which he either believes to be false or does not believe to be true, in relation to the personal character or conduct of any candidate, or in relation to the candidature, or withdrawal of any candidate, being a statement reasonably calculated to prejudice the prospects of that candidate 's election. The sub section requires; (i) publication of any statement of fact by a candidate, (ii) that fact is false, (iii) the candidate believes it to be false or does not believe it to be true, (iv) the statement is in, relation to the personal character or conduct of another candidate; and (v) the said statement is one being reasonably calculated to prejudice the prospects of the other candidate 's election : (see Sheopat Singh vs Ram Pratap.(1). This case thus lays down that the person with whose belief the provision is concerned is ordinarily the candidate who, if we may say so, is responsible for the, publication. The responsibility of the candidate for the publication arises if he publishes the thing himself. He is equally responsible for the publication if it is published by his agent. Thirdly he is also responsible where the thing is published by any other person but with the consent of the candidate or his election agent. In all three cases the responsibility is of the candidate and it is ordinarily the candidate 's belief that matters for this purpose. If the candidate either believes the statement to be false or does not believe it to be true he would be responsible under section 123(4). In the present case the poem was not actually read by the appellant, but it was read in his presence at a meeting at which he was presiding by Avinash Chander. In these circumstances the High Court was right in coming to the conclusion that the recitation of the poem by Avinash Chander at the meeting amounted to the publication of the false statement of fact contained in it by another person with the consent of the candidate, and in this case, even of his election agent who was also present at the meeting. But the responsibility for such publication in the circumstances of this case is of the candidate and it is the candidate 's belief that matters and not the belief of the person who actually read it with the consent of the candidate. What would be the position in a case where the candidate had no knowledge at all of the publication before it was made need not be considered for that is not so here. It is not disputed in this case that the statement that the respondent was the greatest of all thieves, was false. It is, also not seriously challenged that the appellant did not believe it to be true ' The contention that Avinash Chander 's belief should have been proved must therefore fail. (1) ; 136 Then we come to the question of onus. In this connection reliance is placed on Dr. Jagjit Singh vs Giani Kartar Singh(1). In that case it was held that the onus to prove the essential ingredients prescribed by sub section (4) of section 123 of the Act is on him who alleges publication of false statements of fact. The election petitioner has to prove that the impugned statement has been published by the candidate or his agent, or if by any other person, with the consent of the candidate or his election agent. He has further to show that the impugned statement of fact is false and that the candidate either believed that statement to be false or did not believe it to be true. It has further to be proved inter alia that the statement was in relation to the personal character or conduct of the complaining candidate. Finally, it has to be shown that the publication was reasonably calculated to prejudice the prospects of the complaining candidate 's election. But though the onus is on the election petitioner to show all these things, the main things that the election petitioner has to prove are that such a publication was made of a statement of fact and that that statement is false and is with respect to the personal character or conduct of the election petitioner. The burden of proving that the candidate publishing the statement believed it to be false or did not believe it to be true though on the complaining candidate is very light and would be discharged by the complaining candidate swearing to that effect. Thereafter it would be for the candidate publishing the statement to prove otherwise. The question whether the statement was reasonably calculated to prejudice the prospects of the election of the candidate against whom it was made would generally be a matter of inference. So the main onus on an election petitioner under section 123(4) is to show that a statement of fact was published by a candidate or his agent or by any other person with the consent of the candidate ,or his election agent and also to show that that statement was false and related to his personal character or conduct. Once that is proved and the complaining candidate has sworn as above indicated, the burden shifts to the candidate making the false statement of fact to show what his belief was. The further question as to prejudice to the prospects of election is generally a matter of inference to be arrived at by the tribunal on the facts and circumstances of each case. In the present case the main onus that lay on the respondent has been discharged. He has proved that there was a publication ,of the nature envisaged under section 123(4) of the Act. He has also proved that the statement of fact was made with respect to him. He has further proved that that statement was false and related to his personal character or conduct. There can be no doubt that a statement of this nature calling one candidate a thief or the greatest of all thieves is reasonably calculated to prejudice the prospects of (1) A.I.R. 1966 S.C. 773 137 this election. He further swore that the statement was false to the knowledge of the appellant and the latter did not believe it to be true. It was then for the appellant to show what his belief was. The burden having thus shifted we are of opinion that it was for the appellant to show either that the statement was true or that he believed it to be true. This the appellant has failed to do. The High Court therefore rightly held that the respondent had discharged the burden which lay on him. The appeal therefore fails and is hereby dismissed with costs. G.C. Appeal dismissed.

IN-Abs

The appellant was the winning candidate In an election to the Rajasthan Legislative Assembly. The respondent who was one of the unsuccessful candidates filed an ' election petition and alleged therein that the appellant was guilty of corrupt practice within the meaning of a. 123(4) of the Representation of the People Act, 1951. The corrupt practice alleged was that at a meeting presided over by the appellant a poem was read out which represented the respondent to be the greatest of all thieves '. The Election Tribunal as well as the High Court gave their findings against the 'appellant who came to this Court with certificate. It was contended on behalf of the appellant that : (i) the statement in question was not a statement of fact but only of opinion, (ii) No attempt had been made to prove that the person who recited the poem containing the statement believed it to be false or did not believe that it was true, (iii) the onus to prove that corrupt practice had been committed lay on the respondent and that had not been discharged. HELD (i) The mere absence of details as to time and place would not turn a statement of fact into a mere expression of opinion. [130 F G] In the present case taking the poem as a whole there could be no doubt that when the respondent was called the greatest of all thieves there was a clear statement of fact about his personal character and conduct. [133 E F] (ii) The appellant presided and his election agent was present at the meeting at which the poem in question was read. The responsibility for the publication in the circumstances of the case was that of the appellant and it was the appellant 's belief that mattered and not the belief of the person who read it with the consent of the appellant. [135 E G] (iii) The onus on an election petitioner under section 123(4) is to show that a statement of fact was published by a candidate or his agent or by any other person with the consent of the candidate or his election agent and also to show that that statement was false and related to his personal character or conduct. This onus is very light and can be discharged by the complaining candidate swearing to that effect. Once that is done the burden shifts to the candidate, making the false statement of fact to show what his belief was. [136E F] It was for the appellant to show either that the statement was true or that he believed it to be true. The appellant had failed to do so. The High Court therefore rightly held that the respondent had discharged the burden which lay on him. [137 A B] Case law considered.

iminal Appeal No. 67 of 1951. Appeal by special leave from the Judgment and Order, dated 26th June, 1950, of the High Court of Judicature at Bombay (Dixit and Chainani JJ.) in Criminal Appeal No. 784 of 1949. N. C. Chatterjee (H. J. Umrigar and section P. Varma, with him) for the appellant. M. C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the respondent. March 11. The Judgment of the Court was delivered by GULAM HASAN J. This appeal is brought by special leave from the judgment and order of the High Court of Judicature at Bombay (Dixit and Chainani JJ.), dated June 26, 1950, whereby the High Court allowed the appeal of the State of Bombay, setting aside the order of acquittal of the appellant passed by the Sessions Judge of Kaira, dated May 7, 1949, and restoring the order of conviction and sentence of the appellant passed by the Sub Divisional Magistrate, Nadiad Prant, dated December 31, 1948. The appellant, Suleman Issa, who is an inhabitant of Natal in South Africa left Durban in August, 1947, by car for India to pay a visit to his native place Sarsa in District Kaira where his sister was living with her husband Alimahmad Issak. He was accompanied by, 978 Daud Hassam another brother in law and both travelled to Mombasa by car. From Mombasa they took a boat on August 30, and reached Colombo on September 1 1. They flew from Colombo to Madras on September 14, but shipped the car by a steamer. They stayed in Madras until the steamer arrived on September 20. The car was delivered to the appellant on October 1, after he had paid Rs. 2,700 as custom duty and a cash deposit of Rs. 10,000 by way of security as the appellant intended to take the car back to Durban on his return. The party motored to Nardana on October 7, passing through Bangalore, Poona, Nasik and Dhulia. From there they travelled by train and reached Sarsa on October 8. The car was booked in an open truck from Nardana to Anand where it was taken delivery of and then driven to Sarsa. One Ratansing Kalusing Raol, Senior Police Inspector of Nadiad town, having noticed the car bearing no Indian number passing in the town instructed policemen to keep a watch. The appellants ordered to appear before the Sub Inspector on October 12. On being questioned he stated that his family was the original inhabitant of Jamnagar State but for the last 60 years they were doing the business of contractors for purchasing and selling land in Durban. His brother Daud Issa was, however, serving in Bombay. He gave details of the journey performed by him and his companion and produced passports, as also the receipts for paying custom duty and the deposit. On October 15, Head Constable Ajit Singh, informed Raol that some unknown person had come to the shop of Umarbhai jeweller with a large quantity of gold. Accordingly the police visited the shop of the jeweller and his brother (also a jeweller) and came to know that gold had been given to him by the appellant to be melted. This gold along with some other gold kept at another place was seized by the police. The police also took possession of the car. The entire quantity of gold seized was 27731 tolas the value of which is roughly estimated at Rs. 3 lakhs. Proceedings under action 20 of the Indian Telegraph Act were instituted 979 against the appellant and others on the assumption that the wireless set in the car was a transmitter but they were dropped when it was found otherwise. The car was thoroughly examined but nothing incriminating was found. The appellant was also detained under the Public Securities Act but was released. Ultimately on January 2, 1948, he along with others was prosecuted on the complaint of Raol for an offence under section 61 E of the Bombay District Police Act (IV of 1890) read with section 109 of the Indian Penal Code. Section 61E says: " Whoever has in his possession or conveys in any manner, or offers for sale or pawn, anything which there is reason to believe is stolen property or property fraudulently obtained, shall, if he fails to account for such possession or act to the satisfaction of the Magistrate, be punished with imprisonment for a term which may extend to three months or with fine which may extend to one hundred rupees. " He was convicted by the Magistrate and sentenced to a fine of Rs. 100 and the gold was directed to be confiscated under section 517 of the Code of Criminal Procedure. The other accused who were charged with abetment were acquitted,. The Magistrate took the view that there wag no direct evidence to show that the accused had committed theft or had obtained property fraudulently but there were in his opinion circumstances which led to the reasonable belief that the gold in question was either stolen or was fraudulently obtained. The Sessions Judge held that although the possession of the gold was highly suspicious, nevertheless it did not constitute sufficient ground for a reasonable belief that the property was either stolen or was fraudulently obtained. He accordingly set aside the conviction and sentence and ordered the gold to be restored to the appellant. The High Court in appeal by the State did not accept the prosecution story that the gold was brought into India by the appellant in his motor car, but held agreeing with the Magistrate that from the circumstances there was reason to believe that he was in possession of gold which was either stolen property or property 980 fraudulently obtained. The High Court did not accept the explanation of the appellant that his father had brought the gold to Sarsa from time to time when he visited his native place. As regards the order of confiscation under section 517, the High Court held that it was not necessary that the property confiscated must be the property in relation to which an offence appears to have been committed but it was enough if ,the property is produced before the court. In this view the acquittal was set aside and the order of the Magistrate was restored. Mr. Chatterjee on behalf of the appellant stated at the outset that he was not prepared to concede that the appellant 's conviction was right but he proceeded on the assumption that even if it was so, section 517 had no application to the case and the court had no jurisdiction to pass the order of confiscation of the gold. He also urged that 'in any, view of the matter the order of confiscation was not a proper order in the circumstances of this case. Section 517(1) reads thus: When an inquiry or a trial in any criminal court is concluded, the court may make such order as it thinks fit for the disposal (by destruction, confiscation, or delivery to any person claiming to be entitled to possession thereof or otherwise) of any property or document produced before it or in its custody or regarding which any offence appears to. have been committed, or which has been used for the commission of any offence. " The section on a plain reading shows that upon the conclusion of an inquiry or trial the court is empowered to make an order for disposal of any property or document produced before it or in its custody, or regarding which any offence appears to have been committed, or which has been used for the commission of an offence. The section also shows that the power of the court extends to destruction, confiscation or delivery to any 981 person claiming to be entitled to possession of such property. Mr. Chatterjee contended that the gold after it was seized by the Police was sent to the Treasury and was never produced before the court. We do not think that the evidence on this point is clear and definite. This point does not appear to have been raised before the courts below. The High Court justified the order on the ground that the property was produced before the court and held that it was not necessary to find before passing the order that " any offence appears to have been committed " in respect of it. It is clear to us that the property was not one regarding which any offence appears to have been committed, or which has been used for the commission of any offence. Now the power of the court no doubt extends to confiscation of property in the custody of the court but it is not every case in which the court must necessarily pass an order of confiscation irrespective of the circumstances of the case. It is possible to conceive of cases where the subject matter of the offence may be property which under the law relating to that offence is liable to be confiscated as a punishment on conviction. Assuming therefore that the court had jurisdiction to pass an order regarding the disposal of the gold, it seems to us that the order of confiscation was not an appropriate order in the circumstances of this case. Section 517 contains a general provision for disposal of the property in the circumstances mentioned in the latter part of the section. Section 61E by itself does not empower the court to impose the penalty of confiscation and the sentence of imprisonment and fine authorized by the section is a nominal sentence for the obvious reason that the section proceeds upon the mere belief that the property in possession of the person is stolen property or property fraudulently obtained possession of which is not satisfactorily accounted for. It is an offence under the local Police Act and not under an Act which contains any substantive provision such as the Sea Customs Act imposing the penalty of confiscation. Confiscation is not the only mode of disposal under section 517 and is singularly 127 982 inappropriate in a case where the accused is prosecuted for an offence punishable with a maximum sentence of 3 months and a fine of Es. It was certainly open to the court to order the property to be delivered to the person claiming to be entitled to its possession. Here the gold was found from the possession of the appellant, and the court was not called upon to consider any rival claims about its possession. Admittedly ,there was no evidence to prove that it was stolen, or that it was fraudulently obtained and all that was found was that there was reason to believe that it was stolen or fraudulently obtained and that the appellant failed to account for its possession to the satisfaction of the court. The High Court thought that the gold was smuggled from Africa into India but assuming this to be so, its confiscation under section 517 upon the existence of a mere belief required to sustain a conviction under section 61 E was palpably harsh and unreasonable. We hold, therefore, that the order of confiscation of gold cannot be supported. We accordingly set aside the order of confiscation and direct that the, gold seized from the appellant 's possession shall be restored to him. Appeal allowed.

IN-Abs

Under section 517 of the Code of Criminal Procedure the court is empowered on the conclusion of an enquiry or trial to make an 977 order for the disposal of any property or document produced before it or in its custody or regarding which an offence appears to have been committed or which had been used for the commission of any offence. The power of the court extends to the confiscation of the property in the custody of the court but it is not in every case in which the court must necessarily pass an order of confiscation irrespective of the circumstances of the case. Held, that the confiscation of gold worth about 3 lakhs of rupees was singularly inappropriate in a case like the present where the prosecution story that the gold in question was smuggled into India from Africa was not accepted by the court and the accused was convicted for an offence under a. 61 E of the Bombay District Police Act, 1890, which provides a maximum sentence of three months and a fine of Rs. 100 and which does not contain any substantial provision such as the Sea Customs Act imposing the penalty of confiscation.

Appeal No. 2313 of 1966. Appeal by special leave from the judgment and order dated October 13, 1966 of the Andhra Pradesh High Court in Writ Petition No. 853 of 1966. M.C. Setalvad. D. Narasaraju, Anwar Ullah Pasha R. V. Pillai and M. M. Kashatriya, for the appellant. Niren De, Addl. Solicitor General, P. Ram Reddy, section Ramachandra Reddy and T. V.R. Tatachari, for the respondents. The Judgment of the Court was delivered by Vaidyalingam, J. This appeal, by special leave, granted by this Court, is directed against the order dated October, 13, 1966, passed by the Andhra Pradesh High Court, dismissing Writ Petition No 853 of 1966, filed by the appellant, under article 226 of the Constitution. The appellant filed the said writ petition under the following circumstances. The appellant was the Vice Chancellor of the Osmania University, having been appointed, as such, by order dated April 30. 1964, passed by the Governor of Andhra Pradesh, in 216 his capacity as Chancellor of the said University. The appointment of the appellant, under the said order, as Vice Chancellor, there is no controversy, was for a term of five years from the date of taking charge; and the appointment itself was made under sub section (1) of section 12 of the Osmania University Act, 1959 (Andhra Pradesh Act No. IX of 1959). There is, again, no controversy that the appellant took charge as Vice Chancellor, in terms of the said order, on April 30, 1964 and, as such, he became entitled to hold office for the full period of five years, which will expire at the ,end of April 1969. The Osmania University was established in 1918 and the ad ministration of the University was then governed by a Charter of His Exalted Highness, the Nizam of Hyderabad, promulgated in 1947. With effect from November 1, 1956, the State of Hyderabad ceased to exist, and the Telengana region of that State became part of Andhra Pradesh. In 1959, the Andhra Pradesh Legislature passed the Osmania University Act, 1959, earlier referred to. That Act itself was one to amend and consolidate the law relating to the Osmania University. It is only necessary to note at this stage, that under section 12(1) of the said Act, it was provided that the Vice Chancellor shall be appointed by the Chancellor from a panel of not less than three persons selected by a Committee, as constituted under sub section (2); but, if the Chancellor does not approve any of the persons so selected, he may call for a fresh panel from the Committee. Section 13, again, provided for the term of office, salary and allowances etc. , of the Vice Chancellor. Under sub section (1), the term of office of the Vice Chancellor was fixed for a term of five years and there was also a further provision to the effect that he shall be eligible for reappointment. By section 51 of the said Act, the Osmania University Revised Charter, of 1947 was repealed; but, nevertheless, it was provided that the person holding office immediately before the commencement of the Act as Vice Chancellor, was to be the Vice Chancellor on such ,commencement of the Act, and was to continue to hold the said office, in circumstances mentioned therein. There is, again, no controversy that the appellant, who was already the Vice Chancellor of the Osmania University from 1957, was again appointed in 1959, as Vice Chancellor for a period of five years under this Act; and he was similarly appointed for a further term of five years, on April 30, 1964, as Vice Chancellor, as mentioned earlier. During the middle of 1965, certain amendments were sought to be introduced in the Act by providing for removal of the Vice Chancellor, by the Chancellor, from office under certain circumstances. There was also a proposal to reduce the term of office of the Vice Chancellor from 5 years to 3 years, from the date of his appointment, and for provisions being made 217 enabling the Government to give directions to the University relating to matters of policy to be followed by it. The amendments sought to be introduced in the Act, appear to have come in for considerable criticism from several quarters, and these have been elaborately dealt with in the order, under attack. According to the appellant, he was one of those who very strenuously opposed the proposed amendments on the ground that the autonomy of the University was sought to be interfered with by the Government. According to the appellant, again, the various criticisms made by him and others, were taken note of by the Inter University Board, by the Education Minister of the Union and others. It is the further case of the appellant that it was felt by the Government of Andhra Pradesh that he was responsible for the agitation that was being made, against the proposed amendments. But, ultimately, the Andhra Pradesh Legislature passed the Osmania University (Amendment) Act, 1966 (Act 11 of 1966), amending the Osmania University Act of 1959 in certain particulars. The said amendments are to the effect that the Vice Chancellor shall not be removed from office, except as provided for in section 12(2) of the amended Act. The term of office was also fixed at 3 years under the amended section 13. Another provision relating to the power of Government to give instructions to the University, was also introduced, as section 7A; but the appellant continued as Vice Chancellor. The Osmania University Act, was again amended by the Osmania University (Second Amendment) Act, 1966 (Act XI of 1966). Under this amendment, section 13A was enacted. In brief, that section was to the effect that the person holding the office of the ViceChancellor, immediately before the commencement of the amending Act of 1966, was to hold office only until a new Vice Chancellor was appointed under sub section (1) of section 12, and it also provided that such appointment shall be made within 90 days after such commencement. There was a further provision that on the appointment of such new Vice Chancellor, and on his entering upon his office, the person holding the office of Vice Chancellor immediately before such appointment, shall cease to hold that office. Section 7 A, which had been introduced by Act II of 1966, was deleted. Section 33 A was enacted, making special provision as to the re constitution of the Senate, Syndicate, Academic Council and Finance Committee of the University. The appellant filed Writ Petition No. 853 of 1966, in the High Court, praying for the issue of a writ or order declaring section 5 of the Osmania University (Second Amendment) Act. 1966, which introduced section 13A in the original Act, as unconstitutional and void. In that writ petition, he challenged the validity of the new Section, section 13A on several grounds. In brief, his plea was that by virtue 218 of his appointment as Vice Chancellor for 5 years on April 30, 1964, he had acquired a vested right to hold that office for the full term and that such a vested right could not be taken away, during the currency of the period, by any legislative enactment. The legislature had no competence to enact the said provision inasmuch, as section 13A could not be treated as legislation in respect of University education. The appellant had also pleaded that the provision virtually amounted to removal of the appellant from his office without giving him any opportunity to show cause against such removal. According to the appellant, even assuming the Legislature was competent to enact the provision in question, nevertheless, section 13A is unconstitutional and void, inasmuch as it offends article 14 of the Constitution. We do not think it necessary to advert, elaborately, to the various other grounds of attack levelled against the constitutional validity of the provision in question, which have, no doubt, been dealt with by the High Court, because, for the purpose of disposing of this appeal, in our opinion, it is enough to refer to the grounds of attack, taken by the appellant regarding the constitutionality of section 13A, based upon article 14 of the Constitution. So far as this aspect is concerned, according to the appellant, section 9 of Act 11, of 1966 amended the Act of 1959 by incorporating new sub sections (1) and (2) in section 12. Under sub section (1) of section 12, the ViceChancellor is to be appointed by the Chancellor. Under sub section (2), the Vice Chancellor shall not be removed from his office except by an order of the Chancellor passed on the ground of mis behaviour or incapacity; and it also provided for such an order being passed only after due enquiry by a person who Is or has been a Judge of a High Court or the Supreme Court, as may be appointed by the Chancellor, and the Vice Chancellor being given an opportunity of making his representation against the removal. Therefore, in view of these provisions, the Vice Chancellor could not be removed by the Chancellor without any cause, without reason, without enquiry and without an opportunity being given to him to show cause against removal. This provision applied to the appellant, who was in office, on the date of the passing of Act 11 of 1966, as well as Act XI of 1966. Nevertheless, section 5 of Act XI of 1966 incorporated s.13A in the principal Act. Under that section, not only has power been, conferred on the Chancellor, but also a duty imposed, so to say, on him, to remove the appellant, who was the Vice Chancellor, without any reason or justification or even giving an opportunity to him to show cause against such removal. No enquiry, before ordering such removal, is contemplated under this section. Further, while a Vice Chancellor, who is appointed after the passing of Act XI of 1966, cannot be removed from office, except in accordance with the provisions of sub section (2) of section 12, the appellant, who was already in office, could be arbitrarily and 219 illegally removed under section 13A of the Act. There is no provi sion, again, similar to section 13A, applicable to a Vice Chancellor, appointed after the coming into force of the amending Act. Therefore, according to the appellant, the provisions contained in section 13A are clearly directed only against him, as he was the person holding office, prior to the amending Act, and therefore it is a clear case of hostile discrimination. Further, according to the appellant, persons appointed as Vice Chancellors, constitute a group and must be considered as persons similarly situated and they must be treated alike; whereas, by virtue of section 13A, a differentiation is made between the appellant, who was a Vice Chancellor on the date of the commencement of the Amending Act and other persons who are to be appointed as Vice Chancellors thereafter. This differentiation, according to the appellant, is again without any basis; nor has such a classification, any reasonable relation to the main object of the legislation. The appellant also relied on section 33A, introduced by section 6 of Act XI of 1966 relating to the reconstitution of the Senate, Syndicate, Academic Council and the Finance Committee and pleaded that whereas those academic bodies or authorities were allowed to continue without any time limit and to function until they were reconstituted, regarding the Vice Chancellor alone, a period of 90 days had been fixed, under the Amending Act, within which the Chancellor was bound to appoint another Vice Chancellor. This, again, is a clear proof of discrimination against the appellant. The respondents controverted the stand taken on behalf of the appellant. Apart from supporting the competency of the Legislature to enact the measure, in question, they urge that article 14 of the Constitution has no application at all. According to the respondents, inasmuch as the term of office of the Vice Chancellor had been reduced to three years, as per Act 11 of 1966, it was thought fit by the Legislature to provide for the termination of the office of the Vice Chancellor, who was holding that post, at the commencement of Act XI of 1966, as also for the appointment of a new Vice Chancellor. It was, under those circumstances, that section 13A was incorporated in the Act of 1959, by section 5 of Act, XI of 1966. They also referred to similar provisions, which were incorporated in the two enactments relating to the two other Universities in the State, viz., the Andhra University and Sri Venkateswara University. The respondents further pleaded that Act 11 of 1966 placed the Vice Chancellor, who was already appointed and who was functioning prior to that Act, in the first category, as a class apart, from the Vice Chancellors who were to be subsequently appointed and who were to function, after the passing of the said Amending Act, in the second category, both in the matter of the mode of appointment, as well as the term of appointment. The Vice Chancellor 220 viz., the appellant, who was in office, on the date of the passing of Act XI of 1966, according to the respondents, therefore fell into a class all by himself and, as such, came under a third category; and the legislature thought fit to take into account the special features relating to him and, therefore, made separate provisions regarding the termination of his office. Therefore, a suitable provision was made, by enacting section 13A, in respect of the existing Vice Chancellor, who was treated as a class, by himself. The respondents also claimed that the Legislature was entitled to treat the Vice Chancellor, who was then in office, as a class by himself and make suitable provisions with regard to the termination of his office, and therefore a legislation made for that purpose, and on that basis, was constitutionally valid. The charge of hostility towards the appellant, or any attempt to effect discrimination, was stoutly denied by the respondents. The respondents, there fore, urged that the classification of the appellant, as a separate class, was proper and such a classification had a reasonable nexus, with the object of the amending legislation. The respondents further pleaded that the curtailment of the term of office of an existing Vice Chancellor, by a statute, enacted by a competent Legislature, does not amount to 'removal ' of the Vice Chancellor for sufficient and proved cause. The respondents also ` urged that academic bodies or authorities like the Senate, Syndicate and the Academic Council are not similarly situated like the Vice Chancellor, either in the matter of appointment or constitution, or in exercising functions under the statute; and therefore, the appellant, according to them, was not 'entitled to place any reliance. on section 33A, introduced by section 7 of Act XI of 1966. For all these reasons, they urged that article 14 of the Constitution was not violated by the Legislature in enacting section 13A. Before we refer to the findings recorded by the learned Judges of 'the High Court, this will be a convenient stage to refer to the material provisions of the statutes, concerned. We have already mentioned that the appellant was functioning as the Vice Chancellor of the Osmania University, even from 1957, i.e., even before the Osmania University Act, 1959, was passed. We have also indicated that the administration of the University was then governed by a Charter promulgated in 1947. The Osmania University Act, 1959 (Act IX of 1959), (hereinafter called the Act), was passed in 1959 and published in the State Gazette on February 2, 1959. Section 3 of the Act provided that the University, established by the Revised Charter promulgated by H.E.H. the Nizam of Hyderabad, on December 8, 1947, and functioning at Hyderabad immediately before the commencement of the Act, be reconstituted and declared to be a University by the name of 'Osmania University '. The said section also provided that the University would be a 221 residential, teaching and affiliating University consisting of a Chancellor, a Pro Chancellor, a Vice Chancellor, a Senate, a Syndicate and an Academic Council. Section 12(1) provided for the appointment of the Vice Chancellor, by the Chancellor, from a panel of not less than three persons selected by a committee, as constituted under sub section (2) thereof But, if the Chancellor did not approve any of the persons so selected, he could call for a fresh panel from the committee. Sub section (2) provided for the constitution of the committee. Section 13 provided for the term of office salary, allowances etc. , of the Vice Chancellor. Under sub section (1), the Vice Chancellor was to hold office for a term of 5 years and he was eligible for reappointment. There was a proviso to the effect that the ViceChancellor shall continue to hold office after the expiry of his term of appointment, for a period not exceeding six months, or until Ms successor is appointed and enters upon his office, whichever is earlier. Sub section (6) provided for the filling up of the vacancy, in the post of the Vice Chancellor, when it fell permanently vacant; and a Vice Chancellor so appointed as per sub sections (1) and (2) of section 12, was to hold office for a full term of 5 years. Section 51 (I) repealed the Osmania University Revised Charter, 1947; but sub section (2) provided that notwithstanding such repeal, the person holding office immediately before the commencement of the Act, as Vice Chancellor, shall, on such commencement, be the Vice Chancellor of the University, and he was entitled to hold office until a Vice Chancellor is appointed in accordance with the Act. It will be noticed, by the above reference to the material provisions of the Act, that there was no provision for removal of a ViceChancellor; and that the appointment of a Vice Chancellor was to be by the Chancellor, as provided for in section 12. The term of office of the Vice Chancellor was 5 years and he was eligible for reappointment. The appellant, who was already a Vice Chancellor, functioning under the Charter of 1947, was entitled to continue, and did continue, as the Vice Chancellor, by virtue of section 51 of the Act. He was also, as already mentioned, originally appointed as ViceChancellor for a period of 5 years under the Act, in 1959. The Act was amended in certain particulars by the Osmania University (Amendment) Act, 1966 (Act II of 1966) (hereinafter called the First Amendment Act). The First Amendment Act received the assent of the Governor on January 29, 1966. Section 6 of the First Amendment Act, introduced section 7A, which we set out 222 "7A. Instructions by the Government. The Government may, after consultation with the University, give to the University, instructions relating to matters of major educational policy such as pattern of University education, medium of instruction and establishment of post graduate centres, to be followed by it. (2) In the exercise of its powers and performance of its functions under this Act, the University shall comply with the instructions issued under sub section (1). " Similarly, section 9 incorporated new sub sections (1) and (2) in section 12 of the Act, as follows 12. (1) The Vice Chancellor shall be appointed by the Chancellor. (2) The Vice Chancellor shall not be removed from his office except by an order of the Chancellor passed on the ground of misbehaviour or incapacity and after due inquiry by such person who is or has been a Judge of a High Court or the Supreme Court as may be appointed by the Chancellor, in which the Vice Chancellor shall have an opportunity of making his representation against such removal. " Section 10, while effecting certain other amendments to section 13. the Act, incorporated a new sub section (1), as follows : "13. (1) Subject to the provisions of sub section (2) of section 12, the Vice Chancellor shall hold office for a term of three years from the date of his appointment and shall be eligible for re appointment to that office for another term of three years only; Provided that the Vice Chancellor shall continue to hold office after the expiry of his term of appointment for a period not exceeding six months or until his successor is appointed and enters upon his office, whichever is earlier. " It was this Amendment Act, when it was in the Bill stage, that appears to have been severely criticised by various authorities on the ground that the autonomy of the University was sought to be interfered with by the Government. In that connection, the appellant also appears to have made several statements criticising the provisions sought to be incorporated in the Act. It is also on record that counter statements were made on behalf of the Government meeting these criticisms regarding the proposed amendments. They have been dealt with by the High Court rather elaborately; but, we do not propose to go into those matters, for the purpose of this appeal. 223 By virtue of the amendments effected and referred to above, it will be seen that the term of office of the Vice Chancellor has been reduced from 5 years to 3 years. The manner of appointment of the Vice Chancellor has also been changed and a provision is contained for removal of the Vice Chancellor from his office, but that can be done only in accordance with the provisions contained in section 12(2) of the Act. Section 7A gives power to the Government to give instructions to the University relating to matters of major educational policy; and it is made obligatory on the University to comply with such instructions issued by the Government. As we have already stated, the appellant was again appointed as Vice Chancellor for a period of 5 years on April 30, 1964; and he was continuing in office when the First Amendment Act was passed. One of the claims that is made by the appellant, in these proceedings, is that he is entitled to the protection conferred by section 12(2) of the Act referred to above. There does not appear to be any controversy that any appointment of a Vice Chancellor was made, after the passing of the First Amendment Act . The Act was further amended by the Osmania University (Second Amendment) Act, 1966 (Act XI of 1966) (to be referred to as the Second Amendment Act). It received the assent of the Governor on May 16, 1966. Section 2 of the Second Amendment Act, omitted section 7A of the Act. Section 5 of the Second Amendment Act, which introduced new section 13A in the Act, and which provision is the subject of attack in these proceedings, is as follows : "13A. Special provision as to the appointment of a new Vice Chancellor. Notwithstanding anything in this Act, the person holding the office of the Vice Chancellor immediately before the commencement of the Osmania University (Second Amendment) Act, 1966, shall continue to hold that office only until a new Vice Chancellor is appointed by the Chancellor under sub section (1) of section 12 and enters upon his office; and such appointment shall be made within ninety days after such commencement. On the appointment of such new Vice Chancellor, and on his entering upon his office, the person holding the office of the Vice Chancellor immediately before such appointment shall cease to hold that office." Again, section 6 of the Second Amendment Act., incorporated section 33A in the Act, which is as follows : "33A. Special provision as to the reconstitution of the Senate, Syndicate, .Academic Council and Finance Com mittee. Notwithstanding anything in this Act, the members of the Senate, the Syndicate, the Academic Council and the Finance Committee constituted and functioning 224 before the commencement of the Osmania University (Amendment) Act, 1966, shall continue to be such members and function only until a new Senate, Syndicate, Academic Council or Finance Committee, as the case may be, is reconstituted under this Act. On the reconstitution of such new Senate, Syndicate, Academic Council or Finance Committee, the members of the Senate other than the life members thereof, the members of the Syndicate, Academic Council or Finance Committee, as the case may be, holding office immediately before such reconstitution, shall cease to hold that office. " Even according to the respondents, section 13A was incorporated for the purpose of terminating the services of the appellant as Vice Chancellor, so as to enable the Chancellor to make a fresh appointment of a Vice Chancellor. We have referred to section 33A of the Act, because the appellant 's case was also to the effect that with regard to the Senate, Syndicate, Academic Council etc. , there is no provision similar to section 13A of the Act, though they are also similarly situated like him. The findings of the learned Judges of the. High Court may now be briefly summarised : 1. The Andhra Pradesh Legislature was competent to enact section 5 of the Second Amendment Act. The said section does not contravene article 19(1)(f) of the Constitution. The appellant was holding the office of the ViceChancellor when the Act came into force and continued under section 51(2) thereof as Vice Chancellor until the Chancellor passed an order, in 1959 appointing him once again under the Act. Section 13(1), as introduced by the First Amendment Act, is not retrospective and the right of the appellant to continue as Vice Chancellor for the full term of 5 years stood unaffected and the new section 13(1) does not apply to him. The new section 12(2), as introduced by the First Amendment Act, is not applicable to the appellant. Sections 12(2) and 13A of the Act, do not cover the same field. Section 12(2) provides for removal by way of punishment and its operation is on a different field from that of section 13A where the cessation of office is due to a curtailment of the term. Section 12(2) applies only to the future Vice Chancellors and section 13A is solely applicable to the existing Vice Chancellor, the appellant. 225 .lm0 Regarding the attack on section 13A, on the basis of article 14 of the Constitution that there is an unreasonable discrimination, the learned Judges were of the view that the said section did not suffer from any such infirmity. The learned Judges held that the impugned legislation had resulted in classifying Vice Chancellors under two categories, (a) the appellant, as the existing Vice Chancellor, falling under the first category; and (b) future Vice Chancellor, to be appointed under the Act, who falls under the second category. According to the High Court, the object sought to be achieved by such classification, as could be seen from the objects and reasons of the Second Amendment Act, 1966, was to give effect to the reduced term of 3 years fixed under section 13(1) of the Act after the First Amendment. The Hi gh Court further held that the classification adopted by section 13A, of putting the appellant, as the existing ViceChancellor, in a class by himself, is founded on an intelligible differentia, which distinguishes the appellant from future ViceChancellors, and that this differentia has a rational relation to the object sought to be achieved by the Second Amendment Act. In this connection, the learned Judges also advert to the similar provisions enacted, at about the same time, in the Andhra University Act, 1925, and the Sri Venkateswara University Act, 1954. The High Court is also of the view that the Legislature must have taken into account the fact that the appellant has already put in more than 6 years of service as Vice Chancellor, for treating him as a class by himself, as distinct from future Vice Chancellors, who are to be appointed and, as such, have not put in any service at all. The learned Judges have, no doubt, adverted to the fact that the appellant has got an eventful record of efficient service, full of recognition and appreciation, but the appellant cannot plead those circumstances when a competent legislature has passed a valid legislative measure, under which he has to lose his office. Ultimately, on these findings, the High Court came to the conclusion that section 5 of the Second Amendment Act, introducing section 13A in the Act, is not vitiated by any infirmity, as alleged by the appellant, and, finally, dismissed the appellant 's writ petition. The appellant has again raised, no doubt, most of the contentions that were taken before the High Court. But the main ground of attack that has been pressed before us, by learned counsel for the appellant, is the one based upon article 14 of the Constitution. The findings recorded, and the views expressed, by the High Court are sought to be sustained by the learned Additional Solicitor General, appearing for the respondents. But, we do not think it necessary to go into the larger controversy that has been raised by the appellant, before the High Court, in the view that we take, that the appellant must succeed in respect of the attack levelled against the impugned 226 provision, based upon article 14 of the Constitution. As to whether the criticism, made by the appellant, about the proposals to amend the Act, was or was not responsible for the passing of the legislation in question, does not assume much of an importance; because, the simple question is whether the provision, section 13A, as it now stands n the Act, is violative, in any manner, of article 14 of the Constitution. If the answer is 'yes ', it is needless to state that the provision will have to be struck down. Therefore, we are confining our attention only to the provisions of the Act and we will refer to any other circumstance that is brought to our notice only for the limited purpose of considering the grounds of attack based upon article 14 of the Constitution. According to Mr. Setalvad, the appellant is entitled to take advantage of the provisions of section 12(2) of the Act. On the date of the passing of the First Amendment Act, the appellant was, admittedly, a Vice Chancellor and he had been continuing as such. He cannot be removed from his office, except in accordance with the provisions of section 12(2) of the Act. But, in view of section 13A of the Act, introduced by the Second Amendment Act, the appellant is forced out of his office, within 90 days of the passing of the Second Amend ment Act. The creation of two classes of Vice Chancellors, viz., Of Vice Chancellors appointed under the Act and the Vice Chancellor who was in office at the commencement of the Second Amendment Act, is not on any rational basis. Person is appointed as ViceChancellors, constitute a group, and the impugned provision makes a differentiation between the person who is a Vice Chancellor then and other persons who are to be appointed Vice Chancellors thereafter, for which differentiation, there is absolutely no basis. Further, even if it can be stated that there is any basis for the said classification, nevertheless there should be a nexus or connection between the basis of the classification and the object of the legislation, which again, is lacking in this case. Mr. Setalvad further urged that while the services of a ViceChancellor, appointed under the Act, could be terminated only in accordance with the provisions contained in section 12(2) of the Act, the appellant 's services could be terminated under section 13A, without adopting the procedure laid down in section 12(2) of the Act. There was also no provision in the Act, Mr. Setalvad pointed out, making section 13(2) applicable to Vice Chancellors to be appointed in future. Though the term of office for a Vice Chancellor has been fixed under the Act, even after the amendments, as three years, and that may apply to all the Vice Chancellors, so far as the appellant is concerned, his term has been reduced or restricted to 90 days under section 13A of the Act. Mr. Setalvad again urges that even assuming that it is open to the Legislature, in an appropriate case, to make provisions applicable 227 to only one individual or a group of individuals, nevertheless, it is well established, by this Court, that the classification that is effected ,by the statute must be a classification founded on an intelligible differentia and that differentia must have a rational relation to the object sought to be achieved by the statute. Applying these two tests, learned counsel urges, that the impugned legislation must be. considered to be violative of article 14 of the Constitution. The learned Additional Solicitor General has urged that the, term of office of the Vice Chancellor has been reduced to three; years by the First Amendment Act. The Legislature, in order to give effect to this provision and to enable fresh appointments to be made under the Act, has enacted section 13A. That section has, necessarily, to apply only to persons like the appellant who are holding. office at the time when these provisions came into force. Such a provision, in the nature of things, cannot apply to Vice Chancellors who are to be appointed in future under the Act. Therefore it is wrong to state that all Vice Chancellors,. irrespective of the manner ' or mode under which they are appointed, in present or in future, fall under the same category. Further, the appellant has been a Vice Chancellor for nearly 7 years. The legislature, the learned Solicitor points out, having regard to these circumstances, has chosen to treat the appellant, the Vice Chancellor holding office on the date of the Second Amendment Act, as a class by himself and has differentiated him from persons to be appointed ViceChancellor for the first time. Such a classification, is reasonable and it has got a rational relation to the object sought to be achieved by the Second Amendment Act, viz., bringing about uniformity in the tenure of three years of office for all Vice Chancellors. The learned Solicitor points out further that the appellant is not entitled to the benefit of section 12(2) of the Act. The Legislature was competent to enact the Measure in question and the object of the Legislature was to give effect to the amendment provisions as early as. possible. He pointed out that similar provisions were also made in two other enactments at about the same time, viz., in the Andhra University Act, 1925, and the Sri Venkateswara University Act, 1954. It may be that the Legislature could have adopted another method for replacing the present Vice Chancellor, but that is a matter of policy, which cannot be reviewed by the Courts, so long as the Legislature had the competence to enact the measure and the provisions, so enacted, do not suffer from any other legal infirmities. We have given due consideration to the various contentions placed before us by Mr. Setalvad, learned counsel,for the appellant, and the learned Additional Solicitor General, on behalf of the respondents; but we are not inclined to agree with the contentions of the learned Additional Solicitor General. 228 The principles to be borne in mind, when a question arise under article 14 of the Constitution, have been laid down in several ,decisions, by this Court,on a number of occasions. In Budhan Choudhry vs The State of Bihar(1), Das J., speaking for the Court said : "It is now well established that while article 14 forbids class 'legislation, it does not forbid reasonable classification for the purposes of legislation. In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely, (i) that the, classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that that differentia must have a rational relation to the object sought to be achieved by the statute in question. " Therefore, it will be seen that in order to accept a classification as permissible and not hit by article 14, the measure in question will have to pass the two tests laid down in the above decision. The observations, extracted above, have been quoted by Das C. J., in .Ram Krishna Dalmia vs Shri Justice section R. Tendolkar(2). It is no doubt true, as pointed out by the learned Additional SolicitorGeneral, that a statute may direct its provisions against one individual person or thing, or against several individual persons or things. But, before such a provision can be accepted as valid, the Court must be satisfied that there is a reasonable basis of classification which appears on the face of the statute itself, or is deducible from the surrounding circumstances or matters of common knowledge. If no such reasonable basis of classification appears on the face of the statute, or is deducible from the surrounding circumstances, the law will have to be struck down as an instance of naked discrimination. It should also be borne in mind that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon the party who attacks the same as unconstitutional, to ,Show that there is a clear transgression of the constitutional principles; but, as observed by Das C.J., in Ram Krishna Dalmia 's case(2), at p. 297, "while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried (1) ; ,1049. (2) ; , 296. 229 to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation. " Having due regard to the principles referred to above, we now proceed to consider as to whether the appellant has been able to establish that section 5 of the Second Amendment Act, introducing s.13A in the Act, is discriminatory and, as such, violative of article 14 of the Constitution. We have already stated that the appellant was appointed, under the Act, for a further term of 5 years, as Vice Chancellor, on April 30, 1964, and he was continuing in office, as such, at the time when the two Amending Acts were passed; and, normally,. he, would be entitled to continue in that post for the full term, which will expire only at the end of April 1969. The First Amendment Act provided, in section 12 of the Act, that the Vice Chancellor is to be appointed by the Chancellor; but section 12(2) specifically provided that the Vice Chancellor shall not be removed from his office excep t by an order of the Chancellor passed on the ground of misbehaviour or incapacity and, after due inquiry by such person who is, or has been, a Judge of a High Court or the Supreme Court, as may be appointed by the Chancellor. It was also provided that the ViceChancellor was to have an opportunity of making his representation against such removal. Prima facie; the provisions contained in sub section (2) of section 12, must also apply to the appellant, who did continue in office even after the passing of the First Amendment Act. No doubt the term of office of the Vice Chancellor was fixed at 3 years under section 13(1) of the Act. But no provisions, were made in the First Amendment Act regarding the termination of the tenure of office of the Vice Chancellor who was then holding that post. There can be no controversy that section 13A, introduced by section 5 of the Second Amendment Act, deals only with the appellant. In fact, the stand taken on behalf of the respondents in the counteraffidavit filed before the High Court, was to the effect that the Legislature had chosen to treat the Vice Chancellor holding office at the time of the commencement of the Second Amendment Act, as a class by himself and with a view to enable the Chancellor to make fresh appointments, section 13A of the Act was enacted. Therefore, it is clear that section 13A applies only to the appellant. Though, no doubt, it has been stated, on behalf of the respondents,,,, that similar provisions were incorporated, at about the same time, in two other Acts, relating to two other Universities, viz., the Andhra University and the Sri Venkateswara University, and though this circumstance has also been taken into account by the learned Judges of the High Court, in our opinion, those provisions 230 have no bearing in considering the attack levelled by the appellant on section 13A of the Act. This is a clear case where the statute itself directs its provisions by enacting section 13A, against one individual, viz., the appellant; and before it can be sustained as valid, this Court must be satisfied that there is a reasonable basis for grouping the appellant as a class by himself and that such reasonable basis must appear either in the statute itself or must be deducible from other surrounding circumstances According to learned counsel for the appellant, all Vice Chancellors of the Osmania University come under one group and can be classified only as one unit and there is absolutely no justification for grouping the appellant under one class and the Vice Chancellors to be appointed in future under a separate class. In any event, it is also urged that the said classification has no relation or nexus to the object of the enactment. Our attention has been drawn to the Statement of Objects and Reasons to the Second Amendment Bill, the material part of which is as follows "The term of office of the Vice Chancellor has been reduced to three years under section 13(1) of the Osmania University Act as amended by section 10 of the Osmania University (Amendment) Act, 1966. Section 13 A, proposed to be inserted by clause 5 of the Bill, enjoins that notwithstanding anything in the Act, the person holding the office of the Vice Chancellor immediately before the commencement of the Osmania University (Second Amendment) Act, 1966 shall continue to hold that office only until a new Vice Chancellor is appointed by the Chancellor under section 12(1) as amended and enters upon his office, and such appointment shall be made within ninety days after such commencement. " We are inclined to accept the contention of Mr. Setalvad, that there is no justification for the impugned legislation resulting in a classification of the Vice Chancellors into two categories, viz., the appellant as the then existing Vice Chancellor and the future Vice. Chancellors to be appointed under the Act. In our view, the Vice Chancellor, who is appointed under the Act, or the Vice Chancellor who was holding that post on the date ,of the commencement of the Second Amendment Act, form one single group or class. Even assuming that the classification of these two types of persons as coming under two different groups can be made nevertheless, it is essential that such a classification must be founded on an intelligible differentia which distinguishes the appel 231 lant from the Vice Chancellor appointed under the Act. We are not able to find any such intelligible differentia on the basis of which the classification can be justified. It is also essential that the classification or differentia effected by the statute must have a rational relation to the object sought to be achieved by the statute. We have gone through the Statement of Objects and Reasons of the Second Amendment Bill, which became law later, as well as the entire Act itself, as it now stands. In the Statement of Objects and Reasons for the Second Amendment Bill, extracted above, it is seen that except stating a fact that the term of office of the Vice Chancellor has been reduced to 3 years under section 13(1) and that s.13A was intended to be enacted, no other policy his indicated which will justify the differentiation. The term of office fixing the period of three years for the Vice Chancellor, has been already effected by the First Amendment Act and, therefore, the differential principle adopted for terminating the services of the appellant by enacting section 13A of the Act, cannot be considered to be justified. In other words, the differentia adopted in section 13A and directed as against the appellant and the appellant alone not be considered to have a rational relation to the object sought to be achieved by the Second Amendment Act. While a Vice Chancellor appointed under section 12 of the Act can be removed from office only by adopting the procedure under section 12(2), the services of the appellant, who was also a Vice. Chancellor and similarly situated, is sought to be terminated by enacting section 13A of the Act. We do not see any policy underlying the Act justifying this differential treatment accorded to the appellant. The term of office of the Vice Chancellors has been no doubt reduced under the First Amendment Act and fixed for 3 years for all the Vice Chancellors. But, so far as the appellant is concerned, by virtue of section 13A of the Act, he can continue to hold that office only until a new Vice Chancellor is appointed by the Chancellor, and that appointment is to be made within 90 days. While all other Vice Chancellors, appointed under the Act, can continue to be in office for a period of three years, the appellant is literally forced out of his office on the expiry of 90 days from the date of commencement of the Second Amendment Act. There is also no provision in the statute providing for the termination of the services of the ViceChancellors, who are appointed under the Act, in the manner provided under section 13A of the Act. By section 13A, the appellant is even denied the benefits which may be available under the proviso to sub section (1) of section 13 of the Act, which benefit is available to all other ViceChancellors. The appointment of the appellant in 1959 and, again in 1964, under section 12(1) of the Act, as it stood prior to the two amendments, by the Chancellor, must have been, no doubt, from a panel of 232 names submitted by a committee constituted under section 12(2). The appointment of a Vice Chancellor after the passing of the First Amendment Act, is to be made exclusively by the Chancellor under section 12(1), as the section now stands. That is a circumstance, relied on by the respondent, for differentiating the appellant as an existing Vice Chancellor from a Vice Chancellor to be appointed under the Act, as amended. Another circumstance relied on is that the appellant has been a Vice Chancellor for 7 years. In our opinion, these are not such vital or crucial factors which will justify treating the appellant as a class by himself, because the powers and duties of a Vice Chancellor, either under 'the Act, prior to the amendment, or under the Act, after amendment, continue to be the same. To conclude, the classification of the appellant, as a class by himself, is not founded on any intelligible differentia, which distinguishes him from other Vice Chancellors and it has no rational relation to the object of the statute, and so section 13A is hit by article 14. The appellant has attacked section 13A, as discriminatory, relying upon a different provision, made under section 33A, in respect of the Senate, Syndicate, Academic Council and the Finance Committee. We have, however, not considered the question as to whether the appellant can be treated as falling under the same class, as the other authorities mentioned in section 33A, as we have accepted the appellant 's contention, based upon article 14, on other grounds. For the above reasons, we accept the contentions of the learned counsel for the appellant, and hold that section 5 of the Second Amendment Act (Act XI of 1966), introducing section 13A in the Act, is discriminatory and violative of article 14 of the Constitution and, as such, has to be struck down as unconstitutional. The result is that the appeal is allowed, and the appellant will be entitled to his costs in the appeal, payable by the respondents, here and in the High Court. R.K.P.S. Appeal allowed. M19Sup. C.I./66 2,500 18 7 67 GIPF.

IN-Abs

As a result of the Osmania University (Amendment) Act 11 of 1966, section 12(1) of the Osmania University Act, 1959,. was amended to provide for the appointment of the Vice Chancellor by the Chancellor alone; in section 12(2) a provision was introduced whereby he could only be removed from office by an order of the Chancellor passed on the ground of mis behaviour or incapacity after enquiry by a person who was or had been a Judge of a High Court or the Supreme Court and after the Vice Chancellor had been given an opportunity of making his representation against such removal Section 13(1) of the 1959 Act was also amended so as to reduce the term of office of the Vice Chancellor from 5 to 3 years. The 1959 Act was again amended later in 1966 by the Osmania University (Second Amendment) Act XI of 1966. Section 5 of this amending Act introduced a new section 13A into the 1959 Act whereby it was provided that the person then holding the office of Vice Chancellor could only hold that office until a new Vice Chancellor was appointed; and that such new appointment must be made within 90 days of the commencement of the Act whereupon the old Vice Chancellor would cease to hold office. The appellant filed a writ petition claiming, inter alia, that section 5 of the second amending Act introducing the new section 13A was discriminatory as against him and therefore violative of article 14. The High Court dismissed the petition. In the appeal to the Supreme Court, it was contended on behalf of the respondents that as the term of office had been reduced to 3 years by the first amending Act, the legislature. , in order to give effect to this provision and to enable fresh appointments to be made under the Act, had enacted section 13A which had, necessarily, to apply to a person like the appellant who was in office at the time when the provisions came into force. Such provisions could not, in the nature of things, apply to Vice Chancellors who were to be appointed in future; the appellant was appointed from a panel submitted by a committee constituted under the unamended section 12(2) whereas future Vice Chancellors were to be appointed by the Chancellor alone; furthermore, the appellant had been the Vice Cancellor for 7 years. Having regard to these circumstances the legislature had chosen to treat the appellant as a class by himself and had differentiated him from persons to be appointed Vice Chancellors in the 215 future; that such classification was reasonable and had a rational relation to the object sought to be achieved by the second amending Act i.e. bringing about uniformity in the tenure of 3 years. of office fee all Vice Chancellor; that the appellant was not entitled to the benefit of section 12(2) and the legislature was competent to enact section 13A so as to give effect to the amended provisions as early as possible. HELD: Section 5 of the second amending Act (XI of 1966) introducing s 13A into the 1959 Act was discriminatory and therefore violative of article 14. [232 E] There was no intelligible differentia on the basis of which a classification of Vice Chancellors into two categories i.e. the appellant as the then existing Vice Chancellor and the future Vice Chancellors to be appointed under the Act,, could be justified. The term of office of three years for the Vice Chancellor had already been fixed by the first amending Act Therefore the differential principal adopted for terminating the appellant 's service under section 13A in introduced by the second amending Act and directed as against the appellant alone could not be considered to have a rational relation to object sought to be achieved by the second amending Act. Budhan Choudhary vs The State of Bihar,[1955] 1 S.C.R.1045, 1049; Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar ; , 296; referred to. [231 B D] While a Vice Chancellor appointed under section 12 could be removed from office only by adopting the procedure under section 12(2), the services of the appellant, who was also a Vice Chancellor and similarly situated were sought to terminated by enacting section 13A of the Act. There was no policy underelying the Act justifying this differential treatment. There was also no justification for the distinction whereby the appellant would appointed under the Act would continue in office for three years [231E G]

minal Appeal No. 193 of 1964. Appeal from the judgment and order dated April 29, 1964 ,of the Calcutta High Court in Criminal Appeal No. 369 of 1962. section D. Banerjee, Advocate General for the State of West Bengal, B. Sen, P. K. Chatterjee, M. K. Banerjee and P. K. Bose, for the appellant. M.C. Setalvad, A. N. Sinha and Sukumar Ghose, for the respondent, N.S. Bindra, R. H. Dhebar and R. N. Sachthey, for inter vener No. 1. A. V. Rangam, for intervener No. 2. V. A. Seyid Muhamad, Advocate General for the State of Kerala and A. G. Puddisery, for intervener No. 3. O. P. Rana, for intervener No. 4. I. N. Shroff, for intervener No. 5. K. B. Mehta, for intervener No. 6. The Judgment of SUBBA RAO, C.J., WANCHOO, SIKRI, RAMASWAMI, SHELAT, BHARGAVA and VAIDIALINGAM, JJ. was delivered by SBBBA RAO, C. J. BACHAWAT J., delivered a separate concurring Judgment. SHAH, J. delivered a dissenting Opinion. Subbarao, C.J. This Full Bench of 9 Judges has been cons tituted to consider the correctness of the decision of this Court 175 in Director of Rationing and Distribution vs The Corporation of Calcutta(1). The relevant facts are simple and are not in dispute. The State of West Bengal was carrying on the trade of a daily market at 1, Orphanganj Road, Calcutta, without obtaining a licence as required under section 218 of the Calcutta Municipal Act, 1951 (West Bengal Act 33 of 1951) hereinafter called the Act. The Corporation of Calcutta filed a complaint against the State of West Bengal in the Court of the Presidency and Municipal Magistrate, Calcutta, under section 541 of the Act for contravening the provisions of section 218 thereof. Under section 218 of the Act, every person who exercises or carries on in Calcutta any trade, shall take out a licence and shall pay for the same such fee as is mentioned in that behalf in Schedule IV to the Act. Admittedly for the year 1960 61, the Government of West Bengal did not take out a licence under the said section but carried on the said trade. The main contention of the Government was that the State was not bound by the pro visions of the Act. The learned Magistrate, accepting the said contention, acquitted the State. On appeal, the High Court of Calcutta held that the State was carrying on the business of running a market and, therefore, it was as much bound as a private citizen to take out a licence. It distinguished the decision of this Court in Director of Rationing and Distribution vs The Corporation of Calcutta(1) on the ground that the said decision was concerned with the sovereign activity of the State. In the result the State of West Bengal was convicted under section 537 of the Act section 537 appears to be a mistake for section 541 and sentenced to pay a fine of Rs. 250, with the direction that when realized, it should be paid to the Corporation. Hence the present appeal. Learned Advocate General of West Bengal raised before us the following points: (1) The State is not bound by the provisions of a statute unless it is expressly named or brought in by necessary implication; (2) the said principle equally applies to sovereign and non sovereign activities of a State; and Mr. N. section Bindra, learned counsel appearing for the Attorney General raised before us the third point, namely, this Court has no power under the Constitution to review its earlier judgment. While the learned Advocate General contended that the rule of construction in favour of the State was part of the common law of England accepted as the law of this country and, therefore, was law in force within the meaning of article 372 of the Constitution, Mr. N. section Bindra argued that the said rule of construction was law of the land in that it was declared to be so by the Judicial Committee in Province of Bombay vs Municipal Corporation of (1) ; 176 the City of Bombay(1) and, therefore, it was law in force within the meaning of article 372 of the Constitution. The third contention need not detain us, for it has been rejected by this Court in The Bengal Immunity Company Limited vs The State of Bihar(2). There a Bench of 7 Judges unanimously held that there was nothing in the Constitution which prevented the Supreme Court from departing from a previous decision of its own if it was satisfied of its error and of its baneful effect on the general interests of the public. If the aforesaid rule of construction accepted by this Court is inconsistent with the legal philosophy of our Constitution, it is our duty to correct ourselves and lay down the right rule. In constitutional matters which affect the evolution of our polity, we must more readily do so than in other branches of law, as perpetuation of a mistake will be harmful to public interests. While continuity and consistency are conducive to the smooth evolution of the rule of law, hesitancy to set right deviations will retard its growth. In this case, as we are satisfied that the said rule of construction is inconsistent with our republican polity and, if accepted, bristles with anomalies, we have no hesitation to reconsider our earlier decision. At the outset it will be convenient to notice the facts of the decision of this Court in Director of Rationing and ' Distribution vs The Corporation of Calcutta(3) and the reasons given by this Court for applying the said rule of construction to an Indian statute. There, the Director of Rationing and Distribution was using certain premises in Calcutta for storing rice flour, etc. without taking out any licence under section 385 (1)(a) of the Calcutta Municipal Act, 1923. The Corporation of, Calcutta filed a complaint against the said Director in the Magistrate 's Court for the contravention of the said provision. This Court held that the State was not bound by the provisions of section 386 (1)(a) of the said Act and that the appellant was not liable to prosecution for the contravention of the said section. Sinha, C. J., speaking for Imam and Shah, JJ., gave one judgment, Sarkar, J., gave a separate but concurrent judgment, and Wanchoo, J., recorded his dissent. The reasoning of Sinha, C.J., is found in the following passage : "It is well established that the common law of England is that the King 's prerogative is illustrated by the rule that the Sovereign is not necessarily bound by a statutory law which binds the subject. This is further enforced by the rule that the King is not bound by a statute unless he is expressly named or unless he is bound by necessary implication or unless, the statute being for the public good, it would be absurd to exclude the King from it." (at page 170). (1) [1946] L.H. 73 I.R. 271. (2) (3 ; 177 "That was law applicable to India also, as authoritatively laid down by the Privy Council in the case referred to above [(1946) L. R. 73 I.A. 271)]. it (law in force under article 372 of the Constitution) must be interpreted as including the common law of England which was adopted as the law of this country before the Constitution came into force." (At p. 173). Sinha, C.J., therefore, held that the said rule of construction was, part of the common law of England, that it was adopted by this, country and that Art ' 372 of the Constitution continued it. Sarkar, J., on the other hand, agreed with the conclusion arrived at by Sinha, C.J., but on a different ground. He based his conclusion not on any common law doctrine, but simply on the ground that the said rule of construction of statutory provisions was accepted and followed in England, America and India. Wanchoo, J., in his dissent, put the case in a different perspective. The following, passage brings out his line of thought : "Two things are clear from this modern conception of royal prerogative, namely (1) that there must be a Crown or King to whom the royal prerogative attaches, and (2) that the prerogative must be part of the common law of England. Both these conditions existed when the Privy Council decision in Province1 of Bombay vs Municipal Corporation of the City of Bombay(1) was given in October 1946; the King was still there and the Privy Council held that the English common law rule of construc tion applied to Indian legislation as much as to English ,statutes." (At p. 184). "In our country the Rule of Law prevails and our Constitution has guaranteed it by the provisions contained in Part III thereof as well as by other provisions in other Parts. It is to my mind inherent in the conception of the Rule of Law that the State, no less than its citizens and others, is bound by the laws of the land. When the King as the embodiment of all power executive, legislative and judicial has disappeared and in our republican Constitution, sovereign power has been distributed among various organs created 'thereby, it seems, to me that there is neither justification nor necessity for continuing the rule of construction based on the royal, prerogative." (At p. 185). "But where the royal prerogative is merely a rule of construction of statutes based on the existence of the Crown in England and for historical reasons, I fail to see why in a democratic republic, the courts should not follow the ordinary principle of construction that no one (1) [1946] L.R. 73 I.A. 271. 178 is exempt from the operation of a statute unless the statute expressly grants the exemption or the exemption arises by necessary implication." (At pp. 188 189). The conflict between the two views expressed by the learned Judges in the earlier decision mainly rests on the meaning of the expression "law in force" in article 372 of the Constitution. While Sinha, C.J., took the view that the common law of England, including the rule of construction, was accepted as the law of this country and was, therefore, the law in force within the meaning of the said Article, Wanchoo, J., took the view that whatever might be said of the substantive laws, 'a rule of construction adopted by the common law of England and accepted by the Privy Council at a time when the Crown was functioning in India, was not the law in force within the meaning of the said Article. We shall now consider the validity of the conflicting views The common law of England is clear on the subject. In Halsbury 's Laws of England, 3rd Edn., Vol. 7, in Part 5 of the Chapter on "Constitutional Law" under the heading "The Royal Prerogative", the Royal prerogatives are enumerated and their limitations are given. In para 464 it is stated : "The general rule is that prerogatives cannot be affected or parted with by the Crown, except by express statutory authority. " The prerogative right can be taken away by law because the law is made by the Crown with the assent of the Lords and the Commons. It can be taken away only by law to which the Crown is a party. Whether a particular statute has taken away such right pertains to the domain of the rule of construction. The relevant rule of construction evolved by judicial decisions in England may be stated thus : "At all events, the Crown is not reached except by express words or by necessary implication in any case where it would be ousted of an existing prerogative or interest. " (See Perry vs Eames) (1). It is said much to the same effect in Maxwell 's Interpretation of Statutes, 11th Edn., at page 129, thus : "It is presumed that the legislature does not intend to deprive the Crown of any prerogative, right or property, unless it expresses its intention to do so in explicit terms, or makes the inference irresistible." The same rule is given in Bacon 's Abridgment 7th Edn., 9.462. The legal position in England may be summarised thus : (1) [1891] 1 179 "The substantive rule of law is that the prerogative of the Crown can only be taken away by law. The rule of construction evolved by the courts to ascertain the legislative intention is, that it is presumed that a statute has not taken away the prescriptive right unless it has expressly or by necessary implication done so. " There is an essential distinction between a substantive law and a rule of construction and that is well expressed by Craies in his book "On Statute Law", 6th Edn., at p. 10, thus : "A rule of law, e.g., the Rule against Perpetuities or the Rule in Shelley 's case (abolished in 1925), exists independently of the circumstances of the parties to a deed, and is inflexible and paramount to the intention expressed in the deed. A rule of law cannot be said to control the construction of a statute, inasmuch as a British statute is itself part of the supreme law of the land and overrides any pre existing rules with which it is inconsistent. A rule or canon of construction, whether of will, deed or statute, is not inflexible, but is merely a presumption in favour of a particular meaning in case of ambiguity. This was well expressed by Bowen, L.J. in L. N. W. Ry. vs Evans:(1) 'These canons do not override the language of a statute where the language is clear : they are only guides to enable us to understand what is inferential. In each case the Act of Parliament is all powerful, and when its meaning is unequivocally expressed the necessity for rules of construction disappears and reaches its vanishing point. " The same principle was stated by Bhashyam Ayyangar, J., in Bell vs The Municipal Commissioners for the City of Madras(2) thus : "These compendious canons of interpretation which are in the nature of maxims can only be regarded as mere guides to the interpretation of Statutes and ought not to be applied as if they were statutory clauses, enacted with all the precision and provisos of an Interpretation Act. " Franfurter, J., said to the same effect in United States vs United Mine Workers of America thus : (3) "At best, this canon, like other generalities about statutory construction, is not a rule of law. Whatever persuasiveness it may have in construing a particular (1) [1893] I Ch. 16, 27. (2) I.L.R. [1902] 25 Mad. 457, 484. (3) [1947] 91 L. ed. 180 statute derives from the subject matter and the terms of the enactment in its total environment. " Even in England this rule of interpretation has not been treated as inflexible. It is gradually losing ground in many branches of law. The incongruity of the rule of discrimination in favour of the Crown was pointed out by Glanville L. Williams in his treatise on "Crown Proceedings", at p. 53 : "The rule originated in the Middle Ages, when it perhaps had some justification. Its survival, however, is due to little but the vis inertiae. " The author continues at p. 54 : "With the great extension in the activities of the State and the number of servants employed by it, and with the modern idea, expressed in the Crown Proceedings Act, [compare in this connection article 300 of our Constitution], "that the State should be accountable in wide measure to the law, the presumption should be that a statute binds the Crown rather than it does not. " The next question is, how far and to what extent the common law of England relating to the prerogatives of the Crown has been accepted as the law of our country? Nothing has been placed before us to show that the entire body of the common law pertaining to prerogatives was accepted as the law throughout India. India at the relevant time comprised Provinces and Native States. As Bhashyam Ayyangar, J., pointed out in Bell vs The Municipal Commissioners for the City of Madras() "the prerogatives of the Crown in India a country in which the title of the British Crown is of a very mixed character may vary in different provinces, as also in the Presidency towns as distinguished from the mofussil. 'The determination, with anything like legal precision, of all the prerogatives of the British Crown in India is by no means an easy task. " It is well known that the Common law of England was applied as such in the original sides of the High Courts of Calcutta, Bombay and Madras, and that in the mofussil courts the principles embodied in the common law were invoked in appropriate cases on the ground of justice, equity and good conscience. It cannot, therefore, be posited that either the entire body of common law of England relating to prerogatives of the King or even the rule of construction as forming part of that law was accepted as law in every part of the country. It has to be established whenever a question arises as to what part of the common law was accepted as the law in a particular part of the country. Learned Advocate General of West Bengal referred us to the decision of the Privy Council in Province of Bombay vs Municipal (1) I.L.R. ,484. 181 Corporation of the City of Bomhay(1) in support of his contention that the common law of England was accepted as the law of our country in that regard. In that case the question was whether the Crown was not bound by section 222(1) and section 265 of the City of Bombay Municipal Act, 1888 which gave the Municipality power to carry water mains for the purposes of water supply through across or under any street and into, through or under any land "whatsoever within the city. " When the Municipal Corporation wanted to lay water mains through the land belonging to the Government of Bombay, the Government did not agree except on some condi tions. Thereafter, the dispute between the parties was referred to the High Court. Ultimately, setting aside the order of the High Court, the Privy Council held that the rule that no statute bound the Crown unless the Crown was expressly or by necessary implication made bound thereunder applied to the Crown in India and that there was no such express intention or necessary implication in the said section. Indeed, the High Court also accepted that principle, but on the construction of the relevant provisions it came to the conclusion that there was such a necessary implication thereunder. On the application of the principle there was no contest before the Privy Council. The Privy Council expressly stated so at p. 274, when it observed : "The High Court held, following previous decisions of its own, that the principle to be applied for the decision of the question whether or not the Crown is bound by a statute is no different in the case of Indian Legislation from that which has long been applied in England. The parties concurred in accepting this view, and their Lordships regard it as correct. " The decision made on a concession made by the parties even though the principle conceded was accepted by the Privy Council without discussion, cannot be given the same value as one given upon a careful consideration of the pros and cons of the question raised. Further, no argument was raised before the Privy Council that the Common law of England had legal force only in the said three Presidency towns and not in the rest of the country, for that case happened to be one that arose in the City of Bombay. The observations of the Privy Council that the principles obtaining in England also governed the Crown in India are, rather wide. Nor any argument was raised before the Privy Counsel making a distinction between substantive branches of common law and mere rules of construction. It is not possible to predicate what the Privy Council would have said if that distinction had been placed before it. Be that as it may, this decision cannot be taken as finally deciding the question that is raised before us. (1) [1946] L.R. 73 I.A. 271. 182 Learned counsel relied upon a series of Indian decisions in. support of his contention that this rule of construction had become the law of the land. It was held in The Secretary of State in Council of India vs The Bombay Landing and Shipping Company (Limited)(1) that in a winding up proceedings the Crown was entitled to the same precedence in regard to the debts due to it, in England, in Ganpat Putava vs Collector of Kanara(2) that the Crown was entitled to the same precedence in regard to fees payable to it by a pauper plaintiff, in The Secretary of State for India vs Mathura Bhai() that section 26 of the Limitation Act, 1877 being a branch of substantive law did not affect the Crown 's right, in Motilal Virchand vs The Collector of Ahmedabad(4) that the Mamlatdars ' Courts could not entertain and decide a suit to which the collector was a party in The Government of Bombay vs Esufali Salebhai(5) that the Crown had a prerogative right to intervene and claim compensation in Land Acquisition proceedings, in Hiranand Khushiram vs Secretary of State(6), that the Crown was not bound by the provision of the Bombay Municipality Act, in The Secretary of State for India vs The Municipal Corporation of Bombay (No. 1)(7) that the Crown was subject to a charge under section 212 of the Bombay City Municipal Act. A careful study of these decisions discloses that all of them related to particular prerogatives of the Crown and that the Court held either that the prerogative of the Crown Was taken away by the statute or not, having regard to the construction placed by it on the relevant statute. It is true that in some of the decisions the said rule of construction was noticed, but as the decisions turned upon the construction of the relevant provisions, it could not be said that the said rule had been accepted as an inflexible rule of construction by the Bombay High Court. In one of the judgments even the applicability of the rule of construction was doubted. A learned thesis on the subject is found in the judgment of Bhashyam Ayyangar, J., in Bell vs The Municipal Commissioners for the City of Madras(8). The Superintendent of the Government Gun carriage Factory, Madras, having brought timber belonging to the Government into the City of Madras without taking out a licence and paying the licence fees prescribed by section 341 of the City of Madras Municipal Act, was prosecuted. There was no mention of Government in the said section. A Division Bench of the Madras High Court (1) [1868] 5 Ho H. C. Rep. 23,27. (3) Bom. (5) Bom. (7) , 509. (2) Dom. 7. (4) Bom. (6) A.I.R. 1934 Bom. (8) I.L.R. (I 902) , 484. 183 Indian legislation, statutes imposing duties or taxes bound the Government unless the very nature of the duty or tax was such is to be inapplicable to it. Bhashyam Ayyangar, J., in his judgment, after considering all the relevant material on the subject statutes and English and Indian decisions came to the conclusion that exemption from the payment of tolls, rates and taxes was not in reality a prerogative of the Crown, but depended solely upon the right construction to be put on the Crown grant or the statute in question. Though the learned Judge noticed the rule of construction and affirmed its application both to English and Indian statutes vis a vis the Crown, he pointed out that the said rule, like every cognate rule of construction was not really a pre rogative of the Crown but only a canon of interpretation and a mere guide to the interpretation of statutes. That case arose in the Madras City. In Madras the_ position was that non liability of the Crown to taxes was not treated as its prerogative and the aforesaid rule of construction was only treated as a guide in interpreting the provisions of a statute. Now coming to Calcutta, a Division Bench of the Calcutta High Court in Corporation of Calcutta vs Bhupal Chandra Sinha(1) held that the Crown was bound by section 421 of the Calcutta Municipal Act, 1923 and that the unwholesome barley found in the Government stores was liable to be destroyed. No doubt, the Court re stated the said rule of construction and came to the conclusion that by necessary implication the State was bound by the said provision. A Division Bench of the same High Court in Corporation of Calcutta vs Director of Rationing and Distribution(2) held that the State Government which was carrying on a trade at premises No. 259, Upper Chitpur Road, Calcutta, and was using or permitting the use of the said premises for the purpose of storing rice etc. without licence was liable to be convicted under section 386(1)(a) of the Calcutta Municipal Act, 1923, read with section 488 thereof When the said rule of construction was pressed upon the learned Judges, they held that the law, even after coming into force of the Government of India Act, 1935, was that the Crown or the Government was bound by the statute unless it was exempted from its operation either expressly or by necessary implication. They did not, therefore, accept the rule of construction laid down by the Privy Council. It cannot, therefore, be said that in the City of Calcutta there was a universal recognition of the rule of construction in favour of the Crown. The legislative practice in India establishes that the various Legislatures of the country provided specifically exemptions in (1 ) A.I.R 1950 Cal. (2)A.I.R. 1955 Cal.282. 184 favour of the Crown whenever they intended to do so indicating thereby that they did not rely upon any presumption but only on express exemptions, see, for instance, section 74 of the Contract Act, section 9 of the Specific Relief Act, section 90 of the Indian Registration Act, section 2(a) and (b) of the Indian Easements Act, The Crown Grants Act XV of 1895, sections 295 (proviso), 356(b) and 411 and 616 (a) of the Code of Civil Procedure (old), section 212 (proviso) of the Indian Companies Act, section 20 (proviso) of the , section 1(4)(i) of the Indian Ports Act, section 3, proviso (1) of the Indian Stamps Act, 1899, and section 3 of the India Act XI of 1881 etc. What is more, Act XI of 1881 empowered the Governor General in Council by order to prohibit the levy by a Municipal Corporation of any specified tax payable by the Secretary of State for India and to direct the Secretary of State for India to pay to the Municipal Corporation in lieu of such tax some definite amounts. This Act was a pointer against the contention that there was a presumption in favour of the Crown that a statute was not binding on it. It is true that there are other Acts where there are specific provisions to the effect that the provisions of the Acts shall be binding on the Government: see section 10 of the Arbitration Act (Act X of 1940), section 116 of the Oil Field Regulation and Development Act (Act LIII of 1948). Subsequent to the making of the Constitution also there were Acts where such a provision was found. There is no firm legislative practice based upon the said presumptive rule of construction. Different statutes adopted different devices to achieve their desired results. The legislative practice, therefore, does not support the contention that in India the said rule of construction was accepted. It only shows that wherever an exemption was intended to be given to the Government it was expressly mentioned and wherever there might have been any doubt of the liability of the Government, it was expressly made liable. The rule of construction was not statutorily recognised either by incorporating it in different Acts or in any General Clauses Act; at the most, it was relied upon as a rule of general guidance in some parts of the country. Some of the American decisions may usefully be referred to at this stage. It was said that in America where the Crown did not exist, the same rule of construction was adopted in that country as law of the land and therefore by analogy the same legal position must be accepted in India. The decision in H. Snowden Marshall vs People of the State of New York(1) only lays down that the State of New York has the common law prerogative right of priority over unsecured creditors. This case has nothing to do with the rule of construction but was based upon the common law prerogative of the (1) (1920) 65 L.cd. 185 Crown expressly embodied in the State 's Constitution. The decision in Guarantee Trust Company of New York vs United States of America(1) accepted the immunity of the sovereign from he operation of statutes of limitation. That decision was based upon the doctrine of public policy evolved by courts, though in evolving the said policy the courts had been influenced, to some extent, by the doctrine of the pregrogative of the Crown. This decision also does not express any opinion on the rule of construction. The decision in United States of America vs United Mine Workers of America(2) ruled that statutes which in general terms, divested pre existing rights and privileges would not be applied to the sovereign without express words to that effect. But Frankfurter, J., after citing the said rule, pointed out that "At best, this canon, like other generalities about statutory construction, is not a rule of law. " The same rule was again re stated in United States of America vs Reginald P. Wittek.(3) The question there was whether the District of Columbia Emergency Rent Act did not apply to Government owned defence houses in the District such as Bellevue Houses. The Court relied not only upon the said rule of construction but also on other circumstances in support of the conclusion that the United States was exempt from the operation of that Act by necessary implication. In Jess Larson, as War Assets Administrator and Surplus Property Administrator vs Domestic and Foreign,, Commerce Corporation,(4) the purchaser of surplus coal from the War Assets Administration filed a suit against the said Administration for an injunction prohibiting the latter from selling or delivering the coal to any other person. The suit was dismissed on the ground that the sovereign immunity in suits for injunction or for specific performance was based upon public policy. But it was argued that the principle of sovereign immunity was an archaic hangover not consonant with modern morality; the majority conceded that there was substance in such a viewpoint as applied to suits for damages. Mr. Justice Frankfurter in his dissent went further and pointed out that the doctrine of sovereign immunity was in disfavour. The American decisions, therefore, were mainly based either on the provisions of the constitution of the State or on. the ground of public policy evolved by Courts. The founding fathers carried with them the English doctrine of the Crown Prerogative and it continued to influence some of the principles of public policy evolved in that country. Even so, the decisions made it clear that the rule of construction was relied upon only as one of the guides to arrive at the intention of a particular statute. That apart, the fact that the common law of England pertaining to 2,1.4 (1)(1938) 82 L. ed. 1224. (3)(1949) 93 L. ed. 1406. M19Sup. C.I./66 13 (2) (1947) 91 L. ed. 884,923. (4) (1949) 93 L. ed. 186 prerogatives influenced some of the decisions of the Supreme Court ,of the United States cannot help us in coming to a conclusion whether the said rule had become part of the Law in India. Mr. Bindra, the learned counsel appearing for the Attorney General sought to reach at the same result by a different process. He argued that the decision of the Privy Council in Province of Bombay vs Municipal Corporation of the city of Bombay and another(1) is a law of the country. We have already noticed the decision in another context. It accepted the rule of construction on a concession made by the counsel. Even if it was a considered decision on the point, it was nothing more than an application of a rule of construction with which it was familiar for ascertaining the intention of statutory provisions applicable to the Bombay city. To sum up : some of the doctrines of common law of England were administered as the law in the Presidency Towns of Calcutta, Bombay and Madras. The Common Law of England was not adopted in the rest of India. Doubtless some of its principles were embodied in the statute law of our country. That apart, in the mofussil, some principles of Common Law were invoked 'by courts on the ground of justice, equity and good conscience. It is, therefore, a question of fact in each case whether any particular branch of the Common Law became a part of the law of India or in any particular part thereof. The aforesaid rule of construction is only a canon of interpretation, it is not a rule of substantive law. Though it was noticed in some of the judgments of the Bombay High Court, the decisions therein mainly turned upon the relevant statutory provisions. One decision even questioned its correctness. There is nothing to show that it was applied in other parts of the country on the ground of justice, good con.science and equity. In Madras, it was not considered to be a binding rule of law, but only as a simple canon of construction. In Calcutta there was a conflict : one Bench accepted the construction and the other rejected it. The Privy Council gave its approval to the rule mainly on the concession of Advocates and that decision related to Bombay City. It is, therefore, clear that the said rule of construction was not accepted as a rule of construction throughout India and even in the Presidency towns it was not regarded as inflexible rule of construction. In short it has not become a law* of the land. Let us now proceed on the assumption that it has been accepted as a rule of construction throughout India. This leads us to the question whether the said rule of construction is the law of the land after the Constitution came into force. Under Article 372, (1)73 I.A. 271. 187 all the laws in force in the territory of India immediately before the commencement of this Constitution shall continue in force, therein until altered or repealed or amended by a competent Legislature or other competent authority. Can it be said that the said canon of construction was a 'law in force ' which can only be amended by a Legislature? Under Explanation (1) to the said Article, the expression 'law in force ' shall include a law passed or,. made by a Legislature or other competent authority in the territory of India before the commencement of the Constitution. it has been held by this court that the said expression includes not only enactments of the Indian Legislatures but also the Common Law of the land which was being administered by the Courts in India. (See Director of Rationing and Distribution vs The Corporation of Calcutta and others() and V. section Rice and Oil Mills & others vs State of Andhra Pradesh(2). But it is not possible to hold. that a mere rule of construction adopted by English Courts, and also by some of the Indian Courts to ascertain the intention of the Legislature was a law in force within the meaning of this term. There is an essential distinction between a law and a canon of construction. This distinction between law and the canon of construction has been noticed by us earlier and we have held that a canon of construction is not a rule of law. We are not concerned here. with the statutory rules of interpretation. We are, therefore, of the opinion that a rule of construction is not a 'law in force ' within the meaning of Article 372. The next question is whether this Court should adopt the rule of construction accepted by the Privy Council in interpreting statute vis a vis the Crown. There are many reasons why the said rule of construction is inconsistent with and incongruous in the present set up we have no Crown, the archaic rule based on the prerogative and perfection of the Crown has no relevance to a democratic republic; it is inconsistent with the rule of law based on the dictrine of equality. It introduces conflicts and discrimination. To illustrates: (1) State "A" made a general Act without expressly making the Act binding on the said State. In the same State States "B", "C" and "D" and the Union have properties. Would the rule of construction apply only to the properties of State "A? ' or to the properties of all the States and the Union ? (2) The Central Act operated in different States; the rule of construction was accepted in some States and rejected in other States. Is the Central Act to be construed in different States in different ways ? (3) Acts in general terms might be made in different States States where the said rule of construction was accepted and the States where it was not so accepted. 'Should different States construe (1) [1961] 1.S.C.R. 158. (2) 188 the General Acts in different ways, some applying the presumption and some ignoring it ? There is, therefore, no justification for this Court to accept the English canon of construction, for it brings about diverse results and conflicting decisions. On the other hand, the normal construction, namely, that the general Act applies to citizens as well as to State unless it expressly or by necessary implication exempts the State from its operation, steers clear of all the said anomalies. 'It prima facie applies to all States and subjects alike, a construction consistent with the philosophy of equality en shrined in our Constitution. This natural approach avoids the archaic rule and moves with the modern trends. This win not cause any hardship to the State. The State can make an Act, if it chooses, providing for its exemption from its operation. Though the State is not expressly exempted from the operation of an Act, under certain circumstances such an exemption may necessarily be implied. Such an Act, provided it does not infringe fundamental rights, will give the necessary relief to the State. We, therefore, hold that the said canon of construction was not 'the law in force ' within the meaning of article 372 of the Constitution and that in any event having regard to the foregoing reasons the said canon of construction should not be applied for construing statutes in India. In this view it is not necessary to express our opinion on the question whether the aforesaid rule of construction would not apply to the trade activities of the State, even if it applied to its sovereign activities. Even so, it was contended that by necessary implication the State was excluded from the operation of section 218 of the Act. It was contended that, as the infringement of the said provision entailed a prosecution and, on conviction, imposition of fine and imprisonment, and that as the State could not obviously be put in prison and as the fine imposed on the State would merge in the consolidated fund of the State, it should necessarily be implied that the State was outside the scope of the section. This argument was based upon the reasoning of Wanchoo, J., in his dissenting judgment in Director of Rationing and Distribution vs Corporation of Calcutta(1). To appreciate the argument it is necessary to notice the relevant provisions of the Act. Under section 218(1) every person who exercises or carries on in Calcutta any of the trades indicated in Schedule IV shall annually take out a licence before the prescribed date and pay the prescribed fee. Section 218 is in Ch. Under section 541(1)(b) if any person exercises on or after the first day of July in any year any profession, trade or calling referred to in Chapter XIII without having the licence prescribed by that chapter, he shall be punished with fine; and under section 541(2) (1) ; 189 such fine, when levied, shall be taken in full satisfaction of the demand on account of the said licence. Under section 547A, which was inserted in the Act by section 96 of the Calcutta Municipal (Amendment) Act, 1953 (West Bengal Act XIX of 1953), in every case of an offence punishable with imprisonment or fine, or with fine only, in which the offender is sentenced to pay an fine, it shall be competent to the Court to direct that in default of payment of the fine the offender shall suffer imprisonment for such term or further term not exceeding six months as may be fixed by the Court. Under the Act there is a distinction between fines imposed under section 537 and under section 541 of the Act. The fines under section 537 are in respect of offences enumerated therein and they certainly go to the coffers of the States. In respect of such offences it may be contended that, as the fines paid reach the State itself, there is an implication ' that the State is not bound by the sections mentioned therein, for a person who receives the fine cannot be the same person who pays it. This incongruity may lead to the said necessary implication. But the same cannot be said in respect of the provisions covered by section 541. Under the said section the fine recovered for the infringement of the said provisions, when levied, shall be taken in full satisfaction of the demand on account of the licence not taken thereunder. Though the expression "fine" is used, in effect and substance, section 541 is a mode of realization of the fee payable in respect of the licence: it goes to the municipal fund and forms part of it. In this context, section 115 of the Act is relevant. Under that section, there shall be one Municipal Fund held by the Corporation in trust for the purposes of the Act to which the moneys realised or realisable under the Act (other than fine levied by Magistrates) and all moneys otherwise received by the corporation shall be credited. Reliance is placed upon the words within the brackets, viz., "other than fine levied by Magistrates" and an argument is raised that the fine levied under section 541 will not be credited to the Municipal Fund. That interpretation brings that section into conflict with section 512. On the other hand, a harmonious construction of these two provisions makes it clear that the fine mentioned in section 115 is the fine imposed under section 537, for section 541(2) in terms directs that the fine shall be credited to the demand. All amounts credited towards demands, it cannot be denied, necessarily have to be credited in the Municipal Fund. Nor section 547A detracts from our conclusion. Under that section in every case of an offence where the offender is sentenced to pay a fine, it shall be competent to the court to direct that in default of payment of the fine the offender shall suffer imprisonment. It was said that this section necessarily implied that the State could not be, hit by section 218, as it could not obviously be imprisoned for default of payment of fine. But it will be noticed that this section only confers a discretionary power on the court and the court is not bound to 190 direct the imprisonment of the defaulter. It is only an enabling provision. There are other ways of collecting the money from ]persons against whom an order under section 547A is not made. This enabling provision does not necessarily imply an exemption in favour of the State. For all the aforesaid reasons we hold that the State is not exempt from the operation of section 218 of the Act. In the result we hold that the conclusion arrived at by the High Court is correct. The appeal fails and is dismissed. Shah, J. The High Court of Calcutta convicted the State of West Bengal of the offence of carrying on trade as owner and occupier of a market at Calcutta without obtaining a license under section 218 of the Calcutta Municipal Act, 1951, and imposed a sentence of fine of Rs. 250/ . In this appeal, it is urged that the State not being by express enactment or clear intendment bound by the provisions of the Act relating to the obtaining of a license for carrying on trade as owner or occupier of a market, the order of conviction is not sustainable, and reliance is placed upon the judgment of this Court in Director of Rationing & Distribution vs The Corporation of Calcutta & Ors.(1) The Corporation contends that since India became a Republic, the rule that "Crown is not bound by statute unless specially named, or clearly intended" has no application to the interpretation of the Calcutta Municipal Act, 1951. The argument is urged on two grounds : (i) since India has ceased to be governed in the name of the British Crown, the rule in terms has no application; and (ii) even if it be assumed that the rule applies to the State as the sovereign authority, it must be deemed to be superseded, for to accept it would be to countenance unequal treatment between the State and the citizens. The origin of the rule in England that the Crown is not bound by a statute unless expressly named or clearly intended lay undoubtedly in the prerogative of the British Crown. In Bacon 's Abridgement, 7th Edn., p. 462, the general rule is stated thus: "where a statute is general, and thereby any prerogative, right, title or interest is divested or taken away from the King, in such case the King shall not be bound, unless the statute is made by express terms to extend to him." But the Crown is bound where it is expressly named or by clear implication intended to be bound. An inference that the Crown was intended to be bound by implication is, however, not to be raised merely because the Crown assented to the statute, for as stated by Plowden "when the King gives his assent he does not mean to prejudice himself or to bar himself of his liberty and his privilege, but he assents that it shall be a law among his subjects. " (1) [1961]1 S.C.R. 158. 191 The common law of England was adopted in this country subject to local variations and the personal law of the parties, within the Presidency towns by the establishment of Mayors ' Courts in the, 18th century with the express, injunction to apply that law. In the mufassal of the three Presidencies the common law was adopted by the Regulations constituting tribunals for administration of justice enjoining them to decide disputes according to justice, equity and good conscience ', and elsewhere by the diverse Civil Courts Acts imposing similar injunctions. In the three Presidency towns of Calcutta, Madras and Bombay the charters of 1726 which established the Mayors ' Courts introduced within their jurisdiction the English common and statute law in force at the time so far as it was applicable to Indian circumstances. By the statute of 1781 (21 Geo. III c. 70, section 17) the Supreme Court at Calcutta was enjoined to apply in the determination of actions against the Indian inhabitants of the town in matters of succession and inheri tance to lands, rents, goods, and in all matters of contract and dealing between party and party, their personal law if both parties belonged to the same community, and by the law and usages of the defendant if they belonged to different communities. The English common law in its application to Hindus and Mahomedans in the matters enumerated in the statute was to that extent superseded, but in other matters the English common law unless it was inconsistent with statute or Indian conditions continued to apply. Similar statutes were passed enjoining the Courts in the Presidency towns of Madras and Bombay in 1797 (37 Geo. III c. 142, section 13), to apply in the enumerated matters the personal law of the parties. it may however be observed that by the Supreme Court charters, English law, not in its entirety but as nearly as the circumstances of the place and of the inhabitants admit, was applied: Advocate General of Bengal vs Ranee Surnomove Dossee.(1) In the mufassal Courts by Bengal Regulation III of 1793 in respect of Bengal, by Regulation 11 of 1802 in respect of Madras, it was ordained that where no specific rule existed the Courts were to act according to "justice, equity and good conscience" which expression was interpreted to mean the rules of English common law in so far as they were applicable to Indian society and circumstances: Waghela Rajsanji vs Shekh Masludin(2). The Bombay Regulation IV of 1827 provided by section 26 that the law to be observed in the trial of suits shall be Acts of Parliament and Regulations of Government; in the absence of such acts and regulations the usage of the country in which the suit arose; if none such appears, the law of the defendant, and in the absence of specific law and usage equity and good conscience. By the Letters Patents of the High Courts of the three principal Courts of Calcutta, Madras and Bombay by cls. 19 in exercise of the original jurisdiction law or equity to be applied (1) (1864) 9 M. 1. A. 387. (2) (1887) 14 1. A. 89. 192 was such law or equity which would have been applied if the Letters Patents had not been issued. By cl. 20 in respect of suits tried in exercise of the extraordinary original jurisdiction, and by cl. 21 in respect of the appellate jurisdiction, the High Courts were directed to apply law or equity and the rule of good conscience which the Court in which the proceeding was originally instituted would have applied. Similar provisions were made in the Letters Patents of the Allahabad, Patna, Lahore and Nagpur High Courts by cls. 13 & 14 and in respect of Jammu & Kashmir High Court by cls. 14 & 15, and in respect of Rajasthan by cls. 33 & 34 of the Rajasthan High Court Ordinance, 1949. The jurisdiction of the Assam and Orissa High Courts was derived from their respective parent High Courts the Calcutta High Court and the Patna High Court. In the Courts in the mufassal, the Civil Courts Acts e.g. section 37; the , section 5; the Central Provinces Laws Act, 1875, sections 5, 6; the , section 3. require the Courts to decide cases according to justice, equity and good conscience. There can therefore be no doubt that the Courts which functioned in the former British India territory were enjoined to decide cases not governed by any specific statutory rules according to justice, equity and good conscience, which meant rules of English common law in so far as they were applicable to Indian society and circumstances. By a long course of decisions of the High Courts in India the rule of the English common law that the Crown is not, unless expressly named or clearly intended, bound by a statute was applied in India. In The Secretary of State in Council of India vs Bombay Landing and Shipping Co. Ltd.(1) the Secretary of State for India claimed priority in the payment of a debt in the course of winding up of a company and it was held by the High Court of Bombay that a judgment debt due to the Crown is in Bombay entitled to the same precedence in execution as a like judgment debt in England, if there be no special legislative provision affecting that right in the particular case. The Court held that as the Crown is not, either expressly or by implication, bound by the Indian Companies ' Act (X of 1866), and as an order made under that Act for the winding up of a Company does not work any alteration of property against which execution is sought, such an order does not enable the Court to stay the execution of a judgment debt due to the Crown, or to the Secretary of State in Council for India. Westropp, J., who delivered the judgment of the Court after an exhaustive review of the earlier authorities observed "The King, by his prerogative, regularly is to be preferred, in payment of his duty or debt, before any subject although the King 's debt or duty be the latter." (1) 5 Bom. H.C.R O.CJ. 193 The learned Judge also observed that the rule was recognised by the laws of many countries as applicable to the claims of the Sovereign or the State, e.g. France, Spain, America and Scotland and that principle was no novelty in India, because at an earlier date it was promulgated by Hindu jurists Yajnavalkya and others. In The Secretary of State for India vs Mathurahbai and Ors.(1) the rule was held to apply to India as a rule of construction of statutes. In that case the inhabitants of a village sued to establish their right of grazing their cattle on certain Government land and for an injunction restraining the Government from interfering with their right. It was held by the High Court of Bombay that the right of free pasturage which the plaintiffs enjoyed did not necessarily confer that right on any particular piece of land, and that section 26 of the Limitation Act 15 of 1877 did not bind the Secretary of State. It was also applied in three later decisions of the Bombay High Court: Hiranand Khushiram Kirpalani vs Secretary of State; (2) Secretary of State vs Municipal Corporation Bombay (No. 1)(3) and Province of Bombay vs The Municipal Corporation of Bombay(4). In the first case the Secretary of State was held not bound by sections 305, 489 and 491 of the Bombay City Municipal Act, 1888, which deal with levelling, metalling or paving, sewering, draining, channelling and lighting of private streets and with execution of that work to the satisfaction of the Commissioner, if the work be not done in accordance with the requisition and for recovery of the expenses incurred in that behalf. In the second case, the Court held that the Crown was bound by necessary implication in respect of the charge which arises under section 212 of the Bombay City Municipal Act 3 of 1888, that section being an integral part of the general scheme of the Act imposing tax on land in Bombay including Government land. In the third case the Bombay High Court observed that the general principle is that the Crown is not bound by legislation in which it is not named expressly or by necessary implication. But reading the relevant sections in the Act relating to the water supply it appeared that it would be impossible to carry them out with reasonable efficiency, unless Government was bound by them. The view of the High Court in the last judgment that the Province was bound by the statute by imp lication was overruled by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another(5) to which I will presently refer. The Madras High Court in Bell vs The Municipal Commissioners for the City of Madras(6) also upheld the rule which prevailed in the Bombay High Court that the Crown is not bound by a statute unless expressly named or clearly intended. In that case the Superintendent of the Gun 2,1.5 (1) 1. L. R. (3) I.L.R. (5) I.L.R. 73 I.A. 271. (2) I.L.R. (4) I.L.R. (6) I.L.R. 194 Carriage Factory in Madras brought timber belonging to Government into Madras without taking out a licence, and paying the license fee prescribed by section 341 of the ' City of , Madras Municipal Act. The Court held that the timber brought into Madras by or on behalf of Government was liable to the duty imposed by section 341 of the City of Madras Municipal Act, although Government was not named in the section. Bhashyam Ayyangar, J., entered upon a detailed analysis of the case law and set out certain principles at p. 500. The learned Judge was of the view that "the canon of interpretation of Statutes that the prerogative or rights of the Crown cannot be taken away except by express words or necessary implication, is As applicable to the Statutes passed by the Indian Legislatures as to Parliamentary and Colonial Statutes". But he held that "the English law as to the exemption of the Crown and Crown property from payment of tolls, poor rates and other taxes, local or imperial, imposed by statutes rests partly upon historical reasons and principally upon judicial decisions which do not proceed upon a course of reasoning or principle which will be binding on Indian Courts". It is not necessary to express any opinion on the question whether the general exception engrafted by the learned Judge on the rule in so far as it relates to taxing statute is wholly correct and applied to all taxing statutes in India. The Municipal Corporation of Calcutta is, it may be recalled, seeking to collect the license fee by prosecuting the State of West Bengal, but the primary purpose of the prosecution is to enforce compliance with the pro visions relating to the conduct of a market by compelling the State to take out a license, and paying a fee in lieu of services rendered to the owners of the markets. These decisions were affirmed by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another(1). The question which fell to be determined was whether by section 222(1) and section 265 of the City of Bombay Municipal Act, 1888, which invested the Municipality with power to carry water mains through, across or under any street and "into,, through or under any land whatsoever within the city" bound the Crown in whom the lands were vested either expressly or by necessary implication. The Judicial Committee observed that the general principle applicable in England in deciding whether the Crown is bound by a statute that it must be expressly named or be bound by necessary implication applies to Indian legislation. The Board observed at p. 274 : "The maxim of the law in early times was that no statute bound the Crown unless the Crown was expressly named therein, "Roy n 'est lie per ascun statute si il ne soit expressment nosme." But the rule so laid down is subject (1) L.A. 73 I.A. 271. 195 to at least one exception. The Crown may be bound, as has often been said, "by necessary implication". If, that is to say, it is manifest from the very terms of the statute, that it was the intention of the legislature that the Crown should be bound, then the result is the same as if the Crown had been expressly named. It must then be inferred that the Crown, by assenting to the law, agreed to be bound by its provisions. " It is true that counsel appearing before the Judicial Committee accepted the correctness of the rule "that the question whether or not the Crown is bound by a statute is no different in the case of Indian legislation from that which has long been applied in England." But the judgment of the Judicial Committee did not proceed upon a concession: the Board expressly observed that they regarded the rule "as correct". The Union of India now includes territory of the former Indian States in which the law as originally existing and which the Courts are enjoined to apply may have been somewhat different. But that is not peculiar to the application of the rule of interpretation which was adopted by the Courts in British India that the State shall not be deemed to be bound by an enactment unless it is expressly named or by clear intendment included in the statute. Even in respect of matters of personal law, procedure and jurisdiction of the Courts and in other matters where uniform statutes do not apply differences do arise and must be determined according to the law and jurisdiction inherited by the Courts administering justice. But the present case concerns the administration of the law in the town of Calcutta which has for nearly 250 years been governed by the English common law as adopted by the various Acts, Regulations and finally by the Letters Patents. It may also be necessary to observe that we are not called upon to decide whether all the prerogatives of the British Crown have been incorporated in our system of law. Some of those are so wholly inconsistent with the system of law personal and common in India, that they have not been held applicable, e.g. the rule of English law incapacitating aliens from holding real property to their own use, and transmitting it by descent or devise has never been in troduced in India so as to create forfeiture of lands held in Calcutta or the mofussil by an alien and devised by will for charitable purposes. Mayor of the City of Lyons vs The East India Company(1): the English law of felo de se and forfeiture of goods does not extend to a Hindu committing suicide: Advocate General of Bengal vs Ranee Surnomoye Dossee(2). But the rule that the Crown debt is entitled to priority in payment of debts due to it has been adopted,. and the State is entitled to priority in payment of debts due to it : (1) L.R. I Moare 's I.A. 173. (2) (1864) 9 M.I.A. 196 The Secretary of State for India in Council vs The Bombay Landing A Shipping Co. Ltd.(1) and M/s. Builders Supply Corporation vs The 'Union of India(2). As I have already stated the adoption of the English law was not in its entirety, but as nearly as the circumstances of the case and of the inhabitants of the place admit. It would be confusing the issue to hold that because some prerogatives have not been adopted, no prerogative of the State may have any place in our system of law. Again in considering the limited question as to the application of the rule of interpretation under discussion, it would be an idle exercise to enter upon a detailed discussion of the prerogatives which have and which have not been assimilated in our system of law. In Director of Rationing & Distribution vs The Corporation of Calcutta & Ors.(3) this Court regarded the rule as one of interpretation, and it is so expressly stated in State of West Bengal vs Union of India(4); Sri Vankata Seetaramanjaneva Rice and Oil Mills vs State of Andhra Pradesh(5) and M/s. Builders Supply Corporation vs Union of India(2). In England and the Colonies the rule has not been restricted to common Crown actions or the personal prerogatives of the Crown. It excludes from the operation of statutes all public servants acting under the authority of the Crown. It is well settled that in the Colonies the executive government represents the Crown as it does in England, and therefore the Executive Government of the Commonwealth of Australia or of a State in Australia is not bound by a statute unless the intention that it shall be bound is apparent : Roberts vs Ahern(6). Again because of the origin of the rule, its protection is not restricted to the property and rights of the Crown alone, and applies to State property, actions and rights. When a statute expressly includes the State in its operation, no difficulty arises in giving effect to the statute. Even if there be no express provision, the State may be bound by clear intendment of the statute, having regard to the nature of the legislation, if the beneficent purpose intended to be served thereby would be wholly frustrated unless the State is bound. The rule of interpre tation applies only when the Court has no indication either by express reference or by clear intendment in the statute: a presumption arises in such a case that the words of the statute even though general are not intended to bind the State. The question is one of presumed intention where the language, purpose and the nature of the statute give no clear indication and mere general words .ire used. It was urged that in the Act there are certain provisions which ,expressly refer to the liability of the State and the binding character 5 Bom. H.C.R. O.C.J. 23. (2) ; (1) ; (3) 4 [1964] 1 S.C.R. 371. (5) [1964]7 S.C.R. 456. (6) ; 197 of those provisions against the State is not in doubt. But that cannot be a ground for holding that the remaining provisions apply to the State. , The Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another() observed : "They (the Judicial Committee) were pressed with the argument that such an inference might be drawn from certain express references to the Crown in other parts of the Act itself, and from the fact that by the Government Building Act, 1899, the legislature had provided for the exemption of Government buildings from certain municipal laws. The argument was that no express provisions saving the rights of the Crown would be necessary if the Crown were already immune. This is not an unfamiliar argument, but, as has been said many times, such provisions may often be inserted in one part of an Act, or in a later general Act, ex abundanti cautela, and, so far as the Act of 1899 is concerned, it is fallacious to argue that the legislature which passed it must have had in mind the particular sections of the Act of 1888 which are not under review, or that it was impliedly interpreting those sections. " The argument that the rule had not received recognition in the High Courts in India, before the judgment of the Judicial Committee reported in Province of Bombay vs Municipal Corporation of the City of Bombay and Anr.(1) was pronounced, is belied by the course of authorities summarised earlier. There was practically a consistent course of authorities prior to the Constitution in support of the principle which was affirmed by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay and Another(1). The origin of the rule undoubtedly was in the prerogative of the Crown, but there is even in the country of its origin authority for the view that the rule is regarded primarily as one of construction. In Madras Electric Supply Corporation Ltd. vs Boarland(2), in dealing with the question whether "the immunity" of the Crown "from taxation depends on the construction of the statute or arises, from the prerogative in some other way", Lord MacDermott observed : "Whatever ideas may once have prevailed on the subject it is, in my opinion, today impossible to uphold the view that the Crown can find in the prerogative an immunity from tax if the statute in question, according to its true construction, includes the Crown amongst those made liable to the tax it imposes. The appropriate rule as I under (1) L.R. 73 I.A. 271. (2) H.L. 198 stand it is that, in an Act of Parliament, general words shall not bind the Crown to its prejudice unless by express provision or necessary implication. That, however, is, and has long been, regarded as a rule of construction. Lord Reid concurred in the view that the immunity depends upon construction of the statute rather than on royal prerogative. Lord Keith of Avonholm appeared to express a different view. In India the rule has been accepted as a rule of interpretation of statutes and applicable to all statutes which governed State actions, authority or property. Is there any reason then to hold that on January 26, 1950, the rule which previously applied to interpretation of statutes ceased to apply thereto on the date on which the Constitution came into force ? The rule of interpretation was, as already stated, a settled rule and was law in force in the territory of India within the meaning of article 372 of the Constitution. I am unable to agree with the contention that a rule of interpretation is not "law in force" within the meaning of article 372. There is no warrant for holding that a rule of interpretation which is incorporated in a statute e.g. The Indian Succession Act, or the General Clauses Act is law in force, and not a rule which was enunciated by the highest Court in the realm. The circumstance that a rule of interpretation is a rule for determination of intention of the legislature and for its application requires determination of facts and circumstances outside the statute will not make it any the less a rule of law. Acceptance of the proposition that a decision of the highest judicial tribunal before the Constitution is law does not involve the view that it is immutable. A statute may be repealed, and even retrospectively, it would then cease to be in operation : a decision which in the view of this Court is erroneous may be overruled and may cease to be regarded as law, but till then it is law in force. It may be pertinent to bear in mind that it was never seriously argued before us that the judgment of the Judicial Committee which affirmed the view expressed in a long course of decisions was erroneous in the circumstances then prevailing. It was said by counsel for the Corporation that it is one of the fundamental principles of our Constitution that there is equality between the State and the citizens and discrimination is not permissible in the application of a law generally expressed. it was claimed that if other occupiers of markets take out licenses, and comply with the regulatory provisions of the Act, and the State is not obliged to abide by the rules, there would be unequal treatment between owners similarly situate and that the State may ignore 199 the rules regulating the markets, and on that account the public interest would suffer. There is no reason however to assume that the State under a democratic Constitution would be impervious to public opinion, and would merely because it is not bound by a regulatory Act perpetuate 'a nuisance. If it be assumed that such be the attitude of the State there would be nothing to prevent the State from enacting express legislation excluding itself from the operation of the regulatory laws relating to markets. I do not think that the guarantee of the equal protection clause of the Constitution extends to any differential treatment which may result in the application of a special rule of interpretation between the State and the citizens. Nor can it be said that under our Constitution equality in matters of interpretation between the State and the citizens is predicated in all respects. It must be remembered that our Constitutional set up is built up not anew, but on the foundations of our old institutions. The political set up is indisputably changed, but can it be said that our concept of a State is so fundamentally altered that the traditional view about State privileges, immunities and rights must be abandoned because they had a foreign origin, an on the supposed theory of equality between the State and the citizens a theory which seeks to equate common good of the people represented by the State with the rights and obligations of the individual the Court should decline to give effect to the State privileges and immunities ? If it be granted that the State in making laws is entitled to select itself for special treatment different from the treatment accorded to the citizen and it is not denied that in order to achieve public good it can do so even if there is a differential treatment between the State and the citizen is there any reason to suppose that a statute which evidently was framed on the basis of the well settled rule of the pre Constitution days which accorded to the State a special treatment in the matter of interpretation of statutes must be deemed to have a different meaning on the supposition that the Constitution has sought to impose equality between the State and the citizen ? The fact that in our federal set up sovereignty is divided between the Union and the States, and in the application of the rule that the State is not bound by a statute, unless expressly named or clearly implied, conflicts between the State enacting a law and the Union, or another State may arise does not give rise to any insuperable difficulty which renders the rule in applicable to the changed circumstances, for it is the State which enacts a legislation in terms general which alone may claim benefit of the rule of interpretation, and not any other State. It was urged that even if the rule that the State is not, unless expressly named or by necessary implication intended, to be bound, applies, its application must be restricted to cases where an action of the State in its sovereign capacity is in issue. Where, however, 200 the State is following a commercial or trading activity, the rule can have no application. But in the context of modem notions of the functions of a welfare State, it is difficult to regard any particular activity of the State as exclusively trading. The State was originally regarded as merely concerned with the maintenance of law and order, and was not concerned with any trading activity. But that is now an exploded doctrine. For the welfare of the people the State does and is required in modern times to enter into many trading activities, e.g. to effectuate control of prices, prevent hoarding and distribute commodities in short supply, besides maintenance of departments like Posts, Telegraphs, Railways, Telephones etc., activities which may have been regarded as trading activities in the past. But if initiation and completion of schemes for social welfare of the people be regarded as an attribute of the exercise of sovereign authority, it is difficult to regard activities undertaken by the State for setting up markets for effective distribution of goods as merely trading. Assuming that conducting a market in a metropolitan town may be regarded in a sense as a trading activity there is, in my judgment, no sufficient reason to justify any distinction in the application of the rule of interpretation to statutes concerning sovereign authority and trading activity. Under the provisions of the Calcutta Municipal Act the owner or occupier of a market is required to take out a license. But there is no express reference to the State: nor is there anything peculiar in the nature, purpose and object or in the language used in the enactment relating to the issue of licenses which may suggest that the State must by necessary implication be bound by its provisions. I am, therefore, of the view that the High Court was in error in holding that the State of West Bengal was bound by the provisions relating to the issue of licenses for occupation or conduct of a market. I do not deem it necessary to consider the argument that since the State cannot be imprisoned in enforcement of the general provisions, and imposing a fine upon the State would be futile because the hand which pays and the hand which receives the fine is the same, an implication arises that it was not intended that the State should be bound by section 218 of the Calcutta Municipal Act. in my view the penal provision of s.541 is, though in form a provision creating an offence, intended to enable the Corporation to collect the license fee. The offender and the recipient of fine are therefore not the same bodies. Bachawat, J. By the common law of England, the Crown is not bound by a statute save by express provision or necessary implication. This rule was applied to Indian legislation in 201 Province of Bombay vs Municipal Corporation of the City of Bombay(1). In The Director of Rationing and Distribution vs Corporation of Calcutta(2), this Court followed the Privy Council decision. On the subject of the royal prerogative regarding statutes Chitty in his book on "Prerogatives of the Crown at P. 382 said "The general rule clearly is, that though the King may avail himself of the provisions of any Acts of Parliament, he is not bound by such as do not particularly and expressly mention him '. It has been said that the reason of the rule is that "it is inferred prima facie, that the law made by the Crown, with the assent of the Lords and the Commons, is made for the subjects, and not for the Crown" per Alderson, B. in A.G. vs Bonaldson (3). Two rules follow from the proposition that the law is prima facie made for subjects and not for the Crown: (i) the Crown is not bound by a statute save by express words or by necessary implication, (ii) that the Crown may take advantage of a statute, though not bound by it, unless expressly or impliedly prohibited from doing so. This Court categorically rejected the second rule in V. section Rice and Oil Mills vs State of Andhra Pradesh(4) and held that the State cannot be permitted to rely upon the artificial rule that the State can take advantage of a statute though not bound by it. I think that this Court should have refused to recognise the first rule also. The exception of the Crown from the operation of statutes is based sometimes on the royal prerogative, and sometimes on a rule of construction. Originally, the exemption was claimed and allowed on the ground of the prerogative. The King by virtue of his prerogative could claim that a statute was made for subjects only and he stood outside it. He waived this prerogative right by assenting to a statute which bound him expressly or by necessary implication. The immunity of the Crown is now couched in the form of a rule of construction. In spite of this modem disguise, there is high authority for the view that this immunity is still based upon the prerogative. In Madras Electric Supply Corporation Ltd vs Boarland(5) Lord Keith said: "The true explanation, easily understandable on his torical and legal grounds, is that words in a statute capable of applying to the Crown may be overridden in the exercise of the prerogative. That is necessarily involved in the oft repeated phrase that the King is not bound by a statute (1) [1946] L.R. 73 I.A. 271. (2) ; (3) ; ,124. (4) ; , 463, 463 4. (5) , 694. CI/66 14 202 unless by express words or by clear implication. If the statute does not apply to him there can be no question of his being bound by it. It is only because it can apply to him that appeal to the prerogative is necessary. The conception of the prerogative, in my view, is of something that stands outside the statute, on which the Crown can rely, to control the operation of the statute so far as it prejudices the Crown". But the prerogative right of overriding statutes did not extend to India. When the Crown of England became sovereign in India, it acquired such prerogative rights as were enjoyed by the former Indian sovereigns and such other prerogative rights as may be said to inhere in every sovereign power. But the common law was never bodily imported into India and the Crown never possessed in India all the prerogatives allowed to the Crown by the law of England. In The Mayor of the City of Lyons vs Hon. East India Company(1), the Privy Council held that the common law as to alienage and the royal prerogative of forfeiture of the lands held by a deceased alien on the ground of the incapacity of the alien to hold real property and transmit it by devise or descent was never ' introduced in the Presidency town of Calcutta or the mofussil. Such a right was not enjoyed by the Indian sovereign, nor was it a necessary incident of sovereignty. Lord Brougham said at pp. 280, 281, 282 and 286 of the Report: "But it seems to be contended both here and below, that there is something in the law incapacitating aliens, which makes it, so to speak, of necessary application wheresoever the sovereignty of the Crown is established, as if it were inherent in the nature of sovereign power. To this a sufficient answer has been already afforded, if the acts of the sovereign power to which we have referred, show that no such application to Bengal ever was contemplated, unless direct authority can be produced to show that the right is inseparable from the sovereignty, and, as it were, an essential part of it. It certainly is not an incident to sovereignty; in several countries the sovereign has no such right. . . Besides, if reference be made to the prerogative of the English Crown, that prerogative in other particulars is of as high a nature, being given for the same purpose of protecting the State; and it is not contended that these branches are extended to Bengal. Mines of precious metals, treasuretrove, royal fish, are all vested in the Crown, for the purpose of maintaining its power, and enabling it to defend the State. They are not enjoyed by the sovereign in all or even in most (1) 203 countries, and no one has said that they extend to the East Indian possessions of the British Crown. . . Upon the whole, their Lordships are of opinion that the law, incapacitating aliens from holding real property to their own use, and transmitting it by descent or devise, has never been introduced into Calcutta." The common law of attainder or corruption of blood and the prerogative right of forfeiture or escheat on conviction of treason or felony now abolished by the Forfeiture Act, 1870 (33 & 34 Vict. c. 23) did not prevail in India, see Papamma vs Appa Rau(1) ' Nor did the English law as felo de se and the forfeiture of goods and chattels consequent upon suicide apply to a Hindu, though a British subject, committing suicide at Calcutta, see Advocate General of Calcutta vs Ranee Surnomoye Dossee(2). At Common law, no proceedings, civil or criminal, were maintainable against the Sovereign in person for, it was said, that as the Courts were her own they could have no jurisdiction over her, see Halsbury 's Law of England, Vol. 7, article 544, p. 249. In India, the government did not enjoy a general immunity from suits and legal proceedings, see The Peninsular and Oriental Steam Navigation Company vs The Secretary of State for India.(1) The subjection of the Government to suits where it was liable to be sued before the Constitution is preserved by article 300 of the Consti tution. Though orders of mandamus and injunction cannot issue to the Crown in England, see Halsbury 's Laws of England, 3rd Edn. II, article 25 and 184 pages 16 and 98, such orders can issue to Government under articles 32 and 226 of the Constitution. See also State of Bihar vs Sonavati Kumari(4). Province of Bombay vs Khusaldas Advani(5). In England the King by his prerogative may sue in what Court he pleases, see Craies on Statute law, 6th Edn., p. 435. The prerogative of choice of Courts by the Crown never applied in India. The State can sue only in a Court competent to entertain the suit under the general law. In England it was the prerogative of the Crown not to pay costs in any judicial proceeding, see Craies on Statute Law, 6th edn, p. 432. But this prerogative was never recognised in India. The State pays and receives costs like a private individual. The Indian law did not deny that the Crown had certain pre rogatives. The Crown inherited the prerogatives enjoyed by the former Indian Sovereigns and had other prerogatives inherent in the nature of sovereignty. It was the prerogative of the King in Council to hear appeals and petitions from his Indian subjects, (1) 1. L. R. ,396. (2) (3) 5 Bom. H.C.R. Appendix 1. (4) ; (5) ; ,697. 204 see Modee Kai Khocscroo Hormusjee vs Cooverbhaee(1). prerogative was taken away by the Abolition of Privy Council Jurisdiction Act 1949. When there is a failure of heirs on a person dying intestate, the Crown had the prerogative right to take his property by escheat, and this right was said to rest on grounds of general or universal law, see the Collector of Masulipatam vs Cavaly Vencata Narrainapa(2), Sonet Koor vs Himmut Bahadoor(3) Mussammat Khursaidi Begun vs Secretary of State for India(4). The right of the Government to take the property by escheat or lapse on the failure of heirs or as bona vacantia for want of a rightful owner is recognised by article 300 of the Constitution. The prerogative right of the Crown to priority in payment of its claims was recognised on the ground that this right did not arise out of any peculiar quality in the writ of extent and the Hindu, Muhammadan and Poituguese Sovereigns had enjoyed a similar right, see Secretary of State for India vs Bombay Landing and Shipping company(5). The extent of this prerogative right may be limited by a statutory scheme of administration, see GrovernorGeneral in Council vs Shiromani Sugar Mills Ltd. (in liquidation)(6). It has been held that the Government continues to enjoy this prerogative right of precedence after the Constitution came into force, see Builders Supply Corporation vs Union of India (7), Bank of India vs J. Boman(8). The Crown as parens partriae had other prerogative rights. The Crown may have also enjoyed in India certain prerogative rights which were not allowed to the Crown of England by the common law and those prerogatives might vary in different parts of India, see Bell vs Municipal Commissioners for the City of Madras(9).Gopalan vs State of Madras (10). But in India the Crown never enjoyed the general prerogative of overriding a statute and standing outside it. Such a right is not indigenous to India, nor is it a necessary incident of sovereignty. In The Secretary of State for India in Council vs Bombay Landing and Shipping Company(5), Ganpat Putava vs The Col lector of Canars (11) the Bombay High Court held that a prerogative of the Crown cannot be taken away except by express words or by necessary implication. To appreciate these rulings, it is necessary to remember that until 1861 there were constitutional restrictions on the power of the Indian legislature to affect the prerogative of the Crown, see Statutes 3 and 4 William cap. LXXV section 43 and 16 and 17 Vict. cap XCV section 43, which were swept away by later statutes, see the Indian Councils Act, 1861 section 24, the Government of India Act 1915, section 84 (1) (A), the Government of (1) 6 M.I.A. 448,455. (3) [1876] I.L.R. I Cal.391. (5) (7) (9) I.L.R. (2) [1859 61] 8 M.I.A. 500. (4) Patna 538. (6) (8) A.I.R. 1956 Bom. 305 (10) Mad. 798,802. (11) [1875] I.L.R. I Bom. 205 India (Amendment) Act, 1917, section 2 as interpreted in The Secretary of State vs Bombay Municipality(1), with one exception introduced by the Government of India Act, 1935, section 1 10(b)(ii). Having regard to this historical background, it was considered that the prerogative of the Crown was a very special subject matter and in the absence of express words or necessary implication, it should be presumed that general words of an Indian Act were not intended to affect the prerogative. In Bells case(2) Sir Bhashyam Ayyangar J.therefore pointed out that the doctrine that the prerogative could not be taken away save by express words or by necessary implication could be based on the maxim generalia specialibus non derogant. This maxim does not exempt the Crown from the operation of statutes generally whenever a statute prejudicially affects it. In order to invoke this doctrine, the Crown must, establish that it has some prerogative right which it claims to be outside the purview of the statute. As pointed out already under the Indian law the Crown could not claim a general exemption from statutes on the ground of the prerogative. But there is high authority for the view that such an exemption is allowed to the Crown in England on the basis of a rule of construction. In Madras Electric Supply Corporation vs Boarland(3) at p. 685 Lord Macdermott said that the rule that in an Act of Parliament general words shall not bind the Crown to its prejudice unless by express words or by necessary implication has long been regarded as a rule of construction. This rule has a wide sweep, and is not limited to cases where the prerogative right or property of the Crown is in question. It protects the Crown whenever general words in a statute may operate to, its prejudice. See Broom ' s Legal Maxims, 10th Edn., pp. 39 40, Glanville L. Willams ' Crown Proceedings, p. 48 (f. n.). A review of the decided cases shows that until the decision of the Privy Council in the Province of Bombays case(4) this wide rule of construction had not obtained a firm foothold in India. In Verubai vs The Collector of Nasik(5), the Bombay High Court held that the Government was bound by article 167 of Schedule 11 of the Indian Limitation Act, 1877. Westropp, C.J. said: "The legislature in passing the Limitation Act of 1871, which is applicable to this case, where it intends that Government should have a longer period than the subject, has been careful expressly to say so, as for instance, in article 150 of Schedule II, where the period assigned to suits brought by the Secretary of State is sixty years from the time of the accruer of the cause of action; but the Legislature makes no difference between Government and its subjects (1) (2) I.L.R. (3)[1955] A.C. 667,685. (4) [1946] L.R. 73 I.A. 271. (5) I.L.R. 206 in the case of appeals or applications see Govind Lakshman vs Narayan Moreshvar(1)". In Appava vs The Collector of Vizagapatam (2), the Madras High Court held that the Government was bound by article 178 of the Indian Limitation Act, 1877. Turner, C.J. and Muttusami Ayyar, J.said: "If the maxim on which the counsel for the Crown relies applies to this country and the Crown is not bound by the provisions of any Act unless they are expressly declared binding on the Crown it may be inferred from the circumstance that this Act contains provisions prescribing a Limitation to the Government for the institution of suits and presentation of criminal appeals that the Legislature contemplated that the Crown should be subject to the provisions of the Act and should enjoy a privilege to the extent expressed and no further expressum facit cessare tacitum" In the last two cases, the Courts did not apply the strict English rule that the Crown under the prerogative was not bound by the statute of limitation, see Bank Voor Handel vs Hungarian Administrator(3). In The Secretary of State for India vs Mathurabhai(4) Sargent, C. J. was inclined to apply the English rule that the Crown is not included in an Act unless there are words to that effect and to hold that the Government was not bound by section 26 of the Indian Limitation Act, 1877. But he observed that it was not necessary to express a decided opinion on the question. In Bells, case(5), the Madras High Court held that the Government was bound by the taxing provisions of section 341 of the City of Madras Municipal Act, 1884, though not named in that section. Sir Bhashyam Ayyangar, J. reviewed the earlier cases and decisively rejected the general claim of immunity of the Crown from a statute imposing a tax on the basis of any prerogative right or supposed rule of construction. In Motilal vs The Collector of Ahmedabad(6). Russel, Acting C. J. and Beaman, J. doubted the application of the English rule of construction in this country. They said: "It is contended that the maxim of English law that the Crown cannot be bound by any statute unless expressly named therein applies, and reference is made to the cases of Ganpat Putaya vs The Collector of Kanara(7) The Secretary of State for India vs Mathurabhai(8). Without in any way wishing to prejudge the question or fetter future argument, (1) 1 1. (2) [1882] I.L.R.4 Mad. 135. (3) , 984 (H.L). (4) Bom. (5) I.L.R. (6) Bom. 86, 89. (7) [1875] I.L.R. I Bom. 1 (8) Bom. 207 we may say that as at present advised we entertain some doubt whether an exact analogy exists between the privileges and immunities of the Crown under the Constitutional Law of England and those of servants of the Indian Government. " The full Bench left the question open. In The Secretary of State vs Mohammed Yysuf(1), Pratt J. held that sections 17(2) (vii) and 90 of the Indian contained an implication that the Crown was bound by the Act. In Hiranand Khushiram vs Secretary of State for India(2), Beaumont, C. J. and Rangnekar, J. applied the strict English rule of construction and held that since the Crown was not named either expressly or by necessary implication in sections 305, 489 and 491 of the City of Bombay Municipal Act, 1888, the Crown was not bound by those sections. Soon thereafter, the same learned Judges held in Secretary of State for India vs The Municipal Corporation of Bombay(3), that the Crown was bound by section 212 of the City of Bombay Municipal Act, 1888 by necessary implication, though not expressly named therein. In Province of Bombay vs The Municipal Corporation for the City of Bombay(4), Beaumont, C. J. and Rajadhayaksha, J. held that sections 222(1) and 265 of the City of Bombay Municipal Act, 1888 by necessary implication bound the Crown. They refused to follow the dictum of Day, J. in Corton Local Board vs Prison Commissioner(5) that the test of necessary implication binding the Crown involves that the legislation is unmeaning unless the Crown is bound. They said: ". . if it can be shown that legislation cannot operate with reasonable efficiency, unless the Crown is bound, that would be a sufficient reason for saying that the Crown is bound by necessary implication. " This decision was reversed by the Privy Council on appeal in Province of Bombay 's case(6). The Privy Council rejected the test laid down by the Bombay High Court. They held that the strict English rule of construction exempting the Crown from the operation of statutes applied in the case of Indian legislation. The parties appearing before the Privy Council concurred in accepting this view. The attention of the Privy Council was not drawn to Bell 's case(7) and the propriety of applying the English rule to Indian legislation was not considered. Lord Du Parcq said: "If it can be affirmed that, at the time when the statute was passed and received the royal sanction, it was apparent from its terms that its beneficient purpose must be wholly frustrated unless the Crown were bound, then it may be inferred that the Crown has agreed to be bound." (1) , 1136.(2) Bom. (3) (4) I.L.R. 1944 Dom. 95. (5) (6) (1946) L.R. 73 I.A. 271. (7) I. L. R. 208 They held that the Crown was not bound by sections 222(1) and 265 of the City of Bombay Municipal Act, 1888 and an inference of necessary implication binding the Crown could not be drawn from certain express references to the Crown in other parts of the same Act and from the exemption of the Crown in a later general Act since such provisions are often inserted ex abundanti cautela. It is to be noticed that in several earlier decisions the Bombay High Court had drawn an inference of necessary implication binding the Crown in other sections of the same Act. Moreover, except the Bombay High Court, no other High Court held that the English c of Crown exemption from statutes applied to India. Even in Bombay, some of the Judges doubted the applicability of the rule to Indian conditions. The imposition of the strict rule of construction by the Privy Council decision was received very unfavourably in India. In Corporation of Calcutta vs Sub Postmaster, Dharamtala(1), the Calcutta High Court felt bound to follow the Privy Council decision, and held that the Government was not bound by the provisions of the Calcutta Municipal Act, 1923. Mookerjee, J., however, said: "Had the question been res integra and had it been open , to us to consider the question untrammelled by a decision of the Judicial Committee we might have considered the reasonableness and propriety of applying the principles as enunciated by the English Courts and also how far they should be applied to Indian conditions. For some years past the position of the Crown with regard to liability and procedure has been considered by the lawyers in England as being antiquated and absurd as contrasted with that of ordinary individuals and reform in this respect has been considered to be long overdue. " In The Corporation of Calcutta vs Director of Rationing and Distribution(2), the Calcutta High Court refused to follow the Privy Council decision and held that the State was bound by section 386(1) (a) of the Calcutta Municipal Act, 1923. This decision was reversed in The Director of Rationing and Distribution 's case (3) and a majority of a Bench of this Court held that the law was correctly laid down in the Province of Bombay 's case(4) and continued to apply in this country even after the Constitution came into force, and the State was not bound by section 386(1) (a) of the Calcutta Municipal Act, 1923. Wanchoo, J. dissented and held that the rule laid down by the Privy Council did not apply to the construction of Indian statutes after the Constitution came into force. Later decisions of this Court disclose a tendency to relax and soften the rigour of (1) [1948]54 C. W. N. 429. (3) ; (2) A.I.R. 1955 Cal. 282. (4) (1964) L.R. 73 I.A. 271. 209 this rule. In Sri Venkata Seetaramanjaneya Rice and Oil Mills and others vs State of Andhra Pradesh(1) this Court held that an inference of necessary implication binding the State may be drawn if "the conclusion that the State is not bound by the specific provision of a given statute would hamper the working of the statute, or would lead to the anomalous position that the statute may lose its efficacy". In other words, the Court was inclined to revive the Bombay heresy rejected by the Privy Council. With regard to this rule of exemption of the Crown from statutes, Glanville L. Williams in his book on "Crown Proceedings", 1948, pp. 53 and 54 said: "The rule originated in the Middle Ages, when it perhaps had some justification. Its survival, however, is due to little but the vis inertiae. The chief objection to the rule is its difficulty of application . With the great extension in the activities of the State and the number of servants employed by it, and with the modern idea, expressed in the Crown Proceedings Act, that the State should be accountable in wide measure to the law, the presumption should be that a statute binds the Crown rather than that it does not. " Thus, the artificial rule of construction has not escaped criticism even in England. This rule of construction is unsuitable to Indian conditions and should never have been applied to India. Before 1946 there was no settled course of decisions of the Indian Courts necessitating or justifying the application of this rule to the construction of Indian statutes. Rules of English law which could not suitably be applied to Indian conditions were not introduced even in the Presidency Town of Calcutta by 13 Geo HI c 63 or 21 Geo III c 70 or any other cognate statute or by the Charter of Charles II in 1661 see The Mayor of the City of Lyons vs The Hon. East India Company(2) The Advocate General of Calcutta vs Ranee Surnomoyee Dossee(3). Technical rules of English common law were not applied even in the Presidency Towns if they clashed with principles of justice, equity and good conscience, see Abdul Kawder vs Mahomed Mera (4) Mool Chand vs Alwar Chetty (5). In the mofussil, common law had no force proprio vigore but the Judges were free to adopt and apply any rule of common law if it was consonant with principles of justice, equity and good conscience. Artificial rules of Common Law based on feudal notions had no application in India. In Mithibai vs Limii Nowroji Benaji(6), the Bombay High Court refused to apply the rule in Shelley 's case in a case arising between Parsis in the mofussil. In The State of Rajasthan vs Mst. Vidyawati(7) (1) ; , 462 (2) [1837]1 M. A. 175, 246 9, 274 5. (4) I.L.R (5) I.L.R. , 553. 506,531. (3) , 407 13, 424 30. (7) [1962] 2 Supp. S.C.R 989, 1007. (6) Bom. 506, 531. 210 this Court refused to apply rules of immunity of the Crown based on old, feudalistic notions. In interpreting a statute, it is the duty of the Court to give effect to the expressed intentions of the legislature. There is no compelling reason why the Courts in India should not give full effect to the general words of a statute on the basis of some artificial rule of construction prevailing in England. No doubt, there are many Indian Acts which expressly provide that the Crown or the Government shall be bound by their provisions. See the Indian Arbitration Act No. 10 of 1940, section 43, Trades and Merchandise Marks Act No. 43 of 1958, section 130, the Factories Act No. 63 of 1948, section 116, the Oil Fields (Regulation and Development) Act No. 53 of 1948, the , section 85. Some of these Acts are modelled on English statutes which contain similar provisions. In some Acts, the express provision binding the Government is inserted by way of abundant caution. But the bulk of the Indian legislation proceeds upon the assumption that the Government will be bound unless the contrary is stated. Many Acts like the Code of Civil Procedure, 1908 and the make special provisions for the Government in respect of particular matters on the assumption that in respect of all other matters the Government will be bound by the general provisions of the Act. The Indian Limitation Act 1882 provided a special period of limitation for suits by the Government on the assumption that the Government like the subjects will be bound by its other general provisions. To apply the technical rule of construction exempting the Crown from the operation of Indian statutes will be to stultify the intention of the legislature in most cases. The English Courts have gone to the length of deciding that the Crown is not bound even by general regulations as to public safety, see Cooper vs Hawkins(1). Such a result has not escaped criticism even in England. In India, no one has doubted that general regulations as to public safety bind the Government equally like the citizens. The Director of Rationing and Distribution 's case(2) left open the question whether the State could claim immunity from the provisions of a statute with regard to its trading or commercial activities. But the executive power of the State extends to the carrying on of a trade or business, see article 298 of the Constitution. On a question of construction of a statute, no rational distinction can be made between the trading and non trading activities of the State. If the State is not bound by a statute, it would seem that it is not so bound in respect of all its activities. in a country having a federal system of government, it is difficult to apply the rule of Crown exemption from statutes. In (1) (2) ; 211 R vs Sutton(1), the High Court of Australia held that this presumption should not, be applied so as to bring about either State exemption from federal laws or federal exemption from State statutes. But the contrary opinion seems to have prevailed in later cases, see Minister of Works (W.A.) vs Gulson(2). The Commonwealth of Australia vs Bogle(3). This branch of Australian law is discussed in detail by Dr. Wynes in his book on Legislative, Executive and Judicial Powers, 3rd Edition pp. 518 to 544. We should not import in this country either the English rule of implied exception of the Crown or the subtle distinctions engrafted on it by the Australian Courts. Our system of Government is federal in character. The taxing power is vested both in the Union and the States. Subject to certain constitutional restrictions, the Union can tax the State and the State can tax the Union. There is no ground for presuming that the States are excluded from the scope of a general taxing statute enacted by Parliament or that the Union is outside the purview of the general words of a taxing statute enacted by a State legislature. I am therefore of the opinion that the rule that the Govern ment is not bound by a statute unless it is expressly named or bound by necessary implication does not prevail in this country and the decisions in the Province of Bombay 's case(4) and The Director of Rationing and Distribution 's case(s) and the subsequent decisions applying the rule to the construction of Indian Acts should not be followed. The imposition of this artificial rule has been harmful to our body politic. We have power to reconsider our previous decisions, see The Bengal Immunity Company Ltd. vs The State of Bihar(6). This is a fit case where we should exercise this power. If the rule of common law controlling the operation of a statute on the ground of the prerogative applied to India, it would be a law in force before the Constitution and would continue to be in force by virtue of article 372 of the Constitution. It would be the law in force because it would limit and control the operation of the existing Indian Acts. But we have ample power to say that this rule was not in force in India and the Indian law was not correctly laid down by the Privy Council in the Province of Bombay 's case(4) and the decisions which followed it. There is no presumption that the provisions of an Act do not bind the State (using the expression "State" in a compendious sense as including the Union and the States). In each case, it is a question of fair construction of the Act whether or not any particular provision of the Act binds the State. The intention of the legislature has to be gathered on a careful scrutiny of the Act in question. Particular care should be taken in scrutinising the pro visions of a taxing or a penal Act. If the application of the Act (1) ; (3) ; , 254. (5) ; (2) ; (4) [1946] L.R. 73 I.A. 271. (6) 212 leads to some absurdity, that may be a ground for holding that the State is excluded from its operation by necessary implication. If the only penalty for an offence is imprisonment, the State cannot be convicted of the offence, for the State cannot be locked up in prison. If the penalty for the offence is fine and the fine goes to the consolidated fund of the State, it may be presumed that the penal provision does not bind the State, for the legislature could not have intended that the State will be the payer as well as the receiver of the fine. Presumably, the Union is not bound by the Central Income tax Act because if it paid income tax, it will be both the payer and the receiver. Likewise, a State is prima facie not bound by a State Agricultural Income tax Act where the tax is receivable by it. Moreover cases may conceivably arise where "press provisions in a statute binding the State in respect of certain specific matters may give rise to the necessary implication that the State is not bound in respect of other matters. The Calcutta Municipal Act, 1951 contains special provisions exempting the Government from some of its provisions. Section 167(2) exempts from the consolidated rate certain open spaces and parade grounds which are the property of the Government. Section 208(1)(b) exempts certain carriages and animals belonging to the Government from payment of tax on carriages and animals. Section 225(1) (c) proviso exempts carts which are the property of the Government from payment of registration fees. Sections 218(1) and 541(1)(b) are however framed in general terms and do not expressly exempt the Government from their operation. Under section 218(1) it is the duty of every person carrying on any of the trades mentioned in schedule TV to take out a licence and to pay the prescribed fee. Under section 541(1) (b) any person carrying on such a trade without taking out the licence is punishable with fine. Prima facie, the two provisions apply to all persons including the State Government. Section 218 is a taxing section and its object is to levy revenue for the municipality. There is no reason why the State Government like any other person should not take out a license and pay the prescribed fee if it chooses to exercise or carry on a trade and why it should not be punished with fine under section 541(1)(b) if it chooses to carry on a trade without taking a license. By section 541(2), such fine, when levied, is taken by the Municipality in full satisfaction of the demand on account of the license Fee. Section II 5 of the Act no doubt provides that all monies realised or realisable under the Act (other than fine levied by magistrates) shall be credited to the municipal fund. Reading sections 115 and 541(2) together it appears that the excepting words "other than fine levied by magistrates" in section 115 do not refer to the fine levied under section 541. The general provisions of section 115 must be read subject to the special provisions of section 541(2) and the fine realisable under section 541 is receivby the Municipality. It follows that the State Government is 213 the payer but is not the receiver of the fine. There is nothing to indicate that the State Government should be excluded from the purview of section 218(1) and section 541(1)(b). Section 218 renders the State liable to pay the license fee. Section 541(1) provides the remedy for the recovery of the fee in case of default in taking out the license and payment of the fee. If we are to hold that section 218 (1) applies to the State but section 541(1) (b) does not, the result would be that though the State is liable to pay the license fee, the Municipality will have no remedy against the State for the recovery of the fee. The legislature could not have contemplated such a result. Section 541 (1)(b) is a penal provision. But the State is not necessarily exempt from the operation of a statute having a punitive aspect. No doubt, under section 547(A) the Court is competent to direct imprisonment of the offender in default of the payment of fine under section 547(1)(b). Obviously, this provision cannot be applied to the State, because the State cannot be detained in prison. But there is no reason why section 541(1) (b) should not be applied to the State. In Rani Sonavati Kumari vs The State of Bihar( ') this Court held that under the punitive provisions of 0 39, r. 2(3) of the Code of Civil Procedure, 1908, the Court could direct attachment of the property of the State for breach of an order of injunction, though the Court could not direct detention of the State in civil prison. The High Court found that the State of West Bengal was carrying on a trade referred to in schedule IV of the Calcutta Municipal Act, 1951, and was bound to take out a license under section 218(1). It is common case that the State did not take out a license for 1960 61. The State was therefore rightly convicted by the High Court under section 541(1). In the judgment of the High Court it is stated by inadvertence that the conviction was under section 537, but from the materials on the record it is clear that the High Court intended to pass the order of conviction under section 541. It was argued that the State was the owner of a market and did not carry on any business. it was suggested that the trades, if any, in the market were carried on by the stall holders and not by the Government. But the High Court has recorded the finding that the Government carried on a trade. In this appeal under article 136 of the Constitution, I do not propose to interfere with this finding Of fact. This judgment will not preclude the Government from proving in any future case that it is not carrying on any trade or business at 1, Orphanage Road, Calcutta, The appeal is dismissed. ORDER In accordance with the opinion of the majority, the appeal is dismissed. Y. P. (1) [1961] S.C.R.728.

IN-Abs

The appellant State of West Bengal was carrying on trade as owner and occupier of a market at Calcutta without obtaining a licence as required under section 218 of the Calcutta Municipal Act, 1951. The respondent Corporation of Calcutta filed a complaint against the State for contravention thereof. The trial Magistrate, accepting the State 's contention that the State was not bound by the provisions of the Act acquitted the State. on appeal, theHigh Court convicted the State and sentenced it to a fine, holding thatthe State was as much bound as a private citizen to take out a licence. In appeal to this Court the appellant, relying on this Court 's decision inDirector of Rationing vs Corporation of Calcutta, ; ,contended that the State was not bound by the provisions of a statute unless it was expressly named or brought in by necessary implication and this common law rule of construction, accepted as the law in India was "law in force" within the meaning of article 372 of the Constitution and that in any event by necessary implication the State was excluded from the operation of section 218 of the Act. Held:Per Subba Rao C.J., Wanchoo, Sikri, Bachawat, Ramaswami, Shelat, Bhargava and Vaidialingam, JJ. (Shah, J. dissenting) : The State was not exempt from the operation of section 218 of the Calcutta Municipal Act, 1951 and was rightly convicted. Per Subba Rao C. J. Wanchoo, Sikri, Ramaswami. Shelat, Bhargava and Vaidialingam, JJ. (i) The Common Law rule of construction that the Crown is not, unless expressly named or clearly intended, bound by a statute,, was not accepted as a rule of construction throughout India and even in the Presidency Towns, it was not regarded as an inflexible rule of construction. It was not statutorily recognized either by incorporating it in different Acts or in any General Clauses Act; at the most, it was relied upon as a rule of general guidance in some parts of the country. The legislative practice establishes that the various legislatures of country provided specifically, exemptions in favour of the Crown 171 whenever they intended to do so indicating thereby that they did not rely upon any presumption but only on express exemptions. Even those courts that accepted it considered it only as a simple canon of construction and not as a rule of substantive law. In the City of Calcutta there was no universal recognition of the rule of construction in favour of the Crown. The Privy Council, in Province of Bombay vs Corporation of the City of Bombay, (1946) L.R. 73 I.A. 27 gave its approval to the rule mainly on concession made by counsel. [180 D G; 183 H; 184 E F; 186 D G] The archaic rule based on the prerogative and perfection of the Crown has no 'relevance to a democratic republic it is inconsistent with the rule of law based on the, doctrine of equality and introduces conflicts and anomalies. The normal construction, namely, that an enactment applies to citizens as well as to State unless it expressly or by necessary implication exempts the State from its operation, steers clear of all the anomalies and is consistent with the philosophy of equality enshrined in the Constitution. B] If a rule of construction accepted by this Court is inconsistent with the legal philosophy of the Constitution it is the duty of this Court to correct its self and lay down the right rule. This Court must more readily do so in constitutional matters than in other branches of law. [176 B C] Director of Rationing vs Corporation of Calcutta, ; ,, reversed. Province of Bombay vs Corporation of the City of Bombay, (1946) L.R. 73 I.A. 271, held inapplicable. Bengal Immunity Co. vs State of Bihar, , referred to. Case law discussed. (ii)Even assuming that the common law rule of construction was accepted as a canon of interpretation throughout India the rule is not "law in force" within the meaning of Article 372 of the Constitution. There is an essential distinction between a law and a rule of construction. A rule of construction adopted to ascertain the intention of the legislature is not a rule of law. [187 D] (iii)The State is not excluded from the operation of section 218 of the Act by necessary implication. The State is not the payer as well as the receiver of the fine, or the fine, when levied goes to the municipal fund. Though the expression fine ' is used, in effect and substance, section 541 is a mode of realization of the, fee payable in respect of the licence. The provision for imprisonment in default of fine is only an enabling provision and the court is not bound to direct the imprisonment of the defaulter. [189 D H; 190 A B] Per Bachawat, J : (i) This Court should have in Director of Rationing and Distribution vs Corporation of Calcutta, , refused to recognise the rule that the Crown is not bound by a statute save by express words or by necessary implication. In India the Crown never enjoyed the general prerogative of overriding a statute and 'standing outside it. The doctrine of the general immunity of the Crown from the operation of statutes so far as it is based upon the 'royal prerogative was never imported into India. Nor is there any compelling reason why the courts in India should not give full effect to the general words of a statute on the basis of some artificial rule of construction prevailing in England. The bulk of the Indian legislation proceeds upon the assumption that the Government will be bound unless the contrary is stated. The 172 rule,as rule of construction, never gained a firm foothold in untilthe Privy Council decision in Province of Bombay vs Municipal Corporation for the City of Bombay, (1946) L.R. 73 I.A. 271, in 1946, till which time there was no settled course of decisions of the Indian courts necessitating or justifying the application of this rule to the construction of Indian statutes; and even in this decision the propriety of applying the rule to Indian legislation was not considered. The imposition of this strict rule of construction by the Privy Council was received very unfavourably in India till this Court 's decision in the Director of Rationing case wherein Province of Bombay was held to have laid down the correct law. But subsequent decisions of this Court disclosed a tendency to relax and soften the rigour of the rule. Further, in a country having a federal system of government it is difficult to apply the rule of Crown exemption from statutes. This rule was not in force in India and therefore was not "law in force" within the meaning of article 372 of the Constitution. [201 D E; 202 C; 210 A B, C D; C, H; 210 H; 211 F] This Court has power to reconsider its previous decisions and this is a fit case where this power should be exercised. [211 E] Director of Rationing vs Corporation of Calcutta, ; , reversed. Province of Bombay vs Municipal Corporation for the City of Bombay, (1946) L.R. 73 I.A. 271, held inapplicable. Shivenkata Seetararnanjaneya Rice & Oil Mills vs State of Andhra Pradesh, ; and Bengal Immunity Co. vs State of Bihar, , referred to. Case law discussed. (ii)On a question of construction of a statute no rational distinction can be made between the trading and non trading activities of the State. [210 G] (iii)There is nothing in the Act to indicate that the State should be excluded from the purview of section 218(1) 'requiring the taking out of a licence on payment of the prescribed fee and section 5441(1) providing the remedy for the recovery of fee in face of default. If the State is to be exempt from the application of section 541(1)(b) it would lead to the anomaly that the State is liable to pay the licence fee but the Municipality will have no remedy for the recovery of the fee. Also, the fact that under section 547(A) the court is competent to direct imprisonment in default of fine is no reason why section 5411 1) (b) should not be applied to the State. The special provisions of section 541(2) indicate that the fine realizable under section 541 is receivable by the Municipality. It follows that the State Government is the payer but is not the receiver of the fine. The fine, when levied, is taken by the Municipality in full satisfaction of the demand on account of the licence fee. [212 H; 213B] State of Bihar vs Rani Sonavati Kumari ; , relied on. Shah, J. (Dissenting); (i) The English Common Law rule that the Crown is not, unless expressly named or clearly intended, bound by a statute, is a rule of construction and was settled law in India before the Constitution. [197 F; 198 D] The Common Law of England was adopted in this country subject to local variations and the personal law of the parties and the courts which functioned in the former British India territory were enjoined to cases not governed by any specific statutory rules according to equity and good conscience,, which meant rules of English Common Law 173 in so far as they were applicable to Indian society. Them was practically a consistent course of decisions of the High Courts in India, prior to the Constitution, in support of the view, affirmed by the Judicial Committee in Province of Bombay vs Municipal Corporation of the City of Bombay, (1946) L.R. 73 I.A. 271, that the rule that the Crown is not unless expressly named or clearly intended bound by a statute applied to India. It was accepted as a rule of interpretation ofstatutes applicable to all statutes governing state action, authority or property. A difference may have prevailed in Parts of the territories now comprising theIndian Union. But this is not peculiar to this rule of interpretation adoptedby the Courts in British India. Where uniform statutes do not apply differences do arise and must be determined according to the law and jurisdiction inherited by the courts administering justice. The present case concerns the administration of law in the town of Calcutta which has for more than two centuries been governed by the English Common Law as adopted by the various Acts, Regulations and finally by the Letters Patent. [191 A D; 192 D E; D F] Director of Rationing and Distribution vs The Corporation of Calcutta, ; , followed. Province of Bombay vs Municipal Corporation of the City of Bom. bay, L.R. 73 I.A. 271, applied. State of West Bengal vs Union, [1964] 1 S.C.R. 371 Srivenkata Seetaramanjaneya Rice & Oil Mills vs State of Andhra Pradesh, ; , Builders Supply Corporation vs Union of India, ; , referred to. Case law referred to. There is no reason to hold that the rule which previously applied to the interpretation of a statute ceased to apply. on the date on which the Constitution came into force. The Constitution has not so fundamentally altered our concept of 'State ' as to abandon the traditional view about State privileges, immunities and rights because they had a foreign origin and on the supposed theory of equality between the State and its citizens. The guarantee of equal protection clause of the Constitution does not extend to any differential treatment which may result in the application of a special rule of interpretation between the State and the citizens nor has the Constitution predicated in all respects equality in matters of interpretation between the State and its citizens. A State can, in the interest of public good, select itself for special treatment. This being so, there is no reason to suppose that a Statute which was framed on the basis of a well settled rule of pre Constitution days which accorded the State a special treatment in the matter of interpretation. of statutes must be deemed to have a different meaning on the supposition that the Constitution has sought to impose equality between the State and the citizens. [198 H 199 F] The fact that in the Indian federal set up sovereignty is divided between the Union and the States, and in the application of the rule that the State is not bound by a Statute, unless expressly named or clearly implied, conflict between the State enacting a law and the Union,, or another State, may arise, does not give rise to any insuperable difficulty which renders the rule inapplicable to the changed circumstances, for, it is the State which enacts a legislation in terms general which alone may claim benefit of the rule of interpretation and not any other State. [199 G] (ii)The rule of interpretation being a settled rule is "law in force" within Me meaning of article 372 of the Constitution. A rule is not any 174 the less a rule of law because it is a rule for determination of the intention of the legislature and for its application requires determination of facts and circumstances outside the statute. Acceptance of the proposition that a decision of the highest judicial tribunal before the Constitution, is law, does not involve the view that it is immutable. A statue may be repealed, ' and even retrospectively, it would then cease to be in ,operation; a decision which in the view of this Court is erroneous may be overruled and may cease to be regarded as law, but till then it was law in force. [198 D G] (iii)The application of the rule cannot be restricted to cases where an action of the State in its sovereign capacity is in issue. In the context of modem notions of the functions of a welfare State, it is difficult to regard any particular activity of the State as exclusively trading. [200 A B] (iv)The State of West Bengal was not bound by the provisions relating to the issue of licences for occupation or conduct of a market. [200 F] There is no, express reference to the State, nor is there anything peculiar in the nature purpose and object or in the language used in the enactment relating to the issue of licences, which may suggest that the State must by necessary implication be bound by its provision. [200 E]

Appeal No. 822 of 1963 Appeal by special leave from the judgment and decree dated April, 7, 1961 of the Punjab High Court in Regular First Appeal No. 32 of 1957. Bishan Narain and B. P. Maheshwari, for the appellants Nos. 1 3 and 5 10. M. V. Goswami, for appellant No. 4. Bhawani Lal, E C. Agarwala, Ganpat Rai and P.C. Agarwala, for respondent Nos. 1(i) 1(vi). 864 The Judgment of the Court was delivered by WANCHOO, J. This is an appeal by special leave from the decree of the Punjab High Court in a suit brought by the plaintiffs respondents for pre emption. The appellants are vendees to the sale which was preempted. The facts found by the courts below are these. The property in suit consisted of agricultural land as well as some baras in village Jalalpur. Punnu Singh and Mansha Singh who were also parties to the suit as defendants sold the property in suit on January 15,1955 to the appellants. Thereafter consolidation proceedings took place in this village and came to an end before the present suit was filed on January 14, 1956. Of the vendees, six had no share in the village from before while four already had some share in the village. As a result of the consolidation proceedings, six of the vendees who had no share in the village from before were allotted other land in place of the land which they had purchased under the sale deed. The other four vendees who had some share in the village from before were allotted land in two blocks in lieu of the land they had in the village from before as well as the land which they had purchased by the sale deed in question. The plaintiffs respondents instituted the suit on the basis of their being collaterals and co sharers and wanted that they should be given out of the land allotted to the vendees in consolidation proceedings such land as they would be entitled to after pre emption of the sale in question. The suit was resisted by the appellants on a number of grounds. The main ground of defence with which we are concerned in the present appeal was whether the suit was maintainable with respect to the land which had been obtained by the vendees during consolidation proceedings in lieu of the land which was the subject matter of the sale deed. The trial court held in favour of the plaintiffs respondents and granted a decree for pre emption. On ,appeal to the High Court by the vendees, the High Court held on the basis of section 24 of the Patiala and East Punjab States Union Holdings (Consolidation and Prevention of Fragmentation) Act, No. 5 of 2007 Bk. (hereinafter referred to as the Act), that it was open to the pre emptor to follow the land which had been given to the vendees in consolidation proceedings in lieu of the land which was the subject matter of the sale deed. Further in the High Court another point was raised on behalf of four of the appellants who had land from before in the village and it was urged that in their case it was not possible to distinguish which land had been allotted to them in place of the land sold and therefore no pre emption decree should be granted. This argument was also rejected by the High Court, and the appeal was dismissed. The High Court having refused the certificate, the appellants applied and obtained ,special leave from this Court; and that is how the matter has come before us. 86 5 The main question that has been argued before us is that the suit is not maintainable as it is not open to the pre emptor to follow the land which might have been obtained by the vendees in lieu of the land actually sold to them. The answer to this question depends upon the interpretation of section 24 of the Act in the background of the law of pre emption. In Shri Audh Behari Singh vs Gajadhar Jaipuria,(1) this Court held that "The correct legal position seems to be that the law of preemption imposes a limitation or disability upon the ownership of a property to the "extent that it restricts the owner 's unfettered right of sale and compels him to sell the property to his co sharer or neighbour as the case may be The crux of the whole thing is that the benefit as well as the burden of the right of preemption run with the land and can be enforced by or against the owner of the land for the time being although the right of the preemptor does not amount to an interest in the land itself The right of preemption is an incident of property and attaches to the land itself. . . . ." This Court had occasion to consider the matter again in Bishan Singh vs Khazan Singh(2) and pointed out that the right of preemption is not a right to the thing sold but a right to the offer of a thing about to be sold, this being the primary or inherent right, and that the preemptor has a secondary right or a remedial right to follow the thing sold. Reliance is placed on behalf of the appellants on this later decision and it is stressed that the preemptor 's remedial right is merely to follow the thing sold, namely, the very property which is the subject matter of the sale deed under preemption. The later decision on which reliance is placed does not in any manner affect the earlier decision where it was held that the right of preemption is an incident of property and attaches to the land. It is true, as held in the later decision, that ordinarily the right of the preemptor is to follow the property which is the subject matter of the sale deed. The question which, however arises in the present case is whether s.24 of the Act makes any difference to this ordinary position of the law of preemption. That section reads as follows: "A land owner or a tenant at will shall have the same right in the land allotted to him in pursuance of the scheme of consolidati on as he had in his original holding or tenancy as the case may be." Clearly the effect of this provision is to give to the land owner or a tenant at will the same right in the land which he acquires under the scheme of consolidation in lieu of that land which he had before the consolidation proceedings. He cannot get more (1) [1955]1 S.C.R 70, (2) ; 866 rights than he had before nor can be get any less rights. It is urged that section only preserves the rights and has nothing to do with obligations to which the land may be subject. We are of opinion that this is not so. When the section lays down that the land owner or a tenant at will shall have the same right in the land allotted to him in pursuance of the scheme of consolidation as he had in his original holding or tenancy, it clearly implies that obligations would also remain the same. If that were not so and if his obligations were to disappear he would acquire more right in the land allotted to him than he had in the original holding or tenancy. For example, if the land owner had only a life interest in the original holding he would get the same life interest in the land allotted to him and could not claim to be absolute owner of the land allotted in consolidation proceedings. Thus the obligation which attached to his ownership of his original holding (namely, that it was subject to all the disabilities of a limited owner) would also apply to the land allotted to him in consolidation proceedings. Therefore when section 24 speaks of the landowner or the tanant at will having the same right in the land allotted as he had in the original holding or tenancy, it brings in all the rights and obligations which were attached to his ownership or tenancy of the land originally held. It is in this background that the nature of the right of preemption as held in Audh Behari Singh 's case (1) assumes importance. In that case it was held that the law of pre emption imposes a limitation or disability upon the ownership of a property and that the benefit as well as the burden of the right of preemption run with the land. Therefore if the original holding of the landowner was subject to the disability of preemption the land allotted in lieu thereof will be equally subject to the same disability. This will however always be subject to the law of pre emption itself, and to the well settled principle of pre emption, namely, that the preemptor must have a right of preemption at the date of the sale, at the date of the suit and finally at the date of the decree. Section 24 when it says that the landowner or the tenant at will shall have the same right in the land allotted to him as he a in his original holding or tenancy, clearly preserves the obligation that may be on the land in the nature of a disability. The consequence therefore is that the ordinary law of preemption under which the preemptor has the right to follow the land which is the subject matter of the sale deed becomes expanded and the land allotted to the land owner or tenant at will in lieu of the land which may have been subject to preemption also becomes subject to preemption in the same way as the original holding or tenancy. So it follows that if the land allotted in lieu of the original holding or tenancy is preemptible under the law of pre emption and the right of preemption still exists on the three dates to which we have (1)[1955] 1 section C.R, 70. 867 already referred, the pre emptor would by virtue of s.24 be able to enforce his rights against land which may have been allotted to the vendee in lieu of the land which was actually the subject matter of sale. We are therefore of the opinion that the construction of section 24 by the High Court is correct and the plaintiffs respondents have a right by virtue of section 24 of the Act to preempt the land which was allotted to the appellants in lieu of the land which was the subject matter of the sale deed. It is however urged that section 25 of the Act specifically provides for rights with respect to a lease, mortgage or other encumbrance to attach to the land allotted in place of the original holdings, and that shows that no other rights were intended to survive. We are of opinion that there is no force in this argument. It was necessary to enact section 25 when dealing with leases, mortgages and encumbrances for without such a specific provision, a lease, mortgage or encumbrance which was on one piece of land could not in law attach to another piece of land. This however is very different from an incident of ownership of land e.g. liability to preemption which attaches to the land itself and continues to attach to the land allotted in lieu of the original holding or tenancy by section 24. The special provisions, therefore in section 25 do not negative the inference that obligations which attach to the right of ownership of the original holding or tenancy would continue to attach to the land allotted in lieu thereof in consolidation proceedings. This brings us to the subsidiary contention which was raised in the High Court, namely, that four of the vendees were allotted land in lieu both of what they owned from before and what they got under the sale deed in question. The High Court has held and we think rightly that there should be no difficulty in finding out how much of the land allotted pertains to the land which was the subject matter of the sale deed. Land is always valued for purposes of allotment during consolidation proceedings and it would not therefore be difficult to find out how much land was allotted Io these four vendees in place of the land which they got by the sale deed. Lastly it is urged that the form of the decree is incorrect. This submission is made on the basis of the following sentences in the judgment of the trial court: "It does not mean that the land is not distinguishable. It can be considered during execution at the time of delivering the possession of the land. " We have not permitted learned counsel to raise this point for the first time before us, as it was not raised in the High Court. We therefore reject this contention. The appeal fails and is hereby dismissed. Costs as per order dated 8 9 65. Appeal dismissed.

IN-Abs

The appellants purchased certain lands in the State of Punjab and the respondents filed a suit claiming a right of preemption thereon. Under a scheme of consolidation, however, the appellants had before the filing of the suit, been allotted some other lands in lieu of the lands purchased by them, and they contended that the right of pre emption claimed by the respondents did not extend to these lands. The trial court and the High Court decreed the respondents ' suit holding on the oasis of section 24 of the Patiala and East Punjab States Union Holdings (Consolidation and Prevention of Fragmentation) Act 5 of 2007 BK that it was open to pre emptor to follow the land which had been given to the vendees in consolidation proceedings in lieu of the land which was the subject matter of the sale deed. The appellants came to this Court by special leave. HELD : Section 24 when it says that the landowner or the tenant at will shall have the same right in the land allotted to him as he bad in his original holding or tenancy clearly preserves the obligation that may be on the land in the nature of a disability. The consequence therefore is that the ordinary law of pre emption under which the pre emptor his the right to follow the land which is the subject matter of the sale deed becomes expanded and the land allotted to the landlord and tenant at will in lieu of the land which may have been subject to pre emption also becomes subject to pre emption in the same way as the original holding or the tenancy. This inference is not negatived by the special provisions of section 25 in respect of leases and mortgages or other encumbrances. [866 G; 867 D E] Shri Audh Behari Singh vs Gajadhar Jaipuria, [1955] 1 S.C.R. 70, Bishan Singh vs Khazan Singh, ; relied on.

Appeal No. 891 of 1964 Appeal by special leave from the judgment and decree dated October 30, 1961 of the Allahabad High Court in Letters Patent Appeal No. 83 of 1951. N. C. Chatterjee, B. C. Mishra, B. R. G. K. Achar and M. V Goswami, for the appellant. Chaman Lal Pandhi and section L. Pandhi, for the respondents. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment and decree of tie Allahabad High Court. The appellant is a registered partnership carrying on business at Kanpur. It entered into an agreement in December 1948 with the VijiaLakshmi Sugar Mills Limited, Doiwala, District Dehra Dun (hereinafter referred to as the Mills) and was appointed sole selling agent of the Mills. According to the terms of the agreement, the appellant ,deposited a sum of Rs. 50,000/ as security for due performance of the contract, and this amount was to carry interest at the rate of Rs. 6/ per cent per annum to be paid by the Mills. In November 1949 an order was passed. winding up the Mills and this happened before the period of agency can* to an end. Consequent on the winding up of the Mills, the appellant made an application in September 1950 by which it prayed for refund of security deposit along with interest. It was also prayed that the Mills held the amount of deposit as trustee and in consequence the appellant was ,entitled to priority with respect to the amount of Rs. 50,000/ . In addition, there was a claim of Rs. 24,500/ with respect to commission. That claim was given up and we are now not concerned with it. The liquidators admitted that there had been an agreement as alleged by the appellant and that a sum of Rs. 50,000/ had been deposited with the Mills. But their case was that this amount was an 'Ordinary debt with respect to which the appellant could not claim any preference and thatt the appellant 's contention that the amount deposited was a kin 1 of trust with the Mills was not correct. The only question that had to be decided therefore was whether the amount of Rs. 50,000/ deposited as security for due performance of the contract of sole selling agency was in the nature of a trust which was entitled to preference. or was an ordinary, ,debt. 431 The learned Company Judge held on a construction of the agreement that the amount was an ordinary debt. He referred in this connection to the apparent conflict between the decisions of the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other but was of opinion that this conflict was largely illusory as the question whether the deposit in a particular case was in the nature of a trust or was an ordinary debt depended on the facts and circumstances of each case. He finally held that the deposit in question was not In the nature of a trust and, was not entitled to any preference on that ground. The appellant then went in appeal to, a Division Bench. The Division Bench upheld the view taken by the learned Company Judge and dismissed the appeal. The High Court having refused to grant a certificate, the appellant applied for an obtained special leave from this Court, and that is how the matter has come before US. The two main terms of the agreement, viz. Nos. 8 and 9 bet ween the appellant and the Mills which call for consideration in the present case are these: "(8) That the firm has deposited sum of Rs. 50,000/with the said Mill as a security for the due performance of the contract on their part, on which amount the Mill shall pay interest to the said firm at the. rate of 6 per cent per annum. "(9) That the Mill shall refund the said security deposit of Rs. 50,000/ with interest thereon at the rate on termination of the agency. In case he said amount is not refunded with interest thereon the firm shall be entitled to commission at the rates mentioned above as if agency has not terminated. In other words as long as security with interest is not refunded and commission due is not paid this agreement will not be terminated. " It may be mentioned that the agreement was for a period of one year which, as already indicated, had not expired before the winding up order was passed on November 8, 1949. It will be seen from the terms of the agreement already set out: that there was no stipulation that the amount of Rs. 50,000/ deposited as security would be kept as a separate fund by the Miffs and it would not use it for its own purposes. On the other hand,, it is clear that interest had to be paid and there was nothing in the agreement to prevent the Mills from using the money as its own so long as it paid interest on it. It is true that the money was to be re funded along with interest on the,termination of the agency, but cl. (9) further provided that in case the money was, not refunded after one year, the appellant would be entitled to commission as if 432 the agreement had not terminated. As the agreement itself puts it, it will remain alive even after the period of one year so long as the security with interest was not refunded and the commission due was not paid. The last words of cl. (9) of the agreement put the security deposit and the commission due on the same footing. It is because of this provision that the learned Company Judge held that as the security deposit and the commission due were put on the same footing and the commission could only be a debt, the security deposit in the circumstances of this agreement could not be treated on a higher footing. It seems to us that the view taken by the learned Company Judge so far as this agreement is concerned (which was upheld by the Division Bench) is correct. We may now refer to the apparent conflict between the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other, on this question. The representative cases on one side are: (i) Re: Alliance Bank. of Simla: Peter Donald Macpherson vs Dugald Mckechnie and others,(1) and (ii) In the matter of Travancore National and Quilon Bank Limited, Official Liquidators and other applicants (2). On the other side the cases are (i) In re: Manekji Petit Manufacturing Company, Limited(3) and (ii) Maheshwari Brothers vs Official Liquidators(4). The two Calcutta and Madras cases seem to take the view that where there is a deposit there is creation of some kind of trust even though the deposit may carry interest and the person with whom the deposit is made is entitled to use the money as his own. It may however be mentioned that the Calcutta case was with respect to provident fund of the employees of a bank which went into liquidation while the Madras case was with respect to security deposit by an employee of a bank for due performance of his duties. It may be added that such cases were later provided for specifically by the amendment of the Indian Companies Act (No. VII of 1913) which was made in 1936 and by which section 282 B was added to the Companies Act along with cl. (e) in section 230(1) of the same Act. Even so, these two cases make it clear that the proper approach to the question is to ask whether on the interpretation of the document, if there is one, or from proved or admitted facts and circumstances a trust is established or not. if a trust is established, a provision for payment of interest by the trustee does not destroy the character of the trust nor does the fact that the money is not segregated. The matter was again considered by the Calcutta High Court in Kshetra Mohan Das vs D. C. Basu(5) in connection with a deposit made by a sole, selling agent and the principle for deciding whether the deposit was in the nature of a trust or a loan was put thus:. (1) XXVIII (3) A.I.R. 1932 Bom. (2) (4) I.L.R. [1942] All.24. (5) I.L.R. 433 "If the security deposit of an employee or an agent of a company in the hands of such company can be regarded as impressed with trust or held in a fiduciary capacity company then such employee or agent is entitled the whole of the security deposit even after such goes to liquidation. . In the absence of or fiduciary relation the employee or the agent company in liquidation is merely a creditor of the and must share the assets pro rata with other There can in our opinion be no disagreement by such to get back company such trust of the company creditors. There can in our opinion be no disagreement with the principle so enunciated, and the conclusion whether the deposit is in the nature of a trust or a loan will depend upon the facts,and circumstances of each case, particularly on the terms of the agreement if there is one in writing. The difficulty however arises in the application of the principle to particular cases. But the Calcutta and Madras High courts seem to lean to the view that where there is a security deposit it will generally be in the nature of a trust. This brings us to the cases on the other side. The Bombay High Court in Manekji Petit 's case(1) was 'also considering the case of a deposit by an agent. It considered the terms of the agreement which provided for Rs. 6/ per cent interest. Ordinarily the company was entitled to use the deposit as it thought fit, but there was a provision in the agreement that in the event of the company raising a loan secured by debentures of the company or by mortgaging company 's property, the moneys deposited by the agent were to be forthwith invested in Government securities and to be earmarked in some manner satisfactory to the agent. It was held on the basis of this last clause in the agreement that there could be no trust till the contingency provided therein came to pass. In that case that contingency had not come to pass and the moneys were mixed with the moneys of the company and used by it. The Bombay High Court held that upto that stage there was no trust created. In Maheshwarl Brothers(2), the question arose whether the security deposited by the agents for the fulfillment of their obligation under the agreement was impressed with trust. The Allahabad High Court considered the agreement and came to the conclusion that as interest was provided and further as the company was entitled to use the deposit as its own and lastly because a floating charge was intended to be created on the assets of the company which failed for want of registration, the deposit was not in, the nature of a trust. Thus absence of segregation and presence of interest coupled particularly with a,provision for a floating charge which had failed for want of registration inclined the court to hold that the deposit was not in the nature Of a trust. (1) A.I.R. 1932 Bom. Court./67 14 (2) I.L.R. [1942] All. 242. 434 It will thus be seen that the view of the learned Company Judge that the conflict between the Calcutta and Madras High Courts on one side and the Allahabad and Bombay High Courts on the other is more apparent than real is borne out by the fact that in each case the court considered the agreement to decide whether on the terms thereof and facts and circumstances of the case the deposit was impressed with a trust, though it must be admitted that the conclusion reached was not the same. We are of opinion that the question whether the security deposit in a particular case can be said to be impressed with a trust will have to be decided on the basis of he terms of the agreement and the facts and circumstances of each case, without any leaning one way or the other on the fact that the 'money was given as a security deposit. If the terms of the agreement, if it is in writing, clearly indicate that the deposit was in the nature of a trust, the court will come to that conclusion in spite of the fact that interest is provided for in the agreement. But where the terms of the agreement do not clearly indicate a trust, the court will have to consider the facts and circumstances of each case along with the terms to decide whether in fact something in the nature of a trust was impressed on the security deposit. In such a case the fact whether segregation was provided for or not would be one circumstance to be taken into consideration. Where segregation is provided for the court would lean towards the deposit being in the nature of a trust. But where segregation is not provided for and the deposit is permitted to be mixed up with the funds of the person with whom the deposit is made, the court may come to the conclusion that anything in the nature of trust was not intended, for generally speaking in view of section 51 of the Indian Trust Act, (No. 2 of 1882) a trustee cannot use or deal with the trust property for his own profit or for any other purpose unconnected with the trust. It is true that where there is a clear trust and the trust deed if any provides that the trustee may use the trust property as he likes, the fact that the trustee can mix the trust property with his own may not make any difference. But where there is no clear indication that a security deposit was impressed with a trust, absence of segregation would be a circumstance against there being a trust. Another circumstance which may have to be taken into account in a case where the agreement does not indicate clearly that the security deposit is impressed with a trust is the payment of interest. Where there is no payment of interest provided for an inference may be readily drawn that the deposit was in the nature of a trust. But where the person with whom the deposit is made is to pay interest it may be possible to infer that payment of interest is a pointer towards there being no trust. Further any other provision in the agreement and any other circumstance as to the manner in 435 which the deposit was dealt with may also have to be taken into account in coming to the conclusion whether the security deposit in a particular case was impressed with a trust or not. We may now refer to some English and. American cases in this connection. In Gee vs Liddell(1) the facts and circumstances of the case were considered and it was held on those facts and circumstances that there was a trust. In that cast pound 2,000 had been left as trust by a will, but the executor who was ', the son of the testator said that his father had intended to bequeath pound 3,000 and the question was whether the further pound. 1,000 was also a trust. On the facts and circumstances of that case it was held that as the amount bequeathed (namely, pound 2,000) was certainly a trust, the addition of pound 1,000 to it by the executor would be of the same kind and would be equally impressed with trust. That case also shows that where a trust can be inferred clearly a provision for payment of interest would be immaterial. In re: Hallett 's Estate, Knatchbull vs Hallett(2) it was held that if a person held money in a fiduciary character but mixed it up with his own account, the person for whom the money was held could follow it and had a charge on the balance in the bankers ' hands. This case again shows that the main question that courts have to decide in such cases is whether on the facts and circumstances a fiduciary relationship is established. If it is established, then the fact that the money was mixed with the trustee 's money may not make any difference. In re: Hallett & Co.,(3) segregation was the test used for the purpose of deciding whether there was trust or not. In Frank M. McKey vs Maurcie Paradise,(4) the question arose with reference to a claim of an employee welfare association against the employer and it was held that without segregating any money as due to the association there could be no trust. This case shows the significance of segregation in arriving at the inference whether there was a trust. A consideration of these English and American cases also in our opinion shows that the first question in each case where the court is dealing with a security deposit is to ask whether on the agreement in writing, if any, and on the facts and circumstances of the case and. conduct of the parties it can be said that the security deposit was unpressed with some kind of a trust. If that can be said then the question whether interest was provided for and whether the trustee could mix the deposit money with his own money would not be of importance and would not take away the character of the deposit being impressed with a trust. The mere fact that money was deposited as a security is not sufficient to come to the conclusion (1) ; (3) (2) (1879 80) XIII Ch. D. 696. (4) ; 436 that it must be treated as trust money. The court will have to look to all the terms of the agreement if in writing and to the facts and circumstances of the case and to the conduct of the parties before coming to the conclusion whether with a trust. If a trust can clearly be spelled out from the agreement that ends the matter. spelled out clearly the fact there was for and the fact that interest was to be to show that the deposit was not impressed trust particularly where the person with whom the made could mix it with his own money and could use it In such a case the inference would be that the relationship the parties was that of a debtor and creditor. Further these circumstances if there is any other term which a security deposit was impressed the terms of But if the trust cannot be no segregation provided paid would go a long way with the character of a deposit was for himself. between besides suggests one kind of relationship rather than the other that will also have to be taken into account. Illustrations of this will be found both in the Bombay case (i.e. in Manekji 's case(1) and in the Allahabad case (i.e., Maheshwari Brothers ' case(1). In the Bombay case besides absence of segregation and presence of interest there was a further fact that in certain circumstances segregation had been provided for. The court was entitled to take that fact into consideration and hold that the deposit was not impressed with trust till segregation took place. In the Allahabad case a floating charge was created which failed for want of registration, and that circumstance was also used to show that the relationship between the parties was that of a debtor and creditor and not that of a trustee and beneficiary. Let us now apply these principles to the facts of the present case. The facts show that there was no segregation in this case and the Mills could mix the security deposit with its own money and use it for its own purpose. Further because the Mills could use the money for its own purpose, it had to pay interest. In addition to these two circumstances which would incline one to the view that the relationship was that of a debtor and creditor, there is the further fact that cl. (9) of the agreement provides that even though the period fixed in the agreement would continue if the security deposit mission due is not paid. We agree Judge that the last words in cl.(9) commission due on a par. The commission other than a debt; the security deposit That is a further indication that the case was that of a debtor and creditor are of opinion that the High Court was commission due is not paid. The agreement is not refunded and the commission with the learned Company make the security deposit and due can be nothing is put on a par with that relationship in the resent In the circumstances we right in its view as to the nature of the security deposit in the present case. The appeal therefore fails and is hereby dismissed with costs. G.C. Appeal dismissed. (1) A.LR. (2) LL.R. [1942] All. 242.

IN-Abs

The appellant firm was appointed sole selling agent of a sugar manufacturing company and deposited Rs. 50,000 as security for due performance of the contract; this amount was to carry interest at 6 per cent per annum. There was no restriction on the use of the said deposit by the, company. According to cl. (9) of the agreement the security and interest were to be refunded at the termination of the agency; in default of such payment the appellant firm was entitled to a commission as if agency had not terminated. The clause further said that "as long as security with interest is not refunded and commission due is not paid this agreement will not be terminated. " The company was ordered to be wound up before the period of agency came to an end. Consequent on the winding up the appellant made an application praying for refund of its security deposit along with interest. It was contended that as the company held the amount of deposit as a trustee the appellant was entitled to priority among the creditors. On behalf of the liquidators it was denied that the amount deposited was in the nature of a trust entitled to preference over other debts. The company judge held that he amount was an ordinary debt. The Division Bench of the High Court also decided against the appellant. In appeal by special leave to this ' Court. HELD:The deposit did not amount to a trust. The question whether the security deposit in a particular case can be said to be impressed with a trust will have to be decided on the basis of the terms of the agreement and the facts and circumstances of each case, without any leaning one way or the other on the fact that the money was given as a., security deposit. [434 C] If a trust can clearly be spelled out from the terms of the agreement that ends the matter. But if the trust cannot be spelled out clearly the fact that there was no segregation provided for, and the fact that interest was paid, would go a long way to show that the deposit was not impressed ' with the character of a trust particularly when the person with whom the deposit was made could mix it with his own money and could use it for himself. In such a case the inference would be that the relationship between the parties was that of a debtor and creditor. Further besides these circumstances, if there is any other term which suggests one kind of ' f relationship rather than the other that will also have to be taken into account. [436 B C] In the present case the company was free to use the money for its own purpose and had to pay interest on it. Further, in cl. (9) of the agreement the security was put on a par with the commission which was nothing but a debt. The courts below had therefore rightly treated the security deposit as an ordinary debt. [436 F] Peter Donald Macpherson vs Dugald Mckechine and Ors. XXVIII In the matter of Travancore National and 430 Quilon Bank Limited, Official Liquidators and Another Applicants, , In re Manekji Petit Manufacturing Company Ltd. A.I.R. 1932 Bom. 31 1, Maheshwari Brothers vs Official Liquidators, I.L.R. [1942] All. 242, Keshetra Mohan Das vs D. C. Basu, I.L.R. Gee vs Liddell, ; , Knatchbull vs Hallett, (1879 80) XIII Ch. D. 696. In re Hallett & Co., and Frank M.Mckey vs Maurcie Paradise, ; , referred to.

Appeal No. 490 of 1965. Appeal from the judgment and decree dated April 30, 1964 of the Gujarat High Court in Special Civil Application No. 39 of 1963. section T. Desai, P. B. Patwari, and O. C. Mathur, for the appellants. Respondent No. 2 appeared in person. H. R. Gokhale, section P. Nayyar for R. H. Dhebar, for respondent No. 3. The Judgment of the Court, was delivered by Bhargava, J. The appellants in this appeal are the Ahmedabad Mill owners Association, of which all the cotton mills in Ahmedabad local area are members, including the second appellant, the Nagd Mills Ltd. The third respondent, the Textile Labour Association, Bhadra, Ahmedabad (hereinafter referred to as "the Union") represents the workmen employed in the various mills which are members of the first appellant Association. Under Standing Orders ,Settled under the Bombay Industrial Relations Act, 1946 (Bombay Act XI of 1947) (hereinafter referred to as "the Act"), conditions of service, including those relating to leave, were prescribed in view of clause 6 of Schedule 1 of the Act. These Standing Orders were settled at a time when this clause 6 of the First Schedule to the Act read as follows: "Conditions, Procedure and Authority to grant leave." Subsequently, Schedule 1 was amended so as to read as: "Procedure and authority to grant leave," and simultaneously, clause 11 was added in Schedule 11 which read as: "All matters pertaining to leave and holidays, other than those specified in items 6 and 7 in Schedule 1. " Consequent to this amendment in the Schedules, matters pertaining to leave could, thereafter, no longer be prescribed by Standing Orders, which were confined to matters contained in Schedule Iorly. By a letter dated 21st April,, 1961, the Union gave notice to the first appellant, desiring that changes be made as specified in the Annexure to this letter. Those changes sought in the Annexure related to grant of privilege leave, sick leave, casual leave, and pay in lieu of privilege leave to all workers employed in the local textile industry in the same manner in which, under the earlier Standing 439 Orders, the clerical and some other staff were granted these benefits. This notice was given by the Union under section 42(2) of the Act. The dispute was not amicably settled, and consequently, the matter was referred for conciliation. The conciliation proceedings also failed, and, thereupon, the Conciliator, on 23rd June, 1961, issued a certificate that he had come to the conclusion from the discussions which the parties had before him that the dispute ' was not capable of being settled by conciliation. Thereupon, by the letter dated 29th July, 1961, the Union referred the dispute to the Industrial Court under section 73A of the Act. Before the Industrial Court, various pleas were taken on behalf of the appellants, and some of these pleas were the subject matter of preliminary issues which were decided before the Industrial Court could proceed to give the final Award. Though a number of such preliminary issues were decided by the Industrial Court, we are only concerned with two such issues, as they were the only two matters pressed before us on behalf of the appellants in this appeal. One issue raised was that section 73A of the Act was ultra vires Article 14 of the Constitution as it granted a right to the Union to make a reference to the Industrial Court, while no such right was granted to the employers. The second point urged was that the Act did not apply to the cotton mills which were members of the first appellant Association, because it had not been made applicable to them under section 2(4) of the Act, while it could not become applicable to them under section 2(3) of the Act, because the Bombay Industrial Disputes Act, 1938, was not in force in these industries immediately before the commencement of the Act. Both these points were decided by the Industrial Court against the appellants. Consequently, the appellants moved a petition under Articles 226 and 227 of the Constitution in the High Court of Gujarat. The High Court rejected these preliminary pleas raised on behalf of the appellants and upheld the view of the Industrial Court that the reference was competent. The appellants have now come up to this Court under certificate granted by the High Court against this order of the High Court. As we have mentioned earlier, the appellants had raised a number of pleas which were the subject matter of preliminary issues before the Industrial Court and several ' of them were the subject matter of the petition before the High Court also. In this Court, however, reliance has been placed only on the two pleas, mentioned above. The first plea is based on the language of section 73A of the Act which, on the face of it, grants the right to a Union only to make a reference of an industrial dispute for arbitration to the Industrial Court and does not grant any such right to an employer. It was, however, urged on behalf of the respondents that, in fact, this section was introduced in the Act for the very purpose of placing the employers and the Union on terms of equality, and that, instead of creating any discrimination between them, this section, on the 440 contrary, was necessary to satisfy the requirements of article 14 of the Constitution. To appreciate this submission made on behalf of the respon dents, certain features of the Act have to be examined and their implication taken into account. Section 73A grants a right of making a reference of an industrial dispute for arbitration to the Industrial Court only to "a registered union which is a representative of employees and which is also an approved union. " Further, under the proviso to that section, the reference cannot be made if the employer offers in writing before the Conciliator to submit the dispute to arbitration under the Act and the Union refuses to agree to it. Two other conditions attached are that the dispute must first be submitted to the Conciliator and can be referred for arbitration to the Industrial Court only when the Conciliator certifies that the dispute is not capable of being settled by conciliation, and that no such dispute is to be referred if, under any provisions of the Act, it is required to be referred to the Labour Court for its decision. It is the effect of all these detailed provisions, laying down limitations for reference under section 73A, that requires examination. Under section 12 of the Act, the Registrar has to maintain registers of unions registered by him and a list of approved unions. A Union is entitled to registration only if, during the whole of the period of three calendar months immediately preceding the calendar month in which it so applies, the membership of the Union has been not less than 15 per cent of the total number of employees employed in the industry, when it can be registered as a Representative Union. In case there is no such Representative Union, a Union can be also registered either as a Qualified Union or as a Primary Union. But it is clear from the language of section 73A that only a Representative Union has been given the right under that section. Further, section 73A requires that the Union must also be an approved Union, which means that the Union must comply with the requirements of section 23 of the Act and have its name entered in the approved list. Amongst the conditions required to be complied with by a Union to be brought. on the, approved list, the most important is one which lays down that its rules must provide that every industrial dispute, in which a settlement is not reached by conciliation, shall be offered to be submitted to arbitration, and that arbitration under Chapter XI shall not be refused by it in any dispute. It will thus be seen that the right of making reference under section 73A is only granted to a Union which is registered as a Representative Union and, being on approved list, has already made rules laying down that the Union shall offer every industrial dispute for submission to arbitration and will also not refuse arbitration of any dispute if the employers offer to submit the dispute for arbitration under Chapter XI of the Act. Section 66 makes provision for submission of an industrial dispute for arbitration. Sub section (1) of that section gives the power to make a 441 reference to any person chosen by agreement by the disputing parties, while sub s ' (2) gives the option that the submission of the dispute may be made to the arbitration of a Labour Court or the Industrial Court. Further, sub section (5) of section 58 requires that before closing the conciliation proceedings before him, the Conciliator shall ascertain from the parties whether they are willing to submit the dispute to. arbitration. These disputes, to which these provisions apply, can only be those not relating to matters in Schedules I and III, because, under sub section (1) of section 42, and employer is given the right to give a notice of change in respect of any industrial matter specified in Schedule 11, while, under sub section (2) of section 42, the employee is granted a similar '. right to give a notice if a change is desired in respect of an industrial matter not specified in Schedule I or Ill. In respect of matters covered by Schedules I and 111, provision is made in sub section (4) of section 42 which lays down that such disputes are to be decided by making an application to the Labour Court; and, as we have indicated earlier, section 73A does not apply to disputes which are required to be referred to a Labour Court. The result of all these provisions is that section 73A of the Act comes into play only in cases where the dispute relates to matters not contained in Schedules I and III, the dispute is not resolved by private agreement or by conciliation, and there is no submission of the dispute to arbitration under section 66 of the Act. It is in this light that the provision which has to be made by the Union in its rules under section 23(1)(v) assumes importance. Whenever a dispute is raised either by an employer or by a Union which can ultimately take advantage of section 73A; of the Act, the Union must invariably offer that the dispute be submitted to arbitration, and, in the alternative, if the employer offers to submit the dispute to arbitration, the Union must not refuse it. The result is that in respect of any such dispute, the Union has no option but to offer or agree to arbitration of the dispute under section 66 of the Act. On the other hand, there is no such limitation placed on the employer. There is no provision in the Act making it compulsory for the employer either to submit the dispute to arbitration or to agree to the submission of the dispute to arbitration when offered by the Union. Consequently, whenever any industrial dispute arises, the employer can always ensure arbitration of that dispute by making an offer to the Union under section 66 of the Act, whereupon the Union is compelled to agree to submission of the dispute to arbitration. Clearly, therefore, there was no need to make any Provision empowering the employer to make a reference of the dispute for arbitration to the Industrial Court. On the other hand, if a Union wants a dispute to be settled and even offers that the dispute be submitted to arbitration under section 66 of the Act, the employer can refuse, whereupon the Union would be left without any remedy. It is obvious that section 73A was enacted to fill this gap and place the Union on parity with the 442 employer so as to enable the Union to have any dispute settled by arbitration even when the employer does not agree to arbitration. These provisions granting. the rights to the employers and the Union are, of course, in addition to, and without prejudice to, the provisions contained in sections 72 and 73 of the Act, under which the State Government is given the power to refer any industrial dispute between employees and employees, and employers and employees to the arbitration of a Labour Court or the Industrial Court on the basis of a report made by the Labour Officer, or even otherwise. These provisions in sections 72 and 73 leave the discretion with the State Government to make a reference in appropriate cases, so that neither the employers nor the employees can, as of right, obtain a reference under these sections from the State Government. So far as they are concerned, the provisions contained in the Act require that the disputes between them must first go before a Conciliator for conciliation, and subsequently, either party can exercise its option of offering the submission of the dispute to arbitration when such an enquiry is made from them by the Conciliator under section 58(5) of the Act. Thereafter, if the offer is by an employer, the Union, under its rules, is bound to accept the submission, so that whenever an employer desires that a dispute be decided by arbitration, the Union is compelled to agree to it. In the reverse case, when a Union wants submission of the dispute to arbitration, the employer has discretion not to agree, and then only can the Union resort to section 73A and refer the dispute to the Industrial Court. This section, in these circumstances did not at all require that the right granted to the Union should also be granted to the employer. In this connection, two other points were urged by learned ,counsel for the appellants before us. One was that, under section 66 of the Act, the offer to submit the dispute for arbitration can be to any private individual also, and this did not give the right to the employer to have it decided by an Industrial Court so as to be equated with the right of the Union to have it decided by the Industrial Court. We do not think that the provision contained in section 66 of the Act places the employer under any such handicap. Under sub section (2) of section 66, the employer can straight away offer that the dispute be referred to the arbitration of the Industrial Court, and thereupon 'the Union would be debarred from refusing to agree to that submission. In any case, even if the Union were to refuse to agree to it, the State Government will determine under s.71 of the Act whether the dispute should be referred to the arbitration of the Labour Court or the Industrial Court and refer it to that body. The mere fact that the Union may not agree to .he offer of the employer to submit the dispute for arbitration to the Industrial Court whereupon the State Government can direct that the arbitration be made by a Labour Court or the Industrial Court does not, in our opinion, place the employer in any disadvantageous position, and we do not 443 think, therefore, that there was any requirement that the employer should also be given a right corresponding to the right of the Union under section 13A of the Act. The second point urged by the learned counsel was that if the dispute is referred to the Industrial Court by a submission under section 66(2) of the Act, that Court will proceed to give its award in accordance with the provisions of the in view of section 68 of the Act, while if the dispute is referred at the instance of a Union under s.73A of the Act, the Industrial Court will deal with it as a .judicial Tribunal and will give its decision in accordance with the regulations made under section 92 of the Act. We consider that this submission is based on a misapprehension of the scope of section 92 of the Act. The rules and regulations made by the Industrial Court under section 92 are to govern the procedure of the Industrial Court in all proceedings before it irrespective of the fact whether those proceedings come up before it by a reference made by the State Government under. s, 72 or section 73 of the Act, or by a reference made by the Union under section 73A of the Act, or by a joint submission made by the parties under section 66(2) of the Act. Section 68 of the Act is in very general terms, and lays down that proceedings in arbitration under the whole of the Chapter XI are to be in accordance with the provisions of the , in. so far as they may be applicable. The provisions of the have, therefore, been made applicable not only to arbitrations by submission under section 66 of the Act, but also to arbitrations on references made by the State Government under section 72 or section 73 or a reference made by a Union under section 73A of the Act. If the submission or the reference happens to be to the Industrial Court, that Court must follow the and regulations made under s.92, and the provisions of the will only apply insofar as they may be applicable in view of those rules and regulations. Consequently, whether a dispute is referred for arbitration to the Industrial Court by submission under section 66(2) of the Act, or by a reference under section 73A of the Act, that Court has to proceed in the same identical manner and the parties seeking the reference obtain the award in both cases under identical circumstances. In this connection, the regulations made by the Industrial Court, known as the Industrial Court Regulations, 1947 were brought to our notice. A perusal of these regulations shows that, in the matter of procedure of the Industrial Court for dealing with arbitrations made by submissions under section 66, or by references under other sections, there is uniformity and no distinction is made between references under these different sections. The Industrial Court is required to proceed in the same manner in all cases and to give its decision under section 87 of the Act. It is significant that section 87, defining the duties of the Industrial Court, uses identical language in respect of all arbitrations by the Industrial Court; under clause (v) the duty 444 of the Industrial Court is laid down to be to decide industrial disputes referred to it in accordance with submissions registered under section 66 which provide for such reference to the Industrial Court, and under clause (vi), the duty of the Industrial Court is similarly defined to be to decide industrial disputes referred to it under sections 71, 72, 73 or 73A. The ' Industrial Court, in all cases, is required to give a decision on the dispute, and hence, in all these proceedings, the parties have identical rights in the matter of procedure of the Industrial Court of, hearing and of obtaining a decision from it. This makes it clear that section 73A of the Act was required only to fill up a gap which would have existed, leaving no remedy to a Union to obtain arbitration of a dispute if the employers did not agree to that arbitration, and that no similar right was required to be conferred on the employers who, under the other provisions of the Act, could always obtain a reference of the dispute to arbitration by making a submission under section 66 which the Union was bound to agree to. The first point raised on behalf of the appellants has, therefore, no force and section 73A of the Act cannot be held to be invalid. On the second question, it has rightly been urged on behalf of the appellants that the Act was not applied by the State Government to the industries run by the appellants, whether generally or by specifying any local area by issue of a notification under sub section (4) of section 2 of the Act. On behalf of the respondents, reliance was placed on sub section (3) of section 2 for urging that the Act became applicable to the industries run by the appellants, because the Bombay Industrial Disputes Act, 1938 (hereinafter referred to as "the Bombay Act of 1938") was in force in these industries immediately before the commencement of the Act. Admittedly, the Bombay Act of 1938 was made applicable to the entire cotton industry throughout the Province of Bombay by various notifications issued in the year 1939 under that Act by the then Provincial Government. Ahmedabad, where the industries of the appellants are situated, was then a part of the Province of Bombay. The Bombay Act of 1938 was never entirely repealed. However, the Central Government enacted the Industrial Disputes Act No. 14 of 1947 which received the assent of the Governor General on 17th March, 1947, a id was brought into force from April 1, 1947. This Act did not, in terms, repeal the Bombay Act of 1938, but the contention on behalf of the appellants is that the Bombay Act of 1938 and the Central both covered the same field of industrial disputes, and consequently, it should be held that the Bombay Act of 1938 became void on the ground of repugnancy with the under sub section (1) of section 107 of the Government of India Act, 1935. It was urged that the Bombay Act of 1938 as well as the were both enacted under the power conferred on 445 the Bombay Legislature and the Central Legislature under item 29 of of the Concurrent List III of the Seventh Schedule to the Government of India Act, 1935. The principle relied upon by the appellants is that, if two pieces of legislation cover the same field and each one of them contains a complete code making detailed provision for all aspects of the subject matter of the legislation, repugnancy must be held to arise, even though one Act may not, in terms, repeal the other and may not correspond section by section with the other. For this principle, reliance was placed on the tests enumerated by Nicholas in his Australian Constitution, 2nd Edition, p. 303, to determine inconsistency or repugnancy between a State law and a Commonwealth law in Australia. The three tests were enumerated as follows: "(1) There may be inconsistency in the actual terms of the competing statutes; (2) Though there may be no direct conflict, a State law may be inoperative because the Commonwealth law, or the award of the Commonwealth Court, is intended to be a complete exhaustive code; and (3) Even in the absence of intention, a conflict may arise when both State and Commonwealth seek to exercise their powers over the same subject matter. " This principle was deduced from the decisions in Ex Parte McLean(1) and the State of Victoria and Others 'V. The Commonwealth of Australia and OtherS(2). Reliance was also placed on decisions of this Court in Zaverbhai Amaidas vs The State of Bombay(3), Ch. Tika Ramji & Ors. vs The state of Uttar Pradesh & Ors.(4) and Deep Chand vs The State of Uttar Pradesh and Others(5). In the last of these cases, after quoting from Nicholas, this Court held: 'Repugnancy between two statutes may thus be ascertained on the basis of the following three principles: (1) Whether there is direct conflict between the two provisions; (2) Whether Parliament intended to lay down an exhaustive code in respect of the subject matter replacing the Act of the State Legislature; and (3) Whether the law made by Parliament and the law made by the State Legislature occupy the same field." (1) ; (3) [1955] 1 S.C.R. 799. (5) (1959] Supp. 2 S.C.R. 8. (2) ; (4) (1956] 1 section C. R. 393. 446 Relying on these principles, it has been urged that the intended to lay down an exhaustive code in respect of settlement of all industrial disputes, and since the Bombay Act of 1938 was also on the same subject, it must be presumed that the two statutes are repugnant, so that the Bombay Act of 1938 became void with effect from 1st April, 1947 when the came into force. It has, however, been rightly pointed out by the High Court in the judgment under appeal that the Bombay Act of 1938 did not confine itself entirely to the subject of settlement of industrial disputes. Chapter V of that Act, containing sections 26 to 33 deals with a matter which is not covered by the at all. These sections of the Bombay Act of 1938 lay. down the procedure for prescribing Standing Orders regulating the relations between an employer and his employees, and for making changes therein. The prescribing of the Standing Orders and making of changes in them may not involve any industrial dispute at all. In fact, at the first stage, when Standing Orders are prescribed, no question would arise of any industrial dispute requiring settlement. The , did not contain any provisions at all dealing with this subject of prescribing Standing Orders and making changes therein. Consequently, even if the submission made on behalf of the appellants be accepted that the , is an exhaustive code dealing with the question of, settlement of industrial disputes, only those provisions of the Bombay Act of 1938 can be held to be repugnant and void on account of the repugnancy which also dealt with the same subject matter of settlement of industrial disputes. The provisions contained in Chapter V of that Act, which had nothing to do with settlement of industrial disputes, could not, therefore, be affected by the enactment of the , and hence, the enforcement of the did not in any way affect the applicability of the provisions of Chapter V of the Bombay Act of 1938 to the industry run by the appellants. To the extent that Bombay Act of 1938 contained these provisions in Chapter V, that Act, therefore, continued in force and also continued to apply to the industries now in question. It was also urged that the did not, similarly, make any provision for arbitration of industrial disputes and, consequently, the provisions of the Bombay Act of 1938, relating to arbitration of industrial disputes, could not be held to have become invalid. It is not necessary to examine this further question in view of our decision that at 1 east the provisions of Chapter V of the Bombay Act of 1938 continued in force. That Act did not stand repealed as a whole; at best, only a part of that Act can be held to have ceased to be effective because of the repugnancy with the . But, while another part of that Act continued to be in force, the Bombay Act of 1938 also continued to be applicable to the cotton industry in Ahmedabad 447 with which we are concerned. When the Bombay Industrial Relations Act, 1946 came into force on 29th September, 1947, therefore, the Bombay Act of 1938 was applicable to these industries, and consequently, under sub section (3) of section 2 of the Act, the Act became applicable to the industry ' of the appellants and did not require a notification under sub section (4) of section 2 to make it applicable. This point was also therefore, rightly decided against the appellants, and the judgment of the High Court must be upheld. The appeal is, therefore, dismissed with costs.

IN-Abs

A dispute regarding amendment of rules relating to privilege leave etc. arose between the Ahmedabad Millowners ' Association and the union of workmen employed in the textile industry. After conceliation proceedings were declared by the Conciliator to have failed, the union referred the dispute to the Industrial Court under section 73A of the Bombay Industrial Relations Act, 1946. The Industrial Court decided against the Millowners who filed a writ petition in the ' High Court and thereafter appealed to this Court. It was urged on behalf of the appellants that (i) section 73A was violative of article 14 of the Constitution since it gave a right to the workers union to make a reference but not to the employer (ii) the Act had not been made applicable to the cotton industry at Ahmedabad under section 2(4) and it was not applicable under section 2(3) because the Bombay Industrial Disputes Act, 1938 was repugnant to Central) and must be deemed to have been repealed. HELD:(i) Section 73A was not violative of article 14. Whenever any industrial dispute arises the employer can always ensure arbitration of that dispute by making an offer to the union under section 66 of the Act whereupon a registered and approved union is compelled to agree to submission of the dispute to arbitration. Clearly therefore there was no need to make any Provision empowering the employer to make a reference of the dispute for arbitration to the Industrial Court. On the other hand if a Union wants a dispute to be settled and even offers that the dispute be submitted to arbitration under section 66 of the Act, the employer can refuse, whereupon the union would be left without any remedy. It is obvious that section 73A was enacted to fill this gap and place the union on with the employer so as to enable the union to have any dispute = by arbitration even when the employer does not agree to arbitration. This section, in these circumstances did not at all require that the right granted to the union should also be granted to the employer. [441 G H] There was no difference in the procedure to be followed by the Industrial Court in a reference under section 73A and that to be followed when the reference is under section 66. In both the procedure under section 92 had to be followed. [443 E F] (ii)Chapter V of the Bombay Industrial Disputes Act 1938 was not repugnant to the Central Act of 1947 and therefore continued to be in force, and consequently under section 2(3) of the Bombay Industrial Relations Act 1947 the latter Act became applicable to the industry of the appellants and did not require a notification under section 2(4) to make it applicable [446 G H; 447 A B] 438 Ex Parte McLean, ; Victoria and Others vs The Commonwealth of Australia and Others, ; , Zaverbhai Amaidas vs The State of Bombay, [1955] 1 S.C.R. 799, Ch. Tika Ramji & Ors. vs The State of Uttar Pradesh & Ors., and Deep Chand vs The State of Uttar Pradesh and Others, [1959] Supp. 2 S.C.R. 8.

Appeal No. 806 of 1964. Appeal by special leave from the judgment and decree dated July 13, 1962, of the Madras High Court in Appeal No. 347 of 1958. 449 C. B. Agarwala, B. Dutta, T. section Krishnaswamy Iyenr, P. L. Meyyappan and J. B. Dadachanji, for the appellant. A. K. Sen and R. Ganapathji Iyer, for respondent. No. 1. K. R. Chaudhuri and K. Rajendra Chaudhury, for respondent No. 2. The Judgment of the Court was delivered by Wanchoo, J. This is an appeal by special leave against the judgment of the Madras High Court. The facts are not now in dispute and may be briefly narrated. A suit was brought by Nagappa Chettiar, respondent No. 1 (hereinafter referred to as the respondent) against Villiammi Achi appellant and Nachiammai Achi now dead and represented by her legal representative. The respondent claimed two thirds share of the properties left by his father, Pallaniappa and prayed for a decree for separate possession of that share after partition. The facts on which this claim was based are not now in dispute and are these. The respondent is the adopted son of Pallaniappa. having been adopted in 1941. The appellant is the widow of Pallaniappa and Nachiammai Achi was Pallaniappa 's mother. Pallaniappa 's father also named Nagappa had considerable properties. This Nagappa made a will on June 10, 1934 by which after making certain dis positions, in favour of certain persons including his own wife he gave the residue of his property absolutely to Pallaniappa and appointed him as the executor of the will. In one place the will stated that all the property except a small part was the exclusive and self acquired property of the testator while at the end the testator said that he had made the will with the full consent of his son Pallaniappa. After Nagappa 's death in July 1934 Pallaniappa obtained probate of the will and after providing for the legacies to others as indicated therein came into possession of the residue of the property. In 1941 the respondent was adopted by Pallaniappa. In the trial court there was a dispute between the parties whether Pallaniappa and his father were members of a joint Hindu family and whether properties left by Pallaniappa 's father were the joint family properties of both. But it has been found that all the properties left by Pallaniappa 's father were joint family properties of Pallaniappa and his father which Pallaniappa could acquire by survivorship on his father 's death. This finding was upheld by the High Court and is not now in dispute. We have to proceed on the basis that even though Pallaniappa 's father said in the will that the properties, except a small part, were his self acquired properties,. in fact all the properties mentioned in the will of Pallaniappa 's, father were joint family properties of Pallaniappa and his father. The case of the appellant was that even though the properties left by Pallaniappa 's father were joint family properties which MISup. CI/67 15 450 Pallaniappa could acquire by survivorship, the conduct of Pallaniappa in obtaining probate of the will and carrying out its terms amounted to election and thereafter Pallaniappa became absolute owner of the residue of the properties bequeathed to him by the will. The consequence of this was that when Pallaniappa adopted the respondent in 1941 long after he had become the absolute owner of the properties, the respondent acquired no interest in the properties left by his grand father by virtue of the adoption. Pallaniappa died. on September 16, 1956 after the Hindu Succession Act, (No. 30 of 1956) came into force. As there was no joint family property of Pallaniappa and the respondent at the time of Pallaniappa 's ,death, the respondent could not claim half the property on the ground that it was joint family property of himself and Pallaniappa, as Pallaniappa 's election to take under the will of his father would bind the respondent also. Reliance in this connection was placed ,on section 180 of the Indian Succession Act, (No. 39 of 1925) also. The reply on behalf of the respondent to this contention was two fold. In the first place, it was urged that there was no question of election even by Pallaniappa in this case and section 180 of the Indian Succession Act would not apply. It was further urged that even assuming that there could be election by Pallaniappa the respondent would not be bound by that election as the property left by his grandfather was joint family property and the respondent would acquire interest therein as soon ;is he was adopted by Pallaniappa, even though Pallaniappa might have been the sole co parcener for sometime i. e. between 1934 and 1941. This interest of the respondent in the joint family property was independent of his father Pallaniappa and even though Pallaniappa might be bound by any election that he might have made the respondent would not be so bound and would be entitled to treat the property as joint family property in the hands of, Pallaniappa in which he would acquire interest on being adopted. In the second place the respondent 's case was that in any case after his adoption Pallaniappa threw the ,entire property into the family hotch pot and therefore it became joint family property by blending. Two questions therefore arose for consideration in this case namely (i) whether there was election by Pallaniappa and if so whether the respondent would be bound by it, and (ii) whether Pallaniappa threw the entire property into the family hotch pot after adoption of the respondent and therefore it became joint family property in any case. The trial court accepted the case put forward on behalf of the respondent and decreed the suit passing a preliminary decree giving two thirds share to the respondent and one sixth each to the appellant,, and the mother of Pallaniappa. The appellant then appealed to the High Court. The High Court dismissed the appeal. On the question of election, the 451 High Court held that as Pallaniappa and his father were members of a joint Hindu family and as the entire property left by Pallanippa 's father was joint family property, Pallaniappa had interest in the residue as a survivor and in consequence there was no question of election by Pallaniappa for all the property he got by will would have come to him by survivorship. In such a case there could be no question of election, for Pallaniappa had title to the property irrespective of the will. The High Court also held that in any case the claim of the respondent as a member of the joint family was not under his father but independent of him and therefore the respondent would not be bound , even if Pallaniappa were held to have made an election. The High Court also found in favour of the respondent on the question whether the property was thrown into family hotch pot after the adoption of the respondent and in the result dismissed the appeal. The High Court having refused to grant a certificate to appeal to this Court, the appellant applied for and obtained special leave from this Court; and that is how the matter has come before us. The same two questions, as indicated above, arise for consi deration in this appeal. We shall first consider the question of election in the background of the fact that the entire property left by Pallaniappa 's father was joint family property of himself and Pallaniappa and that Pallaniappa had interest in that property as a member of a joint Hindu family. Section 180 of the Indian Succession Act which enunciates the doctrine of election as known to English law for this country is in these terms : "Where a person, by his will professes to dispose of something which he has no right to dispose of, the person to whom the thing belongs shall elect either to confirm such disposition or to dissent from it, and, in the latter case, he shall give up any benefits which may have been provided for him by the will. " It is urged on behalf of the appellant that section 180 would apply to the facts of the present case for the property willed by Pallaniappa 's father was not his which he could will away as it was joint family property in which Pallaniappa who was the residuary legatee had also equal interest. Therefore Pallaniappa had either to confirm the disposition or dissent from it, and his conduct showed that he had confirmed it for he took out probate. Therefore it must be held that after probate was taken out the residue became the absolute property of Pallaniappa and lost its character as joint Hindu family property. Now it is clear from section 180 that after the legatee elects to dissent from the will he must give up any benefits provided for him by the will. This shows that election under section 180 would only arise 452 where the legatee derives some benefit from the will to which he would not be entitled except for the will. In such a case he has to elect whether to confirm the will or dissent from it. But where there is no question of the legatee deriving any benefit from the will to which he would not be entitled except for the will, the fact that he confirms the will and accepts what the will provides would not amount to election, for he would have in any case got what the will gave him. Thus election only arises where the legatee has to choose between his own property which might have been willed away to somebody else and the property which belongs to the testator and which the testator has given to the legatee by the will. The matter is brought out in Halsbury 's Laws of England, Third Edition, Vol. 14, at p. 588, para 1091 in the following words "Where a testator by his will purports to give property to A which in fact belongs to B and at the same time out of his own property confers, benefits on B . in such cir cumstances B is not allowed to take the full benefit given him by the will unless he is prepared to carry into effect the whole of the testator 's dispositions. He is accordingly put to his election to take either under the instrument or against it. If he elects to take under the will he is bound and may be ordered to convoy his own property to A; if he elects to take against the will and to keep his own property, and so disappoints A, then, he cannot take any benefits under the will without compensating A out of such benefits to the extent of the value of the property of which A is disappointed. " Following this principle the High Court held that as the property which the will gave to Pallaniappa would in any case have come to him as a member of the joint family, there was no question of election even by Pallaniappa in this case. This view appears to us to be correct. But even assuming that there was some kind of election by Pallaniappa we cannot see how the nature of the property left by Pallaniappa 's father would change merely because Pallaniappa 's father made a will giving the residue absolutely to Pallaniappa and Pallaniappa took out probate of the will. The property being joint family property Pallaniappa 's father was not entitled to will it away and his making a will would make no difference to the nature of the property when it came into the hands of Pallaniappa. A father cannot turn joint family property into absolute property of his son by merely making a will, thus depriving sons of the son who might be born thereafter of their right in the joint family property. It is well settled that the share which a co sharer obtains on partition of ancestral property is ancestral property as regards his male issues. They take an interest in it by birth whether 453 they are in existence at the time of partition or are born subsequently : [see Hindu Law by Mulla, Thirteenth Edition p. 249, para 223 (2) (4)]. If that is so and the character of the ancestral property does not change so far as sons are concerned even after partition, we fail to see how that character can change merely because the father makes a will by which he gives the residue of the joint family property (after making certain bequests) to the son. A father in a Mitakshara family has a very limited right to make a will and Pallaniappa 's father could not make the will disposing of the entire joint family property, though he gave the residue to his son. We are therefore of opinion,that merely because Pallanappa 's father made the will and Pallaniappa probably as a dutiful son took out probate and carried out the wishes of his father, the nature of the property could not change and it will be joint family property in the hands of Pallaniappa so far as his male issues are concerned. Further it is equally well settled that under the Mitakshara law each son upon his birth takes an interest equal to that of his father in ancestral property, whether it be movable or immovable. It is very important to note that the right which the son takes at his birth in the ancestral property is wholly independent of his father. He does not claim through the father. " (see Mulla 's Hindu Law, Thirteenth Edition, p. 251, para 224). It follows therefore that the character of the property did not change in this case because of the will of Pallaniappa 's father and it would still be joint family property in the hands of Pallaniappa so far as his male issue was concerned. Further as soon as the respondent was adopted he acquired interest in the joint family property in the hands of Pallaniappa and this interest of his was independent of his father Pallaniappa. In such circumstances even if Pallaniappa could be said to have made an election there can be no question of the respondent being bound by that election, for he is not claiming through his father. In this view of the matter, it is unnecessary to consider the question whether Pallaniappa, after the, respondent 's adoption, threw the property into. the family hotch pot. The appeal therefore fails and is hereby dismissed with costs. Y.P. Appeals dismissed.

IN-Abs

A Hindu died after making a will in respect of certain joint family properties and appointed his son as the executor. The son obtained pro. bate of the will, provided for the legacies indicated therein and came into possession of the residue of the property. Thereafter, he adopted the plaintiff. The adoptive father died after the Hindu Succession Act came into force and the plaintiff filed the suit claiming two thirds share of the properties left by his father. The defendants (viz., the widow and mother Of the plaintiffs adoptive father) contended that the conduct of the plaintiff 's adoptive father in obtaining the probate of the will and carrying out its terms amounted to an election and therefore the father became absolute owner of the residue of the properties bequeathed to him by the will, and as the election to take under the will, would bind the plaintiff also he could not claim half the property on the ground that it was joint family property of himself and his father. The trial Court decreed the suit, which in appeal was upheld by the High Court. The defendants appealed to this Court. HELD:The appeal must be dismissed. The character of the property did not change because of the will and it would still be joint family property in the hands of the plaintiff 's father as far as his male issue was concerned. Further, as soon as the plaintiff was adopted he acquired interest in the joint family property in the hands of his adoptive father and this interest of his was independent of that of his father. In such circumstances even if his father could be said to have made an election there could be no question of the plaintiff being bound by that election, for he was not claiming through his father. [453 C, E F] Election under section 180 of the Indian Succession Act, would only arise where the legate derives some benefit from the will to which he would not be entitled except for the will. In such a case he has to elect whether to confirm the will or dissent from it. But where there is no question of the legate deriving any benefit from the will to which he would not be entitled except for the will the fact at he confirms the will and accepts what the will provides would not account to election, for he would have in any case got what the will gave him. Thus election only arises where the legate has to choose between his own property which might have been testator and which the testator has given to the legate by the will. [451 H 452 C]

minal Appeals Nos. 65 and 243 of 1964. Appeals by special leave from the judgment and order dated September 18, 1963 of the Andhra Pradesh High Court in Criminal Appeal No. 385 of 1962. section C. Agarwala, for the appellant (in Cr. A. No. 65/64) and respondent No. 2 (in Cr. A. No. 243/64). K. R. Chaudhuri, for the appellant (in Cr. A. No. 243/64) and respondent No. 1 (in Cr. A. No. 65/64). T. V.R. Tatachari, for respondent No. 2 (in Cr. A. No. 65/64) and respondent No. 1 (in Cr. A. No. 243/64). The Judgment of the Court was delivered by Hidayatullah, J. These are two appeals, one (Criminal Appeal No. 243 of 1964) by one Purna Chandra Rao who has been convicted under section 342, Indian Penal Code by the High Court of Andhra Pradesh but in lieu of the sentence the High Court released him under section 562(1 A) of the Criminal Procedure Code after due admonition, and the other (Criminal Appeal No, 65 of 1964) by one A. K. Mallu against the judgment of the Andhra Pradesh High Court releasing the respondent (who is the appellant 310 in the other appeal) after admonition under section 562 (1 A) of the Code of Criminal Procedure. The two appeals have been respectively filed by the complainant who had lodged a complaint against him on which the conviction resulted, and by the accused. In so far as the appeal of the accused is concerned, we have recorded an order separately which shows that Mr. K. R. Chaudhary, advocate of this Court appeared before us and told us that he would like to withdraw from the case. As the accused is not represented before us, there is no alternative but to dismiss his appeal in default. As regards the other appeal, Mr. section C. Aggarwal contends that section 562 (I A) is not applicable to an offence under section 342 of the Indian Penal Code. His reasons are: that section 562 (1 A) is concerned with offences concerning property and offences not so concerned cannot be subjected to treatment under that section. Section 562 (1 A) reads as follows: "In any case in which a person is convicted of theft, theft in a building, dishonest misappropriation, cheating or any offence under the Indian Penal Code punishable with not more than two years ' imprisonment and no previous conviction is proved against him the Court before whom he is so convicted may, if it thinks fit, having regard to the age, character, antecedents or physical or mental condition of the offender and to the trivial nature of the offence or any extenuating circumstances under which the offence was committed, instead of sentencing him to any punishment, release him after due admonition. " Mr. Aggarwala contends that the Code has mentioned several offences by description, such as theft, theft in building, dishonest misappropriation and cheating which are offences connected with property and, therefore, words "any offence under the Indian Penal Code" which follow, must be given an interpretation, confining them to those sections of the Penal Code where property is either directly or indirectly involved. In our opinion, this submission is not correct and Mr. Aggarwala is not right in reading the section as he contends. The offences which are earlier mentioned in the section are punishable with imprisonment of more than two years and, therefore, it was necessary to mention them so as to include them in addition to offences under the Indian Penal Code punishable with not more than two years ' imprisonment. The words "any offence under the Indian Penal Code" therefore cannot be read ejusdem generis with the offences which are mentioned earlier. This clause stands by itself and indicates that all offences punishable with not more than two years ' imprisonment are also capable of 311 being dealt with under s.562 (1 A). Offences against property are all included in Ch. 17 of the Indian Penal Code and if it was desired to limit the operation of section 562(1 A) to offences against property, it would have been the easiest thing to have mentioned the Seventeenth Chapter of the Code. For these reasons, we do not accept the argument. As a result, both the appeals fail and are dismissed. V.P.S. Appeals dismissed.

IN-Abs

The accused was convicted of the offence of wrongful confinement under section 342 I.P.C., and was released after due admonition under section 562(1 A), Criminal Procedure Code. On the question whether the latter section is concerned only with offences relating to property and was therefore not applicable in the present case, HELD : The clause "any offence under the Indian Penal Code punishable with not more than two years ' imprisonment" in section 562(1 A) Cr.P.C., stands by itself and indicates that all offences punishable with not more than two years ' imprisonment are capable of being dealt with under the section. The words "any offence under the Indian Penal Code" cannot be read ejusdem generis with the offences of theft etc. mentioned earlier in the section. Those offences had to be specifically mentioned so as to be included in the section, because, they are offences punishable with im prisonment of more than two years. [310 G H]

Appeal No. 1065 of 1965. Appeal by special leave from the judgment and order dated February 27, 1963 of the Mysore High Court in Writ Petition No. 1096 of 1961. M. K. Ramamurthi, for the appellants. O. P. Malhotra, P. C. Bhathari and O. C. Mathur, for respondent No. 1. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the Mysore High Court in Writ Petition No. 1096 of 1961 by which the High Court allowed the Writ Petition and quashed the impugned award dated June 30, 1961, made by the Labour Court, Bangalore, in Reference No. 51 of 1960. In order to appreciate the points raised before us it is necessary to give the relevant facts. The second appellant before us, R. Mahalingam, was engaged as a Foreman in the workshop of Sri Rangavilas Motors (P) Ltd., the first respondent, hereinafter referred to as the Company, in the month of April, 1956. By an order dated January 21, 1960, Mahalingam was transferred from Bangalore to Krishnagiri where the head office of the Company is situated. Mahalingam entered into correspondence with the Company alleging that according to the conditions of his employment he could not be transferred from Bangalore to Krishnagiri. Ultimately, the Company framed charges against Mahalingam and removed him from service by an order dated April 7, 1960. On April 8, 1960, Mahalingam complained in writing to the Assistant Commissioner of Labour who was functioning as the Conciliation Officer at Bangalore. Later on, one Selvaraj took part in the conciliation proceedings on the authority of the resolution dated July 21, 1960, passed at the General Body 530 meeting of Krishnagiri Motor Workers ' Union, among whose members 112 out of 170 were employees of the Company. Selvaraj filed a statement of claims before the Conciliation Officer on September 1, 1960. The Conciliation Officer reported to the Government that the conciliation proceedings had failed, and thereupon the State Government by its order dated November 1, 1960, made in exercise of the powers conferred by cl. (c) of sub section (1) of section 10 of the (XIV of 1947) hereinafter referred to as the Act referred for adjudication by the Labour Court, Bangalore, the following points in dispute : " 1. Whether the order of the management of Sri Rangavilas Motor (Private) Ltd., in transferring the workman Sri It. Mahalingam, Foreman, from their branch at Fort, Bangalore, to Krishnagiri, is illegal or unjustified. If so, is the workman entitled to reinstatement in Bangalore Branch with benefits of back wages or to any other relief ? 2. Is Sri R. Mahalingam, Foreman, entitled to arrears of increments and overtime wages, if so, what is the amount he is entitled to ? Selvaraj, inter alia, prayed in his statement of claims, filed on behalf of Mahalingam, as follows ". it is prayed that the Hon 'ble Court may be pleased to direct the second party (the Company) to cause the payment of overtime wages due, increments due (as mentioned in the annexure to this statement) as also the arrears of wages from 1 2 60 to 15 3 1960 and order payment of back wages with effect from the date of termination of service by setting aside the said order of termination and to reinstate the workman with continuity of service. " The Company, in reply, contended that the reference was limited only to the question of transfer, and hence no question of reinstatement or back wages could be adjudicated upon. Further, the Company contended that the reference was bad because it did not fall under any of the items enumerated in the Second Schedule to the Act. It was also contended that the dispute was an individual dispute. One further objection was raised to the effect that the reference should have been made to the National Tribunal and not to the Labour Court The Labour Court overruled all the objections regarding jurisdiction raised by the Company and made the award holding that both the transfer as well as the removal from service of Mahalingam were illegal and that he Was entitled to overtime wages as well as 531 increments. The Labour Court made the following further direction: "The workman Sri Mahalingam should be reinstated in ore branch with full back wages in continuity of the past service and with same emoluments. The second party should also pay the arrears of Rs. 4629/27 towards the overtime wages and as well as the increments due. (sic.) As stated above, the Company filed writ petition challenging the award. The High Court formulated the points which arose out of the arguments addressed before it thus: 1. Whether the dispute referred by the State Government to the Labour Court is an industrial dispute ? 2. If it is such a dispute (a) Whether the State Government of Mysore was not the appropriate Government to make the reference ? and (b) Whether the reference should have been made by the Central Government to a National Tribunal 3. Whether any dispute relating to the termination of the service of the fourth respondent is included in the order of reference ? 4. Whether the points of dispute actually referred fall within the scope of the items enumerated in the second Schedule of the and are therefore within the competence of the Labour Court ? 5. Whether on the question of transfer there was any dispute at all for adjudication On the first point the High Court, agreeing with the Labour Court, held that on the facts what was originally an individual grievance of Mahalingam did assume at the time the reference was made by the Government the character of an industrial dispute. On the first part of the second point, the High Court held that the State Government of Mysore was the appropriate Government to make the reference. On the second par ' it held that it was for the Central Government to decide to refer or not to refer the dispute but the State Government which is the appropriate Government in relation to the dispute does not lose its power of making 'a reference. On the third point the High Court held that the question of legality or otherwise of the Company 's action in removing Mahalingam from service was not the subject matter of reference to the M2 Sup. CI/67 5 532 Labour Court and its award to the extent it dealt with that topic was without jurisdiction. On the fourth point, the High Court held that the first proviso to cl. '(d) to section 10 (1) of the Act did not apply and that the dispute relating to increments and overtime wages was beyond the jurisdiction of the Labour 'Court and could not have been validly referred to it. It also held that the dispute regarding transfer was included in the expression "rules of discipline" enumerated as item 8 of the Third Schedule, and was therefore pot within the, competence of the Labour Court to adjudicate upon in view of these findings the Award was quashed. Regarding point No. 5 formulated by it, the High Court observed that it was. unnecessary to examine that point, but as the matter had been, argued at some length, the High Court stated its opinion thereon. In its opinion, there was no scope far making the order of transfer the subject matter of any dispute. The same points that were formulated by the High Court were . argued before us. Mr. Ramamurti, appearing on behalf of the appellants, urged regarding point No. 3 that on its true interpretation the order of reference was quite clear and that the question of termination of services of Mahalingam was included in the order of reference. We have already reproduced the order of reference and, in our opinion, there is force in what Mr. Ramamurti urges It seems to us that the order of reference is quite clear if regard is: had to the words "reinstatement in Bangalore branch with benefits of back wages. " If the words with benefits of back wages" considered,and with respect,the High Court did not consider them, the High Court 's conclusion might possibly be justified. It seems to us that by the time the reference tame to be made everybody knew that Mahalingam had been removed from service. The words "with benefits of back wages" coup led with the word "reinstatement" are appropriate only to a case of removal and not to a case of transfer. On the facts of this case it is quite clear that the contention of Mahalingam was that the transfer was illegal and if the transfer as illegal, his removal from service would fall automatically with the finding that the transfer was illegal, and one of the appropriate reliefs that would be given would be reinstatement in the Bangalore Branch with benefits of back wales. In our view it is because of the above considerations that the word "removal" was not expressly mentioned. In this connection the High Court relied on the provisions of section 10(4) of the Act which reads as under "10(4) Where in an order referring an industrial dispute to a Labour Court, Tribunal or National Tribunal under this section or in a subsequent order, the appropriate Government has specified the 'points of dispute for adjudication, the Labour Court or the Tribunal or the National 533 Tribunal, as the case may be, shall confine its adjudication to those points and matters inidental thereto. " We are unable to appreciate how this sub section has any re levance to the question of construction of the order of reference made by the Government. It is true that he points in dispute must be specified, but the point with which we are concerned is, whether as a matter of construction the point in dispute has been specified or not, and according to us the dispute regarding removal has been specified. Regarding the fourth point, with respect, the High Court misinterpreted the first proviso to cl. (d) to s."10(1). This proviso reads as follows "Provided that where the dispute relates to any matter specified in the Third Schedule and is not likely to affect more than one hundred workmen, the appropriate Government may, if it so thinks fit, make the reference to a Labour Court under clause (c) The High Court negative the, plea of Mahalingam on two grounds: First that there is nothing either in the order of reference. or in any, other material placed before it to indicate that the Government have applied their mind to the applicability of the proviso to the facts of this case or have actually acted pursuant to the proviso in making the references to the Labour Court and secondly, that there can be no doubt that more than one hundred. per sons are interested in, and are therefore likely to be affected by the dispute in question. In our view it is not necessary that the order of reference should expressly state that it is because of the proviso that a reference is, being made to the Labour Court, and if the reference can be justified on the facts, there is nothing in the Act which makes such a reference invalid. The second reason given by the High Court, with respect is erroneous because it seems to have equated, the words "interested ' and ",affected". It would be noticed that section 10(1A) uses both the words "interested" or "affected". Section 10(5) also uses both the words "interested" or "affected". It seems to us that there is a difference in the import of the words " interested" or, "affected". The Union which sponsors the cause of an individual workman is interested in the dispute but the workmen who are the members of the Union are not necessarily affected by the dispute. The dispute in this case was regarding the validity of the transfer and consequent removal of the appellant. The other workmen would naturally be interested in the dispute but they are not affected by this dispute. In our opinion, the High Court erred in holding that the first proviso to section 10(1)(d) did not apply to the facts of this case. In view of our decision on this point, it is not necessary to go into the question whether the points in dispute fell within the second or the third Schedule to the Act. 534 Therefore, the appeal must succeed unless the Company can satisfy us that the points decided against it should have been decided in its favour. This takes us to the other points. Mr. O. P. Malhotra strongly urges that the State Government of Mysore was not the appropriate Government to make the reference. He .says that although the dispute started at Bangalore, the resolution sponsoring this dispute was passed in Krishnagiri, and,, that the proper test to be applied in the case of individual disputes is where the dispute has been sponsored. It seems to us that on the facts of this case it is clear that there was a separate establishment at 'Bangalore and Mahalingam was working there. There were a number of other workmen working in this place. The order of transfer, it is true, was made in Krishnagiri at the head office, but the order was to operate on a workman working in Bangalore. In our view the High Court was right in holding that the proper question to raise is : Where did the dispute arise ? Ordinarily, if there is a separate establishment and the workman is working in that establishment, the dispute would arise at that place. As the High Court observed, there should clearly be 'some nexus between the dispute and the territory of the State and not necessarily between the territory of the State and the industry concerning which the dispute arose. This Court in Indian Cable Co. Ltd. vs Its Workmen(1) held as follows: "The Act contained no provisions bearing on this question, which must, consequently, be decided on the principles governing the jurisdiction of Courts to entertain actions or proceedings. Dealing with a similar question under the provisions of the Bombay Industrial Relations Act, 1946, Chagla, C. J., observed in Lalbhai Tricumlal Mills Ltd. vs Vin and Others , 558 'But What we are concerned with to decide is: where did the dispute substantially arise ? Now, the Act does not deal with the cause of action, nor does it indicate what factors will confer jurisdiction upon the labour court. But applying the well known tests of jurisdiction, a Court, or Tribunal would have jurisdiction if the parties reside within jurisdiction or if the subject matter of the dispute substantially arises within jurisdiction. ' In our opinion, those principles are applicable for deciding which of the States has jurisdiction to make a reference under section 10 of the Act". Applying the above principles to the facts of this case it is quite. clear that the subject matter of the dispute in this case substantially arose within the jurisdiction of the Mysore Government. (1) [1962] Supp. 3 S.C.R. 589 : 535 Mr. Malhotra further urges that the High Court erred in holding that it was an industrial dispute. We see no force in this contention. The High Court rightly observed that once the findings of fact recorded by the Labour; Court are accepted, there is no doubt in law that in the circumstances of this case, what was originally an individual grievance of Mahalingam did assume, at the time the reference was made by the Government, the character of an industrial dispute. Mr. Malhotra urges that the finding of the Labour Court that the transfer was illegal was perverse. It is not necessary to go into this question because once it is held that there is an agreement between the Company and Mahalingam that he could not be transferred from Bangalore, the transfer would be bad. The Labour Court had observed that one of the terms of agreement was that the Company had agreed not to transfer Mahalingam to any place out of Bangalore, for a period of ten years; the Company had transferred Mahalingam from Bangalore to the head office at Krishnagiri and this action of the Company was in contravention of the terms of the agreement. Then Mr. Malhotra tried to urge the fifth point formulated by the High Court. This point was not taken before the Labour Court and we did not allow him to raise this point. ' In the result the appeal is allowed, judgment of the High Court set aside and the Award of the Labour Court restored. The appellant will have his costs here and in the High Court.

IN-Abs

The second appellant was a workman in the workshop of the first respondent dent company any in its Bangalore branch in the Mysore State. The head,office of the Company at Krishnagiri, in the Madras State, transferred him to Krishnagiri, contrary to the agreement that he would not be transferred .from Bangalore for ten years. On the workman raising objections, the Company removed him from service. The Krishnagiri Motor Workers ' Union, a majority of whose members numbering more than one hundred were employees of the Company, took up the workman 's grievance, and the Government of Mysore referred the industrial dispute to the Labour Court under section 10(1) (c) of the . One of the questions referred was : whether the order of transfer was illegal and if so" Whether the workman was entitled to "reinstatement in the Bangalore branch with benefits of back wages". The Labour Court ordered the reinstatement of the workman in the Bangalore branch. The Company challenged the award by a writ petition in the High Court. The High Court while holding that the Mysore Government was the appropriate Government to make the reference, quashed the award on the grounds : (1) that the legality of the removal of the workman was not the subject matter of reference, and (2) that the reference to the Labour Court could not be justified under section 10(1)(c), because the dispute fell within the Third and not the Second Schedule to the Act; nor under the first proviso to section 10(1)(d), because, the Government did not act under that proviso, and because, more than one hundred persons were interested in and therefore likely to be affected by the dispute. In appeal to this Court, the Company sought to support the judgment of the High Court also on the ground that the Mysore Government was not the appropriate Government to make the reference. HELD : (1) The legality of the termination of the service of the workman wag included in the order of reference. [532 D E] The words "with benefit of back wages" coupled with the word "reinstatement" are appropriate only to a case of removal. On the facts of the case, the transfer of the workman was illegal and so, his removal from service should be set aside and be should be reinstated with benefits of 'back wages. [532 F G] (2) The reference to the Labour Court was valid under the first proviso to section 10(1) (d). [533 H] (a) High Court misinterpreted the proviso by equating the two ,words interested and affected. The members of the Union which sponsored the cause of the workman were interested in the dispute, but they would not necessarily be affected by the dispute. [533 F G] 529 (b) It is not necessary that the order of reference should expressly state that it was because of the proviso that the reference was being made to the Labour Court. If it could be justified on the facts, there is nothing in the Act which makes such a reference invalid. [533 E F] (3) The Mysore Government was the appropriate Government to make the reference, because, the subject matter of the, dispute substantially arose within the jurisdiction of the Mysore Government. [534 H] The proper question to raise is : where did the dispute arise and not where was the dispute sponsored : that is, whether there is a nexus between the dispute and the territory of the State making the reference. Ordinarily if there is a separate establishment and the workman is working in that establishment, the dispute would arise at that place. [534 A E] Indian Cable Co. Ltd. vs Its Workmen, [1962] Supp. 3 S.C.R. 589,followed.

Appeal No. 634 of 1965. Appeal by special leave from the Award (Part 11) dated April 23, 1964 of the Industrial Tribunal, Maharashtra, Bombay in Reference (IT) No. 271 of 1962. H. R. Gokhale and I N. Shroff, for the appellant. K. K. Singhvi, R. section Kulkarni, section C. Agarwala and D. P. Singh, for the respondents. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal against the Award, April 23, 1964, of the Maharashtra Industrial Tribunal, Bombay (Mr. Meher) in reference (IT) 271 of 1962. The Award was given in a dispute between the Kamani Employees Union, Bombay and the Kamani Metals & Alloys Ltd. The Company is the appellant before us. The reference was occasioned by a demand raised by the Union on February 25, 1960 in relation to wage scales and classifications, dearness allowance, production bonus, permanency for daily rated workmen and grades and scales of pay, dearness allowance and abolition of marriage clause for monthly paid employees. At first a reference was made to a Conciliation Board by the Government on September 8, 1962. The conciliation was frustrated for some reasons and on December 14, 1962, the Bombay Government acting under section 10(1)(d) of the referred the dispute to the Tribunal for adjudication. By the Award now under appeal, some points were decided in favour of the Company and some others in favour of the work men. The workmen have not appealed and the Company has also confined this appeal to some of the points decided against it. We are concerned with a Company which is carrying on the business of melting and manufacturing all kinds of rolled products of non ferrous metals and alloys, copper and copper based alloys, such as sheets, strips, coils etc. According to the Company the process of manufacture, unlike the general engineering industry, involves only the melting of the non ferrous metals and casting them into suitable slabs for the subsequent processes of hot and cold rolling to alter their shape, size and metallurgical properties. The product so wrought serves as a base raw,. material for making products such as automobiles, telephones, radios and other electrical gadgets, etc. The Company claims that it cannot be described as a general engineering industry. The main contentions in this appeal concern the revision of wages and monthly pays and the fixing of wage scales and time scales in respect thereof, respectively, and the increase in dearness allowance by adopting a new system of calculation. The Company 466 also complains that the Award has been given retrospective operation entailing heavy burden upon it. In support of the above contentions the Company states that its financial capacity does not bear the revision either of the wages and pays on the one hand or the dearness allowance on the other. It submits that the Tribunal in revising the wages, pays and ' the dearness allowance has followed wrong principles and ignored those laid down by this Court. of the argument in respects of wages to daily rated workmen and pays to monthly rated workmen is common and it will not be necessary to refer to the argument twice over in the course of this judgment. This is the first revision of wages and the dearness allowance in this Company during the last 20 years. The wage scales and the dearness allowance were fixed unilaterally to start with. The minimum basic wage was fixed at Rs. 30 per month or Rs. 1.16 per day which was the minimum settled by the Bombay Textile Standardization Award and the First Central Pay Commission for Government servants in or about 1950. The Tribunal has raised the minimum wage to Rs. 1.35 per day, which is equivalent to a wage of Rs. 35 per month. The maxima have also been raised proportionately. Similarly,, in the case of monthly rated workmen the minimum monthly ' salary, which was Rs. 60 for the lowest grade clerk, has been raised to Rs. 85/ and the maximum has been increased in almost the same proportion. The Company contends that this increase is based upon wrong principles inasmuch as the wages and pays in this company have been compared not only with the companies operating non ferrous metals in the same way but with general engineering concerns and has taken an irrelevant factor, namely, the yield from incentive bonus into consideration, has made wrong grades and unnecessary adjustment in making fitments without taking into account the financial burden thus involved and the capacity of the Company to bear it. We shall consider these submissions. In dealing with these contentions we shall begin by considering one contention which, if accepted$ will cut at the very toot of the case for revision of wages. It has, however, no merit. The submission is that there is no change 'of circumstances justifying a revision of wages and pay scales or dearness allowance. It can hardly be maintained that wages fixed so far back do not need revision, when, as every one knows, commodity prices have soared high, the general level of wages has gone up and in some industries there have been two or three revisions already and in some others Wage Boards have been appointed to revise or fix wages. We can take judicial notice of these facts. In this Company no revision has taken place and the demand is, therefore,. not unjustified. Before we deal with the other contentions it is necessary to make a few preliminary observations about the principles which 467 are to be followed. In questions of this type it is first desirable to consider what amount is necessary to maintain and even improve the workers ' standard of living, how wages of the workers concerned compare with those paid to workers of similar grade and skill by other employers in similar or other industries in the region and what wages the establishment or industry can afford to pay. These are the fundamental principles which have to be borne in mind. The first, however, is a general inquiry into the structure of wages which it may not be necessary to examine elaborately each time because that inquiry is generally made independently of ' individual cases. The data is usually compiled by labour conferences and experts. The other two matters, of course, require attention. Fixation of a wage structure is always a delicate task because a balance has to be struck between the demands of social justice which requires that the workmen should receive their proper share of the national income which they help to produce with a view to improving their standard of living, and the depletion which every increase in wages makes in the profits as this tends to divert capital from industry into other channels thought to be more profitable. The task is not rendered any the easier because conditions vary from region to region, industry to industry and establishment to establishment. To cope with these differences certain principles on which wages are fixed have been stated from time to time by this Court. Broadly speaking the first principle is that there is a minimum wage which, in any event, must be paid, irrespective of the tent of profits, the financial condition of the establishment or the availability of workmen on lower wages. , This minimum wage is independent of the kind of industry and applies to all alike big or small. It sets the lowest limit below which wages cannot be allowed to sink in all humanity. The second principle is that wages must be fair, that is to say, sufficiently high to provide a standard family with food, shelter, clothing, medical care and education of children appropriate to the workman but not at a rate exceeding his wage earning capacity in the class of establishment to which he belongs. A fair wage is thus related to the earning capacity and the workload. It ' must, however, be realised that 'fair wage ' is not 'living wage ' by which is meant a wage which is sufficient to provide not only the essentials above mentioned but a fair measure of frugal comfort with an ability to provide for old age and evil days. Fair wage lies between the minimum wage,which must be paid in any event, and the living wage, which is the goal. As time passes and prices rise, even the fair wage fixed for the time being tends to sag downwards and then a revision is necessary. To a certain extent the disparity is made up by the additional payment of dearness allowance. This allowance is given to compensate for the rise in the cost of living. But as it is 468 not advisable to have a 100%. neutralisation test it lead to inflation, the dearness allowance is often a little less than 100% neutralisation. In course of time even the addition of the dearness allowance does not sufficiently make up the gap between wages and cost of living and a revision of wages and/or dearness allowance then becomes necessary. This revision is done on certain principles. These principles have been stated in more than one case of this Court. The Company, however, relies upon Novex Dry Cleaners vs Its Workmen(1). The principles laid down in that case have been accurately summarized in the head note thus : industry to bear the burden of the said wage scale is a very relevant and very important factor. Before comparing the establishment in question with other establishments engaged in the same trade in the region, it would be obviously necessary for the industrial tribunal to compare the establishments in respect of their standing, the extent of the labour force employed by them, the extent of their respective customers and what is more important, a comparative study should be made of the profits and losses incurred by them for some years before the date of the award. It is well known that in fixing the wage structure on a fair basis ; an attempt is generally made in assessing the additional liability imposed on the employer by the new wage structure and trying to anticipate whether the employer would be able to meet it for a reasonably long period in future. Where the award simply fixed the wage scales on the assumption that the establishment in question was comparable to the other two establishments in the same region without considering the aspects mentioned above, it must be set aside. In the consequence, the industrial tribunal was directed to reconsider the question of fixation of wage scales in the light of the principles mentioned supra. The Company contends that many of the matters here stated have not been considered and the Award being defective for that reason deserves to be set aside. This is not a proper approach. The observations no doubt lay down the principal guide lines but they are not intended to operate with the rigidity of a statutory enactment. The Court has indicated what lines of inquiry are likely to lead to the discovery of correct data for the fixation of fair wages in the sense explained above. In this task all the relevant consi derations must enter but fruitless inquiries into matters of no parti (1) 469 cular importance to a case are hardly to be insisted upon because rather than prove of assistance, they might well frustrate the very object in view. Each case requires to be considered on its own facts. In the case before us, all relevant circumstances have, in our opinion, entered the determination, and it has not been shown to us that any other circumstance could or should have been considered. In fact the argument was that the tribunal considered some irrelevant things and this has vitiated the finding. We shall. now consider the specific objections. The Company has a capital of Rs. 40,00,000. Its sales in 1957 58 to 1961 62 increased from Rs. 1,81,18,873 to Rs. 2,31,50,485 and its profits in 1962 63 were of the order of Rs. 28 lakhs, excluding Rs. 51 lakhs for depreciation and Rs. 2 lakhs for managing agency commission. The burden of the increased wage bill will not be more than 1/10th of its net profits, to say nothing of some other savings by way of reduction of income tax. The tribunal held that the burden could be borne and we agree. One part of the inquiry, namely, the capacity to pay the increased wage bill was satisfied. The next part of the inquiry involved the application of the principle of industry cum region. This principle is that fixation or revision of scales of wages, pays or dearness allowance must not be out of tune with the wages etc. ;prevalent in the industry or the region. This is always desirable so that unfair competition may not result between an establishment and another and diversity in wages in the region may not lead to industrial unrest. In attempting to compare one unit with another care must be taken that units differently placed or circumstanced are not considered as guides, without making adequate allowance for the differences. The same is true when the regional level of wages are considered and compared. In general words, comparable units may be compared but not units which are dissimilar. While disparity in wages in industrial concerns similarly placed leads to discontent, attempting to level up wages without making sufficient allowances for differences, leads to hardships. It is complained that the Tribunal, has done exactly the op posite, namely, that it has compared dissimilar concerns and not compared similar ones. What the Tribunal has done is to compare the Kamani Metals & Alloys (appellant Company) with the Indian Smelting and Refining Co. Ltd. and the Kamani Engineering Corporation Ltd. The appellant Company does not object to the first but to the second as it deals with non ferrous metals and alloys and does not require engineering process in its manufacture. For the same reason a comparison with Alcock Ashdown an( Co. and Richardson and Cruddas & Co. is objected to. On the, other hand, it is submitted that another company Devidayal Metals Industries Ltd., Bombay was a comparable concern. 470 Both sides agree that a comparison with the Indian Smelting and Refining Co. Ltd. was proper. As regards Devidayal it is clear from the records that it is a much smaller concern and does not furnish a just basis for comparison The scales of pay existing in it are considerably lower than the existing scales in many instances. As regards Kamani Engineering Corporation it is necessary to consider a few facts. In 1951 a common award was given in respect of Kamani Engineering Corporation and the Kamani. Metals and Alloys. In 1958 the demand for revision of dearness allowance was rejected by a common award. This time too the charter of demands in respect of the Kamani Engineering and Kamani Metals & Alloys was the same and given within a few days of each other. These references were first pending before Mr. T. Bilgrani but as he had 551 references pending before him five references in respect of the Kamani group of industries were withdrawn from him and made over to Mr. Meher. The references were heard together. The award in the Kamani Engineering was rendered on 27th February, 1964 and that in Kamani Metals & Alloys on 23rd April, 1964. Many of the exhibits were common and the two awards refer to these common exhibits. In these circumstances, the comparison was not inadmissible. The principle of fixation of wages and dearness allowance was stated by this Court in these words decisions is that in applying the, industry cum region formula for fixing wage scales the tribunal should lay stress on the industry part of the formula if there are a large number of concerns in the same region carrying on the same industry ; in such a case in order that production cost may not be unequal and there may be equal competition wages should generally be fixed on the basis of the comparable industries, namely, industries of the same kind. But where the number of industries of the same kind in a particular region is small, it is the region part of the industry cum region formula which assumes importance. . (1). In dealing, therefore, with only one comparable concern it was open to take into consideration the conditions existing in engineering concerns, particularly those in Kamani Engineering Corporation, which belongs to the same group and there is thus affinity between them. We were taken through the comparative charts showing the scales of wages in these concerns and pointed out the differences particularly those operating to the disadvantage of the appellant Company. That some differences are bound to be there because (1) Greaves Cotton & Co. vs Their Workmen [1964] 5 S.C.R. 362: , 346. 471 of many imponderables that go into the fixation of wages, goes without saying. We are, of course, not expected to go into the matter over again in the appeal. An appeal against an award brought by special leave is not an appeal as of right. It is not intended to be an appeal on every ground of fact and of law unless this Court considers it fit to examine the matter from any special angle Before a party can claim redress, it must show that the award is defective by reason of an excess of jurisdiction or of a substantial error in applying the law or some settled principle or of some gross and palpable error occasioning substantial injustice. An industrial adjudication by reason that it is an award cannot be assailed because some other person would have given a different award or that elaborate reasons have not been given. We considered the comparative charts carefully and on the whole, we are satisfied that the scales of wages as fixed by this Award when compared with those existing in Indian Smelting, when they are high, are not so high as to merit special comment or interference. Sometimes they are lower. It remains, however, to consider the case from the angle of the scales of wages existing in Kamani Engineering Corporation. In dealing with the scales of pay in comparison with those existing in Kamani Engineering Corporation the Tribunal observed that higher wages were being fixed in the Kamani Metals & Alloys because the yield from incentive bonus in the Kamani Engineering Corporation was between 20 to 30% of the wages and the dearness allowance whereas in this Company it was abnormally low. Mr. Gokhale contended that the yield from incentive bonus is an irrelevant factor to take into account and observed that if persons could get higher wages by not earning incentive bonus, the result might be a disincentive to work at all. Speaking generally, his objection is Tight to a certain extent. But it is not right in the circumstances of this case. The Company has since 1949 introduced a scheme of wage incentive. There is no straight piece rate system under which the worker is paid a fixed amount for each unit of out put. There is a fixation of average production for a whole group and not for the individual worker. The target in the melting section is fixed at 5000 cwt. and 1.5 %, on every additional 300 cwt. is fixed as bonus. Other sections have different targets and different percentages. A similar scheme also exists in the Kamani Engineering Corporation. What has happened is that the Tribunal in fixing scales of wages in the reference from Kamani Engineering fixed lower rates because it was of the opinion that quite a substantial sum was earned in that establishment by way of incentive bonus. When the Tribunal came to decide the present reference it recalled that lower wages were fixed in the Kamani Engineering Corporation case because of the yield from incentive bonus. It, therefore, ascertained the yield in the Kamani 472 Metals & Alloys and finding it low fixed the wages at the proper level unaffected by consideration of incentive bonus. This really means that proper wages were fixed in the Kamani Metals & Alloys with out being influenced in any way by the yield from incentive bonus although in the case of Kamani Engineering Corporation lower wages were fixed, because the yield from incentive bonus was very high. In these circumstances, we are of the opinion that the wages in the present case 'have not really been influenced by considerations of yield from incentive bonus whatever may be said of Kamani Engineering Corporation. It was next contended that there is no case made out for ad justment of the workmen in the new time scale after granting them one additional increment after every three years ' service and two additional increments after five years ' service. The principle on which a point to point adjustment is sometimes departed from and increments are granted was stated in some cases of this Court. It is sufficient to refer to only one of them. In Hindustan Times, Ltd. vs Their Workmen(1), the ' question of adjustment of existing employees into new scales was considered. It was observed as follows : It may. well be true that in the absence of any special circumstances an adjustment of the nature as allowed in this case by allowing special increment in the new scale on the basis of service already rendered may not be appropriate. Clearly, however, in the present case the. tribunal took into consideration in deciding this question of adjustment the fact that it had been extremely cautious as regards increasing the old wage scales. Apparently, it thought that it would be fair to give some relief to the existing employees by means of such increase by way of adjustment while at the same time not burdening the employer with higher rates of wages for new incumbents. In these circumstances, we do not see any justification for interfering with the directions given by the tribunal in the matter of adjustments. " In this case also the fixation of scales has been very cautious. The increase from Rs. 1.16 to Rs. 1.35 in the lowest category is not very high considering that these wages had existed for 12 years before they were so adjusted. Similarly, the starting wage in all the other three categories cannot be considered to be very high. The same is the case with monthly rated workmen. The annual increment is not unduly high and in these circumstances it cannot be said that the Tribunal was in error in departing from a point to point adjustment. to grant one or two increments, based on the (1) [1964] 1 S.C.R. 234, 249: 115. 473 length of service. The discretion was exercised on sound judicial lines. It was finally contended that the Tribunal was in 'error in making the Award retrospective from October 1, 1962, when the reference was made on December 14, 1962. This objection has no force. In the charter of demands the workmen had claimed retrospective revision from July 1, 1961. The matter was referred to the Board of Conciliation on September 8, 1962. When conciliation was frustrated because of the arrest of some of the workers of the Union under the Defence of India Rules, the present reference was made to the Tribunal. The Tribunal could have easily chosen September 8, 1962 but chose an intermediate date to be fair to both sides. In our judgment, the choice of October 1, 1962 by the Tribunal cannot be characterised as either illegal or unfair. The question of incentive bonus revision was not mooted before us and the direction that incentive bonus should be calculated on the new scale from 1st January, 1964 is more in favour of the employers than the workmen and no grievance can be made about it. This brings us to the question of the monthly rated workers. Most of the points which we have discussed in relation to the daily rated workmen are common. We have seen the scales which have been fixed and compared them with the rates obtaining in Indian Smelting and the Kamani Engineering and other concerns and are satisfied that they have not been put so high as to merit interference at our hands. It is, however, contended that the Tribunal has gone beyond the Reference inasmuch as the Reference was in respect of special categories of monthly rated employees by designation but the Tribunal has fixed the new scales not only for those workmen but for all clerical and other workmen which were classified as Grades A, B, C and D in 1950. It is true that the Tribunal has not only fixed the new scales for those categories of monthly paid employees who were named in the order of reference but has also provided that those scales shall apply to clerks in the A, B, C and D Grades. It is, however, clear that even the monthly paid employees mentioned by name belong to one category or another. in the Grades A to D. It would have been highly invidious if some persons in the Grades were to receive more pay than the others in the same Grade. The Award, therefore, treats the Reference as referring to the 4 Grades although only some of the class who go by special designations in each Grade have been mentioned. The intention, however, was to have a general revision of the scales of payment to all workers paid monthly and the Tribunal was, therefore, right in not reading the Reference as restricted to only a few classes. By doing so the Tribunal has avoided further industrial unrest and disputes and has really given effect to the underlying object of the reference. 474 This brings us to the last question which is related to the dearness allowance payable to the monthly rated workmen. Previous to the present Award the dearness allowance was payable in this company in the following manner : "On the 1st Rs. 100 (upto Rs. 100) 60 per cent with a minimum of the D.A.paid to the Textile Operatives by the Bombay Mill owners Association. On the 2nd Rs. 100 (upto Rs. 200) 20 per cent of the 2nd hundred rupees. On the 3rd Rs. 100 (upto Rs. 300) 15 per cent of the 3rd hundred rupees. On the 4th Rs. 100 (upto Rs. 400) 10 per cent of the 4th hundred rupees. On the 5th Rs. 100 (upto Rs. 500) 10 per cent of the 5th hundred rupees. On every hundred above Rs. 500 of 5 percent of basic every hundred rupees. The above percentage of dearness allowance, is applicable when the Bombay Cost of Living Index rests between 311 to 320. Variation in the above percentage to be allowed per 10 point movement in the index. First slab 3 per cent of dearness allowance ; 2nd slab 1 1/2 per cent of dearness allowance; 3rd slab 1 per cent of dearness allowance ; 4th slab 3/4 per cent of dearness allowance and the last slab 1/2 per cent of the dearness allowance." In the Award this has been altered to a scheme which is as follows On the first Rs. 100 basic pay (upto Rs. 100) 60% On the second Rs. 100 basic pay (upto35% of the 2nd 100 Rs. 200) rupees. On the third Rs. 100 basic pay (upto15 % of the 3rd 100 Rs. 300) rupees. On the Rs. 301 basic and above10 % of the balance. NOTE The minimum dearness allowance will be the revised textile scale. The above percentage of dearness allowance is applicable when the Bombay Consumer Price Index is between 311 and 320. Variation per 10 point movement in the index should be as follows 475 First slab of Rs. 100 basic pay 5 % (e.g. dearness allowance will be 65 % of basic pay when index is between 321 and 330). Second slab of 100 basic pay 1 1/2% Subsequent slabs 1 %". It is contended that linking the dearness allowance, after the consumer price index 321 to wages has made a departure from the fixation of dearness allowance fixed in tie Kamani Engineering Corporation in which, under the same circumstances, the percentage after the consumer price in 0 321 is that of the dearness allowance and not of the basic salary. On the other side, we were shown a number of awards in which dearness allowance has been fixed in the same manner as by this Award. It appears that the case of Kamani Engineering was treated as a special case because the incentive bonus there was yielding a third of the total earnings of the workmen and it was considered that if the dearness allowance was also raised then a very great burden would be thrown upon the employer by reason of the incentive bonus. We cannot, therefore, use the precedent of the award in the Kamani Engineering Corporation because of these special facts. We are satisfied that in many other companies dearness allowance has been ordered to be calculated in the same manner as has been done by this Award and we see no reason, therefore, to interfere. For these reasons we find no force in this appeal. It fails and will be dismissed with costs. V.P.S. Appeal dismissed.

IN-Abs

The award of the Industrial Tribunal in an industrial dispute between the appellant company (manufacturing products of non ferrous metals and alloys) and its workmen, was challenged in appeal to this Court on the following grounds: (1) There was no change of circumstances justifying a revision of Wages, pay scales and dearness allowance, (2) while making such revision by its award, many of the matters stated in the judgment of this Court in Novex Dry Cleaners vs Its Workmen, were not considered by the Tribunal; ' (3) the Tribunal 'had com. pared dissimilar concerns and not compared similar ones; (4) the Tribunal took into account an irrelevant factor, namely, the yield from incentive bonus; (51 no case was made out for adjustment of the workmen in the new time scale after granting them one additional increment after every 3 years service and two additional increments, after 5 years ' service (6) the Tribunal was in error in making the award retrospective from 1st October 1962, when the reference was made to it only on 14th December 1962; (7) the Tribunal had gone beyond the reference inasmuch as the reference was in respect of special categories of monthly rated employees by designation, whereas the Tribunal had fixed the new scales of pay not only for those workmen but for all clerical and other workmen who were classified as Grades A, B, C, and D; and (8) the linking of dearness allowance, after the consumer price index 321, to wages, has made a departure from the fixation of dearness allowance fixed in another concern, where the percentage was that of the dearness allowance and not of the basic salary. HELD : In an appeal brought by special leave against the award, before a party can claim redress, it must be shown that the award was defective by reason of an excess of jurisdiction, or of a substantial error in applying the law or some settled principle, or of some gross and palpable error occasioning substantial injustice. [471 A C] (1) There was no revision of wages or dearness allowance in the last 20 years,, even though commodity prices level of wages had gone up, and there had in some industries, while in some revise or fix wages. There a revision was justified. [466 F 14] (2) In order to make the fair wage meet the increase in the cost of living dearness allowance is paid to make up the disparity to a certain extent. When, in course of time, it is found that it is not sufficient, because of a further increase in the cost of living, a revision of wages and dearness allowance becomes necessary. This Court in its decisions has merely laid down the principal guide lines to be followed in industrial adjudica 464 tion. The various observations are not intended to operate with the rigidity of a statutory enactment. Each case must be considered on its own facts and only relevant circumstances should enter into the determination of the wage structure. The fundamental principles to be considered are: (a) how the wages of the workers concerned compare with those paid, to workers of similar grade an( skill by other employers in similar or other industries in the 'region, and b) what wages the establishment or industry can afford to pay. In the present case, taking into account the increase in its net profits and the fact that the burden of the increased wage bill would not be more than 1/10th of the net profits, the Tribunal was right in holding that the appellant had the capacity to pay the increased wage bill. [467 B C, H; 468 A B, G H; 469 A D] (3) The Tribunal compared the appellant company with four engineering concerns. One of them belonged to the same group of industries as the appellant. There were common awards in respect of both of them. Further, there was an award given at the same time by the same Tribunal in the connected concern also, the charter of demands being the same as in the appellant company and based on several common exhibits. Since the number of industries in the region was small, it was open to the Tribunal to take into consideration the conditions existing in the engineering concerns in the region, particularly those in a concern where there is affinity, even though the appellant company could not be described as a general engineering industry. Smaller concerns,. where the scale of pay is considerably lower, do not furnish a just basis for comparison. [470 A, B, D. F G] Greaves Colton & Co. vs The Workmen, ; , followed. (4) The Tribunal fixed lower wages in the reference relating to the connected concern, because, a substantial ment by way of incentive bonus. But in the case of the appellant company, finding the yield from incentive bonus, low, the Tribunal fixed the wages at the proper level without considering the yield from incentive bonus, that is, without being influenced by it in any way. [471 E, G H; 472 A B] (5) In the present case the fixation of scales of pay has been very cautious, the starting wage and the annual increment were not high, and therefore, it cannot be said that the Tribunal was in error in departing from point to point adjustment in granting increments based on the length of service. [472 G H] Observations in Hindustan Times V. Their Workmen, [1964] 1 S.C.R. 234 at p. 249, followed. (6) In view of the facts that the workmen demanded retrospective revision from 1st July 1961, and that the matter was referred to the Conciliation Board in 'September 1962, the choice of 1st October 1962 by the Tribunal cannot be characterised 'as either illegal or unfair. [473 C] (7)The monthly paid employees mentioned by name in the order of reference belong to one category or another in the Grades A to D. The intention was to have a general revision of the scale of payment to all workers paid monthly; otherwise, it would have been invidious for some persons in the same Grade to receive more pay than others. The Tribunal was therefore right in treating the, reference 'as referring to all the four Grades and not reading it as restricted only to a few classes. [473 F H] (8) There have been a number of awards in which dearness allowance was fixed in the same manner as by the present award. The award in the connected concern could not be used as a precedent. , because of the special 'facts ' obtaining in that concern. [475 C, E] 465

Appeal No. 2340 of 1966. Appeal from the judgment and order dated October 7, 1966 of the Bombay High Court, Nagpur Bench in Special Civil Appli cation No. 940 of 1965. M. C. Setalvad, N. section Bindra and R. H. Dhebar, for appellant No. 1. A. section Bobde, and section G. Kukdey, for respondent No. 1. M. M. Kinkhede, G. L. Sanghi and A. G. Ratnaparkhi, for respondents Nos. 3 16, 19 31, 33, 34, 36 45, 47 53, 55 and 57. The Judgment of the Court was delivered by Bachawat, J. This appeal arises out of a writ petition filed by respondent No. 1 before the Nagpur Bench of the Bombay High Court, challenging the show cause notice dated July 21, 1965 and the order dated September 29, 1965, superseding the municipal corporation of the city of Nagpur. In July, 1962, the term of office of the present Councillors commenced. On July 21, 1965, the Government of Maharashtra issued a notice to respondent No. 1, the Mayor of the Nagpur Municipal Corporation, asking him to show cause why the corporation should not be superseded. On August 1, 1965, respondent No. I filed his reply to the show cause notice. On September 29, 1965, the State Government passed the impugned order superseding the corporation under sections 408 and 409 of the City of Nagpur Corporation Act 1948 (C. P. & Berar Act 11 of 1950). On September 30, 1965, respondent No. I filed a writ petition challenging the show cause notice and the order of supersession. The High Court allowed the writ petition and quashed the order of supersession. The High Court held that the State Government exercised its power under section 408 on grounds which were not reasonably related to its legitimate exercise and the finding upon which the order was passed was rationally impossible on the materials before the State Government. The State of Maharashtra now appeals to this Court on a certificate granted by the High Court. By an order of this Court, the Administrator of the City of Nagpur appointed under the order of supersession of September 29, 1965, has been joined as the second appellant. 585 Section 408 of the City of Nagpur Corporation Act 1948 is in 'these terms: "408. (1) If at any time upon representations made or otherwise it appears to the State the Corporation is not competent to perform or persistently makes default in the performance of the duties imposed on it by or under this Act or any other law for the time being in force, or exceeds or abuses its powers the State Government may ', after having given an opportunity to the Corp oration to show cause why such an order should not be made, or if it" appears to the State Government that the case is one of emergency, forthwith issue an order directing that all the Councillors shall retire from office as and from such date as may be appointed and declare the Corporation to be superseded. Such order shall be published in the Gazette and the reasons for making it shall be stated therein. (2) Notwithstanding anything contained in sections 17 and 20, all Councillors shall vacate their office from the date mentioned in any order under sub section (1).". The consequence of supersession of the corporation under section 408 is that all its members vacate their office, all powers and duties of the; corporation; the Standing Committee and the chief executive officer may be exercised by the administrator of the city appointed by the State government, and all property vested in the corporation vests in the administrator (section 408). The conditions for the exercise of he power under section 408 are clearly stated in the section. It must appear to the State government that the corporation is not competent or persistently makes default in the performance of the duties imposed on it by or under the Act or any other law for the time being in force, or exceeds or abuses its powers. Except in cases of emerge icy, the State government must give to the corporation an opportunity to show cause why the order under the section should not be made. If on a consideration of the explanation submitted by the corporation, the State government considers that there is no ground for making the order, the Government may drop the proceeding. Otherwise, it may issue an order declaring the corporation to 'be superseded and directing that all the Councillors shall retire from office. The order must be published in the Gazette and the reasons: For making it must be stated therein. There is no appeal to the court from the order under section 408. in a writ application the court will not review the facts as an appellate body. But the order is liable to be set aside if no reasonable person on a proper consideration of the materials before the State government could form the opinion that the corporation "is not competent to perform, or persistently makes default in the performance of the duties imposed on it by or under this Act or any other law for the 586 time being in force, or exceeds or abuses its powers". Likewise, the order is liable to be set aside if it was passed in bad faith or if in a case which was not one, of emergency, due opportunity to show cause was not given to the corporation. In all such cases, the order is in excess of the statutory power under section 408 and is invalid. On the question whether the order under section 408 is an administrative or quasi judicial act, our attention was drawn to the decisions in Municipal Committed, Karali and Another, vs The State of Madhya Pradesh(1) and Shri Radheshyam Khare and Anr. vs The State of Madhya Pradesh and Others.(2) These cases turned on the construction of sections 53A and 57 of the C. P. & Berar Municipalities Act 1922 (Act 11 of 1922). The point whether the order under section 408 is quasi judicial or administrative act is not very material, for it is common ground,that the present case was not one of emergency and the State government was bound to give opportunity to the corporation to show cause why the order should not be made. The order dated September 29, 1965 was in these terms: "Whereas it is reported to the Government of Maharashtra that the Municipal Corporation of the City of Nagpur (hereinafter referred to as 'the Municipal Corporation ') constituted under the City of Nagpur Municipal Corporation Act, 1948 (C.P. & Berar Act 11 of 1950) (hereinafter. referred to as 'the said Act ') (a) has, since the present Councillors entered upon their office, planned its expenditure on the basis of uncertain receipts as shown below, that is to say Year Receipts in budget as Actual of previous passed by Corporation year Rs. in lacs Rs. in lacs. 1963 64 351 173 1964 65 221 190 1965 66 258 (200 to 215 lacs anticipated. and without exercising the proper controls provided by or under the said Act has allowed its financial position to deteriorate rapidly and seriously to such an extent that the free cash balance of Rs. 5.81 lacs approximately in March 1962 was reduced to Rs. 53,000 approximately on the 12th July, 1965: and that the Corporation had no funds even to (1) A.I.R. 1958 M.P. 323. (2) 587 disburse the salaries of its officers and 'servants as is noticed from the Resolution of the Municipal Corporation No. 98, dated the 4th September, 1965; and (b) has neglected to under take the improvement of water supply and to provide a sufficient supply of suitable water for public and private purposes; And whereas, an opportunity was given to the Municipal Corporation to show cause why in the aforesaid circumstances an order of supersession under sub section (1) of section 408 of the said Act should not be made , And whereas, after considering the reply of the Municipal Corporation and subsequent it submissions made by it the Government of Maharashtra is of the opinion that the Municipal Corporation is not competent to perform the duties imposed on it by or under the said Act; Now ' therefore, in exercise of the powers conferred by sub section (1) of section 408 and subsection (1) of section 409 of the said Act, and of all other powers enabling it in this behalf, the Government of Maharashtra for the reasons specified aforesaid, hereby (1) directs that all the Councillors of the Municipal Corporation shall retire from office as and from the 1st day of October, 1965; (2) declares the Municipal Corporation to be superseded from that date; and (3) appoints Shri D. H. Deshmukh to be the Administrator of the City of Nagpur From the order it appears that there were two grounds on which the State government formed the opinion that the corporation was not competent to perform the duties imposed on it by or under the Nagpur Municipal Corporation Act, 1948. Annexure 2 to the show cause notice dated July 21, 1965 Set out the following facts relatable to the first ground mentioned in paragraph 1(a) of the order: "II. (1) In March 1962, the free cash balance with the Corporation was Rs., 5. 81 lacs. On 12 7 65, the opening cash balance of the Corporation ",as Rs. 53,821. The Statement 'A ' appended hereto will reveal the financial. position of the Corporation. On the basis of average daily receipts the Corporation will have an opening balance of Rs. 7 74 lacs on 1 8 65 as against that their immediate liabilities are of the order of Rs. 30 84 lacs. 'It is 588 thus clear that the Corporation is heading for a grave. financial crisis and it will not be in a position even to pay fully the salaries and wages of their permanent and temporary employees. Under Chapter IV of the City of Nagpur corporation Act, the Corporation is required to pay salaries to their officers and servants as provided for in Sections 47, 49 and 50 of the said Act. The liability arising out of the payment of salaries; and wages is the third charge on the municipal fund the. previous two charges being repayment of all loans payable by the Corporation under Chapter IX of that Act and the second being the payment for discharge of all liabilities imposed on the Corporation in respect of debts ' and obligations and contracts of ' the Municipality, of Nagpur, to whom the Corporation is a successor. It is assumed that such liabilities do not any ' longer exist. Thus the payment of salaries etc., is the ,second charge on the municipal fund, and it is very obvious from the figures in Statement `A ' that the Corporation is not in a position to discharge that liability. " The opinion of the State, government so far as it is based on the first ground cannot be supported. The show cause notice did not mention the charge that the Councillors planned the expenditure on the basis of uncertain receipts or that they did not exercise .proper controls provided by or under the Act. No opportunity was given to the corporation to explain the charge. Without giving such an opportunity, the State government could not lawfully and that the charge was proved. The cash balances of the cor poration vary from day to day. No reasonable person could possibly come to the conclusion hat the financial position of the corporation had deteriorated from the fact that the cash balances were Rs. 5,81,000 in March 1962 and Rs. 53,000 on July 12, 1965. The, statement that the corporation had no funds to disburse the salaries of its officers and servants had no factual basis. As a matter of fact, the corporation paid the salaries. The dearness allowance was not paid because the bills were not scrutinized. ' The resolution dated September 4, 1965 referred to in the order was passed long after the show cause notice was issued and the corporation was not given an, opportunity to explain it. The resolution did not say that the co ' oration had no ' funds even to disburse ' the salaries of its officers and servants. The, corporation resolved to raise a loan of Rs. 15 lacs from the State; Government, but, the; loan was not raised. The High Court also pointed out that many of the statements in the. statement "A" referred to in the show cause notice were factually incorrect. The opinion of the State government, based on the first ground cannot be sustained, firstly because the corporation had no, opportunity to show cause against the charge, and secondly, because no reasonable Person on the materials 589 before the State government could possibly form the opinion that the charge was proved: The second. ground referred to in paragraph 1 (b) of the order dated September 29, 1965 is more serious. Section 57(1)(k) of the City of Nagpur Corporation Act, 1948 provides that the corporation shall make adequate provision by any means or measures which it may lawfully use or take for. . . "(k) the management and maintenance of all municipal water works and the construction and maintenance of new works and Means for providing sufficient supply of suitable water for public and private purposes. " The charge was that the corporation neglected to undertake the improvement of water, supply and to provide a sufficient supply of suitable water for public and private purposes. The relevant facts were set out in annexure 1 1(1) to (4) and annexure 11 to the show cause notice. It is ' common ground that the water supply of the city of Nagpur was inadequate. The population of the city was fast increasing and it was the duty of the corporation to augment the supply. The improvement of the head works at the Kanhan Stage III and also the re modelling and redesigning of the distribution system was necessary for augmenting and,improving the water supply. The work at Kanhan Stage.111 commenced in 1964 and. for that purpose the Government sanctioned an ad hoc loan of Rs. 21 lacs. The cost of the remaining work at Kanhan Stage III and the work of re modelling and redesigning of distribution system was estimated to be Rs. 70 lacs. The corporation could not meet the cost without. raising a loan. II had the power to raise a loan for this purpose with the previous sanction of the State government under section 90 of the City of Nagpur Corporation Act 1948. The corporation was not in a position to raise 1 he loan in the open market unless the repayment of the loan was guaranteed by the Government. It approached the. Government to give the guarantee. The Government was willing to give the guarantee if two conditions were fulfilled (1) the co oration would meter the water supply immediately, and (2) in the annual budget, the budget of the water works department for the supply of water would be shown separately. The Government was not willing to, give the guarantee unless conditions were fulfilled. In May/June,.965, these conditions were communicated by, the minister in charge to the municipal commissioner and the chairman of the standing committee. On June 5, 1965, the standing committee resolved: "(i) The Corporation may raise in the open market loan of Rs. 70 lacs for the purpose of completing the Kanhan Stage III head works and provision of Alteration plant and for re modelling and redesigning the water distribution system in Nagpur Corporation are. 590 (ii) The principle of universal meterisation should be accepted and all water connection in future should only be in the meter system ' (iii) The principle of providing a separate subsidiary budget for water supply should be accepted. " At a meeting held on June 30, 1965, the corporation appears to have disapproved of the standing committee 's resolution regarding the principle of universal meterisation and setting up a separate subsidiary budget for water supply though no specific resolution to that effect was passed. A meeting of the corporation on July 5, 1965 was convened to discuss the matter of raising a loan of Rs. 70 lacs. In the notice calling the meeting, the following office note appeared at the foot of the relevant agenda: "In this connection the State Government demanded the following two assurances from the Corporation, (1) Nagpur Corporation should meter the water supply immediately. (2) In the annual budget of the Corporation,budget of the water works department should be shown separately for supply of water. In the said budget provision for payment of loans, sinking. fund and future increase, in expenditure should be made separately. After making these provisions the Corporation can expend the money for other works. " On July 5, 1965, the meeting was adjourned. On July 1,2, 1965, the corporation passed the, following resolution: "The Corporation gives its approval to the raising of a loan of Rs. 70 lakhs, in the next three years. Such a loan comprising of Rs. 24 lakhs for Kanhan 3 Stage scheme and Rs. 45 lakhs for improvement in the Distribution System necessitated in view of the additional 29 million gallons of water that will be available after completion of the Kanhan 3 Stage Scheme. The office should take necessary action to obtain the guarantee of the State Government for raising this loan in the open market in accordance with the above Resolution. " The resolution is not printed in the paper book, but an agreed copy of the resolution was filed before us. :The State government was of the view that by the resolution dated July 12, 1965, the corporation refused to accept the two conditions mentioned in the office note and thereby made it impossible for the corporation to meet the cost of construction of the head works and the. remodelling and 591 redesigning of the distribution system and to provide a sufficient supply of water for the public and private purposes. The corporation could not raise the loan without the Government guarantee and the government could, not reasonably guarantee the loan unless the two conditions of universal meterisation and the separate budget for the water supply were accepted. The two conditions were reasonable. The adoption of universal meterisation would have curtailed the wastage of water and secured adequate revenues necessary for the repayment of the loan and the setting up of an adequate sinking and development fund for the water supply. A separate budget for the supply of water would have ensured that the receipts from the/ supply of water were a located to the expenditure on the water supply scheme. The answer of the corporation was twofold. The corporation said firstly that the resolution dated July 12, 1965 neither accepted nor rejected the two conditions and the question of accepting the conditions was left for future negotiations with the government after the government would be approached for the sanction of the loan under section 420(2)(r) of the City of Nagpur Corporation Act 1948, read with City of Nagpur Corporation Loans Rules 1951. The corporation said secondly that the cost of immediate meterisation of the old connections would be Rs. 52 lacs and it was impossible for the corporation to raise this sum, nor could it lawfully divert any portion of the loan of Rs. 70 lacs for meeting this cost. The High Court accepted the contention that at the meeting held on July 12, 1965, the corporation had resolved that the matter with regard to the conditions imposed by the government for giving the loan should be left for further negotiations with the government. But it is to be noticed that the resolution dated July 12, 1965 did riot state that there should be any further negotiations with the government on the matter, nor did it disclose the financial problem with regard to meterisation or the basis upon which further negotiations should take place. On June 30, 1965, he corporation had talked out the recommendation of the standing committee with regard to the universal meterisation and separate budget. In this background, the State government. could reasonably hold that the passing of the resolution excluding the office note amounted to virtual rejection of the conditions mentioned in the note. The High Court was in error in accepting the first contention. The High Court was also in error in holding that the Govern ment passed the order of September 29, 1965 without considering that universal meterisation posed a formidable problem which could not be overcome without a loan of Rs. 52, lacs in addition to the loan of Rs. 70 lacs. The resolution of July 12, 1965 did not state that the corporation wanted an additional loan of Rs. 52 lacs for meeting the cost of universal meterisation. Even in the answer to the showcause notice, the corporation did not say that it wanted to raise 592 an additional loan of Rs. 52 lacs. The answer stated that the raising of this sum for the present was an impossibility. There is nothing to show that the State, government would not have guaranteed repayment of this additional loan or that it was not possible to raise the loan backed, by a government guarantee. In the writ petition respondent No.1 gave a summary of the reply to the show cause notice. But there was no specific averment in the petition supported by affidavit that Rs. 52 lacs was necessary for the meterisation and that the raising of this sum was an impossibility. That is why the point was not dealt with in the return to the writ, petition. Even assuming that the meterisation would cost Rs. 52 lacs, there is nothing to show that the government would not have guaranteed the loan for this sum or that the corporation could not have raised the loan with this, guarantee. Moreover, if the Government was right in assuming that the corporation had refused to entertain the proposal of meterisation, the question of raising funds for the meterisation would not arise and would be irrelevant. The government passed the order after taking into consideration the reply to the show cause notice. There were materials be "ore the State Government upon which it could find that the corporation had neglected to undertake an improvement of water supply and to provide a sufficient supply of water for private and public purpose. On the basis of this finding, the State government could form the opinion that the corporation was not competent to perform the duties imposed on it by or under the Act. Mr. Bobde contended that the opinion of the State government was based on two grounds arid as one of them is found to be non existent or irrelevant, the order is invalid and should be set aside. The cases relied on by him may, be briefly noticed. In a number of cases, the Court has quashed orders of preventive detention based on several grounds one of which is found to be irrelevant or illusory. After reviewing the earlier cases Jagannadhadas J, in Dwarka Dass Bhatia vs The State of Jammu and Kashmir (1) said: "The principle underlying all these decisions is 'this. Where power is vested in a statutory authority to deprive the liberty of a subject on its subjective satisfaction with reference to specified matters, if that satisfaction is stated to be based on a number of grounds or for a variety 'of reasons all taken together, and if some out of them are found to be non existent or irrelevant, the very exercise of that power is bad. This is so because the matter being one for subjective satisfaction, it must be properly based on all the reasons on which it purports to be based. If 'some out of them are found to be non existent or irrelevant, the Court cannot pre dicate what the subjective satisfaction of the said authority would have been on the exclusion of those grounds or (1) ; ,955. 593 reasons. To uphold the validity of such an order in spite of the invalidity of some of the reasons or grounds would be to substitute the objective standards of the Court for the subjective satisfaction of the. statutory authority. In applying these principles, however, the Court must be. satisfied that the vague or irrelevant grounds are such as, if excluded, might reasonably have affected the subjective satisfaction of the appropriate authority. It is not merely because some ground or reason of a comparatively un essential nature is defective that such an order based on subjective satisfaction can be held to be invalid. The Court, while anxious to safeguard the personal liberty of the individual will not lightly interfere with such orders." In Maursinha vs State of Madhya Pradesh(1), the Madhya Pradesh High Court, following the principle of the preventive detention cases, held that an order of supersession of the municipality under section 208 of the Madhya Bharat Municipal ties Act 1954, based on several grounds, most of which were found to be irrelevant, was invalid. In Dhirajlal Girdharilal vs Commissioner of Income tax(2) Mahajan, C. J., said with reference to the order of an income tax tribunal "The learned Attorney General frankly conceded that it could not be denied that to a certain extent the Tribunal had drawn upon its own imagination and had made use of a number of surmises and conjectures in reaching its result. He, however, contended that eliminating the irrelevant material employed by the Tribunal in arriving at its conclusion, there was sufficient material on which the finding of fact could be supported. In our opinion, this contention is not well founded. It is well established that when a court of facts acts on material, partly relevant and partly irrelevant, it is impossible to say to what extent the 'mind of ' the court was affected by the irrelevant material used by it in arriving at its finding. Such a finding is vitiated because of the use of inadmissible material and thereby an issue of law arises. " In State of Orissa vs Bidyabhushan Mahapatra(3) an administrative tribunal in a disciplinary proceeding against a public servant found the second charge and four out of the five heads under the first charge proved and recommended his dismissal. The Governor after giving him a reasonable opportunity to show cause against the proposed punishment dismissed him. The High Court held that, the findings on two of the heads under the first charge could not be sustained as in arriving at those findings the tribunal had violated rules of natural justice. It held that the second charge and only (1) A.I.R. 1958 M.P. 397 (2) A.I.R. 1956 S.C., 271 273. (3) [1963] Supp. I S.C.R. 618,665 6. 594 two heads of the first charge were established and directed the Governor to reconsider whether on the basis of these charges the punishment of dismissal should be maintained. On appeal, this Court set aside the order of the High Court. In the course of the judgment, Shah, J, observed: "If the High Court is satisfied that if some but not all of the findings of the Tribunal were 'unassailable ', the order of the Governor on whose powers by the rules no restrictions in determining the appropriate punishment are placed, was final, and the High Court had no jurisdiction to direct the Governor to review the penalty, for as we have already observed the order Of dismissal passed by a competent authority on a public servant, if the conditions of the constitutional prote ction ha* been complied with, is not justiciable. Therefore if the order may be supported on any finding as to substantial misdemeanour for which the punishment can lawfully be imposed, it is not for the Court to consider whether that ground alone would have weighed with the authority in dismissing the public servant. The Court has no jurisdiction if the findings of the enquiry officer or the Tribunal prima facie make out a case of misdemeanour, to direct the authority to reconsider that order because in respect of same of the findings but not all it appears that there had been violation of the rules of natural justice. " The principle underlying these decisions appears to be this. An administrative or quasi judicial order based on several grounds, all taken together, cannot be sustained if it be found that some of the grounds are non existent or irrelevant, and there is nothing to show that the authority would have passed the order on the basis of the other relevant and existing grounds. On the other hand, an order based on several grounds some of which are found to be non existent or irrelevant, can be sustained if the court is satisfied that the authority would have passed the order on the basis of the other relevant and existing grounds, and the exclusion of the irrelevant or non existent grounds could not have affected the ultimate opinion or decision. Now, the opinion of the State government that the corporation was not competent to perform the duties imposed on it by or under the Act, was based on two grounds one of Which is relevant and the other irrelevant. Both the grounds as also other grounds were set out in paragraphs 1 and 2 read with annexures 1 and 2 of the showcause notice dated July 21, 1965. Para 3 of the show cause notice stated, "And whereas the grounds aforesaid jointly as well as severally appear serious enough to warrant action under section 408(1) of the said Act". The (order dated September 29, 1965, 595 read with the notice dated July 21, 1965 shows that in the opinion of the State government the second ground alone was serious enough to warrant action under section 408(1) and was sufficient to establish that the corporation was not competent to perform its duties under the Act. The fact that the first ground mentioned in the order is now found not to exist and is irrelevant, does not affect the order. We are reasonably certain that the State government would have passed the order on the basis of the second ground alone. The order is, therefore, valid and cannot be set aside. In the result, the appeal is allowed, the order of the High Court is set aside and the writ petition is dismissed. In all the circumstances, there will be no order as to costs in this Court and, in the court below. Y.P. Appeal allowed.

IN-Abs

By section 408 of the City of Nagpur Corporation Act, 1948 the State Government may, after giving an opportunity to the Corporation to show cause, pass an order superseding the Corporation, if it is of opinion that the Corporation is not competent or persistently makes default in the performance of the duties imposed on it by or under the Act. After the requisite show cause notice the State Government passed the impugned Order superseding the Nagpur Municipal Corporation. The High Court, in a writ petition, quashed the Order holding that the State Government exercised its power ' under section 408 on grounds which were not reasonably related to its Legitimate exercise and that the finding upon which the Order was passed was rationally impossible on the materials before the State Government. On appeal to this Court: HELD:The Order of supersession was valid and could not be set aside. (i)Of the two grounds on which the opinion of the State Government was based the first ground could not be sustained, firstly because the Corporation had no opportunity to show cause against the charge, and secondly, because no reasonable person on the materials before the State Government could possibly form the opinion that the charge was proved. Regarding the second ground there were materials before the State Government upon which it could find that the Corporation was not competent to perform the duties imposed upon it. [588H; 592D] In a writ application the court will not review the facts as an appellate body. But the Order of supersession is liable to be set aside, as in excess of the, statutory power under section 408, if no reasonable person on a proper consideration of the materials before the State Government will form the opinion that the Corporation is not competent to perform or persistently defaults in the performance of the duties imposed on it. 'Me Order is also liable to be set aside if it was passed in bid faith or due opportunity to show cause was not given. [585H] (ii)The Order cannot be set aside for the reason that one of the grounds is found to be non existent or irrelevant. The Order, read with the show cause notice shows that in the opinion of the State Government the second ground by itself was serious enough to warrant action under s.408. [595 A B] An administrative or quasi judicial Order based on several grounds, all taken together, cannot be sustained if it be found that some of the grounds are non existent or irrelevant and there is nothing to show that the authority would have passed the Order on the basis of the other relevant and 584 existing grounds. But, an Order based on several grounds some of which are found to be non existent or irrelevant can be sustained if the Court is satisfied that the authority would have passed the Order on the basis of other relevant and existing grounds and the exclusion of the irrelevant or non existent grounds could not have affected the ultimate 'opinion or decision. [594 E G] Dwarka Das Bhatia vs State of Jammu and Kashmir, [19651 S.C.R, 948. Dhirajilal Girdharilal vs Commissioner of Income tax, A.I.R. 1956 S.C. 271, State of Orissa vs Bidyabhushan Mahapatra, [1963] Supp. I S.CR. 648 and Naursinha vs State of Madhya Pradesh, A.I.R. [1958] M.P. 397. referred to.

Civil Appeal No. 70 of 1952. Appeal by special leave from the Judgment and Decree dated the 5th May, 1949, of the High Court of Judicature at Patna (Manohar Lall and Mahabir Prasad JJ.) in Appeal from Appellate Decree No. 2091 of 1946. C.K. Daphtary, Solicitor General far India (G. N. Joshi and Porus A. Mehta, with him) for the appellant. P. Sinha (Nuruddin Ahmed, with him) for the respondent. February 11. The undisputed facts of the case are:That the respondent was appointed a Sub Inspector of Police by the Inspector General of Police, Bihar and Orissa, in January, 1920. In the year 1937 departmental proceedings were taken against him and he was found guilty of cowardice and of not preparing search lists and was punished by demotion for ten years. On appeal; the Deputy Inspector General of Police held 788 that the respondent was guilty of cowardice but acquitted him of the other charge. By an order dated the 23rd July, 1940, which was communicated to the respondent on the 29th of July, 1940, the Deputy Inspector General of Police having found him guilty of cowardice made an order dismissing him from service. Further appeals by the respondent to the Inspector General of Police and to the Governor of Bihar were unsuccessful. Aggrieved by the departmental action taken against him, the respondent filed the suit out of which this appeal arises in the court of additional subordinate judge against the State of Bihar for a declaration that the order of the Deputy Inspector General of Police dismissing him from service was illegal and void and that he should be regarded as continuing in office. He also claimed a sum of Rs. 4,241 from 30th July, 1940, to the date of the suit on account of arrears of salary. The State contested the claim and pleaded that the plaintiff held his service at the pleasure of the Crown, and could not call in question the grounds or the reasons which led to his dismissal, and that in any case he had been reinstated in service from the 30th of July, 1940, and the order of dismissal therefore was no longer operative, and the suit had thus become infructuous. The additional subordinate judge by his judgment dated the 2nd February, 1945, dismissed the suit on the finding that the Government having reinstated the respondent he had no cause of action. As regards the arrears of salary, it was held that the claim to it could only be made according to the procedure prescribed under rule 95 of section 4 of Chapter IV of Bihar and Orissa Service Code. This decision was confirmed in appeal by the additional district judge. On further appeal the High Court reversed these decisions and decreed the claim for arrears of salary in the sum of Rs. 3,099 12 0. It was held that rule 95 of the Bihar and Orissa Service Code had no application because the respondent had never been dismissed within the meaning of that rule. It was further held that the plaintiff was entitled to maintain the suit for arrears of pay in view of the decision 789 of the Federal Court in Tara Chand Pandit 's case(1) the correctness o15 which was not affected by decisions of the Privy Council in cases of 1. M. Lall(2) and Suraj Narain Anand(3). The principal questions involved in this appeal are: (1) Whether the High Court correctly held that rule 95 above mentioned had no application to the case ? (2) Whether a suit 15or arrears of salary by a civil servant is competent in a civil court ? Rule 95 of the Bihar and Orissa Service Code provides: Rule 95 "When the suspension of a Government servant as a penalty for misconduct is, upon reconsideration or appeal, held to have been unjustiliable or not wholly justifiable; or when a Government servant who has been dismissed or removed, or suspended pending enquiry into alleged misconduct is reinstated; the revising or appellate authority may grant to him for the period of his absence from duty (a) if he is honourably acquitted, the full pay to which he would have been entitled if he had not been dismissed, removed or suspended and, by an order to be separately recorded, any allowance of which he was in receipt prior to his dismissal, removal or suspension; or (b) if otherwise, such proportion of such pay and allowances as the revising or appellate authority may direct. " The provisions of this rule enable an appellate or revising authority, when making an order of reinstatement to grant the reliefs mentioned in the rule. Obviously these provisions have no application to the situation that arose in the present case. The respondent here was dismissed by the Deputy Inspector General of Police, though he was appointed by the Inspector General of Police. This was clearly contrary to the (1) (2) 75 I.A. 225. (3) 75 I.A. 343. 790 provisions of section 240 (3) of the Government of India Act, 1935, which provides that no person shall be dismissed from the service of His Majesty by an authority subordinate to that by which he was appointed. But nevertheless the appeal preferred by him to the Inspector General of Police was rejected and his petition to the Government of the State met with the same fate, so that he was never reinstated by the order of any revising or appellate authority. It was only after the present suit was filed that the Government reinstated him. This was no proceeding in revision or appeal. In these circumstances the enabling provisions of rule 95 had no application whatsoever to the case of the plaintiff. What happened subsequently is a matter wholly outside the contemplation of the rule. After the institution of the suit, the Chief Secretary to the Government of Bihar realising the untenability of the Government 's position wrote to the Inspector General of Police that the order of dismissal should be treated as null and void and that the respondent should be reinstated. Thus the reinstatement of the plaintiff the telegram of the 30th December, 1943, was not made at the instance of any of the authorities mentioned in the rule in exercise of their jurisdiction, appellate, or revisional, but was made at the instance of the defendant in the suit who had realised that it was not possible to defend the order of dismissal. For the reasons given above we are of the opinion that the High Court was right in holding that rule 95 had no application to the facts and circumstances of this case and that the enabling provisions of this rule did not operate as a bar to the plaintiff 's action. The next contention of the learned Solicitor General that a suit by a public servant against the State for recovery of arrears of salary cannot be maintained in a civil court is again, in our opinion, without substance. We think that the matter is covered by the decision of the Federal Court in Tara Chand Pandit 's case(1) with which we find ourselves in respectful agreement. In that case the learned Attorney General had argued with great force all the points that were (1) 791 urged in this appeal before us by the learned SolicitorGeneral and were dealt with by the Federal Court in great detail. It was there held that the prerogative right of the Crown to dismiss its servants at will having been given statutory form in sub section (1)of section 240 of the Government of India Act, 1935, it could only be exercised subject to the limitations imposed by the remaining sub sections of that section and that it must follow as a necessary consequence that if any of those limitations was 'contravened the public servant concerned had a right to maintain an action against the Crown for appropriate relief and that there was no warrant for the proposition that that relief must be limited to a declaration and should not go beyond it. It was further held that even if apart from the prerogative of the Crown to terminate the service of any of its servant at will, the further prerogative could be invoked that no servant of the Crown could maintain an action against the Crown to recover arrears of pay even after the pay had been earned and had become due and that the prerogatives of the Crown had been preserved in the case of India by section 2 of the Constitution Act, it must be presumed that this further prerogative had been abandoned in the case of India by the provisions of ' the Code of Civil Procedure and that it was not possible to subscribe to the proposition that while a creditor of a servant of the Crown was entitled as of right to compel the Crown to pay to him a substantial portion of the salary of such servant in satisfaction of a decree obtained against him the servant himself had no such right. Mr. Justice Kania, as he then was, in a separate but concurring judgment, negatived the contention of the Attorney General in these terms: "The question whether the law in England and India is the same on this point should be further considered having regard particularly to the provisions found in the Civil Procedure Code. In this connection, section 60(1) and clauses (i) and (j) of the proviso, and explanation (2) should be noted. Under section 60 all property belonging to the judgment debtor is liable to be attached. In stating the 792 particulars of what may not be attached and sold, exemption to a limited extent is given in respect of the salary of a public servant. These provisions of the Code of Civil Procedure were not noticed in Lucas vs Lucas and High Commissioner for India(1 ), as the application was made in England and the Civil Procedure Code of 1908 did not apply there. The provisions of section 60 of the Civil Procedure Code give a right to the creditor to attach the salary of a servant of the Crown. There can be no dispute about that. If the contention of the appellant was accepted, the result will be that while the civil servant cannot recover the money in a suit against the Crown, his ,creditor can recover the same in execution of a decree against the civil servant. This right of the creditor to receive money in that manner has been recognised in innumerable decisions of all High Courts. There were similar provisions in the Civil Procedure Code of 1882 also. By reason of section 292 of the Constitution Act, the Code of Civil Procedure, 1908, continues in force, in spite of the repeal of the Government of India Act of 1915. Could the Imperial Parliament ' in enacting section 240 and being deemed aware of the provisions of section 60 of the Civil Procedure Code, have thought it proper to give this privilege to a creditor, while denying it to the officer himself ? To hold ' so, the words of section 240 of the Constitution Act will have to be unduly and unnaturally strained. Moreover in explanation (2) of section 60 the word 'salary ' is defined. In the proviso to section 60 clause (i) the word 'salary ' is used as applicable to private employees and to Government servants also. The word 'salary ' in respect of a private employee must mean an enforceable right to receive the periodical payments mentioned in the explanation. In that connection it is not used in the sense of a bounty. It will therefore be improper to give the same word, when used with regard to a civil servant under the Crown a different meaning in the same clause. It seems to me therefore that the Imperial Parliament has not accepted the principle that the Crown is not liable to pay its servant salary (1) 793 for the period he was in service, as applicable to British India or as forming part of the doctrine that service under the Crown is at His Majesty 's pleasure." The learned Solicitor General contended that the decision in Tara Chand Pandit 's case(1), was no longer good law and should be deemed to have been dissented from and overruled by the decision of their Lordships of the Privy Council in I. M. Lall 's case(2), and that in any event the view expressed in that decision should be preferred to the view expressed in Tara Chand Pandits case. We are unable to uphold this contention. It seems that during the arguments in Lall 's case attention of their Lordships was not drawn to the decision of the Federal Court in Tara Chand Pandit 's case because the point was not directly involved therein. In that case no claim had been made by the plaintiff for arrears of his pay. The plaintiff had sued for a declaration simpliciter that the order of his removal from the office was illegal and that he was still a member of the Indian Civil Service. The High Court granted that declaration. The Federal Court, on appeal, substituted for the declaration made by the High Court a declaration that the plaintiff had been wrongfully dismissed. The case was remitted to the High Court with a direction to take such action as it thought necessary in regard to any application by the plaintiff for leave to amend the claim for recovery of damages. On appeal to the Privy Council the decree and the order made by the Federal Court was modified and their Lordships held that in their opinion the declaration should be varied so as to declare that the purported dismissal of the respondent on the 10th August, 1940, was void and inoperative and the respondent remained a member of the Indian Civil Service at the date of the institution of the suit, 20th of June, 1942. The High Commissioner for India had also appealed against the order of the Federal Court remitting the case to the High Court for amendment of the plaint. The plaintiff did not want to maintain the order of the Federal Court to remit, before the (1) (2) 75 I.A. 225. 14 95 S.C.I./59 794 Privy Council. He however urged that he was entitled to recover in the suit his arrears of pay from the date of the purported order of dismissal up to the date of action, though this was not one of the reliefs claimed by him in the suit at all. This relief that was claimed by him before the Board was negatived by their Lordships on the ground that no action in tort could lie against the Crown and that such an action must either be based on contract or conferred by statute. Their Lordships approved of the judgment of Lord Blackburn in the Scottish case of Mulvenna vs The Admiralty(1), in which that learned Judge laid down the rule in the following terms after reviewing various authorities: "These authorities deal only with the power of the Crown to dismiss a public servant, but they appear to me to establish conclusively certain important points. The first is that the terms of service of a public servant are subject to certain qualifications dictated by public policy, no matter to what service the servant may belong, whether it be naval, military or civil, and no matter what position he holds in the service, whether exalted or humble. It is enough that the servant is a public servant, and that public policy, no matter on what ground it is based, demands the qualification. The next is that these qualifications are to be implied in the engagement of a public servant, no matter whether they have been referred to when the engagement was made or not. If these conclusions are justified by the authorities to which I have referred, then it would seem to follow that the rule based on public policy which has been enforced against military servants of the Crown, and which prevents such servants suing the Crown for their pay on the assumption that their only claim is on the bounty of the Crown and not for a contractual debt, must equally apply to every public servant. It also follows that this qualification must be read, as an implied condition, into every contract between the Crown and a public servant, with the effect that, in terms of their contract, they have no right to their remuneration which can be (1) 795 enforced in a civil court of justice, and that their only remedy under their contract lies in an appeal of an official or political kind '. " The observations made in Mulvenna vs The Admiralty(1), which is a Scottish case, could not have been made if in the law of that country there were provisions similar to the provisions made in various sections of the Code of Civil Procedure referred to by the Federal Court in Tara Chand Pandit 's case(2). It was further urged that the same view was taken by Pilcher J. inLucas vs Lucas and the High Commissioner for India(a).There the question for consideration was whether the sterling overseas pay of an Indian civil servant was a debt owing and accruing within the meaning of rule 1 of Order XLV of the Rules of the Supreme Court and which could be attached in satisfaction of an order for the payment of alimony. The real point for decision in that case was whether the whole or any portion of the salary of a member of the Indian Civil Service was liable to attachment in England in satisfaction of the judgment debt. It appears that the attention of the learned Judge was not invited to the provisions of section 60 and other relevant provisions of the Code of Civil Procedure and the learned Judge applied the dictum of Lord Blackburn in Mulvenna vs The Admiralty( 1 ), to the case of a civil servant from India. As the application was made in England and the Civil Procedure Code did not apply there, the provisions of the Code were not noticed in that case. We are therefore of the opinion that the rule laid down by their Lordships of the Privy Council in 1. M. Lall 's case(4), without a consideration of the provisions of the Code of Civil Procedure relevant to the inquiry and without a consideration of the reasoning of the Federal Court in Tara Chand Pandit 's case(2), cannot be treated, particularly because the matter was not directly involved in the suit, as the final word on the subject. We are in no way bound by the decision given either in Tara Chand Pandits case(2 ), or by the (1) (3) (2) (4) 75 I.A. 225. 796 decision given by the Privy Council in I. M. Lall 's case (1). But on a consideration of the reasons given in the two judgments we think that the rule of English law that a,civil servant cannot maintain a suit against the State or against the Crown for the recovery of arrears of salary does not prevail in this country and that it has been negatived by the provisions of the statute law in India. Reliance was also placed by the learned Solicitor General on the decision of the Federal Court in Suraj Norgin Anand vs North West Frontier Province(2). In that case Suraj Narain having been appointed a Sub Inspector of Police posted in the North West Frontier Province by the Inspector General of Police of the Province was subsequently dismissed by the Deputy Inspector General of Police. Failing to get relief by departmental proceedings he instituted a suit in the Court of the Senior Subordinate Judge, Peshawar. The subordinate judge dismissed the suit as being unsustainable. This decision was upheld by the Court of the Judicial Commissioner. The Federal Court held that the Courts below were not justified in dismissing the suit, that the plaintiff was at least entitled to a declaration that the order of dismissal passed against him was void. That court accordingly set aside the decree of the Judicial Commissioner and remitted the case with a declaration that there shall be substituted for the decree appealed against a declaration in the terms above stated, with such further directions as the circumstances of the case may require in the light of the observations of their judgment. The Province appealed to the Privy Council against the decision of the Federal Court. It was held by the Board in the first instance allowing the appeal of the North West Frontier 'Province and reversing the decision of the Federal Court of India, that the North West Frontier Province Police Rules, 1937, had become operative in 1938 at some date before April 25, 1938, when the respondent was dismissed, and that rule 16 (1)was a valid rule made under the authority conferred on the (1) 75 I.A. 225. (2) 797 appellant by section 243 of the Government of India Act, 1935, and that the respondent 's suit was rightly dismissed, but subsequently on the petition of the respondent asking the Board to reconsider ' their decision on the ground that it had been ascertained that the Police Rules of 1937 were in fact printed and published on April 29, 1938, that was, four days after the date of his dismissal, the Board heard the appeal further, when the respondent 's allegation was admitted and, :applying the reasoning in their previously delivered judgment, the Board reversed their former decision and affirmed the judgment of the Federal Court which had held that ' the respondent 's dismissal was void and :inoperative. During the arguments before the Privy ,Council reference was made to section 60 of the Code of Civil Procedure and to the decision of the Federal 'Court in Tara Chand Pandit 's case(1), and it was also noticed that following on the remit of the case to the Judicial. Commissioner by the order of the Federal Court, dated December 4, 1941, the respondent had ,obtained a decree for payment of Rs. 2,283 against the appellant in respect of arrears of pay from the date of dismissal to the institution of the suit. When the appeal came before the Board for further hearing their Lordships on the 6th August, 1948, caused a letter to 'be addressed to the solicitor representing the appellant, informing him that their Lordships now proposed 'humbly to advise His Majesty that the appeal should 'be dismissed, and stating that the order as to costs would not be varied. The letter pointed out that if this :advice were tendered, and if His Majesty were pleased to accept it, the effect would be that the declaratory 'judgment of the Federal Court would stand. Finally, 'the letter referred to the award of Rs. 2,283 to the respondent by the Court of the Judicial Commissioner 'which, according to a submission made by the appellant 's counsel, was open to challenge, and inquired whether the appellant wished to have an opportunity ,of satisfying their Lordships that the point was open, and of being heard on it. By their Lordships ' direction a copy of this letter was sent to the respondent. (1)[1947] F.C.R. 89. 798 An intimation was received by the Privy Council that the appellant did not wish to offer any further arguments on the case. The respondent also did not desire an opportunity of arguing that he should now beawarded arrears of pay from the date of the institution of the suit onwards. In these circumstances the Board refused to deal further with the matter and advised His Majesty that the declaratory judgment of the Federal Court be restored and proceeded to observe that it would be open to the respondent to pursue any remedy which flows from that declaratory judgment in an appropriate court. Their Lordships concluded the judgment with the following observations : "Their Lordships must not be understood, however, as expressing an opinion that the respondent was entitled as of right to recover the sum of Rs. 2,283 which was awarded to him, or that he has any claim to a further sum in respect of arrears of pay. It is unnecessary, owing to the very proper attitude of the appellant, to express any view as to the former question, and the latter question does not arise in this appeal which is from the decision of the Federal Court. If that decision is affirmed the respondent who did not himself enter an appeal, cannot now ask for anything more. " It is thus clear that in express terms in this decision their Lordships declined to give any opinion on the question whether the respondent was entitled as of right to recover arrears of pay awarded to him by the" Judicial Commissioner, in spite of the circumstance that their attention had been drawn to the decision of the Federal Court in Tara Chand Pandit 's case(1). This decision therefore cannot be said to support the view contended for by the learned Solicitor General. On the other hand, it must be assumed that in spite of their decision in 1. M. Lall 's case(1), their Lordships in this case, the judgment in which was delivered subsequent to the decision in 1. M. Lalls case(2), on November 4, 1948, did not reaffirm the propositions (1) (2) 75 I.A. 225. 799 laid down in that case but preferred to express no opinion on the point. It was suggested that the true view to take is that when the statute says that the office is to be held at pleasure, it means "at pleasure", and no rules or regulations can alter or modify that; nor can section 60 of the Code of Civil Procedure, enacted by a subordinate legislature be used to construe an Act of a superior legislature. It was further suggested that some meaning must be given to the words "holds office during His Majesty 's pleasure" as these words cannot be ignored and that they bear the meaning given to them by the Privy Council in 1. M. Lall 's case (1). In our judgment, these suggestions are based on a misconception of the scope of this expression. The expression concerns itself with the tenure of office of the civil servant and it is not implicit in it that a civil servant serves the Crown ex grati or that his salary is in the nature of a bounty. It has again no relation or connection with the question whether an action can be filed to recover arrears of salary against the Crown. The origin of the two rules is different and they operate on two different fields. The rule that a civil servant holds office at the pleasure of the Crown has its origin in the latin phrase" durante bene placito" ("during pleasure") meaning that the tenure of office of a civil servant, except where it is otherwise provided by statute, can be terminated at any time without cause assigned. The true scope and effect of this expression is that even if a special contract has been made with the civil servant the Crown is not bound thereby. In other words, civil servants are liable to dismissal without notice and there is no right of action for wrongful dismissal, that is, that they cannot claim damages for premature termination of their services. [See Fraser 's Constitutional Law, page 126; Chalmer 's Constitutional Law, page 186; Shenton vs Smith (2); Dunn vs The Queen(3) ]. This rule of English law has not been fully adopted in section 240. Section 240 itself places restrictions (1) 75 I.A. 225. (2) , 234. (3) 800 and limitations on the exercise of that pleasure and those restrictions must be given effect to. They are imperative and mandatory. It follows therefore that whenever there is a breach of restrictions imposed by the statute by the Government or the Crown the matter is justiciable and the party aggrieved is entitled to suitable relief at the hands of the court. As pointed out earlier in this judgment, there is no warrant for the proposition that the relief must be limited to the declaration and cannot go beyond it. To the extent that the rule that Government servants hold office during pleasure has been departed from by the statute, the Government servants are entitled to relief like any other person under the ordinary law, and that relief therefore must be regulated by the Code of Civil Procedure. Section 292 of the Government of India Act, 1935, provides that the law in force in British India immediately before the commencement of the Act shall continue in force until altered, repealed or amended by a competent legislature. Sections 100 to 104 of the Government of India Act. 1935, confer legislative powers on the different legislatures in the country. Item 4 of the concurrent list in the Seventh Schedule reads thus: "Civil Procedure and all matters included in the Code of Civil Procedure, at the date of the passing of this Act. " It is clear therefore that the Indian Legislatures were conferred by the Government of India Act, 1935, power to regulate the procedure in regard to actions against the Grown and to make provision for reliefs that could be granted in such actions. These provisions of the Government of India Act, 1935, stand by themselves independently of what is contained in section 240,and therefore no question arises that section 60 of the Code of Civil Procedure which has the sanction of the Government of India Act, 1935, itself is in status lower than the rule laid down in section 240. The rules of English law that the Grown cannot be sued by a civil servant for money or salary or for compensation has its origin in the feudal theory that the Crown cannot be sued by its vassals or subjects in its 801 own courts. From this theory the common law lawyers in England deduced two rules, namely, (1) that the King can do no wrong, and (2) that as a matter of procedure no action can lie in the King 's courts against the Crown. (See Ridge 's Constitutional Law, eighth edition, page 295, and Fraser 's Constitutional Law, page 164). The subject, in this situation, could only proceed by way of a petition of right which required the previous permission of the Crown. Permission was given by a fiat justitia issued by the Crown. It was not in practice refused to a petitioner who had any shadow of a claim, so that probably the disadvantages of this form of procedure were more theoretical that substantial. Petitions of right and various other special forms of English procedure applicable exclusively to actions by and against the Crown were abolished by the Crown Proceedings Act, 1947, which provides that in future claims against the Crown might be enforced as of right and without the fiat of His Majesty, and that they should be enforceable by ordinary procedure in accordance with the rules of the High Court or the County Court as the case might be. Arrears of salary were being actually recovered by the procedure of petition of right in England. '[See Bush vs R. (1)] There the judgment resulted in favour of the suppliant. The claim was in respect of the amount of salary due to him as Master of the Court of Queen 's Bench in Ireland. (Robertson 's Civil Proceedings by or against the Crown, page 338). In India, from the earliest times, the mode of procedure to proceed against the Crown has been laid down in the Code of Civil Procedure and the procedure of petition of right was never adopted in this country, and the same seems to have been the rule in Australia and other Colonies. Section 56 of the Judiciary Act, 1903, relating to the Commonwealth of Australia provides: "Any person making any claim against the Commonwealth, whether in contract or in tort, may respect of the claim bring a suit against the (1) [1869] Times News, May 29. 802 Commonwealth in the High Court or in the Supreme Court of the State in which the claim arose. " Under the New South Wales Act, 39 Vict. No. 38, the Government of the Colony is liable to be sued in an action of tort as well as in contract. Section 65 of the Government of India Act, 1858, conferred the right of suit against the Government. It provided that "all persons and bodies politic shall and may have and take the same suits, remedies and proceedings legal and equitable, against the Secretary of State in Council of India as they could have done against the said company" (the East India Company). This was replaced by section 32 of the Government of India Act, 1915. Sub section (2) of that section ran as follows : "Every person shall have the same remedies against the Secretary of State in Council as he might have had against the East India Company if the Government of India Act, 1858, and this Act had not been passed. " This was replaced by section 176(1)of the Government of India Act, 1935, which substantially reproduced these provisions. From these provisions it is clear that the Crown in India was liable to be sued in respect of acts, which in England could be enforced only by a petition of right. As regards torts of its servants in exercise of sovereign powers, the company was not, and the Crown in India was not, liable unless the act had been ordered or ratified by it. Be that as it may, that rule has no application to the case of arrears of salary earned by a public servant for the period that he was actually in office. The present claim is not based on tort but is based on quantum meruit or contract and the court is entitled to give relief to him. The Code of Civil Procedure from 1859 right up to 1908 has prescribed 'the procedure for all kinds of suits and section 60 and the provision of Order XXI substantially stand the same as they were in 1859 and those provisions have received recognition in all the Government of India Acts that have been passed since the year 1858. The salary of its civil servants in the 803 hands of the Crown has been made subject to the writ of civil court. It can be seized in execution of a decree attached. It is thus difficult to see on what grounds the claim that the Crown cannot be sued for arrears of salary directly by the civil servant, though his creditor can take it, can be based or substained. What could be claimed in England by a petition of right can be claimed in this country by ordinary process. For the reasons given above we are of the opinion that this appeal is without force and we accordingly dismiss it with, costs. Appeal dismissed.

IN-Abs

Held, that the rule of English law that a civil servant cannot ' maintain a suit against the State or against the Crown for the 787 recovery of arrears of salary does not prevail in India and it has been negatived by the provisions of the statute law in India. Section 240 of the Government of India Act, 1935, places restrictions and limitations on the exercise of the pleasure of the Crown and these restrictions must be given effect to. They are imperative and mandatory. Therefore whenever there is a breach of restrictions imposed by the statute ' by the Government or the Crown the matter is justiciable and the aggrieved party is entitled to suitable relief at the hands of the court. Government servants are entitled to relief like any other person under the ordinary law, and that relief must be regulated by the Code of Civil Procedure. Punjab Province vs Pandit Tara Chand ([1947] F.C.R. 89) approved. High Commissioner OF India and Pakistan vs I.M. Lall ([1948] L.R. 75 I.A. 225) distinguished.

iminal Appeal No. 10 of 1965. Appeal by special leave from the judgment and order dated July lo, 1964 of the Mysore High Court in. Criminal Appeal No. 223 of 1963. R. H. Dhebar and section P. Nayyar, for the appellant. The respondent did not appear. 674 The Judgment of the Court was delivered by Shelat, J. This appeal, by special leave, raises the question as to the true meaning of section 42(1) of the (4 of 1939). The respondent, the owner of a motor car bearing No. MYU 1089, carried 8 passengers in his said car on Nanjangud Mysore Road on April 5, 1963 and collected Rs. 5 from each of them. He was charge sheeted under section 42(1) read with section 123 of the Act for having used the said car as "a transport vehicle" without the permit required under section 42(1). The trial Magistrate did not go into the merits though the prosecution led evidence and acquitted him relying on the decision of the High Court of Mysore in Jayaram vs The State of Mysore(1). The State took the matter in appeal to the High Court urging that the said decision required reconsideration. On the view that it did not, , the High Court dismissed the appeal. Hence this appeal. In B.S. Usman Saheb vs The State of Mysore(2) the question arose whether an owner of a motor car who had carried cement bags and other goods from one place to another without a permit under "section 42(1) could be said to have used a "goods vehicle", and, therefore, could be said to have contravened section 42(1). The trial Magistrate convicted the accused on the ground that once the car was used to transport goods, the vehicle was converted into "a goods vehicle" and required permit. The High Court set aside the conviction holding that the mere fact that the owner of such motor vehicle used it for transporting goods did not mean that the vehicle was converted into a "goods vehicle" so as to attract section 42(1). Likewise in Jayaram vs The State of Mysore(1) the accused who had his motor vehicle registered as a motor car used it for ,carrying passengers, for reward. The High Court held that the ,said vehicle having been registered as a motor car as defined by section 2(16) was not "a transport vehicle" and no prosecution could lie under section 42(1). The State of Mysore challenges the correctness of these decisions contending that though a motor vehicle is registered as a motor car, if it is used for a purpose set out in section 42(1) viz., carrying passengers for hire or reward, the motor vehicle on that occasion must be said to have been used as a "transport vehicle", and if so used without a permit, there would be a breach of that provision and the owner so using it or permitting it to be so used would be liable to be convicted. To test the correctness of this contention, some of the relevant 'provisions of the Act may first be considered. Section 2(18) Redefines a "motor vehicle" as meaning any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion (1) (2) 675 is transmitted thereto from an external or internal source. ' Section 2(16) defines a "motor cat" as meaning any motor vehicle other than a transport vehicle, omnibus, road roller, motor cycle or in.valid carriage. :Clause 25 of section 2 defines "public service vehicle" as any motor vehicle used or adapted to be used for the carriage of passengers for, hire or reward, and includes a motor cab, contract carriage and stage carriage. Section 2(33) defines "transport vehicle" as, meaning a public service vehicle or a goods vehicle. Section 3 requires a person driving a motor vehicle in any public place to have an effective driving licence issued to himself authorising him to drive the vehicle and provides that no person shall drive a motor vehicle as a paid employee or, shall so drive a. transport vehicle unless his driving licence specifically entitles him so to do. Section 42 in,Chapter IV deals with control of transport vehicles. Sub section (1)provides: "No owner of a transport vehicle shall use or permit the use of the vehicle in any public place save in accordance with the conditions of a permit granted or countersigned by a Regional or State Transport Authority or,the Commission authorising the use of the vehicle in that place in a manner in which the vehicle is being used." Section 42(1) no doubt uses the words "owner of a transport vehicle" and provides that he shall not use or permit its use in any public place save in accordance with the conditions of a permit granted or countersigned by the prescribed authority. These words, however, cannot mean that the 'sub section applies only to cases where the motor vehicle in question is registered as a transport vehicle. If that were so, a person can use his motor vehicle,provided it is not "a transport vehicle", for carrying passengers for hire or reward without having to take out a permit for its use as"a transport vehicle". Since the section is enacted for control of transport ,vehicles, it could never be the intention of the Legislature to allow such an anomalous result. The sub section, therefore, must be construed in such a manner as to effectuate the object for which it was enacted. So construed, it must mean that if a person owns. a motor vehicle and uses it or permits its use as a transport vehicle he can do so provided he takes out the requisite permit therefor If he does not take out the permit and uses it or permits its use ;Ls "a transport vehicle" he commits an infringement of the subsection. What the sub section emphasises is the use of a motor vehicle as a transport vehicle and the necessity of a Permit which is reqred for purposes of exercising control over vehicles used 'as transport vehicles. This is clear from the definitions of "transport vehicle" and a "public service vehicle". A "transport vehicle" means a "public service vehicle" and "a public service vehicle" means any motor vehicle either used or adapted to be used for carriage of passengers for hire or ' reward. Therefore, any motor vehicle used for carriage of passengers for hire or reward is regarded when so M2Sup. Cl/67 14 676 used as a public service vehicle and therefore a transport vehicle. it is the use of the motor vehicle for carrying passengers for hire or reward which determines the category of the motor vehicle whether it is adapted for that purpose or not. It must follow that even if a motor vehicle is occasionally used for carrying passengers for hire or reward it must be regarded when so used as a public service vehicle and therefore a transport vehicle and if it is so used without the necessary permit such use would be in breach of section 42(1) and the owner who uses it or permits it to be so used would be liable to be punished under section 42(1) read with section 123. A similar construction wag given to para 5(d) of Sch. 11 of the Finance Act, 1920 and section 14 of the Finance Act, 1922 in Payne vs Allcock.(1) Section 14 of the Finance Act, 1922 provided that where a licence was taken out for a mechanically propelled vehicle at any rate under the Second Schedule of the Finance Act, 1920 and the vehicle was at any time, while such a licence was in force, used in an altered condition or in a manner or for a purpose which brings it within, or which if it was used solely in that condition or in that inianner or for that purpose would bring it within a class or description of vehicle to which a higher rate of duty was applicable under the said Schedule, duty at such higher rate would be chargeable in respect of the licence for the vehicle. The appellant in that ,case, who carried on. business as a green grocer held a licence for a private motor car, duty having been paid thereon at the horsepower rate under para 6, Scb. II of the Finance Act, 1920. The car was neither "constructed" nor "adapted" for use for conveyance of goods, but the appellant, while the licence was in force, used the said car occasionally for conveyance of goods in the course of his trade. It was contended that this user was "for a purpose" which brought the car within a class to which higher rate of duty under para 5 of Sch. 11 of Finance Act, 1920 became chargeable. The court accepted the contention and held that the user was for a purpose which brought the car Within para 5 Sch. II of the said Act and the appellant was rightly convicted. It was not in dispute that the car was used by the appellant only occasionally for conveyance of goods in connection with his trade. Negativing the contention that the car was not chargeable to higher duty as it was not adapted. forcarriage of goods, Avory, J., observed that "the section referred to cases where the vehicle, while the licence is in force, had been used in an altered condition or in a manner or for a purpose which brings it within, or which if it was used solely in that condition or in that manner or for that purpose would bring it within, a class or description of vehicle to which a higher rate of ,duty is applicable." He added that to construe that section, one has only to see what was the purpose for which the car was being used which would bring it within the class to which a higher rate of (1) [1932]2 K.B. 413. 677 duty was applicable. The purpose which brought it within para 5, as distinguished from para 6 of Sch. 11, was the purpose of conveyance of goods. At palge 421 of the Report it was further observed, "twhere a licence had been taken out and the vehicle was at any time, while that licence was in force, used, (a) in an altered condition, (b) in a manner, or (c) for a purpose, which brings it within or which if it was used solely in that condition or in that manner or for that purpose could bring it within a class or description of vehicle to which a higher rate of duty is applicable, then duty at the higher rate becomes chargeable. " It is thus clear that what brought the motor vehicle under para 5, Sch. II was the purpose for which it was used. Similarly in Public Prosecutor vs Captain R. Rajagopalan(1) the High Court of Madras held that though rule 30(a) of the Madras Motor Vehicles Rules was intended to apply to motor vehicles used for the express purpose of letting for hire, if a motor vehicle was used even once for such a purpose, then, on that one occasion it was nonetheless let for hire. Hence if a person undertakes to convey goods for reward in his private vehicle on one occasion without the necessary licence he would be regarded as having let his vehicle for hire and would commit an offence under that rule. It was contended in that case that the Legislature did not intend to compel an owner of a private vehicle, who ordinarily uses his vehicle for his own purposes, to take out a licence merely because on one occasion he conveyed goods for hire in his private lorry. That contention was negatived on the ground that a motor vehicle even if used once for conveying goods for reward would nonetheless be regarded on that occasion as one let out for hire. In Re. Manager, Indian Express(2) a motor car owned by the petitioner was twice used for taking bundles of newspapers from the office of the Indian Express to the Railway Station. It was held that when the car was used for taking the said bundles, it came within the definition of a "goods vehicle" as defined by section 2 (8) and, therefore, permit under section 42 (1) was necessary and as the owner had no permit thereunder, he was guilty of an offence punishable under section 123. The combined effect of section 42(1) and the definitions of a "motor vehicle", a "public service vehicle" and a 'transport vehicle" is that if a motor vehicle is used as a transport vehicle, the owner who so uses it or permits it to be so used is required to obtain the necessary permit. It is the use of the motor vehicle for carrying passengers for hire or reward which determines the application of section 42(1). Therefore, whenever it is so used without the permit, there is an infringement of the subsection. If the construction of that subsection adapted by the High Court of Mysore were correct, it would mean that whereas an owner of a transport vehicle is required to have the permit, the owner of a motor vehicle not constructed or (1) A.LR. (2) A.I.R. 1945 Mad. 678 adapted as a transport vehicle can carry with impunity passengers for hire or reward without any permit therefor. Section 42(1) has been enacted for the purpose of controlling vehicles carrying passengers, the object of such control being obviously to ensure safety of passengers. The construction accepted by the Mysore High Court would defeat the object for which the Legislature provided such control in the interest of and for the safety of passengers. The view taken by the Mysore High Court with respect is not correct and the view taken by the High Court of Madras is not only correct but is in consonance with the purpose and object of section 42(i). The appeal is, therefore, allowed. The order of acquittal passed by the trial Magistrate and confirmed by the High Court is set aside and the Magistrate is directed to proceed with the case on merits in accordance with law and in the light of the observations made in this judgment. V.P.S. Appeal allowed.

IN-Abs

Under section 42(1) of the , no owner of a trans port vehicle shall use it or permit it to be used in any public place save in accordance with the conditions of a permit issued by the appropriated authority. A "transport vehicle" means, under section 2(33) a "public ser , vice vehiicle" and a "public service vehicle" means,, under section 2(25), a motor vehicle either used or adapted to be used for the carriage of passengers for hire or reward. The respondent was the owner of a motor vehicle registered as a "motor car" as defined in section 2(16) of the Act and not, as a "transport vehicle". He was charged with an offence under section 42(1) read with section 123 of the Act, as the car was used on one occasion, for carrying passengers on payment of hire, that is for having used the car as a "transport vehicle" without the requisite permit. The trial court, and the High Court on appeal, acquitted him on the ground that as section 42(1) uses the words "owner of a transport vehicle" the sub section applies only to cases where the motor vehicle was registered as a transport vehicle. In appeal to this Court, HELD : It is the use of the motor vehicle for carrying passengers for hire or reward which determines the category of the vehicle and the.appli 'cation of section 42(1). Therefore, even if the motor vehicle was occasionally used for carrying passengers for hire or reward, it must be regarded when so used, as a "public service vehicle" and therefore a "transport vehicle ' and, if it was so used without the necessary permit the owner who uses it or permits it to be so used would be liable under section 42(1) read with,: section 123. The interpretation of the High Court would lead to the anomalous result, namely : that whereas the owner of a transport vehicle is required to have the permit, the owner of a motor vehicle not constructed or adapted as a transport vehicle could carry with impunity passengers without any permit, and such an interpretation would defeat the object of the legislature in making the provision in the interest of the safety of passengeii. A B; 677 H; 678 A B] B section Usman Saheb vs State of Mysore, and. Jayaram vs State of Mysore, , overruled.

Appeal No. 1172 of 1965. Appeal from the judgment and order dated December 17, 1963 of the Patna High Court in Misc. Judicial Case No. 566 of 1960. R. H. Dhebar for R. N. Sachthey, for the appellant. section P. Varma, for the respondent. The Judgment of the Court was delivered by Mitter, J. , This is an appeal from a judgment and answer of the High Court of Judicature, Patna, on a certificate granted by it under section 66 A(2) of the Income tax Act of 1922 corresponding to section 261 'of the Income tax Act of 1961. The Tribunal referred two questions of law to the High Court under section 66(1) "I. Whether on the facts and circumstances of the case, could assessment be made upon the Manager of Court of Wards, Bettiah Estate, in respect of the income from the Bettiah Estate ? 2. If the assessment could be made on the Manager of the Court of Wards in respect of the income from the 749 Bettiah Estate, was it chargeable to tax at maximum rates under section 41(1) of the I ncome tax Act?" The facts of the case are as follows : Maharani Janki Kuer who was the last holder of the Bettiah Estate in Bihar died on November 27, 1954. For many years past before her death, the estate was under the management of the Court of Wards and continued under such management even after her death as it was not known whether she had left any heirs. Under section 13 of the Bengal Court of Wards Act (IX of 1879) "Whenever, on the death of any ward, the succession to his property or any part thereof is in dispute, the Court may either direct that such property or part thereof be made over to any person claiming such property, or may retain charge of the same until the right to possession of the claimant has been determined under Bengal Act VII of 1876, or until the dispute has been determined by a competent Civil Court. " "Court ' here means the Court of Wards. One Suresh Nandan Sinha filed a suit claiming the estate on the allegation that he was the nearest heir of the deceased Maharani. After the death of the Maharani, the Income tax Officer made an assessment on the Manager of the Court of Wards as representing the estate of Bettiah, the assessment relating to the assessment year 1956 57 the accounting year being the financial year 1955 56. The Government of Bihar claimed that the estate had vested in the State Government by escheat and the Manager, Court of Wards put forward that claim before the Income tax authorities. There was a further contention raised by the Manager that even if the assessment was made on him representing the estate, the income should not be taxed at a maximum rate under section 41 (1) of the Income tax Act, 1922. As the litigation was pending, the Income tax Officer and the Appellate Assistant Commissioner both held that it could not be said of the estate that the same had vested in the State by escheat and they also held that the income was taxable at the maximum rate. The same plea was raised before the Appellate Tribunal and the Tribunal observed that as no notification had been issued by the Government on the death of the Maharani or later to the effect that the estate had vested in the State of Bihar by escheat, there was no certainty as to who would be found to be the ultimate heir in view of the pending litigation. The High Court on the case stated, referred to articles 289 and 296 of the Constitution and taking note of the contentions urged on behalf of the parties observed : "In the circumstances of the present case, it is manifest that the Income tax authorities cannot validly impose a tax upon the Manager, Court of Wards, 750 Bettiah Estate, merely because a title suit has been filed with regard to the heirship of the Bettiah Estate without deciding the question as to whether the claim of the State of Bihar that the property has vested in it by escheat is established or not." On this view, the first question was answered in favour of the assessee and no answer was given to the second question because it was academic. It was asserted on behalf of the respondent and not denied by the appellant that the suit of Suresh Nandan Singh had been dismissed, but an appeal had been preferred therefrom and was pending. On the facts as the same appear to us at present, it is not possible to hold that the estate of Bettiah has escheated to the State of Bihar. It is obvious that in case of such escheat there can be no assessment to income tax. The position will be clarified after the appeal by Suresh Nandan Sinha is disposed of. In this view of the matter, the judgment of the Patna High Court is set aside. The proceedings should be finalised after the disposal of the litigation and the High Court may call for a supplementary statement of case, if it thinks necessary. The question as to whether the estate has escheated to the State of Bihar is left open, and the costs of this appeal will abide by the ultimate decision of the High Court. In case it be found that the escheat had taken place, the appellant before us will have to pay the costs of this appeal and if there is no escheat, the Commissioner will have the costs of this appeal.

IN-Abs

During the pendency of a suit by a person claiming to be the heir of the Bettiah estate which was in the possession of the Manager, Court of Wards, the Income Tax Officer made an assessment on the Manager. In those proceedings the State of Bihar and the Manager claimed that the estate had vested in the State by escheat and therefore the income was not liable to tax. The Income tax Officer, the Appellate Assistant Commissioner and the Tribunal held that as the litigation was pending it could not be said of the estate that the same had vested in the State by escheat. The High Court on reference held that the income tax authorities could not impose the tax. Setting aside the judgment of the High Court this Court in appeal. HELD : The proceedings should be made final after the disposal of the litigation and the High Court could call for a supplementary statement of the case if necessary [750 D]

Appeal No. 225 of 1965. Appeal by special leave from the judgment and order dated September 6, 1962 of the Madhya Pradesh High Court in Misc. Civil Case No. 108 of 1958. I.N. Shroff, for the appellant. S.T. Desai, section N. Andley, Rameshwar Nath, P. L. Vohra, and Mahinder Narain, for the respondent. 225 The Judgment of the Court was dilevered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Madhya Pradesh in a reference made to it under section 46 of the Gwalior War Profits Tax Ordinance, Samvat 2001 hereinafter called the Ordinance. Three questions were referred to the High Court by the War Profits Tax Commissioner, but we are only concerned with question No. 1, which reads as follows: "Whether the dividend income of Rs. 11,09,332/received from the Binod Mills was chargeable under the War Profits Tax?" When the reference was first heard by the High Court three contentions were raised by M/s Binodram Balchand of Ujjain, respondents before us, hereinafter referred to as the assessees. They were: "(1) The assessees did not deal in shares and their holdings in the Binod Mills Limited were purely in the nature of investments, having no connections with their business as defined in Section 2(5) read with Rule 1 of Schedule 1, of the Gwalior War Profits Tax Ordinance. The business of the secretaries, treasurers and agents of the Binod Mills Limited, which was carried on by them did not require any holding of the shares of the company and was not dependent on their investment in the said company. (2)The dividend income accrued or arose from the profits of the Binod Mills Limited, and as the Ordinance applied to the business carried on by this company, the dividends were excluded under the explanation to Rule 3(1) of Schedule 1. (3)The dividend income should be considered as income of the full accounting period, i.e., from Diwali of 1943 to Diwali of 1944 and should be apportioned on that basis". The High Court by its judgment dated April 19, 1957, accepted the first contention of the assessees and accordingly answered the question in their favour. It did not deal with contentions Nos. 2 and 3. The Commissioner appealed to this Court and this Court by its judgment dated December 20, 1961, set aside the judgment of the High Court and answered the first contention in relation to question No. I against the assessees and remanded the case to the High Court for the consideration of the other two contentions with reference to that question. The High Court on remand accepted the second contention of the assessees and answered question No. 1, set out above, in favour of the assessees. The Commissioner having obtained special leave, the appeal is now before us for disposal. 226 A few facts may be given in order to appreciate the point that has. been argued before us. The assessees were, at the relevant time, the Managing Agents of the Binod Mills Ltd., Ujjain, which was a private limited company carrying on the business of manufacturing and selling textile goods in 1944. The Ruler of the Gwalior State promulgated the Gwalior War Profits Tax Ordinance, Samvat 2001, for the purpose of imposing tax on excess profits arising out of certain businesses. The Ordinance came into force on July 1, 1944, and applied originally to the counting period falling within the period commencing on July 1, 1944, and ending on June 30, 1945. By virtue of a notification the period was extended to June 30, 1946. The assessees carried on the Managing Agency business during the aforesaid period in Gwalior State and being liable to be assessed to war profits submitted a return for the period commencing from July 1, 1944, to October 16, 1944. It appears that Rs. 11,09,332/ was received by the assessees on July 5, 1944, on account of dividend on shares of the Binod Mills for the year 1943. The assessees inter alia contended before the War Profits Tax Officer that this sum was not liable to be charged. The War Profits Tax Officer, however, by order dated July 9, 1951, in.; clouded this sum of Rs. 11,09,132/ in the taxable income and his view was upheld in appeal by the Appellate Assistant Commissioner and the Commissioner. As stated above, the Commissioner, at the instance of the assessees, referred three questions, including the one with which we are concerned, to the High Court. It appears that before the High Court the learned counsel for the Commissioner did not seriously dispute the contention of the assessees that the dividend income which the assessees had received was exempted by the Explanation to r. 3 of Schedule 1 of the Ordinance. The rule as it existed originally was as follows: "3(1) Income received from investments shall be included in the profits of a business liable to the War Profits Tax, unless it is proved to satisfaction of the War Profits Tax Officer that the investments have no connec tion whatever with the business. (2)In the case of business which consists wholly or mainly in the dealing in or handling of investments, income received from investments shall be deemed to be profits of that business, and in the case of a business, a specific part only of which consists in dealing in investments, the income received from investments held for the purposes of that part of the business shall be deemed to be profits of that part of the business". 227 By section 2 of the Gwalior War Profits Tax (Amendment) Ordi nance, Samvat 2002 hereinafter referred to as, Ordinance 2002, r. 3 of the First Schedule to the Ordinance was amended as follows: "In rule 3(2) of the First Schedule to Ordinance the following shall be added, namely: Explanation "The income from investments to be included in the profits of the business under the provisions of this rule shall be computed exclusive of all income received by way of dividends or distribution of profits from a company carrying on a business to the whole of which the Section of the Ordinance imposing the War Profits Tax applies", This Ordinance was promulgated on February 28, 1946. Another Ordinance called the Gwalior War Profits Tax (Amendment) Ordinance, Samvat 2004 hereinafter referred to as Ordinance 2004 was promulgated on September 6, 1947. This Ordinance amended the Explanation to sub rule (2) of rule 3 of Schedule 1 as follows "In the explanation of sub rule (2) of Rule 3 of Schedule 1 of the Gwalior War Profits Tax Ordinance, Samvat 2001 a comma is added after the words "from a company carrying on a business" and before the words "to the whole of which" and shall be always deemed to be there from the date from which the said Ordinance came into force". The High Court felt no difficulty in holding that the expla nation applied, and that on its plain terms the dividend income which the assessees received from the profits of Binod Mills Ltd. was not liable to be included in the taxable income. The High Court observed: "The language of the explanation is very plain, and it means that if income is received by way of dividends or profits from a company carrying on a business, to the whole of which the section of the Ordinance imposing the War Profits Tax applies, then the income has to be excluded in the assessment to War Profits Tax of the assessee receiving that income. The object of the explanation is clearly to avoid double taxation. Here it is not disputed that the dividend income which the assessee received was from the profits of the Binod Mills Limited and the Mills were subject to the burden of the War Profits Tax under the Ordinance. That being so, the explanation in terms applies to the case, and the assessee is entitled to claim that the dividend income of Rs. 11,09,332/ received from Binod Mills could not 228 be included in the computation of its profits for the purposes of War Profits Tax and was consequently not chargeable under the War Profits Tax Ordinance. Learned Advocate General appearing for the State did not dispute this position". Mr. Shroff, the learned counsel for the Commissioner, contends, first, that the explanation was not in existence at the relevant time, and, therefore, cannot be taken into consideration; secondly, that the explanation is an explanation to r. 3(2) and not to r. 3(1) and, therefore, cannot be used to explain r. 3(1). Mr. Shroff complains that the High Court was wrong in thinking that the explanation formed part of Ordinance 2001, as it was originally promulgated. The High Court seems to have been under this impression because in the order refusing leave to appeal to this Court the High Court observed: "There was no omission at all on our part to consider the question whether the explanation was prospective or not. Indeed, this question was never raised by the learned Advocate General, appearing for the Department and it was rightly not raised as the Explanation was not added subsequent to the promulgation of the Ordinance and the very basis of the assessment of the income of the assessee was that rule 3 of Schedule 1 of the Ordinance together with the Explanation applied to the income received by the assessee during the period from 1st July 1944 to 16th October 1944". It seems that Ordinance 2002 and Ordinance 2004 were not placed before the High Court and for this reason it assumed that the explanation was not added subsequent to the promulgation of the Ordinance. But even if it was added subsequently, in our opinion, the explanation applies to the computation of the profits of the chargeable accounting period July 1, 1944 to October 16, 1944. If we read Ordinance 2002 and Ordinance 2004 together the legislative intention to make the explanation retrospective becomes clear. Apart from Ordinance 2004, it would have been very arguable that the explanation inserted by Ordinance 2002 was retrospective because it dealt with the computation of profits and would apply to all computation of profits made by the Taxing authorities after February 28, 1946. But we need not go into this question because Ordinance 2004 expressly assumes that the explanation was in existence from the date when the Ordinance came into force and no other meaning can be given to section 2 of Ordinance 2004 because by deeming that the comma shall be deemed to be there from the date from which the Ordinance came into force it expressly assumes that the explanation was also in force from that date. Accordingly we are not inclined to 229 accept the first contention of Mr. Shroff and we must hold that the explanation applies to the computation of profits of the chargeable accounting period July 1, 1944 to October 16, 1944. Regarding the second contention, Mr. Shroff says that Ordi nance 2002 expressly provides that the explanation shall be added in r. 3(2) of the First Schedule to the Ordinance. He further says that this explanation is referred in Ordinance 2004 as "explanation of sub rule (2) of rule 3 of Schedule 1". There is no doubt that Ordinance 2002 did purport to add this explanation to r. 3(2) but it seems to us that if we look at the language of the explanation it was meant to be an explanation not only to r. 3(2) but to r. 3(1) also. First, the words "the income from investments to be included in the profits of the business under the provisions of this rule" are comprehensive and include income from investments both under r. 3(1) and r. 3(2). Secondly, there is no reason why any distinction should have been made between investments mentioned in r. 3(1) and investments mentioned in r. 3(2). Rule 3(1) is general and deals with all investments from profits of all businesses and would include investments mentioned in r. 3(2). Rule 3(2) deals with investments of a certain business, i.e., business which consists wholly or mainly in the dealing in or holding of investments. We have not been able to appreciate why, if Mr. Shroff is right, was it necessary to distinguish between income from investments mentioned in r. 3(1) and income from investments mentioned in r. 3(2). At any rate, the language of the explanation is quite clear and it seems to us that by the words "in rule 3(2) of the First Schedule to the Ordinance, the following shall be added" what was really meant was to add the explanation below r. 3(2). In the result we agree with the High Court that the answer to the question referred should be in the negative. The appeal accordingly fails and is dismissed with costs. Appeal dismissed.

IN-Abs

The assessee was the managing agent of a Textile Mill in Uj jain. In 1944, the Gwalior State promulgated the Gwalior War Profits Tax Ordinance. In 1946, by the Gwalior War Profits Tax (Amendment) Ordinance, an Explanation was added after r. 3(2) of the First Schedule to the Ordinance of 1944. In 1947, another Amendment Or dinance was promulgated whereby a comma was inserted in the Explanation. In July 1944. the assesses received about Rs. 11 lacs as dividend on its shares in the Textile Mill. The War Profits Tax Officer included the amount in the assessee 's taxable income, and the order was upheld by the Appellate Assistant Commissioner and the Commissioner. On the question: whether the dividend income was chargeable to war profits tax, the High Court held, on a reference, that the Explanation applied and that under the Explanation the dividend income was not liable to be included in the assessee 's taxable income. In appeal to this Court, it was contended that the Explanation was not applicable, because, (i) it was not retrospective; and (ii) it was only an Explanation to r. 3(2) and not to r. 3(1) which was the rule applicable to the assessee. HELD:The Explanation applies to the computation of the pro fits of the chargeable accounting period, because: (i) the Ordinance of 1947 expressly assumes that the Explanation was in existence from the date when the War Profits Tax Ordinance came into force in 1944; and (ii) on the language of the Explanation it was meant to be an Explanation not only to r. 3(2) but also to r. 3(1). By the words "in r. 3(2) the following shall be added", in the amending Ordinance of 1946, all that was meant was that the Explanation should be added below r. 3(2). [228 H 229 E]

Appeal No. 866 of 1964. Appeal by special leave from the judgment and order dated April 7, 1964 the Allahabad High Court in F.A.F.O. No. 367 of 1959. S.G. Patwardhan,Rameshwar Nath. and Mahinder Narain and Prayag Das Agarwal, for the appellants. J. P. Goyal and Raghunath Singh for the respondents. 758 The Judgment of the Court was delivered by Bachawat, J. This appeal incidentally raises a question of interpretation of article 164 of the Indian Limitation Act 1908. The respondent instituted two suits against the appellant in the court of the First Civil Judge, Kanpur. Suit No. 25 of 1958 was for the recovery of moneys due on a mortgage for Rs. 50,000. Suit No. 22 of 1958 was to recover a sum of Rs. 8,000 due on a ruqqa. On May 15, 1958, both the suits were decreed ex parte. The appellant filed an application to set aside the ex parte decree passed in Suit No. 22 of 1958. This application was numbered as miscellaneous case No. 104 of 1958. On August 16, 1958, the First Civil Judge, Kanpur, passed an order setting aside this ex parte decree on certain conditions. The order sheet in O.S. No. 22 of 1958, Misc. Case No. 104 of 1958 on August 16, 1958 stated : "Heard parties counsel, accept the applicant 's affidavit and hold that due to non service applicant was prevented from being present. Allowed on condition of payment of Rs. 150 as costs within a month and on condition that allotment shall continue. Sd/ K. N. Goyal 16 8 58 Applicant is hereby informed of connected decree of 25 of 1958 as well. Sd/ K. N.: Goyal 16/8. " An appeal by the appellant from this order was dismissed on September 25, 1958. On February 5, 1959, an advocate em ployed by the appellant to file a civil revision petition against the appellate order, obtained a certified copy of the order dated August 16, 1958. On February 24, 1959, a civil revision petition was filed by the appellant against the appellate order. On April 16, 1959, the appellant filed an application in the 'Court of the First Civil Judge, Kanpur, under 0.9, r. 13, C.P.C., for the setting aside of the ex parte decree passed in Suit No. 25 of 1958. The Civil Judge dismissed the application An appeal from than order filed by the appellant was dismissed by the High Court. Both the courts held that the summons in Suit No. 25 of 1958 was not duly served on the appellant but as more than 30 days had expired after the appellant had knowledge of the ex parte decree, the application was barred by Limitation under article 164 of the Indian Limitation Act, 1908. The appellant Dow appeals to this Court by special leave. Under 0.9, r. 13, C.P.C., a decree, passed ex parte against a ,defendant is liable to be set aside if the sununons was not duly 759 served or if the defendant was prevented by any sufficient cause from appearing when the suit was called on for hearing. If the. summons is not duly served, the defendant suffers an injury and be is entitled ex debito justitiae to an order setting aside the ex parte decree provided he applies to the court within the prescribed period of limitation. Under article 164 of the Indian Limitation Act, 1908, the period of limitation for an application by a defendant for an order to set aside a decree passed ex parte was 30 days from "the date of the decree or when the summons was not duly served, when the applicant had knowledge, of the decree". The Onus is on the defendant to show that the application is within time and that he had knowledge of the, decree within 30 days of the application. If the defendant produces some evidence to show that the application is within the, it is for the plaintiff to rebut this evidence and to establish satisfactorily that the defendant had knowledge of the decree more than 30 days before the date of the application. In Pundlick Rowji vs Vasant rao Madhavrao(1), Davar, J., held that the expression "knowledge of the decree in art ' 164 means knowledge not of a decree but of the particular decree which is sought to be set aside, a certain and clear perception of the fact that the particular decree had been passed against him. On the facts of that case, Davar, J., held that a notice to the defendant that a decree had been passed against him in the High Court Suit No. 41 1 of 1909 in ' favour of one Pundlick Rowji with whom he had no dealings was not sufficient to impute to him clear knowledge of the decree in the absence of any information that the decree had been passed in favour of pundlick Rowji as the assignee of a promissory note which he had executed in favour, of another party. This case was followed by the Calcutta ' High Court in Kumud Nath Roy Chowdhury vs Jotindra Nath Chowdhury(1). , In Bapurao Sitaram Karmarkar vs Sadbu Bhiva, Gholap(3), the Bombay High Court held that the evidence of two, persons who had been asked by the plaintiff to. tell the defendant ' about the decree and to settle the matter was not sufficient to impose knowledge of the decree on the defendant within the meaning of article 164. Macleod C.J. said "We think. the words of 'the article mean something more than mere knowledge that a decree had been passed in some suit in some Court against the applicant. We think it means that the applicant must have knowledge not merely that a decree has been passed by some Court against, him, but that a particular decree has been passed 'against 'him in a particular Court in favour of a particular person for a particular sum. A judgment (1) 11 B.L.R. 1296. (2) I.L.R. 403. (3) I.L.R. 7 60 debtor is not in such a favourable position as he used to be when he had thirty days from the time when execution was levied against him. But we do not think that the Legislature meant to go to the other extreme by laying down that time began to run from the time the judgment debtor might have received some vague infor mation that a decree had been passed against him. " This decision was followed in Batulan vs section K. Dwivedi(1) and other cases. We agree that the expression "knowledge of the decree" in article 164 means knowledge of the particular decree which is sought to be set aside. When the summons was not duly served, limitation under article 164 does not start running against the defendant because he has received some vague information that some decree has been passed against him. It is a question of fact in each case whether the information conveyed to the defendant is sufficient to impute to him knowledge of the decree within the meaning of article 164. The test of the sufficiency is not what the information would mean to a stranger, but what it meant to the defendant in the light of his previous dealings with the plaintiff and the facts and circumstances known to him. If from the information conveyed to him, the defendant has knowledge of the decree sought to be set, aside, time begins to run against him under article 164. It is not necessary that a copy of the decree should be served on the defendant. It is sufficient that the defendant has knowledge of the material facts concerning the decree, so that he has a clear perception of the injury suffered by him and can take effective steps to set aside the decree. In this case, in his application for setting aside the ex parte decree, the appellant stated that he got the information of the passing of the ex parte decree in suit No. 25 of 1958 for the first time from the respondent on April 13, 1959. It has been shown conclusively that this statements false. The respondent filed an affidavit stating that the appellant was directly informed of the passing of this ex parte decree by the First Civil Judge on August 16, 1958. This statement was not denied by the appellant. The courts below concurrently found that the appellant was personally present in the court of the First Civil Judge on August 16, 1958 when the learned judge informed him that an ex parte decree had been passed against him in Suit No. 25 of 1958. The appellant was informed that suits Nos. 22 and 25 of 1958 were connected suits. The appellant knew that he had dealings with the respondent in respect of a ruqqa and a mortgage. He knew that the suit No. 22 of 1958 was filed on the ruqqa. From the information conveyed to him by the Civil Judge on August 16, 1958, it must '.have been clear to the appellant that an ex parte decree had been passed against him in favour of the respondent in suit. 1025,1050 8. 761 of 1958 on the basis of the mortgage. The appellant had thus on August 16, 1958 clear knowledge of the decree passed against him in suit No. 25 of 1958 which he now seeks to set aside. Time began to run against him from August 16, 1958 under article 164 of the Indian Limitation Act, 1908. The application filed by him on April 16, 1959 was, therefore, clearly barred by limitation and was rightly dismissed by the courts below. In the result, the appeal is dismissed with costs. V.P.S. Appeal dismissed.

IN-Abs

The appellant had dealings with the respondent in respect of a ruqqa and a mortgage. The respondent filed two suits against the appellant for recovery of the moneys due on the ruqqa and the mortgage respectively. The summons in the suits was not duly served on the appellant and the suits were decreed ex parte. The appellant then filed an application to set aside the ex parte decree in the suit on the ruqqa. The court passed an order on 16th August 1958. , setting aside that ex parte decree and also informed the appellant who was present in court on that day, of the passing of the ex parte decree in the mortgage suit. On 16th April 1959 the appellant filed an application for setting aside the ex parte decree in the mortgage suit. The trial court and the High Court held that the application was barred by limitation under article 164 of the Indian Limitation Act, 1908, as more than 30 days had expired after the appellant had knowledge of the ex parte decree. In appeal to this Court, HELD The application was rightly dismissed. Under article 164 of the Limitation Act, the period of 30 days is counted, when the summons is not duly served, from the date when the applicant had knowledge of the decree; and the expression "knowledge of the decree" means knowledge of the particular decree which is sought to be set aside. It is a question 'of fait 'in each case whether the information` conveyed is sufficient to impute the knowledge, and, the test is not what the information would mean to a stranger, but what it meant to the defendant in the light of his previous dealings with the plaintiff and the facts and circumstances known to him [759 B; 760B D] Pundlik Rowji vs Vasantrao Madhav Rao 11 B.L.R. 1296; Kumud Nath, Roy Choudhury vs Jotindra Nath Chowdhury I.L.R. ; Bapuraa Sitaram Karmarkar vs Sadbu Bhiva Gholap. I.L.R. and Batulan.v. S.K. Dwivedi, I.L.R. 33 Patna, 1025, approved.