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Appeals Nos. 40 46,48 68, 70 74 and 76 86 of 1966. Appeals from the judgment and order dated September 2,1955 of the Andhra Pradesh High Court in Writ Petitions Nos. 96, 281, 303, 836, 1029, 1130, 1219 and 1497 of 1963, and 79, 94, 1 1 1, 112, 141, 142, 148, 149, 159, 167, 171, 172, 173, 183,256,267,286,443,491,497,549,571,591,611,616,680,695,700, 720, 725, 737, 760, 1148, 1464 and 1789 of 1964 respectively. section V. Gupte, Solicitor General and A. V. Rangam, for the appellants in (C.A. No. 40 of 1966). P.Ram Reddy, A. V. V. Nair and A. V. Rangam, for the appellants (in C.A. Nos. 41 46, 48 68, 70 74 and 76 to 86). P. A. Choudhury, and R. Thiagarajan for K. Jayaram, for the respondents Nos. 1 12, 14 19, 21 40, 42 57, 59 113, 115, 116, 118 to 143, 145 156, 159 168, 170, 172 175, 177, 186, 188, 190 196, 197 to 219, 221, 223 233, 235 240, 242 259, 261 330, 332 381, 384 387, 389 391, 393 445, 447 453, 455 472, 474476, 479 485, 494 514 and 556 (In C.A. No. 48 of 1966) and respondents Nos. 1, 4 21, 23 36, 38 43, 45 55, 57 62, 64 76, 79, 80, 82, 83, 85, 87 92, 94, 96 99, 101 104, 106, 108, 109, 111157, 159 198, 200, 202 207, 209 212, 214, 219, 221 to 272, 274 277, 279 299 and 301 324 (In C.A. No. 57 of 1966). K.B. Krishnamurthy, K. Rajendra Chaudhuri and K. R. Chaudhuri, for respondent No. (In C.A. No. 42 of 1966) respondents (in C.A. No. 45 of 1966) respondents Nos. 1 80, 82 96, 98 129, 132 150, 152 207, 209 210 (In C.A. No. 46 of 1966) and respondents Nos. 1 29, 31 110 (In C.A. No. 68 of 1966). K.R. Chaudhuri and K. Rajendra Chaudhuri, for respondents Nos. 1 7 and 9 (in C.A. No. 53 of 1966), respondents Nos. 1 3, 5 9, 11, 12, 14, 17 21, 23 and 24 (in C.A. No. 54 of 1966) and respondents Nos. 1, 2, 4 9, 11 16, 19 28, 30 33, 35 150, 152, 153, 155, 157, 197, 199 328, 330 357, 359 360 and 362 535 (In C.A. No. 44 of 1966). G. section Rama Rao, for the respondent (in C.A. No. 66 of 1966). 30 B. R. L. Iyengar, section P. Nayyar, for R. H. Dhebar, for the intervener. The Judgment of the Court was delivered by Subba Rao, C.J. These 44 appeals by certificate are preferred against the common judgment of a Division Bench of the Andhra Pradesh High Court allowing the petitions filed by the respondents under article 226 of the Constitution for directing the State of Andhra Pradesh and other appropriate authorities to forbear from collecting the assessment of land revenue under the provisions of the Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision Act, 1962 (Act 22 of 1962), hereinafter called the Principal Act, as amended by the Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision (Amendment) Act, 1962 (Act 23 of 1962), hereinafter called the Amending Act. For convenience of reference the Principal Act as amended by the Amending Act will be called in the course of the judgment as "the Act". The appellants raised the question of the constitutional validity of the relevant provisions of the Act. The Principal Act was passed on September 27, 1962 and it came into force on July 1, 1962; and the Amending Act was passed on December 24, 1962, and it came into force on July 1, 1962. We are concerned in these appeals only with the Act, i.e. Principal Act as amended by the Amending Act. It is said that the main object in passing the Principal Act was to rationalize the land revenue assessment in the State by bringing uniformity between Telengana and Andhra areas and to raise the rate of revenue in view of the rise in prices and to make the ryots bear equitably their share of the burden of the plans. With that view, as the long title of the Principal Act indicates, the said Act was passed to provide for the levy of additonal assessment on certain classes of land in the State of Andhra Pradesh and for the revision of the assessments leviable in respect of such lands and matters connected therewith. The relevant provisions of the Act, i.e., the Principal Act as amended by the Amending Act, read thus : lm15 Section 3. In case of dry land in the State, an additional assessment at the rate of seventy five per cent of the assessment payable for a fasli year for that land shall be levied and collected by the Government from the person liable to pay the assessment for each fasli year in respect of that land : Provided that the additional assessment together with the assessment payable in respect of any such land shall in no case be less than fifty naye paise per acre per fasli year. 31 Section 4. In the case of wet land in the State which Is served by a Government source of irrigation specified in classes 1, II, and III of the Table below, an additional assessment at the rate of one hundred per cent and in the case of wet land in the State which is served by a Government source of irrigation specified in Class IV thereof, an additional assessment at the rate of fifty per cent, of the assessment payable for a fasli year for that land shall be levied and collected by the Government from the person liable to pay the assessment for each fasli year in respect of that land : Provided that the additional assessment together with the assessment payable per acre per fasli year for any wet land specified in column (1) of the Table below shall, in no case, be less than the minimum, or exceed the maximum, specified in the corresponding entry against that land (a) in column (2) of the Table ill the case of a single crop wet land, and (b) in column (3) of the Table in the case of a double crop wet land. THE TABLE Rate of assessment Rate of assessment Description Payable for single payable for double of wet land crop wet land,per crop wet land,per acre. (1) (2) (3) Class of, and Number of Settlement Mini Maxi Mini Maxi extent of settlementmum classification ayacut under taram (or) Government Bhagana source of irrigation. (a) (b) (c) (a) (b) (a) (b) Rs.nP. Rs.nP. Rs.nP. Rs,nP. 1. 30,000 (a)1 to 5 16to12 20.00 24.00 30.00 36.00 acres (b)6 to 8 111/2 15.00 18.00 22.50 27.00 and (c)9 and to9 81/2 12.00 15.00 18.00 22.50 above above below II. 5,000 (a) 1to 5 16 to 12 15.00 18.00 22.50 27.00 acres (b) 6 and ll1/2 12.00 15.00 18.00 22.50 and above above and but below below 30,000 acres. III.50 acres All All 9.00 14.00 3.50 21.00 and above tarams bhaganas but below 5,000acres. Below 50 All All 6.00 12.00 9.00 18.00 acres. tarams bhaganas. 32 Explanation. In this Table, (a) The expression Government source of irrigation ' does not include a well, spring channel, parrekalava or cross bunding; (b) taram and bhagana classification shall be as registered in the revenue and settlement records; (c) where no such taram or bhagana classification is recorded in the revenue and settlement records, in respect of any land, that land shall be deemed to bear the taram or bhagana classification which a similar land in the vicinity bears. Section 8. (1) The District Collector, shall, from time to time, by notification published in the Andhra Pradesh Gazette and the District Gazette, specify the Government sources of irrigation falling under classes 1, 11 and IV of the Table under section 4 and may in like manner, include in, or exclude from, such notification any such source. (2) Any person aggrieved by a notification published under subsection (1) may, within forty five days from the date of publication of the notification in the Andhra Pradesh Gazette and the District Gazette, prefer an appeal to the Board of Revenue whose decision thereon shall be final. We will analyse the provisions of the said section at a later ,stage of the judgment. The High Court in deciding against the constitutional validity of the said provisions gave in effect the following findings : (1) Under section 3 of the Act there is no classification at all in the case of dry lands. (2) The ayacut basis adopted in the Table under section 4 of the Act has no rational relation to the taram or quality of the land or the nature of the irrigation source. (3) The minimum fixed by the proviso in many cases is more than 100 per cent increase fixed by the section and thus, the proviso has exceeded the section. (4) The Act is silent as to the machinery for making the assessment, the criteria for fixation of the assessment, within the range of a fixed maximum and a minimum the rights and remedies of the assesses and the obligation of the Government to survey the lands. In short, the High Court struck down the said provisions on the ground that they offend articles 14 and 19 of the Constitution for three reasons, namely (i) in the,, case of dry lands there,. is no reasonable classification at all as the flat minimum rate of 50nP. per acre has no relation to the fertility of the land, (ii) in regard to wet land there is no reasonable relation between the quality of the land and the ayacut to 33 which it belongs, and (iii) the procedure prescribed for the ascertainment of the rate is arbitrary and uncontrolled, The High Court, though it elaborately considered the question whether the revenue assessment was by authority of law within the meaning of article 265 of the Constitution, did not express a final opinion thereon. Mr. section V. Gupte, learned Solicitor General, who appeared in one of the appeals filed by the State, contended broadly that the High Court went wrong in coming to the conclusion that the revenue assessment made under the Act had no reasonable relation to the quality of the soil and pointed out that what the Legislature did was nothing more than imposing a surcharge on previous rates fixed on the basis of tarams in the case of lands in Andhra and bhagana in the case of lands in Telengana. Mr. P. Ram Reddy, learned counsel for the State in the other appeals, while adopting the arguments of the learned Solicitor General, argued in greater detail contending that though the classification under section 4. of the Act was apparently based upon ayacut, there was a correlation between the extent of the ayacut and the duration of water supply and that on that basis the classification could be sustained as it had a reasonable relation to taram or bhagana, as the case may be, and also to the duration of water supply. He took us through various statistical data to support the said connection between the extent of ayacut and the duration of water supply. On the question whether there was any procedure for assessment, he strongly relied upon section 6 of the Act and contended that the said section, by reference, incorporated the pro existing procedure for assessment in Andhra under the Board 's Standing Orders and in Telengana tinder the relevant Acts. Mr. P. A. Chowdhury, learned counsel for some of the res pondents, argued that from time immemorial land assessment, both in Andhra and in Telengana, was scientifically settled on the basis of taram or bhagana, as the case may be, depending upon the quality and the productivity of the soil and that the Act in adopting the maximum and the minimum rates in respect of both dry and wet lands had ignored the said basis and instead adopted a thoroughly arbitrary method of fixing rates on the basis of ayacut which had no relevance at all to the quality or productivity of the land in respect of which a particular assessment was made. He further contended that the Act omitted the entire machinery for assessment which would be found in almost every taxation statuts and conferred an arbitrary and uncanalized power on the appropriate authority to impose assessments and contended that the want of reasonable relation between the quality and fertility of the soil and the ayacut and the conferment of arbitrary power of assess 34 ment would infringe the doctrine of equality enshrined in article 14 of the Constitution, both in its substantive and procedural aspects. Mr. Krishnamurthy, learned counsel appearing for the res pondents in some of the appeals, advanced an additonal argument in respect of lands fed by Yeleru river, that in any event the Act would not apply to the said land as they did not fall under any of the three categories covered by the Act, namely, dry land, single crop wet land and double crop wet land and that, therefore, no assessment under the Act could be imposed in respect of the said lands. Before we consider the said arguments it would be necessary to know briefly the nature and scope of the previous revenue settlements in Andhra and Telengana. After some experiments in the Madras State it was decided in 1865 that a general revision of assessment should be made based on accurate survey and classification of soils. This is known as Ryotwari Settlement. The Ryotwari Settlement was conducted in seven stages : (1) demarcation of boundaries, (2) survey, (3) inspection, (4) classification of soils, (5) assessment, (6) matters subsequent to assessment, and (7) records of settlement. The first two items were done by the Survey Department and the items Nos. 3 to 7 by the Settlement Department. It will be enough for the purposes of those appeals if we describe briefly how this classification of soils was done and the assessment made on that basis. Before proceeding to the detailed classification of soils in each village, there was a preliminary grouping of villages so as to bring together those which were similarly situated having regard to proximity to market, facility of com munication and climate. Thereafter the soil was classified into "series", such as (1) Alluvial islands in rivers and permanently improved soils; (2) Regar or regada, the so called 'black cotton soil, ' (3) Red ferruginous soil; (4) Calcareous chalk or lime and; (5) Arenaceous. Every soil of the said series was again divided into classes on the basis of the variety and physical situation, such as pure clay or half sand or more than 2/3rd sand etc. The classes were again divided into sorts such as good or bad or ordinary or worst. Briefly stated land was classified into series into classes, and classes into sorts. In the case of wet land in addition to the sorts, other distinctions were borne in mind in grading the soil such as (1) whether the land was close to the irrigation main channel and had good level and drainage, (2) whether the land was less favourably situated in these respects, (3) whether the land was imperfectly supplied with water; or whether the level was inconvenient, and drainage bad, and (4) whether the land was so situated that the water could not be let to flow on to it, but had to be raised by baling it out. After the said classification the next stage was to ascertain the amount of crop each different class and 35. sort of soil could produce. After deducting the cost of cultivation the net produce was valued in money and the said amount was divided into proper percentages, one such percentage fixed by the Rules would be the Government revenue. On the basis of this classification a table of class and sort rates called Taram, which would apply equally to several soils was drawn up. We have gathered the necessary particulars from "Land Systems of British India" by Baden Powell, Vol. 3. The principles of settlement of ryotwari land and the manner the Government demand was arrived at is found in the Standing Orders of the Board of Revenue Vol. 1, Paras 1 and 2. They are as follows : (1) The assessment shall be on the land, and shall not depend upon the description of produce, or upon the claims of certain classes such as Brahmans, Mahajanas, Purakkudis and others to reduced rates. (ii)The classification of soils is to be as simple as possible, and is to be alike everywhere instead of each village having its own; (iii)The assessment is to be fixed so as not to exceed half the net produce after deducting the expenses of cultivation, etc. (iv)No tax is to be imposed for a second crop on dry land, but wet lands which in all ordinary seasons have an unfailing supply of water for two crops are to be registered as double crop, the charge for the second crop being generally half the first crop assessment. Remissions may be given when the supply of water fails. In cases where water is raised by baling an abatement of half a rupee per acre is allowed : (v) The Tahsildar, or in the course of a resettlement, the Special Settlement Officer or Special Assistant Settlement Officer may allow the charge for second crop to be compounded in respect of all irrigated lands of which the supply of water is not ordinarily unfailing. The rates of composition will be as follows : For wet land irrigated from a second class irrigation source one third : For wet land irrigated from a third class irrigation source, one fourth; For wet land irrigated from a fourth class irrigation source, one fifth; 36 For wet land irrigated from a fifth class irrigation source, one sixth. Where the irrigation is precarious and the supply is supplemented by wells, the divisional officer, or in the course of a re settlement, the Special Settlement Officer, or Special Assistant Settlement Officer, may allow the charge for second crop to be compounded at one half of the rates referred to above, except under sources grouped in Class 1 or 2 for settlement purposes. Com position at such favourable rates may be allowed to lands for which the charge for second crop has already been compounded at the ordinary rates. If the wells however fall into disrepair, the land should be transferred from compounded double crop to single crop wet. Ryots may be permitted to compound at any time and to any .extent even after the settlement. (2)In carrying out the settlement with reference to the foregoing principles, the Settlement Department divides the soils into certain classes with reference to their mechanical composition, sub divides them into sorts or grades with reference to their chemical and physical properties and other circumstances affecting their fertility, ,and attaches a separate grain value to each grade after numerous examinations of the actual outturn of the staple products in each class and sort of soil. The grain value is then converted into money at the commutation price, based generally on the average of the 20 non famine years immediately preceding the settlement, for the whole district, with some abatement for trader 's profits and for the distance the grain has usually to be carried to the markets, and from the value of the gross produce thus determined, the cost of cultivation and a certian percentage on account of vicissitudes of season and unprofitable areas is deducted, and one half of the remainder is the maximum taken as assessment or the Government demand on the land. After this, soils of similar grain values, irrespective of their classification, are bracketed together in orders called Tarams, each with its own rate of assessment. These rates are further adjusted with reference to the position of the villages in which the lands are situated and the nature of the sources of irrigation. For this purpose villages are formed into groups, in the case of dry lands, with reference to their proximity to roads and markets, and, in the case of wet lands, with reference to the nature and quality of 37 the water supply. This accounts for different rates of assessment being imposed on lands of similar soils, but situated in different groups or under different classes of irrigation. " The broad principles of Ryotwari system may be stated thus (1) Under that system the soil itself is taxed and the assessment is fixed on the land; (2) Lands are classed into two general heads, namely, wet and dry; (3) The soils of similar grain values are bracketed together in orders called "Tarams" each with its own rate of assessment; (4) The rates are further adjusted, in the case of dry lands, with reference to the nature and quality of water supply. This system had been followed from time immemorial and had the general approval of the public. It has a scientific basis and throws equitable burden on the different classes of land. The system followed in Telengana which formed part of the erstwhile Hyderabad State was as follows. The relative scale of soils in respect of classification was in annas or "annawari". The existing or the former rates were taken as the basis and were adjusted having regard to altered circumstances, the rise or fall of prices, increase in population, means of support and other advantages. No attempt was made to fix the assessment at a certain fraction of net assets for determining the money value of the produce of the field crop. But experiments were made by the Settlement Officers and with the results obtained therein the rates fixed were checked in order to ascertain what profit would be left to the cultivators. It will be seen that both in Andhra as well as Telengana area; under the Ryotwari system, the land revenue which was a share of the produce of the land commuted in money value varied according to the classification of soil based upon its productivity. Both in Andhra and Telengana areas under the Ryotwari system the soils of similar grain values were bracketed together in orders called 'Tarams ' or Bhagana and the rates were further adjusted in the dry land having regard to the grouping and in wet lands having regard to the water supply. But in both the cases, the quality and the grade of the soil divided in 'Tarams ' or 'Bhaganas ' as the case may be, was the main basis for assessment. It appears that the Ryotwari Settlements were abandoned in the year 1939. In the Report of the Land Revenue Reforms Committee of the Government of Andhra Pradesh, Hyderabad at page30 it is stated "Re settlement operations were never popular with the ryots, as in all cases due to the steady increase in prices, resettlements always led on to an increase in land revenue assessment. They were finally ordered to be abandoned in 1939. " 38 But the Andhra Pradesh Land Revenue Assessment (Standar dization) Act, 1956 and the Hyderabad Land Revenue (Special Assessment) Act, 1952 were passed in order to standardize the rates on the basis of price level. 'They increased the rates by way of surcharge. In the year 1958 the Government of Andhra Pradesh appointed Land Revenue Reforms Committee to examine the existing system and rates of land revenue assessment and irrigation charges obtaining in the various regions of the State and to make suitable recommendations for their rationalisation. The relevant recommendations of the Land Revenue Reforms Committee of the Government of Andhra Pradesh in regard to fixation of rates are contained in Ch. XV of Part 11 Vol. (iii) of its Report. They are : "No. 51. Land Revenue should be fixed as a percentage of the net produce. No. 53. As periodical settlements or re settlements are not recommended and as revisions in future will be based on prices and other relevant factors, it is not necessary to give an opinion as to what percentage of the net produce, the share of the Government should be. No. 71. In future, the assessment on irrigated land should be fixed on the basis of the dry land potential and the charge for irrigation should be on the basis of a charge, for service, by the Government. No. 72. The productivity of the soils, the capacity of the source based on the duration of supply and the ability of the ryots to bear the charge, are the chief factors which should be considered in determining the water charges. No. 73. In future, the assessment on irrigated land should consist of dry assessment depending on the quality of soil and the charge for irrigation, based on the quantum of service rendered by the Government. Even though, the income from irrigated land is several times that of dry land, still for the service done, it is not suggested to levy a uniform rate, but graduated rates, related to the soil value of the lands, on which the yields would depend. " It will be seen from the said recommendations that the Committee ,did not recommend Ryotwari settlements but suggested that assessments should be based on the quality and productivity of soils, the duration of supply of water and the prices. It may be noticed that the Committee did not make ayacut the basis of the assessment. 39 Let us now analyse the provisions of the Act. Under sections 3 and 4 of the Act and the Table attached to section 4, which have been extracted earlier, a completely new scheme has been laid down. Under section 3, an additional assessment at the rate of 75 per cent of the earlier assessment is imposed and under the proviso the total asessment should not be less than 50 np. per acre for a fasli year. That is to say, irrespective of the quality and productivity of the soil, every acre of dry land has to bear a minimum assessment of 50 np. per acre for a fasli year. Coming to wet lands, under the Table appended to section 4, they are divided into 4 categories depending upon the extent of the ayacuts. Ayacuts of 30,000 acres and above fall under the first class, 5,000 acres and above but below 30,000 acres, under the 2nd class, 50 acres and above but below 5000 acres, under the 3rd class, and below 50 acres, under the 4th class. A maximum and a minimum rate of assessment per acre are fixed for lands under ayacuts under each of the said class . Further, under class I the tarams and bhaganas are divided into 3 groups and different maxima and minima rates of assessment are fixed for each such group. In the 2nd class, tarams and bhaganas are put into two groups and different maxima and minima rates are fixed in respect of the two groups; in classes 3 and 4 no distinction is made on the basis of tarams. Briefly stated, the whole classification is based on the extent of ayacut and in the case of classes 1 and 2 groups of tarams are relied upon only for introducing differences in the maximum and minimum rates. But the distinction between different taranis in each of the groups is effaced without any appreciable reason for such effacement. The minimum flat rates fixed for dry lands as well as for wet lands are not based upon the quality and productivity of the soil and in the case of wet lands the minimum rate is mainly founded on the extent of ayacut. Prima facie we do not see any reasonable relation between the extent of the ayacut and the assessment payable in respect of an acre of land forming part of that ayacut. The system of periodical ryotwari settlement held by the British Government on a scientific basis of quality and productivity of the soil with marginal adjustments on the foot of the duration of water supply in the case of wet lands and grouping of villages in the case of dry lands was given up. The scheme of surcharge on pre existing rates, earlier accepted, was not adopted. The recommendation of the Committee that the assessment should be based on the dura tion of water supply among others was not followed. Instead the Act introduced in the case of both dry and wet lands an unscientific and arbitrary method of assessment imposing a minimum flat rate irrespective of the tarams. In the case of wet lands an additional irrational factor is laid down, viz., the rate is linked with the extent of the ayacut. In the case of wet land, a minimum flat 40 rate with some variations within different groups in classes I and II and a minimum flat rate in respect of the groups in classes III and IV is fixed without any rational connection between the two. Mr. P. A. Choudhury contended that the scheme accepted by the Act was hit by article 14 of the Constitution inasmuch as it gave up practically the principle of tarams and bhaganas and accepted a flat rate irrespective of the quality and productivity of the land and, therefore, suffered from want of reasonable classification. He further contended that the alleged justification for the classification, namely, the extent of the ayacut, had no reasonable relation to the objects sought to be achieved by the Act, namely, rationalisation of the revenue assessments on land in the entire State. Mr. P. Ram Reddy, on the other hand, made a strenuous attempt to sustain sections 3 and 4 of the Act on the basis of reasonable classification. He said that in the case of dry land the minimum rate of 50 np. was so low that in most of the cases 75 per cent of the previous assessment per acre would not be more than 5 np., and. therefore, the mere fact that in a few cases the 75 per cent of the assessment would fall on the other side of the line could not affect the validity of the classification for it would almost be im possible in any scheme of classification to avoid marginal cases. So too, in the case of wet lands, he argued, in regard to classes I and II, the duration of supply of water corresponded to the extent of the ayacut in most of the cases and, therefore, though the classification was based upon the extent of the ayacut, it was really made on the basis of the duration of the water supply. As regards different groupings of the tarams and bhaganas in the first two classes, it was contended that, as the differences between the tarams in each group were not appreciable and, therefore, if the rate of assessment was integrally connected with the duration of the water supply, the said groupings of the tarams would not affect the reasonableness of classifications. In the case of classes 11 and IV, he contended, that in respect of lands falling under the said two classes the difference in the rates between the different tarams was not appreciable and, therefore, that could be ignored. In short he maintained that there was an equation between the duration of supply of water and the extent of the ayacut and that the difference in the duration of water supply in the context of assessment of various lands has a reasonable relation to the aforesaid object of the Act sought to be achieved. Now let us test the contentions of Mr. Ram Reddy with the facts placed before us. Wet Lands.some tabular statements under the headings "average test" and "majority test" have been placed before us in 41 support of the contention. The following are the figures under the "Average test" : "A" AVERAGE TEST Average Average AverageAverage Sl. Name of Taluk for less for bet for bet for more NO. than 3 ween 3 ween 5than 8 months and 5 and 8months months months 1. Anantapur 26.4 50.5 120.8 . . 2. Dbarmavaram 13.7 49.0 120.1 . . 3. Tadipartri 16.4 62.0 126.0 . . 4. Gooty 9.5 48.3 152.8 . . 5. Kalyanadurga 10.2 52.9 152.5 . . 6. Rayadurg 22.0 59.7 162 0 . . 7. Mabakasira 15.2 55.4 143.2 . . 8. Penukonda 10.9 60.6 186.4 . . 9. Hindupur 15.1 58.3 108.7 . . 10. Kadiri 9.9 43.9 147.9 . . Average of Taluks 14.954.1142 2 AverageAverage for bet for bet ween 3 ween 5 and 5 and 8 months months 1. Ichapuram 8.3 69.6 2. Pathapattanam 24.7 47.4 3. Chipurapalli 2.5 139.3 4. Srikakulam 6.4 84.9 5. Sompeta. 6.6 80.8 6. Salur 13.8 . 7. Babbili 19.5 . 8. Palkonda . 37:8 9. Narasannapet . 35.5 10. Parvathipuram . 84.2 Average of Taluks 8.2 57.9 Sl Average Average Average Average No Name of Taluk for less for bet for bet for more than 3 ween 3 ween 5 than 8 months and 5 and 8 months months months 1. Mahabooba 4.8 26.8 60.6 . 2. Mulug 25.1 171.6 370.86086.46 The averages mentioned under different columns are the average extent of the ayacuts in each taluk correlated with particular months of water supply. If we take the average for less than 3 months in respect of different taluks in the Rayalaseema area, which is part of the Andhra, the extents of the ayacuts vary from 9 acres to 26 acres. In regard to the duration of water supply between 3 and 4 months, they vary from 43 to 62 acres. In regard to the duration of water supply between 5 and 8 months, they vary bet M4SupCI 67 4 42 ween 108 and 152 acres. So too in some of the taluks of the Andhra area the same variations are found. It is, therefore, not possible from the average test to hold that particular months of supply corresponded with particular extent of the ayacut. The following tabular form represents the "Majority test" "B" MAJORITY TEST Between 5 months dura Between 5 and 7 month. ; tion Sl. Name of Taluk No. No irr Total No of No of irr Total gation irrigation gation No of irrigation sources sourcessources sources below 50 between 50 acres ayacut and 5000 acres 1. Anantpur 15 30 19 19 2. Dbaramavaram 23 32 14 14 3. Tadapatri 7 9 1 1 4. Gooty 31 34 5 5 5. Kalyandurg 38 51 14 14 6. Kayadurg 5 9 2 2 7. Madakasira 37 62 25 25 8. Pandukonda 54 85 32 32 9. Hindupur 113 155 30 30 10. Kadiri 379 407 18 18 Below 5 months duration Between 5 & 8 months Sl . Name of Taluk NO. of Total No No of Total No irrigation of irri irrigat of irriga sources gation tion tion sources sources sources below 50 between 50 acres ayacut and 5000 acres 1. Ichapuram 165 166 35 79 2. Pathapatnam 927 1,054 147 570 3. Cheepurapalli 1,799 1,905 39 39 4. Srikakulam 465 470 127 129 5. Sompeta 1,082 1,099 125 131 6. Salur 594 614 . 7. Bobbili 1,629 1,771 . 8. Palkonda . . 178 290 9. Narasannapet . . 192 1.214 10. Paravathipuram inclu ding Karupum Section. 135 152 1 Mahabooba Taluk 111 111 90 90 (P. 1456 to 1457 upto 10 acres) 2. Mulugu 179 231 12 12 Do No. of Irrigation Sources Between 5000 & 3,000 acres for more than 8 months 2 Total No. of Irrigation sources do 3 43 By majority test it is meant to convey that in each taluk the majority of the irrigation sources with a particular duration have a proportionate relation to the different extent of the ayacut mentioned in the Act. But the aforesaid tabular form does not support that assertion. In regard to water sources of below 5 months duration with an ayacut of below 50 acres, a comparison of the first two columns shows that, except in a few cases, the test com pletely fails. No doubt in regard to irrigation sources supplying water for between 5 and 8 months of ayacut of 5,000 to 50,000 acres, the test appears to be satisfied. But the table itself is confined only to the, Rayalaseema area of the Andhra Part of the State and even in regard to that area there is no unanimity, as the test fails in regard to sources within 5 months duration. Similar tests in Srikakulam district which is a part of the Andhra area of the State, shows that in many cases the majority test thoroughly breaks. Nothing can, therefore, be built upon the said tests. Further, the statements filed in the case showing the area irrigated for different durations clearly indicates that in many cases the additional assessment is more than 100 per cent or 50 per cent, as the case may be, of the original assessment showing thereby that the increase is on the basis of the flat minimum rate and not on the basis of the duration of the irrigation sources. Further water sources which supply water for more than 5 months but less than 8 months and have registered ayacuts below 5,000 acres fall under class IV. Some of the tanks which supply water for more than 8 months fall under different classes having regard to the ayacut which they serve. For instance, Kumbum tank has a registered ayacut of 10,000 acres, Bukkaepatnam tank has a registered ayacut of 184 acres; and though both supply water for 8 months or More, the former falls under class II and the latter under class 111. A cursory glance through the statistics of the various districts tells the same tale. In the Warrangal district of the Telengana area. in Mahaboobad taluk none of the water sources supplies water for more than 8 months and none of them has an ayacut of more than 175 acres; they are all classified under class III or class IV. In Malug taluk 3 tanks supply water for more than 8 months and they have ayacuts of 3,400 acres, 1,901 acres and 6,470 acres re. , pectively. The first two fall under class III and the last under class H. In Anantapur District, 14 out of 22 source% which supply water for between 3 and 5 months are placed under class 111. III Dharmavaram taluk, out of 22 water sources of similar nature, 9 fall in class III. In Srikakulam district some of the water sources which supply water for more than 8 months fall under class III, because of their ayacut. The record also discloses that Sitanagaram Anicut system has a registered ayacut of 4,017 acres, Mahadevpuram tank system has only 1.500 acres. Dondaped tank system has 1,504 acres, Anamasamudram Giraperu tank system has 826 acres, Jangamamaheswarapuram tank system has only 246 acres. 44 Yerur Tank system has 1,500 acres, and Ponnalur tank system has 987 acres. Under section 4 all these water sources fall under class III. It is not necessary to multiply instances. The High Court has carefully considered this aspect. Enough has been said to make the point that classification based on ayacut has no reasonable relation to the duration of water supply. It is, therefore, clear that the ayacuts do not correspond to the number of months of water supply; indeed, many tanks which supply water for a longer duration have smaller ayacuts. Tanks supplying water for equal durations fail under different classes. In a large number of cases the minimum rate is more than 100 per cent of the earlier assessment indicating thereby that the minimum rate has no relation to the quality or the productivity of the soil. In short, both sections 3 and 4 in fixing the minimum flat rate for dry or wet lands, as the case may be, have ignored the well established taram principle; and in the case of wet lands an attempt has been made to classify different systems on the basis of the ayacuts but the said test is unreasonable and has no relation to either the duration of water supply or to the quality or the productivity of the soil. The classification attempt in either case has no reasonable relation to the objects sought to be achieved, namely, imposition of fair assessments and rationalisation of the revenue assessment structure. Indeed, an arbitrary method has been introduced displacing one of the most equitable and reasonable methods adopted all these years in the revenue administration of that State. The same unreasonableness is writ large on the provisions prescribing the machinery for assessment. The machintry provisions read thus : Section 6. The additional assessment payable under this Act in respect of any land shall, for all purposes, be treated as land revenue. Section 8. (1) The District Collector shall, from time to time, by notification published in the Andhra Pradesh Gazette and the District Gazette, specify the Government sources of irrigation falling under classes I, II and IV of the Table under section 4 and may in like manner, include in, or exclude from, such notification any such source. (2) Any person aggrieved by a notification published under subsection (1) may, within forty five days from the date of publication of the notification in the Andhra Pradesh Gazette and the District Gazette. prefer an appeal to the Board of Revenue whose decision thereon shall be final. 45 Section 8 has nothing to do with the assessment. It only provides for specification of Government sources of irrigation falling under different classes. Therefore, the only provision which may be said to relate to procedure for assessment is section 6. Mr. Ram Reddy argued that section 6 by reference brought into the Act not only the entire provisions of the Andhra Pradesh Revenue Recovery Act but also the elaborate procedure for assessment prescribed by the Standing Orders of the Board of Revenue. He added that section 6 incorporated by reference the Standing Orders of the Board of Revenue relating to procedure and thereby the said Standing Orders were made part of the statute. This argument has been pitched rather high and we do not think that the phraseology of the section permits any such interpretation. Under section 6 the additional assessment payable under the Act shall be treated as land revenue. E.x facie this provision has nothing to do with the procedure for assessment; but the assessment payable is treated as land revenue. An assessment becomes payable only after it is assessed. The section, therefore, does not deal with a stage prior to assessment. The amount payable towards assessment may be recovered in the manner the land revenue is recovered. For the same reason it is not possible to read into the section the entire gamut of the Standing Orders of the Board of Revenue which deal with the mode of assessment; for the said machinery also deals with a stage before the assessment becomes due. If it was the intention of the Legislature that the Standing Orders of the Board of Revenue should be brought into the Act by incorporation, it would have certainly used appropriate words to convev that idea. It would not have left such an important provision so vague and particularly when the Legislature may be presumed to know that the question whether the Standing Orders are law was seriously raised in many proceedings. Therefore, if section 6 is put aside, there is absolutely no provision in the Act prescribing the mode of assessment. Sections 3 and 4 are charging sections and they say in effect that a person will have to pay an additional assessment per acre in respect of both dry and wet lands. They do not lay down how the assessment should be levied. No notice has been prescribed, no opportunity is given to the person to question the assessment on his land. There is no procedure for him to agitate the correctness of the classification made by placing his land in a particular class with reference to ayacut, acreage or even taram. The Act does not even nominate the appropriate officer to make the assessment to deal with questions arising in respect of assessments and does not prescribe the procedure for assessment. The whole thing is left in a nebulous form. Briefly stated, under the Act there is no procedure for assessment and however grievous the blunder made there is no way for the aggrieved party to get it corrected. This is a typical case where a taxing statute does not provide any machinery of assessment. 46 On the said facts the question is whether sections 3 and 4 of the Act offend article 14 of the Constitution. The scope of article 14 has been so well settled that it does not require further elucidation. While the article prohibits discrimination, it permits classification. A statute may expressly make a discrimination between persons or things or may confer power on an authority who would be in a position to do so. Official arbitrariness is more subversive of the doctrine of equality than statutory discrimination. In respect of a statutory discrimination one knows where he stands, but the wand of official arbitrarianess can be waved in all directions indiscriminately. A statutory provision may offend article 14 of the Constitution both by finding differences where there are none and by making no difference where there is one. Decided cases laid down two tests to ascertain whether a classification is permissible or not, viz., (i) 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 the differential must have a rational relation to the object sought to be achieved by the statute in question. The said principles have been applied by this Court to taxing statutes. This Court in Kunnathat Thathunni Moopil Nair vs The State of Kerala(1) held that the Travan core Cochin Land Tax Act, 1955, infringed article 14 of the Constitution, as it obliged every person who held land to pay the tax at the flat rate prescribed, whether or not he made any income out of the property, or whether or not the property was capable of yielding any income. It was pointed out that that was one of the cases where the lack of classification created inequality. In East India Tobacco Co. vs State of Andhra Pradesh(2) though this Court again held that taxation laws also should pass the test of article 14 of the Constitution gave the caution that in deciding whether such law was discriminatory or not it was necessary to bear in mind that the State had a wide discretion in selecting the persons or things it would tax. The applicability of article 14 to taxation statute again arose for consideration in Khandige Sham Bhat vs The Agricultural Income Tax Officer(3) and this Court affirmed the correctness of the decision in K. T. Moopil Nair 's case(1). In the context of a taxation law this Court held "Though a law ex facie appears to treat all that fall within a class alike, if in effect it operates unevenly on persons or property similarly situated, it may be said that the law offends the equality clause. It will then be the duty of the court to scrutinize the effect of the law carefully to ascertain its real impact on the persons or property similarly situated. Conversely, a law may treat (1) ; (2) [1963] 1 section C. R. 404. (3) , 817. persons who appear to be similarly situated differently; but on investigation they may be found not to be similarly situated. To state it differently, it is not the phraseology of a statute that governs the situation but the effect of the law that is decisive. If there is equality and uniformity within each group, the law will not be condemned as discriminative, though due to some fortuitous circumstances arising out of a peculiar situation some included in a class get an advantage over others, so long as they are not singled out for special treatment. Taxation law is not an exception to this doctrine. But in the application of the principles, the courts, in view of the inherent complexity of fiscal adjustment of diverse elements, permit a larger discretion to the Legislature in the matter of classification, so long it adheres to the fundamental principles underlying the said doctrine. The power of the Legislature to classify is of "wide range and flexibility" so that it can adjust its system of taxation in all proper and reasonable ways. " 47 It is, therefore, manifest that this Court while conceding a larger discretion to the Legislature in the matter of fiscal adjustment will insist that a fiscal statute just like any other statute cannot infringe article 14 of the Constitution by introducing unreasonable discrimination between persons or property either by classification or lack of classification. Two decisions relied upon by the learned counsel for the appellant may now be noticed. In C. V. Rajagopalachariar vs State of Madras(1) the facts were : two Acts, namely. Madras Land Revenue Surcharge Act (19 of 1954) and Madras Land Revenue (Additional Surcharge) Act (30 of 1955), were passed by the Madras Legislature increasing the land revenue payable by landlords to the extent of the surcharge levied. Those two Acts were questioned, inter alia, on the ground that they offended article 14 of the Constitution; but the ground of attack was that the Acts fixed a slab system under which the rate of surcharge progressively increased from As. /2/ to As. /8/ on each rupee of the land revenue paid and that the relevant provision was discriminatory in its operation as a distinction had been made between rich and poor people and as the levy of the tax was different for different classes of owners. That contention, for the reasons given therein, was negatived. In the said Madras Acts a surcharge was imposed in addition to the previous rates and the previous rates had been made on the basis of ryotwari settlements which did not offend article 14 of the Constitution and, therefore, a small addition to the said rates could not likewise infringe the said article. The present question did not arise in that case. Nor has (1) A. I.R. 48 the decision of the Mysore High Court in H. H. Vishwasha Thirtha Swamiar or Sri Pejawar Mutt vs The State of Mysore(1) in regard to the Mysore Land Revenue Surcharge Act (13 of 1961) any bearing on the present question. There, as in the Madras Acts, the revenue surcharge levied wag an additional imposition of land tax and, therefore, the Mysore High Court held that it did not offend article 14 of the Constitution. In holding that article 14 was not infringed, the Court said: "We have before us a temporary measure. That is an extremely important circumstance. The State, not unreasonably, proceeded on the basis that a temporary levy could be made on the basis of existing rates. We can think of no other reasonable basis on which the levy could have been made. It may be that in the result some areas were taxed more than others. But yet it cannot be said with any justification that there was any hostile discrimination between one area and another. " It will be seen that in that case on existing rates based upon scientific data a surcharge was imposed as a temporary measure till a uniform land revenue law was enacted for the whole State. That decision, therefore, does not touch the present case. But in the instant case, as we have pointed out earlier, the whole scheme of ryotwari settlement was given up so far as the minimum rate was concerned and a flat minimum rate was fixed in the case of dry lands without any reference to the quality or fertility of the soil and in the case of wet lands a minimum wet rate was fixed and it was sought to be justified by correlating it to the ayacut. Further, the whole imposition of assessment was left to the arbitrary discretion of the officers not named in the Act without giving any remedy to the assessees for questioning the correctness of any of the important stages in the matter of assessment, such as ayacut, taram, rate or classification or even in regard to the calculation of the figures. Not only the scheme of classification, as pointed out by us earlier, has no reasonable relation to the objects sought to be achieved viz., fixation and rationalisation of rates but the arbitrary power of assessment conferred under the Act enables the appropriate officers to make unreasonable discrimination between different persons and lands. The Act, therefore, clearly offends article 14 of the Constitution. In some of the appeals relating to Peddapuram and Kumara puram villages another point was raised, namely, that a special rate bad been fixed which was neither for a single crop nor for a double crop and that, therefore, they do not come under any of (1) ,359. 49 the provisions of the Act. In the view we have expressed on the other questions it is not necessary to notice this argument. In the result the appeals are dismissed with costs. One hearing fee. R. K. P. section Appeals dismissed.

IN-Abs

The Andhra Pradesh Land Revenue (Additional Assessment) and Cess Revision Act, 1962 (Act 22 of 1962) was passed with the object of bringing uniformity in assessment of land revenue in the Telengana and Andhra areas of the State. It also provided for additional levies on certain classes of land. When the assessment of land revenue was sought to be collected from the respondents, they filed writ petitions in the High Court challenging the constitutional validity of the Act and the petitions were allowed. In appeal by the State to this Court. , HELD : The Act offended article 14 of the Constitution and was there fore void. Both in Andhra as well as Telengana area under the Ryotwari system, the land revenue which was a share of the produce of the land commuted in money value varied according to the classification of soil based upon its productivity; the soils of similar grain values were bracketed together in orders called 'tarams ' or 'Bhagana ' and the rates were further adjusted in the dry land having regard to the water supply. But in both the cases, the quality and the grade of the soil divided in 'Tarams ' or 'Bhaganas ' was the main basis for assessment. [37 E G] Sections 3 and 4 of the Act, in fixing the minimum flat rate for dry or wet lands, ignored the well established taram principle; and in the case of wet lands an attempt had been made to classify different systems on the basis of the ayacuts; but this test was unreasonable and had no relation to either the duration of water supply or to the quality or the productivity of the soil. The classification attempted in either case had No. reasonable relation to the objects sought to be achieved, namely, imposition of fair assessments and rationalisation of the revenue assessment structure. An arbitrary method has been introduced displacing one of the most equitable and reasonable methods adopted for many years in the revenue administration of the State. [44 C E] Further, the imposition of assessment was left to the arbitrary discretion of the officers not named in the Act without giving any notice, opportunity or remedy to the assessees for questioning the correctness of any of the important stages in the matter of assessment such as ayacut taram, rate or classification or even in regard to the calculation of the figures. It is not possible to read into the section the entire series of the Standing Orders of the Board of Revenue which deal with the mode of assessment: for if it was the intention of the Legislature that 29 the Standing Orders of the Board of Revenue should be brought into the Act by incorporation, it would have certainly used appropriates words to convey that idea. [45 D E; 48 E F] Kunnathat Thathunni Moopil Nair vs The State of Kerala, ; , East India Tobacco Co. vs State of Andhra Pradesh, ; and Khandige Sham Bhat vs The Agricultural Income tax Officer, ; , applied. C. V. Rajagopalachariar vs State of Madras, A.I.R. 1960 Mad. 543 and H. H. Vishwasha Thirtha Swamiar of Sri Pejavar Mutt vs The State of Mysore, , distinguished.

Appeals Nos. 491 and 492 of 1965. Appeals by special leave from the order , dated September 17, 1963 of the Bombay High Court Nagpur Bench in Letters Patent Appeals Nos. 14 and 15 of 1963, 93 section V. Gupte, Solicitor General and I. N. Shroff, for the appellant (in C.A. No. 491 of 1965). A. G. Ratnaparkhi, for the appellants (in C.A. No. 492 of 1965). Bishan Narain, M. L. Kapur and I. section Sawhney, for the respondents Nos. 1 and 2 (in C.As. Nos. 491 and 492 of 1965). N. Shroff, for respondent No. 1 (in C.A. No. 492 of 1965). The Judgment of the Court was delivered by Bachawat, J. The question in issue in these appeals is whether certain employees of the Nagpur Electric Light & Power Co. Ltd. ,am employees within the meaning of section 2(9) of the (34 of 1948). The company and the employees filed two separate applications before the Employees ' Insurance Court under section 75 of the Act for the determination of the question. Their case is that out of the five categories of staff mentioned in appendices 1 to 5 to the company 's petition, those connected with the receiving station and workshop (appendices 1 and 2) were employees within the meaning of section 2(9), but those connected with the engineering, stores and outdoor work, meter,consumers and allocation departments and administration (appendices 3, 4 and 5) were not such employees. The Regional Director, Employees State Insurance Corporation contested the applications, but he admitted that the workers of the categories mentioned in items 5 to 14 of appendix 4 and items 1, 7 and 8 of appendix 5 were not employees within the meaning of section 2 (9). The Employees Insurance Court found that those workers and also the workers mentioned in item 12 of appendix 5 were not such employees. The correctness of this finding is not in issue in these appeals and we express no opinion on it. The categories of workers mentioned in appendix 111, items 1 4 in appendix TV and items 2 6 and 9 11 of appendix V are as follows 'Appendix III Mains Senior : (1) assistant engineers, (2) supervisors, (3) electricians, (4) overseers. Mains junior : (1) cable jointers, (2) mistries, (3) sub mistries, (4) lineman H.T.O.H. mains, (5) mains coolies, (6) mains coolies temporary, (7) wireman temporary, (8) sub mistries, (9) sub station attendants. Clerical staff : (1) clerk to asstt. engineers, (2)draughtsman, (3) mains office peons. Stores department : (1) storekeeper, (2) asstt.storekeeper, (3) clerks, (4) coolies. 94 Motor car staff : (1) motor drivers, (2) motor cleaners. Mason. Appendix IV Meter senior & junior : (1) deputy meter superintendent, (2) senior meter mechanic, (3) junior meter mechanic, (4) meter testers. Appendix V (2) accounts (department accountant, chief cashier, asstt. accountant, account clerks. (3) Time keeping department : group head, clerks, (4) Filing department : group head, clerks. (5) Typing department : steno typists, typists. (6) Telephone operators. (9) Record keeper and daftari. (9a) Station clerk. (10) Motor car staff : mechanic, drivers, cleaners. (11) Menial staff : peons, garden malies, chowkidars, sweepers, rejas temporary. " The, Employees Insurance Court held that the aforesaid workers were employees within the meaning of section 2 (9) of the Act. The company and the employees filed two separate appeals from this decision to the High Court of Bombay (Nagpur Bench) under section 82 of the Act. Abhayankar, J. affirmed the finding of the Employees Insurance Court and dismissed the appeals. Letters Patent appeals from his orders were summarily dismissed by a Bench of the High Court. The company and the employees have now preferred two separate appeals to this Court by special leave. The Nagpur Electric Light & Power Co., Ltd., occupies cer tain premises at Kamptee Road, Nagpur where it carries on the work of transforming and transmitting electrical energy. 'Me premises are located within a compound wall. Inside the premises there are several buildings, yards and open spaces. The receiving station, the workshop, the meter testing department, the engineers ' quarters, the general office, and stores are in different buildings inside the premises. The company does not generate electricity. It maintains a receiving station inside the premises where it receives electrical energy in bulk from the generating station of the Maharashtra Electricity Board at Khapparkheda. The energy when received is of 11,000 volts. From the receiving station, the energy is either carried through electric supply lines to a transformer and is stepped down to 3,300 volts and is then carried to the sub stations in the city where it is again stepped 95. down to 400 volts by other transformers, or is carried from the receiving station to sub stations where it is stepped down directly from 11,000 to 400 volts. From the sub stations, the energy is transmitted by electric supply lines and distributed to consumers. The first question is whether the company maintains a factory and if so, where its factory is located. The applies in the first instance to all factories other than seasonal factories [s.1(4)] and may be extended to any other establishment or class of establishments, industrial, commercial, agricultural or otherwise [s.1(5)]. 2(12) defines a factory. The relevant part of that section reads : "Sec.2(12) : " 'factory ' means any premises including the precincts thereof whereon twenty or more persons are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power or is ordinarily so carried on but does not include a mine subject to the operation of the Indian Mines Act, 1923 or a railway running shed; The expressions 'manufacturing process ' and 'power ' shall have the meanings respectively assigned to them in the ." Any premises including the precincts thereof (excepting a mine and a railway running shed) constitute a factory if (1) 20 or more persons are working or were working thereon on any day of the preceding 12 months, and (2) in any part thereof a manufacturing process is being carried on with the aid of power. If these two conditions are satisfied, the entire premises including the precincts thereof constitute a ' factory, though the manufacturing process is carried on in only a part of the premises. The premises constituting a factory may be a building or open land or both, see Ardeshir H. Bhiwaniwala vs The State of Bombay(1). Inside the same compound wall, there may be two or more premises; the premises used in connection with manufacturing processes may constitute a factory, and the other premises within the same compound wall may be used for the purposes unconnected with any manufacturing process and may form no part of the factory. Sections 2(g) and (k) of the , define power and manufacturing process. They are in these terms : 2(g). " 'power ' means electrical energy, or any other form of energy which is mechanically transmitted and is not generated by human or animal agency;" (1) 96 2(k). ""manufacturing process ' means any process for (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal, or (ii) pumping oil, water/or sewage, or (iii) generating, transforming or transmitting power; or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or book binding; (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels. " In view of section 2 (k) (iii), the process of transforming electrical energy from a high to a low potential and the process of transmitting the energy through supply lines are both manufacturing processes. In a part of the premises occupied by the company, the two processes are carried on with the aid of power by means of electrical gadgets and other devices. On the premises more than twenty persons were and are working. No part of the premises is used for purposes unconnected with the manufacturing process The premises therefore constitute a factory within the meaning of section 2(12) of the . The High Court said: "This manufacturing process is carried on by the Company not only in the building called the workshop or the receiving station but over the whole area over which the process of transmission is carried on including the sub stations where electricity is stored and supplied to the consumers by further transmission lines. Thus every part over which this process is carried on will be a factory within the meaning of the . " We cannot accept this line of reasoning. It seems to us a startling proposition that every inch of the wide area over which the transmission lines are spread is a factory within the meaning of section 2(12). "A factory must occupy a fixed site", see Halsbury 's Laws of England, 3rd ed., Vol. 71 ,article 15, p. 15. The company 's factory has a fixed site. It is located inside the Kamptee Road 97 and its boundaries are fixed by the compound wall of the premises The next question is whether the members of the staff of the categories mentioned in appendix 111, items 1 4 of appendix IV and items 2 6 and 9 11 of appendix V to the company 's petition am employees within the meaning of section 2(9) of the . It is common case that these workers are employed on remuneration which in the aggregate does not exceed four hundred rupees a month. Section 2(9) is in these terms " employee ' means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies and (i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or (iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services am so lent or let on hire has entered into a contract of service; but does not include (a) any member of the Indian naval, military or air forces or; (b) any person employed on a remuneration which in the aggregate exceeds four hundreds rupees a month; " The definition of employee in section 2(9) may be contrasted with that of a worker in section 2 (1) of the , which is in these terms 98 worker ' means a person employed, directly or through any agency, whether for wages or not, in any manufacturing process, or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with, the manufacturing process, or the subject of the manufacturing process;" It is to be seen that the definition of an employee in the is wider than that of a worker in the . The object of the is to secure the health, safety, welfare, proper working hours, leave and other benefits for workers employed in factories. The benefit of this Act does not extend to field workers working outside the factory, see the State, of Uttar Pradesh vs M. P. Singh(1). The object of the is to secure sickness, maternity, disablement and medical benefits to employees of factories and establishments and dependents ' benefits to their dependants. The benefit of this Act extends inter alia to the employees mentioned in section 2 (9) (i) whether working inside the factory or establishment or elsewhere. The definition of "employee" in section 2 (9) deals with three classes of employees. We are concerned with the class of employees mentioned in section 2 (9) (i). The courts below concurrently found and in our opinion, rightly, that all the workers of the disputed categories are persons employed for wages in or in connection with work of the company 's factory and are directly employed by the company on work of or incidental to or connected with the work of the factory. Some of them do the work in the factory and some work elsewhere, but they are all employees within the meaning of section 2 (9) (i). Take the case of the workers mentioned in appendix 111. The assistant engineers, supervisors, electricians, and overseers are engaged in the erection and maintenance of the electricity supply lines connected with transmission of power. The cable jointer, mistries, linemen, coolies and wiremen are employed for inspection of the supply lines, digging pits, erecting poles for laying distribution mains and service lines. The masons attend to the masonry work of the buildings. The attendants in charge of the sub stations look after the transformation and transmission of power. The motor drivers and cleaners are employed for carrying materials and tower ladders in trucks for maintenance of the supply lines. The clerks, draughtsmen and main office peons help the assistant engineers. The store keepers and clerks with The assistance of coolies issue stores to all the departments and keep accounts relating to stock. The deputy meter superinten dent, meter mechanics and meter testers mentioned in items 1 to 4 of appendix IV attend to the testing calibration and repairs of (1) ; 99 the meters. Let us now take the case of the staff mentioned in items 2 to 6 and 9 to II of appendix V. The clerks in the accounts, time keeping and filing departments are employed to maintain accounts, attendance registers, muster rolls, pay sheets, typing, filing and dispatching documents required in connection with all the departments including the receiving station and the workshop. The telephone operators attend to the telephone calls for all the departments. The menial staff is required to do mis cellaneous work including the cleaning of the office compound. The motor car staff is employed to look after the cars employed in the administration section. All these employees, clerical or otherwise, are employed in connection with the work of the factory, that is to say, in connection with the work of transforming and transmitting electrical power. Some of the employees are clerks; they are not engaged in manual labour. But a person doing non manual work can be an employee within the meaning of s ' 2 (9) (i) if he is employed in connection with work of the factory. The duties of the administrative staff are directly con nected with the work of the factory. The case of the Employees ' State Insurance Corporation, Bombay vs Raman(1) is distinguishable. In that case a company had a factory and an administrative office. The office was situated in a building which was situated within the same compound in which the factory was located. The entire compound was surrounded by one compound wall. It was found that the work of the factory began with the collection of raw materials and ended with the production of finished articles and the work of selling the products was not connected with the work of the factory. The administrative office handled sales of. the products manufactured in the factory as well as goods imported from abroad. The factory and the administrative office maintained separate muster and wage rolls and separate accounts. In these circumstances, it was held that the clerks employed in the administrative office, whose work consisted mainly of taking down dictations from the manager and other officers and typing out letters, were not em ployees within the meaning of section 2(9). The facts of the present case are entirely different. The company maintains one establishment for its factory. The factory does the work of transforming and transmitting electrical energy. All the workers in question including the clerks and the administrative staff are engaged in connection with this work. None of them is employed in any separate establishment unconnected with the work of the factory. Some of the employees work outside the factory, but their duties are connected with the work of the factory. They are therefore employees within the meaning of section 2 (9) (i). Some are (2) 100 employed in the sub stations. It is common case that the stations are not independent factories. The sub stations attendants attend to work which is directly connected with the of the factory at the main station. They are therefore employees within the meaning of section 2 (9) (i). In the result the appeals are dismissed with costs. One hear fee. G.C Appeals dismissed.

IN-Abs

The appellant company carried on the work of transforming And transmitting electrical energy. There was dispute between the company and the respondent whether certain employees of the company like engineers, draughtsmen, clerks, accountants etc. mentioned in Appendices III, IV and V of the company 's petition before the Employees ' Insurance Court, were 'Employees ' or not within the meaning of section 2(9) of the Employees Insurance Act, 1948. The Employees Insurance Court held the said workers to be employees under section 2(9) and this finding was confirmed by the Single Judge as well as the Division Bench of the High Court. The company appealed to this Court by special leave. HELD : (i) The premises of the company were a factory within the meaning of the Employees State Insurance Act but the High Court was wrong in laying down the proposition that every inch of the area over which the transmission lines were spread was a factory within the meaning of section 2(12). The company 's factory had a fixed site and was located within the compound wall of its premises. [96 E, H] (ii)All the employees of the disputed categories clerks or otherwise were employed in connection with the work of the factory, that is to say, in connection with the work of transforming and transmitting electrical power. Some of the employees were not engaged in manual labour. But a person doing non manual work can be an employee within the meaning of section 2(9) (i) if he is employed in connection with the work of the factory. The duties of the administrative staff are directly connected within the work of the factory. [99 C, G] Even those employees who worked outside the factory but whose duties were connected with the work of the factory were employees within the meaning of section 2(9)(i). Among such employees were to be included those attending to sub stations of the factory. [100 A] Ardeshir H. Bhiwaniwala vs The State of Bombay, [1961] 3 S.C.R.542, State of Uttar Pradesh vs M. P. Singh, ; and Employees ' State Insurance Corporation, Bombay vs Raman, referred to.

ns Nos. 133, 156 & 157, 159 171, 178, 184, 206 210 and 234 of 1966. Writ Petitions under article 32 of the Constitution of India for enforcement of fundamental rights. section T. Desai, K. M. Desai, and Ravinder Narain, for the petitioners (in all the petitions). M. C. Setalvad, Purshottam Trikamdas, Vithal Bhai B. Patel and L N. Shroff, for respondents Nos. 1 and 2 (in W.P. No. 133 of 1966. Purshottam Trikamdas Vithalbhai B. Patel and L N. Shroff, correspondents Nos. 1 and 2 (in W. Ps. 156 and 206 of 1966). Vithalbhai B. Patel and I.N. Shroff, for respondents 1 Nos. 1 and 2 (in W.P. Nos. 157, 159 171, 178, 184, 207 210 and 234 of 1966. B. Sen and R. H. Dhebar, for respondent No. 3 (in all the petitions). The Judgment of the Court was delivered by Mitter, J. This is a group of Writ Petitions under article 32 of the Constitution challenging the validity of the assessment book relating to special Property section prepared and published by the Municipal Corporation of the City of Ahmedabad by which the 681 Municipality seeks to impose or has imposed property tax on properties described as Special Properties like textile mills, factories, buildings of the universities, etc. on the basis of a flat rate per 100 sq. ft. of the floor area of the property situate within the municipal limits of the city. In Writ Petitions Nos. 133, 156 157, 159 171, 178, 184 and 234 of 1966, the challenge relates to the validity of the assessment book relating to the year 1966 67; in Writ Petitions No. 206 and 210 of 1966 the challenge relates to the years 1964 65 and 1965 66 while in W.P. Nos. 207, 208 and 209 of 1966 the challenge relates only to the year 1965 66. The difference lies in this So, far as the assessments for the year 1966 67 are concerned, there has been no authentication of the assessment book after the disposal of all complaints relating to the entries made in the book, while the challenge relating to the years 1964 65 and 1965 66 is made at a stage after such authentication and in respect of which attachments of property belonging to the assessees have already been levied. In W. P. No. 234 of 1966 filed in October 1966, the issue of a distress warrant and the levy of attachment are also challenged. Several textile mills in the city of Ahmedabad are before this Court in these petitions and they have a common complaint against the assessments. To appreciate the points raised in these petitions, it is necessary to take a bird 's eye view of the relevant provisions of the Bombay Provincial Municipal Corporations Act (LIX of 1949) under which the assessments were purported to be made. Section 127(1) of the Act makes it obligatory on the Corporation of the City of Ahmedabad to impose, among other taxes, a property tax. Sub section (3) of the section provides that municipal taxes shall be assessed and levied in accordance with the provisions of the Act and the rules and sub section (4) lays down that nothing in this section shall authorise the imposition of any tax which the State Legislature has no power to impose in the State under the Constitution; (it is needless to add that the Act has been amended after the Constitution came into force). Section 128 empowers the Corporation to recover the tax by the processes laid down in the section in the manner prescribed by rules. These are inter alia (1) by presenting a bill; (2) by serving a written notice of demand; (3) by distraint and sale of the defaulter 's movable property; and (4) by the attachment and sale of a defaulter 's immovable property. Section 129 lays down that for the purposes of sub section (1) of section 127 property taxes shall comprise the taxes mentioned which shall, subject to the exceptions, limitations and conditions provided, be levied on buildings and lands in the city. One of these mentioned in cl. (c) is a general tax of not less than 12 per cent of their rateable value which may be levied, if the Corporation so determines, on a graduated scale. A building has been defined in section 2 sub section (5) and land in section 2 sub section 'Land ' under this definition includes land which is being built upon or is built upon or covered 682 with water, benefits to arise out of land, things attached to the earth or permanently fastened to anything attached to the earth and rights created by legislative enactment over any street. Under section 2 (49) 'property tax ' means a tax on buildings and lands in the city. Section 2(53) defines 'rack rent ' as the amount of the annual rent for which the premises with reference to which the term is used might reasonably be expected to let from year to year as ascertained for the purpose of fixing the rateable value of such premises and under section 2(54) 'rateable value ' means the value of any building or land fixed in accordance with the provisions of the Act and the rules for the purpose of assessment to property taxes. Under section 453 the rules in the Schedule as amended from time to time shall be deemed to be part of the Act. The relevant taxation rules are to be found in Chapter VIII of the rules. Rule 7(1) provides that "In order to fix the rateable value of any building or land assessable to a property tax there shall be deducted from the amount of the annual rent for which such land or building might reasonably be expected to let from year to year a sum equal to ten per cent of the said annual rent, and the said deduction shall be in lieu of all allowances for repairs or on any other account whatever." Under r. 7(2) all plant and machinery contained ' or situate in or upon any building or land and belonging to any of the classes specified from time to time by public notice by the Commissioner, with the approval of the Corporation, shall be deemed to form part of such building or land for the purpose of fixing the rateable value thereof under sub r. (1) but, save as aforesaid, no account shall be taken of the value of any plant or machinery contained or situated in or upon any such building or land. Rule 7(3) runs: "A statement setting out clearly the classes of plant and machinery specified from time to time by the Commissioner under sub rule (2) and describing in detail what plant and machinery falls within each such class shall be prepared by the Commissioner under the directions of the Standing Committee and shall be open to inspection at all reasonable hours by members of the public at the chief municipal office." Rule 9 provides inter alia: "The Commissioner shall keep a book, to be called "the assessment book", in which shall be entered every official year (a) a list of all buildings and lands in the city. distinguishing each either by name or number as he shall think fit, and containing such particulars regarding the location or nature of each as will, in his opinion, be sufficient for identification; 683 (b) the rateable value of each such building and land determined in accordance with the provisions of this Act and the rules; (c) the name of the person primarily liable for the payment of the property taxes, if any, leviable on each such building or land; (d) if any such building or land is not liable to be assessed to the general tax, the reason of such non liability; (e) when the rates of the property taxes to be levied for the year have been daily fixed by the Corporation and the period fixed by public notice, as hereinafter provided, or the receipt of complaints against the amount of rateable value entered in any portion of the assessment book has expired, and in the case of any such entry which is complained against, when such complaint has been disposed of in accordance with the provisions hereinafter contained, the amount at which each building or land entered in such portion of the assessment book is assessed to each of the property taxes, if any, leviable thereon; Rule 10 provides for preparation of ward. assessment books for each of the wards into which the city is for the time being divided for the purpose of election and the ward assessment books and their respective parts shall collectively constitute the assessment book. Under r. 13(1) when the entries required by cls. (a), (b), (c) and (d) of rule 9 have been completed, as far as practicable, in any ward assessment book, the Commissioner shall give public notice thereof and of the place where the ward assessment book or a copy of it may be inspected. Under r. 15(i) the Commissioner must, at the time and in the manner prescribed in r. 13, give public notice of a day, not being less than 15 days from the publication of such notice, on or before which complaints against the amount of any rateable value entered in the ward assessment book will be received in hit office. Rule 16 provides for the time and manner of filing complaints against valuation. Rule 17 lays down that the Commissioner must give notice to each complainant of the time and place when his complaint will be investigated. Rule 18 prescribes for the investigation and disposal of the complaint in the presence of the complainant by the Commissioner. Under r. 19(1) when all such complaints, if any, have been disposed of and the entries required by cl. (e) of r. 9 have been completed in the ward assessment book the said book shall be authenticated by the Commissioner who shall 684 certify under his signature that except in the cases, if any, in which amendments have been made as shown therein, no valid objection had been made to the rateable value entered in the said book. Under sub r. (2) of the said rule, the ward assessment book shall thereupon, subject to such alterations as may be made under the provisions of r. 20, be accepted as conclusive evidence of the amount of each property tax leviable on each building and land in the ward in the official year to which the book relates. Rule 21(1) lays down that it shall not be necessary to prepare a new assessment book every official year and that subject to the provisions of sub r. (2) the Commissioner may adopt the entries in the last preceding year 's book with such alterations as he thinks fit, as the entries for each new year. Under sub r. (2) a new assessment book has to be pre pared at least once in every four years. The writ petition of which the papers were placed in detail before the Court is No. 133 of 1966 preferred by the New Manek Chowk Spinning and Weaving Mills Ltd. The respondents are: (1) the Municipal Corporation of the City of Ahmedabad, (2) the Deputy Municipal Commissioner of the same city and (3) the State of Gujarat. The challenge in this case relates to the validity of the assessment book for the year 1966 67. The complaint is that respondent No. 1 by the said book imposed property tax on the petitioner on the basis of a flat rate per 100 sq. ft. of the floor area of the petitioners ' property as also of all other textile mills, factories, university buildings etc. under r. 9 of the Taxation Rules. Annexure 'A ' to the petition gives a synopsis of the entries relating to the year of assessment 1966 67. It is divided into three parts, the first being headed 'buildings ', the second 'additional land ' and the third 'machinery '. So far as 'buildings ' are concerned, there are three columns, the first being the area of the building in square feet, the second monthly rental per 100 sq. and the third the annual rental. The building is again divided into two classes, one for processing and the other non processing. The monthly rental for the processing part of the building is taken at Rs. 6 10 0 per 100 sq. while that for the non processing portion is Rs. 5 4 0 per 100 sq. With regard to the additional land, the valuation is on the basis of the market rate per sq. ft. of land and as regards machinery the valuation is taken to be effective value of which the annual rental at 71 % is taken as the annual value. The petitioner 's complaint is that while under the provisions of the Act and the rules made thereunder it was clear that the rateable value of the property must be arrived at after determining the rack rent or the annual rental value in respect of each premises which is to be computed on the basis of the annual rent for which the property might reasonably be expected to let from year to year, the municipal corporation of Ahmedabad had adopted the method of determining the annual rent on a flat rate method according to the floor area, 685 irrespective of the locality, quality, age and nature of the property which was not a recognised method and was not permissible in law. According to the petition, a formula on the flat rate method of a fixed amount per 100 sq. for arriving at the rental was not only against the express provisions of the Act but was also against the recognised concepts of valuation in the Law of Rating. The method adopted by respondent No. 1 in this case was arbitrary and repugnant to the petitioner 's right guaranteed under article 14 of ' the Constitution. It was said that the buildings of the textile mills. were situate in different localities some of which were in the heart of the city and some on its outskirts. There was no uniformity in the floor area of the mills concerned nor was the age of the buildings in all cases the same. It was further complained that buildings in respect of the properties covered by the special property section included textile mills taxed on the fixed rate method whereas. buildings other than those of textile mills were taxed on the basis of annual rent for which such premises were reasonably expected to let from year to year. A further complaint was made that respondent No. 1 had assessed the property tax apart from buildings and lands on the plant and machinery of the petitioner. It was submitted that the imposition of property tax on plant and machinery was beyond the legislative competence of the State. Sub r. (3) of r. 7 was challenged as giving the Commissioner arbitrary and unguided power to set out the classes of plant and machinery and to describe what plant and machinery fell within each such class. for the purpose of assessment of property tax. Moreover, such classification by the Commissioner was made final and binding and no right was given to any person affected thereby to object to the same nor was any right of appeal against such decision of the Commissioner provided. A complaint was also made that respondent No. 1 had not prepared any ward assessment books for the year 1966 67. It is the petitioner 's case that the figures in the assessment book for the year 1966 67 were adopted from those of the previous year 1965 66, under r. 21 of the Taxation Rules. It was submitted that such adoption was invalid and improper inasmuch as the assessment books for the previous years were bad in law. The assessment books for the previous years were also bad in law inasmuch as the same were authenticated under r. 19 by the Deputy Municipal Commissioner and not by the Commissioner as contemplated in the said rule. The complaints were not considered by the Municipal Commissioner him self. It was said that the action of the Deputy Municipal Commissioner under a purported delegation of power by order dated November 20, 1964 was invalid as a quasi judicial function could not be delegated. In this connection, reference was. made to section 49(i) of the Act. It was further contended that even in the year 1966 67 the power of conducting proceedings under rr.13,. 15, 16, 17, 18 and 19 of the Taxation Rules had been deputed by the Municipal Commissioner in favour of the Deputy Municipal 686 Commissioner and as such deputation was bad in law. Finally, the petition proceeded on the basis that the imposition of property tax on the flat rate method on textile mills as under the special property section was ultra vires the Act and the rules made therein and was violative of the fundamental rights of the petitioner guaranteed under articles 14, 31(i) and 19 of the Constitution and the procedure adopted in preparing the assessment book was ultra wires the procedure laid down by the Act and the rules. The grounds of challenge are formulated in paragraph 35 of the petition. Among the prayers are a writ of mandamus or any similar writ directing respondent No. 1 to forbear from taking any steps for the imposition and realisation of the property tax pursuant to the preparation of the assessment book for the year 1966 67 relating to the Special Property section; a writ of certiorari or other similar writ to quash the assessment book for the said year; a writ of prohibition or other order restraining respondent No. 2, the Deputy Municipal Commissioner from acting under deputation under section 49 (1) and. other reliefs. The points raised in the counter affidavit are as follows: (1) The tax being based on the amount of rent for which the property is or may be let from year to year, such rent has got to be ascertained from either the actual or the hypothetical rent for which the property along with all the equipment like plant and machinery and amenities that it contains, is or may be let and such annual rent where the property is let as a factory equipped as a factory would be the rent that it would fetch as a factory and not as a bare building. (2) Rule 7(2) only gives power to the Corporation to include such plant and machinery as it may determine from time to time taking into consideration various factors like the situation of the city, its facilities for transport to other parts of the State and the country, whether the industry is well established or is just being developed etc. (3) Although under r. 9(b) the amount of the rateable value of the property in the previous year is to be entered, it is open to the Corporation to take any fresh circumstances into consideration before adopting the entry from the earlier year. Entry in col. (b) is neither the imposition of the tax nor the final amount on the basis whereof the tax is leviable. It is in the nature of a proposal by the Corporation and is subject to objection by the assessee and the tax becomes leviable after the objections have been disposed of and the amount is entered in column (e). (4) After the tax has become leviable under the Rules, the assessee is entitled, if he so desires, to file an appeal under section 406 against either the rateable value or the tax fixed or charged under the Act. The Court of Small Causes can hear and determine the appeal. Under section 4 10 there is a provision for a reference to the District Court and section 411 provides for an appeal to it. The High Court would have the power of revision of the order of the District Judge. (5) The fixing of the rateable value on 687 floor area basis is in accordance with the accepted principles and methods in the Law of Rating. In various cities it is common to let out premises on the basis of the floor area. The computation of rateable value by this means depends on the estimate of the annual, rent at which the property may be reasonably expected to let from year to year. The situation of the building, The age of the building, the material used for the building are not relevant for, if the mill containing all plant and machinery and other equipment is let, it is let as a factory for carrying on a business of manufacture of textiles. The grievance of the petitioner is open to redress under section 406 and the other sections mentioned. (6) It is not incumbent on respondent No. 1 to maintain any ward assessment books, and (7) under section 49(1) the power to dispose of complaints against the fixing of rateable value was duty deputed to the Deputy Commissioner and there was nothing illegal about it. The points formulated by Mr. section T. Desai are as follows: (1) The method of adopting a flat rate for a floor area for determining the annual value adopted by the Municipal Corporation of Ahmedabad was against the express provisions of the Act. (2) The method was also in violation of all recognised concepts and principles of valuation for the purpose of rating. (3) The imposition of tax on a flat rate method was violative of article 14 of the Constitution. (4) Rule 7(2) and r. 7(3) were ultra vires the Constitution as beyond the legislative competence and entry 49 of List 11. (5) The delegation of powers of the Commissioner to the Deputy Commissioner was. bad as it involved the delegation of quasi judicial power, and (6) Rule 7(3) suffered from excessive delegation and was violative of ' article 14 of the Constitution. The first, second and third points may be taken together. In the forefront of his argument Mr. Desai relied on a decision of this Court in The Lokmanya Mills vs The Barsi Borough Municipality.(1) There the common question in the appeals related to the validity of r. 2C framed under the Bombay Municipal Boroughs Act, 1925. Under section 73 of the Act the Municipality was entitled to levy a rate on lands and buildings. In 1947 new rules were made after obtaining the approval of the Government of Bombay for the purpose of enhancing the assessment of lands and buildings within the area of the Municipality. Rule 2C of the new rules provided that: "As regards Mills, factories and buildings relating thereto, the annual letting value shall be fixed at Rs. 40/per 100 square feet or part thereof for every floor, ground floor or cellar and the tax shall be assessed on the said annual letting value, at the ordinary rate. (1) ; 688 The Municipality prepared an assessment list under the new scheme of taxation in respect of factories and buildings relating thereto and issued notices of demand calling upon the appellants to pay house tax and water tax so assessed. The question before this ,Court was whether rule 2C was ultra vires. This Court examined the provisions of the Act under which the rate could be levied on lands and buildings ' assessed on the valuation thereof based on annual letting value. It was said: "If the rate is to be levied on the basis of capital value, the building to be taxed must be valued according to some recognised method of valuation: if the rate is to be levied on the basis of the annual letting value, the building must be valued at the annual rental which a hypothetical tenant may pay in respect of the building. The Municipality ignored both the methods of valuation and adopted a method not sanctioned by the Act. By prescribing valuation computed on the area of the factory building, the Municipality not only fixed arbitrarily the annual letting value which bore no relation to the rental which a tenant may reasonably pay, but rendered the statutory right of the tax payer to challenge the valuation illusory. An assessment list prepared under section 78, before it is authenticated and finalised, must be published and the taxpayers must be given an opportunity to object to the valuation. By the assessment list in which the valuation is not based upon the capital value of the building or the rental which the building may fetch, but on the floor area, the objection which the tax payers may raise is in substance restricted to the area and not to the valuation. " It was further observed that if the Municipality had adopted any of the recognised methods of valuation for assessing the annual letting value, the tax would not be open to challenge. The Court further noted: "In any event, there is no evidence on the record of this case that the factories and "buildings relating thereto" such as warehouses, godowns and shops of the Mills situate in the compound of the mills, may be separately let at the uniform rate prescribed by the Municipality. The vice of the rule lies in an assumed uniformity of return per square foot which structures of different classes which are in their nature not similar, may reasonably fetch if let out to tenants and in the virtual deprivation to the rate payer of his statutory right to object to the valuation. " It may be interesting to note that an Act was passed to validate the said imposition. On a Writ Petition No. 1476 of 1966 the Bombay High Court held the Validating Act to be ultra vires. The 689 contention put forward before the Bombay High Court was inter alia that the levy of a tax on buildings and lands on the basis of floor area was necessarily arbitrary and capricious in that the valuation of buildings and lands so arrived at could have no relation to their actual value, for the value of buildings depended, among other things, upon location, age, mode of construction, material used etc. A uniform rate on buildings and lands of widely differing values was clearly discriminatory because of lack of classification leading to inequality. It was further argued that there was violation of article 14 in that the owners of mills and factories were discriminated against as compared to the owners of other buildings and lands. These grounds were upheld by the Bombay High Court. Reference was made by Mr. Desai to decisions of other High Courts wherein similar observations were made. In Bhuvanes wariah vs State(1), the Mysore Buildings Tax Act, 1963 and Schedule 11 thereto were challenged before the High Court of Mysore. It was pointed out that under the scheme of the Act a cow shed and an ultra modern cinema house in the best locality would be charged with the same amount of tax if the extent of floorage of both were the same. The High Court held that the Act suffered from lack of rational classification because: "The floorage basis is not only unscientific, it is something arbitrary and mechanical. It does not conform to any of the known principles of taxation. In the very nature of things, under that basis the incidence of tax must fall unevenly on things similar. " N. Kunhali Haji vs State of Kerala(2) was a case where under the Kerala Buildings Tax Act, 1961 (19 of 1961) tax was sought to be imposed not on the basis of letting value but on the floor area of buildings. It was held that the lack of classification had resulted in inequality with the result that the provisions of the Act were held to be invalid. Relying on the above decisions, Mr. Desai argued that the method adopted by the Municipal Corporation of Abmedabad was against all known principles of rating and was violative of article 14 of the Constitution. He submitted that there were a number of textile mills situated in different parts of the city some of which were old and some were of fairly recent origin. Their method of construction was not the same, some being more permanent in the nature of things than others. Apart from the question of the valuation of plant and machinery, Mr. Desai argued, it was impossible to suggest that a hypothetical tenant would be agreeable to take on rent the building of a mill which was well built and of recent origin as another which was fairly old and not constructed with the same kind of material. Mr. Desai further argued that the situation of the mill was another factor which any tenant would (1) A.I.R. 1965 Mysore page 170. (2) A.I.R. 1966 Kerala 14. 690 take into consideration and even if the buildings of the two mills were otherwise similar, a tenant would not agree to pay for one situated on the outskirts of the city the same rent as he would be willing to pay for the one in the heart of it. In these circumstances, he argued it was wholly unreasonable to think that a tenant would be willing to pay Rs. 6 10 0 per 100 sq. R. of the floor area whether it was in the heart of the city or in the outskirts of it, whether the building was old or whether it was new and whether it was well constructed or ill constructed. Mr. Setalvad tried to argue that such a method of valuation was not unknown and in any event a person who wanted to take on rent a textile factory would only be concerned with what profits he could make out of it and that it did not matter to him as to where it was situate, in the city, whether the building was old or whether it was new. or whether it was constructed properly with first class material or not. According to Mr. Setalvad, the tenant would only go by the use to which the building could be put. So far as the methods of valuation are concerned, we may refer to certain well known n textbook,, on the subject. Halsbury in Vol. 32 (page 76, article 106 Third Edition) points out: "Except in the case of public utility undertakings which, in the absence of special circumstances, must as a matter of law be valued on the profits basis, there is no rule of law as to the method of valuation to be adopted for rating. " This does not however mean that it is open to municipal authorities to fix upon any scale and say that they will adopt it. They must show, if challenged, that the scale adopted by them allows the fixing of an annual value and provides a basis for determination of the same as that which a hypothetical tenant might be expected to pay for the building. All the textbooks lay down certain methods of valuation. As Halsbury points out at page 77, article 108: "In the absence of rental evidence of value, the accounts, receipts or profits of the occupier of the hereditament may be relevant. The profits themselves are not rateable but they may serve to indicate the rent at which the hereditament might reasonably be expected to let, particularly whether profit is the motive of the hypothetical tenant in taking the hereditament, or where, the trade can only be carried on upon that hereditament. " In Article 109, the learned author points out "Where neither actual rents nor the profits of trade afford evidence of annual rental value, a percentage of the cost of construction of structural value of the hereditament, or of a suitable hereditament, is sometimes taken as evidence. " 691 This is referred to loosely as "the contractor 's method". The value taken is sometimes called the "effective" capital value, that is to say, the capital value leaving out of account expenditure on unnecessary ornamentation, or accommodation surplus to requirements and after allowing, if necessary, for age and obsolescence. The percentage to be applied to capital value is that prevailing in the market, and not necessarily that at which the actual occupier can borrow or obtain money. Mr. Setalvad placed reliance on Faraday on Rating (5th Edition) where the learned author gives four recognised methods of arriving at the annual value of a hereditament at page 24 of the book, these being 1. The "competitive or comparative method" i.e. by finding out rents actually paid for the hereditament in question and/or others of a similar kind, adjusting them to bring into line with the statutory conditions, and thus arriving directly at an estimate of the rent. . 2. The "profits basis," or calculation by reference to receipts and expenditure, which is now required to be applied to certain public utility undertakings, and may properly be applied to any other hereditament on which a business is carried on which enjoys privileges in the nature of a monopoly. . 3. The "contractor 's method," by which it is assumed, in the absence of any other better way of estimating the rent, that the tenant would arrive at it by finding the figure for which a contractor would provide him with premises neither more nor less suitable for his purpose, and the rate of interest on that cost which the contractor would charge him as rent. The "unit method" by which schools may be valued at so much a place, hospitals at so much a bed, or certain industrial premises at so much a furnace, or other unit of output. Mr. Setalvad laid particular stress on a passage at page 164 reading : "Modern factories are frequently found in groups due to Town Planning or in some cases because Trading Estates have been developed. Under these conditions it is often possible to arrive at the rental value per foot super of floor area by applying the contractor 's basis to typical factories or because there are sufficient rents or by a combination of the two methods. " This is followed by an illustration of a bakery and warehouse which goes to show that different portions of the building which were of different nature were measured and valued differently and then M2Sup. CI/67 15 692 on the valuation of the total the floor area method was adopted for the purpose of similar buildings. As the learned author himself. points out at page 1 5: "The floor area method of valuation is usually used ' where there are numerous factories in an area mostly similar and used for the same trade. In the North mills, are frequently valued on this method." The learned author also stresses that great care must be taken in applying the price per square foot which will vary according to the character of the factory or mill. Lower down in the same page, the learned author points out that a factory put up years ago may contain machinery which has become old fashioned and modern machines for the same purpose might occupy far more or less space, and therefore, require larger or smaller buildings, and probably reduce the wages bill and effect other economies whilst at the same time giving more output than the old cumbersome undertaking. According to the author, the value of the old factory, from a rental point of view, would be less than that of a new one with the same power of production, since it would be impossible to find a tenant who would give the same rent for both concerns in as much as he could obviously operate in the new buildings more economically than in the old one. There is nothing in the counter affidavit to show that conditions in the City of Ahmedabad with regard to textiles mills are such, as would make the method laid down at p. 164 of Faraday 'section book applicable. The affidavit does not purport to show that the factories were: constructed at or about the same time or in groups or were so similar in their operation that their rental value could be determined at per foot super of floor area applying the contractor 's There is nothing, to show that any textile factory was, valued on the contractor 's basis and that from the figures of valuation go worked out, the rental value per foot super of floor area wag determined On, the other hand, the affidavit suggests that because 'in various cities it was common to let out premises on the basis ,of floor area, the municipal authorities of Ahmedabad had resorted to this method for fixing the rateable value. We can take judicial notice of the fact that sometimes godowns or buildings constructed for office purposes are let out on the basis of floor area but even then, the rate would vary according to the nature of the building and according to the site of the building in the city. It would also depend upon the age of the building and the amenities provided therein. It would be impossible to say that in the City of Ahmedabad a tenant would be willing to pay at the same rate of rent for factory accommodation, no matter where the building was situate or when it was put up or how it was constructed. 693 Our attention was also drawn to other well known books on Rating like Ryde on Rating, Bean and Lockwood on Rating an Graham Eyre on Rating. Incidentally, we may refer to Witton Booth on Valuations for Rating (Fourth Edition) at page 125 wherein the learned author states "Reductions of floor areas to units, as Already described, are necessary to effect reliable comparisons, but it is merely a mechanical process used in preparing material for the valuation, the actual valuation being the decision and application of the appropriate rate or rental value per unit of area. This may be exactly to a standard, and, indeed, it probably will be to the majority of properties where these are so nearly alike in character as to be regarded for rating purposes as identical. Where, however, rates or rental values per unit of area ale applied indiscriminately, without discernment on the wholesale, as it were inequalities are certain to arise, and these give rise to the whole method being caustically Preferred to as "valuations by the foot rule. " The above comment is sufficient to show that this method can only be applied Where the majority of properties are so nearly Alike in character as to be regarded identical for rating purposes. There is no such statement in the affidavit. We are therefore not satisfied that conditions prerequisite for determination of annual value of textiles factories in Ahmedabad on the basis of rental value per foot super of floor area existed at the relevant time nor has. it been shown to us that the. so called contractor 's basis was adopted by the municipal authorities. of Ahmedabad. The method is not. also one which is generally recognise by authorities on rating. Applied indiscriminately as it appears to have been done in this case it is sure to give rise to, inequalities,: as there has been no classification of the factories on any rational basis. Further, there does not seem to be any basis for dividing the factories and the buildings thereof under two general classes as buildings.used for processing and buildings for Reprocessing. purposes. What was said by this Court in The Lokmanya Mills ' case(1) applies with equal force to what has been done here and we must hold that the municipality did not observe the law and failed in its duty to determine the rateable value of each building and land, comprised in each of the textile factories in terms of r. 9(b) of the rules under the Bombay Provincial Municipal Corporations Act, 1949 so tar as the assessment book for the year 1966 67 is concerned. Mr. Setalvad argued that at that stage there is only a proposal and even if the municipality had acted arbitrarily it was open to the (1) ; 694 assessees to take objection thereto and have proper valuations made and the assessment book prepared properly. We cannot accept this argument. If the municipality fails in its initial duty to act in terms of r. 9(b) it does not lie in its mouth to say that any irregularity, however patent on the face of it, is open to correction. Moreover, the methods of correction in this regard are really illusory. The Small Causes Court cannot decide the applicability of article 14 of the Constitution and according to the judgment of the Bombay High Court in Balkrishna vs Poona Municipal Corporation(1) (by which the District Judge would be bound). ". the words used in section 406(1) of the Act,. do not cover the vires of the tax or the legality of the tax which is sought to be levied. " Earlier, the learned Judges had pointed out after noting ss, 406 to 413 that : "the decision of Judge aforesaid upon any appeal against any such value or tax if no appeal is made therefrom under section 411 and if such appeal is made the decision of the District Court in such appeal shall be final." From this it follows that it would be useless for the assessee to take objections or file appeals against the decisions on rateable value to the authorities prescribed by the Act if he was challenging the determination of the rateable value as being violative of article 14 of the Constitution. It is no answer to such a charge to say that the rateable value could be determined properly by the municipal authorities acting under the Act and the rules thereunder when they do not resort to any of the well known methods of valuation and cannot justify their arbitrary method. With regard to the writ petitions questioning the annual values appearing in the assessment books for the years 1964 65 and 1965 66 which,were similarly prepared, a point of res judicata was taken in that some of these mills which have filed writ petitions before this court had challenged the assessment book in Writ petitions under article 226 of the Constitution before the Gujarat High Court and our attention was drawn to the judgment of the Gujarat High Court in W.P. No. 1365 of 1965 decided by that court very recently. The decision in that case cannot operate as res judicata for the simple reason that the learned Judges pointed out at page 141 of the transcript of the judgment made over to us that there were not sufficient averments with regard to the plea of discrimination and violation of article 14 and the submission based on these grounds was therefore rejected and not gone into. To quote from the judgment: "In the absence of any specific averment to the aforesaid effect, it is quite clear that the aforesaid plea cannot be (1) 65 D. L. R. 119. 6 9 5 said to have been properly pleaded. Therefore, we reject that submission on that ground. " Moreover, it appears to us that the right of appeal in a case where the rateable value is challenged on the ground of article 14 is hardly of any use to the assessee. As already noted, section 128 of the Act shows that a municipal tax may be recovered by presenting a bill or by serving a written notice of demand or by attachment and sale of the defaulter 's immovable property etc. As the Commissioner is not likely to pay heed to any complaint against the determination of any rateable value based on article 14 of the Constitution, he is bound to authenticate the assessment book under r. 19 and can under r. 39 cause to be presented to the assessee a bill for the amount of the tax due. Under r. 41 he can serve upon the person liable for the payment of the tax a notice of demand in form if the amount of the tax has not been paid into the municipal office or deposited with him as required by sub section (2) of section 406 within 15 days from the service of the bill. Rule 42(1) lAys down that if the person to whom the notice of demand has been served under r. 41 does not within 15 days from the said service pay the sum demanded or show sufficient cause for non payment of the same to the satisfaction of the Commissioner and if no appeal is preferred against the said tax, such sum with costs of recovery may be levied under a warrant in form to be issued by the Commissioner by distress and sale of movable property of the defaulter or the attachment and sale of immovable property of the defaulter etc. Section 406(1) provides for appeals against any rateable value or tax fixed or charged under the Act. Section 406(2) provides inter alia as follows: "No such appeal shall be heard unless (a) it is brought within fifteen days after the accrual of the cause of complaint; (b) in the case of an appeal against a rateable value a complaint has previously been made to the Commissioner as provided under this Act and such complaint has been disposed of; (e) in the case of an appeal against a tax, or in the case of an appeal made against a rateable value after; a bill for any property tax assessed upon such value has been pre sented to the appellant, the amount claimed from the appellant has been deposited by him with the Commissioner. " The net result of all this is that unless the assessee pays the amount of tax demanded, his appeal cannot be heard so that if he questions the rateable value or the levy of the tax, he must in any event, deposit the amount demanded. In effect, the Act and the appeal rules do not make any provision for relief to an assessee 696 who complains that the assessment book has been prepared in violation of the law. This may be illustrated from what happened in the case of the Ahmedabad Laxmi Cotton Mills Co. Ltd. who have preferred Writ Petition No. 207 of 1966. In this case, the municipality prepared the assessment book for the year 1965 66 adopting the figure from the previous year under. The Mills finally complained on July 3, 1965 raising various objections regarding the jurisdiction and the validity of the imposition of property tax on the floor area method. These were over ruled and the assessment was finalised by an order dated September 15, 1965. On September 17, 1965 the municipality issued a bill in respect of the assessment. The Mills filed a tax appeal on September 27, 1965. On October 7, 1965 a notice of demand under r. 4 1 (1) of the Taxation Rules was made on the Mills. A Writ Petition was filed in the Gujarat High Court being Special Civil Application No. 1155 of 1965 on October 16, 1965. This petition along with various other petitions filed by other textile mills was dismissed by a common judgment in Application No. 1365 of 1966 on May 5, 1966. On May 7, 1966 the municipality issued an order of attachment under r. 45(1) of the rules. The Mills filed another Writ Petition in the Gujarat High Court against the issue of the order of attachment, but this was dismissed in limine on July 18, 1966. It may be noted that the Mills in common with other Mills had preferred an application for grant of a certificate under articles 132 and 133 of the Constitution against the dismissal of the Writ Petition on May 5, 1966 and such certificate was granted on June 20, 1966. Mr. Desai 's next challenge was directed against sub rr. (2) and (3) of r. 7. According to him, it was beyond the legislative competence of the State to levy a property tax on plant and machinery The relevant entry in List II of the 7th Schedule is item 49, namely, 'Taxes on land and buildings '. The corresponding entry in List 11 under the Government of India Act, 1935 was taxes on "lands, buildings, hearths and windows." Mr. Desai contended that the legislature was not competent by the definition of 'land ' in section 2(3) of the Act to include plant and machinery even if they were attached to the earth or permanently fastened to anything attached to the earth. Mr. Desai argued that it may be that the definition of 'land" in certain Acts embraces plant and machinery but when the legislature rates to impose a tax on plant and machinery in the garb of land it travels beyond its powers. He argued that apart from the definition in certain Acts and deeming provisions contained therein, plant and machinery can never be said to form part of the land or included in land or building. Counsel conceded that entries in legislative lists were certainly to be construed very widely but even then no artificial meaning or arbitrary extension of the meaning of the words in an entry could be allowed. In this connection, our attention was drawn to the observations 697 of Gwyer, C.J. in re. The Central Provinces and Berar Act No. XIV of 1938(1) that ". a broad and liberal spirit should inspire those,. whose duty it is to interpret it, but. I do not imply by this that they are free to stretch or pervert the language of the enactment in the interests of any legal or constitutional theory, or even for the purpose of supplying omissions or of correcting supposed errors. " In Diamond Sugar Mills Ltd. & Anr. vs The State of Uttar Pradesh & Anr.(2) the question was, whether entry 52 of, List 11 of the ' Seventh Schedule which empowered State Legislatures to make ii law relating to "taxes on the entry of goods Into a local area for consumption, use or sale therein,," sanctioned the passing of the U.P. Sugarcane Cess Act, 1960 authorising the State Government to impose ,a on the entry of sugarcane in the premises of a factory for I consumption or sale therein. It Was contended by the appel lant that the premises of a factory was not a "local area" within the meaning of the said Entry. The majority of Judges in that case held the impugned legislation to be beyond the competence of the State Legislature and observed: "In considering the meaning of the words "local area" in entry 52 we have, on the one hand to bear in mind the salutary rule that the words conferring the right of legislation should be interpreted liberally and the powers conferred should be given the widest amplitude;: on the other hand, we have to guard ourselves against extending the meaning of the words beyond their reasonable connotation, in an anxiety to preserve the power of the legislature. " In this case, counsel argued the language was clear. and unambiguous and therefore it was not open to resort to any artificial definition. He also referred to Legislative Practice in India on this point and contended that the same was against giving an extended meaning to the expression 'land and buildings ' so as to include plant and machinery. In re. The Central Provinces and Berar Act No. XIV of 1938(3), the question was whether a tax on retail sales of 'motor spirit and lubricants was ultra vires the Provincial Legislature being a duty of excise within the meaning of entry No. 45 in List 1 of the 7th Schedule to the Government of India Act, 1935 and not within entry No ' 48 of List 11 of that Schedule. There Gwyer, C. J. referred to the legislative practice preceding the Constitution Act and said at.p. 53 "Lastly, I am entitled to look at the manner in which Indian Legislation preceding the Constitution Act had (1) at 37. (2) [1961] 3 section C.R. 242.@ 248. (3) 698 been accustomed to provide for the collection of excise duties;. . In all the Acts by which these duties were imposed it is provided (and substantially by the same words) that the duty is to be paid by the manufacturer or producer, and on the issue of the excisable article from the place of manufacture or production. " In the same case, Sulaiman, J. observed: "Our attention has not been drawn to any provincial enactment, which might have imposed any excise duty on the retail sale of motor spirit and lubricants, or for that matter on the retail sale of any other goods." That courts can look into the legislative practice was again adverted to in Ralla Ram vs The Province of East Punjab(1) where the question related to the vires of a Punjab Act taxing the owner of buildings and lands on their annual value. There the contention was that the tax was really one on income and as such beyond the competence of the Provincial Legislature. The Court referred to the Central Provinces and Berar Act 's case and examined the legislative practice in India. Mr. Desai referred us to a large number of Municipal Acts passed by different Provincial and State Legislatures in India both before and after 1935 to show that plant and machinery were expressly excluded from the purview of such taxes. We may refer to a few only of them which are : Punjab Municipal Act, 1911, section 3(1); The Madras Act IV of 1884 section 65(2); Madras District Municipalities Act, 1920 section 82(2) proviso (b); The Patna Municipal Corporation Act, 1951, section 130(3); The Bombay District Municipalities Act, 1911, s ' 3(11); The Bombay Municipal Boroughs Act section 3(1); The Bombay Municipal Corporations Act, 1988, section 154(2); The Calcutta Municipal Act, 1899, section 151 proviso (2); North West Province and Oudh Municipal Act, section 3(1) proviso; The Central Provinces Municipalities Act of 1903 section 36 proviso; and The Central Provinces and Berar Municipalities Act, 1922 section 73 proviso. Mr. Desai also drew our attention to the English Rating and Valuation Act, 1925. Therein section 2(1) gives the power to levy a consolidated rate and sub section (3) states that the rate shall be at a uniform amount, per pound on the rateable value of each hereditament in that area. Section 24(1) of that Act provides that plant and machinery in or on the hereditament as belongs to any of the classes specified in the Third Schedule to the Act shall be deemed to be a part of the hereditament. This according to Mr. Desai went to show that even in England plants and machinery were not considered part of the hereditament and were made so by a sort of fiction. It was argued that (1) (19481) F.C.R. 207. 699 by a deeming provision the meaning of a word may be extended, but when the language was clear, no such extension by way of interpretation was possible. Our attention was also drawn to a number of sections in the Bombay Act of 1949 which on the face of it, went to show that land in those sections was clearly not meant to include the plant and machinery situate therein. On this question, Mr. Setalvad relied on the principles of rating of plant and machinery in England. We have already noted the provisions of the Rating and Valuation Act, 1925. It is pointed out in Ryde on Rating (Eleventh Edition) at p. 399 : "From towards the end of the eighteenth century to the passing of the Rating and Valuation Act, 1925, there has been controversy as to the inclusion in valuation of machinery and plant, and as to the extent to which (if machinery and plant were included) the valuation was to be affected. The series of judicial authorities on this subject extends from R. vs St. Nicholas, Gloucester, decided in 1783(1) to Kirby vs Hunslet Union (2) and Smith vs Willesden Union(3), decided in 1906 and 1919. The effect of the decision of the House of Lords in Kirby vs Hunslet Union(2) was to sweep away the principles on which a discrimination had previously been made between machinery and plant which was to be "taken into account" in valuation, and that which was not such as physical annexation to the hereditament, or legal annexation in the sense that the thing in question would pass to the tenant at landlord 's fixtures on a demise. . ; and practically to direct the rating authority to value the hereditament equipped with Machinery and plant as it appears to the eye.11 The matter is thus put in Witton Booth on Valuations for Rating (Fourth Edition) at p. 575 : "The rateability of plant and machinery under the law which applied universally before 1925, and which still applies to hereditaments valued by reference to the profits 'earned therein depends on legal decisions on what is comprehended by the term "land". These decisions were based on principles applicable to fixtures generally, of which rateable plant and machinery were one kind. " It will therefore be noticed that the rateability of plant and machinery depended on judicial decisions as to the meaning of the (1) (3) (2) 700 word "land". There is no reason why we should accept those decisions as to what was comprehended by the term "land" when we find in our statutes plant and machinery being excluded therefrom. In Kirby vs Hunslet Union (1) Lord Halsbury expressed; him self thus at p. 49 ". decline myself to enter into what I may call the original equities which might have guided this matter. It is, enough for me that a long series of decisions, for certainly half a century, have established the bald proposition, which is all I am insisting upon, namely '. that although the machinery may not be part of the freehold, it yet is to be taken into account, and in saying that, I do not want to muffle it in a phrase, but what I mean by that is, that to increase the amount of the rate which is exacted from the tenant you may enter into that question and form a judgment upon it, although, as a matter of fact, the machinery may hot be attached to the free hold. " There, the Act in question was Parochial Assessment. Act, 1836 under which the assessment of hereditaments was regulated on the principle that the rateable value was the rent which might be expected to be given for the hereditament alone. The contention on behalf of the appellant before the House of Lords was that machinery affixed to the soil so as to become a part of the freehold must be taken into account in assessing the rateable value but no other machinery. Delivering judgment, Lord Halsbury pointed out that : "The overseer had a comparatively simple problem to solve, although it is difficult enough sometimes; he sees the place being conducted as a brewery, or an iron foundry, or what not. , he looks at the premises, he looks at the furniture which is necessary for carrying on the business as a brewery or foundry; he does not in his own mind analyze, and to my mind he ought 'not to analyze, what would be likely to be the initial arrangements between the intended brewer and the owner of the freehold, to see who should provide this or that engine, or what not, but he looks at the premises as they are, as they are being occupied, and as they are being used, and he says to himself, "Well, looking at the whole of the place, such and such is the rent which would probably be paid by a tenant from year to year for such an establishment as this." (1) 701 .rm60 The problem in our case is not quite. the same. The hypothetical tenant would certainly take, into Consideration the machinery in the building if he was going to rent it for the purpose of running a textile factory. But if the State Legislature had power to levy a tax only on land and buildings, we do not see how the same could be levied on machinery contained in or situate on the building even though the machinery was there for the use of the building for a particular purpose. It therefore appears to us that r. 7(2) of the rules framed under the Bombay Act of 1949 was beyond the legislative competence of the State. The rule also suffers from another defect, namely, that it does not lay down any principle on which machinery is to be specified by public notice by the Commissioner to be deemed to form part of such building for the purpose of fixing the, rateable value. To this, Mr. Setalvad argued that if the building was equipped with machinery for the purpose of running a textile mill, whatever machinery was there for the purpose would be valued. According to him, the question would be, which of the machinery would help in the enjoyment of the property and thereby add to its rateable value. Unfortunately, the specification of the classes is done from time to time by the Commissioner with the approval of the Corporation irrespective of the question as to where they are to be found. It therefore depends on the arbitrary will of the Commissioner as to what machinery he would specify and what he would not. Moreover, he is the only person who can examine this question. There is no right of appeal from any specification made under sub r. (3) of r. 7 except that the Commissioner is to act under the directions of the Standing Committee. Rule 7(2) shows that all plant and machinery may not be taken into account for the purpose of valuation and any such plant or machinery which is not included in the classification may escape rateability however much they may be prized by the tenant who takes the premises on rent. It seems to us, therefore, that r. 7(2) is beyond the legislative competence of the State Legislature and sub r. (3) of r. 7 is also invalid on account of excessive dele gation of powers by the Legislature. In view of the above, it is not necessary to go into the question as to whether the Deputy Municipal Commissioner could exercise quasi judicial powers of the Commissioner as regards the determination of the rateable value under section 49(1) of the Act and we express no opinion thereon. In the result, the petitions are allowed. A writ of mandamus will issue in each case directing the respondent No. 1, Municipality, to treat the relevant entries in the assessment book for the years 1964 65. 1965 66 and 1966 67 relating to special property 702 section questioned in these petitions as invalid and cancelled; and directing respondent No. 1 to prepare fresh assessment lists for the said years relating to the textile mills and other properties dealt within the said special property section. The petitioners are entitled to costs of these applications. One set of hearing fee. G.C. Petitions allowed.

IN-Abs

The petitioners were certain textile mills of Ahmedabad. They filed writ petitions under article 32 of the Constitution against assessment to proper tax by the Corporation of the City of Ahmedabad under the provisions of the Bombay Provincial Municipal Corporation Act, 1949. The following contentions fell for consideration : (i) The method of adopting a flat rate for a floor area for determining the annual value adopted by the Corporation was against the provisions of the Act, as well as against all recognised principles of valuation for the purpose of rating; it was also violative of article 14; (ii) Rules 7(2) and (3) made under the Act gave unguided power to the Commissioner to specify machinery to be treated as part of the 'land ' for the purpose of taxation and therefore were bad due to excessive delegation. They also fell beyond the ambit of Entry 49 of List 11 of the Seventh Schedule. HELD : (i) The method of levy of tax on the basis of floor area was against the provisions of the Act and the Rules made thereunder. The latter clearly laid down that the rateable value of the property must be assessed after determining the rack rent or the annual rental value in respect of each premises which is to be computed on the basis of the annual rent for which the property might reasonably be expected to let from year to year. It did not lie in the mouth of the municipality to say that the irregularity was open to correction. [693 G H; 694 A B; 684 G H] (ii) It had not been established that condition prerequisite for determination of annual value of textile factories at Ahmedabad on the basis of the rental value per foot super of floor area existed at the relevant time, nor had it been shown that the so called contractor 's method was adopted by the Municipal authorities of Ahmedabad. The method was also not one which is generally recognised by authorities on rating. [693E] (iii) Applied indiscriminately as it appeared to have been done in the present case the method of taxation on the basis of floor area was sure to give rise to inequalities as there had been no classification of factories on any rational basis. Further there did not seem to be any basis for diving the factories and the buildings thereof under two general classes as buildings for processing and buildings for non processing purposes Article 14 was therefore clearly violated. [693 F G] 680 Lokmanya Mills vs The Barsi Borough Municipality, ; , relied on. Bhuvaneswariah vs State, A.I.R. 1950 Mys. 170 and N. Kunhali Haji vs State of Kerala, A.I.R. 1966 Ker. 14, referred to. (iv) Rules 7(2) and (3) were invalid on account of excessive delegation of powers by the Legislature. Under these rules the specification of the classes of machinery for the purpose of taxation is done by the Commissioner with the approval of the Corporation irrespective of the question as to where they are to be found. It therefore depends on the arbitrary will of the Commissioner as to what machinery he would specify and what he would not. Moreover, he is the only person who can examine this question as there is no right of appeal. [701 D F] (v) Entry 49 in List II of the Seventh Schedule only permitted levy of tax on land and buildings. It did not permit the levy of tax on machinery contained in or situate on the building even though the machinery was there for the use of the building for a particular purpose. Rule 7(2) which levied such a tax was therefore beyond the legislative competence of the State. [701 A C] In re. The Central Provinces and Berar Act No. XIV of 1938, , Diamond Sugar Mills Ltd. & Anr,. vs State of Uttar Pradesh & Anr. ; , Ralla Ram vs The Province of East Punjab, , R. vs St. Nicholas, Gloucester, , Kirby vs Hunslet Union and Smith vs Willesden Union, , considered.

Appeals Nos. 988 and 989 of 1964. Appeals from the judgment and decree dated February 16, 1961 of the Patna High Court in Appeal from Original Decree No. 390 of 1953. D. Goburdhun, for the appellants (in C.A. No. 899 of 1964). section C. Agarwal and R. K. Garg, for the appellants (in C.A. No. 989 of 1964). D. N. Mukherjee and section Mustafi, for respondent No. 1 (in both the appeals). The Judgment of the Court was delivered by Bachawat, J. One Harbans Narain Singh was the proprietor of villages Seha and Dhobaha and other villages. He created several encumbrances over these villages including a mortgage 127 dated February 10, 1886 in favour of Basanti Bibi, two mortgages dated September 9, 1907 and February 5, 1910, in favour of Harprasad Das and a mortgage dated August 2, 1911 in favour of defendant No. I Ramanandan Lal. On June 23, 1915, Harbans Narain sold the villages to Mahabir Missir subject to the above mortgages. Mahabir Missir redeemed the mortgages in favour of Basanti Bibi and Harprasad Das and became subrogated to their rights. Ramanandan Lal instituted a suit to enforce his mortgage, obtained a final decree for sale, put the decree into execution, at the execution sale purchased villages Seha and Dhobaha and obtained possession of the villages in 1919 and 1920. In 1924, Mahabir instituted suit No. 17 of 1924 to enforce his mortgage lien praying for ratable contribution of his dues in respect of villages Seha and Dhobaha from Ramanandan Lal and obtained a final decree on August 22, 1931. Mahabir died leaving his son Kashinath as his legal representative. Kashinath put the decree in suit No. 17 of 1924 into execution. On July 13, 1934, Ramanandan Lal paid the decreetal dues in respect of village Seha. On November 4, 1935, village Dhobaha was sold in execution of the decree in suit No. 17 of 1924 and was purchased by Kashinath. In June, 1934, Ramanandan Lal through his constituted attorney, Munshi Sheobaran Lal granted five leases in respect of the suit lands in the village to defendants 2 to 7. At the time when the leases were created, Ramanandan Lal was the mortgagor in possession of the suit lands over which Kashinath had a mortgage lien. One of the questions in issue in these appeals is whether the leases were binding on Kashinath. It appears that Kashinath obtained a money decree against Ramatahal Pandey, husband of defendant No. 3 and in execution of the money decree attached the suit lands. Defendants 2 to 7 filed claim petitions objecting to the attachment under 0.21, r. 58, CPC. The claim petitions were allowed and the lands were released from attachment by orders of the executing court dated November 20, 1942 and February 26, 1944. The executing court found that the leases were genuine. Kashinath did not file any suit under 0.21, r. 63, CPC. One of the questions in these appeals is whether the orders passed in the claim proceedings under 0.21, r. 58 precluded Kashinath from setting up his claim in the present suit. On June 11, 1946, Kashinath instituted the suit out of which these appeals arise against Ramanandan Lal and the lessees for recovery of possession of the suit lands and mesne profits alleging that the leases were collusive transactions and were otherwise not binding on him. The defendants contested the suit. In the meantime, in other proceedings, it was declared that Mahabir was a benamidar for Shri Thakur Taraknathji and the deity was the real owner of the villages. In view of this adjudication, Kashinath lost 128 all interest in the present suit. By order dated August 25, 1952, the deity was added as a coplaintiff in the suit. The subordinate Judge, Arrah, held that the leases were genuine, were granted by Ramanandan Lal in due course of management and were binding on the plaintiffs. On this finding, he dismissed the suit. The deity preferred an appeal to the High Court of Patna. The High Court allowed the appeal and decreed the suit. It held that the leases were sham transactions were made in contravention of section 65A of the Transfer of Property Act and were not binding upon 'the plaintiffs. Before the High Court, it was contended on behalf of the defendants that the plaintiffs were precluded from challenging the leases in view of the orders passed against Kashinath in the proceedings under 0. 21, r. 58, CPC, but the High Court rejected this contention. Defendants Nos. 2, 6 and 7 and the widow of defendant No. 5 have filed C. A. No. 988 of 1964 and defendants 1 and 4 have filed C. A. No. 989 of 1964 under certificates granted by the High Court, The appellants contend that as Kashinath did not file any suit under O. 21, r. 63, CPC, the adverse orders passed against him in the proceedings under O. 21, r. 58, CPC operated as res judicata, and lie and the deity who now stands in his shoes, were precluded from alleging that the leases were not binding on them. We think that this contention should be rejected. In view of the orders passed against Kashinath in the claim proceedings and his failure to institute suits under O. 21, r. 63, CPC, Kashinath was precluded from claiming that he had the right to attach the suit lands in execution of his money decree, but he was not precluded from claiming that he had the right to sell the lands in execution of his mortgage decree. Rules 58 to 62 of Order 21, CPC, provide for a summary investigation of the claims and objections to the attachment of any property attached in execution of a decree. The issue in the proceeding is whether "such property is liable to such attachment". If the claim is allowed, the property is released from attachment (r. 60). If the claim is disallowed, the attachment continues (r. 61). If the property is subject to mortgage or charge in favour of some person not in possession, the attachment may be continued subject to such mortgage or charge (r. 62). The party against whom an order is made in the claim proceeding may institute a suit to establish the right which he claims to the property in dispute, but subject to the result of such suit, if any the order is conclusive (r. 63). If no suit is brought under r. 63 within the prescribed period of limitation, the order in the claim proceeding is conclusive on the question whether the property was or was not liable to attachment and sale in execution of the particular decree. But the order is not conclusive for all purposes, see Kandai Narasimhachariar vs Raghava Padayachi 129 and others(). A claim proceeding under r. 58 is not a suit or a proceeding analogous to a suit. An order in the claim proceeding does not operate as res judicata. It is because of rule 63 that the order becomes conclusive. The effect of r. 63 is that unless a suit is brought as provided by the rule, the party against whom the order in the claim proceeding is made or any person claiming through him cannot re agitate in any other suit or proceeding against the other party or any person claiming through him the question whether the property was or was no, liable to attachment and sale in execution of the decree out of which the claim proceeding arose, but the bar of rule 63 extends no further. In support of the contention that the orders in the claim proceedings operated as res indicate, counsel for the appellant relied on several decisions. In Subbier vs Moideen Pitchai(2), the decree holder in execution of a money decree attached a debt alleged to be due to the judgment debtor. The garnishee objected to the attachment on the ground that the debt was not due to the judgment debtor, it had been assigned and he had premised to pay to the assignee and the amount of the debt was Rs. 300 and not Rs. 350. The objection was disallowed. The attached debt was sold in execution of the decree and was purchased by the decree holder. The decree holder purchaser then sued to recover the debt. As the garnishee did not file a suit under 0. 21, r. 63, the order passed against him in the claim proceeding became conclusive, and he was precluded from re agitating his objections in the suit. In the course of his judgment, Schwabe, C .J. referred to section 11 of the Code of Civil Procedure and his observations give some support to the contention of the appellants in the present case that the order in the proceeding under r. 58 operates as Yes judicata. But we cannot agree with those observations. The order in the summary proceeding under r. 58 does not operate as res judicata. The reason why the garnishee could not reagitate his objections was that in view of r. 63 he was precluded from asserting that the decree holder was entitled to attach and sell the particular debt on the footing that it was due to the judgment debtor. In Sarju Prasad Missir and others vs Maksudan Choudhuri and others(3), one Lalji Lal obtained a decree for sale of the property mortgaged to him. In execution of the decree Lalji Lal attached 'the property. One Karoal Narian Choudhary filed a petition objecting to the attachment. 'By an order dated September 14, 1886 passed under section 278, CPC of 1992, corresponding to 0. 21 58 CPC of 1908. file executing court directed that the property should not be sold under the decree obtained by Lalji Lal. Sarju Prasad, an assignee of the decree executed the decree, at the execution sale purchased the property and subse (1) I.L.R. (2) A.I.R. 1923 Mad. (3) A.I.R. 1922 P.C. 341. 130 quently instituted a suit against the heir of Kamal Narain for recovery of possession of the property. The Privy Council held that the order dated September 14, 1886 became final and binding upon Lalji Lal and all persons claiming title under him. Sir John Edge observed : "The petition of objection was a petition which the Subordinate Judge had to consider and dispose of and any party to that proceeding who was dissatisfied with the order which the Subordinate Judge might make could have appealed from it. Lalji Lal was a party to that proceeding and he did not appeal, and the order became final and binding upon Lalji Lal and upon those who claim title under him. " The observation that the party dissatisfied with the order made under section 278 of the Code of Civil Procedure, 1882, could have appealed from the order, seems to have been made per incuriam. It seems that no appeal lay from such an order. The reason why Lalji Lal was precluded from contending that the property was liable to be attached and sold in execution of the decree obtained by him was that in the absence of a suit under section 283 of CPC of 1882, he and Sarju Prasad claiming title under him, could not subsequently contend that the property was liable to be sold in execution of the decree. In the two cases discussed above, the adverse orders in the claim proceeding became conclusive on the question whether the property was liable to attachment and sale in execution of the particular decree then sought to be executed. Equally, in the absence of any suit under O. 21, r. 63, CPC, the adverse orders passed against Kashinath conclusively decided that the suit lands were not liable to be sold in execution of the money decree obtained by him against Ramtahal Pandey. But those orders were not conclusive on the question whether the lands were liable to be sold in execution of the mortgage decree obtained by Kashinath against Ramanandan Lal. On the merits, the question is whether the leases granted by Ramanandan La]. while he was the mortgagor, in possession of the suit lands were binding on the mortgagee Kashinath. The High Court held that the leases were in contravention of section 65A of the . Section 65A was inserted in the by section 30 of the Transfer of Property (Amendment) Act, 1929, which came into force on April 1, 1930 Section 63 of the Transfer of Property (Amendment) Act 1929 provided that nothing in the provisions of section 30 of the amending Act would be deemed if any to affect the "terms or incidents of any of property made or effected before the 1st day of April, 1930". Now Kashinath was entitled to the rights of the mortgagees under the mortgages dated February 10, 131 1886, September 9, 1907, February 5, 1910. All these mort gages were executed before April 1, 1930 and nothing in section 65A affected their incidents. The power of the lessor to make leases binding on the mortgagee , was an incident of the mortgages and was not affected by section 65A. The validity of the leases granted by the mortgagor in June 1934 must be determined with reference to the law as it stood before the enactment of section 65A. In Madan Mohan Singh vs Raj Kishori Kumari(1) Mookerjee, J, held that a mortgagor in possession may grant a lease conformable to usage in the ordinary course of management, for instance lie may create a tenancy from year to year in the case of agricultural lands or from month to month in the case of houses. But he is not competent to grant a lease on unusual terms or to alter the character of the land or to authorise its use in a manner or for a purpose different from the mode in which he himself had used before he granted the mortgage. This view of the law as it stood before the enactment of section 65A was approved in Raja Kamakshya Narayan Singh Bahadur vs Chohan Ram and Another(2) and this court held that the question whether the mortgagor in possession has power to lease the mortgaged property must be determined with reference to the authority of the mortgagor as the bailiff or agent for the mortgagee to deal with the property in the usual course of management. In Gobinda Chandra Saha and others vs Sasadhar Mandal(3), B. K. Mukherjea, J., pointed out that normally a permanent lease with rent fixed in perpetuity is not sanctioned by the ordinary course of management. He observed "The mortgagor might be within his rights to create a lease which is from month to month or from year to year as the case might be, but he cannot grant a permanent lease with a rent fixed in perpetuity. This amounts to an alienation of his right to increase the rent in future and is as good as the sale of the property itself. This is not sanctioned by the ordinary course of management as has been mentioned above nor is it warranted by the previous user of this particular property." In the present case, defendants 2 7 were lessees under five leases granted by the mortgagor in June 1934. All 'these defendants claimed to be Permanent lessees with rent fixed in perpetuity. Four of the leases were granted by registered pattas. In respect of four leases the mortgagor received nazrana or premium. All the leases were created after the property was advertised for sale in execution of the mortgage decree. The High Court has found (1) , 92. (2) ,118. (3) A.I.R.1947Cal.73,75. 132 that the leases were created by the mortgagor in bad faith with a view to cause loss to the mortgagee decree holder. The leases were not in the ordinary course of management of the mortgagor as the agent or bailiff of the mortgagee, and were not binding on the mortgagee. On behalf of the appellants it was argued that the leases might not be binding on Kashinath while he was the mortgagee, but after he purchased the property he ceased to be a mortgagee, and he could not thereafter assert that the leases were not binding on him. This novel argument is ingenious but unsound. An auction purchaser at a sale held in execution of a mortgage decree buys not only the interest of the mortgagor but also the interest of the mortgagee. If the lease does not 'bind the mortgagee, it does not equally bind the auction purchaser. It is interesting to notice that in Rust vs Goodale(1), Harman, J. held that the right of the mortgagee to treat a tenant of the mortgagor as a trespasser was a right which passed on sale or foreclosure to his assignee. A lease granted by the mortgagor, out of the ordinary course of management, though not binding on the mortgagee, is binding as between the mortgagor and the lessee. Such a lessee acquires an interest in the right of redemption and is entitled to redeem. If such a lease is created before the institution of a suit relating to the mortgage, the lessee must be joined as a party lo the suit under 0 34, r. 1, CPC; otherwise he will not be bound by the decree passed in the suit and will continue to retain his right of redemption. But in view of section 52 of the , if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of the litigation. If the property is sold in execution of the decree passed in the suit, the lessee cannot resist a claim for possession by the auction purchaser. The lessee could apply for being joined as a party to the suit and ask for an opportunity to redeem the property. But if he allows the property to be sold in execution of the mortgage decree and they have now lost the present case, the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption. They cannot resist the claim of the auction purchaser of recovery of possession of the lands. If a mortgagor in possession of the mortgaged property exe cutes a lease of the property in the ordinary course of management as the agent or bailiff of the mortgagee during the pendency of a suit by the mortgagee to enforce the mortgage, a question may arise whether such a lease is in the eye of the law a lease granted by the mortgagee through his agent and therefore binding on him. But in the present case, that question does not arise (1) ,42,43. 133 as the leases were not granted by the mortgagor in the ordinary course of management as the bailiff or agent of the mortgagee. The High Court held that the leases were sham transactions. We do not think it necessary to decide this question. Even assuming that the leases were not sham transactions they were not binding on Kashinath and the deity. The High Court rightly decreed the suit. The appeals are dismissed with costs. There will be one hearing fee. Y. P. Appeals dismissed.

IN-Abs

The owner of certain properties over which K had a mortgage granted leases to certain persons. The lands were sold in execution of the mortgage decree of K, and were, purchased by K at the auction The lessees allowed the property to be sold and did not apply for being joined as parties. K obtained a money decree against one of the lessees and in execution attached the lands. The lessees filed claim peti tions objecting to the attachment under 0.21 r. 28 C.P.C. The claim petitions were allowed and the executing court found that the leases were genuine. K did not file any suit under O.21 r. 63 C.P.C. But later, K filed a suit against the mortgagor and the lessees for recovery of possession of the lands alleging that the leases were collusive transactions and were otherwise not binding on him. The trial court dismissed the suit holding that leases were genuine,, but the High Court decreed the suit holding that the leases were sham transactions and made in contravention of section 65A of the Transfer of Property Act. In appeal to this Court, the appellants contended that (i) as K did not file any suit under Order 21 r. 63 C.P.C. the adverse Orders passed against him in the proceedings under 0.21 r. 58 C.P.C. operated as res judicata and he was precluded from alleging that the leases were not binding on him; and (ii) the leases granted by the mortgagor were binding on K. HELD: In view of the orders passed against K in the claim proceedings and his failure to institute suits under 0.21, r. 63 C.P.C., K was precluded from claiming that he had the right to attach the suit lands in execution of his money decree, but he was not precluded from claiming that he had the right to sell the lands in execution of his mortgage decree. [128 E] A claim proceeding tinder 0.21 r. 58 C.P.C. is not a suit or a proceeding analogous to a suit. An order in the claim proceeding does not operate as res judicata. It is because of 0.21 r. 63 that the order becomes conclusive. The effect of r. 63 is that unless a suit is brought provided by the rule, the party against whom the order in the claim proceeding is made or any person claiming through him cannot reagitate in any other suit or proceeding against the other party or any person claiming through him the question whether the property was or no, liable to attachment and sale in execution of the decree out of which the claim proceeding arose but the bar of rule 63 extends no further. [129 A C] Kandadai Narasimhachariar vs Raghava Pedayachi & Ors I.L.R. ; approved. 126 Subbier vs Moideen Pitchai, A.I.R. 1923 Mad. 562, and Sarju Prasad Missir and Ors. vs Maksudan Choudhuri & Ors. A.I.R. ; referred to. (ii) 'The validity of the leases granted by the mortgagor was not affected by section 65A of the Transfer of Property Act as the leases were granted before the enactment of section 65A. [131 A B] The leases were not in the ordinary course of management of the mortgagor as the agent or bailiff of the mortgagee and were not binding of the mortgagee. [132 A B] A lease granted by the mortgagor,, out of the ordinary course of management, though not binding on the mortgagee, is binding as between the mortgagor and the lessee. Such a lessee acquires an interest in the right of redemption and is entitled to redeem. If such a lease is created before the institution of a suit relating to the mortgage, the lessee must be joined as a party to the suit under 0.34, r. 1. C.P.C.; otherwise he will not be bound by the decree passed in the suit and will continue to retain his right of redemption. But in view of section 52 of the Transfer of Property Act, if the mortgagor grants such a lease during the pendency of a suit for sale by the mortgagee, the lessee is bound by the result of the litigation. If the property is sold in execution of the decree passed in the suit, the lessee cannot resist a claim for possession by the auction purchaser. The lessee could apply for being joined as a party to the suit and ask for an opportunity to redeem the property. But if he allows the property to be sold in execution of the decree. , he loses his right of redemption. In the present case, the lessees allowed the suit lands to be sold in execution of the mortgage decree and they have now lost the right of redemption. They can of resist the claim of the auction purchaser for 'recovery of possession of the lands. [132 D G] Raja Kamakshya Narayan Singh Bahadur vs Chohan Ram and Anr. ; ; followed. Madan Mohan Singh vs Raj Kishori Kumari , , 92; Gobinda Chandra Saha & Ors. vs Sasadhar Mandal, A.I.R. 1947 Cal. 73, 75 and Rust vs Goodale, , 42 and 43; referred to.

Appeal No. 26 of 1966. Appeal from the judgment and order dated October 28, 1964 of the Punjab High Court in I. T. Reference No. 28 of 1962. section K. Mitra, Gopal Singh, section P. Nayyar and R. N. Sachthey,. for the appellant. Veda Vyasa and B. N. Kirpal, for the respondent. The Judgment of the Court was delivered by Sikri, J. At the instance of the Commissioner of Income Tax,, the Appellate Tribunal, Delhi Bench "C", referred the following question "Whether the cost of land is entitled to depreciation under the schedule to the Income tax Act alongwith the cost of the building standing thereon.?" 182 This question arose out of the following facts : The respon dent, M/s Alps Theatre, hereinafter referred to as the assessee, carries on business as exhibitor of films. The Income Tax Officer initiated proceedings under section 34(1)(b) of the Indian Income Tax Act, 1922, on the ground that in the original assessment depreciation was allowed on the entire cost of Rs. 85,091/ , shown as cost ,of the building which included Rs. 12,000/ as cost of land. The Income Tax Officer, by his order dated February 22, 1959, recomputed the depreciation, excluding cost of land. The assessee ap pealed to the Appellate Assistant Commissioner. The Appellate Assistant Commissioner upheld the order of the Income Tax Officer. The assessee then appealed to the Appellate Tribunal which accepted the appeal. In accepting the appeal it observed as follows : "You cannot conceive of a building without the land beneath it. It is not possible to conceive of a building without a bottom. What Section (10) (2) (vi) of the Act says is that depreciation will be allowed on the building. The word "building" itself connotes the land upon which something has been constructed. It was, therefore, wrong on the part of the authorities below to exclude the value of the land upon which some construction was made. The true meaning of the word 'building ' means the land upon which some construction has been made. The two must necessarily go together. " The High Court answered the question referred to it against the Department. Mahajan, J., observed that in Section 10(2)(vi) of the Income Tax Act, a building is placed at par with machinery and furniture and is treated as a unit, and, therefore, for the purposes of depreciation a building cannot be split up into building material and land. He further observed that if the Legislature wanted to exclude land from the building for purposes of depreciation it could have said so. He then added : "Moreover, depreciation is allowed on the capital. The capital here is a unit building. If later on it is sold and it fetches more than its written down value the surplus is liable to tax [see in this connection Section 10(2) (vii) proviso.]" He felt that "the crux of the matter is that the building is treated as a unit for purposes of depreciation or repair, and there is no warrant in the Act which would permit us to split the unit for the purposes of section IO." He further felt that at any rate two equally plausible interpretations are possible and the one in favour of the assessee should be adopted. 183 Dua, J., in a concurring judgment, felt that the question was not free from difficulty, but he answered the question in favour of the assessee on the ground that much could be said for both points of view and the view in support of the assessee 's submission had found favour with the Tribunal which had not been shown to be clearly erroneous. The answer to the question depends upon the true interpreta tion of section 10(2)(vi), and in particular whether the word "building" occurring in it includes land. Section 10 deals with the profits and gains derived from any business, profession or vocation. Section 10(2) provides that such profits or gains shall be computed after making certain allowances. The object of giving these allowances is to determine the assessable income. The first three allowances consist of allowance for rent paid for the business premises, allowance for capital repairs and allowance for interest in respect of capital borrowed. Sub clauses (iv), (v), (vi), (vi a) and (vii) of section 10(2) deal with allowances in respect of buildings, machinery, plant or furniture. The word "building" must have the same meaning in all these clauses. Sub clause (iv) runs as under : "in respect of insurance against risk of damage or destruction of buildings, machinery, plant, furniture,stocks or stores, used for the purpose of the business,profession or vocation, the amount of any premium paid. " "Building" here clearly, it seems to us, does not include the site because there cannot be any question of destruction of the site. Clause (v) reads : " in respect of current repairs to such buildings, machinery, plant or furniture, the amount paid on account thereof. " This again cannot include the site. Then we come to sub cl. (vi), the relevant portion of which reads as under : "in respect of depreciation of such buildings, machinery, plant or furniture being the property of the assessee, a sum equivalent . as may in any case or class of cases be prescribed. " It would be noticed that the word used is "depreciation" and "depreciation" means : a decrease in value of property through wear, deterioration, or obsolescence the allowance made for this in book keeping, accounting, etc." (Webster 's New World Dictionary '). In that sense land cannot depreciate. The other words to notice are "such buildings". We have noticed that in sub cls. (iv) and 184 (v), "building" clearly means structures and does not include site. That this is the proper meaning is also borne out by r. 8 of the Indian Income Tax Rules, 1922. Rule 8 has a schedule, and as far as buildings are concerned, it reads as under : Class of asset Rate per Remarks centage 1.Buildings (1) First class substantial buildings of materials. 2.5 Double these numbers (2)Scond class building will be taken for factory of less substantial con 5 buildings excluding struction. offices,godowns,officer 's (3)Third class building 7.5 and employees quarters. of construction infeior to that of second class building,but not inclu ding purely temporory erection. (4) Purely temporary No rate is prescribed: erection such as wooden renewals will be allowed structure. as revenue expenditure. The rate of depreciation is fixed on the nature of the structure. If it is a first class substantial building, the rate is less. In other words, first class building would depreciate at a much less rate than a second class building. It would be noticed that for purely temporary erections, such as wooden structures, no rate of depreciation is prescribed and instead renewals are allowed as revenue ex penditure. But if the contention of the respondent is right, some rate for depreciation should have been prescribed for land under the temporary structures. Further it would be difficult to appreciate why the land under a third class building should depreciate three times quicker than land under a first class building. One other consideration is important. The whole object of section 10 is lo arrive at the assessable income of a business after allowing necessary expenditure and deductions. Depreciation is allowable as a deduction both according to accountancy principles and according to the Indian Income Tax Act. Why '? Because otherwise one would not have a true picture of the real income of the business. But land does not depreciate, and if depreciation was allowed it would give a wrong picture of the true income. The High Court relied on Corporation of the City of Victoria and Bishop of Vancouver Island(), but in our view this case is distinguishable and gives no assistance in determining the meaning of the 'word 'buildings ' in the context of section 10(2)(vi). In this case the Privy Council had to construe section 197(1) of the Municipal Act, British Columbia, which exempted from municipal rates and taxes (1) [1912] 1 2 A.C. 384. 185 "every building set apart and in use for the public worship of God." The Privy Council held that the above exemption applied to the land upon which a building of the description mentioned above was erected as well as to the fabric. The Privy Council was not concerned with the question of depreciation but with the question of exemption from Municipal rates. In the result the appeal succeeds, the judgment of the High Court set aside and the question referred is answered in the negative and against the assessee. In the circumstances there will be Y.P Appeal allowed.

IN-Abs

The Revenue authorities did not allow depreciation on the cost of land alongwith the cost of building standing thereon. The Appellate Tribunal accepted the assessee 's appeal and the High Court answered the question in favour of the assessee. In appeal to this Court by the Revenue: HELD: The appeal must be allowed. Building under section 10(2), does not include the site because there cannot be any question of destruction of the site. [183 E] The word used in section 10(2)(vi) is "depreciation" and "depreciation" means "a decrease in value of property through wear, deter oration, or obsolescence, and allowance made for this in book keeping, accountings etc." In that sense land cannot depreciate. [183 H] By r. 8 of the Indian Income tax Rules the rate of depreciation is fixed on the nature of the structure. It would be difficult to appreciate why the depreciation of land would be dependant on the class of structures. [184 D E] The whole object of section 10 is to arrive at the assessable income of a building after allowing necessary expenditure and deductions. If depreciation on land was allowed it would give a wrong picture of the true income. [184 F G] Corporation of the City of Victoria and Bishop of Vancover , distinguished.

: Writ Petition No. 153 of 1966. (Under Article 32 of the Constitution of India for enforcement of the Fundamental Rights) And Writ Petition No. 202 of 1966. (Under Article 32 of the Constitution of India for enforce ment of the Fundamental Rights) And Writ Petition No. 205 of 1966. (Under Article 32 of the Constitution of India for enforcement of the Fundamental Rights) 778 In Writ Petition No. 153 of 1966. R. V. section Mani, section K, Mehta and K. L. Mehta, for the petitioners. Niren,De, Additional Solicitor General of India,and R. N. Sachthey, for the Respondents. Niren De, Additional Solicitor General of India,G.Rajagopal, and R. H. Dhebar,for Intervener Ng. 1. section D. Banerjee, Advocate General for the State of West Bengal, B. Sen and P. K. Bose,for Intervener No.2. Lal Narain Sinha, Advocate General for the State of Bihar, Bajrang Saha, M. M. Gajadhar, K. M. K. Nair, D. P. Singh, M. K. Ramamurthi, R. K. Garg, section C. Agarwala and G. D. Gupta, for Intervener No. 3. Mohan Kumaramangalam., Advocate General for the State of Madras, B. Ramamurthi and A. V. Rangam, for Intervener No. V. D. Mahajan and R. H. Dhebar, for Intervener No., 5. K. L. Mishra, Advocate General for the State of Uttar Pradesh, and O. P. Rana, for Intervener No., 6. V. A. Seyid Muhamad, Advocate General for the State of Kerala, B. R. L. Iyengar, A. G. Pudissery, for Intervener No. 7. Naunit Lal, for Intervener No. 8. K. B. Mehta, for Intervener No. 9. P. Ram Reddy and T. V. R. Tatachari, for Intervener No. 10. M. C. Stealvad, B. R. L. Iyengar and R. H. Dhebar, for Inter vener No. 11. R. Thiagarajan, for Intervener No. 12. D. N. Mukherjee, for Interveners Nos. 13 and 19 to 21. E. Udayairatnam, section section Dalal and D. D. Sharma, for Inter veners Nos. 14 and 15. R. K Garg, D. P. Singh, M. K. Ramamurthi, section C. Agarwala, G. D. Gupta and K. M. K. Nair ' for Intervener No. 16. 'K. Parasaran and K. R. Chaudhuri, for Intervener No. 17. Basudev Prasad, K. Parasaran and K. R. Chaudhuri, for Intervener No. 18. Basudev Prasad, K. Rajendra Chaudhuri, K. R. Chaudhuri and section N. Prasad, for Interveners Nos. 22 to 24. 779 in Writ Petition No. 202 of 1966. M.K. Nambyar, K. B. Jinaraja Hegde, N. A., Subramaniam, Bhuvanesh Kumari, O. C. Mathur, J. B. Dadachanji and Ravin der Narain, for the Petitioner. H. R. Gokhale, B. P. G. K. Achar, K. H. Dhebar, R. N. Sachthey and section P. Nayyar, for Respondent No. 1. Niren De, Additional Solicitor General, N. section Bindra and R. N. Sachthey, for Respondent No. 2. A. K. Sen, F. section Nariman, M. L. Bhakte, section I. Thakere, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for Intervener No. 1. N. A. Palkhiwala, F. section Nariman, M. L. Bhakte, D. M. Popat,0. P. Malhotra, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for Intervener No. 2. D. M., Parulekar B. Dutta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for Intervener No. 3. In Writ Petition No. 205 of 1966. M. K. Nambyar, K. B. Jinaraja Hegde, N. A. Subramaniam, Bhuvanesh Kumari, O. C. Mathur, J. B. Dadachanji and Ravin der Narain, for the Petitioner. H. R. Gokhale, B. R. G. K. Achar, R. H. Dhebar and section P. Nayyar, for Respondent No. 1. section G. Patwardhan, D. M. Parulekar, B. Dutta, section K. Dhelika, 1. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the Intervener. The Judgment Of SUBBA RAO, C.J., SHAH, SIKRI, SHELAT and VAIDIALINGAM, JJ. was delivered by SUBBA RAO, C.I. According to this Judgment (i) the power to amend the Constitution is not to be found in article 368 but in articles 245, 246 and 248 read with Entry 97 of List 1; (ii) the amending power can. not be used to abridge or take away the fundamental rights guaranteed in Part III of the Constitution; (iii) a law amending the Constitution is "Law" within the meaning of article 13(2) and (iv). the First, Fourth and Seventeenth Amendments though they abridged fundamental rights were valid in the past on the basis of earlier decisions of this Court and continue to be valid for the future. On the application of the doctrine of "prospective over ruling", as enunciated in the judgment, the decision will have only prospective operation and Parliament will have no power to abridge or take away Fundamental Rights from the date of the judgment. The Judgment of WANCHOO, BHARGAVA and MITTER, JJ. was delivered by WANCHOO, J. According to this Judgment (i) the 780 power of amending the Constitution resides in article 368 and not in articles 245, 246 and 248, read with EntrY 97 of List 1; (ii) there, are no restrictions on the power if the procedure in article 368 is followed and all the Parts of the Constitution including Part III, can be amended, (iii) an amendment of the Constitution is not " 'law" under article 13(2); and (iv) the doctrine of "prospective overruling" cannot be applied in India. HIDAYATULLAH, J. delivered a separate judgment agreeing with SUBBA RAo, CJ. on the following two points: (i) that the power to amend the Constitution cannot be used to abridge or take away fundamental rights; and (ii) that a law amending the Constitution is "law" under article 13 (2). He agrees With WANCHOO, J. that the power to amend does not reside in articles 245 and 248 read wish Entry 97 of List 1. article 368, according to him, is sui generis and procedural and the procedure when correctly followed, results in an amendment. He does not rely on the doctrine of "prospective overruling". As regards the First, Fourth and Seventh Amendments, these having long enured and been acquiesced in, he does not treat the question of their validity as being before him. As regards the Seventeenth Amendment he finds sufficient support for it in the Constitution as amended by the First, Fourth and Seventh Amendments and holds that the new definition of "estate", introduced by the Amendment, though it is "law" under article 13 (2) and is an inroad into fundamental rights, is beyond the reach of the courts because it falls within the word "law" in articles 31 (1), (2), 2A and 31A(1). He, however, declares section 3 of the Seventeenth Amendment Act ultra vires the amending process as an illegitimate exercise of the amending power. [BACHAWAT and RAMASWAMI, JJ. delivered separate judgments concurring with WANCHOO, J.] Subbarao, C.J. These three writ petitions raise the important question of the validity of the Constitution (Seventeenth Amendment) Act, 1964. Writ Petition No. 153 of 1966, is filed by the petitioners therein against the State of Punjab and the Financial Commissioner, Punjab. The petitioners are the son, daughter and granddaughters of one Henry Golak Nath, who died on July 30, 1953. The Financial Commissioner, in revision against the order made by the Additional Commissioner, Jullundur Division, held by an order dated January 22, 1962 that an area of 418 standard acres and 9 1/4 units was surplus in the hands of the petitioners under the provisions of the Punjab Security of Land Tenures Act X of 1953, read with section 10 B thereof. The petitioners, alleging that the relevant provisions of the said Act where under the said area was 781 declared surplus were void on the ground that they infringed their rights under cls. (f) and (g) of article 19 and article 14 of the Constitution, filed a writ in this Court under article 32 of the Constitution for a direction that the Constitution (First Amendment) Act 1951, Constitution (Fourth Amendment) Act, 1955, Constitution (Seventeenth Amendment) Act, 1964, insofar as they affected their fundamental rights were unconstitutional and inoperative and for a direction that section 10 B of the said Act X of 1953 was void as violative of articles 14 and 19 (1) (f) and (g) of the Constitution. Writ Petitions Nos. 202 and 203 of 1966 were filed by different petitioners under article 32 of the Constitution for a declaration that the Mysore Land Reforms Act (Act 10 of 1962) as amended by Act 14 of 1965, which fixed ceilings on land holdings and conferred ownership of surplus lands on tenants infringed articles 14, 19 and 31 of the Constitution and, therefore, was unconstitutional and void. The States of Punjab and Mysore, inter alia, contended that the said Acts were saved from attack on the ground that they infringed the fundamental rights of the petitioners by reason of the Constitution (Seventeenth Amendment) Act, 1964, which, by amending article 31 A of the Constitution and including the said two Arts in the 9th Schedule thereto, had placed them beyond attack. In Writ Petition No. 153 of 1966, 7 parties intervened. In Writ Petition No. 202 of 1966 one party intervened. In addition, in the first petition, notice was given to the Advocates General of various States. A11 the learned counsel appearing for the parties, the Advocates General appearing for the States and the learned counsel for the interveners have, placed their respective viewpoints exhaustively before us. We are indebted to all of them for their thorough preparation and clear exposition of the difficult questions of law that were raised in the said petitions. At the outset it would be convenient to place briefly the respective contentions under different heads : (1) The Constitution is intended to be permanent and, therefore, it cannot be amended in a way which would injure, maim or destroy its indestructible character. (2) The word "amendment" implies such an addition or change within the lines of the original instrument as will effect an improvement or better carry out the purpose for which it was framed and it cannot be so construed as to enable the Parliament to destroy the permanent character of the Constitution. (3) The fundamental rights are a part of the basic structure of the Constitution and, therefore, the said power can be exercised only to preserve rather than destroy the essence of those rights. (4) The limits on the power to amend are implied in article 368, for the 782 expression "amend" has a limited meaning. The wide phraseo logy used in the Constitution in other Articles, such as "repeal" and "re enact" indicates that article 368 only enables a modification of the Articles within the framework of the Constitution and a destruction of them. (5) The debates in the Constituent Assembly, particularly the speech of Mr. Jawahar Lal Nehru, the first PA= Minister of India, and the reply of Dr. Ambedkar, who piloted the Bill disclose clearly that it was never the intention of the makers of the Constitution by putting in article 368 to enable the Parliament to repeal the fundamental rights, the circumstances under which the amendment moved by Mr. H. V. Kamath, one of the members of Constituent Assembly, was withdrawn and article 368 was finally adopted, support the contention that amendment of Part II, is outside the scope of article 368. (6) Part III of the Constitution is a self contained Code. and its provisions are elastic enough to meet all reasonable requirements of changing situations. (7) The power to amend is sought to be derived from three sources, namely, (i) by implication under article 368 itself; The procedure to amend culminating in the amendment of the Constitution necessarily implies that power, (ii) the power and ,the limits of the power to amend are implied in the Articles sought to be amended, and (iii) article 368 only lays down the procedure to amend, but the power to amend is only the legislative power conferred on the Parliament under articles 245, 246 and 248 of the Constitution. (8) The definition of "law" in article 13(2) of the Constitution includes every branch of law, statutory, constitutional, etc., ' and therefore, the power to amend in whichever branch it may be classified, if it takes away or abridges fundamental rights would be void thereunder. (9) The impugned amendment detracts from the jurisdiction of the High Court under article 226 of the Constitution and also the legislative powers of the States and therefore it falls within the scope of the proviso to article 368. The said summary, though not exhaustive, broadly gives the various nuances of the contentions raised by the learned counsel, who question the validity of the 17th Amendment. We have not noticed the other arguments of Mr. Nambiar, which are peculiar to the Writ Petition No. 153 of 1966 as those questions do not arise for decision, in the view we are taking on the common questions. On behalf of the Union and the States the following points were pressed : (1) A Constitutional amendment is made in exercise of the sovereign power and not legislative power of Parliament and,. therefore, it partakes the quality and character of the Constitution itself. (2) The real distinction is between a rigid and a flexible Constitution. The distinction is based upon the express limits of the amending power. (3) The provisions of article 783 368 axe clear and unequivocal and there is no scope for invoking implied limitations on that power: further the doctrine of impliedpower has been rejected by the American courts and jurists. (4) The object of the amending clause in a flexible Consetitution is to enable the Parliament to amend the Constitution in order to express the will of the people according to the changing course of events and if amending power is restricted by implied limitations, the Constitution itself might be destroyed by revolution. Indeed, it is a safety valve and an alternative for a violent change by revolution. (5) There are no basic and non basic features of the Constitution; everything in the Constitution is basic and it can be amended in order to help the future growth and progress of the country. (6) Debates. in the Constituent Assembly cannot be relied upon for construing article 368 of the Constitution and even if they can be, there is nothing in the debates to prove, positively that fundamental rights were excluded from amendment. (7) Most of the amendments are made out of political necessity: they involve, questions, such. as, how to exercise power,, how to make the lot of the citizens better and the like and, therefore, not being judicial questions, they are outside the court 's jurisdiction. (8) The language of article 368 is clear, categorical, imperative and universal, on the other hand, the language of article 13(2) is such as to admit qualifications or limitations and, therefore, the Court must construe them in such a manner as that Article could not control article 368. (9) In order to enforce the Directive Principles the Constitution was amended from time to time and the great fabric of the Indian Union has been built since 1950 on the basis that the Constitution could be amended and, therefore, any reversal of, the previous I decisions would introduce economic chaos in our country and that, therefore, the burden is very heavy uponthe petitioners to establish that the fundamental rights cannot be amended under article 368 of the Constitution. (10) article 31 A and the 9th Schedule do not affect the power of the High Court under article 226 or the legislative power of the States though the area of their operation is limited and, therefore, they do not fall within the scope of the proviso to article 3 68. The aforesaid contentions only represent a brief summary of elaborate arguments, advanced by learned counsel. We shall deal in appropriate context with the other points mooted before US. It will be convenient to read the material provisions of theConstitution at. this stage. Article 13(1) (2) 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, toy the extent of the contravention, be void. 784 (3) In this article, unless the context otherwise requires, (a) "law" includes any Ordinance, order, bye law, rule regulation, notification, custom or usage having in the territory of India the force of law. Article 31 A(1), Notwithstanding anything contained in article 13, no law providing for, (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31. (2) (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 tenure in force in that area and shall also include, (ii) any land held under ryotwari settlement, (iii) any land held or let for purposes of agriculture or for purposes ancillary thereto. Article 31 D. Without prejudice to the generality of the provisions contained in article 31 A, none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is inconsistent with, or takes away or abridges any of the rights conferred by, any provisions of this Part, and not withstanding any judgment decree or order of any court or tribunal to the contrary, each of the said Acts and Regulations shall, subject to the power of any competent Legislature to repeal or amend it, continue in force. In the Ninth Schedule to the Constitution the Mysore Land Reforms Act, 1961, (Mysore Act 10 of 1962) is included as item 51 and the Punjab Security of Land Tenures Act, 1953 (Punjab Act 10 of 1953) is included as item 54. The definition of "estate" was amended and the Ninth Schedule was amended by including therein the said two Acts by the Constitution (Seventeenth Amendment) Act, 1964. 785 The result of the said amendments is that both the said Acts dealing with estates, within their wide definition introduced by the Constitution (Seventeenth Amendment) Act, 1964, having been included in the Ninth Schedule, are placed beyond any attack on the ground that their provisions are inconsistent with or take away or abridge any of the rights conferred by Part III of the Constitution. It is common case that if the Constitution (Seventeenth Amendment) Act, 1964, was constitutionally valid, the said Acts could not be impugned on any of the said grounds. The question of the amendability of the fundamental rights was considered by this Court earlier in two decisions, namely, Sri Sankari Prasad Singh Deo vs Union of India and State of Bihar(1) and in Sajjan Singh vs State of Rajasthan (2) In the former the validity of the Constitution (First Amend ment) Act, 1951, which inserted, inter alia, articles 31 A and 31 B in the Constitution, was questioned. That amendment was made under article 368 of the Constitution by the Provisional Parliament. This Court held that Parliament had power to amend Part III of the Constitution. The Court came to that conclusion on two grounds, namely, (1) the word "law" in article 13(2) was one made in exercise of legislative power and not constitutional law made in exercise of constituent power; and (ii) there were two articles (articles 13(2) and 368) each of which was widely phrased and, therefore, harmonious construction required that one should be so read as to be controlled and qualified by the other, and having regard to the circumstances mentioned in the judgment article 13 must be read subject to article 368. A careful perusal of ' the judgment indicates that the whole decision turned upon an assumption that the expression "law" in Art 13(2) does not include constitutional law and on that assumption an attempt was made to harmonise Article 13 (2) and 368 of the Constitution. The decision in Sajjan Singh 's case(2) was given in the con text of the question of the validity of the Constitution (Seventeenth Amendment) Act, 1964. Two questions arose in that case: (1) Whether the amendment Act insofar it purported to take away or abridge the rights conferred by Part III of the Constitution fell within the prohibition of article 13(2) and (2) Whether Articles 31 A and 31 B sought to make changes in articles 132, 136 or 226 or in any of the lists in the Seventh Schedule and therefore the requirements of the proviso to Article 368 had to be satisfied. Both the Chief Justice and Mudholkar, J. made it clear that the first contention was not raised before the Court. The learned counsel appearing for both the parties accepted the correctness of the decision in Sankari Prasad 's case(1) in that (1) ; ,105. (2) ; , 946, 950, 959, 961, 963. 786 regard. Yet Gajendragadkar, C.J. speaking for the majority ,agreed with the reasons given in Sankari Prasad 's case(1) on the first question and Hidayatullah and Mudholkar, JJ. expressed their dissent from the said view. But all of them agreed, though for different reasons on the second question. Gajendragadkar, C.J. speaking for himself, Wanchoo and Raghubar Dayal, JJ. rejected the contention that article 368 did not confer power on Parliament to take. away the fundamental rights guaranteed by Part III. When a suggestion was made that the decision in the aforesaid case should be reconsidered and reviewed, the learned Chief Justice though he conceded that in a case where a decision had a significant impact on the fundamental rights of citizens, the Court would be inclined to review its earlier decision in the interests of the public good, he did not find considerations of substantial and compelling character to do so in that case. But after: referring to the reasoning given in Sankari Prasad 's case(1) the; learned Chief Justice observed "In our opinion , the expression "amendment of the, Constitution" plainly and unambiguously means amendment of all the provisions of the Constitution. " Referring, to article 13 (2), he restated the same reasoning found in, the earlier decision and added that if it was the intention of the Constitution makers to save, fundamental rights from the amending,process they should have taken the precaution of making A . clear provision in that regard. In short, the majority, speaking through Gajendragadkar, C.L agreed that no case had been made, out for reviewing the earlier decision and practically accepted the reasons given in the earlier decision. Hidyatullah J. speaking for himself, observed "But I make it clear that I must not be understood to have subscribed to the view that the word "law" in article 13(2) does not control constitutional amendments. , I reserve my opinion on that case for I apprehend that it depends on how wide is the "law"in that Article." After giving his reasons for doubting the correctness of the reasoning given in Sankari Prasad 's case(1), the learned Judge concluded thus : "I would require stronger reasons than those given in Sankari Prasad 's case(1) to make me accept the view that Fundamental Rights were not really fundamental but were intended to be within the powers of amendment in common with the other parts of the Constitution and without the concurrence of the States." (1) ; 787 The. learned Judge continued "The Constitution gives so many assurances in Part III that it would be difficult to think that they were the playthings of a special majority. " Mudholkar, J. was positive that the result of a legislative action of a legislature could not be other than "law" and, therefore, it seemed to him that the fact that the legislation dealt with the amendment of a provision of the Constitution would not make, its results anytheless a 'law". He further pointed out that article 368 did not say that whenever Parliament made an amendment to the Constitution it assumed a different capacity from that of a constituent body. He also brought out other defects in the line of reasoning adopted in Sankari Prasad 's case(1). It will, therefore,be seen that the correctness of the decision in Sankari Prasad 's case(1) was not questioned in Sajjan Singh 's case(2) Though it was not questioned, three of the learned Judges agreed with the view expressed therein, but two learned Judges were inclined to take a different view. But, as that question was not raised, the minority agreed with the conclusion, arrived at by the majority on the question whether the Seventeenth Amendment Act was, covered by the proviso. to article 368 of the Constitution. The conflict between the majority and the minority in Sajjan 's Singh 's case(1) falls to be resolved in this case. The said conflict and, the great importance of the question raised is the justification for . the Constitution of the larger Bench. , The decision in Sankri Prasad 's case(1) was assumed to be correct in subsequent decisions of this Court. See section Krishnan vs State of Madras(1), The State ' of West Bengal vs Anwar All Sarkar(1) and Basheshar Nath vs The Commissioner of Income tax, Delhi and Rajasthan(5). But nothing turns upon that fact, as the correctness of the derision was not questioned . in those cases. A correct appreciation of the scope and the place of funda mental rights in our Constitution will give its the right perspective for solving the problem presented before us, Its scope cannot be appreciated unless we have a conspectus of the Constitution, its objects. and its machinery to achieve those object. The objective sought to be achieved by the Constitution is declared in sonorous terms. in its preamble which reads "We the people of India having solemnly resolved to constitute India into a Sovereign, Democratic, Republic and to secure to all its citizens justice. liberty. equality. and fraternity . (1) ; (3) ; at page 652. (2) [1965] 1 S.C.R.933. (4) ; , 366. (5) [1959] Supp. 1 S.C.R. 528,563. 788 It contains in a nutshell, its ideals and its aspirations. The preamble is not a platitude but the, mode of its realisation is worked out in detail in the Constitution. The Constitution brings into existence different constitutional entities, namely, the Union, the States and the Union Territories. It creates three major instruments of power, namely, the Legislature, the Executive and the Judiciary. It demarcates their jurisdiction minutely and expects them to exercise their respective powers without overstepping their limits. They should function within the spheres allotted to them. Some powers overlap and some are superseded during emergencies. The mode of resolution of conflicts and conditions for supersession are also prescribed. In short, the scope of the power and the manner of its exercise are regulated by law. No authority created under the Constitution is supreme; the Constitution is supreme; and all the authorities function under the supreme law of the land. The rule of law under the Constitution has a glorious content. It embodies the. modem concept of law evolved over the centuries. It empowers the Legislatures to make laws in respect of matters enumerated in the 3 Lists annexed to Schedule VII. In Part IV of the Constitution, the Directive Principles of State Policy are laid down. It enjoins it to bring about a social order in which justice, social. economic and political shall inform all the institutions of national life. It directs it to work for an egalitarian society where there is no concentration of wealth, where there is plenty, where there is equal opportunity for all, to education, to work, to livelihood '. and where there is social justice. But, having regard to the past history of our country, it could not implicitly believe the representatives of the people, for uncontrolled and unrestricted power might lead to an authoritarian State. It, therefore, preserves the natural rights against the State encroachment and constitutes the higher judiciary of the State as the sentinel of the said rights and the balancing wheel between the rights, subject to social control. In short, the fundamental rights, subject to social control, have been incorporated in the rule of law. That is brought about by an interesting process. In the implementation of the Directive Principles, Parliament or the Legislature of a State makes laws in respect of matter or matters allotted to it. But the higher Judiciary tests their validity on certain objective criteria, namely, (i) whether the appropriate Legislature has the legislative competency to make the law; (ii) whether the said law infringes any of the fundamental rights; (iii) even if it Infringement the freedoms under article 19, whether the infringement only amounts to "reasonable restriction" on such rights in "public interest. " By this process of scrutiny, the court maintains the validity of only such laws as keep a just balance between freedoms and social control. The duty of reconciling fundamental rights in article 19 and the laws of social control is cast upon the courts 789 and the touchstone or the standard is contained in the said two expressions. The standard is an elastic one; it varies with time, space and condition. What is reasonable under certain circumstances may not be so under different circumstances. The constitutional philosophy of law is reflected in Parts 1111 and IV of the Constitution. The rule of law under the Constitution serves the needs of the people without unduly infringing their rights. It recognizes the social reality and tries to adjust itself to it from time, to time avoiding the authoritarian pat@. EKery institution or political party that functions under the Constitution must accept it; otherwise it has no place under the Constitution. Now, what are the fundamental rights ? They are embodied in Part III of the Constitution and they may be classified thus : (i) right to equality, (ii) right to freedom, (iii)right against exploitation, (iv) right to freedom of religion, (v) cultural and educational rights, (vi) right to property, and (vii) right to constitutional remedies. They are the rights of the people preserved by our Constitution. "Fundamental rights" are the modern name for what have been traditionally known as "natural rights". As one author puts: "they are moral rights which every human being everywhere at all times ought to have sim y because of the fact that in contradistinction with ot moral. " They are the primordial ment of human personality. man to chalk out his own life in is rational and ry for the developrights which enable a he likes best. Our Constitution, in addition to the well known fundamental rights, also included the rights of the minorities, untouchables and other backward communities, in such rights. After having declared the fundamental rights, our Constitution says that all laws in force in the territory of India immediately before the commencement of the Constitution, insofar as they are inconsistent with the said rights, are, to the extent of such inconsistency, void. The Constitution also enjoins the State not to make any law which takes away or abridges the said rights and declares such laws, to the extent of such inconsistency, to be void. As we have stated earlier, the only limitation c)n the freedom enshrined in article 19 of the Constitution is that imposed by a valid law rating as a reasonable restriction in the interests of the public. It will, therefore, be seen that fundamental rights are given transcendental position under our Constitution and are kept beyond the reach of Parliament. At the same time Parts 1111 and V constituted an integrated scheme forming a self contained code. The scheme is made so elastic that all the Directive ' Principles of State Policy can reasonably be enforced 'without taking up. Cl/67 5 790 away or abridging the fundamental rights. While recognizing the immutability of fundamental rights, subject to social control, the Constitutional itself provides for the suspension or the modification of fundamental rights under specific circumstances, for instance, article 33 empowers Parliament to modify the rights conferred by Part III in their application to the members of the armed forces, article 34 enables it to impose restrictions on the rights conferred by the said parts while martial law is in force in an area, article 35 confers the power on it to make laws with respect to any of the matters which under clause (3) of article 16, Clause (3) of article 32, article 33 and article 34 may be provided for by law. The non obstante clause with which the last article opens makes it clear that all the other provisions of the Constitution are subject to this provision. Article 32 makes the right to move the Supreme Court, by appropriate proceedings for the enforcement of the rights conferred by the said Parts a guaranteed right. Even during grave emergencies article 358 only suspends the provisions of article 19; and article 359 enables the President by order to declare the right to move any court for the enforcement of such of the rights conferred by Part III as may be mentioned in that order to be suspended; that is to say, even during emergency, only article 19 is suspended temporarily and all other rights are untouched except those specifically suspended by the President. In the Book "Indian Constitution Corerstone of a Nation" by Granville Austin, the scope origin and the object of funda mental rights have been graphically stated. Therein the learned author says : ". . the core of the commitment to the social revolution lies in Parts III and IV, in the Fundamental Rights and fit the Directive Principles of State Policy. These are the conscience of the Constitution. " Adverting to the necessity for incorporating fundamental rights in a Constitution, the learned author says That a declaration of rights had assumed such importance was not surprising; India was a land of communities, of minorities, racial, religious, linguistic, social and caste. For India to become a state these minorities had to agree to be governed both at the centre and in the provinces by fellow Indian members, perhaps, of another minority and not by a mediatory third power, the British. On both psychological and political, rounds. , therefore , the demand for written right rights would provide tangible safeguards, against oppression proved overwhelming. 791 Motilal Nehru, who presided over the Committee called for by the Madras Congress resolution, in May, 1928 observed in his report : "It is obvious that our first care should be to have our Fundamental Rights guaranteed in a manner which will not permit their withdrawal under any circumstances . Another reason why great importance attached to a Declaration of Rights is the unfortunate existence of communal differences in the country. Certain safeguards are necessary to create and establish a sense of security among those who look upon each other with distrust and suspicion. We could dot, better secure the full enjoyment of religious and communal rights to all communities than by including them among the basic principles of the Constitution." Pandit Jawaharlal Nehru, on April 30, 1947 in proposing for the adoption of the Interim Report on Fundamental Rights, said thus : "A fundamental right should be looked upon, not from the point of view of any particular difficulty of the moment, but as something that you want to make permanent in the Constitution. The other matter should be looked upon however important it might be not from this permanent and fundamental point of view, but from the more temporary point of view." Pandit Jawaharlal Nehru, who was Prime Minister at that time and. who must have had an effective voice in the framing of the Constitution, made this distinction between fundamental rights and other provisions of the Constitution, namely, the former were permanent and the latter were amendable. On September 18, 1949 Dr. Ambedkar in speaking on the amendment proposed by Mr. Kamath to article 304 of the Draft Constitution corresponding to the present article 368, namely, "Any provision of this Constitution may be amended, whether by way of variation, addition or repeal, in the manner provided in this article", said thus "Now, what is it we do ? We divide the articles of the Constitution under three categories. The first category is the one which consists of articles which can be amended by Parliament by a bare majority. The second set of articles are articles which require two thirds majority. If the future Parliament wishes to amend any particular article which is not mentioned in Part III or article 304, all that is necessary for them is to have two thirds majority. Then they can amend it. " 792 Therefore, in Dr. Ambedkar 's view the fundamental rights were so important that they could not be amended in the manner provided by article 304 of the Draft Constitution, which corresponds to the present article 368. We have referred to the speeches of Pandit Jawaharlal Nehru and Dr. Ambedkar not with a view to interpret the provisions of article 368, which we propose to do on its own terms, but only to notice the transcendental character given to the fundamental rights by two of the important architects of the Constitution. This Court also noticed the paramountcy of the fundamental rights in many decisions. In A. K. Gopalan vs State of Mad ras(1) they are described as "paramount ', in State of Madras vs Smt. Champakam Dorairajan(2) as "sacrosanct", in Pandit M. section M. Sharma vs Shri Sri Krishna Sinha(s) as "rights reserved by the people ', in Smt. Vijam Bai vs State of Uttar Pradesh(1) as "inalienable and inviolable",and in other cases as "transcendental". The minorities regarded them as the bedrock of their political existence and the majority considered them as a guarantee for their way of life. This, however, does not mean that the problem is one of mere dialectics. The Constitution has given by its scheme a place of permanence to the fundamental freedoms. In giving to themselves the Constitution, the people have reserved the fundamental freedoms to themselves. Article 13 merely incorporates that reservation. That Article is however not the source of the protection of fundamental rights but the expression of the reservation. The importance attached to the fundamental freedoms is so transcendental that a bill enacted by a unanimous vote of all the members of both the Houses is ineffective to dero gate from its guaranteed exercise. It is not what the Parliament regards at a given moment as conducive to the public benefit, but what Part III declares protected, which determines the ambit of the freedom. The incapacity of the Parliament therefore in exercise of its amending power to modify, restrict or impair fundamental freedoms in Part III arises from the scheme of the Constitution and the nature of the freedoms. Briefly stated, the, Constitution declares certain rights as fundamental laws infringing the said rights of social control infringing the said power on Parliament and the them in specified circumstances; if the decisions in San Prasad 's case(1) and Sajjan Singh 's case(1) laid down the correct law, it enables the same Parliament to abrogate them with one stroke, provided the party in power singly or in combination with other parties commands the neces (1) ; 198. (3) [1959] Supp. 1 S.C.R. 806. (5) [1952] S.C.P. 89,105. (2) ; (4) [1963] 1 S.C.R. 778. (6) ; 793 sary majority. While articles of less significance would require consent of the majority of the States, fundamental rights can. be dropped without such consent. While a single fundamental right cannot be abridged or taken away by the entire Parliament unanimously voting to that effect, a two thirds ' majority can do away with all the fundamental rights. The entire super structure built with precision and high ideals may crumble at one false step. Such a conclusion would attribute unreasonableness to the makers of the Constitution, for, in that event they would be speaking in two voices. Such an intention cannot be attributed to the makers of the Constitution unless the provisions of the Constitution compel us to do so. With this background let us proceed to consider the provisions of article 368, vis a vis article 13(2) of the Constitution. The first question is whether amendment of the Constitution under article 368 is "law" within the meaning of article 13(2). The marginal note to article 368 describes that article as one prescribing the procedure for amendment. The article in terms only prescribes various procedural steps in the matter of amendment: it shall be initiated by the introduction of a bill in either House of Parliament; it shall be passed by the prescribed majority in both the Houses; it shall then be presented to the President for his assent; and upon such assent the Constitution shall stand amended. The article assumes the power to amend found else and says that it shall be exercised in the manner laid down therein. The argument that the completion of the procedural AM culminates in the exercise of the power to amend may be subtle but does not carry conviction. If that was the intention of the provisions, nothing prevented the makers of the Constitution from stating that the Constitution may be amended in the manner suggested. Indeed, whenever the Constitution sought to confer a special power to amend on any authority it expressly said so : (See articles 4 and 392). The alternative contention that the said power shall be implied either from article 368 or from the nature of the articles sought to be amended cannot be accepted, for the simple reason that the doctrine of necessary implication cannot be invoked if there is an express sion or unless but for such implication the article will no necessity to imply any plenary power to make any Constitution subject to the Uninfluenced by any foreign doctrines let us look at the provisions of our Constitution. Under article 245, "subject to the provisions of the Constitution, Parliament may make laws for the whole or any part of the territory of India. . Article 246 demarcates the matters in respect of which Parliament and State 794 Legislatures may make laws. In the field reserved for Parliament there is Entry 97 which empowers it to make laws in respect of " any other matter not enumerated in Lists II and III including any tax not mentioned in either of those lists. " Article 248 expressly states that Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List ,or State List. It is, therefore, clear that the residuary power of legislation is vested in Parliament. Subject to the argument based upon the alleged nature of the amending power as understood by jurists in other countries, which we shal consider at a later stage, it cannot be contended, and indeed, it was not contended, that the Constituent Assembly, if it were so minded, could not have conferred an express legislative power on Parliament to amend the Constitution by ordinary legislative process. Articles 4 and 169, and para 7 of the 5th Schedule and para 21 of the 6th Schedule have expressly conferred such power. There is, therefore, no inherent Inconsistency between legislative process and the amending one. Whether in the field of a constitutional law or statutory law amendment can be brought about only by law. The residuary power of Parliament, unles there is anything contrary in the ,Constitution, certainly takes in the power to amend the Constitution. It is said that two Articles 'indicate the contrary intention. As article 245, the argument proceeds, is subject to the provisions of the Constitution, every law of amendment will necessarily be inconsistent with the articles sought to be amended. 'Ibis is an argument in a circle. Can it be said reasonably that a law amending an article is inconsistent with the article amended ? If an article of the Constitution expressly says that it cannot be amended, a law cannot be made amending it, as the power of Parliament to make a law is subject to the said Article. It may well be that in a given case such a limitation may also necessarily be implied. The limitation in article 245 is in respect of the power to make a law and not of the content of the law made Within the scope of its power. The second criticism is based upon article 39 of the Constitution. That provision confers power on the President to remove difficulties; in the circumstances mentioned in that provision, he can by order direct that the Constitution shall during such period as may be specified in that order have effect subject to such adaptations, whether by way of modification, addition ,or omission, as he may deem to be necessary or expedient. The argument is that the President 's power, though confined to a temporqry period,is co extensive with legislative power and if the power to amend is a legislative power it would have to be held that the President can amend the Constitution in terms of article 368. Apart from the limited scope of article 392, which is intended only for the purpose of removing difficulties and for bringing about a smooth transition, an order made by the Presi 795 dent cannot attract article 368, as the amendment contemplated by that provision can be initiated only by the introduction of a bill in the Parliament. There is no force in either of the two criticisms. Further, there is, internal evidence in the Constitution itself which indicates that amendment to the Constitution is a "law" within the meaning of article 245. Now, what is "law" under the Constitution ? It is not denied that in its comprehensive sense it includes constitutional law and the law amending the Constitution is constitutional law. But article 13(2) for the purpose of that Article gives an inclusive definition. It does not exclude Constitutional law. It prima facie,takes in constitutional law. Article 368 itself gives the necessary clue to the problem. The amendment can be initiated by. the introduction of a bill; it shall be passed by the two Houses; it shall ' receive the assent of the President. These are well known procedural steps in the process of law making : Indeed this Court in Sankari Prasads case(1) brought out this idea in clear terms. It said "in the first place, it is provided that the amendment must be initiated by the introduction of a "bill in either House of Parliament ' a familiar feature of Parliament procedure (of Article 107(1) which says "A bill may originate in either House of Parliament"). 'Then, the bill must be "Passed in each House," just what Parliament does when it is called upon to exercise its normal legisrative function Article 107(2)1; and finally, the bull thus passed must be "president to the President" for his "assent", again a parliamentary process through which every bill must pass before it can reach the statute book, (Article 1 1 1 ). We thus find that each of the component units of Parliament is to play its allotted part in bringing about an amendment to the Constitution. We have already seen that Parliament effects amendments of the first class mentioned above by going through the same three fold procedure but with a simple majority. The fact that a different majority in the same body is required for effecting the second and third categories of 1 amendments make the amending agency a different body. " In the same decision it is pointed out that article 368 is not a complete code in respect of the procedure. This Court said "There are gaps in the procedure as to how and after what notice a bill is to be introduced, how it is to be passed by each House and how the President 's assent is to be obtained. Having provided for the Constitution of a Parliament and prescribed a certain procedure for the conduct of its ordinary legislative business to be supplemented by rules made by each House (Article 118), the makers of the Constitution must be taken to have intended Parliament to follow that procedure, so far as they may be applicable consistently with the express provision of article 368, when they have entrusted to it the power of =ending the Con (1) ( 1 952) S.C. R. 89. 796 stitution. " The House of the People made rules providing procedure for amendments, the same as for other Bills with the addition of certain special provisions viz., Rules 155, 156, 157 and 158. If amendment is intended to be something other than law, the constitutional insistence on the said legislative process is unnecessary. In short, amendment cannot be made otherwise than by following the legislative process. The fact that there are other conditions, such as, a larger majority and in the case of articles mentioned in the proviso a ratification by Legislatures is provided, does not make the amendment anytheless a law. The imposition of further conditions is only a safeguard against hasty action or a protection to the States, but does not change the Legislative character of the amendment. This conclusion is reinforced by the other articles of the Constitution. Article 3 enables Parliament by law to form now States and alter areas, boundaries or the names of existing States. imposed two, further conditions, of the President, and (ii) in therein, the views expressed by the Legislatures. Notwithstanding the said conditions it cannot be suggested that the expression "law" under the said Article is not one made by the Legislative process. Under article 4, such a law can contain provisions for amendment of Schedules I and IV indicating thereby that amendments are only made by Legislative process. What is more, cl. (2) thereof introduces a fiction to the affect that such a law shall not be deemed to be an amendment to the Constitution. This shows that the amendment is law and that but for the fiction it would be an amendment within the meaning of article 368. Article 169 which empowers Parliament by law to abolish or create Legislative Councils in States, para 7 of the 5th Schedule and para 21 of the 6th Schedule which enable Parliament by law to amend the said Schedules, also bring out the two ideas that the amendment is law made by legislative process and that but for the fiction introduced it would attract Article 368. That apart amendments under the said provisions can be made by the Union Parliament by simple majority. That an amendment is made only by legislative process with or without conditions will be clear if two decisions of the Privy Council are considered in juxta position. They are McCawley vs The King(1) and The Bribery Commissioner vs Pedrick Rana singhe(2). The facts in McCawley vs The King(1) were these: In 1859 Queensland had been granted a Constitution in the terms of an Order in Council made on June 6 of that year under powers derived by Her Majesty from the Imperial Statute, 18 & 19 Vict. (1) (2) 797 c. 54. The Order in Council had set up a legislature for the territory, consisting of the Queen, a Legislative Council and a. Legislative Assembly, and the law making power was vested in Her Majesty acting with the advice and consent of the Council and Assembly. Any laws could be made for the "peace, welfare and good government of the Colony". The said legislature of Queensland in the year 1867 passed the Constitution Act of that year. Under that Act power was given to the said legislature to make laws for "peace, welfare and good Government of the Colony in all cases whatsoever". But, under section 9 thereof a two thirds majority of the Council and of the Assembly %,as required as a condition precedent to the validity of legislation altering the constitution,of the Council. The Legislature, there fore, had, except in the case covered by section 9 of the Act, an unrestricted power to make laws. The Legislature passed a law which conflicted with one of the existing terms of the Constitution Act. Lord Birkenhead, L.C., upheld the law, as the Constitution Act conferred an absolute power upon the legislature to pass any law by majority even though it, in substance, amended the terms of the Constitution Act. In The Bribery Commissioner vs Pedrick Ranasinghe(1), the facts are these : By section 29 of the Ceylon (Constitution) Order in Council, 1946, Parliament shall have power to make laws for the, "peace. order and good government" of the Island and in the exercise of its power under the said section it may amend or repeal any of the provisions of the Order in its application to the Island. The proviso to that section says that no Bill for the amendment or repeal of any of the provisions of the Order shall be presented for the Royal assent unless it has endorsed on it a certificate under the hand of the Speaker that the number of votes cast in favour thereof in the House of Representatives amounted to not less than two thirds of the whole number of members of the House. Under section 55 of the said Order the appointment of Judicial Officers was vested in the Judicial Service Com mission. But the Parliament under section 41 of the Bribery Amendment Act, 1958, provided for the appointment of the personnel of the Bribery Tribunals by the Governor General on the advice of the Minister of Justice. The said Amendment Act was in conflict with the said section 55 of the Order and it was passed without complying with the terms of the proviso to section 29 of the Order. The Privy Council held that the Amendment Act was void. Lord Pearce, after considering McCawley 's case(2) made the following observations, at p. 1310 : ". . a legislature has no power to ignore, the conditions of law making that are imposed by the (1) ; (2) 1. 798 instrument which itself regulates its power to make law. This restriction exists independently of the , question whether the legislature is sovereign, as is the legislature of Ceylon, or whether the Constitution is "uncontrolled", as the Board held the Constitution of Queensland to be. Such a Constitution can, indeed, be altered or amended by the legislature, if the regulating instrument so provides and if the terms of those provisions are complied with. . It will be seen from the said judgments that an amendment of the Constitution is made only by legislative process with ordinary majority or with special majority, as the case may be. There.fore, amendments either under article 368 or under other Articles ,axe made only by Parliament by following the legislative process adopted by it ' n making other law,. In the premises, an amendment "Of the Constitution can be nothing but "law". A comparative study of other Constitutions indicates that no particular pattern is followed. AR the Constitutions confer an ,express power to amend, most of them provide for legislative procedure with special majority, referendum, convention, etc., and a few with simple majority. Indeed, Parliament of England, which is a supreme body, can amend the constitution like any other :statute. As none of the Constitutions contains provisions similar to article 368 and article 13(2), neither the said Constitutions nor the decisions given by courts thereon would be of any assistance in construing the scope of article 368 of our Constitution. A brief survey of the nature of the amending process adopted by various constitutions will bring out the futility of any attempt to draw inspiration from the said opinions or decisions on the said constitutions. The nature of the amending power in different constitutions generally depends on the nature of the polity created by the constitution, namely, whether it is federal or unitary constitution or on the fact whether it is a written or an unwritten constitution or on the circumstances whether it is a rigid or a flexible constitution. Particularly the difference can be traced to the "spirit and genius of the nation in which a particular constitution has its birth". The following articles of the 'Constitution of the different countries are brought to our notice by one or other of the counsel that appeared before us. article 5 of the Constitution of the United States of America, articles 125 and 128 of the Commonwealth of Australia Constitution Act, article 92 (1) of the British North American Act, section 152 of the South African Act, article 217 of the Constitution of, the United States of Brazil, Section 46 of the Constitution of Ireland, 1937, articles 207, 208 and 209 of the Constitution of the Union of Burma, article 88 ,of the Constitution of the Kingdom of Denmark Act, article 90 of 799 the Constitution of the French Republic, 1954, article 135 of the United States of Mexico, article 96 of the Constitution of Japan, article 112 of the Constitution of Norway, article 85 of the Constitution of the Kingdom of Sweden, articles 118, 119, 120, 121, 122 and 123 of the Constitution of the Swiss Federation, articles 140, 141 and 142 of the Constitution of Venezuela, and article 146 of the Constitution of the Union of Soviet Socialist Republics, 1936 and section 29(4) of Ceylon Constitution Order in Council, 1946. Broadly speaking amendments can be made by four methods (i) by ordinary legislative process with or without restrictions, (ii) by the people through, referendum, (iii) by majority of all the units of a federal State; and (iv) by a special convention. The first method can be in four different ways, namely, (i) by the ordinary course of legislation by absolute majority or by special majority, (See Section 92 (1 ) of the British North America Act, sub section 152 South African Apt, where under except sections 35, 137 and 152, other provisions could be amended by ordinary legislative process by absolute majority. Many constitutions provide for special majorities.); (ii) by a fixed quorum of members for the consideration of the proposed amendment and a special majority for its passage; (see the defunct Constitution of Rumania), (iii) by dissolution and general election on a particular issue; (see the Constitutions of Belgium, Holland, Denmark and Norway), and (iv) by a majority of two Houses of Parliament in joint session as in the Constitution of the South Africa. The second method demands a popular vote, referendum , or plebiscite as in Switzerland, Australia, Ireland, Italy, France and Denmark. The third method is by an agreement in some form or other of either of the majority or of all the federating units as in Switzerland, Australia and the United States of America. The fourth method is generally by creation of a special body ad hoc for the purpose of constitution revision as in Latin America. Lastly, some constitutions impose express limitation on the power to amend. (See article 5 of the United States Constitution and the Constitution of the Fourth French Republic). A more elaborate discussion of this topic may be found in the American political Constitution by Strong. It will, therefore, be seen that the power to amend and the procedure to amend radically differ from State to State; it is left to the constitution makers to prescribe the scope of the power and the method of amendment having regard to the requirements of the particular State. There is no article in any of the constitutions referred to us similar to article 13(2) of our Constitution. India adopted a different system altogether: it empowered the Parliament to amend the Constitution by the legislative process subject to fundamental rights. The Indian 1 Constitution has made the amending process comparatively flexible, but it is made subject to fundamental rights. 800 Now let us consider the argument that the power to amend is a sovereign power, that the said power is supreme to the legislative power, that it does not permit any implied limitations and that amendments made in exercise of that power involve political questions and that, therefore, they are outside judicial review, This wide proposition is sought to be supported on the basis of opinions of jurists and judicial decisions. Long extracts have been read to us from the book "The Amending of the Federal Constitution (1942)" by Lester Bernhardt Orfield, and particular reference was made to the following passages : "At the point it may be well to note that when the Congress is engaged in the amending process it is not legislating. It is exercising a peculiar power bestowed upon it by Article Five. This Article for the most part ,controls the process; and other provisions of the Constitution, such as those relating to the passage of legislation, having but little bearing. " Adverting to the Bill of Rights, the learned author remarks that they may be repealed just as any other amendment and that they are no more sacred from a legal standpoint than any other part of the Constitution. Dealing with the doctrine of implied limitations, he says that it is clearly untenable. Posing the question 'Is other a law about the amending power of the Constitution ?", he answers, "there is none". He would even go to the extent of saying that the sovereignty, if it can be said to exist at all, is located in the amending body. The author is certainly a strong advocate of the supremacy of the amending power and an opponent of the doctrine of implied limitations. His opinion is based upon the terms of article 5 of the Constitution of the United States of America and his interpretation of the decisions of the Supreme Court of America. Even such an extreme exponent of the doctrine does not say that a particular constitution cannot expressly impore restrictions on the power to amend or that a court cannot reconcile the articles couched in unlimited phraseology. Indeed article 5 of the American Constitution imposes express limitations on the amending power. Some passages from the book "Political Science and Government" by James Wilford Garner are cited. Garner points out : "An unamendable constitution, said Mulford, is the &&worst tyranny of time, or rather the very tyranny of time" But he also notices "The provision for amendment should be neither so rigid as to make needed changes practically impossible nor so flexible as to encourage frequent and 801 unnecessary changes and thereby lower the authority of the Constitution. " Munro in his book "The Government of the United States", 5th Edition, uses strong words when he says ". . it is impossible to conceive of an unamendable constitution as anything but a contradiction in terms. " The learned author says that such a constitution would constitute "government by the graveyards." Hugh Evander Wills in his book "Constitutional Law of the United States" avers that the doctrine of amendability of the Constitution is grounded in the doctrine of the sovereignty of the people and that it has no such implied limitations as that an amendment shall not contain a new grant of power or change the dual form of government or change the protection of the Bill of Rights, or make any other change in the Constitution. Herman Finer in his book "The Theory and Practice of Modem Government" defines "constitution" as its process of amendment, for, in his view, to amend is to deconstitute and reconstitute. The learned author concludes that the amending clause is so fundamental to a constitution that he is tempted to call it the constitution itself. But the learned author recognizes that difficulty in amendment certainly products circumstances and makes impossible the surreptitious abrogation of rights guaranteed in the constitution. William section Livingston in "Federalism and Constitutional Change" says : "The formal procedure of amendment is of greater importance than the informal processes, because it constitutes a higher authority to which appeal lies on any question that may arise. " But there are equally eminent authors who express a different view. In "American Jurisprudence", 2nd Edition, Vol. 16, it is stated that a statute and a constitution though of unequal dignity are both laws. Another calls the constitution of a State as one of the laws of the State. Cooley in his book on "Constitutional Law" opines that changes in the fundamental laws of the State must be indicated by the people themselves. He further implies limitations to the amending power from the belief in the constitution itself, such as, the republican form of Government cannot be abolished as it would be revolutionary in ifs characters. In the same book it is further said that the power to amend the constitution by legislative action does not confer the power to break it any more than it confers the power to legislate on any other subject contrary to the prohibitions. C. F. Strong in his book "Modem Poliical Constitutions", 1963 edition, does not accept the theory of absolute sovereignty of the amending power which does not brook any limitations, for he says. 802 "In short, it attempts to arrange for the recreation of a constituent assembly whenever such matters are in future to be considered, even though that assembly be nothing more than the ordinary legislature acting under certain restrictions. At the same time, there may be some elements of the constitution which the constituent assembly wants to remain unalterable by the action of any authority whatsoever. These elements are to be distinguished from the rest, and generally come under the heading of fundamental law. Thus, for example, the American Constitution, the oldest of the existing Constitutions, asserts that by no process of amendment shall any State, without its own consent, be deprived of its equal suffrage in the Senate, , while among the Constitutions more recently promulgated, those of the Republics of; France and Italy, each containing a clause stating that the republican form of government cannot be the subject of an amending proposals" it is not necessary to multiply citations from text books. A catena of American decisions have been cited before us in support of the contention that the unending power is a supreme power or that it involves political issues which are not justiciable. It would be futile to consider them. at length, for after going through them carefully we find that there are no considered judgments of the American Courts, which would have a persuasive effect in that regard. In the Constitution of the United States of America, prepared by Edwards section Corwin, Legislative Reference Service, Library of Congress, (1953 edn.), the following summary under the heading "Judicial Review under Article V" is given : "Prior to 1939, the Supreme Court had taken cognizance of a number of diverse objections to the validity of specific amendments. Apart from holding that official notice of ratification by the several States was con clusive upon the Courts, it had treated these questions as justiciable, although it had uniformly rejected them on the merits. In that year, however, the whole subject was thrown into confusion by the inconclusive decision in Coleman vs Miller. This case came up on a writ of certiorari to the Supreme Court of Kansas to review the denial of a writ of mandamus to compel the Secretary of the Kansas Senate to erase an endorsement on a resolution ratifying the child labour amendment to the Constitution to re effect that it had been adopted by the Kansas Senate. The attempted ratification was 803 assailed on three grounds : (1) that the amendment had been previously rejected by the State Legislature; (2) that it was no longer open to ratification because an unreasonable period of time thirteen years, had elapsed since its submission to the States, and (3) that the lieutenant governor had no right to cast the deciding vote in the Senate in favour of ratification. Four opinions were written in the Supreme Court, no one of which commanded the support of more than four mem bers of the Court. The majority ruled that the plain tiffs, members of the Kansas State Senate, had a sufficient interest in the controversy to give the federal courts jurisdiction to review the case. Without agreement as to the grounds for their decision, a different majority affirmed the judgment of the Kansas court denying the relief sought. Four members who concur red in the result had voted to dismiss the writ on the ground that the amending process "is political" in its. entirety, from submission until an amendment becomes part of the Constitution, and is not subject to judicial guidance, control or interference at any point. " whether the contention that the lieutenant governor should have been permitted to cast the deciding vote in favour of ratification presented a justiciable controversy was left undecided, the court being equally divided on the point. In an opinion reported as "the opinion of the Court" ' but in which it appears that only three Justices concurred, Chief Justice Hughes declared that the writ of ' mandamus was properly denied because the question as to the effect of the previous rejection of the amendment and the lapse of time since it was submitted to the States were political questions which should be left to Congress. On the same day, the Court dismissed a. writ of certiorari to review a decision 'of the Kentucky Court of Appeals declaring the action of the Kentucky General Assembly purporting to ratifying the child labour amendment illegal and void. Inasmuch as the governor had forwarded the certified copy of the resolution to the Secretary of State before being served with a copy of the restraining order issued by the State Court, the Supreme Court found that there 'was no longer a controversy susceptible of judicial determination. " This passage, in our view, correctly summarises the American law on the subject. It will be clear therefrom that prior to 1939 the Supreme Court of America had treated the objections to the validity of specific amendments as justiciable and that only in 1939 it rejected them in an inconclusive judgment without 804 discussion. In this state of affairs we cannot usefully draw much from the judicial wisdom of the Judges of the Supreme Court of America. One need not cavil at the description of an amending power as sovereign power, for it is sovereign only within the scope of the power conferred by a particular constitution. All the authors also agree, that a particular constitution can expressly limit the power of amendment, both substantive and procedural. The only conflict lies in the fact that some authors do not pen nit implied limitations when the power of amendment is expressed in general words. But others countenance such limitations by construction or otherwise. But none of the authors goes to the extent of saying, which is the problem before us, that when there are conflicting articles couched in widest terms, the court has no jurisdiction to construe and harmonize them. If some of the authors meant to say that in our view, they did not we cannot agree with them, for, in that event this Court would not be discharging its duty. Nor can we appreciate the arguments repeated before us by learned counsel for the respondents that the amending process involves political questions which are, outside the scope of judicial review. When a matter comes before the Court, its jurisdiction does not depend upon the nature of the question raised but on die, question whether the said matter is expressly or by necesssary implication excluded from its jurisdiction. Secondly, it is not possible to define what is a political question and what is not. The character of a question depends upon the circumstances and the nature of a political society. To put if differently, the court does not decide any political question at all in the ordinary sense of the. term, but only ascertains whether Parliament is acting within the scope of the amending power. It may be that Parliament seeks to amend the Constitution for political reasons, but the Court in denying that power will not be deciding on political questions, but will only be holding that Parliament has no power to amend particular articles of the Constitution for any purpose whatsoever, be it political or otherwise. We, therefore, hold that there is nothing in the nature of the amending power which enables Parliament to override all the express or implied limi tations imposed on that power. As we have pointed out earlier, our Constitution adopted a novel method in the sense that Parliament makes the amendment by legislative process subject to certain restrictions and,that the amendment so made being law" is.subject to article 13(2). The next argument is based upon the expression "amendment" in article 368 of the Constitution and if is contended that the said 805 expression has .a Positive and a negative content and that in exercise of the power amendment parliament cannot destroy the structure of the Constitution, but it can only modify the provisions thereof within the framework of the original instrument for its better effectuation. If the fundamentals would be amenable to the ordinary process of amendment with a special majority, the argument proceeds, the institutions of the President can be abolished, the parliamentary executive can be removed, the fundamental rights can be abrogated, the concept of federalism ' can be obliterated and in short the sovereign democratic republic can be converted into a totalitarian system of government. There is considerable force in this argument. Learned and lengthy arguments are advanced to sustain it or to reject it. But we are relieved of the necessity to express our opinion on this all important question as, so far as the fundamental rights are concerned, the question raised can be answered on a narrower basis. This question may arise for consideration only if Parliament seeks to destroy the structure of the Constitution embodied in the provisions other than in Part III of the Constitution. We do not, therefore, propose to express our opinion in that regard. In the view we have taken on the scope of article 368 vis a vis the fundamental rights, it is also unnecessary to express our opinion on the question whether the amendment of the fundamental rights is covered by the proviso to article 368. The result is that the Constitution (Seventeenth Amendment) Act, 1964, inasmuch as it takes away or abridges the funda mental rights is void under article 13(2) of the Constitution. The next question is whether our decision should be given retrospective operation. During the period between 1950 and 1967 i.e 17 years as many as 20 amendments were made in our Constitution. But in the context of the present petitions it would be enough if we notice the amendments affecting fundamental right to property. The Constitution came into force on January 26, 1950. The Constitution (First Amendment) Act, 1951, amended articles 15 and 19, and articles 31 A and 31 B were inserted with retrospective effect. The object of the amendment was said to be to validate the acquisition of zamindaries or the abolition of permanent settlement without interference from courts. The occasion for the amendment was that the High Court of Patna in Kameshwar Singh v, State of Bihar(1) held that the Bihar Land Reforms Act (30 of 1950) passed by the State of Bihar was unconstitutional, while the High Courts of Allahabad and Nagpur upheld the validity of corresponding legislations in Uttar Pradesh and Madhya Pradesh respectively. (1) A. I. R. 1951 Patna 91. C.T.167 6 806 The amendment was made when the appeals from those decisions were pending in the Supreme Court. In Sankari Prasad 's case(1) the constitutionality of the said amendment was questioned but the amendment was upheld. It may be noticed that the said amendment was not made on the basis of the power to amend fundamental rights recognized by this Court but only in view of the conflicting decisions of High Courts and without waiting for the final decision from this Court. article 31 A was again amended by the Constitution (Fourth Amendment) Act, 1955. Under that amendment cl. (2) of article 31 was amended and cl. (2 A) was inserted therein. While in the original article 31 A the general expression "any provisions of his Part" was found, in the amended article the scope was restricted only.to the violation of articles 14, 19 and 31 and 4 other clauses were included, namely, clauses providing for (a) taking over the management of any property by the State for a limited period; (b) amalgamation of two or more corporations; (c) extinguishment or modification of rights of person; interested in corporations; and (d) extinguishment or modification of rights accruing under any agreement, lease or licence relating to minerals, and the definition of "estate" was enlarged in order to include the interests of raiyats and under raiyats. The expressed object of the amendment was to carry out important social welfare legislations on the desired lines, to improve the national economy of the State and to avoid serious difficulties raised by courts in that regard. Article 31A has further been amended by the Constitution (Fourth Amendment) Act, 1955. By the said amendment in the Ninth Schedule to the Constitution entries 14 to 20 were added. The main objects of this amending Act was to distinguish the power of compulsory acquisition or requisitioning of private property and the deprivation of property and to extend the scope of article 31 A to cover different categories of social welfare legislations and to enable monopolies in particular trade or business to be created in favour of the State. Amended article 31(2)makes the adequacy of compensation not justiciable. It may be said that the Constitution (Fourth Amendment) Act, 1955 was made by Parliament as this Court recognized the power of Parliament to amend Part III of the Constitution; but it can ' also be said with some plausi bility that, as Parliament had exercised the power even before the. decision of this Court in Sankari Prasad 's case(1), it would have amended the Constitution even if the said decision was not given by this Court. The Seventeenth Amendment Act was made on June 20, 1964. The occasion for this amendment was the decision of this Court in Karimbil Kunhikoman vs State of Kerala(2), which struck down the Kerala Agrarian Relations Act IV of 1961 relating to ryotwari lands. Under that amendment the definition of the expression "estate" was enlarged so as to take (1) ; , 105 (2) [1962] Supp. 1 S.C.R. 829 807 in any land held under ryotwari settlement and any held or let for purposes of agriculture or for purposes ancillary thereto, including waste land, forest land, land for pasture or sites of buildings and other structures occupied by cultivators of land, agricultural labourers and village artisans. In the Ninth Schedule the amendment included items 21 to 65. In the objects and reasons it was stated that the definition" 'estate" was not wide enough, that the courts had struck down many land reform Acts and that, therefore, in order to give them protection the amendment was made. The validity of the Seventeenth Amendment Act was questioned in this Court and was held to be valid in Sajian Singh 's case(1). From the history of these amendments, two things appear, namely, unconstitutional laws were made and they were protected by the amendment of the Constitution or the amendments were made in order to protect the future laws which would be void but for the amendments. But the fact remains that this Court held as early as in 1951 that Parliament had power to amend the fundamental rights. It may, therefore, said that the Constitution (Fourth Amendment) Act, 1955, and the Constitution (Seventeenth Amendment) Act, 1964, were based upon the scope of the power to end recognized by this Court. Further the Seventeenth Amendment Act was also approved by this Court. Between 1950 and 1967 the Legislatures of various States made laws bringing about an agrarian revolution in our country zamindaries, inams and other intermediary estates were abolished, vested rights were created in tenants, consolidation of holdings of villages was made, ceilings were fixed and the surplus lands transferred to tenants. All these were done on the, basis of the correctness of the decisions in Sankari Prasads case(2) and Sajjan Singh 's case(1), namely, that Parliament had the power to amend the fundamental rights and that Acts in regard to estates were outside judicial scrutiny on the ground they infringed the said rights. The agrarian structure of our country has been revolutionised on the basis of the said laws. Should we now give retrospectivity to our decision, it would introduce chaos and unsettle the conditions in our country. Should we hold that because of the said consequences Parliament had power to take away fundamental rights, a time might come when we would gradually and imperceptibly pass under a totalitarian rate. Learned counsel for the petitioners as well as those for the respondents placed us on the horns of this dilemma, for they have taken extreme positions leamed counsel for the petitioners want us to reach the logical position by holding that all the said laws are void and the learned counsel for the respondents persuade us to hold that Parliament has unlimited power and, if it chooses, it can do away with fundamental rights. We do not think that (1) ; (2) ; , 808 this Court is so helpless. As the highest Court in the land we must evolve some reasonable principle to meet this extraordinary situation. There is an essential distinction between Constitution and statutes. Comparatively speaking, Constitution is permanent; it is an organic statute; it grows by its own inherent force. The constitutional concepts are couched in elastic terms. Courts are expected to and indeed should interpret, its terms without doing violence to the language, to suit the expanding needs of the society. In this process and in a real sense they make laws. Though it is not admitted, the said role of this Court is effective and cannot be ignored. Even in the realm of ordinary statutes, the subtle working of the process is apparent though the approach is more conservative and inhibitive. In the constitutional field, therefore, to meet the present extraordinary situation that may be caused by our decision, we must evolve some doctrine which has roots in reason and precedents so that the past may be preserved and the future protected. There are two doctrines familiar to American Jurisprudence, one is described as Blackstonian theory and the other as "prospective over ruling", which may have some relevance to the present enquiry. Blackstone in his Commentaries, 69 (15th edn., 1809) stated the common law rule that the duty of the Court was "not to pronounce a new rule but to maintain and expound .the old one". It means the Judge does not make law but only discovers or finds the true law. The law has always been the same. If a subsequent decision changes the earlier one, the latter decision does not make law but only discovers the correct principle of law. The result of this view is that it is necessarily retrospective ,operation. But Jurists, George F. Canfield, Robert Hill Freeman, John Henry Wigmore and Cardozo, have expounded the doctrine of "prospective over ruling" and suggested it as "a useful judicial .tool". In the words of Canfield the said expression means ". a court should recognize a duty to an nounce a new and better rule for future transactions whenever the court has reached the conviction that an old rule (as established by the precedents) is unsound even though feeling compelled by stare decisis to apply the old and condemned rule to the instant case and to transactions which had already taken place. " Cardozo, before he became a Judge of the Supreme Court of the United States of America, when he was the Chief Justice of New York State addressing the Bar Association said thus The rule (the Blackstonian rule) that we are asked to apply is out of tune with the life about us. It has been made discordant by the forces that generate a 809 living law. We apply it to this case because the repeal might work hardship to those who have trusted to its existence. We give notice however that any one trusting to it hereafter will do at his peril. " The Supreme Court of the United States of America, in the year 1932, after Cardozo became an Associate Justice of that Court in Great Northern Railway vs Sunburst Oil & Ref. Co.,(1) applied the said doctrine to the facts of that case. In that case the Montana Court had adhered to its previous construction of the statute in question but had announced that that interpretation would not be followed in the future. It was contended before the Supreme Court of the United States of America that a decision of a court over ruling earlier decision and not giving its ruling retroactive operation violated the due process clause of the 14th Amendment. Rejecting that plea, Cardozo said : "This is not a case where a Court in overruling an earlier decision has come to the new ruling of retroactive dealing and thereby has made invalid what was followed in the doing. Even that may often be done though litigants not infrequently have argued to the contrary . This is a case where a Court has refused to make its ruling retroactive, and the novel stand is taken that the Constitution of the United States is infringed by the refusal. We think that the Federal Constitution has no voice upon the subject. A state in defining the elements of adherence to precedent may make a choice for itself between the principle of forward operation and that of relation backward. It may be so that the decision of the highest courts, though later over ruled, was law nonetheless for intermediate transactions . On the other hand, it may hold to the ancient dogma that the law declared by its Courts had a platonic or ideal existence before the act of declara tion, in which event, the discredited declaration will be viewed as if it had never been and to reconsider declaration as law from the beginning. The choice for any state maybe determined by the juristic philosophy of the Judges of her Courts, their considerations of law, its origin and nature. " The opinion of Cardozo tried to harmonize the doctrine of prospective over ruling with that of stare decisis. In 1940, Hughes, C.J., in Chicot County Drainage District vs Baxter State Bank(2) stated thus (1) ; , 366. ; (2) ; 810 "The law prior to the determination of unconstitutionality is an operative fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration. " In Griffin vs Illionis(1) the Supreme Court of America reaffirmed the doctrine laid down in Sunburst 's case (2). There, a statute required defendants to Submit bills of exceptions as a pre requisite to an appeal from a conviction; the Act was held unconstitutional in that it provided no means whereby indigent defendants could secure a copy of the record for this purpose. Frankfurter, J., in that context observed ". in arriving at a new principle, the judicial process is not important to, define its scope and limits. Adjudication is not a mechanical exercise nor does it compel 'either/or ' determination." In Wolf vs Colorado(3) a majority of the Supreme Court held that in a prosecution in a State Court for a state crime, the 14th Amendment did not forbid the admission of evidence obtained by an unreasonable search and seizure. But in Mapp. vs Ohio(4) the Supreme Court reversed that decision and held that all evidence obtained by searches and seizure in violation of the 4th Amendment of the Federal Constitution was, by virtue of the due process clause of the 14th Amendment guaranteeing the right to privacy free from unreasonable State instrusion, inadmissible in a State court. In Linkletter vs Walker(5) the question arose whether the exclusion of the rule enunciated in Mapp vs Ohio(4) did not apply to State Court convictions which had become final before the date of that judgment. Mr. Justice Clarke, speaking for the majority observed "We believe that the existence of the Wolf doctrine prior to Mapp is 'an operative ' fact and may have consequences which cannot justly be ignored. The past cannot always be erased by a new judicial declaration." "Mapp had as its prima purpose the enforcement of the Fourth Amendment through the inclusion of the exclusionary rule within its rights. . . We cannot say that this purpose would be advanced by making the rule retrospective. The misconduct of the police prior to Mapp has already occurred and win (1) [1956]351U.S.12,2. (2) (1932) 287 U. section 358,366: ; (3) ; 193L.Ed. 872. (4) ; 6 L. Ed. (5) ; 1081. 811 not be corrected by releasing the prisoners involved. On the other hand, the States relied on Wolf and followed its command. Final judgments of conviction were entered prior to Mapp. Again and again the Court refused to reconsider Wolf and gave its implicit approval to hundreds of cases in their application of its rule. In rejecting the Wolf doctrine as to, the exclusionary rule the purpose was to deter the lawless action of the police add to effectively enforce the Fourth Amendment. That purpose will not at this late date be served by the wholesale release of the guilty victims." "Finally, there are interests in the, administration of justice and the integrity of the judicial process to consider. To make the rule of Mapp retrospective would tax the administration of justice to the utmost. Hearings would have to be held on the excludability of evidence long since destroyed, misplaced or deteriorated. If it is excluded, the witness available at the time of the original trial will not be available or if located their memory will be dimmed. To thus legitimate such an extraordinary procedural weapon that has no bearing on guilt would seriously disrupt the administration of justice. " This case has reaffirmed the doctrine of prospective overruling and has taken a pragmatic approach in refusing to give it retroactivity. In short, in America the doctrine of prospective overruling is now accepted in all branches of law, including constitutional law. But the carving of the limits of retrospectivity of the new rule is left to courts to be done, having regard to the requirements of justice. Even in England the Blackstonian theory was criticized by Bentham and Austin. In Austin 's Jurisprudence, 4th Ed., at page 65, the learned author says : "What hindered Blackstone was 'the childish fiction ' employed by our judges, that the judiciary or common law is not 'Made by them, but is a miraculous something made, by nobody, existing, I suppose, from eternity, and merely declared from time to time by the Judges." Though English Courts in the past accepted the Blackstonian theory and though the House of Lords strictly adhered to the doctrine of 'precedent ' in the earlier years, both the doctrines were practically given up by the "Practice Statement (Judicial Precedent)" issued by the House of Lords recorded in (1966) 1 W.L.R. 1234. Lord Gardiner L.C., speaking for the House of Lords made the following observations 812 "Their Lordships nevertheless recognise that too rigid adherence to precedent may lead to injustice in a particular case and also unduly restrict the proper development of the law. They propose, therefore, to modify their present practice and, while treating former decisions of this House as normally binding, to depart from a previous decision when it appears right to do so. In this connection they will bear in mind the danger of disturbing retrospectively the basis on which contracts, settlements of property and fiscal arrangements have been entered into and also the especial need for certainty as to the criminal law." This announcement is not intended to affect the use of precedent elsewhere than in this House. " It will be seen from this passage that the House of Lords hereafter in appropriate cases may depart from its previous decision when it appears right to do so and in so departing will bear in mind the danger of giving effect to the said decision retroactivity. We consider that what the House of Lords means by this statement is that in differing from the precedents it will do so only without interefering with the transactions that had taken place on the basis of earlier decisions. This decision, to a large extent, modifies the Blackstonian theory and accepts, though not expressly but by necessary implication the doctrine of "prospective overruling. " Let us now consider some of the objections to this doctrine. The objections are: (1) the doctrine involved legislation by courts; (2) it would not encourage parties to prefer appeals as they would not get any benefit therefrom; (3) the declaration for the future would only be obiter, (4) it is not a desirable change; and (5) the doctrine of retroactivity serves as a brake on court which otherwise might be tempted to be so fascile in overruling. But in our view, these objections are not insurmountable. If a court can over rule its earlier decision there cannot be any dis pute now that the court can do so there cannot be any valid reason why it should not restrict its ruling to the future and not to the past. Even if the party filing an appeal may not be benefited by it, in similar appeals which he may file after the change in the law he will have the benefit. The decision cannot be obiter for what the court in effect does is to declare the law but on the basis of another doctrine restricts its scope. Stability in law does not mean that injustice shall be perpetuated. An illuminating article on the subject is found in Pennsylvania Law Review, [Vol. I 10 p. 650]. 813 It is a modem doctrine suitable for a fast moving society. It does not do away with the doctrine of stare decisis, but confines it to past transactions. It is true that in one sense the court only declares the law, either customary or statutory or personal law. While in strict theory it may be said that the doctrine involves making of law, what the court really does is to declare the law but refuses to give retroactivity to it. It is really a pragmatic solution reconciling the two conflicting doctrines, namely, that a court finds law and that it does make law. It finds law but restricts its operation to the future. It enables the court to bring about a smooth transition by correcting its errors without disturbing the impact of those errors on the past transactions. It is left to the discretion of the court to prescribe the limits of the retroactivity and thereby it enables it to would the relief to meet the ends of justice. In India there is no statutory prohibition against the court refusing to give retroactivity to the law declared by it. Indeed,. the doctrine of res judicata precludes any scope for retroactivity in respect of a subject matter that has been finally decided between the parties. Further, Indian court by interpretation reject retroactivity. to statutory provisions though couched in general terms on the ground that they affect vested rights. The present case only attempts a further extension of the said rule against retroactivity. Our Constitution does not expressly or by necessary implica tion speak against the doctrine of prospective over ruling. Indeed, articles 32, 141 and 142 are couched in such wide and elastic terms as to enable this Court to formulate legal doctrines to meet the ends of justice. The only limitation thereon is reason, restraint and injustice. Under article 32, for the enforcement of the fundamental rights the Supreme Court has the power to issue suitable directions or orders or writs. Article 141 says that the law declared by the Supreme Court shall be binding on all courts; and article 142 enables it in the exercise of its jurisdiction to pass such decree or make such order as is necessary for doing complete justice in any cause or matter pending before it. These articles are designedly made comprehensive to enable the Supreme Court to declare law and to give such directions or pass such orders as are necessary to do complete justice. The expression "declared" is wider than the words "found or made". To declare is to announce opinion. Indeed, the latter involves the process, while the former expresses result. Interpretation, ascertainment and evolution are parts of the process, while that interpreted, ascertained or evolved is declared as law. The law declared by the Supreme Court is the law of the and. If so, we do not see any acceptable reason why it, in declaring the law in superses 814 sion of the law declared by it earlier, could not restrict the operation of the law as declared to future and save the transactions, whether statutory or otherwise that were effected on the basis of the earlier law. To deny this power to the Supreme Court on the basis of some outmoded theory that the Court only finds law but does not make it is to make ineffective the powerful instrument of. justice placed in the hands of the highest judiciary of this country. As this Court for the first time has been called upon to apply the doctrine evolved in a different country under different ,circumstances, we would like to move warily in the beginning. We would lay down the following propositions : (I) The doctrine of prospective over ruling, can be invoked only in matters arising under our Constitution; (2 it an be applied only by the highest court of the country, i.e., the Supreme Court as it has the constitutional jurisdiction to declare an binding on all the courts in India; (3) the scope of the retroactive operation of the law declared by the Supreme Court superseding its earlier decisions .is left to its discretion to be moulded in accordance with the justice of the cause or matter before it. We have arrived at two conclusions, namely, (1) Parliament has no power to amend Part III of the Constitution so as to take away or abridge the fundamental rights; and (2) this is a fit case to invoke and apply the doctrine or prospective overruling. What then is the effect of our conclusion on the instant case ?. Having regard to the history of the amendments their impact on the social and economic affairs of our country and the chaotic situation that may be brought about by the sudden withdrawal at this stage of the amendments from the Constitution, we think that considerable judicial restraint is called for. We, therefore, declare that our decision will not affect the validity of the Constitution (Seventeenth Amendment) Act, 1964, or other amendments made to the Constitution taking away or abridging the fundamental rights. We further declare that in future Parliament will have no power to amend Part III of the Constitution so as to take away or abridge the fundamental rights. In this case we do not propose to express our opinion on the question of the scope of the amendability of the provisions of the Constitution other than the fundamental rights, as it does not arise for consideration before us. Nor are we called upon to express out opinion on the question regarding the scope of the amends ability of Part Ill of the constitution otherwise than by taking away or abridging the fundamental rights. We will not also in dicate our view one way or other whether any of the Acts questioned can be sustained under the provisions of the Constitution without the aid of articles 31A, 31B and the 9th Schedule. 815 The aforesaid discussion leads to the following results (1) The power of the Parliament to amend the Constitution is derived from articles 245, 246 and 248 of the Constitution and not from article 368 thereof which only deals with procedure. Amendment is a legislative process. (2) Amendment is 'law ' within the meaning of article 13 of the Constitution and, therefore, if it takes away or abridges the rights conferred by Part III thereof, it is void. (3) The Constitution (First Amendment) Act, 1951, Constitution (Fourth Amendment) Act, 1955, and,the Constitution (Seventeenth Amendment) Act, 1964, abridge the scope. of the fundamental rights. But, on the basis of earlier decisions of this Court, they were valid. (4) On the application of the doctrine of 'prospective over ruling ', as explained by us earlier, our decision will have only prospective operation and, therefore, the said amendments will continue to be valid. (5) We declare that the Parliament will have no power from the date of this decision to amend any of the provisions of Part III of the Constitution so as to take away or abridge the fundamental rights enshrined therein. (6) As the Constitution (Seventeenth Amendment) Act holds the field, the validity of the two impugned Acts, namely, the Punjab Security of Land Tenures Act X of 1953, and the Mysore Land Reforms Act X of 1962, as amended by Act XIV of 1965, cannot be questioned on the ground that they offend articles 13, 14 or 31 of the Constitution. Before we close, it would be necessary to advert to an argu ment advanced on emotional plane. It was said that if the provisions of the Constitution could not be amended it would lead to revolution. We have not said that the provisions of the Constitution cannot be amended but what we have said is that they cannot be amended so as to take away or abridge the fundamental rights. Nor can we appreciate the argument that all the agrarian reforms which the Parliament in power wants to effectuate cannot be brought about without amending the fundamental rights. It was exactly to prevent this attitude and to project the rights of the that the fundamental rights were inserted in the Constitution. If it is the duty of the Parliament to enforce the directive principles, it is equally its duty to enforce them without infringing the fundamental rights. The Constitution makers thought that it could be done and we also think that the directive prin 816 ciples can reasonably be enforced within the self regulatory machinery provided by Part III. Indeed both Parts III and IV of the Constitution form an integrated scheme and is elastic enough to respond to the changing needs of the society. The verdict of the Parliament on the scope of the law of social control of fundamental rights is not final, but justiciable. If not so, the whole scheme of the Constitution will break. What we can I not understand is how the enforcement of the provisions of the Constitution can bring about a revolution. History shows that revolutions are brought about not by the majorities but by the minorities and some time by military coups. The existence of an all comprehensive amending power cannot prevent revolutions, if there is chaos in the country brought about by mis rule or abuse of power. On the other hand, such a restrictive power gives stability to the country and prevents it from passing under a totalitarian or dictatorial regime. We cannot obviously base our decision on such hypothetical or extraordinary situations which may be brought about with or without amendments. Indeed, a Constitution is only permanent and not eternal. There is nothing to choose between destruction by amendment or by revolution, the former is brought about by totalitarian rule, which cannot brook constitutional checks and the other by the discontentment brought about by mis rule. If either happens, the constitution will be a scrap of paper. Such considerations are out of place in construing the provisions of the Constitution by a court of law. Nor are we impressed by the argument that if the, power of amendment is 'not all comprehensive there will be no way to change the structure of our Constitution or abridge the fundamental rights even if the whole country demands for such a change. Firstly, this visualizes an extremely unforeseeable and extravagant demand; but even if such a contingency arises the residuary power of the Parliament may be relied upon to call for a Constituent Assembly for making a new Constitution or radically changing it. The recent Act providing for a poll in Goa, Daman and Diu is an instance of analogous exercise of such residuary power by the Parliament. We do not express our final opinion on this important question. A final appeal is made to us that we shall not take a different view as the decision in Sankari Prasad 's case(1) held the field for many years. While ordinarily this Court will be reluctant to reverse its previous decision, it is its duty in the constitutional field to correct itself as early as possible, for otherwise the future progress of the country and the happiness of the people will be at stake. As we are convinced that the decision in Sankari Prasad 's case(1) is wrong, it is pre eminently a typical case where this Court should over rule it. The longer it holds the field the greater will (1) ; , 105 817 be the scope for erosion of fundamental rights. As it contains the seeds of destruction of the cherished rights of the people the sooner it is over ruled the better for the country. This argument is answered by the remarks made by this Court in the recent judgment in The Superintendent and Legal Remembrancer State of West Bengal vs, The Corporation of Calcutta(1). "The third contention need not detain us ] 'or 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 that 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 interest of the public. If the aforesaid rule of construction accepted by this Court is in consistent 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 deviation 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." In the result the petitions are dismissed, but in the circumstances without costs. Wanchoo, J. This Special Bench of eleven Judges of this Court has been constituted to consider the correctness of the decision of this Court in Sri Sankari Prasad Singh Deo vs Union of India(,,) which was accepted as correct by the majority in Sajjan Singh vs State of Rajasthan (4) . The reference has been made in three petitions challenging the constitutionality of the Seventeenth Amendment to the Constitution. In one of the petitions, the inclusion, of the Punjab Security of Land Tenures Act, (No. X of 1953) in the Ninth Schedule, which makes it immune from. attack under any provisions contained in Part III of the Constitution ' has been attacked on the ground that the Seventeenth Amendment is in itself unconstitutional. In the other two petitions, the inclusion of the Mysore Land Reforms Act, (No. 10 of 1962) has been attacked on the same grounds. It is not necessary to set out the facts in (1) ; ,176 (2) [1955] 2S.C.R.603. (3) ; (4) [1965] 1.C.S.R. 933. 818 the three petitions for present purposes. The main argument in all the three petitions has been as to the scope and effect of article 368 of the Constitution and the power conferred thereby to amend the Constitution. Before we come to the specific I points raised in the present petitions, we may indicate the circumstances in which Sankari Prasad 's case(1) as well as Sajjan Singh 's case (2) came to be decided and what they actually decided. The Constitution came into force on January 26,.1950. It provides in Part III for certain fundamental rights. Article 31 which is in Part 111, as it originally stood, provided for compulsory acquisition of property. By clause (1) it provided that "no person shall be deprived of his property save by authority of law". Clause (2) ;hereof provided that any law authorising taking of Possession or acquisition of property must provide for compensation therefor and either fix the amount of compensation or specify the principles on which, and the manner in which the compensation was to be determined and paid. Clause(4) made a special provision to the effect that if any Bill pending at the commencement of the Constitution in the Legislature of a State had, after it had been passed by such Legis lature, been reserved for the consideration of the President and had received his assent, then such law would not be called in question though it contravened the provisions of cl. (2) relating to compensation. Clause (6) provided that any law of the State enacted not more than eighteen months before the Constitution might be submitted to the President for his certification, and if so certified, it could not be called in question on the ground that it contravened the provision of cl. (2) of article 31 relating to compensation. These two clauses of article 31 were meant to safeguard legislation which either had been passed by Provincial or State legislatures or which was on the anvil of State legislatures for the purpose of agrarian reforms. One such piece of legislation was the Bihar Land Reforms Act, which was passed in 1950. That Act received the assent of the President as required under cl. (6) of article 31. It was however challenged before the Patna High Court and was struck down by that court on the ground that it violated Art ' 14 of the Constitution. Then there was an appeal before this Court, but while that appeal was pending, the First Amendment to the Constitution was made. We may briefly refer to what the First Amendment provided for. It was the First Amendment which was challenged and was upheld in Sankari Prasad 's case(1). The First Amendment contained a number of provisions; but it is necessary for present purposes only to refer to those provisions which made changes in Part III of the Constitution. These changes related to articles 15 (1) ; (2) ; 819 and 19 and in addition, provided for insertion of two Articles, numbered 31 A and 31 Bin Part III Article 31 A provided that no law providing for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights shall be deemed to be void on the ground that it was. inconsistent with, or took away or abridged any of the rights conferred by any provision in part Ill. 'The word "estate" was also defined for the purpose of article 31 A Further Article 31 B. provided for validation of certain Acts and Regulations and specified such Acts and Regulations in the Ninth Schedule, which was for the first time added to the Constitution. The Ninth Schedule then contained 13 Acts, all relating to estates , passed by various legislatures of the Provinces or States. It laid down that those Acts and Regulations would not be deemed to be void or ever to have become void, on the ground that they were inconsistent with. or took away or abridged any of the rights conferred by any provision of Part III. It further provided that notwithstanding any judgment, decree or order of any court or tribunal to the contrary, all such Acts and Regulations subject to the power of any competent legislature to repeal or amend them, continue in force. This amendment, and in particular articles 31 A and 31 B were. immediately challenged by various writ petitions in this Court and these came to be decided on October 5, 1951 in Sankari Prasad 's case(1). The attack on the validity of the First Amendment was made on various grounds; but three main grounds which were. taken were, first 1 , that amendments to the Constitution made under article 368 were liable to be tested under article 13(2); secondly that in any case as articles 31 A and 31 B insert the Constitution by the First. Amendment affected the power of the High Court under article 226 1 and of this Court under Articles 132 and 136; the amendment required ratification under the proviso to article 368; and, thirdly that Acts. 31 A and 31 B were invalid on the ground that they related to matters covered by the State List, namely, item 18 of List 11, and could not therefore be passed by Parliament. This Court rejected all the three contentions. It held that although ."law" would ordinarily include constitutional law, there was a clear demarcation between ordinary law made in the exercise of legislative power and constitutional law made in the exercise of constituent power, and in the context of article 13, "law" must be taken to mean rules or regulations made. in exercise of ordinary legislative power and not amendments to, the Constitution made in the exercise of constituent power; in consequence article 13(2) did not affect amendments made under article 3 68. It further held that articles 3 1 A and 31 B did not curtail the power of the High Court under article 226 or of this court under articles 132 and 136 and did not require ratification under the (1) ; 820 proviso contained in article 368. Finally, it was held that articles 31. A and 31 B were essentially amendments to the Constitution and Parliament as such had the power to enact such amendments. In consequence, the First Amendment to the Constitution was upheld as valid. After this decision, there followed sixteen more amendment .to the Constitution till we come to the Seventeenth Amendment, which was passed on June 20, 1964. There does not seem to have been challenge to any amendment up to the Sixteenth Amendment, even though two of them, namely, the Fourth Amendment and the Sixteenth Amendment,, contained changes in the provisions of Part III of the Constitution. Further the nature of these amendments was to add to, or alter or delete various other provisions of the Constitution contained in Part III thereof On December 5, 1961 came the decision of this Court by which the Kerala Agrarain Reforms Act (No. 4 of 1961), passed by the Kerala legislature, was struck down, among other grounds, for the reason that ryotwari lands in South India were not estates within the meaning of article 31 A and therefore acquisition of reyotwari land was not protected under article 31 A of the Constitution : [see Karimbil Kunhikoman vs State of Kerala(1)]. This decision was followed by the Seventeenth Amendment on June 20, 1964. By this amendment, changes were made in article 31 A of the Constitution and 44 Acts were included in the Ninth Schedule to give them complete protection from attack under any provision of Part III of the Constitution. Practically all these Acts related to land tenures and were concerned with agrarian reforms. This amendment was challenged before this 'Court in Sajjan Singh 's case(2). The points then urged were that as article 226 was likely to be affected by the Seventeenth Amendment, it required ratification under the proviso to article 368 and that the decision in Sankari Prasads case(3) which had negatived this contention required re consideration. It was also urged that the Seventeenth Amendment was legislation with respect to land and Parliament bad no right to legislate in that behalf, and further that as the Seventeenth Amendment provided that the Acts put in the Ninth Schedule would be valid in spite of the decision of the Courts, it was unconstitutional. This Court by a majority of 3 to 2 upheld the correctness of the decision in Sankari Prasad 's case(,,). It further held unanimously that the Seventeenth Amendment did not require ratification under the proviso to article 368 because of its indirect effect on article 226, and that Parliament in enacting the Amendment was not legislating with respect to land and that it was open to Parliament to validate legislation which had been invalid by courts. Finally this Court held by majority (1) [1962] Supp. 1 S.C.R. 829. (2) ; (3) ; 821 that the power conferred by article 368 included the power to take away fundamental rights guaranteed by Part HI and that the power to amend was a very wide power and could not be controlled by the literal dictionary meaning of the word "amend" and that the word "law" in article 13 (2) did not include an amendment of the Constitution made in pursuance of article 368. The minority however doubted the correctness of the view taken in Sankari Prasads case(1) to the effect that the word 'law" in article 13 (2) did not include amendment to the Constitution made under article 368 and therefore doubted the competence of Parliament to make any amendment to Part III of the Constitution. One of the learned Judges further doubted whether making a change in the basic features of the Constitution could be regarded merely as an amendment or would, in effect, be re writing a part of the Constitution, and if so, whether it could ' be done under article 368. It was because of this doubt thrown on the correctness of the view taken in Sankari Prasad 's case(1) that the present reference has been made to this Special Bench. As the question referred to this Bench is of great constitutional importance and affected legislation passed by various States, notice was issued to the Advocates General of all States and they have appeared and, intervened before us. Further a number of persons who were also affected by the Seventeenth Amendment have been permitted to intervene. The arguments on behalf of the petitioners and the interveners who support them may now. be briefly summarised. It is urged that article 368 when it provides for the amendment of the Constitution merely ' contains the procedure for doing so and that the power to make amendment has to be found. in article 248 read with item 97 of List 1. It is further urged that the word "amendment" in article 368 means that the provisions in the Constitution can be changed so as to important upon them And that this power is of a limited character and does not authorise Parliament to make any addition to, alteration of or deletion of any ,provision of the Constitution, including the provision contained in Part III. So article 368 authorises only those amendments which have the effect of improving the Constitution. Then it is urged that amendment permissible under article 368 is subject to certain implied limitations and the these limitations are that basic features of the Constitution cannot be amended at all. An attempt was made to indicate some of these basic features, as, f( example, the provisions in Part III, the federal structure, the republican character of the State, elected Parliament and State Legislatures on the basis of adult suffrage, control by the judiciary and so on, and it is. said that an amendment under article 3 69 is subject to the implied limi (1) (1952] S.C.R. 89. L3Sup. CI/67 7 822 tations that these basic features and others of the kind cannot be, changed. Thus in effect the argument is that there is a very limited power of amendment under the Constitution. It is further urged that apart from these implied limitations, there is an express limitation under article 13(2) and the word "law in that Article includes an amendment of the Constitution. The argument thus in the alternative is that as the word "law" in article 13(2) includes a constitutional amendment, no amendment can be made in Part HI under article 368 which would actually take away or abridge the rights guaranteed under that Part. In effect, it is said that even if there are no implied limitations to amend the Constitution under article 368, article 13(2) is an express limitation insofar as the power to amend Part III is concerned and by virtue of article 13(2) the rights guaranteed under Part III cannot be taken away or abridged under article 368, though it is conceded that Part III may be amended by way of enlarging the rights contained therein. Another line of argument is that in any case it was necessary to take action under the proviso to article 368 and as that was not done the Seventeenth Amendment is not valid. It is urged that article 2,26 is seriously affected by the provisions contained in the Seventeenth Amendment and that amounts to an amendment of Aft. 226 and in consequence action under the proviso was necessary. It is also urged that article 245 was addition of a number of Acts in the Ninth 13 (2) and therefore also it was necessary to take action under the proviso. It is further urged that it was not competent for Parliament to amend the Constitution by putting a large number of Acts in the Ninth Schedule as the power to legislate with respect to land is solely within the. competence of State Legislatures and that is another reason why the addition to the Ninth Schedule read with article 31 B should be struck down. Lastly an argument had been advanced which we may call the argument of fear. It is said that if Art.368 is held to confer full to amend each and every part of the Constitution as has been held in Sankari Prasad 's case(1). Parliament May do all kinds of things, which were never intended, under this unfettered power and may, for example, abolish elected legislatures, abolish the President or change the present form of Government into a Presedential type like the United States. Constitution or do away with the federal structure altogether. So it is urged that, we should,interpret article 368 in such a way that Parliament may not be able to do all these things. In effect this argument of fear has been put forward to reinforce the contention that this Court should (1)[1952] S.C.R. 89. 823 hold that there are some implied limitations on the amending power and these implied limitations should be that there is no power any where in the Constitution to change the basic features of the Constitution to which reference has already been made. This is in brief the submission on behalf of the petitioners and the interveners who support them. The submission on behalf of the Union of India and the States may now be summarised. It is urged that article 368 not only provides procedure or amendment but also contains in it the power to amend the Constitution. It is further urged that the word "amendment" in law does not merely mean making such changes in the Constitution as would improve it but includes the power to make any addition to the Constitution, any alteration of any of the existing provisions and its substitution by another provisions, and any deletion of any particular provision of the Constitution. In .effect, it is urged that even if the word "amendment" used in article 368 does not take in the power to abrogate the entire 'Constitu tion and replace it by another new Constitution, it certainly means that any provisions of the Constitution may be changed and this change can be in the form of addition to, alteration of or deletion of any provision of the Constitution. So long therefore as the Constitution is not entirely abrogated and replaced by a new Constitution at one stroke, the power of amendment would enable Parliament to make all changes in the existing Constitution by addition, alteration or deletion. Subject only to co repeal being not possible, the power of amendment contained in article 368 is unfettered. It is further urged that there can be no implied limitations on the power to amend and the limitations if any on this. power must be found hi express terms in the Article providing for amendment. It is conceded that there may be an express limitation not merely in the Article providing for amendment, but in some other part of the Constitution. But it is said that if that is so, there must be a clear provision to that effect. In the absence of express limitations, therefore, there can be no implied limitations ,on the power to amend the Constitution contained in article 368 and that power will take in all changes whether by way of addition, alteration or deletion, subject only to this that the power of amendment may riot contain the, power to abrogate and repeal the entire Constitution and substitute it with a new one. It is then urged that there is no express provision in Art.368 itself so far as any amendment relating to the substance of the amending power is concerned , die only limitations in Art, 368 are as to procedure and courts can only see that the procedure as indicated in article 368 is followed before an amendment can be said to be valid. It is further urged that the word "law", in article 13 does not include an amendment of the Constitution and only 824 moans law as made. under the legislative provisions contained in Chapter, I of Part XI read with, Chapters II and III of Part V of the. Constitution and Chapters III and V of Part VI thereof. In effect it is a law which is made under the Constitution which included in the word "law" in article 13(2) and not an amendment to the Constitution under article 368. As to Articles 226 and 245 and the necessity of taking action under the proviso to article 368, it is urged that there is no change in articles 226 and 245on account of any provision in the Seventeenth Amendment and therefore no action under the proviso was necessary. it is only direct change in articles 226 and 245 which would require following the procedure as to ratification or at any rate such change in other Articles which would have the effect of directly compelling change in Arts 226 and 245 and that in the present case no such direct compulsion arises. Lastly as to the argument of fear it is urged that there is always a provision with respect to amendment in written federal Constitutions. Such a provision may be rigid or flexible. In our Constitution article 368 provides for a comparatively flexible provision for amendment and there is ' no reason to make it rigid by implying any limitations on that power. Further there Is no reason to suppose that all those things will be done by Parliament which are being urged to deny the power under article 368 which flows naturally from its terms. Besides the above, reliance is also placed on behalf of the Union of India and the States on the doctrine. of stare decisis. It is urged that since the decision of this Court in Sankari Prasad 's case(1), sixteen further amendments have been made by Parliament on the faith of that decision involving over 200 Articles of the Constitution. The amendments relating to Part III have been mainly with respect to agrarian reforms resulting in transfers of title of millions of acres of land in favour of millions of people. Therefore ', even though Sankari Prasad 's case(1) has stood only for fifteen years there has been a vast agrarian revolution effected on the faith of that decision and this Court should not now go back on what was decided in that case. Further, besides the argument based on state decisis, it is urged on the basis of certain decisions of this Court that the unanimous decision in Sankari Prasad 's case(1) which had stood practically unchallenged for about '15 'years till the decision in Sajjan Singh 's case(2), should not be over ruled unless it is found to be incorrect by a large majority of the Judges constituting this Special Bench. It is urged that if the present Bench is more or less evenly divided it should not over rule the unanimous decision in ' Sankari Prasad 's case(1) by a Majority of one. (1) (1952] S.C.R. 89. (2) ; 825 We shall first take Art, 368. It is found in Part XX of the Constitution which is headed. Amendment of the Constitution" and is the only Article in that Part. That Part thus provides specifically for the amendment of the Constitution, and the first question that arises is whether it provides power for the amendment of the Constitution as well as the procedure for doing so. It is not disputed that the procedure for amendment of the Constitution is to be found in article 368, but what is in dispute is whether article 368 confers power also in that behalf. Now the procedure for the amendment of the Constitution is this: The amendment is initiated by the introduction of a Bill in either House of Parliament. The Bill has to be passed in each House by a majority of the total membership of that House and by a Majority of not less two thirds of the members of that House present and voting. After it is so passed, it has to be presented to the President for his assent. On such presentation if the President assents to the Bill, article 3 68 provides that the Constitution shall stand amended in accordance with the terms of the Bill. Further there is a proviso for ratification with respect to certain Articles and other provisions of the Constitution including article 368, and those matters can only be amended if the Bill passed by the two Houses by necessary majority is ratified by the legislatures of not less than one half of the States by resolutions to that effect. In such a case the Bill cannot be presented for his assent to the President until necessary ratification is available. But when the. necessary ratification has been made, the Bill with respect to these matters is then presented to the President and on his assent being given, the Constitution stands amended. in accordance with the terms of the Bill. The argument is that there is no express provision in terms in article 368 conferring power on Parliament to amend the Constitution, and in this connection our attention has been invited to an analogous provision in the Constitution of Ireland in article 46, where cl. 1 provides that any provision of the Constitution, may be amended in the manner provided in that Article, and then follows the procedure for amendment in clauses 2 to 5. Reference is also made to similar provisions in. other constitutions, but it is unnecessary to refer to them. It is urged that as article 368 has nothing comparable to cl. I of article 46 of the Irish Constitution, the power to amend the Constitution is not in. article 3 68 and must .be. found elsewhere. We are not prepared to accept this argument. The fact that article 368 is not in two parts, the first part indicating that the Constitution shall be amended in the manner provided thereafter, and the second part indicating the procedure for amendment, does not mean that the power to amend the Cons titution is not contained in article 368 itself. The very fact that a 826 separate Part has been devoted in the Constitution for amendment thereof and there is only one Article in that Part shows that both the power to amend and the procedure for amendment are to be found in article 368. Besides, the words "the Constitution shall stands amended in accordance 'with the terms of the Bill" in article 368 clearly in our opinion provide for the power to amend after the procedure has been followed. It appears that our Constitution makers were apparently thinking of economy of words and elegance of language in enacting article 368 in the terms in which it appears and that is why it is not in two parts on the model of Art.46 of the Irish Constitution. But there can in our opinion. be not doubt, when a separate Part was provided headed "Amendment of the Constitution" that the power to amend the Constitution must also be contained in article 368 which is the only Article in that Part. If there was any doubt about the matter, that doubt in our opinion is resolved by the words to which we have already referred namely "the Constitution shall stand amended in the terms of the Bill". These words can only mean that the. power is there to amend the Constitution after the procedure has been followed. It is however urged that the power to amend the Constitution is not to be found in article 368 but is contained in the residuary power of Parliament in article 48 read with item 97 of List 1. It is true that article 248 read with item 97 of List I, insofar as it provides for residuary power of legislation, is very wide in its scope and the argument that the, power to amend the Constitution is contained in this provision appears prima facie attractive 'in view of the width of the residuary power. But we fail to see why when there is a whole Part devoted to the amendment of the Cons titution the power to amend should not be found in that Part, if it can be reasonably found there and why article 368 should only be confined to providing for procedure for amendment. It is true that the marginal note to article 368 is "procedure for amendment of the Constitution", but. the marginal note cannot control the meaning of the words in the Article itself, and we have no doubt that the words "the Constitution shall stand amended in accord the power of amendment. If we were to compare the language of cls. 2 to 5of article 46 of the Irish Constitution which prescribes the procedure for amendment, we find no words therein comparable to these words in article 368. These words clearly are com parable to cl. I of article 46 of the Irish Constitution and must be rod as conferring power on Parliament to amend the Constitution. Besides it is remarkable in contrast that article 248 read with List I does not in terms mention the amendment of the Constitution. while therefore there is a whole Part devoted to the amendment of the Constitution, we do not find any specific mention of the 827 amendment of the Constitution in article 248 or in any entry of List 1. It would in the circumstances be more appropriate to read in power in article 3 68 in view of the, words which we have already referred to than in article 248 read with item 97 of List I. Besides it is a historical fact to which we can refer that originally the intention was to vest residuary power in States, and if that intention had been eventually carried out, it would have been impossible for any one to argue that the power to amend the Constitution was to be found in the residuary power if it had been vested in the States and not in the Union. The mere fact that during the passage of the Constitution by the Constituent Assembly, residuary power was finally vested in the Union would not therefore mean that it includes the power to amend the Cons titution. On a comparison of the scheme, of the words in Art 368 and the scheme of the words in article 248 read with item 97 of List 1, therefore, there is no doubt in our mind that both the procedure and power to amend the Constitution are to be found in article 368 and they are not to be found in article 248 read with item 97 of List I which provides for residuary legislative power of Parliament. There is in our opinion another reason why the power to amend the Constitution cannot found in article 248 read with item 97 of List 1. The Constitution is the fundamental law and no law passed under mere legislative power conferred by the Constitution can affect any change, in the Constitution unless there is an express power to that effect given in the Constitution itself. But subject to such express power given by the Constitution itself, the fundamental law, namely the Constitution, cannot be changed by a law passed under the legislative provisions contained in the Constitution as all legislative acts passed under the power conferred by the Constitution must conform to the Constitution can make no change therein. There are a number of Articles in the Constitution, which expressly provide for amendment by law, as,. for example, 3, 4, 10, 59(3), 65(3), 73(2), 97, 98(3), 106, 120(2), 135, 137, 142(1), 146(2), 148(3), 149, 169, 171(2), 196, 187(3), 189(3), 194(3), 195, 210(2), 221(2). 225, 229(2), 239(1), 241(3), 283(1) and (2), 285(2), 287, 306(1), 313, 345, 373, Sch. V. cl. 7 and Sch. VI, cl. 21,, and so far as these Articles are concerned they can be amended by Parliament by. ordinary law making process. But so far as the other Articles are concerned they can only be amended by amendment of 'the Constitution under article 368. Now article 245 which gives power to make law for the whole or any part of the territory of India by Parliament is "subject to the provisions of this Consti tution" and any law made by Parliament whether under article 246 read with List I or under article 248 read with item 97 of List I be subject to the provisions of the Constitution. If therefore the power to amend the Constitution is contained in article 248 828 read with item 97 of List 1, that power has to be exercised subject to the provisions of the Constitution and cannot be used to change the fundamental law (namely, the Constitution) itself. But it is argued that article 368 which provides a special procedure for amendment of the Constitution should be read along with articles 245 248, and so read it would be open to amend any provision of the Constitution by law passed under article 248 on the ground that article 248 is subject to article 368 and therefore the two together give power to Parliament to pass a law under article 248 which will amend even those provisions of the Constitution which are not expressly made amendable by law passed under the legislative power of Parliament. This in our opinion is arguing in a circle. If the fundamental law (ie. the Constitution) cannot be I changed by any law passed under the legislative powers contained therein, for legislation so passed must conform to the fundamental law, we fail to see how a law, passed under the residuary power which is nothing, more than legislative power conferred on parliament under the Constitution, can change the Constitution (namely, the fundamental law) Itself. We,may in this connection refer to the following passage in The Law.and the Constitution by W. Ivor Jennings (1933 Ed.) at p. 51 onwards : "A written constitution is thus the fundamental law of a country, the express embodiment of the doctrine of the region of law. All public uthorities legislative, administrative and judical take their powers directly or indirectly from it. .Whatever the nature of the written constitution it is clear that there "is a fundamental distinction between constitutional law and the rest of the law. . There is a clear separation, therefore, between the constitutional law and the rest of the law. " It is because of this difference between the. fundamental law (namely, the Constitution) and the law passed under the legislative provisions of the Constitution that it is not possible in the absence of an express provision to that effect in the fundamental law to ,change the fundamental law by ordinary legislation passed thereunder, for such ordinary legislation must always conform to the fundamental law (i.e. the Constitution). If the power to amend the Constitution is to be found in article 248 read with item 97 of List 1. It will mean that ordinary legislation passed under fundamental law would amend that law and this cannot be done unless there is express provision as in article 3 etc. to that effect In the absence of such express provisions any law passed under the legislative powers granted under the fundamental ' law cannot amend it. So if we were to hold that the power to amend the 829 Constitution is comprised in article 248, that would mean that no amendment ,of the Constitution would be possible at all except to the extent expressly provided in various Articles to which we have referred already, for the power to legislate under article 245 read with article 248 is itself subject to the Constitution. Therefore reading article 368 and considering the scheme of the legislative powers conferred by Articles 245 and 248 read with item 97 of List I" this to our mind is clear, firstly that the power to amend the, Constitution is to be found in article 368 itself, and secondly, that the power to amend the Constitution can never reside in article 245 and article 248 read with item 97 of List 1, for that would make any amendment of the Constitution impossible except with respect to the express provisions contained in certain Articles thereof for amendment by law . We may in this connection add that all this argument that power to amend the Constitution is to be found in article 245 and article 248 read with item 97 of List I has been based on one accidental circumstance, and that accidental circumstance is that the procedure for amendment of the Constitution contained in article 368 is more or less assimilated to the procedure for making ordinary laws under the Constitution. The argument is that constitutional amendment is also passed by the two Houses of Parliament, and is assented to by the President like ordinary legislation, with this difference that a special majority is required for certain purposes and a special majority plus ratification is required for certain other purposes. It may be admitted that the procedure for amendment under article 368 is somewhat similar to the procedure for passing ordinary legislation under the Constitution. Even so, as pointed out by Sir Ivor Jennings in the passage already quoted, there is a clear separation between constitutional law and the rest of the law and that must never be forgotten. An amendment to the Constitution is a constitutional law and as observed in Sankari Prasad 's case(1) is in exercise of constituent power; passing of ordinary law is in exercise of ordinary legislative power and is clearly different from the power to amend the Constitution. We may in this connection refer, for example, to article V of other U.S. Constitution, which provides for the, amendment thereof. It will be clearly seen that the power contained in article V of the U.S. Constitution is not ordinary legislative power and no one can possibly call it ordinary legislative power, because the procedure provided for the amendment of the Constitution in article V differs radically from the procedure provided for ordinary legislation, for example, the President 's assent is not required constitutional amendment under article V of the U.S. Constitution,; Now if article 368 also had made a similar departure from the procedure provided for ordinary legislation, it could never have (1) [1952 ] 1 section C. R. 89 830 said that article 368 merely contained the procedure for amendment and that what emerges after that procedure is followed is ordinary law of the same quality and nature as emerges after following the procedure for passing ordinary law. If, for example, the assent of the President which is to be found in article 368 had not been there and the Constitution would have stood amended after the Bill had been passed by the two Houses by necessary majority and after ratification by not less than one half of the States where so required , it could never have been argued that the power to amend the Constitution was contained in article 245 and 248 read with item 97 of List I and article 368 merely con tained the procedure. We are however of opinion that we should look at the quality and nature of what is done under article 368 and not lay so much stress on the similarity of the procedure contained in article 368 with the procedure for ordinary lawmaking. If we thus look at the quality and nature of what is done under article 368, we find that it is the exercise of constituent power for the purpose of amending the Constitution itself land is very different from the exercise of ordinary legislative power for passing laws which must be in conformity with the Constitution and cannot go against any provision thereof, unless there is express provision to that effect to which we have already referred. If we thus refer to the nature and quality of what is done under article 368, we immediately See that what emerges after the procedure in article 368 is gone through is not ordinary law which emerges after the legislative procedure contained in the Constitution is gone through. Thus article 368 provides for the coming into existence of what may be called the fundamental law in the form of an amendment of the Constitution and therefore what emerges after the procedure under article 368 is gone through is not ordinary legislation but an amendment of the Constitution which becoming a part of the fundamental law itself, by virtue of the words contained in article 368 to the effect that the Constitution shall stand amended in accordance with the terms of the 'Bill. It is urged in this connection on behalf of the Union of India that even though the assent of the President is required under Aft. 368, the ;President must assent thereto and cannot withhold his assent as is possible in the case of ordinary law in view of article III of the Constitution, for the words "that he withholds assent therefrom" found in article III are not to be found in article 368. It is however difficult to accept the argument on behalf of the Union that the President cannot withhold his assent when a Bill for amendment of the Constitution is presented to him. Article '368 provides that a Bill for the amendment of the, Constitution shall be presented to the President for his assent. It further provides 831 that upon such assent by the President, the Constitution shall, stand amended. That in our opinion postulates that if assent is not given, the Constitution cannot be amended. Whether a President will ever withhold his assent in our form of Government is a different matter altogether, but as we road article 368 we cannot. hold that the President is bound to assent and cannot withhold his assent when a Bill for amendment of the Constitution is presented to him. We are of opinion that 'the President can refuse to give his assent when a Bill for amendment of the Constitution is presented to him, the result being that the Bill altogether falls, for there is no specific provision for anything further to be done,: about the Bill in article 368 as there is in article III. We may in this. connection refer to the different language used in cl. 5 of article 46 of the Irish Constitution which says that "a Bill containing a proposal for the amendment of this Constitution shall be signed by the President Forthwith upon his being satisfied that the provisions of this Article have been complied with, in respect thereof '. It will be seen therefore that if the intention kinder article 368 had been that the President cannot withhold his assent, we would have found language similar in terms to that in cl. 5 of article 46 of the Irish Constitution. We thus see that in one respect at any rate article 368 even on its present terms differs from the power of the President in connection with ordinary legislation under the Constitution and that is if the President withholds his assent the Bill for amendment of ' the Constitution immediately falls. We cannot accept that the procedure provided under the proviso to article 111 can apply in such a case, for this much cannot be disputed that so far as the procedure for amendment of the Constitution is concerned we must look to article 368 only and nothing else. In any case the mere fact that the procedure in article 368 is very much assimilated. to the procedure for passing ordinary legislation is no reason for, holding that what emerges after the procedure under article 368 is followed is ordinary law and no more. We repeat that we must look at the quality and nature of what is done under article 368, and that is, the amendment of the Constitution. If we look at that we must bold that what emerges is not ordinary law passed under the Constitution but something which has the effect of amending the fundamental law itself which could not be done by ordinary legislative process under the Constitution unless there is express provision to that effect. We have already referred to such express provisions in various Articles, but article 368 cannot be treated as such an Article, for it deals specifically with the amendment of the Constitution as a whole. It is also remarkable to note in this connection that the, word "law" which has been used in so many Articles of 'the Consti 832 tution has been avoided apparently with great care in article 368. We again refer to the concluding words 368 which says that the "Constitution shall stand amended in accordance with the terms of the Bill. Now it is well known that in the case of ordinary legislation as soon both Houses and has received the assent of the main part of article stand amended in ac it is well known that as the Bill is passed by of the President it becomes an Act. But article 368 provides that as soon as the Bill for amendment of the Constitution has been passed in accordance with the procedure provided there in the Constitution shall stand amendmend in accordance with the terms of the Bill. These words in our opinion have significance of their own. It is also remarkable that these words clearly show the difference between the, quality of what emerges after the procedure under article, 368 is followed and what happens when ordinary law making procedure is followed. Under article III, in the case of ordinary law making when a Bill is passed by the two Houses of parliament it is presented to the President and the President shall declare either that he assents to the Bill or that he withholds assent therefrom. But it is remarkable that article 111 does not provide that when the Bill has been assented to by the President it becomes an Act ' The reason for this is that the Bill assented to by the President though it may become law is still not declared by article I I I to be a law, for such law is open to challenge in courts on various ,grounds, namely, on the ground that it violates any fundamental rights, or on the ground that Parliament was not competent to pass it or on the ground that it is in breach of any provision of the Constitution. On the other hand we find that when a Bill for the amendment of the Constitution is passed by requisite majority and assented to by the President, the Constitution itself ,declares that the Constitution shall stand amended in accordance with the terms of the Bill. Thereafter what courts can see is whether the procedure provided in article 368 has been followed, for if that is not done, the Constitution cannot stand amended in accordance with the terms of the Bill. But if the procedure has been followed, the Constitution stands amended, and there is no question of testing the amendment of the Constitution thereafter on the anvil of fundamental rights or in any other way as in the case of ordinary legislation. In view of an this we have no doubt that even though. by accident the procedure provided in the Constitution for amendment thereof is very akin to the procedure for passing ordinary legislation, the power contained in article 368 is still not ordinary legislative power but constituent power for the specific purpose of amendment of the Constitution; and it is the quality of that power which determines the nature of what emerges after the procedure in article 368 has been followed and what thus emerges is not ordinary legislation but fundamental law which cannot be tested,. for example, under article 13(2) of the Constitution or under any other provision of the Constitution. 833 We may briefly refer to an argument on behalf of the Union of India that the amending power contained in article 368 is same sovereign power which was possessed by the Constituent Assembly when it made the Constitution and therefore it is not subject to any fetters of any kind. We do not think it necessary to enter into the academic question as to where sovereignty re sides and whether legal sovereignty is in the people and political. sovereignty in the body which has the power to amend the Constitution and vice versa. In our view the words of article 368 clearly confer the power to amend the Constitution and also provide the procedure for doing so, and that in our opinion is enough for the purpose of deciding whether the Seventeenth Amendment is valid or not. Further as we have already stated, the power conferred under article 368 is constituent power to change the fundamental law i.e. the Constitution, and is distinct and different from the ordinary legislative power conferred on Parliament by various other provisions in the Constitution. So long as this distinction is kept in mind Parliament would have the power under article 368 to amend the Constitution and what Parliament does under article 368 is not ordinary law making which is subject to article 13 (2) or any other Article of the Constitution. What is the extent of the power conferred on Parliament and whether there are any limitations on it express or implied will be considered by us presently. But we have no doubt, without entering into the question of sovereignty and of whether article 368 confers the same sovereign power on Parliament as the Constituent Assembly had when framing the Constitution, that article 368 does confer power on Parliament subject to the procedure provided therein for amendment of any provision of the Constitution. This brings us to the scope and extent of the power conferred, for amendment under article 368. It is urged that article 368 only gives power to amend the Constitution. Recourse is had on behalf of the petitioners to the dictionary meaning of the word, "amendment". It is said that amendment implies and means improvement in detail and cannot take in any change in the basic features of the Constitution. Reference in this connection may be made to the following meaning of the word " 'amend" in the Oxford English Dictionary, namely, "to make professed improvements in a, measure before Parliament; formally, to after in detail, though practically it may be to alter its principle, so as to thwart ". This meaning lit any rate does not support the case of the petitioners that amendment merely means such change as results in improvement in detail. It shows that in law though amendment MAY professedly, be intended to make improvements and to alter only in detail, in reality, it may make a radical change in the provision which is amended. In any case, as was pointed out in Sajjan Singh 's case(1) the word "amend" or "amendment" ' is well under (1) ; 834 stood in law and will certainly include any change whether by way of addition or alteration or deletion of any provision in the Constitution. This is no reason to suppose that when the word. "amendment" of the Constitution was being used in article 368, the intention was to give any meaning less than what we have stated above. To say that "amendment" in law only means a change 'which results in improvement would make amendments impossible, for what is improvement of an existing law is a matter of opinion and what, for example, the legislature may consider an improvement may not be so considered by others. It is therefore in our opinion impossible to introduce in the concept of amendment as used in article 368 any idea of improvement as to details of the Constitution. The word "amendment" used in article 368 must therefore be given its full meaning as used in law and that .means that by amendment an existing Constitution or law can be changed and this change can take the form either of addition to the existing provisions, or alteration of existing provisions and their substitution by others or deletion of certain provisions. altogether. In this connection reference has been made to contrast certain other provisions of the Constitution, where, for example the word "amend" has been followed by such words as "by way of addition, variance or repeal" (see Sixth Schedule, paragraph 2 1) and more or less similar expressions in other Articles,of the Constitution. it is very difficult to say fact, that no such words appear in article make any difference, for the meaning of the word why this was done. But the 368 does not in our, mind "amendmend" in law is clearly as indicated above by us and the presence or sense, of explanatory words of the nature indicated above do not in our opinion make any difference. The question whether the power of amendment given by article 368 also 'includes the power to abrogate the Constitution completely and to replace it by an entire new Constitution, does not really arise in the present case, for the Seventeenth Amendment has not done any such thing and need not be considered. It is enough to say that it may be open to doubt whether the power of amendment contained in article 568 goes to the extent of completely abrogating the present Constitution and substituting it by an entirely new one. But short of that, we are of opinion that the power to amend includes the power to add any provision to the Constitution. to alter any provision and substitute any other provision in its place and to delete any provision. The Seventeenth Amendment is merely in exercise of the power of amendment a indicated above and cannot be struck down on the ground that it goes beyond the power conferred on Parliament to amend the Constitution by article 368. The next question that arises is whether there is any limi tation on the power of amendment as explained by us above. 835 Limitations may be of two kinds, namely, express or implied. So far as express limitations are concerned, there are none such in ' article 368. When it speaks of the "amendment of this Constitution it obviously and clearly refers to amendment of any provision thereof, including the provisions contained in Part III relating to fundamental rights. Whether article 13(2) is an express limitation on the power of amendment will be considered by us law, but so far as, article 368 is concerned there are no limitation whatsoever in the matter of substance on the amending power and any provision of the Constitution, be it in Part III and any other Part, can be amended under article 368. The next question is whether there are any implied limita tions on the power of amendment contained in article 368, and this Wags us to the argument that there are certain basic features of the Constitution which cannot be amended at all and there is an implied limitation on the power of amendment contained in article 5 68 so far as these basic features are concerned. We may in this connection refer to the view prevailing amongst jurists in the United States of America as to whether there are any plied limitations on the power of amendment contained in article V of the U.S. Constitution. There are two lines of thought in this matter in the United States. Some jurists take the, view that there are certain implied limitations on the power to amend contained in article V of the U.S. Constitution. These are said to be with respect to certain basic features, like, the republican character of Government, the federal structure etc. On the other hand, it is that the more prevalent view amongst jurists in the United States is that there are no implied limitations on the scope of the amending power in article V of the U.S. Constitution. Willis on the Constitutional Law of the United States of America (1936 Edition says that probably the correct position is that the amending power embraces everything; in other words there are no legal limitations whatever on the power of amendment, except what is expressly provided, in article V : (see discussion on pp. 1.22 to 127). Even with respect to these express limitations, Munro in The Government of the United States (Fifth Edition) at p. 77 says that even these express limitations can be removed and one of the ways of doing so is "to remove, the exception by a preliminary amendment and thus clear the way for further action". Besides, as a matter of fact there is no decision of the Supreme Court of the United States holding that there are implied limitations on the power of amendment contained in article V of the U.S. Constitution and all amendments so far made in the United States have been upheld by the Supreme Court there in the few cases that have been taken to it for testing the validity of the amendments. 836 We have given careful consideration to the argument that certain basic features of our Constitution cannot be amended under article 368 and have come to, the conclusion that no limitations can be and should be implied upon the power of amendment under article 368. reason for coming to this conclusion is that if we were to accept that certain basic features of the Constitution cannot be amended under article 368, it will lead to the position that any amendment made to any Article of the Constitution would be liable to challenge before courts on the ground that it amounts to amendment of a basic feature. Parliament would thus never be able to know what amendments it can make in the Constitution and what it cannot; for, till a complete catalogue of basic features of the Constitution is available, it would be impossible to make any amendment under article 368 with any certainty that it would be upheld by courts. If such an implied limitation were to be put on the power of amendment contained in article 368, it would only be the courts which would have the power to decide what are basic features of the Constitution and then to declare whether a particular amendment is valid or not on the ground that it amends a particular basic feature or not. The .result would be that every amendment made in the Constitution would provide a harvest of legal wrangles so much so that Parliament may never know what provisions can be amended and what cannot. The power to amend being a constituent power cannot in our opinion for these reasons be held subject to any implied limitations thereon on the ground that certain basic features of the Constitution cannot be amended. We fail to see why if there was any intention to make any part of the Constitution unamendable, the Constituent Assembly failed to indicate it expressly in article 368. If, for example, the Constitution makers intended certain provisions in the Constitution, and Part III in particular, to be not amendable, we can see no reason why it was not so stated in article 368. On the clear words of article 368 which provides for amendment of the Constitution which means any provision thereof,. we cannot infer an implied limitation on the power of amendment of any provision of the Constitution ', be it basic or otherwise. Our conclusion is that constituent power, like that contained,in article 368, can only be subject to express limitations and not to any implied limitations so,far as substance of the amendments are concerned and in the absence of anything in article 368 making any provision of the Constitution unamendable, it Must be held that the power to. amend in article .3 68 reaches every provision of the Constitution and can be used to amend any provision thereof provided the procedure indicated, in article 368 is followed. Copious references were made during the course of arguments to debates in Parliament and it is urged that it is open to this 837 Court to look into the debates in order to interpret article 368 to find out the intention of the Constitution makers. We are of opinion that we cannot and should not look into the debates that took place in the Constituent Assembly to determine the interpretation of article 368 and the scope and extent of the provision contained therein. It may be conceded that historical background and perhaps what was accepted or what was rejected by the Constituent Assembly while the Constitution was being framed, may be taken into account in finding out the scope and extent of article 368. But we have no doubt that what was spoken in the debates in the Constituent Assembly cannot and should not be looked into in order to interpret article 368. Craies on Statute Law (Sixth Edition) at p. 128 says that "it is not permissible in discussing the meaning of an obscure enactment, to refer to 'parliamentary history ' of a statute, in the sense of the debates which took place in Parliament when the statute was under consideration", and supports his view with reference to a large number of English cases. The same is the view in Maxwell on Interpretation of Statutes, (11th Edition) p. 26. Crawford on Statutory Construction (1940 Edition) at p. 340 says that resort may not be had to debates to ascertain legislative Intent though historical background in which the legislation came to be passed, can be taken into consideration . In Administrator General of Bengal vs Prem Lai Mullick(1), the Privy Council held that "proceedings of the legislature cannot be referred to as legitimate aids to the construction of the Act in which they result. " In Baxter vs Commissioner of Taxation(2), it was said that reference to historical facts can be made in order to interpret a statute. There was however no reference to the debates in order to arrive at the meaning of a particular provision of the Constitution there in dispute. In A. K. Gopalan vs the State of Madras(3), Kania C.J. re ferring to the debates and reports of the Drafting Committee of the Constituent Assembly in respect of the words of article 21 observed at p. I 10 that they might not be read to control the meaning of the Article. In that case all that was accepted was that "due process of law" which was a term used in the. U.S. Constitution, was not accepted for the purpose of article 21 which used the words 44 the procedure established by law". Patanjali Sastri J. (at p. 202) also refused to look at the debates 'and particularly the speeches made in order to determine the meaning of article 21. Fazl Ali, J. (at p. 158) was of opinion that the pro (1) (2) ; (3) ; Sup. CI/67 8 838 ceedings and discuss ions In Constituent Assembly were not relevant for the purpose of construing the expressions used in article 2 1. Again in The Automobile Transport (Rajasthan) Limited vs the State of Rajasthan(. '), this Court looked into the historical background but refused to look into the debates in order to determine the meaning of the provisions of the Constitution in dispute in that case. We are therefore of opinion that it is not possible to read the speeches made in the Constituent Assembly in order to interpret An. 368 or to define its extent and scope and to determine what it,takes in and what it does not. As to this historical facts. namely, what was accepted or what was avoided in the Constituent Assembly in connection with article 368, it is enough to say that we have not been able to find any help from the material relating to this. There were proposals for restricting the power of amendment under article 368 and making fundamental rights immune from and there were counter proposals before the Constituent assembly for making the power, of amendment all embracing They were all either dropped or negatived and in the circumstanses are of no help in determining the interpretation of article 368 which must be interpreted on the words thereof as they finally found place in the Constitution, and on those words we have no doubt that there are no implied limitations of any kind on the power to amend given therein. An argument is also raised that limitations on the power to amend the Constitution can be found in the preamble to the Constitution. As to that we may refer only to in re: the Berubari Union and Exchange of Enclaves(2) with respect to the value of the preamble to the Constitution and its importance therein. It was observed in that case unanimously by a Bench of nine judges that "although it may be correct to describe the preamble as a key to the mind of the Constitution makers, it form no part of the Constitution and cannot be regarded as the source of any substantive power which the body of the Constitution alone can confer on the Government , expressly or by implication. This is equally true to prohibitions and limitations". The Court there was considering whether the preamble could in any way limit the power of Parliament to cede any part of the national teritory and held that it was not correct to say that "the preamble in any way limit the power of Parliament to cede parts of the national territory". On a parity, of reasoning we are of opinion that the preamble cannot prohibit or control in any way or impose any implied prohibitions or limitations oft Me power to amend the Constitution contained in article 368. (1) [1963] 1 S.C.R. 491. (2) 839 This brings us to the question whether the word "law" in article 13 (2) includes an amendment of the Constitution, and therefore there is an express provision in article 1 3 (2) which at least limits the power of amendment under article 3 68 to this extent that by such amendment fundamental rights guaranteed by Part 111 cannot be taken away or abridged. We have already pointed out that in Sankari Prasad 's case(1) as well as Sajjan Singh 's case(1) it has already been held, in one case unanimously and in the other by majority, that the word "law" in article 13(2) does not include an amendment of the Constitution, and it is the correctness of this view which is being imputed before this Bench, Article 13 is in three parts. The first part lays down that "all laws in force in the territory of India immediately before the commencement of this Constitution, insofar as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void". Further all previous constitutional,provisions were repealed by article 395 which provided that " 'the Indian Independence Act, 1947, and the Government of India Act, 1935, together with all enactments amending or supplementing the latter Act, but not including the Abolition of Privy Council Jurisdiction Act, 1949, are hereby repealed." ' Thus it is clear that the word "law" in article 13(1) does not include any law in the nature of a constitutional provision, for no such law remained after the repeal 'in article 395. Then comes the second part of article 13, which says that 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". The third part defines the word "law" for the purpose of article 13; the definition is inclusive and not exhaustive. It is because of the definition in cl. (3 ) of article 13 being inclusive that it is urged that the word "law" in article 13 (2) includes an amendment of the Constitution also. Now we see no reason why if the word "law" in article 13(1) relating to past laws does not include any constitutional provision the word "law" in cl. (2) would take in an amendment of the Constitution, for it would be reasonable to the word "law" 'in article 13(2) includes an amendment of the 13. But apart from this consideration, we are of opinion that the word "law" in Art 13(2) could never have been intended to take in an amendment of the Constitution. What article 13(2) means is that a law made under the constitutional provisions would, be tested on the anvil of Part III and if it takes away or abridges rights conferred by Part III it would be void to the extent of the contraventions. There are many Articles in the Con stitution, which directly for making law in addition to Articles 245, 246, 248, etc. and the three Lists and Aft. 13(2) (1) ; (2) ; 840 prohibits the State from making any law under these provisions. We see no difficulty in the circumstances in holding that article 13 (2) when it talks of the State making any law, refers to the law made under the provisions contained in Ch. I of Part XI of the Constitution beginning with article 245 and also other provisions already referred to earlier. Article 246 provides that Parliament may make laws for the whole or any part of the territory of India and the legislature of a State may make laws for the whole or any part of the State. Article 246(1) gives exclusive power to Parliament to make laws with respect to subjects enumerated in List 1. Article 246(3) gives exclusive power to State legislatures to make laws with respect to List II. Article 248(1) gives exclusive power to Parliament to make laws with respect to any matter not enumerated in the Concurrent List or the State List. We are referring to these provisions merely to show that the various provisions in Chapter I of Part XI provide for making laws,and these laws are all laws which are made under the legislative power conferred on Parliament or on State legislatures under the Constitution. Therefore when in article 13( ) it is said that the State shall not make any law (State there including Parliament and legislature of each State), its meaning could only take in laws made by Parliament and State legislatures under the powers conferred under Chapter I of Part XI. and also other provisions already referred to earlier. We have already held that the power to amend the Constitution is to be found in article 368 along with the procedure and that such power is not to be found in article 248 read item 97 of List I. Therefore an amendment of the Constitution is not an ordinary law made under the powers conferred under Chapter I of Part XI of the Constitution and cannot be subject to article 13(2) where the word "law" must be read as meaning law made under the ordinary legislative power. We have already referred to a large number of Articles where Parliament is given the power to make law with respect to those Articles. So far as this power of Parliament is concerned it is ordi nary legislative power and it will certainly be subject to article 13 (2). But there can in our opinion be no doubt that when article 13(2) prohibits the State from making any law which takes away or abridges rights conferred by Part III, it is only referring to ordinary legislative power conferred on Parliament and legislatures of States and cannot halve any reference to the constituent power for amendment of the Constitution contained in article 368. We have already pointed out that there are no implied limitative on the power to amend under article 368 and it is open to Parliament under that Article to amend any part of the Constitution, including Part M. It is worth remembering that a whole Part XX is devoted by the Constitution makers to the subject of 841 amendment of the Constitution. If it was their intention that Part III of the Constitution will not be liable to amendment by way of abridgement or abrogation under the amending power contained in article 368 we see no reason why an express provision to that effect was not made in article 368. We cannot see what prevented the Constituent Assembly from making that clear by an express provision in article 368. It is however said that it was not necessary to say so in article 368, because the provision was already made in article 13(2). We are unable to accept this contention, for we have no doubt that article 13(2), when it refers to making of laws is only referring to the ordinary legislative power and not to the constituent power which results in amendment of the Con stitution. In any case it seems to us somewhat contradictory that in article 368 power should have been given to amend any provision of the Constitution without any limitations but indirectly that power is limited by using words of doubtful import in article 13(2). It is remarkable that in article 13(2) there is no express provision that amendment of the Constitution, under article 368, would be subject thereto. It seems strange indeed that no express provision was made in Part XX in this matter and even in article 13(2) no express provision is made to this effect, and in both places the matter is left in a state of uncertainty. It is also remarkable that in article 368 the word "law", which we find so often used in so many Articles of the Constitution is conspicuously avoided, and it is specifically provided that after the procedure has been gone through the Constitution shall stand amended in accordance with the terms of the Bill. This language of article 368 is very significant and clearly makes a distinction between a constitutional Amendment and an ordinary law passed as an Amending Act. The validity of a law has to be determined at the time when the Bill actually matures into an Act and not at the stage while it is still a Bill. The provision in article 368 has the effect that when a Bill amending the Constitution receives the assent of the President, the Constitution stands amended in accordance with the terms of the Bill. The Constitution thus stands amended in terms of the Bill if the Bill has been introduced, passed and assented to by the President in accordance with the procedure laid down in article 368 and not as a result of the Bill becoming an Amendment Act introducing amendment in the Constitution. The provision that the Constitution shall stand amended in terms of the Bill was thus clearly intended to indicate that the amendment of the Constitution is not dependent on the Bill being treated as a law or an Act duly passed by Parliament. Thus it is clear that by indicating that the Constitution is to stand amended in accordance with the terms of the Bill, article 368 clearly envisages that the power of amendment of the Constitution stands on an entirely different footing from an ordinary law made by Parliament in exercise of its legislative power. 842 If We keep in mind this difference, between constitutional amendment or constitutional law and an ordinary amending Act or law, it should not be difficult to hold that when Art 13 (2), speaks of the St ate making a law, it is referring to ordinary law made under the powers conferred by article 245 etc read with various Lists and various provisions of the Constitution where express provision to that effect has been made and is not referring to the amendment of the Constitution which is made under the 'constituent power. Once it is held that the power to amend is found in article 368 and is not to be found in article 248 read with item 97 of List I, it must follow that the power to amend the Constitution under article 368 is a different power (namely, constituent power) and when article 13 (2) speaks of making 'law, it can only refer to making ordinary law, particularly when we compare the words of article 13 (2) (namely, the State shall not make any law) and the words of articles 245, 248, and 250 (which all speak of Parliament making law, State legislatures making law, and so on). Lastly, as the power to amend is in article 368 and on the words, as they stand in that Article, that power is unfettered and includes the power to amend Part III, it is strange that that power should be limited by putting an interpretation on the word "law" in article 13(2), which would include constitutional law also. There is nothing to suggest this even in the inclusive definition of the words "law" and "laws in force" in article 13(3). Besides, it is conceded on behalf of the petitioners that article 368 gives power to amend Part 111, but that power is only to amend one way, namely, towards enlargement of the rights contained therein, and not the other way, namely, for, abridging or taking away the rights contained therein. W. , must say that it would require a very clear provision in the Constitution to read the power to amend the Constitution relating to Part III in this manner. We cannot find that clear provision in article 1 3 (2). We repeat that when the Constituent Assembly was taking the trouble of providing a whole Part for amendment of the Constitution and when the words in article 368 clearly give the power to amend the Constitution and are subject to no implied limitations and contain no express limitations, it is strange indeed that it should have omitted to provide in that very Article that Part III is not liable to amendment thereunder. In any case if the power of amendment conferred by the words of article 368 is unfettered, we must avoid any inconsistency between that power and the provision contained in article 13 (2). We avoid that in keeping with the unfettered power in article 368 by reading the word "law" in article 13 (2) as meaning law passed under: ordinary legislative power and thus not including an amendment of the Constitution therein. The words in article II (2) are in our opinion not specific and clear ' enough to take in 843 the power of amendment under article 368 and must be confined only to the power of ordinary law making contained in articles 245 etc., and other provisions of the Constitution read with various Lists. We have therefore no hesitation in agreeing with the view taken in Sankari Prasad 's case(1) which was upheld by the majority in Sajjan Singh 's case(2). The next argument is that action under the proviso to article 368 is necessary as the Seventeenth Amendment affects the power of the High Court contained in article 226. It is said that by including various Acts in the Ninth Schedule and making them immune from challenge under the provisions contained in Part III, the power of the High Court under article 226 is affected inasmuch as the High Court cannot strike down any of the Acts included in the Ninth Schedule on the ground that they take away or abridge the rights conferred by Part III. So it is said that there has been a change in article 226 and it was necessary that the Seventeenth Amendment should have been ratified by more than half the States under the proviso. A similar argument was raised in Sankari Prasad 's case(1) and was turned down unanimously. The same argument was again raised in Sajjan Singh 's case(2) and was also turned down. Now ratification is required under the proviso if the amendment seeks to make any change in various provisions mentioned therein and one such provision is article 226. The question therefore is whether the Seventeenth Amendment makes any change in article 226 and whether this change has to be a direct change in the words of article 226 or whether merely because there may be some effect by the Seventeenth Amendment on the, content of the power in article 226 it will amount to change in article 226. We are of opinion that when the proviso lays down that there must be ratification when there is any change in the entrenched provisions, including article 226, it means that there must be actual change in the terms of the provision concerned. If there is no actual change directly in the entrenched provision, no ratification is required, even if any amendment of any other provision of the Constitution may have some effect indirectly on the entrenched provisions mentioned in the proviso. But it is urged that there may be such a change in some other provision as would seriously affect an entrenched provision, and in such a case ratification should be necessary. This argument was also dealt with 'in the majority judgment in Sajjan Singh 's case(2) where the doctrine of pith and substance was applied and it was held that where the amendment in any other Article so affects the entrenched Article as to amount to an amendment therein, then ratification may be necessary, even though the entrenched Article may not be directly touched. Perhaps the use of the doctrine of pith and substance (1) ; (2) [1965] 1 S.C.P. 933. 844 in such a case is not quite apt. But what was meant in Sajjan Singh 's case(1) was that if there is such an amendment of an unentrenched Article that it will directly affect an entrenched Article and necessitate a change therein, then recourse must be had to ratification under the proviso. We may illustrate this by two examples. Article 226 lays down inter alia that the High Court shall have power to issue writs for the enforcement of any of the rights conferred by Part III and for any other purpose. Now assume that Part III is completely deleted by amendment of the Constitution. If that takes place, it will necessitate an amendment of article 226 also and deletion therefrom of the words "for the enforcement of any of the rights conferred by Part III". We have no doubt that if such a contingency ever happens and Part III is completely deleted, Parliament will amend article 226 also and that will necessitate ratification under the proviso. But suppose Parliament merely deletes Part III and does not make the necessary consequential amendment in article 226, it can then be said that deletion of Part III necessitates change in article 226 also, and therefore in such a case ratification is necessary, even though Parliament may not have in fact provided for amendment of Art 226. Take another example. Article 54 is an entrenched Article and provides for the election of the President. So is article 55 which provides for the manner of election. Article 52 which lays down that there shall be a President is on the other hand not an entrenched Article. It is said that article 52 may be altered and something else may be substituted in its place and that would not require ratification in terms as article 52 is not among the entrenched Articles. But we are of opinion that if Parliament amends article 52, it is bound to make consequential amendments in articles 54 and 55 which deal with the election of the President and the manner thereof and if it is so the entire amendment must be submitted for ratification. But suppose Parliament merely amends article 52 and makes no change in articles 54 and 55 (a supposition which is impossible to visualise). In that case it would in our opinion be right to hold that article 52 could not be altered by abolition of the office of the President without necessi tating a change in articles 54 and 55 and in such a case if article 52 alone is altered by Parliament, to abolish the office of President, it will require ratification. These two examples will show where alteration or deletion of an unentrenched Article would necessitate amendment of an entrenched Article, and in such a case if Parliament takes the incredible course of amending only the unentrenched Article and not amending the entrenched Article, courts can say that ratifi (1) ; 845 cation is necessary even for amending the unentrenched Article, for it directly necessitates, a change in an entrenched Article. But short of that we are of opinion that merely because there is some effect indirectly on an entrenched Article by amendment of an unentrenched Article it is not necessary that there should be ratification in such circumstances also. Besides, let us consider what would happen if the argument on behalf of the petitioners is accepted that ratification is necessary whenever there is even indirect effect on an entrenched Article by amending an unentrenched Article. Take the case of article 226 itself. It gives power to the High Court not only to issue writs for the enforcement of fundamental rights but to issue them for any other purpose. Writs have thus been issued by High Courts for enforcing other rights conferred by ordinary laws as well as under other provisions of the Constitution, like articles 301 and 311. On this argument if any change is made in articles 301 and 311 there is bound to be an effect on article 216 and therefore ratification would be necessary, even though both articles 301 and 311 are not entrenched in the proviso. Further, take an ordinary law which confers certain rights and it is amended and those rights are taken away. Article 226 would be clearly affected. Before the amendment those rights may be enforced through article 226 while after the amendment the rights having disappeared there can be no enforcement thereof. Therefore, on this argument even if there is amendment of ordinary law there would be an effect on article 226 and it must therefore be amended every time even when ordinary law is changed and the entire procedure under article 368 must be gone through including ratification under the proviso. It is however said that when ordinary law is amended, rights disappear and therefore there is no question of enforcement thereof; if that is correct with respect to ordinary law, it is in our opinion equally correct with respect to the amendment of an unentrenched provision of the Constitution. The answer given in Sankari Prasad 's case(1) to this argument was that article 226 remained just the same as it was before, and only a certain class of cases had been excluded from the purview of Part III and the courts could no longer interfere, not because their powers were curtailed in any manner or to any extent, but because there would be no occasion thereafter for the exercise of their power in such cases. We respectfully agree with these observations and are of opinion that merely because there is some indirect effect on article 226 it was not necessary that the Seventeenth Amendment should have been ratified by more than one half of the States. It is only in the extreme case, the examples of which we have given above, that an amendment of an unentrenched Article without amendment of entrenched Article (1) ; 846 might be had for want of ratification, and this is what was intended by the majority judgment in Sajjan Singh 's case(1), when it applied the doctrine of pith and substance in these circumstances. The argument that ratification is necessary as article 226 is indirectly affected has therefore no force and must be rejected. This is equally true with respect to the power of this Court under articles 132 and 136. Then it is urged that article 245 is enlarged by the Seventeenth Amendment inasmuch as State legislatures and Parliament were freed from the control of Part III in the matter of certain laws affecting, for example. ryotwari lands, and therefore as article 245 is an entrenched Article there should have been ratification under the proviso. This argument in our opinion is of the same type as the argument with respect to the effect on article 226 and our answer is the same, namely, that there is no direct effect on article 245 by the amendment and the indirect effect, if. any, does not require that there should have been ratification in the present case. It is then urged that ratification is necessary as article 31 B deals with State legislation and in any case Parliament cannot make, any law with respect to Acts which were put in the Ninth Schedule and therefore Parliament could not amend the Constitution in the manner in which it was done by making additions in the Ninth Schedule, both for want of ratification and for want of legislative competence. The answer to this argument was given in Sahkari Prasad 's case(2) and it was observed there that "Article 31 A and 31 B really seek to save a certain class of laws and certain specified laws already passed from the combined operation of article 13 read with other relevant Articles of Part III. The new Articles being thus essentially amendments of the Con stitution, Parliament had the power of enacting them. That laws thus saved relate to matters covered by List II does not in any way affect the position. It was said that Parliament could not validate a law which it had no power to enact. The proposition holds good where. the validity of the impugned provision turns on whether the subject matter, falls within or without the jurisdiction of the legislature which passed it. But to make a law which contravenes the Constitution, constitutionally valid is a matter of constitutional amendment and as such it falls within the exclusive power of Parliament." (1) ; (2) ; 847 We respectfully agree with these observations. They succinctly put the legal and constitutional position with respect to the 'validity of Arts, 3 1 A and 3 1 B. It seems to us that article 3 1 B in particular is a legislative drafting device which compendiously puts in one place amendments which would otherwise have been added to the Constitution under various Articles in Part III. The laws in the Ninth Schedule have by the device of article 3 1 B been excepted from the various provisions in Part ]III, which affected them and this exception could only be made by Parliament. The infirmity in the Arts put in the Ninth Schedule was apprehended to be a constitutional infirmity on the ground that those laws might take away or abridge rights conferred by Part HI. Such a constitutional infirmity could not be cured by State legislatures in any way and could only be cured by Parliament by constitutional amendment. What Parliament in fact did by including various Acts in the Ninth Schedule read with article 3 1 B was to amend the various provisions in Part III, which affected these Acts by making them an exception to those provisions in Part III. This could only be done by Parliament under the constituent power it had under article 368 and there was no question of the application of the proviso in such a case, for Parliament was amending Part III only with respect to these laws. The laws had already been passed by State legislatures and it was their constitutional infirmity, if any, which was being cured by the device adopted in article 3 1 B read with the Ninth Schedule, the amendment 'being only of the relevant provisions of Part III which was compendiously put in one place in article 3 1 B. Parliament could alone do it under article 368 and there was no necessity for any ratification under the proviso, for amendment of Part III is not entrenched in the proviso. Nor is there any force in the argument that Parliament could ' not validate those laws by curing the constitutional infirmity because they dealt with land which is in List 11 of the Seventh Schedule to the Constitution over which State Legislatures have exclusive legislative power. The laws had already been passed by State legislatures under their exclusive powers; what has been done by the Seventeenth Amendment is to cure the constitutional ' infirmity, if any, in these laws in relation to Part III. That could only be done by Parliament and in so doing Parliament was not encroaching on the exclusive legislative power of the State. The States had already passed the laws and all that was done by the Seventeenth Amendment was to cure any constitutional infirmity in the laws by including them in the Ninth Schedule read with article 31 B. We must therefore reject the argument that the Seventeenth Amendment required ratification because laws put in the Ninth Schedule were State law ,. We must equally reject the argument that as these laws dealt with land, which is in the 848 exclusive legislative power of State legislature, Parliament could not cure the constitutional infirmity, if any, in these laws by putting them in the Ninth Schedule. We now come to what may be called the argument of fear. It is urged that if article 368 confers complete power to amend each and every provision of the Constitution as we have held that it does frightful consequences will follow on such an interpretation. If Parliament is clothed with such a power to amend the Constitution it may proceed to do away with fundamental rights altogether, it may abolish elected legislatures, it may change the present form of Government, it may do away with the federal structure and create a unitary state instead, and so on. It is therefore argued that we should give a limited interpretation to the power of amendment contained in article 368, as otherwise we shall be giving power to Parliament to destroy the Constitution itself. This argument is really a political argument and cannot be taken into account in interpreting article 368 when its meaning to our mind is clear. But as the argument was urged with a good deal of force on behalf of the petitioners and was met with equal force on behalf of the Union and the States, we propose to deal with it briefly. Now, if this argument means that Parliament may abuse its power of amendment conferred by article 368, all that need be said in reply is that mere possibility of abuse cannot result in courts withholding the power if the Constitution grants it. It is well settled so far as ordinary laws are concerned that mere possibility of abuse will not induce courts to hold that the power is not there, if the law is valid and its terms clearly confer the power. The same principle in our opinion applies to the Constitution. If the Constitution gives a certain power and its terms are clear, there is no reason why that power should be withheld simply because of possibility of abuse. If we may say so, possibility of abuse of any power granted to any authority is always there; and if possibility of abuse is a reason for withholding the power, no power whatever can ever be conferred on any authority, be it "executive, legislative or even judicial. Therefore, the so called fear of frightful consequences, which has been urged on behalf of the Petitioners (if we hold, as we do, that the power to amend the Constitution is unfettered by any implied limitations), is no ground for withholding the power, for we have no reason to suppose that Parliament on whom such power is ,conferred will abuse it. Further even if it abuses the power of constitutional amendment under article 368 the check in such circumstances is not in courts but is in the people who elect members of Parliament. The argument for giving a limited 849 meaning to article 368 because of possibility of abuse must therefore be rejected. The other aspect of this argument of fear is that we should not make the Constitution too flexible so that it may be open to the requisite majority with the requisite ratification to make changes too frequently in the Constitution. It is said that the Constitution is an organic document for the governance of the country and it is expected to endure and give stability to the institution which it provides. That is undoubtedly so and this is. very true of a written federal Constitution. But a perusal of. various Constitutions of the world shows that there are usually provisions for amendment of the Constitution in the Constitution itself. This power to amend a Constitution may be rigid or flexible in varying degrees. Jurists have felt that where the power to amend the Constitution is made too rigid and the people outgrow a particular Constitution and feel that it should be amended but cannot do so because of the rigidity of the Constitution, they break the Constitution, and this breaking is more often than not by violent revolution. It is admitted by even those writers on the United States Constitution who are of the view that there are certain basic features which cannot be amended and who would thus make the U. section Constitution even more rigid ' than it is; that howsoever rigid the Constitution may be its rigidity will not stop the people from breaking it if they have outgrown it and this breaking is, generally speaking, by violent revolution. So, making our Constitution rigid by putting the interpretation which the petitioners want us to put on it will not stop the frightfulness which is conjured up before us on behalf of the petitioners. If anything, an interpretation which will make our Constitution rigid in the manner in which the petitioner want the amending power in article 368 to be interpreted will make a violent revolution, followed by frightfulness of which the petitioners are afraid, a nearer possibility than an interpretation which will make it flexible. It is clear that our Constitution makers wanted to avoid ' making the Constitution too rigid. It is equally clear that they did not want to make an amendment of the Constitution too easy. They preferred an intermediate course which would make,the Constitution flexible and would still not allow it to be amended too easily. That is why article 368 provides for special majorities of the two Houses for the purpose of amendment of the Constitution. Besides it also provides for ratification by more than half the States in case of entrenched Provisions in the proviso. Subject to these limitations, the Constitution has been, made moderately flexible to allow any change when the people feel that change is necessary. The necessity for special majorities 850 in each House separately and, the necessity for, ratification by more than half the States in certain cases appear to us to be sufficient safeguards to prevent too easy change in the Constitution without making it too rigid. But it is said that, in the last sixteen Years, a large number of amendments have been made to the constitution and that shows that the power to amend is much too easy and should be restricted by judicial interpretation. Now, judicial interpretation cannot restrict the power on the basis of a political argument. It has to interpret the Constitution and finds it on the basis of well known,canons of construction,and on the terms of article 368 in particular. If on those terms it is clear we think it is that power to amend is subject to no limitations except those to be expressly found in the Constitution, courts must give effect to that. The fact that 'm the last sixteen years a large number of amendments could be made and have been made is in our opinion due to the accident that one party has been returned by electors in sufficient strength to be able to command the special majorities which are required under article 368, not only at the Centre but also in all the Stites. It ' is because of this circumstance that we have had so many amendments in the course of the last sixteen years. But that in our opinion is no ground for limiting the clear words of article 368. The power of amendment contained in a written federal Con stitution is a safety valve which to a large extent provides for stable growth and makes violent revolution more or less unnecessary. It has been said by text book writers that the power of amendment, though it allows for change, also makes a Constitution long lived and stable and serves the needs of the people from time to time. If this power to amend is made too rigid it loses its value as a safety valve. The more rigid a Constitution the more likely it is that people will outgrow it and throw it over board violently. On the other hand, if the Constitution is flexible (though it may not be made too easy to modify it) the power of amendment provides for stability of the Constitution itself and for ordered progress of the nation. If therefore there had to be a choice between giving an interpretation to article 368 which would make our Constitution rigid and giving an interpretation which would make it flexible, we would prefer to make it flexible, so that it may endure for a long period of time and may, if necessary, be amended from time to time in accordance with the progress in the ideas of the people for whom it is meant. But we feel that it is not necessary to go to this extent, for that would be entering into the field of politics. As we see the terms of article 368, we are clearly Df opinion that the Constitutionmakers wanted to make our Constitution reasonably flexible and ,.that the interpretation that we have given to article 368 is in 851 consonance with the terms thereof and the intention of those who made it. We therefore reject the argument of fear altogether. This brings us to the argument of stare decisis raised on behalf of the Union of India and the States. The argument is put thus. After the decision of the Patna High Court invalidating the Bihar Land Reforms Act, 1950, Parliament passed the First Amendment to the Constitution. That Amendment was challenged in this Court by a number of writ petitions and was upheld in Sankari Prasad 's case( ) in 1951. That case practically stood unchallenged till Sajjan Singh 's case(2) in 1964 after the Seventeenth Amendment was passed. Thus in the course of these fifteen years or so a large number of State Acts were passed on the basis of the First Amendment by which in particular articles 31 A and 31 B were introduced in the Constitution. It is said that though Sankari Prasad 's case (1) has stood for less than 15 years there have been so many laws dealing with agrarian reforms passed on the basis of the First Amendment which was upheld by this Court that the short period for which that case has stood should not stand in the way of this Court acting an the principle of, stare decisis. The reason for this is that an agrarian revolution, has taken place all over the country after the First Amendment by State laws passed on the faith of the decision of this Court in Sankari Prasad 's case(1). This agrarian revolution has led to millions of acres of land having changed hands and millions of now titles having been created. So it is urged that the un animous decision in Sankari Prasad 's case(2), which was challenged when the Seventeenth Amendment was passed and was upheld by majority in Sajjan Singh 's case(2) should not now be disturbed as its disturbance would create chaos in the country, particularly in the agrarian sector which constitutes the vast majority of the population in this country. We are of opinion that there is force in this argument . Though the period for which Sankari Prasad 's case(1) has stood unchallenged is not long, the effects which have followed in, the passing of State laws on the faith of that decision ', are so overwhelming that we should not disturb the decision in that case. It is not disputed that millions of acres of land have changed hands and millions of new titles in agricultural lands have been created and the State laws dealing with Agricultural land which have been passed in the course of the last fifteen years after the decision in Samkari Prasad 's case(1) have brought about an agrarian revolution. Agricultural population constitutes a vast majority of the population in this country. In these circumstances it would in our opinion be wrong to hold now that (1) ; (2) ; 852 Sankari Prasad 's case (1) was not correctly decided and thus disturb all that has been done during the last fifteen years and create chaos into the lives of millions. of our countrymen who have benefited by these laws relating, to agrarian reforms. We would in the circumstances accept the argument on behalf of the Union of India and the States that this is the fittest possible case in which the principle of stare decisis should be applied. On this basis also, apart from our view that Sankari Prasad 's case (1) was in fact rightly decided, we would not interfere with that decision now. But it is urged that instead of following the principle of stare decisis which would make die decision in Sankari Prasad 's case(1) good for all times. , we should follow the doctrine of prospective over ruling, which has been evolved by some United States courts so that everything that has been done up to now, including the Seventeenth Amendment would be held good but in future it would not be open to Parliament to amend Part III by taking away or abridging any of the rights conferred thereby and, if the argument as to implied limitations on the power to amend is accepted, further limit the power of Parliament to amend what may be called basic features of the Constitution. We must say that we are not prepared to accept the doctrine of prospective over ruling. We do not know whether this doctrine which it is urged should be applied to constitutional amendment would also be applied to amendments of ordinary laws. We find it difficult to visualise what would be the effect of this doctrine if it is applied to amendment of ordinary laws. We have so far been following in this country the well known doctrine that courts declare law and that a declaration made by a court is the law of the land and takes effect from the date the law came into force. We would on principle be loath to change that well known doctrine and supersede it by the doctrine of prospective over ruling. Further it seems to us that in view of the provisions of article 13(2) it would be impossible to apply the doctrine of prospective over ruling in our country, particularly where a law infringes fundamental rights. Article 13(2) lays down that all. laws taking away or abridging fundamental rights would be void to the extent of contravention. It has been held by this Court in Deep Chand vs The State of Uttar Pradesh (2) that a law made after the Constitution came into force which infringes fundamental rights is a stillborn law and that the prohibition contained in article 13(2) went to the root of the State power of legislation and any law made in contravention of that provision was void ab initio. This case has been followed in Mahendra Lal Jaini vs The State of Uttar Pradesh(3). In the face of these (1) ; (2) [1959] Supp. 2 S.C.R. 8. (3) [1963] Supp. 1. S.C.R. 912. 853 decisions it is impossible to apply the principle of prospective over ruling in this country so far as ordinary laws are concerned. Further, if the word "law" in article 13(2) includes an amendment of the Constitution, the same principle will apply, for that amendment would be stillborn if it infringes any fundamental rights contained in Part III. In these circumstances, it would be impossible to apply the principle of prospective over ruling to constitutional amendments also. On the other hand, if the word "law" in article 13(2) does not include an amendment of the Constitution, then there is no necessity of applying the principle of prospective over ruling, for in that case unless some limitations on the power of amendment of the Constitution are implied the amendment under article 368 would not be liable to be tested under article 13(2). We are therefore unable to apply the doctrine of prospective over ruling in the circumstances. Further as we are of opinion that this is the fittest possible case in which the prin ciple of stare decisis applies,we must uphold Sankari Prasad 's case (1) for this reason also. Lastly we would refer to the following observations in Sajjan Singh 's case(2) (at pp. 947 48) with respect to over ruling earlier judgments of this Court and specially those which are unanimious like Sankari Prasad 's case(1): "It is true that the Constitution does not place any restriction on our powers to review our earlier decisions or even to depart from them and there can be no doubt that in matters relating to the decision of constitutional points which have a significant impact on the fundamental rights of citizens, we would be prepared to. ' review our earlier decisions in the interest of public good. . . Even so, the normal principle that "judgments pronounced by this Court would be final, cannot be ignored and unless considerations of a substantial and compelling character make it necessary to. do so, we should be slow to doubt the correctness of previous decisions.or to depart from them. "It is universally recognised that in regard to a large number of constitutional problems which are brought before this Court for its decision, complex and difficult questions arise and on many of such questions two views are possible. Therefore, if one view has been taken. by this Court after mature deliberation, the fact that another Bench is inclined to take a different view may not justify the Court in reconsidering the earlier decision or in departing from, it. . . Even so, the Court should be re (1) (1952] S.C.R. 89. (2) [1965] 1 S.C.R. 933. p. CI/67 9 854 luctant to accede to the suggestion that its earlier decisions should be light heartedly reviewed and departed from. In such a case the test should be: is it absolutely necessary and essential that the question already decided should be reopened The answer to this question would depend on the nature of the infirmity alleged in the earlier decision, its impact on public good, and the validity and compelling character of the considerations urged in support of the contrary view. If the said decision has been followed in a large number of cases, that again is a factor which must be taken into account. " A similar view was taken in the Keshav Mills Company Limited vs Commissioner of Income tax,(1) where it was observed that ". before a previous decision is pronounced to be plainly erroneous, the Court must be satisfied with a fair amount of unanimity amongst its members that a revision of the said view is fully justified. " These principles were applied in Sajjan Singh 's case(2) and it was observed that if Sankari Prasad 's case(3) were to be overruled, "it would lead to the inevitable consequence that the amendments made in the Constitution both in 1951 and 1955 would be rendered invalid and a large number of decisions dealing with the validity of the Acts included in the Ninth Schedule which have been pronounced by, different High Courts ever since the decision of this Court in Sankari Prasad 's case(3) was declared, would also be exposed. to serious jeopardy. " The majority in that case therefore was not in favour of reviewing Sankari Prasad 's case(".) even so in View of the argument raised and the importance of the question it considered the arguments against that decision and came to the conclusion its that that case was rightly decided We may add that besides so many cases in the High Courts there have been a large number of cases in this Court to which it is unnecessary to refer where on the faith of various amendments made in the Constitution, particularly the First, the Fourth and the Sixteenth, amending fundamental rights, this Court has upheld the, validity of various Acts on the basis of these amendments. Further we would be very reluctant to over rule the unanimous decision in Sankari Prasad 's case.(3) or any other unanimous decision by the slender majority of one in a larger Bench constituted for the purpose. We say this with great respect and would hold that apart 'from the principle of stare decisis we should not say that the (1) ; (2) ; (3) ; 855 unanimous judgment in Sankari Prasad 's case(,) was wrongly decided by such a slender majority in this Special Bench. We therefore hold that Sankari Prasad 's cases(1) was correctly decided and that the majority,in Sajjan Singh 's case(2) WAS Correct in following that decision. We would follow the decision in Sankari Prasad 's case(1) even now as in our opinion it was correctly decided. ' Following that decision we hold that the Seventeenth Amendment is good. In view of this decision it is unnecessary to refer to other arguments raised with respect to the two petitions challenging the Mysore Land Reforms Act. In our view therefore all the three petitions should fail and we would dismiss them. In the circumstances we would pass no order as to costs. Hidayatulla. J In these three writ petitions, the facts of which appear in the two judgment just delivered, the validity of the Punjab Security of Land Tenures Act, 1953 and the Mysore Land Reforms Act, 1953, is principally involved. ' Since these Acts are protected by the Constitution (Seventeenth Amendment) Act, 1964, the validity of the constitutional amendment is also questioned. Therefore, a much larger field must be traversed because of the claim of the State that no part of the Constitution from the Preamble to the Ninth Schedule, is beyond the provision for amendment contained in article 368. The article, forms the Twentieth Part of the Constitution and is said to be a code by itself in which reposes a sovereign power, transcending anything elsewhere in the Constitution. The State submits that (except as stated in the article) there are no limitations on the amending power and denies that there are any implied restrictions. It claims, therefore, that an amendment of the Constitution Or of any of its part can never be a justiciable issue if the procedure for amendment has been duly followed. In this claim no exception is made the Preamble, the Fundamental Rights, the guaranteed remedy to uphold them all of them severally and together are said to be capable of being Partially or wholly abrogated by an amendment. Looked at from, this Point of view the Seven teenth Amendment Act not only 'must be valid but also beyond the Power of the courts to question. The petitioners, on the other hand, contend that this is to deny the real importance and inviolability of the Fundamental Rights which the Constitution itself, paramount even to article, 368 consideration. ' before we can Acts are valid or not. (1) ; (2) ; 856 The same questions were before this Court on two earlier occasions. They arose for the first time immediately after the Constitution (First Amendment) Act, 1951 was adopted and became the subject of a decision of this Court reported in Sri Sankari Prasad Singh Deo vs Union of India(1). There Patanjali Sastri J. speaking for Harilal Kania C.J., Mukherjea, Das and Chandrasekhara Aiyar, JJ.and himself upholds the First Amendment on the grounds that the power conferred by Part XX is constituent, paramount and sovereign and is, therefore, not subject to article 13(2) which prohibits the making of ordinary laws tending to abridge or take away Fundamental Rights. The questions were again before the Court in sajjan Singh c. State of Rajasthan(2) when the Seventeenth Amendment was impugned. The authority of Sankari Prasad 's case(1) was the ministry ofof the argument in support of the validity of the new amendment. This time the Court was not unanimous although the Court as aas a whole did not strike down the Act. Three opinions weredelivered by Gajendragadkar, C.J. on behalf of Wanchoo and Raghubar Dayal, JJ. and himself, by Mudholkar, J. and by me. I found the reasoning in Sankari Prasad 's case(1) to be unaccept able, although for reasons which I shall give, I refrained from expressing a final opinion. Mudholkar, J. in his opinion supported me with additional and forceful reasons but he also did not express himself finally on the broader question. I closed my opinion with the following observations : "I would require stronger reasons than those given in Sankari Prasad 's case(1) to make me accept the view that Fundamental Rights were not really fundamental but were intended to be within the powers of amendment in common with the other parts of the Constitution and without the concurrence of the States. No doubt article 19 by clauses numbered 2 to 6 allows a curtailment of rights in the public interest. Ibis shows that Part III is not static. It Visualises changes and progress but at the same time it preserves the individual rights. There is hardly any measure of reform which cannot be introduced reasonably, the guarantee of individual liberty notwithstanding. Even the agrarian reforms could have been partly carried out without Article 31 A and 31 B but they would have cost more to the public exchequer. 'the rights of society are made paramount and they ire placed above those of the individual. This is as it should be. But restricting the Fundamental Rights by resort to cls. 2 to 6 of Mt. 19 is (1) ; (2) ; 857 one thing and removing the rights from the Constitution or debilitating them by an amendment is quite another. This is the implication of Sankari Prasad 's case(1). It is true that such things would never be, but one is concerned to know if such a doing would be possible." "The Constitution gives so many assurances in Part III that it would be difficult to think that they were the playthings of a special majority. To hold this would prima facie that the most solemn parts of our Constitution stand on the same footing as any other provision and even on a less firm ground than one on which the articles mentioned in the proviso stand. The anomaly that article 226 should be somewhat protected but not article 32 must give us pause. Article 32 does not erect a shield against private conduct but against state conduct including the legislatures (See article 12). Can the legislature take away this shield ? Perhaps by adopting a liberal construction of article 368 one can say that. But I am not inclined to play a grammarian 's role. As at present advised I can only say that the power to make amendments ought not ordinarily to be a means of escape from absolute constitutional restrictions. " My opposition (lest one misunderstands its veridical charac ter) appears to be cautious and even timid but this was because it was attended by an uneasy feeling that I might have missed some immanent truth beyond what was said in Sankari Prasad 's case(1). The arguments then were extremely brief. After hearing full arguments in this case, which have not added to the reasoning of the earlier cases, I am not satisfied that the reasons are cogent enough for me to accept them. I say it with respect that I felt then, as I do so even more strongly now, that in the two earlier cases, the result was reached by a mechanical juris prudence in which harmonious construction was taken to mean that unless article 368 itself made an exception the existence of any other provision indicative of an implied limitation on the amending power, could not be considered. This was really to refuse to consider any argument which did not square with the a priori view of the omnicompetence of article 368. Such reasoning appears to me to be a kind of doctrinaire conceptualism based on an and textual approach supplemented by one concept that an amendment of the Constitution is not an exercise of legislative (1) ; 858 power but of constituent Dower and, therefore, an amendment of the Constitution is not law at all as contemplated by article 13(2). I. am reminded of the. words of. Justice Holmes that "we ,must think things and not words". The true principle is that if there are two provisions in the Constitution which seem to be hostile, juridical hermeneutics requires the Court to interpret them by combining them and not by destroying one with the aid of the other. No part in a Constitution is superior to another part unless the Constitution itself says so and there is no accession 'of strength to any provision by calling it a code. Portalis, the great. French Jurist .(who helped in the making of the Code Napole on) supplied the correct principle when he said that it is the context of the legal provisions which serves to illustrate the meaning. of the different parts, so that among them and between them there should be correspondence and harmony. We have two provisions to reconcile. Article 368 which says that the Constitution may be amended by, following this and this. procedure, and article 13(2) which says, the State shall not make any law which takes away or abridges the rights conferred by Part III and that any law made in contravention of the clause shall, to the extent of the contravention, be void. The question, therefore, is : does this create any limitation upon the amending process ? On the answer to this question depends the solution of all the problems in this case. It is an error to view our Constitution as if it were a mere organisational document by which the people established the atructure and the mechanism of their Government. Our Constitution is intended to be much more because it aims at being a social document In which the relationship of society to the indiVidual and of Government to both and the rights of the minorities and the backward classes are clearly laid down. This social document is headed by a Preamble* which epitomizes the principles on which the Government is intended to function and these principles are later expanded into Fundamental Rights in Part III and the Directive Principles of Policy in Part TV. The former 'are protected but the latter are not. The former represent the "PREAMBLE WE THE PEOPLE OF INDIA having solemnly Resolved to .constitute India into a SOVEREIGN DEMOCRATIC REPUBLIC and to secure all Its citizens: JUSTICE, social, economic and political; EQUALITY of status and of opportunity; and to promote among them.all FRATERNITY assuring the, dignity of the individual and.the unity of Nation: IN OUR CONSTITUENT ASSEMBLY this twenty sixth day of November,1949,do HEREBY ADOPT,ENACT AND GIVE TO OURSELVES THIS CONSTffUTION. " 859 limits of State action and the latter are the obligations and the duties of the Government as a good and social Government. Why was it necessary to have the Fundamental Rights at all and make them justiciable ? As we seem to be forgetting our own history so soon let me say that the answer lies there the Nationalist Movement and the birth of the Indian National Congm in 1885 were the direct result of the discriminatory treatment of the Indians in their own country. The demand for the guarantee of Fundamental Rights had unfortunately to be made. then to a foreign ruler and it appeared in the Constitution of India Bill framed by the Indian National Congress ten years later. All that is valuable to an Individual in civilized society, including free speech, imprisonment only by a competent authority, free law education, etc. were claimed therein. Resolutions of the Congress since then reiterated this demand and the securing of Fundamental Rights in any future Constitution became one of the articles of faith. To cut the narration short, the main steps may only be mentioned. Mrs. Besant 's Commonwealth of India Bill 1925 with its seven fundamental rights (the precursor of article 19), the Madras Congress Resolution of 1927 "a constitution on the basis of declaration of rights" the Nehru Report it is obviour, that our first care should be to have the Fundamental Rights guaranteed in a manner which will not permit their withdrawal in any circumstancees , the draft article in the Nehru Constitution "No person shall be deprived of his liberty, nor shall his dwelling or property be entered, requisitioned or confiscated save in accordance with law" , the Independence Resolution of 26th January, 1930 We believe that it is the inalienable right of the Indian people, as of any other people, to have freedom and to enjoy the fruits of their toil and have the necessities of life, so that they may have full opportunities of growth" the Karachi Resolution on Fundamental Rights, Economic and Social Change (1931), the Sapru Report (1945) which for the first time distinguished between justiciable and non ,justiciable rights, the Suggestion of the Cabinet Mission for the constitution of an Advisory Committee on Fundamental and Minority Rights, and, lastly the Committee on Fundamental Rights of the Constituent Assembly, are just a few of the steps to be remembered. The Fundamental Rights and the Directive Principles were the result. Fundamental laws are needed to make a Government of laws and not of men and the Directive Principles are needed to lay down the objectives of a good Government. Our Constitution was not the cause but the result of political and personal freedom". Since Dicey had said that "the proclamation . in a Constitution or Charter of the right to personal freedom, or indeed of any other right, gives of itself but slight security that the right has more than a 860 nominal existence",(1) provision had to be made for guaranteeing them andto make them justiciable and enforceable. This result is reachedby means of articles 12, 13, 32, 136, 141, 144 and 226. The The High Courts and finally this Court have been made the Judges of whether any legislative or executive action on the part oft the State considered as comprehensively as is possible, offends the Fundamental Rights and article 13(2) declares that legislation which so offends is to be deemed to be void. It is thus that Parliament cannot today abridge or take away a single Fundamental Right even by a 'unanimous vote in both the Chambers. But on the argument of the State it has only 'to change the title of the same Act to an Amendment of the Constitution Act and then a majority of the total strength and a 2/3rds majority of the members present and voting in each House may remove not only any of the Fundamental Rights, but the whole Chapter giving them. And this is said to be possible because of article 368 and its general language which, it is claimed, makes no exception in its text and, therefore, no exception can be implied. It is obvious that if an Act amending the Constitution is treated as a law it must also be subject to the provisions of article 13(2). Since the definition of the word 'law ', makes no exception a strenuous eeffort is made on the basis of argument and authority to establish that a constituent power does not result in a law in the ordinary sense. Distinction is thus made between laws made ordinarily that is to say, from day to day by ordinary majority and laws made occasionally for the amendment of the Constitution by a slightly enhanced majority. In our Constitution this distinction is not valid in the eye of article 13(2). It is not essential,, of course, that a difference must always exist in the procedure for the exercise of constituent and ordinary, legislative power. One has not to go far to find the example of a country in which constitutional law as such may be made by the same agency which makes ordinary laws. The most outstanding, example is that of England about which de Tocqueville observed. "the Parliament has an acknowledged right to modify the Constitution; as, therefore, the Constitution may undergo perpetual changes, it does not in reality exist; the Parliament is at once a legislative and a constituent assembly:"(2) of course, the dictum of de Tocqueville that the English Constitution "elle n 'existe point" (it does not exist) is far from accu (1)Dicey: "Law of the Constitution" 10th Edn. p. 207. (2)Introduction to the Study of the Law of the Constitution A.V. Dicey Tenth Edn p. 88 quoting from OEuvres completes (14th ed.,1864) (Democratie en Amerique), pp. 166, 167. 861 rate. There is a vast body of constitutional laws in England which is written and statutory but it is not all found in one place and arranged as a written Constitution usually is. The Act of Settlement (1701), the Act of Union with Scotland (1707), the Act of Union with Ireland (1800) the Parliament Act (1911) the Representation of the Peoples Acts of 1832, 1867, 1884, 1918, 1928 and 1948, the Ballot Act (1872), the Judicature Acts 1873, 1875 and 1925, the Incitement to Disaffection Act (1934), His Majesty 's Declaration of Abdication Act (1936), the Regency Act (1937) and the various Acts setting up different ministries are examples of what will pass for constitutional law under our system(1). The Bill of Rights (1689) lays down the fundamental rule in England that taxation may not be levied without the consent of Parliament which in our Constitution has its counterpart in article 265. In our Constitution also the laws relating to delimitation of constituencies or allotment of seats to such constituencies made or purporting to be made under article 327 or article 328, by reason of the exclusion of the powers of the courts to question them, are rendered constitutional instruments. Other examples of constitutions which, in addition to constitution proper, contain certain ordinary legislation, having constitutional qualities, also exist. (2) What then is the real distinction between ordinary law and the law made in the exercise of constituent power? I would say under the scheme of our Constitution none at all. This distinction has been attempted to be worked out by several authors. It is not necessary to quote them. Taking the results obtained by Willoughby(3) it may be said that the fact that a Constitution is written as a Constitution is no distinction because in Britain constitutional law is of both kinds and both parts coexist. The test that the Constitution requires a different kind of procedure for amendment, also fails because in Britain Parliament by a simple majority makes laws and also amends constitutional statutes. In our Constitution too, in spite of the claim that article 368 is a code (whatever is meant by the word ,code, here), articles 4, 11 and 169 show that the amendment of the Constitution can be by the ordinary law making procedure. By this method one of the legislative limbs in a State can be removed or created. 'This destroys at one stroke the claim that article 368 is a code arid also that any special method of amendment of the Constitution is fundamentally necessary. (1) The list is raken from K. C. Wheare 's: "The Statute of Westminster and Dominion Status" (4th Edn) p. 8. Dicey and others give different list. (2) See Constitutions of Austria, Honduras, Nicaragua Peru, Spain and Sweden among others. The Constitution of Spain, in particular is in several Instruments. The Constitution of Austria (A t. 149) makes special mention of these constitutional instruments. (3) Tagore Law Lectures (1924) p. 83. 862 The next test that the courts must apply the Constitution in preference to the ordinary law may also be rejected on the ansalogy of the British practice. There, every statute has equal standing. Therefore, the only difference can be said to arise from the fact that.constitutional laws are generally amendable under a process which in varying degrees, is more difficult or elaborate. This may give a distinct character to the law of the Constitution but it does not serve to distinguish it from the other laws of the land for purposes of article 13(2). Another difference is that in the written constitutions the form and power of Government alone are to be found and not rules of private law as is the case with ordinary laws. But this is also not an invariable rule. The Ame Constitution and our Constitution itself are outstanding examples There are certain other differences of degree, such as that nary _legislation may be tentative or temporary, more detailed or secondary, while the Constitution is intended to be permanent, general and primary. Because it creates limitations on the ordinary legislative power, constitutional law in a sense is fundamental law, but if the legislative and constituent processes can become one, Ls there any reason why the result should be regarded as law in the one case and not in the other ? On the whole, therefore, as observed in the American Jurisprudence "It should be noticed however that a statute and a constitution, though of unequal dignity are both laws and each rests on the will of the people. . " A Constitution is law which is intended to be, for all time and is difficult to change so that it may not be subject to "impulses ofmajority" "temporary excitement and popular caprice or passion"(2). I agree with the authors cited before us that the power of amendment must be possessed by the State. I do not take a narrow view of the word "amendment" as including only minor changes within the general framework. By an amendment new matter may be added, old matter removed or altered. I alm concede that the reason for the amendment of the Constitution is a political matter although I do not go as far as some Justice of the Supreme court of the United States did in Coleman vs Miller(3) that the whole process is "political in its entirely from submission until an Amendment becomes part of the Constitution and is not subject to judicial guidance, control or interference at any point. " There are fundamental differences between our Con (1) American Jurispruence Vol. II Section 3. (2) Amendment is expressly called a legislative process in the Constitutions of Colombia:, Costa Rica, Hungary, Panama and Peru. In Portugal the ordinary legislatures enjoy constituent powers every 10 years. (3) 3)7 U.S. 443 ; 863 stitution and the Constitution of the United States of America. Indeed this: dictum of the four Justices based upon, the case of Luther vs Borden(1) has lost some of its force after Baker vs Carr(2) A Republic must, as says Story, (8) possess the means for altering and improving the fabric of the Government so as, to promote the happiness and safety of the people. The power is also needed to disarm opposition and prevent factions over the Constitution. The power, however, is not intended to be used for experiments or as an escape from restrictions against undue state action enacted in the Constitution itself. Nor % 'LS the power of amendment available for the purpose of removing express or fmplied restrictions against the State. Here I make a difference between Government and State which I shall explain presently. As Willoughby(4) points out constitutional law ordinarily limits Government but not the State because a constitutional law is the creation of the State for its own purpose. But there is nothing to prevent the State from limiting itself. The rights and duties of the individual and the manner in which such rights are to be exercised and enforced ;ire ordinarily to be found in the laws though some of the Constitutions also fix them. It is now customary to have such rights guaranteed in the Constitution. Peaslee,(5) writing in 1956 says that about 88% of the national Constitutions contain clauses respecting individual liberty and fair legal process; 83% respecting freedom of speech and the press; 82% respecting property right; 80% respecting rights of assembly and association; 80% respecting rights of conscience and religion; 79% res pecting secrecy of correspondence and inviolability of domi cile; 78% respecting education; 73% respecting equality 64% respecting right to petition; 56% respecting labour; 51% respecting social security; 47% respecting rights of movement within, and to and from the nation; 47% respecting health and motherhood; and 35% respecting the non retroactivity of laws. In some of the Constitutions there is an attempt to put a restriction against the State seeking to whittle down the rights conferred on the individual. Our Constitution is the most outstanding example of this restriction which is to be found in article 13(2). 'The State is no doubt legally supreme but in the supremacy of its powers it may create, impediments on its own sovereignty. Government is always bound by the restrictions created in favour of fundamental Rights but the State may or may not be. Amendment may be open to the State according to the procedure laid (1) (2) ; (7 L. Ed. 2d 633). (3) Commentaries on the Constittition of the United States (1833) Vol. III pp 686 687. (4) Tagore Law Lectures, p. 84. (5) Constitutions of Nations, Vol. I (2nd Edn.) p. 7. 863 stitution and the Constitution of the United States of America.this: dicttan of the four Justices based upon, the case of Luther vs Borden(1) has lost some of its force after Baker vs Carr(2). A Republic must, as says Story, (,,) ssess the means for ai and:improving the 'fabric of tc Government so as, to promote the happiness and safety, of the people. The power, is dw needed to disarm opposition and prevent factions over theThe power, however, is not intended to be used for experiments or as an escape from restrictions against undue state action enacted in the Constitution itself. Nor is the power of amendment available for the purpose of removing express or implied restrictions against the State. Here I make a difference between Government and Statewhich I shall explain presently. As Willoughby(4) points out wmtitutional law ordinarily limits Government but not the State because a constitutional la,* is the creation of the State for its own pu, se. But there is nothing to prevent the State from rpo limiting itself. The rights and duties of the individual and the. manner in which such rights are to be exercised and enforced are ordinarily to be found in the laws though some of the Constitutions also fix them. It now customary to have such rights guaranteed in the Constitution. Peaslee,(5) writing in 1956 says that about 88,Yo of the, national Constitutions contain clauses respecting individual liberty and fair legal process; 83% respecting freedom of speech and the press; 82% respecting property right; 80% respecting rights of assembly and association; 80% respecting rights of conscience and religion; 79% respecting secrecy of correspondence and ' inviolability of domicile; 78% respecting education; 73% respecting equality; .64% respecting right to petition; 56% respecting labour; 51% respecting social security; 47% respecting rights of movement within, and to and from the nation; 47% respecting health and motherhood; and 35% respecting the non retroactivity of laws. In some of the Constitutions there is an attempt to put a restriction Against the State seeking to whittle down the rights conferred ' on the 'individual. Our Constitution is the most outstanding i6xample of this restriction Which is to be found in article 1.3(2). ,Tbe State is no doubt legally supreme but in the supremacy of its powers it may creat e impediments on its OI%M sovereignty. Govent is always bound by the restrictions created in favour of Fundamental Rights but the State may or may not be. Amendment may be open to the State according to the procedure lai(r (1)7 How. 1 (2) ; (7 L. Ed. 2d 633). (3) Commentaries on the Constitution of the United, Sta:tes (1 833) 'Vol. III PP, 686 687. (4)Tagore Law Lectures, p. 84. (5)Constitutions of Nations, Vol. I (2nd Edn.) p. 7. 864 down by the Constitution. There is nothing, however, to prevent the State from placing certain matters outside the amending procedure( '). Examples of this exist in several Constitutions of the world : see article 5 of the American Constitution; article 95 of the Constitution of France,; article 95 of the Constitution of Finland; article 97 of the Constitution of Cambodia; article 183 of the Constitution of Greece; article 97 of the Japanese Constitution; article 139 of the Italian Constitution, to mention only a few. When this happens the ordinary procedure of amendment ,ceases to apply. The unlimited competence (the kompetenz kompetenz of the Germans) does not flow from the amendatory process. Amendment can then be by a fresh constituent body. To attempt to do this otherwise is to attempt a revolution. I do not known why the word "revolution", which I have used before, should evoke in some persons an image of violence and subversion. The whole American Constitution was the result of a bloodless revolution and in a sense so was ours. The adoption of the whole Constitution and the adoption of an amendment to the Constitution have much in common. An amendment of the Constitution has been aptly called a Constitution in little and the same question arises whether it is by a legal process or by revolution. There is no third alternative. An amendment, which repeals the earlier Constitution, unless legal, is achieved by revolution. As stated in the American Jurisprudence : "An attempt by the majority to change the fundamental law in violation of self imposed restrictions is unconstitutional and revolutionary". ( ') There are illegal and violent revolutions and illegal and peaceful revolutions. Modification of Constitution can only be by the operation of a certain number of wills acting on other wills. The pressure runs through a broad spectrum, harsh at one end and gentle at the other. But whatever the pressure may be, kind or cruel, the revolution is always there if the change is not legal. The difference is one of method, not of kind. Political thinking starts from the few at the top and works downward more often than in the reverse direction. It is wrong to think that masses alone, called "the people" after Mazini, or "the proletariate" after Marx, 'begin a revolutionary change. Political changes are always preceded by changes in thought in a few. They may be outside the (1) In the Constitution of Honduras, partial amendment only is possible. For a complete amendment a Constituent Assembly has to be convoked. In the Constitution of Brazil, the Constitution cannot be amended when there is a state of seige (our emergency). In Turkey an amendment of Article 1 cannot even be proposed. (2) Vol. 12, Section 25 pp. 629 630. 865 Government or in it. It is a revolution nevertheless, if an attempt is made to alter the will of the people in an illegal manner. A revolution is successful only if there is consent and acquiescence and a failure if there is not. Courts can interfere to nullify the revolutionary change because in all cases of revolution there is infraction of existing legality. It is wrong to classify as revolution some thing coming from outside the Government and an illegality committed by the Government against the Constitution as evolution. I am mindful of the observations of Justice Holmes, that "We need education in the obvious to learn to transcend our own convictions and to leave room for much that we hold dear to be done away with short of revolution, by the orderly change of law. "(1) But the problem we are faced with is not an orderly change of law but of a claim to a revolutionary change against the vitals of the Constitution. In such a case the apprehension is that democracy may be lost if there is no liberty based on law and law based on equality. The protection of the fundamental Rights is necessary so that we may not walk in fear of democracy itself. Having assumed the distinction between Government and ' State let me now explain what I mean by that distinction and what the force of article 13(2) in that context is. I shall begin first by reading the pertinent article. Article 13 (2), which I quoted earlier, may again be read here: "13. . . . . . (2)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 contravention, be void. " The definition of the State in article 12 reads "12. In this Part, unless the context otherwise requires, "the State" includes.the Government and Parliament of India and the Government and the Legislature of each of the States and all local or other authorities within the territory of India or under the control of the Government of India. " The State is the sum total of all the agencies which are also individually mentioned in article 12 and by the definition all the parts severally are also included in the prohibition. Now see how 'law ' is defined: "13. . . . . (1) The Mind and Faith of Justice Holmes p. 390. 866 (3)In this article, unless the context otherwise requires, (a) "law" includes any ordinance, order, bye law, rule, regulation, notification, custom or usage having in the territory of India the force of law;" In Sajjan Singh 's case(1) I said that if amendments of the constitution were meant to be excluded from the word "law" it was the easiest thing to add to the definition the further words "but shall not include an amendment of the Constitution". it 'LS argued now before us that this wag not necessary because article 368 does not make any exception. This argument came at all stages like a refrain and is the real cause of the obfuscation in the opposite view. Those who entertain this thought do not pause to consider : why make a prohibition against the State? As Cooley said: "there never was a republican Constitution which delegated to functionaries all the latent powers which lie dormant in every nation and are boundless in extent. and incapable of definition. ", If the State wields more power than the functionaries there must be a difference between the. State and its agencies such as Government, Parliament, the Legislatures of the States and the local and other authorities. Obviously, the State means more than any of there or all of them put together. By making the State subject 'to Fundamental Rights it is clearly stated in article 13 (2) that any ' ,of the agencies acting alone or all the agencies, acting together are not above the Fundamental Rights. Therefore, when the House .of the People or the Council of States introduces a Bill for the abridgement of the Fundamental Rights, it ignores the injunction against it and even if the two Houses pass the Bill the injunction is next operative against the President since the expression "Government of India" in the General Clauses Act means the President of India. This is equally true of ordinary laws and laws seeking to amend the Constitution. The meaning of the word "State" will become clear if I draw attention at this stage to article 325 of the Constitution of Nicargua, which reads as follows: "325. The agencies of the Government, jointly or separately, are, for bidden to suspend the Constitution or to restrict she rights granted by it, except in the cases provided therein. " In our Constitution the agencies of the State are controlled jointly and separately and the prohibition is against the whole force of (1) ; 867 the State acting either in its executive or legislative capacity. Ile of the Executive is more important than even the Legislature. In modem politics run on parliamentary democracy the Cabinet attains a position of dominance over the Legislature. The Executive, therefore, can use the Legislature as a means of securing changes in the laws which it desires. It happened in Germany under Hitler. The fact has been noticed by numerous writers. for example, Wade and Philips(1), Sir Ivor Jennings(2) , Dawson(3), Keith(4) and Ramsay Muir(5). Dawson in particular said that a Cabinet is no longer responsible to the Commons but the Commons has become instead responsible to the Government. Ivor Jennings added that if a Government had majority it could always secure the legislation. The others pointed out that the position of the Cabinet towards Parliament tends to assume more or less dictatorial powers and that was why people blamed Government, this is to say, the Cabinet rather than Parliament for ineffective and harsh laws. This is true of our country also regarding administration and Station. Fortunately, this is avoided at least in so far as the Fundamental Rights are concerned. Absolute, arbitrary power in defiance of Fundamental Rights exist nowhere under our Constitution, not even in the largest majority. The people 's representatives have, of course, inalienable and undisputable right to alter, reform or abolish the Government in any manner they think fit, but the declarations of the Fundamental Rights of the citizens are the inalienable rights of the people. Ile extent of the power of the rulers at any time is, measured by the Fundamental Rights. It is wrong to think of them as rights within the Parliament 's giving or taking. Our Constitution enables an individual to oppose successfully the whole community and the State and claim his rights. This is because the Fundamental Rights are I so safe guarded that within the limits set by the Constitution they are inviolate. The Constitution has itself said what protection has been created round the person and property of the citi zens and to what extent this protection may give way to the general good. it is wrong to invoke the Directive Principles as if there is some antinomy between them and the Fundamental Rights. The Directive Principles lay down the routes of State but such action must avoid the restrictions stated in the Fundamental Rights. Prof. Anderson (6) taking the constitutional amendments, as they have been in our country, considered the Directive principles to be more potent than the Fundamental (1) Constitutional Law, 6th Edn. p. 27. (2) Parliament (1957) pp. 11 12. (3) Government of Canada (1952) Chapter XIX. (4) An Introduction to British Constitutional Law (1931) P. 48, (5) How Britain is Governed P. 5,6. (6) Changing Law in Developing Countries, pp. 88, 89. 868 Rights. That they are not, is clear when one takes the Fundamental Rights. with the guaranteed remedies. The Directive Principles are not justiciable but the Fundamental Rights are ' made justiciable. This gives a judicial control and check over State action even within the four corners of the Directive Principles. It cannot be conceived that in following the Directive Principles the Fundamental Rights (say for example, the equality clause) can be ignored. If it is attempted, then . the action is capable of being struck down. In the same way, if an amendment of the Constitution is law for the reasons explained by me, such an amendment is also open to challenge under article 32, if it offends against the Fundamental Rights by abridging or taking them away. Of course, it is always open to better Fundamental Rights. A law or amendment of the Constitution would offend the Fundamental Rights only when it attempts to abridge or take them away. The importance of Fundamental Rights in the world of today cannot be lost sight of. On December 10, 1948, the General. Assembly of the United Nations adopted the Universal Declaration of Human Rights without a dissent. This draft was made after the Third Committee of the United Nations had devoted 85 meetings to it. The Declaration represents the civil, political and religious liberties for which men have struggled through the centuries and those new social and economic rights of the Individual which the Nations are increasingly recognising in their Constitutions. Some of these were proclaimed during the French Revolution and areincluded in the declarations of Nations taking pride in the dignity and liberty of the Individual. They are epitomized in the Preamble, and more fully expressed in Parts III and IV of our Constitution. These Declarations wherever found are intended to give a key to social progress by envisaging rights to work, to education and to 'social insurance. The Nations of the world are now in the second stage, where Covenants are being signed on the part of the States to respect such rights. United Nations Human Rights Commission has worked to produce two drafts one dealing, with civil and political rights and the other with economic, social and cultural rights. , The third stage is still in its infancy in which it is hoped to provide for the enforcement of these rights on an international basis. The Regional Charter of the Human Rights under which there is established already a European Commission of Human Rights to investigate and report on violations of Human Rights, is a significant step in that direction. After 1955 the European Commission has become competent to receive complaints from individuals although the enforceability of Human Rights on an international basis is still far from being achieved. If one compares the Uni 869 versal Declaration with Parts III and IV of our Constitution one finds remarkable similarity in the two. It is significant that our Committee on Fundamental Rights was deliberating when the This Committee of the United Nations was deliberating on the. Universal Declaration of Human Rights. Both are manifestos of man 's inviolable and fundamental freedoms. While the world is anxious to secure Fundamental Rights in ternationally, it is a little surprising that some intellectuals in our country, whom we may call "classe non classe" after Hegel, think of the Directive Principles in our Constitution as if they were superior to Fundamental Rights. As a modern philosopher(1) said such people 'do lip service ' to freedom thinking all the time in terms of social justice "with 'freedom ' as a by product". Therefore, in. their scheme of things Fundamental Rights become only an epitheton ornans. One does not know what they believe in the communistic millennium of Marx or the individualistic Utopia of Bastiat. To them an amendment of the Fundamental Rights is permissible if it can be said to be within a scheme of a supposed socioeconomic reform, however, much the danger to liberty, dignity and freedom of the Individual. There are others who hold to liberty and freedom of the. Individual under all conditions. Compare the attitude of Middleton Murray who would have Communism provided "there was universal freedom of speech, of association, of elections and of Parliament" To such the liberty and dignity of the Individual are inviolable. Of course, the liberty of the individual under our Constitution, though meant to be fundamental, is subject to such restrictions as the . needs of society dictate. These are expressly mentioned in the Constitution itself in the hope that no further limitations would require to be imposed at any time. I do not for a moment suggest that the question about reasonableness, expediency or desirability of the amendments of the Constitution from a political angle is to be considered by the courts. But what I do say is that the possession of the necessary majority does not put 'any party above the constitutional limitations implicit in the Constitution. It is obvious that the Constituent Assembly in making the Fundamental Rights justiciable was not justisfied with reliance on the sense of self restraint or public opinion(2) on which the majority in Sajjan Singh 's(3) case does. This is not argument of fear: The question to ask is : can a party, which enjoys 2/3rds majority today, before it (1)Benedetto Croce. (2)Sir Robert Peel calls it "that great compound of foiiy, weakness, prejudice, wrong feeling, right feeling, obstinacy and newspaper paragraphs" (3)[1965] 1 S.C.R. 933. CI/67 10 870 loses it, amend article 368 in such wise that a simple majority would be sufficient for the future amendments of the constitution ? Suppose it did so, would there be any difference between the constitutional and the Ordinary laws made thereafter ? The liberty of the Individual has to be fundamental and it has been so declared by the people. Parliament today is not the constituent body as the Constituent Assembly was, but is a constituted body which must bear true, allegiance to the Constitution 'as by law established. To change the Fundamental part of the Individual 's liberty is a usurpation of constituent functions be cause they have been placed outside the scope of the power of constituted. Parliament. It is obvious that Parliament need not now legislate at all. It has spread the umbrella of article 31 B and .has only to add, a clause that all legislation involving Fundamental Rights would be deemed to be within that protection hereafter. Thus the only palladium against legislative dictatorship may be removed by a 2/3rds majority not only in praesanti but, defuturo. This can hardly be open to a constituted Parliament. Having established, that there is no difference between the ordinary legislative and the amending processes in so far as cl.(2) of Aft. 13 is concerned, because both being laws in their true character, come within the prohibition created, by that, clause against the State and that the Directive Principles cannot be invoked to destroy Fundamental Rights. I proceed now to examine whether the English and Amercan precedents lay down any principle applicable to amendments of our Constitution. In, Britain the question whether a constitutional amendment is valid or not at arise because the courts are powerless ' Parliamentary Sovereignty under the English Constitution means that Parliament enjoys the right to make or unmake any law whatever and no person or body has any right to question the legislation. The utmost and absolute despotic power belongs to Parliament. It "make, confirm, enlarge, restrain, abrogate, repeal, revise and expand law concerning matters of all possible denominations". What Parliament does, no authority on earth can undo. The The Queen, each House of Parliament the constituencies and the law courts have in the past claimed independent legislative powers but these claims are unfounded. It is impossible to compare the Indian Parliament with the Brittsh Parliament as the former con codedly in the ordinary legislation is subject to judicial review, both on the ground of competence arising from a federal structure And the existence of Fundamental Rights. The question of competence in the matter of amendment of the Constitution depends upon, firstly, compliance with the procedure laid down in article 368 and, secondly, upon the question whether,the.process is in 871 any manner restricted by the Fundamental Rights. Such questions cannot obviously arise in the British Parliament( '). The example of the Constitution of the United States cannot also serve any purpose although the greatest amount of support was sought to be derived from the decisions of the Supreme Court and the institutional writings in the United States. The power of amend in the United States Constitution flows from article V. (1). It must be noticed that the power is clearly not made equal to ordinary legislative process. One salient point of difference is that the President is nowhere in ' this scheme because his negative does not run. ( ') The amendment is thus not of the same quality as ordinary legislation. The Supreme Court of the United States has no doubt brushed aside objections to amendments of the Constitution on the score of incompetence, but has refrained from giving any reasons. In the most important of them, which questioned the 18th Amendment, the Court only stated its conclusions. After recalling the texts of the Article under which Amendments may be made and of the 18th Amendment proposed by the Congress in 1917 and proclaimed as ratified by the States in 1919, the Court announced : "4. The prohibition of the manufacture, sale, trans portation, importation, and exportation of intoxicating liquors for beverage purposes, as embodied in the 18th amendment, Is within the power to amend reserved by article 5 of the Constitution." (emphasis supplied) (4) One would have very much liked to know why this proposition was laid down in the terms emphasised above if the effective exercise of the. power depended upon a particular procedure which was immaculately followed. The silence of the Court about its reasons has been noticed in the same judgment by Mr. Justice (1) Dicey gives three supposed limitations on the power of Parliament. Of these one that language has been used in Acts of Parliament which implies that one Parliament can make laws which cannot be touched by any subsequent Parliament, is not true. The best examples are Act of treaties with Scotland and Ireland but these same Acts have been amended later. Francis Bacon found this claim to be untenable. See Dicey 'The Law of the Constitution pp. 64, 65. (2) Article V. The Congress, whenever two thirds of both houses shall deem it necessary, shall propose amendments to this Constitution, or, on the application of the legislatures of two thirds of the several States, shall call a convention for proposing amendments, which, in either case, shall be valid to all intents and purposes, as part of this Constitution, when ratified by the legislatures of three fourths of the several States, or by conventions in three fourths thereof, as the one or the other mode of ratification may be proposed by the Congress, provided that no amendment which may be made prior to the year ' one thousand eight hundred and eight shall in any manner affect the first and fourth clauses in the ninth section of the first article; and that no State, without its consent, shall be deprived of its equal suffrage in the Senate." (3) Hollingsworth vs Virginia ; (4) National Prohibition Cases; , 872 Mckenna. In feser vs Garnett(1) the Court was hardly more expressive. The only question considered by the Court was "The first contention is that the power of amendment conferred by the ' Federal Constitution, and sought to be exercised, does not dxtend to this Amendment, because of its character." (emphasis supplied). This was repelled by Brandeis, J on behalf of the unanimous court on the grx)und that the Amendment was in character and phraseology similar to the 15th Amendment and was adopted by following the same method. As the,lsth Amendment had been accepted for half a century the suggestion that it was not in accordance with law, but as a war measure validated by acquiescence was not accepted. It is significant, however, that at the time of the 18th Amendment, the arguments were (a) that 'amendment ' was ' limited to the correction of error in the framing of the Constitution, (b) Article V did not comprehend the adoption of additional or supplementary provisions, (c) ordinary legislation could not be embodied. in the constitutional amendment, and (d) Congress could not 'propose amendment which pared the sovereign power of the States. None of these at I guin ents was accepted. At the time of the 19th Amendment, which increased the franchise in the States, the narrow ground was that a State which had not ratified the Amendment would be, deprived of its equal suffrage in the Senate because its representatives in that body would be persons not of its choosing, i.e. persons,chosen by voters whom the State itself had not authorised to vote for Senators. This argument was rejected. However, in Dillion vs Gloss(2) the Supreme Court held that Congress had the, power to a time limit for ratification because article V implied that application must be within some reasonable time after. the proposal". The fixation of 7 years was held by the Court to be reasonable. In 1939 came the case of Coleman vs Miller(3) which dealt with the Child Labour Amendment. Such a law was earlier re jected by the Kansas Leizislature. Later the State ratified the amendment after a lapse of 13 years by the casting vote of the Lt. Governor. Mandamus was asked against the Secretary of Kansas Senate to erase the endorsement of ratification from its record and it was denied. The Supreme Court of Kansas refused to review this denial on certiorari. The Supreme Court of the United States in an opinion, in which not more than 4 Justices (1) 258 U.S. 130. (2)256 U.S. 368. (3) 307 U.S. 443. 873 took any particular view,. declined to interfere. Majority affirmed the decision of Supreme Court of Kansas. Four Justices considered that the question was political from start to finish and three Justices that the previous rejection of the law and the extraordinary time taken to ratify were political questions. Although the Supreme Court has scrupulously refrained from passing on the ambit of article V it has nowhere said that it will not take jurisdiction in any case involving the amending process. (1) In Hollingsworth vs Virginia(2) the supreme Court assumed that the question was legal. The Attorney General did not even raise an objection. In Luther vs Borden($) the matter was finally held to be political which opinion prevailed unimpaired 'till some doubts have arisen after Baker vs Carr(4). In the case the Court remarked "We conclude. that the non justiciability of claims resting on the guarantee clause which arises from the embodiment of questions that were thought 'Political ' can have no bearing upon the justiciability of the, equal protection claim presented in this case. We ernphasise that it is the involvement in guarantee clause claims of the elements thought to define "political questions" and no other feature, which could render them non justiciable. specifically, We have said that such claims are not held non justiciable because they touch matters of State governmental Organisation. It would appear that the Equal Protection Clause was held to supply a guide for examination of apportionment methods better than the Guarantee Clause. Although there is no clear pronouncement, a great contro versy exists whether questions of substance can ever come before the Court and whether there are any implied limitations upon the amendatory Power. In the cases above noted, the other articles (particularly the Bill of Rights) were not read as limitations and no limitation outside the amending clause was implied. In the two cases inwhich the express limitation of Equal suffrage Clause was involved the Court did not enter the question. Thus the 15th and, on its strength, the 19th Amendments were upheld. In Coleman vs Miller(5) the political question doctrine brought the support of only four Justices and in Baker vs Carr(4) the Federal, Courts were held to have jurisdiction to scrutinise the fairness of legislative apportionment, under the 14th Amendment and to take steps to assure that serious inequities were wiped out. The (1) See Rottschaeffer: Handbook of American Constitutional Law (1939) pp. 397, 398, though the author 's opinion is that it will deny jurisdiction. (2) ; (3) (4) ; (5) 307 U. section 443 874 courts have thus entered the political thicket '.The question of delimitation of constituencies cannot, of, course, arise before courts under our Constitution because of article 329. Baker vs Carr(1) makes the Court sit in judgement over the possession and distribution of politcal power which is an essential part of a Constitution. The magical formula of "political questions" is losing ground and it is to be hoped that a change may be Soon. coming. Many of the attacks on the amendments were the result of a misunderstanding that the Constitution Was a compact between States and that the allocation of powers was not to be changed at all. This was finally decided by Texas vs White (2) as far back as 1869. The main question of implied limitations has evoked a spate of writings. Bryce(s), Weaver(4), Mathews(5), Burdick(6), Willoughby(7), Willis(8), Rottshaefer(9), Orfield(10) (to name only a few) are of the opinion that there are no, implied limitations, although, as Cooley points out, "it is sometimes expressly declared what indeed is implied without the declaration that everything in the declaration of rights contained is excepted out of the general powers of Government, and all laws contrary thereto shall be void(11). " Ex press checks there are only three. Two temporary checks were operative till 1808 and dealt with interference with importation of slaves and the levying of a direct tax without apportionment among then States according to population. Permanent check that now remains is equality of representation of States in the Senate. Some writers suggest that this, check may also be removed in two moves. By the first the Article can be, amended and by the second the equality removed. When this happens it will be seen whether the Supreme Court invokes any doctrine such as achieving. indirectly what cannot be done directly. It will, of course, be completely out of place in a judgment to discuss the. views of the several writers and so I shall confine myself to the observation of Orfield to whom again and again counsel for the State turned either for support or inspiration. Accord. ing to him, there are ' no implied limitations unless the Courts adopt (1) ; (2) Wall.700. (3) The American Commonwealth Vol. I. (4) Constitutional law and its Administration (1946). (5) American Constitutional System (2nd Edn.) p. 43 45. (6)The Law of the American Constitution (7th Imp.) p. 45. (7) Tagore Law Lectures (1924). (8)constitutionaI Law of United States (1936). (9) Handbook of American Constitutional Law. (10)The Amending of the Federal Constitution (11)Constitutional Limitations Vol. I, 8th Edn. 95, 96. 875 that view and therefore no limitations on the substance of the amendments except the Equality Clause. His view is that when Congress is in the amending process, it is not legislating but exercising a peculiar power bestowed by article V. I have already shown that under our Constitution the amending process is a legislative process, the only difference being a special majority and the existence of article 13(2). Orfield brushes aside the argument that this would destroy the very concept of the Union which, as Chief Justice. Marshall had said, was indestructible. Orfield faces boldly the question whether the whole Constitution can be overthrown by an amendment and answers yes. But he says that the amendment must not be in violation of the Equality Clause. This seems to be a great concession. He makes this exception but Munro( '), who finds it difficult to conceive of an unamendable constitution suggests that it should be possible to begin with that clause and then the door to amendments would be wide open. Of course, the Supreme, Court has not yet faced an amendment of this. character and it has not yet denied jurisdiction to itself. In the. United States the Constitution works because, as observed by Willis, the Supreme Court is allowed to do " 'the work of remolding the Constitution to keep it abreast with new conditions and new times, and to allow the agencies expressly endowed with the; amending process to act only in extraordinary emergencies or when, the general opinion disagrees with the opinion of the Supreme Court. " In our country amendments, so far have bean made only with the object of negativing the Supreme Court,decisions, but more of it later. I have referred to Orfield although there are greater names than his expounding the same views. I have refrained from referring to the opposite view which in the words of Willoughby has been "strenuously argued by reputable writers" although Willis discourteously referred to them in his book. My reason for not doing so is plainly this. The process of amendment in the United States is clearly not a legislative process and there is no provision like article 13 (2) under which "laws" abridging or taking away Fundamental Rights can be declared void. Our liberal Constitution has given to the Individual all that he should have freedom of speech, of association, of assembly, of religion, of motion and locomotion, of property and trade and profession. In addition it has made the State incapable of abridging or taking away these rights to the extent guaranteed, and has itself shown how far the enjoyment of those rights can be curtailed. It; has given a guaranteed right 'to the person affected to move the Court. , I le guarantee is worthless if the rights are capable of being taken away. This makes our Constitution unique and the American precedents cannot be of much assistance. (1) The Govenment of the United States (5th Edn.) p. 77. 876 The Advocate General of Madras relied upon Vedel.(1) According to Vedel, a prohibition in the Constitution against its own amendment has a political but not juridical value, and from the juridical point of view, a declaration of absolute constitutional immutability cannot be imagined. The constituent power being supreme, the State cannot be fettered even by itself. He notices, however, that the Constitution of 1791 limited the power of amendment (revision) for a certain time and that of 1875 prohibited the alteration of the Republican form of Govermment. He thinks that this hindrance can be removed by a two step amendment. He concludes that the constituent of today cannot bind the nation of tomorrow and no Constitution can prohibit its amend Of course, the French have experimented with over a dozen Constitutions, all very much alike, while the British have slowly changed their entire structure from a monarchical executive to an executive from Parliament and have reduced the power of the House of Lords. Cambell Bannerman former Prime Minister of England summed up the difference to Ambassador M. de Fleurian thus : ". Quand nous faisons une Revolution, nous ne ditruisons pas notre maison, nous en conservons avec soin la facade, et, derriere cette facade, nous reconstruisons une nouvelle maison. Vous, Francais, agissez autrement; vous jetez bas le vieil edifice et vous reconstruisez la mime maison avec une autre facade et sous un nom different." (When we make a Revolution we do not destroy an house, we save with care the facade and behind construct a new house. You, Frenchmen, act differently. You throw down the old edifice and you reconstruct the same house with a different facade and under a different name). M.de Fleurian agreed that there was a lot of truth in it (ll ya du vrai dans cette boutade) (2). But of course to a Frenchman brought up in a legal system in which the Courts do not declare even an ordinary statute to be invalid, the idea of the unconstitutionality of a constitutional amendment does not even occur. France and Belgium have created no machinery for questioning legislation and rely on moral and political sanctions. Even an English lawyer and less so an American lawyer find it difficult to understand how the legality of an amendment of the Constitution can ever be questioned. It (1) Mannual Elementaire da Droil Constitutional (Sirey) p. 117. (2) Recounted by M. de Fleuriau in the Preface to J. Magnan de Bornier, L 'Empire Britannique, son evolution politique et constitutionnelle p. 6, quoted in Wheare: The Statute of Westminster and Dominion status, P. 9 10. 877 appears to them that the procedure for the amendment being gone through there is no one to question and what emerges is the Constitution as valid as the old Constitution and just as binding. The matter, however, has to be looked at in this way. Where the Constitution is overthrown and the Courts lose their position under the old Constitution, they may not be able to pass on the validity of the new Constitution. This is the, result of a revolution pure and simple. Where the new Constitution is not accepted and the people have not acquiesced in the change and the courts under the old Constitution function, the courts can declare the new Constitution to be void. Perhaps even when the people acquiesce and a new Government comes into being, the courts may still declare the new Constitution to be invalid but only if moved to do so. It is only when the courts begin to function under the new Constitution that they cannot consider the vires of that Constitution because then they owe their existence to it. I agree with Or field in these observations taken from his book. He, however, does not include amendments of the Constitution in these remarks and expressly omits them. His opinion seems to indicate that in the case of amendments courts are completely free to see that the prescribed constitutional mode, of alteration is complied with and the alteration is within the permissive limits to which the Constitution wishes the amendments to go. This is true of all amendments but particularly of an amendment seeking to repeal the courts ' decision and being small in dimension, leaves the courts free to consider its validity. The courts derive the power from the existing terms of the Constitution and the amendment fails if it seeks to overbear some existing restriction on legislation. What I have said does not mean that Fundamental Rights are not subject to change or modification. In the most inalienable of such rights a distinction must be made between possession of a right and its exercise. The first is fixed and the latter controlled by justice and necessity. Take for example article 21 : "No person shall be deprived of his life or personal liberty except according to procedure established by law". Of all the rights, the right to one 's life, is the most valuable. This article of the Constitution, therefore, makes. the right fundamental. But the inalienable right is curtailed by a murderer 's conduct as viewed under law. The deprivation, when it takes place, is not of the right which was immutable but of the continued exercise of the right. Take a Directive Principle which is not enforceable at law but where the same result is reached. The right to employ ment is a directive principle. Some countries even view it as a Fundamental Right. The exercise, however, of that right must depend upon the capacity of Society to afford employment to all 878 and sundry. The possession of this right cannot be confused with its exercise. One right here is positive and can be enforced although its, exercise can be curtailed or taken away, the other is a right which, the State must try to give but which cannot be enforced. The Constitution permits a curtailment of the exercise of most of the Fundamental Rights by stating the limits of that curtailment. But this power does not permit the, State itself, to take away or abridge the right beyond the limits set by the Constitution. It must also be remembered that the rights of one% individual are often opposed by the rights of another individual and thus also become limitative. The Constitution in this way" permits the Fundamental Rights to be controlled in their exercise but prohibits their erasure. It is argued that such approach makes Society static and robs the State of its sovereignty. It is submitted that it leaves revolution as the holy alternative if change is necessary. This is not right. The whole Constitution is open to amendment only two dozen articles are outside the reach of article 368. That too because the Constitution has made them fundamental. What is being suggested by the counsel or the State is itself a revolution, because as things are that method of,amendment is illegal. There is a legal method. Parliament must act in a different way reach the Fundamental Rights. The State must reproduce the power which it has chosen to put under a restraint. Just as the French or the Japanese,etc. cannot change the articles of their Constitution which are, made free, from the power of amendment and ' must call a convention or a constituent body, so also we ' India cannot abridge or take away the Fundamental Rights by the ordinary amending process. Parliament must amend article 369 to convoke another Constituent Assembly pass a law under item 97 of the First List of Schedule VII to call a Constituent Assembly and then that assembly may be able to abridge or take away the Fundamental Rights if desired. It cannot be done otherwise. The majority in Sajjan Singh 's case(1) suggested bringing article 32 under the Proviso to improve protection to the Fundamental Rights. Article 32 does not stand in need of this Protection. To abridge or take away that article (and the same is true of all other Fundamental Rights) a constituent body and not a constituted body is required. Parliament today is a constituted body with powers of legislation which include amendments of the Constitution by a special majority but only so far as article 13 (2) allows. To bring into existence a constituent body is not impossible as, I had ventured to suggest during the hearing and which I have now more fully explained here. It may be said that. this is not necessary because article 368 can be amended by Parliament to confer on itself constituent powers over the Fundamental Rights. This would he wrong and against article 13 (2). Parliament cannot. increase its (1) ; 879 powers in this way and do indirectly which it is intended not to de. directly. The State does not lose its sovereignty. but as it has chosen. to create, self imposed restrictions through one constituent body those restrictions cannot be ignored by a constituted body which makes laws. Laws so made can affect those parts of the Constitution which are outside the restriction in article 13 (2) but any 'law (legislative or mendatory) passed by such a body must conform to that article. To be able to abridge, or take away the Fundamental Rights which give so many assurances and guarantees a fresh Constituent Assembly must be, convoked. Without such action the protection of the Fundamental Rights must remain immutable and any attempt to abridge or take them away in any other way must be regarded as revolutionary. I shall now consider the amendments of the Fundamental Rights made since the adoption of the Constitution, with a view to illustrating my meaning. Part III is divided under different headings. They are (a), General (b) Right to Eqility (c) Right to Freedom (d) Right against exploitation (e) Right to Freedom of Religion (f) Cultural and Educational Rights (g) Right to Property (h) Right to Constitutional Remedies. I shall first deal with amendments of topics other than the topic (g) Right to Property. 'The articles which are amended in the past are Art 15 & and 19 by the 1st Amendment (18th June 1951) and Art, 16 by the 7th Amendment (19th October 1956). The 16th Amendment added the words "the sovereignty and integrity of India to some clauses. As that does not abridge or take away any Fundamental Right, I shall not refer to the 16th Amendment hereafter. That Amendment was valid. The changes so made may be summarized. In article 15, which deals with. prohibition or discrimination on the ground of religion, race, caste, sex or place of birth, clause (3) allowed the State to make special provision for women and children. A new clause was added which reads: "(4) Nothing in this article or in clause (2) of article 29 shall prevent the State from making any special provision for the advancement of any socially and educationally backward classes of citizens or for the Scheduled Castes and the Scheduled Tribes". It is argued by counsel for the State that by lifting the ban to make special provision for backward classes of citizens, there is discrimination against the higher classes. This is the view which classes in a privileged position who had discriminated against the backward ,classes for centuries, might indeed take. But I cannot accept this contention. The Constitution is intended to secure to all citizens "Justice, social, economic and political and Equality of status and opportunity" (vide the Preamble) and the Directive Principles include article 38 which provides: 880 .lm15 "38 The State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political, shall inform all the institutions of the national life." To remove the effect of centuries of discriminatory treatment and to raise the down trodden to an equal status cannot be regarded ,as discriminatory against any one. It is no doubt true that in State of Madras vs Champakam(1) the reservation of seats for Backward Classes, Scheduled Castes and Tribes in public educational institutions was considered invalid. Articles 16(4) and 340 had already provided for special treatment for these backward ,classes and article 46 had provided that the State shall promote, with special care their educational and economic interests. With all ,due respects the question of discrimination hardly arose because in view of these provisions any reasonable attempt to raise the status of the backward classes could have been upheld on the principle of classification. In any event, the inclusion of this clause to article 16 does not abridge or take away any one 's Fundamental Rights unless the view be taken that the backward classes for ever must remain backward. By the First Amendment the second and the sixth clauses of article 19 were also amended. The original cl. (2) was substituted by a new clause and certain words were added in clause (6). The changes may be seen by comparing the unamended and the amended clauses side by side : "19( 1) All citizens shall have the right (a) to freedom of speech and expression; (2) (Before Amendment) (After Amendment) Nothing in sub clause (a) of clause (1), Nothing in sub clause (a) of clause (1)shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to libel, slander, defamation, contempt of Court or any matter which offends against decency or morality or which undermines the security or tends to overthrow, the State. shall affect the operation of any existing law, or prevent the State from making any law. in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interest of the. security of the State, friendly relations with foreign States, public order, decency or morality, or in relation to contempt of court, defamation or incitement to an offence, The amendment was necessary because in Romesh Thapar v State of Madras(2) it was held that disturbances of public tranquallity did not come within the expression "undermines the secu (1)[1951]S.C.R.525. (2) ; 881 rity of the State". Later the Supreme Court itself observed in the State of Bihar vs Shailabala Devi(1) that this Court did not intend to lay down that an offence against public order could not in any case come within that expression. The changes related to (a) "friendly relations with foreign States", (b) "public order" and (c) "incitement to an offence" and the words ."undermines the security of the State or tends to, overthrow the State". were replaced by the words "in the interests of the security of the State". This change could be made in view of the existing provisions of the clause as the later decision of this Court above cited 'clearly show that "public order" and "incitement to offence" were already comprehended. The amendment was within the permissible limits as it did not abridge or take away any Fundamental Right. The Amending Act passed by Parliament also included a sub section which read "(2) No law in force in the territory of India, immediately before the commencement of the Constitution which is consistent with the provisions of article 19 of the Constitution as amended by sub section (1) of this section shall be deemed to be void, or ever to have become void, on the ground only that being a law which takes away or abridges the right conferred by sub clause (a) of clause ( I ) of the said article, its operation was not saved by clause (2) of that article as originally enacted. Explanation. In this sub section, the expression "law in force" has the same meaning as in clause (1) of article 1 3 of this Constitution". This sub section was not included in the Constitution. That device was followed in respect of certain State statutes dealing with property rights by including them in a now Schedule. It did not then occur to Parliament that the laws could be placed. under a special umbrella of constitutional protection. Perhaps it was not considered ' necessary because article 19(2) was retrospectively changed, and the, enactment of this sub section was an ordinary legislative action. If the amendment had failed, the second subsection of section 3 would not have availed at all. Tuming now to clause (6), we may read the original and the amended clause side by side "19(1) All citizens shall have the right= (g) to practise any profession, or to carry on any occupation, trade or business. (1) ; 882 (6) (Before, Amendment) Nothing, in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause, and, in particular nothing in the said sub clause, shall affect the operation of any existing law in so far as it prescribes or empowers any authority to prescribe, or prevent the State from making any law prescribing or empowering any authority to prescribe, the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business. (After Amendment) Nothing in sub clause (g) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the said sub clause, and, in particular, nothing in the said sub clause, shall affect the operation of any existing law in so far as it relates to, or prevent the State from making any law relating to, (i)the professional or technical qualifications necessary for practising any profession or carrying on any occupation, trade or business, or (ii)the carrying on by the State, or a corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise, The first change is in the verbiage and is not one of substance. It only removes some unnecessary words. The new sub clause is innocuous except where it provides for the exclusion of citizens. It enables nationalisation of industries and trade. Sub clause (g) (to the generality of which the original clause (6) created some exceptions) allowed the State to make laws imposing, in the interests of the general public, reasonable restrictions on the exercise of the right conferred by the sub clause. A law creating restrictions can, of course, be made outside the Constitution or inside it. If it was considered that this right in the state was required in the interests of the general public, then the exercise of the right to practise profession or to carry on an occupation, trade or business could be suitably curtailed. It cannot be said that nationalisation is never in the interest of the general public. This amendment was thus within the provision for restricting the exercise of the Fundamental Right in sub cl. (g) and was perfectly in order. The Seventh Amendment introduced certain words in article 16 (3). 'no clauses may be, compared: " 16. (3) (Before Amendment) Nothing in this article shall prevent Parliament from making any law prescribing, in regard to a class or classes of employment or appointment to an office under any State specified in the First Schedule or any local or other authority within its territory, any requirement as to residence within the 'State prior to such employment or appointment. (After Amendment) Nothing in this article shall prevent Parliament from making any law prescribing, in regard to a class or classes of employment or appointment to an office under the Government of, or any local authority within, a State or Union territory, any requirement as to residence within that State or Union territory prior to such employment or appointment. " 883 The change, is necessary to include a reference to Union territory. It has no breaking upon Fundamental Rights., and, neither abridges nor, takes away any of them. In the result none of the, amendments, of the article. in parts other than that dealing with Right to property is, outside the amending process because article 13(2) is in no manner breached. This brings me, to the main question in this case,, It is whether the amendments of the part Right to Property in Part, III of the Constitution were legally made or not. To understand this part of the case I must first begin by discussing what property rights mean and how they were safeguarded by the Constitution as it was originally framed. "Right to Property"in Part III was originally the subject of one article, namely, article 31. Today there are three articles 3 1, 3 1 A and 31 B and the Ninth Schedule. The original thirty first article read: "31 Compulsory acquisition of property. (1) Nov person shall be deprived of his property save by authority of law. (2) 'No property, movable or immovable, including any interest in or in any company owning, any commercial or industrial undertaking, shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principle on which, and the manner. in which, the compensation is, to be determined and given. No such law as is referred to in clause. (2) made by the Legislature of the State shall have effect unless such law, having been reserved for the consideration of the President, has received his assent. (4) If any Bill pending at the commencement of this Constitution in the Legislature of a State has, 'after it has been passed by such Legislature, been reserved for the consideration of the President and has received his assent, then, notwithstanding anything in this constitution, the law so assented to shall not be Called in question in any, court on the ground that it contravenes the provisions of clause (2). (5) Nothing in clause(2) shall affect (a) the provisions of any existing law other than a law to which the provisions of clause (6) apply,.or 884 (b) the provisions of any law which the State may hereafter make (i) for the ,purpose of imposing or levying any tax or penalty, or (ii) for the promotion of public health or the prevention of danger to life or property, or (iii) in pursuance of any agreement entered into between the Government of the Dominion of India or the Government of India and the Government of . any other country, or otherwise, with respect to property declared by law to be evacuee property. (6) Any law of the State enacted not more than eighteen months before the commencement of this Constitution may within three months from such commencement be submitted to the President for his certification; and thereupon, if the President by public notification so certifies, it shall not be called in question in any court on the ground that it contravenes the provisions of clause (2) of this article or has contravened the provisions of sub section (2) of section 299 of the Government of India, Act, 1935". The provisions of this article are intended to be read with article 19(1) (f) which reads "19(1) All citizens shall have the right (f) to acquire, hold and dispose of property". Article 19 1 ) (f ) 'is subject to clause (6) which I have already set out elsewhere and considered. Ownership and exchange of property are thus recognised by the article. The word "property" is is not defined and I shall presently consider what may be included in 'property '. Whatever the nature of property, it is clear that by the first clause of article 3 1 the right to property may be taken away under authority of law. This was subject to one condition under the original article 3 1, namely, that the law must either fix the compensation for the deprivation or specify the principles on which and the manner in which compensation was to, be determined and given. This was the heart of the institution 'of property as understood by the Constituent Assembly. The rest of the article only gave constitutional support against the second clause, to legislation already on foot in the States. This created a Fundamental Right in property. The question may now be 885, asked,:why was it necessary to make such a Fundamental Right at all ? There is no natural right in property and as Burke said in his Reflections, Government is not made in virtue of natural rights, which may and do exist in total independence of it. Natural rights embrace activity outside the status of citizen. Legal rights are required for free existence as a social being and the State undertakes to protect them. Fundamental Rights are those rights which the State enforces against itself. Looking at the matter briefly but historically, it may be said that the Greeks were not aware of these distinctions for as Gierke(1) points out they did not distinguish between personality as a citizen and personality as a human being. For them the Individual was merged in the citizen and the citizen in the State. There was personal liberty and private law but there was no sharp division between the different kinds of laws. The Romans evolved this gradually not when the Roman Republic existed, but when the notion of a Fiscus developed in the Empire And the legal personality of the Individual was separated from his membership of the State. It was then that the State began to recognize the rights of the Individual in his dealings with the State. It was Cicero(2) who was the first to declare that the ' primary duty of the Governor of a State was to secure to each individual in the possession of his property. Here we may see a recognition of the ownership of property as a Fundamental Right. This idea wasso engrained in early social philosophy that we find Locke opining in his Civil Government ' (Ch. 7) that "Government has no other end but the preservation of property". The concepts of liberty, equality and religious freedom were well known. To them was added the concept of property rights. Later the list included "equalitas, libertas ius securitatis, ius defensionis and ius puniendi. The concept of property right gained further support from Bentham and Spencer and Kant and Hegel(3). The term property in its pristine meaning embraced only land but it soon came to mean much more. According to Noyes(4)_ "Property is any protected right or bundle of rights (interest or thing) with direct, or indirect regard to any external object (i.e. other than the person himself) which is material or quasi material (i.e. a protected ,process) and which the then and there Organisation of Society permits to be either private or public, which is connoted by the legal concepts of occupying, possessing or, using". (1) Das Doutscheg Genossenschaftrecht (III, 10). (2) De Off. (The Offices) It Ch. XXI (Everyman) p. 105. (3) W. Friedman:Legal Theory (4th Edn.) see pp. 373 376. (4) The Institution of Property (1936) p. 436. L3Sup CI/67 11 886 The right is enforced by excluding entry or interference by a per. son not legally entitled. The position of the State vis a vis the individual is the subject of articles 19 and 31, 31 A and 31 B. Now in the enjoyment, the ultimate right may be an interest which is connected to the object through a series of intermediaries in which each 'holder ' from the last to the first 'holds of ' 'the holder ' before him. Time was when there was a lot of 'free property ' which was open for appropriation. As Noyes( ') puts it, "all physical manifestations capable of being detected, localised and identified" can be the objects of property. One exception now made by all civilized nations is that humanbeings are no longer appropriable. If any free property was available then it could be brought into possession and ownership by mere taking. It has been very aptly said that all private property is a system of monopolies and the right to monopolise lies at the foundation of the institution of property. Pound( ) in classifying right in rem puts private property along with personal integrity [right against injury to life, body and health (bodily or mental), personal liberty (free motion and locomotion)], Society and control of one 's family and dependents. An extremely valuable definition of ownership is to be found in the Restatement of the Law of Property where it is said : "It is the totality of rights as to any specific objects which are accorded by law, at any time and place, after deducting social reservations". This is the core from which some rights may be detached but to which they must return when liberated. The right to property in its primordial meaning involved the acquisition, of 'a free object by possession and conversion of this possession into ownership by the protection of State or the ability to exclude interference. As the notion of a State grew, the right of property was strong or we according to the force of political opinion backing it or the legislative support of the State. The English considered the right as the, foundation of society. Blackstone(&) explained it on religious; and social ground% claiming universality for it and called it the right of the English people. William ' Paley(4),although he thought the institution paradoxical and unnatural found it full of advantage and Mackintosh in his famous diatribe against the French Revolution described it as the "sheet anchorof society". This in"stitution ' appeared in the Magna Carta, in the American Declaration of Independence and the French Declaration of Rights of Man. Later we find it in many (1) The Institution of Property (1936)p. (2) Readings; p. 420. 3) Commentaries. (4) Moral Philosophy. 887 Constitutions described as Fundamental, general and guaran teed(1). Our Constitution accepted the theory that Right of Property is a fundamental right. In my opinion it was an error to place it in that category. Like the original article 16 of the Draft Bill of the Constitution which assured freedom of trade, commerce and intercourse within the territory of India as a fundamental right but was later removed, the right of property should have been placed in a different chapter. Of all the fundamental rights it is the weakest. Even in the most democratic of Constitutions, (namely, the West German Constitution of 1949) there was a provision that lands, minerals and means of production might be socialised or subjected to control. article 31, if it contemplated socialization in the same way in India should not have insisted so plainly upon payment of compensation. Several speakers warned Pandit Nehru and others of the danger of the second clause of article 31, but it seems that the Constituent Assembly was quite content that under it the Judiciary would have no say in the matter of compensation. Perhaps the dead hand of section 299 of the Constitution Act of 1935 was upon the Constituent Assembly. Ignored were the resolutions passed by the National Planning Committee of the Congress (1941) which had advocated the co operative principle for exploitation of land, the Resolution of 1947 that land with its mineral resources and all other means of production as well as distribution and exchange must belong to and be regulated by the Community, and the warning of Mahatma Gandhi that if compensation had to be paid we would have to rob Peter to pay Paul(2) In the Constituent Assembly, the Congress (Which wielded the majority then, as it does today) was satisfied with the Reprt of the Congress Agrarian Reforms Committee 1949 which declared itself in favour of the elimination of all intermediaries between the State and the tiller and imposition of prohibition against subletting. The Abolition Bills were the result. Obviously the Sardar Patel Committee on Fundamental Rights was not prepared to go far. In the debates that followed, many amendments and suggestions to alter the draft article protecting property, failed. The attitude was summed up by Sardar Patel. He conceded that land would be required for public purposes but hopefully added : "not only land but so many other things may have to be acquired. And the State will acquire them after paying compensation and not expropriate thenm". (3) (1) Under the Constitution of Norway the rights (Odels and Asaete rights) cannot be abolished but if the State requires the owner must surrender the property and he is compensated. (2) Gandhi : Constituent Assembly Debates Vol. IX pp. 1204 06. (3) Patel : Constituent Assembly Debates Vol. I p. 517. 888 What was then the theory about Right to Property accepted by the Constituent Assembly ? Again I can only describe it historically. Grotius(1) had treated the right as acquired right (ius quaesitum) and ownership (dominium) as either serving individual interests (vulgare) or for the public good (eminens). According to him, the acquired right had to give way to eminent domain (ex vi auper eminentis dominii) but there must be public interest (publicautilitas) and if possible compensation. In the social contract theory also . the contract included protection of property with recognition of the power of the ruler to act in the public interest and emergency. Our constitutional theory treated property rights as inviolable except through law for public good and on payment of compensation. Our Constitution saw the matter in the way of Grotius but overlooked the possibility that just compensation may. not be possible. It follows almost literally the German jurist Ulrich Zasius (except in one respect) : Princeps non potest auferee mihi rem mean sive iure gentium, sive civile sit facta mea. All would, have been well if the Courts had construed Article 31 differently. However, the decisions of the High Courts and the Supreme Court, interpreting and expounding this philosophy took a different view of compensation. I shall refer only to some of them. , First the Patna High Court in. Kameshwar vs Bihar(2) applied article 14 to strike down the Reforms Act in Bihar holding it to be discriminatory. This need not have occasioned an amendment because the matter could have been righted, as indeed it wag, by,an appeal to the Supreme Court [see State of Bihar vs Kameshwar(3)].The Constitution (First Amendment) Act, 1951 followed. It left article 31 intact but added two fresh articles, articles 31 A and 31 B which are respectively headed "saving of laws providing for acquisition of estates etc." and "Validation of certain Acts and Regulations" and added a schedule (Ninth) to be read with Art 31 B naming thirteen Acts of the State Legislatures. Article 31 A was deemed always to have been inserted and article 31 B wiped out retrospectively all decisions of the courts which had. declared any of the scheduled Acts to be invalid. The texts of these new articles may now be seen: "31A. Saving of laws providing for acquisition of estates, etc. (1) Notwithstanding anything in foregoing provisions of this Part, no law providing for the acquisition by the State of any estate or of any rights therein or for (1) Grotius : De jure Belli ac Pacis. 11 c. 2 2 (5)6. 1 c. I 6 and II c. 14 7 and 8. (2) A.L.R. 1951 Patna 91. (3) 889 the extinguishment or modification of any such rights shall be deemed to be void on the: ground that it is consistent with, or takes away or abridges any of the rights conferred by, any provisions of this Part Provided that where such law is a law made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved for the consideration of the President, has received his assent. (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 any jagir, inam or muafi or other similar grant; (b) the expression "right" in relation to an estate shall include 'any rights vesting in a proprietor, sub proprietor, tenure holder or other intermediary and any rights or privileges in respect of land revenue." "31 B. Validation of certain Acts and Regulations. Without prejudice to the generality of the provisions contained in article 31A, none of the Acts and Regulations specified in the Ninth Schedule nor any of the provisions thereof shall be deemed to be void, or ever to have become void, on the ground that such Act, Regulation or provision is inconsistent with, or takes away or abridges any of the rights conferred by, any provision of this Part, and notwithstanding any judgment, decree or order of any court or tribunal to the, contrary, each of the said Acts and Regulations shall, subject to the power of any competent Legislature to repeat or amend it, continue in force '. " Article 31 A has been a Protean article. It has changed its face many times. Article 31 B has remained the same till today but the Ninth Schedule has grown. The Constitution (Fourth Amendment) Act, 1955, took the number of the Scheduled statutes to 20 and the Constitution (Seventeenth Amendment) Act, 1964 to 64 and a so called explanation which saved the application of the Proviso in article 31 A, was also added. The device [approved by Sankari Prasad 's case(1)] was,found so (1) ; 890 attractive that many more Acts were sought to be included but were dropped on second thoughts. Even so, one wonders how the , The West Bengal Land Development and Planning Act and some others could have been thought of in this connection. By this device, which can be extended easily to other spheres, the Fundamental Rights can be completely emasculated by a 2/3 majority, even though they cannot be touched in the ordinary way by a unanimousvote of the same body of men! The State Legislatures may drive a coach and pair through the Fundamental Rights and the Parliament by 2/3 majority will then put them outside the jurisdiction of the courts. Was it really intended that the restriction against the State in articles 13(2) might be overcome by the two agencies acting hand in hand ? Article 3 1 A dealt with the acquisition by the State of an .estate ' or of any rights therein or the extinguishment or modification of any such rights. A law of the State could do these with the President 's assent, although,it took away or abridged any of the rights conferred by any provisions of Part Ill. The words 'estate ' and 'rights in relation to an estate ' were defined. The constitutional amendment was challenged in Sankari Prasad 's case(1) on various grounds but was upheld mainly on two grounds to which I objected in Sajjan Singh 's case(2). I have shown in this judgment, for reasons which I need not repeat and which must be read in addition to what I said on the earlier occasion, that I disagree respectfully but strongly with the view of the Court in those two cases. This touches the first part of the amendment which created Art.31 A. I do not and cannot question Art.31 A because (a) it was not considered at the hearing of this case, and (b) it has stood for a long time as part of the Constitution under the decision of this Court and has been acquiesced in by the people. If I was free I should say that the amendment was not legal and certainly not justified by the reasons given in the earlier cases of this Court. Under the original article 31, compensation had to be paid for acquisition by the State. This was the minimum requirement of article 31 (1) and (2) and no amendment could be made by a constituted parliament to avoid compensation. A law made by a constituted Parliament had to conform to article 13(2) and article 31 could not be ignored. In 1954 the Supreme Court in a series of cases drew the dis tinction between article 19(1)(f) and article 31, particularly in West Bengal vs Subodh Gopal(3), Dwarkadas Srinivas vs Sholapur Spinning Co. (4). In State of I West Bengal vs Mrs. Bela Banerjee and Others(5), this Court held a compensation in article 31(2) meant (1) ; (2) ; (3)[1954] S.CR. (4) ; (5) 891 just equivalent, i.e. full and fair money equivalent ' thus making the adequacy of compensation justiciable. The Constitution (Fourth Amendment) Act, 1955 then amended both article 31 and article 31 A. Clause (2) of article 31 was substituted by "(2) No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and other fixes the amount of the compensation or specifies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be called in question in any court on the ground that the compensation provided by that law is not adequate". The opening words of the former second clause were modified to make them more effective but the muzzling of courts in the matter of adequacy of the compensation was the important move. As Basu says : "It is evident that the 1955 amendment of clause (2) eats into the vitals of the constitutional mandate to pay Compensation and demonstrate a drift from the meetings of the American concept of private Property and judicial review to which our Constitution was hitherto tied, to that of socialism. "(1) It is appropriate to recall here that as expounded by Professor Beard (2) (whose views offended Holmes and the Times of New York but which are now being recognised after his further explanation(3) the Constitution of the United States is an economic document prepared by men who were wealthy or allied with property rights, that it is based on the concept that the fundamental rights of property are anterior to Government and morally beyond the, reach of popular majorities and that the Supreme Court of the United States preserved the property rights till the New Deal era. The, threat at that time was to enlarge the Supreme Court but not to amend the Constitution. It appears that the Indian Socialists charged with the idea of Marx, the Webbs, Green, Laski and others viewed property rights in a different way. Pandit Nehru once said that he had no property sense,meaning that he did not value property at all. The Constitution seems to have changed its property significantly. In addition to avoiding (1) Basu : commentaries on the Constitution of India (5th Edn.) Vol. 2 p. 230. (2) An Economic Interpretation of the United States Constitution (3) See Laski : The American democracy; Weaver : Constitutional Law, Brown: Charles Beard and the constitution; will is constitutional Law. 892 the concept of just compensation, the amendment added a new clause (2A) as follows : "(2A) Where a law does not provide for the transfer of the ownership or right to possession of, any property to the State or to a corporation owned or control led by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that ' it deprives any person of his property." This narrowed the field in which compensation was payable. In addition to this, clause (1) of article 31 A was substituted and was deemed to be always substituted by a new clause which provided: "(1) Notwithstanding anything contained in article 13, no law providing for (a) the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights, or (b) the taking over of the management of any property by the State for a limited period either in the public interest 'or in order to secure the proper management of the property, or (c) amalgamation of two or more corporations either in the public interest or in order to secure the proper management of any of the corporation, or (d) the extinguishment or modification of any rights of 'managing agents secretaries and treasurers, managing directors, directors or managers of corporations, or of any voting rights of shareholders thereof, or (e) the extinguishment or modification of any rights accruing by virtue of any agreement, lease or licence for the purpose of searching for, or winning, any mineral or mineral oil, or the premature termination or cancellation of any such agreement, lease or licence, shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31 Provided that where such law is a law made by the Legislature of a State, the provisions of this article shall not apply thereto unless such law, having been reserved 893 for the consideration of the President, has received assent." In clause (2)(a) after the word 'grant ', the words "and in any State of Madras and Travancore Cochin any, Janmam right" were inserted 'and deemed always to have been inserted and in clause (2) (b) after the words 'tenure holder ' the words "raiyat, under raiyat" were inserted and deemed always to have been inserted. Once again the reach of the State towards private property was made longer and curiously enough it was done retrospectively from the time of the Constituent Assembly and so to speak, in its name. As to the retrospective operation of these, Constitutional amendment. I entertain considerable doubt. A Constituent Assembly makes a new Constitution for itself. Parliament is not even a Constituent Assembly and to. abridge fundamental rights in the name of the Constituent Assembly appears anomalous. I am reminded of the conversation between apo leon and Abe . Sieyes, the, great jurist whose ability to draw up one Constitution after another has been recognised and none of whose efforts lasted for long. When Napoleon asked him "what has survived ?" Abe Sieyes answered "I have survived". I wonder if the Constituent Assembly will be able to say the same thing What it had written or the, subject of property rights, appears to have been written on water. The Fourth Amendment served to do away with the distinction made by this Court between articles 19 and 31 and the theory of just compensation. The Fourth Amendment has not been challenged before us. Nor was it challenged at any time before. For the reasons for which I have declined to consider the First Amendment I refrain from considering the validity of the Fourth Amendment. It may, however, be stated here that if I was free to consider it,, I would have found great difficulty in accepting that the constitutional guarantee could be abridged in this way. I may say here that the method I have followed in not recon , sidering an amendment which has stood for a long time, was also invoked by the Supreme Court of United: States in Leser vs Garnett(1). A constitution works only because of universal recognition. This recognition may. be voluntary or forced where people have lost liberty of speech. But the acquiescence of the people is necessary for the working of the Constitution. The examples of our neighbours, of Germany, of Rhodesia and others illustrates the recognition of Constitutions by acquiescence. It is obvious that it is good sense and sound policy for the 'Courts to decline to take 'up an amendment for consideration after a considerable lapse of time when it was not challenged before, or was sustained on an earlier occasion after challenge. (1) ; 894 It is necessary to pause here and see what the property rights have become under the repeated and retrospective amendments of the Constitution. I have already said that the Constitution started with the concept of which, Grotius may ' be said to be the author, although his name is not particularly famous for theories of constitutional or municipal laws. The socialistic tendencies which the amendments now manifest take into consideration some later theories about the institution of property. When the original article 31 was moved by Pandit Jawaharlal Nehru, he had described it as a compromise between various approaches to the question and said that it did justice and equality not only to the individual but also to the community ' He accepted the principle of compensation but compensation as determined by the Legislature and not the Judiciary. His words were "The law should do it. Parliament should do it. There is no reference in this to any judiciary coming into the picture. Much thought has been given to it and there has been much debate as to where the judiciary comes in. Eminent lawyers have told us that on a proper construction of this clause, normally speaking the judiciary should not come in. Parliament fixes either the compensation itself or the principle governing that compensation and they should not be challenged except for one reason, where it is thought that there has been a gross abuse of the law, where, in fact, there has been a fraud on the Constitution. Naturally the judiciary comes in to see if there has been a fraud on the Constitution or not. "(1) He traced the evolution of property and observed that property was becoming a question of credit, of monopolies, that there were two approaches, the approach of the Individual and the approach of the community. He expressed for the for protection of the indi vidual 's rights.(2) The attitude changed at the time of the First Amendment. Pandit Nehru propheised that the basic problem would come before the House from time to, time. That it has, there is no doubt, just as there is no doubt that each time the individual 's rights have suffered. Of course, the growth of collectivist theories have made elsewhere considerable inroads into the right of property. In Russia there is no private ownership of. land and even in the Federal Capital Territory of Australia, the ownership of land is with the Crown and the individual can get a leasehold right only. Justification for this is found in the fact that the State must benefit from (1) Constituent Assemembly Debates Vol. IX pp. 1193 1195. (2) Constituent Assembly Debates Vol. IX p. 1135. 895 the rise in the value of land. The paucity of land and of dwelling houses have led to the control of urban properties and creation of statutory tenancies. In our country a ceiling is put on agricultural land held by an individual. The Supreme Court, in spite of this, has not frustrated any genuine legislation for agrarian reform. It has upheld the laws by which the lands from latifundia have been distributed among the landless. It seems that as the Constitutions of Peru, Brazil, Poland, Latvia, Lethuania and Mexico contain provisions for such reforms, mainly without payment of compensation, our Parliament has taken the same road. Of course, the modem theory regards the institution of proper on a functional basis(1) which means that property to be productive must be property distributed. As many writers have said property is now a duty more than a right and ownership of property entails a social obligation. Although Duguit(2), who is ahead of others, thinks that the institution of property has undergone a revolution, the rights of the Individual are not quite gone, except where Communism is firmly entrenched. The rights are qualified but property belongs still to the owner. The Seventeenth Amendment, however, seems to take us far away, from even this qualified concept, at least in so far as "estates" as defined by article 31 A. This is the culmination of a process. Previous to the Constitution (Seventeenth Amendment) Act the Constitution (Seventh Amendment) Act, 1956 had given power indirectly by altering entry No. 42 in List III. The entries may be read side by side : "42. (Before Amendment) (After Amendment) Principles on which compensation for Acquisition and requisitioning, of pro property acquired or requisitioned for perty. 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 to be given. " This removed the last reference to compensation in respect of acquisition and requisition. What this amendment began, the Constitution (Seventeenth Amendment) Act, 1964 achieved in full. The Fourth Amendment had added to the comprehensive definition of 'right in relation to an estate, the rights of raiyats and under raiyats. This time the expression 'estate ' in article 31 A was amended retrospectively by a new definition which reads: "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 (1) See G.W. Paton : Text Book of Jurisprudence (1964) pp. 484 485. (2) Transformations du droit prive. 896 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, land for pasture or sites of buildings and other structures occupied by cultivators of land, agricultural labourers and village artisans," The only saving of compensation is now to be found in the second proviso added to clause (1) of the article which reads "Provided further that, where any law makes any provision for the acquisition by the State of any estate. and where any land comprised therein is held by a per , son under his personal cultivation, it shall not be lawful for the State to acquire any portion of such land as is within the ceiling limit applicable to him under any law for. the time being in force or any building or structure standing thereon or appurtenant thereto, unless the law relating to the acquisition of such land, building or structure, provides for payment of compensation at a rate which shall not be less than the market value thereof. " There is also the provision for compensation introduced indirectly in an Explanation at the end of the Ninth Schedule, in respect of the Rajasthan Tenancy Act, 1955. By this explanation the provisions of this Tenancy Act in conflict with the proviso last last quoted are declared to be void. The sum total of this amendment is that except for land within the ceiling,all other land can be acquired ed or rights therein extinguished or modified without compensation and No. challenge to the law can be made under articles 14, 19 or 31 of the Constitution. The same is also true of the taking over: of 'the management of any property by the State for a limited period either in the public interest or in order to secure the proper management of the property, or the amalgamation of two or more companies, or the extinguishment or modification of any rights of managing agents,, secretaries, treasurers, managing directors, directors or managers, of corporations or of any voting right, of shareholders thereof any rights by virtue of an), agreement, lease, or licence for the purpose of searching for, or winning, any mineral or mineral oil, or of the premature 897 termination. or cancellation of any such agreement, lease or licence. It will be noticed further that deprivation of property of any person is not to be regarded as acquisition or requisition unless the benefit of the transfer of the ownership or right to possession goes to the State or to a corporation owned or controlled by the State. Acquisition or requisition in this limited sense alone requires that it should be for public purpose and under authority of law which fixes the compensation or lays down the principles on which and. the manner in which compensation is to be deter mined. and given, and the adequacy of the compensation cannot be any ground of attack. Further still acquisition of estates and of rights therein and the taking over of property, amalgamation of corporations, extinguishment or modification of rights in companies and mines may be made regardless of articles 14, 19 and 31. In addition 64 State Acts are given special protection from the courts regardless of therein contents which 'may be in derogation of the Fundamental Rights. This is the kind of amendment which has been upheld in Sajjan Singh(1) case on the theory of the omnipotence of article 368. The State had bound itself not to ' enact any law in derogation of Fundamental Rights. Is the Seventeenth Amendment a law ? To this question my answer is a categoric yes. It is no answer to gay that this is an amendment and; therefore; not a law, or that it is passed by a special power of voting. It is the action of the State all the same. The State had put restraints on itself in law making whether the laws were made without Dr. within the Constitution. it is also ' no answer to say that this Court in a Bench of five Judges on one, occasion and by a majority of 3 to 2 on another, has said the,same thing. In a. matter of the interpretation of the Constitution this Court must,look at the functioning of the Constitution as a whole. The rules of res indicate and stare decisis are not, always appropriate in interpreting a Constitution, particularly when article 13(2) itself declares a law to be void. The sanctity of a former judgment is for the matter then decided . In Plessy vs Fergusson(2), Harlan, J. alone, dissented against the "separate but equal doctrine uttering the memorable words that there was no caste and that the Constitution of the United States was 'colour blind. This dissent made some Southern Senators to oppose his grandson (Mr. Justice John Marshall Harlan) in 1954. It took fifty eight years for the words of Harlan, J. 's lone dissent (8 to 1) to become, the law of the united states at least in respect of segregation in the public schools [See Brown vs Board of Education(3)]. As Mark Twain (1) (1965] 1 section C. R. 933. (2)163 U. section 537. (3) ; 898 said very truly "Loyality to a petrified opinion never yet broke a chain or freed a human soul" I am apprehensive that the erosion of the right to property may be practised against other Fundamental Rights. If a halt is to be called, we must declare the right of Parliament to abridge or take away Fundamental Rights. Small inroads lead to larger inroads and become as habitual as before our freedom won The history of freedom is not only how freedom is achieved but how it is preserved. I am of opinion that an attempt to abridge or take away Fundamental Rights by a constituted Parliament even through an amendment of the Constitution can be declared void. This Court has the power and jurisdiction to make the declaration. I dissent from the opposite view expressed in Sajjan Singh 's(1) case and I overrule that decision. It remains to consider what is the extent of contravention. Here I must make it clear that since the First, Fourth and Seventh Amendments are not before me and I have not, therefore, questioned them, I must start with the provisions of articles 31, 31 A, 31 B, List III and the Ninth Schedule as they were immediately preceding the Seventeenth Amendment. I have elsewhere given a summary of the inroads made into property rights of individuals and Corporations by these earlier amendments. By this amendment the definition of 'estate ' was repeated for the most part but was extended to include: "(ii) any land held under ryotwari settlement; (iii) any land held or let for purposes ancillary thereto, including waste land, forest land, land for pasture or sites of buildings and other structures occupied by cultivators of land, agricultural labourers and village artisans." Further reach of acquisition or requisition without adequate compensation and without a challenge under articles 14, 19 and 31 has now been made possible. There is no kind of agricultural estate or land which cannot be acquired by the State even though it pays an illusory compensation. The only exception is the second proviso added to article 31 A(1) by which, lands within the ceiling limit applicable for the time being to a person personally cultivating his land, may be acquired only on paying compensation at a rate which shall not be less than the market value. This may prove: to be an illusory protection. The ceiling may be lowered by legislation. The State may leave the person an owner in name and acquire all his. other rights. The latter question did come before this Court in two cases Ajit Singh vs State of Punjab (2) (1) (1965] 1 & C. R. 933 (2) ; 899 and Bhagat Ram and Ors. vs State of Punjab, and Ors. (1) decided on December 2, 1966. My brother Shelat and, I described the device as a fraud upon this proviso but it is obvious that a law lowering the ceiling to almost nothing cannot be declared a fraud on the Constitution. In other words, the agricultural landholders hold land as tenants at will. To achieve this a large number of Acts of the State Legislatures have been added to the Ninth Schedule to bring them under the umbrella of article 31 B. This list may grow. In my opinion the extension of the definition of 'estate ' to include ryotwari and agricultural lands is an inroad into the Fundamental Rights but it cannot be questioned in view of the existence of article 31 A(1) (a) as already amended. The constitutional amendment is a law and article 31 (I) permits the deprivation of property by authority of law. The law may be made outside the Constitution or within it. The word 'law ' in this clause includes both ordinary law or an amendment of the Constitution. Since "no law providing for the acquisition by the State of any estate or of any rights therein or the extinguishment or modification of any such rights shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31", the Seventeenth Amendment when it gives a new definition of the word 'estate cannot be questioned by reason of the Constitution as it exists. The new definition of estate introduced by the amendment is beyond the reach of the courts not because it is not law but because it is "law" and falls within that word in article 31 (1) (2) (2 A) and article 31 A(1). 1, therefore, sustain the new definition, not on the erroneous reasoning in Sajjan Singh 's case (2 ) but on the true construction of the word 'law ' as used in articles 13(2), 31(1)(2 A) and 31 A(1). The above reason applies a fortiori to the inclusion of the proviso which preserves (for the time being) the notion of compensation for deprivation of a cultural property. The proviso at least saves something. It prevents the, agricultural lands below the ceiling from being appropriated without payment of pro per compensation. It is clear,that the proviso at least cannot be held to abridge or take away fundamental rights. In the result I uphold the second section of the Constitution (Seventeenth Amendment) Act, 1964. This brings me to the third section of the Act. That does no more than add 44 State Acts to the Ninth Schedule. The object of article 31 B, when it was enacted, was to save certain State Acts notwithstanding judicial decision to the contrary. These Acts were already protected by article 31. One can with difficulty understand such a provision. Now the Schedule is being used to (1) 11967] 2 section C. R. 165. (2) ; 900 give advance protection to legislation which is known appre hended to derogate from the Fundamental Rights. The power under article 368, whatever it may be, was given to amend the Constitution. Giving. protection to statutes of State Legislatures which offend the Constitution in its most fundamental part, can hardly merit the description amendment of the Constitution in fact in so cases it is not even known whether the statues in question stand in need of such aid. The intent is to silence the courts and not to amend the Constitution. If these Acts were ', not included in the Schedule they would have to face the Fundamental Rights and rely on articles 31 and 31 A to save them. By this device protection far in excess of 'these articles is afforded to them. This in my judgment is not a matter of amendment at all. The power which is given is for the specific purpose of amending the Constitution and not to confer validity on State Acts against the rest of the Constitution. If the President 's assent did not do this, no more would this section. I consider section 3 of the Act., to be invalid as an illegitimate exercise of the powers . of amendment however generous. Ours is the only Constitution in the world which carries a long list of ordinary laws which it protects against itself,. In the result I declare section 3 to be ultra vires the amending process. As stated by me in Sajjan Singh 's case(1) article 368 outlines process, which if followed strictly results in the amendment of the Constitution. The article gives power to no particular person or persons. All the named authorities have to act according to the letter of the article to achieve the result. The procedure of, amendment, if it can be called a 'power at all is a legislative power but it is sui generi and outside the three lists in Schedule 7 of the Constitution. 'It does 'not ' have to depend. upon any entry,in the lusts. Ordinarily there would be no limit to the extent of the , amendatory legislation but. the Constitution itself makes distinctions. It states three methods and places certain bars. For some amendments an ordinary, majority fs sufficient; for some others 'a 2/3rd majority of the, members present and voting with a majority of the total members, in each House is necessary: and for some others in addition to the second requirement, ratification by at least one,half of the legislatures of the States must be forthcom ing. Besides these methods, article 13(2) puts an embargo on the legislative power of the State and consequently upon the agencies of the State. By its means the boundaries of legislative action of any of including legislation to amend the Constitution have been marked out. (1) [1965]1 S.C.R 933. 901 I have attempted to show hem that under our Constitution revolution is not the only alternative to change of Constitution under article 368. A Constitution can. be changed by consent or, revolution Rodee, Anderson and Christol (1) have shown the sovereignty of the People is either electoral or constituent. When the People elect the Parliament and the Legislatures they exercise their electoral sovereignty. I includes some constituent sovereignty also but only in so far as conceded. The remaining constituent sovereignty which is contained in the Preamble and Part III is in abeyance because of the curb placed by the People on the state under article 13(2). It is this power which can be reproduced. I have indicated the method. Watson(2) quoting Ames On Amendments p. 1 note 2) points out that the idea that provision should be made in the instrument of Government itself for the method of its amendment is peculiarly American. But even in the Constitution of the United States of America some matters were kept away from the amendatory process Other temporarily or permanently. Our Constitution has done the same . Our Constitution provides for minorities, religions, socially and educationally backward peoples, for ameliorating the condition of depressed classes, for removing class distinctions, titles, etc. This reservation was made so that in the words of Madison(3), men of factious tempers, of local prejudices, or sinister designs may not by intrigue, by corruption, or other means , first obtain the suffrages and then betray the interests of the people. It was to plug the loophole such as existed in section 48 of the Weimar Constitution( 4) that article 13 (2) was. adopted. of course, as. Story( ' ') says, an amendment process is a safety valve to, let off all temporary effervescence and excitement, as an effective instrument to control and adjust the Movements of the machinery when out of order or in danger of self d tion but is not an open valve to let, out ' even that which was intended to be retained. In the words of Wheare(6) the people or a Constituent Assembly acting on their behalf, has authority to enact a Constitution and by the same token a portion of the Constitution placed outside the amenditory process by one Constituent body can only be amended by another Constituent body. In the Commonwealth of, Australia Act the provisions of the last Paragraph of section 128 have been regarded as, mandatory, and held to be clear limitations of the power of amendment. Dr. Jethro Brown considered that the amendment of the paragraph was logically impossible even by a two step amendment. Similarly, section 105 A has been judicially (1) Introduction to Political Science, p. 32 et seq. (2) Constitution" Its History, Application and Construction Vol. II (1910) p. 1301. (3) Federalist No. 10. (4) See Louis L. Snyder: The Weimar Constitution, p. 42 et seq. (5) Commentaries on the Constitution of the United States (I 833) Vol. (6) K. C. Wheare: Modern Constitutions, p. 78. sup Cl/67 12 902 considered in the Garnishee case( ') to be an exception to the power of amendment in section 128 although Wynes(2) does not agree. I prefer the judicial view to that of Wynes. The same position obtains under our Constitution in article 35 where the opening words, are more than a non obstante clause. They exclude article 368 and even amendment of that article under the proviso. It is, therefore, a grave error to think of article 368 as a code ;Dr as omnicompetent. It is the duty of this Court to find the limits which the Constitution has set on the amendatory power and to enforce those limits. This is what I have attempted to do in this judgment. My conclusions are (i) that the Fundamental Rights are outside the amendatory process if the amendment seeks to abridge or take away any of the rights; (ii) that Sankari Prasad 's case (and Sajjan Singh 's case which followed it) conceded the power of amendment over Part III of the Constitution on an erroneous view of articles 13(2) and 368; (iii) that the First, Fourth and Seventh Amendments being part of the Constitution by acquiescence for a long time, cannot now be challenged and they contain authority for the Seventeenth Amendment; (iv) that this Court having now laid down that Fundamental Rights cannot be abridged or taken away by the exercise of amendatory process in article 368, any further inroad into these rights as they exist today will be illegal and unconstitutional unless it complies with Part III in general and article 13(2) in particular, (v) that for abridging or taking away Fundamental Rights, a Constituent body will have to be, convoked; and (vi) that the two impugned Acts, namely, the Punjab Security of Land Tenures Act, 1953 (X of 1953) and the Mysore Land Reforms Act, 1961 (X of 1962) as amended by act XIV of 1965 are valid under the Constitution not because they are included in schedule 9 of the Constitution but because the, are protected by article 31 A, and the President 's assent. (1) ; (2) Legislative, Executive and Judicial Powers in Australia pp. 695 698. 903 In view of my decision the several petit ions will be dismissed, but without costs. The State Acts Nos. 21 64 in the Ninth Schedule will have to be tested under Part HI with such protection as articles 31 and 31 A give to them. Before parting with this case I only hope that the Fundamental Rights will be able to withstand the pressure of textual readings by "the depth and toughness of their roots". Bachawat, J The constitutionality of the Constitution First, Fourth and Seventeenth Amendment Acts is challenged on the . ground that the fundamental rights conferred by Part HI are inviolable and immune from amendment. It is said that article 368 does not give any power of amendment and, in any event, the amending power is limited expressly by article 13(2) and impliedly by the language of article 368 and other articles as also the preamble. It is then said that the power of amendment is abused and should be subject to restrictions. The Acts are attacked also on the ground that they made changes in articles 226 and 245 and such changes could not be made without complying with the proviso to article 368. Article 31 B is subjected to attack on several other grounds. The constitutionality of the First Amendment was upheld in Sri Sankari Prasad Singh Deo vs Union, of India and State of Bihar(1), and that of the Seventeenth amendment, in Sajjan Singh is that these cases were Part XX of the Constitution specifically provides for its amendment. It consists of a single article . Part XX is as follows "PART XX. Amendment of the Constitution Procedure for amendment of the Constitution 368. An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting, it shall be presented to the President for his assent and upon such assent being given to the Bill the Constitution shall stand amended in accordance with the terms of the Bill : Provided that if such amendment seeks to make any change in (a) article 54. article 55, article 73, article 162 or (1) ; (2) ; 1196712 S.C.IL 904 (b) Chapter IV of Part V, Chapter V of Part VI, or Chapter 1 of Part XI, or (c) any of the Lists in the Seventh Schedule, or (d) the representation of States in Parliament, or (e) the provisions of this article, the amendment shall also require to be ratified by the Legislatures of not less than one half of the States by resolutions to that effect passed by those Legislatures before the Bill making provision for such amendment is presented to the President for assent. " The contention that article 368 prescribes only the procedure of amendment cannot be accepted. The article not only prescribes the procedure but also gives the power of amendment. If the procedure of art.368 is followed, the Constitution "shall stand amended" in accordance with the terms of the bill. It is because the power to amend is given by the article that the Constitution stands amended. The proviso is enacted on the assumption that the several articles mentioned in it are amendable. The object of the proviso is to lay down a stricter procedure for amendment of the articles which would otherwise have been amendable under the easier procedure of the main part. There is no other provision in the Constitution under which these articles can be amended. Articles 4, 169, Fifth Schedule Part D, and Sixth Schedule Para 21 empower the Parliament to. pass laws amending the provisions of the First, Fourth, Fifth and Sixth Schedules and making amendments of the Constitution consequential on the abolition or creation of the legislative councils in States, and by express provision no such law is deemed to be an amendment of the Constitution for the purposes of article 368. All other provisions of the Constitution can be amended by recourse to article 368 only. No other article confers the power of amending the Constitution. Some articles are expressed to continue until provision is made by law [see articles 59(3), 65(3), 73(2), 97, 98(3), 106, 135, 142(1), 148(3), 149, 171(2), 186, 187(3), 189(3), 194(3), 195, 221(2), 283(1) and (2), 285, 313, 345, 372(1), 373]. Some articles continue unless provision is made otherwise by law [see articles 120(2), 133(3), 210(2) and some continue save as otherwise provided by law [see articles 239(1), 287]. Some articles are subject to the provisions of any law to be made [see articles 137, 146(2), 225, 229(2), 241(3), 300(1), 309], and some are expressed not to derogate from the power of making laws [see articles 5 to 11, 289(2)]. All these articles are transitory in nature and cease to operate when provision is made by law on the subject. None of them can be regarded as conferring 905 the power of 'amendment of the Constitution. Most of articles continue until provision is made by law made by the Parliament. But some of them continue until or unless provision is made by the State Legislature (see articles 189 (3), 194 (3), 195, 210(2), 229(2), 300(1), 345) or by the appropriate legislature (see articles 225, 241(3)); these articles do not confer a power of amendment, for the State legislature cannot amend the Constitution. Many of the above mentioned articles and also other articles (see articles 22(7), 32(3), 33 to 35, 139,140, 239A, 241, 245 to 250, 252, 253, 258(2), 286(2), 302, 307, 315(2), 327, 369 delegate powers of making laws to the legislature. None of these articles gives the power of amending the Constitution. It is said that article 248 and List 1 item 97 of the 7th Schedule read with article 246 give the Parliament the power of amending the Constitution. This argument does not bear scrutiny. article 248 and List I item 97 vest the residual power of legislation in the Parliament. Like other powers of legislation, the residual power of the Parliament to make laws is by virtue of article 245 subject to the provisions of the Constitution. No law made under the residual power can derogate from the Constitution or amend it. If such a law purports to amend the Constitution, it will 'be void. Under the residual power of legislation, the Parliament has no power to make any law with respect to any matter enumerated in Lists II and III of the 7th Schedule but under article 368 even Lists II and III can be amended. The procedure for constitutional amendments under article 368 is different from the legislative procedure for passing laws under the residual power of legislation. If a constitutional amendment could be made by recourse to the residual power of legislation and the ordinary legislative procedure, article 368 would be meaningless. The power of amending the Con stitution is to be found in article 368 and not in article 248 and List I item 97. Like other Constitutions, our Constitution makes express provisions for amending the Constitution. The heading of article 368 shows that it is a provision for amendment of the Constitution, the marginal note refers to the procedure for amendment and the body shows that if the procedure is followed, the Constitution shall stand amended by the power of the article. Chapter VIII of the Australian Constitution consists of a single section (section 128). The heading is "Alteration of the Constitution". The marginal note is "Mode of altering the Constitution". The body lays down the procedure for alteration. The opening words are : "This Constitution shall not be altered except in the following manner". Nobody has doubted that the section gives the power of amending the Constitution. Wynes in his book on Legislative Executive and Judicial Powers in Australia, third edition, 906 p. 695, stated "The power, of amendment extends to alteration of this Constitution ' which includes section 128 itself. It is true that section 128 is negative in form, but the power is impled by the terms of the section. " Article 5 of the United States Constitution provides that a proposal for amendment of the constitution by the Congress on being ratified by the three fourth of the states "shall be valid to all intents and purposes as part of this Constitution". The accepted view is that "power to amend the Constitution was reserved by article 5", Per Van Devanter, J, in Rhode Island vs Palmer(1): Art .368 uses stronger words. On the passing of the bill for amendment under article 368, "the Constitution shall stand amended in accordance with the terms of the bill". Article 368 gives the power of amending "this Constitution". This Constitution means any of the provisions of the Constitution. No limitation on the amending power can be gathered from the language of this article. Unless this power is restricted by some ,other provision of the Constitution, each and every part of the Constitution may be amended under article 368. AR the articles mentioned in the proviso are necessarily within this amending power. From time to time major amendments have been made in the articles mentioned in the proviso (see articles 80 to 82, 124 (2A),131,214,217(3),222,(k2) 224A,226(IA) 230,231,241 and Seventh Schedule) and other articles (see articles 1, 3, 66, 71, 85, 153. 158, 170, 174, 239, 239A, 240, 258A, 2,69, 280, 286, 290A, 291, 298, 305, 311, 316, 350A, 350B, 371, 371A, 372A, 376, 379 to 391, the first third and fourth schedules), and minor amendments have been made in innumerable articles. No one has doubted so far that these articles are amendable. Part III is a part of the Constitution and is equally amendable. It is argued that a Constitution Amendment Act.is a law and therefore the power of amendment given by article 368 is limited by article 13(2). , article 13(2) is in these terms: "13(1). . . . . . . (2) The State shall not make any law which takes away or abridges the tights conferred by this Part and any law made in contravention of this clause shall, to the extent of the contravention, be void." Now article 3 68 gives, the power of amending each and every provision of the Constitution article 13 (2) is a part of the Constitution and is within the reach of the amending power. In other words art 13 (2) is subject to the overriding power of an. 368 and is controlled by it. article 368 is not controlled by article 13 (2) and the (1) ; : ; 907 prohibitory injunction in article 13(2) is not directed against the amending power Looked at from this broad angle, article 13 (2) does not forbid the making of a constitutional amendment abridaing or taking away any right confesed by Part III. Let us now view the matter from a narrower angle. The con tention is that a constitutional amendment under article 368 is a law within the meaning of article 13. 1 am inclined to think that this narrow contention must also be rejected. In article 13 unless the context otherwise provides 'law ' includes any ordinance, order, bye law, rule, regulation, notification, custom or usage having in the territory of India the force of law [article 13(3).(a)]. The inclusive definition of law in article 13 (3) (c) neither expressly excludes nor expressly includes the Constitution or a constitutional amendment. Now the term law ' in its widest and generic sense includes the Constitution and a constitutional amendment. But in the constitution this term is employed to designate an ordinary statute or legislative act in contradistinction to the Constitution or a constitutional amendment. The Constitution is the basic law providing the framework of government and creating the organs for the making of the laws. The distinction between the Constitution and the laws is so fundamental that the Constitution is not regarded as a law or a legislative act. The Constitution means the Constitution as amended. An amendment made in conformity with article 368 is a part of the. Constitution and is likewise not a law. The basic theory of our Constitution is that it cannot be changed by a law or legislative Act. It is be cause special provision is made by articles 4, 169, Fifth Schedule Part D and Sixth Schedule para 21 that some parts of the Constitution are amendable by ordinary laws. But by express provision no such law is deemed to be a constitutional amendment. Save as express.1y provided in articles 4, 169, Fifth Schedule Part D and Sixth Schedule para 21, no law can amend the Constitution, and a law which purports to make such an amendment is void. In Marbury vs Madison(1), Marshall, C.J., said: "It is a proposition too plain to be contested, that the Constitution controls any legislative Act repugnant to it; or, that the legislature may alter the Constitution by an ordinary Act. Between these alternatives there is no middle ground. The Constitution is either a superior paramount law, unchangeable by ordinary means, or it is on a level with (1) ; ,177:. ; , 73. 908 Ordinary legislative Acts, and, like other Acts, is alter able when the legislature shall please to alter it. If the former part of the alternative be true, then a legislative Act contrary to the Constitution is not law; if the, latter part be true, then written constitutions are absurd attempts, on the part of the people, to limit a power in its own nature illimitable. Certainly all those who have framed written constitutions contemplate them as forming the fundamental and paramount law of the nation, and, consequently, the theory of every such government must be, that an Act of the Legislature, repugnant to the Constitution, is void. This theory is essentially attached to a written constitution, and is consequently to be considered, by this court, as one of the fundamental principles of our society. " It is because a Constitution Amendment Act can amend the Constitution and is not a law that article 368 avoids all reference to law making by the Parliament. As soon as a bill is passed in conformity with article 368 the Constitution stands amended in accordance with the terms of the bill. The power of amending the Constitution is not an ordinary law making power. It is to be found in article 368 and not in articles 245, 246 and 248 and the Seventh Schedule. Nor is the procedure for amending the Constitution under article 368 an ordinary law making procedure. The common feature of the amending process under art, 368 and the legislative procedure is that a bill must be passed by each House of Parliament and assented to by the President. In other respects the amending process under article 368 is very different from the ordinary legislative proms. A constitution amendment Act must be initiated by a bill introduced for that purpose in either House of Parliament. The bill must be passed in each House by not less than two thirds of the members present and voting, the requisite quorum in each House being a majority of its total membership; and in cases coming under the proviso, the amendment must be ratified by the legislature of not less than one half of the States. Upon the bill so passed being assented to by the President, the Constitution stands. amended in accordance with the terms of the bill. The ordinary legislative process is much easier. A bill initiating a law may be passed by a majority of the members present and voting at a sitting of each House or at a joint sitting of the Houses, the quorum for the meeting of either House being one tenth of the total number of members of the House. The bill so passed on being assented to by the President becomes a law. A bill though passed by all the members of both Houses cannot take effect as a 909 Constitution amendment Act unless it is initiated for the express purpose of amending the Constitution. The essence of ,a written Constitution is that it cannot be changed by an ordinary law. But most written Constitutions Provide for their organic growth by constitutional amendments. The main method of constitutional amendments are (1) by the ordinary legislature but under certain restrictions, (2) by the people through a referendum, (3) by a majority of all the units of a Federal State; (4) by a special convocation, see C.F. strong Modem Political institutions, 5th Edition, pp. 133 4,146. Our Constitution hag by article 368 chosen the first and a combination of the first and the third methods. The special attributes of constitutional amendment under article 368 indicate that it is not a law or a legislative act. Moreover it will be seen presently that the Constitution makers could not have intended that the term "law" in article 13 (2) would include a consti tutional amendment under article 368. If a constitutional amendment creating a new fundamental right and incorporating it in Part III were a law, it would not be open to the. parliament by a subsequent constitution to abrogate the new fundamental right for such an amendment would be repugnant to Part ]III. Bit the conclusion is absurd for. the body which created the right can surely take it away by the same process. Shri A. K. Sen relied upon a decision of the Oklahoma Supreme Court in Riley vs Carter(1) where it was held that for some purposes the Constitution of a State was one of the laws of the State. But even in America, the term "law ' does not ordinary include the Constitution or a constitutional amendment in this connection, I will read the following passage in Corpus Juris Secundum, Vol, XVI Title Constitutional Law article .lm15 "The term 'constitution ' is ordinarily employed to designate the organic law in contradistinction to the term law, which is generally used to designate statutes Or legislative enactments. Accordingly the term 'law. ' under this distinction does not include a constitutional amendment. However, the term "law ' may, in accordance with the context in which it is used, comprehend or included the constitution or a constitutional provision or amendment. A statute and a constitution, although of unequal dignity,, are both 'laws ', and rest on the will of the people." (1) 88 A:A.L.R. 1008. 910 In our Constitution, the expression "law" does not include either the constitution or a constitutional amendment. For all these reasons we must hold that a constitutional amendment under article 368 is not a law within the meaning of article 13 (2). I find no conflict between articles 13(2) and 368. The two articles operate in different fields. article 13(2) operates on laws; it makes no express exception regarding a constitutional amendment, because a constitutional amendment is not a law and is outside its purview. article 368 occupies the field of constitutional amendments. It does not particularly refer to the, articles in Part III and many other articles, but on its true construction it gives the power of amending each and every provision of the Constitu tion and necessarily takes in Part III. Moreover, article 368 gives the power of amending itself, and if express power for amending the provisions of Part III were needed, such a power could be taken by an amendment of the article. It is said that the non obstante clause in article 35 shows that the article is not amendable. No one has amended article 35 and the point does not arise. Moreover, the non obstante clause is to be found in articles 258(1), 364, 369, 370 and 371A. No one has suggested that these articles are not amendable. The next contention is that there are implied limitations on the amending power. It is said that apart from article 13 (2) there are expressions in Part III which indicate that the amending power ,cannot touch Part III. Part III is headed " fundamental rights". The right to move the Supreme Court for enforcement of the rights conferred by this Part is guaranteed by article 32 and cannot be suspended except as otherwise provided for by the Constitution (article 32(4)). It is said that the terms "fundamental" and "guarantee" indicate that the rights conferred by Part HI are not amendable. The argument overlooks the dynamic character of the Constitution. While the Constitution is static, it is the fundamental law of the country, the rights conferred by Part III are, fundamental, the right under article 32 is guaranteed, and the principles of State policy enshrined in Part IV are fundamental 'm the governance of the country. But the Constitution is never at rest; it changes with the progress of time. article 368 provides the means for the dynamic changes in the Constitution. The scale cf values embodied in Parts III and IV is not immortal. Parts III and IV being parts of the Constitution are not immune from amendment under article 368. Demands for safeguards of the rights embodied in Part III and IV may be traced to the Constitution of India Bill 1895, the Congress Resolutions between 1917 and 1919, Mrs. Beasan 's Commonwealth of India Bill of 1925, the Report of the Nehru Committee set up under the Congress Resolution in 1927, the Congress 911 Resolution of March. 1931 and the Sapru Report of 1945. The American bill of rights,the constitutions of other countries the declaration of human rights by the United Nations and other declarations and charters gave impetus to the demand. In this background the Constituent Assembly embodied in preamble to the Constitution the resolution to secure to all citizens social, economic and political justice, liberty of thought, expression, belief, faith and worship, equality of status and opportunity and fraternity assuring the dignity of the individual and the unity of the nation and incorporated safeguards as to some human rights in Parts III and IV of the Constitution after separating them into two parts on the Irish model. Part III contains the passive obligations of the State. It enshrines the right of life, personal liberty, expression, assembly, movement, residence, avocation, property, culture and education, constitutional remedies, and protection against exploitation and obnoxious penal laws. The State shall not deny these rights save as provided in the Constitution. Part IV contains the active obligations of the State. The State shall secure a social order in which social, economic and political justice shall inform all the institutions of national life. Wealth and its source of production shall not be concentrated in the hands of the few but shall be distributed so as to subserve the common good, and there shall be adequate means of livelihood for all and equal pay for equal work. The State shall endeavour to secure the health and strength of workers, the right to work, to education and to assistance in cases of want, just and humane conditions of work, a living wage for workers, a uniform civil code, free and compulsory education for children. The State shall take steps to organize village panchayats, promote the educational and economic interests of the weaker sections of the people, raise the level of nutrition and standard of living, improve public health. organize agricultural and animal husbandry separate the judiciary from executive and promote international peace and security. The active obligations of the State under Part IV are not justiciable. If a law made by the State in accordance with the fundamental directives of Part IV comes in conflict with the fundamental rights embodied in Part II the law to the extent of repugnancy is void. Soon after the Constitution came into force, it became apparent that laws for agrarian and other reforms for implementing the directives of Part IV were liable to be struck down as they infringed the provisions of Part III. From time to time constitutional amendments were proposed with the professed object of validating these laws, superseding certain judicial inter pretations of the Constitution and curing defects in the original Constitution. The First, Fourth, Sixteenth and Seventeenth Amendments made important changes in the fundamental rights. The First amendment introduced cl. (4) in article 15 enabling the State to make special provisions for the benefit of the socially and 912 educationally backward class of citizens, the,scheduled castes and the scheduled tribes in derogation of articles 15 and 29,(2) with a view to implement article 46 and to supersede the decision in State of Madras vs Champakam(1), substituted a new cl. (2) in article 19 with retrospective effect chiefly with a view to be in public order within the permissible restrictions and to supersede the decisions in Romesh Thappar vs State of Madras( '), Brij Bhushan vs State of Delhi( '),, amended cl. (6) of article 19 with a view to free state trading monopoly from the test of reasonable ness and to supersede the decision in Moti Lal vs Government of State of Uttar Pradesh(). Under the stress of the First amendment it is now suggested that Champakam 's case( '), Romesh Thappar 's case( ') and Motilal 's(4) case were wrongly decided, and the amendments of articles 15 and 19 were in harmony with the original Constitution and made no real change in it. It is to be, noticed however that before the First amendment no attempt was made to overrule these cases, and but for the amendments, these judicial interpretations of the Constitution would have continued to be the law of the land. The Zamindari Abolition Acts were the subject of bitter attack by the zamindars. The Bihar Act though protected by cl. 6 of article 31 from attack under article 31 was struck down as violative of article 14 by the Patna High Court (see the State of Bihar vs Maharajadhiraj Sri Kameshwar Singh(5), while the Uttar Pradesh Act (see Raja Surya Pal Singh vs The State. of U.P.) (6) and the Madhya Pradesh Act (see Visweshwar Rao vs State.of Madhya Pradesh (7), though upheld by the High Courts were under challenge in this Court. The First amendment therefore introduced article 31A, 31B and the Ninth Schedule with a view to give effect to the policy of agrarian reforms, to secure distribution of large blocks of land in the hands of the zamindars in conformity with article 39, and to immunize specially 13 State Acts form attack under Part Ill. The validity of the First Amendment was upheld in Sri Sankari Prasad Singh Deo 's case(8). The Fourth amendment changed article 31(2) with a view to supersede the decision in State of West Bengal vs Bela Banerjee(9) and to provide that the adequacy of compensation for property compulsorily acquired would not be justiciable, inserted Cl. (2A) in article 31 with a view to supersede the decisions in the State of West Bengal vs Subodh Gopal Bose("), Dwarka Das Shrinivas vs Sholapur Spinning and Weaving Co., Ltd.,("), (1) ; (2) ; (3) ; (4) I.L.R. [1951] 1 All. (5) 1951 Pat. 91). (6) (1952] S.C.R. 1056 (A.I.R. 1961). (7) All. 674.) (8) ; (9) ; (10) 11954] S.C.R. 587.(11) ; 913 Saghir Ahmad vs The State of Uttar Pradesh,(1) and to make it clear that clauses (1) and (2) of article 31 relate to different subject ' matters and a deprivation of property short of transference of ownership or right to possession to the State should not be treated as compulsory acquisition of property. The Fourth amendment also amended article 31A with a view to protect certain laws other than agrarian laws and to give effect to the policy of fixing ceiling limits on land holdings and included seven more Acts in the Ninth Schedule. One of the Acts (item 17) though upheld in Jupiter General Insurance Co. vs Rajgopalan(2) was the subject of criticism in Dwarka Das 's case (3 ) . The Sixteenth amendment amended clauses (2), (3) and (4) of article 19 to enable the imposition of reasonable restrictions in the interest of the sovereignty and integrity of India. The Seventeenth amendment amended the definition of estate in article 31A with a view to supersede the decisions in Karimbil Kunhikoman vs State of Kerala (4 ) and A. P. Krishnaswami Naidu vs State of Madras( ') and added a proviso to article 31A and included 44 more Acts in the Ninth Schedule, as some of the Acts had been struck down as unconstitutional. The validity of the Seventeenth amendment was upheld in Sajjan Singh 's case( '). Since 1951, numerous decisions of this Court have recognised the validity of the First, Fourth and Seventeenth amendments. If the rights conferred by Part III cannot be abridged or taken away by constitutional amendments, all these amendments would be invalid. The Constitution makers could not have intended that the rights conferred by Part TIT could not be altered for giving effect to the policy of Part TV. Nor was it intended that defects in Part III could not be cured or that possible errors in judicial interpretations of Part III could not be rectified by constitutional amendments. There are, other indications in the Constitution that the fundamental rights are not intended to be inviolable. Some of the articles make express provision for abridgement of some of the fundamental rights by law (see articles 16(3), 19(1) to (6), 22(3), 23(2), 25(2), 28(2), 31(4) to (6), 33, 34). Articles 358 and 359 enable the suspension of fundamental rights during emergency. Likewise, article 368 enables amendment of the Constitution including all the provisions of Part Ill. It is argued that the preamble secures the liberties grouped together in Part III and as the preamble cannot be amended, Part III is not amendable. The argument overlooks that the preamble is mirrored in the entire Constitution. , If the rest of the Constitution is amendable, Part III cannot stand on a higher (1) [1954) S.C.R. 1218. (3) ; ,706. (5) ; (2) A.I.R. 1952 Pun. (4) [1962] Supp. I S.C.R. 829. (6) ; 914 control the unambiguous language of the articles of the Constitution, see ' Wynes, Legislative Executive and Judicial Powers in Australia third edition, pp. 694 5; in Re Berubari Union & Exchange of Enclaves("). The last case decided that the Parliament can under article 368 amend article 1 of the Constitution so as to enable the cession of a part of the national territory to a foreign power, The Court brushed aside the argument that "in the transfer of the areas of Berubari to Pakistan the fundamental rights of thousands of persons are involved. " The case is an authority for the proposition that the Parliament can lawfully make a con stitutional amendment under article 368 authorising cession of a part of the national territory and thereby destroying the fundamental rights of the citizens of the Effected territory, and this power under article 368 is not limited by the preamble. It is next argued that the people of India in exercise of their sovereign power have placed the fundamental rights beyond the reach of the amending power. Reliance is place on the following passage in the judgment of Patanjali Sastri, J., in A. K. Gopalan V. The State of Madras(2): "There can be no doubt that,the people of India have, in exercise of their sovereign will as expressed in the Preamble, adopted the democratic ideal which assures to the citizen the dignity of the, individual and other cherished human values as a means to the full evolution and expression of his personality, and in delegating to the Legislature the executive and the Judiciary their respective powers in the Constitution, reserved to themselves certain fundamental rights, so called, I apprehend, because they have been retained by the people and made, paramount to the delegated powers, as in the American Model. " I find nothing in the passage contrary to the view unequivocally expressed by the same learned Judge in Sri Sankari Prasad Singh Deo 's(3) case that the fundamental rights are amendable. The power to frame the Constitution was vested in the Constituent Assembly by section 8 (1 ) of the Indian Independence Act, 1947. 'The Constitution though legal in its origin was revolutionary in character and accordingly the Constituent Assembly exercised its powers of framing the Constitution in the name of the people. The objective resolution of the Assembly passed on January 22, 1947 (1) ,261 2,281 (2)[1950] S.C.R. 88, 98. (3) (1952] S.C.R. 89. 915 solemnly declared that all power and authority of sovereign independent India, its constituent parts, and organs and the Government were derived from the people. The preamble to the Constitution declares that the people of India adopts, enacts and gives to themselves the Constitution. In form and in substance the Constitution emanates from the people. By the Constitution. the people constituted themselves into a republic. Under the republic all public power is derived from the people and is exercised by functionaries chosen either directly or 'indirectly by the people. The Parliament can exercise only such powers as are delegated to it under the Constitution. The people acting through the Constituent Assembly reserved for themselves certain rights and liberties and ordained that they shall not be curtailed by ordinary legislation. But the people by the same Con stitution also authorised the Parliament to make amendments to, the Constitution. In the exercise of the amending power the Parliament has ample authority to abridge or take away the fundamental rights under Part III. It is urged that the word 'amend ' imposes the limitation that an amendment must be an improvement of the Constitution. Reliance is placed on the dictum in Livermore vs E. C. Waite(1): "On, the other hand, the significance of the term 'amendment ' implies such an addition or change within the lines of the original instrument as will effect an improvement, or better carry out the purpose for which it was framed." Now an attack on the eighteenth amendment of the U.S. Constitution based on this passage was brushed aside by the U.S. Supreme Court in the decision in the National Prohibition(2) case. The decision totally negatived the contention that "an amendment must be confined in its scope to, an alteration or improvement of that which is already contained in the Constitution and cannot change its basic structure, include new grants of power to the Federal Government nor relinquish, in the State those which already have been granted to it", see Cooley on Constitutional Law, Chapter III article 5, pp. 46 & 47. 1 may also read a passage from Corpus Juris Secundum Vol. XVI, title 'Constitutional Law, p. 26 thus : "The term 'amendment a , used in the constitutional article giving Congress a power of proposal includes additions to, as well as corrections of, matters. already treated, and there is nothing there which suggests that it is used in a restricted sense. " Article 368 indicates that the term "amend" means "change". The proviso is expressed to apply to amendments which seek to make any "change" in certain articles. The main part of article 368 (1) (2) Rhode Island vs Palmer 253 U.S. 350 : 64 L. ed. 947, 960, 978. 916 thus gives the power to amend or to make changes in the Constitution. A change is not necessarily an unprovement. Normally the change is made with the object of making an improvement, but the experiment may fail to achieve the purpose. Even the plain dictionary meaning of the word "amend" does not support the contention that an amendment must take an improvement, see Oxford English Dictionary where the word "amend" is defined thus : "4. to make professed improvements (in a measure before Parliament); formally to alter 'in detail, though practically it may be to alter its principle so as to thwart it. " The 1st, 4th, 16th and. 17th Amendment Acts made changes in Part III of the Constitution. All the changes are authorized by article 368. It is argued that under the amending power, the basic features .,of the Constitution cannot be amended. Counsel said that they could not give an exhaustive catalogue of the basic features, but sovereignty, the republican form of government the federal structure and the fundamental rights were some of the features. The Seventeenth Amendment has not derogated from the sovereignty, ,the republican form of government and the federal structure, and 'the question whether they can be touched by amendment does not arise for decision. For the purposes of these cases, it is sufficient to say that the fundamental rights are within the reach of the amending power. It is said that in the course of the last 16 years there have been numerous amendments in our Constitution whereas there have been very few amendments of the American Constitution during 'the last 175 years. Our condition is not comparable with the American. The dynamics of the social revolution in our country may require more rapid changes. Moreover every part of our Constitution is more easily amendable than the American. Alan Gledhill in his book "The Republic of India", 1951 Edition, pp. 74 & 75 , said: "The Indian Founding, Fathers were less determined than were their American predecessors to impose rigidity on their Constitution. . . . The Indian Constitution assigns different degrees of rigidity to its different parts, but any part of it can be more easily amended than the American Constitution. " It is said that the Parliament is abusing its power of amendment by making too many frequent changes. If the Parliament 'has the power to make the amendments, the choice of making any particular amendment must be left to it. Questions of policy cannot be debated in ' this Court. The possibility of, abuse of a power is not the test of its existence. In Webb vs Outrim(1) lord (1) 917 Hobhouse said, "If they find that on the due construction of the Act a legislative power falls within section 92, it would be quite wrong of them to deny its existence because by some possibility it may be abused, or limit the range which otherwise would be open to the Dominion Parliament". With reference to the doctrine of implied prohibition against the exercise of power ascertained in accordance with ordinary rules of construction, Knox C.J., in the Amalgamated Society of Engineers vs The Adelaide Steams Company Limited and others(1) said, "It means the necessity of protection against the aggression of some outside and possibly hostile body. :It is based on distrust, lest powers, if once conceded to the least degree, might be abused to the point of destruction. But possible abuse of powers is no reason in British law for Emiting the natural force of the language creating them The historical background in which the Constitution was framed shows that the ideas embodied in Part III were not intended to be immutable. The Constituent Assembly was corn of representatives of the provinces elected by,the members of the lower houses of the provincial legislatures and representatives of the Indian States elected by electoral colleges constituted by the rules. The draft Constitution was released on February 26, 1948While the Constitution was on the anvil it was envisaged the, future Parliaments would be elected on the basis of adult suffrage. Such a provision was later incorporated in article 326 of the Constitution. In a special article written on August 15, 1948, Sir B., N. Rau remarked: "It seems rather illogical that a constitution should be settled by a simple majority by an assembly elected indirectly on a very limited franchise and that it should not be capable of being amended in the same way by a Parliament elected and perhaps for the most Part elected directly by adult suffrage", (see B. N. Rau ' India 's Constitution in the making, 2nd Edition p. 394). The conditions in India were rapidly changing and the country was in a state of flux politically and economically. Sir B. N. Rau therefore recommended that the Parliament should be empowered to amend the Constitution by its ordinary law making process for at least the first five years. Earlier, para 8 of the Suggestions of the Indian National Congress of May 12, 1946 and para 15 of the Proposal of the Cabinet Mission of May 16, 1946 had recom mended similar powers of revision by the Parliament during the initial years or at stated intervals. The Constituent Assembly did not accept these recommendations. On September 17, 1949 an amendment (No. 304) moved by Dr. Deshmukh providing (1) ; ,151. Cf/67 13 918 for amendment of the Constitution at any time by a clear majority in each house of Parliament was negatived. The Assembly was conscious that future Parliaments, elected on the basis of adult suffrage would be more representative, but they took the view that article 368 provided a sufficiently flexible machinery for amending all part , of the Constitution. The Assembly never entertain the proposal that any part of the Constitution including Part III should be beyond the reach of the, amending power. As a matter of fact, Dr. Deshmukh proposed an amendment (No. 212) habiting any amendment of the rights with respect to property or otherwise but on September 17, 1949 he withdrew this proposal (we Constituent Assembly Debates Vol. IV pp. 1 642 43). The best exposition of the Constitution is that which it has received from contemporaneous judicial decisions and enactments. We find a rare unanimity of view among Judges and legislators from the very commencement of the Constitution that the fundamental rights are within the reach of the amending power. No one in the Parliament doubted this proposition when the Constitution First Amendment Act of 1951 was passed. It is remarkable that most of the members of this Parliament were also. members of the Constituent Assembly. In, section Krishnan and Others vs The state of Madras(1), a case decided on May 7, 1951 Bose, J. said: "My concept of a fundamental right is something which Parliament cannot touch save by an amendment of the Constitution". , In Sri Sankari Prasad Singh Deo 's case(2), decided on October 5, 1951, this Court expressly decided that fundamental rights could be abridged by a constitutional amendment. This view was acted upon in all the subsequent decisions and was reaffirmed in Sajjan Singh 's case(3). Two learned Judges then expressed some doubt but even they agreed with the rest of the Court in upholding the validity of the amendments. A static system of. laws is the worst tyranny that any constitution can impose upon a country. An unamendable constitution means that all. reform and progress are at a standstill. If Parliament cannot amend Part III of the Constitution even by recourse to article 368, no other power can do so. There is no, provision in the Constitution for calling a convention for its revision or for submission of any proposal for amendment to the referendum. Even if power to call a convention or to submit a proposal. to the refere be taken by amendment of article 368, Part III. would sip remain unamendable on the assumption that a constitutional amendment is a law. Not even the unanimous vote of the 500 (1) ; , 652. (2) ; (3) ; 919 million citizens or their representatives, at a special convocation could amend Part III. The deadlock could be resolved by revolution only. Such a consequence was not intended by the framers of the Constitution. The Constitution is meant to endure. It has been suggested that the Parliament may provide for another Constituent Assembly by amending the Constitution and that Assembly can amend Part III and take away or abridge "the fundamental rights. Now if this proposition is correct, a suitable amendment of the Constitution may provide that the Parliament will be the Constituent Assembly and there upon the Parliament may amend Part III. If so, I do not see why under the Constitution as it stands now, the Parliament cannot be regarded as a recreation of the Constituent Assembly. for the special purpose of making a constitutional amendments under article 368, and why the amending power cannot be regarded a a constituent power as was held in Sri Sankari Prasad Singh Deo 's (1) case. The contention that the constitutional amendments of Part III had the effect (I changing articles 226 and 245 and could not be passed without complying with the proviso to article 368 is not tenable; A constitutional amendment which does not profess to amend article 226 directly or by inserting or striking words therein cannot be regarded as seeking to make, any change in it and thus falling within the constitutional inhibition of the proviso. article 226 gives power to the High Court throughout the territories in relation to which it exercises jurisdiction to issue to any person or authority within those territories directions, orders and Writs for the enforcement of any of the rights conferred by Part III and for any purpose The Seventeenth Amendment made no direct change in article 226. It made changes in Part In and abridged or took away some of the rights conferred by that Part. As a result of the changes, some of those rights no longer exist and as the High Court cannot issue writs for the enforcement of those rights its power under article 226 is affected incidentally. But an alteration in the area of its territories or in the number of persons or authorities within those territories or in the number of enforceable rights under Part III or other rights incidentally affecting the Power of the High Court under article 226 cannot be regarded as an ' amendment of that article. article 245 empowers the Parliament and the Legislatures of, the States to make laws subject to the provisions of the Constitution. This power to make laws is subject to the limitations imposed by Part M. The abridgement of the rights conferred by Part III by the Seventeenth Amendment necessarily enlarged the scope of the legislate power, and thus affected article 245 indirectly. But the Seventeenth amendment made no direct change in article 145 and did not amend it. (1) ; 920 Art 3 1B retrospectively validated the Acts mentioned in the Ninth Schedule notwithstanding any judgment decree or order of any court though they take away or abridge the rights conferred by Part Ill. It is said that the Acts are still bom and cannot be validated. But by force of article 31B the Acts are deemed never to have become void and must be regarded as valid from their inception. The power to amend the Constitution carries with it the power to make a retrospective amendment. It is Said that article 3 1B amends article 141 as it alters the law declared by this Court on the validity of the Acts. This argument is baseless. As the Constitution is amended retrospectively, the basis upon which the judgments of this Court were pronounced no longer exists, and the law declared by this Court can have no application. It is said that article 3 1B is a law with respect to land and other matters within the competence of the State Legislature, and the Parliament has no power to enact such a law. The argument is based on a misconception. The Parliament has not passed any of the Acts mentioned in the Ninth Schedule. article 3 IB removed the constitutional bar on the making of the Acts. Only the Parliament could remove the bar by the Constitution amendment. It has done so by article 3 1 B. The Parliament could amend each article in Part III separately and provide that the Acts would be protected from attack under each article. Instead of amend ing each article separately, the Parliament has by article 3 1 B made a comprehensive amendment of all the articles by providing that the Acts shall not be deemed to be void on the ground that they are inconsistent with any of them. The Acts as they stood on the date of the Constitution Amendments are validated. By the last part of article 31B the competent legislatures will continue to the power to repeal or amend the Acts. The subsequent repeals and amendments are not validated. If in future the competent legislature passes a repealing or amending Act which is inconsistent with Part III it will be void. I have, therefore, coma to the conclusion that the First, Fourth, Sixteenth and Seventeenth Amendments are constitutional and am not void. If so, it is common ground that these petitions must be For the last 16 years the validity of constitutional amendments of fundamental rights have been recognized by the people and all the organs of the government 'including the legislature, the judiciary and the executive. Revolutionary, social and economic changes have taken place on the strength of the First, Fourth and Seventeenth Amendments. Even if two views were possible on the question of, the validity of the amendments, we should not now reverse our previous decisions and pronounce them to be invalid. Having heard lengthy arguments on the question I have 921 come to the conclusion that the validity of the constitutional amendments was rightly upheld in Sri Sankari Prasad Singh Deo 's(1) and Sajjan Singh 's(2) cases and I find no reason for over ruling them. The First, Fourth and Seventeenth amendment Acts are sub jected to bitter attacks because they strike it the entrenched property rights. But the abolition of the zemindari was a necessary reform. It is the First Constitution Amendment Act that made this reform possible. No legal argument can restore the outmoded feudal zemindari system. What has been done cannot be undone. The battle for the past is lost. The legal argument necessarily shifts. The proposition now is that the Constitution Amendment Acts must be recognized to be valid in the past but they must be struck down for the future. The argument leans on the ready made American doctrine of prospective overruling. Now the First, Fourth, Sixteenth and Seventeenth Amendment Acts take away and abridge the rights conferred by Part M. If they are laws they are necessarily rendered void by article 13(2). If they are void, they do not legally exist from their very inception. They cannot be valid from 1951 to 1967 and invalid thereafter. To say that they were valid in the past and will be invalid in the future is to amend the Constitution. Such a naked power of amendment of the Constitution is not given to the Judges. The argument for the petitioners suffers from a double fallacy, the first that the Parliament has no power to amend Part III so as to abridge or take away the entrenched property rights, and the second that the Judges have the power to make such an amend ment. I may add that if the First and the Fourth amendments are valid, the Seventeenth must necessarily be valid. It is not possible to say that the First and Fourth amendments though originally invalid have now been validated by acquiescence. If they infringed article 13(2),t they were void from their inception. Referring to the 19th amendment of the U.S. Constitution, Brandeis, J. said in Leser vs Garnett(3) "This Amendment is in character and phraseology precisely similar to the 15th. For each the same method of adoption was pursued. One cannot be valid and the other invalid. That the 15th is valid, although rejected by six states, including Maryland, has been recognized and acted on for half a century. . The suggestion that the 15th was incorporated in the Constitution, (1) ; (2) [1965] 1 S.C.R. 933. (3) ; : ; , 51 1. 922 not in accordance with law, but practically as a war measure, which has been validated by acquiescence, cannot be entertained. " Moreover the Seventeenth amendment has been acted upon and its validity has been upheld by this Court in Sajjan Singh 's case. If the First and the Fourth Amendments are validated by acquiescence, the Seventeenth is equally validated. Before concluding this judgment I must refer to some of the speeches made by the members of the Constituent Assembly in the course of debates on the draft Constitution. These speeches cannot be used as aids for interpreting the Constitution. See State of Travancore Cochin and others vs The Bombay Co. Ltd.( ' ). Accordingly, I do not rely on them as aids to construction. But I propose to refer to them, as Shri A K. Sen relied heavily on the speeches of Dr. B. R. Ambedkar. According to him, the speeches of Dr. Ambedkar show that he did not regard the fundamental rights as amendable. This contention is not supported by the speeches. Sri Sen relied on the following passage in the speech of Dr. Ambedkar on September 17, 1949 "We divide the articles of the Constitution under three categories. The first category is the one which consists of articles which can be, amended by Parliament by a bare majority. The second set of articles are articles which require two thirds majority. If the future Parliament wishes to amend any particular article .which is not mentioned in Part III or article 304, all that is necessary for them is to have two thirds majority. They can amend it. Mr. President : Of Members present. Now, we have no doubt put articles in a third .category where for the purposes of amendment the .mechanism is somewhat different or double. It requires two thirds majority plus ratification by the, States. "(2) I understand this passage to mean that according to Dr. Am bedkar an amendment of the articles mentioned in Part. III and 368 requires two thirds majority plus ratification by the States He seems to have assumed (as reported) that the provisions of Part III fall within the. proviso to article 368. But he never said that part III was s not amendale. He maintained consistently that all the articles of the Constitution are amendable under article 368 On November 4, 1948, be. said : "The second means adopted to avoid rigidity and legalism is the provision for facility with which the (1) (1952] S.C.R. 1112. (2) Constituent Assembly Debat Vol. IX p. 1661. 923 Constitution could be amended. The provisions of the Constitution relating to the amendment of the Constitution divide the Articles of the Constitution into two groups. In the one group are placed Articles relating to (a) the distribution of legislative powers between the Centre and the States, (b) the representation of the States in Parliament, and (c) the powers of I the Courts. All other Articles are placed in another group. Articles placed in the second group cover a very large part of the Constitution and can be amended by Parliament by a double majority, namely, a majority of not less than two thirds of the members of each House present and voting and by a majority of the total membership of each House. The amendment of these Articles does not require ratification by the States. It is only in those Articles which are placed in group one that an additional safeguard of ratification by the States is introduced. One can therefore safely sky that the Indian Federation will not suffer from the faults of rigidity or legalism. Its distinguishing feature is that it is a flexible Federation. The provisions relating to amendment of the Constitution have come in for a virulent attack at the hands of the critics of the Draft Constitution. it is said that the provisions contained in the Draft make amendment difficult. It is proposed that the Constitution should be amendable by a simple majority at least for some. years. The argument is subtle and ingenious. It is said that this Constituent Assembly is not elected on adult suffrage while the future Parliament will be elected on adult suffrage and yet the former has been given the right to pass the Constitution by a simple majority while 'the latter has been denied the same right. It is paraded as one of the absurdities of the Draft Constitution. I must repudiate the charge because it is without foundation. To know how simple are the provisions of the Draft Constitution in respect of amending the Constitution one has only to study the provisions for amendment contained in the American and Australian Constitutions. 'Compared to them those contained in the Draft Constitution will be found to be the simplest. 'The Draft Constitution has eliminated the elaborate and difficult procedures such as a decision by a convention or are ferenduni. The Powers of amendments left with the Legislatures Central and Provincial. It is only, for amendment , or specific matters and they are only few, that the ratification of the State Legislatures is required. 924 All other Articles of the Constitution are left to be amended by Parliament. The only limitation is that it shall be done by a majority, of not less than two thirds of the members of each House present and voting and a majority of the total membership of each House. It is difficult to conceive a simpler method of amending the Constitution."(, ') On December 9, 1948 , Dr. Ambedkar said with reference to article 32: "The Constitution has invested the Supreme Court with these rights and these writs could not be taken away unless and until the Constitution itself is amended by means left open to the legislature. "(2) On November 25, 1949, Dr. Ambedkar strongly refuted the suggestion that fundamental rights should ' be absolute and unalterable. He said: "The condemnation of the Constitution largely comes from two quarters, the Communist Party and the Socialist Party. . The second thing that the Socialists want is that the Fundamental Rights mentioned in the Constitution must be absolute and without any limitations so that if their Party comes into power, they would have the unfettered freedom not merely to criticize, but also to overthrow the State. . Jefferson, the great American statesman who played so great a part in the making of the American Constitution, has expressed some very weighty views which makers of Constitution can never afford to ignore. In one place, he has said: 'We may consider each generation as a distinct nation, with a right, by the will of the majority, to bind themselves, but none to bind the succeeding generation, more than the inhabitants of another country. In another place, he has said: 'The idea that institutions established for the use of the nation cannot be touched or modified, even to make them answer their end, because of rights gratuitously supposed in those employed to manage the min the trust for the public, may perhaps be a Salutary provision against the abuses of a monarch, but is most absurd against the nation itself. Yet our lawyers and priests generally inculcate this doctrine, and suppose that preceding generations held the earth more freely than we do; had a right to impose laws on us, unalterable by ourselves, and (1) Constituent Assembly Debates Vol. 7, pp. 35 6, 43 4. (2) Constituent Assembly Debates Vol. 7, 953. 925 that we, in the like manner, can make laws and impose burdens on future generations, which they will have no right to alter; in fine, that the earth belongs to the dead and not the living. I admit that what Jefferson has said is not merely true, but is absolutely true. There can be no question about it. Had the Constituent Assembly departed from this principle laid down by Jefferson it would certainly be liable to blame, even to condemnation. But I ask, has it? Quite the contrary. One has only to examine the provision relating to the amendment of the Constitution. The Assembly has not only refrained from putting a seal of finality and infallibility upon this Constitution by denying to the people the right to amend the Constitution as in Canada or by making the amendment of the Constitution subject to the fulfilment of extraordinary terms and conditions as in America of Australia but has provided a most facile procedure for amending the Constitution. I challenge any of the critics of the Constitution to prove that any Constituent Assembly anywhere in the world has, in the circumstances in which this country finds itself, provided such a facile procedure for the amendment of the Constitu tion. If those who are dissatisfied with the Constitution have only to obtain a 2/3 majority and if they cannot obtain even a two thirds majority in the parliament elected on adult franchise in their favour, their dissatisfaction with the Constitution cannot be deemed to be shared by the general public. '(1) On November 11, 1948, Pandit Jawahar Lal Nehru said: "And remember this, that while we want this Constitution to be as solid and as permanent a structure as we can make it, nevertheless there is no permanence in Constitutions. There should be a certain flexibility. If you make anything rigid and permanent, you stop a Nation 's growth, the growth of living vital organic people. Therefore it has to be flexible. "(2) The views of Jefferson echoed by Ambedkar and Nehru were more powerful expressed by Thomas Paine in 1791 "There never did, there never will, and there never can, exist a parliament, or any description of men, or any generation of men, in any country, possessed of the (1) Constituent Assembly Debates Vol. I 1, pp. 975 6. (2) Constituent Assembly Debates Vol. 7, p. 322. 926 right or the power of binding and controuling posterity to the end of time ', or of commanding for ever how the world. shall be governed, or who shall govern it , and therefore all such clauses, acts or declarations by which the makers of them attempt to do what they have neither the right nor the power to do, nor take power to execute, are in themselves null and void. Every age and generation must be as free to act for itself in all cases as the ages and generations which preceded it. The vanity and presumption of governing beyond the grave is the most ridiculous and insolent of all tyrannies. Man has no property in man; neither has any generation a property in the generations which are to follow. The parlia ment of the people of 1688 or of any other period, had no more right to dispose of the people of the present day, or to bind or to controul them in any shape whatever, than the parliament or the people of the present day have to dispose of, bind or controul those who are to live a hundred or a thousand years hence. Every Generation is, and must be, competent to all the purposes which its occasions require. It is the living, and not the dead, that are to be accommodated. When man ceases to be, his power and his wants cease with him; and having no longer any participation in the concerns of this World, he has no longer any authority in directing who shall be its governors, or how its government shall be organized, or how administered." (See 'Rights of Man ' by Thomas Paine, unabridged edition by H. B. Bonner, pp. 3 & 4). For the reasons given above, I agree with Wanchoo, J. that the writ petitions must be dismissed. In the result, the writ petitions are dismissed without costs. Ramaswami, J. I have perused the judgment of my learned Brother Wanchoo, J. and I agree with his conclusion that the Constitution (Seventeenth Amendment) Act, 1964 is legally valid, but in view of the importance.of the constitutional issues raised in this case I would prefer to state, my own reasons in a separate judgment. In these petitions which have been filed under article 32 of the Constitution, a common question arises for determination, viz.,. whether the Constitution (Seventeenth Amendment) Act, 1964 which amends article 31 A and 3 1 B of the Constitution is ultra vires and unconstitutional, . 927 The petitioners are affected either by the Punjab Security of Land Tenures Act, 1954. (Act X of 1953) or by the Mysore Land Reforms Act (Act 10 of 1962) as amended by Act 1 1965 which were added to the 9th Schedule of the Constitution by the impugned Act and, their contention is that the impugned Act being unconstitutional and invalid , the validity of the two Acts by which they are affected cannot be saved. The impugned Act consists of three sections. The first section. gives its short title. Section 2 (i) adds a proviso to Cl. ( 1 ) of article 3 I A after the existing proviso. This proviso reads, thus: "Provided further that where any law makes any provision for the acquisition by the State of any estate and where any land comprised therein is held by a person under his personal cultivation, it shall not be lawful for the State to acquire any portion of such land as is within the ceiling limit applicable to him under any law for the time being in force or any building or structure standing thereon or appurtenant thereto, unless the law relating to the acquisition of such land, building or structure, provides for payment of compensation at a rate which shall not be less than the market value thereof." Section 2(ii) substitutes the following sub clause for sub cl. (a) of cl. (2) of article 31 A "(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 force in that area and all to land tenures in also include (i) any jagir, inam or muafi or other similar grant and in the States of Madras and Kerala, any ianmam right; (ii) any land held under ryotwari settlement; (iii) any land held or let for purposes of agriculture or for purposes ancillary there to, including wast land, forest land, land for posture or ones of buildings and other structures occupied by cultivators of land, agricultural labourers and village artisans;" Section 3 amends the 9th Schedule by adding 44 entries to it. In dealing with the question about the validity of the im pugned Act, it is necessary to consider the scope and effect of the provisions contained in article 368 of the Constitution, because the main controversy in the present applications turns upon:the 928 decision of the question as to what is the construction of that Article. Article 368 reads as follows: "An amendment of this Constitution may be initiated only by the introduction of a Bill for the purpose in either House of Parliament, and when the Bill is passed in each House by a majority of the total membership of that House and by a majority of not less than two thirds of the members of that House present and voting, it shall be presented to the President for his assent and upon such assent being given to the Bill, the Constitution shall stand amended in accordance with the terms of the Bill . Provided that if such amendment seeks to make any change (a) Article 5, article 55, article, 73, article 162 or article 241, or (b) Chapter IV of Part V, Chapter V of Part VI, or Chapter I of Part XI, or (c) any of the Lists in the Seventh Schedule, or (d) the representation of States in Parliament, or (e) the provisions of this article, the amendment shall also require to be ratified by the Legislatures of not less than one half of the States by resolutions to that effect passed by those. Legislatures before the Bill making provision for such amendment is presented to the President for assent. " It is necessary at this stage to set out briefly the history of articles . 31 A and 31 B. These Articles were added to the Constitution with retrospective effect by section 4 of the Constitution (First Amendment) Act, 1951. Soon after the promulgation of the Constitution, the political party in power, commanding as it did a majority of votes in the several State legislatures as well as in Parliament, carried out radical measures of agrarian reform in Bihar, may be referred to as Zamindari Abolition Acts. Certain zamindars, feeling themselves aggrieved, attacked the validity of those Acts in courts of law on the ground that they contravened the 'fundamental rights conferred on them by Part III of the Constitution. The High Court of Patna held that the Act passed iii Bihar was unconstitutional while the High Courts of Allahabad and Nagpur upheld the validity of the corresponding legislation in Uttar Pradesh and Madhya Pradesh respectively (See Kameshwar Uttar Pradesh and Madhya Pradesh by enacting legislation which 929 vs State of Bihar(1) and Surya Pal vs U.P. Government(1). The parties aggrieved by these respective decisions had filed appeals by special leave before this Court. At the same time petitions had also been preferred before this Court under article 32 by certain other Zamindars, seeking the determination of the same issues It was atstage that the Union Government, with a view to put an endall this litigation and to remedy what they considered to be certain defects brought to light in the work of the Constitution, brought forward a bill to amend the Constitution, which,. after undergoing amendments in various particulars, was passed by the require majority as the Constitution (First Amendment) Act, 1951 by which articles 31 A and 31 B were added to the Constitution. That was the first step taken by Parliament to assist the process of legislation to bring about agrarian reform, by introducing Articles 31 A and 31 B. The second step in the same direction was taken by Parliament in 1955 by amending article 31 A by the Constitution (Fourth Amendment) Act, 1955. The object of this amendment was to widen the scope of agrarian reform and to confer on the legislative measures adopted in that behalf immunity from a possible attack that they contravened ' the fundamental rights of citizens. In other words, the amendment Protected the legislative measures in respect of certain other items of agrarian and social welfare legislation, which affected the proprietary rights of certain citizens. At the time when the first amendment was made, article 31 B expressly provided that none, of the, Acts and Regulations specified in the 9th Schedule, nor any of the provisions thereof, shall be deemed to be void or ever to have become void on the ground that they were inconsistent with or took: away or abridged any of the rights conferred by Part III, and it added that notwithstanding any judgment, decree or order of any Court or tribunal to the contrary, each of the said Acts and Regulations shall subject to the power of any competent legislature to repeal or amend, continue in force. At this time, 19 Acts were listed in Schedule 9, and they were thus effectively validated. One more Act was added to this list by the Amendment Act of 1955, so that as a result of the second amendment, the Schedule contained 20 Acts which were validated. It appears that notwithstanding these amendments, certain other legislative measures adopted by different States for the purpose of giving effect to the agrarian policy of the party in power, were effectively challenged. For instance, the Karimbil Kunhikoman vs State of Kerala(3), the validity of the Kerala Agrarian Relations Act (IV of 1961) was challenged by writ petitions filed under article 32, and as a result of the majority decision of this Court, the whole Act was struck down. The decision of this (1) A I R. 1951 Pat. 91 (2) A.I.R. 1951 All. 674. (3)[1962] Supp. 1 S.CR. 829. 930 Court was pronounced on December 5, 1961. In A. P. Krishna swami Naidu vs The State of Madras(1) the constitutionality of the Madras Land Reforms (Fixation of Ceiling on Land) Act (146. 58 of 1961) was the subject matter of debate, and by the decision of this Court pronounced, on March 9, 1964, it was declared that the whole Act was invalid. It appears that the Rajas than Tenancy Act III of 1955 and the Maharashtra Agricultural Lands (Ceiling and Holdings) Act 27 of 1961 had been similarly declared invalid, and in consequence, Parliament thought it necessary to make a further amendment in Art: 31 B so as to gave the validity of these Acts which had been struck down and of other similar Acts which were likely to be challenged. With that object in view, the impugned Act has enacted section 3 by which 44 Acts have been added to Schedule 9. It is therefore clear that the object of the First, Fourth and the Seventeenth Amendments of the Constitution was to help the State Legislatures to give effect to measures of agrarian reform in a broad and comprehensive sense in the interests of a very large section of Indian ,citizens whose social and economic welfare closely depends on the persuit of progressive agrarian policy. The first question presented for determination in this case is whether the impugned Act, in so far as it purports to take away or abridge any of the fundamental rights conferred by Part III .or the Constitution,falls within the prohibition of article 13 (2) which provides that "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". In other words, the argument, of the petitioners was that the law to which Art, 13(2) applies, would include a law passed by Parliament by virtue of its constituent power to amend the Constitution, and so, its validity will have. to be tested by article 13(2) itself. It was contended that the State" includes Parliament within article 12 and "law" must include, a constitutional amendment. It was said that it was the deliberate intention of the framers of the Constitution, who realised the sanctity of the fundamental rights conferred by Part III, to make them immune from interference not only by ordinary laws passed by the legislatures in the country but also from constitutional amendments. In my opinion, there is no substance in this argument. Although "law" must ordinarily include constitutional law, there is 'a juristic distinction between ordinary law made in exercise of legislative power and constitutional law which is Made in exercise of constituent power. In a written federal form of Constitution there is a clear and well known distinction between the law of the Constitution and ordinary law made by the legislature on the basis of separation of powers and (1)[1964]7 S.C.R.82. 931 pursuant to the power of law making conferred by the Consti tution (See Dicey on 'Law of the Constitution, Tenth: Edn. p. 110, Jennings, 'Law and the Constitution ' pp. 62 64, and 'American Jurisprudence ', 2nd Edn. 16, p. 181). In such a written Constitution, the amendment of the Constitution is .a substantive, constituent act which is made in the exercise, of the sovereign power which created the Constitution and which is effected by a special means, namely, by a predesigned fundamental procedure unconnected with ordinary legislation. The amending power under article 368 is hence sui generis and cannot be, compared to the law making power of Parliament pursuant to article 246 read with List I and 111. It follows that the expresSion "law" in article 13(2) of the Constitution cannot be construed as including an amendment of the Constitution which is by Parliament in exercise of, its sovereign constituent power, but must mean law made by Parliament in its legislative capacity :pursuant to the powers of law making given by the Constitution itself under article 246 read with Lists I and In of the 7th Schedule. It is also clear, on the same line of reasoning, that 'law ' in article 13(2) cannot be construed so as to include 'law ' made by Parliament under articles 4, 169, 392, 5th Schedule Part D and 6th Schedule para 2 1. The amending power of Parliament exercised under these Articles stands on the same as the constitutional amendment made under article U8 so far as article 13(2) is concerned and does not fall within the definition of law within the meaning of this last article. It is necessary to add that the definition of 'law ' in article 13(3) does not include in terms a constitutional amendments though it includes "any Ordinance,, order, bye law, rule, regulation, notification, custom or usage ". It should be noticed that The language. of article 3 6 8 is perfectly general and empowers Parliament to amend the Constitution without any exception Whatsoever. H I ad it been intended by the Constitution makers that the fundamental rights guaranteed under Part III should be completely outside the scope of article 368, it is reasonable to assume that they would have made an express provision to that effect. It was stressed by the petitioners during the course 'of the, argument that Part III is headed as 'Fundamental Rights" and that article 32 "guarantee 's ' the right to move the Supreme Court by appropriate proceedings for enforcement of rights conferred by Part M. But the expression "fundamental" in the phrase "Fundamental Rights" means that such rights are fundamental vis a vis the laws of the legislatures and the acts of the executive authorities mentioned in article 12. It cannot be suggested, that the expression "fundamental" lifts the fundamental rights above the Constitution itself. Similarly, the expression "guaranteed ' in article 32(1) and 32(4) means that the right to move the Supreme Court for enforcement of fundamental rights without 932 exhausting the, normal channels through the High Courts or the lower courts is guaranteed. This expression also does not place the fundamental rights above the Constitution. I proceed to consider the next question arising in this case, the scope of the amending power under article 368 of the Constitution. It is contended on behalf of the petitioners that article 368 merely lays down the procedure for amendment and does not vest the amending power as such in any agency constituted under that article. I am unable to accept this argument as correct Part XX of the Constitution which contains only article 368 is described as a Part dealing with the Amendment of the Constitution and article 368 which prescribes the procedure for amendment of the Constitution, begins by saying that an amendment of this Constitution may be initiated in the manner therein indicated. In MY Opinion, the expression "amendment of the Constitution" in article 368 plainly and unambiguously means amendment of all the provisions of the Constitution. It is unreasonable to suggest that what article 368 provides is only the mechanics of the procedure to be followed in amending the Constitution without indicating which provisions of the Constitution can be amended and which cannot. Such a restrictive construction of the substantive part of article 368 would be clearly untenable. The significant fact , that a separate Part has been devoted in the Constitution for "amendment of the Constitution and there is only one Article in that Part shows that both the power to amend and the procedure to amend are enacted in article 368. Again, the words "the Constitution shall stand amended in accordance with the terms of the Bill" in article 368 clearly contemplate and provide for the power to amend after the requisite procedure has been followed. Besides, the words used in the proviso unambiguously indicate that the substantive part of the article applied to all the provisions of the Constitution. It is on that basic assumption that the proviso prescribes a specific procedure in respect of the amendment of ,the articles mentioned in cls. (a) to (e) thereof. Therefore it must be held that when article 368 confers on Parliament the right to amend the Constitution the power in question can be exercised over all the provisions of the Constitution. How the power should be exercised, has to be determined by reference to the question as to whether the proposed amendment falls under the substantive part of article 368, or whether it attracts the procedure contained in the proviso. It was suggested for the petitioners that the power of amendment is to be found in articles 246 and 248 of the constitution read with item 97 of List I of the 7th Schedule. I do not think that it is possible to accept this argument. Article 246 stats that 933 Parliament has exclusive power to make laws with respect to matters enumerated in List I in the Seventh Schedule, and article 248, similarly, confers power on Parliament to make any law with respect to any matter not enumerated in the Concurrent List or State List. But the power of law making in articles 246 and 248 is "subject to the provisions of this Constitution". It is apparent that the power of constitutional amendment cannot fall within these Articles, because it is illogical and a contradiction in terms to say that the amending power can be exercised and at the same time it is "subject to the provisions of, the Constitution". It was then submitted on behalf of the petitioners that the amending power under article 368 is subject to the doctrine of implied limitations. In other words, it was contended that even if article 368 confers the power of. amendment, it was not a general but restricted power confined only to the amendable provisions of the Constitution, the amendability of such provision being determined by the nature and character of the respective provision. It was argued, for instance, that the amending power cannot be used to abolish the compact of the Union or to destroy the democratic character of the Constitution teeing individual and minority rights. It was said that the Constitution was a permanent compact of the States, that the federal character of the States was individual, and that the existence of any. of the States as part of the federal Compact Cannot4be put an end to by the power of amendment. It was also said that the chapter of fundamental rights of the Constitution cannot be the subject matter of any amendment under article 368. It was contended that the preamble to the Constitution declaring that India was a sovereign democratic republic was beyond the scope of the amending Power. it, was suggested that other basic, features of the Constitution were the Articles relating to. distribution of legislative powers, the Parliamentary form of Government and the establishment of Supreme Court and the High, Courts in the various States. I am unable to accept this argument as correct. If the Constitution makers considered that there were certain basic features of the Constitution which were permanent it. is must unlikely that they should not have expressly said in Art 368 that these basic features were. not amendable. On the contrary, the Constitution makers have expressly provided. that article 368 itself should be amendable by the process indicated in the proviso to that Article. This cir cumstance is significant and suggests. that all the articles of the Constitution are amendable either under the proviso to article 368 or under the main part of that Article. In MY opinion, there is no room for an. implication in the construction of article 368. So far as the federal character of the Constitution is concerned, it was held by this Court in State of West Bengal vs Union of Cl/67 14 934 India(1) that the federal structure is not an essential pan of our Constitution and there is no compact between the States and them is no dual citizenship in India. It was pointed out in that case that there was no constitutional guarantee against the alteration of boundaries of the States. By An. 3 the Parliament is by law authorised to form a new State by redistribution of the territory of a. State or by uniting two or more States or parts of States or by uniting any territory to a part of any State, to increase the area of any State, to diminish the area of any State to alter the boundaries of any State, and to alter the name of any State. In In Re The Berubari Union and Exchange of Enclaves (2) it was argued that the Indo Pakistan agreement with regard to Berubari could not be implemented even by legislation under article 368 because of the limitation imposed by the preamble to the Constitution and that such an agreement could not be implemented by a referendum. The argument was rejected by this Court and it was held that the preamble could not, 'in i any way, limit the power of Parliament to cede parts of the national territory. On behalf of the petitioners the argument was s that the chapter on fundamental rights was the basic feature, of the Constitution and cannot be the subject of the amending power under Art 368. It was argued that the freedoms of democratic life are secured by the chapter on fundamental rig its and dignity of the individual cannot be preserved if any of the fundamental rights is altered or diminished. It is not possible to accept this argument as correct. The concepts of liberty and equality are changing and dynamic and hence the notion of permanency or immutability cannot be attached to any of the fundamental rights. The Directive Principles of Part IV are as fundamental as the constitutional rights embodied in Part III and article 37 imposes a constitutional duty upon the States to apply these principles in making laws. Reference should in particular be made to article 39(b) which enjoins upon the State to direct its policy towards securing that the ownership and control of the material resources of the community are so distributed as best to subserve the common good. article 3 8 imposes a duty upon, the State to promote the welfare of the people by securing and protecting as effectively as it may, a social order in which justice, social, economic and political, shall inform all the institutions of the national life. I have already said that the language of article 368 is clear and unambiguous in support of, the view that there is no implied limitation on the amending power. In Principle also it aPPears unreasonable to suggest that the Constitution makers wanted to provide that the fundamental rights guaranteed by the Constitution should never be touched by way of, amendment. In modern democratic thought I there are two main trends the liberal idea of individual 'rights (1) [1964] 1 S.C.R. 371 p 405. (2) 935 protecting the individual and the democratic idea proper pro claiming the equality of rights and popular sovereignty . The gradual extension of the idea of equality from political to economic and social fields in the modern State has led to the problems of social security, economic planning and industrial welfare legislation. The implementation and harmonisation of these. somewhat conflicting principles is a dynamic task. The adjustment between freedom and compulsion, between the rights of individuals and the social interest and welfare must necessarily be a matter for changing needs and conditions. The proper approach is therefore to look upon the fundamental rights of the individual as conditioned by the social responsibility, by the necessities of the Society, by the balancing of interests and not as pre ordained and untouchable private rights. As pointed out forcefully by Laski: "The struggle for freedom is largely transferred from the plane of political to that of economic rights. Men become less interested in the abstract fragment of politi cal power an individual can secure than in the use of massed pressure of the groups to which they belong to secure an increasing share of the social Product. Individualism gives way before socialism. The roots of liberty are held to be in the ownership and control of the instruments of production by the state, the latter using its power to distribute the results of its regulation with increasing approximation to equality. So long, as there is inequality, it is argued, there cannot be liberty. The historic inevitability of this evolution was seen a century ago by de tocqueville. It is interesting to compare his insistence that the democratization of political power meant equality and that its absence would be regarded by the masses as oppression with the argument of Lord Action that liberty and equality are antitheses. To the latter liberty was essentially an autocratic ideal; democracy destroyed individuality, which was the very pith of liberty, by seeking identity of conditions. The modem emphasis is rather toward the principle that material equality is growing inescapable and that the affirmation of personality must be effective upon an immaterial plane. it is found that doing as one likes, subject only to the demands of peace, is incompatible with either international or municipal necessities. We pass from contract to relation as we have passed from status to contract. Men are so involved in intricate networks of relations that the place for their 936 liberty is in a sphere where their behaviour does not impinge upon that self affirmation of others which is liberty." (Encyclopaedia of the Social Sciences, Vol. IX, 445.). It must :not be forgotten that the fundamental right guaran teed by article 31, for. instance. is not absolute. It should be not that cl. (4) of that Article, provides an exception to the requirements of cl. (2). 'Clause (4) relates 'to Bills of a State Legislature relating to public acquisition which were pending at the commencement of fhe Co 'stitution. If such a Bill has been passed and assented to by the President, the Courts shall have no jurisdiction to question the validity of such law on the of contravention of cl. (2), ie., on the ground that it does not provide for compensation or that it has been enacted without a public purpose. Clause (6) of the, Article is another exception to cl. (2) and provides for ouster of jurisdiction of the Courts. While cl. (4) relates to Bills pending in the State Legislature at the encement of the Consistitution, cl. (6) relates to Bills enacted by the State within IS I months before commencement of the Constitution i.e., Acts providing for public acquisition which were enacted not earlier than July 26, 1948. If the President certifies ' 'such an Act within 3 months from the commencement of the Constitution, the Courts shall have no jurisdiction to invalidate that Act on the ground of contravention of cl. (2) of that Article Similarly, the scheme of Art 19 indicates that the fundamental rights guaranted by sub cls. (a) to (g) of cl, (1) can be validly regulated in the light of the provisions contained in cls. (2) to (6) of article 19. In other words, the scheme of Art.19 is two fold; the fundamental rights of the citizens are of paramount importance, but even the said fundamental rights can be regulated to serve the interests of the general public or other objects mentioned respectively in cls. (2) to (6) of article 19. It is right to state that the purposes for which fundamental rights can be regulated which are s specified in cls. (2) to (6), could not have been assumed by the Constitution makers to be static and incapable of expansion. It cannot be assumed that the Constitution makers intended to forge a political strait jacket for generations to come. The Constitution makers , must have anticipated that in dealing with, socioeconomic problems which the 1egislatures may have to face from time to time, the concepts of public interest and other important considerations which are the basis of cls. (2) to (6), may change and may even expand. As Holmes ' J. has said in Abrams vs United States (1) : "the .,Constitution is an experiMent, as all life is an experiment". It is therefore legitimate to assume that the Constitution makers (1) ; , 630. 937 intended that Parliament should be competent to make amend ments in these rights so as to meet the challenge of the problems which may arise in the course of socioeconomic progress and development of the country. I find it therefore difficult to accept the argument of the petitioners thal the Constitution makers contemplated that fundamental rights enshrined in Part III were finally and immutably settled and determined once and for all and these rights are beyond the ambit of any future amendment. Today at a time when absolutes are discredited, it must riot be too readily assumed that there are basic features of the Constitution which shackle the amending power and which take precedence over the general welfare of the nation and the need for agrarian and social reform. In construing article 368 it is moreover essential to remember the nature and subject matter of that Article and to interpret it subjectae materies. The power of amendment is in point of quality an adjunct of sovereignty. It is in truth the exercise of the highest sovereign :power in the State. If the amending power is an adjunct of sovereignty it does not Admit of any limitations. This view is expressed by Dicey in "Law of the Constitution", 10th Edn., at page 148 as follows "Hence the power of amending the constitution has been placed, so to speak, outside the constitution, and that the legal sovereignty of the United States resides in the States ' governments as forming one aggregate body represented by three fourths of the several States at any time. belonging to the Union. " A similar view is stated by Lord Bryce in" "The" American Commonwealth", Vol. 1, ch. XXXII, page 366. Lester Bernhardt Orfield states,as follows in his book he Amending of the Federal Constitution" "In the last analysis, one is brought to the conclusion that sovereignty in the United States, if it can be said to exist at all, is located in the amending body. The amending body has often beep referred to as the sovereign, because it meets the fest of the location of sovereignty. As Willoughby has said: 'In all those cases in which, owing to the distribution of governing power, there is doubt as to the political body in which the Sovereignty rests, the test to be applied is the determination of which authority has, in the last instance, the legal power to determine its own competence as well as that of others '. 938 Applying the criteria of sovereignty which were laid down at the beginning of this chapter, the amending, body is sovereign as a matter of both law and fact. Article Five expressly creates the amending body. Yet in a certain manner of speaking the amending body may be said to exist as a matter of fact since it could proceed to alter Article Five or any other part of the Constitution. While it is true that the sovereign cannot act otherwise than in compliance with law, it is equally true that it creates the law in accordance with which it is to act. " In his book "Constitutional Law of the United States", Hugh Evander Willis says that the doctrine of amendability of the Constitution is based on the doctrine of the sovereignty of the people ,and that it has no such implied limitations as that an amendment shall not contain a new grant of , power nor be in the form of legislation, nor change "our dual form of government nor change the protection of the Bill of Rights, nor make any other change in the Constitution." James G. Randall also enunciates the proposition that when a constitutional amendment is adopted "it is done not by the 'general government, but by the supreme sovereign power of the nation i.e., the people, acting through State Legis latures or State conventions" and that "the amending power is 'equivalent to the Constitution makin power and is wholly above 'the authority of the Federal Government" ( 'Constitutional Pro Under Lincoln ', p. 395). , The legal position is summarised 'by Burdick at page 48 of his treaties "The Law of the American Constitution as follows : "The result of the National Prohibition Cases ; seems to be that there is no limit to the power to amend the Constitution, except that a State may not without its consent be deprived of its equal suffrage in the Senate. To out the case most extremely, this means that by action of two third, of both Houses of Congress and of the, legislatures in three fourths , of the states all of the powers of the national government could be surrendered to the States, or all of the reserved powers of the States could be transferred to the federal government. It is only public opinion acting upon these agencies which places any check upon the amending power. But the alternative to this result would be to recognize the power of the Supreme Court to veto the will of the people expressed in a constitutional amendment without any possibility of the reversal of the court 's action except through revolution. " 939 The matter has been clearly put by George Vedel in Manuel Elementaire De Droit Constitutionnel (Recueil Sirey) at page 117 as follows : "Truly speaking no constitution prohibits for ever its amendment or its amendment in all its aspects. But it can prohibit for example, the amendment (revision) during a certain time (the Constitution of 1791) or it can prohibit the amendment (revision) on this or that point (as in the Constitution of 1875) which prohibits amendment of the republican form of Government and the present Constitution follows the same rule. But this prohibition has only a political but no juridical value. In truth from the juridical viewpoint a declaration of absolute , constitutional immutability cannot be imagined. The Constituent power being the supreme power in the state cannot be fettered, even by itself. For example,article 95 of our constitution stipulates, "The republican form of Government cannot be the subject of a proposal for amendment. But juridically the obstacle which this provision puts in the way of an amendment of the republican form of government can be lifted as follows. It is enough to abrogate, by way of amendment (revision) the article 95 cited, above. After this, the obstacle being removed, a second amendment can deal with the republican form of Government. In practice, this corresponds to the idea that the constituent assembly of today cannot bind the nation of tomorrow. " the argument of implied limitation was advanced by Mr. N. C. Chatterji and it was contended that item No. 3 of the Indo Pakistan Agreement providing for a division of Berubari Union between India and Pakistan was outside the power of constitutional amendment and that the preamble to the, Constitution did not permit the dismemberment of India but preserved the integrity of the territory of India. The argument was rejected by this Court and it was held that Parliament acting under article 368 can make a law to give effect to and implement the Agreement in question or to pass a law amending article 3 so as to cover cases of cession of the territory of India and thereafter make a law under the amended article 3 to implement the Agreement. (1) 940 There is also another aspect of the matter to be taken into account. If the fundamental rights are unamendable and if article 368 does not include any such power it follows that the amendment of, say, article 31 by insertion of articles 31 A and 31 B can only be made by a violent revolution. It was suggested for the petitioners that an alteration of fundamental rights could be made by convening a new Constituent Assembly outside the frame work of the present Constitution, but it is doubtful if the proceeding,., of the new Constituent Assembly will have, 'any legal validity, for the reason is that if the Constitution provides its own method of amendment, any other method of amendment of the Constitution will be unconstitutional and void. For instance, in George section Hawke vs Harvey C. Smith, as Secretairy of State of Ohio(1) it was held by the Supreme Court of the U.S.A. that Referendum provisions. of State Constitutions ' and statutes cannot be applied in the 'ratification or rejection of amendments to the Federal Constitution without violating the requirements of Article 5 of such Constitution and that such ratification shall be by the legislatures of the several states, or by conventions therein, as Congress shall decide. It was held in that case that the injunction was properly issued against the calling of a referendum election on the act of the legislature of a State ratifying an amendment to the Federal Constitution. If, therefore, the petitioners are right in their contention that article 31 is not amendable within the frame work of the present Constitution, the only other recourse for making the amendment would, as I have already said, be by revolution and not through, peaceful means, It cannot be reasonably supposed. that the Constitution makers contem plated that article 31 or any other article on fundamental rights should be altered by a violent revolution and not by peaceful change. It was observed in Feigenspan vs Bodine (2) "If the plaintiff is right in its contention of lack of power to insert the Eighteenth Amendment into the United States Constitution because of its subject matter. it follows that there is no way to incorporate it and others of like character into the national organic law, except, through revolution. This, the plaintiff concedes, is the inevitable conclusion of its contention. This is so starting a proposition that the judicial mind may be pardoned for not readily acceding to it, and for insisting that only the most convincing reasons will justify 'its acceptance. " I am, therefore, of the opinion that the petitioners Are unable to make good their argument on this aspect of: the case. It was then contended for the petitioners,that there would be anomalies if article 368 is interpreted to have no implied limita (1) ; (2)264 Fed. 941 tions. It was said that the more important articles of the Constitution can be amended by the procedure mentioned in the substantive part of article 368 but the less important articles would require ratification by the legislatures of not less than half of the States under the proviso to that Article. It was argued that the fundamental rights and also article 32 could be amended by the majority of two thirds of the members of Parliament but article 226 cannot be amended unless there was ratification of the legislatures of not less than half of the States, It was pointed out that articles 54 and 55 were more difficult to amend but not article 52. Similarly, article ' 162 required ratification of the States but not article 163 which related to the 'Council of Ministers to aid and advise the Governor in the exercise of his functions. In my opinion the argument proceeds on a misconception. The scheme of article 368 is not to divide the Articles of the Constitution into two categories, viz., important and not so important Article. It was contemplated by the Constitution makers that the amending power in the main part of article 368 should extend to each and every article of the Constitution but in the case of such articles which related to the federal principles or the relation of the States with the Union, the ratification of the legislatures of at least half the States should be obtained for any amendment. It was also contended that if article 368 was construed without any implied limitation the amending power under that Article could be used for subverting the Constitution. Both Mr. Asoke, Sen and Mr. Palkiwala resorted to the method of reduction ad absurdem 'MI pointing out the abuses that might occur if there were no limitations on the power to amend. It was suggested that Parliament may, by a constitutional amendment, abolish the parliamentary system of government or repeal the chapter of fundamental rights or divide India into. two States, or even reintroduce the rule of a monarch. It. is inconceivable that 'Parliament should utilise the amending power for bringing about any of these contingencies. It is, however, not permissible, in the first place, to assume that in a matter of constitutional amendment there will be abuse of power and then utilise it as a test for finding out the scope of the amending power. This Court has declared repeatedly that the possibility of abuse is not to be used as a test of the existence or extent of a legal power [See for example, State of West Bengal vs Union of India(1), at page 407]. In the second place, the amending power is a power, of an altogether different kind from the ordinary governmental power and if an abuse occurs,, it occurs at the hands of Parliament and the State Legislatures representing an extraordinary majority of the people, so that for all practical purposes it may be said to be the people, or at least. the highest agent of the people, and one exercising sovereign powers. It is therefore (1) [1964]1 S.C.R. 371. 942 anomalous to speak of 'abuse ' of a power of this description. In the last analysis, political machinery and artificial limitations will not protect the people from themselves. The perpetuity of our democratic institutions will depend not upon special mechanisms or devices, nor even upon any particular legislation, but rather upon the character and intelligence and the good conscience of our people themselves. As observed by Frankfurter, 1. in American Federation of Labour vs American Sash & Door Co.(1) "But a democracy need rely on the courts to save it from its own unwisdom. If it is alert and without alertness by the people there can be no enduring democracy unwise or unfair legislation can readily be removed from the statute books. It is by such vigilance over its representatives that democracy proves itself" I pass on to consider the next objection of the petitioners that the true purpose and object of the impugned Act was to legislate in respect of land and that legislation 1n respect of land falls within the jurisdiction of State legislatures under Entry 18 of List 11, and the argument was. that since the State Legislatures alone can make laws in respect of land, Parliament had no right to pass the impugned Act. The argument was based on the assumption that the impugned Act purports to be, and in fact is, a piece of land legislation. It was urged. that the scheme of articles 245 and 246 of the Constitution 'clearly showS that Parliament has no right to make a law in respect of land, and since the impugned Act is a legislative measure in relation to land, it is in Valid. In my opinion, the argument is based upon a misconception. Whet the impugned Act purports to do is not to make any land legislation but to protect and validate the legislative measures in respect of agrarian reforms passed by the different State Legislatures in the country by granting them immunity from attack based on the plea that they contravene fundamental rights. The impugned Act was passed by Parliament in exercise of the amending power conferred by article 368 and it is impossible to accept the argument that the constitutional power of amendment can be fettered by articles 245 and 246 or by the legislative Lists. It was argued for, the petitioners that Parliament cannot validate a law Which it has no Power to enact. The proposition holds good where the validity on impugned Act turns on whether the subject matter falls within or without the jurisdiction of the legislature which passed it. But to make a law which contravenes the Constitution constitutionally valid is a matter of constitutional amendment, and as such it falls within the exclusive power of Parliament and within the amending power conferred by article 368. I am accordingly of the opinion that the petitioners are unable to (1) ; ,556. 943 substantiate their argument on this aspect of the case. I should like to add that in Lesser vs Garnett(1), in National Prohibition Cases(2 ) and in United States vs Sprague(3), a similar argument Was advanced to the effect that a constitutional amendment was not valid if it was in the form of legislation. But the argument was rejected by the Supreme Court of the U.S.A. in all the three cases. It remains to deal with the objection of the petitioners that the newly inserted articles 31 A and 31 B require ratification of the State legislatures under the proviso to article 368 of the Constitution because these articles deprive the High Courts of the power to issue appropriate writs under article 226 of the Constitution. I do not "think there is any substance in this argument. The impugned Act does not purport to change the provisions of article 226 and it cannot be, said even to have that effect directly or in any substantial measure. It is manifest that the newly inserted articles do I not either in terms or in effect seek to make any change in article 226 of the Constitution. Article 31 A aims 'at saving laws providing for the compulsory acquisition by the State of a certain kind of property from the operation of article 1 3 read with other relevant articles in Part III, while article 31 b purports to validate certain specified Acts g Regulations, already passed, which, but for such a; provision , would be liable to be impugned under article 13 It is therefore ' not correct to say that the powers of High Courts to issue writs is, in 'any way, affected. The jurisdiaction 'of the High Courts remains just the same as it Was before. Only 'a certain category of cases has been excluded from the purview of Part III and the High Courts can no longer intervene, not because their Jurisdiction or powers have been curtailed in any manner or to. any but because there would be no occasion hereafter for the exercise of their power in such cases. As I have already said, the effect of the impugned Act on the jurisdiction of the High Courts under article 226 of the, Con stitution is not direct but only incidental in character and therefore the contention " of the petitioners on this point against the validity of the impugned Act must be rejected. It is well settled that in examining a constitutional question of this character, it is legitimate to consider whether the impugned legislation is a legislation directly in respect of the subject matter covered by any particular article of the Constitution or whether touches the said articles only incidentally or indirectly. In A. K. Gopalan vs The State of Madras (4), kania , C.J., had occasion to consider the validity of the argument that, the Preventive detention order resulted in the detention of the applicant in a cell, and so, it contravened his fundamental rights guaranteed by (1) ; (2)253 U.S. 350. (3) ; (4) ; 101. 944 article 19(1)(a), (b), (c), (d), (e) and (g). , Rejecting this argument, the learned Chief Justice observed that the true approach in dealing with such a question was only to consider the directness of the legislation and not what will be the result of the detention otherwise valid, on the mode of the detenu 's life. On that ground alone, he was inclined to reject the contention that the order of detention.contravened the fundamental rights guaranteed to the petitioner under article 19(1). At page 100 of the report, Kania, C.J., stated as follows : "As the preventive detention order results in the detention of the applicant in a cell it was contended on his behalf that the rights specified in Article 19(1) (a), (b), (c), (d), (e) and (g) have been infringed. It was argued that because of his detention he cannot have a free right to speech as and where he desired and the same argument was urged in respect of the rest of the rights mentioned in sub clauses (b), (c), (d) (e) and (g). Although this argument is advanced in a case which deals with preventive detention, if correct, it should be applicable in the case of punitive detention also to any one sentenced to a term of imprisonment under the relevant section of the Indian Penal Code. So considered, the argument must clearly be rejected. In spite of the saving clauses (2) to (6), permitting abridgement of the rights connected with each of them, punitive detention under several sections of the Penal Code, i.e., for theft, cheating, forgery and even ordinary assault, will be illegaL Unless such conclusion necessarily follows from the article, it is obvious that such construction should be avoided. In my opinion, suc h result is. clearly not the outcome of the Constitution. The article has to be read without any pre conceived notions. So read, it clearly means that the legislation to be examined must be directly in respect of one of the rights mentioned in the sub clauses. If there is a legislation directly attempting to control a citizen 's freedom of speech or ex pression, or his right to assemble peaceably and without arms, etc., the question whether that legislation is saved by the relevant saving clause of article 19 will arise. If, however, the legislation is not directly in respect of any of these subjects but as a, result of the operation of other legislation, for instance, for punitive or preventive detention, his right under any of these sub clauses is abridged, the question of the application of article 19 does not arise. 'Me true approach is only to consider the direct ness of the legislation and not what will be the result of the detention otherwise valid, on the mode of the detenu 's 945 life. On that , short ground, in my opinion, this argument about the infringement of the rights mentioned in article 19(1) generally must fail. Arty other construction put on the article, it seems to me , will be unreason It is true that the opinion thus expressed by Kania, C.J. in the case of A. K. Gopalan vs The State of Madras( ) did not receive, the concurrence of the other learned Judges who heard the said case. Subsequently, however, in Ram Singh & Others vs The State of Delhi & Anr.(2) the said observations were cited with approval by the Full Court. The same. principle was accepted by this Court in Express Newspapers (Pvt.) Ltd. vs The Union of India( '), in the majority judgment in Atiabari Tea Co. Ltd. vs The State of Assam (4 ) and in Naresh Shridhar Mirajkar vs The State of Maharashtra("),. Applying the same principle to the present case, consider that the effect of the impugned Act on the powers of the High Court under article 226 is indirect and incidental and not direct. I hold that the impugned Act falls under the substantive part of article 368 because the object of the impugned Act is to amend the relevant Articles in Part III which confer fundamental rights on citizens and not to change the power of the High Courts under article 226. In this connection I should like to refer to another aspect of the matter. The question about the validity of the Constitution (First Amendment) Act has been considered by, this Court in Sri Sankari Prasad Singh Deo vs Union of India and State of Bihar(6). In that case, the validity of the said Amendment Act was challenged, firstly, on the ground that the newly inserted articles 31 A and 31 B sought to make changes in articles 132 and 136 in Ch. IV of Part V and article 226 in Ch. V of Part VI. The second ground was that the amendment was invalid because it related to legislation in respect of land. It was also urged, in the third place, that though it may be open to Parliament to amend the provisions in respect of fundamental rights contained in Part ITT, the amendment made in that behalf would have to be tested in the light of provisions of article 13(2) of the Constitution. The argument was that the law to which article 13(2) applied would include a law passed by Parliament by virtue of its constituent power to amend the Constitution, and so, its validity will have to be tested by article 13(2) itself. All these arguments were rejected by this Court and it was held in that case that the Constitution (First Amendment) Act was legally valid. The same question arose for consideration in Sajjan Singh vs State of Rajasthan (7) with regard to the validity of the Constitution (Seventeenth Amendment) Act, 1964. In that case, the petitioners in their (1) ; (2) ; ,456. (3) ,129 30. (4) ; , 864. (5) ; (6) [1995] 1 S.C.R. 89. (7) 946 Writ Petitions in this Court contended that the Constitution (Seventeenth Amendment) ' Act was constitutionally invalid since the powers Prescribed by article 226 which is in Ch. V, Part VI of the Constitution Were likely to be affected by the Seventeenth Amendment, and therefore the special procedure laid down under article 368 should have been followed. It was further contended in that case that the decision of this court in Sankari Prasads(1) case should be reconsidered. 'Both the contentions were re , rejected by this Court by ' a majority Judgment and it was held that the Constitution (Seventeenth Amendment) Act amended the fundamental rights solely with the object of assisting the State Legislatures to give effect to the socioeconomic policy of the party inpower and its effect on article 226 was incident and insignificant and the impugned Act therefore fell under the substantive part of article 368 and did not attract the proviso to that article. It was further held. by this Court that there Was no justification for re considering Sankari Prasad 's(1) case. On behalf of the respondents it was submitted by the Additional Solicitor Generat that this was a very strong case for the application of the principle of stare decisis. In my opinion, this contention must be accepted as correct. If the arguments urged by the petitioners are to prevail it would leadto the inevitable consequence that the amendments made to the Constitution both in 1951 and in 1955 would be rendered invalid and. a large number of decisions dealing with the validity of the Acts included in the 9th Schedule which were pronounced by this Court ever since, the decision in Sankari Prasad 's(1) case was dec lared, would also have to be overruled. It was also pointed out that Parliament, the Government and the people have acted on the, faith of the decision of this Court in Sankari Prasad 's(1) case and titles to property have been transferred, obligations have been incurred and rights have been acquird in the implementation of the legislation included in the 9th Schedule. The, effect of land reform legislation has been clearly summarised in ch. VIII of Draft Outline on Fourth Plan as follows "Fifteen years ago when the First Plan was being formulated, intermediary tenures like zamindaris, jagirs and inams covered more than 40 per cent of the area. There were large disparities in the ownership of land held under ryotwari tenurer which covered the other 60 per cent area; and ' a substantial portion of the land was cultivated through tenants at will and share croppers who paid about one half the produce as rent. Most holdings were small and fragmented. Besides, there was a large population of landless agricultural labourers. In these conditions, the, principal. measures recommended for securing the objec (1)[1952] S.C.R. 89. 947 tives of the land policy were the abolition of intermediary tenures, reform of the tenancy system, including fixation of fair rent at one fifth to one fourth of the grossproduce, security of I tenure for the tenant, bringing tenants into direct relationship with the State and investing in them ownership of land. A ceiling on land holding was also recmmended so that some surplus land, may be made available for redistribution to the landless agricultural workers. Another important part of, the progamme was consolidation of agricultural holdings and increse in the size of the operational unit to an economic scale through cooperative methods. Aboiition of Intermediaries. During the past 15 years, progress has been made in several directions. Theprogramme for the abolition of intermediaries has been carried out practically all over, the country. About 20 million tenants of former intermediaries came into direct relationship with the State and became owners of their holdings. State Governments are now engaged in the assessment and payment of compensation. There were some initial delays but a considerable progress hag been made in this direction in recent years and it is hoped that the issue of compensatory bonds will be completed in another two years. Tenancy Reform. TO deal with the problem of tenants at will in the ryotwari areas and of 'sub ' tenants in the zamindari areas, a good deal of legislation has been enacted. Provisions for security of tenure, for bringing them into direct relation with the State and converting them into owners have 'been made in several States. As a result, about 3 million tenants and share croppers have acquired ownership of 'More than 7 million acres. Ceiling on Holdings. Laws imposing ceiling on agri,cultural holdings bave been enacted in all the States. In the former Punjab area, however the State Government has the power to settle tenants on land in excess of the permissible limit although it has not set a ceiling on ownership. According to available reports over 2 million acres of surplus areas in excess of the ceiling limits have, been declared or taken possession of by Government. " It is true that the principle of stare decisis may not strictly apply to, a decision on a constitutional point. There is no restriction in the Constitution itself which prevents this Court from reviewing its earlier decisions or even to depart from them in the interest of public good. It is true that the problem of construing constitutional provisions cannot be adequately solved by merely adopting 948 the literal construction of the words used in, the various articles. The Constitution is an organic document and it is intended to serve as a guide to the solution of changing problems which the Court ' may have to face from time to time. It is manifest that in a progressive and dynamic society the character of these problems is bound to change with the inevitable consequence that the relevant words used in the Constitution may also change their meaning and significance. Even so., the Court is reluctant to accede to, the suggestion that its earlier decisions should be frequently reviewed or departed from. In such a case the test should be : what is the nature of the error alleged in the earlier decision, what is its impact on the public good and what is the compelling character of the considerations urged in support of the contrary view. It is also a relevant factor that the earlier decision has been followed in, a large number of cases, that titles to property have passed and multitude of rights and obligations have been created in consequence of the earlier decision. I have already dealt with the merits of the contention of the petitioners with regard to the validity of the impugned Act and I have given reasons for holding that the impugned Act is constitutionally valid and the contentions ,of the petitioners are unsound. Even on the assumption that it is possible to take a different view and to hold that the impugned Act is unconstitutional I am of opinion that the principle of state decisis must be applied to the present case and the plea made by the, petitioners for reconsideration of Sankari Prasad(1) case and the decision in Sajjan Singh vs State of Rajasohan(2) is wholly unjustified and must be rejected. In Writ Petition No. 202 of 1966, it was contended by Mr. Nambyar that the continuance of the Proclamation of Emergency under article 352 of the Constitution was a gross violation of power because the emergency had ceased to exist. It was also contended that article 358 should be so construed as to confine its operation on to legislative or executive action relevant to the Proclamation of Emergency. It was submitted that the Mysore State was rot a border area and the land reform legislation of that State had no relevant connection with the Proclamation of Emergency and the fundamental rights conferred by article 19 cannot be suspended so far as the petitions are concerned. I do not think that it is necessary to express any opinion on these points because the Writ Petition must fail on the other grounds which I have already discussed above. It is also not necessary for me to express an opinion on the doctrine of prospective overruling of legislation. For the reasons already expressed I hold that all these petitions fail and should be dismissed, but there will be no order as to Petitions dismissed. Costs.

IN-Abs

The validity of the Punjab Security of Land Tenures Act, 1953 (Act 10 of 1953) and of the Mysore Land Reforms Act (Act 10 of 1962) as amended by Act 14 of 1965 was challenged by the petitioners under article 32 of the Constitution. Since these Acts were included in the 9th Schedule to the Constitution by the Constitution (Seventeenth) Amendment Act, 1964, the validity of the said Amendment Act was also challenged. In this connection it was urged that Sankari Prasad 's case in which the validity of the constitution (First) Amendment Act, 1951 had been upheld and Sajjan Singh 's case in which the validity of the Constitution (Seventeenth) Amendment Act, 1964, had been upheld by this Court, had been wrongly decided. It was contended that Parliament had no power to amend fundamental rights in Part III of the Constitution. HELD: Per Subba Rao, C.J., Shah, Sikri, Shelat and Vaidialingam, JJ. (Hidayatullah, J. Concurring) : Fundamental Rights cannot be abridged or taken away by the amending procedure in Ail. 368 of the Constitution. An amendment to the Constitution is 'law ' within the meaning of article 13(2) and is therefore subject to Part III of the Constitution. Sri Sankari Prasad Singh Deo vs Union of India Rajasthan; , , reversed. Per Subba, Rao, C.J., Shah, Sikri, Shelat and Vaidialingam, JJ. (i) Fundamental rights are the primordial rights necessary for the development of human personality. They are the rights which enable a 763 man to chalk out his own life in the manner he likes best. Our Constitution, in addition to the well known fundamental rights, also included the rights of minorities and other backward communities in such rights. [789 E] The fundamental rights are given a transcendental position under our Constitution and are kept beyond the reach of Parliament. At the same time Parts III and IV of the Constitution constituted an integrated scheme forming a self contained code. The scheme is made so elastic that all the Directive Principles of State Policy can reasonably be enforced without taking away or abridging the fundamental rights. While recognisingthe immutability of the fundamental rights, subject to social control the Constitution itself provides for the suspension or the modification of fundamental rights under specific circumstances, as in articles 33, 34 and 35. The non obstante clause with which the last article opens makes it clear that all the other provisions of the Constitution are subject to this provision. Article 32 makes the right to move the Supreme Court by appropriate proceedings for the enforcement of the rights conferred by the said Parts a fundamental right. Even during grave emergencies article 358 only suspends article 19 and all other rights are untouched except those specifically suspended by the President under article 359. [789 H; 790 D] The Constitution has given a place of permanence to the fundamental freedoms. In giving to themselves the Constitution the people have reserved the fundamental freedoms to themselves. article 13 merely in corporates that reservation. The Article is however not the source of the protection of fundamental rights but the expression of the reservation. The importance attached to the fundamental freedoms is so transcendatal that a bill enacted by a unanimous vote of all the members of both Houses is ineffective to derogate from its guaranteed exercise. It is not what Parliament regards at a given moment as conducive to the public benefit but what Part III declarer. protected, which determines the ambit of the freedom. The incapacity of Parliament therefore in exercise of its amending power to modify, restrict, or imposefundamental freedoms in Part III arises from the scheme of theConstitution and the nature of the freedoms. [792 D F] A. K. Gopalan vs State of Madras, [1950] S.C.R.88, State of Madras vs Smt. Champakam Dorairajan, (1951) S.C.R. 525, Pandit M. section M. Sharma vs Shri Sri Krishna Sinha, [1959] Supp. 1 S.C.R. 806 and Ujjam Bai vs State of Uttar Pradesh, [1963] 1 S.C.R. 778, referred to. If it is the duty of Parliament to enforce directive principles it is equally its duty to enforce them without infringing the fundamental rights. The verdict of Parliament on the scope of the law of social control of fundamental rights is not final but justiciable. If it were not so, the whole scheme of the Constitution would break. [815 H; 816 A B] , (ii)Article 368 in terms only prescribes various steps in the matter of amendment. The article assumes the power to amend found else where. The completion of the procedural steps cannot be said to culminate in the power to amend for if that was so the Constitution makers could have stated that in the Constitution. Nor can the power be implied either from article 368 or from the nature of the articles sought to be amended; the doctrine of necessary implication cannot be invoked if there is an express provision. There is no necessity to imply any such power as Parliament has the plenary power to make any law including the law to amend the Constitution subject to the limitations laid down therein [793 E G] (iii)The power of Parliament to amend the Constitution is derived from articles 245, 246 and 248 read with item 97 in List I. The residuary 764 power of Parliament can certainly take in the power to amend the Constitution. [794 A D] Though a law made under article 245 is subject to the provisions of the Constitution it would be wrong to say that every law of amendment made under it would necessarily be inconsistent with the articles sought to be amended. It cannot reasonably be said that a law amending an article is inconsistent with it. The limitation in article 245 is in respect of the power to make a law and not of the content of the law made within the scope of its power. [794 E F] An order by the President under article 392 cannot attract Art 368 as the amendment contemplated by the latter provisions can be initiated only by the introduction of a bill in Parliament. It cannot therefore be said that if the power of amendment is held to be a legislative power the President acting under article 392 can amend the Constitution in terms of article 368. [794 G H] (iv) The Constituent Assembly, it so minded, could certainly have conferred an express legislative power on Parliament to amend the Constitution by ordinary legislative process. There is, therefore, no inherent inconsistency between legislative process and the amending one. Whether in the field of a constitutional law or statutory law amendment can be brought about only by 'law '. [794 C D] Article 13(2), for the purpose of that Article, gives an inclusive definition of 'law '. It does not Prima facie exclude constitutional law. The process under article 368 itself closely resemble the legislative process. Article 368 is not a complete code in respect of the procedure of amendment. The details of procedure in respect of other bills have to be followed so far as possible in respect of a Bill under article 368 also, The rules made by the House of the People providing procedure for amendments lay down a procedure similar to that of other bills with the addition of certain special provisions. If amendment is intended to be Something other than law the constitutional insistence on the said legislative process is unnecessary. The imposition of further conditions is only a safeguard against the hasty action or a protection to the states but does not change the legislative character of the amendment [795 G 796 C] Article 3 of the Constitution permits changes in States and their boundaries by a legislative process under articles 4 and 169 amendments in the Solution are made by 'law ' but by a fiction are deemed not to be amendments for the purpose of article 368. This shows that amendment is law and that but for the fiction it would be an amendment within the meaning of Art, 368. [796 C F] Therefore amendments either under article 368 or under other Articles are only made by Parliament following the legislative process and are 'law ' for the purpose of article 13(2). [798 C] Mccawley vs The king, [1920]A.C., 691 and The Bribery Commissioner vs Pedrick Ransinghe, ; , referred to. (v) One need not cavil at the description of amending power as a sovereign power for it is sovereign only viithin the scope of the power conferred by a particular Constitution which may expressly limit the power of amendment both substantive and procedural. If cannot therefore be said that amending power can have no limitations being a sovere4p power. [804] The argument that the amending process involves political questions and is therefore outside.the scope of judicial re view cannot also be aeCePted It may be. Parliament seeks to amend the Constitution for political reasons but the court in denying that power will not be deciding 765 a political question; it will only be holding that Parliament has no power to armed Particular articles of the Constitution for any purpose whatsoever, be it political or otherwise. [804 E G] (vi) If power to abridge the fundamental rights is denied to Parliament revolution is not a necessary result. The existence of an all comprehensive power cannot prevent revolution if there is chaos in the country brought about by misrule or abuse of power. Such considerations are out of place in construing the provisions of the Constitution by a Court of law. [816 B C] (vii) While ordinarily @ Court will be reluctant to reverse its previous decisions it is its duty in the constitutional field to correct itself as early as possible, for otherwise the future progress of the country and happiness of the people will be at stake. As it was clear that the decision in Sankari Prasad 's case was wrong, it was pre eminently a typical case where this Court should overrule it. The longer it held the field the greater the scope for erosion of fundamental rights. As it contained the seeds of destruction of the cherished rights of the people, the sooner it was overruled the better for the country. [816 G H] The Superintendent and Legal Remembrancer Stale of West Bengal vs The Corporation at Calcutta; , relied on. (viii) The Constitution (Seventeenth Amendment) Act, 1964, inasmuch as it takes away or abridges fundamental rights was beyond 'the amending power of Parliament and void because of contravention of article 13(2). But having regard to the history of this and earlier amendment to the Constitution, their effect on the social and economic affairs of the country and the chaotic situation that may be brought about by the sudden withdrawl at this stage of the amendments from the Constitution it was undesirable to give retroactivity of this decision. The present was therefore a fit case for the application of the doctrine of "prospective. overruling, evolved by the courts in the United States of America. [805 E; 807 E, G; 808 C D] Great Northern Railway vs Sunburst Oil & Ref. Co. ; , Chicot County Drainage vs Baxter State Bank; , , Griffin vs Illionis, ; , Wolf vs Colorado, ; : 193 L. Ed. 872, Mapp vs Ohio, ; : 6 L. Ed. (2nd Edn.) 1081 and Link letter vs Walker; , , referred to. (ix), The doctrine of "prospective overruling" is a modern doctrine suitable for a fast moving society. It does not do away with the doctrine of state decision but confines it to past transactions. While in Strict theory it may be said that the doctrine 'involves the making of law, *hat the court really does is to declare the law but refuse to give retroactivity to it. It is really a pragmatic solution reconciling the two conflicting doctrines, namely, that a court finds the law and that it does make law It finds law but restricts its operation to the future. It enables the court to bring about a smooth transition by correcting, its errors without disturbing the impact of those errors on past transactions. By the application of this doctrine the past may be preserved and the future protected. [913 A C; 814 E F] Our Constitution does not expressly of by necessary implication speak against the doctrine of prospective overruling. Articles 32, 141 and 142 are designedly made comprehensive to enable the Supreme Court to declare law and to give such directions or pass such orders as are necessary to do complete justice. The expression 'declared ' in article 141 is wider than the words 'found or made '. The law declared by the Supreme Court is the law of the land. If so, there is no acceptable reason why 7 66 the Court, in declaring the law in supersession of the law declared by it earlier, could not restrict the operation of the law as declared to the future and save the transactions whether statutory or otherwise that were affected on the basis of the earlier law. [813 F H] As this Court for the first time has been called upon to apply the doctrine evolved in a different country under different circumstances, it would like to move warily in the beginning and would lay down the following propositions : (1) The doctrine of prospective overruling can be invoked only in matters arising under our Constitution; (2) it can be applied only by highest court of the country, ie. the Supreme Court as it has the constitutional jurisdiction to declare law binding on all the Courts as it has India; (3) the scope of the retrospective operation of the law declared by the supreme Court superseding its earlier decisions is left to its discretion to be moulded in accordance with the justice of the cause or matter before it. [814 C D] Applying the doctrine of prospective overruling in the circumstances of the present case the Court declared that this decision would not affect the validity of the Constitution (Seventeenth Amendment) Act 1964, or other amendments to the Constitution taking away or abridge the fundamental rights. It further declared that in future Parliament will have no power to amend Part III of Abe Constitution so as to take away or abridge the fundamental rights. [814 F G] (x) As according to the above decision the Constitution (Seventeenth Amendment) Act held the field the validity of the two impugned Acts, namely the Punjab Security of Land Tennures Act, 10 of 1953 and the Mysore Land Reforms Act, 10 of 1962, as amended by Act 14 of 1965, could, not be questioned on the ground that they offended Art 13, 14 or 31 of the Constitution. [815 E] (xi) On the findings the following, questions did not fall to be considered : (a) Whether in the exercise of the power of amendment the fundamental structure of the Constitution may be changed or even destroyed or whether the power is restricted to making modification within the framework of the original instrument for its better effectuation ? (b) Whether the amendment of fundamental rights is covered by the proviso to article 368 ? (c) To what extent can the provisions of die Constitution other than fundamental rights be amended ? (d) To what extent can Part III be amended otherwise thin by taking away or abridging the fundamental rights ? (e) Whether the impugned Act could be sustained under the provisions of the Constitution without the aid of articles 31A and 31B of the Schedule. Obiter If necessity to abridge the fundamental rights does arise the residuary power of Parliament may be relied upon to call for a constituent bly for making a new Constitution or radically changing it. The recent Act providing for a poll in Goa, Daman and Diu was an instance of analogus exercise of such residuary power by the Parliament, [816 E F] Per Hidayatullah. J. : (i) The scope of the amending power under the COnstitution is not to be determined by taking an apriori view of the 767 omnicompetence of article 368. When there is conflict between that Article and article 13(2) juridical hermeneutics requires the Court to interpret them by combining 'them and not by destroying one with the aid of the other. No part in a Constitution is superior to another part unless the Constitution itself says so and there is no accession of strength to any provision. by calling it a code. It is, the context of the legal provisions that illustrates the meaning of the different parts so that among them and between them there should be correspondence and harmony. [857 H 858C] (ii) It is wrong to think of the Fundamental Rights as within Parliament 's giving or taking. They are secured to the people by articles 12, 13, 32, 136, 141,,144 and 226. The High Courts and finally this Court have been made the Judges of whether any lagislative or executive action on the part of the State, considered as comprehensively as is possible,offends the Fundamental Rights and article 13(2)declares that legislation which so offends is to be deemed to be void. The general words of article 368 cannot be taken to mean that by calling an Act an Amendment of the Constitution Act a majority of total strengths and a 2/3rds majority of the members presnt and voting in each House may remove not only any of the Fundamental Rights but the whole Chapter giving them. [860 A D; 867 FF] (iii) In Britain there is no distinction between constitutional law and ' ordinary law as to the procedure of their enactment. In our Constitution too in spite of the claim that article 368 is a Code articles 4, 11 and 169 show that the amendment of the Constitution can be by the ordinary law making procedure. By this method one of the legislative limbs in a State can be removed or created. This destroys at one stroke the claim that article 368 is a code and. also that any special method of amendment of the Constitution is fundamentally necessary. [861 E G] The only difference between constitutional law and ordinary law can, be said to arise from the fact that constitutional laws are generally amend able under a process which in varying degrees, is more difficult or elaborate. This may give a distinct character to the law of the Constitutionbut it does not serve to distinguish it from the other laws of the land for the purpose of article 13(2). The Article itself does not exclude constitutional law which could have been easily done had the constitution makers. so intended. [862 B; 866 B] An amendment to the Constitution is not made under power derived ' from articles 245 or 248 of the Constitution read with entry 97 of List 1. The power of amendment is sui generis. [900 E] (iv) A narrow view need not be taken of the word amendment '. By an amendment new matter may be added, old matter removed or altered. The power of amending the Constitution is however not intended to be used for experiments or as an escape, from restrictions against undue State action enacted in the Constitution itself. Nor is the power of amendment available for the purpose of remoing express or implied restrictions against the State. [862 F; 863 B C] Coleman vs Milter, ; 307 U.S. 443 , Luther V. Borden,, and Baker vs Carr, 369 U.S. 186 ; , 633), referred to. The State is no doubt supreme but in the supremacy of its powers it may create impediments on its own sovereignty. There is nothing to prevent the State from placing certain matters outside the amending procedure. When this happens the ordinary procedure of amendment ceases to apply. Amendment can then only be by a freshly constituted body. 768 To attempt to do this otherwise is to attempt revolution which is to alter the will of the people in an illegal manner. Courts can interfere to nullify the revolutionary change because there is an infraction of exiting legality. Democracy may be lost if there is no liberty based on law and law based on equality. The protection of the fundamental rights is necessary so that we may not walk in fear of democracy itself. [863 G; 864 A C; 865 A D] (v) In article 13(2) the restriction is against the State. There is a difference between the State and its agencies such as Government, Parliament, the Legislature of the States, and the local and other authorities. The State means more than any of these or all of them put together. By making the State subject to Fundamental Rights it is clearly stated in article 13(2) that any of the agencies acting alone or all the agencies acting together are not above the Fundamental Rights. Therefore when the House of the People or the Council of States introduces a Bill for the abridgement of the Fundamental Rights, it ignores the injunction against it and even if the two Houses pass the Bill the injunction is next operative against the President since the expression Government of India in the General Clauses Act means the President of India. Thus the injunction in article 13(2) is against the whole force of the State acting either in its executive or legislative capacity. [866 E H] (vi) It is wrong to invoke the Directive Principles as if there is some antinomy between them and the Fundamental Rights. The Directive Principles lay down the routes of State action but such action must avoid the restrictions stated in the Fundamental Rights. It cannot be conceived that in following the Directive Principles the Fundamental Rights can be ignored. [867 G, 868 B] (vii) Our Constitution has given a guaranteed right to the persons whose fundamental rights are affected to move the Court. The guarantee is worthless if the rights are capable of being taken away. This makes our Constitution unique and the American or other foreign precedents cannot be of much assistance. [875 H] Hollingsworth vs Virginia, ; , Leser vs Garnett, ; , Dillon vs Gloss, ; and Texas vs White; , , referred to. It is not that Fundamental Rights are not subject to any change or modification. The Constitution permits a curtailment of the exercise of most of the Fundamental Rights by stating the limits of that curtailment. It permits the Fundamental Rights to be controlled but prohibits their erasure. [878 B] (viii) Parliament today is not the constituent body as the constituent 'assembly was but a constituted body which must bear true allegiance to the Constitution as by law established. To change the Fundamental Part of the individuals liberty is a usurpation of the constituent functions because they have been placed outside the scope of the power of the constituted Parliament. [870 B D] Our Constitution like some others has kept certain matters outside the amendatory process so that the their representatives. In article 35 obstante clause. They exclude Article under the proviso. It is therefore a great error to think of article 368 as a code or as omnicompetent. [901 C E; 902 A B] 769 Garnishee case; , , referred to. Article 368 cannot directly be amended by Parliament to confer power on itself over the fundamental rights, It would be against article 13(2). Parliament cannot do indirectly what it cannot do directly. [878 H] (ix) If it is desired to abridge the Fundamental Rights the legal method is that the State must reproduce the power which it has chosen to put under restraint. Parliament must amend article 368 to convoke another constituent assembly, pass a law under item 97 of the List 1 of Schedule 7 to call a constituent assembly, and then that assembly may be able to abridge or take away the fundamental rights. Any other method must be regarded as revolutionary. [878 D E; 879 B] (x) The various amendments that have been made by Parliament in articles 15, 16 and 19 did not abridge fundamental rights and were therefore valid. [879 C, 883 B] (xi) Our Constitution accepted the theory that Right of Property is a fundamental right though perhaps it was an error to do so if socialisation was desired. It treated property rights as inviolable except through law for public good and on payment of compensation. However the various amendments have significantly changed the position. As a result of them, except for land within the prescribed ceiling, all other land can be acquired or rights therein extinguished or modified without compensation and no challenge to the law can be made under articles 14, 19 or 31 of the Constitution. [887 B; 888 B C; 896 F G] As there is apprehension that the erosion of the right to property may be practised against other fundamental rights it is necessary to call a halt. An attempt to abridge or take away Fundamental Rights by a constituted Parliament even through an amendment of the Constitution can I declared void. This Court has the power and the jurisdiction to do so. The opposite view expressed in Sajjan Singh 's case was wrong. [898 B C] (xii) The First, Fourth and Seventh amendments of the Constitution, cannot now be challenged because of long acquiescence. It is good sense and sound policy for the courts to decline to take up an amendment for consideration after a considerable lapse of time when it was not challenged before or was sustained on an earlier occasion after challenge. [893 O, H 1902 D E] Lesser vs Garnett, ; (1922), referred to. (xiii) In the Seventeenth Amendment, the extension of the definition of 'estate ' to include ryotwari and agricultural lands is an inroad into the Fundamental Rights but it cannot be questioned in view, of the existence of article 3 1A(1) (a) whose validity cannot now be challenged. The new definition of estate introduced by the amendment is beyond the reach of the Courts not because it is not law but because it is "law" and fills within that word in article 31(1) (2) (2A) and article 3 1 A(1). [899 C G] The third section of the Act is however invalid. It adds 44 State Acts to the ninth schedule. The Schedule is being used to give advance protection to legislation which is known or apprehended to derogate,from the Fundamental Rights. The power under article 368 was not meant to give protection to State statute , which offend the Constitution. The intent here is to silence the courts and not to amend the Constitution. [900 A D] 770 (xiv) The two impugned Acts namely the Punjab Security of Land Tenures Act, 1953 and the Mysore Land Reforms Act, 1962 as amended are valid under the Constitution not because they are included in Schedule 9 of the Constitution but because they are protected by article 3 1 A and the President 's assent. [902 G H] Per Wanchoo, Bachawat, Ramaswami, Bhargava and Mitter, JJ. (dissenting): Article 368 carries the power to amend all parts of the Constitution including the fundamental rights in Part III of the Constitution. An amendment is not 'law ' for the purpose of article 13(2) and cannot be tested under that Article. Sri Sankari Prasad Singh Deo vs Union of India, ; and Sajjan Singh vs State of Rajasthan, ; , reaffirmed. Per Wanchoo, Bhargava and Mitter, JJ. (i) The Constitution provides a separate part headed 'Amendment of the Constitution ' and article 368 is the only article in that Part. There can therefore, be no doubt that the power to amend the Constitution must be contained in article 368. If there was any doubt in the matter it is resolved by the words, namely, "the Constitution shall stand amended in accordance with the terms of the bill". These words can only mean that the power is there to amend ,the Constitution after the procedure has been followed. [826 A D] (ii) While there is a whole part devoted to the amendment of the Constitution there is no specific mention of the amendment of the Constitution in article 248 or in any entry of List 1. It would in the circumstances 'be more appropriate to read the power in article 368 than in article 248 read with item 97 of List I. [826 H 827 A] The original intention of the Constitution makers was to give residuary power to the States. The mere fact that during the passage of the Constitution by the Constituent Assembly residuary power was finally vested in the Union would not therefore mean that it includes the power to amend the Constitution. Moreover residuary power cannot be used to change the fundamental law of the Constitution because all legislation is under article 245 "subject to the provisions of this Constitution". [827 B, H] Mere accident of similarity of procedure provided in article 368 to that provided for ordinary legislation cannot obliterate the basic difference 'between constitutional law and ordinary law. It is the quality and nature of what is done under article 368 and not its similarity to other procedure that should be stressed. What emerges after the procedure in article 368 has been followed is not ordinary law but fundamental law. [829 D; 830 C D] (iii) The procedure under the proviso to article III cannot apply to a 'bill to amend the Constitution. If the President refused to, give his assent to such a bill , the proposed amendment falls. In this respect at any rate the procedure under article 368 differs from, the ordinary legislative process. [831 B E] (iv) The word 'law ' has been avoided apparently with great care in Art.368. What emerges after the procedure has been followed is not an Act but the Constitution stands amended. After that the courts can only see whether the procedure in article 368 was followed. If it has been followed there is no question of testing the amendment of the Constitution On the avail of fundamental rights or in any other way as in the case of ordinary legislation. [832 A G] 771 (v) To say that 'amendment ' in law only means a change which results in improvement would make amendment impossible for what is improvement is a matter of opinion. [834 B] It may be open to doubt whether the power of amendment contained in article 368 goes to the extent of completely abrogating the present Constitution and substituting I it by an entirely new one. But short of that the power to amend includes the power to add any provision to the Constitution to alter any provision and substitute any other provision in its place or to delete any provision. [834 F G] The seventeenth amendment is merely in exercise of the power of amendment as indicated above and cannot be struck down on the ground that it goes beyond the power conferred by Parliament to amend the Constitution by article 368. [834 H] (vi) There is no express limitation on power of amendment in article 368 and no limitation can or should be implied therein. If the Constitution makers intended certain basic provisions in the Constitution, and Part III in particular, to be not amendable there is no reason why it was not so stated in article 3 68. The acceptance of the principle that them is an implied bar to amendment of basic features of the Constitution would lead to the position that any amendment to any article would be liable to challenge before the courts on the ground that it amounted to amendment of a basic feature. Constituent power like that in Art 368 can only be subject to express limitations so far as the substance of the amendments is concerned. [835 A; 836 D, G] (vii) For interpreting article 369 it is not permissible to read the speeches made in the Constituent Assembly. Historical facts namely what was accepted or what was not accepted or what was avoided in the Constituent Assembly can be looked into; but in connection with article 368 no help can be got from the historical material available. [838 C] Administrator General, of Bengal vs Prem Lal Mullick, (1895) XXII I.A 107, Baxter vs Commissioner of Taxation, (1907) 4 C.I.R. 1087, A. K. Gopalan vs State of Madras [1950] S.C.R. 88 and The Automobile Transport (Rajasthan) Ltd. vs State of Rajasthan, [1963] 1 S.C.R. 491, referred to. (viii) The preamble to the Constitution cannot prohibit or control in any way or impose any implied restrictions or limitations on the power to amend the Constitution contained in Aft. 368. [838 H] In re the Berubari Union and Exchange of Enclaves, , referred to. (ix) The word 'law ' in article 13(1) does not include. any law in the nature of a constitutional.provision for no such law remained in view of article 395 which provided that "the Indian Independence Act, 1947 and the Government of India Act, 1935, together with all enactments amending or supplementing the latter Act, but not including the Abolition of Privy Council Jurisdiction Act, 1949, are hereby repealed. There is no reason why if the word 'law ' in article 13(1) relating to past laws does not include any constitutional provision the word 'law ' in cl. (2) would take in an amount of the Constitution for it would be reasonable to read the word in the same sense in both the clauses. [839 D F] Article 13 (2) when it talks of the State making any law, refers to the law made under the provisions contained in Ch. 1 of Part XI of the Constitution beginning with article 245. It can have no reference to the 772 Constituent power of amendment under article 368. For it is somewhat contradictory that in article 368 power should have been given to amend any provision of the Constitution without any limitations but indirectly that power should be limited by using words of doubtful import in article 13(25.[841 C] The power conferred by the words of article 368 being unfettered, inconsistency between. that power and the provision in article 13(2) must be avoided. Therefore in keeping with the unfettered power in article 368 the word 'law ' in article 13(2) must be read as meaning law passed under the ordinary legislative power and not a constitutional amendment. The words in article 13(2) are not specific and clear enough to be regarded as an express limitation on article 368. [842 G H] (x) Merely because there was some indirect effect on article 226 it was not necessary that the Seventeenth Amendment should have been ratified under the proviso to article 368. article 245 had not also been directly affected by the said Act and no ratification % as required on this ground either. [843 G H; 846 C] (xi) The laws added to the Ninth Schedule by the Seventeenth Amendment Act had already been passed by the State Legislatures and it was their constitutional infirmity, if any, which was being cured by the device adopted in article 31B read with the Ninth Schedule, the amendment being only of the relevant provisions of Part III which were compendiously put in one place in article 31B. Parliament could alone do it under article 368 and there was no necessity for any ratification under the proviso, for amendment of Part HI is not entrenched in the proviso. [847 E] In curing the infirmity of the said laws Parliament was not encroaching on the exclusive legislative powers of the States because only Partiament could card the infirmity. For the same reason the fact that the laws in question were State laws did. not make ratification obligatory. [847 G] A limited meaning cannot be given to Art, 368 because of the possibility of abuse of the power. The check is not in the courts but in the people who plect members of Parliament. [848 F] The power of amendment contained in a written federal constitution is a safety valve which to a large extent provides for stable growth and makes violent revolution more or less unnecessary. The fact that in the last sixteen years a large number of amendments , could be made and have been made is due to the accident that one party has been returned by electors in sufficient strength to be able to command Special majorities which are required in article 368, not only at the Centre but in all the States. But that is no ground for limiting the clear words of article 368. [850 C D, E] (xii)Though the period for which Sankari Prasad 's case has stood unchallenged is not long, the effects which have followed on the passing of State laws on the faith of that decision, are so overwhelming that the decision should not be disturbed otherwise chaos will follow. This is the fittest possible case in which the principle of stare decisis should be applied [851 G] Keshav Mills: Company, Ltd V Commissioner of Income tax; , , referred to. (xii)The doctrine of prospective overruling cannot be accepted in this country. The doctrine accepted here is that courts declare law and that a declaration made by a court is the law of the land and takes effect 773 from the date the law came into force. It would be undesirable to give up that doctrine and supersede it with the doctrine of prospective overruling. [852,D F] Moreover a law contravening article 13(2) is void ab initio as held by this Court in Deep Chand 's case and Mahendra Lal Jaini 's case. In the face of these decisions it is impowible to apply the doctrine of prospective overruling to ordinary laws. If constitutional law is to be treated as ordinary law the same principle applies. If however it is not treated as 'law ' under article 13(2) then there is no necessity of applying the principle of prospective overruling for in that case the amendment under article 368 does not have to be tested under article 13(2). [852 G H; 853 B] Deep Chand vs St ate of Uttar Pradesh, [1959] Supp. 2 S.C.R. 8 and Mahendra, Lal Jaini vs State of Uttar Pradesh, [1963] Supp. 1 S.C.R. 912, referred to. Per Bachawat J. (i) Article 368 not only prescribes the procedure but also gives the power of amendment. It is because the power to amend is given by the article that by following its procedure the Constitution stands amended. The proviso is enacted on the assumption that the several articles mentioned in it are amendable; but for the proviso they would have been amendable under the main part. There is no other provision in the Constitution under which these articles ' can be amended. [904 D] Articles 4, 169, Fifth Schedule Part D and Sixth Schedule Para 21 empower the Parliament to make amendments to certain parts of the Constitution by law, and by, express provision such law is deemed not to be amendment for the purpose of article 368. All other provisions of the Constitution can be amended by recourse to article 368 only. No other article confers the power of amending the Constitution. [904E F] (ii) The power to amend the Constitution cannot be said to reside in article 248 and List 1, item 97 because if amendment could be made by ordinary legislative process article 368 would be meaningless. Under the residual power the Parliament has no competence to make any law with respect to any matter enumerated in Lists II and III of the 7th Schedule, but under article 368 even Lists 11 and III can be amended. Moreover a law passed by residual power is passed by virtue of article 245 and must be subject to the provisions of the Constitution so that it cannot derogate from the Constitution or amend it. Such a law would be void. [905 C P] (iii) Article 368 gives the power of amending 'this Constitution '. This Constitution means every part of the Constitution including Part ITT and article 13(2). Thus article 13(2) is also within the reach of the amending power. Instead of controlling article 368 it is controlled by that Article. [906 C D; H] (iv) The contention that a constitutional amendment under article 368 is a law within the meaning of article 13 must be rejected. The distinction between the Constitution and law is so fundamental that the Constitution is not regarded as a law or a legislative act. The Constitution mean , the Constitution as amended. An amendment made in conformity with article 368 is a part of the Constitution and is likewise not law. Save as expressly provided in articles 4, 169 Fifth Schedule Part D and Sixth Schedule para 21 no law can amend the Constitution and a law which purports to make such an amendment is void. It is for this reason that article 368 avoids all reference to law making by the Parliament. There 3 Sup. CI./67 4 774 are. also material differences between the ordinary law making procedure and the procedure under the Article. [907 B F; 908 D H] If a constitutional amendment creating a new fundamental rights and incorporating it in Part III were a law, it would not be open to the Parliament by a subsequent amendment to abrogate the new fundamental right for such an amendment would be repugnant to Part 111. But the conclusion is absurd for the body which enacted the right can surely take it away by the same process. [909 E] Marbury vs Madison, ; :2 L.Ed. 60 and Riley vs Carter, , referred to. (v) There is no conflict between articles 13(2) and 368. The two articles operate in different fields, the former in the field of law, the latter in that of constitutional amendment. [910 B] (vi) The non obstante clause in article 35 does not show that the article is not amendable. The non obstante clause is to be found also in, articles 258(1). 364, 369, 370 and 371A. No one has suggested that these articles are not amendable. [910 D] (vii) The words 'fundamental ' used in regard to rights in Part III and the word guaranteed in article 32 do not mean that the said rights cannot be amended. The constitution is never at rest; it changes with the progress of time. The scale of values in Parts III and IV is not immortal and these Parts being parts of the Constitution are not immune from amendment under article 368. [910 F G] The impugned amendments to be Constitution were made to meet the situations created by decisions of this Court and to carry out urgent agrarian reforms. If it is held that the rights, conferred by Part III cannot be abridged or taken away by constitutional amendments, all these amendments would be invalid. The Constitution makers could not have intended that the ' rights conferred by Part III could not be altered for ' giving effect to the policy of Part. Nor was it intended that defects in Part III could not be cured or that possible errors in judicial interpretations of Part III could not be rectified by constitutional amendments. [913 D E] (viii) It cannot be said that the people in exercise of their sovereign power have placed the fundamental rights beyond the reach of the amending power. The people acting through the Constituent Assembly reserved for themselves certain rights and liberties and ordained that they shalt not be curtailed by ordinary legislation. But the people by the same Constitution also authorised the Parliament to make amendments to the Constitution. In exercise of the amending power the Parliament has ample authority to, abridge or take away the fundamental rights under Part III [915 B C] Merely because of possibility of abuse, the power cannot be denied. [916 H] Webb vs Outrim, and amalgamated Society of Engineers '. The Adelaide Steamship Company Limited & Ors. ; , referred to. (ix) The main part of article 368 gives the power to amend or make changes in the Constitution. A change is not necessarily an improvement. Normally the change is made with the object of making an improvement but the experiment may fail to achieve the purpose. [916 A] Livermore vs E. G. Waite, L.R.A. 312 and National Prohibition case. ; , referred to. 77 5 (x) The best exposition of the Constitution is that which it has received from contemporaneous judicial decisions and enactments. No one in Parliament doubted the proposition that fundamental rights could be amended, when the First Amendment Act of 1951 was passed. The concept of amendability was upheld in section Krishnan & Ors. vs State of Madras ; decided in 1951, 'in Sankari Prasad decided in 1952 and Sajjan Singh decided in 1964. [918 C D] (xi) There is no provision in the Constitution for calling a convention for its revision or far submission of any proposal for amendment to the referendum. [918 G] (xii) The impugned amendments affected articles 226 and 245 only indirectly and did not require ratification under the proviso to article 168. [919 D H] In validating the impugned laws Parliament was not encroaching on .the State List. It was only validating the said laws and such constitutional validating was within its competence. [920 C E] (xiii) The abolition of Zamindari was a necessary reform. It is the First Constitution Amendment Act that made this reform possible. , No legal argument ' can restore the outmoded feudal Zamindari system. What has been done cannot be undone. The battle for the put is lost. [921 B C] If the First Fourth, Sixteenth & Seventeenth Amendments Acts are void they do not legally exist from their inception. They cannot be, valid from 1951 to 1967 and invalid thereafter. To say that they were valid in the past and Will be invalid in the future is to amend the. Constitution. Such a naked power of amendment is not given to the Judges and therefore the doctrine of prospective overruling cannot be, adopted. [921 D E] It is not possible to say that the First and Fourth Amendments though originally valid have now been validated by acquiescence. If they infringe article 13(2) they were void from their inception. If these ammendments are validated by acquiescence the Seventeenth Amendment is equally validated. B] (xv) The contention that Dr. Ambedkar did not regard the fundamental rights as amendable is not supported by the speeches in the ' Constituent Assembly. [922 C D] Per Ramaswami J.(i) In a written Constitution the amendment of the Constitution is a substantive constituent act which, is made in the exercise of the sovereign power through a predesigned procedure unconnected with ordinary legislation. The amending power in article 368 is hence sui generis and cannot be compared to the law making power of Parliament pursuant to article 246 read with Lists II and Ill. It follows that the expression 'law ' in article 13(2) cannot be construed as including an amendment of the Constitution which is achieved by Parliament in exercise of its sovereign constituent power but must mean law made by Parliament in its legislative capacity under article 246 read 'with I List I and III of the 7th Schedule. It is also clear on the same line of reasoning that law in article 13(2) cannot be construed so as to include "law ' made by Parliament under articles 4, 169, 392, 5th Schedule Part 1 and 6th Schedule para 21. The amending power of Parliament exercised under these Articles stands on the same pedestal as the constitutional amend ment made under article 368 so far as article 13(2) is concerned. [930 H 931 E] (ii) The language of article 368 is perfectly general and empowers Parliament to amend the Constitution without any exception whatsoever. 776 The use of the word 'fundamental ' to describe the rights in Part III and the word 'guaranteed ' in article 32 cannot lift the fundamental rights above the Constitution itself [931 F, H] (iii) It is unreasonable to suggest that what article 368 provides is only the mechanics of the procedure for amendment and not the power to amend. The significant fact that a separate part has been devoted in the Constitution for "amendment of the constitution" and there is only one Article in that Part shows that both the power and the procedure to amend are enacted in article 368. Again the words "the Constitution shall stand amended in accordance with the terms of the Bill" in article 368 clearly contemplate and provide for the power to amend after the requisite procedure has been followed. [932 C E] (iv) The power of constitutional amendment cannot fall within articles 246 and 248 read with item 97 of List I because it is illogical and a contradiction in terms to say that the amending power can be exercised "subject to the provisions of the Constitution" as the power under these articles must be. [933 B] (v) There is no room for an implication in the construction ofArt. If the Constitution makers wanted certain basic features to be unamendable they would have said so. [933 G H] State of West Bengal vs Union of India, [1964] 1 S.C.R. 371 and In re The Berubari Union and Exchange of Enclaves , referred to. The concepts of liberty and equality are changing and dynamic and hence the notion of permanency or immutability cannot be attached to any of the fundamental rights. The adjustment between freedom and compulsion, between the rights of individuals and the social interest and welfare must necessarily be a matter for changing needs and conditions. The proper approach is therefore to look upon the fundamental rights of the individual as conditioned by social responsibility, by the necessities of the society, by the balancing of interests and not as pre ordained and untouchable private rights. [934 E 935 C] (vi) It must not be forgotten that neither the rights in article 31 nor those in article 19 are absolute. The purposes for which fundamental rights can be regulated which are specified in cls. (2) to (6) could not have been assumed by the Constitution makers to be static and incapable of expansion. It cannot be assumed that the Constitution makers intended to forge a political strait jacket for generations to come. Today at a time when absolutes are discredited, it must not be too readily assumed that there are basic features of the Constitution which shackle the amending power and which take precedence over the general welfare of nation and the need for agrarian and social reform. [936 B 937 C] (vii) In construing article 368 it is essential to remember the nature and subject matter of that Article and to interpret it subjectae materies. The power of amendment is in point of quality an adjunct of sovereignty. It is in truth the exercise of the highest sovereign power in the State. if the amending power is an adjunct of sovereignty it does not admit of any limitations. [937 D] (viii) If the fundamental rights are unamendable and if article 368 does not include any such power it follows that the amendment of, say, article 31 by insertions of articles 31A and 31B can only be made by a violent revolution. It is doubtful if the proceedings of a new Constituent Assembly that may be called will have any legal validity for if the 777 Constitution provides its own method of amendment, any other method will be unconstitutional and void. [490 A B] George section Hawke vs Harvey C. Smith, ; and Feigenspan vs Bodine, , referred to. (ix) It is not permissible in the first place to assume that in a matter of constitutional amendment there will be abuse of power and then utilise it as a test for finding out the scope of the amending power. In the last analysis political machinery and artificial limitations will not protect the people from themselves. [941 F G] State of West Bengal vs Union of India, [1964] 1 S.C.R. 371 and American Federation of Labour vs American Sash & Door Co. ; , referred to. (x) What the impugned Act purports to do is not to make any and legislation but to protect and validate the legislative measure passed by different State legislatures. This was within the legislative competence of Parliament. [942 F] Leser vs Garnett, ; , National Prohibition Cases. ; and United States vs Sprague, ; , referred to. Articles 226 and 245. were not directly affected by the impugned Act and therefore no ratification by the State Legislatures was necessary. [942 D H; 945 D] A. K. Gopalan vs State of Madras, ; , Ram Singh & Ors. vs State of Delhi & Anr. , ; , Express Newspapers (Pvt.) Ltd. vs Union of India, , Atiabari Tea Co. Ltd. vs State of Assam, ; and Naresh Shridhar Mirajkar vs State of Maharashtra ; , referred to. (xi) Even on the assumption that the impugned Act is unconstitutional the principle of stare decisis must be applied to the present case and the plea made by the petitioners for reconsideration of Sankari Prasad 's case and Sajjan Singh 's case must be rejected. [948 D E] On the landings it was not necessary to express an opinion on the doctrine of prospective overruling of legislation.

Appeals Nos. 130 and 131 of 1951. Appeals from. the Judgment and Decrees, dated the 12th August, 1948, of the High Court of Judicature at Calcutta in Appeals from Original Decrees Nos. 214 of 1942 and 231 of 1943 arising from the Decrees, dated the 16th June, 1942, of the Court of the Subordinate Judge, Burdwan, in Money Suit No. 261 of 1932/ Miscellaneous Case No. 132 of 1941 and Money Suit No. 262 of 1932/Miscellaneous Case No. 131 of 1941. N. C. Chatterjee (A. K. Dutt and Sukumar Ghose, with him) for the appellant. Manmohan. Mukherjee and P. K. Chatterjee for respondent No. 1. 989 1954. March 12. The Judgment of the Court was delivered by MUKHERJEA J. These two analogous appeals, which are between the same parties and involve the same points in dispute, are directed against a common judgment of a Division Bench of the Calcutta High Court dated the 12th of August, 1948, by which the learned Judges affirmed, in appeal, the decision of the Subordinate Judge of Burdwan passed in two analogous proceedings under section 36 of the Bengal MoneyLenders Act. The facts material for our present purpose lie within a narrow compass and may be stated as follows: The principal respondents are certain idols, represented by their managing Shebait Ram Govinda Roy. The idols are the family deities of the Roys of Bonpash in the district of Burdwan, and the number of Shebaits being very large, there is a recognised usage in this family that the seniormost member amongst the descendants of the founder acts as the managing Shebait and it is he who manages the endowed properties and looks after the due performance of the worship of the idols. It is not disputed by the parties that it is within the competence of the managing Shebait to borrow money to meet the necessities of the idols and to execute such documents as may be necessary for that purpose. Admittedly Adwaita Charan Roy was the managing Shebait of the deities from 1926 to 1930 and as Shebait, he executed a Hatchita in favour of one Nanitosh Chakraborty some time in April, 1928, on the basis of which he received advances of money from time to time from the latter. The last entry in the Hatchita was made in March, 1929, and the total amount borrowed up to that date came up to Rs. 3,801. Adwaita died in March, 1930, and after his death, Satish Chandra Roy became the managing Shebait and continued to act as such till his death in 1940. There was an adjustment of accounts between Nanitosh, the creditor,in whose favour the Hatchita was executed, and Satish Chandra, the managing Shebait some time in October, 1931, and a sum of Rs. 5,068, having been found due to the 128 990 creditor, Satish Chandra gave him a renewed Hatchita for that amount. It appears that while Adwaita was still the managing Shebait, a suit was instituted by some of his co Shebaits to remove him from his office and pending the hearing of the suit, Ramjanaki Roy, another co Shebait, was appointed a Receiver of the debutter property by the court. With the permission of the court, Ramjanaki borrowed from the same Nanitosh Chakraborty three sums of money on three different promissory notes executed respectively on the 27th September, 1929, 1st October, 1929, and 14th January, 1930. The suit was eventually dismissed for non prosecution after Adwaita 's death. Nanitosh died in 193 1, and in 1932) his two sons Aditya and Dhirendra, who figure as respondents 14 and 15 in these appeals, instituted two money suits against Satish Chnandra, the managing Shebait, in the Court of the Subordinate Judge, Burdwan, being Money Suits Nos. 261 and 262 of 1932, for recovery of the moneys due in respect of the Hatchita and the promissory notes mentioned aforesaid. Both the suits were decreed on the basis of a compromise dated the 23rd July, 1933, and two consent decrees were passed, one for a sum of Rs. 5,800, and the other for Rs. 2,200, both payable in sixteen yearly instalments with a further stipulation that in default of payment of any one of the instalments, the whole or balance of the decretal amount would become due and payable in each. The instalments not having been paid in either of the cases both the decrees were put into execution. In Execution Cases Nos. 76 and 77 of 1936, arising out of Money Suits Nos. 261 and 262 of 1932, the properties mentioned in Schedule Ka in each case were put up to sale and they were purchased ostensibly by the two decreeholders Aditya and Dhiren. Three years later, Execution Cases Nos. 17 and 18 of 1939 were started again in connection with the said decrees and this time the properties specified in Schedule Kha were attached and put up to sale and they were also purchased by the Chakraborty decreeholders. Finally, in Execution Cases Nos. 163 of 1939 and 5 of 1940, the properties described in Schedule GA were sold and 991 they were, knocked down to Srimati Oramba Sundari Dasi, who figures as the appellant in the appeals before us and who, it may be noted, is the wife of Aghore Nath Roy, a son of Adwaita, the former managing Shebait of the debutter estate. Subsequently, the decreeholders, who purchased Ka and Kha Schedule properties sold them by a registered Kobala to the said Oramba Sundari Dasi on the 26th of July, 1940. The result, therefore, was that the properties described in the three Schedules came to vest in Oramba Sundari, the wife of Aghore Nath Roy. On the 28th August, 1941, the deities represented by some of the Shebaits filed two applications under section 36 (6) (a) (ii) of the Bengal Money Lenders Act praying for the reopening of the two compromise decrees mentioned aforesaid and the passing of. new installment decrees in accordance with the provisions of the Act. There were prayers also for restoration. to the deities of all the properties mentioned in Schedules, Ka, Kha and Ga which were purchased in execution of the decrees. The principal opposite parties to these proceedings were the Chakraborty decreeholders, Oramba Sundari, the ostensible purchaser, and Aghore Nath Roy, her husband. The allegations in the applications, in substance, were that the Chakrabortys were mere benamidars for Aghore Nath Roy, who was the real lender and the real decreeholder in both these suits. It was alleged that Aghore Nath Roy purchased these properties in the benami of the decreeholders in two out of the three execution proceedings and in the benami of his wife Oramba Sundari in the third. The subsequent Kobala executed by the Chakrabortys in favour of Oramba . Sundari was also asserted to be a fictitious conveyance made in favour of Aghore Nath Roy in the name of his wife. In these circumstances, the judgment debtors prayed that they were entitled to have the two compromise decrees reopened and on the passing of new instalment decrees to have the properties, which were in possession of the real decreeholder, restored to the deities in terms of section 36(2)(c) of the Bengal Money Lenders Act. The trial judge decided 992 in favour of the judgment debtors and granted their prayers in both the applications. Orders were made for reopening of the decrees and making of fresh decrees in their places in accordance with the provisions of the Bengal Money Lenders Act. Direction was also given for restoration of the properties mentioned in Schedules Ka, Kha and Ga to the deities under the provision of section 36(2)(c). Against this decision, Oramba Sundari took two appeals to the High Court of Calcutta and the learned Judges, who heard the appeals, affirmed the decision of the court below and dismissed both the appeals. Oramba Sundari has now come up in appeal to this court on the strength of a certificate given by the High Court under sections 109 (a) and 110 of the Civil Procedure Code. Mr. Chatterjee who appeared in support of the appeals, has not challenged before us the findings of fact concurrently arrived at by the courts below, viz. ,that the appellant Oramba Sundari was a mere benamidar for her husband Aghore in respect of the purchase of Ga Schedule properties in court sale, and also that the Kobala executed by the Chakrabortys in her favour on July 26, 1940, was a fictitious transaction. The point, which he has pressed for our consideration, is that in a proceeding under section 36 of the Bengal Money Lenders Act, it is not open to the court to go behind the decree and launch an enquiry as to whether the decreeholders on record were in fact benamidars for another person. In other words, the contention is that, even if Aghore was proved to have advanced the money upon which the Chakrabortys obtained the decrees, in reopening the decrees and in working out the rights of the parties in accordance with the provisions of the Bengal Money Lenders Act the court could treat the Chakrabortys alone as the decreeholders. For a proper determination of this point, it is necessary to examine the scope of section 36 of the Bengal Money Lenders Act and the reliefs which the Court is competent to grant in terms of that section. Section, 36 of the Bengal Money Lenders Act sets out the various powers which the court can exercise, 993 if it has reason to believe that the exercise of one or more of the powers will give relief to the borrower as contemplated by the Act; and one of the powers, which is mentioned in clause (a) of sub section (1) of the section is to reopen any transaction and take an account between the parties. The drafting of section 36 is indeed obscure and somewhat clumsy, but it is clear, as the Privy Council (1) has pointed out, that the power of reopening a transaction, as contemplated by the section, extends to reopening of decrees as well. Sub section (2) of section 36 contains detailed provisions as to what the court may or may not do when a decree is reopened. It cannot be disputed that the court reopens a decree under section 36(2) only for the purpose and so far as it is necessary to give relief to the borrower in the manner provided for in the Act, namely, to release him from all liability for interest in excess of the limits prescribed by section 30 of the Act. A new decree is passed only for the purpose of substituting the method of accounting sanctioned by the Act for the calculations upon which the original decree was passed and to give an opportunity to the judgment debtor to pay the decretal dues thus ascertained by instalments. But save and except for these, the old decree as well as the adjudications made thereunder are not wiped out and the parties are not relegated to their rights and liabilities under the original cause of action (2). How the rights of the parties are to be adjusted and worked out when a decree hat; been reopened has been dealt with exhaustively in the several clauses of section 36 (2) of the Bengal Money Lenders Act, and an examination of these clauses makes it clear to our minds that an enquiry as to whether the decree holder was in fact a benamidar for another person in respect of the decree, does not come within the purview of these provisions. Clause (a) of section 36(2) empowers the court to pass a new decree in accordance with the provisions of the Act. Obviously, this new decree is to be passed in favour of the original decreeholder and only the calculations upon which the old (1) Vide Renula vs Manmatha, 72 I.A. 156. (2) Vide Bank of Commerce Ltd. vs Amulya Krishna Babu Roy Chowdhury 994 decree was based would be changed by substituting the statutory method of accounting in place of what rested upon the contract between the parties. Clauses (b) and (C) contemplate cases where properties have been sold in execution of the original decree. If the purchaser is the decreeholder, himself and he is in possession of the property when the decree is reopened, it is incumbent upon the court to order restoration of these properties to the judgment debtor under clause (c). If, on the other hand, the properties had been acquired by strangers either by purchase at the execution sale or from the decreeholder purchaser, their interests would be protected if they have acquired these rights bona fide as contemplated by clause (b). Under clause (d), the court has to order the payment of the decretal amount in such instalments as it thinks proper, and clause (e) further imposes a duty on the court to give a direction in such cases that if there is default in the payment of any one of the instalments, the properties restored to the judgment debtor under clause (e) would be put back into the possession of the decreeholder. It is quite true that the object of restoring possession of the properties sold in execution of the decree to the judgment debtor is to enable the latter to pay off the decretal dues, but it is to be remembered that the sale itself is not annulled, and in case of default in payment of any of the instalments, the properties are returned to the decreeholder purchaser. We agree that if the purchaser is a mere benamidar for the decreeholder, clause (b), subsection (2) of the section would not afford protection to him in any way. He could not be regarded as a person other than the decreeholder acquiring rights bona fide as contemplated by that clause. For the purpose of giving effect to clauses (b) and (c), therefore, the court has not only the right but is under a duty to make an enquiry as to whether the ostensible purchaser at the execution sale, or the person who purports to have acquired an interest therein under a subsequent transfer from the decreeholder purchaser, has bonafide acquired such rights within the meaning of clause (b). But we do not agree with the learned 995 Judges of the High Court that in making a new decree under clause (a) of section 36(2) and giving the judgment debtor consequential relief under clause (c) of the sub section, the court can at all enter into the question as to whether the decreeholder on record is himself a benamidar for another person in respect of the decree. Such enquiry, it seems to us, is altogether outside the purview of the different clauses of section 36(2) of the Bengal Money Lenders Act. These provisions do not recognise any other decreeholder than the one in whose favour the original decree was passed. It is between him and the judgment debtor that the rights are to be adjusted in accordance with the provisions of the Act; to him would the instalments have to be paid under the new decree, and he alone would be compelled to restore the properties which he had purchased in execution proceedings. None but the decreeholder on record can give a valid discharge or record satisfaction of the decree. This being the position, it is altogether immaterial, in our opinion, that it was Aghore, the husband of the appellant, who, really advanced the money upon which the decrees were obtained. We must treat the Chakrabortys and the Chakrabortys alone as the decreeholders and see to what extent the provisions of the Act could be applied against them in the circumstances of the present case. So far as the properties described in Schedules Ka and Kha are concerned, it is not disputed that they were purchased by the decreeholders themselves. No price was actually paid by the decreeholders, but the sale proceeds were set off against the decretal dues. The decreeholders, therefore, must be deemed to be the purchasers of these properties within the meaning of clause (c) of section 36(2); and as the subsequent conveyance of these properties in favour of Oramba Sundari, the appellant, has been held by both the courts below to be a fictitious transaction, we must hold that Oramba Sundari did not bona fide acquire any right which could be protected under clause (b) of section 36(2). With regard to these properties, therefore, the order for restoration of possession made by both the courts below should stand. As regards Ga 996 Schedule properties, however, Oramba Sundari was the purchaser at the execution sale and whether or not the money for such purchase was paid by her husband becomes immaterial. This was not the property purchased by the decreeholders and there is no proof of the decreeholders being in possession of the same either by themselves or through Oramba Sundari. In these circumstances, clause (e) of section 36(2) cannot be attracted in favour of judgment debtors so far as this property is concerned and the possession of it must remain with the appellant. We, therefore, allow the appeal in part and set aside the order for restoration of possession made by the courts below in respect to the Ga Schedule property. The rest of the decision of the High Court will stand. We make no order as to costs of these appeals. Appeal partly allowed.

IN-Abs

Held, that in a proceeding under section 36 of the Bengal Money Lenders Act, 1940, it is not competent to the court to go behind the decree and embark on an enquiry as to whether the decree holders on record were in fact benamidars for another person. Scope of section 36 of the Act discussed. Renula vs Manmatha (72 I.A. 156) and Bank of Commerce Ltd. vs Amulya Krishna Basu Boy Chowdhury ([1944] F.C.R. 126) referred to.

Appeal No. 1323 of 1966. Appeal by special leave from the judgment and order dated September 10, 1965 of the Allahabad High Court in Civil Miscellaneous Writ No. 3567 of 1965. Niren De, Addl. Solicitor General and N. H. Hingorani, for the appellant. R.K. Garg, D. K. Agarwala and M. V. Goswami, for respon dent No. 1. The appellant will be so entitled, if it is held to be 'a railway ', as contended, on behalf of the appellant. The High Court of Allahabad, in its order and judgment, under appeal, has held that the appellant is not a railway, but only a tramway and, as such, not eligible for exemption, from the tax, in question. The short facts, leading to this appeal, may now be briefly set out. The appellant is a limited liability company; and it runs a railway, between Shahdara, in Delhi, and Saharanpur, in the State of Uttar Pradesh a distance of about 95 miles or 148.865 kilo meters. The appellant company also operates within the municipal area of Saharanpur. The company was, originally, registered as a tramway, under the (Act XI of 1886) (hereinafter called the Tramways Act), on November 20, 1905. By Notification, No. 5752, dated July 5, 1907, the Governor General in Council extended to the appellant company, the whole of the Indian Railways Act, 1890 (Act I of 245 1890) (hereinafter called the Railways Act), excepting the provisions of Section 135. The Municipal Board of Saharanpur, the first respondent herein, imposes a terminal tax, under the provisions of section 128(1)(xiii) of the United Provinces Municipalities Act, 1916, as amended by Act I of 1918. Under the said Act, the first respondent has prohibited the importation of goods, within the local limits of the Saharanpur Municipality, by rail, until the tax leviable thereon, or in respect thereof, has been paid, in accordance with the provisions of the Act and the Rules. The Board has also framed rules for the assessment and collection of Terminal Tax, as authorized by the Government Notification No. 856/XI D.T. 3, dated May 1, 1919. The rules have been amended, as per another notification, No. 5965/XI D.T. 3, dated September 21, 1939. Item 2, of Schedule B, of, these rules, provides for a list of articles being exempted from payment of Terminal Tax. The said item is as follows : "Railway stores and materials, which are required for use on Railways, whether in construction, maintaining or working the same and which are not removed outside the Railway land boundaries but not stores imported into Municipal limits for purchase and consumption by Railway employees nor stores with which Railway Cooperative Stores are stocked for sale to Member. " It is the claim of the appellant that, till 1961, the first respondent has never imposed any terminal tax, on 'railway stores and materials ' required for use on the railway of the appellant company, for the purposes mentioned in item 2 of Schedule B. But, for the first time, in January 1962, according to the appellant, the first respondent imposed tax on such stores and attempted to make the appellant liable. The appellant company protested against this levy, on the ground that, it being a railway, was entitled to the exemption provided in respect of 'railway stores and materials, which are required for use on railway '. But, the first respondent, by its order, dated October 11, 1962, over ruled the appellant 's objections in this regard. An appeal, taken by the appellant company, to the Additional District Magistrate, Saharanpur, under section 160 of the Municipalities Act, read with the relevant Rules, did not meet with success, as the said Magistrate rejected the appeal, by his order dated May 25, 1965. The appellant company filed Civil Miscellaneous Writ No. 3567 of 1965, in the High Court of Allahabad, challenging the levy of terminal tax and claimed exemption, under item 2, of Schedule B, referred to earlier. The learned Judges of the Allahabad High Court, by their judgment, dated September 10, 1965, dismissed 246 the writ petition. They were of the view that the appellant company was not 'a railway ', but 'a tramway ' constructed tinder the Tramways Act. In this connection, the learned Judges adverted to the Railways Act, which defines both the terms 'tramway ' and ' railway '. It is their view that when a tramway and a railway, are both separately defined in an Act, a tramway cannot also be a railway. The learned Judges, of the High Court, then referred to the fact that so far as the appellant company was concerned, the Central Government had not applied section 135 of the Railways Act, though all the other provisions of that Act had been applied. They further held that a mere application of the Railways Act, in whole or in part, to a tramway, will not convert the tramway into a railway and that, in order to be a railway, it has to be opened, in accordance with the provisions contained in Chapter IV, of the Railways Act. So, they concluded that, inasmuch as the appellant railway was not opened, in accordance with the provisions of the Railways Act, it had been, from its inception, and it continued to be, not a railway, but only a tramway. On this line of reasoning, the High Court further held that in the rules framed by the Municipal Board, the expression 'railway ' must be intended to refer only to 'railways ' coming under the Railways Act, and could not include a 'tramway ', like the appellant, opened under the Tramways Act. In consequence, the claim of the appellant, for exemption, was, according to the High Court, rightly rejected by the authorities. The result was the dismissal of the appellant 's writ petition, by the High Court. We shall now refer to the main features of the appellant company. The appellant railway is worked by steam, or other mechanical power, and is not wholly within a Municipal area. The railway line comprises narrow gauge track of 2 6" gauge, and consists of main line, transportation sidings and commercial sidings. 'Me line passes through four districts viz. Saharanpur, Muzaffarnagar, Meerut and Delhi, within the provinces of Uttar Pradesh and Delhi. The system has about 155 level crossings, comprising of Special Class, A class, B class and C class. Some of the level crossings are provided with signalling and interlocking arrangements and the system takes in 406 bridges, and 26 railway stations ' in all. The bridges and culverts are maintained, in accordance with the instructions contained in 'Way and Works Manual ' of the Indian Railways, and the railway stations are fitted with Morse speakers and instruments, for working trains, as per general rules applicable to all railways. There is annual inspection of the railway line, by the Additional Commissioner of Railways Safety, appointed by the Government, to inspect Indian Railways. There are arrangements for through booking of goods and passengers. From 247 what is stated above, it will be seen that the appellant company is a 'railway ', as commonly understood, and described in ordinary parlance. The Tramways Act was an Act passed to facilitate the con struction and to regulate the working of Tramways. Section 3(5) defines 'tramway ' as follows : " 'tramway ' means a tramway having one, two or more rails, and includes (a)any part of a tramway, or any siding, turnout, connection, line or track belonging to a tramway; (b) any electrical equipment of a tramway; and (c) any electric supply line transmitting power from a generating station or sub station to a tramway or from a generating station to a sub station from which power is transmitted to a tramway. " The expression 'order ', under section 3(6), means an order authorizing the construction of a tramway under the Act, and includes a further Order substituted for, or amending, extending or varying, that order. There are various other provisions in this Act relating to the construction and maintenance of tramways, orders authorizing the construction of tramways, and other incidental matters. The Railways Act was an Act to consolidate, amend and add to the law relating to Railways in India. Section 3(1) defines 'tramway ' as meaning a tramway constructed under the Tramways Act. or any special Act relating to tramways. Section 3(4) defines 'railways ' and is as follows " railway ' means a railway, or any portion of a railway, for the public carriage of passengers, animals or goods, and includes (a)all land within the fences or other boundary marks indicating the limits of the land appurtenant to a railway; (b)all lines of rails, sidings or branches worked over for thepurposes of, or in connection with, a railway; (c)all stations, offices, warehouses, wharves, work shops,manufactories, fixed plant and machinery and other works constructed for the purposes of, or in connection with, a railway; and (d) all ferries, ships, boats and rafts which are used on inland waters for the purposes of the traffic of a railway and belong to or are hired or worked by the autho rity administering the railway. " 248 This Act also contains various provisions relating to the opening of railways, inspection of railways, construction and maintenance of works, working of railways and several other incidental matters. Section 135, occurring in Chapter X, containing supplemental provisions, relates to taxation of railways by local authorities. That section reads : " 135. Notwithstanding anything to the contrary in any enactment, or in any agreement or award based on any enactment, the following rules shall regulate the levy of taxes in respect of railways and from railway adminis trations in aid of the funds of local authorities, namely : (1)A railway administration shall not be liable to pay any tax in aid of the funds of any local authority unless the Central Government has, by notification in the Official Gazette, declared the railway administration to be liable to pay the tax. (2)While a notification of the Central Government under clause (1) of this section is in force, the railway administration shall be liable to pay to the local authority either the tax mentioned in the notification or, in lieu thereof, such sum, if any, as an officer appointed in this behalf by the Central Government may, having regard to all the circumstances of the case, from time to time determine to be fair and reasonable. (3)The Central Government may at any time re voke or vary a notification under clause (1) of this section. (4)Nothing in this section is to be construed as debarring any railway administration from entering into a contract with any local authority for the supply of water or light, or for the scavenging of railway premises, or for any other service which the local authority may be rendering or be prepared to render within any part of the local area under its control. (5) 'Local authority ' in this section means a local authority as defined in the General Clauses Act, 1887, and includes any authority legally entitled to or entrusted with the control or management of any fund for the maintenance of watchmen or for the conservancy of a river. " The point to be noted, in this provision, is that unless a notification has been issued by the Central Government, under sub section (1) of section 135, declaring a railway administration to be liable to pay a tax, a railway administration shall not be liable to pay any tax in 249 aid of the funds of any local authority. Section 146, giving power to the Government to extend the Railways Act to certain tramways, is as follows: "146. (1) This Act or any portion thereof may be extended by notification in the Official Gazette (a) to any tramway which is wholly within a municipal area or which is declared not to be a railway under clause (20) of article 366 of the Constitution, by the State Government; and (b) to any other tramway, by the Central Government. (2) This section does not apply to any tramway not worked by steam or other mechanical power. " We have already pointed out that all the provisions of the Railways Act, except section 135, have been extended to the appellant company. The next enactment to be referred to is the (Act X of 1895), which provided for the payment, by railway companies, registered under the Indian Companies Act, 1 882, of interest out of capital during construction. Section 2(1) defines 'railway ' as meaning a railway as defined in section 3, cl. (4) of the Railways Act. Section 3 provided for a railway company paying interest on its paid up share capital, out of capital, for the period, and subject to the conditions and restrictions contained in that section. There are other consequential provisions, in this Act. The (Act IV of 1902) was one to apply the provisions of the , to certain tramway companies. The preamble to this Act IV of 1902, stated that it was expedient to apply the provisions of the , to companies formed for the construction of tramways 'not differing in structure and working from light railways '. This preamble will clearly show that, even as early as 1902, the Legislature considered that though certain systems were called 'tramways, substantially they did not differ, in structure and working, from light railways. The expression 'railway ' is defined, in section 311(2) of the Government of India Act, 1935, as follows : " railway ' includes a tramway not wholly within a municipal area. " It is to be noted that if a system, though a tramway, is wholly not within a municipal area, that system will be a 'railway '. Entry 250 58, of List 1 (Federal List) of the Seventh Schedule to the 1935 Act, was : "Terminal taxes on goods or passengers carried by railway or air; taxes on railway fares and freights. " It is, again, to be noted, that under this Entry, in respect of a tramway, which is not wholly within a municipal area and which will, therefore, be a 'railway ', under section 311(2), the levy of terminal tax on goods or passengers carried by such a system, will be within the competence of the Federal Legislature. Under article 366(20) of the Constitution, the expression 'rai lway ' is dealt with, as follows : " railway ' does not include (a) a tramway wholly within a municipal area, or (b) any other line of communication wholly situate in one State and declared by Parliament by law not to be a railway. " It may be noted here that the appellant 's system does not come within the exclusions mentioned in cls. (a) or (b) of this definition. Entry 89 of List 1 (Union List), of the Seventh Schedule to the Constitution, is as follows : "Terminal taxes on goods or passengers, carried by railway, sea or air; taxes on railway fares and freights." ' It may be noted that the competent legislative body to levy terminal taxes on goods or passengers, carried by the appellant 's system, which will be a 'railway ', under article 366(20), is the Parliament. The only other Act to be referred to is the (Act XXV of 194 1 ), which was an Act to regulate the extent to which railway property shall be liable to taxation imposed by an authority. Section 3(1) of that Act provided that a railway administration shall be liable to pay any tax in aid of the funds of any local authority, if the Central Government, by notification in the Official Gazette, declared it to be so liable. Section 4 provided for the Central Government, by notification in the Official Gazette, revoking or varying any notification issued under section 135(1) of the Railways Act. The learned Additional Solicitor General, appearing for the appellant, pointed out that the expression 'railway ' had not been defined in the United Provinces Municipalities Act, or in the Terminal Tax Rules. In the absence of any special definition contained in the provisions, granting the exemption, in question, the expression 'railway ', occurring in item 2, of Schedule B, of the Terminal Tax Rules, must bear the commonly understood meaning of 'a carriage of passenger and goods, on iron rails '. By virtue of the definition, in section 311(2) of the 1935 Act, and the provision, 251 corresponding to it, in the Constitution, viz., article 366(20), the appellant 's system, though registered under the Tramways Act, was a railway. The mere fact that section 135, of the Railways Act, had not been applied to the appellant 's system, is not a decisive factor against the appellant, as had been assumed by the High Court. In view of the various features of the appellant 's system, and pointed out by us earlier, it is argued that the appellant 's system is a 'railway ', both in law and in fact. It satisfies all the ingredients of a railway and, if that is so, the appellants are entitled to the exemption provided for, under item 2 of Schedule B, of the Terminal Tax Rules. On the other hand, Mr. Garg, learned counsel appearing for the respondent Board, pressed before us for acceptance the various reasons, given by the High Court, for holding that the appellant is not entitled to claim be exemption. In particular, counsel pointed out that there were two different enactments, one dealing with 'tramways ' and the other with 'railways ', being the Tramways Act and the Railways Act, respectively. Therefore, there were two diff erent systems, under two different names, namely 'tramways ' and 'railways ', which was clearly known to the authorities concerned at the time when the Terminal Tax Rules were framed, and so when the expression 'railway ' was used in the exemption clause, it must have been the intention of the framers of the Rules to bring, within its ambit, only the 'railways ' constructed under the Railways Act. The appellant 's system, though called a 'railway ' and though it might have ill the features of i railway, it is pointed out, nevertheless, that inasmuch is it has been constructed under a different enactment, viz., the Tramways Act, it cannot be treated as a 'railway ' for the purposes of the exemption. Counsel also stressed that section 135 of the Railways Act had not been applied to the appellant. We are not impressed with the approach made by the learned Judges of the High Court, for negativing the claim for exemption, made by the appellant. It must be borne in mind that the expression 'railway has not been defined either in the concerned Municipalities Act, orthe Rules; if such is the case. , the definition must hold the field. Going by the definition of the expression ' railway ', containedin section 311(2) of the Government of India Act, 1935, and the corresponding provision in article 366(20) of the Constitution, the appellant 's system is a 'railway '. All the provisions of the Railways Act have been extended to the appellant, excepting section 135. In our opinion, if the appellant is a 'railway ', otherwise, the mere fact that the provisions of section 135, of the Railways Act, have not been applied, is of no consequence. We have already referred to the fact, which is not in dispute, that the appellant 's railway passes through four districts in U.P. and 252 Delhi, and that it has got all the features of a railway, as ordinarily understood. In this connection, we may refer to certain English decisions, where the claim, made on behalf of a system, for being taxed at a concessional rate, had come up for consideration. In Blackpool and Fleetwood Tramroad Company vs Thornton Urban Council(1), the Court of Appeal had to consider as to how far the Blackpool & Fleetwood Tramroad Company, the appellant before them, was entitled to the assessment, at a lower rate under section 211 (1) (b), of the Public Health Act, 1875 (38 & 39 Viet. c. 55). The material portion of that section was : "the occupier of any land . used only as a canal . or as a railway, constructed under the powers of any Act of Parliament, for public conveyance, shall be assessed in respect of the same in the proportion of one fourth part only of the net annual value thereof. " The question was as to whether the appellant, in that case, was a 'railway ', to whom the said provision would apply. The appellant company had constructed and maintained a tramroad connecting two systems of tramways, under the local Acts of 1896 and 1898. Various provisions of the Railways Clauses Consolidation Act, 1845, had been applied to the tramroad. The tramroad, in that case, was on rails laid on sleepers, fenced off from adjoining land, excepting at the level crossings of roads. The Divisional Court had rejected the claim of the appellant; but the Court of Appeal held that the tramroad was land 'used only as a railway constructed under the power of an Act of Parliament for public conveyance, within the meaning of section 21 1 (1)(b) of the Public Health Act, 1875, and that the company was, consequently, entitled to be assessed, in respect of the said 'railway ', at onefourth of its net annual value. The appellants contended that the tramroad was and could only be worked as a railway and was, in fact and in law, used as a railway, and, in consequence, they urged that the tramroad, maintained by them, is 'land ' used only as a railway. The Court of Appeal noted that the rails were raised and laid on sleepers, just as a railway is laid, and that was the main distinction between the appellant 's system, and a tramway, which ran along public streets and in grooved rails. No doubt, it was pointed out for the Urban Council, that the appellant company had been incorporated under the Tramways Act and the very fact that certain provisions of the Railway Clauses Consolidation Act were applied to the appellant 's system showed that the appellant was not a railway. The Court of Appeal held that it was impossible to distinguish the piece of tramroad, owned by the (1) L. R. [190711 K.B.D. 568. 253 appellants, from a railway and that the exemption provided for in the Public Health Act applied to the tramroad of the appellants as it would, to any ordinary railroad passing through parts where it was not deriving the full benefit from the district rates in those parts. The Court of Appeal also rejected the contention of the Urban Council that the tramroad, owned by the appellants could be treated as a 'railway ' only for particular purposes, and not for the purpose of claiming the exemption under the Public Health Act; because, according to the Court of Appeal, a reading of section 211 (1) (b) of the Public Health Act, showed that it applied to land used as a railway, i.e., constructed as a railway in fact. This decision was taken up in further appeal, before the House of Lords, whose decision is reported as Thornton Urban Council vs Blackpool and Fleetwood Tramroad Company(1), and the decision of the Court of Appeal was confirmed. In the course of the judgment, after referring to section 211 of the Public Health Act, Lord Macnaghten observed, at p. 267 : "Now it cannot be denied that the rails on which the tramcars run, with the embankment or foundation on which they rest, and everything that supports them, do form a road or way, and that that road or way was constructed under parliamentary powers for public conveyance. Is it 'a railway '? There is nothing in the Public Health Act, 1875, or in the earlier Acts, in which the same provision is found, to confine the word ' railway ' as used in those Acts to a particular kind of railway, or to limit the generality of the expression in any way. " His Lordship, further observed at p. 268 : "It seems to me that if it is a railway in fact, not differing from other railways in any material particular, it is nonetheless a railways because the promoters in their special Act chose to call it a 'tramroad ' a very convenient term to use for the title of their Act and the name under which they sought incorporation. Nor is it the less a railway because some only of the sections of the Railways Clauses Consolidation Act are incorporated in the special Act, or because, if one did not know what the thing really was, the language used for the purpose of applying the sections which are incorporated might seem to import that it was not, properly speaking, a railway at all. You must look at the special Act to see that it confers the appropriate powers of construction. Every thing else in the Act is, I think, beside the question which this House has now to determine." (1) 254 In our opinion, the observations of the House of Lords, ex tracted above, are apposite, to the case on hand. We have already pointed out that neither the Municipal Act, nor the Terminal Tax Rules give any special definition of the expression 'railway ', and, so far as we could see, there is nothing in the said Act or the Rules to indicate that the word 'railway ', in item 2 of Schedule B, is used only to refer to a 'railway ' registered under the Railways Act or to limit the generality of the expression 'railway ' in any way. Under those circumstances, if the appellant is a 'railway ' in fact, as commonly understood there does not appear to be any serious controversy on that point it will be a 'rail way ', notwithstanding the fact that it is registered as a 'tramway ', under the Tramways Act. The legislature itself has applied the various provisions of the Railways Act to the appellant, and the appellant also satisfies the definition of a 'railway ' under the Government of India Act, 1935, and the Constitution. The provisions of the , have also been applied to the tramways constructed, under the Tramways Act, by the Indian Tramway Act of 1902. The second preamble to the last mentioned Act, clearly shows that the tramways, to which the Indian Railway Companies, Act was made applicable, '#,lo not differ in structure and working from railways '. The object underlying the exemption under item 2, of Sche dule B, to the Terminal Tax Rules, is also not far to seek. The railways pass through areas where it is not deriving the full benefit of all the amenities provided by the Municipal Boards. Therefore, in our opinion, the appellant satisfies the definition of a 'railway ', so to be entitled to the exemption provided under item 2 of Schedule B. Before we close the discussion, we ",ill also refer to the decision of th House of Lords in Tottenham Urban Council vs Metropolitan Electric Tramways, Ltd.(1). The same question regarding the eligibility of a 'tramway ' for exemption, under section 21 1(1)(b) of the Public Health Act, 1 875, came up for consideration in that case. From the judgment, it will be seen that the company were working, as a connected system, a tramway and a light railway, which were constructed in and along certain public streets and roads, in the district of the urban Council. The 'tramway ' was constructed under the Tramway Acts and Orders and the 'railway, ' under the Light Railways Act, 1896. Both were identical as to the mode of construction and materials used. The claim of the company in respect of the 'railway ', as such, for assessment at a lower rate. was accepted; but, so far as the 'tramway ' ",as concerned, the House of Lords held that it is not a 'railway ', within the meaning of section 21 1(1)(b), of the Public Health Act, 1875. The (1) L. R. [1913]1 A. C. 702. 255 reason given by the House of Lords, for not accepting the claim of the tramway, was that in the great bulk of public legislation, relating to railways, the legislation has universally been understood and interpreted by Courts as applying only to that which is popularly known as a 'railway ', and not to that which is Popularly known as a 'tramway '. And special emphasis is laid by the House of Lords that the legislature has used the word 'railways ' and not 'railways and tramways ', in section 211 of the Public Health Act, 1875. We are only adverting to this decision to show that, on the basis of an interpretation placed by the Courts, the House of Lords held that the word 'railways ', in the Public Health Act, 1875, will not take in 'tramways '. But, no such circumstances, as pointed out by the House of Lords, in the said decision, exist in the present case before us. On the other hand, the position is exactly the opposite, as will be seen from the Government of India Act, 1935, and the Constitution. Even applying the popular test, adopted by the House of Lords, in this case, the appellant is undoubtedly a .railway '. In our opinion, the principles laid down by the House of Lords in Thornton Urban Council vs Blackpool and Fleetwood Tramroad Company(1), apply to the particular matter on hand and, we hold that the appellant, being a 'railway ', is entitled to the exemption under item 2, of Schedule B, to the Terminal Tax Rules, in question. We, accordingly, allow the appeal and set aside the judgment of the High Court, and further direct that a writ will issue, as prayed for by the appellant. The appellant will be entitled to its costs, from the first respondent, both in this Court and in the High Court. G. C. Appeal allowed.

IN-Abs

The appellant company ran a narrow gauge railway between Shahdara and Saharanpur. As it operated partly within the Municipal area of Saharanpur the Municipal Board of that place sought to subject railway stores and materials brought within the municipal area to terminal tax as provided by the Rules framed under the United Provinces Municipalities Act, 1916, as amended by Act 1 of 1918. The exemption from terminal tax given to railway stores and materials by item 2 to Schedule B of the said rules was denied to the appellant company on the ground that it was a 'tramway ' and not a 'railway '. The company had been originally registered in 1905 under the , (Act 11 of 1886); in 1907 the whole of the Indian Railways Act, 1890, (Act 1 of 1890) with the exception of section 135 had been extended to the company by the Governor General in Council. The Company 's claim that it was a 'railway ' entitled to the exemption under item 2 of Schedule B aforesaid, was rejected by the Municipal authorities as well as in appeal, by the Additional District Magistrate. The company therefore filed a writ petition before the High Court which was rejected. By special leave appeal was filed to this Court. It was contended on behalf of the appellant that : (i) in the absence of any special definition contained in the provisions granting the exemption in question, the expression 'railway ' occurring in item 2 of Schedule B of the Terminal Tax Rules must bear the commonly understood meaning of a "carriage of passenger send goods, on iron rails"; (ii) by virtue of the definition in section 311(2) of the Government of India Act, 1935, and the provision corresponding to it in the Constitution viz., article 366(20) the appellant 's system though registered under the Tramway.% Act, was a railway, (iii) the mere fact that section 135 of the Railways Act had not been applied to the appellant 's system was not a decisive factor against the appellant as assumed by the High Court. It was not in dispute that appellant 's system had all the features of a railway. HELD:Neither the Municipal Act nor the Terminal Tax Rules give any special definition of the expression 'railway ' and there is nothing in the said Act or Rules to indicate that the word 'railway ' in item 2 of Schedule B is used only to refer to a 'railway ' registered under the Rail ways Act or to limit the generality of the expression 'railway ' in any way. Under those circumstances, if the appellant was a 'railway ' in fact. , as commonly understood there did not appear to be any controversy on the point it would be a railway notwithstanding the fact that it was rep. C.I./67 3 244 gistered as a 'tramway ' under the Tramways Act. The legislature itself had applied the provisions of the Railway Act to the appellant, and the 'appellant also satisfied the definition of a 'railway ' under the Government of India Act, 1935 and the Constitution. [254B D] If the appellant was a 'railway ' otherwise, the mere fact that the provisions of section 135 of the Railways Act had not been applied to it, was of no consequence. [251H] Blackpool and Fleetwood Tramroad Company vs Thornton Urban Council, L.R. [1907] 1 K.B.D. 568, Thornton Urban Council vs Blackpool and Fleetwood Tramroad Company, L.R. [1909] AC. 264 and Tottenham Urban Council vs Metropolitan Electric Tramways, Ltd., , referred to.

Appeal No. 1230 of 1966. Appeal by special leave from the judgment and order dated August 27, 1962 of the Bombay High Court in Income tax Re ference No. 18 of 1961. section T. Desai, M. N. Shroff for 1. N. Shroff, for the appellant. R. M. Hazarnavis, Gopal Singh, section P. Nayyar for R. N. Sachthey, for the respondent. 239 The Judgment of the Court was delivered by Ramaswami J. This appeal is brought, by special leave, from the judgment of the High Court of Bombay dated August 27, 1962 in Income Tax Reference No. 18 of 1961. The appellant is an individual having income from House Property, Government Securities, Cinema Exhibition and financing film producers and distributors. During the period from March 3, 1952 to November 5, 1952 the appellant advanced a sum of Rs. 40,000/ to a firm of film distributors known as Tarachand Pictures. The appellant thereafter entered into an agreement dated January 5, 1953 with Tarachand Pictures under which the appellant advanced a further sum of Rs. 60,000/ in respect of the distribution, exploitation and exhibition of a picture called "Shabab". According to cl. 2 of the agreement the distributors were to pay a lumpsum of Rs. 1,750/ by way of interest on the initial advance of Rs. 40,000/ . Clause 3 of the agreement read as follows : "No interest will run henceforth on this sum of Rs. 40,000/ as also on the advances to be made as provided hereinabove but in lieu of interest it is agreed that the Distributors will share with the Financier profit and loss of the Distribution, Exploitation and Exhibition of the picture SHABAB in the Bombay Circuit, two third going to the Financier and one third to the Distributors. " Clauses 4 and 5 were to the following effect "4. The Distributors shall on or before the 15th of every month submit to the Financier a Statement of Account of the business done during the previous month in respect of the picture 'SHABAB ' in the territories of Bombay Circuit. The Distributors shall keep the proper accounts of the business of the picture 'SHABAB ' and the same as well as all documents, reports and contracts will be available to the Financier or his agent for inspection. " Clause 7 read as follows: "In case the picture is not released in Bombay within 15 months from the date hereof the Distributors shall be bound to immediately return all the moneys so far advanced to the Distributors by the Financier. In that event the Distributors shall be bound to return all the moneys together with interest thereon @ 9% per annum. " Clause 8 stated: "In case of any breach being committed by the Dis 240 tributors of any of the terms herein provided this agreement shall at once terminate and the moneys paid by the Financier shall be at once repaid by the Distributors to the Financier with interest @ 9% per annum." It appears that the distributors were not in a position to exhibit the film in Bombay within the stipulated time. When the film was ultimately released for exhibition it proved to be unsuccessful. The matter was taken to the City Civil Court and ultimately a consent decree was obtained in Suit No. 2061 of 1954 in the Bombay City Civil Court. In the end the appellant found that there was a balance of Rs. 80,759/ which was irrecoverable and he accordingly wrote it off as a bad debt on December 31, 1955 in the ledger account. For the assessment year 1956 57, the corresponding previous year being the calendar year 1955, the appellant claimed a loss of Rs. 80,759/ which he had written off as bad debt, under section 10(2)(xi) of the Income tax Act. By his assessment order dated July 31, 1957, the Income tax Officer disallowed the claim on the ground that the moneys advanced by the appellant under the agreement could not be regarded as a dealing in the course of his financing business, but the true nature of the transaction, as evidenced by the agreement, was a venture in the nature of a trade. The Income tax Officer accordingly held that the loss was a capital loss and it could not be allowed as a bad debt under section 10(2)(xi) of the Income tax Act. The appellant took the matter in appeal to the Appellate Assistant Commissioner of Income tax who dismissed the appeal. The appellant preferred a second appeal before the Income tax Appellate Tribunal which by its order dated February 19, 1960 rejected the appeal, holding that the loss of Rs. 80,759/ was a capital loss and not a loss of stock in trade. The Tribunal took the view that the transaction was not a joint venture with the distributors or any partnership business and that it was also not a mere financing deal or a part of the money lending activities of the appellant. According to the Appellate Tribunal, the true nature of the transaction was an investment of the capital for a return in the shape of share of profits, and the loss suffered by the appellant was therefore a capital loss and not a revenue loss. As required by the appellant, the Tribunal stated a case to the High Court under section 66(1) of the Income tax Act on the following question of law: "Whether the aforesaid loss of Rs. 80,759/ is deductible under any of the provisions of the Act ?" By its judgment dated August 27, 1962, the High Court answered the Reference in the negative and against the appellant. On behalf of the respondent it was submitted that the High Court was right in taking the view that the appellant had advanced 241 a sum of Rs. 1,00,000/ not with a view to earn interest thereon but with a view to making an investment in the business of Tarachand Pictures and get a return on the said investment by way of a share of profits in the said business. It was contended that the money was not lent for any definite term and no rate of .interest had been fixed under cl. 3. The argument was also, stressed that cl. 3 of the agreement stipulated that the appellant was to share with the distributors not only the profit but also the loss of the business, and in the case of no money lending transaction is there a covenant between the parties that the money lender will share the loss of the business for which the money is lent. In other words, it was argued that no money lending transaction can have the attribute of the money lender sharing the risk of the loss of the business for which the money is lent, nor could it be a feature of any purely financial deal. We are unable to accept the argument of the respondent that the transaction between the parties under the agreement dated January 5, 1953 was not a money lending transaction or a transaction in the nature of a financial deal in the course of the appellant 's business. If cl. 3 of the agreement is taken in isolation there may be some force in the contention of the respondent that the term under which the appellant undertook to share the loss took the transaction out of the category of a money lending transaction and the loss suffered by the appellant was therefore a capital loss. In the present case, however, cl. 3 of the agreement dated January 5, 1953 cannot be read in isolation but it must be construed in the context of cl. 7 which provides that in case the picture was not released in Bombay within 5 months from the date of the agreement, the distributors will return all the moneys so far advanced to them by the appellant together with interest thereon at 9% per annum. It is the admitted position in the present case that the picture was not released by ,the distributors till the stipulated date, namely, April 4, 1954 but it was released on May 28, 1954 and cl. 7 of the agreement there fore came into operation. The result therefore is that on and from April 4, 1954 there was a contract of loan between the parties in terms of cl. 7 of the agreement and the principal amount became repayable from that date to the appellant with interest thereon at 9% per annum. It follows therefore that the appellant is entitled to claim the amount of Rs. 80,759/ as a bad debt under section 10(2) (xi) of the Income tax Act and the loss suffered by the appellant was not a loss of capital bat a revenue loss. To find out whether an expenditure is on the capital account or on revenue account, one must consider the expenditure in relation to the business. Since all payments reduce capital in the ultimate analysis, one is apt to consider a loss as amounting to a loss of capital. But it is not true of all losses, because losses in the running of the business cannot be said to be of capital. The distinc 242 tion is brought out for example, in Reid 's Brewery Co. Ltd. vs Male(1). In that case, the brewery company carried on, in addition to the business of a brewery, a business of bankers and moneylenders making loans and advances to their customers. This helped the customers in pushing sales of the product of the brewery company. Certain sums bad to be written off and the amount was held to be deductible. In the course of his judgment Pollock B. said : "Of course, if it be capital invested, then it comes within the express provision of the Income tax Act, that no deduction is to be made on that account." but held that : business can doubt that this is not capital invested. What it is is this. It is capital used by the Appellants but used only in the sense that all money which is laid out by persons who are traders, whether it be in the purchase of goods be they traders alone, whether it be in the purchase of raw material be they manufacturers, or in the case of money lenders, be they pawnbrokers or money lenders, whether it be money lent in the course of their trade, it is used and it comes out of capital, but it is not an investment in the ordinary sense of the word. " In the present case, the conditions for the grant of the allowance under section 10(2)(xi) of the Income tax Act are satisfied. In the first place, the debt is in respect of the business which is carried on by the appellant in the relevant accounting year and accounts of the business are admittedly kept on mercantile basis. In the second place, the debt is in respect of and incidental to the business ,of the appellant. It has also been found that the debt had become irrecoverable in the relevant accounting year and the amount had been actually written off as irrecoverable in the books of the appellant. For these reasons, we hold that the judgment of the Bombay High Court dated August 27, 1962 should be set aside and the question referred to the High Court must be answered in the affirmative and in favour of the appellant. We accordingly allow this appeal with costs here and in the High Court. V.P.S. Appeal allowed.

IN-Abs

The appellant, who was carrying on the business of financing film producers and distributors, had advanced a sum of Rs. 1,00,000 to a firm of film distributors. Clause 3 of the agreement between the parties provided that the appellant was not entitled to any interest but that he was to share with the distributors their profit and loss; and cl. 7 provided that in case the picture was not released within the stipulated time, the distributors would return to the appellant all the moneys advanced by him together with interest at 9% per annum. There was delay in releasing the picture and a dispute arose between the appellant and the distributors, which was settled. The appellant found that a sum of Rs. 80,759 was irrecoverable. He accordingly wrote it off as a bad debt and claimed it as a revenue loss which should be deducted under section 10(2)(xi) of the Income tax Act, 1922. The department, the Appellate Tribunal, and the High Court on reference, held against the appellant, on the basis of cl. 3 of the agreement, that the loss suffered by the appellant was a capital loss. In appeal to this Court, HELD : Since all payments reduce capital one is apt to consider a loss as a capital loss. But losses in the running of a business cannot be said to be of capital. To find out whether an expenditure is on the capital account or on revenue account, one must consider the expenditure in relation to the business. In the present case, the debt was in respect of and incidental to the business of the appellant in the relevant accounting year, and the accounts of his business were kept on mercantile basis. If cls. 3 and 7 of the agreement are read together, the transaction would be a money lending transaction or a transaction in the nature of a financial deal in the course of the appellant 's business, resulting in a loan repayable with interest. Therefore, the loss suffered was a revenue loss and the appellant was entitled to claim the deduction of the amount as a bad debt under section 10(2) (xi) of the Act. [241H; 242E F] Reid 's Brewery Co. Ltd. vs Male, , applied.

Appeal No. 1420 of 1966. 129 Appeal by special leave from the judgment and order dated October 21, 1965 of the Mysore High Court in Writ Petition No. 2173 of 1964. section T. Desai, B. R. L. Iyenger and B. R. G. K. Achar, for the appellant. R. B. Datar, Anil Kumar Sablok and B. P. Singh, for the respondent. The Judgment of the Court was delivered by Shelat, J. This appeal by special leave is against the Judg ment and Order of the High Court of Mysore quashing the memorandum dated July 4, 1963 whereby the State Government terminated the service of the respondent. The only question arising in this appeal is one of interpretation of the Government Order No. GAD 46 SRR, dated September 22, 1961. The respondent entered government service as an officiating computor in the Government Press on March 11, 1958 and con tinued in that post until September 1, 1958. He was thereafter appointed from time to time in officiating capacity in different posts though in the same department until December 3, 1959 when he was appointed as a proof examiner. He continued in that post until February 28, 1961. According to the appellants there was break in his service on March 1, 1961 as his service was terminated on February 28, 1961 and he was once again appointed on March 2, 1961 as a second division clerk (industrial.). He continued in that post until July 4, 1963 when the impugned order terminating his service was passed. The first of March 1961 on which it was said there was break in his service was a holiday. There is no dispute that the respondent was throughout work ing in officiating capacity and was a "local candidate" like several other such employees appointed by direct recruitment by Government instead of regular recruitment by the Public Service Commission of the State as required by the rules of Recruitment. Rule 8(27A) of the Mysore, Civil Service Rules, 1958 defines a "local candidate" as meaning a temporary Government servant not appointed regularly in accordance with the Rules of Recruitment to that service. Rule I(A) of the Mysore Government Servants ' (Seniority) Rules, 1957 provides that those rules do not apply to a person appointed as a local candidate so long as he is treated as such. It further provides that where his appointment is treated as regularised from any date, his seniority in the service shall be determined in accordance with these rules as if he had been appointed regularly in accordance with the Rules of 130 Recruitment to the post held by him on that day. Since the appointment of local candidates as in the case of the respondent was not made by or through the Public Service Commission as required by the Rules, the State Government with a view to regularise such appointments passed the said order dated September 22, 1961. The material portion of the said order runs as follows 2. (i) All appointments to Class III Direct Recruitment Posts made by the local appointing authorities, both in the old Mysore area (including Bellary District) and in the other integrating areas up to 31st December 1959 (inclusive) may be regularised subject to the condition that the candidates were within the prescribed age limits and had the requisite qualifications at the time of their initial appointments; (ii) The services of local candidates shall be regularised with effect from the date of their appointment, from which their service is continuous provided they were in service on 1st January 1960 and continue to be in service at the time their services are regularised. (iii) The local service will count for purposes of leave, pension and increments. . but not for purposes of seniority; only the service from the date of regularisation of their appointments in the particular department will count for seniority; (iv) Breaks in service will not be condoned even if such breaks are only for short periods. In the Writ Petition filed by the respondent against the im pugned order dated July 4, 1963 terminating his service the respondent raised two points : (1) that though he was a local candidate appointed from time to time to the aforesaid posts he was entitled to have his service regularised under the said order and (ii) that as he was entitled to be so regularised he was also entitled to the protection of Article 311(2) of the Constitution. Consequently, his service could not be terminated in the manner it was done by the impugned order. The contention of the State Government on the other hand was that the order of regularisation did not apply to the respondent as his service was not continuous as required by the said order and therefore there was no question of Article 311 being applicable to his case and the State Government was entitled therefore to terminate his service by the said order of July 4, 1963. 131 The High Court on an interpretation of the Order dated September 22, 1961 repelled the Government 's contentions and held that the respondent was entitled to have his service regularised with effect from the date his service was continuous prior to December 31, 1959 and that being so, the order terminating his service on the erroneous basis that he was a temporary government servant not entitled to the benefit of the aforesaid regularisation order was violative of Article 311. This interpretation meant that the appointment and service of the respondent were not only to be regularised but as a result of such regularisation the respondent had to be treated as a permanent servant being entitled to the protection of Article 311(2). The High Court arrived at this result on the interpretation it gave to the portion of the said Order which we have set out above. The High Court observed that sub clause (2) of clause 2 of the said Order provided for the fixation of the date with effect from which the appointment was deemed to have been made permanent and that the second part of that sub clause laid down the conditions which if satisfied entitled the respondent for regularisation. According to the High Court the necessary conditions for such regularisa tion were : (a) that the local candidate should be in service on January 1, 1960 and (b) that he should continue to be in service at the time his service was to be regularised. The High Court further observed that what sub clause (2) required was "not continuity of service but that the services be continued at the time of the regularisation" and that the intention of the Government was not to lay down the condition of continuous service between December 31, 1959 and the date of the said Government order. It then observed "When the Government order by a fiction of the law provided for regularisation of services with effect from a date anterior to 31 12 1959, the local candidates who satisfy the qualifications and conditions prescribed by sub paras (i) and (ii) are deemed to have been permanently appointed with effect from a date anterior to 31 12 1959. Where the local candidate possesses the qualifications prescribed in sub para (i) of para 2, if his initial appointment was made before 31 12 1959, he is entitled to have his appointment regularised provided he was in service on 1st January 1960 and is continued in service at the time of the G.O., notwithstanding any break in service between 31 12 1959 and 22 9 1961. " The High Court also held that sub clause (iv) on which reliance was placed by the Government had reference to break in service before December 31, 1959 and not during the period subsequent to that date. Thus, according to the High Court if a local candidate 132 was initially appointed prior to December 31, 1959 and was in service on January 1, 1960 and also on September 22, 1961 he was entitled to the benefit of the regularisation order. So long as he was in service on the two termini his service would have to be regularised irrespective of whether his service during the interval was continuous or not. The High Court also equated regularisation with permanence of service and therefore held that once a local candidate 's service was regularised he had to be treated as a permanent servant. Before we proceed to consider the construction placed by the High Court on the provisions of the said order we may men tion that in the High Court both the parties appear to have proceeded on an assumption that regularisation meant permanence. Consequently it was never contended before the High Court that the effect of the application of the said order would mean only regularising the appointment and no more and that regularisation would not mean that the appointment would have to be considered to be permanent as an appointment to be permanent Would still require confirmation. It seams that on account of this assumption on the part of both the parties the High Court equated regularisation with permanence. We are however not called upon in this appeal to decide and we do not decide that question as Mr. Desai on behalf of the State Government assured us that the Government bad come in appeal only in its anxiety to have the order interpreted by this Court as the construction placed by the High Court on the said order, if upheld, would have considerable repurcussions on the prospects of other State employees. He also assured us on behalf of the State Government that since the break in the service of the respondent during the material time was only of one day, viz., March 1, 1961, assuming there was such a break, the government would not do anything to adversely affect his service and would not take away the benefit which he acquired as a result of the High Court 's judgment, even if we were to disagree with the interpretation placed by the High Court on the said Order. Coming now to the Order, sub clause (i) of clause 2 provides that all appointments to Class III posts by direct recruitment made up to December 31, 1959 should be regularised provided the candidates satisfied the conditions as to age and qualifications at the time of their initial appointment. The controversy arises ,on the construction of sub clause (ii). That sub clause provides that the services of such candidates shall be regularised with effect from the date of their appointment from which their services are continuous provided they were in service on January 1, 1960 and continue to be in service at the time their services are regularised. It is clear from the express words used in this sub clause that 133 continuity of service from January 1, 1960 until the date of the order is a condition prescribed for regularisation. In other words, a candidate claiming the benefit of this order has to satisfy that he was initially appointed prior to December 31, 1959, that he was in service on January 1, 1960 and continued in that service, till the date of the order, i.e., September 22, 1961. This construction finds support from sub clause (iii) which provides that local service prior to regularisation would be counted for the purposes of leave, pension and increments though not for seniority as seniority was to be fixed from the length of service calculated from the date of regularisation. It is manifest that unless the local service was continuous such service could not be taken into account for the purposes, in particular of pension and increments. How would increments, for example, be granted unless the service prior to such increments was continuous ? The same consideration would also apply in the case of pension. It had therefore to be provided as has been done in sub clause (iv) that a break in service would not be condoned for a period howsoever short. Continuity of service is thus a condition for both sub clauses 2 and 3. The High Court was therefore in error when it said that sub clause (iv) did not relate to considerations under sub clause (ii) or that it had reference only to a break in service before December 31, 1959. The High Court was also in error when it construed sub clause (ii) to mean that the only thing it required was, that the candidate had to be appointed initially prior to December 31, 1959 and that he had to be in service on the two dates,. viz., January 1, 1960 and September 22, 1961 and that the service during the interval need not be continuous. If that construction were to be upheld it would result in injustice, for local candidates. not recruited regularly and not in continuous service provided they were in service on the two relevant dates, viz., January 1, 1960 and September 22, 1961, would get seniority over candidates. regularly appointed after December 31, 1959 and whose service Is continuous. Such a result would manifestly be both unjust and improper and could hardly have been contemplated. Therefore the proper interpretation would be that in order that the regularisation order may apply to a particular case the local, candidate must be initially appointed prior to December 31, 1959, he must be in service on January 1, 1960 and continue to be in service without any break till the date of the said order. If his service is regularised, his service from the date of such regularisation would be counted for seniority as against others who were recruited properly under the Rules of Recruitment. Under subclause (iii) however if the service is continuous from January 1, 1960 to September 22, 1961, such service is to be taken into account for purposes of leave, pension and increments but not for purposes of seniority. The construction which we are inclined to adopt thus harmonises all the provisions of the Order and besides. 134 results in fairness to all the local candidates appointed by direct recruitment whether regularly or otherwise. For the reasons aforesaid the construction placed by the High Court cannot be sustained. Though the construction which we are inclined to adopt is in support of the stand taken by the State Government, in view of the assurance given by counsel on behalf of the Government that this construction should not affect the regularisation of the respondent 's service and its having been considered by the High Court as permanent, it is not necessary to interfere with the order passed by the High Court. The appeal consequently is dismissed. There will however be no order as to costs. G.C. Appeal dismissed.

IN-Abs

The respondent joined Class III service of the Mysore Government in 1958 as a local candidate. According to the Mysore Civil Service Rules, 1958 a local candidate meant a temporary Government servant not appointed regularly in accordance with the rules of recruitment to that service. On September 22, 1961 the Mysore Government passed art order whereby under sub cl. (i) of cl. 2 local candidates appointed before Dec. 31, 1959, were entitled to have their appointments regularised subject to certain conditions. According to sub cl. (ii) of cl. 2 of the Order the services of local candidates were to be regularised with effect from the date of their appointment ', from which their service was continuous provided they were in service on 1st January 1960 and continued to be in service at the time their services were regularised. Sub clause (iii) said that local service would count for purposes of leave, pension and increments but not for purposes of seniority, and that only the service from the date of regularisation of the appointment in the particular department would count for seniority. Sub clause (iv) laid down that breaks in service would not be condoned even if such breaks were only for short periods. There was a break of one day in the respondent 's service on March 1, 1961. The Mysore Government terminated his service on July 4, 1963. The respondent filed a writ petition before the High Court claiming that he was entitled to have his appointment regularised under the aforesaid Government Order. The High Court held that the requirements of the Order were that a local candidate was entitled to its benefit if he joined service before Dec. 31, 1959, and was in service on two dates, namely 1st January 1960 and 22nd September 1961. On this view the High Court allowed the respondent 's petition whereupon the State appealed to this Court. HELD : The High Court was wrong in its construction of sub cl. (ii) of cl. 2 of the Order. On a harmonious construction of sub cl. (ii) with the other subclauses of cl. 2 its proper interpretation would be that in order that the regularisation order may apply to a particular case the local candidate must be initially appointed prior to December 31, 1959, he must be in service on January 1, 1960 and continue to be in service without any break till the date of the order. Since the service of the respondent was not continuous during this period he was not entitled to regularisation of his appointment under the Order. (133 G]

Appeal No. 524 of 1966. Appeal by special leave from the judgment and order dated December 2, 1964 of the Jammu and Kashmir High Court in Civil First Appeal No. 7 of 1964. B. C. Misra, section K. Mehta and K. L. Mehta, for the appellant. M. C. Setalvad and Mohan Behari Lal, for respondent No. 1. The Judgment of the Court was delivered by Shelat J. Respondent No. 1 Mod a suit in the Court of Addi tional District Judge, Jammu for possession of the house in dispute, owned by the second respondent and sold by her to the appellant. The cause of action pleaded was that respondent No. 1 had a right of prior purchase under section 15 (fourthly) of the 274 Right of Prior Purchase Act, II of 1993 as her house and the house in question had a common outer entrance within the meaning of that clause. The trial court and the High Court on evidence held that the two houses had a common outer entrance and decreed the suit on respondent No. 1 paying the sale price of Rs. 13,000/ . Hence this appeal by special leave. On behalf of the appellant, the vendee, Mr. Misra raised two questions (1) that on a proper construction of section 15 (fourthly) this was not a case of the two houses having a common outer entrance as that clause requires that such an entrance must be owned jointly by the owners of such two houses, and (2) that section 15 (fourthly) is ultra vires as it offends article 19(1)(f) and constitutes an Unreasonable restriction on the appellant 's right to property. The evidence shows that the entire property consisting of these two, together with other houses in the vicinity were owned at one time by witness Mohinder Nath and one Uttam Chand. Subsequently they sold some of them. To give to these houses access to the public road, called the Secretariat Road, they retained to themselves the ownership of the lane but granted a right of way thereon to the said vendees. The lane ends as a blind alley where the two houses are situate. The plan produced during the trial shows that there is first a common outer entrance through which one enters into this lane from the Secretariat Road and at a distance of about IO yards there is another such entrance marked 'common entrance ' in the plan through which one enters into the alley and on which the doors of these and certain other houses open. During the course of the trial, the trial Judge made local inspection and recorded his inspection note which was admitted by the parties as correct. The inspection note is as follows : "On spot I find that there is a common outer entrance from the street to number of houses and then again about 1 0 yards from the common outer entrance there is another common outer entrance of six houses and there is a street which ends at the houses of the plaintiff and the suit house. At the end of the street the outer door of the plaintiff and the suit house abut". There is thus no room for dispute that the said passage leading to the said Secretariat Road has two common entrances, one where it opens on to the said Road and the other at a distance of about 10 yards therefrom. Apart from the inspection note, the parties led oral and documentary evidence on a consideration of which the trial Judge recorded the following finding : "Both the parties agree with this note and they admit that there is a common outer entrance from the Municipal Street to the plaintiff 's house and the suit house. The difference between the plaintiff 's case and the defen 275 dant 's case as made out by the counsel for the defendant is that the plaintiff 's house and the defendant 's house both open into the blank alley (kucha sarbasta) and into the same alley opens some more houses. The plaintiff has not shown that the alley was the private property of the owners of the houses which abut on that. According to the statement of Pt. Mohinder Nath that alley belongs to him and Pt. Uttam Chand. The owners of the houses which abut in that alley are entitled to right of way over it. As they are not owners of the alley so according to the counsel for defendant No. 1 the plaintiff is not entitled to right of prior purchase on the basis of their having a common outer entrance . The words used in the subclause are that the property sold and the property on the basis of which the right is exercised must have a common outer entrance. It is not essential that the street which leads from outer entrance to the houses of the plaintiff and the defendant should be owned by them". The High Court also came to a similar finding and held that once it had been shown that the owners of the four houses abutting on that alley had exclusive right of way over it, it was enough to vest in them the right of pre emption. The High Court also held that it was not necessary to prove that the common outer entrance was jointly owned by the owners of the houses. It is therefore clear that the question raised by the appellant was not that there was no common outer entrance to the two houses but that on a proper construction of section 15 (fourthly), such a common outer entrance would not give rise to a right of prior purchase unless the owner claiming such a right and the owner of the house in question jointly own the common outer passage. The construction urged before the trial court and the High Court and rejected by both of them was once again urged before us by Mr. Misra. The language of section 15(fourthly) is plain. The section in unambiguous language provides that "the right of prior purchase. . . . shall vest Fourthly : Where the sale is of property having a common outer entrance with other properties in the owners of such properties". The section clearly says that where the sale is of property having a common outer entrance with other properties, the right of prior purchase shall vest in the owners of such properties. There is nothing in the section to warrant the construction that such a right would vest only if the common outer entrance is jointly owned by the owners of such houses. What the section requires is the existence of a common outer entrance which need not be owned by the person claiming the right of pre emption. Whether L5Sup. Cl/67 5 276 there is such a common outer entrance which would attract the provisions of section 15(fourthly) would, therefore, depend upon the facts proved in each case. In the present case, both the trial court as also the High Court came to the conclusion from the evidence led by the parties that there does exist a common outer entrance for both the houses. Nothing has been shown by Mr. Misra from the evidence which would justify our disagreeing with that conclusion. Let us now turn to the decisions relied upon by Mr. Misra. In Naba and others vs Piara Mal and another(1), the High Court of Punjab held that the entrance to the alley in question was not 'a common entrance from the street ' of the pre emptor and the vendor within the meaning of section 13(1)(fifthly) of the Punjab Preemption Act, 1905. The decision, however, turned on the facts and the situation of the alley which was said to be the common entrance to the houses in question. The High Court found that the evidence led by the plaintiff was insufficient to prove that the said alley was the private property of the owners of the houses opening on to it or that none except the owners thereof had free access to or right of way over it. Nor was it shown that the houses at one time constituted one building and were subsequently subdivided and that the privacy of those houses was ensured by the blind alley as it ordinarily would be by the existence of a common entrance. In Nanak Chand vs Tek Chand and others(2), the right of pre emption was claimed on the ground that there was a step leading to a thara which formed part of the plaintiff 's house and the house in question. The High Court held that the step could not be called either a 'staircase ' or a common entrance from the street within the meaning of section 13(1)(fifthly) of the Punjab Preemption Act, 1905. In Asa Nand vs Mahmud(3), the dispute was between two parties claiming the right of pre emption and the High Court rejected the defendant 's claim on the ground that he had not even the right of way over the compound and his use of it was only permissive. In Ram Chand vs Ram Jowaya (4 ), the Punjab Chief Court held that a public street leading from the main road to two houses cannot be considered a common entrance from the street and that to bring a case within section 1 3 (1) (fifthly) it would not be sufficient to prove that the street into which the house sold and the house of the person claiming pre emption opened was common to the two properties or that each had an entrance from that street. There must be an entrance from the street which is common to both properties. None of these decisions, in our view, can assist, for, each turned on its own facts which determined whether there was in fact a common entrance within the meaning of the Punjab Act. (1) 912) 44 P. R 159. (2) A.I.R. 1927 Lah. (2) A.I.R. 192) Lah. (4) 277 In the instant case, there is the admitted evidence that the alley, at the blind end of which the two houses are situate, has a common entrance which opens into a passage of about 10 yards where there is again another common entrance opening on to the public road. It is also not in dispute that the entire passage is owned by the original owners of the houses opening into this passage and that at the time of the sales of some of these houses they had granted a right of way over this passage to them so that the said houses may have access from the public road. The said passage, therefore, is the private property of the said Mohinder Nath and Uttam Chand and the right of way over it is enjoyed only by the owners of the houses opening on to it. The appellant did not raise any dispute with regard to these facts. Indeed, the only question raised by her was that in order to constitute a common outer entrance under section 15(fourthly) such an entrance must be owned jointly by the owner of the house in question and the owner claiming pre emption. As aforesaid, both the courts negatived the suggested construction and we think that they were right for the plain words of the section do not justify such a construction. The question next is whether section 15(fourthly) providing for the right of prior purchase amounts to an unreasonable restriction. There can be no doubt that such a provision amounts to a restriction in the sense that a person purchasing such a property has to give way to the person claiming such a right. The nature of the right is expressed in felicitous language by Mahmood J. in Govind Dayal vs Inayatullah(1). The right of pre emption, he observed : "is simply a right of substitution, entitling the pre emptor, by means of a legal incident to which sale itself was subject, to stand in the shoes of the vendee in respect of all the rights and obligations arising from the sale, under which he derived his title. It is, in effect, as if in a sale deed the vendee 's name were rubbed out and preemptor 's name inserted in its place". This statement was approved by this Court in Bishan Singh vs Khazan Singh(2), and the Court summarising the incidents of the right observed : "That the right of pre emption is not a right to the thing sold but a right to the offer of a thing about to be sold. This right is called the primary or inherent right. The pre emptor has a secondary right or a remedial right to follow the thing sold. It is a right of substitution but not of re purchase, i.e., the pre emptor takes the entire bargain and steps into the shoes of the original vendee". That being the nature of the right, the next question is whether the restriction on the vendee 's right of property created by section 15 (fourthly) can be said to be an unreasonable restriction. A similar (1) [1885]1.L.R.7 All.775,809. (2) ; 278 question in regard to a similar provision in section 16 of the Punjab Pre emption Act, 1913 arose in Babu Ram vs Baijnath(1). Section 16 of that Act provided for pre emption on six grounds, the first, third, fourth and sixth grounds being in favour of co sharers, owners of common staircases, owners of common entrance from a street and owners of contiguous property. The Court held that the first, third and fourth grounds of pre emption did not offend Articles 19(1)(f) and 14 and were valid. The Court observed that the law under the first ground providing for pre emption by co sharers imposed reasonable restriction in the interest of the general public on the right under article 19(1)(f). If an outsider was introduced as a co sharer in a property it would make common management extremely difficult and destroy the benefits of ownership in common. The advantage of excluding a stranger in the case of a residential house was all the greater as it would avoid all kinds of disputes. The third ground which applied in a case where the property sold had a staircase common with other properties stood practically on the same footing as that of co sharers. Regarding properties having a common entrance from the street with other properties, the Court held that that ground was similar to the first and the third grounds. At page 741 dealing with the fourth ground, the Court observed that the buildings were in a common compound and perhaps were originally put up by members of one family or one group with a common private passage from the public street. In such a case the owners of the buildings would stand more or less in the Position of co sharers, though actually there might be no co sharership in the house sold. Such a case would approximate to cases of a common staircase and co sharers and, therefore, the right of preemption in such a case was sustainable. The reasoning employed in upholding the validity of the fourth ground in section 16 of the Punjab Act would apply with equal force to the provisions of section 15(fourthly) before us. Consequently, the contention that the impugned provision amounts to an unreasonable restriction cannot be sustained. Both the contentions raised by Mr. Misra fail. The appeal is dismissed with costs. V.P.S. Appeal dismissed. (1) [1962]3Supp.S.C.R.724.

IN-Abs

The second respondent sold her house to the appellant. The first respondent filed a suit for possession of the house on the ground that she had a right of prior purchase under section 15 (fourthly) of the Right of Prior Purchase Act 1993, because, her house and the house in question had a common outer entrance within the meaning of that clause The suit was decreed. In appeal to this Court it was contended that: (1) On a proper construct ion of the clause such an entrance would not give rise to a right of pre emption unless the owner claiming the right and the owner of the house in question jointly owned the common outer entrance, and, (2) the clause as interpreted by the Courts below violated article 19(1)(f) of the Constitution and was therefore ultra vires. HELD: (1) The clause provides that where the We is of property having a common outer entrance with other properties, the Tight of prior purchase shall vest in the owners of such properties. There is nothing in the section to warrant the construction that such a right would vest only if the common outer entrance is jointly owned by the owners of such houses. [275H] (2) In the case of properties having a common entrance, the owners of the buildings would stand more or less in the position of co sharers and the right of pre emption is sustainable as a reasonable restriction. [278E] Bhau Ram vs Baijnath, [1962] Supp. 3 S.C.R. 724, followed. Bishan Singh vs Khazan Singh, ; , referred to.

Appeals Nos. 2596 and 2597 of 1966. Appeals by special leave from the Orders dated May 2, 1966 and June 22, 1966 of the Government of India, Ministry of Mines and Metals, New Delhi on application is filed by the appellant under Rule 54 of the Mineral Concession Rules, 1960. section J. Sorabji, A. J. Rana, J. R. Gagrat and B. R. Agarwal, or the appellant (in both the appeals). G. N. Dikshit, R. N. Sachthey for section P. Nayyar, for respondent No. 1 (in both the appeals). P. Ram Reddy and B. Parthasarathy, for respondent No. 2 (in both the appeals). M. C. Setalvad, B. Dutta, and O. C. Mathur, for respondent No. 3 (in both the appeals). The Judgment of the Court was delivered by Mitter, J. These two appeals by special leave, are Iimited to the question as to whether in dismissing a revision and confirming the order of the State of Andhra Pradesh, the Union of India was bound to make a speaking order. The text of the order is the same in both the cases, the only difference being in 304 the situs and the area in respect of which the lease was applied for. One of the orders runs as follows "New Delhi, the 22nd June, 1966". I am directed to refer to your revision application dated 14 12 1964 and letter dated 28 1 1966 on the above subject and to say that after careful consideration of the grounds stated therein, the Central Government have come to the conclusion that there is no valid ground for interfering with the decision of the Government of Andhra Pradesh rejecting your application for grant of mining lease for asbestos over an area of Ac.1 13 50 in Brahmanapalii village, Cuddapah District, Andhra Pradesh. Your application for revision is, therefore, rejected. " The facts leading to the two appeals are as follows : In response to a notification dated January 8, 1964 published in the State Gazette by the Andhra Pradesh Government inviting applications under r. 58 of the rules framed under the (hereinafter referred to as the Rules and the Act) the appellant submitted two applications in the prescribed form viz., Form "I" for areas aggregating Ac. 113 50 in village Brahmanapalli and Ac. 13 10 in village Ippatta both in the district of Cuddapah for mining asbestos. Respondent No. 3 also made similar applications on the same date. According to the appellant his applications complied with all the requirements of Form "I" while those of respondent No. 3 were defective in some respects. Besides the appellant and the respondent No. 3, there was only one other person who applied for a prospecting licence which was rejected off hand. As between the appellant and the respondent No. 3, the Government of Andhra Pradesh preferred the latter. The relevant portion of the order dated 19th October 1964 in respect of the village Brahmanapalli under section 10(3) of the Act was as follows : "As between the other applicants Sri Bhagat Raja and M/s. Tiffin 's Barytes, Asbestos and, Paints Ltd., the Government prefer M/s. Tiffin 's Barytes. as they are having adequate general experience and technical knowledge, and are old lessees in the district, without any arrears of mineral dues to the Government. The mining lease application of Sri Bhagat Raja for the areas covered by the mining lease application of M/s. Tiffin 's Barytes, Asbestos and Paints Ltd. is rejected. " 305 The text of the Order with regard to village Ippatta is practically the same. The appellant filed application in revision in the prescribed form i.e. Form 'N ' under section 30 of the Act read with r. 54 to the Union of India on December 14, 1964. The appellant tried to bring out in his revision applications that the financial condition of the 3rd respondent was extremely precarious as would be evidenced by documents, copies whereof were annexed to his petition. The 3rd respondent filed a counter statement to the revision application in April 1965. In March 1966 the appellant received the comments of the Andhra Pradesh Government on his revision applications. The appellant filed rejoinder to the counter statements of the 3rd respondent in May 1965 and to the comments of the Andhra Pradesh Government in April 1966. He also asked for the grant of a personal hearing before the decision of the case which was not given. Ultimately, his applications were rejected by orders quoted hereinabove. Various grounds of appeal were taken in the application for special leave to appeal preferred by the appellant. An, attempt has been made therein to show that respondent No. 3 had no experience in asbestos mining, that its financial position was very unsatisfactory and that its application for mining lease was not in proper form. A complaint was also made that in rejecting the applicant 's revision applications the Union of India was bound to give reasons for its decision as it was exercising quasi judicial powers under section 30 of the Act read with rr. 54 and 55, that principles of natural justice and fairplay requiring the divulgence of the grounds were violated and that a personal hearing should have been given to the appellant before the disposal of the revision applications. We are not called upon in this case to go into the merits of the case but only to examine the question as to whether it was necessary for the Government of India to give reasons for its decision in view of the provisions of the Act and the Rules or aliunde because the decision was liable to be questioned in appeal to this Court. It is necessary to take note of a few provisions ofthe Act and the relevant rules framed thereunder to ascertain the scope of a party 's right to, apply for a lease and the powers and duties of the Government in accepting or rejecting the some. The preamble to the Act shows that its object was to provide for the regulation of mines and the development of minerals under the control of the Union of India. Under section 4(1) no person can undertake any prospecting or mining operations in any area, except under and in accordance with the terms and conditions of a prospecting licence or a mining lease granted under the Act and the Rules. Under sub section (2) of the section 306 "No prospecting licence or mining lease shall be granted otherwise than in accordance with the provisions of this Act and the rules mad. , thereunder. " S.5 lays down certain conditions which a person desiring to have a mining lease must fulfil. section 8 provides for the period for which a mining lease may be granted. Under section 10(1) an application for a mining lease has to be made to the State Government concerned in the prescribed form. Sub section (3) of S.10 runs as follows : "On receipt of an application under this section, the State Government may, having regard to the provisions of this Act and any rules made thereunder, grant or refuse to grant the licence or lease." Under sub section (2) of section 11 a person whose application for a licence is received earlier than those of others shall have a preferential right for the grant thereof over the others. The proviso to this sub section enacts that where applications are received on the same day, the State Government, after taking into consideration the matters specified in sub section (3), may grant the mining lease to such one of the applicants as it may deem fit. Sub section (3) specifies the matters referred to in sub section (2) and they are as follows : (a) any special knowledge or experience in, prospecting operations or mining operations, as the case may be, possessed by the applicant; (b) the financial resources of the applicant; (c) the nature and quality of the technical staff employed or to be employed by the applicant; and (d) such other matters as may be prescribed. 'section 13(1) enables the Central Government to make rules for regulating the grant of prospecting licences and mining leases. Under s.19 any mining lease granted, renewed or acquired in contravention of the provisions of the Act is to be void and of no effect. Power of revision of the order of the State Government is given to the Central Government in the following terms: "The Central Government may, of its own motion or on application made within the prescribed time by the aggrieved party, revise any order made by a State Government or other authority in exercise of the powers conferred on it by or under this Act. " Rules were made by the Central Government under s.13 of the Act known as the Mineral Concession Rules, 1960. R.22 pres cribes that an application for the grant of a mining lease must be made to the State Government in Form "I" accompanied by a 307 fee of Rs. 200/ , a deposit of Rs. 5001 and an income tax clearance certificate. Under r. 26 the State Government is obliged to give reasons for refusal to grant a mining lease. Any person aggrieved by an order made by the State Government may prefer an application for revision under r. 54 in Form 'N '. In every such application against the order of the State Government refusing to grant a mining lease, a person to whom a lease has been granted must be impleaded as a party. R. 55 originally framed in 1960 was amended in July 1965. Under the amended r.55 the position is as follows: "(1) On receipt of an application for revision under r. 54, copies thereof shall be sent to the State Government and to all the impleaded parties calling upon them to make such comments as they may like to make within three months of the date of issue of the communication and if no comments are received within that period, it is to be presumed that the party omitting to make such comments has none to make. (2) On receipt of the comments from any party under Sub rule (1), copies thereof have to be, sent to the other parties calling upon them to make further comments as they may like to make within one month from the date of the issue of the communication. (3) The revision application, the communications containing comments and counter conmments referred to in sub rules (1) and (2) shall constitute the record of the case. (4) After considering the records referred to in sub rule (3), the Central Government may confirm, modify or set aside the order or pass such other order in relation thereto as it may deem just and proper. " From the above, it will be amply clear that in exercising its powers of revision under r. 55 the Central Government must take into consideration not only the material which was before the State Government but comments and counter comments, if any, which the parties may make regarding the order of the State Government. In other words, it is open to the parties to show how and where the State Government had gone wrong, or, why the order of the State Government should be confirmed. A party whose application for a mining lease is turned down by the State Government is therefore given an opportunity of showing that the State Government had taken into consideration irrelevant matters or based its decision on grounds which were not justified. At the time when applications for a licence are made by different parties to the State Government. they are not L5Sup/67 7 308 given an opportunity of showing any defects or demerits in the applications of the others or why their applications should be Preferred to others. The State Government has to make up its mind by considering the applications before it as to which party is to be preferred to the other or others. S.11(3), as already noted, prescribes the matters which the State Government must consider before selecting one out of the numerous applicants. But the possibility of the State Government being misled in its consideration of the matters cannot be ruled out. It may be that a party to whom a lease is directed to be granted has in fact no special knowledge or experience requisite for the mining operations or it may be that his financial resources have not been properly disclosed. It may also be that the nature and quality of the technical staff employed or to be employed by him is not of the requisite standard. In an application for revision under r. 55 it will be open to an aggrieved party to contend that the matters covered by sub section (3) of section 11 were not properly examined by the State Government, or that the State Government had not before it all the available material to make up its mind with respect thereto before grant in a licence. In a case where complaints of this nature are made, of necessity, the Central Government has to scrutinise matters which were not canvassed before the State Government. A question may arise in such cases as to whether the order of the Central Government in the form in which it was made in this case would be sufficient, specially in view of the fact that the correctness thereof may be tested in appeal to this Court. It is now well settled that in exercising its powers of revision under r. 55 the Central Government discharges functions which are quasi judicial : see Shivji Nathubhai vs The Union of India & Ors. (1) and M. P. Industries vs Union (1). In the latter case one of us (our present Chief Justice) said (at p. 471) : "The entire scheme of the rules posits a judicial procedure and the Central Government is constituted as a tribunal to dispose of the said revision. Indeed this Court in Shivji Nathubhai vs The Union of India (supra) rules that the Central Government exercising its power of review under r. 54 of the Mineral Concession Rules, 1949, was acting judicially as a tribunal. The new rule, if at all, is clearer in that regard and emphasises the judicial character of the proceeding. If it was a tribunal, this Court under article 136 of the Constitution can entertain an appeal against the order :of the Central Government made in exercise of its revisional powers under r. 55 of the Rules." (1) [1960]2 S.C.R. 775. (2) 309 Let us now examine the question as to whether it was incum bent on the Central Government to give any reasons for its decision on review. It was argued that the very exercise of judicial or quasi judicial powers in the case of a tribunal entailed upon it an obligation to give reasons for arriving at a decision for or against a party. The decisions of tribunals in India are subject to the supervisory powers of the High Courts under article 227 of the Constitution and of appellate powers of this Court under article 136. It goes without saying that both the High Court and this Court are placed under a great disadvantage if no reasons are given and the revision is dismissed curtly by the use of the single word "rejected", or, "dismissed". In such a case, this Court can probably only exercise its appellate jurisdiction satisfactorily by examining the entire records of the case and after giving a hearing come to its conclusion on the merits of the appeal. This will certainly be a very unsatisfactory method of dealing with the appeal. Ordinarily, in a case like this, if the State Government gives sufficient reasons for accepting the application of one party and rejecting that of the others, as it must, and the Central Government adopts the reasoning of the State Government, this Court may proceed to examine whether the reasons given are sufficient for the purpose of upholding the decision. But, when the reasons given in the order of the State Government are scrappy or nebulous and the Central Government makes no attempt to clarify the same, this Court, in appeal may have to examine the case de novo without anybody being the wiser for the review by the Central Government. If the State Government gives a number of reasons some of which are good and some are not, and the Central Government merely endorses the order of the State Government without specifying those reasons which according to it are ,sufficient to uphold the order of the State Government, this Court, in appeal, may find it difficult to ascertain which are the grounds which weighed with the Central Government in upholding the order of the State Government. In such circumstances, what is known as a "speaking order" is called for. The order of the Central Government of June 22, 1966 is so worded as to be open to the construction that the reviewing authority was primarily concerned with finding out whether any grounds had been made out for interfering with the decision of the State Government. In other words, the Central Government was not so much concerned to examine the grounds or the reasons for the decision of the State Government but to find out whether here was any cause for disturbing the same Prima facie the order does not show that the reviewing authority had any thought of expressing its own reasons for maintaining the decision arrived at. If detailed reasons had been given by the 310 State Government and the Central Government had indicated clearly that it was accepting the reasons for the decision of the State Government, one would be in a position to say that the reasons, for the grant of a lease to a person other than the appellant were obvious. But, where as here, the State Government does not find any fault or defect in the application of the unsuccessfully applicant and merely prefers another on the ground that "he had adequate general experience and technical knowledge and was an old lessee without any arrears of mineral dues" it is difficult to say what turned the scale in favour of the successful applicant excepting the fact that he was known to the State Government from before. We do not want to express any views on this but if this be a proper test, then no new entrant in the field can have any chance of success where there is in old lessee competing with him. The order of the Central Government does not bring out any reason for its own decision except that no ground for interference with the decision arrived at was established. Now we propose to examine some decisions of this Court where the question as to whether the reviewing authority should give reasons for its decisions was gone into. In Harinagar Sugar Mills vs Shyam Sundar Jhunjhunwala(1) this Court had to consider whether the Central Government exercising appellate powers under s.111 of the before its amendment in 1960 was a tribunal exercising judicial functions and as such, subject to the appellate jurisdiction of this Court under article 136 of the Constitution and whether the Central Government had acted in excess of its jurisdiction, or acted illegally otherwise in directing the company to register the transfer or transfers in favour of the respondents. There, the articles of association of the company concerned gave the directors the right in their absolute discretion and without assigning any reason to refuse to register any transfer of shares. The directors declined to register some shares in the name of the transferees who applied to the High Court at Bombay for orders under section 38 of the Indian Companies Act, 1913 for rectification of the share register on the ground that the board of directors had exercised their right mala fide, arbitrarily and capriciously. The High Court rejected these petitions on the ground that controversial questions of law and fact could not be tried in summary proceedings under section 38. The transferees requested the directors once more to register the shares. On their refusal to do so, appeals were preferred to the Central Government under s.111(3) of the Indian which had since come into operation. The Joint Secretary, Ministry of Finance, who heard the appeals declined to order registration of transfers (1)[1962] 2 S.C.R. 339 @ 357. 311 practically on grounds similar to those put forward by the High Court of Bombay. Thereafter, the original holder of the shares transferred some shares to his son and some to his daughter in id '", and the transferees requested the company to register the transfers. The directors once more refused. Against the resolution of the directors, separate appeals were preferred by the son and daughter in law of the original holder of the shares. The Deputy Secretary to the Government of India set aside the resolution passed by the board of directors and directed the company to register the transfers. No reasons were however given for such order. The company came up in appeal to this Court under article 136 of the Constitution. According to the judgment of the majority of Judges, the exercise of authority by the Central Government was judicial as it had to adjudicate upon the rights of contesting parties when there was a lis between them. It was observed in that case that "If the Central Government acts as a tribunal exercising judicial powers and the exercise of that power is subject to the jurisdiction of this court under Art 136 of the Constitution, we fail to see how the power of this court can be effectively exercised if reasons are not given by the Central Government in support of its order." This Court further held that there had been no proper the appeals, no reasons having been given in support orders of the Deputy Secretary who heard them and result, the orders were quashed with a direction that the be re heard and disposed of according to law. In Sardar Govindrao vs State(1) the appellants who to be descendants of former ruling chiefs in same districts of Madhya Pradesh applied under the Central Provinces and Berar Revocation of Land Revenue Exemptions Act, 1948 for grant of money or pension as suitable maintenance for themselves. They held estates in two districts on favourable terms as Jahgirdars Maufidars and Ubaridars and enjoyed, an exemption from paymnent of land revenue aggregating Rs. 27,828 5 0 per year. On the passing of the Act, the exemption was lost and they claimed to be entitled to grant of money or pension under the provisions of the Act. They applied to the Deputy Commissioner who forwarded their applications to the State Government. These were rejected without any reasons being given therefor. The appellants filed a petition in the High Court of Madhya Pradesh under article 226 of the Constitution for a writ of certiorari 'to quash the order of the State Government. The High Court held that the State Government "was (1) [ ; 312 not compelled to grant either money or pension because the exercise of the power under section 5 was discretionary and the petition, therefore was incompetent." section 5(3) of the C.P. and Berar Act provided as follows : "The Provincial Government may make a grant of money or pension (i) for the maintenance or upkeep of any religious, charitable or public institution or service of a like nature, or (ii) for suitable maintenance of any family of a descendant from a former ruling chief. " section 6 'barred the jurisdiction of civil courts. It was observed by this Court . "The Act lays down upon the Government a duty which obviously must be performed in a judicial manner. The appellants did not seem to have been heard at all. The Act bars a suit and there is all the more reason that Government must deal. with such case in a quasi judicial manner giving an opportunity to the claimants to state their case in the light of the report of the Deputy Commissioner. The appellants were also entitled to know the reason why their claim for the grant of money or pension was rejected by Government and how they were considered as not falling within the class of persons who it was clearly intended by the Act to be compensated in this manner. . As the order of Government does not fulfil the elementary requirements of a quasijudicial process we do not consider it necessary to order a remit to the High Court. " In the result this Court set aside the order of the Government and directed the disposal of the case in the light of the remarks made. In M. P. Industries vs Union(1) the order of the Central Government rejecting the revision application under r. 55 of the Mineral Concession Rules was couched in exactly the same language as the order in appeal before us (see at p. 475 of the report) One cannot help feeling that the Ministry concerned have a special form which is to be used whenever a review application is to be rejected. This may easily lead anyone to believe that the review is a sham and nothing but the formal observance of the power granted to the Central Government. In that case, all the three learned Judges of this Court who heard the appeal were unanimous in dismissing it : some of the obser (1) [196] 1 S.C.R. 466. 313 vations made bear repetition. It was there argued that if the Central Government had to give reasons when it functioned as a tribunals it would obstruct the work of the Government and lead to unnecessary delays. As to this it said by our present Chief Justice : "The Central Government functions only through different officers and in this case it functioned through an Under Secretary. The condition of giving reasons is only attached to an order made by the Government when it functions judicially as a tribunal in a comparatively small number of matters and not in regard to other administrative orders it passes. Our Constitution posits a welfare State. .In the context of a welfare State, administrative tribunals have come to stay. Indeed, they are the necessary concomitants of a welfare State. But arbitrariness in their functioning destroys the concept of a welfare State it , self Self discipline and supervision exclude or at any rate minimise arbitrariness. The least a tribunal can do is to disclose its mind. The compulsion of disclosure guarantees consideration. The condition to give reasons introduces clarity and excludes or at any rate minimises arbitrariness; it gives satisfaction to the party against whom the order is made; and it also enables an appellate or supervisory court to keep the tribunals within bounds. A reasoned order is a desirable con dition of judicial disposal. If tribunals can make orders with out giving reasons, the said power in the hands of unscrupulous or dishonest officers may turn out to be a potent weapon for abuse of power. But, if reasons for an order are given, it will be an effective restraint on such abuse, as the order, if it discloses extraneous or irrelevant considerations, will be subject to judicial scrutiny and correction. A speaking order will at its best be a reasonable and at its worst be at least a plausible one. The public should not be deprived of this only safeguard. " It was further observed in that case that the position of ordinary courts of law was different from that of tribunals exercising judicial functions and it was said : "A Judge is trained to look at things objectively, uninfluenced by considerations of policy or expediency; but, an executive officer generally looks at things from the standpoint of policy and expediency. The habit of 314 mind of an executive officer so formed cannot be expected to change from function to function or from act to act. So it, is essential that some restrictions shall be imposed on tribunals in the matter of passing orders affecting the rights of parties; and the least they should do is to give reasons for their orders. Even in the case of appellate courts invariably reasons are given, except when they dismiss an appeal or revision in limine and that is because the appellate or revisional court agrees with the reasoned judgment of the subordinate court or there are no legally permissible grounds to interfere with it. But the same reasoning cannot apply to an appellate tribunal, for as often as not the order of the first tribunal is laconic and does not give any reasons. That apart, when we insist upon reasons; we do not prescribe any particular form or scale of the reasons. The extent and the nature of the reasons depend upon case of affirmance where the original tribunal gives bunal shall give its own reasons succinctly; but in a case of affirmance where the original tribunal gives adequate reasons, the appellate tribunal may dismiss the appeal or the revision, as the case may be, agreeing with those reasons. What is essential is that reasons shall be given by an appellate or revisional tribunal expressly or by reference to those given by the original tribunal. The nature and the elaboration of the reasons necessarily depend upon the facts of each case. " It must be noted however that the above view was not shared by the two other Judges of the Bench constituting this Court. It was said by them : "For the purpose of an appeal under article 136, orders of Courts and tribunals stand on the same footing. An order of court dismissing a revision application often gives no reason, but this is not a sufficient ground for quashing it. Likewise, an order of an ad minstrative tribunal, ' rejecting a revision application cannot be pronounced to be invalid on the sole ground that it does not give reasons for the rejection. " They distinguished the case of Harinagar Sugar Mills Ltd.(1) on the ground that the Central Government had reversed the decision ' appealed without giving any reasons and the latter did not disclose any apparent grounds for reversal and added: "There is a vital difference between the order of reversal by the appellate authority in that case for no (1) [1962] 2 section C.R. 339. 315 reason whatsoever and the order of affirmance by the revising authority in the present case. " As has already began noted, the board of directors in that case did not give any reasons for the refusal to register and the Central Government adopting the same course reversed the decision of the directors without giving any reasons. Clearly, the act of the Central Government there savoured of arbitrariness. Under the articles of association of the company, the directors were not obliged to give any reasons. Their power of refusal was unrestricted if they acted bona fide or in the interest of the company. The reversal of their discretion clearly amounted to a finding that they had acted arbitrarily or mala fide and one was; left to guess the reasons of the Central Government for coming to this conclusion. As has already been said, when the authority whose decision is to be reviewed gives reasons for its conclusion and the reviewing authority affirms the decision for the reasons given by the lower authority, one can assume that the reviewing authority found the reasons given by the lower authority as acceptable to it; but where the lower authority itself fails to give any reason other than that the successful applicant was an old lessee and the reviewing authority does not even refer to that ground, this Court has to grope in the dark for finding out reasons for upholding or rejecting the decision of the reviewing authority. After all a tribunal which exercises judicial or quasi judicial powers can certainly indicate its mind as to why it acts in a particular way and when important rights of parties of far reaching consequence to them are adjudicated upon in a summary fashion, without giving a personal hearing where proposals and counter proposals are made and examined, the least that can be expected is that the tribunal should tell the party why the decision is going against him in all cases where the law gives a further right of appeal. On behalf of the respondents, it was contended that r. 55 which provided for a revision did not envisage the filing of fresh pleadings and fresh material but only invited comments of the parties with regard to the matter before the Central Government. It was argued that if after going through the comments and counter comments the Central Government found no reason to arrive at a conclusion different from that of the State Government, it was not called upon to disclose any grounds for its decision in review. Our attention was drawn in particular to r. 26 of the Mineral Concession Rules which enjoined upon the State Government to communicate in writing the reasons for any order refusing to grant or renew a mining lease. The absence of any provision in r. 55 for giving such reasons was said to be decisive on the matter as indicative of the view of the legislature that there was no necessity for giving reasons for the order on review. We find ourselves unable to accept this contention. Take the case 316 where the Central Government sets aside the order of the State Government without giving any reasons as in Harinagar Sugar Mills ' case(1). The party who loses before the Central Government cannot know why he had lost it and would be in great difficulty in pressing his appeal to the Supreme Court and this Court would have to do the best it could in circumstances which are not conducive to the proper disposal of the appeal. Equally, in a case where the Central Government merely affirms the order of the. State Government, it should make it clear in the order itself as to why it is affirming the same. It is not suggested that the Central Government should write out a judgment as courts of law are wont to do. But we find no merit in the contention that an authortiy which is called upon to determine and adjudicate upon the rights of parties subject only to a right of appeal to this Court should not be expected to give an outline of the process of reasoning by which they find themselves in agreement with the decision of the State Government. As a matter of fact, r. 26 considerably lightens the burden of the, Central Government in this respect. As the State Government has to give reasons, the Central Government after considering the comments and counter comments on the reasons given by the State Government should have no difficulty in making up its mind as to whether the reasoning of the State Government is acceptable and to state as briefly as possible the reasons for its own conclusion. Our attention was drawn to a judgment of this Court in Nandrant Hunatram, Calcutta vs Union of India(2). There, one of the points made by the appellant in the appeal to this Court was that the order of the Central Government, in review, upholding the action of the State Government cancelling the mining lease granted to the appellant was bad inasmuch as no reasons were given. It was pointed out in the judgment in that case that the facts there were so notorious that the reasons for the action of the State Gov ernment and the confirmation of its order by the Central Government were too obvious and could not possibly be questioned by anybody. There the partners of the appellant firm had fallen out among themselves and none of them was willing to spend money on the colliery with the result that the work came to a stand still and the colliery began to get flooded. At this juncture, Government stepped in and made a promise to the essential workmen that their wages would be paid and this saved the colliery. Thereafter the Chief Inspector of Mines was informed by one of the partners of the appellant firm that the other partners were preventing him 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. Tre Manager also (1) [1962]2 S.C.R. 339. (2) A.I.R. resigned and the Sub Divisional Officer of the district informed Government that the situation had become so alarming that some action on the part of the Government was absolutely necessary. In spite of notice, the partners refused to take any action with the result that the Government took over the colliery and terminated the lease. The revision application filed before the Central Government under r. 54 of the rules was turned down without giving any reasons. Negativing the contention of the appellant that the order of the Central Government was bad in law because no reasons were given, it was said by this Court that "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 col liery 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 action of the State Government far from being arbitrary or cap ricious was perhaps the only one to take and all that the Central Government has done is to approve of it." The last portion of the passage was relied upon by the counsel for the respondents in support of his argument that as the order in review is merely in confirmation of the action of the State Government reasons need not be given. But the above dictum cannot be considered dissociated from the setting of the circumstances in which it was made. There it was plain as a pike staff that the State Government had no alternative but to cancel the lease : the absence of any reasons in the order on review could not possibly leave anybody in doubt as to whether reasons were. As a matter of fact in the setting of facts, the reasons were so obvious that it was not necessary to set them out. There is nothing in this decision which is contrary to M.P. Industries vs Union(1). What the decision says is that the reasons for the action of the State were so obvious that it was not necessary, on the facts of the case, to repeat them in the order of the Central Government. Our attention was also drawn to another judgment of this Court in Commissioner of Income tax vs K. V. pilliah(2). One of the questions in that case before the High Court of Mysore (1) [1966] T. section C. R. 466. (2) 43 1. T R. 411. 318 under section 66(2) of the Indian Income tax Act was, whether, on the facts and in the circumstances of the case, the Income tax Appellate Tribunal was justified in sustaining both the addition ,of Rs. 41 142/ as income from business and Rs. 7,000/ as cash credits, and whether such addition did not result in double taxation. It was held by this Court that the question whether Rs. 41,142/ was liable to be taxed fell to be determined under. the first question. In respect of the other amount of Rs. 7,000/the Income tax Officer had held that the explanation of the assessee was untrue and the Appellate Assistant Commissioner and the Tribunal had agreed with that view. In this setting of facts, it ,,was said by this Court: "The Income tax Appellate Tribunal is the final factfinding authority and normally it should record its conclusion on every disputed question raised before it, setting out its reasons in support of its conclusion. But, in failing to record reasons, when the Appellate Tribunal fully agrees with the view expressed by the Appellate Assistant Commissioner and has no other ground to record in support of its conclusion, it does not act illegally or irregularly, mnerely because it does not repeat the grounds of the Appellate Assistant Commissioner on which the decision was given against the assessee or the department. The criticism made by the High Court that the Tribunal had "failed to perform its duty in merely affirming the conclusion of the Appellate Assistant Commissioner" is apparently unmerited. On the merits of the claim for exclusion of the amount of Rs. 7,000/ , there is no question of law which could be said to arise out of the order of the Tribunal. " The above observations were sought to be pressed into service 'by the counsel for the respondents 'but there, is a good deal of ,difference between that case and the one with which we have to deal. The High Court there was merely called upon to give its ,opinion on the statement of facts set out by the Appellate Tribunal. It was for the Income tax Officer in the first instance to accept or reject the explanation with regard to the cash credit. It the Income tax Officer found the assessee 's explanation unacceptable, lie had to say why he did not accept it. Unless the assessee in appeal was able to point out to the Appellate authorities some flaw in the reasoning of the Income tax Officer, it is not necessary for the appellate authorities to give their reasons independently. The ,explanation of the assessee is either accepted or rejected; but in the case which we have before us, the State Government has to consider the merits and demerits of the applications and to give its reasons why it prefers one to the other or others. There is a dispute between two or more contesting parties and the reasons for 319 preferring one to the other or others may be more than one. It is. not a question of accepting or rejecting an explanation. In our opinion, what was said in the above Income tax case will not apply in the case of a review by the Central Government of a decision of the State Government under the Act and the Rules. It may be of interest to note that in Rex vs Northumberland Compensation Appeal Tribunal, Ex parte Shaw(1) an application was made in the King 's Bench Division in England for an order of certiorari for the quashing of a decision reached by the Compensation Appeal Tribunal dismissing an appeal by Shaw against an award to him of compensation for loss of employment as a clerk to a Hospital Board payable under the National Health Service (Transfer of Officers and Compensation) Regulations, 1948. There the question of the practice and procedure with regard to the issue of a writ of certiorari was gone into at some length. The tribunal in that case had made a speaking order. It was contended by the counsel for the tribunal that the King 's Bench Division had no power to examine the order in the case before it on certiorari oil the ground that certiorari went only to defect of jurisdiction. This was turned down and the Divisional Court held that it had jurisdiction to quash by certiorari the decision of an inferior tribunal when the latter had embodied the reasons for its decision in its order and those reasons are bad in law. For our purpose, we need only refer to the observations of Lord Goddard, C.J. at p. 724 of the report where he said : "I think it is beneficial in this case that we should do so, not merely having regard to the facts of this case, but because so many tribunals have now been set up, all of whom, I am certain, desire to do their duty in the best way, and are often given very difficult sets of regulations and statutes to construe. It certainly must be for their benefit, and I have no doubt but that they wilt welcome, that this court should be able to give guidance to them if, in making their orders, they make their orders speaking orders, so that this court can then consider them if they are brought before the court on certiorari '. " The case for giving reasons or for making a speaking order becomes much stronger when the decision can be challenged not only by the issue of a writ of certiorari but an appeal to this court. Counsel for the respondents referred us to the comment on this case made by Sir C. K. Allen in his Law and Orders (Second Edition) at p. 259 to p. 261. According to the learned author, the Northumberland Compensation case might be a great deterrent than encouragement to speaking orders inasmuch as "the prospect (1) [1951]1 K.B. 711. 320 of having their mental process set forth in literary form, might be ,extremely disagreeable to them" and up to the year 1956 did not seem to have assisted greatly the means of recourse against decisions of inferior jurisdictions. Speaking for ourselves, with great respect to the learned author, we do not think that the position of the Central Government as a reviewing authority tinder the Mineral Concession Rules can be equated with an appellate tribunal of the type whose decision was before the King 's Bench Division in England. If the State Government is enjoined by law to give its reasons, there is no reason why it should be difficult for the appellate authority to do so. The necessity and the desirability of tribunals making speaking orders has been adverted upon by different High Courts in India. Thus in Vedachala Mudaliar vs State of Madras(3) where the State Government of Madras set ,aside the order of the Central Road Traffic Board without giving ;any reasons, it was observed that "When the policy of the Legislature is to confer powers on administrative tribunals with a duty to discharge their functions judicially I do not see any reason why they should be exempted from all those safeguards inherent in its exercise of that jurisdiction. From the standpoint of fair name of the tribunals and also in the interests of the public, they should be, expected to give reasons when they set aside an order of an inferior tribunal. . Further, if reasons for an order are given, there will be less scope for arbitrary or partial exercise of powers and the order 'ex facie ' will indicate whether extraneous circumstances were taken into consideration by the tribunal in passing the order." Refrence may also be made to Ramayya vs State of Andhra (2 and Annamalai vs State of Madras(3). To the same effect is the judgment of the Kerala High Court in Joseph vs Superintendent of Post Offices, Kottayam(1). We have already commented that the order of the Central Gov ernment in this case is couched in the same language as was used in the case before this court in M.P. Industries vs Union(5) in August 1965. The old rule 55 was replaced by a new rule which ,came into force on 19th July 1965. Whereas the old rule directed the Central Government to consider comments on the petition of review by the State Government or other authority only, the new rule is aimed at calling upon all the parties including the State Government to make their comments in the matter and the parties are given the right to make further comments on those made by (1) A.I.R. 1952 Madras 276. (3) A.I.R. 1957 Andhra Pradesh 739. (2) I.L.R. 1956 Andhra Kerala 245. (5) ; 321 the other or others. In effect, the parties are given a right to bring forth material which was not before the State Government. It is easy to see that an unsuccessful party may challenge the grant of a lease in favour of another by pointing out defects or demerits which did not come to the knowledge of the State Government. The order in this case does not even purport to show that the comments and counter comments, which were before the Central Government in this case, had been considered. It would certainly have been better if the order of 22nd June 1966 had shown that the Central Government had taken into consideration all the fresh material adduced before it and for the reasons formulated they thought that the order of the State Government should not be disturbed. In the result, the appeals are allowed and the orders of the Central Government passed on 22nd June, 1966 are set aside. The Central Government is directed to decide the review applications afresh in the light of the observations made. The appellant will get his costs throughout from the 3rd respondent. G.C. Appeals allowed.

IN-Abs

The appellant was one of several applicants for a mining lease in Andhra Pradesh. The State Government however granted it to 'respondent No. 3. The appellant then filed an application in revision, under section 30 of the Mines & Minerals (Regulation and Development) Act, 1957, read with r. 54, to the Union of India. Respondent No. 3 filed a counter statement and the State Government filed its comments. The appellant filed a rejoinder. The Union Government without hearing the appellant rejected his revision application. An appeal was filed before this Court. The question that fell for consideration was whether it was necessary for the Government of India to give reasons for its decision in view of the provisions of the Act and the Rules or aliunde because the decision was liable to be questioned in appeal to this Court. HELD : (i) In exercising its powers of revision under r. 55 the Central Government discharges functions which are quasi judicial. The decisions of tribunals in India are subject to the supervisory powers of the High Court under article 227 of the Constitution and of appellate powers of this court under article 136. Both the High Court and this Court are placed under a great disadvantage if no reasons are given and the revision is dismissed curtly by the use of the single word 'rejected ' or 'dismissed '. In such a case this Court can probably only exercise its appellate jurisdiction satisfactorily by examining the entire records of the case and after giving a hearing come to its conclusion on the merits of the case. This would certainly be a very unsatisfactory method of dealing with the appeal. [308E F; 309B C] If the State Government gives sufficient reasons for accepting the application of one party and rejecting that of others, as it must, and the Central Government adopts the reasoning of the State Government, this Court may proceed to examine whether the reasons given are sufficient for the purpose of upholding the decision. But when the reasons given in the order of the State Government are scrappy or nebulous and the Central Government makes no attempt to clarify the same, this Court, in appeal may have to examine the case de novo, without anybody being the wiser for the review by the Central Government. The same difficulty would arise where the State Government gives a number of reasons some of which are good and some are not and the Central Government gives its decision without specifying those reasons which according to it are sufficient to uphold the order of the State Government. That is why in such circumstances, what is known as a 'speaking order ' is called for. [309C F] 3 03 A 'speaking order ' is all the more necessary in the case of a decision under r. 55 because there is provision for new material being placed before the Central Government which was not there before the State Government, and further, because the decision, affecting important rights of parties, is given in a summary manner without a hearing being allowed to the parties. A party is entitled to know why the decision has gone against him. [320G 321B] The absence in r. 55 of any provision for giving such reasons is not decisive of the matter in view of the above considerations. [315H] Shivji Nathubhai vs The Union of India, ; , M.P. Industries vs Union, ; , Harinagar Sugar Mills Ltd. vs Shyam Sundar Jhunihunwala, ; and Sardar Govindraov. State, [1965] 1 S.C.R. 678, followed. Nandram Hunatram, Calcutta vs Union of India, A.I.R. 1966 S.C.1922 and Commissioner of Income tax vs K. V. Pilliah, , distinguished. Rex vs Northumberland Compensation Appeal Tribunal Ex parte Shaw, , Vedachala Mudaliar vs State of Madras, A.I.R. 1952 Madras 276, Rantayya vs State of Andhra, I.L.R. 1956 Andhra 712, Annamalai vs State of Madras, A.I.R. 1957 Andhra Pradesh 738 and Joseph vs Superintendent of Post Offices, Kottayam, I.L.R. 1961 11 Kerala 245, referred to.

minal Appeal No. 217 of 1966. Appeal by special leave from the judgment and order dated September 16, 1966 of the Bombay High Court in Criminal Appeal No. 1349 of 1965. R. Jethamalani, N. H. Hingorani and K. Hingorani, for the appellant. D. R. Prem and section P. Nayyar, for the respondent. The judgment of the Court was delivered by Hidayatullah, J. On November 16, 1964, the shop of the ap pellant Govani situated in Suklaji Street, Bombay was searched by the Enforcement Branch of the Reserve Bank of India. Nothing incriminating from the point of view of the Reserve Bank was found in the shop but a large number of watches, clocks, cigarette lighters, cameras, transistors, tape recorders, etc., were found. The officers of the Enforcement Branch appear to have informed the customs authorities. The Assistant Collector of Customs thereupon issued a warrant for the search of the premises under section 105 of the . This warrant was made out in the name of Preventive Additional Chief Inspector R. C. Dutta, Preventive Inspector P. N. Ramchandani and Preventive Officers Ranade, Thakur and Menon. It was stated in the warrant that there were 417 reasons to believe that prohibited and dutiable goods liable to confiscation and documents and things useful for and relevant to the proceedings were secreted in the shop. The officers were accordingly charged with the duty to search and seize such prohibited and dutiable goods, documents and things in the shop under section 110 of the Act. The search was effected and the goods above mentioned were seized. Some of the watches were returned as they were old and given for repairs. The other watches were seized. Proceedings for the confiscation of the goods and for penalties were started by Dutta and a summons under section 108 of the Act was issued to Govani. He could not prove that the goods had borne the necessary customs duties. The Additional Collector of Customs, Bombay thereupon sanctioned his prosecution under section 135(b) of the Act. The trial took place before the Presidency Magistrate (19th Court), Bombay. Govani was charged on two counts, under. 135(a) and section 135(b) of the . Two witness es were examined at the trial. Preventive Officer, Customs, Ranade deposed to the seizure of the goods. As the search was under the direction of Dutta, Ranade admitted in cross examination that he was told by Dutta that information had been received that Govani had secreted some contraband articles in his shop. He admitted that Dutta decided which of the watches were to be seized and which were to be released. Ranade, however, stated that he had asked Govani to produce bills regarding the watches but Govani produced none. He had also asked Govani to produce the account books but Govani again did not produce any. The second witness Nanvani only proved the seizure of the contraband goods and the exhibits in the case. He was not cross examined. Govani did not lead any evidence in his own behalf. He was examined under section 342 of the Code of Criminal Procedure and admitted that he had neither imported the watches nor paid customs duty on them. He stated that he had purchased the watches from certain customers, sometimes one and sometimes two or three from the same customer. He had no defence evidence to lead but filed a written statement and claimed that no offence had been disclosed against him in the prosecution case as laid before the court. He analysed section 135 of the Act and stated that the gist of the offence was that he should have known or have had reason to believe that the contraband goods had not been customed. He stated that under section 123 of the Act, the burden would have been on him to prove that the goods had been customed provided the goods had been seized under the Act in the reasonable belief that they were smuggled goods but no witness had deposed to such belief. This statement was filed on July 15, 1965. The following day, the prosecution applied for the examination of Dutta, Inspector of Customs, Bombay as a court witness in the interests of justice. 418 This application was opposed by Govani. The Magistrate, however, by his order dated July 26, 1965, ordered the examination of Dutta under section 540 of the Code. Dutta stated that he had seized the watches in the reasonable belief that they were smuggled. Govani was thereafter examined again and was given an opportunity to lead defence evidence. He stated that he had nothing further to add and no defence evidence to lead. The Magistrate. after considering the arguments, convicted Govani under sections 135(a) and 135(b) of the awarding him a sentence of one year 's rigorous imprisonment and a fine of Rs. 2,000/ (in default, further rigorous imprisonment for six months) on each of the two counts. The watches were also ordered to be confiscated. Govani appealed to the High Court. His main contention was that the evidence of Dutta was improperly received by the Magistrate and should be excluded from consideration. The High Court rejected these contentions and accepting the testimony of the witnesses on facts, upheld the conviction. Govani now appeals to this Court by special leave. The grant of special leave is limited to the questions whether the evidence of Dutta was improperly received by the Magistrate and whether, if excluded, the conviction of Govani can be supported. The question falls to be considered under section 540 of the Code ,of Criminal Procedure. That section is to be found in Chapter 46 of the Code among several others which have been appropriately described in the heading to the chapter as 'miscellaneous '. It provides : " section 540 : Any Court may, at any stage of any inquiry, trial or other proceeding under this Code, summon any person as a witness, or examine any person in attendance, though not summoned as a witness, or recall and re examine any person already examined; and the Court shall summon and examine or recall and reexamine any such person if his evidence appears to it essential to the just decision of the case. " The section gives a power to the court to summon a material witness or to examine a person present in court or to recall a witness already examined. It confers a wide discretion on the COURT to act as the exigencies of justice require. Another aspect of 'his power and complementary to it is to be found in section 165 of the Indian Evidence Act which provides: " section 165 : The Judge may, in order to discover or to obtain proper proof of relevant facts,, ask any question he pleases, in any form, at any time, of any witness, or of the parties, about any fact relevant or irrelevant; and may order the production of any document or 419 thing; and neither the parties nor their agents shall be entitled to make any objection to any such question or order, nor, without the leave of the Court, to crossexamine any witness upon any answer given in reply to any such question These two sections between them confer jurisdiction on the Judge to act in aid of justice. The Presidency Magistrate, Esplanade, in, dealing with the petition to call Dutta passed an order on July 26, 1965 in which he remarked that there was no gap or lacuna in the prosecution case to fill because Dutta was named as one of the witnesses and as the officer who had seized the watches. He held that the evidence of Dutta was necessary for the just decision of the case. He accordingly granted leave for the examination of Dutta. In view of the fact that he spoke in the language of the second part of section 540, it is reasonable to think that he exercised the powers conferred on him under the second part although his order is not clear as to which part he had in mind. He, however, ruled that Govani would be further examined under section 342 of the Code of Criminal Procedure and allowed to lead further evidence. This action of the Magistrate which was approved by the High Court, is challenged before us. It is submitted that the powers under section 540, however wide, must be reconciled with the mandatory requirements of Chapter 21 laying down the procedure of trial of warrant cases by Magistrates. It is pointed out that the trial had gone through the stage of taking evidence for the prosecution (section 252), framing of the charge (section 254), recording of the plea (section 255) and the defence (section 256) of the accused and as Govani did not wish to lead evidence. (section 257), it had reached the stage of section 258 and the court could either acquit or convict him. It is, therefore, submitted that the Magistrate had really allowed the prosecution to fill a gap in the case which had the effect of dispensing with the burden which was on the prosecution to prove the case under section 135 (a) and (b) of the and of placing the burden upon Govani to rebut the presumption that the goods were smuggled. This, it is said, is not only unfair but unjust and cannot be regarded as falling within the powers of the court, however, wide the language of the section. We shall consider these objections and refer to the rulings which were cited before us in support of them. To begin with, we do not accept as sound the argument that Chapter 21 must limit the powers under section 540. Offences under .he Code of Criminal Procedure are tried in different ways according to their gravity. There are thus trials of summons and war5 Sup. C.I./67 13 420 rant cases by Magistrates, trials before High Courts and Courts of Session and summary trials. All these trials have their procedure laid down from one step to another till the stage is reached for acquittal or conviction. If the argument advanced on the basis of the procedure laid down in Chapter 21 is accepted there would be no room for the exercise of the power under section 540 because it would always be impossible to fit it into any chapter without doing violence to the sequence established there. Section 540 is intended to be wide as the repeated use of the word 'any ' throughout its length clearly indicates. The section is in two parts. The first part gives a discretionary power but the latter part is mandatory. The use of the word 'may ' in the first part and of the word 'shall ' in the second firmly establishes this difference. Under the first part, which is permissive, the court may act in one of three ways : (a) summon any person as a witness, (b) examine any person present in court although not sum moned, and (c) recall or re examine a witness already examined. The second part is obligatory and compels the Court to act in these three ways or any one of them, if the just decision of the case demands it. As the section stands there is no limitation on the power of the Court arising from the stage to which the trial may have reached, provided the Court is bona fide of the opinion that for the just decision of the case, the step must be taken. It is clear that the requirement of just decision of the case does not limit the action to something in the interest of the accused only. The action may equally benefit the prosecution. There are, however, two aspects of the matter which must be distinctly kept apart, The first is that the prosecution cannot be allowed to rebut the defence evidence unless the prisoner brings forward something suddenly and unexpectedly. This was laid down by Tindal, C.J. in. words which are oft quoted : "There is no doubt that the general rule is that where the Crown begins its case like a plaintiff in a civil suit, they cannot afterwards support their case by calling fresh witnesses, because they are met by certain evidence that contradicts it. They stand or fall by the evidence they have given. They must close their case before the defence begins; but if any matter arises ex improviso, which no human ingenuity can foresee, on the part of a defendant in a civil suit, or a prisoner in a criminal case, there seems to me no reason why that matter which so arose ex improviso may not be answered by contrary evidence on the part of the Crown." (Reg. vs Frost)(1). There is, however, the other aspect namely of the power of the Court which is to be exercised to reach a just decision. This power (1) at 386. 421 is exercisable at any time and the Code of Criminal Procedure clearly so states. Indeed as stated by Avory J. in Rex vs Dora Harris(1) : "The cases of Reg. vs Chapman ; and Reg. vs Holden ; establish the proposition that the presiding judge at a criminal trial has the right to call a witness not called by either the prosecution or the defence, if in his opinion this course is necessary in the interests of justice. It is true that in none of the cases has any rule been laid down limiting the point in the proceedings at which the judge may exercise that right." However the learned Judge points out that injustice is possible unless some limitation is put upon the exercise of that right and he adopts for that purpose the rule laid down by Tindal, C.J. in Reg. vs Frost(2) even in those cases where a witness is called by the Judge after the case for the defence is closed, and states, "that the practice should be limited to a case where the matter arises eximproviso, which no human ingenuity can foresee, on the part of a prisoner, otherwise injustice would ensue" and cites the case of Reg. vs Haynes(3) where Bramwell B. refused to allow fresh evidence to be gone into after the close of the whole case. In Dora Harris 's(1) case, five persons were tried, two for stealing and they pleaded guilty and three others for receiving who pleaded not guilty. The first two remained in the dock and the trial proceeded against the other three. They gave evidence on their own behalf and the prosecution case was not quite strong. The Recorder then asked one of the other two accused to give evidence and allowed the prisoner Dora against whom the evidence went to cross examine him but did not ask Dora to enter the box again to contradict the new evidence. This was held by the Court of Criminal Appeal to be a wrong exercise of the power of the Court. It was an extreme example of the exercise of the power. Mr. Jethmalani relies strongly upon this case and cites several decisions of the High Courts in India in which this dictum was applied. In particular he relies upon In re K. V. R. section Mani(4 ), Shreelal Kajaria vs The State(5) and In re V. Mahadevan(6). In these cases it is laid down that the powers under section 540 of the Code of Criminal Procedure, wide though they may be, must not be exercised to the disadvantage of the accused, particularly after his defence is over. There is nothing new in these cases. They follow in essence the decision in Reg. vs Frost(2) as applied in Dora. Harris(1) case. (1) at 594. (2) 4St. (N.S.) 85 at 386. (3) [1859] 1 F. & F. 666. (4) I.L.R. [1951] Mad. (5) 1, (6) 422 On the other side reliance is placed upon In re K. K. Narayanali Nambiar(1), State vs Sheikh Mohamad Abdullah and others,(2), Ratnakar Das vs The State and others(3) and Ramjeet and others vs State(4) among others in which a liberal interpretation in favour of the court 's powers is placed upon the section. It is not necessary to refer to the cases cited on either side. They illustrate the application of the general principle spoken to by Avory J. in the extract from Dora Harris(5) case and the condition laid down in Reg. vs Frost(6) Dora Harris and Reg. vs Frost cases involved rebuttal of the defence evidence. In neither case was there any unexpected move by the prisoner and the evidence was therefore, wrongly admitted. It is difficult to limit the power under our Code to cases which involve something arising eximproviso which no human ingenuity could foresee, in the course of the defence. Our Code does not make this a condition of the exercise of the power and it is not right to embark on judicial legislation. Cases that go that far are of course not quite right. Indeed they could be decided on fact because it can always be seen whether the new matter is strictly necessary for a just decision and not intended to give an unfair advantage to one of the rival sides. Even in England where the rule in Dora Harris(5) case obtains, the powers of the Court have not been held to be wrongly exercised, when fresh evidence has been let in for a just decision. In William Sullivan(7) rebutting evidence was held to be properly called when the accused put forward a suggestion which could not have been foreseen and in John Mckenna(8) it was held that a judge had complete discretion whether a witness should be recalled and that the Court of Criminal Appeal would not interfere unless it was made to appear that injustice had been caused. In that case (like the one here) the defence had closed the case and the accused had submitted that there was no case to go to the jury. It would appear that in our criminal jurisdiction, statutory law confers a power in absolute terms to be exercised at any stage of the trial to summon a witness or examine one present in court or to recall a witness already examined, and makes this the duty and ,obligation of the Court provided the just decision of the case demands it. In other words, where the court exercises the power under the second part, the inquiry cannot be whether the accused has brought anything suddenly or unexpectedly but whether the ,court is right in thinking that the new evidence is needed by it for a just decision of the case. If the court has acted without the requirements of a just decision, the action is open to criticism but (1) A.I.R. 1942 Mad. (3) A.I.R. 1966 Orissa 102. (5) at 594. (7) (2) (4) I.L.R. [1958] All. 52. (6) at 386. (8) 423 if the court 's action is supportable as being in aid of a just decision the action cannot be regarded as exceeding the jurisdiction. In the present case the position is this. In 1955, by a notification under the Imports and Exports (Control) Act, 1947, the import of watches, clocks and parts thereof except under a licence was completely stopped [Notification No. 17/1955 dated December 7, 1955 known as Imports (Control) Order, [1955]. Govani was found on November 16, 1964 to be in possession of 305 watches of foreign make. The warrant of search issued by the Assistant Collector of Customs recited : "Whereas there are reasons to believe that prohibited and dutiable goods liable to confiscation . are secreted in. Premises of Shri G. K. Gowani, Shop No. 20, Suklaji Street, Bombay, etc." The watches (among other articles) were seized by Dutta. He separated the old watches from the new and asked to see any document which would show that the watches were legitimately imported. Govani produced no document although a summons under section 108 of the was served upon him. The watches were, therefore, seized. There was evidence to show that in 1963 1,300 watches were seized from Govani 's locker in a safe deposit vault but the prosecution then had resulted in acquittal. The Magistrate and the High Court were of opinion that these circumstances might lead to a reasonable belief in the mind of the person seizing the watches, that they were smuggled. The prosecution examined Ranade, Prevention Officer, Customs who had assisted at the search but failed to examine Dutta who seized the watches and under whose direction the search was conducted. The question was why were the watches seized ? They were obviously not seized because they were stolen property or belonged to some other person. They were seized after search on a warrant which expressed the belief that they were smuggled and after affording Govani an opportunity by notice to explain his possession. It is obvious that the just decision of the case required a finding whether they were smuggled or not. The circumstances already deposed to by Mukund Ranade and otherwise on the record clearly established that someone must have seized the watches entertaining a belief that they were smuggled. This belief obviously was entertained by Dutta. This was not a case in which the prosecution was trying to fill a gap in the pro secution case. The court was right in thinking that a just decision of the case required that the nature of the belief underlying the seizure should be before it on oath of the person making the seizure so that Govani might be required, as the policy of the requires, to prove his innocent possession. Govani had really no defence in view of the Control Order of 1955 and the gap of time between the promulgation of the order and the 424 date of the seizures. He admitted this before and after Dutta 's evidence. In these circumstances it cannot be said that the court had exceeded its jurisdiction in acting under the second part of section 540 of the Code of Criminal Procedure. As Dutta 's evidence was rightly taken and gone into, and as Govani had no defence beyond taking advantage of the inadvertent omission, the defence had no merit. The conviction was, therefore, rightly reached. The appeal fails and is dismissed. R.K.P.S. Appeal dismissed.

IN-Abs

Upon a warrant issued under section 105 of the , the appellants ' shop was searched and a number of watches, clocks, etc., were seized. As he could not prove that the goods had borne the necessary customs duty, the appellant was prosecuted on two counts under sections 135(a) and 13 5 (b) of the . The appellant did not lead any evidence in his own behalf. He filed a written statement in which he claimed, inter alia, that no offence had been disclosed against him as under section 123 of the Act the burden would have been on him to prove that the goods had be en customed provided the goods had been seized under the Act in the reasonable belief that they were smuggled goods but no witness had deposed to such belief. The day after this statement was filed, the prosecution applied for the examination of the Customs Officer who was in charge of the search as a court witness in the interest of justice. Although this application was opposed by the appellant, the Magistrate ordered the examination of the officer under section 540 of the Code in the course of which he stated that he had seized the watches in the reasonable belief that they were smuggled. The appellant was thereafter examined again and was given an opportunity to lead defence evidence but he stated that he had nothing further to add and no evidence to lead. The, trial court then convinced the appellant under Sections 135(a) and 135(b). An appeal to the High Court against this conviction was dismissed. In the appeal to this Court by special leave, the question for determination was whether the evidence of the officer was improperly received by the Magistrate and whether if excluded the conviction of the appellant could be supported. It was contended an behalf of the appellant that the. powers under section 540, however wide, must be reconciled with the mandatory requirements of Chapter 21 laying down the procedure of trial of warrant cases by Magistrates and that as the trial bad gone through the various stages and had reached the stages of section 258, the court could either acquit or convict him; it was therefore submitted that the Magistrate had really allowed the prosecution to fill a gap in the. case which had the effect of dispensing with the burden which was on the prosecution to prove the case under sections 135(a) and (b) of the Custom Act and of placing the burden upon the appellant to rebut the presumption that the goods were smuggled; HELD : Dismissing the appeal, The contention that Chapter 21 must limit the powers under Section 540 must be rejected. Offences under the Code of Criminal Procedure are 416 tried in different ways according to their gravity. The trials in the Magistrate 's courts the High Courts and Courts of Session as well as summary trials have their procedure laid down from one step to another till the state is reached for acquittal or conviction. If the argument advanced on the basis of the procedure laid down in Chapter 21 was to be accepted, there would be no room for the exercises of the power under section 540 because it would always be impossible to fit it into any chapter without doing violence to the sequence established there. [419H 420B] In the present case the trial Judge appeared to have exercised power conferred on him under the second part of section 540 i.e., to admit the evidence of the officer as essential to the just decision of the case. As die Section stands, there is no limitation on the power of the court arising from the stage to which the trial may have reached provided the court is bona fide of the opinion that for the just decision of the case steps authorised by the Section may be taken. [420D E] It was obvious that a just decision in the present case required finding whether the watches, etc., seized were smuggled or not. The circumstances already on record clearly established that some one must have seized the watches entertaining a belief that they were smuggled and this belief obviously was entertained by the Officer in charge of the search. This was not a case in which the prosecution was trying to fill a gap in its case. The court was right in thinking that a just decision of the case required that the nature and the plea underlying seizure should be before it on oath of the person making the seizure so that the appellant might be required, as the policy of the requires, to prove his innocent possession. [423F H] Case law discussed.

Appeal No. 274 of 1967. Appeal by special leave from the judgment and order dated November 18, 1965 of the Rajasthan High Court in D. B. Civil Writ Petition No. 336 of 1964. Brijbans Kishore and D. P. Gupta, for the appellant. 432 G.C. Kasliwal, Advocate General for the State of Rajasthan and K. Baldev Mehta, for the respondent. The Judgment of the Court was delivered by Bhargava, J. The appellant, Unikat Sankunni Menon, was in the service of the Rajasthan Government in the Secretariat after Rajasthan was constituted as a State. The pay and grades of the posts in the Secretariat were governed by the Rajasthan Civil Services (Unification of Pay Scales) Rules and Schedules framed by the Rajpramukh under Article 309 of the Constitution of India. Under those Rules, an Assistant Secretary to Government drew pay in the scale of Rs. 250 25 400 E.B. 25 500 and was, in addition, entitled to a special pay of Rs. 501 . A Deputy Secretary to Government drew pay in the scale of Rs. 500 25 700 and was, in addition, entitled to a special pay of Rs. 100/ . Subsequently, the Rajasthan Secretariat Service Rules, 1954 were framed by the Rajpramukh under Article 309 of the Constitution of India and were brought into force with effect from 10th January, 1955. Under these Rules, the appellant became a member of the Rajasthan Secretariat Service (hereinafter referred to as "the R.S.S."). He was, at that time, holding the post of an Assistant Secretary which carried the time scale of Rs. 250 25 400 EB 25 500. He was also drawing a special pay of Rs. 75/ per month. By the notification dated 25th May, 1956, the Rajpramukh, again acting under article 309 of the Constitution of India, promulgated Rajasthan Civil Services (Rationalisation of Pay Scales) Rules and Schedules, 1956. Under these Rules, the grades of pay applicable to Deputy Secretaries and Assistant Secretaries were revised. The posts of Assistant Secretaries were shown as belonging to the ordinary time scale of the R.S.S., carrying the grade of Rs. 250 25 500 EB 25 750 with a special pay of Rs. 75/ . Further, it was laid down that there will be selection posts for members of the R.S.S. which were indicated as posts of Deputy Secretaries to Government by putting this designation in brackets, and a new scale of Rs. 500 30 740 EB30 800 50 900 without special pay was prescribed for these selection posts. In the remarks column, there was a note that, on promotion as Deputy Secretary, an Officer will receive Rs. 5001 or a minimum increase of Rs. 150/ on his basic pay as Assistant Secretary whichever is higher. These were the Rules in force when, on 10th January, 1959, the appellant was appointed as Deputy Secretary. On that date, he was drawing a salary of Rs. 475/p.m. in the ordinary time scale of the R.S.S. and was also getting a special pay of Rs. 75/ , as he was holding the post of an Assistant Secretary to Government. Consequently, on his appointment as Deputy Secretary, which was a selection post for the R.S.S., his salary was fixed at Rs. 650/ . Under the formula laid down in the remarks column, mentioned above, the salary admissible to him 433 came to Rs. 625/ , but, since in the new grade fixed for the selection posts there was no stage at Rs. 625/ , his pay was fixed at Rs. 650/ at the next higher stage above the amount calculated in his case on the basis of the formula laid down in the remarks column. This procedure was adopted under the Government instructions. Subsequently, the grades for the posts of Dy. Secretaries and Assistant Secretaries were again revised by the Governor of Rajasthan under the proviso to Article 309 of the Constitution by promulgating the Rajasthan Civil Services (Revised Pay) Rules, 1961. Under these Rules, the grade applicable to Assistant Secretary to Government belonging to the R.S.S. was prescribed as Rs. 360 25 560 30 590 EB 30 860 900. The Rules also indicated that this revised scale had been prescribed as a result of merging the special pay in the grade pay itself. The grade for Deputy Secretaries to Government was also revised to Rs. 550 30 820 EB 30850 50 1 100. It appears that, subsequently, there was another revision of scales of pay in the year 1966, and the latest grade applicable to the members of the R.S.S. holding the posts of Deputy Secretaries is Rs. 900 50 1500. Apart from these various Rules which, from time to time, were applicable to members of the R.S.S., we may also indicate the Rules that were applicable to members of the Rajasthan Administrative Service (hereinafter referred to as "the R.A.S.") when holding posts of Deputy Secretaries. Under the Rajasthan Civil Services (Unification of Pay Scales) Rules and Schedules, 1950, which were in force until the year 1956, a member of the R.A.S., on appointment as Deputy Secretary, drew salary in the same grade of Rs. 500 25 700 with a special pay of Rs. 100/ in the same way as a member of the R.S.S. When the Rajasthan Civil Services (Rationalisation of Pay Scales) Rules & Schedules, 1956 came into force, this principle was departed from. While laying down the grades of pay applicable to members of the R.A.S., their senior and junior scales were combined into one scale shown as the time scale of Rs. 250 25 500 EB 25 750 with a selection grade of Rs. 500 30 740 EB 30 800 50 900 which was to be admissible personally to Officers who had been appointed substantively earlier to the grade of Rs. 500 25 700 vide Government Orders issued on 9th April, 1951 and 19th January, 1955. Then, it was further laid down that special pay would be admissible on certain posts to Officers of the R.A.S. on time scale or selection grade, and, amongst these, were the posts of Deputy Secretaries to Government. The Rules prescribed a special pay of Rs. 1501 for the members of the R.A.S. when appointed to posts of Deputy Secretaries to Government. In the subsequent revision of grades under the Rajasthan Civil Services (Revised Pay Scales) Rules, 1961, the grade of the R.A.S. was revised to Rs. 285 25 510 EB 25 560 30 800 for the ordinary time scale and Rs. 550 30 820 EB 30 850 50 950 for 4 3 4 posts in the senior scale, together with a selection grade of Rs. 65050 1250. Under these Rules again, it was laid down that an Officer of the R.A.S. holding a post in the senior scale on appointment as Dy. Secretary, will be entitled to a special pay of Rs. 150/Under the last revision in 1966, a member of the R.A.S., on appointment as Dy. Secretary, was to draw salary in his regular time scale of Rs. 550 30 820 EB 30 850 50 1100, subject to a minimum of Rs. 640/ , with a special pay of Rs. 1501 . In the case of a member of the R.A.S. holding a post in the selection grade applicable to his service, he was to draw the pay in his selection ,grade with a special pay of Rs. 1501. Thus, in the case of members of the R.A.S. appointed to posts of Deputy Secretaries, a special pay remained admissible, while the principle of granting special pay to members of the R.S.S. on appointment as Deputy Secretaries was abolished. It was on the basis of these Rules that the appellant filed a petition under article 226 of the Constitution before the High Court of Rajasthan claiming that the words "without special pay" in the Rajasthan Civil Services (Rationalisation of Pay Scales) Rules & Schedules, 1956 may be declared as invalid and violative of Articles 14 and 16 of the Constitution. The High Court dismissed the petition and, consequently, the appellant has now come up to this Court by special leave. The claim of the appellant has to be examined in two different aspects,. The first aspect is that the Rules, as applicable from time to time to members of the R.S.S. on appointment to the posts of Deputy Secretaries, were, at no stage, made less favourable than the Rules previously applicable. As has been mentioned earlier, under the Rajasthan Civil Services (Unification of Pay Scales) Rules & Schedules, 1950, a person serving in the Rajasthan Secre tariat, on appointment as Deputy Secretary, was placed in the time scale of Rs. 500 25 700 and was, in addition, entitled to a special pay of Rs. 100/ . When the Rules were revised for the first time under the Rajasthan Civil Services (Rationalisation of Pay Scales) Rules & Schedules, 1956, a member of the R.S.S., working on the ordinary time scale as Assistant Secretary, became entitled, on ap pointment as Deputy Secretary, to pay in the scale of Rs. 500 30740 EB 30 800 50 900. It is true that, on such appointment under these Rules, he was not entitled to any special pay; but the principle for fixation of pay given in the remarks column ensured that the pay admissible to the Officer would certainly be higher than the pay which would have been admissible if the earlier Rules had continued in force. The scale of pay prescribed for the post of Deputy Secretary was higher than the previous scale. Further, on promotion as Deputy Secretary, every Officer of the R.S.S. received a minimum increase of Rs. 1501/ on his basic pay as Assistant Scretary. The fact that the special pay as Assistant Secretary was 435 ignored in fixing the pay on appointment to the post of Deputy Secretary did not result in any reduction of the emoluments to be received under the new scales, as compared with the emoluments which he would have received if the old scales had continued to remain in force. The subsequent revisions in 1961 and 1966 also observed this principle, so that the Rajpramukh or the Governor of Rajasthan, in promulgating these various Rules revising the pay scales applicable to Deputy Secretaries, ensured that no revised Rule operated to the prejudice of a member of the R.S.S., as compared with the earlier Rules under which rights had vested in him. Further, it was, at no stage, urged that the Rajpramukh or the Governor was incompetent to promulgate these revised Rules from time to time in exercise of his power under Article 309 of the Constitution. The Rules thus applicable to the member of the R.S.S. on appointment to the post of Deputy Secretary, against which the appellant made his grievance in the High Court, cannot be held to be vitiated in any manner, if considered by themselves in the light of rights which the members of the R.S.S. possessed from time to time. The second aspect, and the one on which reliance was mainly placed by learned counsel for the appellant in. this appeal, is that the Rules, on the face of them, show that, in the case of members of the R.S.S. appointed as Deputy Secretaries, no special pay is admissible, while special pay is admissible to members of the R.A.S. when holding similar posts. It is on the basis of this apparent differentiation that the appellant urged that Articles 14 and 16 of the Constitution were violated when special pay was denied to the members of the R.S.S., while special pay was admissible to members of the R.A.S. There are two reasons why this grievance put forward on behalf of the appellant has to be rejected. The first is that the appellant comes to the post of a Deputy Secretary from the R.S.S., which is a service distinct and separate from the R.A.S. The methods of recruitment, qualifications, etc., of the two Services are not identical. In their ordinary time scale, the two Services do not carry the same grades. Even the posts, for which recruitment in the two Services is made, are, to a major extent, different. The members of the R.S.S. are meant to be employed in the Secretariat only, while members of the R.A.S. are mostly meant for posts which are outside the Secretariat though some posts in the Secretariat can be filled by members of the R.A.S. In such a case, where appointment is made to the posts of Deputy Secretaries of government servants belonging to two different and separate Services, there can arise no question of a claim that all of them, when working as Deputy Secretaries, must receive identical salaries, or must neces sarily both be given special pay. It is entirely wrong to think that every one, appointed to the same post, is entitled to claim that be L5 Sup. CI/67 14 436 must be paid identical emoluments as any other person appointed to the same post, disregarding the method of recruitment, or the source from which the Officer is drawn for appointment to that post. No such equality is required either by article 14 or article 16 of the Constitution. This principle was explained by this Court first in the case of All India Station Masters ' and Assistant Station Masters ' Association & Others vs General Manager, Central Railways and Others(1). In that case, the question arose about the rights of promotion of Assistant Station Masters and Guards already employed in the Railway Service. The Assistant Station Masters claimed equality of opportunity for promotion qua the Guards on the ground that they were entitled to equality of opportunity in the matter of employment or appointment to any office of the State under article 16(1) of the Constitution. This Court held : "It is clear that, as between the members of the same class, the question whether conditions of service are the same or not may well arise. If they are not, the question of denial of equal opportunity will require serious consideration in such cases. Does the concept of equal opportunity in matters of employment apply, however, to variations in provisions as between members of different classes of employees under the State ? In our opinion, the answer must be in the negative. The concept of equality can have no existence except with reference to matters which are common as between individuals, between whom equality is predicated. Equality of opportunity in matters of employment can be predicated only as between persons, who are either seeking the same em ployment, or have obtained the same employment." Proceeding further, the Court held : "There is, in our opinion, no escape from the conclusion that equality of opportunity in matters of promotion, must mean equality as between members of the same class of employees, and not equality between members of separate, independent classes." The same principle was later confirmed in the case of Kishori Mohanlal Bakshi vs Union of India(2). In that case, persons appointed to Class 11 of Income tax Officers claimed that there was discrimination against them in the matter of pay scales, as compared with Income tax Officers recruited direct to the Class I Service. The Court, rejecting this argument, held : "The only other contention raised is that there is discrimination between Class I and Class II Officers inasmuch as, though they do the same kind of work, their pay scales are different. This, it is said, violates article 14 of the Constitution. If this contention had any validity, there could be no incremental scales of pay fixed dependent on the duration of an officer 's service. The abstract doctrine of equal pay for equal work has nothing to do with article 14. The contention that article 14 of the Constitution has been violated, therefore, fails. " The claim of the appellant in the present case that, (1) 1. (2) A.I.R. 1962 S.C. 11 39. 437 on appointment as Deputy Secretary, he must be held entitled to receive special pay on the ground of being placed on parity with the members of the R.A.S., has, therefore, to be rejected. The second ground, which shows that the claim made on behalf of the appellant has no basis, is that, under the various Service Rules themselves, a member of the R.S.S., on appointment as Deputy Secretary, is given pay in a grade specially and separately fixed for the posts of Deputy Secretaries, while a member of the R.A.S., is not placed in that grade at all. Thus, under the latest Rules, a member of the R.S.S., on appointment as Deputy Secretary, draws salary in the grade of Rs. 900 50 1500. On the other hand, a member of the R.A.S., appointed as Deputy Secretary, is not granted pay in this scale. In his case, he continues to draw his salary in the scale applicable to him in the R.A.S. and is allowed a special pay of Rs. 1501 . This special pay allowed to a member of the R.A.S. is, therefore, not in addition to the pay in the grade specially prescribed for the posts of Deputy Secretaries. That grade is much higher than the grade applicable to the member of the R.A.S. which continues to apply to him on his appointment as Deputy Secretary, and it is only in addition to that lower time scale that a member of the R.A.S. is allowed the special pay of Rs. 1501 . It is thus clear that the method of fixation of salary for members of the two Services, on appointment as Deputy Secretaries, is quite different. A member of the R.S.S. is allowed a special higher grade, while a member of the R.A.S. continues on his old scale and only gets an extra salary of Rs. 1501 per month. In such a case, no question can arise of holding that a member of the R.S.S. must also be granted a special pay in addition to being placed in the higher grade of pay prescribed for the post of Deputy Secretaries when that post is held by the member of the R.S.S. In this connection, learned counsel for the appellant drew our attention to Rule 7(3 1) of the Rajasthan Civil Service Rules, 1951, framed under Article 309 of the Constitution, defining special pay. The definition given in the Rule is that "Special Pay" means an addition of the nature of pay, to the emoluments of a post or of a government servant, granted in consideration of : (a) the specially arduous nature of the duties, (b) a specific addition to the work or responsibility; or (c) the unhealthiness of the locality in which the work is performed. It was urged by learned counsel that, if the post of Deputy Secretary was considered as involving specially arduous nature of duties for members of the R.A.S., there is no reason to hold that that post is not equally arduous for members of the R.S.S. and, consequently, there would be no justification for denying special pay 438 to members of the R.S.S. holding such a post, when special pay is granted to members of the R.A.S. It appears to us that this submission is made on a misconception of the scope of this Rule. The Rule, in defining special pay, envisages an addition of the nature of pay to the emoluments of either a post or of a government servant and, consequently, it is clear that a special pay is to be granted, if a person is appointed to a post which is specially arduous in nature as compared with the earlier post held by him. Similarly, it may be granted to a government servant who is appointed to a post involving specially arduous duties as compared with the posts to be held by him ordinarily, while continuing in the Service in which he holds his permanent appointment. Special pay does not arise out of any inherent quality of being arduous in nature of the post itself. Thus, when special pay is granted to a member of the R.A.S. on appointment as Deputy Secretary, the reason may be that the post is considered more arduous in nature than the post which would be held by him, if he had continued on a regular post borne on the cadre of his Service. In the case of a member ,of the R.S.S., the post of a Deputy Secretary is already designated as a selection post for hi in and in view of this difference between the post to which he is appointed, as compared with the post of an Assistant Secretary earlier held by him, he is granted a special and higher grade, so that there is no question of his being granted a special pay on the basis that the post of Deputy Secretary is more arduous in nature than the post of Assistant Secretary. The Rules, ,as framed, are, thus, based on well recognised principles for granting salary to members of different Services, even when they are appointed to the same post. In these circumstances, no question arises of any discrimination under article 14 of the Constitution, or ,of any denial of equality of opportunity under article 16 of the Constitution. The appeal has no force and is dismissed, but, in the circumstances of this case, we make no order as to costs. R.K.P.S. Appeal dismissed.

IN-Abs

Under the Rajasthan Civil Services (Unification of Pay Scales) Rules & Schedules, 1950, a person serving in the Rajasthan Secretariat, on appointment as Deputy Secretary, was placed in a specified pay scale and was, in addition, entitled to a Special Pay. Under the same Rules a member of the Rajasthan Administrative Service, on appointment as Deputy Secretary, was also entitled to draw salary in the same pay scale and a similar Special Pay. The 1950 Rules were superseded by the Rajasthan Secretariat Service (Rationalisation of Pay Scales) Rules & Schedules, 1956, by which it was provided that for Assistant Secretaries in the Secretariat Service there would be a number of selection posts of Deputy Secretaries on an increased pay scale without any Special pay Furthermore, the scales applicable to the members of Administrative Service on appointment as Deputy Secretary were also 'revised upwards though not to the same extent as for those in the Secretariat Service and in their case the principle of Special Pay on such appointment was continued. The rules were revised again in 1961 and 1966 whereby higher pay scales were introduced to apply to members of each service on appointment to the post of a Deputy Secretary but the system of a special pay on such appointment, was continued only for members of the Administrative Service. The appellant, who was an Assistant Secretary in the Secretariat Service and had been promoted as a Deputy Secretary, filed a petition under article 226 of the Constitution claiming that the words "without special pay" in the 1956 Rules, applicable in respect of his Service may be declared invalid and violative of Articles 14 and 16 of the Constitution. The High Court dismissed the Petition. In the appeal to this Court it was contended, inter alia that Articles 14 and 16 were violated because, (i) the Rules, on the fare of them, showed that in the case of members of the Secretariat Service appointed as Deputy Secretaries, no special pay was admissible, while such pay was admissible to members of the Administrative Service when holding similar posts; and (ii) the definition of "Special Pay" in Rule 3(31) of the Rajasthan Civil Service Rule,,, 1951, showed that it was meant to be additional pay in consideration, inter alia, of the specially arduous nature of duties and that if the post of Deputy Secretary was considered as involving such duties for members of the Administrative Service, there was no reason to hold that the same post was not equally arduous for members of the Secretariat Service. HELD : There was no discrimination under Article 14 or any denial 4 3 1 of equality of opportunity under Article 16. (1) The Rules, as applicable from time to time to members of the Secretariat Service on appointment to the posts of Deputy Secretaries, were, at no stage made less favourable than the Rules previously applicable to them and could not be held to be vitiated in any manner, if considered by themselves in the light of rights which the members of the Secretariat Service possessed from time to time. [435C D; 438E F] The appellant came to the post of a Deputy Secretary from the Secretariat Service which is a service distinct and separate from the Administrative Service. The methods of recruitment qualification, etc., of the two Services are not identical. In their ordinary time scale, the two Services do not carry the same grades. Even the posts, for which recruitment in the two Services is made, are to a major "tent, different. The members of the Secretariat Service are meant to be employed in the Secretariat only, while members of the Administrative Service are mostly meant for posts which are outside the Secretariat though some posts in the Secretariat can be filled by members of that service. In such a case, where appointment is made to the posts of Deputy Secretaries of government servants belonging to two different and separate Services, there can arise no question of a claim that all of them, when working as Deputy. Secretaries, must receive identical salaries, or must necessarily both be given special pay. It is entirely wrong to think that every one, appointed to the same post, is entitled to claim that he must be paid identical emoluments as any other person appointed to the same post, disregarding the method of recruitment, or the source from which the Officer is drawn for appointment to that post. No such equality is required either by article 14 or article 16 of the Constitution. [435F 436B] All India Station Masters ' and Assistant Station Masters ' Association & Others vs General Manager, Central Railways and Others,, ; ; Mohanlal Bakshi vs Union of India A.I.R. 1962 S.C. 1139, relied on. Furthermore, under the various Service Rules themselves a member of the Secretariat Service on appointment as Deputy Secretary was allowed a special higher grade, while a member of the Administrative Service continued on his old scale and only got an extra salary of Rs. 1501 per month by way of Special Pay. In such a case, no question can arise of holding that a member of the Secretariat Service must also be granted a special pay in addition to being placed in the higher grade. 'Special Pay ' does not arise out of any inherent quality of being arduous in the nature of the post itself. Thus, when special pay was granted to a member of the Administrative Service on appointment as Deputy Secretary, the reason might be that the post was considered more arduous in nature than the post which would beheld by him, if he had continued on a regular post borne on the cadre of his Service. In the case of an Assistant Secretary in the Secretariat Service, the post of a Deputy Secretary was already designated as a selection post for him on a grade, and there could be no question of his being granted a on the basis that the post Deputy Secretary is more arduous in nature than the post of Assistant Secretary [437D F; 438C E]

minal Appeal No. 116 of 1964. Appeal by special leave from the judgment and order dated December 20, 1963 of the Punjab High Court in Criminal Revi sion No. 824 of 1963. K.Baldev Mehta, G. D. Gupta and Indu Sani, for the appel lant. Bikramjit Mahajan and R. N. Sachthey, for the respondent. 441 The Judgment of the Court was delivered by Shelat, J. In 1961 Ravi Datt Joshi was the Assistant District Inspector of Schools at Kamal and the appellant was then working under, him as a clerk. Between March to December 1961, Joshi authorised the appellant to draw certain amounts from the State Bank of India, Karnal. Accordingly, on March 11, 1961, the appellant drew Rs. 979.12 for payment to M/s. Joti Pershad Gupta & Sons. On March 31, 1961, he drew a further sum of Rs. 1449.38 out of which Rs. 1404 were to be paid to the Indian Red Cross Society. He made an entry in the cash book showing as if that amount was paid to the said Society and got that entry initialled by Joshi. On July 3, 1961, he encashed a bill for Rs. 424, the amount being payable to two teachers, Ishwar Datt and Chand Ram. The appellant made an entry in the acquittance roll showing as if he had paid Rs. 200 to Chand Ram. On November 15, 1961 he received Rs. 281.15 in respect of arrears of salary of one teacher, Harbhajan Kaur and on December 2, 1961, he received Rs. 42.66 and Rs. 494, the first amount being the, salary of Ram Sarup, another teacher and the other as contingent fund payable to the staff. None of these amounts was paid to any of the aforesaid persons for payment to whom they were received by him. On M/s. Joti Pershad Gupta & Sons complaining to Joshi that the amount due to them was not paid, Joshi looked into the matter and finding that that amount and other amounts were embezzled, he lodged a complaint before the Police. The police thereupon registered a case under section 409 against the appellant and under sections 409, 465, 477 A and section 120 B of the Penal Code against Joshi. The trial Magistrate convicted Joshi and the appellant under section 120 B and under section 409 for criminal breach of trust in respect of Rs. 3414.53 and also under section 477 A and awarded different sentences and fines directing the sentences to run concurrently. In appeal, the Additional Sessions Judge acquitted Joshi of all the charges. He also acquitted the appellant on charges under section 120 B and section 477 A but upheld his conviction under section 409. The appellant filed a revision in the High Court where he conceded that the aforesaid amounts were received by him from the Bank but pleaded that he had handed them over to Joshi and that it was Joshi 's duty to disburse those amounts and to maintain accounts as Joshi was incharge of the office. The High Court held that the said moneys having been admittedly received by the appellant, the burden of proof was upon him to show what he had done with them, that there being no evidence that he handed them over to Joshi except his bare allegation, the appellant had failed to discharge the burden and was, therefore, rightly convicted under section 409. The High Court relied upon the evidence of Sukhminder Singh, the District Inspector of Schools that the appellant had confessed before him that 442 out of the said sum of Rs. 3414 53 he had misappropriated Rs. 2500 and that Joshi had misappropriated the balance of Rs. 979 and that the appellant was prepared to deposit the amount of Rs. 2500. The evidence of the District Inspector of Schools also was relied upon as showing that when approached for payment, the appellant had falsely represented to M/s. Joti Pershad Gupta & Sons and the Assistant Secretary of the Red Cross Society that he had remitted to them the two amounts payable to them. Before the High Court, the appellant contended that the trial suffered from misjoinder of charges, that Joshi being the drawing and disbursing officer, it was he and not the appellant who was responsible for the said misappropriation, that he had applied to the trial Magistrate for production of certain documents, that those documents were not produced and that he was prejudiced by the said non production as he could have shown from those documents that he had handed over the said amounts to Joshi as Joshi was the officer responsible for disbursements. The High Court rejected these contentions and on merits accepted the finding both of the Magistrate and the Additional Sessions Judge that the appellant had misappropriated the said amounts and dismissed the revision. Hence this appeal by special leave. Mr. Mehta for the appellant first contended that the High Court erred in proceeding with the, case as if the appellant had to prove his case beyond reasonable doubt that he had handed over the said moneys to Joshi. In support of his contention he relied upon Woolmington vs The Director of Public Prosecutions(1) and argued that if the appellant could show that his case was reasonably probable and could cast a doubt on the prosecution case that would be enough to entitle him to the benefit of reasonable doubt. There was, however, no question of the appellant raising any reasonable doubt in view of (a) his admission that he had received the said moneys, (b) the evidence of the District Inspector of Schools that he had confessed before him of having misappro priated Rs. 2500 at least and was prepared to deposit the said amount, and (c) the evidence as to his false representations to M/s. Joti Perhad Gupta & Sons and the Assistant Secretary of the Red Cross Society that moneys due to them had already been remitted. But the argument of Mr. Mehta was 'that he could have raised a doubt on the prosecution evidence if the documents called for by the appellant had been produced and his application for their production had not been rejected. In his statement under section 342 of the Code of Criminal Pro cedure the appellant admitted that he had drawn the said amounts from the Bank. His case, however, was that he did so on Joshi (1)[1935] A.&. 443 authorising him to do so and that he had handed them over to Joshi. He pleaded that he had made entries in the remittance transfer register showing disbursement of these amounts but those entries were made by him at the instance of Joshi and Joshi had initialled those entries. The argument was that in order to prove his case the production of the said documents was necessary. The appellant had called for five documents, viz., (1) A Memo dated June 27, 1960 from the Secretary to the Finance Department to all heads of Departments showing that it was the. head of office, i.e., Joshi, who was responsible for disbursement, (2) Instructions issued in 1962 according to which a clerk could make disbursement only if he had furnished security of Rs. 600, (3) the Bill book which witness Des Raj admitted was maintained and which if produced would have shown that the appellant had handed over the said moneys to Joshi, (4) the remittance transfer register admitted by the District Inspector of Schools could be found in the office, and (5) the sub voucher for Rs. 494 which the District Inspector assured the trial Magistrate he would send for but failed to produce. Regarding item No. 1 a copy of the Memo was in fact filed in the court and admitted in evidence. For the rest of the items, the trial Magistrate passed an order directing the prosecuting police inspector to make a report. On December 29, 1962, the officer made the report that there was no bill book, i.e. item No. 3, that item No. 4, the remittance transfer register was part of the record of the Assistant District Inspector 's office and that the same could be found there and that the sub voucher item No. 5 was not traceable. No grievance remained in respect of items 1 and 2 as a copy of the said Memo was admitted in evidence. Therefore, there would be no dispute that Joshi was the disbursing authority. But in view of the extra judicial confession made by the appellant that he had in fact misappropriated Rs. 2500, the fact that Joshi was the disbursing authority would not be of any importance. Items 3 and 5, according to the said report, could not be traced. No point, therefore, can be made on the score of their non production. There remained, therefore, only the remittance transfer register. The order sheet of the Magistrate shows that at the time when the prosecution closed it,, case and the statements of the appellant and Joshi were recorded under section 342 of the Code, no objection was taken by the appellant that the case should not proceed until the said register was produced. The case was adjourned to December 29, 1962 for defence evidence. On that date also no objection appears to have been taken and the case was allowed to proceed. Ultimately on January 14, 1963, the Magistrate passed his aforesaid order of conviction. Apart from that, since the moneys were not remitted to the parties concerned there can be no question of there being any R.T.R. in respect of them. Evidentially that 444 document was called for by the appellant in order to create confusion knowing full well that it was not there. We find, therefore, no substance in the contention that if these documents had been produced the appellant could have, thrown some doubt on the prosecution evidence and could have made out a reasonably probable case that he had handed over the said amounts to Joshi. Mr. Mehta next argued that under section 409 assuming that the said moneys were entrusted to the appellant, such entrustment must be in his capacity as a public servant. Being a clerk in the office of the Assistant District Inspector of Schools the appellant undoubtedly was a public servant. But the contention was that it was not his duty as a clerk to receive these moneys and that he had only received them at the instance of Joshi. Not being his duty so to receive the said moneys, it cannot be said that it was in his capacity as a clerk or as part of his duties that the said moneys were entrusted to him. There was, however, evidence that the appellant not only used to receive moneys but also used to disburse them. Whether it was done by him as part of his duties, would clearly be a matter of evidence. This contention was not raised in the High Court and being dependent on evidence, he is not entitled now to raise it before us. The decision ,of this Court in Budha Lal vs The State of Rajashan(1) rested on different facts as there was clear evidence that entrustment of moneys deposited in the complainant 's savings account in the post ,office was to the accused 's brother who was the post master and not to the accused. In the present case the position is that Joshi authorised the. appellant to draw and receive the moneys in question for the express purpose of payment to different parties. There was, therefore, entrustment to the appellant of the said moneys for an express purpose. The decision in Budha Lal 's,(1) case cannot apply. The third contention of Mr. Mehta was that the charge as to ,criminal breach of trust against the appellant and Joshi being one under section 409 read with section 120B and there being no charge under section 409 simplicitor a conviction under section 409 only is not valid. He argued that as the prosecution failed to establish conspiracy the appellant could not be convicted of the offence under section 409 simplicitor. In our view, there is no substance in this contention. If the charge of conspiracy to commit criminal breach of trust is followed by a substantive charge of criminal breach of trust in pursuance of such conspiracy there is nothing to prevent the court convicting an accused under the second charge even if the prosecution fails to establish conspiracy. In any event, there was no prejudice caused to him as he was aware that there was a sub (1) Criminal Appeal 156 of 1962 decided on 27th January, 1965. 445 stantive charge under section 409 against him. Mr. Mehta, however, relied upon a decision of the Kerala High Court in Kizhakeppallik Moosa vs The State(1). That decision cannot be of any avail as it is directly contrary to this court 's decision in Willie Slaney vs The State of Madhya Pradesh(2). It was then argued that the trial suffered from misjoinder of charges in that there were six items of moneys in respect of which misappropriation was alleged and three entries in respect of which falsification of accounts was charged against the appellant. There is some conflict of judicial opinion as to whether a charge of misappropriation where a lump sum consisting of several items together with a charge of falsification of several entries made with a view to screen the misappropriation is correct. We need not in the present case decide which view is correct. The appellant did not at any earlier stage take objection to the charges under sections 409 and 477 A on the ground that he was likely to be embarrassed in his defence. He has also not shown that any prejudice was caused to him and that being so this contention also must fail. The last contention was that though he was charged under section 120 B and section 477 A no sanction under section 196 A(2) of the Criminal Procedure Code was obtained and, therefore, the entire trial was vitiated. We may observe that the Additional Sessions Judge found that sanction was not obtained though the appellant and the said Joshi were charged under the aforesaid two sections along with the charge under section 409. Reliance in this connection was placed on a decision of the Patna High Court in Abdul Mian vs The King(3), where it was held that sanction to prosecute is a condition precedent to the institution of prosecution and that it is the sanction which confers jurisdiction on the court to try the case. The charge sheet in that case was under section 295 A of the Penal Code and sanction having not been obtained for prosecution the High Court held that even though the Magistrate trying the accused ultimately convicted him under section 298 which did not require sanction the trial was vitiated as the Magistrate could not proceed with the charge sheet without the requisite sanction. The decision in Govindram Sunder Das vs Emperor ( 4 ) was also called in aid as it has been observed there that where the offence of conspiracy to commit forgery is charged against a person and the previous consent of the local Government under section 196A though required is not obtained, the court cannot take cognizance of the complaint. These decisions, however, are in respect of cases where a single charge in respect of an offence requiring sanction was preferred against the accused and previous sanction was not obtained and the court held that in the absence of such sanction the trial court could not take cognizance of the complaint. (1) I.A.R. 1963 Kerala 68. (2) ; (3) [A.I R] 1951 Pat. 513 (4) A.I.R. 1942 Sind 63. 446 Section 196A(2) provides that no court shall take cognizance of the offence of criminal conspiracy punishable under section 120 B in a case where the object of the conspiracy is to commit any noncognizable offence or a cognizable offence not punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, unless the State Government or a Chief Presidency Magistrate or District Magistrate empowered in this behalf by the State Government has, by order in writing, consented to the initiation of the proceedings. It is clear that the court cannot take cognizance without the necessary consent in the case of a charge of criminal conspiracy under section 120 B of which the object is as stated therein. The conspiracy to commit an offence is by itself distinct from the offence to do which the conspiracy is entered into. Such an offence, if actually committed, would be the subject matter of a separate charge. If that offence does not require sanction though the offence of conspiracy does and sanction is not obtained it would appear that the court can proceed with the trial as to the substantive offence as if there was no charge of conspiracy. In Sukumar Chatterjee vs Mosizuddin Ahmed(1) where the charge was under section 404 read with section 120 B and no sanction was obtained it was held that the case could proceed though only under section 404. Similarly, in Syed Yawar Bakht vs The Emperor(2), the accused was charged under section 120 B read with section 467 and also under section 467 read with section 109 of the Penal Code. No sanction was obtained. It was held that the consequence of not obtaining the sanction was as if the charge under section 120B read with section 467 had never been framed but the accused could be convicted under the other charge viz., under section 467 read with section 109 of the Penal Code. The same view has also been taken by the Punjab High Court in Ram Pat vs State(3) where it was held that where a complaint discloses more offences than one, some of which can be inquired into without sanction and others only after sanction has been obtained, there can be no objection to the inquiry being carried on in respect of the first category of offences. Reference may be made to the decision in Nibaran Chandra Bhattacharyya vs Emperor (4 ) . The two petitioners were convicted under section 120B. They were also convicted under section 384 and section 384 read with section 114 of the Penal Code respectively. The learned Judge accepted the contention that the trial was vitiated as no sanction was obtained in respect of the charge under section 120 B and set aside the conviction also under section 384 and section 384 read with section 114 passed against petitioners 1 and 2. But the report of the decision shows that he did so because he felt that by proceeding with the charge under section 120 B admitting evidence on that charge and that charge resulting in conviction prejudice was caused to the petitioners in the matter of the other charges and (1) (2) (3) (4) A.I.R. 1929 Cal. 447 that therefore the trial could not be said to be severable. No such question of prejudice can be said to arise in the present ease in view of the extra judicial confession of the appellant of having misappropriated Rs. 2,500 out of Rs. 3,414 and odd in question. There was in the instant case not only a charge for conspiracy under section 120 B but also two other separate charges for offences under sections 409 and 477 A alleged to have been committed in pursuance ofthe conspiracy. Though the charge under section 120B required sanction no such sanction was necessary in respectof the charge under section 409. At the most, therefore, it can be argued that the Magistrate took illegal cognizance of the charge under section 120 B as section 196 A(2) prohibits entertainment of certain kinds of complaints for conspiracy punishable under section 120 B without the required sanction. The absence of sanction does not prevent the court from proceeding with the trial if the complaint also charges a co conspirator of the principal offence committed in pursuance of the conspiracy or for abetment by him of any such offence committed by one of the co conspira tors under section 109 of the Penal Code. (See Mohd. Bachal Abdulla vs The Emperor(1). In our view, the fact that sanction was not obtained in respect of the complaint under section 120 B did not vitiate the trial on the substantive charge under section 409. No prejudice could be said to have resulted in view of the appellant 's confession that he had in fact misappropriated Rs. 2,500 and was prepared to deposit that amount. The appeal is dismissed. Y.P. Appeal dismissed.

IN-Abs

J had authorised the appellant a clerk under him, to withdraw moneys from Bank for payments to different persons. J, discovering that the moneys were not paid to persons concerned, lodged a report. The appellant admitted to have withdrawn the moneys, but stated that he had handed them over to J, and made entries in the register showing disbursement at J s instance, and J had initiated them. J was charged under section 409 and the appellant under sections 409, 465, 477A and 120 B I.P.C. The Trial Court convicted both under sections 120 B and 409 but the Sessions Judge acquitted J and convicted the appellant under section 409 only. The High Court, too, maintained the appellant 's conviction holding that the moneys having been admittedly received by the appellant, the burden of proof was upon him to show what he had done with them and there being no evidence that he handed them over to J, except his bare allegation he had failed to discharge that burden. In appeal to this Court, the appellant contended that (i) the case proceeded erroneously as if the appellant had to prove his case beyond reasonable doubt that he had handed over the moneys to J and a reasonable doubt could have been raised in the prosecution evidence if the document called for by the appellant had been produced and his application for their production had not been rejected; (ii) it was not his duty as a clerk to receive these moneys and that he had only received them at the instance of J; (iii) the charge as to criminal breach of trust against the appellant and J being one under section 409 read with section 120 B and there being no charge under section 409 simplicitor a conviction under section 409 only was not valid; (iv) the trial suffered from misjoinder of charges in that there were six items of moneys in respect of which_ misappropriation was alleged and three entries in respect of which falsification of accounts was charged against the appellant; and (v) though he was charged under section 120 B and section 477 A no sanction tinder section 196 A(2) of the Criminal Procedure Code was obtained and, therefore, the entire trial was vitiated. HELD:The appeal must be dismissed. (i)There was no question of the appellant raising any reasonable doubt in view of his admission that he had received the moneys. There was no substance in the contention that if the documents had been produced the appellant could have made out a reasonably probable case that he had handed over the moneys to J. [444A B] (ii)There was evidence that the appellant not only used to receive moneys but also used to disburse them. Whether it was done by him as part of his duties would clearly be a matter of evidence, which cannot be gone into in this Court as it was not raised in the High Court. J 440 authorised the appellant to draw and receive the moneys in question far the express purpose of payment to different parties. There was, therefore, entrustment to the appellant of the said moneys for an express purpose. [444D, F] Budha Lal vs State of Rajasthan, Cr. A. No. 156 of 1962 decided on 27th January[1965], referred to. (iii)If the charge of conspiracy to commit criminal breach of trust is followed by a substantive charge of criminal breach of trust in pursuance of such conspiracy there is nothing to prevent the court convicting an accused under the second charge even if the prosecution fails to establish conspiracy. In any event, there was no prejudice caused to him as he was aware that there was a substantive charge under section 409 against him. [444H 445B] Kizhakkeppallik Moosa vs State, A.I.R. 1963 Kerala 68, disapproved. Willie Slaney vs State of Madhya Pradesh, [1955] 2 S.C.R. 1140, referred to. (iv)The appellant did not at any earlier stage take objection to the charges under sections 409 and 477 A on the ground that he was likely to be embarrassed in his defence. He has also not shown that any prejudice was caused to him and that being so this contention also must fail. [445D] (v)Though the charge under section 120 B required sanction no such sanction was necessary in respect of the charge under section 409. At the most, therefore, it can be argued that the Magistrate took illegal cognizance of the charge under section 120 B as section 196(2) prohibits entertainment of certain kinds of complaints for conspiracy punishable under section 120 D without the required sanction. The absence of sanction does not prevent the court from proceeding with the trial if the complaint also charges a co conspirator of the principal offence committed in pursuance of the conspiracy or for abatement by him of any such offence committed by one of the conspirators under section 109 of the Penal Code. The fact that sanction was not obtained in respect of the complaint under section 120 B did not vitiate the trial on the substantive charge under section 409. No prejudice could be said to have resulted in view of the appellant 's confession. [447C F] Abdul Mian vs The King, A.I.R. 1951 Pat. 513, Govindram Sunder Das vs Emperor, A.I.R. 1942 Sind. 63 and Nibaram Chandra Bhattacharyya vs Emperor, A.I.R. 1929 Cal. 754, referred to. Sukumar Chatterjee vs Mosizuddin Ahmed, Syed Yawar Bhakat vs Emperor, , Ram Pat vs Emperor, (1962) 64 P.L 'R. 519 and Mohd. Bachal Abdulla vs The Emperor, , approved.

l Appeals Nos. 2114 to 2134 of 1966. Appeals from the judgment and order dated March 25, 1966 of the Assam and Nagaland High Court in Civil Rule Nos. 104, 105, 147, 149, 150, 169, 170, 174, 175, 205, 206, 207, 237, 238, 246, 258, 259, 262, 263, 264 and 265 of 1965 respectively. Purshottam Tricumdas and Naunit Lal, for the appellants (in C. As. 2114 2120 of 1960). 493 Naunit Lal, for the appellants (in C. As. 2121 2117 of 1966). H. R. Gokhale, Hareshwar Goswami, K. RaJendra Chaudhury and K. R. Chaudhuri for respondent No. 1 (in C. As. 21142117 of 1966). Vineet Kumar, for respondent No. 3 (in C. As. Nos. 2114 to 2120 of 1966). I. M. Oberoi, section K. Mehta and K. L. Mehta, for respondent No. 1 (in C. A. No. 2118 of 1966). Bishan Narain, Bhuvanesh Kumari, O. C. Mathur, for res pondent No. 1 (in C. As. 2119 and 2120 of 1966). The Judgment of the Court was delivered by Wanchoo, J. These are twenty one appeals on certificates granted by the High Court of Assam and Nagaland and will be dealt with together as they raise common questions. Facts necessary for present purposes may be briefly narrated. On September 26, 1964, the Governor of Assam issued a notification under r. 126 AA of the Defence of India Rules, 1962 (hereinafter referred to as the Rules). By this notification he applied r. 126 AA to a large number of employments as he was of opinion that the employments notified were essential "for securing the public safety and for maintaining supplies and services necessary to the life of community". On the same day another notification was issued under sub r. (4) of r. 126 AA. By this notification, the Governor ordered payment of ad hoc cost of living allowance of Rs. 100/per mensem to all workers drawing pay upto Rs. 400/ per mensem engaged in the employments notified for purposes of sub r. (1) of r. 126 AA. Another notification was also issued on November 4, 1964 under sub r. (4) by which the Governor ordered payment of ad hoc cost of living allowance of 34.46 paisas per day to all persons engaged on daily wage basis in the employments which had been notified on September 26, 1964 for the purpose of r. 126 AA(1). The validity of these three notifications was challenged by writ petitions before the High Court by the respondents on various grounds. It was first urged that r. 126 AA was a case of excessive delegation and was therefore ultra vires. The second contention was that r. 126 AA was beyond the powers conferred under section 3 of the Defence of India Act (No. 51 of 1962), and was bad on that account. Thirdly, it was urged that the first notification under r. 126 AA (1) was bad as conditions precedent to the exercise of the power conferred by that sub rule had not been fulfilled inasmuch as (a) the State Government had not formed the opinion necessary before issuing the notification, and (b) no reasonable man could have formed the opinion that notification of various 494 employments mentioned in the schedule was necessary for securing the public safety and for maintaining supplies and services necessary to the life of community. Fourthly, it was contended that the exercise of the power under sub r. (1) was colourable inasmuch as it was not exercised for the purpose mentioned in the sub rule but for extraneous purposes on the ground that the notification did not show how it was necessary to notify the employments indicated therein for the purposes mentioned therein, the more so as two purposes had been mentioned in the notification and it did not appear which purpose applied to which employment. Lastly, it was urged that the notification under sub r. (1) was mala fide. It was on these grounds that the notification under sub r. (1) was attacked. The respondents also attacked the two notifications issued under sub r. (4) on three grounds. It was first urged that the notifications fixing ad hoc cost of living allowance were invalid as it was not stated therein that the regulation of wages proposed under the notifications had any connection with securing public safety and maintaining supplies and services necessary to the life of community. Nor was it shown that the two objects of r. 126 AA (1) mentioned in the notification could be achieved by a general notification of the type issued under sub r. Secondly, it was urged that wages could be regulated under the Minimum Wages Act (No. II of 1948), and in some cases steps bad been taken to do so. Therefore, it was not open to take recourse to r. 126 AA (4) to achieve the same purpose, as the effect of the notification under sub r. (4) was to deprive the respondents of the right to place materials before the committee empowered to fix minimum wages and it was thus a colourable exercise of the power conferred by the sub rule. Thirdly, it was urged that these notifications were also mala fide. The High Court held that r. 126 AA was not a case of exces sive delegation of power. It also held that the rule was within the power conferred under section 3 of the Defence of India Act. These two conclusions of the High Court are not being challenged by either party before us and need not be considered any further. The High Court further held that the conditions precedent to G the exercise of the power conferred by r. 126 AA had not been complied with and therefore the notification under sub rule (1) was bad. The High Court was of the view that the Governor did not form such opinion as was necessary before the issue of the notification under sub r. Nor was it shown that the employments included in the impugned notification were essential for securing public safety and for maintaining supplies and services necessary to the life of community. The High Court also held that the exercise of power under sub rule (1) was colourable as it 495 was not shown that the employments mentioned in the notification under sub r. (1) were essential for securing public safety and thus one of the purposes mentioned in the notification was non existent. As such it could not be predicated as to which of the two purposes mentioned in the notification led the State Government to issue the notification and in consequence the notification under sub r. (1) was invalid. Finally, the High Court held that the notification under sub r. (1) was mala fide in law, though there was nothing to show that there were mala fides in fact in the issue of the notification; presumably, the High Court came to the conclusion that the notification, was mala fide in law on the basis of its, view on the other points indicated above. As to the notifications under sub r. (4) the High Court held that they were invalid as it was neither stated in the notifications nor was it shown how fixation of wages in the employments included in the notification under sub r. (1) was necessary for the purposes of securing public safety and for maintaining supplies and services necessary to the life of community. The High Court also seems to have held that these notifications were bad inasmuch as they replaced proceedings under the Minimum Wages Act which had been taken in respect of some of the employments included in the notification under sub r. (1), though the decision of the High Court on this point is not quite clear. Finally, the High Court held that the notifications under sub r. (4) were also mala fide. Here again there was no question of mala fide on facts. The High Court seems to have held that the notifications were mala fide in law, presumably on the view it took on other points indicated above. The result of these findings of the High Court was that the High Court struck down the notification under sub r. (1) and the two notifications under sub r. (4) of r. 126 AA. The State of Assam then applied for and obtained certificates from the High Court to appeal to this Court, and that is how the matter has come up before us. We shall first consider the notification under sub rule (1) However before we do so we should like to analyse the provisions of r. 126 AA. Sub rule (1) thereof lays down what are essential services in the context of the emergency which is the basis of the Defence of India Act and the Rules. Under sub rule (1) all employments under the Central Government or the State Government are essential services. In addition to these employments any employment or class of employment which the Central Government or the State Government, being of opinion that such employment or class of employment is essential for securing the defence of India and civil defence, the public safety, the maintenance of public order, or the efficient conduct of military operation, or for maintaining 496 supplies and services necessary to the life of the community, declares by notification to be essential service, becomes an employment within sub rule (1) above. The explanation to sub rule (1) says that "employment" includes employment of any nature, and whether paid or unpaid. Thus there are three classes of employments which are treated as essential services for purposes of sub r. (1), namely, (i) employments under the Central Government, (ii) employments under the State Government, and (iii) any employment which is declared by notification under sub r. (1) to be essential for the purposes mentioned therein. Then comes sub rule (2) which gives power to the Central Government or the State Government to direct by general or special order that any person or persons engaged in any employment to which sub rule (1) applies shall not depart out of such area or areas as may be specified in such order. An order under this sub rule has to be published in such manner as the Government making the order considered best calculated to bring it to the notice of the persons affected by the order. It will be seen that sub rule(2) is consequential to sub rule (1). It does not however apply of its own force and the Central Government or the State Government has to pass an order thereunder and the effect of the order is that any person or persons engaged in any employment to which sub rule (1) applies cannot leave the area or areas specified in the order. The object of sub rule (2) clearly is that in emergency persons employed in essential services do not run away with the result that essential services are brought to a stand still with con sequent danger to community. Then comes sub rule (3). It applies to a person engaged in any employment or class of employment and to an employer of any person so engaged. So far as persons engaged are concerned, subrule (3) lays down that if any person (a) disobeys any lawful order given to him in the course of such employment, (b) without reasonable excuse abandons any such employment or absents himself from work, or (c) departs from any area specified in an order under sub rule (2) without the consent of the authority making that order, he shall be. deemed to have contravened this rule. As to the employer, sub rule (3) lays down that if any employer without reasonable cause (i) discontinues the employment of such person, or (ii) by closing an establishment in which such person is engaged causes the discontinuance of his employment, he shall also be deemed to have contravened this rule. Except for the part which depends upon the order under sub rule (2), sub rule (3) comes into force by its own terms and prohibits certain things in the cases both of employer and employee in the essential services mentioned in or notified under sub r. Thus sub r. (3) is again consequential to sub r. 497 Then we turn to sub rule (4) with which we are particularly concerned. It is in these terms : "The Central Government or the State Government may by order regulate the wages and other conditions of service of persons or of any class of persons engaged in any employment or class of employment to which this rule applies. " It is again consequential to sub rule (1) and the obvious object of sub rule (4) is to see that essential services are maintained during an emergency and if it is necessary to regulate wages and other conditions of service in that behalf that can be done by an order by the Central Government or the State Government. It also appears that as sub r. (3) prohibits employers and employees from doing certain things, sub r. (4) has been enacted to see that there is a contented labour force during an emergency so that essential services as specified in sub rule (1) or declared by a notification thereunder are maintained. Then follows sub rule (5) which lays down punishment for contravention of any of the provisions contained in r. 126 AA. This analysis of r. 126 AA shows that it is a provision for maintenance of essential services during an emergency, and it is with that object that various powers are conferred on the Central Government or the State Government including the power of regulating wages and other conditions of service of persons engaged in essential services indicated in sub r. (1) or declared to be such thereunder. It is with this background of emergency that we have to construe the provisions contained in sub r. (1) and also sub r. (4) with which we are particularly concerned in the present appeals. Turning first to stb Rule (1), we have already indicated that this sub rule by its own force declares all employments under the Central Government or the State Government to be essential services for its purposes. Besides these two classes of employment,,, the Central Government or the State Government has been given the power to declare other employments also to be essential for the purpose of sub rule (1) and to be covered thereby. This the Central Government or the State Government can do by notification, if it is of opinion that such employment or class of employments is essential for securing any of the purposes mentioned in the sub rule. It was Linder this power that the Governor of Assam issued the notification dated September 26, 1964 under sub rule (1). The notification refers to a large number of employments and states that the Governor of Assam was of opinion that the employments specified there in were essential for securing public safety and for maintaining supplies and services necessary to the Supp. CI/67 2 498 life of the community. The notification has been issued under the authentication of the Joint Secretary to the Government of Assam, Labour Department. As it stands the notification is clearly in compliance with the provisions contained in sub r. (1) of r. '126 AA. It is true that the notification has included a large number of employments in it; but we do not see why one notification may not be issued with respect to any number of employments, though there can be no objection to the Government issuing one notification with respect to one employment only. The mere fact that a notification includes within it a large number of employ ments is no ground for holding, as the High Court seems to have held, that the Governor did not apply his mind to the conditions precedent to the issue of the notification. Nor do we think that the fact that the notification in question gave two purposes for its ,issue. Damely, for securing public safety and for maintaining supplies and services necessary to the life of the community shows that the Governor did not apply his mind to the conditions precedent to the issue of the notification. Further when the Governor says in the notification that the employments included therein were essential for securing the public safety and for maintaining supplies and services necessary to the life of the community, he obviously holds the opinion that these employments were essential for both purposes. It was not therefore necessary for the Governor to specify which of the employments were essential for the purpose of maintaining supplies and services necessary to the life of the community and which were essential for the purpose of securing public safety. The notification, as it reads, indicates that in the opinion of the Governor these employments were essential for both purposes. We do not think therefore that the High Court was right in holding that as the notification does not show which employment was essential for which purpose, the Governor had not applied his mind and the notification was therefore colourable and mala fide in law. We may also refer to a ground which was urged in the High Court, namely, that the notification was issued for the purposes of "defence" also as stated in the counter affidavit of the appellant, though the notification itself did not mention "defence" at all. The High Court thus thought that defence had been introduced in the counter affidavit as one of the grounds for making the declaration while there was no mention of it in the notification itself, and that also showed that there was no application of mind by the Governor to the conditions precedent to the issue of the notification under sub r. It appears that in some of the writ petitions "defence" was introduced by the petitioners as a round for the issue of the notification of sub r. (1); so in the reply of tile State the same ground was mechanically repeated in the counteraffidavit without carefully looking into 'the notification which had been issued under sub r. It is because of this mechanical 499 introduction of defence by the State in the counter affidavit that the High Court has held that it showed that the authority ha( equated public safety with defence and that the Government misconceived its powers and had no clear conception of the scope. and ambit thereof. There is no doubt that the word "defence" came in the counter affidavit mechanically in reply to the introduction of the word "defence" in many of the writ petitions. What the court has to see is whether the conditions precedent were complied with at the time of the issue of the notification. It is unfortunate that in the counter affidavit the word "defence" was introduced mechanically in reply to what was said in the writ petitions. But that in our opinion should not have led the High Court to the. conclusion at which it has arrived, namely, that the Government misconceived its powers and had no clear conception of 'the scope. and ambit thereof. In the circumstances we are inclined to attach no importance to the introduction of the word "defence" in the counter affidavit filed on behalf of the State as it seems that that word came in mechanically in reply to the introduction of the word "defence" in some of the writ petitions. It is clear that a notification under sub r. (1) is conditioned on the subjective satisfaction of the Central Government or the State Government as to the various purposes mentioned in sub r. The High Court was also conscious of the fact that this subjective opinion was generally speaking not justiciable and it was not open to a court to see if the opinion of the authority was justified by objective tests. The High Court was also conscious of the fact that it was not open to the court to examine the adequacy of the material on which the opinion rested. Further the High Court also held that the reasonableness of the opinion could not be examined by the court. This statement of the law by the High Court is well settled and was accepted by the High Court. The High Court further held that the validity of an order might be challenged on the ground of mala fide and this again is well settled. The High Court further stated that a court could examine whether the, opinion was formed at all before the issue of the. notification. To this again, there can be no exception. Finally, the High Court held that it was open to the court to see whether the opinion was relevant and germane to the circumstance% which fell to be considered under the rule and whether they were such as could possibly and rationally support the conclusion drawn by the authority. Having thus stated the law correctly, the High Court con sidered whether it could be said in this case that the conditions precedent had been satisfied before the issue of the notification under sub r. (1) and came to the conclusion that they were not satisfied, mainly because two purposes were mentioned as the 500 basis of the notification and a large number of employments, were included in one notification, as already pointed out by us above. We are of opinion that both these grounds for holding that the conditions precedent to the issue of the notification under sub r. (1) have not been fulfilled cannot be sustained. As the notification reads, it shows that the employments mentioned therein were essential for both purposes and this must be held to be the opinion of the Governor. That opinion cannot in our view be challenged in court unless it is shown to be mala fide or it is shown that no reasonable man can come to that conclusion in the context of the employments specified in the notification. We cannot agree with the High Court that simply because a large number of employments were mentioned in one notification that can by itself show that the Governor had not applied his mind. Nor can we agree with the High Court that because two purposes were mentioned as the basis of the notification and as there was nothing to show which employment referred to which purpose, there is no formation of opinion. As we read the notification it must be held that the Governor 's opinion was formed with respect to the employments specified in the notification on the basis of both the purpose, mentioned in the notification. The only thing that the High Court could see was whether considering the nature of the employments it was impossible for any reasonable man to come to the opinion. that those employments were essential for securing public safety, and for maintaining supplies and services necessary to the life of the community, and this has to be judged in the context of are emergency. It seems to us that where certain employments are essential for the maintenance of supplies and services necessary to the life of the community the Governor may very well come to the conclusion that those employments are also necessary for securing public safety, for if supplies and services necessary to the life of community are not maintained, there may be danger to public safety. In these circumstance ,; we cannot agree with the High Court that the two purposes mentioned in the notification have no nexus with the employments specified therein, except in on case. We cannot also agree with the High Court that no reason, able man could come to the conclusion that the employment mentioned in the notification were essential for the two purpose which were the basis of the notification except again in the case of one employment. We have looked through all the employments which are included in the notification and it is enough say that except in one case it cannot be said that no reasonably man could come to the conclusion that those employments we, essential for securing public safety and for maintaining supplier and services necessary to the life of the community. The only exception we find is veneer mills. Veneering, vs understand, is a process by which thin flat plates or slips of file 501 wood or other suitable material are applied to other inferior wood in cabinet work or similar other furniture. In the Concise Oxford Dictionary, the word "veneer" means cover (wood, furniture etc.) with thin coating of finer wood, and that is the meaning which must be given to veneer mills as entered at No. 5 of the notification for that entry is "employment in plywood and veneer mills". Veneering, we understand, is done for the purpose of beautifying furniture etc. We fail to see how veneer mills which carry on this process of laying finer wood on inferior wood for purposes of beautifying furniture etc. can be said by any reasonable man to be essential for the maintenance of supplies and services necessary to the life of the community and for securing public safety. It is open to us to strike down the notification tinder sub r. (1) with respect to veneer mills alone, for the present notification including a large number of employments can be read to amount to so many single notifications, relating to each employment, rolled into one. Therefore, as we see the notification under sub r. (1) we see no reason to hold that the Governor had not applied his mind to the conditions precedent before he issued the notification in question. We are also satisfied except in the case of veneer mills that it cannot be said that no reasonable man could have come to the conclusion that the employments included in the notification were not essential for securing public safety and for maintaining supplies and services necessary to the life of the community. In this view of the matter we cannot see how the notification under sub r. (1) can be said to be for any extraneous purpose unconnected with the purposes mentioned in the sub rule; nor is there any reason to hold that the employments mentioned in the notification (except one) were not essential for securing public safety in addition to maintenance of supplies and services necessary to the life of the community. Nor do we see any reason to hold that the notification under sub rule (1) was mala fide. We have already mentioned that there are no mala fides in fact and we do not think there can be any question of any mala ride in law in view of what we have said above. We therefore uphold the notification under sub rule (1) dated September 26, 1964 except in the case of veneer mills. We strike down the notification only with respect to the veneer mills mentioned it item 5 of the employments included therein. We now come to the two notifications under sub r. In cidentally we, may mention that though the second notification is dated November 4, 1964, the letter written by the Department of Labour, Government of Assam, to the Charduar Cotton Mills says that the cost of living allowance for persons engaged on daily wages provided in the notification of November 4, 1964 should be paid from September 26, 1964. Now there is nothing in the notification of November 4, 1964 to show that it was retrospective, 502 and we cannot understand how the Department of Labour advised the Mill in question to pay cost of living allowance to persons engaged on daily wages from September 26, 1964, which was the date of the notification under sub r. Nor do we think that there is anything in sub r. (4) which authorises the Government to make an order thereunder with retrospective effect. But apart from this, we have to consider whether the two notifications under sub r. (4) are valid or not. The High Court .struck them down on the ground that there was nothing in the two notifications to show that it was necessary to pay cost of living allowance which comes within the ambit of the words "regulation of wages ' for purposes of securing public safety and maintaining supplies and services necessary to the fife of the community and that those purposes would be achieved by the notification. The High Court also seems to have struck down the notifications on the ground that action should have been taken under the Minimum Wages Act and thus the power exercised under sub r. (4) of r. 126 AA was a colourable exercise of power. For these two reason, the High Court also held that the notifications were mala fide in law, though there was nothing to suggest that they were in fact mala fide. We cannot agree with the High Court that it was necessary to recite in the notifications under sub r. (4) that action was being taken thereunder for the purpose of securing public safety and for maintaining supplies and services necessary to the life of ' the community. Nor do we think that sub r. (4) requires that notifications should show that the two purposes would in fact be achieved by the provision made thereunder. Further it is clear that the power under sub r. (4) is not for fixation of minimum wages. It is power to regulate wages and this power is analogous to the power of industrial tribunals and therefore the fact that there is provision in the Minimum Wages Act for fixation of minimum wages is no round for holding that the power exercised by sub r. (4) must be colourable. The two reasons given by the High Court for striking down the two notifications and hold ing them maala fide do not appear to us to be correct. But this in our opinion is not the end of the matter. The real question is whether the power under sub r. (4) is a power which can be exercised merely on the subjective opinion of Government or whether sub r. (4) requires anything more. The notifications seem to proceed on the view that powers exercised thereunder are entirely within the subjective satisfaction of Government and it is that view which we must examine now. It is true that this aspect of the matter was not put forward in clear terms before the High Court, but it so clearly arises that we have permitted learned counsel for the respondents, when they raised this aspect of the matter, to do so. 503 We have already indicated that the power conferred by sub r. (4) is consequential to the issue of a notification under sub r. (1), in case of employments other than those under the Central Government or the State Government. Once the notification under sub r. (1) is issued, the Central Government or the State Government has the power to regulate the wages and other conditions of service of persons or any class of persons engaged in any employment or class of employment included in the notification, of course, the wages and other conditions of service of Central Government and State Government employees are also liable to be regulated under sub r. But it is unnecessary to refer to that aspect of the matter and what we say hereafter may be taken to apply only to those employments which are brought under r. 126AA by issue of a notification under sub r. (1) thereof. The main argument on behalf of the respondents in this behalf is that there is nothing in sub r. (4) to show that the regulation envisaged therein by an order depends entirely on the subjective satisfaction of the Central Government and the State Government. It is urged that sub r. (4) gives power to Government which is analogous to the power of industrial tribunals and enables Government to interfere with contractual relations between employers and employees and even in many cases with relations between employers and employees established by industrial awards. It is therefore urged that when there is nothing express in sub r. (4) to show that the power thereunder can be exercised merely on the subjective satisfaction of Government it should be held that power thereunder can only be exercised after consolation with employers and employees concerned. On the other hand it is urged on behalf of the appellant that these powers are meant to be exercised in a real emergency and therefore though the powers conferred by sub rule (4) are analogous to the powers of industrial tribunals they are still meant to be exercised on the subjective satisfaction of Government. It is submitted that in a real emergency it would not be possible for Government to go through the elaborate procedure of industrial tribunals, for a real emergency may require immediate action. Learned counsel for the appellant also referred to certain other provisions of the Rules where according to him there was no express provision with respect to subjective satisfaction and still the powers conferred thereunder were intended to be exercised on subjective satisfaction of Government. Particular reference in this connection is made to Kumaon Motor Owners ' Union Limited vs The State of Uttar Pradesh(1) and it was pointed out that in that case the power conferred on the State Government under r. 131 (2) (gg) and (i) was held to be exercisable on the subjective satisfaction of Government. That case dealt with control of road transport ; 504 during emergency, which in our opinion stands on a different footing altogether from regulation of wages and other conditions of service of employees. The particular provisions considered in that case, provided for prohibition and restriction of carriage of persons or goods by any vehicle or class of vehicles, either generally or between any particular places or on any particular route and making of other provisions in relation to road transport. The order in that case was passed in the interest of defence of India, and civil defence prohibiting certain class of vehicles from plying in certain areas near the Chinese border with India. Considering the nature of the power conferred and the purpose for which it was conferred and its effect, this Court in the context of that provision held that the rule envisaged subjective satisfaction of Government. The present case however which deals with regulation of wages and ,other conditions of service and has a far reaching effect on industrial relations based on contracts or even on industrial awards stands on a different footing altogether and cannot be governed by the ratio of that case. We do not think it necessary in the present appeals to consider the various other rules to which reference has been made. Nor would it be desirable to do so for those rules do not arise for interpretation in the present appeals. We propose therefore to confine ourselves to sub r. (4) with which alone we are concerned in these ,cases. Now the question whether the power under a particular pro vision has to be exercised purely on the subjective satisfaction of Government or other authority or has to be exercised subject to some objective tests depends upon a number of factors. The language of the provision, the nature of the power conferred and the purpose for which it has been conferred, the circumstances and the manner of the exercise of power, what things are affected by such exercise and how, and other relevant factors, in the context of the particular provision, may have to be considered in deter mining whether the power envisaged can be exercised merely on the subjective satisfaction of Government or other authority, or there are to be some objective tests before the power can be exercised. The intention of the legislature is primarily to be gathered from the language used and where the language used is plain and unambiguous, effect must be given to it and there is nothing more to be said. But where the language is not clear, all these factors must be weighed to arrive at the final conclusion whether the power conferred depends entirely on the subjective satisfaction of Government or the authority concerned or there have to be some objective tests before the power can be exercised. It is on the basis of these principles that we have to decide whether sub r. (4) gives power to Government to regulate wages and other conditions of service purely on its subjective satisfaction. 505 We have already set out sub r. (4) and a perusal of its language will show that there is nothing in the words themselves which plainly and unambiguously indicates that the power exercised thereunder depends purely on the subjective satisfaction of Government. It is true that sub r. (4) so far as it applies to employments other than those of Government is consequential on a notification under sub r. (1). But that does not mean in the absence of express in sub r. (4) that the power exercised thereunder depends purely on the subjective satisfaction of Government. We have already indicated that the power under sub r. (4) is analogous to the power of industrial tribunals to decide disputes between employers and employees. The result of the exercise of the power under sub r. (4) is to vary the contractual relations between employers and employees concerned in employments with respect to which a notification under sub r. (1) has been. issued. The effect of the exercise of such power is to unsettle relations between employers and employees which may be existing for a long time and which may be the outcome either of contractual relations or even of industrial awards. Sub rule (4) not only deals with wages but also with other conditions of service and thus in a real emergency may practically supersede all industrial adjudication. The power conferred is thus of a far reaching nature in the field of industrial relations and may have the effect of disturbing all such relations for the duration of a real emergency. The question therefore arises whether in the absence of express words in sub r. (4) to indicate that the power is to be exercised purely on the subjective satisfaction of Government we should hold that an order under sub r. (4) call be passed purely on such subjective satisfaction. When the effect of orders passed under sub r. (4) can be so far reaching and so wide in its impact we would be loath to hold that such wide and far reaching powers were conferred on Government to be exercised. purely on its subjective satisfaction without even consulting the interests concerned specially when the language is not plain and unambiguous and there is no indication in the sub rule itself that. the power can be exercised purely on the subjective satisfaction of Government. We are not unmindful of the fact that the power under sub r. (4) has to be exercised in a real emergency. But the ambit of the power therein is analogous to the power of industrial courts. The power under sub r. (4) may be exercised instead of referring industrial disputes relating to wages and other condition. , of service to industrial tribunals. We are also not unmindful of the fact that in a real emergency, decisions may have to be taken quickly and delay inevitable in the elaborate procedure provided for resolution of industrial disputes by industrial tribunals may not be desirable. Even so in the absence of express words in sub r. (4) to show that the power thereunder depends for its exercise entirely on the subjective satisfaction of Government we would not be 506 prepared to hold that that is what sub r. (4) indicates. We have already said that the effect of sub r. (4) is to disturb settled industrial relations whether based on contracts or on industrial awards, and it seems to us that before Government exercises the power under sub r. (4) it should even in a real emergency consult the interests concerned before taking action thereunder. It is not for us to indicate in detail what should be the procedure adopted by Government in a real emergency to consult the interests concerned, as that is a matter for Government to evolve for itself. But we may indicate that some kind of public notice to the particular interest,; should be given indicating what the Government intends to do and inviting representations from those interests and if necessary calling for data from them and also giving an oral hearing to the representatives of the interests concerned. This does not mean that notice should be given to individual employers or employees. Nor do we mean to say that this consultation should be of the same amplitude as adjudication by a quasi judicial tribunal. It is not necessary that oral evidence should lie taken and witnesses should be called, examined and cross exanamed and documents produced or called for and arguments heard 'is if the matter was being tried by a quasi judicial tribunal. But .some kind of collection of data with the help of the interests concemed and some kind of hearing or conference with the interests concerned seems to us to be the barest minimum necessary to enable Government to exercise the power conferred under sub r. (4), for we have no doubt that this sub rule does not intend that Government should have power of the far reaching nature conferred there tinder purely on its subjective satisfaction. Further if such consultation is necessary under sub r. (4) and it seems to us that it is necessary before an order can be passed thereunder, it would in our opinion be more convenient to hold consultation employment by employment, for it may be that needs of every employment may not be the same. After such consultation and consideration of data collected by Government itself as well as supplied by the interests concerned, it would be open to Government to pass an order under sub r. (4) indicating that it has considered the data and consulted the interests concerned. We have indicated this procedure merely to illustrate what we say; but it is for Government to evolve such procedure as it considers will meet the needs of sub r. Once it is clear, as we have no doubt that it is so, that the order under sub rule (4) is not to be passed merely on the subjective satisfaction of Government, it seems to us that even in a real emergency this consultative procedure should not take long and should be over within a few weeks. It has been urged on behalf of the appellant that though the appellant 's contention has been that the power under sub r. (4) can be exercised purely on the subjective satisfaction of Government, 507 in effect the Government had consulted the interests concerned before issuing the two notifications under sub r. (4) and therefore the two notifications should be upheld. In this connection, an affidavit was filed on behalf of the appellant in this Court and the contention that there was consultation is based on that affidavit. The facts stated in that affidavit are these. Soon after the Chinese invasion in 1962, the Labour Minister Assam called an emergent meeting at Gauhati of the representatives of employers and workmen. 49 persons including about 17 representatives of employers attended the meeting. Unanimous resolutions were passed exhorting the employers and workmen to keep industrial peace and it was resolved to set up a Sub Committee for the purpose of working out details of a machinery to be set up for adjustment of D.A. to neutralise any rise in the cost of living. A Sub Committee consisting of three officials, three representatives of employers and three of workmen was set up. This Sub Committee submitted its report in July 1964 and evolved a formula to neutralise any rise in working class cost of living of workers getting a salary of Rs. 400/ or less. Complaints were received from Industrial Workers Unions of Tinsukia and Kamrup Districts in 1963 and 1964 about rise in prices of essential commodities and requests were made to Government to grant substantial emergency allowance. Consequently after consultation with the Director of Statistics on the rise in the cost of living, the Government on a consideration of all this material and the report of the Sub Committee decided to issue the notifications in questions ordering payment of ad hoc cost of living allowance of Rs. 10/ per mensem to all workers drawing upto Rs. 400/ per mensem whether monthly rated or daily rated. This affidavit has been challenged on behalf of the respondents; but accepting it as correct, it still in our opinion fall& short of the consultation necessary under sub r. As we have said already, the consultation must be with the interests concerned including employers and employees and should be employment by employment, for needs of every employment may not be the same. All that we may accept after considering the affidavit filed on behalf of the appellant is that the notifications in question were not issued entirely arbitrarily but we do not think that the consultation to which reference was made in the affidavit of the appellant was enough for the purpose of sub r. We are therefore of opinion that the two notifications should be struck down and we do so, but for reasons different from those which commended themselves to the High Court. We therefore partly allow the appeals and uphold the notification under sub r. (1) except to veneer mills. The order of the High Court striking down the notifications under sub rule (4) is upheld, though for different reasons. In the circumstances we order parties to bear their own costs in all the appeals.

IN-Abs

On 26th September, 1964, the Governor of Assam notified under r. 126AA(1) a large number of employments as he was of opinion that they were essential for securing the public safety and for maintaining Supplies and services necessary to the life of the community, and under In (4) ordered payment of rupees ten per mensem as ad hoc cost of living allowance to certain workers in the notified employments. On 4th November, 1964, he issued another notification under sub r. (4) by which he ordered payment of 38.46 paise as ad hoc cost of living allowance per day to persons engaged on daily wages in the notified employments. The two notifications under sub. r. (4) were issued to see that there was a contented labour force during emergency. Though the second notification was dated November 4, 1964, the Labour Department of the State Government advised one of the respondents to pay the amount retrospectively from September 26, 1964. The respondents challenged the validity of the three notifications by writ petitions in the High Court. The High Court held that : (i) The notification under r. 126AA(1) was mala fide in law and should be struck down, because, the conditions precedent to the exercise of the power conferred by the rule, namely, that the Governor should form the necessary opinion had not been satisfied since; (a) both the purposes, namely public safety and maintenance of supplies and services, were mentioned as the basis of the notification without indicating which of the two purposes led the State Government to issue the notification; (b) a large number of employments were included in one notification; and (c) the counter affidavit of the State Government stated that the notification was issued for purposes of "defence" also though. the notification itself did not mention "defence", thus showing that the Governor had not applied his mind. (ii) The two notifications under r. 126AA(4) were also mala fide in law and should be struck down because; (a) it was not stated in the notifications nor was it shown how the fixation of wages in the employments was necessary for the purpose of securing public safety and for maintaining supplies and services necessary to the life of the community and (b) the notifications replaced proceedings under the Minimum Wages Act which were taken in respect of some of the notified employments. 491 In appeal to this Court, HELD: (i) The notification under r. 126AA(1) should be upheld with respect to all employments except veneer mills. [501 G] A notification under r. 126AA(1) could be issued on the subjective satisfaction of the Central or State Government as to the various purposes mentioned in the sub :rule, which include securing public safety and maintenance of supplies and services necessary to the life of the community. That opinion could not be challenged in Court unless it was shown to be mala fide, or that no reasonable person could come to that conclusion with respect to the employments specified in the notification. [499 D, F] (a) The fact that the notification gave both purposes for its issue did not show that the Governor did not apply his mind to the conditions. When the Governor said that the employments were included in the notification for two purposes, he obviously held the opinion that the employments were essential far both purposes, and, it was not necessary for him to specify which of the employments were essential for one purpose and which were essential for the other purpose. Where certain employments are essential for the maintenance of supplies and services necessary to the life of the community, the Governor may very well come to the conclusion that those employments are also necessary for securing public safety, for, if supplies and services necessary to the life of the community are not maintained, there may be danger to public safety. [498 C E; 500 E F] (b) There is nothing in r. 126AA(1) which prevents a notification from being issued with respect to any number of employments, and the mere fact that a notification included within it a large number of employments is no ground for holding that the Governor did not apply his mind to the conditions. [498 B C] (c) As regards the word "defence", it crept into the counter affidavit mechanically in reply to the petitioners ' contention using that word in some of the writ petitions. But that should not have led the High Court to the conclusion that the Government had no clear conception of its powers, for, the High Court had only to see whether the conditions were complied with at the time of the issue of the notification. [499 B C] As regards veneer mills which carried on the process of having finer wood on inferior wood for purposes of beautifying furniture, it cannot be said by any 'reasonable person to be essential for the maintenance of supplies and services necessary to the life of the community and for securing public safety. This Court could therefore strike down the notification with respect to veneer mills treating the notification as so many single notifications each relating to. an employment, rolled into one. [501 A C] (ii) The reasons given by the High Court for striking down the two notifications under sub r. (4) were erroneous, because : (a) It was not necessary to recite in the notification under sub r. (4) that action was being taken for the purpose of securing public safety and for main taining supplies and services necessary to the life of the community. Nor does the sub rule require that the notification should show that the two purposes would in fact be achieved by the provision made thereunder. [502 D E] (b) The power under the sub rule is not for fixation of minimum wages, but to regulate wages and is analogous to the power of industrial tribunals. Therefore, the fact that there is provision in the Minimum Wages Act for fixation of minimum wages was no ground for holding that the power exercised under sub r. (4) was colourable. The two notifications should however be struck down, because, before the Government exercises the power under sub rule (4), it should consult the interests concerned, as the order is not to be passed merely on the subjective satisfaction of the Government, even when there was an emer gency. [506 A B] Whether the power under a particular provision has to be exercised purely on the subjective satisfaction of Government or other authority or has to be exercised subject to some objective tests depends upon a number of factors. The language of the Provisions the nature of the power conferred and the purpose for which it has been conferred, the circumstances and the manner of the exercise of power, what things are affected by such exercise and how, and other relevant factors in the context of the particular provision may have to be considered in this behalf. The intention of the legislature is primarily to be gathered from the language used and where the language used is plain and unambiguous, effect must be given to it and there is nothing more to be said. But when the language is not clear all these factors must be weighed to arrive at the final con clusion. [504 E H] The power under sub r. (4) is of a far reaching nature and not only deals with wages but also with other conditions of service, and, in an emergency may practically supersede all industrial adjudication. It is unlikely that such wide powers were conferred on the Government to be exercised purely on its subjective satisfaction without even consulting the interests concerned, specially, when the language of the sub rule is not plain and unambiguous indicating that the power could be so exercised. The power, no doubt, was intended to be exercised in an emergency and decisions may have to be taken quickly and delay should be avoided; even so, the Government should evolve some procedure by which there would be some kind of collection of data with the help of the interests concerned and some kind of hearing or conference. The consultation should be employment by employment, for, it may be that the needs of every employment may not be the same. In the present case, there was some indication that the notifications were not issued arbitrarily but on the basis of a report submitted by a sub committee consisting of Government officials and representatives of the employers and employees; but it was not a consultation employment by employment, and therefore, the consultation fell short of the legal requirements. [505 D H; 506 D H; 507 F] Kumaon Motor Owners ' Union Ltd. vs The State of U.P. ; , distinguished. Further, as regards the second notification under r. 126AA(4) the Government could not and did not make it with retrospective effect; and the Labour Department was in error in writing to one of the respondent mills to make the payments retrospectively. [502A B]

Appeal No. 92 of 1966. , Appeal from the order dated May 30, 1963 of the Punjab High Court in Letters Patent Appeal No. 148 of 1963. R. V. section Mani and M. L. Agarwal, for the appellants. Dipak Dutt Chaudhuri and R. N. Sachthey, for the respon dents. section K. Mehta, and K. L. Mehta, for the interveners. The Judgment of the Court was delivered by Shelat, J. The appellants are members of a Hindu undivided family of which the first appellant is the Karta. Prior to August 21, 1956, the family owned 64.35 standard acres of land in village Kurali, District Patiala. The land stood in the revenue records in the name of the first appellant. On December 23, 1957, the first appellant transferred 26 standard acres to one Babu Singh by a registered deed. According to them, they had Planted an orchard in 10 acres of land. Their contention was that the said 26 standard acres and the said 10 standard acres could not be taken into account while ascertaining surplus land under the Pepsu Tenancy and Agricultural Lands Act, XIII of 1955. Both these claims were rejected by the authorities. By his order dated January 20, 1961 ', respondent 'No. 3 declared 34.35 standard acres out of the said 64.35 standard acres as 'Surplus land. The appeal filed by the appellants against the said order was rejected. They then filed a revision application before respondent No. 1. While that was pending they filed a writ petition in the High Court. During the pendency of that writ petition. the Punjab Legislature passed the Amendment Act, XVI of 1962 inserting section 32 KK in the principal Act. The learned Single Judge,. who heard the writ petition, held (1) that the finding that the appellants had not planted the said orchard within the statutory period was one of fact and could not be challenged in the writ petition and (2) that the said transfer of 26 standard acres was hit by section 32 FF and therefore was rightly ignored while ascertaining the surplus land. The main contention urged before the High Court, however, was that each of the three appellants who constituted the said family was entitled to ,retain 30 standard acres, that as the total holding was only 64.35 605 standard acres, there was no surplus land liable to be acquired under the Act and, therefore, the order declaring 34.35 Standard acres, as surplus land was illegal. The High Court following its earlier decision in Bhagat vs State of Punjab(1) "missed the writ petition. A Letters Patent Appeal against that judgment was dismissed in limine. The present appeal by certificate is directed against the dismissal of the said writ petition. Mr. Mani 's contentions were: (1) that under Hindu Law every coparcener in a Hindu undivided family acquires right in the property of such coparcenery on birth and is entitled to a right of joint possession and enjoyment of its entire property, that section 32KK deprives such a coparcener of his rights of property in that that it takes away the rights of the descendants of the landowner to claim for themselves the permissible area and vest them in the head of the family alone so that there is not only an infringement of the right to hold property under article 19 (1 ) (f ) but also dis crimination in favour of the head of the family infringing thereby article 14; (2) that the effect of section 32 KK is that where an undivided family is possessed of land, instead of each of the descendants getting a ceiling area of 30 standard acres, the head of the family alone gets 30 standard acres and therefore the section is violative of article 31; (3) that the section, being applicable only to Hindu undivided families infringes article 15(1) inasmuch as it discriminates by reason only of religion such families as against other undivided families in Punjab amongst communities other than Hindus and (4) that the section cannot be said to be legislation whose object is agrarian reform and, therefore, is not protected by article 31 A. Section 32 KK, the validity of which is impeached in this appeal, reads as follows : "Notwithstanding anything contained in this Act or in any other law for the time being in force : (a) where, immediately before the commencement of this Act, a landowner and his descendants constitute a Hindu undivided family, the land owned by such family shall, for the purposes of this Act, be deemed to be the land of that landowner and no descendant shall, as member of such family, be entitled to claim that in respect of his share of such land he is a landowner in his own right". The section first lays down a fiction and then its result. The fiction is that where a landowner and his descendants form a Hindu undivided family, the land owned by such a family shall be, deemed to be. the land of that landowner. The fiction so en (1) I.L.R. (1963) 16 (1) Punjab 5O. 6O6 acted is limited only for the purposes of the Act. The result of the fiction again for the purposes of the Act is that no descendant shall, as a member of such family, be entitled to claim that in respect of his share of such land he is a landowner in his own right. There is no doubt that the section has a direct adverse ,effect on the rights of the descendants of a landowner. It treats such a family as one unit equating the landowner and his descendants with an individual landowner depriving by such equation the descendant of the right to hold a ceiling area for himself. Prima facie, such a provision would infringe article 19(1) (f) and article 31 and would be hit by article 13. Article 31 A, however, provides that notwithstanding anything contained in article 13, no law providing for the acquisition by the State of any ,estate or of any rights therein or the extinguishment or modification of any such rights shall be deemed to be void on the ground that it is inconsistent with or takes away or abridges any of the rights conferred by articles 14, 19 or 31. If, therefore, section 32 KK falls within the scope of article 31 A, it is obviously protected there under and the validity of the section is placed beyond any ,challenge on the ground of its infringing any of the rights under articles 14, 19 or 31. In K. K. Kochuni vs The State of Madras(1), this Court laid ,down that article 31 A properly construed envisages agrarian reform and provides for the acquisition, extinguishment or modification of proprietary and various other kinds of subordinate rights in a tenure called the 'estate ' solely for that purpose and must be limited to it. The Court held that the Act impugned there did not ,contemplate any agrarian reform or seek to regulate the rights inter se between the landlords and tenants or modify or extinguish any of the rights appertaining to janmam right leaving all the characteristics intact and, therefore, did not come within the purview of article 31 A. In Ranjit Singh vs The State Punjab (2), this Court considered the scope of that decision and held that the 'Word 'estate ' in article 31 A should be given a liberal meaning and that the changes proposed by the Punjab Consolidation Acts passed since 1948 and onwards were included in the general scheme of planning of rural areas and the productive utilisation of vacant and waste lands, that if agrarian reforms were to succeed, mere distribution of land to the landless was not enough, that there should be a proper planning of rural economy and conditions and that a scheme which makes villages self sufficient cannot but be regarded as part of larger reforms which consolidation ,of holdings, fixing of ceilings on lands, distribution of surplus lands and utilising of vacant and waste lands contemplate. It is not necessary to refer to other decided cases as this decision clearly points out that the fixing of ceiling on lands and provisions (1) (2) [1965]1 S.C.R. 82. 607 relating to it would form part of and constitute agrarian reform and, therefore, such provisions would have the protection of article 3 1 A. A brief outline of the provisions of the Act will show the objects and the policy the legislature had in mind in passing the Act and while amending it from time to time. The Act declares that it was passed to amend and consolidate law relating to tenancy and agricultural lands and to provide for certain measures of land reforms. Section 3 defines " permissible limit" as meaning 30 standard acres of land. Section 5 entitles ,very landowner owning land exceeding the permissible limit to select for personal cultivation from the land held by him any parcel or parcels of land not exceeding in aggregate the permissible area. Chapter III provides for the rights of tenants and section 7 therein lays down that no tenancy shall be terminated except in accordance with the provisions of the Act or except on any of the grounds therein set out. Section 7 A lays down additional grounds for termination of tenancy in cases such as where the land comprising the tenancy has been reserved by the landowner for his personal cultivation or where the landowner owns 30 standard acres or less of land and the land falls within the permissible limit. Section 9 provides the maximum amount of rent payable by a tenant. Chapter IV deals with acquisition or proprietary rights by a tenant on such tenant paying compensation determined in accordance with the principles set out in section 26. Chapter IV A, which was added by Act 15 of 1956, deals with ceiling on lands and acquisition and disposal of surplus land. Section 32 A provides that no person shall be entitled to own or hold as landowner or tenant land exceeding the permissible limit. Section 32 B obliges a person owning or holding as landowner or tenant land which exceeds the permissible limit to furnish to the Collector a return giving particulars of all his land and stating therein his selection of land not exceeding the permissible limit which he desires to retain and of lands in respect of which he claims exemption from the ceiling. Section 32 D directs the Collector to prepare a draft statement on the basis of the information given in the said returns showing the total area of land owned or held by such person and the land selected by him by way of permissible limit the exemption claimed by him and the surplus area. Section 32 E provides that in the case of surplus area of a landowner or a tenant which is not included within the permissible limit such area shall on the date on which possession thereof is taken by the State Government, be deemed to have been acquired by the State Government for a public purpose. Section 32 F authorises the Collector to direct the landowner or the tenant in possession of the surplus area to deliver possession thereof within the prescribed time. Section 32 FF provides that no transfer or 608 other disposition of land made after August 21, 1956 shall affect the right of the State Government to the surplus area to which it would be entitled to but for such transfer or disposition. Section 32 G lays down principles on which compensation in respect of surplus area is to be determined. Section 23 J deals with disposal of such surplus area. Section 32 KK already recited above was inserted in the Act by Punjab Act XVI of 1962. It is clear from these provisions that the objects of the Act are : (a) to secure the rights of tenants, (b) to provide for acquisition of proprietary rights in the land,to the tenant, (c) to provide for permissible limit of 30 standard acres, (d) to acquire surplus areas and distribute them amongst certain classes of persons including landless persons, and (e) to provide for compensation at prescribed rates payable by tenants and by Government on its acquiring surplus land. The principle laid down by the, Act is that no person, whether a landowner or tenant, should hold land more than the permissible area so that the surplus land can be distributed amongst the more needy sections of society. In following this principle the Act lays down two corollaries, namely, (1) not to recognise any transfer or disposition made by a landowner after a certain date as otherwise the scheme of distribution of surplus land would be frustrated, and (ii) to equates an individual landowner and a Hindu undivided family consisting of a landowner and his descendants so that both the units are entitled to hold only the permissible area of 30 standard acres. In our view, it cannot be gainsaid that section 32 KK deals with an estate within the meaning of article 31 A and is concerned with agrarian reform. The decision in Kochuni 's case(1) cannot, therefore, avail the appellants. In Pritam Singh vs The State of Punjab (2) , this Court up held the validity of section, 32 FF and held that that section was protected by article 31 A against any challenge under article 19. If a transfer or a disposition of land can validly be ignored under section 32FF for the purpose of ascertaining surplus land and acquisition of such surplus land by the State and that section is protected by article 31 A, it is difficult to say why section 32 KK which, as aforesaid, equates a Hindu undivided family with an individual landowner for the limited purpose of the Act without affecting the other rights of its members is not equally protected by that Article. The object of enacting section 32 KK was to prevent the landowner and his descendants by reason of their constituting a Hindu undivided family from each of them claiming in his own right the permissible area from the joint holding of the family and thus retain for themselves in the aggregate area larger than 30 standard ' acres and preventing thereby distribution of surplus area. As to (1) (2) ; 609 the pros and cons of such a provision much can be said on either side. The appellants could have perhaps contended that such a provision amounted to an unreasonable restriction. But such a contention is debarred by article 31 A an d a challenge to the validity of that Article is no longer possible in view of the recent decision in 1. C. Golak Nath vs The State of Punjab(1). The contention that the section is not one relating to agrarian reform is hardly sustainable in view of the above mentioned objects of the Act in general and of section 32 KK in particular. Similarly, the contention that the section has the affect of defeating the rights of a member of a Hindu undivided family from the family property also cannot be sustained because his rights in the permissible area retained by the landowner and his right to compensation in respect of the surplus area are not touched by the section. Nor is it possible to say that 'the section results in the transfer of rights of the descendants of a landowner in the permissible or surplus area in favour of such landowner. The section does not effect any change in the rights of the descendants as members of a Hindu undivided family or the relationship of the family inter se except to the extent of depriving the descendants of their right to claim the ceiling area for each of them. The contention as to the validity of section 32 KK, therefore, must fail. The next contention was that the section infringes article 15 inasmuch as by limiting it only to Hindu undivided families it discriminates against descendants forming such families on the ground of religion only. It was argued that the customary law in Punjab recognises joint and undivided families amongst non Hindu persons also and since the section affects only the Hindu undivided families, it violates article 15. In support of this contention passages from Rattigan 's Digest of Customary Law, 14th Ed. pp. 35 to 36 were relied on to show that the institution of undivided family exists amongst certain classes of Muslims in certain districts of Punjab. Support was also sought from the decisions in Banarsi Das vs Wealth Tax Officer.(2) and Mammad Kevi vs Wealth Tax Officer (3). The former was concerned with the question whether a Hindu undivided family is embraced within the term 'individuals ' in Entry 56 of List 1 of the Seventh Schedule to the Constitution for purposes of the Wealth Tax Act, 1957. The latter decision does not touch the question under article 15. Neither of the two decisions, therefore, can assist. On the other hand, in the case of Bhagat vs State of Punjab(4) the High Court of Punjab has held that section 32 KK does not create any discrimination on the ground of religion. In 'the present case, it is not possible to give (1) ; (3) L7Sup. Cl/67 9 (2) (4) I.L.R. [1963] 16 (1) Punj. 610 any concluding answer to the contention raised by Mr. Mani firstly because such a point was not raised in the writ petition and secondly because the appellants have not placed before us sufficient data to enable us to go into the question. We, therefore, refrain from examining that contention. The appeal fails and is dismissed with costs. Y.P. Appeal dismissed.

IN-Abs

While ascertaining the surplus land under the Pepsu Tenancy and Agricultural Lands Act, the excess over 30 acres owned by the appellants, a Hindu undivided family was declared surplus. In ascertaining the surplus, the authorities ignored the transfer of land by the Karta of the family to an outsider by a registered deed. The appellants unsuccessfully filed writ petition. In appeal to this Court, the appellants contended that section 32 KK deprives a coparcener in a Hindu undivided family of his rights of property. in that it takes away the rights of the descendants of the land owner to claim for themselves the permissible area and vest them in the head of the family alone so that there is not only an infringement of the right to hold property under article 19(1) (f) but also discrimination in favour of the head of the family infringing thereby article 14 and that the section cannot be said to be legislation whose object is agrarian reform and, therefore, is not protected by article 31 A. HELD:The appeal must fail. In Pritam Singh vs State of Punjab [(1967) 2 S.C.R. 536] this Court upheld the validity of section 32 FF and held that that section was protected by article 31 A against any challenge under article 19. If a transfer or a disposition of land can validly be ignored under section 32 FF for the purpose of ascertaining surplus land and acquisition of such surplus land bit he State and that section is protected by article 31 A, it is difficult to say why section 32 KK which, equates a Hindu undivided family with an individual landowner for the limited purpose of the Act without affecting the other rights of its members is not equally protected by that Article. The object of enacting section 32 KK was to prevent the landowner and his descendants by reason of their constituting a Hindu undivided family from each of them claiming in his own right the permissible area from the joint holding of the family and thus retain for themselves in the aggregate area larger than 30 standard acres and preventing thereby distribution of surplus area. [608 F H] The contention that the section is not one relating to agrarian reform is hardly sustainable in view of the objects of the Act in general and of section 32 KK in particular. Similarly, the contention that the section has the affect of defeating the rights of a member of a Hindu undivided family from the family property also cannot be sustained because his rights in the permissible area retained by the landowner and his right to compensation in respect of the surplus area are not touched by the section. Nor is it possible to say that the section results in the transfer of rights of the descendants of a landowner in the permissible or surplus area in favour of such landowner. The section does not effect any change in the rights of 604 the descendants as members of a Hindu undivided family or the relationship of the family inter se except to the extent of depriving the descendants of their right to claim the ceiling area for each of them. [609 B E] The decision of Ranjit Singh vs The State of Punjab ([1965] 1 S.C.R. 82) points out that the fixing of ceiling on lands and provisions relating to it would form part of and constitute agrarian reform and, therefore, such provisions would have the protection of article 31 A. [607 H]

(Case No. 24 of 1050). Appeal under article 132 (1) of the Constitution of India, against the judgment and order of the High Court of Judicature at Calcutta in Criminal Miscellaneous Case No. 361 of 1050. A.C. Gupta and Sudhansu Sekhar Mukherjee (Arun Kumar Dutta and S.N. Mukherjee, with them) for the appellants. M.C. Setalvad, Attorney General, (B. Sen, with him) for the respondent. Jan. 25. The Judgment of Kania C.J., Fazl Ali, Mukherjea and Chandrasekhara Aiyar JJ., was delivered by Kania C.J. Patanjali Sastri and Das JJ. delivered separate judgments. KANIA C.J. This is an appeal under article 132 of the Constitution of India from the judgment of the 214 High Court at Calcutta, which rejected the habeas corpus petitions of the appellants. The detention orders under the , in all cases were served on the appellants on the 26th February, 1950, and the grounds for the detention were served on the 14th March, 1950. By way of specimen we quote one of them: "You are beings detained in pursuance of a detention order made under sub clause (ii) of clause (a) of subsection (1)of section a of the , (Act IV of 1950), on the following grounds: (1) That you have been assisting the operations of the Communist Party of India, which along with its volunteer organisations has been declared unlawful by Government under section 16 of the Indian Criminal Law Amendment Act (Act XIV of 1908), and which has for its object commission of rioting with deadly weapons, robbery, dacoity, arson and murder and possession and use of arms and ammunitions and explosives and thus acting in a manner prejudicial to the maintenance of public order and that it is necessary to prevent you from acting in such manner. (2) That as a member of the C.P.I. on its Kishan front, you have fomented trouble amongst the peasants of Howrah District and incited them to acts of lawlessness and vio lence: and have thereby acted in a manner prejudicial to the maintenance of public order: That as a worker of the C.P.I. you have tried to foment trouble amongst the tramways men and other workers at Cal cutta and in speeches which you delivered at the University Hall and other places you actually incited them to resort to acts of violence and lawlessness; and have thereby acted in a manner prejudicial to the maintenance of public order. " On the 16th of July, 1950, the Government of West Bengal served on the appellants "in continuation of the grounds already furnished on the 14th of March, 1950, supplementary grounds" for their detention a specimen of which is in the following terms: 215 "In continuation of the grounds already furnished under order No. 6163 H.S. dated 14th March, 1950, you are being informed of the supplementary grounds for your detention which are as follows: You as the Secretary of the Bengal Chatkar Mazdoor Union, as a member of the Executive Committee of the Federa tion of Mercantile Employees ' Union, as the honorary report er of the 'Khabar ' newspaper (C. P.I. organ) carried on the disruptive programme of the C.P.I. On the 29th July, 1948, you along with others led a procession at Howrah preaching discontent against Government and have been thus acting in a manner prejudicial to the maintenance of public order. ' ' As in the case of the first grounds, these "supplemen tary grounds" were also served on each appellant separately. The appellants applied for a Rule of habeas corpus separate ly under section 491 of the Criminal Procedure Code and on the 21st July, 1950, the High Court issued a Rule in each case on the Chief Secretary to the Government of West Ben gal. A second set of grounds were communicated to the appellants on the 22nd or 23rd of July, 1950. A specimen of one is in the following terms: "In continuation of the grounds already furnished under order No. 12820 dated 14th July, 1950, you are being in formed of the supplementary grounds for your detention which are as follows: 1. That in a meeting held at the University Institute on the 19th March, 1947, under the auspices of the Calcutta Tramway Workers ' Union, you held out the threat that any attempt to take out tram cars on the 20th March, 1947, would be inviting disaster and you further said that if the au thorities tried to resume the tram service you and your friends would not hesitate to remove the tram lines and cut the wires. That on the 13th June, 1948, you presided over a meeting under the auspices of the Students ' Federation (C. P.I. controlled) and delivered speech 28 216 advocating withdrawal of ban on the Communist Party of India and its organ Swadhinta." The High Court after considering the whole matter re jected the petitions of the appellants and the appellants have thereupon come in appeal before us. In the High Court, it was first contended on behalf of the appellants that the communication of the grounds dated the 14th March was not a compliance with article 22 (5)of the Constitution of India, as those grounds were not commu nicated "as soon as may be. " The High Court rejected this contention. Under the circumstances of the case, we agree with the High Court and are unable to hold that in furnish ing the grounds dated the 14th March, 1950, the authorities had failed to act in accordance with the procedure laid down in article 22 (5) of the Constitution. Under the Bengal Criminal Law Amendment Act, 1930, a very large number of persons were detained. The validity of that Act was being challenged in the High Court and the judgment was expected to be delivered towards the end of February, 1950. The , was passed by the Parliament of India in the last week of February, 1950, and these orders on all those detenus were served on the 26th of February, 1950. Having regard to the fact that the Provin cial Government had thus suddenly to deal with a large number of cases on one day, we are unable to accept this contention of the appellants. On behalf of the appellants it was next urged that there has been a non compliance with the procedure laid down in article 22 (s)of the Constitution and section 7 of the in the manner of supplying grounds to the appellants resulting in not providing to the appel lants the earliest opportunity to make a representation, which they had a right to make. In the judgment delivered today in Case No. 22 of 1950(1) we have discussed in detail the nature of the two rights conferred under article 22 (5). We have to apply those principles to the facts of this appeal for its decision. (11 Supra, P. 167. 217 When the authorities sent their second communication dated 16th July, 1950, to the appellants they described it as "in continuation of the grounds already furnished" and as the "supplementary grounds for your detention". Relying on the wording of this communication it was argued that these were additional grounds which were furnished to the detenu and therefore the procedure prescribed under article 22 (5) had not been followed. It was argued that the obligation to communicate grounds "as soon as may be" was absolute. The grounds for detention must be before the Provincial Government before they could be satisfied about the necessity for making the detention order. If the grounds before the detaining authorities on the 26th of February, 1950, were only those which they communicated on the 14th of March, they cannot support the detention on additional grounds which were not before them on that day and which they set out in the second communication four months later. It was also contended that the fact of this communication showed that the authorities were not satisfied on the origi nal grounds and had therefore put forth these supplementary grounds as an afterthought. In our opinion these arguments cannot be accepted. A 'description of the contents of the second communication as "supplementary grounds" does not necessarily make them additional or new grounds. One has to look at the contents to find out whether they are new grounds as explained in our judgment in Case No. 92 of 1950(1). Examining the contents of the later communication in that way we find that they only furnish details of the second heads of the grounds furnished to the appropriate appellant on 14th March, 1950, in respect of his activities. We are unable to treat them as new grounds and we agree with the High Court in its conclusion that these are not fresh or new grounds. We do not think it proper to consider the true effect of the communication only by reading its opening words. The whole of it must be read and considered togeth er. The contention that the authorities were not satisfied on the original (1) Supra, p. 167. 218 grounds and therefore put forth this. communication as the supplemental grounds is again unsound. The fact that these details were communicated later does not necessarily show that they were not within the knowledge of the authorities when they sent the communication dated the 14th of March. The contention that this communication of the 16th of July, 1950, was not "as soon as may be", has to be rejected having regard to the principles set out in our judgment in Case No. 22 of 1950. The facts in each case have to to be taken into consideration and if the detained person contends that this part of the procedure prescribed in article 22 (5) was not complied with, the authorities will have to place materials before the court to refute that contention. In the present case the High Court has considered that there has been no infringement of this procedural law and we see no reason to come to a different conclusion. It was next argued that the grounds being vague, they could not be considered as grounds at all and therefore they could not be sufficient "to satisfy" the authorities. On this point we have nothing to add to what we have stated in our judgment in Case No. 22 of 1950. We are unable to accept the contention that "vague grounds" stand on the same footing as "irrelevant grounds". An irrelevant ground has no connection at all with the satisfaction of the Provincial Government which makes the order of detention. For the reasons stated in that judgment we are also unable to accept the contention that if the grounds are vague and no repre sentation is possible there can be no satisfaction of the authority as required under section 3 of the . This argument mixes up two objects. The sufficiency of the grounds, which gives rise to the satis faction of the Provincial Government, is not a matter for examination by the court. The sufficiency of the grounds to give the detained person the earliest opportunity to make a representation can be examined by the court, but only from that point of view. We are therefore unable to accept the contention that the quality and characteristic of 219 the grounds should be the same for both tests. On the ques tion of satisfaction, as has been often stated, one person may be, but another may not be, satisfied on the same grounds. That aspect however is not for the determination of the court, having regard to the words used in the Act. The second part of the enquiry is clearly open to the court under article 22 (5). We are therefore unable to accept the argument that if the grounds are not sufficient or adequate for making the representation the grounds cannot be suffi cient for the subjective satisfaction of the authority. As regards the grounds furnished by the Government in each case in its first communication, it is sufficient to notice that while the first ground is common to all the appellants, the second ground is different in most cases. The High Court has considered the case of each appellant in respect of the communication dated the 14th of March, 1950, sent to him. In their opinion those grounds are not vague. They have held that the procedural requirement to give the detained person the earliest opportunity to make a represen tation has not been infringed by the communication of the grounds of the 14th of March and by the subsequent communi cation made to the appellants in July. This point was not seriously pressed before us. After hearing counsel for the appellant we see no reason to differ from the conclusion of the High Court on this point. The result is that the appeal fails and is dismissed. PATANJALI SASTRI J. This appeal was heard along with Case No. 22 of 1950 (The State of Bombay vs Atma Ram Sridhar Vaidya)(1), as the main question involved was the same. In the view I have expressed on that question in my judgment delivered today in that case, this appeal cannot succeed and I agree that it should be dismissed. DAS J. The same important questions have been raised in this appeal by 100 detenus against an order of a Bench of the Calcutta High Court as were raised (1) Supra, p. 167, 220 by the detenu in the appeal of the State of Bombay in which judgment has just been delivered. One additional point raised in this appeal was that the fact that a large number of fresh orders of detention were made "overnight" indicates bad faith on the part of the authorities, for the authori ties could not have applied their minds to each individual case. I am unable to accept this contention as correct. The authorities had already applied their minds to the suspected activities of each of the detenus and were satisfied that with a view to prevent them from doing some prejudicial act of a particular kind it was necessary to make an order of detention against them under the local Acts. There being doubt as to the validity of the local Acts and the Preven tive Detention Act having been passed in the meantime the question was to make a fresh order under the new Act. The minds of the authorities having already been made up as to the expediency of making an order of detention against them, an elaborate application of mind, such as is now suggested, does not appear to me to be necessary at all. I do not think there was any failure of duty on the part of the authorities which will establish bad faith on their part. In my view, for reasons stated in my judgment in the other appeal, there being no proof of any mala fides on the part of the authori ties, no fundamental rights of the petitioners have been infringed. In the case of each of the detenus, apart from the common ground, there were one or more specific grounds of detention which are quite sufficient to enable the detenu concerned to make his representation. Therefore, the ques tion of supplementary particulars does not arise at all. In my opinion the conclusions arrived at by Roxburgh J. were correct and well founded, and, therefore, this appeal should be dismissed. Appeal dismissed.

IN-Abs

A large number of persons were detained under the Bengal Criminal Law Amendment Act, 1930. The validity of this Act was being challenged in the High Court. Meanwhile, the Preventive Detention Act of 1950 was passed on 26th Febru ary, 1950, and on the same date detention orders under this Act were served on them. The grounds of detention were served on them on the 14th of March, and on the 16th of July the Government served on them "supplementary grounds" in continuation of the grounds already furnished on the 14th of March. A second set of grounds were communicated to the appellants on the 22nd or 23rd of July. They applied to the High Court of Calcutta for writs of habeas corpus contending that the orders of detention were invalid on various grounds. The High Court rejected these applications and they appealed to the ' Supreme Court. Held per KANIA C.J., FAZAL ALI, MUKHERJEA and CHANDRASEK HARA AIYAR JJ. (i) that in the particular circumstances of the case, especially in view of the fact that a large number of causes had to be dealt with on the passing of the Preven tive Detention Act in February, 1950, it cannot be said that the grounds were not communicated to the appellants "as soon as nay be" within the meaning of article 22 (5); ' 213 (ii) it cannot be held that the appellants were not given the "earliest opportunity" to make a representation, as required by article 22(5), merely because further details and facts were communicated to the appellants on the 16th July and 22nd July as these later communications did not contain any new or additional grounds (though they were described as "supplementary grounds ") but only furnished details of the heads of grounds furnished on the 14th March; (iii) merely because a ground is vague it cannot be considered that it is no ground at all and therefore cannot be sufficient to ' satisfy '.the authorities; a ' vague ' ground does not stand on the same footing as an irrelevant ground, which can have no connection at all with the satis faction of the Government; (iv) the sufficiency of the grounds for the purposes of satisfaction of the Government is not a matter for examina tion by the court; their sufficiency to give the detained person the earliest opportunity to make a representation can be examined by the court, but only from that point of view. Held also, per DAS J. The fact that a large number of fresh orders of detention were made overnight did not neces sarily indicate bad faith on the part of the authorities in the circumstances of these cases as the authorities had already applied their minds to the suspected activities of each of the detenus and were satisfied that with a view to prevent them from doing some prejudicial act, it was neces sary to detain them. The State of Bombay, vs Atma Ram Sridhar Vaidya supra P.167 followed.

Appeal No. 136 of 1952. Appeal under articles 132(1) and 133(1)(c) of the Constitution of India from the Judgment and Order dated the 19th October, 1951, of the High Court of Judicature for Rajasthan at Jodhpur in D. B. Miscellaneous Writ Petition No. 3/1951. K. section Hajela, Advocate General of Rajasthan, for the appellant. K. N. Aggarwal and P. C. Agarwal for the respondents. M. C. Setalvad, Attorney General for India (Porus A. Mehta, with him) for the intervener (the Union of India). March 12. The Judgment of the Court was delivered by GHULAM HASAN J. The question involved in this appeal relates to the constitutional validity of clause 25 of the Rajasthan Foodgrains Control Order, 1949, hereinafter called the Control Order, and arises in the following circumstances : The respondents, who are grain merchants at Raniwara in Jodhpur Division, Rajasthan State, held 984 licences for dealing in foodgrains. They held considerable stocks of bajra in the ordinary course of business but on October 7, 1950, their stocks were frozen by the Deputy Commissioner, Civil Supplies, Jodhpur, through the Sub Divisional Officer. It is not disputed that the market price then prevailing was about Rs. 18 per maund. The State, however, requisitioned the stocks at the rate. of Rs. 9 per maund and sold them at Rs. 13 5 4 per maund. The respondents claimed that they had purchased the bajra at the prevailing market rate of Rs. 17 to Rs. 18 per maund. They filed a petition on January 23, 1951, for the issue of a writ under article 226 of the Constitution before the High Court of Rajasthan, contending that clause 25 of the Control Order was void under articles 14, 19 (1) (g) and 31 (2) of the Constitution. The High Court held that clause 25 was void inasmuch as it is a restriction upon the fundamental right of the respondents to carry on business under article 19 (1)(g) of the Constitution, that the restriction is not reasonable and is not saved by clause (6) of article 19. The High Court further held that clause 25 was also hit by article 31 (2) as fair compensation had not been fixed by the law for the acquisition of the foodgrains. As the grains had already been disposed of by the Government, the High Court holding that Rs. 17 a maund was fair compensation directed that the State of Rajasthan shall pay compensation at that rate. The State has preferred.the present appeal on a certificate granted by the High Court. The impugned clause 25 is as follows: " 25. Notwithstanding anything contained in this Order, the Commissioner, the Director, the Deputy Commissioner, the Nazim, the Assistant Commissioner, the Sub Divisional Officer, the Senior Officer of a jurisdictional Thikana, the enforcement officer 'or such other officer as may be authorized by the Commissioner in this behalf, may freeze any stocks of foodgrains held by any person, whether in his own behalf or not, and such person shall not dispose of any foodgrains out of the stock so freezed except with the permission of the said authority. Such stocks shall 985 also be liable to be requisitioned or disposed of under orders of the said authority at the rate fixed for purposes of Government procurement. " It is not disputed that bajra is an essential commodity within the meaning of the Essential Supplies Act (No. XXIV of 1946). The question that arises for consideration is how far and in what respects clause 25 can be said to be void as violating Part III of the Constitution. The clause authorises the Commissioner and various other authorities mentioned therein and such other officers as may be authorised by the Commissioner to freeze any stock of foodgrains held by a person. It is true that the authority of the Commissioner to delegate his powers to any other officer at his discretion is expressed in somewhat wide terms but we need not decide that per se would be sufficient to invalidate the clause. Admittedly that :power has not been exercised in the. present case. Nor do we think that the power to freeze the stocks of foodgrains is arbitrary or based on no reasonable basis. It is not disputed that the clause does not state in express terms the circumstances in or the grounds on which the stocks may be freezed but it should be read along with section 3 of the Essential Supplies Act which lays down the policy for controlling the production,, supply and distribution of essential commodities. Section 3 in so far as it is material says: " The Central Government, so far as it appears 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, may by order provide for regulating or prohibiting the production, supply and distribution thereof Sub section (2) lays down: " Without prejudice to the generality of the powers conferred by sub section (1) an order made thereunder may provide. . . . (a). . . . . (b). . . . . (c). . . . . 986 (d) for regulating by licences, permits or otherwise the storage, transport, distribution, disposal, acquisition, use or consumption of any essential commodity; (e) for prohibiting the withholding from sale of any essential commodity ordinarily kept for sale; We are clear, therefore, that the freezing of stocks of foodgrains is reasonably related to the object which the Act was intended to achieve, namely, to secure the equitable distribution and availability at fair prices and to regulate transport, distribution, disposal and acquisition of an essential commodity such as foodgrains. We do not agree with the High Court that the first portion of clause 25 is void under article 19 (1) (g). The last portion of clause 25 to the effect that such stocks shall also be liable to be requisitioned or disposed of under orders of the said authority at the rate fixed for purposes of Government procurement ", however stands on a different footing. The clause, as it is worded, leaves it entirely to the Government to requisition the stocks at any rate fixed by it and to dispose of such stocks at any rate in its discretion. This obviously vests an unrestrained authority to requisition the stocks of foodgrains at an arbitrary price. In contrast with this provision we may refer to clauses 23 and 24 of the Control Order. They are as follows: " 23. The Commissioner or the Director, and the Deputy Commissioner or the Senior Officer of a jurisdictional Thikana with the approval of the Director, may fix the ceiling prices at which foodgrains in any area to which this order applies shall be sold, and may from time to time vary such prices." "24. The Commissioner, the Director, the Deputy Commissioner, the Nazim, the Assistant Commissioner, the Sub Divisional Officer, or the Senior Officer of the jurisdictional Thikana as the case may be, may direct any person or persons in possession, whether on his own behalf or not of any foodgrains to sell such foodgrains or part thereof to any person or persons at any 987 specified place and at such price as may be fixed under clause 23. " It appears from these clauses that while the authorities may fix the ceiling price at which foodgrains should be sold in the market by the dealers and may direct any person in possession of foodgrains to sell them to any other person at the price fixed under clause 23, there is no such limitation upon the power of the Government to acquire the stocks. In other words, it will be open to the Government to requisi tion the stocks at a price lower than the ceiling price thus causing loss to the persons whose stocks are freezed while at the same time the Government is free to sell the same stocks at a higher price and make a profit. It is obvious that the dealer whose stocks are thus freezed will stand to lose considerably and will be unable to carry on his trade or business at the prevailing market price. No dealer will be prepared to buy foodgrains at the market price when he knows that he is exposed to the risk of his stocks being freezed any moment and the same being requisitioned at the procurement rate. The present is a typical case which illustrates how the business of a grain dealer can be paralyzed, for it is admitted that while the Government procurement rate was Rs. 9 a maund, the market rate was Rs. 17 or Rs. 18 per maund, with the result that the stock holder suffered nearly cent. per cent. lose, while the Government made a profit of Rs. 4 5 4 per maund on the stock requisitioned. We hold, therefore, that the last portion of clause 25 places an unreasonable restriction upon the carrying on of trade or business and is thus an infringement of the respondent 's right under article 19(1)(g) of the Constitution and is, therefore, to that extent void. The same result follows if the impugned clause is examined in the light of article 31(2). The clause by vesting the power in the authority to acquire the stocks at any price fails to fix the amount of the compensation or ,specify the principles on which the compensation is to be determined. The clause leaves it entirely to the discretion of the executive authority to fix any compensation it likes. The High Court 988 rightly held that the clause offended against article 31(2). For the foregoing reasons we hold that the last portion of clause 25 is void and dismiss the appeal with costs. Appeal dismissed. Agent for the appellant and for the intervener: R. H. Dhebar.

IN-Abs

Held, that the first portion of cl. 25 of the Rajasthan Foodgrains Control Order, 1949, relating to the freezing of stocks of foodgrains is not void under article 19(1)(f) of the Constitution because such freezing of stocks of foodgrains is reasonably related 983 to the object which the Act was intended to achieve, namely to secure the equitable distribution and availability at fair prices and to regulate transport, distribution, disposal and acquisition of an essential commodity such as foodgrains. Hold, that the last portion of cl. 25 to the effect that " such stocks shall also be liable to be requisitioned or disposed of under orders of the said authority at the rate fixed for purposes of Government procurement ", is void both under article 19(1)(f) and article 31(2) of the Constitution: (i)because the clause places an unreasonable restriction upon the carrying on of trade or business and is thus an infringement of the respondents ' right under article 19(1)(f) of the Constitution; (ii)because the clause by vesting the power in the authority to acquire the stocks at any price fails to fix the amount of compensation or specify the principles on which it is to be determined and leaves it entirely to the discretion of the executive authority to fix any compensation it likes and is thus hit by article 31(2) of the Constitution.

Appeals Nos. 526,527 and 529 of 1964. Appeals from the judgment and order dated December 15, 1959, of the Punjab High Court in Civil Writ Nos. 827, 826 and 823 of 1959 respectively. Civil Appeals Nos. 39 to 43 of 1965. Appeals by special leave from the judgments and orders dated March 30, 1961 of the Punjab High Court in Civil Writ Nos. 467, 473, 476, 474 and 477 of 1960 respectively. Civil Appeal No. 81 of 1965. Appeal from the judgment and order dated May 2, 1963 of the Punjab High Court in Letters Patent Appeal No. 155 of 1963. Civil Appeal No. 540 of 1965. Appeal from the judgment and order dated February 18, 1963 of the Punjab High Court in Civil Writ No. 206 of 1962. M. C. Setalvad, R. K. Garg and section C. Agarwala, for the appellants (In C.As. No. 526, 527 and 529 of 1964). R. Ganapathy Iyer and R. N. Sachthey, for the respondents (in C. A. Nos. 526, 527 and 529 of 1964). Rameshwar Nath and Mahinder Narain, for the appellants (in C.As. 39 43 of 1965). Hardev Singh and R. N. Sachthey, for the respondents (in C.As. 39 43 of 1965). section T. Desai and O. C. Mathur, for the appellants (in C.As. Nos. 81 and 540 of 1965). R. Ganapathy Iyer and R. N. Sachthey, for the respondents (in C.A. No. 81 of 1965). O. P. Malhotra and R. N. Sachthey, for the respondents (in C.A. No. 540 of 1965). The Judgment of the Court was delivered by Subba Rao, C.J. The decision on these appeals depends upon the interpretation of the relevant provisions of the Punjab General Sales Tax Act, 1948 (Punjab Act 46 of 1948), as amended by Punjab Act 7 of 1958, relating to three categories of goods, namely, oil seeds, iron and cotton. The facts may be briefly stated. 560 The assessees in. Civil Appeals Nos. 526, 527 and 529 of 1964 carry on business at Moga in Punjab and each owns an oil mill They purchase oil seeds and, after crushing the same in their oil mills, sell the oil and the residual oil cake. They are registered dealers under the Act. The Amending Act imposed a purchase tax of 2% on the purchase of oil seeds "for the use in the manufacture of goods for sale. " This was in addition to the sales tax leviable on the sales of oil and oil cake. On June 23, 1959, the Excise and Taxation Officer, Ferozepore, the 3rd respondent ill the said appeals, issued notices to the 3 appellants assessees to the effect that they did not submit their returns for the year ending 1958 59 and failed to pay purchase tax in respect thereof and asked them to show cause why they should not be prosecuted for the said default. The appellants filed 3 petitions under article 226 of the Constitution in the High Court of Punjab questioning the validity of the relevant provisions of the Act and for appropriate reliefs. A Division Bench of the High Court heard the petitions, along with other connected petitions, and dismissed the petitions of the appellants so far as they related to purchase tax on oil seeds. Hence the appeals. Civil Appeals Nos. 39 to 43 of 1965 relate to purchase tax on iron. The appellants carry on business in rolling steel at Gobindgarh. They purchase steel scrap and steel ingots and convert them into rolled steel sections. Under the Act, the assessing authority imposed purchase tax at the rate of 2% on the purchase of steel scrap and steel ingots made by them during the period April 1, 1958 to March 31, 1959 for making rolled steel section and selling the same. The appellants filed petitions under article 226 of the Constitution in the High Court for appropriate writs for quashing the orders of the assessing authorities and for prohibiting them from levying purchase tax on the goods purchased and for refund of the tax illegally collected from them. A Division Bench of the High Court dismissed the petitions. Hence the appeals. Appeals Nos. 81 of 1965 and 540 of 1965 relate to purchase tax on cotton. The appellants in Civil Appeal No. 81 of 1965 are the trustees of Birla Education Trust. They own a cotton and textile mill, Bhiwani. They purchase cotton from various dealers in Punjab and outside for the manufacture of yarn and cloth. By ,in order dated March 11, 1962, the District Taxation Officer, Hissar, imposed purchase tax on the appellants in respect of the cotton purchased by them for the assessment years 1958 59 and 1959 60. The appellant in Civil Appeal No. 540 of 1965 is a limited company carrying on the business of producing and selling yarn. For the purpose of its business it acquires cotton from commission agents. It is a registered dealer under the Act. The Excise and Taxation Officer, Hissar, by his order dated November 561 29, 1961, assessed the appellant to purchase tax for the assessment year 1958 59 in respect of the cotton purchased by it and so too on January 27, 1962, he had taken proceedings for making assessment to purchase tax for the assessment year 1959 60 in respect of the same commodity. The appellants in both the appeals filed petitions under article 226 of the Constitution in the High Court questioning the validity of the said orders. The said writ petitions were dismissed by a Division Bench of the High Court. Hence the appeals. We shall at first take the points raised which are common to all the appeals and then proceed to consider the points peculiar to some of the appeals. Mr. M. C. Setalvad, learned counsel appearing for the appel lants in the batch of appeals relating to tax on purchase of oil seeds, raised before us the following points which are common to other appeals : (1) Section 5 of the East Punjab General Sales Tax Act, 1948, was held to be, void on the ground that it conferred essentially legislative power on the provincial Government and, therefore, the said section was stillborn and that,, as the said section was the charging section, the entire Act was void, with the result Act 19 of 1952, which amended section 5 with retrospective effect could not breathe a new life into the said Act. A void Act was non est and, therefore, could not be brought into force by an amending Act. (2) Clause (ff) of section 2 introduced by Act 7 of 1958 defining "purchase", subject to the conditions mentioned therein as a taxing event was ultra vires the State Legislature inasmuch as the transaction defined therein was not a sale" within the meaning of that expression in entry 52 of List 11 of the 7th. Schedule to the Constitution and was in fact an "excise" duty inasmuch as it was imposed on the production of oil in the garb of purchase tax. (3) The said amendment was also bad in that it made an unreasonable discrimination in the matter of taxation between the same classes of goods based on the character of the purchaser. If the goods were purchased by a manufacturer, they were liable to purchase tax; and if the same goods were purchased by an ordinary dealer, they were not liable to the said tax. (4) The amended 'provision, section 2(ff), was also void because it contravened sections 14 and 15 of the Central Sales tax Act, 1956, whereunder sales tax was prohibited to be imposed on the declared goods at more than one stage, whereas under the Act it could be imposed both at the purchase point and at the sale point of the transactions entered into by the manufacturer. (5) Purchase tax was not leviable on oil seeds, as the assessees did not manufacture oil out of the seeds but only produced the oil. We shall now proceed to consider the points seriatim. The provisions relevant to the first two points read thus: C1167 6 562 East Punjab General Sales Tax Act (46 of 1948) Section 5. Subject to the provisions of this Act, there shall be levied on the taxable turnover every year of a dealer a tax at such rates as the Provincial Government may by notification direct. East Punjab General Sales Tax (Second Amendment) Act, 1952 (Act No. 19 of 1952). Section 2. Amendment of section 5 of Punjab Act 46 of 1948 : In sub section (1) of section 5 of the East Punjab General Sales Tax Act, 1948, after the word " rates" the following words shall be inserted and shall be deemed always to have been so inserted, namely, 'not exceed in two pice in a rupee '. The High Court of Punjab held that section 5 of the Act was void as it gave an unlimited power to the executive to levy sales tax at a rate which it thought lit. But it held that the amendment of section 5 by the Punjab Act 19 of 1952 cured the defect in the said Act and had the effect of giving a new life to it. The first question, therefore, is whether section 5 of the East Punjab General Sales Tax Act, 1948 (46 of 1948), as it originally stood, was void, and the second question is, if the said section was void, whether the amendment could give life to it. The law on the subject is fairly well settled, though difficulties are met in its application to each case. In Corporation of Calcutta, vs Liberty Cinema(1) on which Mr. Ganapati Iyer relied relates to a levy imposed on cinema houses under the Calcutta Municipal Act (33 of 1951). There, the majority held that the levy therein was a tax, that the fixing of a rate of tax was not of the essence of legislative power, that the fixing of rates might be left to a nonlegislative body and that when it was so left to such a body, the Legislature must provide guidance for such fixation. The majority he Id in that case that such a guidance was found in the monetary needs of the Municipality for discharging the functions entrusted to it under the Act. Sarkar I., speaking for the majority &aid thus : "It (the Municipal Corporation) has to perform various statutory functions. It is often given power to decide when and in what manner the functions are to be performed. For all this it needs money and its needs will very from time to time, with the prevailing exigen cies. Its power to collect tax, however, is necessarily (1) [1965]2 S.C.R.4 7 563 limited by the expenses required to discharge those functions. It has, therefore, where rates have not been specified in the statute, to fix such rates as may be necessary to meet its needs. That, we think, would be sufficient guidance to make the exercise of its power to fix the rates valid. " If this decision is an authority for the position that the Legislature can delegate its power to a statutory authority to levy taxes and fix the rates in regard thereto, it is equally an authority for the position that the said statute to be valid must give a guidance to the said authority for fixing the said rates and that guidance cannot be judged by stero typed rules but would depend upon the provisions of a particular Act. To that extent this judgment is binding on us. But we cannot go further and hold, as the learned counsel for the respondents asked us to do, that whenever a statute define , the purpose or purposes for which a statutory authority constituted and empowers it to levy a tax that statute necessarily contains a guidance to fix the rates it depends upon the provisions of each statute. Learned counsel for the State argued that under article 162 of the Constitution the executive power of the State shall extend to: matters with respect to which the Legislature of a State has power to make laws : that is to say, the executive power of a State extends to matters mentioned in List 11 of the Seventh Schedule to, the Constitution, that under article 266(1) of the Constitution all the taxes collected will go to the Consolidated Funds of the State, that the State has an unlimited power to raise funds by taxation to discharge its vast constitutional duties and that necessarily the amount of tax required would depend upon its needs which can only be known to it. In the said circumstances, the argument proceeds '. the doctrine of constitutional and statutory needs would afford reasonable guidelines for the Government to fix the rate and that the principle laid down by this Court in the aforesaid decision would equally apply to this case. If this argument be accepted, it would mean that every statute conferring a naked power on the Government to impose taxes would be good, for in every case the discharge of the constitutional duties by the Government would be deemed to be a sufficient guide for fixing the rate. We cannot accept this argument for three reasons, namely, (1) the decision of this Court in Calcutta Corporation vs Liberty Cinema(1) should he confined only to the provisions of the Calcutta Municipal Act Wherein this Court found a guidance; (2) the provisions of the Sale,; Tax Act, including the preamble, do not disclose any policy or guidance to the, State for fixing the rates: and (3) the general (1) [1965]2 S.C.R. 477, 564 constitutional power to impose taxes has no relevance for discovering a statutory policy under a particular Act. Nor does the decision of this Court in The State of Madras vs Gannon Dunkerley & Co., (Madras) Ltd.(1) lend support to the argument so widely advanced by the learned counsel. That case has nothing to do with the fixation of rates of taxes. There section 6(1) of the Madras General Sales Tax Act, 1939, as amended by Madras Act 25 of 1947, provided that no tax will be payable on any sale of goods specified in the schedule to it. Section 6(2) ,of that Act authorised the State Government to amend the schedule by notification. The amendment of the Schedule by the State Government was challenged on the ground that section 6(2) was invalid as it was a delegation of the essential power of legislation ,of the State Government. Venkatarama Ayyar, J., speaking for the Court, in rejecting that contention, observed thus : "Now, the authorities are clear that it is not unconstitutional for the legislature to leave it to the executive to determine details relating to the working of taxation laws, such as the selection of persons on whom the tax is to be laid, the rates at which it is to be charged in respect of different classes of goods, and the like. " It is not necessary to scrutinize the correctness of this statement, having regard to the decisions relied upon, for this Court in Corporation of Calcutta vs Liberty Cinema(2) accepted it, but made it clear that such a power to fix the rates must be supported by some reasonable guidance given under the Act whereunder the said power was conferred. Nor the observations of Rajagopala Ayyangar, J., in the said decision speaking for the minority, lend support to the contentions of the respondents. The decision in Vasantlal Maganbhai Sanjanwala vs The State of Bombay(3) raised the question whether section 6(2) of the Bombay Tenancy and Agricultural Lands Act, 1948 (Bom. 67 ,of 1948), which enabled the Government to fix the rent payable by a tenant within the maximum limits prescribed thereunder, was valid. When it was argued that it was bad because of excessive delegation, this Court sustained it on the basis of a legislative policy disclosed by section 12(3) of the Act. In The Union of India vs Messrs. Bhana Mal Gulzari Mal(4), this Court rejected the contention that caluse 11B of Iron and Steel (Control of Production & Distribution) Order, 1941, whereunder the Central Government was authorised to issue notification fixing the maximum price of steel, was void on the ground of excessive delegation, as it found that the said clause only further canalized the policy disclosed in sections 3 and 4 of the Act. (1) ; S.C.R.379, 435. (2) [1965]2 S.C.R. 477. (3) [1961] 341. (4) ; 565 Further citation is unnecessary, for the principle of excessive delegation is well settled and the cases are only illustrations of the application of the said principle. The law on the subject may briefly be stated thus : "The Constitution confers a power and imposes a duty on the legislature to make laws. The essential legislative function is the determination of the legislative policy and its formulation as a rule of conduct. Obvi ously it cannot abdicate its functions in favour of another. But in view of the multifarious activities of a welfare State, it cannot presumably work out all the details to suit the varying aspects of a complex situation. It must necessarily delegate the working out of details to the executive or any other agency. But there is a danger inherent in such a process of delegation. An overbur dened legislature or one controlled by a powerful executive may unduly overstep the limits of delegation. It may not lay down any policy at all; it may declare its policy in vague and general terms; it may not set down any standard for the guidance of the executive; it may confer an arbitrary power on the executive to change or modify the policy laid down by it without reserving for itself any control over subordinate legislation. This self effacement of legislative power in favour of another agency either in whole or in part is beyond the permissible limits of delegation. It is for a Court to hold on a fair, generous and liberal construction of an impugned statute whether the legislature exceeded such limits. But the said liberal on struction should not be carried by the Courts to the extent of always trying to discover a dormaint or latent legislative policy to sustain an arbitrary power conferred on executive authorities. It is the duty of the Court to strike down without any hesitation any arbitrary power conferred on the executive by the legislature. See Vasantlal Maganbhai Sanjanwala vs The State of Bombay(1) at pp. 356 357. Under section 5 of the Punjab General Sales Tax Act, 1,948, as it originally stood, an uncontrolled power was conferred on the provincial Government to levy every year on the taxable turnover of a dealer a tax at such rates as the said Government might direct. Under that section the Legislature practically effaced itself in the matter of fixation of rates and it did not give any guidance either under that section or under any other provisions of the Act no other provision was brought to our notice. The (1) 566 argument of the learned counsel that such a policy could be gathered from the constitutional provisions cannot be accepted, for, if accepted,. it would destroy the doctrine of excessive delegation. It would also sanction conferment of power by Legislature on the executive Government without laying down any guide lines in the Act. The minimum we expect of the Legislature is to lay down in the Act conferring such a power of fixation of rates clear legis lative policy or guide lines in that regard. As the Act did not prescribe any such policy, it must be held that section 5 of the ,said Act, is it stood before the amendment, was void. The next step in the argument of Mr. M. C. Setalvad was that sections 4. 5 and 6 of the Punjab Central Sales Tax Act, 1948, together formed a group of charging sections and they were so integrally connected with each other that if section 5 was void, sections 4 and 6 also fell with it, as one was not severable from the other. As the charging sections were the crux of the Act, the argument proceeded, the whole Act was void and therefore the Act amending section 5 could not revive the Act which was still born. The relevant provisions may now be read. Section 4 (1). Subject to the provisions of sections 5 and 6, every dealer except one dealing exclusively in goods declared tax free under section 6 whose gross turnover during the year immediately preceding the com mencement of this Act exceeded the taxable quantum shall be liable to pay tax under this Act on ill sales effected after coming into force of this Act. Section 5 his already been extracted. Section, 6(1). No tax shall be payable on the sale of goods specified in the first column of Schedule B subject to the conditions and exceptions, if any, set out in the corresponding entry in the second column thereof and no dealer shall charge sales tax on the sale of goods which are declared tax free from time to time under this section. It will be seen that section 4 is a charging section, that section 5 provides for fixation of rates and that section 6 prescribes for exemptions. Section 4 is made subject to sections 5 and 6. IF section 5 is struck out, will section 4 become void This will depend upon two questions, namely, (i) whether section 5 is a charging section ? and (ii) even if section 4 alone is the charging section. , as it is made subject to section 5 and as the section subject to which it is made was still born, whether section 4, on the application of the doctrine of severance, becomes void. 567 In the context of Income tax Act it was held by this Court in Kesoram Industries and Cotton Mills Ltd. vs Commissioner of Wealth tax, (Central), Calcutta(1) that the charging section for the purpose of income tax was section 3 of the Indian Income tax Act, 1922, and the annual Finance Acts only gave the rate for quantifying the tax. Section 3 of the said Income tax Act read: "Where any Central Act enacts that income tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or tile members of tile association Individually. " Section 2 of tile Finance (No. , read "(1) Subject to the provisions of subsections (2), (3), (4) and (5) for the year beginning on the 1st day of April, 1957, (a)income tax shall be charged at the rates specified in Part 1 of the First Schedule, and, in the cases to which Paragraphs A, B and C of that Part apply, shall be increased by a surcharge for purposes of the Union and a special surcharge on unearned income, calculated in either case in the manner provided therein;" It was argued that the liability to tax did not arise till the Finance Act was made and the tax quantified. Dealing with this question, this Court by majority observed "A liability to pay income tax is a present liability though it becomes payable after it is quantified in accordance with ascertainable data. " The only difference between Income tax Act and the present Act is that while in the Income tax Act section 3 thereof does not expressly make, the liability subject to the provisions of tile Finance Act which fixes the rate, under the Sales tax Act in question section 4 thereof in terms is made subject to section 5. But under both the Acts there is a clear distinction between chargeability and the quantification of tax. While, it is true that the tax cannot be, realised without it being quantified, the non quantification of the liability will not destroy the liability tinder the clearing section. The liability has to be distinguished from its enforceability. It cannot be said, and indeed it Is not said, that the Income tax Act has no legal existence till the Finance Act is made, though till the Finance (1) [1966]2 S.C.R. 688, 7,8. 568 Act is made it cannot be enforced. But reliance is placed on section 67B of the Income tax Act in support of the contention that its existence in the statute book keeps the Act alive, for the rate prescribed by the previous Finance Act is applicable till the new Finance Act is passed. But it will be noticed that the Court 's decision was not based on the existence of the said provision but on that of the charging section itself. It follows that striking out section 5 does not make section 4 void, though till an appropriate section is inserted it remains unenforceable. The decision of this Court in B. Shama Rao vs The Union Territory of Pondicherry(,) is clearly distinguishable. There, subsection (1) of section 2 of the Pondicherry General Sales Tax Act, 10 of 1965, provided that : "The Madras General Sales Tax Act, 1959 (No. 1 of 1959) (hereinafter referred to as the Act) as in force in the State of Madras immediately before the commencement of this Act shall. extend to and come into force in the Union of Territory of Pondicherry subject to the following modifications and adaptations. . Section 1(2) of the said Act provided that the Act would come into force on such date as the Government by notification may appoint. The effect of the section was that the Madras Act as it stood on the date (if the notification issued would be in force in the Union Territory of Pondicherry. Indeed it turned out that the Madras Act was ended before the said notification. This Court held that there was a total surrender in the matter of sales tax legislation by the Pondicherry Assembly in favour of the Madras legislature and for that reason the said sections were void or stillborn. It was argued that the Act could not be said to be still born as it contained certain provisions independent of the Madras Act, viz., a section which provided for the appellate tribunal and the schedule. But it was pointed out that the core of the taxing statute was in the charging section and that the remaining sections bad no independent existence. In the present case the charging section was intact and what was struck out was only the section providing for rates. It cannot, therefore, be said that when section 5 was struck out, section 4 or other sections fell with it. It was then contended that even if the whole Act was not stillborn, section 5 was non est, that the amending Act did not insert a new section 5 but purported to amend the earlier section 5 which was not in existence. Now under the East Punjab General Sales Tax (Second Amendment) Act, 1952 (Act No. 19 of 1952) section 5 of the East Punjab General Sales Tax Act, 1948 was amended. Section 2 of the said amending Act says: (1) ; 569 .lm15 "In sub section (1) of Section 5 of the East Punjab General Sales Tax Act, 1948, after the word 'rates ' the following words shalt be inserted and shall be deemed always to have been so inserted, namely : 'not exceeding two pice in a rupee '." No doubt in terms the section inserts the words "not exceeding two, pice in a rupee" in section 5. If section 5 is inserted in the Act by the Amending Act with the said words added, there cannot possibly be any objection, for that would be an amendment of an existing Act. But in substance the amendment brings about the same effect. The words "shall be deemed always to have been so inserted" indicate that in substance section 5, as amended, is Inserted in the Act with retrospective effect. Even so it wits contended that section 5, as amended, only gave the maximum rate and did not disclose any policy giving guidance to the executive for fixing any rate within that maximum. Here we are concerned with sales tax. If the Act had said "2 pice In a rupee" it would be manifest that it was a clear guidance. But as the Act applies to sales or purchases of different commodities it had become necessary to give some discretion to the Government in fixing the rate. Conferment of reasonable area of discretion by a fiscal statute has been approved by this Court in more than (me decision : see Khandige Sham Bhat vs The Agricultural Income tax Officer(1). At the same time a larger statutory discretion placing a wide gap between the minimum and the maximum rates and thus enabling the Government to fix an arbitrary rate may not be sustained. In the ultimate analysis, the permissible discretion depends upon the facts of each case. The discretion to fix the rate between I pice and 2 pice in a rupee is so insignificant that it is not possible to hold that it exceeds the permissible limits. It follows that section 5 of the Act as amended is valid. The next argument is that section 2(ff) inserted in the Punjab General Sales Tax Act, 1948, by the East Punjab General Sales Tax (Amendment) Act, 1958 (Act No. 7 of 1958) Lind amended by Amending Act 13 of 1959 is void. The said clause (ff) as amended by Act 13 of 1959 reads " 'Purchase ', with all its grammatical or cognate expressions, means the acquis ition of goods specified in Schedule 'C ' for use in the manufacture of goods for sale for cash or deferred payment or other valuable considera tion otherwise than under a mortgage, hypothecation, charge or pledge. " The first limb of the argument is that the definition of "purchase" is more comprehensive than the definition of "sale" under the Indian and, therefore, the State Legislature was (1) ; 570 incompetent to make a law under entry "sale or purchase" in List 11 of the 7th Schedule to the Constitution. The constitutional position is well settled. Entry 54 of List II of the 7th Schedule to the Constitution reads : "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List 1." In The State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd.(1) Venkatarama Aiyer, J., speaking for the Court, observed : "Thus, according to the law both of England and India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of course presupposes capacity to contract, that it must be supported by money consideration, and that as a result of the transaction property must actually pass in the goods. Unless these elements are present, there can be no sale. Thus, if merely title to the goods passes but not as a result of any contract between the parties, express or implied, there is no sale. " This Court also held that the State Legislature, by enlarging the ,definition of "sale", could not include transactions which were not sales according to the well established concepts of law tinder the Law of Contract or the ; see Sales tax Officer vs Budh Prakash (2 ) and George Oakes vs State of Madras(3). Bearing that in mind let us look at clause (ff) in section 2 of the Principal Act in which the said clause was inserted. The ingredients of the definition of "purchase" are as follows : (i) there shall be acquisition of goods; (ii) the acquisition shall be for cash ,or deferred payment or other valuable consideration; (ii) the said valuable consideration shall not be other than under a mortgage, hypothecation, charge or pledge. Clause (h) of ' section 2 defines thus "sale" means an transfer of property in goods other than goods specified in Schedule C for cash or deferred payment or other valuable consideration but does not include a mortgage, hypothecation, charge or pledge. If we turn to the , section 4 thereof define contract of sale of goods. It reads : "Contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property ill goods to the buyer for a price. (1) ; ,397 398. (2) A.I.R. 1964 S.C. 459 (3) A. 1. R. 571 The essential requisite of sale are (i) there shall be a transfer of property or agreement to transfer property by one party to another; and (ii) it shall be for consideration of money payment or promise thereof by the buyer. A sale and a purchase are different aspects of the same transaction. If we look at it from the standpoint of a purchaser it is purchase and if we look at it from the standpoint of the seller it is a sale. Whether purchase or sale it shall have the said ingredients both in common law and under the Indian Contract Act. 'Price ' has been defined in the to mean money consideration for the sale of goods : see section 2(10) of the Indian . It will, therefore, be seen that the definition of 'purchase ' in the Act prima facie appears to be wider in scope than 'sale '. While transfer of goods from one person to another is the ingredient of 'sale ' in general law, acquisition ion of goods, which may in its comprehensive sense take in voluntary as well as involuntary transfers, is an ingredient of 'purchase ' in clause (ff). While 'price ', i.e., money consideration, is the ingredient of 'sale ', cash, deferred payment or any valuable consideration is an ingredient of 'Purchase '. But a closer scrutiny compels us to give a restricted meaning to the expression "acquisition" and "price". Acquisition is the act by which a person ac quires property in a thin . "Acquire" is to become the owner of the property. One can, therefore, acquire a property either by voluntary or involuntary transfer. But the Sales Tax Act applies only to "sale" as defined in the Act. Under clause (h) of section 2 of the Act it is defied as a transfer of property. As purchase is only a differed, aspect of sale, looked at from the stand point of the purchaser, and as the Act imposes tax at different points in respect of sales, having regard to the purpose of the ,ale, it is unreasonable to assume that the Legislature contemplated different categories of transactions when the taxable event is it the purchase point. Whether it is sale or purchase the transaction is the same. If it was a transfer inter vivos, in the case of a sale it must equally be so in the case of a purchase. Context, consistency and avoidance of anomaly demand a restricted meaning. That it must only mean transfer is also made clear by the nature of the transactions excluded from the acquisition, namely, mortgage, hypothecation,charge or pledge all of them belong to the species of transfer. We must, therefore,hold that the expression "acquisition" in clause (ff) of section2 of the Act means only "transfer". coming to the expression "price". it is no doubt defined in the as "money consideration". Cash or deferred payment in clause (ff) of section 2 of the Act satisfied the said definition. The expression "valuable consideration" has a wider connotation, but the said expression is also used in the same collocation in the definition of "sale" in section 2(h) of the Act. The said expression must bear the same meaning, in clause 5 72 (ff) and clause (h) of section 2 of the Act. It may also be noticed that in most of the Sales Tax Acts the same three expressions are used. It has never been argued or decided that the said expression means other than monetary consideration. This consistent legislative practice cannot be ignored. The expression "valuable consideration" takes colour from the preceding expression "cash or deferred payment". If so, it can only mean some other monetary payment in the nature of cash or deferred payment. We, therefore, hold that clause (ff) of section 2 of the Act is not void for legislative incompetence. Another argument to invalidate clause (ff) of section 2 of the principal Act may also be noticed. It is said that that clause offends article 14 of the Constitution on the ground that by reason of the said definition the same goods if purchased by a manufacturer would be taxed but they would not be taxed if purchased by a person other than a manufacturer. But a close scrutiny of clause (ff) of section 2 discloses that there is a reasonable classi fication in the said definition. The raw goods purchased by a manufacturer are transformed on manufacture into some other goods and that is the reason why the Legislature taxes the goods before they lose their identity. But where no manufacturer intervenes there is no such metamorphosis and, therefore, the taxable event is the sale. There is certainly a reasonable relation between the object of the statute and the differences between the two categories of transactions. The next argument turns upon the interpretation of clause (ff). The argument is, to come Linder the definition of "purchase" it is not enough that the acquisition of goods shall be for cash etc. but that the acquisition shall be for use in the manufacture of goods for sale for cash etc. On this construction it is argued that the tax levied was excise duty and, therefore, beyond the competence of the State Legislature. The contention is that the tax on the purchase was in connection with the manufacture of goods and, therefore, an excise duty. There is an essential distinction between the two imposts : while excise duty is in respect of manufacture of goods, the sales tax is upon the sale of the goods. The question, therefore, is whether under the Act the purchase tax is imposed on the sale of the goods or in connection with the manufacture of goods. The decisions of this Court establish that "in order to be ,in excise duty (a) the levy must be upon 'goods ' and (b) the taxable event must be the manufacture or production of goods." : see Messrs. Shinde Brothers vs The Deputy Commissioner, Raichur(1) The tax has no nexus with the manufacture of goods. The purpose for which the goods are purchased is only relevant for fixing the (1) Civil Appeals No. 1580 1586, 1588 and 1590 1600 of 1966 (decided on 26 9 1966). 573 taxable event, but the tax is on the purchase of the goods. That taxable event is fixed before the goods are actually manufactured. We, therefore, hold that the tax under the Act is a purchase tax and not an excise duty. Then it is contended that while section 15 of the (Act 74 of 1956) imposes a restriction on the State not to tax at more than one stage, the amending Act by introducing the definition of "purchase" enables the State to tax the same goods at the purchase point and at the sale point. But this argument misses the point that goods purchased and the goods sold are not identical ones. Manufacture changes the identity. Therefore, the same goods are not taxed at two stages. The last argument is that the said definition only takes in the purchase of goods for use in the manufacture of goods, but tax is imposed on the purchase of goods for producing oil. To state it differently, oil is not manufactured out of oil seeds but only produced. Reliance is placed upon the user of two words in the Act, viz. manufacturing or processing in the proviso to sub section (2) of section 4 and sub section (5) thereof and the expression "edible oils produced" in entry 57 of Schedule B to the Act and a con tention is raised that the Act itself makes a distinction between manufacturing and processing and manufacture and production and, therefore, oil is not manufactured but only produced from oil seeds. Support is sought to be derived for this argument from the decision of this Court in Union of India vs Delhi Cloth & General Mills(1). But a perusal of the judgment shows that this Court only held that refined oil produced out of seeds was only an intermediate stage in the manufacture and was, therefore, not liable to excise duty. On the other band, the dictionary meaning of "manufacture" is "transform or fashion raw materials into a changed form for use". When oil is produced out of the seeds the process certainly transforms raw material into different article for use. We cannot, therefore, accept this contention. Now coming to Civil Appeals Nos. 39 to 43 of 1965, the first additional point raised is that when iron scrap is converted into rolled steel it does not involve the process of manufacture. It is contended that the said conversion does not involve any process of manufacture, but the scrap is made into a better marketable commodity. Before the High Court this contention was not pressed. That apart, it is clear that scrap iron ingots undergo a vital change in the process of manufacture and are converted into a different commodity, viz., rolled steel sections. During the process the scrap iron loses its identity and becomes a new marketable commodity. The process is certainly one of manufacture. (1) [1963] Supp. 1 S.C.R. 586. 574 The next argument is that the Act is in conflict with section 15 of the , inasmuch as it enables the levy of sales tax at more than one stage. In these and connected appeals we are concerned only with two periods the first period upto October 31, 1958 and the second period from November 1, 1958 to March 31, 1960. It is, therefore, necessary to notice the relevant provisions governing the said two periods. The relevant part of section 15 of the (74 of 1956), as amended by Central Sales Tax (Amendment) Act 16 of 1957, reads thus : "Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on, the ,,ale or purchase of declared goods, be subject to the following restrictions and conditions, namely (a) the tax payable under that law in respect of any sale or purchase of such goods inside the State shall be levied only in respect of the last sale or purchase inside the State and shall not exceed two per cent of the sale or purchase price; (b) notwithstanding anything contained in clause (a), no tax shall be levied in respect of the last sale or purchase inside the State if the declared goods purchased are intended for sale in the course of inter State trade or commerce. Explanation. The expression "last sale or purchase inside the State means the transaction in which a dealer registered under the sales tax law of the State (i) sells to or purchases from another such dealer declared goods for use by the purchaser in the manufacture of goods for sale or for use by the purchaser in the execution of any contract; or (ii) purchases declared goods from another such dealer for sale to a dealer not registered under the sales tax law of the State or to a consumer in the State." This section was amended by the Central Sales Tax (Amend ment) Act 31 of 1958 with effect from October 1, 1958. The relevant part of the amended section reads : "Every sales tax law of a State shall, in so far as it imposes or authorises the imposition of a tax on the sale or purchase of declared goods, be subject to the following restrictions and conditions, namely (a)the tax payable under that law in respect of any sale or purchase of such goods inside the State shall not exceed.two per cent. of the sale or purchase price there 575 of, and such tax shall not be levied at more than one stage; (b) Where a tax has been levied under that law in respect of the sale or purchase inside the State of any declared goods and such goods are sold in the course of interstate trade or commerce, the tax so levied shall be refunded to such person in such manner and subject to such conditions is may be provided in any law in force in that State. While section 15 of the before the amendment described the stage at which the purchase tax can be levied, section 15 after the amendment only declares that it cannot be levied at more than one stage. This Court in M/s Modi Spinning & Weaving Mills Co. Ltd. vs Commissioner of Income tax, Punjab & Anr. (1) observed as follows : "The meaning or the intention of clause (3) of article 286 is not to destroy all charging sections in the Sales Tax Acts of the States which are discrepant with section 5(a) of the , but to modify them in accordance therewith. The law of the State is declared to be subject to the restrictions and conditions contained in the law made by Parliament and the rate in the State A ct would pro tanto stand modified. The effect of article 286(3) is now brought out by the second proviso to section 5(1). But this proviso is enacted out of abundant caution and even without it the result was the same. " The effect of this judgment is that the stage prescribed under section 15 of the before the amendment and the prohibition against taxation at more than one stage contained in the amended section would automatically control the provisions of the Punjab Genet at Sales Tax Act, 1948. With the result upto October 1, 1958, tinder the State Sales Tax Act a tax could be levied only in respect of purchase of declared goods inside the State and only on the purchase made by a dealer of goods for use by him in the manufacture of goods; and from October 1, 1958, the State can only levy tax at one stage. For the second period the Central Act by its own force did not fix the stage. Pursuant to the provisions of section 15 of the , before it was amended, Act 7 of 1958 added clause (ff) to section 2 of the Principal Act fixing the same stage indicated by section 15 of the Central Act, i.e. the stage when the purchase is made by a dealer for use in the manufacture of goods. This section was amended by Act 13 of 1959 and Act 24 of 1959. Under the latter amendment in clause (ff) of section 2 for the words "goods for use in the manufacture of goods for sale" the (1) 576 words "goods specified in Schedule 'C ' for use in the manufacture of goods for sale" were substituted; that is to say, the stage for taxation prescribed in the earlier definition was amended. It may be recalled that under the , as amended, the description of the stage was omitted, but that does not affect the question, for that description is maintained even under the amended clause (ff). It follows from the said discussion that the Punjab General Sales Tax Act, during the crucial period which is the subject matter of these appeals, in terms fixed a stage for taxation, i.e., the stage of purchase by a dealer for use in the manufacture of goods. There are, therefore, no merits in this contention either,. Now coming to Civil Appeals Nos. 81 of 1965 and 540 of 1965, three additional points are raised by Mr. Desai, namely, (i) by including in the term "purchase", read with the definition of "dealer", where there is acquisition of cotton through commission agents, the State Legislature has exceeded its legislative power under entry 54 of List 11, of Schedule 7 to the Constitution; (ii) ,during the relevant period tax was leviable on cotton without fixing any stage and at more than one stage in violation of section 15 of the ; and (iii) there is no rational basis to single out the three items, namely, cotton, oil seeds and resin for imposition of purchase tax and, therefore, the relevant provisions offend article 14 of the Constitution. We have already held in another context that there are no merits in the second point. The first point need not detain us, as in the High Court no specific point was raised in that regard. On the third point also no adequate material was placed in the court below and, therefore, it does not call for our consideration. In the result the appeals are dismissed with costs. One hearing fee R.K.P.S. Appeals dismissed.

IN-Abs

Section 5 of the East Punjab Sales Tax Act, 1948, as originally enacted, conferred on the Government power to levy tax at such rates as the Government might fix. The section was amended by Act 18 of 1952, with retrospective effect, fixing the rate of tax at "not exceeding two piece in a rupee". Section 2(ff) of the Act as amended by Act 13 of 1959, define , "purchase" as the "acquisition" of the goods "for use in the manufacture of goods for sale, for cash or deferred payment or other valuable consideration otherwise than under a mortgage hypothecation, charge or pledge". The appellants ' petition in the High Court challenging the imposition of purchase tax for the years 1958 59 and 1959 60 on the purchase of oil seeds, steel scrap and cotton for manufacture of goods for sale, were dismissed, and they appealed to this Court. Mean while, the High Court had considered the validity of the Act in a Sales Tax Reference and declared section 5, as it originally stood, void. In this Court it was contended : (i) since section 5 as originally enacted, was declared void,that being the charging section, the entire act was void and the Amending Act of 1952 could not revive an Act which was non est, and (ii) section 2(ff) was invalid for want of legislative competence. HELD : (i) Section 5 as it stood before the amendment was void, but the section as amended by the Amending Act of 1952 is valid. An Act conferring a power to fix rates of taxation must lay down clear legislative policy or guide lines in that regard and the doctrine of constitutional and statutory needs would not afford reasonable guidelines in the fixation of such rates. There was nothing in the provisions of the Act, including the preamble disclosing any policy or guidance to the State for fixing rates. Section 5 as it stood before the Amendment conferred on the Government an uncontrolled power in the matter of fixation of rates and was therefore void. [565 G 566 B; 569 F] Corporation of Calcutta vs Liberty Cinema, , explained. State of Madras, vs Gannon Dunkerlev & Co. (Madras) Ltd. ; , 435, Vasantlal Maganbhai Sanjanwala vs State of Bombay. 558 ; and The Union of India vs M/s. Bhana Mal Gulzari .Mal; , , referred to. Although section 5 was void, the entire Act was not void. Section 4 is the 'Charging section and Section 5 dealt only with the quantification of tax, that is, the charging section was intact and what was struck down was only the section providing for rates. The fact that section 4 is made subject to section 5 does not render the former void on the principle of non severability, because, under the Act, there is a clear distinction between chargeability and the quantification of tax. Therefore, striking out section 5 only made section 4 unenforceable. The amendment of section 5 has, in substance, the effect of amending an existing Act. [567 G H; 568 F G; 569 B C] B. Shama Rao vs The Union Territory of Pondicherry, [1967] 2 S.C.R., distinguished. Kesoram Industries and Cotton Mills Ltd. vs Commissioner of Wealth Tax (Central) Calcutta, ; , referred to. Conferment of a reasonable area of discretion by a fiscal statute is permissible and the discretion to fix the rate between 1 pice and 2 pice cannot be said to exceed the permissible limits. [569D F] Khandige Sham Bhat vs The Agricultural Income Tax Officer, ; , referred to. (ii) Clause (ff) of section 2 is not void for want of legislative competence. Although the words "acquisition" and "valuable consideration in the definition of "purchase" in section 2(ff) of the Act indicate, prima facie, that this definition is wider in scope than the definition "sale", these expressions in the context must be given a restricted meaning. The expression "acquisition" in the definition means only "transfer" and the expression "valuable consideration" takes colour from the preceding expression "cash or deferred payment" and can only mean some other monetary payment in the nature of cash or deferred payment. [571 F G; 572 B] The State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd. ; , Sales Tax Officer vs Budh Prakash, A.I.R. and George Oakes vs State of Madras, A.I.R. , referred to. Purchase tax, under the Act is leviable on the purchase of goods and not in respect of manufacture of goods and therefore is not an excise duty. The purpose for which goods are purchased is only relevant for fixing the taxable event and the taxable event is fixed before the goods are actually manufactured. [572 H 573 B] M/s. Shinde Bros. vs The Deputy Commissioner, Raichur, C.As. 1580 1586 and 1590 1600 of 1955 (decided on 26 9 1966), referred to. The Act does not enable levy of tax on the same goods at more than one stage and therefore is not in conflict with section 15 of the Central Sales Tax Act 1596. Manufacture changes the identity and the goods purchased and the goods sold are not identical and therefore the same goods are not taxed at two stages. Further, cl. (ff) of section 2 of the Act during. the periods relevant to the present case, in terms, fixed the stage for taxation, i.e., the stage of purchase by a dealer for use in the manufacture of goods. [573 B C; 576 B] 559 The fact that the same goods when purchased by a manufacturer would be taxed but would not be taxed when purchased by a person other than a manufacturer would not violate article 14 of the Constitution as section 2(ff) discloses a reasonable classification. [572C E]

Appeal No. 38 of 1967. Appeal from the judgment and order dated December 1, 1966, of the Assam and Nagaland High Court in Civil Rule No. 145 of 1964. section V. Gupte, Solicitor General and Naunit Lal, for the appellants. 612 Ram Labhaya Obhrai, I. M. Obhrai, S.K. Mehta and K. L. Mehta, for the respondent. The Judgment of the Court was delivered by Subbarao C.J. This appeal by certificate is directed against the order of the High Court of Assam declaring that the Assam Motor Vehicles Taxation (Amendment) Acts of 1963 and 1966 were repugnant to the Assam Motor Vehicles Taxation Act, 1936 (Assam Act 9 of 1936), hereinafter called the Principal Act, and, therefore, void as they were made in contravention of the provisions of article 254(2) of the Constitution. The facts are in a small compass and they are as follows The Principal Act came into force on March 1, 1937. The assent of the Governor General in Council was given under section 35 of the Government of India Act, 1935. This Act imposes tax on motor vehicles in the Province of Assam. In 1955 the Principal Act was amended by Assam Act IV of 1956 and it had received the assent of the President. Subsequently the Principal Act was amended by Act 15 of 1963, but the Bill was introduced in the Assam State Assembly with the previous sanction of the President and it came into force on April 1, 1963. Subsequent to the filing of the petition, out of which the present appeal has arisen, the Principal Act was again amended in the year 1966 and it came into force on April 1, 1966. The tax on the stage carriage motor vehicles was gradually raised under each amendment and under the last of the amendments a sum of Rs. 56/ was imposed per seat. Under the last amendment Act the petitioner respondent had to pay a sum of Rs. 1680/ as tax for the stage carriage she was plying. The respondent filed a petition under article 226 of the Constitution in the High Court for declaring the amending Acts void and for other reliefs. The petition was heard by a Division Bench of the High Court and the learned Judges delivered two separate but concurrent judgments. They held that the Amending Acts of 1963 and 1966 were void and gave the petitioner respondent the reliefs :asked for. Hence the present appeal. The main question in the appeal is whether the said Amending Acts increasing the rate of tax are void for constitution incompetence. The High Court in effect held that the provisions of the said Amending Acts were inconsistent with those of the existing law, namely, the Principal Act and, therefore, as they had not received the assent of the President, were void under article 254 of the Constitution. This conclusion was arrived at on the ground that the Amending Acts were made in respect of the matter contained in entry 35 of the Concurrent List. 613 To appreciate the contentions it will be convenient to read at the outset the relevant Articles of the Constitution. Entry 57 of List II of the Seventh Schedule to the Constitu tion : Taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of entry 35 of List 111. Entry 35 of List III Mechanically propelled vehicles including the principles on which taxes on such vehicles are to be levied. article 254 (1) If any provision of law made by the Legislature of a State is repugnant. . to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2). . the existing law, shall prevail and the law made by the Legislature of the State shall, to the extent of the repugnancy, be void. (2) Where a law made by the Legislature of a State with respect to one of the matters enumerated in the Concurrent List contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State. article 366(10) Existing law means any law, ordi nance or bye law, rule or regulation passed or made before the commencement of the Constitution by any Legislature, authority or person having power to make such a law, ordinance or bye law, rule or regulation. The application of the said provisions to the subject matter of the present appeal leads to the following result. The Principal Act was an existing law. If the Amending Acts were made under entry 35 of the Concurrent List and if they were in conflict with any of the provisions of the existing law, to the extent of the inconsistency the said amendments would he void. But, on the other hand, if the Amending Acts were passed under entry 57 of List 11 of the Seventh Schedule, they would fall outside the scope of article 254 of the Constitution, as article 254 would apply only to a conflict between the provisions of an "existing law" and those or the post constitution law in respect of matters enumerated in any of the entries of the Concurrent List. The learned Solicitor General raised before us two points, namely, (i) article 254 of the Constitution posits the existence of 614 two. parallel laws One an "existing law" and the other a post Constitutional law in respect of any one of the entries in the Concurrent List and the provisions thereof are in conflict with each other; but it has no application to a case where the State Legislature, within the scope of its legislative competency, amends an existing law so as to extinguish a part of it. (2) The amending Acts were only made under entry 57 of List 11 and, therefore, there is no scope for invoking the provisions of article 254 of the Constitution. Learned counsel for the respondent, on the other hand, con tended that there was no distinction between an amending Act and a new Act in the matter of. application of article 254 of the Constitution, as in either case the provisions of the said Acts would be inconsistent with the existing law. He further argued that the Amending Acts introduced new principles of taxation and, therefore, fell squarely within the scope of entry 35 of the Concurrent List. As we are holding in favour of the appellant on the second point, it is not necessary to express our view on the first. The short question, therefore, is whether any of the provisions of the Amending Acts is repugnant to any of the provisions of the existing law with respect to any of the matters enumerated in the Concurrent List. Under the existing law, i.e., Act 9 of 1936, no motor vehicle could be used in the Assam Province unless the owner thereof had paid in respect of it a tax at the appropriate rate specified in the Schedule to the Act and, save as therein specified, such tax should thereafter be payable annually notwithstanding that the motor vehicle might from time to time cease to be used (see section 4). As aforesaid, the Schedule annexed to the Principal. Act was amended from time to time by different amending Acts and the rate was increased. Under the 1963 amending Act, apart from other provisions which do not relate to any principles of taxation, a new Schedule has been substituted. Neither the amending Act nor the Schedule laid down any principles of taxation in respect of motor vehicles. So too, the amending Act ,of 1966 substituted the Schedule of the Act by another Schedule. A persual of the aforesaid Schedule only disclose that different rates were fixed; that is to say, the amended Schedule does not lay down any principles on which taxes on motor vehicles are to be levied within the meaning of entry 35 of the Concurrent List; it is solely concerned with taxes on vehicles within the meaning entry 57 of List 11. The two entries deal With two different matters though allied ones one deals with taxes on vehicles and the other with the principles on which such taxes are to be levied. When two entries in the Constitution, whether in the same List or different Lists, deal with two subjects, if possible, an attempt 615 shall be made to harmonize them rather than to bring them into conflict. Taxes on vehicles in their ordinary meaning connote the liability to pay taxes at the rates at which the taxes are to be levied. On the other hand, the expression "principles of taxation" denotes rules of guidance in the matter of taxation. We, therefore, hold that the Amending Acts do not come into conflict with the existing law in respect of any principles of taxation, 'but only deal with a subject matter which is exclusively within the legislative competence, of the State Legislature. In this view, there is no scope for the application of article 254 of the Constitution. Even so, learned counsel for the respondent contended that the amending Acts offend the provisions of article 301 of the Constitution. Article 301 reads "Subject to the other provisions of this Part, trade, commerce and intercourse throughout the territory of India shall be free,. " The scope of this Article has been authoritatively defined by this Court in The Automobile Transport (Rajasthan) Ltd. vs The State of Rajasthan(1). There the majority held that regulatory Measures or measures imposing compensatory taxes for the use of trading facilities did not hamper trade, commerce or interCourse but rather facilitate them, and, therefore, were not hit by the freedom declared by article 301. There, by virtue of section 4 of the Rajasthan Motor Vehicles Taxation Act, 1951, read with the Schedules, no one could use or keep a motor vehicle in Rajasthan without paying an appropriate tax for it and, if he did so, be was made liable to the penalties imposed under section 11 of that Act. This Court by majority held that such taxes were com pensatory and regulatory taxes which did not hinder the freedom of trade. In the present case the respondent in her petition questioned the validity of the provisions, of the amending Acts on the following grounds : (i) The Act abolished the permit fee previously payable on such motor vehicles. She alleges that as a result of the rationalisation of tax and the introduction of a single point levy, the tax fixed irrespective of road condition. distance travelled, region catered for imposes crushing burden oil the petitioner and the other stage carriage permit bolders plying their vehicles in the short distance route and gives discriminatory weightage in favour of the State Carriage, Inter State public carriers and other vehicles plying in longer distance routes. It will be seen that the averments are general and vague. On the other hand, the State has filed a detailed affidavit. The following figures show the expenditure incurred on new roads and maintenance of old roads and the income from motor vehicles for (1) [1963] 1 S.C.R.491. 616 some years. In 1962 63 the expenditure was Rs. 671.60 lakhs and the income was Rs. 75.58 lakhs. In 1965 66 the expend ture was Rs. 1499.77 lakhs and the income was Rs. 137.96 lakhs. From the said figures it is clear that the State is charging from the users of motor vehicles some thing in the neighbourhood of II% and IO % respectively for the said two years of the cost it has to, incur in maintaining and making roads. From Annexure D to the said affidavit it appears that in some cases tax under the 1963 Act had been increased by 50% under the 1966 Act and in some cases the tax under 1963 Act has been increased by 40% under 1966 Act. It is obvious that comparatively small proportion of the general expenditure is realised through the impugned taxation. In the circumstances, we must hold that the said Acts were only regulatory measures imposing _compensatory taxes for facilitating trade, commerce and intercourse. The Acts are, therefore, not hit by article 301 of the Constitution. in the result the order of the High Court is set aside and the appeal is allowed. The petition filed by the respondent in the High Court is dismissed with costs here and in the court below.

IN-Abs

Under the Assam Motor Vehicles Taxation Act, 1936, no motor vehicle could be used in the Assam Province unless the owner thereof had paid in respect of it a tax at the appropriate rate specified in the Schedule to the Act. The Schedule was amended from time to time by the substitution of new Schedules and as a result of such amendments in 1963 and 1966, the tax on stage carriage motor vehicles was gradually raised. In a writ petition, filed by the respondent, challenging the validity of the Amending Acts of 1963 and 1966, the High Court held that the Amending, Acts were made in respect of the matter contained in Entry 35 of the Concurrent List, namely principles of taxation of motor vehicles, and, as the provisions of the Amending Acts were inconsistent with those of the existing law, namely, the 1936 Act, the Amending Acts were ,void, because, the assent of the President as required by article 254 was not received. In appeal to this Court, HELD : (i) Taxes on vehicles connote the liability to pay taxes at &he rates at which the taxes are to be levied, while, the expression "principles of taxation" denotes rules of guidance in the matter of taxation. The Amending Acts do not come into conflict with the existing law in respect of any principles of taxation within the meaning of Entry 35 of the Concurrent List, but only deal with a subject matter , namely, taxes on vehicles within the meaning of Entry 57 of the State List, which is exclusively within the legislative competence of the State Legislature; and as such. there is no scope for invoking article 254. [615A C] (ii) It is only a comparatively small proportion of the general expenditure incurred on new roads and the maintenance of the ,)Id roads that was realised through the impugned taxation. Therefore, the Amending Acts are only regulatory measures imposing compensatory taxes for faci litating trade, commerce and intercourse. The Acts are, hence, not hit by article 301 of the Constitution. [616C] The Automobile Transport (Raiasthan) Ltd. vs The State of Rajasthan, [1963] 1 S.C.R. 491, followed.

minal Appeal No. 218 of 1966. Appeal by special leave from the order dated August 5, 1966 of the Patna High Court in Criminal Revision No. 1020 of 966, AND Criminal Appeal No. 238 of 1966. Appeal by special leave from the judgment and order dated September 13, 1966 of the Patna High Court in Criminal Revi sion No. 40 of 1965. B. P. Jha and Subhag Mal Jain, for the appellants (in Cr. A. No. 218 of 1966). Nuruddin Ahmed and R. C. Prasad, for the appellants (in Cr. A. No. 238 of 1966). U. P. Singh, for the respondents (in both the appeals). The Judgment of the Court was delivered by Vaidialingam, J. The common question, that arises for con sideration, in these two criminal appeals, by special leave, is as to whether a Magistrate can direct the police to submit a charge sheet, when the police, after the investigation into a congnizable offence, had submitted a final report, under section 173 of the Code of. Criminal Procedure (hereinafter called the Code). There is a conflict of opinion, on this point between the various High Courts in India. The High Courts of Madras, Calcutta, Madhya Pradesh, Assam and Gujarat have taken the view that the Magistrate has no such power, whereas, the Patna and Bombay High Courts have held a contrary view. In Criminal Appeal No. 218 of 1966, the respondent, Dinesh Mishra, lodged a first information report, on June 3, 670 1965, at the Rajoun Police Station, that he saw a thatched house, of one Uma Kant Misra, situated on the northern side of his house, burning, and the petitioners herein., running away from the scene,. The police made an investigation and submitted what is called a 'final report ', under section 173 (1) of the Code, to the effect that the offence complained of, was false. The Sub Divisional Magistrate received this report on July 13, 1965, but, in the meanwhile, the respondent had filed what is termed 'a protest petition ', challenging the correctness of the report submitted by the police. The Magistrate appears to have perused the police diary and, after hearing the counsel for the respondent and the public prosecutor, passed an order on October 27, 1965, directing the police to submit a charge sheet, against the petitioners, herein. The petitioners challenged this order, without success, both before the learned Sessions Judge, Bhagalpur, and the Patna High Court. It was held by the High Court, following its previous decision, that the Magistrate has jurisdiction to call for a charge sheet, when he disagrees with the report submitted by the police, under section 173(1) of the Code. The petitioners, in this appeal, challenge these orders. Similarly, in Criminal Appeal No. 238 of 1966, the second respondent therein, had lodged a written report, on February 24. 1.964, before the police, at Malsalami police station, that his daughter, Hiramani, was missing from February 21, 1964, and that the appellants in that appeal, had kidnapped her. A case under section 366 I.P.C. was registered against them. The police, after investigation, submitted a final report to the Magistrate. to the effect that the girl concerned, had been recovered and that she bad stated that she had, of her own accord, eloped; and therefore the police stated that the case might be treated as closed. The second respondent filed a 'protest petition ' in Court, challenging the statements of the police and he also filed a complaint, under section 498 I.P.C. The Magistrate, after a perusal of the case diary of the police, and hearing the lawyer for the appellants and the second respondent, as also the public prosecutor, passed an order directing the investigating officer to submit a charge sheet, against the accused persons, under section 366 I.P.C This order has been confirmed by the, learned Sessions Judge, as well as the Patna High Court. Here also, the Patna High Court, in accordance with its previous decision, held that the Magistrate had jurisdiction to pass the order, in question. All these orders are challenged by the appellants, in this appeal. On behalf of the appellants, in Criminal Appeal No. 218 of 1966, Mr. Jha, learned counsel pointed out that when a final report is submitted by the police, under section 173(1) of the Code,, 6 71 stating that no case is made out, the Magistrate has no jurisdiction to direct the police to file a charge sheet. It may be open, counsel points out, to the Magistrate, to direct further investigation to be made by the police, or to treat the protest petition filed by the second respondent, as a complaint, and take cognizance of the offence and proceed, according to law. , The scheme of Chapter XIV of the Code, counsel points out, clearly indicates that the formation of an opinion, as to whether or not there is a case to place the accused on trial, is that of the investigating officers, and the Magistrate cannot compel the police to form a particular opinion on the 'investigation and to submit a report, according to such opinion. In this case, there is nothing to show that the protest petition, filed by the second respondent, has befell treated as a complaint, in which case, it may be open to the Magistrate to take cognizance of the offence, but, in the absence of any such procedure being adopted according to counsel, the order of the Magistrate directing a charge sheet to be filed, is illegal and not warranted by the provisions of the Code. These contentions have been adopted, and reiterated, by Mr. Nuruddin Ahmed, on behalf of the appellants, in Criminal Appeal No. 238 of 1966. Both the learned counsel pressed before us, for acceptance, the views, as expressed by the Gujarat High Court, in its Full Bench judgment, reported as State of Gujarat vs Shah Lakhamshi(1). On the, other hand, Mr. U. P. Singh, learned counsel for the respondent, in Criminal Appeal No. 218 of 1966, has pointed out that the Magistrate has jurisdiction, in proper cases, when he does not agree with the final report submitted by the police, to direct them to submit a charge sheet. Otherwise, counsel points out, the position will be that the entire matter is left to the discretion of the police authorities, and the Courts will be powerless, even when 'they feel that the action of the police is not justified. Quite naturally, counsel prays for acceptance of the views expressed by the dissenting Judges, in A. K. Roy vs State of W. B. (2) and by the Bombay and Patna High Courts, in the decisions reported as State vs Murlidhar Govardhan(3), and Ram Nandan vs State ( 4 ) , respectively. In order, properly, to appreciate the duties of the police, in the matter of 'investigation of offences, as well as their powers, it is necessary to refer to the provisions contained in Chapter XIV of the Code. That chapter deals with 'Information to the Police and their Powers to investigate ', and it contains the group of section beginning from section 154 and ending with section 176. Section 154 deals with information relating to the commission of a cognizable R. 1966 Guj, 283. (2) A. 1. R. B.). (3) A. 1. R. (4) A. 1. R. 1966 Pat. 67 2 offence, and the procedure to be adopted in respect of the same. Section 155, similarly, deals with information in respect of noncognizable offences. Sub section (2), of this section, prohibits a police officer from investigating a non cognizable case, without the order of a Magistrate. Section 156 authorizes a police officer, in charge of a police station, to investigate any cognizable case, without the order of a Magistrate. Therefore, it wilt be seen that large powers are conferred on the police, in the matter of investigation into a cognizable offence. Sub section (3), of section 156, provides for any Magistrate empowered under section 190, to order an investigation. In cases where a cognizable offence is suspected to have been committed, the officer, in charge of a police station, after sending a report to the Magistrate, is entitled, under section 157, to investigate the facts and circumstances of the case and also to take steps for the discovery and arrest of the offender. Clause (b), of the proviso to section 157(1), gives a discretion to the police officer not to investigate the case, if it appears to him that there is no sufficient ground for entering on an investigation. Section 158 deals with the procedure to be adopted in the matter of"a report to be sent, under section 157. Section 159 gives power to a Magistrate, on receiving a report under section 157, either to direct an investigation or, himself or through another Magistrate subordinate to him, to hold a preliminary enquiry into the matter, or otherwise dispose of the case, in accordance with the Code. Sections 160 to 163 deal with the power of the police to require attendance of witnesses, examine witnesses and record statements. Sections 165 and 166 deal with the power of police officers, in the matter of conducting searches, during an investigation, in the circumstances, mentioned therein. Section 167 provides for the procedure to be adopted by the police, when investigation cannot be completed in 24 hours. Section 168 provides for a report being sent to the officer, incharge of a police station, about the result of an investigation, when such investigation has been made by a subordinate police officer, under Chapter XIV. Section 169 authorises a police officer to release a person from custody, on his executing a bond, to appear, if and when so required, before a Magistrate, in cases when, on investigation under Chapter XIV, it appears to the officer, in charge of the police station, or to the police officer making the investigation, that there is no sufficient evidence or reasonable ground of suspicion, to justify the forwarding of the accused to a Magistrate. Section 170 empowers the officer, incharge of a police station, after investigation under Chapter XIV, and if it appears to him that there is sufficient evidence, to forward the accused, under custody, to a competent Magistrate or to take securtiy from the accused for his appearance before the Magistrate, in cases where the offence is bailable. Section 172 makes it obligatory on the police officer making an investigation, to maintain a diary recording the various particulars therein and in the 673 manner indicated in that section. Section 173 provides for an investigation, under Chapter XIV, to be completed, without unnecessary delay and also makes it obligatory, on the officer, incharge of the police station, to send a report to the Magistrate concerned, in the manner provided for therein, containing the necessary particulars. It is now only necessary to refer to section 190, occurring in Chapter XV, relating to jurisdiction of criminal Courts in inquiries and trials. That section is to be found under the heading 'Conditions requisite for initiation of proceedings ' and its sub section (1) is as follows : "(1) Except as hereinafter provided, any Presidency Magistrate, District Magistrate or Sub divisional Magistrate and any other Magistrate specially empowered in this behalf, may take cognizance of any offence (a) upon receiving a complaint of facts which constitute such offence; (b) upon a report in writing of such facts made, by any police officer; (c) upon information received from any person other than a police officer, or upon his own knowledge or suspicion, that such offence has been committed. " From the foregoing sections, occurring in Chapter XIV, it will be seen that very elaborate provisions have been made for securing that an investigation does take place into a reported offence and the investigation is carried out within the limits of the law, without causing any harassment to the accused and is also completed without unnecessary or undue delay. But the point to be noted is that the manner and method of conducting the investigation, are left entirely to the police, and the Magistrate, so far as we can see, has no power under any of these provisions, to interfere with the same. If, on investigation, it appears to the officer, in charge of a police station, or to the officer making an investigation, that ,,here is no sufficient evidence or reasonable grounds of suspicion justifying the forwarding of an accused to a Magistrate,, section 169 says that the officer shall release the accused, if in custody, on hi , executing a bond to appear before the Magistrate. Similarly, if on the other hand, it appears to the officer, in charge of a police station, or to the officer making the investigation, under Chapter XIV, that there is sufficient evidence or reasonable ground to justify the forwarding of an accused to a Magistrate, such an officer is required, under section 170, to forward the accused to a Magistrate or, if the offence is bailable, to take security from him for his appearance before such Magistrate. But, whether a case comes under section 169, or under section 170, of the Code, on the completion of the investigation, the police officer has to L7SupCI/67 13 674 submit a report to the Magistrate, under section 173, in the manner indicated therein, containing the various details. The question as to whether the Magistrate has got power to direct the police to file a charge sheet, on receipt of a report under section 173 really depends upon the nature of the jurisdiction exercised by a Magistrate, on receiving a report. In this connection, we may refer to certain observations, made by the Judicial Committee in King Emperor vs Khwaja Nazir Ahmed(1) and by this Court, in H. N. Rishbud and Inder Singh vs The State of Delhi(2). In Nazir Ahmed 's Case(1), Lord Porter observes, at 212, as follows "Just as it is essential that every one accused of a crime should have free access to a court of justice so that he may be duly acquitted if found not guilty of the offence with which he is charged, so it is, of the utmost importance that the judiciary should not interfere with the police in matters which are within their province and into which the law imposes on them the duty of inquiry. In India, as has been shown, there is a statutory right on the part of the police to investigate the circumstances of an alleged cognizable crime without requiring any authority from the judicial authorities, and it would, as their Lordships think, be an unfortunate result if it should be held possible to interfere with those statutory rights by an exercise of the inherent jurisdiction of the court. The functions of the judiciary and the police are complementary, not overlapping, and the combination of individual liberty with a due observance of law and order is only to be obtained by leaving each to exercise its own function, always, of course, subject to the right of the court to intervene in an appropriate case when moved under section 491 of the Criminal Procedure Code to give directions in the nature of habeas corpus. In such a case as the present, however, the court 's functions begin when a charge is preferred before it, and not until then. " These observations have been quoted, with approval, by this Court, in State of West Bengal vs section N. Basak(3). This Court in Rishbud and Inder Singh 's Case(1), observes, at p. 1156, as follows : "Investigation usually starts on information relating to the commission of an offence given to an officer incharge of a police station and recorded under sec (1) L. R. 71 1. A. 203. (2) (3) A. 1. R. 675 tion 154 of the Code. If from information so received or otherwise, the officer in charge of the police station has reason to suspect the commission of an offence, he or some other subordinate officer deputed by him, has to proceed to the spot to investigate the facts and circumstances of the case and if necessary to take measures for the discovery and arrest of the offender. Thus investigation primarily consists in the ascertainment or the facts and circumstances of the case. By definition, it includes 'all the proceedings under the Code for the collection of evidence conducted by a police officer '. " Again after a reference to some of the provisions in Chapter XIV of the Code, it is observed at p. 1157 "Thus, under the Code investigation consists generally of the following steps : (1) Proceeding to the spot, (2) Ascertainment of the facts and circumstances of the case, (3) Discovery and arrest of the suspected offender, (4) Collection of evidence relating to the commission of the offence which may consist of (a) the examination of various persons (including the accused) and the reduction of their statements into writing, if ' the officer thinks fit, (b) the search of places of seizure of things considered necessary for the investigation and to be produced at the trial, and (5) Formation of the opinion as to whether on the material collected there is a case to place the accused before a Magistrate for trial and if so taking the necessary steps for the same by filing of a charge sheet under section 1 7 3. . It is also clear that the final step in the investigation viz., the formation of the opinion as to whether or no ' there is a case to place the accused on trial is to be that of the officer in charge of the police station. " We are referring to these observations for the purpose of emphasizing that the scheme of Chapter XIV, clearly shows that the formation of an opinion as to whether or not there is a case to place the accused on trial, has been left to the officer incharge of a police station. Bearing in mind these principles referred to above, we have to consider the question that arises for consideration, in this case. The High Courts which have held that the Magistrate has no jurisdiction to call upon the police to file a charge sheet, under such circumstances, have Tested their decision on two principles viz., (a) that there is no express provision in the Code empowering a Magistrate to pass such an order; and (b) such a power, in view of the scheme of L7SUPCI/67 14 676 Chapter XIV, cannot be inferred vide Venkata Subha v Anjanayulu(1); Abdul Rahim vs Abdul Muktadin(2); Aman Premanand vs State(3); the majority view in A. K. Roy vs State of W. B.(1); and Stale of Gujarat vs Shah Lakhamshi(5). Or the other hand, the High Courts which have recognised such a power, rest their decision again on two grounds viz., (a) where a report is submitted by the police, after investigation, the Magistrate has to deal with it judicially, which will mean that where the report is not accepted, the Magistrate can give suitable directions to the police , and (b) the Magistrate is given supervision over the conduct of investigation by the police, and there ore, such a power can be recognised in the Magistrate vide State vs Murlidhar Goverdhan(6); and Ram Nandan vs State(7). Though it may be that a report submitted by the police may have to be dealt with, judicially, by a Magistrate, and although the Magistrate may have certain supervisory powers, nevertheless, we are not inclined to agree with the further view that from these considerations alone it can be said that when the police submit a report that no case has been made out for sending up an accused for trial, it is open to the Magistrate to direct the police to file a charge sheet. But, we may make it clear, that this is not to say that the Magistrate is absolutely powerless, because, as will be indicated later, it is open to him lo take cognizance of an offence and proceed, according to law. We do not also find any such power, under section 173(3), as is sought to be inferred, in some of the decisions cited above. As we have indicated broadly the, approach made by the various High Courts in coming to different conclusions, we do not think it necessary to refer to those decisions in detail. It will be seen that the Code, as such, does not use the ex pression 'charge sheet ' or 'final report '. But it is understood, in the Police Manual containing Rules and Regulations, that a report by the Police, filed under section 170 of the Code, is referred to as a 'charge sheet '. But in respect of the reports sent under section 169, i.e., when there is no sufficient evidence to justify the forwarding of the accused to a Magistrate, it is termed variously, in different States, as either 'referred charge ', 'final report ', or 'Summary '. In these two appeals, which are from the State of Bihar, the reports, under section 169, are referred to as 'final report '. Now, the question as to what exactly is to be done by a Magistrate, on receiving a report. under section 173, will have to be considered. That report may be inrespect of a case, coming under section 170, (1) A.I.R. 1932 Mad. 673. (2) A.I.R. 1953 Assam 112. (3) A.I.R. 1960 M P. 12. (4) A.I.R. 1962 Cal. (5) A.I.R. 1966 Guj. (6) A.I.R. 1960 Born. (7) A.I.R. 1966 Pat. 677 or one coming under section 169. We have already referred to section 190, which is the first section in the group of sections headed 'Conditions requisite for Initiation of Proceedings. ' Sub section (1), of this section, will cover a report sent, under section 173. The use of the words 'may take cognizance of any offence ', in sub section (1) of section 190 in our opinion imports the exercise of a 'judicial discretion ', and the Magistrate, who receives the report, under section 173, will have to consider the said report and judicially take a decision, whether or not to take cognizance of the offence. From this it follows that it is not as if that the Magistrate is bound to accept ,,the opinion of the police that there is a case for placing the accused, on trial. It is open to the Magistrate to take the view that the facts disclosed in the report do not make out an offence for taking cognizance or he may take the view that there is no sufficient evidence to justify an accused being put on trial. On either of these grounds, the Magistrate will be perfectly justified in declining to take cognizance of an offence, irrespective of the opinion of the police. On the other hand, if the Magistrate agrees with the report, which is a charge sheet submitted by the police, no difficulty whatsoever is caused, because he will have full jurisdiction to take cognizance of the offence, under section 190(1)(b) of the Code. This will be the position, when the report under section 173, is a charge sheet. Then the question is, what is the position, when the Magis trate is dealing with a report submitted by the police, under section 173, that no case is made out for sending up an accused for trial, which report, as we have already indicated, is called, in the area in question, as a 'final report '? Even in those cases, if the Magistrate agrees with the said report, he may accept the final report and close the proceedings. But there may be instances when the Magistrate may take the view, on a consideration of the final report, that the opinion formed by the police is not based on a full and complete investigation, in which case in our opinion the Magistrate will have ample jurisdiction to give directions to the police, under section 1 5 6 ( 3 ), to make a further investigation. That is, if the Magistrate feels, after considering the final report, that the investigation is unsatisfactory, or incomplete, or that there is scope for further investigation, it will be open to the Magistrate to decline to accept the final report and direct the police to make further investigation, under section 156(3). The police, after such further investigation, may submit a charge sheet, or,, again submit a final report, depending upon the further investigation made by them. If, ultimately, the Magistrate forms the opinion that the facts, set out in the final report, constitute an offence, he, can take cognizance of the offence under section 190(1) (c), notwithstanding the contrary opinion of the police, expressed in the final report. 678 In this connection, the provisions of section 169 of the Code, are relevant. They specifically provide that even though, on investigation, a police officer, or other investigating officer, is of the opinion that there is no case for proceeding against the accused, he is bound, While releasing the accused,, to take a bond from him to appear, 'If and. when required, before a Magistrate. This provision is obviously to meet a contingency of the Magistrate, when he considers the report of the investigating officer, and judicially takes a view different from the police. We have to approach the, question, arising for consideration in this case, in the light of the circumstances pointed out above. We have, already referred to the scheme of Chapter XXIV, as well as the observations of this Court in Rishbud and Inder Singh 's Case(1) that the formation of the opinion as to whether or not there is a case to place the accused on trial before a Magistrate, is 'left to the officer in charge of the police station. There is no express power, so far as we can see, which gives jurisdiction to pass an order of the nature under attack; nor can any such powers be implied. There is certainly no obligation, on the Magistrate, to accept the report, if he does not agree with the opinion formed by the police. Under those circumstances, if he still suspects that an offence has been committed, he is entitled, notwithstanding the opinion of tile police, to take cognizance, under section 190(1)(c) of the Code. That provision, in our opinion, is obviously intended to secure that offences may not go unpunished and justice may be in voked even where persons individually aggrieved are unwilling or unable to prosecute. or the police, either wantonly or through bona fide error, fail to submit a report, setting out the facts constituting the offence. Therefore, a very wide power is conferred on the Magistrate to take cognizance of an offence. not only when he receives information about the commission of an offence from a third person, but also where he has knowledge or even suspicion that the offence has been committed. It is open to the Magistrate to take cognizance of the offence, under section 190(1) (c), on the ground that, after having due regard to the final report and the police records placed before him, be has reason to suspect that an offence has been committed. Therefore, these circumstances will also clearly negative the power of a Magistrate to call for a charge sheet from the police, when they have submitted a final report. The entire scheme of Chapter XIV clearly indicates that the formation of the opinion, as to whether or not there is a case to, place the accused for trial, is that of the officer in charge of the police station and that opinion determines whether the report is to be under section 170, being a 'charge sheet ', or under section 169, 'a final report '. It is no (1) [1955]1 S.C.R. 1150. 67 9 doubt open to the Magistrate, as we have already pointed out, to accept or disagree with the opinion of the police and, if he disagrees, he is entitled to adopt any one of the courses indicated by us. But he cannot direct the police to submit a charge sheet, because, the submission of the report depends upon the opinion formed by the police, and not on the opinion of the Magistrate. The Magistrate cannot compel the police to form a particular opinion, on the investigation, and to submit a report, according to such opinion. Thai will be really encroaching on the sphere of the police and compelling the police to form an opinion so as to accord with the decision of the Magistrate and send a report, either under section 169, or under section 170, depending upon the nature of the decision. Such a function has been left to the police, under the Code. We have already pointed out that the investigation, under the Code, takes in several aspects, and stages, ending ultimately with the formation of an opinion by the police as to whether, on the material covered and collected, a case is made out to place the accused before the Magistrate for trial, and the submission of either a charge sheet, or a final report is dependent on the nature of the opinion, so formed. The formation of ,the said opinion, by the police, as pointed out earlier, is the final step in the investigation, and that final step is to be taken only by the police and by no other authority. The question can also be consider from another point of view. Supposing the police send a report, viz., a charge sheet, under section 170 of the Code. As we have already pointed out, the Magistrate is not bound to accept that report, when he considers the matter judicially. But, can he differ from the police. and call upon them to submit a final report, under s.169 ? In our opinion, the Magistrate has no such power. If he has no such power, in law, it also follows that the Magistrate has no power to direct the police to submit a charge sheet when the police have submitted a final report that no case is made out for sending the accused for trial. The functions of the Magistracy and the police, are entirely different, and though, in the circumstances mentioned earlier the Magistrate may or may not accept the report, and take suitable action, according to law, he cannot certainly infringe upon the jurisdiction of the police, by compelling them to change their opinion, so as to accord with his view. Therefore, to conclude, there is no power, expressly or im pliedly conferred, under the Code, on a Magistrate to call upon the police to submit a charge sheet, when they have sent a report under section 169 of the Code, that there is no case made out for sending tip an accused for trial. L7 Sup. CI/67 15 680 In these two appeals, one other fact will have to be taken note of. It is not very clear as to whether the Magistrate, in each of these cases, has chosen to treat the protest petitions, filed by the respective respondents, as complaints, because, we do not find that the Magistrate has adopted the suitable procedure indicated in the Code, when he takes cognizance of an offence, on a complaint made to him. Therefore, while holding that the orders of the Magistrate, in each of these cases, directing the police to file charge sheets, is Without jurisdiction, we make it clear that it is open to the Magistrate to treat the respective protest petitions, as complaints, and take further proceedings, according to law, and in the light of the views expressed by us, in this judgment. Mr. Nuruddin Ahmed, learned counsel for the appellants in Criminal Appeal No. 238 of 1966, particularly urged that it is unnecessary to direct further proceedings to be continued, so far as his clients are concerned. Learned counsel pointed out that the police report before the Magistrate clearly shows that the girl, in question, who is stated to be above 19 years of age, has herself stated that she bad eloped, of her own accord and that if that is so, further proceedings against his clients, are absolutely unnecessary, to be continued. We are not inclined to accept these contentions of the learned counsel. As to whether an offence is made out or whether any of the appellants or both of them are guilty of the offences with which they may be charged, are all matters which do not require to be considered, by this Court, at this stage. In the result, subject to the directions contained above, the orders of the Magistrate, directing the police to file a charge, will be set aside, and the appeals allowed, to that extent. V.P.S. Appeals allowed.

IN-Abs

On the question whether a magistrate could direct the police to submit a charge sheet, when the police, after investigation into a cognizable offence, had submitted a report of the action taken under section 169, Cr. P.C., that there was no case made out for sending up the accused for trial, HELD : There was no such power conferred on a magistrate either expressly or by implication. When a cognizable offence is reported to the police they may after investigation take action under section 169 or section 170 Cr. If the police :think there is not sufficient evidence against the accused, they may, under section 169 release the accused from custody on his executing a bond to appear before a competent magistrate if and when so required; or, if the police think there is sufficient evidence, they may, under section 170, forward the accused under custody to a competent magistrate or release the accused on bail in cases where the offences are bailable. In either case the police should submit a report of the action taken, under section 173, to the competent magistrate who considers it judicially under section 190 and takes the following action : (1) If the report is a charge sheet under section 170 it is open to the magistrate to agree with it and take cognizance of the offence under section 190(1) (b); or to take the view that the facts disclosed do not make out an offence and decline to take cognizance. But he cannot call upon the police to submit a report that the accused need not be proceeded against on the ground that there was not sufficient evidence. (2) If the report is of the action taken under section 169, then the magistrate may agree with the report and close the proceeding. If he disagrees with the report he can give directions to the police under section 156(3) to make a further investigation. If the police, after further investigation submit a charge sheet, the magistrate may follow the procedure where the charge sheet under section 170 is filed; but if the police are still of the opinion that there was not sufficient evidence against the accused, the magistrate may agree or disagree with it. Where he agrees, the case against the accused is closed. Where the magistrate disagrees and forms the opinion that the facts set out in the report constitute an offence, he .can take cognizance under section 190(1)(c). The provision in section 169 enabling the Police to take a bond for the appearance of the accused before a magistrate if so required, is to meet such a contingency of the magistrate taking cognizance of the offence notwithstanding the contrary opinion of the police. The power under section 190(1)(c) was intended to Secure that 66 9 offences may not go unpunished and justice may be invoked even where persons individually aggrieved are unwilling or unable to prosecute, or he police either wantonly or through a bona, fide error do not submit a charge sheet. But the magistrate cannot direct the Police to submit a charge sheet, because the submission of the report depends entirely upon the opinion formed by the police and not on the opinion of the magistrate. The magistrate, if he disagrees with the report of the police, can. himself take cognizance of the offence under section 19O(1)(a) or (c), but, be cannot compel the police to form a particular opinion on investigation and submit a report according to such opinion. [672F H; 673B; 676H; 677B H; 678 A H; 679A C. E H] State of Gujarat vs Shah Lakhamshi, A.I.R. 1966 Gujarat 283 (F.B.); Venkatusubha vs Anjanayulu, A.I.R. 1932 Mad. 673; Abdul Rahim vs Abdul Muktadin, A.I.R. 1953 Assam 112; Amar Premanand vs State, A.I.R. 1960 M.P. 12 and A. K. Roy vs State of West Bengal, A.I.R. 1962 Cal. 135 (F.B.), approved. State vs Murlidhar Govardhan, A.I.R. 1960 Bom. 240 and Ram Wandan vs State, A.I.R. 1966 Pat. 438, disapproved.

Appeal No. 604 of 1966. Appeal by special leave from the judgment and order dated August 5, 1964 of the Madras High Court in Tax Case No. 131 of 1963 (Revision No. 87). G. Ramanujam and A. V. Rangam, for the appellant. K. Srinivasan and R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Shah, J. M/s. R. Nand Lal & Company hereinafter called 'the assessee are dealers in wool at Vaniyambadi in North Arcot District in ' the State of Madras. In proceedings for assessment of sales tax for the year 1959 60 the assessees were assessed to pay tax at the rate, of seven per cent. on a turnover of Rs. 2,08,343 05 from sales effected by them to certain registered dealers in the State of Punjab. The assessing authority declined to assess the turnover at one per cent. as prescribed by section 8(1) of the , because in his view the assessees had submitted declarations in Form 'C ' covering two or more transactions contrary to the first proviso to r. 10(1) of the Central Sales Tax (Madras) Rules, 1957. The Appellate Assistant Commissioner and the Sales Tax Appellate Tribunal, Madras confirmed the order of the assessing authority. The High Court of Madras, in exercise of its revisional jurisdiction, set aside the order of the Sales Tax Appellate Tribunal, and declared that the ass s were liable to pay tax on the turnover in dispute at the lower rate. The State of Madras has appealed to this Court with special leave. Section 8 of the (as amended by Act '31 of 1958) insofar as it is material provided "(1) Every dealer, who in the course of inter State trade or commerce (a) (b) sells to a registered dealer other than the Government 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. (2) The tax payable by any dealer on his turnover in so far as the turnover or any part thereof relates to the sale of goods 647 in the course of inter State trade or commerce not falling within sub section (1) (a). . . (b) in the case of goods other than declared goods, shall be calculated at the rate of seven per cent. or at the rate applicable to the sale or purchase of such goods inside the appropriate State, whichever is higher; (2A) (3) (4) The povisions 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) a declaration duly filed and signed by the registered dealer to whom the goods are sold containing the prescribed particulars in a prescribed form obtained from the prescribed authority; or (b). . . (5) It is common ground that the turnover was in respect of goods of the class 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 process of manufacture of goods for sale. A registered dealer selling goods in the course of inter State trade or commerce of the description referred to in sub section (3) is viable under section 8 ( 1 ) of the , to pay tax only if the rate of one per cent. on his turnover. But to qualify himself for that rate of tax he has to furnish to the prescribed authority a declaration duly filled and signed by the registered dealer to whom the goods are sold. Such a declaration must contain the Prescribed particulars in the prescribed form obtained from the Prescribed authority. If the selling dealer fails to furnish the declaration in the prescribed form, he is liable to pay tax at the higher rate mentioned in sub section (2) (b) of section 8. The respondents did furnish declarations in Form 'C ' pres cribed under the Rules framed ' by the Central Government in exercise of the, powers vested by section 1 3 (1) (d) of the . But each such declaration covered more transactions of sale than one and the aggregate value of the transactions recorded in each declaration exceeded Rs. 5,0001 The sales tax authorities and the Tribunal were of the view that these declarations contravened the express direction of the rule made by 648 the Madras State in exercise of the powers under section 13 (4) (e) of the . The High Court held that r. 10(1) of the Central Sales Tax (Madras) Rules, 1957, applied only to a transaction of purchase by a dealer in the State of Madras, and not to the purchasing dealer in the State of Punjab; that the Madras State was incompetent to frame rules governing the conduct of the purchasing dealers in the Punjab that since the corresponding rules framed by the State of Punjab under section 13 (4) (e) of the did not include a provision requiring separate form to be used for each sale transaction, the purchasing dealers were not obliged to comply with r. 10(1) of the Madras Rules, and that since the Madras selling dealers could not compel the purchasing dealers to comply with the rules relating to furnishing of separate declaration forms ordained by the Madras Rules, the declarations were not defective. In any event, the High Court held, r. 10(1) of the Madras Rules was directory and not mandatory. The assumption made by the High Court that no rule was framed by the State of Punjab under section 13 (4) (e) of the requiring the purchasing dealers in the State of Punjab to issue a separate declaration form in respect of each individual transaction is erroneous. It is conceded before us that the Punjab Government had in purported, exercise of the powers under sub sections (3) & (4) of section 13 of the Central Sales Tax, 1956, made r. 7(2 A) with effect from February 17, 1958 that: "No single declaration in Form 'C ' prescribed under the Central. Sales Tax (Registration and Turnover) Rules ' 1957, shall cover more than one transaction of sale except when the total amount of sales does not exceed five thousand rupees." But, for reasons which we will presently set out, the judgment of the High Court must still be, affirmed. Sub section (4) of section 8 of the provides that in order to, qualify himself for the lower rate of tax it, respect of sales in the course of inter State trade or commerce, the dealer selling goods has to furnish to the prescribed authority in the prescribed manner a declaration duly filled and signed by the registered dealer to whom the goods are sold. The expressions "prescribed authority" and "prescribed manner" mean the authority and manner prescribed by rules under the Act. Section 13(1) of the , authorises the Central Government to make rules, providing, inter alia, the form in which and the particulars to be contained in any declaration of certificate to be given under the Act. By sub section (3) of section 13 the State Government is authorised to make rules not inconsistent with the provisions of the Act and the rules made under sub section (1) to 64 9 carry out the purposes of the Act, and by sub s (4) of section 13 the State Government is, in particular and without prejudice to the powers conferred by sub section (3), authorised to make rules for all or any of the purposes set out therein including "the authority from whom, the Conditions subject to which and the fees subject to payment of which any form of declaration prescribed under sub section (4) of section 8 may be obtained, the manner in which the form shall be kept in custody and records relating thereto maintained, the manner in which any such form may be used and any such declaration may be furnished." In exercise of the power conferred by section 131 (d) the Central Government has prescribed the form of declaration to be furnished by the purchasing dealer under section 8 (4). That is Form 'C '. The form is in three sections the "counterfoil", the "duplicate" and the "original". The "original" contains at the foot of the Form the following Note: "(To be furnished to the prescribed authority in accordance with the rules framed under section 13(4) (e) by the appropriate State Government.)" The Madras State Government presuming to act in exercise of authority under section 13(3) and section 13(4)(e) framed the Central Sales Tax (Madras) Rules, 1957, r. 10(1) of which reads as follows ': "A registered dealer, who wishes to purchase goods from another such dealer on payment of tax at the rate applicable under the Act to sales of goods by one registered dealer to another, for the purpose specified in the purchasing dealer 's certificate of registration, shall obtain from the assessing authority in the City of Madras and the registering authority at other places a blank declaration form prescribed under rule 12 of the Central Sales Tax (Registration and Turnover) Rules, 1957 for furnishing it to the selling dealer. Before furnishing the declaration to the selling dealer, the purchasing dealer,or any responsible person authorized by him in this behalf shall fill in all the required particulars in the form and shall also affix his usual signature in the space provided in the form for this purpose. Thereafter the counterfoil of the form shall be retained by the purchasing dealer and the other two portions marked "original" and "duplicate" shall be made over by him to the selling dealer Provided that no single declaration shall cover more than one transaction of sales except 650 (a) in cases where the total amount covered by one declaration is equal to or less than Rs. 5,000 or such other amount as the State Government may, by a general order, notify in the Fort. St. George Gazette, and (b) Ex facie, this rule imposes no obligation upon a dealer in the State of Madras wishing to sell goods : it applies to a dealer wishing to purchase goods from another dealer. The argument that cl. (1) of r. 10 is intended to apply to a registered dealer in the State of Punjab is negatived by the scheme of the and the Rules framed thereunder. By section 7 of the , every dealer liable to pay tax under the Act has to make an application for registration under the Act to such authority in the appropriate State as the Central Government may by general order specify. The authority to be specified is designated in the Central Sales Tax (Registration and Turn over) Rules, 1957, framed by the Central Government under section 13(1), the "notified authority" : vide r. 2(c). Rule 3 provides that an application for registration under section 7 shall be made by a dealer to the notified authority in Form 'A '. In exercise of the powers conferred by sub section (1) of section 7 of the , the Central Government issued a notification No. S.R.O. 643 dated February 22, 1957, specifying the persons mentioned in Col. (3) of the Schedule thereto as the authorities to whom the dealers of the description in Col. (2) shall make the application for registration. Item 1 of the Schedule requires a dealer having a single place of business in a State to make an application to the authority competent to register him under the general sales tax law of the State if he were liable to, be so registered : and item 2 provides that the dealer having more than one place of business in a State shall make an application to the authority competent to register him in respect of the principal place of business under the general sales tax law of the State if he were liable to be so registered. A registered dealer contemplated by r. 10 is therefore registered in the State where he has his place of business. The expression "assessing authority" is defined in the Central Sales Tax (Madras) Rules, 1957, as meaning any person authorized by the State Government to make any assessment under the Madras General Sales Tax Act, 1959 (Madras Act 1 of 1959). The dealer has again to obtain the form of declaration from the assessing.authority in the State of Madras. These are clear indications that the rules framed by the Madras Government were intended to apply to dealers within the State of Madras. The High Court was, in our judgment, right in holding that under the scheme of the and the Rules framed under that Act by the State of Madras, the injunc 651 tion against the purchasing dealers in r. 10(1) did not apply to, dealers in the State of Punjab. It is unnecessary on that view to, express any opinion on the question whether the State Government could, in exercise of the powers under section 13 (4), impose upon dealers not within the State, obligations to comply with conditions relating to the contents of the 'C ' Form declarations. Since, r. 10 ( 1 ) requiring that a separate declaration form in respect of each individual transaction shall be furnished was intended only to apply to dealers in the State of Madras, and not to dealers outside the State, proviso to r. 10(1) which directs that no single declaration shall cover more than one transaction of sale except in certain cases has no application to a purchasing dealer outside the State of Madras. Rule 10(2), provides : "A registered dealer who claims to have made a sale to another registered dealer shall, in respect of such claim attach to his return in Form the portion marked "original" of the declaration received by him from the purchasing dealer. The assessing authority may, in its discretion, also direct the selling dealer to produce for inspection the portion of the declaration marked "duplicate". " But this rule does not direct that a declaration covering more than one transaction of sale shall not be given. The rules framed by the Madras Government do not otherwise impose any binding obligation upon the selling dealer in the State of Madras to obtain a separate declaration form in respect of each sale transaction, nor do the rules visit him with a penalty on failure to comply with the requirement. We are constrained to observe that the rule making authori ties have failed to appreciate the scheme of section 13 of the . We are of the opinion that it was not within the competence of the State authorities under section 13(3) & (4) of the to provide that a single declaration covering more than one transaction shall not be made. Authority to prescribe such an injunction cannot have its source in section 13(3) or section 13 (4) (e) : it can only be in the authority conferred by cl. (d) of section 13(1) by the Central Government. The Central Government has, in exercise of the power under section 1 3 (1) (d), prescribed the form of declaration and the particulars to be contained in them declaration. A direction that there shall be a separate declaration in respect of each individual transaction may appropriately be made in exercise of the power conferred under section 13 (1) (d). The State Government is undoubtedly empowered to make rules under sub sections (3) and (4) of section 13 but the rules made by them 652 State Government must not be inconsistent with the provisions of ,the Act and the rules made under sub section (1) of section 13 to carry out the purposes of the Act. If the authority to make a rule prescribing that the declaration shall not contain more than one transaction can be made only under section 13 (1) (d), the State Government cannot exercise that authority. The situation which has arisen in this case could have been avoided, if instead of each State making its rules requiring that no single declaration shall ,cover more than one transaction, the Central Government in exercise of the power under section 13 (1) (d) of the Act had made the rules. The appeal fails and is dismissed with costs. G.C. Appeal dismissed.

IN-Abs

The assessee firm was a 'dealer ' in Madras State. For the year 1959 60 the firm was taxed at 7% on certain sales effected to registered dealers in the Punjab on the ground that the declarations taken from dealers in Punjab in Form 'C ' were not in accordance with r. 10(1) of the Central Sales Tax (Madras) Rules, 1957. The latter rule required ,that there must be a separate declaration in respect of each transaction whereas the declarations in the present case were in respect of several transactions each. The appellant firm claimed that on the turnover in question it should have been assessed at one Per cent only, as laid down in section 8(1) of the Central Sales Tax Act, 1056. The claim was turned down by the Sales tax Authorities and the Tribunal, but the High Court held that r. 10(1) of the Central Sales Tax (Madras) Rules, 1957 applied only to transactions of purchase by a dealer in the State of Madras and not to the purchasing dealer in the State of Punjab, that the Madras State was incompetent to frame rules governing the conduct of the chasing dealers in the Punjab, and that in any event r. 10(1) was tory and not mandatory. The State appealed. HELD: (i) Ex facie r. 10(1) imposes no obligation upon a dealer in the State of Madras wishing to sell goods : It applies to a clear wishing to purchase goods from another dealer. The High Court was further right in holding that under the scheme of the Central Sales Tax Act and the Rules framed under that Act by the State of Madras the injunction against the purchasing dealers in r. 10(1) did not apply to dealers in the State of Punjab. [650B 651A] Accordingly the proviso to r. 10(1) which,directs that no single declaration shall cover more than one transaction of sale except in certain cases has no application to a. purchasing dealer outside the State of Madras. Nor does r. 10(2). impose any binding obligation upon the selling dealer in Madras to obtain a separate declaration form in respect of each sale transaction. [651C F] The appellants were therefore to be taxed at the rate of one per cent and not seven per cent on the turnover in question. (ii) A rule prescribing that a declaration by a purchasing dealer shall not contain more than one transaction can only be made by the Central Government under section 13(1)(d) and the State Governments do not have 646 power under section 13(3) and section 13(4)(e) to make any such rule. The situation which had arisen in this case could have been avoided if instead of each State making its rules requiring that no single declaration shall cover more than one transaction, the Central Government in exercise of the power under section 13(1)(d) of the Act had made the rule. [651G H; 652A B]

Appeal No. 51 of 1964. Appeal by special leave from the judgment and decree dated January 3, 1962 of the Punjab High Court in Regular Second Appeal No. 1958 of 1959. Bishan Narain and Sadhu Singh, for the appellant. J. P. Goyal and Raghunath Singh, for respondents Nos. 1 (a) to 1 (d). The Judgment of the Court was delivered by Bhargava, J. This appeal arises out of a suit brought for possession of some land which was admittedly owned at one time by one Labhu. Labhu died in the year 1917 and, on his death his widow, Smt. Harnam Kaur, who filed the suit as plaintiff, came into possession of the land. She continued in possession of the land until the year 1954 when, on an application made by the collaterals of Labhu, the Naib Tehsildar, by his order dated 26th June, 1954, effected mutation in favour of these collaterals. These collaterals were defendants 1 to 4, Mangal Singh, Amer Singh, Santa Singh and Ishar Singh. These collaterals, on the basis of the order of the Naib Tehsildar, dispossessed Smt. Harnam Kaur. Harnam Kaur 's appeal against the order of the Naib Tehsildar was dismissed by the Collector. The claim of these collaterals was that Smt. Harnam Kaur had entered into karewa marriage with one of these collaterals, Ishar Singh. defendant No. 4 and, consequently, she had lost her right to hold the land of her first husband Labhu. Harnam Kaur denied that she had entered into any karewa marriage with Ishar Singh and, on the basis of this denial, instituted the suit claiming possession of that land. She pleaded that the four defendants had no right to this land and had wrongfully dispossessed her, so that they were mere trespassers. This suit was instituted on 1st March, 1956. After the institution of the suit, the (No. 30 of 1956) hereinafter referred to as "the Act" came into force on 17th June, 1956. The suit was, at that time, pending and it continued to remain pending until the year 1958 when Smt. Harnam Kaur died. Thereupon, Smt. Rattno applied to be substituted as plaintiff in place of Smt. Harnam Kaur as her legal representative. This application was allowed,, though 456 it was opposed by defendants 1 to 3. In the trial of the suit defendants 1 to 3 took the plea that Smt. Harnam Kaur, the original plaintiff, had lost her right to the land because of her karewa marriage with Ishar Singh, defendant No. 4. Defendant No. 4, however, admitted the claim of Smt. Hamarn Kaur in his written statement, denied that he had dispossessed her and also denied the allegation of her karewa marriage with him. In these circumstances, two main questions came up for decision by the trial court. The first question was whether Smt. Hamam Kaur had entered into a karewa marriage with Ishar Singh, defendant No. 4, so as to lose her right to the disputed land as widow of the previous mal e owner, Labhu ? The second question that arose was whether Smt. Rattno, who was substituted as the legal representative of Smt. Hamam Kaur, was entitled to succeed to the property of Smt. Hamam Kaur ? This second question depended on whether Smt. Harnam Kaur had, or had not, become full owner of the land under section 14 of the Act. The trial court held that Smt. Hamam Kaur had contracted karewa marriage with Ishar Singh, defendant No. 4, and had lost her rights. The further finding of the trial court was that Smt. Hamam Kaur had been dispossessed before the Act came into force and, consequently, section 14 of the Act did not apply, with the result that Smt. Rattno could not claim succession to Smt. Hamam Kaur under that provision of law. On these findings, the trial court dismissed the suit. On appeal, the Additional District Judge, Patiala, recorded the finding that Smt. Hamam Kaur had not entered into karewa marriage with Ishar Singh, defendant No. 4, and, further, that section 14 of the Act was applicable to the present case, as the land in suit was possessed by Smt. Harnam Kaur so as to make her full owner of this land under that provision of law. On these findings, the first appellate Court decreed the suit against defendants 1 to 3 with costs in both courts, after making a comment that Ishar Singh , defendant No. 4, was a profoma defendant. Defendants 1 to 3, thereupon, came up in second appeal to the High Court of Punjab and impleaded as respondents Smt. Rattno as well as Ishar Singh. The High Court dismissed the appeal and, thereupon, defendants 1 to 3 have come up to this Court in appeal under special leave granted to them. In this appeal also, defendants 1 to 3 impleaded both Smt. Rattno and Ishar Singh as respondents. During the pendency of this appeal, one of the defendants appellants died and his legal representatives were brought on the record as appellants. Rattno also died and her legal representatives were impleaded as respondents. Further, Ishar Singh,. defendant No. 4, who was a respondent in this appeal, also died. The application to bring his legal representatives on record was dismissed by the order of this Court dated 14th September, 1965 457 in Civil Miscellaneous Petition No. 1589 of 1965. In view of this order, a preliminary objection was raised at the time of hearing of this appeal by learned counsel for the respondents, who had been impleaded as legal representatives of Smt. Rattno, that the appeal had abated on account of the failure of the appellants to implead the legal representatives of Ishar Singh respondent. It, however, appears that, on the pleadings of parties and the nature of the dispute that came to be settled by the lower courts, it cannot be held that this appeal must abate as a whole, or must fail because of its abatement against Ishar Singh on his death. We have already mentioned that, though the plaintiff, Smt. Harnam Kaur, had come forward with the allegation that she had been dispossessed by all the four defendants 1 to 4, Ishar Singh, defendant No. 4, in his written statement, repudiated this claim. He put forward the plea that he had not dispossessed the plaintiff and, further, supported the claim of the plaintiff by pleading that there had been no karewa marriage between them. 'The suit was dismissed by the trial court. It was decreed by the first appellate Court only against defendants 1 to 3, treating Ishar Singh as a profoma defendant. In these circumstances, it is obvious that, when the case came up before the High Court, the dispute was confined between Smt. Rattno, legal representative of the original plaintiff on the one side, and defendants 1 to 3 on the other. Defendants 1 to 3 sought vacation of the decree for possession which had been granted against them in favour of Smt. Rattno. lshar Singh, against whom the suit had not been decreed at all, thus became an unnecessary party. In these circumstances even if Ishar Singh had not been impleaded as respondent in the High Court, the relief claimed by defendants 1 to 3 in that Court against Smt. Rattno could have been granted, without bringing into effect any contradictory decrees. In the appeal in this Court also, in these circumstances, Ishar Singh was an unnecessary party and, consequently, the failure to implead his legal representatives as respondents in the appeal after his death does not affect the right of defendants 1 to 3 to claim the relief for which they have come up to this Court in appeal. The preliminary objection, therefore, fails and is rejected. On merits, we are of the opinion that the decision given by the High Court against the defendant appellants must be upheld. The first appellate Court, which was the final Court for deciding question of fact, clearly recorded a finding that the karewa marriage alleged to have been entered into by the plaintiff, Smt. Harnam Kaur, with Ishar Singh, defendant No. 4, was not proved. That finding of fact was binding on the High Court and was rightly accepted by it. It is no longer open to the appellants to challenge that finding of fact in this Court. On this finding, it has to be held that the rights to the land, to which Smt. Hamam Kaur had succeeded as widow of Labhu, were not lost by her 458 until her death, and that her dispossession by defendants 1 to 3 in the year 1954 was illegal. They had no right to this land in ' preference to Smt. Hamam Kaur. It was, however, urged on behalf of the appellants that, when Smt. Hamam Kaur died, she was not in actual possession of this land. She had been dispossessed in the year 1954 and, at the time of her death in 1958, this suit instituted by her for possession of that land was still pending. In the suit, her own pleading was there that the land was in actual possession of defendants 1 to 3 as trespassers, and, in such circumstances, it should be held that the land was not possessed by Smt. Hamam Kaur at any time after the Act came into force, so that section 14 of the Act never became, applicable and she never became full owner of that land. It may be mentioned that there was no dispute in the High Court, nor was it disputed before us that, if it be held that section 14 of the Act had become applicable and Smt. Hamam Kaur became full owner of this land, her rights would pass on her death to Smt. Rattno and, subsequently, on the latter 's death, to the present respondents in this appeal. The only question for decision in this appeal, therefore, is whether it can be held that this property was possessed by Smt. Harnam Kaur as envisaged by section 14 of the Act, so that she became full owner of this land. Section 14(1) of the Act is as follows "14. (1) Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner. Explanation. In this sub section, "property" includes both movable and immovable; "property, acquired" includes both movable and immovable property acquired by a female Hindu by inheritance or devise, or at a partition, or in lieu of maintenance or arrears of maintenance, or by gift from any person, whether a relative or not, before, at or after her marriage, or by her own skill or exertion, or by purchase or by prescription, or in any other manner whatsoever, and also any such property held by her as stridhana immediately before the commencement of this Act. " The dispute in the case has arisen, because this section confers the right of full ownership on a Hindu female only in respect of property possessed by her, whether acquired before or after the commencement of the Act; and, in the present case, admittedly, the plaintiff had been dispossessed in the year 1954 and was not able to recover possession from the defendants apppellants until her death in the year 1958. It was urged on behalf of the appellants that, in order to attract the provisions of section 14 (1) of the Act, it must be shown that the female Hindu was either in actual 459 physical possession, or constructive possession of the disputed property. On the other side, it was urged that, even if a female Hindu be, in fact, out of actual possession, the property must be held to be possessed by her, if her ownership rights in that property still exist and, in exercise of those ownership rights, she is capable of obtaining actual possession of it. It appears to us that, on the language used in section 14(1) of the Act, the latter interpretation must be accepted. It is significant that the Legislature begins section 14(1) with the words "any property possessed by a female Hindu" and not "any property in possession of a female Hindu". If the expression used had been "in possession of" instead of "possessed by", the proper interpretation would probably have been to hold that, in order to apply this provision, the property must be such as is either in actual possession of the female Hindu or in her constructive possession. The constructive possession may be through a lessee. mortgagee, licensee, etc. The use of the expression "possessed by" instead of the expression "in possession of ', in our opinion, was intended to enlarge the meaning of this expression. It is commonly known in English language that a property is said to be possessed by a person, if he is its owner, even though he may, for the time being, be out of actual possession or even constructive possession. The expression "possessed by" is quite frequently used in testamentary documents, where the method of expressing the property, which is to pass to the legate, often adopted is to say that "all property I die possessed of shall pass to. . . In such documents, wills, etc., where this language is used, it is clear that whatever rights the testator had in the property would pass to the legate, even though, at the time when the will is executed or when the will becomes effective, the testator might not be in actual, physical or constructive possession of it. The legate will, in such a case, succeed to the right to recover possession of that property in the same manner in which the testator could have done. Stroud in his Judicial Dictionary of Words and Phrases, Vol. 3, at p. 2238, has brought out this aspect when defining the scope of the words "possess" and "Possessed". When dealing with the meaning of the word "possession", Stroud defines " possession" as being in two ways, either actual possession or possession in law. He goes on to say that "actual possession is when a man enters in deed into lands or tenements to him descended, or otherwise. Possession in law is when lands or tenements are descended to a man, and he has not as yet really, actually, and in deed, entered into them. " In Wharton 's Law Lexicon, 14th Edn., at p. 777, the word "possession" is defined as being equivalent to 'the state of owning or having a thing in one 's own hands or power." Thus, three different meanings are given; one is the state of owning, the second is having a thing in one 's own bands, and the third is having a thing in one 's own 460 power. In case where property is in actual physical possession, obviously it would be in one 's own hands. If it is in constructive possession, it would be in one 's own power. Then, there is the third case where there may not be actual, physical or constructive possession and, yet, the person still possesses the right to recover actual physical possession or constructive possession; that would be a case covered by the expression "the state of owning". In fact, elaborating further the meaning of the word "possession ', Wharton goes on to say that "it is either actual, where a person enters into lands or tenements descended or conveyed to him; apparent, which is a species of presumptive title where land descended to the heir of an abator, intruder, or disseisor, who died seised; in law, when lands, etc., have descended to a man, and he has not actuary entered into them, or naked, that is, more possession, without colour of right. " It appears to us that the expression used in section 14(1) of the Act was intended to cover cases of possession in law also, where lands may have descended to a female Hindu and she has not actually entered into them. It would of course, cover the other cases of actual or constructive possession. On the language of section 14(1), therefore, we hold that this prorovision will become applicable to any property which is owned by a female Hindu, even though she is not in actual, physical or constructive possession of that property. Section 14(1) came up for interpretation in various cases before a number of High Courts, and was considered by this Court also in several cases. In none of those cases, however, did the question directly arise as to whether section 14(1) will be applicable, if the female Hindu is out of actual, physical or constructive possession and the property happens to have been wrongfully taken into possession by a trespasser. Most of those cases were cases where the female Hindu had either alienated her rights by a, deed of transfer or had made a gift, and it was only incidentally; that, in some of those cases, comments were made on the question whether section 14(1) of the Act will be attracted or not in cases the female Hindu bad been dispossessed by a trespasser. So far as this Court is concerned, the earliest case is that of Gummalpura Taggina Matada Kotturuswami vs Setra Veeravva and others(1). Dealing with the scope of section 14(1) of the Act in that case, this Court cited from a decision of Viswanatha Sastri, J. in Gaddam Venkavamma vs Gaddam Veerayya (2) , and noticed the fact that in that case it was held that the word "possessed" is used in section 14 in a broad sense and, in the context, possession means the state of owning or having in one 's bands or power. It was also noticed that the learned Judges of the Andhra Pradesh High Court in that case had expressed the view that even if a trespasser were in possession of the land belonging to a female (1) [1959] Supp. 1 S.C.R. 968. (2) A. I.R. 461 owner, it might conceivably be regarded as being in possession of the female owner, provided the trespasser had not perfected his, title. Since in that case this Court was not concerned with a situation where a trespasser had actually dispossessed the female owner, the Court went on to hold: "We do not think that it is necessary in the present case to go to the extent to which the learned Judges went. It is sufficient to say that "possessed" in section 14 is used in a broad sense and, in the context, means the state of owning or having in one 's hand or power. " Thus, in that case decided by this Court, the broad meaning of the word "possessed ' was accepted as even including cases where the state of owning the property exists. Learned counsel for the appellants, when bringing to our notice the views expressed by this Court in that case, also drew our attention to another part of the judgment, where this Court remarked: "Reference to property acquired before the commencement of the Act certainly makes the provisions of the section retrospective, but even in such a case, the property must be possessed by a, female Hindu at the time the Act came into force in order to make the provisions of the section applicable. There is no question in the present case that Veerawa acquired the property of her deceased husband before the commencement of the Act. In order that the provisions of section 14 may apply to the present case, it will have to be further established that the property was possessed by her at the time the Act came into force. " Learned counsel, from these words, tried to draw an inference that this Court had laid down that section 14(1) will only apply to cases where the property was possessed by the Hindu female at the commencement of the Act. We do not think that any such interpretation can be placed on the words used by this Court. Section 14(1) covers any property possessed by a female Hindu, whether acquired before or after the commencement of the Act. On the face of it, property acquired after the commencement of the Act by a female Hindu could not possibly be possessed by her at the commencement of the Act. This Court, when it made the comments relied upon by learned counsel, was, in fact, concerned with a case of a female Hindu, who had acquired the right to the property before the commencement of the Act, but was alleged to be no longer possessed of it because of having adopted a son before the commencement of the Act. It was in these circumstances that the Court in that particular case was concerned with the question whether the female Hindu was possessed of the property in dispute or not at the time the Act came into force. The Court was not laying down any general principle that section 14(1) will not be attracted at all to cases where the female Hindu was not possessed of the property at the date of the commencement of the Act. In fact, there are no words used in section 14(1) which would lead to the interpretation that the property must be possessed by the female Hindu at the date of the 462 commencement of the Act. It appears to us that the relevant date, on which the female Hindu should be possessed of the property in dispute, must be, the date on which the question of applying the provisions of section 14(1) arises. If, on that date, when the provisions of this section are sought to be applied, the property is possessed by a female Hindu, it would be held that she is full owner of it and not merely a limited owner. Such a question may arise in her own life time or may arise subsequently when succession to her property opens on her death. The case before us falls in the second category, because Smt. Harnam Kaur was a limited owner of the property before the commencement of the Act, and the question that has arisen is whether Smt. Rattno was entitled to succeed to her rights in this disputed property on her death which took place in the year 1958 after the commencement of the Act. The next case in which section 14 was considered by this Court was Brahmdeo Singh and Another vs Deomani Missir and Others(1) In that case, the female Hindu, who had succeeded to the property as the widow of her husband, Ramdeo Singh, had transferred the property under two sale deeds. It was held that the sale deeds were not for legal necessity; and the question arose whether, in those circumstances, when the Act came into force, it could be held that the widow was possessed of that property. This Court, after citing the judgment in the case of Gummalapura Taggina Matada Kotturuswami(2) held that the conflict of judicial opinion on this question had already been resolved in that earlier case, where the Court had observed : "The provisions in section 14 of the Act were not intended to benefit alienees who, with their eyes open, purchased the property from a limited owner without justifying necessity before the Act came into force and at a time when the vendor had only a limited interest of a Hindu woman. " The ;Court further dealt with the contention that the possession of the alienees is the possession of the widow herself who is still alive, and held : "We are unable to accept this contention as correct. It is well settled that an alienation made by a widow or other limited heir of property inherited by her, without legal necessity and without the consent of the next reversioners, though not binding on the reversioners, is, nevertheless, binding on her so as to pass her own interest (i.e. life interest) to the alienee. " It was, thus, made clear in that case that the property was held not to be possessed by the widow, because, the alienation made by her being binding on her, she had no longer any legal right left in that property even in the sense of being in the state of owning it. The case, thus, explains why, in cases of alienation or a gift made by a widow, even though that alienation or gift may not be bind (1) Civil Appeal No. 130 of 1960 decided on October 15, 1962. (2) [1959] Supp. 1 S.C.R. 968. 463 ing on a reversioner, the property will not be held to be possessed by the widow, because the alienation or the gift would be binding on her for her life time and she, at least, would not possess any such rights under which she could obtain actual or constructive possession from her transferee or donee. Having completely partted with her legal rights in the property, she could not be said to be possessed of that property any longer. The third case of this Court brought to our notice is that of section section Minna Lal vs section section Rajkumar and Others(1). In that case, a Digamber Jain of the Porwal sect died in 1934 leaving behind his widow, his son and three grand sons. His son died in 1939. In 1952, a son of one of the grandsons filed a suit for partition of the joint family properties, while the widow was still alive. While the suit was still pending, the widow died. Amongst other questions arising in the partition suit, one question that arose was whether the 1/4th share of the widow declared in the preliminary decree was possessed by her and whether, on her death, it descended to her grandsons in accordance with the provisions of sections 15 and 16 of the Act. Dealing with this question, this Court explained the scope of section 14(1) by stating that, by section 14(1), the Legislature sought to convert the interest of a Hindu female which, under the Sastric Hindu law, would have been regarded as a limited interest into an absolute interest. It was held that, by section 14(1), manifestly, it was intended to convert the interest, which a Hindu female has in property, however restricted the nature of that interest under the Sastric Hindu law may be, into absolute estate. It was also noticed that "under the Sastric Hindu law, the share given to a Hindu widow on partition between her sons or her grandsons was in lieu of her right to maintenance, and she was not entitled to claim partition. But the Legislature, by enacting the Hindu Women 's Right to Property Act, 1937, made a significant departure in that branch of the law; the Act gave a Hindu widow the same interest in the property which her husband had at the time of his death, and if the estate was partitioned, she became owner in severalty of her share, subject, of course, to the restrictions on disposition and the peculiar rule of extinction of the estate on death actual or civil. " Applying these principles to the facts of that case, it was remarked : "In the light of the scheme of the Act and its avowed purpose, it would be difficult, without doing violence to the language used in the enactment, to assume that a right declared in property in favour of a person under a decree for partition is not a right to property. If, under a preliminary decree, the right in favour of a Hindu male be regarded as property, the right declared in favour of a Hindu female must also be regarded as property. The High Court was, therefore, in our judgment, in error in holding that the right declared in favour of Khilonabai (1) [1962] Supp. 3 S.C.R. 418. 464 was not possessed by her, nor are we able to agree with the submission of the learned counsel for Rajkumar that it was not property within the meaning of section 14 of the Act. " In that case, it will be noticed that the widow died, while the suit for partition was still pending, and she was not in actual, physical or constructive possession of the property which was held to be possessed by her at the time of her death. Only a preliminary decree declaring her right to the share had been passed. That decree was passed before the Act came into force and the widow died after the Act came into force. On these facts, the Court came to the finding that the disputed property was possessed by the widow; and this finding was given despite the circumstance that she was not in actual possession or constructive possession of the property, but had merely obtained the right to the property under the preliminary decree. The principle laid down in that case, thus, supports the broader meaning given to the expression "possessed by" indicated by us earlier. The last case of this Court brought to our notice is Eramma vs Veerupana and Others(1). That was a converse case in which the female Hindu, in fact, did not possess any legal right or title to the property, though she was actually in physical possession of it. It was held: "The property possessed by a female Hindu, as contemplated in the section, is clearly property to which she has acquired some kind of title, whether before or after the commencement of the Act. It may be noticed that the Explanation to section 14(1) sets out the various modes of acquisition of the property by a female Hindu and indicated that the section applies only to property to which the female Hindu has acquired some kind of title, however restricted the nature of her interest may be. The words "as full owner thereof and not as a limited owner" as given in the last portion of sub section (1) of section 14 clearly suggest that the legislature intended that the limited ownership of a Hindu female should be changed into full ownership. In other words, section 14 (1) of the Act contemplates that a Hindu female who, in the absence of this provision, would have been limited owner of the property, will now become full owner of the same by virtue of this section. The object of the section is to extinguish the estate called "limited estate" or "widow 's estate" in Hindu Law and to make a Hindu woman, who, under the old law, would have been only a limited owner, a full owner of the property with all powers of disposition and to make the estate heritable by her own heirs and not revertible to the heirs of the last male holder. " In the concluding part, it was held : "It follows, therefore, that the section cannot be interpreted so as to validate the illegal possession of a female Hindu and it does not confer any title on a mere trespasser. In other words, the provisions of section 14(1) of the Act cannot be attracted in the case of a Hindu female who is in possession of the property (1) A.I.R. 1966 S.C. 1879. 465 of the last male holder on the date of the commencement of the Act when she is only a trespasser without any right to property. " This case also, thus, clarifies that the expression "possessed by" is not intended to apply to a case of mere possession without title, and that the legislature intended this provision for cases where the Hindu female possesses the right of ownership of the property in question. Even mere physical possession of the property without the right of ownership will not attract the provisions of this section. This case also, thus, supports our view that the expression "possessed by" was used in the sense of connoting state of ownership and, while the Hindu female possesses the rights of ownership, she would become full owner if the other conditions mentioned in the section are fulfilled. The section will, however, not apply at all to cases where the Hindu female may have parted with her rights so as to place herself in a position where she could, in no manner, exercise her rights of ownership in that property any longer. In this view that we have taken, it does not appear to be necessary for us to refer to the decisions of the various High Courts which were cited before us by learned counsel for the appellants. The cases mentioned were : Sansir Patelin and Another vs Satyabatt Naikani and Another(1); Ganesh Mahanta and Others vs Sukria Bewa and Others(2); Harak Singh vs Kailash Singh and Another(3); Ram Gulam Singh and others vs Palakdhari Singh and others(4) ; Nathuni Prasad Singh and Another vs Mst. Kachnar Kuer & Others(5); and Mst. Mukhtiar Kaur vs Mst. Kartar Kaur and Others(4). All these were cases relating to situations where the widow had made some alienation of her rights in the property and none of them was concerned with a case where the female Hindu might have been dispossessed by a trespasser. The reasons given by the High Courts in those cases are, therefore, of no assistance in deciding the applicability of section 14(1) of the Act to a case of the nature before us. On the interpretation of section 14(1) of the Act that we have accepted above, it must be held that the property involved in the present suit was possessed by Smt. Harnam Kaur when she died in the year 1958 and, consequently, Smt. Rattno and, after her, the present respondents must be deemed to have succeeded to those rights. We have already mentioned above that it was not disputed that, if it is held that Smt. Hamam Kaur had become full owner of this property, it would pass on her death to Smt. Rattno. As a result, the decision given by the High Court must be upheld. The appeal is dismissed with costs. G. C. (1) A.I.R. 1958 Orissa 75. (3) A.I.R. 1958 Patna 581. (5) A.I.R. 1965 Patna 160. Appeal dismissed. (2) A.I.R. 1963 Orissa 167. (4) A.T.R. 1961 Patna 60. (6) A.I.R. 1966 Pun.

IN-Abs

A Hindu widow in the Punjab came into possession of her husband 's land on his death in 1917. She continued in possession till 1954 when on an application made by certain collaterals of her late husband the Naib Tehsildar effected a mutation in favour of the collaterals. On the basis of the Naib Tehsildar 's order the collaterals dispossessed the widow. She filed a suit for recovery of possession of the land. After the institution of the suit the , came into force. During the pendency of the suit, in 1958, the widow died and her daughter was substituted as legal representative. The defendants pleaded that the widow had lost her right to the land because of her karewa marriage with one of the collateral&,, and that the daughter could not succeed to the land as she was not in possession of the land on the coming into force of the so as to become full owner of the land under section 14 thereof. The trial court dismissed the suit but the first appellate court decreed it, holding that there was no karewa marriage as alleged by the defendants, and that section 14 was applicable to the case. The High Court dismissed the appeal filed by the defendants who came to this court by special leave. HELD : (i) The finding of fact by the first appellate court that there was no karewa marriage was binding on the defendants, and the High Court rightly accepted it. It was not open to the defendants to challenge the finding in this Court. [457H] (ii) The use of the expression "possessed by" instead of the expression "in possession of" in section 14(1) was intended to enlarge the meaning of this expression to cover cases of ion in law. On the language of section 14(1) the provision will become applicable to any property which is owned by a female Hindu even though she is not in actual physical or constructive possession of the property. [459C D; 460D] The section however will not apply to cases where the Hindu female may have parted with her rights so as to place herself in a position where she could in no manner exercise her rights in that property any longer. [465C] On the facts of the case the plaintiff widow had acquired full rights of ownership of the land under s 14 of the . On her death in 1958 the property passed to her daughter. The High. Court, rightly dismissed the defendants, appeal. [465G] Gimmalapura Taggina Matada Kotturuswami vs Setra Veerayya & Ors, [1959] Supp. 1 S.C.R. 968 and Brahmdeo Singh vs Deomani Missir C.A. No. 130/1960 dated 15 10 1962, distinguished. 455 section section Munna Lal vs section section Rajkumar, [1962] Supp. 3 S.C.R. 418 and Eramma vs Veerupana, A.I.R. 1965 S.C. 1879, applied. Gaddam Venkayamma vs Gaddanz Veerayya, A.I.R. 1957 A.P. 280, Sansir Patelin & Anr. vs Satyabati Naikani & Anr. A.I.R. 1958 Orissa 75, Gajesh Mahanta vs Sukria Bewa, A.I.R. 1963 Orissa 167, Hapak Singh vs Kailash Singh & Anr. A.I.R. 1958 Patna 581, Ram Gulam Singh vs Palakdhari Singh, A.I.R. 1961 Patna 60. ' Nathuni Prasad Singh vs Mst. Kachnar Kuer, A.I.R. 1965 Patna 160 and Mst. Mukhtiar Kaur vs Mst. Kartar Kaur & Ors., A.I.R. 1966 Pun. 31, referred to.

Appeals Nos. 1425 and 1426 of 1966. Appeals by special leave from the judgment and order dated October 29, 1962 of the Madras High Court in Tax Case No. 195 of 1960. section Swaminathan and R. Gopalakrishnan, for the appellant (in both the appeals). 654 T. V. Viswanatha Iyer, T. A. Ramachandran, section P. Nayyar for R. N. Sachthey, for the respondent (in both the appeals). The Judgment of the Court was delivered by Shah, J. The Income tax Appellate Tribunal submitted two questions for the opinion of the High Court of Madras : "1. Whether the sum of Rs. 1,28,716/ is assessable as income under any of the provisions of the Act ? 2. If the answer is in the affirmative, the assessment years in which the amount falls to be assessed by suitable apportionment. " The first question was answered by the High Court in the affirmative. The High Court declined to answer the second question because it did not, :in their view, arise out of the order of the Tribunal. The assessees have appealed to this Court. By order dated January 30, 1944, the Collector of Madras, ,,exercising power under r. 75A of the Defence of India Rules, 1939, requisitioned a property known as "Lutterals Gardens" belonging to the assessees. The property continued to remain under requisition till it vested in the Government of Madras absolutely in consequence of an order made on May 24, 1949 by the Collector of Madras under section 5 of the Requisitioned Land (Continuance of Powers) Act, 1947, declaring.the intention of the Government of Madras to acquire that property. The assessees declined the offer made by the Collector to pay Rs. 2,40,000/ as compensation for acquisition of the property and interest at the rate of 6% thereon from the date, of notification for acquisition, and the dispute relating to compensation payable to the assessees was referred to the Chief Judge of the Court of Small Causes, Madras. By order of the High Court of Madras in appeal from the order of the Chief Judge it was adjudged that the assessees be paid Rs. 5,00,0001 as compensation for the property. The High Court also awarded interest at the rate of 6% on the amount of compensation from the date of notification for acquisition. During the two previous years corresponding to the assessment years 1955 56 and 1956 57 the assessees received, pursuant to the ,order of the High Court, a total sum of Rs. 6,28,716/ . In proceedings for assessment of tax for the assessment years 1955 56 and 1956 57, the Income tax Officer apportioned the amount of Rs. 1,28,716/ on the basis of actual receipts in the two previous years and assessed the amounts so apportioned to income tax. The Appellate Assistant Commissioner held that the apportioned amounts were of the nature of revenue and not capital receipts, but ' in his view the income received was liable to be calculated on accrual basis year after year from the date of the notification for ac 655 quisition, and on that account the assessments of the previous years from 1950 51 to 1954 55 should be reopened and the interest which accrued in those years should be assessed. The Commissioner of Income tax and the assessees appealed to the Appellate Tribunal against the order of the Appellate Assistant Commissioner. The assessees submitted that Rs. 1,28,716/received as interest being part of compensation were not assessable to tax, whereas the Commissioner claimed that the Income tax Officer was justified in assessing the amounts in the years in which they were received. The Income tax Appellate Tribunal accepted the contention of the assessees that the receipts were not assessable to tax because they were of the nature of capital receipts. At the instance of the Commissioner, the Tribunal referred the two questions set out here in before. Section 5 of the Requisitioned Land (Continuance of Powers) Act, 1947 authorises the Government by which or under the authority of which land has been requisitioned, to acquire the land subject to requisition, by publishing a notice to the 'effect that the Government has decided to acquire such land. Section 6 of the Act provides, inter alia, that compensation payable to the owner of the land shall be determined in accordance with the provisions of section 19 of the Defence of India Act, 1939, and the rules made thereunder. Section 19 of the Defence of India Act, 1939, sets out the principles for determining the compensation payable to a claimant. The amount of compensation may be fixed by agree ment between the owner and the Government : where no such agreement is reached the Central Government is enjoined to appoint an arbitrator having the qualifications prescribed therein. Under section 19(1) (e.) the arbitrator in making his award must have regard, inter alia, to the provisions of sub section (1) of section 23 of the Land Acquisition Act, 1894 in so far as the same can be made applicable. An appeal Res against the award of the arbitrator to the High Court. Sub sections (2) and (3) of section 19 confer upon the Central Government authority to frame rules for the purpose of carrying into effect the provisions of section 19. In exercise of that power, the Government of India framed "The Defence of India (Payment of Compensation and Arbitration) Rules, 1943" which amongst other provisions directed that the Collector shall pay compensation as soon as may be practicable. But neither section 19(1) of the Defence of India Act, nor the Rules framed under section 19(2) and (3) provide that interest shall be paid on the amount of compensation. In the present case, interest was, however, offered to be paid by the Collector; and the High Court also awarded interest on the amount of compensation from the date of the notification of acquisition. It was held by this Court in Dr. Shamlal Narula vs Commis sioner of Income tax, Punjab, Jammu and Kashmir, Himachal 656 Pradesh and Patiala(1) that the statutory interest paid under section 34 of the Land Acquisition Act, 1894, on the amount of compensation awarded from the date on which the Collector has taken possession of land compulsorily acquired under the Land Acquisition Act, 1804, is interest paid for delayed payment of the compensation and is a revenue receipt liable to tax under the Income tax Act. It was observed in that case at p. 156 ". interest, whether it is statutory or contractual, represents the profit the creditor might have made if he had the use of the money or the loss he suffered because he had not that use. It is something in addition to the capital amount, though it arises out of it. Under section 34 of the Act when the legislature designedly used the word "interest" in contradistinction to the amount awarded, we do not see any reason why the expression should not be given the natural meaning it bears. The scheme of the Act and the express provisions thereof establish that the statutory interest payable under section, 34 is not compensation paid to the owner for de priving him of his right to possession of the land acquired, but that given to him for the deprivation of the use of the money representing the compensation for the land acquired. " Counsel for the assessee however contended that the principle of Dr. Shamlal Narula 's case(1) is not applicable to this case, since there is no provision in the Requisitioned Land. (Continuance of Powers) Act, 1947 and the Defence of India Act, 1939, and the rules framed thereunder for payment of interest on the amount of compensation. Counsel said that under the Act, the owner is paid not the market value of the property, but compensation determined in accordance with a highly artificial scheme, and that the interest paid, in truth, bears the same quality as compensation for deprivation of property and is on that account a capital receipt not exigible to tax. In support of his.contention, counsel invited our attention to two decisions : The Commissioners of Inland Revenue vs Ballantine(2) and Simpson (H.M. Inspector of Taxes) vs Exe cutors of Bonner Maurice as Executor of Edward Kay(3). In Ballantine 's case(2) a claim of a firm of contractors against a railway company for "additional costs, loss and damage ' was referred to arbitration. The arbitrator awarded to the claimant a sum of money mainly as damages, together with interest thereon at 5 per cent. per annum from the date of lodgement of claim until payment. The Revenue sought to charge the interest paid by the (1) (3) (2) 657 railway company to tax under Case III of Sch. D of the Income tax Act, 1918. It was held that the sum added in the name of interest was part of damages, and was not "interest of money" chargeable to income tax under Case III of Sch. D. Lord President Clyde observed : "Now it is familiar that an assessment of the kind may contain as one of its constituent elements an allowance in respect that the claimant has lain for a long time out of his remedy. The propriety of such an allowance may depend on the character of the claim, and its amount may depend on many considerations of which time is only one. But an interest calculation is a natural and legitimate guide to be used by an arbiter in arriving at what he thinks would be a fair amount. In most cases in which such an allowance is a constituent of an award it does not separately appear, but is slumped along with other elements in the gross sum decerned for; but there is nothing to prevent an arbiter, if he thinks it just and reasonable in a particular case, to make the allowance in the form of an actual interest calculation from a past date until the sum fixed as at that date is paid. In all such cases, however whether the allowance is wrapped up in a slump award or is separately stated in the decree the interest calculation is used in modum aestimationis only. The interest is such merely in name, for it truly constitutes that part of the compensation decerned for which is attri butable to the fact that the claimant has been kept out of his due for a long period of time. It is not therefore "interest of money" chargeable under Case ITT of Schedule D." In Simpson vs Executors of Bonner Maurice as Executor of Edward Kay(1) the executors of Kay, a naturalised British subject, who died during the First World War received, as the result of the peace treaty claims, amounts representing partly capital of securities, stocks and shares in Banks in Germany deposited by Kay; partly interest and dividends; and partly compensation under the Peace Treaty. In a proceeding for assessment of the receipt to tax it was held that the compensation computed on the basis of interest was not income for the purposes of income tax. Lord Hanworth, M. R., observed at p. 601 "I want to add now one more word in reference to the sum which has been paid by way of compensation under Article 297. It is said in reference.to that 'that. at least, arose at the time when it was paid under the order of the Mixed Arbitral Tribunal '. It wag a sum (1) c. CI/67 12 658 which was calculated as interest" . 'and it is interest, and therefore it is within the words of the Schedule, which undoubtedly impose a tax upon interest which arises or accrues to a person liable to tax. ' But is it interest ? Is that its quality, or is it compensation estimated and measured in terms of interest ? It appears to me quite clear that, apart from Article 297, no such sum could have been recovered. " Lawrence, L.J., observed at p. 605 "Neither the fact that the compensation was measured by the amount of the interest, which but for the embargo placed upon the money by the German Government could have been earned by the Respondents, nor the fact that part of the compensation was described as "interest" in the decision of the Mixed Arbitral Tribunal in my judgment, has the effect of altering the character of the compensation paid to the Respondents. " But it must be noticed that liability to pay interest arose in Ballantine 's case(1) under the award of the arbitrator and in the Executors of Bonner Maurice as Executor of Edward Kay 's case (2) under the order of the Mixed Arbitral Tribunal, and in each case, it was held that what was paid, though called "interest", was in truth compensation for loss suffered on account of deprivation of property. According to the view taken by this Court in Dr. Shamlat Narula 's case(3), if the course of the obligation imposed by the statute to pay interest arises because the claimant is kept out of his money, the interest received is chargeable to tax as income. The same principle would apply if interest is payable under the terms of an agreement and the Court or the arbitrator gives effect to the terms of the agreement express or implied and awards interest which has been agreed to be paid. It is therefore necessary to determine whether the obligation to pay interest awarded under the order of the High Court of Madras arose out of the statute or out of the award. In Satinder Singh & Ors. V. Amrao Singh and Ors. (4) lands forming part of Cis Sutlej Jagir were compulsorily acquired under the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act, 1948. The claimants to the lands claimed in addition to statutory compensation interest from the date from which they were dispossessed and till the date of payment of compensation. The arbitrator appointed under the Act awarded interest on the amount of compensation and the High Court of Punjab in appeal Confirmed the order. This Court held that the claimants were (1) , (2) (3) (4) ; , 659 entitled to interest on the compensation amount from the date of dispossession till the date on which 'the amount of compensation was paid to the claimants. Section 5 of the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act, 1948, set out the principles according to which compensation was to be paid in regard to the acquired property, and by cl. (e) thereof it was provided that the arbitrator in making the award shall have regard 'to the provisions, of sub section (1) of section 23 of the Land Acquisition Act, 1894 in so far as the same may be applicable. The Act contained no express provision for payment of interest on compensation determined by the arbitrator. This Court rejected the contention of the State of Punjab, that sections 28 and 34 of the Land Acquisition Act which dealt with the payment of interest were not intended to apply to the proceedings before the arbitrator. It was observed "Stated broadly the act of taking possession of immovable property generally implied an agreement to pay interest on the value of the property and it is oil this principle that a claim for interest is made against the State. " The Court further observed : "It would thus be noticed that the claim for interest proceeds on the assumption that when the owner of immovable property loses possession of it he is entitled to claim interest in place of right to retain possession. The question which we have to consider is whether the application of this rule is intended to be excluded by the Act of 1948, and as we have already observed, the mere fact that section 5(e) of the Act makes section 23(1) of the Land Acquisition Act of 1894 applicable we cannot reasonably infer that the Act intends to exclude the application of this general rule in the matter of the, payment of interest. " The Court also observed "When a claim for payment of interest is made by a person whose Immovable property has been acquired compulsorily he is not making claim for damages properly or technically so called; he is basing his claim on the general rule that if be is deprived of his land he should be put in possession of compensation immediately; if not, in lieu of possession taken by compulsory acquisition interest should be paid to him on the said amount of compensation. " The scheme of the East Punjab Acquisition and Requisition of Immovable Property (Temporary Powers) Act, 1948 is similar to the scheme of the Requisitioned Land (Continuance of Powers) Act, 1947. The Court in Satinder Singh 's case(1) held that be (1)[1961] 3 S.C.R. 676. 660 cause of the injunction expressly to apply the provisions of section 23(1) of the Land Acquisition Act, 1894, in the determination of compensation, the application of sections 28 and 34 dealing with the payment of interest on the amount awarded as compensation cannot be deemed excluded. The Court also held that when the owner of property is dispossessed pursuant to an order for compulsory ac quisition, an agreement that the acquiring authority will pay interest on the amount of compensation is implied. The reasoning on which the right of the owner of the lands acquired to interest was affirmed in Satinder Singh 's case(1), prima facie, applies in this case. Counsel for the assessees contended that the application of sections 28 and 34 of the Land Acquisition Act in proceedings for arbitration under the Requisitioned Lands (Continuance Powers) Act, 1947, was expressly excluded by section 19(1)(g) of the Defence of India Act which enacted that: "Save as provided in this section and in any rules made thereunder, nothing in any law for the time being in force shall apply to arbitration under this section." But cl. (g) is not susceptible of any such interpretation. Clauses (a) to (f) of section 19(1) are a Code relating to arbitration in determining the compensation payable to a person deprived of his property. Provisions relating to payment of interest are not, however, part of the law relating to arbitration and there is nothing in cl 1. (g) which excludes the application of the substantive law relat ing to payment of interest when the arbitration is determining the amount of compensation. We are therefore of the view that the principle on which The Commissioners of Inland Revenue vs Ballantine(2) and Simpson (H.M. Inspector of Taxes) vs Executors of Bonner Maurice as Executor of Edward Kay(3) were based has no application to this case. It may be recalled that in those cases the arbitrator and the Arbitral Tribunal were, in awarding interest, not seeking to give effect to, or to recognize a right to interest, conferred by statute or contract. The source of the right to interest in both the cases did not arise from the statute or agreement. In the case on hand, the right to interest arose by virtue of the provisions of sections 28 and 34 of the Land Acquisition Act, 1894, and the arbitrator and the High Court merely gave effect to that right in awarding interest on the amount of compensation. Interest received by the assessee was therefore properly held taxable. The appeals fail and are dismissed with costs. One hearing Y.P. Appeals dismissed. (1)[1961] 3S.C.R. 676.

IN-Abs

The assesses& were offered compensation and interest on the amount of compensation in respect of their property which was first requisitioned under r. 75A of the Defence of India Act, 1939 and later acquired by the State under section 5 of the Requisitioned Land (Continuance of Powers) Act. The Requisition Act provided that. compensation payable shall be determined in accordance with the provisions of section 19 of the Defence of India Act and the rules thereunder, but neither section 19 nor the Rules provided that interest shall be paid on the amount of compensation. The assessee demanded more compensation and interest, and, the High Court in appeal enhanced the compensation and awarded interest on it The Revenue assessed to income tax the amount of interest, which was upheld, in reference, by the High Court. In appeal. this Court. HELD : Interest received by the assessee was taxable. If the source of the obligation imposed by the statute to pay interest arises because the claimant is kept out of his money, the interest received is chargeable to tax as income. The same principle would apply if interest is payable under the terms of an agreement and the court or the arbitrator gives effect to the terms of the agreement express or implied and awards interest which has been agreed to be paid Clauses (a) to, (f) of section 19(1) of the Defence of India Act are a Code relating to a arbitration in determining the compensation payable to a person depraved of his property. Provisions relating to payment of interest, are not, however, part of the law relating to arbitration and there is nothing in cl. (g) which excludes the application of the substantive law relating to payment of interest when the arbitration is determining the amount of compensation. In this case, the right to interest arose by virtue of the provisions of Ss. 28 and 34 of the Land Acquisition Act, 1894, and the arbitrator 'and the High Court merely gave effect to that right in awarding interest on the account of compensation. [658 E F; 660 D H] Dr. Shamtal Narula vs Commissioner of Income tax, Punjab, Jammu and Kashmir, Himachal Pradesh and Patiala, 53 I.T.R. 151, and Satinder Singh & Ors. vs Amrao Singh & Ors. ; , followed. The Commissioners of Inland Revenue vs Bellantine, 8 T.C. 59,5, and Simpson (H. M. Inspector of Taxes) vs Executors of Bonner Maurice as Executor of Edward Kay, , distinguished.

Appeal No. 728 of 1964. Appeal by special leave from the. judgment and decree dated September 25, 1961 of the Punjab High Court in Civil Regular Second Appeal 343 of 1961. section K. Mehta and K. L. Mehta, for the appellant. A. D. Mathur, for the respondents. The Judgment of the Court was delivered by Bhargava, J. One Ramji Dass died leaving behind a widow, Smt. Bhagwani. At the time of his death, he owned some land and a house. 4 bighas and 17 biswas of the land were mortgaged by Smt. Bhagwani on 2nd May, 1948 in favour of respondent No. 3, Babu Ram. Later, on 22nd August, 1949, she executed a deed of gift in respect of the house and the land covering an area of 50 bighas and 14 biswas in favour of Smt. Kala Wanti who was related to her as a grandniece. Sawan Ram appellant instituted a suit for a declaration that both these alienations were without legal necessity and were not binding on him, claiming that he was the nearest reversioner of Ramji Dass, being his collateral. In that, suit, Smt. Bhagwni the donee, Smt. Kala Wanti, respondent No. 1, and the mortgagee, Babu Ram, respondent No. 3, were impleaded as defendants. That suit was decreed and Smt. Bhagwani went up in appeal to the High Court. During the pendency of the appeal, Smt. Bhagwani adopted respondent No. 2, Deep Chand, the son of Brahmanand and his wife, respondent No. 1, Smt. Kala Wanti. A deed of adoption was executed by her in that respect on 24th August, 1959. The appeal was dismissed in spite of this adoption. Bhagwani died on 31st October, 1959, and thereupon, the appellant brought a suit for possession of the house and the land which had been gifted by Smt. Bhagwani to respondent No. 1 as well as for possession of the land which she had mortgaged with respondent No. 3. It was claimed that Smt. Bhagwani had only a life interest in all these properties, because she had divested herself of all the rights in those properties on 22nd August, 1949, before the (No. 30 of 1956) came into force. The adoption of Deep Chand was also challenged as fictitious and ineffective. It was further urged that, even if that adoption was valid, Deep Chand became the adopted son of Smt. Bhagwani and could not succeed to the properties of Ramji Dass. The suit was dismissed by the trial court, holding that the adoption of Deep Chand was valid and that, though Smt. Bhagwani had not become the full owner of the property under the , Deep Chand was entitled to succeed to the property of Ramji Dass in preference to the appellant, so that the appellant could not claim possession of these pro 689 perties. That order was upheld by the High Court. of Punjab, and the appellant has now come up to this Court in appeal by special leave. In this appeal before us, only two points have been urged by learned counsel for the appellant. The first point taken is that, even though the appellant did not challenge the finding of fact that respondent No. 2 was, in fact, adopted by Smt. Bhagwani, that adoption was invalid under clause (Ii) of section 6 read with sub section (2) of section 9 of the (No. 78 of 1956) (hereinafter referred to as "the Act"). It is urged that, under section 9 (2) of the Act, if the father of a child is alive, he alone has the right to give in adoption, though the right is not to be exercised, save with the consent of the mother. In this case, reliance was placed on the language of the deed of adoption dated 14th August, 1959, to urge that Deep Chand was, in fact, given in adoption to Smt. Bhagwani by his mother, respondent No. 1, even though his father, Brahmanand, was alive. This point raised on behalf of the appellant is negatived by the evidence on the record. There is oral evidence of the adoption which has been accepted by the lower courts, and it shows that. Deep Chand was given in adoption by both the parents to Smt. Bhagwani. Even the deed of adoption dated 24th August, 1959, on which reliance was placed on behalf of the appellant in support of this argument, does not bear out the suggestion that Deep Chand was given in adoption by his mother and not by his father. The deed clearly mentions that "the parents of Deep Chand have, of their own free will, given, Deep Chand to me, the executant, today as my adopted son. " This recitation is followed by a sentence which states : "Mst. Kala Wanti, mother of Deep Chand, has put her thumb mark hereunder in token of her consent. " It was from this solitary sentence that inference was sought to be drawn that Deep Chand had been given in adoption by his mother, Kala Wanti and not by the father. The deed, in the earlier sentence quoted above, clearly mentions that Deep Chand had been given in adoption by his "parents" which necessarily includes the father. This later sentence, it appears, was put in the deed, because section 9(2) of the Act mentions that the father is not to exercise his right of giving his child in adoption, save with the consent of the mother. "The consent of the mother" having been used in the Act which was applicable, the draftsmen of the deed included in it the fact that Deep Chand 's mother had actually given her consent and obtained her thumb impression in token thereof. This mention of the consent cannot, in these cir cumstances, be held to show that it was the mother who, in fact, gave the child in adoption and not the father. The second point and the one, on which reliance is mainly placed by learned counsel for the appellant, is that, according 690 to him, under the Act, an independent right of adoption is given to a Hindu female and if a widow adopts a son, he becomes the adopted son of the widow only and is not to be deemed to be the son of her deceased husband. Under the Shastric Hindu Law, no doubt, if a Hindu widow made an adoption after the death of her husband on the basis of consent obtained from him in his lifetime, the adopted son was deemed to be the son of the deceased husband also; but it is urged that the Act has completely changed this policy. In support of this proposition, learned counsel drew our attention to the provisions of section 8 of the Act, under which any female Hindu, who is of sound mind, who is not a minor, and who is not married, or if married, whose marriage has been dissolved or whose husband is dead or has completely and finally renounced the world or has ceased to be a Hindu or has been declared by a court of competent jurisdiction to be of unsound mind, has been granted the capacity to take a son or a daughter in adoption. Then reference was made to section 12 of the Act, which runs as follows : "12. An adopted child shall be deemed to be the child of his or her adoptive father or mother for all purposes with effect from the date of adoption and from such date all the ties of the child in the family of his or her birth shall be deemed to be severed and replaced by those created by the adoption in the adoptive family; Provided that (a) the child cannot marry any person whom he or she could not have married if he or she had continued in the family of his or her birth; (b) any property which vested in the adopted child before the adoption shall continue to vest in such person subject to the obligations, if any, attaching to the owner ship of such property, including the obligation to maintain relatives in the family of his or her birth , (c) the adopted child shall not divest any person of any estate which vested in him or her before the adoption. " Reliance was also placed on sections 13 and 14 of the Act which are reproduced below: "13. Subject to any agreement to the contrary, an adoption does not deprive the adoptive father or mother of the power to dispose of his or her property by transfer inter vivos or by will. (1) Where a Hindu who has a wife living adopts a child, she shall be deemed to be the adoptive mother. 691 (2) Where an adoption has been made with the consent of more than one wife, the senior most in marriage among them shall be deemed to be the adoptive mother and the others to be, step mothers. (3) Where a widower or a bachelor adopts a child, any wife whom he subsequently marries shall be. deemed to be; the stepmother of the adopted child. (4) Where a widow or an unmarried woman adopts a child, any husband whom she marries subsequently shall be deemed to be the stepfather of the adopted child. " On the basis of these provisions, it was urged that the scheme of the Act is that, when a Hindu female adopts a child, he becomes the adopted son of the Hindu female only and does not necessarily become the son of the deceased husband, if the Hindu female be a widow. Emphasis was laid on the fact 'that even an unmarried female Hindu is permitted to take a son or daughter in adoption and in such a case, naturally, no question would arise of the adopted child becoming the adopted son of a Hindu male also. In this connection, reliance was placed on a decision of the High Court of Andhra Pradesh in Nara Hanumantha Rao vs Nara Hanumayya and Another(1). For convenience, the facts of that case may be briefly reproduced as given in the head note to indicate the question of law that fell to be decided. A and his two sons B and C were members of a Hindu joint family. B died on 26th August, 1924 leaving behind his widow D. A died in the year 1936. On 17th June, 1957, D adopted E, and E filed the suit against C and his son F for partition and separate possession of a half share in the properties. The trial court held : (1) that there is a custom among the members of the Kamma caste, to which the parties belonged, whereby the adoption of a boy more than 15 years old is valid; and (2) that the adoption of E could not have the result of divesting the interest of B that had vested in C long prior to the date of the adoption, having regard to the provisions of the Act. In appeal, the High Court upheld the decision of the trial court on both the points that were raised. The existence of the caste custom, by which boys aged more than 15 years could be adopted, was held to be sufficiently proved by evidence. Then the High Court proceeded to consider the provisions of the Act to find out whether E could claim a share in the property of B, the deceased husband of D who had adopted him. The learned Judges of the High Court enumerated the contents of the various relevant sections of the Act and then proceeded to consider whether E could claim a right in the property left by B. The Court, after reproducing the provisions of section 12 of the Act held : (1) [1964] I Andhra Weekly Reporter, 156. 69 2 "Under the terms of the above section, an adopted child is deemed to be the child of his or her adoptive father or mother for all purposes with effect from the date of the adoption. Relying on the words "for all purposes", it is argued that the adopted child has the same rights and privileges in the family of the adopter as the legitimate child. From the language of the section, it is manifest that an adopted child is deemed to be the child of his or her adoptive father or mother. The use of the word "or" between the words "father" and "mother ' makes this abundantly clear. The use of the expression "with effect from the date of adoption" as also the language of clause (c) of the Proviso are important. The expression "with effect from the date of adoption" introduces a vital change in the pre existing law. Under the law as it stood before the Act came into operation, the ground on which an adopted son was held entitled to take in defeasance of the rights acquired prior to his adoption was that, in the eye of law, his adoption related back, by a legal fiction, to the date of death of his adoptive father. The rights of the adopted son, which were rested on the theory of "relation back", can no longer be claimed by him. This is clear from the specific provision made in section 12 that the rights of the adopted are to be determined with effect from the date of adoption. Clause (c) of the Proviso to section 12 lays down the explicit rule that the adoption of a son or daughter, by a male or female Hindu is not to result in the divesting of any estate vested in any person prior to the adoption. " When finally expressing its opinion on the question of law, the Court said : "The Act has made a notable departure from the previous law in allowing a widow to adopt a son or daughter to herself in her own right. Under the Act, there is no question of the adopted child divesting of any property vested in any person or even in herself. The provisions of section 13 make this position clear, by providing that an adoption does not deprive the adoptive father or mother of the powers to dispose of his or her property by transfer inter vivos or by will. On a fair interpretation of the provisions of section 12 of the Act, we are of the opinion that the section has the effect of abrogating the ordinary rule of Mitakshara law that, as a result of the adoption made by the widow, the adoptee acquires rights to the share of his. deceased 39 6 adoptive father which has passed by survivorship to his father 's brothers. " We are unable to accept this interpretation of the provisions of the Act by the Andhra Pradesh High Court as it appears to us that the High Court ignored two important provisions of the Act and did not consider their effect when arriving at its decision. The first provision, which is of great significance, is contained in section 5 (1) of the Act which lays down : "No adoption shall be made after the commencement of this Act by or to a Hindu except in accordance with the provisions contained in this Chapter, and any adoption made in contravention of the said provisions shall be void. " It is significant that, in this section, the adoption to be made is mentioned as "by or to a Hindu". Thus, adoption is envisaged as being of two kinds. One is adoption by a Hindu, and the other is adoption to a Hindu. If the view canvassed on behalf of the appellant be accepted, the consequence will be that there will be only adoptions by Hindus and not to Hindus. On the face of it, adoption to a Hindu was intended to cover cases where an adoption is by one person, while the child adopted becomes the adopted son of another person also. It is only in such a case that it can be said that the adoption has been made to that other person. The most common instance will naturally be that of adoption by a female Hindu who is married and whose husband is dead, or has completely and finally renounced the world, or has been declared by a court of competent jurisdiction to be of unsound mind. In such a case, the actual adoption would be by the female Hindu, while the adoption will be not only to herself, but also to her husband who is dead, or has completely and finally renounced the world or has been declared to be of unsound mind. The second provision, which was ignored by the Andhra Pradesh High Court, is one contained in section 12 itself. 'The section, in its principal clause, not only lays down that the adopted child shall be deemed to be the child of his or her adoptive father or mother for all purposes with effect from. the date of the adoption, but, in addition, goes on to define the rights of such an adopted child. It lays down that from such date all the ties of the child in the family of his or her birth shall be deemed to be severed and replaced by those created by the adoption in the adoptive family. A question naturally arises what is the adoptive family of a child who is adopted by a widow, or by a married woman whose husband has completely and finally renounced the world or has been declared to be of unsound mind even though alive. It is well recognized that, after a female is married, she belongs to the family of her husband. The child adopted by her must also, therefore, belong to the same family. On adoption by a widow, therefore, the adopted son is to be deemed to be a member of the family of the deceased husband of the widow. Further still, he loses all his rights in the family of his birth and those rights 694 are replaced by the rights created by the adoption in the adoptive family. The right, which the child had, to succeed to property by virtue of being the son of his natural father, in the family of his birth, is, thus, clearly to be replaced by similar rights in the adoptive family and, consequently, he would certainly obtain those rights in the capacity of a member of that family as an adopted son of the deceased husband of the widow, or the married female, taking him in adoption. This provision in section 12 of the Act, thus, itself makes it clear that, on adoption by a Hindu female who has 'been married, the adopted son will, in effect, be the adopted son of her husband also. This aspect was ignored by the Andhra Pradesh High Court when dealing with the effect ,of the language used in other parts of this section. It may, however, be mentioned that the conclusion which we have arrived at does not indicate that the ultimate decision given by the Andhra Pradesh High Court was in any way incorrect. As we have mentioned earlier, the question in that case as whether E, after the adoption by D, the widow of B, could divest C of the rights which had already vested in C before the adoption. It is significant that by the year 1936 C was the sole male member of ,the Hindu joint family which owned the disputed property. B died in the year 1924 and A died in 1936. By that time, the Hindu Women 's Rights to Property Act had not been enacted and, consequently, C, as the sole male survivor of the family became full owner of that property. In these circumstances, it was clear that after, the adoption of E by D, E could not divest C of the rights already vested in him in view of the special provision contained in clause (c) of the proviso to section 12 of the Act. It appears that, by making such a provision, the Act has narrowed down the rights of an adopted child as compared with the rights of a child born posthumously. Under the Shastric law, if a child was adopted by a widow, he was treated as a natural born child and, consequently, he could divest other members of the family of rights vested in them prior to his adoption. It was only with the limited object of avoiding any such consequence on the adoption of a child by a Hindu widow that these provisions in clause (c) of the proviso to section 12, and section 13 of the Act were incorporated. In that respect, the rights of the adopted child were restricted. It is to be noted that this restriction was placed on the rights of a child adopted by either a male Hindu or a female Hindu and not merely in a case of adoption by a female Hindu. This restriction on the rights of the adopted child cannot, therefore, in our opinion, lead to any inference that a child adopted by a widow will not be deemed to be the adopted son of her deceased husband. The second ground taken on behalf of the appellant also, therefore, fails. The appeal is, consequently, dismissed with costs. Y.P. Appeal dismissed.

IN-Abs

A widow, whose husband had died before the Hindu Succession Act came into force, adopted respondent 2 after the enforcement of the Act. On the widow 's death, the appellant the nearest reversioner of her husband, filed a suit challenging the adoption. The trial court dismissed the suit, which, in appeal, the High Court upheld. In appeal, to this Court the appellant contended that (i) the adoption was invalid under (ii) of section 6 read with section 9 (2) of the as the son was given in adoption by his mother, even though his father was alive; and (ii) under the , an independent right of adoption is given to Hindu female and if a widow adopts a son, he becomes the adopted son of the widow only and was not deemed to be the son of her deceased husband. HELD : The appeal must be dismissed. (i) The evidence on record established that the son was given in adoption by both the parents. The deed of adoption mentions that the had been given in adoption by his "Parents which necessarily includes the father. The following sentence stating that the mother of the boy had 'put her thumb mark hereunder in token of her consent, ' was put in the deed, because section 9(2) of the Adoptions and Maintenance Act mentions that the father is not to exercise his right of giving his child in adoption, save with the consent of the mother. "The consent of the, mother" having been used in the Act which was applicable, the draftsmen of the deed included in it the fact that the boy 's mother had actually given her consent and obtained her thumb impression in token thereof. 689D H] (ii) The provision in section 12 of the Act, makes it clear that, on adoption by a Hindu female who has been married, the adopted son will, in effect, be the adopted son of her husband also. Under the Shastric Law if a child was adopted by a widow, he was treated as a natural born child and, consequently, he could divest other members of the family of rights vested in them prior to his adoption. It was only with the limited object of avoiding any such consequence on the adoption of a child by a Hindu widow that the provisions in clause (c) of the proviso to section 12, and section 13 of the Act were incorporated. In that respect, the rights of the adopted child were restricted. It is to be noted that this restriction was placed on the rights of a child adopted by either a male Hindu or a female Hindu and not merely in a case of adoption by a female Hindu. This restriction on the rights of the adopted child cannot, therefore, lead to any inference that a child adopted by a widow will not be deemed to be the adopted son of her deceased husband. [694B C,F H] Nara Hanumantha Rao vs Nara Hanumayya and another, [1964] 1 Andhra Weekly Reporter, 156, discussed.

Appeal No. 702 of 1966. Appeal by special Leave from the judgment and order dated July 30, 1964 of the Kerala High Court in Income tax Referred Case No. 20 of 1963. section T. Desai, section K. Aiyar and R. N. Sachthey, for the appellant. T. V. Viswanath Iyer, section K. Dholakia, and O. C. Mathur, for the respondent. The Judgment of the Court was delivered by Shah, J. Two persons Walter and Ramasubramony carried on business in cashewnuts as partners in the name and style of Messrs. Gemini Cashew Sales Corporation. The partnership was dissolved on the death of Ramasubramony on August 24, 1957, and the business was taken over and continued by Walter on his own account. The services of the employees were not interrupted and there was no alteration in the terms of employment of the employees of the establishment. In proceedings for assessment of tax it was urged on behalf of the firm that an amount of Rs. 1,41,506 taken into account under the head "Gratuity payable to workers of the business" in settling the accounts of the firm till August 24, 1957, was a permissible outgoing. The Income tax Officer rejected the claim and the Appellate Assistant Commissioner confirmed that order. The Income tax Appellate Tribunal held that by the transfer of the undertaking to Walter, there was no interruption in the employment of the workmen of the establishment, that the terms and conditions of service applicable to the workmen were not altered to their detriment, that Walter had not expressly agreed to take over the liability for compensation payable under section 25FF of the , and since there was dissolution of the partnership on August 24, 1957 and the undertaking was transferred, the workmen became entitled to retrenchment compensation, which the firm was liable to pay. The Tribunal accordingly held that the firm was entitled to deduct the sum of Rs. 1,41,506 in the computation of income in the assessment year. 1958 59. In recording their opinion on the following question submit ted by the Tribunal, 729 "Whether the allowance of Rs. 1,41,506 constitutes an allowable expenditure in the assessment of the firm for the year 1958 59", the High Court of Kerala observed that in the determination of the taxable profits of the firm till its dissolution, considerations about the liability to pay retrenchment compensation devolving upon Walter as the assignee of the business valuable consideration were irrelevant, and since it was maintaining accounts on mercantile system, the firm could claim as a Permissible outgoing the amount for which liability was incurred though no actual payment was made to the workmen. The Commissioner of Income tax appeals with special leave, against the order of the High Court recording an answer in the affirmative. The, subject matter of the claim was retrenchment compen sation payable to workmen of the establishment under section 25FF of the , Section 25F of the In dustrial Disputes Act, 1947, provides : "No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until (a) the workman has been given one month 's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice: Provided that no such notice shall be neces sary if the retrenchment is under an agreement which specifies a date for the termination of service; (b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent to fifteen days ' average pay for every completed year of service or any part thereof in excess of six months; and (c) notice in the prescribed manner is served on the appropriate Government. " Section 25FF, as substituted by Act 18 of 1957 with effect from November 28, 1956, provides : "Where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who 73 0 has been in continuous service for not less than one year in that undertaking immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of Section 25F, as if the workman had been retrenched : Provided that nothing in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if (a) the service of the workman has not been interrupted by such transfer; (b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable to the workman than those applicable to him immediately before the transfer; and (c) the new employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his service has been continuous and has not been interrupted by the transfer." Under section 25FF the right of the workmen to retrenchment com pensation arises on transfer of ownerships or management from the employer in relation to the undertaking to a new employer. But in the conditions set out in the proviso no such right accrues. It is common ground that the first and the second conditions in the proviso are satisfied. Counsel for the Commissioner contended that the third condition of the proviso was also satisfied, and no right to retrenchment compensation arose in favour of the workmen under section 25FF of the . Counsel for the Commissioner contended that the liability of the partners in a firm to pay retrenchment compensation being joint and several, when the undertaking carried on by a firm is continued by one of the partners after its dissolution, and the services of the workmen are not terminated and the terms and conditions of the service are not made less favourable, the partner continuing the business may appropriately be held liable to pay to the workmen retrenchment compensation on the footing that the service of the workmen had been continuous. Counsel relied upon the view expressed by the Calcutta High Court in Alex A. Apcar (Jr.) & Company vs M. N. Gan and Others(1) in which it was observed that a change of partnership by inclusion or retirement of partner, which legally changes the constitution of the firm, does not result (1) A.I.R. 1960 Cal. 14 731 in, a "change of business or employer within the meaning of sections 25F and 25FF". Counsel for the assessee relied upon a judgment of this Court in Anakapalia Co operative Agricultural and Industrial Society vs Its Workmen & Others(1) in support of the contention that on a bona fide transfer of an undertaking the workmen employed in the undertaking are entitled to retrenchment compensation under section 25FF against the transferor. That however was a case in which the transferee had declined to re employ the workmen of the transferor and the first condition of the proviso was not fulfilled. That case can have no application to the present case. In the view we take, that the allowance claimed is not a proper outgoing, or allowance in computing the profits of the assessee, we do not express any opinion on the question whether the workmen of the undertaking became entitled to retrenchment compensation on the transfer of the undertaking to Walter. Liability to pay retrenchment compensation arises under section 25FF when there is a transfer of the ownership or management of an undertaking : it arises on the transfer of the undertaking and not before. Transfer of ownership or management of an undertaking in law operates, except in the conditions Set out in the proviso, as retrenchment of the workmen. But until there is a transfer of the undertaking resulting in determination of employment the workmen do not become entitled to retrenchment compensation. So long as the ownership of the business continues with the employer, the right of the workmen to claim compensation remains contingent. A workman may, before the transfer of ownership of the business, himself terminate the employment: he may die or he may become superannuated: in none of these cases the owner of the business is under any obligation to pay retrenchment compensation to the workman. The obligation to pay compensation becomes definite only when there, is retrenchment by the employer, or when the ownership or management of the undertaking is, except in the cases contemplated by the proviso, transferred to a new employer, and not till then. The right therefore arises from determination of employment, or from transfer of the undertaking : it has no existence before these events take place. The judgment of this Court in Calcutta Company Ltd vs Com missioner of Income tax, West Bengal (2) on which reliance was placed by counsel for the assessee has no bearing on the present case, for in that case, expenditure which it was estimated had to be incurred to discharge an existing and definite obligation enforceable against the assessee in praesenti was held a permissible (1) [962] (2) 732 deduction in the computation of income. The Calcutta Com pany Ltd had sold plots of land for building purposes undertaking to develop them within six months by laying out roads, providing drainage and installing lights, etc. In the accounts of the Company maintained according to the mercantile system, the Company had credited the full sale price of the. plots agreed to be paid by the purchasers, but not actually received, and against the price it debited an estimated sum as expenditure for the development it had undertaken to carry out, even though no part of the amount was actually spent. By the terms of sale, the Company had undertaken an unconditional obligation which was enforceable against it : the liability was not contingent upon the happening of a future event. It was held by this Court that the outgoing debited was properly admissible. The decision of the House of Lords in Owen (H. M. Inspector of Taxes) vs Southern Railway of Peru Ltd.(1) on which counsel for the assessee relied also does not assist the the assessee. In that case under the Peruvian law the Southern Railway of Peru Ltd. was bound to pay its employees in Peru prescribed compensation payments upon termination of their services, subject to the fulfilment by the employee of certain conditions. The amount to be paid depended on the length of service and rate of pay at the end of the period of service. The Company set apart from the gross profits of each year sums prospectively payable under the Peruvian law as compensation on the termination of employment. In proceedings for assessment to tax of the Company made under Case 1 of Sch. D of the Income Tax Act, 1918 (8 & 9 Geo. 5, Ch. 40), it was contended on behalf of the Company that upon proper principles of commercial accountancy compensation calculated to have accrued due to each employee from year to year as deferred remuneration was properly allowable as a deduction. The Special Commissioners upheld the claim of the Company on the (,round that it was a matter of correct accountancy practice to make provision in the accounts for the sums in question. The matter reached the House of Lords in appeal from an order on a reference under section 64 of the Income Tax Act, 1952. The House held that where a number of similar contingent obligations arise from trading, there is no rule of law which prevents the deduction of a provision for them in ascertaining annual profits, if a sufficiently accurate estimate can be made. But a majority of the House held that the "provision claimed by the Company throughout the proceedings was not permissible by reason of the absence of discount and other factors". Lord MacDermott observed at p. 635 : ". .as a general proposition it is, I think, right to say that in computing his taxable profits for a (1) 733 particular year a trader who is under a definite obligation to pay his employees for their services in that year an 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. Apart from special circumstances, such a procedure, if practicable, is justified because it brings the true costs of trading in the particular year into account for that year and thus promotes the ascertainment of the "annual profits or gains arising or accruing fro in" the trade. " Lord MacDermott was of the view that the provision made by the Company led to anomalies, and was not admissible as made, and the case should be remitted to the Special Commissioners whether it is practicable to arrive at satisfactory deductions. Lord Radcliffe with whom the Lord Chancellor and Lord Tucker agreed was of the view that there is no rule of law which forbids the introduction of a provision for future payments in or payments out, if the right to receive them or the liability to make them, is in legal terms contingent at the closing of the relevant year. The question which arises in the present case is not about the admissibility of a provision made by a trader by the adoption of it reasonably satisfactory method estimating the present value of an obligation which may arise in future to pay a sum of money to his employees. The question that falls to be determined is whether the liability which arises on transfer of the, business is to be regarded as a permissible outgoing in the account of the business which is transferred. Broadly stated, the present value on commercial valuation of money to become due in future, under a definite obligation, will be a permissible outgoing or deduction in computing the taxable profits of a trader, even if in certain conditions the obligation may cease to exist because of forfeiture of the right. Where, however, the obligation of the trader is purely contingent, no question of estimating its present value may arise, for to be a permissible outgoing or allowance, there must in the year of account be a present obligation capable of commercial valuation. As already observed, the liability to pay retrenchment com pensation arose for the first time after the closure of the business and not before. It arose not in the carrying on of the business, but on account of the transfer of the business. During the entire period that the business was continuing, there was no liability to pay retrenchment compensation. The liability which arose on transfer of the business was not of a revenue nature. Profits of a business involve comparison between the state of the business at 734 two specific dates. Normally the liability which occurs after the last date, unless its source is in a pre existing definite obligation, cannot be regarded as a part of the outgoing of the. business debit able in the profit & loss account. A deduction which is proper and necessary for ascertaining the balance of profits and gains of the business is undoubtedly properly allowable, but where a liability to make a payment arises not in the course of the business, not for the purpose of carrying on the business, but springs from the transfer of the business, it is not, in our judgment, a properly debatable item in its profit & loss account as a revenue outgoing. The claim of the firm to treat it as an item in the determination of the profits of the firm under section 10(1) of the Income tax Act can.not, therefore,. be sustained. Under section 10(2) (xv) of the Indian Income tax Act in the computation of taxable profits (omitting parts of the clause not material) "any expenditure laid out or expended wholly and exclusively for the purpose of such business, profession or vocation", i.e. business, profession or vocation carried on by the assessee, is a permissible allowance. But to be a permissible allowance the expenditure must be for the purpose of carrying on the business. Where accounts are maintained on the the mercantile system, if liability to make the payment has arisen during the time the business is carried on, it May appropriately be regarded as expenditure. But where the liability is, during the whole of the period that the business is carried on, wholly contingent and does not raise any definite obligation during the time that the business is carried on, it cannot fall within the expression "expenditure laid not or expended wholly and exclusively" for the purpose of the business. Two cases illustrative of the principle may be noticed. It was held by the Madras High Court in Commissioner of Income tax, Madras vs Indian Metal and Metallurgical Corporation(1) that a provision made in the annual accounts maintained by an employer setting apart by way of a reserve to meet the liability, if any, to which the employer may become subject in the event of retrenching workmen because of the necessity of retrenchment of the services of the staff, was not a liability in praesenti in the year of account, but was only a contingent liability which may arise on the happening of a particular contingency and was not allowable as a ,deduction in assessment of tax. This Court in dealing with a case under the Wealth Tax Act in Standard Mills Company Ltd. V. ,Commissioner of Wealth tax, Bombay(1) held that a liability under the award of the Industrial Court to pay gratuity to its ,employees at certain rates on death while in service, or on voluntary retirement or resignation after fifteen years ' continuous (1) (2) 735 service, or on termination of service after certain specified periods, but not if the employee was dismissed for dishonesty or misconduct, was a mere contingent liability which arose only when the employment of the employee was determined by death, incapacity, retirement or resignation : the liability did not exist its praesenti. The amount of Rs. 1,41,506/ claimed as a permissible allow ance by the assessee in its profit & loss account cannot, in our judgment, be regarded as properly admissible either under section 10 (1) or section 10 (2) (xv) of the Income tax Act. The answer to the question must, therefore, be in the negative. The appeal is allowed and the order passed by the High Court is set aside. The Commissioner will be entitled to his costs in this Court. R.K.P.S. Appeal allowed.

IN-Abs

A partnership of two partners was dissolved on the death of one of them on August 24, 1957 and the business was taken over by the surviving partner on his own account. The services of the employees were not interrupted and there was no alteration in their terms of employment. In proceedings for assessment to income tax for the assessment year 1958 59 it was urged on behalf of the firm that an amount of Rs. 1,41,506 taken into account under the head "gratuity payable to workers of the business" in settling the accounts of the firm till August 24, 1957 was a permissible outgoing. The Income tax Officer rejected the claim and the Appellate Assistant Commissioner confirmed his order. However, the Tribunal, in appeal, held that on the dissolution of the firm, the workmen became entitled to retrenchment compensation under section 25FF of the and the firm was therefore entitled to the deduction. The High Court, upon a reference, confirmed this view. On appeal to this Court, HELD : The amount claimed by the assessee as a permissible allowance in his profit and loss account could not be regarded as properly admissible either under section 10(1) or under section 10(2)(xv) of the Income Tax Act, 1922. [735 B] Under the proviso to section 25FF the liability.to pay retrenchment compensation arose for the first time after the closure of the business and not before. It arose not in the carrying on of the business, but on account of the transfer of the business. It was not therefore a liability of a revenue nature and could not be treated as a permissible deduction under section 10(1). [733 H] Alex A. Apcar (Jr.) & Company vs M. V. Gan and Others, A.I.R, , referred to. Anakpalia Cooperative Agricultural and Industrial Society vs Its, Workmen & Others, , Calcutta Company Ltd. vs Commissioner of Income tax, West Bengal, and Owen (H. M. Inspector of Taxes) vs Southern Railway of Peru Ltd., , distinguished. Where accounts are maintained on the mercantile system, if liability to make a payment has arisen during the time the business is carried on. and the expenditure is for the purpose of carrying on the business, it may be deductible under Section 10(2)(xv) but where the liability is during the whole of the period that the business is carried on wholly contingent and does not raise any definite obligation during that time it cannot fall L9Sup. CI/67 3 728 within the expression "expenditure laid out or expended wholly or exclusively" for the purpose of the business. [734 D E) Commissioner of Income tax, Madras vs Indian Metal and Metallurgical Corporation, and Standard Mills Company Ltd. vs Commissioner of Wealth tax, Bombay, , relied on.

Appeal No. 2453 of 1966. Appeal from the judgment and order dated August 9, 1963 of the Madras High Court in T.C. No. 152 of 1961. R. Venkatram and R, Ganapathy Iyer, for the appellant. B. Sen and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Shah, J. In Sundaram & Company (Private) Ltd. hereinafter called "the Company" the public are not substantially interested within the meaning of section 23A of the Indian Income tax Act, 1922. In dealing with the assessment of income of the Company for the assessment years 1946 47 to 1951 52, the Income tax Officer, Central Circle, Madras, passed orders under section 23A of the Income tax Act, 1922, and directed that the total income of the Company as determined in the years of assessment less tax payable be deemed to have been distributed amongst the shareholders of the Company as on the relevant dates of the General Body Meetings. The following table sets out the relevant details 800 Assessment Amount of divi Date of order passed year. dend deemed to under section 23A deeming have been dec dividend to have been declared. lared. 1946 47 46,563 March 18,1952 1947 48 43,959 do 1948 49 47,829 do 1949 50 97,875 do 1950 51 92,591 do 1951 52 25,899 March 30, 1955 3,54,716 On July 7, 1955 the Company in a general meeting resolved that the amount of Rs. 3,54,716/ which was under the orders of the Income tax Officer deemed to have been distributed as ;dividend amongst the shareholders pursuant to orders under section 23A of the Income tax Act, be distributed as dividend to the shareholders, and in pursuance of that resolution proportionate part of the dividend due to each shareholder was credited to his account. The Income tax Officer completed the assessment of the Company for the year 1956 57 and determined Rs. 5,69,396/as its total income. The Income tax Officer computed the supertax payable by the Company under the Finance Act, 1956, at the rate of six annas and nine pies in the rupee of the total income and granted a rebate at the rate of four annas in the rupee in accordance with the provisions of Cl. D proviso (i) (b) & (ii) ,of the Schedule to that Act. Sometime thereafter the Income tax Officer being of the opinion that excessive relief had been granted to the Company within the meaning of section 34 (1) (b) of the Income tax Act, issued a notice on January 31, 1959 for reopening the assessment for the year 1956 57. The Company filed its return of income in compliance with the notice and contended that the proceedings commenced by the, Income tax Officer were unauthorised, because the income of the Company had not been the subject of "excessive relief" within the meaning of section 34(1)(b), and that actual distribution of dividends already deemed to have been distributed in accordance with the orders passed under section '23A cannot be taken into consideration for the purpose of reducing the rebate of super tax admissible under the proviso 2 to Paragraph D of the Finance Act, 1956. The Income tax Officer rejected the contentions and ordered that the rebate of super tax to the extent of Rs. 80,978/ be withdrawn. In appeal to the Appellate Assistant Commissioner it was held that in the circumstances of the case, assessment could be reopened under section 34(1) (b) on the ground that the income had ' been made the subject of "excessive relief", but only Rs. 77,600/and not the whole amount of Rs. 3,54,716/ which was deemed to be distributed under orders under section 23A could be taken into 801 consideration as dividend distributed by the Company during the previous year relevant to the assessment year 1956 57. The Commissioner of Income tax appealed to the Income tax Appellate Tribunal. He, contended that in the circumstances of the case the amount of Rs. 3,54,716/ was liable to be taken into consideration for the purpose of withdrawing the rebate of supertax admissible under the Finance Act, 1956. The Tribunal held that the case of the Company "did not fall within any of the situations contemplated by section 34(1)(b)" and the Company 's income had not been the subject of excessive relief as the rebate of super tax originally granted was out of the tax otherwise computable and not from the assessed income. But the Tribunal confirmed the order of the Appellate Assistant Commissioner directing that Rs. 77,600/ be taken into account in withdrawing rebate of super tax. The Tribunal then referred three questions to the High Court of Judicature at Madras : "1. Whether the Tribunal was justified in disposing of 'the appeal as it did.? 2. Whether the Tribunal was right in law in entertaining the assessee 's contention relating to the applicability, of section 34(1) (b) under Rule 27 of the Appellate Tribunal Rules ? 3. Whether the setting aside of 'the assessment under section 3 4 (I ) (b) was correct in law ? " The High Court decided in favour of the Company on the first two questions. In considering the third question the High Court observed that the plea of the Company that re assessment proceedings under section 34 (I) (b), on the ground of "excessive relief cannot be initiated, must be accepted. The Court then proceeded to consider whether allowance of rebate to which the assessee was not entitled, did not amount to assessing income at too low a rate, and observed that "there can be no question that the rebate of tax rate and a reduction of such rebate is essentially the arithmetic of rate. Reading however the provisions of the Finance Act, 1956, as a whole in the perspective that its chief aim and object is to prescribe the rate of income tax and super tax, it seems to us that an assessee escaping some of its provisions and failing to pay the full measure of tax is assessed at too low a rate". The High Court accordingly held that proceedings under section 34(1) (b) could be initiated when rebate in the payment of super tax was ranted to the assessee without reducing it in the circumstances set out in the second proviso to Part 11 of the First Schedule Paragraph D in the Finance Act, 1956, on the ground that the income, profits and gains of the Company were assessed to tax 802 at too low a rate. The High Court answered the third question in favour of the Commissioner. Against the order passed by the High Court on the third question, this appeal is preferred by the, Company. The Commissioner of Income tax has not challenged the correctness of the decisions on Questions I & 2. We are unable to agree with counsel for the assessee that the first question raised an enquiry not only as to the correctness of the procedure followed by the Tribunal, but also to the right of the Income tax Officer to initiate a proceeding under section 34(1) (b) to bring to tax rebate which was not reduced. In terms, the first question relates to a matter of procedure : and in the answer recorded to that question it is not implied that the Income tax Officer had no power to initiate the proceeding under section 3 4 ( 1 ) (b). The third question raised by the Tribunal was defective. The true scope of the enquiry arising out of the argument before the Tribunal was not whether the order of assessment was proper. but whether the proceeding for re assessment was properly initiated under section 34(1) (b). That is how the High Court also understood the question. We therefore re frame the question as follows : "Whether the Income tax Officer was in the circumstances of the case competent to initiate the proceeding under section 34 (I) (b) of the Indian Income tax Act for bringing to tax the excessive rebate granted to the assessee ?" Section 34(1) (b) of the Indian Income tax Act, as it stood at the relevant time, provided "If (a) (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income tax Officer has in consequence of information in his possession reason to believe that income, profit% or gains chargeable to income tax have escaped assessment for any year, or have been under assessed, or assessed at too low a rate, or have been made the subject of excessive relief under this Act or that excessive loss or depreciation has been computed, he may in cases falling under clause (a) at any time and in cases falling under clause (b) at any time within four years of the end of that year, serve on the assessee, or, if the assessee is a company, on the principal officer 803 thereof, a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 22 and may proceed to assess or reassess such income, profits or gains or recompute the loss or depreciation allowance; and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section It was held by the High Court of Bombay in P. section Subraman yan, Income tax Officer, Companies Circle I (1) Bombay and Another vs Simplex Mills Ltd.(1) that "the relief referred to in section 34(1) (b) of the Income tax Act, 1922, can only be such relief as is granted to the assessee by reason of his income, profits and (rains being chargeable to tax. It is, therefore, referable to the various kinds of relief afforded to the assessee under the Act in respect of his income, profits and gains, such, for instance, as are granted under sections 15A, 15C, 49A, 49B, 49C, 49D and 60 of the Act." This Court affirmed the judgment of the Bombay High Court in P. section Subramanyan, Income tax Officer, Companies Circle I (1) and Another vs Simplex Mills Ltd. 2 In Simplex Mills(2) case advance tax paid by the assessee for the assessment year 1952 53 was found refundable and the Income tax Officer allowed interest on the tax paid under section 18A(5) of the Incometax Act, 1922, as it then stood. The Act was amended by the Income tax (Amendment) Act, 1953, with retrospective effect from April 1, 1952, and it was found that interest allowed to the Company was excessive. The Income tax Officer then initiated a proceeding under section 34 (1 ) (b) to reassess the tax on the ground that income for that year had been under assessed and had been made the subject of excessive relief. The Bombay High Court rejected the claim of the Income tax Officer, and this Court held that the original assessment could not be reopened under section 34, because it could not be said either that there was under assessment of the income, or that excessive relief was granted. In the light of that judgment, the High Court opined that the claim of the Department to initiate a proceeding under section 34(1) (b) on the round that excessive relief was allowed could not be sustained. But the High Court held that a proceeding for reassessment could be initiated on the ground that income had been assessed at too low a rate. Counsel for the Company contends that the High Court was in error in proceeding to enlarge the scope of the enquiry and in entering upon a question which was never mooted before the Tribunal. Section 2 of the Finance Act, 1956, provides insofar as it is material, that : (1) (2) 48 1.T.R. 182 (section C.) 804 .lm15 "Subject to the provisions of sub sections (2), (3), (4) and (5), for the year beginning on the 1st day of April, 1956, (a) income tax shall be charged at the rates specified in Part I of the First Schedule. . (b) rates of super tax shall, for the purposes of section 55 of the Indian Income tax Act, 1922 (XI of 1922) . . , be those specified in Part 11 of the First Schedule. . . . Part 11 of the First Schedule specifies the rates of super tax. Clause D provides : "In the case of every company on the whole of total income Rate Six annas and nine pies in the rupee. Provided that (i) (ii) a rebate at the rate of four annas per rupee of the total income shall be allowed in the case of any company which satisfies condition (a), but not condition (b) of the preceding clause; and (iii) Provided further that (i) the amount of the rebate under clause (i) or clause (ii), as the case may be, of the preceding proviso shall be reduced by the sum, if any, equal to the amount or the aggregate of the amounts, as the case may be, computed as here under : (a) on the amount representing the face value of any bonus shares or the amount of any bonus issued to its share holders during the previous year with a view to increasing the paid up capital, except to the extent to which such bonus shares or bonus have been issued out of premiums received in cash on the issue of its shares; and at the rate of two annas per rupee. 805 (b) in addition, in the case of a Company referred to in clause (ii) of the preceding proviso which has distributed to its shareholders during the previous year divi dends in excess of six per cent of its paid up capital, not being dividends payable at a fixed rate on that part of the said divi . at the rate dends which exceeds 6 per cent. of two annas but does not exceed 10 per per rupee. of the paid up capital; on that part of the said divi at the rate of ' dends which exceeds 10 per cent three annas of the paid up capital; per rupee. Paragraph D read with section 2(b) of the Finance Act, 1956 fixes the rate of super tax payable by Companies for the purpose of section 55 of the Indian Income tax Act. From the super tax declared payable, in certain conditions rebate is granted, and that rebate is also related to the total income of the assessee. By the second proviso, part of the rebate may be withdrawn, if the Company has in the previous year issued bonus shares or bonus or has distributed dividend in excess of six per cent. of its paid up capital. The super tax and the rebate admissible are both related to the total income, whereas the reduction of rebate is related to the face value of the bonus shares or of the value of bonus or the amount of dividends distributed. Super tax payable by a Company is therefore determined as a fraction of the total income, reduced by a percentage of the value of the bonus shares or bonus or dividends distributed. Counsel for the Company contends that the expression "too low a rate" used in section 34(1) (b) must, having regard to the context in which the expression is used and in the scheme of the Indian Income tax Act, be regarded merely as the fraction which determines tax liability of the assessee, but when in computing super tax liability, the Income tax Officer has after determining the amount by applying the fraction to reduce the resultant by reference to a factor unrelated to total income, it cannot be said that tax is charged at a certain rate. Counsel says that the Legislature has not used the expression "assessed at too low an amount" but the expression used is "assessed at too low a rate" therefore says counsel for the Company the jurisdiction of the Income tax Officer will be attracted only when the wrong fraction 806 has been applied in the determination of super tax, and not when the computation of tax depends on other factors. We are unable to accept this contention. The assumption that the expression "rate" has been used in section 34(1) as meaning a fraction of total income is, in our judgment, not warranted. By the use of the expression "rate" in the context in which it occurs, undoubtedly a relation between the taxable income and the tax charged is intended, but the relation need not be of the nature of proportion or fraction. The expression "rate" ' is often used in the sense of a standard or measure. Provided the tax is computable by the application of a prescribed standard or measure, though not directly related to taxable income, it may be called tax computed at a certain rate. We agree with the High Court that the rebate of tax and the reduction of such rebate are essentially matters of measure or standards of rate. The chief aim and object of the Finance Act, 1956, is to prescribe the standard or measure of income tax and super tax and it seems that an assessee escaping some of its provisions, and failing to pay the full measure of tax is assessed at too low a rate. But the view we have taken is not sufficient to dispose of the appeal. It may be recalled that the question arising out of the order of the Tribunal was about the competence of the Income tax Officer, to initiate proceedings under section 34 (I) (b). It is true that it was not argued before the Tribunal on behalf of the Company that on the notice served by the Income tax Officer proceedings for reassessment could only be initiated on the ground that income had been the subject of excessive relief, and not on any other ground. But the Company did contend that the initiation of the reassessment proceeding was invalid, and the plea, that the initiation was invalid because the notice was defective was only tin aspect of the plea raised by the Company. The question is originally raised by the Tribunal, and as reframed by us, includes that enquiry. Counsel for the Company did argue before the High Court that in a proceeding to reassess income initiated on a notice that income has been subject to excessive relief, the Income tax Officer was incompetent to reassess income on the footing that income was assessed at too low a rate, but the High Court did not record their decision on that plea : they merely suggested that it will be open to the Company to raise the question when the matter is again taken up for consideration. If however the question arising out of the order of the Tribunal was, as correctly pointed out by the High Court, one about the "validity of initiation of proceeding under section 34(1) (b)", the High Court was bound to decide all aspects of that question raised before them, before recording an answer : if they did not, the Tribunal would 807 be powerless to enter upon an enquiry of any other aspect of the question after answer to the question is recorded by the High, Court. We are unable to agree with the assumption made by the High Court that because a particular aspect of the question of law raised was not specifically argued before the Tribunal, the High Court cannot deal with that aspect. We are, in the state of the record before us, unable to record an answer to the question, and the case must be remanded to the High Court to determine whether the proceedings were validly initiated on the notice issued against the Company. The notice which was served upon the Company is not included in the paper book prepared for use in this Court. The notice must of necessity be part of the record of the Income tax Officer, even if it be not on the record of the Tribunal. It will be open to the High Court, in determining the contention raised by the Company, to call for a supplementary statement of the case relating to the form and contents of the notice and the validity thereof from the Tribunal. After receiving the supplementary state ment, if any, the High Court will proceed to dispose of the third question in the light of the reasons set out by us in this judgment. Costs of this appeal will be costs in the High Court. Y.P. Appeal remanded.

IN-Abs

The Income tax Officer issued a notice to the assessee for reopening the assessment for the year 1956 57 on the ground that "excessive relief" within the meaning of section 34(1)(b) of the Income tax Act, 1922 had been granted to the assessee. Rejecting the contention of the assessee that the income had not been the subject of "excessive relief" and therefore the proceedings were unauthorised and that the amount deemed to have been distributed under orders under section 23A could not be taken into consideration for the purpose of reducing the rebate of super tax admissible under proviso 2 to paragraph D of the Finance Act, 1956, the Income tax Officer ordered that the rebate of super tax granted be reduced. The Appellate Assistant Commissioner held that only a part of the amount of dividend deemed to have been declared by the assessee could be taken into consideration in withdrawing the rebate of super tax. On appeal by the Commissioner, the Tribunal held that the case of the assessee did not fall within any of the situations contemplated by section 34(1) (b), but confirmed the order of the Appellant Assistant Commissioner. On the question "whether the setting aside of the assessment under section 34(1) (b) was correct in law" the High Court was of the opinion that the claim of the department to initiate proceedings under section 34(1)(b) on the ground that excessive relief was allowed could not be sustained, but held that the proceedings under the section could be initiated on the ground that the income profits and gains of the asses see were " assessed at too low a rate". The High Court did not 'record its decision on the plea of the assessee that in a proceeding to re assess income initiated on a notice that income had been subject to "excessive relief", the Income tax Officer was incompetent to re assess income on the footing that income was assessed at too low a rate. In appeal to this Court the assessee contended that (i) the High Court was in error in enlarging the scope of the enquiry and entering upon a question never mooted before the Tribunal and (ii) by the use of the expression "assessed at too low a rate" it was intended that the jurisdiction of the Income tax Officer would be attracted only when the wrong fraction had been applied in the determination of super tax and not when the computation of tax depended on other factors. HELD : (i) The case must be remanded to the High Court to determine whether the proceedings were validly initiated on the notice issued against the asscssee. [807B] 799 The scope of the enquiry arising out of the arguments before the Tribunal was not whether the assessment was proper, but, whether the Income tax Officer was in the circumstances of the case competent to initiate the proceeding under section 34(1) (b) of the Income tax Act for bringing to tax the excessive rebate granted to the assessee. The question referred to the High Court had to be reframed accordingly The question, as framed by the Tribunal, though defective, included that enquiry. The High Court was, therefore, bound to decide all aspects of that question and it was wrong in making the assumption that because a particular aspect of the question of law raised was not specifically argued before the Tribunal the High Court could not deal with it. [S02D E; 806F H; 807A B] P. section Sutbramanyan, Income tax Officer, Companies Circle I (1) and Anr. vs Simplex Mills Ltd. , referred to. (ii) The High Court was right in holding that the rebate of tax and the reduction of such rebate were essentially matters of measure or Standards of rate. The expression rate in section 34(1) does not mean a fraction of total income; it is often used in the sense of standard or measure. Provided the tax is computable by the application of a prescribed standard or measure, though not directly related to taxable income, it may be said that the tax is computed at a certain rate. The aim and object of the Finance Act, 1956, is to prescribe the standard or measure of income tax or super tax, and an assessee escaping some of its provisions and failing to pay the full measure of tax is "assessed at too low a rate". [806B C]

Appeal No.155 of 1953. Appeal by special leave from the Judgment and Order dated the 15th July, 1953, of the Election Tribunal, Nagpur, in Election Petition No. 3 of 1952.B. Sen and T. P. Naik for the appellant. Veda Vyas (section K. Kapur with him) for respondent No. 1. 1954. February 15. The Judgment of the Court was delivered by Bose J. This is an appeal against a decision of the Nagpur Election "Trbunal. The contest before the tribunal was about two seats in the Bhandara Parliamentary Constituency. The elections were held on five days 'in December, 1951, and January, 1952. 819 Thirteen candidates filed nomination papers, among them the petitioner. Of these, six contested the seat reserved for the Scheduled Castes. One of these was Gangaram Thaware who has since died. The Scheduled Caste in question is the Mahar caste. Objection was taken to Thaware 's nomination for the reserved seat on the ground that he was not a Mahar. It is admitted that he was born a Mahar, but later in life he joined the Mabanubhava Panth. This, according to the appellant, is a sect which does not believe in caste, and alternatively that it forms a separate caste in itself The contention was that when Gangaram Thaware joined the Panth he ceased to be a member of the Mahar caste ' The objection succeeded and his nomination was rejected. The nomination of another Scheduled Caste candidate was also rejected and five others were withdrawn before the election, among them was the present petitioner. That left six candidates of whom three were eligible for the reserved seat. The two who were elected were Tularam Sakhare, for the Scheduled Caste seat, and chaturbhuj, Jasani, nor the general seat. Jasani 's election was challenged on the ground that he was subject to the disqualifications set out in section 7 (d) of the Representation of the People Act (Act XLIII of 1951) as he was interested in a contract for the supply of goods to the Central Government. The Election Tribunal held that the rejection of Gangaram Thaware 's nomination was improper as he continued to be a member of the Mahar caste despite his conversion to the tenets of the Mahanubhava. Panth. It also held that Chaturbhuj Jasani had a contract with the Central Government, so he was disqualified. Accordingly it set aside the whole election. We will deal with Chaturbhuj Jasani 's election first. Section 7(d) is in these terms : "A person shall be disqualified for being chosen as, and for being, a member etc. * * * * 820 (d)if by himself he has any share or interest in a contract for the supply of goods to the appropriate Government." Chaturbhuj Jasani was, and still is, a partner in the firm of Moolji Sicka & Company, and it is said that at all material times the firm had a contract for the supply of bidis to the Government for the troops. Moolji Sicka & Company is a firm of bidi manufacturers. The Central Government was interested in stocking and purchasing bidis for sale to its troops through its canteens. Accordingly, it placed two of the brands of bidis manufactured by this firm on its approved list and entered into an arrangement with the firm under which the firm was to sell, and the Government was to buy from the firm, from time to time, these two brands of bidis. It was argued that this amounted to a contract for the supply of goods within the meaning of the section. It was said that the contract was embodied in four letters. We do not intend to analyse these letters in detail. It is enough to say that in our opinion no binding engagement can be spelt out of them except to this extent : Moolji Sicka & Company undertook to sell to the canteen contractors only through the Canteen Stores and not direct and undertook to pay a commission on all sales. This, in our opinion, constituted a Continuing arrangement under which the Canteen Stores, i.e., the Government, would be entitled to the commission on all orders placed and accepted in accordance with the arrangement ; and in fact the Canteen Stores did obtain a sum of Rs. 7,500 'in satisfaction of a claim of this kind. This money was paid long before the dates which are crucial here but the settlement illustrates that there was an arrangement of that nature and 'that it was a continuing one. In our opinion, it continued in being even after that and the mere fact that there was no occasion for any claim subsequent to the settlement does not indicate that it was no longer alive. But except for this, the; letters merely set out the terms on which the parties were ready to do business with 821 each other if and when orders were placed and executed. As soon as an order was placed and accepted a contract arose. It is true this contract would be governed by the terms set out in the letters but until an order was placed and accepted there was no contract. Also, each separate order and acceptance constituted a different and distinct contract: see Rose and Frank Co. vs J. R. Crompton & Bros. Ltd.(1) The crucial dates with which we are concerned are 15th November, 1951, the last date for putting in the nominations, and 14th February, 1952, the date on which the results were declared. The section runs "A person shall be disqualified for being chosen as. The words which follow, "and for being", need not be considered as it is enough for our purposes to use only the former. Now the words of the section are "shall be disqualified for being chosen. " The choice is made by a series of steps starting with the nomination and ending with the announcement of the election. It follows that if a disqualification attaches to a candidate at any one of these stages he cannot be chosen. The disqualification alleged in this case is that Chaturbhuj Jasani had an interest in a contract, or a series of contracts, for the supply of goods to the Central Government. He had this interest because the contracts were made with Moolji Sicka & Company a firm of which Jasani is one of the partners. The fact of partnership is admitted but the other facts are denied. We have therefore to see whether any contract for the supply of goods to Government by Moolji Sicka & Company existed at any 'time on or between the relevant dates. Exhibit C is a tabular statement which sets out the dealings between the parties during certain months. It is accepted as correct by both sides. The following extracts from this statement show that Moolji Sicka & Company had an interest in a series of contracts for the sale of bidis to the Canteen Stores at and between the relevant dates. (1) ; 822 Date of order Date of invoice Price of Date of by and goods pay Canteen Stores Despatch. supplied.ment. 8 10 1951 18 10 1951Rs. 1,684 13 919 12 1951. 8 10 195119 10 19513,373 9 3do 17 8;195126 10 195112,602 8 0do 12 9 195126 10 195111,426 14 6do 11 10 195126 10 19518,411 14 0do 21 10 195130 11 195110,125, 2 9do 9 8 195129 8 195125,812 12 024 12 1951 8 10 195118 10 19514,793 4 9do 14 11 195122 11 1951:1,887 9 95 I .1952 17 10 19518 11 195116,534 2 022 1 1952 12 11 195120 11 19514,205 15 0do 13 12 195110 1 195213,97,079 7 912. 2 1952 14 1 195222 1 19521,691 11 9do 21 12 195110 1 195216,983 8 018 2 1952 12 11 195122 11 19518,411 14 013 3 1952 9 1 195216 1 19525,888 4 9do 23 1 195228 1 19528,411 ,14 020 3 1952 This statement reveals that various contracts aggregating Rs. 15,39,345 6 0 less some small sums for railway freight, were outstanding at one time or another between the two crucial dates and that payments in discharge of these liabilities were made at various dates between 15th November, 1951, and 20th March, 1952. It also shows that orders were placed and accepted for goods priced at Rs. 84,659 14 3 before 15th November, 1951, and that payment was not made till after that date. Therefore, on 15th November, 1951, goods worth Rs. 84,659 14 3 had still to be paid for. Then between 15th November, 1951, and 14th. February, 1952, further orders for goods valued at Rs. 39,695 8 9 were placed And accepted and they were not paid for till after 14th February, 1952. It was argued that there is nothing to show that. the goods were, not supplied before 15th November, 1951, and before 14th February, 1952. It was said on behalf of 'the appellant that these are the only dates which are crucial, so if Moolji Sicka. & Company hid. fully 823 executed their part of the contracts before the two crucial dates the disqualification would not apply. That raises these questions: (1) Does a person who has fully executed his part of a contract continue to have an interest in it till the goods are paid for ?; and (2) were these contracts fully executed so far as Moolji Sicka & Company 's part was concerned? The parties are not agreed about this, so it will now be necessary to examine their letters in detail to determine the terms of the various contracts. The correspondence discloses that the Canteen Stores and Moolji Sicka & Company dealt with each other from time to time under various arrangements which they called " systems. The earliest letter we have about the transactions between these parties is one dated 30th March, 1951. It shows that the "system" which they called the " Direct Supply System " was in use at that time. The details of the " system " are set out in an order dated 17th April, 1951. Under it Moolji Sicka & Company had to send supplies of bidis direct to the Canteen Stores contractors as and when ordered. The value of the goods so supplied was to be recovered from the contractors direct and the Canteen Stores were to be informed of the sales and were to be paid a certain commission. This led to some friction and in their letter of 30th March, 1951, the Canteen Stores complain that information about some of the sales to the contractors had been suppressed with the result that the Canteen Stores lost their commission. Moolji Sicka & Company replied to this on 24th April, 1951, and suggested a slight change in the system, namely that all orders for the goods should in future be placed through the Canteen Stores and that there should be no dealings with the contractors direct except to supply them with the goods ordered by the Canteen Stores; then, ' they said, there would be no complaint about their having been kept in the dark. This appears to have been agreed to because such of the subsequent order& as are on record were placed by the Canteen Stores. 824 The order dated 17th April, 1951, to which we have referred above is a sample. This was considered unsatisfactory and it was felt that a change was called for. Moolji Sicka & Company 's letter of 24th April, 1951, shows that their complaint was that the Canteen Stores did not keep a sufficient stock of bidis on hand. They said " We feel that you can stock more of our bidis. And that will mean an added profit to you; since the rebate you get on supplies made under the Direct Supply System is Rs. 4 only, whereas on supplies made to you we have now offered a much higher rebate. . . We have therefore to request you to kindly 8stock more of our bidis. " In view of this, two representatives of Moolji Sicka & Company, met the Chairman of the Board of Administration, who was in charge of the Canteen Stores Department, on 10th July, 1951. They reached certain tentative conclusions which were reduced to writing by the Canteen Stores on 11th July, 1951. Their letter of that date shows that the Canteen Stores proposed to abolish the Direct Supply System in the near future but so far as Moolji Sicka & Company were. concerned they said that the system could be abolished. at once (" forthwith " is the word used) provided Moolji Sicka & Company would agree to supply bidis for the Bombay, Calcutta and Delhi Depots of the Canteen Stores under a new system which they called the " Consignment System ". Under this the Canteen Stores were to pay as they sold. But the new system was intended only for the Bombay, Calcutta and Delhi Depots of the Canteen Stores. The letter goes on to say that for the Pathankot and Srinagar Depots the supplies would have to be made on the " Outright Purchase Basis ". These proposals were embodied under the heading " Future Business RelationsThen there was a provision for what was called theTransition Period ". That said that Untilstocks could be placed in our depots, it was agreed that you would supply your bidis direct against our orders and on such supplies you would allow us rebate as at present. 825 These proposals were sent to Moolji Sicka & Company for confirmation. It will be seen that the ' letter makes four proposals: (1)That so far as Moolji Sicka & Company were concerned, " The Direct Supply System " should be terminated at once though, so far as other manufacturers were concerned, it should continue in force for some time longer; (2)That in its place the Calcutta, Bombay and Delhi Depots were to be supplied under a new system called the " Consignment System "; (3)That the Pathankot and Srinagar Depots were to be supplied under another new system called the Outright Purchase System "; (4)That during the "transition period" the "Direct Supply System" was to continue in operation " as at present " even with Moolji Sicka and Company. Moolji Sicka & Company replied on 16th July, 1951, saying that they were prepared to accept these terms provided the Canteen Stores confirmed certain modificatioins which Moolji Sicka & Company proposed. They were as follows: (1)Regarding the " Transition Period " they said" "We are pleased to note that you will soon be abolishing the Direct Supply System. But it should be applied to all suppliers at the same time. Till then we should be allowed to supply any orders received from the Canteen Contractors. You should inform us of the date on which Direct Supply System will be discontinued. (2) Regarding the new proposals under the heading Future Business Relations Moolji Sicka & Company said "Goods sent to your depot on consignment basis must be either returned to us or paid for fully within three months of the date of supply. We understand that the system. of supplying goods on consignment basis will be discontinued in about six months ' time. " 107 826 (3) They said " And for this purpose we have agreed to offer you Rs. 7,500 in full and final settlement of all your claims to date and upon the understanding of your acceptance of the terms for future business. They concluded " Upon receiving your confirmation we shall instruct our Bombay office to send you the cheque for the amount stated above. " The Rs. 7,500 was what the Canteen Stores claimed from Moolji Sicka & Company as compensation for breach of the agreement under which Moolji Sicka & Company had agreed not to sell to the Canteen Contractors without paying the Canteen Stores a commission. Neither side was able to produce exact figures but this was the estimate made by the Canteen Stores of the loss suffered by them by reason of that breach. It will be seen that the proposal about the " Consignment System " which the Canteen Stores made was that they would pay Moolji Sicka & Company only when they sold the stocks with which Moolji Sicka & Company were to supply them for stocking their depots at Calcutta, Bombay and Delhi. Moolji Sicka & Company were not satisfied with this and said that the Canteen Stores must either return or pay for all stocks supplied, within three months from the date of supply. The Canteen Stores replied on 19th July, 1951, as follows: (1) They accepted Moolji Sicka & Company 's suggestion that when the Direct Supply System was abolished the abolition would apply to all suppliers of bidis. (2) As regards the " Consignment Account System they did not turn down the proposals but observed that they were thinking of doing away with that too in favour of the " Outright Purchase System" and warned Moolji Sicka & Company that in view of that it might not be necessary to place any of Moolji Sicka & Company 's stocks in their depots. 827 (3) They wanted a six months ' guarantee period in place of three months. The letter concludes "Although under the system of provisioning,adopted by us, and as explained to you during our discussions, it may not be that we shall at any time have any stocks surplus to our requirements or stocks which have not been disposed of within the guarantee period, but should there be any solitary occasions will you please confirm that you will replace Such stock with fresh stock without any cost to us? We await your agreement by return. " They also said, "We now await your cheque for Rs. 7,500. Moolji Sicka & Company replied on 26th July, 1951, and commenced by saying " We agree to all you have said in page one of your letter under reply. " Regarding the guarantee they said they could not agree to six months but would agree to three provided the guarantee was limited to goods found to be defective because of faults in manufacture. They concluded "We have also to pay you Rs. 7,500 as per our ' letter, dated 16th July, 1951," and asked how the Canteen Stores would like the payment to be made. The Canteen Stores replied on 31st July, 1951, and explained what they meant by the " guarantee period ". Bidis deteriorate by keeping, so the idea was to have a system under which they could be returned within six months to prevent their deterioration. They explain that this is in the interests of the 'manufacturer because (1) it will not bring their brands into disrepute, for that would, be the inevitable result if stale bidis which had deteriorated were sold in the canteens and (2) if the period is made too short, then "the goods will not stay in our depots and in the stalls of our canteens and contractors long enough to sell and hence our depots will always be,, anxious to 828 return these stocks. The result will be obvious. Your sales will be, lower. They continue " We therefore consider that the period of six months should be the least before the expiry of which goods may be taken back by you and replaced. . . The period of three months within which you expect us to return your stocks, should we find them not moving, will be too short. " They conclude by saying that they hope Moolji Sicka & Company will agree to the six months. Now it will be seen that all this correspondence related to the proposals about the " Consignment System " which were first mooted on 11th July, 1951. Moolji Sicka & Company complained on 24th April, 1951, that the Canteen Stores were not keeping large enough stocks of their bidis and they asked the Canteen Stores to stop the Direct Supply System and purchase stocks direct. The Canteen Stores were naturally reluctant to keep large stocks on hand because bidis 'deteriorate and become unsaleable in course of time. Therefore they proposed the " pay as we sell " system, that is, they would keep stocks of bidis and pay for whatever they sold. But the problem of unsold stocks deteriorating still remained. Who was to be responsible? The obvious answer was that the manufacturers should take back the unsold stocks before they were too far gone and in their place send fresh consignments for sale on the " pay as we sell " basis. We say "obvious" because the manufacturers could use the stale tobacco by re curing and blending it, or could use it for other purposes provided it was not too far gone. The proposal therefore was that the, Canteen Stores were to keep stocks of Moolji Sicka & Company 's bidis in their depots and canteens, pay for what they sold and return all unsold stocks within six months. Moolji Sicka & Company were then to replace them with fresh stocks which would be paid for when sold. This was agreed to in the main but the point at which they were at issue was the six months. Mooli Sicka & Company proposed three months while the 829 Canteen Stores wanted six months. We think 'the argument used in the letter of 31st July, 1951, that " the result will be obvious. Your sales will be lower " can only have reference to an arrangement of this kind, otherwise no question of the sales being lower could arise. In the case of an outright sale, the sale would be complete when the order was executed, and except for bidis found to be defective due to manufacture Moolji Sicka & Company would have no further concern with them. The sentences the goods may be taken back by you and replaced and " should we find them not moving " can only refer to these proposals about the "Consignment System " In any case, it certainly includes this system. Moolji Sicka & Company 's reply is dated 9th August, 1951. They say "We are in receipt of your letter No. 7B/29/ 17 1299, dated 31st July, 1951, and are pleased to extend the guarantee period from three to six months. We are sure this will now enable you to keep adequate stocks of our bidis. Awaiting your esteemed orders. " This is an acceptance of the interpretation of the " guarantee period " as given by the Canteen Stores in their letter of 31st July, 1951. The words "now" and "adequate" relate to the dispute which started on 24th April, 1951, when Moolji Sicka & Company complained that the Canteen Stores were not keeping adequate.stocks of their bidis in their depots. The ,subsequent correspondence was aimed at finding out ways and means to meet this objection and at the same time satisfy both sides. It all ended by Moolji Sicka & Company accepting the terms set out in the letter of 31st July, 1951. We are accordingly of opinion, that Moolji Sick& & Company accepted the " Consignment System " on 9th August, 1951. That imported a "pay as we sell" arrangement with an obligation to take back stocks unsold within six months and replace them with fresh stocks which would be paid for when sold. in the "transition period " the Direct Supply System was also to continue. That meant that there would be two systems in force for a time in certain depots: the "Consignment 830 System " regarding stocks ordered for the stocking up of the Calcutta, Bombay and Delhi depots of the Canteen Stores and the " Direct Supply System " till such time as the depots were stocked. The third system of " Outright Purchase " was limited for the time being to the Pathankot and Srinagar depots. Both the "Direct Supply" and the "Consignment" systems were abolished together on list November, 1951 (see the Canteen Stores ' letter dated 24th November, 1951). But the obligation to take back unsold stocks within the six months ' period continued to attach to all contracts for consignment to the Calcutta, Bombay and Delhi depots made between 9th August, 1951, and 31st October, 1951. The tabular statement shows that the following contracts for consignment to one or other of these three depots were made during that period. The date of the invoice is the date of the execution of the order and thus of the acceptance of the proposal contained in the order. Date of Invoice Depot Price of goodsd date & despatch supplied payment. 1 10 1951 Bombay. Rs. 5,056 2 0 15 11 1951 13 10 1951 do. 13,536 4, 6 do 18 10 1951 Delhi 1,684 13 919 12 1951 19 10 1951 Calcutta 3,373 9 3 do 18 10 1951 Bombay 4,793 4 924 12 1951 The value of these orders comes to Rs. 28,444 2 3. The obligations under these several contracts continued from 1st April, 1952 to 18th April, 1952. It was argued that assuming that to be the case then there were no longer any contracts for the "supply of goods" in existence but only an obligation arising under the guarantee clause. We are unable to accept such a narrow construction. This term of the contract, whatever the parties may have chosen to call it, was a term in a contract for the supply of goods. When a contract consists of a number of terms and conditions, each condition does not form a separate contract but is an item in the one contract of which it is a part. The consideration for each 831 condition in a case like this is the consideration for the contract taken as a whole. It is not split up into several considerations apportioned between each term separately. But quite apart from that, the obligation, even under this term, was to supply fresh stocks for these three depots in exchange for the stocks which were returned and so even when regarded from that narrow angle it would be a contract for the supply of goods. It is true they are replacements but a contract to replace goods is still one for the supply of the goods which are sent as replacements. But even if all that be disregarded and it be assumed that Moolji Sicka & Company had fully performed their part of the contract by placing the goods on rails before 15th November, 1951, we are of opinion that the contracts were not at an end until the vendors were paid and the contracts were fully discharged. The words of the sections are "if. he has any share or interest in a contract for the supply of goods to. . the appropriate Government. " There can be no doubt that these various transactions were contracts and there can equally be no doubt that they were contracts for the supply of the goods. Whether they were contracts for the supply of goods to the Government is a matter which we shall deal with presently. But we have no doubt that they were contracts for the supply of goods. The question then is, does a contract for the supply of goods terminate when the goods are supplied or does it continue in being till payment is made and the contract is fully discharged by performance on both sides 9 We are of opinion that it continues in being till it is fully discharged by performance on both sides. It was contended, on the strength. of certain observations in some English cases, that the moment a contract is fully executed on one side and all that remains is to receive payment from the other, then the contract terminates and a new relationship of debtor and creditor takes its place. With the utmost respect we are unable to agree. There is always a possibility of the liability being disputed before actual payment is made and the vendor may 832 have to bring an action to establish his claim to payment. The existence of the debt depends on the contract and cannot be established without showing that payment was a term of the contract. It is true the contractor might abandon the contract and sue on quantum meruit but if the other side contested and relied on the terms of the contract, the decision would have to rest on that basis. In any case, as we are not bound by the dicta and authority of those cases, even assuming they go that far, we prefer to hold that a contract continues in being till it is fully discharged by both sides: see the observations of Gibson J. in O 'Carroll vs Hasting8(1). To use the language of O 'Brien L.C.J. in that case at page 599, these contracts have not been "merged, abandoned, rescinded, extinguished or satisfied; and if any demur was made as to payment before payment was actually made, he could have sued upon the contract specially; or if he sued for work done at the request of the defendants the contract would have been. a part of his necessary proofs" We agree with the learned Lord Chief Justice in thinking that "it is far fetched to contend that a man is not concerned in the contract or security by which he can enforce payment. " The same view was taken, by Costello J. in an Indian case in Satyendrakumar Das vs Chairman of the Municipal Commissioners8 of Dacca(2). Counsel for the appellant relied strongly on certain English cases. They were all examined and distinguished in the above decisions. They either turned on special facts or on the words of a statute which are not the same as ours. The leading case appears to be Royse vs Birley(3 ). But the decision turned on the language of the English statute which the learned Judges construed to mean that the contract must be executory on the contractor 's part before the English Act can apply. Tranton vs Astor(4) follows the earlier ruling. The statute with which Darling J. was dealing (1) at 608. (2) I.L.R. from p. 193 onwards. (3) (4) 833 in Cox vs Truscott(1) is nearer the language of our Act. He hesitatingly proceeded on the debtor and creditor basis. We need not go further than this because, as we have said, if these decisions cannot be distinguished, then we must with respect differ. We hold therefore that these contracts which Moolji Sicka & Company had entered into with the Government subsisted on 15th November, 1951, and on 14th February, 1952, and that as Chatturbhuj Jasani, the appellant, was a partner in the firm he also had both a share and an interest in them on the crucial dates. That brings us to article 299 (1) of the Constitution. It states: "All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President . and all such contracts. made in the exercise of that power shall be executed on behalf of the President . by such persons and in such manner as he may direct or authorise." The contention was that as these contracts were not expressed to be made by the President they are void. Cages were cited tons under the Government of India Acts of 1919 and 1935. Certain sections in these Acts were said to be similar to article 299. We do not think that they are, but in any case the rulings ,under section 30 (2) of the Government of India Act, 1915, as amended by the Government of India Act of 1919 disclose a difference of opinion. Thus, Krihsnaji Nilkant vs Secrtary of State(2) ruled that contracts with the Secretary of State must be by a deed executed on behalf of the Secretary of State for India and in his name. They cannot be made by correspondence or orally. Secretary of State vs Bhagwandas(3) and Devi Prasad Sri Krihhna Prasad Ltd. vs Secretary of State(1) held they could be made by correspondence. Secretary of State V. O.T. Sarin & Company(1) took an intermediate vie,* and held that though contracts in the prescribed form could not be enforced by either side, (1) (4) A.I.R. 1941 All. 377. (2) A.I.R. 1937 Bom. 449,451. (5) I.L.R. 11 Lah. (3) A.I.R. 1938 Bom. 108 834 a claim for compensation under section 70 of the Indian Contract Act would lie. Province of Bengal vs section L. Puri(1) took a strict view and held that even letters headed "Government of India" did not comply with, the rule in section 175 (3) of the Government of India Act, 1935. The Federal Court was called upon to construe section 40 (1) of the Ninth Schedule of the Government of India Act, 1935. It held that the directions in it were only directory and not mandatory, and the same view was taken of article 166 (1) of the present Constitution by this court in Dattatreya Moreshwar Pangarkar vs State of Bombay(2). None of these provisions is quite the same as article 299. For example, in article 166, as also in section 40(1) of the Government of India Act of 1935, there is a clause which says that "orders" and "instruments" and "other proceedings" "Made" and "expressed" in the name of the Governor or Governor General in Council and "authenticated" in the manner prescribed shall not be, called in question on the ground that it is not an "order" or "instrument" etc. 'made" or "executed" by the Governor or Governor General in Council. It was held that the provisions had to be read as a whole and when that was done it became evident that the intention of the legislature and the Constitution was to dispense with proof of the due "making" and "execution" when the form prescribed was followed but not to invalidate orders and instruments otherwise valid. Article 299(1) does not contain a similar clause, so we are unable to apply the same reasoning here. In our opinion, this is a type of contract to which section 236(3) of the Indian Contract Act would apply. This view obviates the inconvenience and injustice to innocent persons which the Federal Court felt in J. K. Gas Plant Manufacturing Co., Ltd. vs The King. Emperor (3)and at the same time protects Government. We feel that some reasonable meaning must (1) (2) ; at 632, 633. (3) at 156, 157, 835 be attached to article 299(1). We do not think the provisions were inserted for the sake of mere form. We feel they are there to safeguard Government against unauthorised contracts. If in fact a contract is unauthorised or in excess of authority it is right that Government should be safeguarded. On the other hand, an officer entering into a contract on behalf of Government can always safeguard himself by having recourse to the proper form. In between is a large class of contracts, probably by far the greatest in numbers, which, though authorised, are for one reason or other not in proper form. It is only right that an innocent contracting party should not suffer because of this and if there is no other defect or objection we have no doubt Government will always accept the responsibility. If not, its interests are safeguarded as we think the Constitution intended that they should be. In the present case, there can be no doubt that the Chairman of the Board of Administration acted on behalf of the Union Government and his authority to contract in that capacity was not questioned. There can equally be no doubt that both sides acted in the belief and on the assumption, which was also the fact, that the goods were intended for Government purposes, namely, amenities for the troops. The only flaw is that the contracts were not in proper form and so, because of this purely technical defect, the principal could not have been sued. But that is just the kind of case that section 230(3) of the Indian Contract Act is designed to meet. It would, in our opinion, be disastrous,to hold that the hundreds of Government officers who have daily to enter into a variety of contracts, often of a petty nature, and sometimes in an emergency, cannot contract orally or through correspondence and that every petty contract must be effect ed by a ponderous legal document couched in a particular form. it may be that Government will not be bound by the contract in that case, but that is a very different thing from saying that the contracts as such are void and of no effect. It only means "that the principal cannot be sued ; but we take it there would 836 be nothing to prevent ratification, especially if that was for the benefit of Government. There is authority for the view that when a Government officer acts in excess of authority Government is bound if it ratifies the excess: see The Collector of Masulipatam vs Cavaly Venkata Narrainapah(1). We accordingly hold that the contracts in question here are not void simply because the Union Government could not have been,sued on them by reason of article 299(1). Now section 7(d) of the Representation of the People Act does not require that the contracts at which it strikes should be enforceable against the Government; all it requires. is that the contracts should be for the supply of goods to the Government. The contracts in question are just that and so are hit by the section. The purpose of the Act is to maintain the purity of the legislatures and to avoid a conflict between duty and interest. It is obvious that the temptation to place interest before duty is just as great when there is likely to be some difficulty in recovering the money from Government (for example, if Government were to choose not to ratify the contracts) as when there is none. In our opinion, the Election Tribunal was right in disqualifying Chatturbhuj Jasani. We now turn to Gangaram Thaware. He stood as a Scheduled Caste candidate and his nomination was rejected on the ground that he did not belong to the Scheduled Caste in question, namely the Mahars. The only question here is whether he ceased to be a Mahar when he joined the Mahanubhava Panth. This gave rise to much controversy and we have been presented with many conflicting opinions. Thus, the Imperial Gazetteer of India, Voluime XXI, page 3012 states that the founder of the sect repudiated the caste system as also a multiplicity of God7f3 and insisted on the monotheistic principle. At the same time it ,says that he taught his disciples to eat with none but (1) 8 M.I.A. 529 at 554. 837 the initiated and to break off all former ties of caste and religion. Russell in Volume IV of his Tribes and Castes of the Central Provinces says that the Manbhaos (Mahanubhau) is a religious sect,or order which has " now" (1911) become a caste. The Central Provinces Ethnographic Survey, Volume IX, says the same thing at page 107 and at page 110 and adds that members of the sect often act as priests or gurus to the Mahars. As against this, the Election Tribunal has quoted a number of opinions which tend the other way. Thus, V. B. Kolte says at page 247 of his Shri Chandradhar Charitra that no serious attempt has been made by them to abolish caste, and Ketkar says at page 76, Volume XVIII of the 1926 edition of his Maharashtriya Dhnyankosh that there are two divisions among the Mahanubhavas, one of Sanyasig who renounce the world and the other a secular one. The latter observe the caste system and follow the rituals of their own caste and carry on social contacts with their caste people and marry among them. Similar views are expressed by Bal Krishna Mohanubhav Shastri. But we are not really concerned 'with their theology. What we have to determine are the social and political consequences of such conversions and that, we feel, must be decided in a common sense practical way rather than on theoretical and theocratic grounds. Conversion brings many complexities in its train, for it imports a complex composite composed of 'many ingredients. Religious beliefs, spiritual experience and emotion and intellectual conviction mingle with more material considerations such as severance of family and social ties and the casting off or retention of old customs and observances. The exact proportions of the mixture vary from person to person. At one extreme there is bigoted fanaticism bitterly hostile towards the old order and at the other an easy going laxness and tolerance which makes the conversion only nominal. There is no clear out dividing line and it is not a matter which can be viewed from only one angle. 838 Looked at from the secular point of view, there are three factors which have to be considered: (1) the reactions of the old body, (2) the intentions of the individual himself and (3) the rules of the new order. If the old order is tolerant of the new faith and sees no reason to outcaste or ex communicate the convert and the individual himself desires and intends to retain his old social and political ties, the conversion is only nominal for all practical purposes and when we have to consider the legal and political rights of the old body the views of the new faith hardly matter. The new body is free to ostracise and outcaste the convert from its fold if he does not adhere to its tenets, but it can hardly claim the right to interfere in matters, which concern the political rights of the old body when neither the dld body nor the convert is seeking either legal or political favours from the new as opposed to purely spiritual advantage. On the other hand, if the convert has shown by his conduct and dealings that his break from the old order is so complete and final that he no longer regards himself as a member of the old body and there is no reconversion and readmittance to the old fold, it would be wrong to hold that he can nevertheless claim temporal privileges and political advantages which are special to the old order. In our opinion, broadly speaking, the principles laid down by the Privy Council in the case of a Hindu convert to Christianity apply here: not, of course, the details of the decision but the broad underlying principle. In Abraham vs Abraham(1), their Lordships say: " He " (the convert) " may renounce the old law by which he was bound, as he has renounced his old religion, or, if he thinks fit, he may abide by the old law, notwithstanding he has renounced the old religion. " The only modification here is that it is not only his choice which must be taken into account but also the views of the body whose religious tenets he has (1) 9 M.I.A. 199 at 242, 243, and 244. 839 renounced, because here the right we are considering is the right of the old body, the right conferred on it as a special privilege to send a member of its own fold to Parliament. But with that modification the observations which follow. apply in their broad outline. "The profession of Christianity releases the convert from the trammels of the Hindu law, but it does not of necessity involve any change of the rights or relations of the ' convert in matters with which Christianity has no concern, such as his rights and interests in, and his powers over, property. The convert, though not bound as to such matters, either by the Hindu law or by any other positive law, may by his course of conduct after his conversion have shown by what law he intended to be governed as to these matters. He may have done so either by attaching himself to a class which as to these matters has adopted and acted. upon some particular law, or by having himself observed some family usage or custom; and nothing can surely be more just than that the rights and interests in his property, and his powers over it, should be governed by the law which he has adopted, or the rules which he has observed. " Now what are the facts here ? Whatever the views of the founder of this sect may have been about caste, it is evident that there has been no rigid adherence to them among his followers in later years. They have either changed their views or have not been able to keep a tight enough control over converts who join them and yet choose to retain their old caste customs and ties. We need not determine whether the Mahanubhava tenets encourage a repudiation of caste only as a desirable ideal or make it a fundamental of the faith because it is evident that present day Mahanubhavas admit to their fold persons who elect to retain their old caste customs. That makes it easy for the old caste to regard the converts as one of themselves despite the conversion which for all practical purposes is only ideological and involves no change of status. 840 Now no witness has spoken of any outcasting, neither outcasting in general nor in this special case. No single instance has been produced in which any person who has joined this sect from the Mahar community has ever been outcasted from the Mahars for that reason; and as the sect is said to be over 1000 years old, therehas been time enough for such instances to accumulate. Further, no instance has been produced of a Mahanubhava marrying outside his or her old caste whereas there are instances of Mahanubhavas who have married non Mahanubhavas belonging to their own caste. Nene (P. W. 1), Sadasheo (P. W. 3), Sitaram (P. W. 4) and Haridas (P. W. 5) say that a Mahar 'convert does not lose his caste on conversion. He is admitted to all caste functions and can marry in the community. Of these, Sadasheo (P. W. 3) and Haridas (P. W. 5) are Mahars. There is no evidence to rebut this. The witnesses on the other side take refuge in theory and, when confronted with actual facts, evade the issue by saying that Mahanubhavas who do these things are not real Mahanubhavas. Harendra (R. W. 1) is a Mahanubhava Guru and so ought to know, but he affects an otherworldly indifference to mundane affairs and says that as he does not lead a worldly life he does not know whether converts retain their caste distinctions and whether there are inter dinings and inter marriages in the Mahanubhava fold itself among those who belonged to different castes before conversion. Shankar (R. W. 2) says that a convert loses his caste on conversion but gives no instance of ostracism from the old fold. In any case, his evidence is confined to the sanyasi order among the Mahanubhavas because he says that every person who becomes a convert to this sect must renounce the world and cannot marry. When pinned down in cross exami nation he had to admit that he did know two or three Mahanubhavas who were leading a worldly life but he meets that by saying that they are not real Mahanubhavas. Chudaman (R. W. 3) evades the issue in the same way. He is a Mahanubhava Pujari and so is 841 another person who ought to have special knowledge. Despite that he says he cannot give a single instance of a person belonging to one caste, initiated into the Mahanubhava sect, marrying a person of another caste initiated into the same Panth. When further pressed he said the question did not arise as a man lost his caste on conversion. On this evidence, and after considering the historical material placed before us, we conclude that conversion to this sect imports little beyond an intellectual acceptance of certain ideological tenets and does not alter the convert 's caste status, at any rate,, so far as the householder section of the Panth is concerned. So much for the caste consciousness on both sides. Now considering Gangaram Thaware the individual we find that he was twice married and on both occasions to Mahar girls who were not Mahanubhavas at the time of their respective marriages. His first wife was never converted. His second wife was converted after her marriage. The witnesses say ' he was still regarded as a Mahar after his conversion and always looked upon himself as a Mahar and identified himself with the caste. No one on the other side denies this. As we have shown, they took shelter behind generalities and evaded the issue by saying that in that case he cannot be a real Mahanubhava. If he was not, then he must have continued a Mahar even on their view. The evidence also discloses that Gangaram Thaware led Mahar agitations and processions as a member and leader of the Mahar caste. In 1936 he contested the election for the Provincial Assembly as a Mahar candidate. No one appears to have questioned his competency. And lastly, he declared himself to be a Mahar in the verification to his nomination form in the present election as also in an affidavit filed before the Returning Officer who rejected his nomination. The 'Returning Officer described that as a "cleverly, worded document. " We have read it and find nothing tricky or crooked in it., Therefore, applying the test in Abraham vs Abraham(1), we hold that despite his (1) 9 M.I.A. 199. 109 842 conversion he continued to be a Mahar and so his nomination form was wrongly rejected. That affects the whole election. The other points argued before the Election Tribunal were not pressed before us. We therefore uphold the decision of the Tribunal and dismiss the appeal with costs. Appeal dismissed.

IN-Abs

A contract for the supply of goods does not terminate when the goods are supplied, it continues into being till payment is made and the contract is fully discharged by performance on both sides. O 'Carroll vs Hastings ( [1905] 2 I.H. 590) and Satyendrakumar Das vs Chairman of the Municipal Commissioners of Dacca (I.L.R.58 Cal. 180) relied upon. The firm Moolji Sicka and Company of which the candidate was a partner had entered into contracts with the Central 106 818 Government for the supply of goods. The contracts subsisted on ;he crucial dstes, November 15, 1951, and February 14, 1952. November 15, 1951, was the last date for putting in, nominations and February 14, 1952, was the date on which results were declared : Held, that the candidate had both a share and an interest in the contracts for the supply of goods to the appropriate Government on the crucial dates and was thus disqualified for being chosen as a member of Parliament by virtue of the disqualification set out in section 7(d) of the Representation of the People Act (XLIII of 1951). Held further, that the contention that the contracts in question were void because the Union Government could not be sued by reason of article 299(1) of the Constitution as the contracts were not expressed to be made by the President was without force because this was the type of case to which a. 230(3) of the Indian Contract Act would apply. When a Government officer acts in excess of authority Government is bound if it ratified the excess. The Collector of Masulipatam vs Cavaly Venkata Narrainapah (8 M.I.A. 529) reliecl upon. A member of the Mahar caste which is one of the Scheduled Castes continues to be a member of the Mahar caste despite his conversion to the tenets of the Mahanubhava Panth as such conversion imports little beyond @ an intellectual ' acceptance of certain ideological tenets and does not alter the convert 's caste status. Abraham vs Abraham (9 M.I.A. 199) relied upon.

Appeal No. 852 of 1964. Appeal by special leave from the judgment and decree dated August 24, 1962 of the Punjab High Court in Regular Second Appeal No. 843 of 1956. Bishan Narain and A. G. Ratnaparkhi, for the appellant. K. C. Nayyar and Mohana Behar Lal, for respondent No. 1. 790 The Judgment of the Court was delivered by Bhargava, J. This appeal has come up as a result of a dis pute relating to succession to the property of one Sunder Singh. Sunder Singh, on 4th November, 1950, executed a will in respect of his property in favour of his niece, Udham Kaur. Subsequently, on 27th October, 1951, one Tarlok Singh executed a document divorcing his wife, Mst. Angrez Kaur, respondent No. 1 in this appeal, on the ground that she frequently went away from his house without his consent and whenever he made enquiries from her, she became furious with him. In the document, he recited that Mst. Angrez Kaur was no longer his wife and that she had gone to live with Sunder Singh. According to respondent No. 1 on this divorce being granted to her by her first husband, Tarlok Singh, she was married to Sunder Singh by a custom, known as 'Chadar Andazi '. On 7th June, 1952, Sunder Singh revoked his previous will and, in that document, acknowledged Mst. Ang rez Kaur as his wife and left the property to her. Sunder Singh died in 1953. Thereafter, the appellant, Gurdit Singh, who was a collateral of Sunder Singh in the third degree, applied for mutation. On 12th December, 1954, mutation of the property left by Sunder Singh was sanctioned in favour of Gurdit Singh by the authorities. Thereupon, Mst. Angrez Kaur filed a suit on 17th March, 1955, claiming the property as widow of Sunder Singh. The trial Court decreed the suit, holding that respondent No. I had married Sunder Singh by 'Chadar Andazi ' and the marriage was valid. On appeal, the Additional District Judge set aside the decree of the trial Court and held that the marriage of Mst. Angrez Kaur with Sunder Singh during the life time of her first husband, Tarlok Singh, was invalid and was not justified by any custom and, consequently, she could not be treated as the widow of Sunder Singh. Respondent No. 1, there on, appeale to the High Court of Punjab and the learned Judge, who heard the appeal, felt that the question of custom had not properly tried by the trial Court and the first appellate Court. Consequently he framed the following issue : "Is there any custom amongst the tribes of the parties according to which the divorce given by Tarlok Singh 'to Mst. Angrez Kaur is recognised enabling her to enter into a valid marriage by Chadar Andazi with Sunder Singh?" This issue was remitted to the trial Court for recording a finding after giving the parties an opportunity to lead further evidence. Further evidence was led in the trial Court which answered this issue in the negative and against respondent No. 1. The District Judge, in his report, endorsed the view of the trial Court. The High Court, however, held that the 7 91 custom was proved under which Mst. Angrez Kaur could validly marry Sunder Singh, even though her first husband, Tarlok Singh, was alive, and, consequently decreed the suit. Gurdit Singh appellant has now come up to this Court against this decree of the High Court by special leave. As is clear from the facts narrated above, the, only issue that arose in this case was whether respondent No. 1, Mst. Angrez Kaur, had succeeded in proving the existence of a custom in the community to which she belonged, according to which Tarlok Singh, her first husband, could divorce her, whereupon she was at liberty to enter into a valid marriage by Chadar Andazi with Sunder Singh, whose property is now under dispute. The parties are residents of the District of Jullundur where, according to Gurdit Singh appellant, no such custom, as claimed by respondent No. 1 exists amongst the Jats, which is the caste to which the parties belong. To urge this point, learned counsel for the appellant relied before us on 'The Digest of Customary Law ' by Sir W. H. Rattigan, and on the 'Riwaj i am ' recorded at the time of the settlement in 1885 and 1914 15. It was argued that Rattigan 's Digest of Customary Law in the Punjab had always been treated as an authoritative exposition of the customs prevailing in the Punjab and had been accepted as such by the Privy Council as well as other Courts in India. Reliance was placed on para 72 at page 471 of the 14th Edition of Rattigan 's, 'Digest of Customary Law ', where it is stated that "amongst Muhammadans of all classes a man may divorce a wife without assigning any reason; but this power, in the absence of a special custom, is not allowed to Hindus nor to females of any class". In paragraph 74, he proceeds to lay down that "until the former marriage is validly set aside, a woman cannot marry a second husband in the life time of her first husband;" and in paragraph 75, it is stated that "A 'Karewa ' marriage with the brother or some other male relative of the deceased husband requires no religious ceremonies, and confers all the rights of a valid marriage. " The marriage claimed by respondent No. 1 with Sunder Singh was described as a 'karewa ' marriage. On the basis of the principles laid down in the above paragraphs, it was urged that it should be held that respondent No. I could not have entered into a valid marriage with Sunder Singh, while her first husband, Tarlok Singh, was alive. It is, however, to be noted that in paragraph 72, Rattigan himself makes an exception to the general rule, and recognises the fact that, if there be a special custom, divorce can be resorted to even by Hindus. In earlier paragraphs of his book, Rattigan has dealt with existence of special customs in the Punjab and, in dealing with L Sup. CI/67 7 792 the Jats, he expressed the view that, as regards Jats, and specially Sikh Jats who hold very liberal views on questions relating to marriage and whose notions of sexual morality are lax, it will be difficult to enunciate any general principles as are opposed to public policy. Then, he goes on to say that custom in the Punjab is primarily tribal and not local, though the custom of a particular tribe may and often does differ in particular localities. Rattigon 's conclusion is expressed by saying that it seems to be clear that there is no uniform custom applicable to the whole of the Punjab. Custom varies from time to time and from place to place. It is in this background that we have to consider further remarks recorded by Rattigan in paragraph 72 mentioned above, where he says that, in one case, it was doubted whether, in Jullundur District, a Hindu fat can divorce his wife. He also noticed a number of decisions relating to divorce in the surrounding districts in which it was held that the custom of divorce prevailed in almost identical terms in those districts. This custom according to him, is that the husband is entitled to turn out his wife and, if he does so, she is entitled to remarry. It was on the basis of these observations of Rattigan that it was urged before us that the High Court committed an error in relying on the circumstance that, in a number of surrounding districts, it was found that the custom of divorce amongst the Hindu Jats so prevalent could lead to an inference that a similar custom prevailed in the district of Jullundur also. In Rattigan 's book, by itself, we are unable to find any proposition laying down that, in the district of Jullundur, there is any custom among Hindu fats permitting divorce as claimed by respondent No. 1. In fact, Rattigan leaves the question open by saying that it has been doubted whether such a custom exists in the Jullundur District. He also mentions the Riwaj i am of Jullundur District, but does not attach much importance to it on the ground of its being un reliable. Rattigan 's book on 'Customary Law ', in these circumstances, appears to us to be of little help in arriving at a conclusion about the existence of a custom on divorce amongst the Jats in Jullundur District. The only other document relating to Jullundur District available was the Riwaj i am of that district and learned counsel for the appellant placed great reliance on it. He drew our attention to the decision of their Lordships of the Privy Council in Kunwar Basant Singh vs Kinwar Brij Rai Saran Singh(1) where their Lordships held "The value of the riwaj i am as evidence of customary law is well established before this Board; the most recent decision is (1) 62 I.A. 180. 79 3 Vaishno Ditti vs Rameshri(1), in which the judgment of the Board was delivered by Sir John Wallis, who states : "It has been held by this Board that the riwaj i am is a public record prepared by a public officer in discharge of his duties and under Government rules; that it is clearly admissible in evidence to prove the facts entered thereon subject to rebuttal; and that the statements therein may be accepted even if unsupported by instances. " Reliance was also placed upon the principle laid down by this Court in Mahant Salig Ram vs Musammat Maya Devi(2), where this Court held : "There is no doubt or dispute as to the value of the entries in the Riwaj i am. It is well settled that though they are entitled to an initial presumption in favour of their correctness irrespective of the question whether or not the custom, as recorded, is in accord with the general custom, the quantum of evidence necessary to rebut that presumption will, however, vary with the facts and circumstances of each case. " The Court also approved of the principle laid down by the Lahore High Court, indicating the circumstances in which Riwaj i am can be held to prove a custom, and in that connection said : "It has been held in Qamar ud Din vs Mt. Fateh Bano(3) that if the Riwaj i am, oil which reliance is placed, is a reliable and trustworthy document, has been carefully prepared, does not contain within its four corners contradictory statements of custom, and in the opinion of the Settlement Officer is not a record of the wishes of the persons appearing before him as to what the custom should be in those circumstances the Riwaj i am would be a presumptive piece of evidence in proof of the special custom set up therein. If, on the other hand, the Riwaj i am is not a document of the kind indicated above, then such a Riwaj i am would have no value at all as a presumptive piece of evidence. " It is in the light of these principles that we have to examine the value to be attached to the Riwaj i am in Jullundur District which has been relied upon by learned counsel for the appellant. The Riwaj i am of Jullundar District appears in the form of questions and answers and an extract of it has been placed before us. In answer to the questions about the grounds on which a wife may be divorced, whether change of religion is a sufficient cause and whether,a husband may divorce his wife without (1) [1928] L. R. 55 I.A. 407,421, (2) (3) Lah. 110. 7 94 assigning any cause, the record states that among all Muhammadans except Rajputs the Muhammadan Law is followed; and a husband can divorce his wife without assigning any reason. Among the Muhammadan Rajputs and all Hindus no divorce is recognised. But an exception is mentioned that the Kambohs of the Nakodar Tahsil also divorce their wives. They are not required to assign any cause. In answer to the question as to what are the formalities which must be observed to constitute a revocable or an irrevocable divorce, is was stated that among Hindus there is no divorce except among Kambohs of the Nakodar Tahsil who give 'talaq ' by executing a written deed. Reliance is placed on the entry in the Riwaj i am that the custom of divorce among Hindus does not exist in the Jullundur District to urge that the High Court wrongly held that respondent No. 1 could be divorced by her first husband, Tarlok Singh, and could validly marry Sunder Singh by Chadar Andazi. It, however, appears that the Riwaj i am of Jullundur District is unreliable, and, according to the principle laid down by this Court in the case of Mahant Salig Ram(1), such a Riwaj i am cannot be held to prove that there was no custom of divorce among Hindus in this district. It does not appear necessary to refer to the various decisions of the Lahore High Court on 'the question of unreliability of the Riwaj i am of Jullundur District. It is enough to quote the latest decision of the East Punjab High Court in Mohammad Khalil and Another vs Mohammad Bakhsh(2). In that case., Bhandari J., delivering the judgment of the Bench, reproduced the principle laid down by the Lahore High Court in Qamar ud Din & Others(3), which was later approved by this Court in the case of Mahant Salig Ram(1). ,and then proceeded to hold : "Unfortunately, the Riwaj i am of the Jullundur District cannot be regarded as a reliable or trustworthy document, for, it has been held in a number of decided cases, such as Zakar Hussain vs Ghulam Fatima(1), Ghulam Mohammad vs Balli(5), and Mt. Fatima vs Sharaf Din(1), that it has not been prepared with care and attention. It seems to me, therefore, that it is impossible to accept the statements appearing therein at their face value." Learned counsel for the appellant, however, urged before us that all these cases, in which the Riwaj i am of Jullundur District ,was held to be unreliable, related either to the custom about the right of succession to property of a daughter against collaterals, (1) (3) A. I. R. (36) 1949 E.Pb. (5) A. I. R. (1 4) 1927 Lab. (2) I. I. R. (4) A. 1. R. (18) (6) A. 1. R. (33) 79 5 or about the right to execute wills and gifts. None of these cases related to the custom of divorce and at least, insofar as it records that there is no custom of divorce amongst Hindus in this district, the Riwaj i am should be accepted. There are two reasons why we must reject this contention. The first is that the Riwaj i am having been found unreliable in respect of two customs, the inference clearly follows that it was not drawn up carefully and correctly and, consequently it would not be safe to rely even on other aspects of the Riwaj i am. The second, and which is the more important reason, is that, in this particular case which is 'before us, the evidence tendered by both the parties shows that this Riwaj i am has incorrectly recorded the custom about the right of a Hindu husband of this district to divorce his wife. Respondent No. 1, in order to prove her case as to the existence of the custom, has primarily relied on two pieces of evidence. The first piece of evidence consisted of the Riwaj i am of the neighbouring districts where there was a clear record that the custom of divorce among Hindu Jats existed. The existence of such a custom. in the neighbouring district, which surround the Jullundur District all around, is certainly a relevant consideration for an inference that such a custom may be prevalent in the Jul lundur District also, particularly in view of Rattigan 's opinion that the custom is primarily tribal though also local. If the custom existed among the tribes of Hindu Jats in all the districts surrounding the district of Jullundur, it is probable that a similar custom exists in the district of Jullundur also. The other piece of evidence relied upon was the statements of a number of witnesses examined to prove that not only such a custom existed, but also that instances were available showing that there had been divorces in recent times. Respondent No. 1 has examined nine witnesses in this behalf. The learned District Judge, in his report, did not place full reliance on the testimony of these witnesses, but their evidence has been accepted by the High Court. On behalf of the appellant also, a number of witnesses were examined to prove the non existence of a custom of divorce. It, however, appears that the appellant 's own witnesses belied his case. Several of those witnesses clearly admitted that in this district a custom did exist permitting a husband to divorce his wife. Three of the witnesses, Bhag Singh, Karam Singh and Kartar Singh, who were examined on behalf of the appellant, in their examination in chief itself, mentioned a custom under which a Zamindar could divorce his wife, though they added that, if the husband divorces his wife, the wife cannot contract Chadar Andazi during the life time of her husband. Ujagar Singh, another witness, in his cross examination clearly admitted that the husband can divorce his wife, but a wife cannot divorce her husband. He can divorce her both verbally as well as in writing. Similarly, Niranjan Singh, another 796 witness, stated that a husband can divorce his wife, but a wife cannot divorce her husband. Gurdit Singh, in his examination in chief, mentioned that a husband and wife could live separate from each other and, in such a case, the wife could not contract Chadar Andazi during the life time of her first husband, and added that, if she contracted Chadar Andazi, she could not inherit the property of her second husband. In cross examination, he stated that "there is no custom among us for divorcing the wives with mutual consent". All these witnesses examined on behalf of the appellant himself thus proved the existence of a custom under which a Hindu Jat in the district of Jullundur could divorce his wife, though all of them added a qualification that, in case a wife is divorced by a Hindu husband, she is not entitled to a second marriage during the life time of her first husband. They all admit that a custom permitting, a Hindu Jat to divorce his wife does actually exists in the district of Jullundur. Some of them, at some stages of their evidence, tried to distinguish the right of a husband by saying that he could desert his wife or that there ,could be separation between the husband and the wife, but, at ,other stages, they admitted in clear words that the custom recognised included the right of the husband to divorce his wife. Thus, the record in the Riwaj i am that there is no such custom of divorce among the Hindus of the Jullundur District, is proved to be incorrect not only by the evidence of the witnesses examined ,on behalf of respondent No. 1, but even from the evidence given by the witnesses of the appellant. In these circumstances, we hold that there is no force at all in the submission of the learned counsel that this Riwaj i am could be held to be reliable insofar as it records the absence of the custom, on the mere ground that in earlier cases the unreliability of this Riwaj i am was found in regard to record of customs relating to other matters. There is no doubt that the witnesses examined on behalf of the appellant, while admitting the existence of a custom permitting a Hindu husband to divorce his wife, have added a qualification that, if such a divorce is brought into effect by a husband, the wife cannot legally contract a second marriage during his lifetime. This limited custom sought to be proved by these witnesses does not. find support from the Riwaj i am, nor is it in line with the principles laid down by Rattigan in his book on 'Customary Law '. All that he stated in paragraph 74 of his book was that " until the former marriage is validly set aside, a woman cannot marry a second husband in the life time of her first husband. " We have already held that, even according to the witnesses exa mined by the appellant, a custom exists which permits a valid divorce by a husband of his wife and that would dissolve the marriage. On the dissolution of such a marriage, there seems to be no reason why the divorced wife cannot marry a second 797 husband in the life time of her first husband. It also appears to us incongruous to accept the proposition put forward on behalf of the appellant that, though a wife can be divorced by her husband, she is not at liberty to enter into a second marriage and thus secure for herself means for proper living. In these circumstances, the High Court committee no error in accepting the evidence given by witnesses examined on behalf of respondent No. 1 who stated that the custom as prevailing in the Jullundur District not only permitted divorce, but also recognised the validity of second marriage of the divorced wife even in the life time of her first husband. The High Court was further right in relying on the instances proved by the evidence of these witnesses of respondent No. 1 showing that a number of divorced wives had actually contracted second marriages in the life time of the in husbands and these, marriages were recognised as valid marriages by the members of 'their community. The appeal, consequently, fails and is dismissed with costs. G.C. Appeal dismissed.

IN-Abs

S married A after the latter had been divorced by her husband T. The parties were Jats of Jullundur District in the Punjab. After the death of S a collateral of his got the lands of S mutated in his favour. A then filed a suit claiming the land as widow of section Her marriage to S was challenged on the ground that there was no custom among the Jats of Jullundur District permitting a divorced woman to remar ry in the life time of her first husband, The, entries in the Rattilgan 's digest and the Riwaj i am of Jullundur District came up for consideration. HELD : Rattigan 's digest was not of help in arriving at a conclusion about the existence of such a custom of divorce among the Jats in Jullundur District. 'Me Riwaj i Am of Jullundur District was unreliable as it had been so held by courts. [792 F G; 795 A C] On the basis of the existence of a custom of divorce among the Jats of districts surrounding Jullundur District and on the basis of oral evidence adduced in the case, the High Court rightly held that a custom of divorce existed among the Jats of Jullundur District, and the custom permits the divorced women to marry in the life time of her first hus band. The divorce of A by T being valid her subsequent marriage to S was also valid, and accordingly she was entitled to succeed to S 's property. L797 B C] Basant Singh vs Kunwar Brij Rai Saran Singh, 62 I.A. 180, Vaishnoo Ditt vs Rameshri, (1928) L.R. 55 I.A, 407, Mahant Salig Ram vs Musammat maya Devi , Qamar ud din vs Mt. Fateh Bano, Lab. 110, Muhammad Khalil vs Mohammad Baksh. A.I.R. (36) 1949 E. Pb. 252, Zakar Hussain vs Ghulam Faima, A.I.R. (14) 1927 Lab. 261, Ghulam Mohammad vs Ball, A.I.R. (18) 1931 Lab. 641 and Mt. Fatima vs Sharaf Din, A.I.R. (33) 1946 Lab. 426, referred to.

Appeal No. 1413 of 1966. 822 Appeal by special leave from the judgment and order dated July 31, 1963, of the Allahabad High Court in Special Appeal No. 205 of 1963. B. Sen, section K. Aiyar and R. N. Sachthey, for the appellant. A. K. Sen, J. P. Goyal and G. C. Sharma, for the respondent. The Judgment of the Court was delivered by Shah, J. A business of manufacture and sale of tents was commenced in 1940 in the name and style of Messrs Jawahar Tent Factory, Agra, in partnership. There were four partners in the firm Jawahar Lai, Shiam Lal, Radha Raman and Radha Krishan. Jawahar Lal represented his Hindu undivided family and his share in the profit & loss was /8/ (eight annas) in a rupee. The share of other partners was /12/8 (two annas eight pies) each. The firm was registered under section 26A of the Indian Income tax Act, 1922, and tax was assessed on The income of the firm in accordance with section 23 (5) (a) of the Act. The partnership was, according to the Income tax Officer, dissolved on October 23, 1946. This appeal relates to the tax liability of Jawahar Lal in respect of the income from the firm for the assessment years 1944 45, 1945 46, 1946 47 and 1947 48. The tax attributable to the share of Jawahar Lal, which it is claimed could not be recovered from him, is sought to be recovered from his erstwhile partner Radha Krishan. The following table sets out the share of 'the income of Jawahar Lal and the tax liability not satisfied by him in respect of the four years of assessment : Year of assessment Share of income of Jawahar Lal from the firm Tax liability not satisfied 1944 45 47,717 8,623 56 1945 46 53,864 39,416 23 1946 47 35,167 16,92 59 1947 48 19,466 15,163 87 79,296 25 The manner in which the tax liability is determined requires some elucidation. The Hindu undivided family of Jawahar Lal had considerable other income. In accordance with the provisions of section 25(3) (a) of the Indian Income tax Act, the share of Jawahar Lal from the income of the partnership was added to the other income of the family, and the family was assessed to tax on the total income. For the purpose of computing "the tax liability not satisfied" as shown in the last column of the statement set out herein before, the Income tax Officer determined the average rate of tax on the total income of the Hindu undivided family and then applied that rate to the share of Jawahar Lal from th~e fir~m to determine the tax liability attributable to that share. Tax collected from Jawahar Lal was credited proportionately to the 823 income under the two heads towards the tax liability so determined, and the tax liability of Jawahar Lal attributable to his share in the income was computed. The Income tax Officer served Radha Krishan respondent in this appeal on October 3, 1962 with demand notices for the tax remaining unpaid by Jawahar Lal. Radha Krishan thereupon moved the High Court of Judicature at Allahabad for a writ of certiorari quashing the notices of demand and for an order directing the Income tax Officer to withdraw the notices. Manchanda, J., allowed the petition filed by Radha Krishan and the order passed by Manchanda, J., was confirmed in appeal by a Division Bench of the High Court. With special leave, the Income tax Officer, Agra has appealed to this Court. Section 23(5) of the Income tax Act, as it stood at the material time, read as follows : "(5) Notwithstanding anything contained in the foregoing sub sections, when the assessee is a firm and the total income of the firm has been assessed under sub section (1), sub section (3), or sub section (4) as the case may be. (a) in the case of a registered firm, the sum payable by the firm itself shall not be determined but the total income of each partner of the firm, including therein his share of its income, profits and gains of the previous year, shall be assessed and the sum payable by him on the basis of such assessment shall be determined Provided Provided further Provided also (b) in the case of an unregistered firm, the Income tax Officer may instead of determining the sum payable by the firm itself proceed in the manner laid down in clause (a) applicable to a registered firm, if in his opinion, the aggregate amount of the tax including super tax, if any, payable by the partners under such procedure would be greater than the aggregate amount which would be payable by the firm and the partners individually if the firm were assessed as an unregistered firm. The machinery for assessment to tax the income of a firm in the relevant years of assessment may be noticed. A firm under the Income tax Act is a unit of assessment; and the income of the firm is computed as that of the unit irrespective of whether the L9SUP. Cl/67 9 8 24 firm is registered or unregistered, after the income of the firm is computed if the firm is registered under section 26A the share of each partner in the income of the firm is determined and is added to his other income and the total income so computed is brought to tax. If the firm is unregistered, the tax payable by the firm is, except when the Income tax Officer otherwise directs in the interests of revenue, determined as in the case of any other entity, and demand for tax is made on the firm itself. The result is that if the firm is registered tax is collected from the partners individually and there is no levy of tax against the firm. If the firm is unregistered, the tax may, unless other wise directed, be levied against the firm. In either case, the machinery Set up by section 23 (5) is for assessment of tax payable on the income of the firm. The income of the firm is computed, but tax is assessed on that income on the partners or the firm, according as the income is of a firm registered or unregistered. Counsel for the Income tax Officer contended that even though by section 23(5) (a) a provision was made for assessment to tax of the total income of each member of a registered firm by adding to his separate income the share of the profits of the firm, it is the firm which is assessed to tax, and if the tax attributable to the share in the income of the firm of a partner cannot be recovered from him, it may be recovered from his other partners. Counsel for the Income tax Officer says that this is so because the liability of the partners of a firm in respect of all its obligations including the liability to pay tax is joint and several. Undoubtedly contractual obligations of a firm are enforceable jointly and severally against the partners. But the liability to pay Incometax is statutory: it does not arise out of any contract, and its incidence must be determined by the statute. If the statute which imposes liability has not made it enforceable jointly and severally against the partners, no such implication can arise merely because contractual liabilities of a firm may be jointly and severally enforced against 'the partners. Counsel also relied upon section 44 of the Income tax Act, which, as it stood at the relevant time, read as follows "Where any business, profession or vocation carried on by a firm or association of persons has been discontinued, or where an association of persons is dissolved, every person who was at the time of such discontinuance or dissolution a partner of such firm or a member of such association shall, in respect of the income profits and gains of the firm or association, be jointly and severally liable to assessment under Chapter IV and for the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment. " 825 Section 44 is enacted with a view to prevent evasion of tax by discontinuance of the business of a firm or dissolution of an association of persons. On discontinuance of the business of a firm or dissolution of the association of persons, it is declared that every person who was, at the time of such discontinuance or dissolution, a partner of such firm or a member of such association shall, in respect of the income, profits and gains of the firm or association be jointly and severally liable to assessment and for the amount of tax payable. This Court has in Commissioner of Income tax, Madras and Anr. vs section V. Angidi Chettiar(1) held that the provisions of section 44 of the Income tax Act apply both to registered and unregistered firms. But there is nothing in section 44 of the Act which supports the contention that for payment of tax assessed against a partner of a registered firm individually under section 23(5) (a) of the Act, another partner becomes liable jointly and severally with that first partner to pay tax. The entire scheme of taxing the income of a registered firm in the hands of individual partners is Inconsistent with any assumption that for payment of tax assessed against a partner, other partners are liable. The tax assessed against a partner of a registered firm is assessed on his total income inclusive of the share in the firm income and the rate applicable is determined by the quantum of the total income of the partner. Section 44 contemplates cases of joint and several assessment of income of the business of a firm which is discontinued. When such an assessment is made, each member of the firm may be liable to pay jointly and severally tax payable by the firm. But when under the scheme of the Act tax is assessed individually against each partner, and no tax is made payable by the firm, the principle of joint and several liability under section 44 has no application. Counsel for the Commissioner said that this Court had, if not expressly tacitly, accepted the view that the liability of the partners of a firm to pay tax attributable to the share of each partner in the income of the firm is joint and several. Counsel relied upon the clause "determining the tax payable by registered and unregistered firms respectively" in the judgment of this Court in Commissioner of Income tax. , Bombay vs Amritlal Bhogilal & Company 2 ) at p. 136; "It is true that the Income tax Officer is empowered to follow the two methods specified in section 23(5) (a) and (b) in determining the tax payable by registered and unregistered firms respectively and making the demand for the tax so found due; but this does not affect the computation of taxable income", (1) (2) 34 1,T.R. 130. 8 2 6 and contended that the tax determined to be payable under section 23 (5) is payable by the firm, and hence by all the partners jointly and severally. But in Amritlal Bhogilal 's case(1) the Court was called upon to determine whether the Commissioner of Incometax in exercise of his revisional power may cancel registration of the firm granted under section 26A and direct the Income tax Officer to make fresh assessment of the firm as an unregistered firm, when an appeal is pending against the order of assessment before the Appellate Assistant Commissioner. In making the observa tions relied upon, the Court broadly examined the scheme of assessment of registered firms: it was not stated by the court expressly, nor can it be implied, that for tax attributable to the share of a partner in a registered firm, the other partners are liable, notwithstanding separate assessment under section 23(5) (a). Reliance was then placed upon the following observations made by this Court in section V. Angidi Chettiar 's case(1) ;it p. 744 "Under section 23 (5) of the Indian Income tax Act, before it was amended in 1956, in the case of a registered firm the tax payable by the firm itself was not required to be determined but the total income of each partner of the firm including therein the share of its income, profits and gains of the previous year was required to be assessed and the sum payable by him on the basis of such assessment was to be determined. But this was merely a method of collection of tax due from the firm." In section V. Angidi Chettiar 's case (1) it was held that the Incometax Officer has power to make an order under section 28 imposing penalty on a firm even after dissolution of the firm. There is nothing in the observations relied upon which indicates that under section 23(5) (a) when the income of a registered firm is computed, and the tax liability is imposed by the machinery provided thereunder, the tax is imposed upon the firm or is recoverable jointly and severally from the partners of the firm. A recent case was also relied upon : Shivram Poddar vs In come tax Officer, Central Circle II, Calcutta and Anr.(3). In that case it was held that the firm, by the discontinuance of its business, does not cease to be liable to pay tax on the income earned by it; nor can a procedure different from the, one prescribed under Ch. IV of the Income tax Act, 1922 apply for assessment of the income of such a firm. The firm, after it has discontinued its business, whether it is dissolved or not, will be assessed either under section 25(1) in the year of account in which it discontinues its business, or in the year of assessment. In both (1) (2) (3) 827 cases the procedure for assessment is under section 23(3) and (4) supplemented by section 23(5). The principle of that judgment also has no application to the present case. Reliance was placed upon the observation made at p. 828. "On the discontinuance of the business of a firm. however, by section 44 a joint and several liability of all partners arises to pay tax due by the firm. " But that obviously means that a joint and several liability arises when the income of a firm which has discontinued its business is assessed under section 44. It does not mean that where the assessment is made under section 23 (5) (a) of a registered firm and the income of each individual partner is assessed, the partners become jointly and severally liable to pay the aggregate amount of tax attributable to their various shares, in their individual assessments. The cases relied upon by counsel for the Income Tax Officer do not support the claim made by the Income tax Officer. The appeal fails and is dismissed with costs. G.C. Appeal dismissed.

IN-Abs

The respondent was one of the partners in a partnership firm registered under section 26A of the Indian Income tax Act, 1922. The Incometax Officer in making assessments for the assessment years 1944 45, 1945 46, and 1946 47 and 1947 48 determined the shares of each of the partners and taxed them according to the provisions of section 25 (3) (a) of the Indian Income tax Act,. One of the partners defaulted in the payment of tax and the Income tax Officer sought to recover the unpaid tax attributable to the share of the defaulting partner in the firm from the respondent. The respondent 's petition tinder article 226 challenging the attempted recover was allowed by the single Judge whose order was confirmed by the Division Bench. The Revenue by special came to this Court. It was urged on behalf of the Revenue that even though by section 23 (5) (a) the total income of each member of a registered firm is taxed it is the firm which is assessed to tax so that the tax attributable to the share of one partner can be recovered from another, the responsibility of all being joint and several. Reliance was also placed on section 44 of the Act. HELD : (i) Undoubtedly contractual obligations of a firm are enforceable jointly and severally against the partners. But the liability to pay income tax is statutory" it does not arise out of any contract, and its incidence must be determined by the statute. If the statute which imposes the liability has not made it enforceable jointly and severally against the partners, no such implication can arise merely because contractual liabilities (if a firm may be jointly and severally imposed against the partners.[825E F] (ii) There is nothing in section 44 of the Act which supports the contention that for payment of tax assessed against a partner of a registered firm individually under section 23(5)(a) of the Act, another partner becomes liable jointly and severally with the first partner to pay tax. [825C] The entire scheme of taxing the income of a registered firm in the hands of the individual partner is inconsistent with any assumption that for payment of tax assessed against a partner, other partners are liable. The tax assessed against a partner of a registered firm is assessed on his total income inclusive of the share in the firm 's income and the rate applicable is determined by the quantum of the total income of the partners[1825D E] Commissioner of Income tax, Madras vs section V. Angidi Chettiar, , Commissioner of Income tax, Bomaby vs Amritlal Bhogilal & Company, and Shivram Poddar vs lncometax Officer, Central Circle II, Calcutta, , distinguished.

Criminal Appeals Nos. 244 246 of 1964. 829 Appeals from the judgment and order dated February 19, 1964 of the Allahabad High Court in Criminal Misc. Applications Nos. 1853, 3043 and 3044 of 1963. W.S. Barlingay, J. C. Jalwar and R. L. Kohli, for the appellant (in all the appeals). J.P. Goyal and R. B. Pathak, for respondent No. 1 (in all the appeals). The Judgment of the Court was delivered by Hidayatullah, J. Kamla Prasad Singh the appellant had filed three complaints in the Court of the Additional District Magistrate, (Judicial) Varanasi for the prosecution of Harinath Singh (respondent No. 1) under section 218 Indian Penal Code. In each of these complaints Harinath was a co accused with another. In one, it was Mangla Prasad Pandey, Ahlmad, Court of Tahsildar, Sadar Varanasi, in another it was Ramchander Lekhpal of Village Balua and in the third it was Ram Samravlal Lekhpal of Village Cholapore. In each case Harinath Singh was said to have abetted the offence committed by his co accused. The circumstances in which the complaints were lodged were common and may now be briefly stated. Certain Bhumidari lands in these villages were the property of Nankoo s/o Mehar Singh and Sumitra widow of one Ajudhia Singh. On December 4, 1962, Nankoo sold his half share to Kamla Prasad Singh and some others. Kamla Prasad 's com plaint is that Harinath Singh in conspiracy with the two Lekhpals got certain forged entries to be made in the Khasra after the sale in favour of Kamla Prasad, and applied for the correction of the Jamabandi. The Ahlmad in conspiracy with Harinath Singh ante dated the said application to November 9, 1962, to make it appear that it was made prior to the sale deed and to shield the Lekhpals. The application was entered in the register of Jamaband 's as Case No. 116 dated November 9, 1962 although the case bearing that number was one between Bhagwati Singh and Bhagwati of Birbalpura Kaswal Raja. After the complaints were in Court, Harinath Singh filed an application under section 561 A of the Code of Criminal Procedure stating that the offence, if any, was one under section 193 of the Indian Penal Code and the provisions of section 195 of the Code of Criminal Procedure barred the private complaints. The High Court accepted the application for the above reason and quashing the proceedings against Hari Nath Singh ordered his discharge. In these appeals by certificate, the order of the High Court is questioned. The first question is what are the distinct features of section 193 and section 218 of the Indian Penal Code. Section 193 states the 830 punishment for giving false evidence in any stage of a judicial peoceeding or fabricating false evidence for the purpose of being used in any stage of judicial proceeding. Section 191 defines the offence of giving false evidence and section 192 the offence of fabricating false evidence. We may ignore section 191 because here admittedly there is no giving of false evidence as defined in the Penal Code. The offence of fabricating false evidence comes into existence when a person causes any circumstances to exist or makes any false entry in any book or record or makes any document containing a false statement intending that such circumstance false entry or false statement may appear in evidence in a judicial proceeding etc. and so appearing cause an erroneous opinion be formed touching a point material to the result of such proceeding. The offence is a general one and does not specify the person, or the kind of document. It may be any person and the fabricated evidence may be in any form. Section 218 on the other hand deals with the intentional preparation of a false record by a public servant with the object of saving or injuring any Person or property. The difference between the two sect tons is clearly noticeable. Section 192 deals with judicial proceeding and the false evidence is intended to be used in a judicial proceeding. Section 218 deals with public servants and there the gist is the intentional preparation of a false record with a view of saving or injuring any person or property. This need not have relation to a judicial proceeding as such. The bar of section 195 of the Code of Criminal Procedure which was invoked by Hari Nath Singh arises thus. No Court can take cognizance of an offence under section 193 when such offence is alleged to have been committed in or in relation to any proceeding in any Court except on the complaint in writing of such Court. In these cases, Hari Nath Singh is charged with abetment of three offences committed by three public servants namely the two Lekhpals who have caused the preparation of an incorrect Khasra knowing it to be likely that they would thereby cause loss or injury to Kamla Prasad Singh and the other vendees. Hari Nath Singh is charged in the third case with abetment of the act of the Ahlmad who is alleged to have intentionally made a false entry about the case intending that the false entry should be used in a judicial proceeding and wrong opinion be formed about the date of the institution of the proceeding. It will appear from this that the alleged offence committed by the Ahlmad was clearly in or in relation to a proceeding, in Court. In fact he made an incorrect entry about a case actually in Court with the intention that the date of the institution of the proceeding may be taken to be November 9, 1962 although the case was alleged to be instituted after December 4, 1962. 83 1 His offence (if any be proved against him) would fall within section 192. Section 192 deals with fabrication of false evidence to be used in a judicial proceeding so as to cause an erroneous opinion to be formed on a material point. Section 192 therefore completely covers the case against Ahlmad, and must cover the case of Hari Nath Singh the alleged abettor. Section 218 Indian Penal Code does not apply in this case, because the record was not made with the object of saving or injuring any person or property. The offence of section 192 Indian Penal Code is punishable under section 193 Indian Penal Code and the latter section is one of the sections mentioned in section 195 (1 ) (b) of the Code of Criminal Procedure, the gist of which has been reproduced above. The decision of the High Court was therefore right that the Court could not take cognizance of the offence alleged against the Ahlmad and his abettor, because the offence was fabricating of false evidence in a case which was in fact pending and the false entry was made with the object that an erroneous opinion be formed on a material point. Such a case could only be instituted by a Court in which or in relation to which this offence was committed and a private complaint was therefore incompetent. The alleged offence against the Lekhpals and their abettor Hari Nath Singh in the other two cases is of a different order. The offence of section 218 Indian Penal Code is not a minor offence, included within section 192. It is a distinct offence which can be proceeded against without the bar of section 195 of the Code of Criminal Procedure. There is some resemblance between section 192 and section 21 8 Indian Penal Code, because both deal with the preparation of a false record. There the resemblance ceases. Whereas in section 192, the record is prepared for use in a judicial proceeding with the intention that an erroneous opinion be formed regarding a material point, the offence in section 218 is the preparation of a false record by a public servant with the intention of saving or injuring any person or property. The intention here was to save the property from the vendees namely Kamla Prasad Singh and others. The offence was complete the moment the false record was made with the said intention and it was not necessary for the completion of this offence that the record should be used in a judicial proceeding so as to cause an erroneous opinion to be formed touching on a point material to the result of such proceeding. In the Ahlmad 's case this latter condition was the most important ingredient. In the case of the Lekhpals, it was immaterial whether the record would be produced in a judicial proceeding or not so as to cause an erroneous opinion to be formed. The intention was to save the property from the effects of the sale and the preparation of the false record was therefore sufficient from this point of view. In other words, the offence of the Lekhpals (if any be proved against them) would fall within section 218 and not section 192/193 of the Indian Penal Code. It may fill in the latter sections if the entry 8 32 can be said to be in or in relation to a Court. This cannot be said of the entries in the Khasra. As section 218 is not named in section 195 of the Code of Criminal Procedure, the private complaint of Kamla Prasad Singh could be entertained by the Court and there was no bar. To hold that a record such as is contemplated in section 218 Indian Penal Code is always one intended for use in a Court would put section 218 Indian Penal Code in section 195 of the Code of Criminal Procedure which the Code of Criminal Procedure has not thought of. Therefore section 218 Indian Penal Code must be treated as an independent and distinct offence. There could be a private complaint in respect of an offence under section 218 Indian Penal Code. The result is that the case against Hari Nath Singh of abet ment of the act of the Ahlmad could not begin except on a complaint in writing of the Court concerned. There was no bar to the commencement of the case against Hari Nath Singh and the two Lekhpals on the private complaint of Kamla Prasad Singh. Accordingly Criminal Appeal No. 244 of 1964 shall be dismissed. Criminal Appeals Nos. 245 246 of 1964 shall be allowed and the concerned cases will be remitted to the Court of first instance for trial according to law. Y.P. Appeal No. 244 dismissed Appeals 245 246 allowed.

IN-Abs

The appellant. a private person, filed three complaints under section 218 I.P.C. for the prosecution of respondent 1 charging him in each ease with abetment of offences committed by three public servants. In each complaint respondent 1 was a co accused with another in one with an Ahmad of Tahsildar 's Court. in another with one Lekhpal, and in the third with the another Lekhpal. The Ahmad was alleged 10 have intentionaIIy made a false entry about the case intending that the false entry should be used in a judicial proceeding and wrong opinion be formed, the Lekhpals were alleged to have caused the preparation of an incorrect Khasra knowing to be likely that they would thereby cause loss or injury to the appellant. The respondent 1 filed an application under 561 A Cr. P.C. slating that the offence, if any, was one under section 193 I.P.C. and the provisions of section 195 Cr. P.C. barred private complaints, which the High Court accepted. In appeal, this Court, HELD: The bar of private complaints applied 10 the case of Ahmad, but not to those of Lekhpals. 1832 C D] The difference between sections 192 and 218 I.P.C. is that the former deals with judicial proceeding and the false evidence is intended to be used in a judicial proceeding, while the latter deals with public servants, and there the gist is the international preparation of false record with a view of saving or injuring any person or property and need not have relation to a judicial proceeding as such. I830 D] Section 192 I.P.C. covers the case against the Ahmad and respondent 1 and the offence is punishable under section 193 I.P.C. which is mentioned in section 195(1)(b) Cr. P.C. No Court can take cognizance of an offence under section 193 except on the complaint in writing of such court. The alleged offence against the Lekhpals and respondent 1, their abettor, in the other two cases was of a different order. The offence of section 218 I.P.C. is not a minor offence included within section 192. It is distinct offence which can be proceeded against without the bar of section 195 Cr. The offence was complete the moment the false record was made with the said intention and it was not necessary for the completion of this offence that the record should be used in a judicial proceeding so as to cause an erroneous opinion to be formed touching on a point material to the result of such proceeding. In the Ahmad 's case this latter condition was the most important ingredient. [831 B C, D G]

ivil Appeal No. 1260 of 966. Appeal from the judgment and decree dated July 10. 1962 the Allahabad High Court. Lucknow Bench in Special Appeal No. 551 of 1960. C.B. Agarwala and O.P. Rana, for the appellants. B.C. Misra, B.P. Jha and C.L. Lal, for the respondent. 849 The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by the State of Uttar Pradesh against the judgment and order of the High Court of Allahabad, October 24, 1962, confirming_ in special appeal the decision of a learned Single Judge dated July 10, 1962. By that order the High Court has set aside the order of dismissal made by the State Government against the respondent C. section Sharma on the ground that he did not have a fair enquiry before the Commissioner of Sales Tax when certain charges against him were inquired into. The facts of the case are as follows. The respondent C. section Sharma was appointed as a Sales Tax Officer in January 1949 and was transferred on April 1, 1950 to Hathras where he re mained till the end of September 1952. An enquiry was made with reference to certain allegations against him during his period of stay at Hathras. On October 3, 1952, he was transferred to Lakhampur Kheri and was ordered not to visit Hathras until allowed by the authorities. It appears that in November 1952, an ex parte inquiry was made by the Assistant Commissioner and the proceedings were submitted with a preliminary report to 'lie Commissioner. On the basis of this report an order of suspension was passed against him on February 18,1953 and he was placed for inquiry before the Commissioner. A set of charges was delivered to him on April 15, 1953; then a supplementary charge sheet was issued on July 8, 1953. Sharma asked for the inspection of the record of the preliminary inquiry as also the report, but he was told to submit his explanation to the charges first before inspection could be allowed. He submitted his explanation and in compliance with the directions contained in the charge sheet issued to him, he submitted a list of three. defence witnesses whom he wished to examine in support of his case. He requested that the witnesses against him should be examined vivavoce in his presence before he was asked to meet that evidence and also wished to be heard in person. On October 31, 1953, Sharma submitted the list of witnesses above mentioned. On the same day the Commissioner informed Sharma that he would be permitted to produce the witnesses mentioned in his letter in due course. In another communication he was told that another date would be fixed for hearing the witnesses in his defence. It is not necessary to describe the charges here because many of them, though found against him by the Commissioner, were not accepted by the State Government. The order of dismissal was based upon three allegations which are allegation No. 5 in charge No. 1 and allegations No. 1 and 3 in charges Nos. 2 and 3 respectively. The Commissioner in his report found him guilty of these charges and also of other allegations which the State Government did not accept. We shall refer to these charges presently after completing the narration of events which took place before the Enquiring Officer. 850 After the inquiry opened, the Commissioner did not examine the witnesses afresh, but their previous statements. recorded at the earlier enquiry, were tendered in evidence and Sharma was asked to cross examine them. Sharma duly cross examined those witnesses and then the question arose whether he would be allowed to lead his defence or not. In the first application which he had made giving the list of witnesses he had named three witnesses and had also added that they were to be examined in relation to a specific charge about a car owned by him. Oil February 2, 1954, he made an application for 20 (lays ' extension of time for giving the list of witnesses he wished to examine in his defence. Third February had been fixed for summerising of the. witnesses against him but no date till then. ,,.,Lis fixed for the examination of his defence witnesses. His application of February 2, 1954 was rejected by the Commissioner on February 6, 1954, without fixing a date for the examination of the witnesses or for giving him an opportunity to give evidence in his own behalf. Not knowing that he would not be even any further opportunity. Sharma submitted a list of four witnesses oil February 10, 1954, but stated that he could not give the addresses of some of the witnesses because he did not know where they were. On February 24, 1954, he again stated that he wanted to examine defence witnesses and to examine himself. No order was how ever, made on these applications. On April 8, 1954, the Commissioner made his report recommending the dismissal of Sharma and the order of the State Government was made after due opportunity to show cause why he should not be dismissed. In reply to the show cause notice Sharma complained that he had not been allowed to lead evidence on his own 'behalf that is one of the contentions in the present case. The charges against him which have been held proved against him and to which we have referred were as follows Charge No. 1, Allegation No. 5 "You accepted the accounts of Sarvsri Radhey Shiam Brij Kishore without due verification. " Charge No. 2, Allegation No. I "Sarvsri Damodar Das Radhey Shiam had been declared non assessable for 1948 49 and for three quarters of 1949 50 by your predecessor. The Judge (Appeals) had also declared the dealer unassessable in an appeal against Your orders. Still you assessed the dealers for the first three quarters to harass him. Ultimately you declared the dealer unassessable." 851 Charge No. 3, Allegation No. 3 "You accepted Rs. 5001 from Mithoo Lal of the firm Noor Mohammed Mithoo Lal as bribe through Chhotey Lal vakil. " In, addition to these charges there was a charge against him that he was in possession of a car which his means did not allow him to purchase andin respect of which he had made a reply that he had received this car from his father in law. This was charge No. 4 and inrelation to this charge apparently he had cited the first list ofthree witnesses for the examination in his defence. This charge was not accepted by the State Government when the matter reached it. After the order of dismissal was made, Sharma filed a writ petition in the High Court of Allahabad asking that the order made against him be quashed and his allegations were that the enquiry against him was made by a Commissioner who was biased against him; that the witnesses for the enquiry were not examined viva voce in his presence but were only tendered for crossexamination and lastly that no adequate opportunity was given to him for summoning his defence witnesses or to examine himself. The High Court in the two orders which were made, reached the conclusion that the enquiry was defective, but different reasons were given 'by the learned Single Judge and the Division Bench. We need not go into this matter elaborately because in our opinion the appeal here must be dismissed because ' we are satisfied that no adequate opportunity was afforded to Sharma to lead his defence which the principles of natural justice required. The first question is whether this inquiry was made under sub rule (1) or (3) of r. 55 of the Civil Services (Classification, Control and Appeal) Rules. It is an admitted fact that Sharma was a temporary employee and therefore his case would fall to be governed by sub rule (3) of r. 55 if it could be said that the enquiry which was being made was for a specific fault or on account of his unsuitability for service. Sub rule 1 ) of r. 55 is a general rule for enquiries where the conduct of a person is inquired into for misconduct but sub rule (3) says that that subrule shall not apply where it is proposed to terminate the employement of a probationer, or to dismiss, remove or reduce in rank a temporary government servant for any specific fault or on account of his unsuitability for the service. Sub rule (3) says that in such cases, the probationer or temporary government servant concerned shall be apprised of the grounds of such proposal, given an opportunity to show cause against the action to be taken against him, and his explanation in this behalf, if any. shall be duly considered before orders are passed by the competent authority. If the third sub rule applied, it is obvious that the kind of enquiry made complied with its requirements. The first sub 852 rule, however, provides for a full blooded enquiry which is the counter part of a regular trial : witnesses have to be examined in support of the allegations, opportunity has to be given to the delinquent, officer to cross examine them and to lead evidence in his defence. In our judgment the present case was governed by the first sub rule and not the third sub rule. The third sub rule deals with the unsuitability of an officer for the service or with a charge for any specific fault. This fault means a fault in the execution of his duties and not a misconduct such as taking bribe etc. which are charges of a more serious nature, affecting the character of the individual concerned. The collocation of the words "any specific fault" or "on account of unsuitability for service" give the clue of the distinction between the third sub rule and the first sub rule. An officer who is, for example, habitually lazy or makes mistakes frequently or is not polite or decorous may be considered unsuitable for the service. Another officer who makes a grievous default in the execution of his work may be charged for the specific individual fault, that is a dereliction or defect in the execution of that duty. Where there is an allegation that an officer is guilty of a misconduct such as accepting bribe or showing favours, the matter is not one of specific fault in the execution of his work but something more. That matter will fall to be governed by the first sub rule because you cannot charge a man with criminal conduct without affording him adequate opportunity to clear his character. Mr. Aggarwal fairly pointed out that the Government had appointed the enquiring officer to take action under r. 55(1) and it is thus quite clear that Government viewed the matter also in this light. It, therefore, follows that if the procedure under the first subrule had to be followed, adequate opportunity had to be given to Sharma to lead evidence on his own behalf to clear himself of serious charges which were levelled against him and give evidence on his own behalf. It is obvious that he has not been able to lead his defence or to give evidence on his own behalf. The question is whether he has to thank himself or the omission proceeded because of some action on the part of the enquiring officer. Considering the whole matter we are satisfied that the enquiring officer was to blame and we shall now show why we think so. Throughout the enquiry, as late as February 24, 1954, Sharma had again and again given indication that he would lead evidence in his defence. At first he had given a list of three witnesses which he later amplified to four leaving out one from the original list and adding two new names. He had also stated that he wanted to examine himself in his defence. The learned Commissioner who was holding the enquiry on more than one occasion stated that he would be afforded this opportunity and also that a date would be fixed for the examination of the defence wit 853 nesses. It is true that Sharma was playing for time and on the 2nd of February (before the date of hearing came) he put in an application that he would like an adjournment of 20 days before he submitted a final list of witnesses with their addresses. This application was rejected on February 6, but between February 6, and April 8, when the report was made, two long months passed and it was possible for the Commissioner to have fixed a date, on which, if he was so minded, Sharma could bring his witnesses in support of his case or tender himself for examination. No action was taken between February 6, 1954 and April 8, 1954 to enable Sharma to lead his defence, if any, in support of his part of the case. This omission in our judgment was sufficient to vitiate the whole proceeding because no enquiry of this type in which there are charges of a criminal nature, can be said to be properly conducted when the defence of the officer is either frustrated or ruled out. It was submitted by Mr. Agarwal,that the witnesses were being summoned by him to clear himself of the charge of owning a car without having the visible means to afford it and this charge was not accepted by the State Government. This is true enough, but the State Government came on the scene much later. In so far as the enquiring officer was concerned, he had accepted the allegation against Sharma and even if the original list be considered, Sharma was entitled to lead evidence with regard to the car itself. It is possible that if a date had been fixed, he would, not only have led evidence with regard to the car, but would have brought witnesses to clear himself of other charges, but no such opportunity was clearly afforded to him. Further before the case closed, the Commissioner had before him a list of four witnesses and fair play demanded, that he should have fixed a date and left it to Sharma to procure attendance of his witnesses on that date, but if no date was fixed, Sharma was not expected to bring hi,, witnesses day after day in the hope that the Commissioner would examine them any day. The enquiry cannot be said to comply with the elementary principles of natural justice and therefore we have no hesitation in accepting the decision of the High Court that the enquiry was vitiated. We may not omit to state that there was an allegation against the Commissioner that he was biased against Sharma. It does appear that the Commissioner, in one of his letters, stated that he had heard witnesses and satisfied himself that Sharma was definitely corrupt. This statement of the Commissioner showed that :he approached the case with a feeling that Sharma was guilty although the State Government cannot be said to share this bias of the Commissioner. We would have said something more about this, if the occasion had demanded this, but as we are upholding the order of the High Court on the ground that no reasonable 8 54 opportunity was afforded to Sharma to lead his evidence, it is not necessary to say whether an officer in the position of the Commissioner, who on the basis of secret enquiries behind the 'back of ,delinquent officer has reached the conclusion that there are good grounds for holding that the officer is corrupt, should himself ,conduct the enquiry. That matter may be left for consideration in another case. On the whole, therefore, we think that the ends of justice will be served in maintaining the order made by the High Court. The enquiry, if Government so decides, must proceed before an officer who will examine the witnesses in support of the charge in the manner laid down by this Court and afford Sharma an opportunity of leading his defence, if any. The appeal, therefore, fails and is dismissed with costs. G.C. Appeal dismissed.

IN-Abs

The respondent was a Sales tax Officer under the Uttar Pradesh Government. Inquiries against him in respect of some charges of corruption were first made by the Assistant Commissioner of Sales tax who examined some witnesses. The enquiry was then passed on to the Commissioner who neither examined the witnesses against the respondent himself nor gave an opportunity to the respondent, despite the latter 's repeated 'requests to produce his defence witnesses. On orders of dismissal being passed after the enquiry the respondent filed a writ petition before the High Court which succeeded. The State appealed. It was conceded on behalf of the State that the enquiry was under sub (1) or r. 55 of the Civil Services (Classification Control and Appeal) Rules. The distinction between 'sub:ft. (1) and (3) was considered. HELD: The third sub rule deals with the unsuitability of an officer for the service or with a charge for any specific fault. This fault means a fault in the execution of his duties and not a misconduct such as taking scribe etc. which are charges of a more serious nature affecting the character of the individual concerned. The collocation of the words any specific fault ' or 'on account of unsuitability for service ' give the clue to the distinction between the third sub rule and the first sub rule. [852B C] Sub rule (1) of r. 55 is the general rule for enquiries when the conduct of a person is inquired into for misconduct. A person cannot the charged with criminal conduct without affording him adequate opportunity to clear his character. If therefore the procedure under the first sub rule had to be followed adequate opportunity had to be given to the respondent to lead evidence on his own behalf to clear himself. No such opportunity having been given the enquiry could not be said to comply with the elementary principles of natural justice and the High Court rightly held that the enquiry was vitiated. [851 F G; 852 853 F G]

Appeal No. 185 of 1966. Appeal by special leave from the judgment and order dated March 20, 1962 of the Mysore High Court in Writ Petition No. 109 of 1960. A.K. Sen, R. Ganapathy Iyer and R. Gopalakrishnan, for the appellants. D.Narsaraju, T. A. Ramachandran and R. N. Sachthey, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought, by special leave, from the judgement of the Mysore High Court dated March 20, 1962 dismissing writ petition No. 109 of 1960. The appellants had prayed therein for the grant of writ for quashing a. notice dated January 16, 1960 issued by the respondent under section 15 of the Excess Profits Tax Act, 1940 (Act XV of 1940), hereinafter called the 'Act ', calling upon the appellants to submit a return of the standard profits and the profits actually made during the chargeable accounting period from October 30, 1943 to October 30, 1944 on the ground that the profits had been under assessed. The appellants carried on a business constituting themselves into a partnership called 'Guduthur Thimmappa & Brothers in 1934. On the date of commencement of the business the part ners were G. Thimmappa, G. Ekambarappa, and G. Padmanabhan, each of the partners representing their respective joint families. The business of the firm was in Bellary town and the partners of the firm were residents of Bellary town during the period the firm was carrying on business. The, firm was dissolved on October 16, 1944. Thimmappa, one of the partners, died on April 13, 1955. For the chargeable accounting period from October 30, 1943 to April 30, 1944, the Excess Profits Tax Officer had taken steps to assess the "escaped" profits of the firm. He issued the necessary notices to G. Padmanabhan and G. Ekambarappa as the partners of the dissolved firm. He also issued notice to G. M. Prabhu and G. Lakshmidevamma as the representatives of G. Thimmappa. The contention of the appellants, before the High Court was that as from November 1, 1956 the Act must be 866 deemed to have been repealed so far as Bellary district is concerned and therefore the respondent was not competent to take any proceedings for determining the escaped income under section 15 of that Act. The High Court rejected the contention on the ground that, though the Act stood repealed by reason of the inclusion of Bellary district in Mysore State, the liability to pay tax on the escaped profits continued by virtue of section 6 of the General Clauses Act. The question to be considered in this appeal is whether the appellants continued to be liable to be proceeded against under section 15 of the Act on the profits which had escaped taxation. The present Bellary district was a part of the old Madras State which was a Part "A" State under the Constitution of India till its merger with the Mysore State on October 1, 1953 which was a Part "B" State. The Mysore State continued to be a Part "B" State till November 1, 1956. The Act extended, when first promulgated, to. the territory of former British India. After the Constitution came into force, section 1(2) of the Act was adapted so as to extend the operation of the Act "to the whole of India except Part 'B ' States" by the Adaptation of Laws Order, 1950. After the formation of new States in pursuance of the States Reorgani sation Act, 1956 (Act 37 of 1956), sub section (2) of section 1 of the Act was adapted by the President by Adaptation of Laws (No. 3) Order, 1956 dated December 31, 1956. Section 1(2) of the Act as adapted read as follows : "It extends to the whole of India except the territories which immediately before the 1st November, 1956 were comprised in part 'B ' state." The result of the adaptation was that all the provisions of the Act stood repealed so far as the district of Bellary was concerned with effect from December 31, 1956. It was contended on behalf of the appellants that it is not a case of repeal of the Act and so the provisions of section 6 of the General Clauses Act could not be invoked to sustain the validity of the notices issued by the respondent under section 15 of the Act. It was argued that so far as the Act was con cerned, the Adaptation of the Laws Order, 1956 only modified the provisions of section 1 (2) of the Act and did not repeal the Act as such and the effect of the modification was that the provisions of the Act were no longer applicable to the Bellary district which was comprised in the territory of Part 'B ' State of Mysore immediately before November 1, 1956. In our opinion there is no justification for the argument put forward on behalf of the appellants. The result of the Adaptation of Laws Order, 1956 so far as the Act was concerned, was that the provisions of that Act were no longer applicable or in force in Bellary district. To put it differently, the Act was repealed so far as the area of Bellary 8 6 7 district was concerned. Repeal of an Act means revocation or abrogation of the Act and, in our opinion, section 6 of the General Clauses Act applies even in the case of a partial repeal or repeal of part of an Act. Section 6 of the General Clauses Act states "Effect of repeal. Where this Act or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not (c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or Section 3(19) of the General Clauses Act defines an "enactment" as including "a Regulation and also as including any provision contained in any Act or in any such Regulation as aforesaid". The argument was also stressed on behalf of the appellants that even if section 6(c) of the General Clauses Act was applicable there was no "liability incurred or accrued" as there was no assessment of escaped profits before November 1, 1956 when the adaptation was made. We do not think there is any substance in this argument. The liability of the appellants to tax arose immediately at the end of the chargeable accounting period and not merely at the time when it is quantified by assessment proceedings. It follows therefore that the notice issued under section 15 of the Act was legally valid and the appellants representing the original partners of the firm continued to be liable to be proceeded against under that section for the profits which had escaped taxation. In Wallace Brothers and Co. Ltd. vs Commissioner of income tax(1), the Judicial Committee expounded in clear terms the scope of a tax liability under the Income tax Act. It was observed by the Judicial Committee as follows : ". . the rate of tax for the year of assessment may be fixed after the close of the previous year and the assessment will necessarily be made after the close of that year. But the liability to tax arises by virtue of the charging section alone, and it arises not later than the close of the previous year, though quantification of the amount payable is postponed. " The same view has been expressed by this Court in Chatturam Horilram Ltd. vs C.I.T. (2) in which the legal position was reviewed (1) , 244. (P.C.) (2) 868 with regard to the question of charge to income tax. In that case, the assessee company carrying on business in Chota Nagpur was assessed to tax for the year 1939 40, but the assessment was set aside by the Income tax Appellate Tribunal on March 28, 1942, on the ground that the Indian Finance Act, 1939, was not in force during the assessment year 1939 40, in Chota Nagpur which was a partially excluded area. On June 30, 1942, a Regulation was promulgated by which the Indian Finance Act of 1939 was brought into force in Chota Nagpur retrospectively as from March 30, 1939. Thereupon the Income tax Officer made an order holding that the income of the assessee for the year 1939 40 had escaped assessment and issued to the assessee a notice under section 34 of the Income tax Act. The validity of the notice was questioned. It was held by th Court that though the Finance Act was not in force in that area in 1939 40, the income of the assessee wasliable to tax in that year and, therefore, it had escapdently of the passing of the Finance Act but until the Finance Act It was pointed out that the income was chargeable to tax independing dently of the passing of the Finance Act but until the Finance Act was passed no tax could be actually levied. The same principle was reiterated by this Court in Kalwa Devadattam vs Union of India(l). The question in that case was whether the liability of a Hindu undivided family arose before or after partition of the family. In that case, this Court speaking through Shah, J. stated in clear terms thus : "Under the Indian Income tax Act liability to pay income tax arises on the accrual of the income, and not from the computation made by the taxing authorities in the course of assessment proceedings; it arises at a point of time not later than the close of the year of account. " The same view has been taken in a recent case by this Court in State of Kerala vs N. Sami lyer (2 ) . In view of the principle expressed in these authorities we are of the opinion that the liability to pay excess profits tax accrued immediately at the end of the chargeable accounting period and that liability was preserved under section 6 (c) of the General Clauses Act even though the Act stood repealed so far as Bellary district was concerned with effect from November 1, 1956. Mr. Narsaraju contended in the alternative that on the combined operation of section 53 of the Andhra Pradesh Act (Act 30 of 1953) and s ' 119 of the State Reorganisation Act (Act 37 of 1956) all the provisions of the Excess Profits Tax Act, 1940 remained in operation in Bellary district in spite of the Adaptation of Laws Order, 1956. Section 53 of the Andhra Pradesh Act states as follows: (1) (2) A.I.R. 1966 S.C. 1415. 8 69 .lm15 "The provisions of Part 11 shall not be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to the State of Madras or of Mysore shall, until otherwise provided by a competent Legislature or other competent authority, continue to have the same meaning. " .lm0 Section 119 of the State Reorganisation Act reads as follows "The provisions of Part It shall not be deemed to have effected any change in the territories to which any law in force immediately before the appointed day extends or applies, and territorial references in any such law to an existing State shall, until otherwise provided by a competent Legislature or other competent authority, be construed as meaning the territories within that State immediately before the appointed day. " Section 120 of this Act states : "For the purpose of facilitating the application of any law in relation to any of the States formed or territorially altered by the provisions of Part II, the appropriate Government may, before the expiration of one year from the appointed day, by order make such adaptations and modifications of the law, whether by way of repeal or amendment, as may be necessary or expedient, and thereupon every such law shall have effect subject to the adaptations and modifications so made until altered, repealed or amended by a competent Legislature or other competent authority. Explanation. In this section, the expression "appropriate Government" means (a) as respect any law relating to a matter enumerated in the Union List, the Central Government; and (b) as respects any other law, (i) in its application to a Part A State, the State Government, and (ii) in its application to a Part C State, the Central Government. " it was pointed out that the Act was in force in Bellary district When the Constitution came into force and the effect of section 53 of the Andhra Pradesh Act was to continue the operation of that Act so far as Bellary district was concerned. The effect of section 119 870 of the State Reorganisation Act was to preserve the territorial operation of the law which was immediately in force before the date of the promulgation of that Act until such law was repealed by the competent legislature or a competent legislative authority. There is great force in. the argument advanced by Mr. Narsaraju on this point. But it is not necessary for us to express any concluded opinion on this aspect of the case because we have already given reasons for holding that the appeal must be dismissed on the ground that the Act stood repealed by reason of the Adaptation of Laws Order, 1956 and the liability to pay tax on escaped profits continued under section 6 of the General Clauses Act. We accordingly affirm the judgment of the Mysore High Court dated March 20, 1962 and dismiss this appeal with costs. G.C. Appeal dismissed.

IN-Abs

The District of Bellary originally belonged to the Part 'A ' State of Madras in British India. On October 1. 1953 it merged in the Part 'B ' '.State of Mysore. The Excess Profits Act, 1940 applied only to British India. When Bellary District went to the Part 'B ' State of Mysore the Act ceased to apply to it. After the , Mysore also became a Part 'A ' State. But according to section 1(2) of the Adaptation of Laws (No. 3) Order dated December 31, 1956. the aforesaid Excess Profits Tax Act was to extend "to the whole of India ,except the territories which immediately before November 1, 1956 were comprised in a Part 'B ' State. " In 1960 the Excess Profits Tax Officer, Bellary gave a notice to the appellants under section 15 of the Act in respect of the period October 30, 1943 to October 30, 1944. The appellants objected that the Act did not apply to Bellary district as immediately before November 1, 1956 it was in a Part 'B ' State. The plea was rejected by the departmental authorities as well as by the High Court in a writ petition under article 226 of the Constitution. In appeal. by special leave, to this Court it was contended that so far as Bellary District was concerned it was not a case of repeal but only of non application of the Act, and thus section 6 of the General Clauses Act was not attracted. It was further urged that even if section 6 applied no liability bad accrued or been incurred in terms of cl. (e) of the section as there was no assessment of escaped profits before November 1, 1956 when the adaptation was made. HELD : (i) The result of the Adaptation of Laws Order 1956 so far as the Act was concerned, was that the provisions of the Act were no longer applicable or in force in Bellary district. To put it differently, the Act was repealed so far as the area of Bellary district was concerned. Repeal of the Act means revocation or abrogation of the Act and section 6 of the General Clauses Act applies even in the case of a partial repeal, or repeal of part of an Act. [866H; 867A] (ii)The case was covered by section 6(e) of the General Clauses Act. The liability of an assessee to tax arises immediately at the end of the chargeable accounting period and not merely at the time when it is quantified. by assessment proceedings. It followed therefore that the 865 notice issued under section 15 of the Act was legally valid and the appellants representing the original partners of the firm continued to be liable to be proceeded against under that section for the profits which had escaped taxation. [867 E F] Wallace Brothers & Co. vs Commissioner of Income tax, , Chatturam Horilram Ltd. vs C.I.T., ; Kalwa Devaduttam vs Union of India, and State of Kerala V. N. Same lyer, A.I.R. 1966 S.C. 1415, relied on.

ivil Appeal No. 2586 of 966. Appeals from the judgment dated November 17, 1966 of the Andhra Pradesh High Court in Writ Petition No. 1589 of 1965. P. Ram Reddy and A.V.V. Nab ', for the appellants. 1. V. Rangacharya, B. Parthasarathy and P.C. Bhartari. for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by certificate, is directed against the order of the Andhra Pradesh High Court, allowing a writ petition, filed by the respondent, under article 226 of the Constitution. The facts leading up to the filing of the Writ Petition, by the respondent, may be briefly indicated. In respect of Sri Swami Hathiramji Math. Tirumalai, Tirupati, disputes arose regarding 89 3 the succession to the office of the Mahant of the Math, after the death, in 1947, of the then Mahant, Prayag Dossji. An agreement seems to have been arrived at, on October 29, 1947, laying ,town the procedure for choosing a successor to the office of 'the Mahant, when a vacancy arises. The Akada Panchayat appears to have been constituted the supreme authority, in such matters. That agreement also provided, as to who, among the respondent, and one Chetham Doss, was to succeed to the office of the Mahant, on the death of one Narayan Doss. Narayan Doss died on December 9, 1958, and Chetham Doss succeeded as Mahant. The respondent filed O. section 84 of 1958, in the Subordinate Judge 's Court, Chittoor, for a declaration that he is entitled to succeed to the office of Mahant. The suit was resisted, by Chetam Dass, on the basis that under the agreement of October 29, 1947, he was legitimately entitled to succeed as Mahant. Sometime later, the respondent and Chetam Dass, entered into a compromise, by virtue of an agreement, dated July 15, 1961. Both of theta agreed that Chetam Das was entitled to continue as Mahant, and that, after his death, the respondent was to succeed as Mahant. III view of this agreement, the respondent got dismissed, as settled, O.S. 84 of 1958. Chetam Dass died, on March 18, 1962, and the respondent claims to have succeeded as Mahant, in his own right. But, according to the appellant, the Commissioner H.R. & C.E., Andhra Pradesh, received telegram stating that there was a dispute about the person who was to succeed as Mahant. The, Assistant Commissioner, H.R. & C.E., took action, under section 53 of the Madras Hindu Religious & Charitable Endowments Act, 1951 (Act XIX of 1951). (hereinafter called the Act), which is applicable to the State of Andhra Pradesh, and assumed charge, on March 24. 1962, of the Math and its properties. The respondent filed. on March 26, 1962, O.S. 24 of 1962, for a declaration that he is the rightful successor to the office of the Mahant of the Institution, in question. The Commissioner, H.R. & C.E., was made a party to the suit. The respondent also filed a revision, before the Government, on April 18, 1962, challenging the assuming charge of the Math, under section 53 of the Act, by the Assistant Commissioner. The Government stayed further proceedings; and, in consequence, O.S. 24 of 1962, was withdrawn, by the respondent, on April 24, 1962. The Government also passed an order, on June 5, 1962, stating that it was necessary to take action, for making suitable arrangements for the proper administration of the Math and its endowments, till the civil court decided as to who should succeed to the office of the Mahant. In this connection, the State Government referred to an objection, received, from one Devendra Dass, stating that he is the proper person entitled to succeed to the office of the Mahant. Ultimately, by the said order, the Government appointed the respondent, as an 894 interim Mahant, subject to the various conditions, laid down therein. Devendra Dass filed writ petition No. 602 of 1962, on June 21, 1962, in the High Court, challenging this order of the State Government dated June 5, 1962. That writ petition was, dismissed on August 27, 1962. In the meanwhile, Devendra Dass, who was a minor, had instituted two suits, O.S. Nos. 50 of 1962 and 57 of 1962, to declare him as the person entitled to succeed to the office of the Mahant, on the death of Chetam Dass. In the first suit he was represented, by one Mukundd Dos!,, as next friend, and in the second suit he was represented by one Bhagwant Doss, as the next friend. When Devendra Doss attained majority, later on, he preferred to continue O.S. 50 of 1962. and therefore O.S. 57 of 1962 was dismissed, as unnecessary. On August 22, 1964, the Government passed an order, direct ing the respondent to show cause why its previous order, dated June 5, 1962, appointing the respondent, as interim Mahant, should not be cancelled. This appears to have been issued, by the State Government, in view of the fact that the respondent was taking a particular attitude regarding the pada kanikkas received by him. In the said order, the Government also proceeded, on the basis that it has no jurisdiction to appoint an interim Mahant when action is taken, under section 53 of the Act. On receipt of this notice, the respondent filed writ petition No. 1534 of 1964, challenging the said order. His claim appears to have been that he had succeeded to the office of Mahant. in his own right, after the death of Chetam Dass, and that no action can be taken, under section 53 of the Act, and therefore, the question of the Government, either appointing him as interim Mahant. or taking any action to cancel such an order, does not arise. It is seen that further proceedings, in pursuance of the notice, issued by the Government, were stayed, by the High Court, pending the disposal of the writ petition. The State Government passed an order, on September 9, 1965, framing certain charges, as against the respondent, and directing him to furnish his explanation. regarding the same, and, at the same time, placed him under suspension. The respondent filed, writ petition No. 1589 of 1965. challenging this order of the Government, placing him under suspension. In view of this writ petition, the earlier writ petition. No. 1534 of 1.964, was dismissed, as infructuous, on April 14. In the meanwhile, Bhagwant Doss, who had originally instituted O.S. No. 57 of 1962, as the next friend of Devendra Dass, and which suit was got dismissed by the minor, after attaining majority, instituted another suit, O.S. No. 69 of 1965 on September 29. 1965, claiming in his own right to be the person entitled to succeed to the office of Mahant. This suit appears to be still pend 89 5 ing. But O.S. 50 of 1962, which was decided to be continued, by Devendra Doss, was contested by the respondent and, ultimately, dismissed, on April 28, 1966. It is stated that an appeal., A.S. No. 476 of 1966, has been filed, on November 17, 1966. against this decree and it is still pending. The main contention, taken by the respondent, in writ peti tion No. 1589 of 1965, was that he had already in law succeeded as Mahant, on March 18, 1962, when the presiding Mahant, Chetam Doss, died. Therefore, according to him, there was no vacancy which can be aid to have occurred, in the office of the trustee of the Math, so as to give jurisdiction to the Assistant Commissioner, or the Commissioner, H.R. & C.E., to take action, under section 53 of the Act. The respondent also relied upon the circumstance that the suit filed by Devendra Doss, O.S. 50 of 1962, had been dismissed and the Court had accepted his title to hold the office of the Mahant, on the basis of the Panchayat Agreement, dated October 29, 1947, as well as the agreement, dated July 15, 1961, entered into between him and the then Mahant, Chetam Dass. The respondent also relied upon the circumstance that his assumption of office, as Mahant, on the death of Chetam Dass, has been approved, on March 18, 1962, by the supreme authority, namely, the Akada Panchayat. The appellant resisted the claim of the respondent. , on the ,,round that when Chetam Doss died, and the respondent attempted to take charge as Mahant, a claim was made, by one Devendra Doss, that he was the person, lawfully entitled to succeed to the office of the Mahant. On the death of Chetam Doss, on March 18, 1962, a vacancy occurred, in the office of the trustee of the nath, and there is also a dispute, between the respondent and Devendra Doss, regarding the right of succession to such office. In view of the fact that the necessary conditions, for invoking section 53 exist, the assumption of management of the Math was taken over, by the Assistant Commissioner, H.R. & C.E., for the proper management of the institution. It was also pointed out that the suit instituted, by Bhagwant Doss, O.S. No. 69 of 1965, claiming in himself the right to succeed, as a trustee, was still pending and that also shows there is a dispute, regarding succession to the office of the trustee. The appellant has also urged, that in any event, inasmuch as the respondent has been appointed, to manage the institution, by the department, under section 53 of the Act, and. as he was continuing in such management by virtue of such appointment, the State had ample jurisdiction to pass orders either of suspending, or even dismissing the respondent. The learned Judges of the High Court have held that the res pondent has succeeded as Mahant, on March 18, 1962, on the death of Chetam Dass, by virtue of the Panchayat Agreement, of October 29. 1947, and the compromise agreement, dated July 15, 896 1961. Therefore, it Cannot be said that there was any vacancy in the office of the trustee of the Math, so as to enable the appellant to take action, under section 53 of the Act. The High Court has, in this connection, referred to the findings recorded, by the Subordinate Judge 's Court, in favour of the respondent, in O.S. 50 of 1962. The mere circumstance that after a person has succeeded to the office of the trustee, other people lay claims to that office, and institute litigation for that purpose, will not, according to the High Court, give jurisdiction to the appellants to take action, under section 53 of the Act. The High Court is further of the view that the appellant 's action, in placing the respondent under suspension, is contrary to the directions given by the High Court, on April 9, 1965, pending the disposal of the writ petition. The High Court is further of the view that the stand, taken by the appellants, is quite contrary to the earlier stand, taken in their order, dated June 5, 1962, wherein they had categorically stated that the civil Court 's decision will be conclusive and final, regardin the succession to the office of the Mahant. This reason, is given by the High Court, as it was of the view that the appellant should give due respect to the decision, in O.S. 50 of 1962. On these grounds the High Court quashed the order passed, by the State Government, dated September 9, 1966, placing the peti tioner, under suspension. Mr. Rain Reddy, learned counsel appearing for the appellants. has raised the same contentions that were taken, before the High Court. In addition, counsel has also pointed out that the decision, in O.S. 50 of 1962, has not become final, inasmuch as Devendra Doss, who lost that litigation, has filed A.S. No. 476 of 1966, which is still pending. Counsel further points out that, in view of the dispute raised, by Devendra Doss, by making a claim for the trusteeship or the Math, before the Government the writ petition, No. 602 of 1962, filed by the said party, Lis well as the various suits, referred to above, will clearly show that there is a dispute regarding the succession to the office of the trustee of the Math. when a vacancy occurred, on the death of Chetam Dass, on March 18, 1962. Therefore, action taken by the appellant, in the interests of the institution, was perfectly valid. Counsel also urged that inasmuch as the respondent is functioning as Manager of the institution, by virtue of his appointment, on June 5, 1962, by the Government, subject to the conditions mentioned therein, the Government was competent to take disciplinary action, as against the respondent, for breach of those conditions. Mr. 1. V. Rangacharya, learned counsel for the respondent, of Lilly supports the reasons, given by the learned Judges of the High Court, for accepting the claim made by his client, in the writ petition. 897 The short question, that arises, for .consideration, is as to whether the Assistant Commissioner, H.R. & C.E., had jurisdiction to assume management of the Math, in question, under section 53 of the Act. That will depend on the further question as to whether the State Government had jurisdiction to place the respondent, under suspension, as they have purported to do, 'by their order. dated September 9. The answer to the above question is to be decided, by reference to section 53 of the Act. Section 53 of the Act. occurs in 'Chapter IV, relating to Maths. Sub section (1) of that Section enables the commissioner or any two or more ' persons having interest and having obtained the consent, in writing, of the Commissioner, to institute a suit to obtain a decree for removing the trustee of ,a math or a specific endowment attached to a math, for any one or more of the grounds mentioned in cls. (a) to (f) therein. Section 53, which is the material section, and which relates to filling of vacancies, is as follows: "53. (1) When a vacancy occurs in the office of the trustee of a math or specific endowment attached to a math and there is a dispute respecting the right of succession to such office or, when such vacancy cannot be filled up immediately or when the trustee is a minor and has no guardian fit and willing to act as such or there is a dispute respecting the person who is entitled to act as guardian, or when the trustee is by reason of unsoundness of mind or other mental or physical defect or infirmity unable to discharge the functions of the trustee, the Assistant Commissioner may take such steps and pass such order as he thinks proper for the temporary custody and protection of the endowments of the ' math or of the specific endowment, as the case may be, and shall report the matter forthwith to the Commissioner. (2) Upon the receipt of such report, if the Commissioner, after making such inquiry as he deems necessary. is satisfied that an arrangement for the administration of the math and its endowments or of the specific ' endowment, as 'the case may be, is necessary, he shall make such arrangement as he thinks fit until the disability of the trustee ceases or another trustee succeeds to the office, as the case may be. (3) In making any such arrangement, the Commissioner shall have due regard to the claims of the ' disciples of the math, if any. 898 (4) Nothing in this section shall be deemed to affect anything contained in the Madras Court of Wards Act, 1902. " Section 53(1) contemplates four contingencies, under which the Assistant Commissioner may take steps for the temporary ,custody and protection of the math. We are concerned, in this case, only with the first contingency, referred to in that subsection. Before that provision can be invoked, two conditions are necessary, viz., (a) a vacancy must have occurred, in the office of the trustee of a math; and (b) there must be a dispute, respecting the right of succession, to such office. In this case, it is possible to say, in view of the claim made by Devendra Das. and the litigations referred to, above, that there was a dispute Tespecting the right of succession to the office of the Mahant. But in order to give jurisdiction to the appellant to take action, tinder the first contingency, referred to in sub section (1) of section 53, the two conditions adverted to above, will have to exist. In this case, it is the claim of the appellant that there was a vacancy, in the office of the trustee of the Math, on March 18, 1962, when Chetan Das died. On the other hand, according to the resPondent, there was no vacancy in the office of the Mahant, it that time, because, on the death of Chetan Das, the respondent succeeded to the office of the Mahant. Therefore, the point to be considered is, as to whether a vacancy has occurred, in the office of the trustee of the Math, on March 18, 1962. That there must be an actual vacancy, unfilled, is clear, from the wording of section 53(1), when it deals with two different contingencies. providing for the assumption of management. Under the first contingency, a vacancy should have occurred in the office of a trustee of a Math, and there is a dispute in respect of the succession to such office. That is, the office has not been filled in. by anybody having a prima facie legal, right to assume management. Similarly, the second contingency, contemplated unders. 53(1), when assumption of management can be made by the Department, is when a vacancy occurs in the office of a trustee of a Math and when such vacancy cannot be filled up immediately. This clearly shows that there must be a vacancy, as I fact, in the sense that nobody with any legal right has assumed Office of the trustee of a Math. In this case, as we have pointed out earlier, the High Court has accepted the claim of the respondent that by virtue of the Panchayat agreement dated October 29, 1947, and the compromise agreement, dated July 1.5, 1961, the respondent has succeeded to the office of the trustee of the Math, on March 18, 1962, on the death of Chetan Das. The supreme authority. according to the High Court, the Akada Panchayat, has also 899 approved of the said appointment, by resolution of the same date. We do not propose to consider the findings recorded in O.S. 50 of 1962, which are no doubt in favour of the respondent, because that decision is the subject of an appeal, in A.S. No. 476 of 1966. Nor do we propose to consider the claim of Bhagwant Doss in O.S. 69 of 1965, which is still pending adjudication, at the hands of the Court. But even without reference to those litigations, the view of the High Court that there is no vacancy in the office of the trustee of the Math which alone will give jurisdiction to the appellant to take action under section 53(1), can be accepted its correct, for the other reasons, mentioned by us, earlier. Mr. Ram Reddy, learned counsel for the appellants, further points out that, in this case, the respondent is in management or the Math, by virtue of the appointment made, by the State Government, on June 5, 1962, and therefore the State Government is entitled to take disciplinary action against him for breach of conditions, under which he was holding that office. Counsel also united our attention to the averments made by the respondent himself, in Writ Petition No. 602 of 1962, that the State Government has appointed him as interim Mahant. The stand taken by the respondent, in writ petition No. 602 of 1962, cannot assist the appellant, because he was interested then in fighting the claim made by Devendra Dass, in the said writ petition. In resisting such claim, he has, no doubt, made reference to the fact that his right to function, as Mahant, cannot be disturbed, as the State Government has appointed him a ,; interim mahant. Therefore, the stand taken by the respondent, in the said writ petition, must be understood in the said context. No doubt, normally, if it is established that the respondent 's only right to function as Manager of this institution, is exclusively on the basis of the Government order, dated June 5, 1962, there will be considerable force in the contention of learned counsel for the appellant that the State Government has got jurisdiction to take disciplinary action, against the respondent. But 'the facts in this case show that the position is entirely different. If the respondent, as held by the High Court with which view we are in agreement has succeeded to the office of the trustee of the Math, on the death of Chetam Dass, on March 18, 1962, in hi, ; own right, the mere circumstance that the Government also passe,; an order appointing him as interim Mahant, or Manager, later, will not take away the right of the respondent to function as trustee. on the basis of his original right. Once it is held that the respondent is not holding the office of the Mahant, exclusively on the basis of the order of the Government, dated June 5. 1962, it follows that the appellant has no jurisdiction to pass an order, placing the respondent under suspension, as that virtually amounts to a removal of the trustee of a Math. The removal of 900 trustee of a Math can be done only in the manner, and in the circumstances, mentioned in section 52 of the Act. Therefore, the view of the High Court that the order of the Government, placing the respondent Linder suspension, is not valid, is correct. The result is, that the appeal fails, and is dismissed. In the Circumstances of the case, there will be no order as to costs.

IN-Abs

After the death of the Mahant of Sri Swami Hathiramji Math, Tirumalai, Tirupati, in 1947, an agreement was arrived at on October 29, 1947 resolving certain disputes regarding the succession to the office of Mahant and laying down a procedure for choosing a successor when a vacancy arose. Furthermore, the Akada Panchayat was constituted the supreme authority in such matters. One C.D. became the Mahant in 1958. The respondent challenged the succession by a declaratory suit but eventually there was a compromise and in an agreement dated .July 15, 1961, it was agreed that C.D. was entitled to continue as Mahant, and that after his death the respondent would succeed him. On the death of C.D. on March 18, 1962, the respondent claimed to have succeeded as Mahant in his own right and the Akada Panchayat approved the succession by a resolution on the same date. However, the Commissioner Hindu Religious and Charitable Endowments Andhra pradesh, having received a telegram disputing the respondent 's claim, took action under section 53 of the Madras Hindu Religious and Charitable Endowments Act XIX of 1959 and assumed charge of the Math and its property on March 24, 1964. The respondent thereafter filed a suit for a declaration that he was the rightful successor. He also filed a revision before the Government challenging the action taken under section 53 whereupon the Government stayed further proceedings and the respondent therefore withdrew his suit. On June 5, 1962 the Government issued an order stating that as there were disputes about who was the rightful successor, until the Civil Court decided this question, it was necessary to make suitable arrangements for the proper administration of the Math and its endowments; it therefore appointed the respondent as interim Mahant subject to various conditions laid down in the order. in view of the respondent 's attitude in the discharge of certain of his duties, on August 22, 1964, the Government passed an order directing him to show cause why the previous order of June 5, 1962, should not he cancelled. The respondent filed a Writ Petition against this order claiming that he had succeeded to the office of Mahant in his own right and that no action could be taken by the Government under section 53 other appointing him as interim Mahant or cancelling such appointment , the High Court thereupon stayed further proceedings in pursuance of the notice pending the disposal of the writ petition. The State Government then passed a further order on September 9, 1965, framing certain charge , against the respondent, calling for his explanations to them '.Ind. at the same time, placing him under suspension. The respondent filed a second writ petition challenging this new order whereupon the earlier writ petition was dismissed as infructious. The High Court allowed the second writ petition. 892 It was condendcd on behalf of the appellant that (i) on the death of C D. on March 18,1962, a vacancy occurred in the of]fire of Mahant and there was a dispute between the respondent and two other persons each of whom claimed the right of succession; suits had been filed by each of those two persons to establish their claims and ,tithough these had been dismissed, an appeal was pending in respect of one of them; view of this the necessary conditions existed for invoking the power under section 53 for the proper management of the Math; furthermore, that inasmuch as the respondent had been appointed to manage the institution by the department under section 53 of the Act, and, as he, was continuing in such management by virtue of that appointment, the State had ample jurisdiction to pass orders either of suspending or even dismissing the respondent. HELD: Dismissing the appeal; The High Court had rightly held that 'there was no jurisdiction for the exercise of the power under section 53 of the Act. (i) Before section 53 can be invoked. two conditions are necessary viz., (a) a vacancy must have occurred in the office of the trustee of a Math; and (b) there must be a dispute respecting the right of succession to such office. In the present case although it. was possible to say that there was a dispute resperting the right of succession to the office of Mahant, the further condition that there must be a vacancy could not be said to have existed and the High Court had rightly accepted the claim of the respondent that by virtue of the Panchayat agreement of October 29, 1947, the compromise agreement of Julv 15, 1961, and the approval given to his succeession by the Akada Panchayat. he had succeeded as Mahant March 18, 1962, on the death of C.D. 1898 B D. H] (ii) If the respondent had succeeded as Mahant on the death of C.D., in his own right. the mere circumsta 'nce that the Government also passed an order appointing him as interim Mahant, later would not take away the right of the respondent to function as Mahant. Once it is held that he was not holding the office exclusively on the basis of the order of the Government of June 5, 1962. it follows that the appellant had no jurisdiction to. pass an order, placing the respondent under suspension, as that virtually amounted 10. a removal of the trustee of a Math which could only be done in accordance with the provisions of section 52 of the Act. [899 G 900 A]

Appeal No. 897 of 1964. 887 Appeal by special leave from the judgment and order dated November 14, 1961 of the Allahabad High Court in Civil Revi sion No. 686 of 1953. Bishan Narain and M. I. Khowaja, for the appellant. Niren De. Addl. Solicitor General, M. V. Goswami and Yogeshawr Parshad, for the respondent. The Judgment of the Court was delivered by Bhargava, J. The respondent firm, K. B. Bass & Co., instituted a suit on 13th April, 1951, for rendition of accounts against the appellant firm, Messrs Hulas Rai Baij Nath, alleging that the appellant was the commission agent of the respondent and that the accounts between respondent as the principal and appellant as the agent had not been settled since the dealings be an in the year 1941 onwards. Tentatively, a sum of Rs. 2,100/ was claimed in the plaint. In the written statement filed on behalf of the appellant, the suit was contested on various grounds; but for the purposes of this appeal, we need mention the pleas taken in only two paragraphs 8 and I 1. In paragraph 8, it was pleaded that one Lala Shiva Charan, a partner of the respondent firm, had come with a Munim in the month of Agahan last and account. ,; were fully explained to him as worked out upto Kartik Sudi 15. Sambat 2007. In that statement of account, a sum of Rs. 10,677 14 3 was found due to the appellant from the respondent and the representatives of the respondent asked for two months ' time for making the payment of the amount found due. It was thus urged that there was no occasion for rendition of accounts and the plaintiff 's suit was not fit to proceed according to law. In paragraph I 1, the appellant pleaded that "if, in the opinion of the court, the court has jurisdiction to try the suit and it is necessary to tender the accounts, it is equitable that a decree for the amount which may be found due to the contesting defendant, after rendition of accounts, together with costs and interest be passed in favour of the contesting defendant, after necessary court fee being realized from the defendant. " A number of issues were framed and the case was taken up for recording of evidence on several dates of hearing. Some of the issues were even given up during the 'trial. Ultimately, on 5th May, 1953, after a considerable amount of evidence had been recorded, an application was presented on behalf of the plaintiff respondent, for withdrawal of the suit. The round given for withdrawal was that the respondent firm was in the charge of one Bhagwat Charan who had colluded with the appellant and litigation was going on between the respondent and Bhagwat Charan for effecting partition of the business. Consequently, it was difficult to prosecute the suit, No prayer was made for permission to file a fresh suit. The appellant filed an application objecting to this application for with. L9Sup. CI/67 13 888 drawal. The main ground taken for contesting this application for withdrawal was that, in a suit of this nature, it is permissible to pass a decree in favour of the defendant if, on accounting, something is found due to him against the plaintiff, and it followed that, if the defendant paid court fee on 'the amount which was found due to him from the plaintiff, his position became that of ,A plaintiff himself and he became entitled to have 'the accounting done and to obtain a decree. It was urged that the plaintiff 's game in withdrawing the suit after protracted duration and considerable expenditure on the part of the defendant was to defeat this right of the defendant. The trial Court held that the right of the plaintiff in this suit to withdraw under 0. 23, r. 1 of the Code of Civil Procedure was inherent and such a right could be exercised at any time before judgment. All 'that the defendant could claim was an order for costs in his favour. The Court, therefore, dismissed the suit, awarding costs of the suit to the appellant. The appellant filed a revision in 'the High Court of Allahabad against this order, with a prayer that the High Court may set aside the order of the trial Court and remand the suit for trial according to law. The High Court dismissed the application for revision; and the appellant has now come tip to this Court in 'this appeal by special leave. The short question that, in these circumstances, falls for decision is whether the respondent was entitled to withdraw from the suit and have it dismissed by the application dated 5th May, 1953 at the stage when issues had been framed and some evidence had been recorded, but no preliminary decree for rendition of accounts had yet been passed. The language of 0.23, r. 1. sub r. (I ), C.P.C., gives an unqualified right to a plaintiff to withdraw from a suit and, if no permission to file a fresh suit is , ought under sub r. (2) of that Rule, the plaintiff becomes liable for such costs as the Court may award and becomes precluded from instituting any fresh suit in respect of that subject matter under sub r. (3) of that Rule. There is no provision in the Code of Civil Procedure which requires the Court to refuse permission .to withdraw the suit in such circumstances and to compel tile plaintiff to proceed with it. It is, of course, possible that different considerations may arise where a set off may have been claimed under 0. 8 C.P.C., or a counterclaim may have been filed, if permissible by the procedural law applicable to the proceedings governing the suit. In the present case. the pleadings in paragraphs 8 and II of the written statement. mentioned above, clearly did not amount to a claim for set off. Further, there could be no counterclaim, because no provision is shown under which a counter claim could have been filed in the trial Court in such a. suit. There is also the circumstance that the application for withdrawal was moved at a stage when no preliminary decree had been passed for rendition of account and, in fact, the appellant 889 was still contending that there could be no rendition of accounts in the suit, because accounts had already been settled. Even in para 11, the only claim put forward was that, in case the Court found it necessary to direct rendition of accounts and any amount is found due to the appellant, a decree may be passed in favour of the appellant for that amount. In this paragraph also, the right claimed by the appellant was a contingent right which did not exist at the time when the written statement was filed. Even if it be assumed that the appellant could have claimed a decree for the amount found due to him after rendition of accounts, no Such right can possibly be held to exist before the Court passed preliminary decree for rendition of accounts. It is to be noted that in the case of a suit between principal and agent, it is the principal alone who has normally the right to claim rendition of accounts from the agent. The agent cannot ordinarily claim a decree for rendition of accounts from the principal and, in fact, in the suit, the appellant, who was the agent of the respondent, did not claim any rendition of accounts from the respondent. In 'these circumstances; at the stage of withdrawal of the suit, no vested right in favour of the appellant had come into existence and there was no ground on which the Court could refuse to allow withdrawal of the suit. It is unnecessary for us to express ,my opinion as to whether a Court is bound to allow withdrawal of a suit to a plaintiff after some vested right may have accrued in the suit in favour of the defendant. On the facts of this case. it is clear that the right of the plaintiff to withdraw the suit not at all affected by any vested right existing in favour of the appellant and, consequently, the order passed by the trial Court was perfectly justified. On behalf of the appellant, reliance was placed on the views expressed by a Division Bench of the Madras High Court in Seethai Achi vs Meyappa Chettiar and Others (1), where the Court held: "Ordinarily, when the Court finds no impediment to the dismissal of a suit after the announcement of the withdrawal of theclaim by the plaintiff, it will simply say that the suit is dismissed as the plaintiff has withdrawn from it. An order as to costs will also be passed. But several exceptions have been recognised to this general rule. ]n suits, for partition, if a preliminary. decree is passed declaring and defining the shares of the several parties, the suit will not be dismissed by reason of any subsequent withdrawal by the plaintiff, for the obvious reason that the rights declared in favour of the defendants under the preliminary decree would be rendered nugatory if the suit should simply be dismissed. So also in partnership suits and suits for 890 accounts, where the defendants too may be entitled to some reliefs in their favour as a result of the settlement of accounts, the withdrawal of the suit by the plaintiff cannot end in the mere dismissal of the suit. " We do not think, as urged by learned counsel, that the learned Judges of the Madras High Court were laying down the principle that, in a suit for accounts, a defendant is always entitled to relief in his favour and that the withdrawal of such a suit by the plaintiff cannot be permitted to terminate the suit. In the context in which that Court expressed its opinion about suits for accounts, it clearly intended to lay down that the dismissal of the suit on plaintiff 's withdrawal is not to be necessarily permitted, if the defendant has become entitled to a relief in his favour. But such it right, if at all, can in no circumstances be held to accrue before a preliminary decree for rendition of accounts is passed. In fact, in mentioning suits for partition and suits for accounts, the Court was keeping in view the circumstance mentioned in the earlier sentence which envisaged that a preliminary decree had already been passed defining rights of parties. In any case, we do not think that any defendant in a suit for rendition of accounts can insist that the plaintiff must be compelled to proceed with the suit at such a stage as the one at which the respondent in the present case applied for withdrawal of the suit. The appeal, therefore, fails and is dismissed with costs.

IN-Abs

In a suit for rendition of accounts, the defendant pleaded that accounts, had been settled and he was to get certain money from the plaintiff; that there could be no rendition of accounts; and that if the court concluded that rendition of account was necessary, a decree for the amount which may be found due to the defendant with costs and interest may be passed in favour of the defendant after necessary court fee was realised from the defendant. While no preliminary decree for rendition of accounts had 'been passed, and, in fact, the defendant was .still contending that there could be no rendition of accounts in the suit. the plaintiff applied for withdrawal of the suit. The defendant opposed the withdraw claiming that in a suit of this nature, his position became that of a plaintiff and he became entitled to have the accounting done and to obtain a decree, and the withdrawal after protracted duration was to defeat this right of the defendant. The trial Court allowed the withdrawal, which was upheld by the High Court. In appeal by the defendant, this Court HELD : At the stage of withdrawal of the suit, no vested right in favour of the defendant had come into existence and there was no ground on which the Court could refuse to allow withdrawal of the suit. There is no provision in the Code of Civil Procedure which requires the Court to refuse permission to withdraw the suit in such circumstances and to compel the plaintiff to proceed with it. It is, of course, possible that different considerations may arise where a set off may have been claimed under 0.8, C.P.C., or a counter claim may have been filed,, if permissible by the procedural law applicable to proceedings governing the suit. In the present case, the pleadings did not amount to a claim for set off. Even if it be assumed that the defendant could have claimed a decree for the amount found due to him after rendition of accounts, no such right can possibly be held to exist before the Court passed a preliminary decree for rendition of accounts. In the case of a suit between principal and agent, it is the principal alone who has normally the right to claim rendition of accounts from the agent. The agent cannot ordinarily claim a decree for rendition of accounts from the principal and, in fact, in the suit, the defendant, who was the agent of the respondent, did not claim any rendition of accounts from the plaintiff. [888F H] 889B D] Seethai Achi vs Meyappa Chettiar and Others, A.I.R. 1934 Mad, 337. refered to

minal Appeal No. 64 of 1967. 927 Appeal by special leave from the judgment and order dated March 3, 1967 of the Bombay High Court in Criminal Applica tion No. 24 of 1967. K. Sen, section G. Sheth and I. N. Shroff, for the appellant. N. section Bindra and section P. Nayyar, for the respondents. The Judgment of the Court was delivered by Bachawat, J. The appellant along with other persons is being tried for an offence under Sec. 120B of the Indian Penal Code read with Sec. 167(81) of the , and Sec. 5 of the Imports and Exports Control Act, 1947. The offence is bailable. The appellant was released on bail under orders of Magistrates dated May 11, 1960 and April 1, 1961. A large number of witnesses have been examined but the trial has not yet been concluded. By an order dated March 3/6, 1967, the High Court of Maharashtra, Bombay, in the exercise of its inherent jurisdiction cancelled the bail orders and directed him to surrender to his bail. From this order, the present appeal has been filed by special leave. In Talab Haji Hussain vs Madhukar Purshottam Mondkar and another(1), this Court held that a High Court has the inhe rent power to cancel a bail granted to a person accused of a bailable offence where such an order is necessary to secure the ends of justice or to prevent the abuse of process of any Court, and this power is preserved by Sec. 561 A of the Code of Criminal Procedure. On behalf of the appellant it was strenuously argued that this case was wrongly decided. Having heard full arguments, we find no reason for departing from our earlier decision. In the matter of admission to bail, the Code of Criminal Procedure makes a distinction between bailable and non bailable offences. The grant of bail to a person accused of a non bailable offence is discretionary under Sec. 497 of the Code and the person released on bail may again be arrested and committed to custody by an order of the High Court, the Court Session and the Court granting the bail. Under See. 498 of the Code the High Court and the Court of Session may release any person on bail and by a subsequent order cause any person so admitted to bail to be arrested and committed to custody. A person accused of a bailable offence is treated differently; at any time while under detention without a warrant and at any stage of the proceedings before the Court before which he is brought, he has the right under Sec. 496 of the Code to be released on bail. The Code makes no express provision for the cancellation of a bail granted under Sec. 496. Nevertheless, if at any subsequent stage of the proceedings, it is found that any person accused of a bailable offence is (1) ; 9 2 8 intimidating, bringing or tampering with the prosecution witnesses or is attempting to abscond, the High Court has the power to cause him to be arrested and to commit him to custody for such period as it thinks fit. This jurisdiction springs from the over riding inherent powers of the High Court and can be invoked in exceptional cases only when the High Court is satisfied that the ends of justice will be, defeated unless the accused is committed to custody. For the reasons given in Talab Haji Hussain 's case(1), we hold that this inherent power of the High Court exists and is preserved by Sec. 561 A of the Code. The person committed to custody under the orders of the High Court cannot ask for his release on bail under sec. 496, but the High Court may by a subsequent order admit him to bail again. Counsel for the appellant argued that the inherent power of the High Court is not conferred by any legislation or statute, and the deprivation of the personal liberty of the appellant by an order of the High Court in the exercise of its inherent powers is violative of the constitutional protection under article 21 of the Constitution. article 21 is in these terms "No person shall be deprived of his life or personal liberty except according to procedure established by law. " The term 'law ' in article 21 was the subject of an elaborate discussion in A. K. Gapalan vs The State of Madras( ). Kania C.J. at pp. 111 113 said that the term 'law ' in that Article must mean the law of the State or enacted law, and not rules of natural justice. Fazl Ali J. who was in the minority, said at page 169 that 'law ' must include certain principles of natural justice. Patanjali Sastri J. at p. 1 99 said that 'law ' in article 21 means positive or State made law '. Mahajan J. at page 226 expressed no opinion on the point. Mukherjea J. at p. 278 said that "in article 21 the word 'law ' has been used in the sense of State made law and not as an equivalent of law in the abstract or general sense embodying the principles of natural justice. " Das J. said at page 309 that "there is no scope for introducing the principles of natural justice in Article 21 and 'procedure established by law ' must mean procedure established by law made by the State which, as defined, includes Parliament and the Legislatures of the States." As explained by four of the learned Judges in A. K. Gapalan 's case(1), the expression 'law ' in article 21 means enacted or Statemade law, and not the general principles of natural _justice. In Pandit M. section M. Sharma vs Shri Sri Krishna Sinha and others(1), this Court held that a deprivation of personal liberty of any person by a Legislative Assembly of a State in exercise (1) ; (2) ; (3) [1959] Stipp. I S.C.R.8 6. 929, of its power to punish for its contempt is according to a procedure established by law and does not contravene article 21. Art.194(3) of the Constitution provides that "the powers, privileges and immunities of a House of the Legislature of a State, and of the members and the committees of a House of such Legislature, shall be such as may from time to time be defined by the Legislature by law, and, until so defined, shall be those of the House of Commons of the Parliament of the United Kingdom, and of its members and committees, at the commencement of this Constitution." Article 194(3) thus confers on the Legislative Assembly. of a State the existing inherent powers enjoyed by the British House of Commons including the power to punish for its contempt. article 208 (1 ) empowers the Legislative Assembly to make rules regulating its procedure. As explained in Pandit Sharma 's case(1), these powers and the procedure prescribed by the rules has the sanction of enacted law and an order of committal for contempt of the Assembly is according to procedure established by law. Das C.J., speaking for four learned Judges said at page 861 : "Art, 194(3) confers on the Legislative Assembly those powers, privileges and immunities and article 208 confers power on it to frame rules. The Bihar Legislative Assembly has framed rules in exercise of its powers under that Article. It follows, therefore, that article 194(3) read with the rules so framed has laid down the procedure for enforcing its powers, privileges and im munities. If, therefore, the Legislative Assembly has the powers, privileges and immunities of the House of Commons and if the petitioner is eventually deprived of his personal liberty as a result of the proceedings before the Committee of Privileges, such deprivation will be in accordance with procedure established by law and the petitioner cannot complain of the breach, 'I 'Actual or threatened, of his fundamental right under article 21." Subba Rao J. in his minority judgment in that case and the Court in Special Reference No. 1 of 1964 2 did not say anything to the contrary an this point. Now the question is whether the inherent power of tile High Court is conferred by or has the sanction of enacted law. From its very inception the High Court has possessed and enjoyed its inherent powers including the power to prevent the abuse of the process of any Court within its jurisdiction and to secure the ends of justice. These powers inherent in the High Court and spring from its very nature and constitution as a court of superior jurisdiction. All the existing powers of the High Courts were preserved and continued by legislation from time to time,. 561 A of the Criminal Procedure Code declared that "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 (1) [1959] Supp.1 S.C.R. 806. (2) ; 9 30 to give effect to any order passed under this Code, or to prevent the abuse of process of any Court or otherwise to secure the ends of justice. " The section was inserted in the Code by Act XVIII of 1923 to obviate any doubt that these inherent powers have been taken away 'by the Code. In terms, this section did not confer any power, it only declared that nothing in the Code shall be deemed to limit or affect the existing inherent powers of the High Court, see King Emperor vs Khwaja Nazir Ahmad(1). Then came other enactments which were framed differently. 2 2 of the Government of India Act, 1935, provided : "Subject to the provisions of this Part of this Act, to the provisions of any Order in Council made under this or any other Act and to the provisions of any Act of the appropriate Legislature enacted by virtue of powers conferred on that Legislature by this Act, the jurisdiction of and the law administered in, any existing High Court, and the respective powers of the judges thereof in relation to the administration of justice in the court, including any power to make rules of Court and to regulate the sittings of the Court and of members thereof sitting alone or in division courts, shall be the same as immediately before the commencement of Part III of this Act." The Section enacted that the jurisdiction of the existing High Courts and the powers of the judges thereof in relation to the administration of justice "shall be" the same as immediately before the commencement of Part III of the Act. The statute confirmed and re vested in the High Court all its existing powers and jurisdiction including its inherent powers. Then came the Constitution. article 225 of the Constitution provides : "225. Subject to the provisions of this Constitution and to the provisions of any law of the appropriate legislature made by virtue of powers conferred on that Legislature by this Constitution, the jurisdiction of, and the law administered in, any existing High Court, and the, respective powers of the Judges thereof in relation to the administration of justice in the Court, including any power to make rules of Court and to regulate the sittings of the Court and of members thereof sitting alone or in Division Courts, shall be the same as immediately before the commencement of this Constitution. The proviso to the article is not material and need not be read. The irticle enacts that the jurisdiction of the existing High Courts and the powers of the judges thereof in relation to administration of justice "shall be" the same as immediately before the cornmencement of the Constitution. The Constitution confirmed and (1) L.R. 61 I.A. 203,213. 931 re vested in the High Court all its existing powers and jurisdiction including its inherent powers, and its power to make rules. When the Constitution or any enacted law has embraced and confirmed the inherent powers and jurisdiction of the High Court which previously existed, that power and jurisdiction has the sanction of an enacted saw" within the meaning of article 21 as explained in A. K. Gopalan 's(l) case. The inherent powers of the High Court preserved by Sec. 561 A of the Code of Criminal Procedure are thus vested in it by "law" within the meaning of article 21. The procedure for invoking the inherent powers is regulated by rules framed by the High Court. The power to make such rules is conferred on the High Court by the Constitution. The rules previously in force were continued in force by Article 372 of the Constitution. The order of the High Court canceling the bail and depriving the appellant of his personal liberty is according to procedure established by law and is not violative of article 21. The High Court cancelled the previous bail orders, as it found that the appellant was intimidating and tampering with certain German citizens whom the prosecution intended to examine as witnesses. This finding is challenged by the appellant. Normally, it is not the practice of this Court to re examine findings of fact in an appeal under article 136 of the Constitution. Having heard full arguments, we are not inclined to interfere with the findings of the High Court. The High Court reserved liberty to the appellant to move the High Court on or after June 26, 1967, for a fresh order of bail. It was contemplated that within the time so fixed, the prosecution will examine the German witnesses. On March 13, 1967, the appellant surrendered to his bail and since then he is in jail custody. The prosecution has been given ample opportunity to examine the witnesses before June 26, 1967, without any interference from the appellant. From the correspondence placed before us, it appears that during the pendency of this appeal the prosecution has refrained from taking steps for the examination of the German witness. This Court did not pass any order staying the proceedings or admitting the appellant to bail. The delay in the examination of the witnesses is caused entirely by the laches of the prosecution. Even if the prosecution cannot now examine the witnesses by June 26, 1967, we see no reason why the appellant should remain in custody after that date. We direct that the appellant be released on bail on June 26, 1967, whether or not the prosecution witnesses are examined by that date. The bail will be given to the satisfaction of the Presidency Magistrate, 23rd Court, Esplanade, Bombay, before whom the case is pending. Subject to this modification, the appeal is dismissed. Order modified and Appeal dismissed.

IN-Abs

The appellant along with others was being tried for an offence under section 120B of the Indian Penal Code read with section 167 (81) of the , and section 5 of the Imports and Exports Control Act, 1947. Although he was at first released on bail by the Presidency Magistrate, the High Court, by an order dated March 6, 1967 in the exercise of its inherent powers cancelled the previous bail orders, as it found that the appellant was interfering and tampering with certain foreigners whom the prosecution intended to examine as witnesses. The High Court, however, reserved liberty to the appellant to move the court on or after June 26, 1967 far a fresh order of bail as it was contemplated that within the time so fixed, the prosecution would examine the foreign witnesses. In the appeal to this Court, the appellant challenged the order of the High Court on the ground that the inherent powers of the High Court were not conferred by any legislation or statute, and the deprivation of the personal liberty of the appellant by an order of the High Court in the exercise of its inherent powers was violative of Art, ' II of the Constitution HELD : The High Court 'has the inherent power to cancel bail granted to a person accused of a bailable offence. This jurisdiction should be invoked in exceptional cases only when the High Court is satisfied that the ends of justice will be defeated unless the accused is committed to custody. [928A B] The order of the High Court cancelling the bail and depriving the appellant of his personal liberty was according to procedure established by law was not violative of article 21. [931C] The existing powers and jurisdiction of the High Court, including its inherent powers, had been confirmed and continued by section 223 of the Government of India Act, 1935, and article 225 of the Constitution. When the Constitution or any enacted law has embraced and confirmed the inherent power and the jurisdiction of the High Court which previously existed, that power and jurisdiction has the sanction of an en acted 'law ' within the meaning of article 21. [929H; 93A B] Case law discussed. [On the facts the court noted that there had been unnecessary delay in the examination of the foreign witnesses and directed that the appellant should be released on bail on June 26, 1967.

l Appeals No. 1005 of 1964. Appeal by special leave from the judgment and order dated July 12, 1962 of the Bombay High Court, Nagpur Bench in appeal No. 16 of 1960 under the Letters Patent. A. section Bobde, G. L. Sanghi, and O. C. Mathur, for the appellant. N. C. Chatterjee and M. section Gupte, for respondents Nos. 1 and 2. W. section Barlingay and A. G. Ratnaparkhi, for respondent No. 4. The Judgment of the Court was delivered by Wanchoo, C.J. This is an appeal by special leave from the judgment of the Bombay High Court and arises in the following circumstances. The respondents were members of a Co operative Housing Society and had created a mortgage on their property in favour of the society. As the amount due under the mortgage was not paid, the matter was referred to the Registrar, Co operative Societies, and he made an order dated May 1, 1957 that the respondents should pay a sum of Rs. 9,000 and odd and interest at Rs. 12 per cent per annum from August 1, 1953 till satisfaction of the debt due to the Society. The Registrar further directed that if the amount was not paid in cash to the society, the property mentioned in his order would be sold in satisfaction of the amount. The order also provided that in case the amount due was not realised from the sale of the property, 'the society would have the right to proceed against the respondents for the balance. The amount was not paid as directed in the order. Consequently an application was made to the civil court as provided by law for recovery of the amount under the order of the Registrar which amounted to a decree. In consequence the property on which charge was created by the order of the Registrar was brought 'to 697 sale. The sale was held on April 7, 1958 and the appellant being the highest bidder, the sale was concluded in his favour. Normally the sale would have been confirmed after 30 days, if no application had been made under O. XXI r. 90 of the Code of Civil Procedure, for O. XXI r. 92 inter alia provides that "where no application is made under r. 89, r. 90 or r. 91, or where such application is made and disallowed, the court shall make an order confirming the sale and thereupon the sale shall become absolute". As an application had been made on May 3, 1958 under O. XXI r. 90, the sale could not be confirmed till that application was disposed of. Proceedings under O. XXI rule 90 seem to have gone on upto October 7, 1958. On that day it appears that one of the respondents gave evidence as a witness. Thereafter it was the turn of the Society decree holder to give evidence. But before the evidence of the society began, it appears that respondents requested for one month 's time to deposit the decretal amount along with the auction purchaser 's commission. They also appear to have stated that in that event they were prepared to withdraw their application under O. XXI r. 90. The society as well as the auction purchaser had no objection to time being allowed. The executing court therefore granted time to the respondents till November 21, 1958 to deposit the entire decretal amount along with the auction purchaser 's commission. After time was thus allowed with consent of the parties, the application under O. XXI r. 90 was dismissed as withdrawn with no order as to costs. On November 20, 1958, an application was made by he respondents in which they referred to what had been ordered on October 7, 1958. They further stated that November 21, 1958 was a holiday and it was not possible to deposit the amount on that day though they were prepared to do so. They consequently prayed for time for one day so that the deposit might be made on November 22, 1958. No order was passed on this application on November 20, 1958 though it bears an endorsement of the executing court to the effect that it had been filed on November 20, 1958. November 21, 1958 being a holiday it appears that the matter came before the executing court on November 22. On that day the court noted that no amount had been deposited. The order sheet also shows that counsel for the respondents prayed for time for a fortnight. The society decree holder as well 'as the auction purchaser (appellant) opposed the prayer for extension of time. The executing court held that as the society decree holder and the auction purchaser were not willing to extend time the court could not extend time which had been given under an agreement of the parties by way of compromise. The court therefore rejected the prayer for extension of time and thereafter confirmed the sale as required by 0 XXI r. 92 as the application under O. XXI r. 90 had already been dismissed on October 7, 1958. 698 The respondents went in appeal to the District Judge. He held that the court had always the power whether under section 148 of the Code of Civil Procedure or otherwise, to postpone passing of orders confirming sale of immovable properties. He, went on to hold that the executing court erred in holding that it had no power to grant further extension of time. The appeal was therefore allowed, the order of the executing court set aside and the case remitted to. the executing court for deciding the application for extension of time on merits. It may be mentioned that though the District Judge said in the order that the application presented on November 22, 1958 for granting further time would be disposed of after hearing parties and considering the merits of the case, there was in fact no written application on November 22, 1958 and there was only an oral prayer. That however makes no difference to the main question before us. There was then a second appeal 'by the appellant to the High Court. A question was raised in the High Court whether O. XXXIV r. 5 applied to the present case. The learned Single Judge seems to have held that O. XXXIV r. 5 did not apply. He further held that in view. of the provisions of O. XXI r. 92, the sale was rightly confirmed and section 148 of the Code of Civil Procedure could not under the circumstances be invoked. The appeal therefore was allowed and the order of the executing court restored. Then there was a Letters Patent Appeal by the respondents. The Division Bench appears to have held that O. XXXIV r. 5 would apply in a case of this kind. It also went on to say that even if O. XXXIV r. 5 did not apply, it was a fundamental principle that before a mortgagor could be prevented from making the payment and redeeming the property, his rights must have come to an end and they would come to an end only when his title was lost by confirmation of sale. It went on to hold that if the application for extension of time was wrongly rejected if the mortgagor had the right and the court had 'the power to grant adjournment it would be open in appeal to consider whether the executing court refused the adjournment properly or not. If in appeal the court came 'to the conclusion that the order of the executing court refusing extension of time was wrong, the confirmation which followed on such wrong order would fall and the mortgagor judgment debtor would be entitled to deposit the amount. It appears that as the respondents had deposited some money after the order of the District Judge in appeal, the Letters Patent Bench allowed the appeal, set aside the order of the learned Single Judge and restored the order of the District Judge and further set aside the order of confirmation made by the executing court on November 22, 1958. It also ordered that the amount lying in deposit should be paid to the decree holder mortgagee and the auction purchaser. It may be added that this deposit was not made before the confirmation 69 9 of sale on November 22, 1958 but long afterwards in 1959. It further directed that if on making up the accounts, it was found that any additional amount had to be deposited, the court would give reasonable time to the judgment debtors, namely, the present respondents before us. The High Court having refused leave to appeal, the appellant obtained special leave from this Court, and that is how the matter has come before us. The principal question that arises for decision in this case is whether the executing court was right in the view that it could not extend time which had been given by consent of parties on October7, 1958. If that view is correct, there would be no difficulty in holding, in view of O. XXI r. 92, that the order confirming sale was proper. We shall proceed on that assumption that O. XXXIV c. 5 applies in the present case and that the order of the Registrar which was under execution was a final decree in a mortgage suit. O. XXXIV r. 5(1) gives an opportunity to the judgment ' debtor in a mortgage decree for sale to deposit the amount due under the mortgage decree at any time before the confirmation of sale made in pursuance of the final decree, and if such a deposit is made the court executing the decree has to accept the payment and make an order in favour of the judgment debtor in terms of ' O. XXXIV r. 5 (1). Though O. XXXIV r. 5 (1) recognises the right of the judgment debtor to pay the decretal amount in an execution relating to a mortgage decree for sale at any time before, the confirmation of sale, that in our opinion does not mean that be said rule gives power to the court to extend time for payment on an application made by the judgment ;debtor. There is no pro vision in O. XXXIV r. 5 (1) like that contained in O. XXXIV r. 4 (2) to extend time for payment after the final decree is passed in a mortgage suit. As we read O. XXXIV r. 5 it only permits he judgment debtor to deposit the amount due. under the decree and such other amount as may be due in consequence of a sale having taken place, provided the deposit is made before the confirmation of sale. But there is no power in O. XXXIV r. 5 (1) to grant extension of time and postpone confirmation of sale there:or. The observation of the District Judge that the court has always the power to postpone passing orders confirming sale of immovable property is in our view incorrect, in the face of the provisions contained in O. XXI r. 92 (1). That provision makes it absolutely clear that if no application is made under r. 89, r. 90 or r. 91 or where such application is made and disallowed, the court has to make an order confirming the sale and thereupon the ,ale becomes absolute. It is not open to the court to go on fixing late after date and postponing confirmation of sale merely to accommodate a judgment debtor. If that were so, the court may go on postponing confirmation of sale for years in order to accommodate a judgment debtor. What O. XXI r. 92 contemplates is that where conditions thereunder are satisfied an order for confirmation 700 must follow. ' Further we have already indicated that O. XXXIV r. 5 does not give any power to court to rant time to deposit the money after the final decree has been passed. All that it permits is that a judgment debtor can deposit the amount even after the final decree is passed at any time before the confirmation of sale and if he does so, an order in terms of O. XXXIV r. 5 (1) in his favour has to be passed. With respect we cannot understand what the Letters Patent Bench meant by saying that before a mortgagor could be prevented from making payment and redeeming the property, his rights must have come to an end and that they could not come to an end unless his title to the property had been lost by confirmation of sale. It is true that so long as his right to redeem subsists the mortgagor may redeem the property. It is this principle which is recognised in O. XXXIV r. 5 which provides that the mortgagor judgment debtor can deposit the amount due even after the final decree has been passed but this deposit must be made at any time before confirmation of sale. It may be noted that there is no power under O. XXXIV r. 5 to extend time and all that it does is to permit the mortgagor judgment debtor to deposit the amount before confirmation of sale. It does not give any right to the mortgagor judgment debtor to ask for postponement of confirmation of sale in order to enable him to deposit the amount. We have to interpret O. XXXIV r. 5 and O. XXI r. 92 harmoniously and on a harmonious interpretation of the two provisions it is clear that though the mortgagor has the right to deposit the. amount due at any time before confirmation of sale, there is no question of his being granted time under O. XXXIV r. 5 and if the provisions of O. XXI r. 92 (1) apply the sale must be confirmed unless before the confirmation the mortgagor judg ment debtor has deposited the amount as permitted by O. XXXIV r. 5. We may in this connection refer to the decision of this Court in Janak Rai vs Gurdial Singh(1), where it has been laid down that once the conditions of O. XXI r. 92 (1) are complied with, the executing court must confirm the sale. It is on these principles that we have to decide whether the trial court was correct. We have already indicated that the sale was held on April 7, 1958, and in the normal course it would have been confirmed after 30 days unless an application under r. 89, r. 90, or r. 91 of O. XXI was made. Besides, this case is, as we have already assumed, analogous to the case of a final mortgage decree. The judgment debtor mortgagor had the right to deposit the amount at any time before confirmation of sale within 30 days after the sale or even more than 30 days after the sale under O. XXXIV r. 5 (1 ) so long as the sale was not confirmed. If the amount had been deposited before the confirmation of sale, the judgment debtors had the right to ask for an order in terms of (1) ; 70 1 O. XXXIV r. 5 (1) in their favour. In this case an application under O. XXI r. 90 had been made and therefore the sale could not be confirmed immediately after 30 days which would be the normal course; the confirmation had to await the disposal of the application under O. XXI r. 90. O Chat application was disposed of on October 7, 1958 and was dismissed. It is obvious from the order sheet of October 7, 1958 that an oral compromise was arrived at between the parties in court on that day. By that compromise time was granted to the respondents to deposit the entire amount due to the decree holder and the auction purchaser by November 21, 1958. Obviously the basis of the compromise was that the respondents withdrew their application under O. XXI r. 90 while the decree holder society and the auction purchaser appellant agreed that time might be given to deposit the amount up to November 21, 1958. If this agreement had 'not been arrived at and if the application under O. XXI r. 90 bad been dismissed (for example, on merits) on October 7, 1958, the court was bound under O. XXI r. 92(1) to confirm the sale at once. But because of the compromise between the parties by which the respondents were given time up to November 21, 1958, the court rightly postponed the question of confirmation of sale till that date by consent of parties. But the fact remains that the application under O. XXI r. 90 had been dismissed on October 7, 1958 and thereafter the court was bound to confirm the sale but for the compromise between the parties giving time upto November 21, 1958. Now let us see what happened about November 21, 1958. On November 20, 1958, an application was made by the respondents praying that they might be given one day more as November 21, 1958 was a holiday. No order was passed on that date, but it is remarkable that no money was deposited on November 20, 1958. When the matter came up before the court on November 22, 1958 no money was deposited even on that day. Now under O. XXXIV r. 5 it was open to the respondents to deposit the entire amount on November 22, 1958 before the sale was confirmed, but no such deposit was made on November 22, 1958. On the other hand, counsel for the respondents prayed to the executing court for extension of time by 14 days. The executing court refused that holding that time upto November 21, 1958 had been granted by consent and it was no longer open to it to extend that time. The executing court has not referred to O. XXI r. 92 in its order, but it is obvious that the executing court held that it could not grant time in the absence of an agreement between the parties, because O. XXI r. 92 required that as the application under O. XXI r. 90 had been dismissed, the sale must be confirmed. We are of the view that in the circumstances it was not open to the executing court to extend time without consent of parties for time between October 7, 1958 to November 21, 1958 was granted by consent of parties. Section 148 of the Code Civil Procedure would not apply 702 in these circumstances, and the executing court was right in holding that it could not extend time. Thereafter it rightly the sale as required under O. XXI r. 92, there being no question of the application of O. XXXIV r. 5, for the money had not been deposited on November 22, 1958 before the order of confirmation confirmed was passed. In this view of the matter, we are of opinion that the order of the executing court refusing grant of time and confirming the sale was correct. it is however urged that it does not appear that the time was , ranted on October 7, 1958 by consent of parties because the respondents had only asked for one month 's time and the court gave time for about six weeks. It appears however that the grant of 'time on October 7, 1958 was as a result of an oral compromise between the parties. This is quite, clear from the fact that the application under O. XXI r. 90 was withdrawn on the basis that time would be granted. The fact that time was actually granted for six weeks does not mean that that was done without the consent of the parties. It seems to us that the whole thing took place in the presence of the court and the order granting time upto November 21, 1958 must in the circumstances be read as a consent order. It is borne out by the fact that on November 22, 1958 the same presiding judge of the executing court said that time had been granted with the consent of the parties by way of compromise. We cannot therefore accept the contention that time was not granted by consent of parties and therefore the court had power under section 148 to extend time which had already been granted. We, allow the appeal, set aside the order of the Letters Patent Bench and of the District Judge and restore that of the executing court dated November 22, 1958. It follows that the sale stood confirmed in favour of the appellant on November 22, 1958. We direct that the respondents (judgment debtors) will pay the costs of the appellant throughout. The money deposited by the respondent can be taken back by them. R.K.P.S. Appeal allowed. L7 Sup/67 17 5 68 2,500 GIPF.

IN-Abs

The respondents were members of a Cooperative housing society and 'had created a mortgage on their property in favour of the society. As an amount due under the mortgage was not paid, the matter was referred to the Registrar of Cooperative Societies and he made an order on May 1, 1957 directing the respondent to pay the amount due from August f. 1953 till the debt was discharged. He further directed that if the amount was not paid, the property could be sold in satisfaction of the amount. The amount was not paid as directed and the property was therefore sold on April 7, 1958 to the appellant. As an application was made by the respondents on May 3, 1958 under O. XXI, r. 90 the sale could not be confirmed under O. XXI, r. 92 until this application was disposed of. The proceedings on the application continued up to October 7, 1958 when an order was passed with the consent of the parties whereby the respondents were granted time till November 21, 1958 to deposit the amount due and the application under O. XXI r. 90 was dismissed as withdrawn. When the matter came up before the executing court on November 22, the court noted that no amount bad been deposited and although an application was made on behalf of the respondents for a further extension of time, the executing court held that as the society decree holder and the auction purchaser were not willing to extend time, the court could not extend time which had been given under an agreement of the parties by way of compromise. The court therefore confirmed the sale under O. XXI r. 92. After appeals to the District Judge and a single bench of the High Court, a Division Bench, in a Letters Patent Appeal, held that O. XXXIV r. 5 would apply in a case of 'this kind and that even if it did not apply. it was a fundamental principle that before a mortgagor could be pre vented from making the payment and redeeming 'the property. his rights must have come to an end and they would come to an end only when his title was lost by confirmation of sale. The court allowed the appeal holding that the application for extension of time was wrongly rejected by the executing court as it had the power to grant an extension. It further directed that as some amount had been paid by he respon dents, if on making up the accounts it was found that any additional amount was due the court would give reasonable time for this to be deposited. On appeal to this Court, HELD : The order of the executing court refusing extension of time and confirming the sale in favour of the appellant under O. XXI r. 92 was correct. [702B] 696 It was not open to the executing court to extend time without the consent of parties, for time between October 7, 1958 to November 21, 1958 was granted by consent of parties. Section 148 of the Code of Civil Procedure would not apply in these circumstances. [701H] Though O. XXXIV r. 5(1) recognises the right of the judgment debtor to pay the decretal amount in an execution relating to a mortage decree for sale at any time before the confirmation of sale, the rule does not give any power to the court to grant time to deposit the money after the final decree has been passed. It is not open to the court to go on fixing date after date and postponing confirmation of sale merely to accommodate a judgment debtor. A harmonious construction of O. XXXIV r. 5 and O. XXI r. 92 makes it clear that if the provisions of O. XXI r. 92(1) apply the sale must be confirmed unless before the confirmation the mortgagor judgment debtor has deposited the amount as permitted by O. XXXIV r. 5. [699D E. H; 700E] Janak Rai vs Gurdial Singh ; , referred to.

Appeal Nos. 474 477 966. Appeals by special leave from the judgment and order dated September 5, 1963 of the Gujarat High Court in Income tax Reference No. 19 of 1962. S.T. Desai, A. N. Kirpal, R.N. Sachthey and S.P. Nayyar for the appellant (in all the appeals). R.J. Kolah, M.L. Bhakta and O.C. Mathur, for the respondents (in all the appeals). The Judgment of the Court was delivered by Sikri, J. These four appeals by special leave are ' directed against the judgment of the Gujarat High Court in Income Tax Reference No. 19 of 1962, whereby the High Court answered the questions referred to it by the Income tax Appellate Tribunal against the Commissioner of Income tax, who is the appellant before us. The reference was in respect of assessment years 1955 56 and 1956 57 in the case of Shri Jayantilal Amratlai (Individual) and in respect of assessments years 1958 59 and 1959 60 in the case of Jayantilal Amratlal Charitable Trust Ahamedabad. The questions referred are: (1 ) Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the income of Jayantilal Amratlal Charitable Trust was not assessable in the hands of the settlor Jayantilal Amratlal under the first proviso to Sec. 16(1)(c) of the Income tax Act for the assessment years 1955 56 and 1956 57 ? (2) Whether on 1he facts and in the circumstances of the case, the Tribunal was right in holding that the income of the Trust should be considered in the assessment of the trustees and that they were entitled to the benefits of the refunds attached to the dividends from the Trust properties for 'the assessment years 1958 59 and 1959 60 ? The answer to these quest.ions depends on the true interpretation of section 16(1)(c) of the Indian Income tax Act, 1922, and the interpretation of the Trust Deed dated June 19, 1947, and 948 to appreciate the points fully it is necessary to give a few facts which are stated in the statement of the case. Jayantilal Amratlal, individual, hereinafter referred to as the settlor, executed a trust deed whereby he settled 80 ordinary shares of M/s Jayantilal Amratlal Ltd., on trust and created a trust known as "Jayantilal Amratlal Charitable Trust" to carry out the following various objects set out in the Trust Deed : "For the relief of poor, for education, for medical relief, for advancement of religion, knowledge, commerce, health, safety or any other objects beneficial to mankind." This Trust Deed was registered with the Charity Commissioner under the Bombay Public Trust Act, 1950. The Department accepted this trust as a valid charitable trust and gave the necessary relief to the trustees in respect of the income of the Trust. till the assessment year 1957 58. The Income tax Officer, while dealing with the assessment of Jayantilal Amratlal Charitable Trust for the year 1958 59, wrote A letter to the Trust to show cause why the income of the Trust should not be included in that of the settlor and why the case of the Trust should not be decided accordingly. The Managing Trustee submitted his reply. The Income tax Officer wrote lengthy order holding that on the facts the case was covered by the first proviso to section 16 ( 1 ) (c). He was impressed both by the wide powers given to the settlor and the way in which the settlor had been utilising his powers under the various clauses of the Trust Deed. He held : "It is not necessary that there should be diversion of income or assets from char table purposes to noncharitable purposes to constitute "retransfer of assets to or re assumption of power over" the income or assets of the settlor. It is not even necessary for the purpose of 1st proviso to section 16(1)(c), especially its later part i.e. "give the settlor a right to reassume power directly or indirectly over the income or assets" that income or assets should be used for personal ends. For diversion of such assets or income from one charitable purpose to another in accordance with the wishes of the settlor and the utilisation of income and investment of income or assets not in full conformity with the desires of the trustees would be enough to drag the Trust property in the ambit of section 16 (I) (c). In the instant case, the settlor is all in all, he is the managing trustee and in the event of a conflict of opinion amongst the trustees the settlor would exercise predominating 949 influence both as managing trustee as also in his capacity of an arbitrator and his decision would be binding on all. The most important point which needs consideration is that all the inherent powers and discretion for the income and corpus of the Trust property remain with The settlor, in his capacity as settlor and not by way of his capacity of a trustee. " The Income tax Officer accordingly held that the income of the Trust would not be computed in the hands of the trustees but would be computed in the hands of the settlor under section 16(1) (c). For the assessment year 1959 60 he passed a similar order on the same date. On the same day he also dealt with the assessments of Jayantilal Amratlal, individual, for the years 1955 56 and 1956 57. Following his reasoning he included the relevant income of the Trust in the hands of Jayantilal Amratlal. Four appeals were taken to the Appellate Assistant Commis sioner who, by his two orders dated November 8, 1960, dismissed the appeals. Before him the settlor relied on section 35 of the Bombay Public Trust Act, 1950, but the Appellate Assistant Commissioner held that this did not assist the settlor because the Income tax law did take into consideration income derived directly or indirectly by illegal means. He felt that the settlor "could not be precluded from utilising funds of the trust directly or indirectly to his benefit since he had a right under the settlement to do so and the Bombay Public Trust Act did not hold any fear for him as the penalties leviable were not of a deterrent nature, compared to the advantages that he could gain directly or indirectly by re assuming control over the investments or its income". On appeal, Income tax Appellate Tribunal, however, reversed these orders and held that the income from the Trust was not hit by the first proviso to section 16(1)(c). The Tribunal ignored the factual position relied on by the Income tax Officer and the Appellate Assistant Commissioner and confined itself only to the Trust Deed. Regarding the offending clauses 4, 10 and 21 of the Trust Deed, which we will presently refer to, the Appellate Tribunal held: "We see nothing in these clauses which confer on the assessee the right to retransfer to the assessee directly or indirectly the income or the assets or to reassume power over them. He has always to exercise these powers within the framework of the Trust. There is no doubt power in clause (10) to invest in any manner and thereby in the assessee 's own companies, but this is overridden by clause 35 of the Bombay Trust 9 5 0 Act under which it is registered. If the Charity Commissioner has chosen not to take action, it may also be that he has considered the matter and approved the action. It is purely his responsibility. The. fact that the investment itself has not been made illegal under the Trust Act and that the assessee can offend the provisions with impunity as the penalty is light are all matters extraneous to this consideration which has to be confined only to the provisions in the deed. " At the instance of the Commissioner of Income tax the Appellate Tribunal stated the case and referred the questions which we have already reproduced above. The High Court held : "When a statute talks about a right to reassume, it must mean a lawful right which can be lawfully exercised. a right to reassume must be given to the settlor independently of any third party and dependent upon his own volition. It is true that the Charity Commissioner may grant leave to the settlor, but he may or may not grant it. A right to reassume cannot rest dependent upon whether the Charity Commissioner may or may not grant sanction. " Shelat, C.J., observed "Surely, it must be presumed that the Charity Commissioner would not grant his sanction to an investment which is bound to result in a conflict of duty and interest on the part of the settlor who is also a trustee. Therefore, such a right, if it can be called a right, is not one of any substance and cannot, therefore, be construed as a right to reassume power over the trust assets or the income thereof, as contemplated by proviso I to section 16(1)(c)." "A loan, by the very nature of it, cannot be said to amount to an exercise of dominion or control over its subject matter. It is repayable and is given on conditions as to the time of repayment and interest, if any. By taking a loan a settlor does not exercise over its subject matter power.or dominion which, but for the trust or the settlement, he would have been able to exercise." Section 16(1) (c) reads as follows "16. Exemptions and exclusions in determining the total income. . (1) In Computing the total income of an assessee. (a) . 951 (b). (c) all income arising to any person by virtue of a settlement or disposition whether revocable or not, and whether effected before or after the commencement of the Indian Income tax (Amendment) Act, 1939 (VII of 1939), from assets remaining the property of the settlor or disponer, shall be deemed to be income of the settlor or disponer, and all income arising to any person by virtue of a revocable transfer of assets shall be deemed to be income of the transferor : Provided that for the purposes of this clause a settlement, disposition or transfer shall be deemed to be revocable if it contains any provision for the retransfer directly or indirectly of the income or assets to the settlor, disponer or transferor, or in any way gives the settlor, disponer or transferor a right to reassume power directly or indirectly over the income or assets; Provided further that the expression "settlement or disposition" shall for the purposes of this clause include any disposition, trust, covenant, agreement, or arrangement, and the expression "settlor or dispone r" in relation to a settlement or disposition shall include any person by whom the settlement or disposition was made : Provided further that this clause shall not apply to any income arising to any person by virtue of a settlement or disposition which is not revocable for a period exceeding six years or during the life time of the person and from which income the settlor or disponer derives no direct or indirect benefit but that the settlor shall be liable to be assessed on the said income as and when the power to revoke arises to him." The learned counsel for the appellant, Mr. section T. Desai, has submitted three propositions before us (1) The operation of the first proviso to section 16(1) (c) depends only on the settlement and its terms and not on any provision of the Bombay Public Trusts Act, which may or may not be observed; (2) The absolute powers reserved over the income and corpus of the trust property remain vested in the settlor in his capacity as the settlor and not as trustee, and further they fall within the purview of the first pro. viso to section 16(l.) (c); and (3) It is a relevant consideration that, as found by the authorities, the settlor has been deriving direct and indirect benefits from the trust properties. He relies on clauses 4, 6, 8, 10, 11 and 21 of the Trust Deed to show that the Trust Deed gives the settlor right to re assume power directly 9 Sup. CI/67 17 952 or indirectly over the income or assets of the Trust within the first proviso to section 16(1)(c). Let us now examine the Trust Deed. This indenture was made between Jayantilal Amratlal, hereinafter called the settlor, and Jayantilal Amratlal, Padmavati wife of the said Jayantilal Amratlal, Ramanlal Amratlal, Hariprasad Amratlal, Kasturlal Chandulal Parikh and Bhagubhai Chandulal, hereinafter called the Trustees. Clause, 1 vests the shares and the other trust properties and income in the trustees. Clause 2 gives the name of the trust Clause 3 obliges the trustees to get and collect income ,of the trust properties and pay expenses, etc. Clause 4 creates the trust for the relief of poor, and for education, medical relief, etc. It further provides : "The Trustees shall at the direction of the Settlor during, his lifetime and after his death at their discretion set aside any portion of the income of the Trust Premises to provide cash, food and clothes for any temple or temples of the Pushti Marg Sampradaya. In applying. the income of the Trust Premises for all or any of the objects hereinbefore specified the Trustees may consider the claims of any needy or poor person belonging to the Visa Porwad Community. " Clause 5 enables the settlor to give direction to the trustees to accept contributions ,or donations to the Trust from other persons. Clause 6 provides as follows : "The Setflor may at any time or times by writing direct that any specific funds or investments or property forming part of the Trust Premises and/or the income thereof shall be utilised and applied exclusively for any one more of the aforesaid ,charitable objects and the Settlor may by writing at any time or times vary or revoke any such directions previously given by him and Trustees shall be bound to carry into effect all such directions given by the Settlor. " Clause 7 enables the Trustees to utilise the whole or any portion of the Trust Premises for all or any of the charitable object ,,, if the Settlor so directs. Clause 8 may be set out in full : "8. The Trustees shall from time to time at the direction of the settlor during his life time and after his death may at any time at their discretion deliver or hand over the income of the Trust Premises or any part of such income to any institution, association or society to be applied for all or any of the purposes of these presents without being bound to see to the application thereof or being liable for the loss or misapplication thereof. " Clause 9 enables the Trustees to invest the residue, etc., and to accumulate the same and apply towards the objects of the Trust. Clause 10 inter alia empowers the Settlor to give directions regardin the investment of moneys "as are authorised by law for invest 953 ment of trust premises or in ordinary or preference shares of joint stock companies, whether partly or fully paid, or in debentures or in giving loans to any public company or firm of good standing and reputation or in the purchase or mortgage of any movable or immovable property with power to the Trustees with the like direction to vary or transpose the said investments into or for others of the same or of a like nature. " Clause II inter alia enables the Settlor to direct the Trustees to vary the investments. Out of the other clauses we need only mention clause 21 which reads as follows : "All questions arising in the management and administration of the trusts or powers hereof and all differences of opinion amongst the Trustees shall be disposed of in accordance with the opinion of the Settlor during his lifetime and on and after the death of the settlor in accordance with the opinion of the majority of the Trustees in the case of their being equally divided the trustee senior most in age shall have a casting vote. " The learned counsel for the appellant says that these clauses read fairly would enable the Settlor to direct the Trustees to give a loan to him and he could give directions to the Trustees in 'such a way as to re assume control over the assets. He says that as a matter of fact the Income tax Officer did find that the Settlor has been utilising these powers for his own benefit. There is no doubt that under the Trust Deed the Settlor has very wide powers and the Settlor could direct the Trustees to grant loan to him. The Trustees could even grant loan to a firm in which be was interested. But this would be contrary to the provisions of the Bombay Public Trust Act. Section 35 (I) of the Bombay Public Trust Act provides : "35(1) : Investment of Public Trust Money Where the trust property consists of money and cannot be applied immediately or at an early date for the purposes of the public trusts the trustee shall be bound (notwithstanding any direction contained in the Instrument of the Trust) to deposit the money in any scheduled bank as defined in the , in the Postal Savings Bank or in a Cooperative Bank approved by the State Government for the purpose or to invest it in Public security; Provided. Provided further that the Charity Commissioner may by general or special order permit the Trustee of any public trust or classes of such trusts to invest the money in any other manner. " 9 54 Mr. section T. Desai submits that we cannot take into consideration the provisions of the Bombay Public Trust Act. We are unable to accept this submission. The Bombay Public Trust Act must, to the extent it operates, override any provisions in the Trust Deed. As Shelat, J., observed, "when proviso 1 talks about a right to reassume power, prima facie, that must mean that there, is such power lawfully given under the deed of trust. " It seems to us that the Legislature, in proviso I to section 16(1)(c) is thinking of powers lawfully given and powers lawfully exercised. Any person can commit breach of trust and assume power over the income or assets but for that reason the income of the trust cannot be treated as the Income of the settlor under the proviso. The Calcutta High Court in Commissioner of Income tax, West Bengal vs Sir section M. Bose(1) observed "The first proviso to Section 16(1)(c) only contemplates cases where the settlor can lawfully reassume power over the income or the assets. Unless that was so, the proviso would cover every trust where a settlor has made himself trustee because a trustee acting dis honestly could always assume control over the income. " We agree with these observations. Similarly, in an unreported judgment (Commissioner of Income tax, Bombay North vs Mathuradas Mangaldas Parekh ( 2 ) the Bombay High Court repelled a similar argument by observing : "The first answer to this contention is that them trustees would be committing a breach of the law if they were to advance moneys to themselves. There is a clear prohibition under Section 54 of the Trusts Act. " If we do not ignore the provisions of the Bombay Public Trust Act and the general principles applicable to public trusts, the question arises whether on a true interpretation of the first proviso to section 16 ( 1 ) (c) the powers reserved to the settlor under the Trust Deed come within its mischief. The learned counsel says that the words of the proviso are very wide. I He points out the reasons why Parliament has inserted this proviso. He draws our atten tion to the following observations of Lord Macmillan in Chamberlain vs Inland Revenue Commissioners(1), quoted in. Tulsidas Kilachand vs Commissioner of Income tax(1) (1) at p. 141. (2) I.T. Ref. No. 4 of 1954, judgment dated August 26, 1954, reported in "unreported Income tax Judgmenis of the Bombay High Court, Book One, Published by Western India Regional Council of the Institute of Chartered Accountants of India, Bombay" p. 314 at p. 316. (3) 329. (4) , 4. 955 .lm15 "This legislation. (is) designed to overtake and circumvent a growing tendency on the part of taxpayers to endeavour to avoid or reduce tax liability. by means of settlements. Stated quite generally, the method consisted in the disposal by the taxpayer of part of his property in such a way that the income should no longer be receivable by him, while at the same time he retained certain powers over, or interests in, the property or its income. The Legislature 's counter was to declare that the income of which the taxpayer had thus sought to disembarrass himself should, notwithstanding, be treated as still his income and taxed in his hands accordingly. " This Court held in that case, that these observations applied also to the section under consideration, and the Indian provision is enacted with the, same intent and for the same purpose. But even so, Lord Simonds observed while construing a similar provision in Wolfson vs Commissioners of Inland Revenue(1) : "It was urged that the construction that I favour leaves an easy loophole through which the evasive taxpayer may find escape. That may be so; but I will repeat what has been said before. It is not the function of a court of law to give to words a strained and unnatural meaning because only thus will a taxing section apply to a transaction which, had the Legislature thought, of it, would have been covered by appropriate words." Viscount Simonds observed again in Saunders vs Commissioners of Inland Revenue(1) in construing a similar provision occurring in the English Act : "I am assuredly not going to depart from the fair meaning of words in a taxing Section in order that tax may be exacted. " What then is the fair meaning of section 16(1)(c) proviso.1 ? It seems to us that the words "reassume power ' give indication to the correct meaning of the proviso. The latter part of the proviso contemplated that the settlor should be able by virtue of something contained in the Trust Deed, to take back the power he had over the assets or income previous to the execution of the Trust Deed. A provision enabling the settlor to give directions to trustees to employ the assets or funds of the trust in a particular manner or for a particular charitable object contemplated by the trust cannot be said to confer a right to reassume power within the first proviso. Otherwise a settlor could never name himself a sole trustee. It seems to us that the latter part of the proviso contemplates a provision which would enable the settlor (1) , 169. (2) ,431, 956 to take the income or assets outside the provisions of the Trust Deed. Mr. Desai says that if a settlor can derive some direct or indirect benefit under a trust deed the trust would fall within first proviso. But the first proviso does not use these words. The words "direct or indirect benefit" occur only in the third proviso. This Court held in Commissioner of Income tax, Punjab vs section Raghbir Singh(1) that although the settlor in that case obtained a benefit from the trust payment of his debts the first proviso was not attracted. Coming to the various clauses of the Trust Deed there is no doubt that the settlor has retained power to see that his wishes are carried out while he is alive. But he can only direct the carrying out of his wishes within the terms of the Trust Deed. What he can direct under clause 4 is the application of income to a particular charitable purpose. Similarly under clause 6 he can nominate the charitable object and the fund or investment which should be utilised for that object. This is in no sense a power to reassume control. Clause 8 enables the settlor to delegate the carrying out of a particular charitable object. For instance, he could direct some contributions to be made to a hospital or a school without obliging the trustees to see that the hospital or the school does not misapply the funds. Clauses 10 and It which enable the settlor to give directions regarding the investment must be read subject to the provisions of the Bombay Public Trust Act and the general principles of law relating to trusts. We have already said that he could not legally direct a loan to be made to himself. Further it is difficult to subscribe to the,, proposition that a loan to a company in which the settlor is interested would give power to the settlor over the assets within the meaning of the first proviso. Clause 21 only shows the wide powers which the settlor has reserved to himself. None of these clauses comes within the purview of Proviso 1. In the result we agree with the conclusions of the High Court. The appeals accordingly fail and are dismissed with costs. One hearing fee. G.C. Appleas dismissed.

IN-Abs

J executed a trust deed whereby he created a charitable trust. The 4iced was registered with the Charity Commissioner under the Bombay Public Trust Act, 1950. For the year 1958 59 the Income tax Officer held that since the settlor had reserved to himself wide powers for own benefit and had also utilised those powers to his benefit, the case was coveted by section 16(1)(c) of the Income tax Act, 1922. Accordingly the Income tax Officer taxed the income of the trust in the hands of the 'settlor. A similar order was passed for the year 1959 60. In his appeal before the Appellate Assistant Commissioner the settlor relied on section 35 of the Bombay Public Trusts Act, 1950 to .show that he was thereby precluded from utilising the funds for his own benefit but his plea was not accepted. The Appellate Tribunal, however, relying on the terms .of the deed itself decided in favour of the settlor and. the High Court in reference did the same. The revenue appealed. HELD: (i) There was no doubt ' that under the Trust Deed the settlor had very wide powers and could direct ' the Trustees to. grant loan him. The Trustees could even grant a loan to a firm in which he was interested. But this would be contrary to the provisions of section 35 the Bombay Trust Act. The said Act to the extent it operates must override provisions in the Trust Deed. [953E 954A B] The Legislature in proviso 1 to section 16(1)(c) is thinking of powers lawfully given and powers lawfully exercised. Any person can commit breach of trust and assume power over income or assets but for that reason the income of the trust cannot be treated as the income of the settlor under the proviso. Commissioner of Income tax, West Bengal vs Sir S.M. Bose, 21 ].T.R. 135 and Commissioner of Income tax, Bombay North vs Mathuradas Mangaldas Parekh, I.T. Ref. No. 4/54, Judgment by Bombay High Court dated August 26, 1954, referred to. (ii) The words 're assume power ' give indication to the correct meaning of section 16(1)(c) proviso 1. The latter part of the proviso contemplates that the settlor should be able by virtue of something contained in the Trust Deed, to take back the power he had over the assets or income previous to the execution of the Trust Deed. A provision enabling the settlor to give directions to. trustees to employ the assets or funds of the trust in a particular manner or for a particular charitable object contemplated by the trust cannot be said to confer a right to re assume power within the first proviso. Otherwise a settlor could never name himself a sole trustee. The mere fact that the settlor can derive some direct or indirect benefit under a trust deed would not ' bring the deed within the first proviso. [955G H; 966A B] 947 Chamberlain vs Inland Revenue Commissioner , Tulsidar Kalichand vs Commissioner of Income tax, 42 I.T.R. 1, WoIfson vs Commissoners Inland Reventte, , Saunders vs Commissioners Inland Revenue, , referred to. Commissioner of Income tax, Punjab vs section Raghbir Singh, 57/.T.R., followed. On an examination of terms of the Trust Deed the Court held none of its clauses came within the purview of Proviso 1. [956C F]

iminal Appeal No., 7 of 1951. Appeal under article 134(1)(c) of the Constitution of India from the Judgment and Order dated the 10th March,, ' 1951, of the judicial Commissioner Vindhya 1099 Pradesh, Rewa in Criminal Appeal No. 81 of 1950 arising out of the Judgment and Order dated the 26th July, 1950, of the Court of the Special Judge, Rewa, in ' Criminal Case No. 1 of 1949. Jai Gopal sethi (K. B. Asthana, with him) for appellant No.1. S.C. Isaacs (Murtza Fazl Ali, with him) for appellant No. 2. Porus A. Mehta for the respondent. March 5. The Judgment of the Court was delivered by BHAGWATI J. The appellant No. 1 was the Minister *of Industries and the appellant No. 2 was the Secretary to the Government of the Commerce and Industries Department of the State of Vindhya Pradesh. The appellant No. 1 was charged with having committed offences under sections 120 B, 161, 465 and 466 of the Indian Penal Code and the appellant No. 2 under sections 120 B and 161 of the Indian Penal Code as adopted by the Vindhya Pradesh Ordinance No. 48 of 1949. They were tried in the Court of the Special Judge at Rewa under the Vindhya Pradesh Criminal Law Amendment (Special Courts) Ordinance No. LVI of 1949 and the Special Judge acquitted both of them. The State of Vindhya Pradesh took an appeal to the Court of the Judicial Commissioner, Rewa. The Judicial Commissioner reversed the order of acquittal passed by the Special Judge and convicted both the appellants of the several offences with which they were charged. The Judicial Commissioner awarded to the appellant No. 1 a sentence of 3 years rigorous imprisonment and a fine of Rs. 2,000 in default rigorous imprisonment of 9 months under section 120 B of the Indian Penal Code and a sentence of three years ' rigorous imprisonment under section 161 of the Indian Penal Code, both the sentences to run concur rently. He imposed no sentence upon the appellant No. 1 under sections 465 and 466 of the Indian Penal Code. He awarded to the appellant No. 2 a sentence of rigorous imprisonment for one year and a fine of Re. 1,000 and in default rigorous imprisonment for 1100 nine months under section 120 B of the Indian Penal Code. He did not award any separate sentence to appellant No. 2 under section 161 of the Indian Penal Code. On an application made to the Judicial 'Commissioner, Rewa, for leave to appeal to the Supreme Court the Judicial Commissioner granted the appellants leave to appeal under article 134(1)(c) of the Constitution in regard to the four points of law raised in the case before him. The constitutional points involved in the appeal came up for hearing before the Constitution Bench of this court and were dealt with by the Judgment of this court delivered on the 22nd May, 1953. The Constitution Bench held that the appeal to the Judicial Commissioner from the acquittal by the Special Judge was competent and that there was no infringement of the fundamental rights of. the appellants under articles 14 and 20 of the Constitution (Vide ; The appeal was accordingly directed to be posted for consideration whether it was to be heard on the merits. An application wag thereafter made by the appellants to this court for leave to urge additional grounds and this court on the 20th October, 1953, made an order that the appeal should be heard on merits. The appeal has accordingly come up for hearing and final disposal before us. The case for the prosecution was as follows. By an agreement executed on the 1st August, 1936, between the Panna Durbar of the one part and the Panna Diamond Mining Syndicate represented by Sir Chintubhai Madholal and Hiralal Motilal Shah of the other part, the Panna Durbar granted to the syndicate a lease to carry on diamond mining operations for a period of 15 years. The period of the lease was to expire on the 30th October, 1951, but there was an option reserved to the lessee to have a renewal of the lease for a further period of 15 years from the date of such expiration. There were disputes between the syndicate on the one hand and the Panna Durbar on the other and by his order dated the 31st October, 1946, the Political Minister of Panna stopped the mining operations of the syndicate. The, State of 1101 Panna became integrated in the Unit of Vindhya Pradesh in July, 1948, and the administration of Panna came under the control and superintendence of the Government of Vindhya Pradesh with its seat at Rewa under His Highness the Maharaja of Rewa as Rajpramukh and the appellant No. I became the Minister in charge of the Industries Department in the Cabinet which was formed by the Rajpramukh. The appellant No. 2 held the post of Secretary, Commerce and Industries Department, and was working under the appellant No. 1. On the 1st September, 1948, the syndicate appointed one Pannalal as Field Manager to get the said order of the Panna Durbar stopping the working of the mines rescinded. Pannalal made several applications for procuring the cancellation of the said order and on the 13th January, 1949, and the 26th January, 1949, Pannalal made two applications and handed them over personally to the appellant No. I requesting for the resumption of the mining operations and was asked to come in February for the purpose. The appellant No. I consulted the legal advisers of the State and a questionnaire was framed which was to be addressed to the syndicate for its answers. When Pannalal went to Rewa the questionnaire. was handed over to him on the 9th February, 1949, for being sent to Sir Chinubbai Sir Chinubhai sent the replies to the said questionnaire along with a covering letter dated the 18th February, 1949, where in he expressed a desire to meet the appellant No. 1 for personal discussion in regard to the settlement of the matter of the resumption of the mining operations etc. In reply to the telegrams sent by Sir Chinubhai on the 19th February, 1949, the Personal Assistant to appellant No. 1 intimated to Sir Chinubhai that he could go to Rewa and see the appellant No. 1 on the 7th March, 1949. As Sir Chinubhai was ill he deputed his Personal Assistant, Nagindas Mehta to go to Rewa and see the appellant No. 1 on his behalf Nagindas arrived at Rewa on the evening of the 6th March, 1949. The appellant No. 1 had gone out of Rewa and Nagindas had to wait. He saw the appellant No. 1 on the morning. of the 8th March, 1949, but was asked 1102 to see the appellant No. 2. The appellant No. 2 saw Nagindas at the Guest House where lie had put up and informed Nagindas that a third party was offering Rs. 50,000 for the mining rights. Nagindas told the appellant No. 2 that the syndicate was a limited concern and could not afford to pay so much money . but if the amount was reduced they would make an effort to pay the sum. The appellant No. 2 then told Nagindas that he would talk over the matter with the appellant No. I and let him know. The same day in the afternoon the appellant No. 2 saw Nagindas at the Guest House and informed him that as the syndicate was working for the last so many years the appellant No. 1 was prepared to reduce the amount to about Rs. 25,000. Nagindas told the appellant No. 2 that he would talk over the matter with Sir Chinubhai in Bombay and would let him know about it. Nagindas then left for Bombay but he reached Bombay on the 29th March, 1949, having been detained on the way for some other business of his. He saw Sir Chinubhai in Bombay and reported to him what had happened, at Rewa and gave him to understand that resumption orders would not be passed unless a bribe of Rs. 25,000 was paid. Sir Chinubhai did not approve of the idea of giving a bribe and suggested that Nagindas should lay a trap for catching the appellant No. 1. Nagindas sent a telegram on the 29th March, 1949, agreeing to go to Rewa in the week thereafter for completion. On receipt of that telegram the appellant No. 2 in the absence of appellant No. 1 who was on tour sent a telegram on the 1st April, 1949, to Sir Chinubhai pressing him to come the same week as his presence was essential to complete the matter which had been already delayed. On the 4th April, 1949, Pannalal was informed by the appellant No. 2 that the appellant No. 1 was leaving for Delhi that day and that he should go to Bombay and send Sir Chinubhai to Delhi to meet the appellant No. I in the Constitution House where he would be staying. He also gave a letter to Pannalal to the same effect. Appellant No. 1 left for Delhi on the 4th April,, 1949, with the files of the Panna Diamond Mining 1103 Syndicate and reached Delhi on the 5th April, 1949. On the 6th April, 1949, the appellant No. 1 sent a telegram through his Personal Assistant Mukherji to Sir Chinubhai at Bombay asking him to meet the appellant No. I on the 7th, 8th or 9th April, 1949, at 31 Constitution House for final talks regarding the Panna Diamond Mining Syndicate. On receipt of the said telegram Sir Chinubhai sent a telegram in reply stating that his Personal Assistant, Nagindas and Pannalal were reaching Delhi on the 9th April, 1949. Nagindas reached Delhi on the 8th April, 1949, and put up at the Maidens Hotel and Pannalal reached Delhi on the 10th April, 1949, and put up at the Regal Hotel. On the 9th April, 1949, Nagindas informed the appellant No. I on the telephone about his arrival at Delhi and an appointment was fixed for 10 30 am. on the 10th April, 1949 Nagindas contacted Shri. Bambawala, the inspector General of Police of the Special Police Establishment on the morning of the 10th April, 1949, before, coming to meet the appellant No. I and told him how the appellant No. 1 was coercing him to pay a bribe. Shri Bambawala referred Nagindas to Pandit Dhanraj, Superintendent,, Special Police Establishment, and Nagindas told him the whole story of his harassment by the appellant No. 1 and it was then decided to lay a trap for, appellant No. 1. Nagindas informed Pandit Dhanraj that he would meet the appellant No. 1 at about 11 a.m. and then report their talk to him in the afternoon. Nagindas then saw the appellant No. 1 at the Constitution House at the appointed time and at this meeting the appellant No. 1 demanded from Nagindas a sum of Rs. 25,000 as a bribe for allowing the resumption of the mining operations and made it quite clear that he would not accept anything less than ' Rs. 25,000. As Nagindas had not received the moneys from Bombay, the following day, ie., the 11th April, 1949, at 3 p.m. was fixed for the next meeting. Nagindas thereafter informed Pandit Dhanraj as to what had taken place at the aforesaid meeting between him and the appellant No. 1. Nagindas went to the Constitution House and saw the appellant No. I at about 3 p.m. on the 11th April,, 1949. Pannalal was already 143 1104 there. Nagindas and the appellant No. 1 went into the bedroom where Nagindas requested the appellant No. I to extend the period of the lease for 10 years so that the syndicate might be compensated for the loss sustained by the stoppage of the mining operations. The appellant No. I thereupon asked Nagindas to submit a written application in Hindi and as Nagindas did not know it he called Pannalal into the bedroom and asked him to write out an application to that effect. The appellant No. I after making sure from Pannalal that Pannalal was present at Rewa on the 1st April, 1949, asked Pannalal to put the date on the said application as the 1st April, 1949. The appellant No. 1 made an endorsement at the foot of the said application and dated it as of the 1st April, 1949. It was arranged that Nagindas should see the appellant No. 1 at 9 p.m. that day, that Nagindas should pay Rs. 25,000 to the appellant No. I at that time and the appellant No. I would deliver the resumption order to Nagindas on payment of the said sum of Rs. 25,000. Nagindas then left the Constitution House and reported to Pandit Dhanraj what had transpired between him and appellant No. 1. He further told Pandit Dhanraj that he had not received any moneys upto that time. Pannalal was asked to proceed to the Constitution House in advance and inform the appellant No. 1 that Nagindas would be coming along at 9 p.m. that night. Nagindas and Pandit Dhanraj then proceeded to the house of Shri Shanti Lal Ahuja, Additional District Magistrate. Pandit Dhanraj made arrangements for a raiding party. Nagindas 's statement was recorded on oath and a search of his person was made and he was then given three bundles containing 250 Government currency notes of Rs. 100 and a memorandum of the same was also prepared. After these formalities were gone through Pandit Dhanraj, Nagindas and the Additional District Magistrate along with the police party left for the Constitution House. It was arranged that Pannalal should be sent out by Nagindas after the completion of the transaction, on some pretext or other to the taxi waiting outside and that this would serve as a signal for the raiding party 1105 which would rush into the room No. 31 Constitution House which was occupied by the appellant No. 1. Nagindas then went inside the suit of rooms occupied by the appellant No. 1 and the appellant No. 1 took him to his bedroom and closed the door which connected the bedroom with the sitting room where Pannalal was already waiting. After this the appel lant No. 1 handed over the resumption order to Nagindas and on reading the same Nagindas found that the extension given was only for 4 years and be asked the appellant No. 1 why this was so when the appellant No. 1 had promised before to give an extension for 10 years. On this the appellant No. I told Nagindas that he should put up another application after a few months and then the appellant No. 1 would extend the period. Appellant No. 1 then signed the resumption order and put down the date thereunder as the 2nd April, 1949. As soon as the signed order was handed over to him Nagindas handed over to the appellant No. I the Government currency notes of the value of Rs. 25,000 which had been given to him previously by the Additional District Magistrate. Nagindas then asked for an extra copy of the said order and the same was accordingly given to him after being dated and initialled by the appellant No. 1. The appellant No. 1 took the Government currency notes and put them in the upper drawer of the dressing table in the bedroom. After the transaction was thus completed Nagindas shouted to Pannalal to go to the taxi and bring his cigarette case. Pannalal went opt to the taxi and on receipt of this signal the Additional District Magistrate and Pandit Dhanraj rushed into the sitting room along with the other members of the raiding party. The appellant No. 1 met the raiding party at the communicating door between the two rooms. After the Additional District Magistrate and Pandit Dhanraj had disclosed their identity appellant No. I was asked by Pandit Dhanraj whether he had received any money as a bribe to which the appellant No. 1 replied in the negative. Pandit Dhanraj then told appellant. No. 1 that he should produce the money which he had received, otherwise he would be 1106 forced to search the room. On this appellant No. I went to the said dressing table, opened the top drawer and brought out the three bundles of Government currency notes given to him by Nagindas and handed them over to Pandit Dhanraj. On inquiry by the Additional District Magistrate as to how he had come into possession of the said notes, the Appellant No. 1 stated that he had brought Rs. 40,000 from his home out of which Rs. 15,000 had been spent by him in the purchase of a motor car and the remaining sum was with him which was required by him to purchase some ornaments in connection with the marriage of his daughter. In the meanwhile two respectable witnesses, Shri Gadkari, who was a member of the Central Electricity Authority, Ministry of Works;, Mines and Power, Government of India, and Shri Perulakar, who was the Minister for Agriculture and Labour, Madhya Bharat, were brought to the bedroom of the appellant No. 1 by the police. The appellant No. 1 repeated the said statement and gave the same explanation before these two witnesses which he had given and made before the Additional District Magistrate and Pandit Dhanraj a little while before. Nagindas was then searched in the presence of these two witnesses and the two copies of the order which had been given to him by appellant No. I were recovered from his person. Two other copies of the said order and the application and the file of the Panna Diamond Mining syndicate were recovered from the. search of the upper drawer of, the dressing table in the bedroom of appellant No. I Appellant No. 1 also produced a receipt in support of his story of the purchase of the car. The relevant memos of the search were prepared and also a list of the numbers of the Government currency notes of Rs. 25,000 which had been produced by the appellant No. 1. This list was compared and checked by the said witnesses Gadkari and Perulgkar with the numbers of notes and also with those appearing in the list which was in the possession of the Aditional District Magis trate and which, was shown to the said witnesses. They found that the numbers in the said two lists tallied in all respects. After the completion of the list the Additional 1107 District Magistrate confronted appellant No. 1 with the documents which were produced before him by Nagindas and also the list of notes and asked appellant No. 1 if he had any explanation to offer. The apppllant No. 1 was confused and could give no explanation. On further enquiry whether the appellant No. I had any other money with him, he opened an iron confidential box a key of which was in his possession and brought out a sum of Rs. 132 which was not taken charge of as the same had no concern with the case. Thereafter appellant No. I was put under arrest and was subsequently released on bail. * * * * After these documents were forged the next important event was the passing, of the sum of Rs. 25,000 as and by way of bribe or illegal gratification by Nagindas to the appellant No. 1. Here also it would have been difficult for the prosecution to establish the guilt of the appellant No. 1 if the matter had rested merely on the evidence of Nagindas or that of the police witnesses supported a,% they were by Shanti Lal Ahuja, the Additional District Magistrate. Nagindas 's evidence suffering from the infirmity pointed out before could not be enough to carry conviction with the court. He was out to trap the appellant No. 1 and had been clever enough also to have inveigled the police authorities to procure the wherewithal of the bribe for him. It is patent that but for the procurement of these Rs. 25,000 by the police authorities and their handing over the sum to Nagindas, Nagindas would not have had the requisite amount with him and the offence under section 161 would never have been committed. The police authorities also exhibited an excessive zeal in the matter of bringing the appellant No. 1 to book and their enthusiasm in the matter of trapping the ' appellant No. I was on a par. with that of Nagindas and both the parties were thus equally to blame in the matter of entrapping the appellant No. 1. The evidence of these witnesses therefore was not such as to inspire confidence in the mind of the court. Shanti Lal Ahuja, the Additional District Magistrate, also lent himself to the. police authorities and became 1108 almost a limb of the police. His position as the Additional District Magistrate was submerged and he reduced himself to the position of an ordinary witness taking part in the affair as a member of the raiding. party and his evidence could be no better or no worse than that of the police witnesses themselves. If therefore the matter had rested merely upon their evidence it would have been difficult to carry the guilt home to the appellant No. 1. The evidence as to the recovery of this sum of Rs. 25,000 from the top drawer of the dressing table in the bedroom of the appellant No. I and also in regard to the handing over of that sum by the appellant No. I to Shanti Lal Ahuja, the Additional District Magistrate, was equally tainted and if that evidence stood by itself no court would have been safe in acting upon the same. The statement which was made by the appellant No. I to Shanti Lal Ahuja, the Additional District Magistrate, was inadmissible in evidence. Section 162 of the Criminal Procedure Code rendered the statement made by the appellant No. I to the police officers inadmissible. The investigation into the offence had already started immediately on the First Information Report being registered by the police authorities and Pandit Dhanraj himself admitted in his evidence that the investigation into the offence had thus started before the raid actually took place. The statement made by the appellant No. 1 to Shanti Lai Ahuja, the Additional District Magistrate was therefore made after the investigation had started and during the investigation of the offence and was therefore hit by section 164 of the Criminal Procedure Code. It was urged on behalf of the respondent that this statement was not a confessional statement and was therefore not hit by section 164 and Shanti Lai Ahuja, the Additional District Magistrate, could therefore depose to such statement even though the same was not recorded as required by the provisions of section 164 of the Criminal Procedure Code. There is authority however for the proposition that once the investigation had started any non confessional statement made by the accused also required to be recorded in the manner indicated in that section and if no such record had 1109 been made by the Magistrate, the Magistrate would not be competent to give oral evidence of such statement having been made by the accused. (See A.I.R. 1936 Privy Council 253 and Indian Law Reports 49 Calcutta 167 followed in and A.I.R. 1937 Nagpur 254). The statement made by the appellant No. 1 therefore to Shanti Lal Ahuja, the Additional District Magistrate, not having been recorded by him in accordance with the provisions of section 164 was inadmissible in evidence and could not be proved orally by him. , If therefore the statement was thus eliminated from evidence nothing remained so far as the witnesses Nagindas and Pannalal on the one hand and the police witnesses as well as Shanti Lal Ahuja, the Additional District Magistrate, on the other hand were concerned which could bring the guilt home to the appellant No. 1. Reliance was therefore placed by the prosecution on the evidence of Gadkari and Perulakar. They occupied responsible positions in life and were absolutely independent witnesses. Two criticisms were levelled against their evidence by the Special Judge. The one criticism was that contrary to the evidence of Pandit Dhanraj they asserted that their, statements were not recorded on the night of the 11th April, 1949. Pandit Dbanraj had recorded their statements after they had left the bedroom of the appellant No. I at the Constitution House relying upon his memory of the events that had happened that night. These statements however were not read over to them and therefore could not have the value which otherwise they would have had. The other criticism was that they had appended their signatures to the Panchnama of the numbers of the currency,notes recovered at that time which Panchnama contained the statement that on being asked the appellant No. I had produced the bundles of currency notes from the top drawer of the dressing table. This statement was not factually correct as both these witnesses were brought into the bedroom of the appellant No. I after the recovery of the Government currency notes by the police from the appellant No., 1. It was certainly indiscreet on their part not to have scrutinised 1110 the contents of the Panchnama before they appended their signatures thereto. That is however a far cry from coming to the conclusion that they acted in a highly irresponsible manner and their testimony was unreliable. The circumstances under which the numbers of the currency notes were recorded in the Panchnama, the statement made by the appellant No. 1 to them and the confusion into which the appellant No. 1 fell when he was questioned by the police authorities on the tallying of the numbers contained in the memo prepared when the raid was organised with the numbers of the currency notes actually found in the bedroom of the appellant No. 1 were events which would indelibly print themselves in the memory of these witnesses and even though they were examined in the Court of the Special Judge about 10 months after the occurrence, these events and particularly the fact that the appellant No. I claimed these moneys which were thus recovered as his own would certainly not be in any manner whatever forgotten by them. The only suggestion which was made against the credibility of these witnesses on this point was that they must not have exactly remembered what transpired on that night in the bedroom of the appellant No. I and that they might have committed an honest mistake when narrating the events that had happened on that night. An honest lapse of memory would no doubt be a possibility but having regard to the circumstances of the case we are of the opinion that the events that happened that night in the bedroom of the appellant No. I and which were deposed to, by these witnesses were not such as to be easily forgotten by them and when these witnesses deposed to the fact that the appellant No. I claimed this sum of Rs. 25,000 as his own and was utterly confused when explanation was sought from him by the police authorities in regard to the tallying of the numbers of these Government currency notes, it is not easy 'to surmise that they were suffering from any lapse of memory. The evidence of these witnesses in regard to the statement made by the appellant No. 1 before them was also attacked on the ground that Shanti Lal 1111 Ahuja, the Additional District Magistrate 's asking the appellant No. 1 to repeat the statement which he had earlier made before him to these witnesses was a mere camouflage. Shanti Lal Ahuja, the Additional District Magistrate, knew very well that the statement made by the appellant No. 1 to him was not recorded under the provisions of section 164 of the Criminal Procedure, Code and was therefore inadmissible in evidence and he therefore resorted to these tactics of having the appellant No. 1 repeat the very same statement to these witnesses so as to avoid the bar of section 164. Reliance was placed in this behalf on A.I.R. 1940 Lahore 129 (Full Bench) where it wag held that if on the facts of any case it was found that a statement made to a third person was in reality intended to be made to the police and was represented as having been made to a third person merely as a colourable pretence in order to avoid the provisions of section 162 the court would hold it excluded by the section. The same ratio it was submitted applied to the statements made to these two witnesses because they were a colourable pretence to avoid the provisions of section 164 of the Criminal Procedure Code which had certainly not bee n complied with by Shanti Lal Ahuja, the Additional District Magistrate. It has however to be observed that every statement made to a person assisting the police durirng an investigation cannot be treated as a statement made to the police or to the Magistrate and as such excluded by section 162 or section 164 of the Criminal Procedure Code. The question is one of fact and has got to be determined having regard to the circumstances of each case. On a scrutiny of the evidence of these two witnesses and the circumstances under which the statements came to be made by the appellant No. 1 to them we are of the opinion that the appellant No. I was asked by Shanti Lal Ahuja, the Additional, District Magistrate, to make the statements to these two witnesses not with a view to avoid the bar of section 164 of the Criminal Procedure Code or by way of colourable pretence but by way of greater caution particularly having regard to the fact that the appellant No. 1 occupied the position .of a Minister of 144 1112 industries in the State of Vindhya Pradesh. The statements .made by the appellant No. 1 to these witnesses therefore did not suffer ' from this disability and were admissible in evidence. The evidence of these witnesses being thus worthy of credit and the statements made by the appellant No. 1 to them being admissible in evidence there is no doubt that the appellant No. 1 claimed these moneys, viz., Rs. 25,000, which were recovered from the top drawer of the dressing table in the bedroom of the appellant No. 1 as his own being the balance of Rs. 40,000 which he had brought from his home when he came to Delhi. If this was ' so the very fact that the numbers of these Government currency notes of the value of Rs. 25,000 tallied with the numbers of the notes which had been handed over to Nagindas earlier when the raid was organised and which numbers were also specified in the memo prepared at that time was enough to establish the falsity of the allegation made by the appellant No. 1 that he had brought these moneys from his home These moneys were proved to have been provided by the police authorities and given to Nagindas when the raid was organised and were the instruments of the offence of the taking of the bribe or illegal gratification by the appellant No. 1. If the numbers of these notes tallied with the numbers of the notes which were thus handed over by the police authorities to Nagindas they could not have belonged to the appellant No. 1 and were certainly brought there by Nagindas and handed over by him to the appellant No. 1 as alleged, by the prosecution. A suggestion was made that there was oportunity for Nagindas to plant these moneys into the top drawer of the dressing table when the back of the appellant No. 1 was turned upon him. Even assuming that there was that possibility it is sufficiently negatived by the fact that when these moneys were recovered from the top drawer either at the instance Nagindas as alleged by the appellant No. 1 or at, the instance of the appellant No. 1 as alleged by the prosecution the appellant No. 1 did not express any surprise at these moneys being thus found there. If the version of the appellant No. 1 1113 was correct he had only brought about Rs. 25,000 from his house. Rs. 15,000 has been already spent by him in the purchase of the car. , About Rs. 10,600 were spent by him in the purchase of the ornaments and only a sum of Rs. 100 odd was the, balance left with him. According to that version there was not the slightest possibility of the sum of Rs. 25,000 being found in the top drawer of the dressing table. Far from expressing a surprise in this manner the appellant No. 1 claimed these moneys as his own. The appellant No. 1 could not have by any mischance failed to appreciate that these Government currency notes which were thus recovered from the to p drawer of the dressing table exceeded by far the amount which according to him he had left with him by way of balance and the most natural reaction to the recovery of this large sum of money would . have been that he would have certainly denied that these moneys were his and he would have been surprised at finding that such a large sum of money was thus found there. No such reaction was registered on his face. On the contrary if the evidence of the two witnesses Gadkari and Perulakar is to be believed and we see no reason why it should not be believed, the appellant No. 1 claimed this sum of Rs. 25,000 as his own being the balance out of the money which he had brought from his home when he came to Delhi. This is sufficient to establish that these moneys which earlier bad been handed over by the police authorities to Nagindas found their way into the top drawer of the dressing table in the bedroom of the appellant No. 1 and were the primary evidence of the offence under section 161 having been committed by the appellant No. 1. The further circumstance that on the num bers of these notes being tallied and his explanation in that behalf being asked for by the 'Police authorities the appellant No. 1 was confused and could furnish no explanation in regard thereto also supports this conclusion and there is no doubt left in our minds that the appellant No. 1 was guilty of the offence. under section 161 of the Indian Penal Code with ;Which he was charged 1114 We cannot however leave this case without expressing our strong disapproval of the part which the police authorities and Shanti Lal Ahuja, the Additional District Magistrate, took in this affair. As already observed this offence would never have been committed by the appellant No. I but for the fact that the Notice authorities provided Nagindas with the wherewithal of the commission of the offence. Sir Chinubhai as it appears from the evidence was not in a position to provide Nagindas with this sum of Rs. 25,000 or any large sum and in fact in spite of the telephone calls made by Nagindas upon him had not provided any amount beyond Rs. 3,000 which was meant for the other expenses of Nagindas, to him. Nagindas was therefore not in a position to provide this sum of Rs. 25,000 for payment of the bribe or the illegal gratification to the appellant No. 1. But for the adventitious aid which he got from, the police authorities the matter would not have progressed any further, and Nagindas would I have left Delhi empty handed. The police authorities however once they got scent of the intention of Nagindas thought that it was too good an opportunity to miss for entrapping the appellant No. 1 who occupied the position of the Minister of Industries in the State of Vindhya Pradesh. They therefore provided the sum of Rs. 25,000 on their own and handed it over to Nagindas. The police authorities in this step which they took showed greater enthusiasm than Nagindas himself in the matter of trapping the .appellant No. 1. It may be that the detection of corruption may sometimes call for the laying of traps, but there is no justification for the police authorities to bring about the taking of a bribe by supplying the bribe money to the giver where he has neither got it nor has the capacity to find it for himself. It is the duty of the police authorities to prevent crimes being committed. It is no part of their business to provide the instruments of the offence. We cannot too strongly disapprove of the step which the police authorities took in this case in the matter of providing the sum of Rs. 25,000 to Nagindas who but for the 1115 police authorities thus coming to his aid would never have been able to bring the whole Affair to its culmination. Not only did the police authorities thus become active parties in the matter of trapping the appellant No. I they also provided a handy and an ostensibly independent witness in the person of Shanti La] Ahuja, the Additional District Magistrate. Even though he was a member of the judiciary be lent his services to the police authorities and became a limb of the police as it were. The part which Shanti Lal Ahuja, the Additional District Magistrate, took in this affair cannot be too strongly condemned. We can only repeat in this connection the observations of the Privy Council in A.I.R. 1936 Privy Council 253 at page 258 in regard to the Magistrates placing themselves in positions where they would have to step into the witness box and depose as ordinary citizens.: "In their Lordships view it would be particularly unfortunate if Magistrates were asked at all generally to act,rather as police officers under section 162 of the Code; and to be at the same time freed, notwithstanding their position as Magistrates, from any obligation to make records under section 164. In the result they would indeed be relegated to the position of ordinary citizens as witnesses and then would be required to depose to matters transacted by them in their official capacity unregulated by any statutory rules of procedure or conduct whatever. . " The position was laid down with greater emphasis by Mr. Justice P. B. Mukharji in A.I.R. 1951 Calcutta 524 at page 528 where the learned Judge observed: "Before I conclude I wish to express this court 's great disapprobation of the practice that seems to have become very frequent of sending Magistrates as witnesses of police traps. The Magistrate is made to go under disguise to witness the trap laid by the police. 'In this case it was Presidency Magistrate and in other cases which have come to our notice there have been other Magistrates who became such witnesses. To make the Magistrate a party or a limb of the police during the police investigation seriously 1116 undermines the independence of the Magistrates and ,perverts their judicial outlook. The Magistrates are the normal custodians of the general administration of criminal justice and it is they who normally decide and pass judgments on the acts and conduct of the police. It is not enough to say, therefore, that the Magistrate acting as a witness in a particular case does not himself try that case. This practice is all the more indefensible here specially when there is no separation of the executive from the judiciary. The basic merit of the administration of criminal justice in the State lies in the fact that the person arrested by the police is entitled to come before an independent and impartial Magistrate who is expected to deal with the case without the Magistrate himself being in any way a partisan or a witness to police activities. There is another danger and that is the Magistrates are put in the unenviable and embarrassing position of having to give evidence as a witness and then being disbelieved. That is not the Way to secure respect for the Magistracy charged with the administration of justice. In my judgment this is a practice which is unfair to the accused and unfair to, the Magistrates. It is also unfair to the police. Because charged with the high responsibility and duty of performing a great and essential public service of this State the police cannot afford to run the risk of opprobrium ' even if unfounded, that they have enlisted the Magistrate in their cause. That risk is too great and involves forfeiting public respect and confidence. . . " We perfectly endorse the above observations made 'by Mr. Justice P. B. Mukharji and hope and trust that Magistrates will not be employed by the police authorities in the manner it was done by the Special Police Establishment in this case before us. The independence of the judiciary is a priceless treasure to be cherished and safeguarded at all costs against predatory activities of this character and it is of the essence that public confidence in the independence of ,the judiciary should not be undermined by any such tactics adopted. by the executive authorities We have therefore eliminated from our consideration the whole of the evidence given by Shanti Lal Ahuja, the Additional District Magistrate, and come to our conclusion in regard to the guilt of the appellant No. I relying solely on the testimony of the two independent witnesses Gadkari and Perulakar. The result therefore is that the appeal of the appellant No. 1 will be dismissed except with regard to his conviction and sentence, under section 120 B of the Indian Penal Code and the convictions and sentences passed upon him by the Judicial Commissioner under section 465 and section 466 as also section 161 of the Indian Penal Code will be confirmed. The appeal of the appellant No. 2 will be allowed and he be acquitted and discharged of the offences with which he was charged and immediately set at liberty. The bail bond of the appellant No. 2 will be cancelled.

IN-Abs

After the investigation into an offence has been started on the registration of the First Information Report by the Police, no statement made by the accused to the Magiarate can be proved unless the statement has been recorded in accordance with the provisions of section 164 of the Code of Criminal Procedure and therefore, if the non confessional statement has not been recorded by the Magistrate in the manner indicated in section 164, the Magistrate would not be competent to give oral evidence of such statement having been made by the accused. Nazir Ahmad vs King Emperor (A.I.R. , Legal Bomembrancer vs Lalit Mohan Singh Boy (I.L.R. 49 Cal. 167), Abdul Bahim and Others vs Emperor and Karu Mansukh Gond vs Emperor (A.I.R. referred to. The conduct of the Police and the Additional District Magistrate inactively instigating the accused to commit the off once of which he was charged by furnishing him with the necessary materials (without which he could not have committed the offence), for the purpose of trapping him, was strongly disapproved. It is the duty of the police to prevent the crimes being committed. It, is no part of their duty to provide the instruments of the offence. The observations of Mr. Justice P. B. Mukherji in the case of M. 0. Mitra vs The State (A.I.R. at p. 528) condemning the practice of sending Magistrates as witnesses of Police trap endorsed because such practice makes a Magistrate a party or a limb of the Police during police investigation and undermines seriously the independence of the Magistrates and perverts their judicial outlook.

Appeal No. 2177 of1966. Appeal by special leave from the judgment and order dated July 12, 1963 of the Mysore High Court in Writ Petition No. 1076 of 1962. Veda Vyasa, R. Ganapathy Iyer, R. N. Sachthey and section P. Nayar, for the appellant. R. Gopalakrishnan, for the respondent. The Judgment of the Court was delivered by Shah, J. The respondents a Hindu undivided family were assessed for the assessment year 1949 50 to tax under s ' 23 of the Mysore Income tax Act on a total income of Rs. 10,100/ The Second Additional Income tax Officer (Urban Circle), Bangalore, commenced a proceeding under section 34 of the Mysore Income tax Act for re assessment of the income of the respondents for the 7 assessment year 1949 50, and served a notice in that behalf on March 6, 1951. On May 21, 1954 the Income tax Officer determined the respondents ' total income at Rs. 75,957/ . In appeal against the order, the Appellate Assistant Commissioner of Income tax. 'A ' Range, Bangalore, by order dated November 4, 1961, set aside the order and directed the Income tax Officer to make a fresh assessment after making inquiries on certain matters specified in the order. At the request of the respondents under section 66(2) of the Mysore Income tax Act, the Commissioner of Income tax, Mysore, referred the following questions to the High Court of Mysore: "1. On the facts and in the circumstances of the assessee 's case whether within the meaning of section 34 of the Mysore Income tax Act, if a notice under that section is issued within the prescribed period, whether the Income tax Officer can proceed to assess or re assess such escaped income after four years from the close of the assessment year? 2. On the facts and in the circumstances of the case, whether the Appellate Assistant Commissioner of Incometax is competent to set aside and give directions to the Income tax Officer to re do the assessment in the manner the Appellate Assistant Commissioner of Income tax has done?" At the hearing of the reference, the respondents did not press the first question, and the High Court answered the second question in the affirmative. The Income tax Officer commenced inquiry directed by the Appellate Assistant Commissioner. The respondent , then applied to the High Court of Mysore for issue of a writ of prohibition restraining the Income tax Officer from continuing the assessment proceeding for the year 1949 50 on the plea that the proceeding was because of expiry of the period of limitation barred. The High Court of Mysore upheld the contention of the respondents and allowed the petition. In the view of the High Court the provisions of section 34 of the Mysore Income tax Act were "more or less similar to Rule 34 of the Mysore Sales Tax Act, 1948. Hence the present case clearly comes within the rule laid down by this Court in M/s K. section Subbarayappa and Sons vs State of Mysore [(1952)] Mysore L. J. 2341 which means that the present proceedings are barred". The Commissioner of Income tax has appealed to this Court with special leave. The question arising in this appeal must, it is common ground, be determined in the light of the provisions of the Mysore Incometax Act, 1923. Even after the merger of the State of Mysore with 8 the Union of India a proceeding for assessment of income tax relating to the assessment year 1949 50 has to be heard and disposed of under the Mysore Act. Section 34 of the Mysore Incometax Act reads as follows "If for any reason, profits or gains chargeable to income tax have escaped assessment in any year, or have been assessed at too low a rate, the Income tax Officer may, at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or in the case of a company, on the principal officer thereof a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22, and may proceed to assess or re assess such income, profits or gains and the provision of this Act shall, so far as may be, apply according as if the notice were a notice issued under that sub section". A proceeding for re assessment under section 34 of the Mysore Act may be commenced if two conditions co exist: (i)that the profits and gains chargeable to income tax have escaped assessment or have been assessed at too low a rate, and (ii) the notice is served within four years of the end of the year of assessment. But if a proper notice is served within the period provided by the section, the proceeding may be completed even after the expiry of four years from the close of the assessment year, for the Act prescribes no period for completion of the proceeding. A notice for re assessment was in fact served on the respon dents on March 6, 1951 under section 34 of the Mysore Act. That notice was served within four years of the end of the year of assessment 1949 50, and the Income tax Officer was of the view that tie profits or gains chargeable to income tax had escaped assessment in the year 1949 50. It is true that the Appellate Assistant Commissioner vacated the order of assessment dated May 21, 1954, but he did not set aside the notice served upon the respondents. He merely remanded the case for further inquiry to be made in the light of the directions given by him. It is difficult to appreciate the grounds on which it could be held that the proceeding for re assessment to tax the income which had escaped assessment in the year 1949 50 commenced after due notice served on March 1951 was barred. The High Court was, in our judgment, plainly in error in holding that the proceeding for re assessment was barred. It must also be remembered that the respondents had under an order of the Commissioner obtained a reference on the first question set out hereinbefore. That question was not pressed before the High Court, and it must be deemed to have been answered 9 against the respondents. That question could not thereafter be reagitated by the respondents in a petition for the issue of a writ under article 226 of the Constitution. The appeal is allowed. The order passed by the High Court is set aside. The respondents will pay the costs of the Commissioner in this Court and in the High Court. Appeal dismissed.

IN-Abs

The Income tax Officer, Bangalore commenced a proceeding under section 34 of the Mysore Income tax Act for reassessment of the income of the respondents for the assessment year 1949 50 and served a notice in that behalf in March 1951, on the respondents. The Income tax Officer determined the total income of the respondents in May 1954, but the order was set aside by the Appellate Assistant Commissioner in November 1961, and the Income tax Officer was directed to make a fresh inquiry, When the Income tax Officer commenced inquiry, the respondents applied to the High Court for a writ of prohibition and the High Court passed an order restraining the Income tax Officer on the ground that the assessment proceeding was barred because of the expiry of the period of limitation. In appeal to this Court, Held: The High Court was in error, because, though the Appellate Assistant Commissioner vacated the Income tax Officer 's assessment order of 1954 and remanded the case for further inquiry, the Appellate Assistant Commissioner did not set aside the notice of March 1951 served on the respondents, If a proper notice was served within the period provided by the section (four years from the close of the assessment year) the proceeding could be completed even after the expiry of four years for the Act prescribes no period for completion of the proceeding. [8E G]

Civil Appeal No. 767 of Appeal by special leave from the judgment and order dated August 14, 1961 of the Rajasthan High Court in D.P. Civil Misc. Application No. 128 of 1960. Gopi Nath Kunzru, W.S. Barlingay and Ganpat Rai, for the appellant. C.B Agarwala, K.K. Jain, H.K. Puri and Uma Mehta, for respondents Nos. 3, 4, 5, 7, 12, 13, 15 18, 21, 23 and 24. The Judgment of the Court was delivered by Bachawat, J. On September 10, 1955, Narain Lal, Mool Chand, Mangilal and Kesharichand obtained the consent in writing of the Advocate General, Rajasthan to institute a suit against 917 the respondents under section 92 of the Code of Civil Procedure. The consent was in these terms : "For the reasons detailed above I grant permission to the applicants Sarvashri (1) Narainlal, (2) Mool Chand, (3) Mangilal and (4) Seth Kesharichand for filing suit against the opposite parties Shri Malilal Kasliwal and 27 other members and office holders of the executive committee Jain Atishaya Kshetra Shri Mahabir Swami Temple Chandangaon, for the reliefs detailed in para 28 sub paras I to 5 and 7 of the draft plaint filed by them before me. " Shortly thereafter Mangi Lal died. On March 6, 1956, Narain. Lal Mool Chand and Kesari Chand instituted a suit against the respondents under section 92 of the Code of Civil Procedure, claiming a declaration that the temple of Shri Mahabirji at Naurangabad and the appertaining properties were a public charitable trust for the benefit of the Shwetambar Sangh of the Jain community or of the Jain community as a whole and for other reliefs. On March 9, 1958, Kesari Chand died. The trial court raised and tried the following preliminary issue "Whether the suit is not maintainable on the strength of the permission obtained by the plaintiffs along with Mangi Lai who died prior to the institution of the suit ?" The trial court held that the suit was maintainable. The High Court in its revisional jurisdiction set aside the order of the trial ' court and held that the suit was not maintainable. The present appeal has been tiled from the order of the High Court by special leave. A suit claiming any of the reliefs specified in sub section (1) of section 92 of the Code of Civil Procedure in respect of a trust for public purposes of a charitable or religious nature may be instituted by the Advocate General or "two or more persons having an interest in the trust and having obtained the consent in writing of the Advocate General", and save as provided by the and certain other laws, no suit claiming Such reliefs in respect of any such trust can be instituted except in conformity with sub section (1) of section 92. In the present case, fourpersons obtained the necessary sanction of the Advocate General. one of them died before the suit was filed, and the remaining three, instituted the suit. The question is whether the suit is brought in conformity with section 92(1). The decided cases show that a suit under section 92 must be, brought by all the persons to whom the sanction of the Advocate General has been given, and a suit instituted by some of them 918 only is not maintainable. In Muddala Bhagayannarayana V. Vadapalli Perumallacharyulu(1) where the, sanction was given to four persons and two of them alone brought the suit alleging that the other two had been won over by the defendants and hall refused to join as plaintiffs, it was held that the suit was not maintainable. In Pitchayya and another vs Venkatakrishnamacharlu and eleven others(2), where the sanction was given to three persons, the court held that the suit instituted by two of them. was invalidly brought and the defect could not be cured by impleading the other person as a defendant. In Sibte Rasul vs Sibte Nabi and others(1), where four persons obtained the sanction and the suit was instituted by three of them, it was held that the suit was incompetent and the defect could not be cured by impleading the fourth as a plaintiff at the date of the delivery of the judgment. We may add that in Venkatesha Malia vs B. Ramaya Hegade and twelve others(1) where the sanction to sue under section 18 of the was given by the district judge to two persons, it was held that only one of them could not institute the suit. We hold that an authority to sue given to several persons without more is a joint authority and must be acted upon by all jointly, and a suit by some of them only is not competent. As Sir George Rankin said in Musammat Ali Begam vs Badr ul Islam Ali Khan(1), "where the consent in writing of the Advocate General or Collector is given to a suit by three persons as plaintiffs, the suit cannot be validly instituted by two only. The suit as instituted must conform to the consent. Once the representative suit is validly instituted, it is subject to all the incidents of such a suit; the subsequent death of a plaintiff will not render the suit incompetent, see Raja Anand Rao vs Ramdas Daduram(6), and an appeal by some of the plaintiffs impleading the remaining plaintiff as a respondent is not incompetent because all did not join as appellants, see Musammat Ali Begam vs Badr ul Islam Ali Khan (5). In Shea Ram vs Rain Chand and others ( 7 the sanction of the Collector to bring a suit under section 92 was given to twenty persons. One of them died before the suit was brought and the remaining nineteen instituted the suit. Skempg, J. held that in view of tile two Privy Council rulings the suit was validly instituted. But he erroneously assumed that in Musammat Ali Begam vs Badr ul Islam Ali Khan(5) it was held that where the sanction had been given to three persons, a suit by two of them only was validly (1) (2) I.L.R. (3) I.L.R. (1943) All. 112. (4) 1.L.R. 38 Mad. (5) I.L.R. 65 1. A. 198. (6) L.R. 48 I.A. 12. (7) A.I.R. 1940 Lah. 919 instituted. From the report of Raja Anand Rao vs Ramdas Daduram(1), it is not clear whether all the persons to whom the sanction was given brought the suit, and the point raised and decided was that the death of one of the plaintiffs after the institution of the suit did not render the suit incompetent. We are unable to agree with the Lahore ruling. Where sanction is given to four persons and one of them dies before the institution of the suit, a suit by the remaining three is incompetent. Fresh sanction must be obtained by the survivors for the institution of the suit. We must hold that the suit brought by the appellants was competent. The High Court rightly held that the suit was not maintainable. This judgment will not bar the institution of a fresh suit in conformity with a fresh consent obtained from the Advocate General or Collector. In the result, the appeal is dismissed without costs. G.C. Appeal dismissed (1) L. R. 48 I.A. 12.

IN-Abs

Four persons obtained. the consent of the Advocate General of Rajasthan to institute a suit against the respondents under section 92 of the Code o,f Civil Procedure. Shortly thereafter one of the said four persons died and the suit was instituted by the three survivors. On the preliminary issue whether the suit filed by three persons, when the permission had been given to. four, was maintainable, the trial court held that it was. The High COurt, however, in revision held the suit not to. be maintainable. Appeal was filed in this Court by special leave. HELD: An authority to sue given to several persons without more is a joint authority and must be exercised by all jointly, and a suit by some of them only is not competent. When sanction in the present case was given to. four persons and one of them died before the institution of the suit, a suit by the remaining three was incompetent. Fresh sanction must be obtained by the survivors for the institution of the suit. [918D E, 919B ] Muddala Bhagavannarayana vs Vadapalli Perumallacharyuht, , Pitchayya & Anr. vs Venkatakrishnamacharlu & eleven Ors. I.L.R. , Sibte Rasid vs Sibte Nabi & Ors. I.L.R. (1943) All 112 Venkatesha Mafia vs B. Ramaya Hegade and twelve Ors. I.L.R. 38 Mad. 1192, Musammat Ali Begam vs Badr ul Islam Ali Khan, L.R. 65 I.A. 198, Raja Anand Rao vs Ramdas Daduram. L.R. 48 I.A. 12 and Sheo Ram vs Rama Chand & Ors., A.I.R. 1940 Lab. 356, referred to.

Appeal No. 215 of 1961. Appeal by special leave from the judgment and decree dated January 22, 1958 of the Bombay High Court at Rajkot in Civil First Appeal No. 93 of 1956. R. H. Dhebar, for the appellant. H. K. Puri and Bishamber Lal, for the respondents Nos. The Judgment of the Court was delivered by Shelat, J. In 1947 and prior thereto the respondent carried on business as an exporter of fish in the State of Junagadh in the name and style of Ayub lqbal and Company. In 1947 the Customs authorities of the, State of Junagadh seized two motor trucks, a station wagon and other goods belonging to the respondent on the grounds, (a) that the respondent had not paid import duties on the said trucks, (b) that they were used for smuggling goods in the State and (c) that some of the goods were smuggled goods. The action was taken under the Junagadh State Sea Customs Act, II of S.Y. 1998 then in vogue in the State. The respondent filed an appeal against tbis order to the Home Member of the State as provided in the said Act. Pending the appeal, the State of Junagadh merged in the United States of Saurashtra which ultimately was converted into the State of Saurashtra. The State of Saurashtra thereafter merged with the former State of Bombay and on bifurcation of the Bombay State became part of the State of Gujarat. In the meantime the appeal was transferred to the Revenue Tribunal which was constituted by the State of Saurashtra and which was the competent forum to hear such appeals. On February 6, 1952, the Revenue Tribunal set aside the said order of confiscation of the Customs authority and directed the return of the said vehicles to the respondent. On March I '), 1952, the respondent applied for the return of 'the said vehicles but was informed that they had been disposed of under an order of a Magistrate passed under section 523 of the Code of Criminal Procedure and that the sale proceeds viz., Rs. 2213/8/ were handed over to a creditor of the respondent under an attachment order passed in his favour. On February 5, 1954, the respondent filed 940 the present suit for the return of the said vehicles or in the alternative for their value viz., Rs. 31786/8/ on the ground that pursuant to the said order of the Tribunal, which in the absence of any proceedings against it had become final, the State Government was bound to hand over the said vehicles. In its written statement the State Government denied the respondent 's claim 'Lind took up diverse pleas. It is not necessary to go into the details of these pleas except to say that the State Government did not raise any contention therein 'that it was not liable for any tortious act committed in respect of the said goods and vehicle s by any one of its servants. On these pleadings the trial court raised various issues. No issue with regard to the absence of liability for the tortious act of any servant of the Government was or could be raised in the aforesaid state of pleadings. The evidence led by the State and in particular of the police officer Trambaklal Naranji showed (a) that the said vehicles were seized in 1947 by the Customs Officer of the State of Junagadli, (b) that somehow they were kept in an open space opposite to the police station at Veraval, (c) that they remained totally uncared for from 1947 to October, 1951 with the result that the greater part of the machinery of the vehicles, tyres and even some wheels were pilfered away leaving only the skeletons of the vehicles, (d) that no entries were made in any of the registers maintained at the police station to show as to how these vehicles came to be kept in the said open space or whether the customs authority had handed over the said vehicles to the police for safe custody, (e) that in October, 1951, witness Trambaklal who was then incharge of the police station reported to his superior officers the fact of these vehicles lying in the said open space as uncared and unclaimed vehicles, (f) that on October 3, 1951, directions were given to him to apply to the Magistrate for disposal of the said Vehicles as unclaimed property under section 523, (g) that on October 21, 1951, the police recorded a Panchanama as regards the condition of the said vehicles, and (h) that on October 29. 1951 pursuant to the said directions, the police officer made an application which mentioned the fact that these vehicles were seized by the Port Commissioner in 1947 from Memon Mahomed Haji Hasam of Veraval, the respondent. It is clear that in spite of the police authorities being aware that the said vehicles were seized from the respondent, his name having been mentioned in the said application, no notice was served upon him of the said application which, as aforesaid, was made on the footing that the said vehicles were unclaimed property. The only notice which was issued by the Magistrate was a public notice which was ordered to be pasted at a public place. Clearly, the respondent was right when he said that he was not aware of the said proceedings or the order passed by the Magistrate therein. It appears from the Rojkam of the Magistrate 's court that on February 9 41 5, 1952, the said vehicles were auctioned in the condition in which they were and only Rs. 2,000 and odd were realised from that auction. The trial court found that the customs officer was competent to seize the said vehicles on a suspicion that a custom offence tinder the said Act had been committed. It held, however, that after the Tribunal had set aside his order and directed the return of the said property to the respondent it was the duty of the State Government to return the said property and on failure to do so the respondent had a cause of action and the suit was maintainable. On these findings, the trial court passed a decree against the State Government for Rs. 26797/8/ . The State Government thereupon filed an appeal in the High Court of Bombay at Rajkot taking a number of grounds in its memorandum of appeal. In the memorandum of appeal the State Government inter alia raised the following grounds : "The learned Civil Judge ought to have decided that the State is not liable for any acts tortious or otherwise of its servants and of the customs or the police authorities". The High Court held that no such plea having been taken in its written statement nor any issue having been raised in the trial court, the State Government was not entitled to raise the contention for the first time in the appeal. The High Court confirmed the said decree except for a slight reduction in the decretal amount from Rs. 26797/8/ to Rs. 25532/10/ . The High Court found (1) that the said vehicles were sold on February 5, 1952 while the appeal before the Revenue Tribunal was still pending, (2) that the said vehicles were sold at the instance of the police officer under section 523 on the footing that they were unclaimed property, (3) that such an assumption was wrong as the vehicles were lying with the authorities while the appeal was still pending and when the issue, whether the said vehicles were liable to confiscation, was not finally decided, (4) that the said vehicles could not be sold by auction because they were liable to be returned in the event of the Tribunal holding that the said seizure and confiscation were illegal and directing the vehicles to be returned to the owner. The High Court hold (a) that the Junagadh Customs Act which applied to the instant case provided an appeal against an order of seizure and confiscation, (b) that there being a provision for appeal in the said Act there was a statutory duty on the State to see that the property which was seized was kept intact till the appeal was disposed of, (c) that there was an implied obligation to see that the said property was not tampered with during the pendency of the appeal in which the order of confiscation was under scrutiny, (d) that the breach of the said obligation gave a cause of action to the respondent, and (e) that 942 the cause of action on which the said suit was grounded was the respondent 's right to the return of the said property and that the relief claimed on that cause of action was the return of the said property or in the alternative the value thereof and not damages for any negligence either of the State Government or of any of its servants. It is against this judgment and decree of the High Court that this appeal by special leave is directed. It is clear that both the trial court and the High Court concurrently found that the said vehicles were seized by the customs authority, that between 1947 and October, 1951 when they were disposed off they were lying uncared for in an open space, that they were disposed of at the instance of the Police as unclaimed property, that when they were sold most of the valuable parts were missing and lastly that they were sold while the appeal against the order of seizure and confiscation was still pending. Mr. Dhebar 's contention was that since they were seized by a ,competent officer the seizure was lawful and that the utmost that ,could be alleged in the circumstances was that one or the other servants of the State Government was guilty of negligence. Fe ,contended that the State Government was not liable for any tor tious act of any of its servants. Before we proceed to consider this contention it is necessary to examine some of the provisions of the said Act which both the parties conceded was the relevant law applicable to the present ,case. Section 150 lays down various offences under the Act and the respective penalties therefor. Clause (8) of section 150 provides that if any goods, the importation or exportation of which is for the time being prohibited or restricted by or under Chapter IV of this Act, be imported into or exported from the Junagadli 'State contrary to such prohibition or restriction, or if any attempt is made so to import or export any such goods, or if any such goods are found in any package produced to any officer of Customs as containing no such goods etc., such goods shall be liable to confiscation and any person concerned in any such offence shall be liable to a penalty as set out therein. Section 160 provides that a thing liable to confiscation under this Act may be seized in 'any place by an officer of Customs or other person duly employed for the prevention of smuggling. Section 163 provides that when a thing is seized the officer making such seizure shall on demand of the person in charge of the goods so seized give him a statement in writing of the reasons for such seizure. Section 166 provides for adjudication of confiscation and penalties. Section 172 providas for an appeal from a subordinate Customs officer to the Chief Customs authority and section 175 provides a revision by the Ruler of the Junagadh State. The power of revision under section 175 includes the power to reverse or modify the decision or, order in the exercise of His Highness 's extraordinary revisional jurisdiction. 943 It would appear from these provisions that the seizure of the said vehicles was carried out with jurisdiction and the order of confiscation was also made, apart from the question as to its merits, by a competent officer with jurisdiction. It is also possible to contend that as the said vehicles were sold pursuant to a judicial order no liability can be attached on the State Government for their disposal by public auction. But between their seizure and the auction there was a duty implicit from the provisions of the Act to take reasonable care of the property seized. This is so because .the order of confiscation was not final and was subject to an appeal and a revision before the Home Member and later on before the Revenue Tribunal after Junagadh merged in the State of Saurashtra in 1948 49. The appellant State was aware that the order of seizure and confiscation was not final being subject to an appeal and was liable to be set aside either in appeal or in revision. It was also aware that if the said order was set aside, the property would have to be returned to the owner thereof in the same state in which it was seized except as to normal depreciation. In spite of this clear position, while the appeal was still pending before the Revenue Tribunal and without waiting for its disposal, it allowed its police authorities to have it disposed of as unclaimed property. The State Government was fully aware, firstly, by reason of the pendency of the appeal and secondly because the application under section 523 expressly mentioned the person from whom the said vehicles were seized, that the vehicles were and could not be said to be unclaimed property. In the circumstances, the State Government was during the pendency of the appeal under a statutory duty to take reasonable care of the said vehicles which on the said appeal being decided against it were liable to be returned to their owner. The contention that the order of disposal was a judicial order or that the respondent could have filed a revision application against that order and have it set aside would be beside the point. There being a statutory obligation under the Act to return the property once the order of seizure and confiscation was held to be wrong, the respondent could rely on that obligation and claim the return of the said vehicles. On behalf of the respondent, the contention urged was that though the seizure might be lawful and under the authority of the Statute, the State Government was from the time that the said goods were seized until the decision of the appeal, in a position of a bailee and was, therefore, bound to take reasonable care of the said vehicles. That no such reasonable care was taken and the vehicles remained totally uncared for is not in dispute. Mr. Dhebar 's reply was that there was no bailment nor can such bailment be inferred as section 148 of the Contract Act requires that a bailment can arise only under a contract between the parties. That contention is not sustainable. Bailment is dealt with by the Contract Act only 944 in cases where it arises from a contract but it is not correct to say that there cannot be a bailment without an enforceable contract. As stated in "Possession in the Common Law" by Pollock and Wright, p. 163, "Upon the whole, it is conceived that in general any person is to be considered as a bailee who otherwise than as a servant either receives possession of a thing from another or consents to receive or hold possession of a thing for another upon an understanding with the other person either to keep and return or deliver to him the specific thing or to (convey and) apply the specific thing according to the directions antecedent or future of the other person". 'Bailment is a relationship sui generis and unless it is sought to increase or diminish the burdens imposed upon the bailee by the very fact of the bailment, it is not necessary to incorporate it into the law of contract and to prove a consideration"(1). There can, therefore, be bailment and the relationship of a bailee in respect of specific property without there being an enforceable contract. Nor is consent indispensable for such a relationship to arise. A finder of goods of another has been held to be a bailee in certain circumstances. On the facts of the present case, the State Government no doubt seized the said vehicles pursuant to the power under the Customs Act. But the power to seize and confiscate was dependent upon a customs offence having been committed or a suspicion that such offence had been committed. The order of the Customs Officer was not final as it was subject to an appeal and if the appellate authority found that there was no good ground for the exercise of that power, 'the property could no longer be retained and had under the Act to be returned to the owner. That being the position and the property being liable to be returned there was not only a statutory obligation to return but until the order of confiscation became final an implied obligation to preserve the property intact and for that purpose to take such care of it as a reasonable person in like circumstances is expected to take. Just as a finder of property has to return it when its owner is found and demands it, so the State Government was bound to return the said vehicles once it was found that the seizure and confiscation were not sustainable. There being thus a legal obligation to preserve the property intact and also the obligation to take reasonable care of it so as to enable the Government to return it in the same condition in which it was seized, the position of the State Government until the order became final would be that of a bailee. If that is the correct position once the Revenue Tribunal set aside the order of the Customs Officer and the Government became liable to return the goods the owner (1) "Law of constract "by Chesire and Fi foot,pp./73,74. 94 5 had the right either to demand the property seized or its value, if, in the meantime the State Government had precluded itself from returning the property either by its own act or that of its agents or servants. This was precisely the cause of action on which the respondent 's suit was grounded. The fact that an order for its disposal was passed by a Magistrate would not in an ,, way interfere with or wipe away the right of the owner to demand the return of the property or the obligation of the Government to return it. The order of disposal in any event was obtained on a false representation that the property was an unclaimed pro perty. Even if the Government cannot be said to be in the position of a bailee, it was in any case bound to return the said property by reason of its statutory obligation or to pay its value if it had disabled itself from returning it either by its own act or by any act of its agents and servants. In these circumstances, it is difficult to apperciate how the contention that the State Government is not liable for any tortious act of its servants can possibly arise. The decisions in State of Rajasthan vs Mst. Vidh yawati(l) and Kasturilal Jain vs The State of U.P.(2) to which ,Mr. Dhebar drew our attention have no relevance in view of the pleadings of the parties and the cause of action on which the respondent 's suit was based. In our view, the High Court was right in conferming the decree passed by the trial court on the basis that there was an obligation on the State Government either to return the said vehicles or in the alternative to pay their value. The appeal is dismissed with costs. G.C. Appeal dismissed. ( 1) [1962] Suppl. 2 S.C.R. 989.

IN-Abs

Two trucks and a station wagon belonging to the respondent were seized by the customs authorities of the State of Junagarh under the provisions of the Junagarh State Sea Customs Act of S.Y. 1998. The Junagrah State was merged into the United States of Saurashtra and after further changes became part of the present Gujarat State. The respondent 's appeal against the aforesaid seizure of his goods succeeded before the Revenue Tribunal which ordered the return of the said vehicles to the respondent. When however he applied for the return of the vehicles he was informed that they had been disposed of under an order of a Magistrate under section 523 of the Code of Criminal Procedure, and that the sale proceeds had been paid to a creditor of the 'respondent under an attachment order. The respondent thereupon filed a suit for the recovery of the value of the vehicles. It appeared in the evidence that the vehicles were kept for several in an. open place outside the police station at Veraval so that most of their parts were pilfered away and only the skeletons of the vehicles were left. Finally on the report of the officer incharge of the aforesaid police station they were sold it an auction as unclaimed property after obtaining the order of a Magistrate. The trial court on the above evidevice decreed the respondent 's suit and the High Court upheld the decree though partly reducing the amount. The State appealed to this Court It wits contended on behalf of the appellant that the sale was under a judicial order and therefore there was no liability to pay; at the most one or the other officers of the Government could be held guilty of negligence. It was further contended on behalf of the State that it could not be treated as a bailee because a bailment could arise only under a contract. HELD : (i) The State Government no doubt seized the said vehicles pursuant to the power tinder the Customs Act. But the power to seize and confiscate was dependent upon a customs offence having been committed or a suspicion that such offence had been committed. The order of the Customs Officer was not final as it was subject to appeal and if the authority found that there was no good ground for the exercise of that power the property Could no longer be retained and had under the Act to be returned to the owner. Thus there was a clear obligation to return the vehicle to the owner if the appeal went his favour. [944E] There was also an implied legal obligation to preserve tile property intact and to take reasonable care of it so is to enable it to be returned 93 9 in the same condition in which it was seized. The position of the State Government until the order became final was therefore that of a bailee. There can be bailment and the 'relationship of a bailor and bailee in respect of specific property without there being an enforceable contract. Nor is consent indispensable for such a relationship to arise. Even a finder of goods of another becomes a bailee in certain circumstances. 1.944A D; F H] The High Court was right in confirming the decree passed by the trial court on the basis that there was an obligation on the State Government either to return the said vehicles or in the alternative to pay their value. [945 E] State of Rajasthan vs Mst. Vidhyawati, [1962] Supp. 2 S.C.R. 989 and Kasturilal Jain vs State of U.P. ; , held inapplicable.

Appeals Nos. 2253 and 2254 of 1966. Appeals from the judgment and decree dated July 5, 1965 of the Calcutta High Court in Appeals from Original Decrees Nos. 490 and 489 of 1960 respectively. Sarjoo Prasad and R. Ganapathy Iyer, for the appellant (in C. A. No. 2253 of 1966). Devaprasad Chaudhury and Sukumar Ghove, for the appellant (In C. A. No. 2254 of 1966). A.K. Sen, section K. Gambhir and D. N. Gupta, for the respon dents (in both the appeals). The Judgment of the Court was delivered by Bachawat, J. The respondents are limited companies having their head offices in Calcutta. On May 15, 1953, the two Companies jointly purchased the premises known as King 's Court ' at No. 46B Chowringhee Road, Calcutta, for the purpose of providing residential accommodation for their staff. They instituted a suit against one B. M. Lall, since deceased, predecessor of the appellants in C. A. No. 2253/66 for recovery of possession of flat No. 8 in the aforesaid premises in his occupation as a tenant, and another suit against the appellant in C. A. No. 2254/66 for recovery of possession of flat No. 9 in his occupation as a tenant, on the ground that they reasonably required the flats for the occupation of their staff. By Sec. 13(1) of the West Bengal Premises Tenancy Act, 1956, (West Bengal Act XII of 1956), the tenants are protected from eviction except on one or more of the grounds specified in the sub section. The grounds mentioned in clause (f) of section 13(1) are: "Where the premises are reasonably required by the landlord either for purposes of building or re building or for making thereto substantial additions or alterations or for his own occupation if he is the owner or for the occupation of any person for whose benefit the premises are held;". . The respondents claim that they reasonably require the flats for their own occupation. The trial court dismissed the suits. From these decrees, the respondents filed appeals in the High Court at Calcutta. The High Court set aside the decrees passed by the trial court and decreed the suits. The present appeals have been filed under certificates granted by the High Court. 25 The High Court held that (1) a limited company can be a landlord within the meaning of section 13(1)(f) and can reasonably require the premises for its own occupation, and (2) where there are several landlords, the requirement of the premises by the landlords for the occupation of one or more of them is sufficient to bring the case within Sec. 13(1)(f). These findings are not challenged in this Court. Before us it is also conceded by all the appearing parties that the respondents are entitled to a decree for recovery of possession of the two flats under sec. 13(1)(f), if they establish that they reasonably require the flats for the occupation of respondent No. 2, Guest Keen and Williams Ltd. only. The two courts concurrently found that respondent No. 2 reasonably requires the flats for the occupation of its staff. The Company is under an obligation to provide free residential accommodation for its officers in properties either rented or owned by it. In view of the acute scarcity of accommodation in the city, it is not possible to find other convenient flats for officers who were transferred to the city from other stations. Suitable provision for the accommodation of officers visiting Calcutta on tour is a matter of necessity. The sole question is whether the occupation by its staff officers would be the company 's own occupation. The point of dispute on which the two courts differed is whether the officer to whom the flat would be allotted would occupy it as a tenant or as a licensee. It is common case before us that if he is a licensee his occu pation would be on behalf of the company and its requirement would be for its own occupation. On the other hand, if he is a tenant his occupation would be on his own account and the company 's requirement would not be for its own occupation. It appears that the officers provided with accommodation by the Company are required to execute agreements in a standard form. The terms and conditions of the agreement are as follows: 1 . The Licensee whilst in the employment of the Company at Calcutta and for the sole purpose of the Licensee being more conveniently situated in such employment is hereby permitted by the Company to occupy as a Licensee during the term of his employment at Calcutta Flat No. 25, situated in the Company 's property known as Kings Court, Calcutta, or such other flat as may be allotted to the Licensee at the company 's discretion (hereinafter referred to as "the said permises") subject to the terms and conditions hereinafter contained. In the event of the Company deciding to levy License fees and the Company reserves the right to do so without prior notice, the Licensee shall pay to the Company each month such License fees which may be varied by the 'Company from time to time at its discretion and the Company shall be entitled to deduct such License fees from the emoluments or to become due to the Licensee from Company. The occupation of the said premises by the Licensee is a condition of his employment at Calcutta with the company and such right of occupation shall forthwith cease upon his employment being terminated by the company or on his leaving such employment or on his transfer away from Calcutta or on his death whichever is earlier. Notice given by the Company to the Licensee of termination of employment or of transfer away from Calcutta shall be deemed to be sufficient notice of revocation of the licence. The Company shall be entitled to determine forthwith the licence hereby granted if the licensee shall fail to comply with any of the terms and conditions herein contained and on his part to be observed and non compliance with the terms and conditions herein contained may be deemed by the company to be misconduct. These presents shall not or shall not be deemed to create any relationship of landlord and tenant between the company and the licensee in respect of the said premises. The company shall pay all present and future revenue and municipal taxes payable in respect of the said premises and keep the said premises in repair during the continuance of these presents. Conditions to be complied with by the licensee: 1. The Licensee shall pay the cost of electricity and gas consumed within the said premises and the company may at its discretion deduct such charges from the emoluments due or to become due to the Licensee from the company. The Licensee shall not cause or permit to be cause any disturbance or nuisance in or in the vicinity of the said premises. No structure or alteration temporary or permanent, other than common ornaments shall be erected, fixed or carried out by the Licensee in the said premises or garden without prior written permission from the company. The Licensee shall not do or permit to be done any act or thing which causes damage or is liable to cause damage to the said premises. The cost of rectification of such damage will be recoverable in accordance with condition (1). Alterations of or extensions to the installed electrical circuit are strictly prohibited. No notice advertisement or placard other than the Licensee 's own name, which may be fixed to the main door of the said premises, shall be fixed or permitted to be fixed to any portion of the said premises. The said premises shall be used entirely as a dwelling place and no business or trade shall be carried out on the said premises or any part thereof without prior written permission from the company. The Licensee will not permit any persons other than his own personal servants to occupy the servants ' quarters allotted to him by the company and will not permit the garage allotted to him by the company to be used for residential purpose. The Licensee shall not take in any paying guest without prior written permission from the company and such permission shall be deemed to have been withdrawn when the paying guest ceases to reside. The Licensee shall not let or part with possession of the whole or any part of the said premises to any person, firm or company. During periods when the Licensee is absent from Calcutta the Company may assign the premises to any other employee or suitable person at its sole discretion. The question is whether the occupier under this agreement is a tenant or a licensee. The distinction between a lease and a license is well known. 105 of the Transfer of Property Act defines a lease. 52 of the Indian Easements Act defines a license. A lease. is the transfer of a right to enjoy the premises; whereas a license is a privilege to do something on the premises which otherwise would be unlawful. If the agreement is in writ ing, it is a question of construction of the agreement having regard to its terms and where its language is ambiguous, having regard to its object, and the circumstances under which it was executed whether the rights of the occupier are those of a lessee or a licen see. The transaction is a lease, if it grants an interest in the land; it is a license if it gives a personal privilege with no interest in the land. The question is not of words but of substance and the label which the parties choose to put upon the transaction, though relevant, is not decisive. The test of exclusive possession is not decisive, see Errington vs Errington and Woods,(1) Associated Hotels of India Ltd. vs R. N. Kapoor,(2) though it is a very important indication in favour of tenancy. See Addiscombe Garden Estates Ltd. and Anr. vs Crabbe and Ors.(3). A servant in occupation of premises belonging to his master may be a tenant or a licensee, see Halsbury 's Laws of England, Third Edition, Vol. 23, article 990. p. 411. A service occupation is a particular kind of license whereby a servant is required to live in the premises for the better performance of his duties. Formerly, the occupation of the servant was regarded as a tenancy unless it was a service occu (1)[1952] 1 K.B. 290, 298. (2) [1260] 368, 381 5. (3) ,525. 28 pation, see Nippon Menkwa Kalmshiki vs F. Portlock(1). Now it is settled law that a servant may be a licensee though he may not be in service occupation. In Torbett vs Faulkner(2) Denning, L. J. said: "A service occupation is, in truth, only one form of licence. It is a particular kind of licence whereby a servant is required to live in the house in order the better to do his work. But it is now settled that there are other kinds of licence which a servant may have. A servant may in some circumstances be a. licensee even though he is not required to live in the house, but is only permitted to do so because of its convenience for his work see Ford vs Langford 1(1949) 65 The Times L.R. 1381, per Lord Justice Asquith, and Webb, Ltd. vs Webb (unreported, October 24, 1951) and even though he pays the rates, Gorham Contractors, Ltd. vs Field (unreported, March 26, 1952), and even though he has exclusive possession, Cobb vs Lane (1952) 1 The Times L.R. 1037)". The Lord Justice then continued: "If a servant is given a personal privilege to stay in a house for the greater convenience of his work, and it is treated as part and parcel of his remuneration, then he is a licensee, even though the value of the house is quan tified in money; but if he is given an interest in the land, separate and distinct from his contract of service, at a sum properly to be regarded as a, rent, then he is a tenant, and none the less a tenant because he is also a servant. The distinction depends on the truth of the relationship and not on the label which the parties choose to put upon it: see Facchini vs Bryson (1952 ) The Times L.R. 1386). " The last observation covers the present case. Under the standard form of agreement of respondent No. 2, the occupation of the officer ceases not only on the termination of his employment but also on his transfer from Calcutta and on his death. The company is at liberty to allot any other flat to the officer. During the absence of the servant from Calcutta, the company is at liberty to assign the premises to any other employee or other person. The accommodation is free, but the Company reserves the right to levy license fees. All the terms of the agreement are consistent with the expressed intention that the officer is permitted to occupy the flat as a licensee and nothing in the agreement shall be deemed to create the relationship of landlord and tenant. The agreement on its true construction read in the light of the surrounding circumstances operates as a license and not as a tenancy. It creates no interest in the land. It gives only a personal privilege or license (1)A.I.R. 1922 Botm. (2) [1952]2 T.L.R. 659,660, 29 of the servant to occupy the premises for the greater convenience of his work. The High Court rightly held that the respondents reasonably require the flats for respondent No. 2 's own occupation through officers holding the flats on its behalf as licensee. If so, it is conceded that it is not necessary for the respondents to establish the reasonable requirement by respondent No. 1 also for its own Occupation. The High Court decided this issue also in favour of the respondents. As the decision on this issue is not necessary for the disposal of this appeal, we express no opinion on it. The High Court rightly decreed the suits. In the result, the appeals are dismissed. There will be no order is to costs. R.K.P.S. Appeals dismissed.

IN-Abs

The respondent limited companies purchased certain premises in Calcutta for the purpose of providing residential accommodation for their staff. They instituted suits against the appellants for the recovery of possession of two flats on the ground that as these flats were required for housing their officers, they were reasonably required for the occupation of the respondents within the meaning of section 13(1) (f) of the West Bengal Premises Tenancy Act, 1956. The Trial Court dismissed the suits but the High Court allowed an appeal and held that a limited company can be a landlord within the meaning of section 13(1) (f) and can reasonably require the premises for its own occupation; and that where there are several landlords, the requirement of the premises by the landlords for the occupation of one or more of them is sufficient to bring the case within section 13(1) (f). In the appeal before the Supreme Court the only question for determination was whether on the construction of the terms of an agreement which was normally signed between each of the respondents and any officer who was allotted a flat, the officer occupied the flat as a tenant or a licensee, and therefore whether the officer 's occupa tion would be the company 's own occupation within the meaning of clause (f). Held:Dismissing the appeal: The High Court nightly held that the respondent reasonably required the flats for the second respondent company 's own occupation through officers holding flats on its behalf as licensees. [29B] Under the standard form of agreement, the occupation of the officer ceased on the termination of his employment, upon his death, or on his transfer and the company was at liberty to allot him any other flat or to assign the premises to any other employee or other person during his absence. In view of these and its other terms the agreement operated as a license and not as a tenancy. It created no interest in the land and gave only a personal privilege or license to the servant to occupy the premises for the greater convenience of his work. [28F H] Under section 105 of the Transfer of Property Act, a lease is the transfer of a right to enjoy the premises whereas under section 52 of the Indian Easements Act a license is a privilege to do something on the premises which otherwise would be unlawful. The transaction is a lease if it grants an interest in the land; it is a license if it gives a personal privilege with no interest in the land. [27E F] Errington vs Errington and Woods, ; , 298: Associated Hotels of India Ltd. vs R. N. Kapoor. ; ; 3815. Addiscombe Garden Estates Ltd. and Anr, V. Crabe and Ors. , 525; referred to. 24 A service occupation is a particular kind of license whereby a servant is required to live in the premises for the better performance of his duties. Now it is also settled law that a servant may be a licensee though he may not be in service occupation. [27H] Nippon Menkwa Kalmshiki vs F. Portlock, A.1.R. ; and Torbett vs Faulkner, , 560; referred to.

Appeal No. 768 of 1966. Appeal by special leave from the judgment and order dated December 18, 1964 of the Gujarat High Court in Special Civil Application No. 332 of 1964. B.Sen, section K. A Iyar, R. N. Sachthey and section P. Nayar, for the appellant. section T. Desai and 0. C. Mathur, for the respondent. The Judgment of the Court was delivered by Shah, J. The assessees M/s A. Raman & Company are dealers in "mill stores" in the course of their business they sell " mill stores" to other dealers including two concerns trading in the names of M/s A. M. Shah & Co. and M/s R. Ambalal & Co., which are owned by the Hindu undivided families, managers of which are the only partners of the assessees. For the assessment years 1959 60, 1960 61 and 1961 62 the assessees were originally assessed by the Income tax Officer, Circle 1, Ward A, Ahmedabad, while the partners of the assessees and the Hindu undivided families which traded in the names of M / s A. M. Shah & Co. and M / s R. Ambalal & Co. were assessed by Income tax Officers in other Circles. The cases of assessees, of the partners of the assessees and of the two Hindu undivided families trading in the names of A. M. Shah & Co. and R. Ambalal & Co. were later transferred to the Income tax Officer, Group Circle J, Ahmedabad. That Officer by letter dated March 20, 1964 informed the assessees that he was convinced from a perusal of the assessment records of the assessees, their partners and their individual Hindu undivided families, that the partners of the assessees had contrived to divert profits of the assessees to their respective Hindu undivided families and had tried to "evade proper taxation", and on that ground he called upon the assessees to submit their objections, if any, to the reopening of the assessments for the years 1959 60, 1960 61 and 1961 62. The assessees in reply contended that the Income tax Officer had no jurisdiction to reopen the assessments since the Hindu undivided families of the two partners and the assessees had submitted "effect and complete returns of income" supported by their books of account, "quantity details" of purchases, sales and expenses, and had given all material facts and relevant information necessary for assessment at the time of each assessment. The Income tax Officer issued three separate notices under section 147 of the Income tax Act, 1961, requiring the assessees to show cause why the assessments for the years 1959 60, 1960 61 12 and 1961 62 should not be reopened. The High Court of Gujarat in a petition for a, writ under article 226 of the Constitution quashed those notices and restrained the Income tax Officer from taking proceedings in pursuance thereof. With special leave granted by this Court, the Commissioner of Income tax has appealed to this Court. In support of the claim of the Income tax Officer, to reopen the assessments, reliance was placed in the High Court on cl. (b) of section 147 (1), of the Income tax Act, 1961. The material part of section 147(1)(b) may be read: "If (a) (b)notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance as the case may be, for the assessment year concerned. Explanation 1 For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely: (a) where income chargeable to tax has been underassessed; or * * * * *" Under section 147(1)(b) reason to believe that income chargeable to tax has escaped assessment in consequence of information in the possession of the Income tax Officer is a condition precedent to the exercise of his jurisdiction to assess or reassess the income of the assessee. If that condition does not exist, steps taken by the Income tax Officer to assess or reassess the income will be without jurisdiction. It was held by this Court in Calcutta Discount Co. Ltd. vs Income tax Officer, Companies District I, Calcutta & Another(1) that the High Court in appropriate cases has power to issue an order prohibiting the Income tax Officer from proceeding to reassess the income when the conditions precedent do not exist. At p. 207, K. C. Das Gupta, J., delivering the majority judgment of the Court observed: "It is well settled however that though the writ of prohibition or certiorari will not issue against an executive 13 authority, the High Courts have power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an exe cutive authority acting without jurisdiction subjects or is likely to subject a person to lengthy proceedings and unnecessary harassment, the High Courts, it is well settl ed, will issue appropriate orders or directions to prevent such consequences". The High Court may, therefore, issue a high prerogative writ prohibiting the Income tax Officer from proceeding with re assessment when it appears that the Income tax Officer had no jurisdiction to commence proceeding. The condition which invests the Income tax Officer with jurisdiction has two branches: (i) that the Income tax Officer has reason to believe that income chargeable to tax has escaped assessment; and (ii) that it is in consequence of information which he has in his possession and that he has reason so to believe. Since the learned Judges of the High Court have concentrated their attention upon the second branch of the condition and have reached their conclusion in favour of the assessees on that branch, it would be appropriate to deal with the correctness of that approach. The expression "information" in the context in which it occurs must, in our judgment, mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. If as a result of information in his possession, the Income tax Officer has reason to believe that income chargeable to tax had escaped assessment, the Income tax Officer has jurisdiction to assess or reassess income under section 147(1)(b) of the Income tax Act, 1961. Information in his possession that income chargeable to tax has escaped assessment furnishes a starting point for assessing or reassessing income. If he has that information, the Income tax Officer may commence proceedings for assessment or reassessment. To commence the proceeding for reassessment it is not necessary that on the materials which came to the notice of the Income tax Officer, the pre vious order of assessment was vitiated by some error of fact or law. The High Court exercising jurisdiction under article 226 of the Constitution has power to set aside a, notice issued under section 147 of the Income tax Act, 1961, if the condition precedent to the exercise of the jurisdiction does not exist. The Court may, in exercise of its powers, ascertain whether the Income tax Officer had in his possession any information: the Court may also determine whether from that information the Income tax Officer may have reason to believe that income chargeable to tax had escaped assessment. But the jurisdiction of the Court extends no further. Whether on the information in his possession he should commence 14 a proceeding, for assessment or reassessment, must be decided by the Income tax Officer and not by the High Court. The Incometax Officer alone is entrusted with the power to administer the Act: if he has information from which it may be said, prima facie, that lie had reason to believe that income chargeable to tax had escaped assessment, it is not open to the High Court, exercising powers under article 226 of the Constitution, to set aside or vacate the notice for reassessment on a re appraisal of the evidence. The High Court in this case was apparently of the view that the information in consequence of which proceedings for reassessment were intended to be started, could have been gathered by the Income tax Officer in charge of the assessment in the previous years from the disclosures made by the two Hindu undivided families. But that, in our judgment, is wholly irrelevant. Justification of the Income tax Officer to reassess income arises if he has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment. That information, must, it is true, have come into the possession of the Income tax Officer after the previous assessment, but even if the information be such that it could have been obtained during the previous assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the Income tax Officer is not affected. The High Court was also of the view that the inference raised by the Income tax Officer that the Hindu undivided families of the assessees had made profit by sale of articles purchased from the assessees larger than the profit which the assessees had made, was not justified, since there was no evidence on the record about the price at which similar goods were sold by the assessees to other merchants and about the profit which those other merchants made by sale of those goods. But in a petition under article 226 of the Constitution the taxpayer may challenge the validity of a notice under section 147 of the Income tax Act, 1961, on the ground that either branch of the condition precedent does not exist, but an investigation whether the inferences raised by the Income tax Officer from the information are "correct or proper" cannot be made. Counsel for the Commissioner is, therefore, right in contending that the High Court entered upon an investigation of matters which were not within their competence. But the appeal of the Commissioner must still fail. The case of the Commissioner on the materials placed before the High Court, suffers from a serious infirmity on the first branch of the jurisdictional condition. The averments made in the affidavit filed by the Income tax Officer in that behalf do not establish the existence of that branch of the condition. In reply to the averment by the 15 assessees that the Income tax Officer had no reason to believe that income had escaped assessment, the Income tax Officer stated: "In the course of the discussions I had at the several meetings hereinabove referred, I also learnt that in the earlier years also the petitioners (the assessees) had effected such sales to the said Hindu undivided families, and that over and above the margin of profits earned by the petitioners (the assessees) from the Hindu undivided families, the Hindu undivided families had earned substantial profits on the resale of such goods. 1, therefore, came to the conclusion that the creation of the Hindu undivided family business was merely a subterfuge or a contrivance by the partners of the petitioner firm (the assessees) to divert the huge profits made by the petitioners (the asses sees) on imported articles". The plea raised by the Income tax Officer is that income which could have been earned by the assessees was not earned, and a part of that income was earned by the Hindu undivided families. That according to the Income tax Officer was brought about by "a subterfuge or contrivance". Counsel for the Commissioner contended that if by resorting to a "device or contrivance", income which would normally have been earned by the assessee is divided between the assessee and another person, the Incometax Officer would be entitled to bring the entire income to tax as if it had been earned by him. But the law does not oblige a trader to make the maximum profit that he can out of his trading transactions. Income which accrues to a trader is taxable in his hands: income which he could have, but has not earned, is not made taxable as income accrued to him. By adopting a device, if it is made to appear that income which belonged to the assessee had been earned by some other person, that income may be brought to tax in the hands of the assessee, and if the income has escaped tax in a previous assessment a case for commencing a proceeding for reassessment under section 147(1)(b) may be made out. Avoidance of tax liability by so arranging commercial affairs that charge of tax is distributed is not prohibited. A taxpayer may resort to a device to divert the income before it accrues or arises to him. Effectiveness of the device depends not upon considerations of morality, but on the operation of the Income tax Act. Legislative injunction in taxing statutes may not. except on peril of penalty, be violated, but it may lawfully be circumvented. If the goods were nominally transferred to the Hindu undivided families the latter acting merely as benamdars for the assessees, and the profits were earning in truth by the assessees, income earned by sale of the goods by the Hindu undivided families may be held chargeable to tax as income which has escaped assessment to tax in 16 the hands of the assessees. In the present case,, no such case was attempted to be made out in the affidavit filed by the Income tax Officer. We hold, therefore, that on the materials on the record, the Income tax Officer. had no reason to believe that income chargeable to tax had escaped assessment for the three years in question. The order passed by the High Court is therefore confirmed. There will, however, be no order as to costs in this Court and the High Court. G.C. Appeal dismissed.

IN-Abs

The assessee firm consisted of two partners who were managers of their respective Hindu Undivided Families. The firm sold its goods to the aforesaid families and the families again sold the goods on their own account. In income tax proceedings for the years 1959 60, 1960 61 and 1961 62 the firm and the Hindu Undivided Families were separately assessed in respect of their incomes. Subsequently the Income tax Authorities took view that the sale of goods by the firm to the families was only a device to divert the profits of the firm and on this view issued notices under section 147 of the Incometax Act, 1961 requiring the assessee to show cause why the assessments for the years 1959 60, 1960 61 and 1961 62 should not be reopened. The High Court of Gujarat in a petition for a writ under article 226 of the Constitution quashed those notices and restrained the Income tax Officer from taking proceedings in pursuance thereof. With special leave granted by this Court, the Revenue appealed. Held:(i) The High Court may issue a high prerogative writ prohibiting the Income tax Officer from proceeding with reassessment when it appears that the Income tax Officer had no jurisdiction to commence proceedings because the conditions precedent do not exist. [12G H; 13B C] Calcutta Discount Co. Ltd. vs Income tax Officer, Companies District 1, Calcutta, & Anr. , followed. It is however not open to the High Court exercising powers under article 226 to set aside or vacate the notice for reassessment by itself re appraising the evidence. [15B] (ii)The condition which invests the Income tax Officer with jurisdiction has two branches: (i) that the Income tax Officer has reason to believe that income chargeable to tax has escaped assessment; and (ii) that it is in consequence of information which he has in his possession and that he has reason so to believe. The expression 'information ' in the context of which it occurs must mean instruction or knowledge derived from an external source concerning facts or particulars, or as to law relating to a matter bearing on the assessment. If he has such information the Income tax Officer may commence proceedings under section 147(1)(b). But to commence such a proceeding it is not necessary that on the materials which came to the notice of the Income tax Officer, the previous order of assessment was vitiated by some error of fact or law. [13C G] (iii)In the present case however the pre conditions for the issue of a notice of re assessment did not exist. The law does not oblige a trader to make the maximum profit that he can out of his 11 trading transactions. Income which accrues to a trader is taxable in his hands: income which he could have, but has not earned is not made taxable as income accrued to him. Avoidance of tax liability by so arranging commercial affairs that charge of tax is distributed is not prohibited. [15D G]

Appeal No. 1984 of 1966. Appeal from the judgment and order dated January 2, 1964 of the Madras High Court in T.C. No,. 153 of 1962. section Swaminathan and R. Gopalakrishnan, for the appellant. Veda Vyasa, A. N. Kirpal, R. N. Sachthey and section P. Nayar, for the respondent. The Judgment of the Court was delivered by Ramaswami, J. This appeal is brought from the judgment of the Madras High Court dated January 1, 1964 in Tax Case No. 153 of 1962. The asessment year involved in this appeal is 1948 49, the corresponding previous year being the financial year 1947 48. For the accounting period from November 13, 1947 to November 1, 1948 which was the corresponding previous year for the assessment year 1949 50 there was shown a credit of Rs. 25,000 in the capital account of the appellant. On November 13, 1947, this amount was credited in the books of the appellant. On October 30, 1948 this amount was transferred to the account of one Amrithlal. Ranchoodas, the father in law of the appellant. The Income tax Officer included the said amount as income of the appellant from undisclosed sources in the assessment for the assessment year 1949 50. On appeal to the Appellate Assistant Commissioner the appellant contended that the amount could not be included in the assessment year 1949 50 because the credit appeared prior to March 31, 1948. The Appellate Assistant Commissioner allowed the appeal holding that the credit came into the books of the appellant on November 13, 1947, i.e., in the financial year 1947 48 which is the previous year for the assessment year 1948 49. On this finding, the Appellate Assistant Commissioner deleted the addition of Rs. 25,000 from the assessment of the appellant for the year 1949 50. In doing so, the Appellate Assistant Commissioner followed the decision in C.1.T. vs 19 P.Darolia & Sons(1). Consequently on November 3, 1958 the, Income tax Officer issued a notice under section 34(1)(a) of the Incometax Act, 1922, (hereinafter referred to as the. 'Act ' to the appellant for the assessment year 1948 49. By his order dated April 20, 1959 he rejected the contention of the appellant that the assessment was barred by limitation and assessed the sum of Rs. 25,000 as income from other sources. The appellant took the matter in appeal to the Appellate Assistant Commissioner who, by his order dated February 23, 1960, allowed the appeal. He took the view that there was no finding in the order of the Appellate Assistant Commissioner that the credit represented the income of the appellant or that the same credit should be assessed in the assessment year 1948 49. He further held that the notice under section 34 issued on November 3, 1958 was bad in law and was not saved by the second proviso to section 34(3) of the Act. The Commissioner of Incometax preferred an appeal against the order of the Appellate Assistant Commissioner to the Income tax Appellate Tribunal which allowed the appeal, holding that "the order of the Appellate Assistant Commissioner in the appeal against the assessment for 1949 50 should be taken to contain a finding that the sum of Rs. 25,000 represented income of the assessee to be considered in the assessment year 1948 49". At the instance of the appellant the Appellate Tribunal referred the following questions of law for the opinion of the High Court under section 66(1) of the Act: "(1) Whether on the facts and in the circumstances of the case, the proceedings initiated against the assessee for the assessment year 1948 49 under section 34 and the assessment for the said year are barred by limitation and. hence not lawful? (2) Whether the proceedings initiated against the assessee for the assessment year 1948 49 under section 34 and the assessment made under section 34 for the assessment year 1948 49 could be justified in law as for the purpose of giving effect to, a finding or directions in the order of the Appellate Assistant Commissioner in I.T.A. No. 134 of 1958 59? (3) Whether on the facts and in the circumstances of the case, the assessment made is saved from the bar of limitation under the second proviso to section 34(3)?" By its judgment dated January 2, 1964, the High Court answered the questions in favour of the respondent and against the appellant. The High Court followed an earlier decision in A.S. Khader Ismail vs Income tax officer(1), in which it had held that the word "finding" in the proviso to section 34(3) of the Act must be given a (1) (2) 20 wide significance so as to include not only findings necessary for the disposal of the appeal but it would apply to cases where it is held that the income in question was in respect of an earlier year which was not the subject matter of the appeal before the appellate authority. On behalf of the appellant Mr. Swaminathan put forward the argument that the decision of the High Court is contrary to the view taken by this Court in Income tax Officer, A Ward, Sitapur vs Murlidhar Bhagwan Das(1) in which it was held that the expressions "finding" and "direction", in the second proviso to section 34(3), meant respectively, a finding necessary for giving relief in respect of the assessment for the year in question, and a direction which the appellate or revisional authority, as the case may be, was empowered to give under the sections mentioned in that proviso. A "finding", therefore, could only be that which was necessary for the disposal of an appeal in respect of an assessment of a particular year. The Appellate Assistant Commissioner might hold, on the evidence, that the income shown by the assessee was not the income for the relevant year and thereby exclude that income from the assessment of the year under appeal. The finding in that context was that the income did not belong to the relevant year. He might incidentally find that the income belonged to another year, but that was not a finding necessary for the disposal of an appeal in respect of the year of assessment in question. It was further held that the second proviso to section 34(3) did not save the time limit prescribed under section 34(1) in respect of an escaped assessment of a year other than that which was the subject matter of the appeal or revision, as the case may be, and accordingly the notice issued under section 34(1) (a) in that case was barred by limitation and was not saved by the second proviso to section 34(3). In the course of its judgment this Court overruled the judgment of the Madras High Court in A. section Khader Ismail vs Income tax Officer(1). It follows therefore that the view taken by the High Court in the present case is not correct in law and must be overruled. On behalf of the respondent, however, Mr. Veda Vyasa con tended that in answering the reference the effect of section 2 of the Income tax (Amendment) Act (Act 1 of 1959) must be taken into consideration and in view of the amendment made by that section of the amending Act the questions referred to the High Court must be answered necessarily against the appellant. Section 2 of the Amendment Act. 1959 inserted in section 34 of the Act a new sub section (4) which provides: "A notice under clause (a) of sub section (1) may be issued at any time notwithstanding that at the time of the issue of the notice the period of eight years specified (1)52 I.T.R. 335. (2) 21 in that subsection before its amendment by clause of section 18 of the Finance Act, 1956 (18 of 1956), had expired in respect of the year to which the notice relates. Section 4 of the Amending Act, 1959 read as follows: "No notice issued under clause (a) of sub section (1) of section 34 of the principal Act at any time before the commencement of this Act and no assessment, reassessment or settlement made or other proceeding taken in consequence of such notice shall be called in question in any court, tribunal or other authority merely on the ground that at the time the notice was issued or at the time the assessment or re assessment was made the time within which such notice should have been issued or the assessment or re assessment should have been made under that section as in force before its amendment by clause (a) of section 18 of the Finance Act, 1956 (18 of 1956), had expired. " Mr. Veda Vyasa referred to the decision of the Bombay High Court in Onkarmal Meghraj vs C.I.T. Bombay I.(1) in which it was held that there was nothing in section 2 or 4 of the Amendment Act of 1959 to restrict the terms of the words "at any time" occurring in section 4 of that Act as meaning "at any time after April 1, 1956", viz., the date on which the amendments made by the Finance Act, 1956, came into force and there was nothing in the provisions of the Amendment Act of 1959 which limited the retrospective operation of section 4. It was also held that since the enactment of the Amendment Act of 1959 a notice issued after April 1, 1956, for reopening an assessment, by virtue of section 4, could not be permitted to be called in question on the ground that the notice was not issued within the period prescribed by the unamended section 34(1)(a). On behalf of the respondent reference was also made to the decision of this Court in section C. Prashar vs Vasantsen Dwarkadas,(2) in which it was held that section 4 of the Amendment Act, 1959 operated on and validated notices issued under section 34(1)(a) as amended in 1948 even earlier than April 1, 1956, in other words, in respect of assessment years prior to March 31, 1956. and therefore notices issued under section 34(1)(a) of the Income tax Act before April 1, 1956, could not be challenged on the ground that they were issued beyond the time limit of eight years from the respective assessment years prescribed by the 1948 amendment. On behalf of the appellant Mr. Swaminathan raised the objection that the point was not taken up by the respondent in the High Court, nor was there any reference to it in the statement of the case tiled by the respondent. It was also contended that the point raised was outside the scope of the questions of law referred by the Appellate Tribunal to the High Court. We do not think there is any substance in the (1) (2 ) ; 22 objection raised on behalf of the appellant. One of the questions referred to the High Court is "whether on the facts and in the circumstances of the case the assessment made is saved from the bar of limitation under the second proviso to section 34(3)?" It is true that the impact of the Amending Act, 1959 (Act 1 of 1959) was not raised before the Appellate Tribunal or before the High Court, but it is not a separate question by itself and is only an aspect of the question of limitation which has already been referred by the Appellate Tribunal to the High Court. As pointed out in CI.T. Bombay V. Scindia Steam Navigation Co. Ltd.,(1) the question of law referred to the High Court under section 66 may be a simple one having its impact on one point, or it might be a complex one, involving more than one aspect and requiring to be tackled from different standpoints. All that section 66(1) requires is that the question of law which is referred to the High Court and which the High Court is to decide must be the question which was in issue before the Tribunal. Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal, and it will be an over refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 66(1) of the Act. In our opinion, the argument of the respondent with regard to the legal effect of the Amending Act of 1959 (Act 1 of 1959) is within the frame work of the question already referred to the High Court and it is therefore competent to this Court, in a case of this description, to allow a new contention to be advanced. It is, however, necessary that the case should be remanded to the High Court for examining the question of law referred to it after 'considering the impact of the Amending Act of 1959 (Act 1 of 1959). For these reasons we allow this appeal, set aside the judg ment of the High Court dated January 2, 1964 and remand the case to it for further hearing and answering the reference in light of the Income tax Amending Act 1 of 1959. In the circumstances of the case we direct that the respondent should pay the cost of this appeal in this Court, Appeal allowed.

IN-Abs

There was a cash credit in November 13, 1947, in the capital, account of the Appellant assessee whose accounting period was from November 13, 1947 to November 1, 1948. The Income tax Officer assessed the said credit as income from undisclosed sources in the assessment for the assessment year 1949 50. The Appellate, Assistant Commissioner relying on C.I.T. vs Darolia & Sons. held that the amount was not taxable in the assessment year 1949 50. The Income tax Officer thereupon assessed the amount in 1948 49 after having issued in November 1958 a notice under section 34(1) (a) of the Indian Income ' tax Act, 1922. He rejected the appellant 's contention that notice under the said section was timebarred. In appeal the Appellate Assistant Commissioner held that in the earlier appeal there was no finding that the credit represented the assessee 's income or that it should be assessed in the year 1948 49 and that consequently the notice under section 34 issued in November 1958, was not saved by the second proviso to section 34(3) of the Act. The appeal filed by the Revenue was allowed by the Tribunal and in reference the Madras High Court relying on its own ruling in A.S. Khader Ismail vs Income tax Officer, upheld the order of the Tribunal. The appellant came to this Court and relied on this Court 's decision in Income Tax Officer A Ward Sitapur vs Murlidhar Bhagwandas in which the aforesaid Madras decision had been overruled. The Revenue urged that in answering the reference the effect of section 2 of the Income tax (Amendment) Act 1959 must be taken into consideration. To this the appellant objected that the point was outside the scope of the questions of law referred by the Appellate Tribunal to the High Court. HELD:(i) The view taken by the Madras High Court as to the scope of the word 'finding ' in A. section Khader Ismail 's case and followed by it in the present case had been overruled, by this Court. Accordingly the department could not take advantage of the second proviso to section 34(3). [20E F] Income Tax Officer, A Ward Sitapur vs Murlidhar Bhagwan Das, , applied (ii)However, the impact of section 2 of the Amending Act of 1959 had to be considered before the reference could be properly answered. Although the question had not been raised before the Tribunal or the High Court it was only an aspect of the question of limitation which had been referred. All that section 66(1) requires is that the question of law which is referred to the High Court and which the High Court is to decide must be the question which was in issue before 18 the Tribunal. When the question itself was under issue there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal and it will be an over refinement of the position to hold that each aspect of a question is itself a distinct question for the purpose of section 66(1) of the Act. [22B D] C.I.T. Bombay vs Scindia Steam Navigation Co. Ltd. 42 I.T.R. 589, applied. Onkarmal Mehraj vs C.I.T., Bombay 1, , and section C. Prashar vs Vasantsen Dwarkadas, ; , referred to. [On the above view the case was remanded to the High Court for examining the question of law referred to it after considering the impact of the Amendment Act of 1959.]

Appeal No. 2162 of 1966. Appeal from the judgment and order dated September 6, 9, 1963 of the Gujarat High Court in Income tax Reference No. 9 of 1963. B. Sen, A. N. Kirpal, R. N. Sachthey and section P. Nayar, for the appellant. I. N. Shroff, for the respondent. The Judgment of the Court was delivered by Shah, J. By an agreement dated October 29, 1928 Ciba (India) Ltd. hereinafter called 'the principals ' appointed one Tejaji Farasram Kharawalla selling agent for the District of Ahmedabad in respect of certain kinds of dyes and dye stuffs, and agreed to pay him commission at the rate of 12 1/2% on sales by him of dyes and dye stuffs of the principals. The commission was to include " all charges in connection with the upkeep of offices and godown, turnover rebates and contingency expenses etc. " The terms relating to commission were modified by agreement dated August 20, 1935 and out of the commission agreed to be paid, 71% was to be treated as the selling commission and 5% was to be treated as compensation in lieu of the contingency expenses which the selling agent had to meet, "such as commission to Dyeing Masters, agents etc.". The rights of the selling agent were assigned with the consent of the principals to the respondent Company with effect from October 27, 1947. In assessing the income of the Company for the assessment year 1949 50, the Income tax Officer included in the taxable income Rs. 58,025/ being the difference between Rs. 1,90,538/ received by the Company as "5% commission" and Rs. 1,32,512/ spent by the Company for meeting the charges which the selling agent was to meet. The Income tax Appellate Tribunal, however, upheld the contention of the Company that in the computation of the income of the Company, the "5% commission" was wholly exempt by virtue of section 4 (3)(vi) of the Income tax Act, 1922. The Commissioner then moved the Tribunal to draw up a statement of the case and to refer the following question to the High Court of Judicature at Bombay: "Whether on the facts of the case, a portion viz. 5 of the selling agency commission of 12 1/2% received by the assessee company from M/s Ciba Ltd. in the course of carrying on the selling agency business is exempt from tax under section 413(vi) of the Act?" But the Tribunal only referred the following question: "Whether the assessee company held an office or employment of profit within the meaning of section 4(3)(vi) of the Indian Income tax Act?" 39 The application preferred by the Commissioner to the High Court for calling upon the tribunal to submit a statement on the question originally submitted was rejected, and the High Court answered the question referred by the Tribunal in the affirmative, observing that it had been conclusively determined by their earlier decision in Tejaji Farasram Kharawalla vs Commissioner of Income tax, Bombay (Mofussil)(1) which arose out of a proceeding for assessment to tax of the income of the original selling agent under the same agency agreement. It appears that in so observing the Court was under some misapprehension, for the question referred by the Tribunal had not been decided in the earlier judgment. Against the order passed by the High Court recording an answer in the affirmative on the question referred by the Tribunal and against the order dismissing the notice of motion, the Commissioner appealed to this Court. This Court set aside the order passed by the High Court dismissing the application of the Commissioner and without expressing any opinion on the correctness or otherwise of the answer recorded by the High Court on the question referred by the Tribunal, remanded the case to the High Court with a direction that the Tribunal be called upon to state a case on the question raised in the application of the Commis sioner. The case was then heard by the High Court of Gujarat to which it stood transferred because of the reorganisation of the State of Bombay. The High Court of Gujarat held that the "5% commission" received by the Company represented a special allowance to meet expenditure "such as commission to Dyeing Masters, agents etc.", and was on that account exempt from tax. The High Court also held that the Company held an office or employment of profit. The Commissioner has again appealed to this Court against the answers recorded by the High Court on the original and supplementary question. Section 4(3)(vi) of the Indian Income tax Act, 1922, as it stood in the year of assessment read as follows: "Any income, profits or gains failing within the following classes shall not be included in the total income of the person receiving them: (vi) Any special allowance, benefit or perquisite specifically granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit. " The clause grants exemption in respect of expenses "incurred": but on that account an allowance granted to meet expenses to be incurred in future in the performance of the duties of an (1) 40 office or employment of profit is not outside the exemption claimed. In the context in which the expression "incurred" occurs, it undoubtedly, means "incurred or to be incurred". To qualify for exemption the allowance must it is clear be granted to meet expenses incurred or to be incurred wholly and necessarily in the performance of the duties of an office or employment of profit. But the purpose for which the allowance is granted, in our judgment, is alone not determinative of the claim to exemption. An allowance though made to a person holding an office or employment of profit intended for appropriation towards expenditure incurred or to be incurred in the discharge of the duties, does not constitute any real income of the grantee. It is in truth expenditure incurred by the employer through the agency of the grantee. The intention of the framers of the Act was to grant exemption in respect of amounts received by the assessee, not for his own benefit, but for the specific purpose of meeting the expenses wholly and necessarily incurred or to be incurred in the performance of his duties as an agent. It would, therefore, be reasonable to hold that the allowance granted to meet the expenses wholly and necessarily incurred or to be incurred in the performance of the duties of the office or employment of the grantee alone qualifies for exemption under the Act, and any surplus remaining in the hands of the grantee after meeting the expenses does not bear the character of the allowance for meeting expenses but for performing the duties of the office or employment. This would be so even if the employer has disabled himself from demanding refund of the amount not expended for meeting the expenses incurred or to be incurred in the performance of the duties of an office or employment of profit, and the surplus remaining in the hands of the grantee acquires for the purpose of the Incometax Act the character of additional remuneration. We are unable to agree with the decision of the Bombay High Court in Tejaji Farasram Kharawalla 's case(1) that the object with which the grant is made by the employer determines the claim to exemption under section 4(3)(vi) of the Income tax Act. The observations made by Chagla, C.J., at p. 267 that "what is emphasized in this sub clause section 4(3)(vi) is the purpose of the grant, the object with which the grant was made. Once it is established that the grant was for that particular purpose, it is no longer necessary for the assessee to prove that in fact he expended that grant for the purpose for which it was given. He may spend more, or he may spend less, but qua that grant which is given. for a particular purpose, he is entitled to the exemption", do not, in our judgment, give due effect to the key words "to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit. " What is exempted is not the consideration paid for meeting the expenditure incurred ' or to be incurred in the performance of the duties of an office or (1) 41 employment:the exemption operates only in respect of a special allowance or benefit specifically granted to meet expenses wholly and necessarily incurred in the discharge of the duties of the office or employment. The judgment of the Allahabad High Court in Commissioner of Income tax, U. P. vs Sharma & Company(1) and especially the observations of Pathak, J., on which reliance was placed by counsel, for the Company may also be referred to. In Sharma & Company 's case(1) the assessee firm which was the sole selling agent of a "cotton mill", received a sum exceeding Rs. 67,000/ from the owners of the mills for the purpose of meeting the expenses in connection with the management of a retail cloth shop on behalf of the mill and actually spent only Rs. 12,641/ . The claim of the firm that it was entitled to exemption from liability to pay tax under section 44(3)(vi) of the Act (before it was amended in 1955) even in respect of the balance retained by it was upheld by the High Court of Allahabad. Pathak, J., observed that section 4(3)(vi), as it then stood, required the Income tax Officer to enquire whether the purpose of the grant was covered by the language of the clause, and he was not concerned to determine whether the amount granted was actually expended by the recipient. The learned Judge in so holding was impressed by two considerations: that the expression "incurred" means incurred already, or to be incurred in future; and that income tax being an annual tax in a case where the allowance is an ad hoc allowance which is to cover a period longer than or ending after the year of account, or is a periodical allowance, the Income tax Officer may under the Act exempt expenditure incurred in the year of account and no more, and thereby the intention of the employer would be wholly frustrated and the employee may be called upon to pay tax on a receipt which is not his income. The expression "incurred" means for reasons already set out incurred or to be incurred. But that has no bearing on the question whether the unexpended surplus in the hands of the employee is taxable. And we do not feel impressed by the second consideration. The allowance may be in respect of a period longer than the accounting year or which runs into the succeeding accounting year or years. But on that account the whole receipt reduced by the expenses actually incurred in the year of account is not liable to be brought to tax. If it appears from a review of the circumstances that a special allowance is made for a period longer than the year of account, or that the period covered by the grant of a special allowance extends beyond the close of the account year, it would, in our judgment, be the duty of the income tax Officer to determine the amount allowed in respect of the year of account in which the expenditure has been incurred, and the difference between the amount so determined and the amount actually expended would alone be brought to tax. (1) 42 It may be noted that the Parliament has by the Finance Act, 1955, with effect from April 1, 1955, recast cl. (vi) of section 4(3) of the Income tax Act, 1922 and has expressly provided that the special allowance granted to meet expenses wholly and necessarily incurred in the performance of the duties of an office or employment of profit to the extent to which such expenses are actually incurred for that purpose, was exempt from tax. The Legislature, by the amendment made it clear that only the expenses actually incurred by the assessee will be exempted under section 4(3)(vi). But the principle that an amount granted to cover expenses to be incurred for a period which extends beyond the year of account in which the grant is received will be allocated between the year of account and the period outside the year of account will apply to the Act as amended. There is no doubt that the selling agent under the agreement with the principals holds an employment for profit. No argument to the contrary was advanced before us. It is unnecessary therefore to consider the elaborate judgment of the High Court on the question whether the selling agent holds an office within the meaning of section 4(3) (vi) of the Act. The appeal is therefore allowed and the answer recorded by the High Court to the supplementary question is discharged, and the following answer to the supplementary question is recorded: "That portion of 5 per cent of the selling agency commission received by the assessee company is exempt under section 4 (3) (vi) of the Income tax Act, 1922, which is wholly and necessarily incurred in the year of account in the performance of the duties of the company as selling agent. " There will be no order as to costs in this appeal in this Court and in the High Court. G.C. Appeal allowed.

IN-Abs

The respondents were selling agents for the goods manufactured by another company. They were paid 7 1/2% on the sales as selling commission and 5% as contingency expenses. The question in income tax proceedings was whether the amount not spent out of the grant for contingency expenses was exempt from taxation by virtue of s, 4(3) (vi) of the Indian Income tax Act, 1922. The High Court in reference held that the "5% commission" received by the respondents represented a special allowance to meet expenditure and was on that account exempt from tax. The Revenue appealed. HELD,: (i) In the context in which: the expression 'incurred ' occurs in section 4(3) (vi) it undoubtedly means 'incurred or to be incurred '. To qualify for exemption the allowance must be granted to meet expenses incurred or to be incurred wholly and necessarily in the performance of the duties of an office or employment of profit. [41A] (ii) In framing section 4(3) (vi) the intention of the framers of the Act was to grant exemption in respect of amounts received by the assesses, not for his own benefits but for the specific purpose of meeting the expenses wholly and necessarily incurred or to be incurred in the performance of his duties as agent. It would therefore be reasonable to hold that the allowance granted to meet the expenses wholly and necessarily incurred or to be incurred in the Performance of the duties of the office or employment of the grantee alone qualifies for exemption under the Act, and any surplus remaining in the hands of the grantee after meeting the expenses does not bear the character of the allowance for meeting expenses. This would be so even if the employer has disabled himself from demanding refund of the amount not expended for meeting the expenses incurred or to be incurred in the performance of the duties of an office of employment or profit, and the surplus remaining in the hands of the grantee acquires for the purpose of the Income tax Act the character of additional remuneration. [40C E] Tejaji Farasram Kharawala vs Commissioner of Income tax. Bombay (Mofussil), , disapproved. (iii) The allowance may be in respect of a period longer than the accounting year or years. But on that account the whole receipt reduced by the expenses actually incurred in the year of account is not liable to be brought to tax in that year. In such a case it will be the duty of the Income tax Officer to determine the amount allowed in respect of the year of account in which the expenditure has been incurred and the difference between the amount so determind and the amount actually expended would alone be brought to tax. [41G] The position in this respect remains the same even after the amendment of section 4(3) (vi) by the Finance Act, 1955. [41B] 38 Commissioner of Income tax, U.P. vs Sharma & Company. , disapproved.

Appeal No. 596 of 1966. Appeal by special leave from the judgment and order dated January 27, 1964 of the Allahabad High Court in Special Appeal No. 270 of 1958. section T. Desai and C. P. Lal, for the appellant. C. B. Agarwala and J. P. Agarwal, for the respondent. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the High Court of Allahabad accepting a petition under article 226 of the Constitution and directing the District Board, Moradabad, not to levy upon M/s Nundan Sugar Mills,, Amroha, respondent before us, circumstances and property tax for any one year exceeding the sum of Rs. 200. The High Court held that no special resolution of the Board had been passed, nor had a notification been made imposing the tax, under section 119 and section 120, respectively, of the United Provinces District Boards Act, 1922 (U. P. Act of 1922) hereinafter referred to as the Act. The relevant facts out of which this appeal arises are these On July 28, 1925, it was notified under sub section (2) of section 120 of the Act that the District Board of Moradabad, in exercise of the powers conferred by section 108, sub section (2), of the Act has imposed the following tax, with effect from September 1, 1925: "A tax on. all persons ordinarily residing or carrying on business in the rural area of the Moradabad District according to their circumstances and property, at the rate of four pies per rupee on the total taxable income; provided that the total amount of tax imposed on any person shall not exceed Rs. 200. Provided also that no income once assessed shall be reassessed". On May 28, 1927, the District Board took action upon a memo randum prepared by the Chairman of the District Board. The memorandum of the Chairman pointed out: ". . the maximum amount of tax recoverable from an assessee should be raised from Rs. 200/ to Rs. 500/ P.A. Hence proposal (c) framed under section 115 sanctioned by G. 0. No dated 28 7 25 so be modified as to read as under: "That there shall be a rate of tax 4 pies in the rupee. provided that the total amount of tax imposed on any person shall not exceed Rs. 5001 The resolution of the Board was in these terms: "The bye laws be modified accordingly after necessary publication and sanction. The assessing officer to assess them at 2 pies (sic) in anticipation of final sanction". 3 On January 11, 1928, the Government of United Provinces issued a, notification amending the rules for the assessment and collection of a tax on circumstances and property in the rural areas of the Moradabad District. The following rule 16 was added: "16. The total amount of tax imposed on any person shall not in any year exceed the sum of Rs. 5001 . " On August 31, 1931, the Board passed another resolution approving the following memorandum: ". . The words and figures 'Rs. 500 ' be substituted by 'Rs. 2,000 ' in rule 16 of the rules for the assessment and collection of a tax on circumstances and property in the rural area of the Moradabad district published with Government Notification No. . dated 11 1 1928". The exact terms of the resolution were: "Resolved unanimously that thememo. be approved and necessary action be taken on it. If publication is required, it be done and Government be moved to accord sanction for the same". On March 18, 1932, the Government of United Provinces issued a notification amending rule 16. The amendment it was in the following terms: "In Rule 16 published with notification No. 33/IX185(14 24) dated January 19, 1928 'Rs. 2,000 ' shall be substituted for 'Rs. 500". It appears that no further action was taken by the District Board to enforce this amendment in rule 16 or the amendment dated January 11, 1928. Further action is contemplated by sections 119 and 120, read with section 12 1, of the Act. These sections may be reproduced in full. " 119. Resolution of board directing imposition of tax Upon receipt of the copy of the rules sent under the preceding section, the board shall by special resolution direct the imposition of the tax with effect from a date (to be specified in the resolution) not less than six weeks from the date of such resolution". " 120. Imposition of tax (1) A copy of the resolution passed by the board under Section 119 shall be submitted to the State Government. (2) Upon receipt of the copy of the resolution the State Government shall notify in the official Gazette the imposition of the tax from the appointed date, and the imposition of a tax shall in all cases be sub ject to the condition that it has been so notified. (3) A notification of the imposition of a tax Linder sub section (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act". 4 "121. Procedure for altering taxes The procedure for abolishing or suspending a tax, or for altering a tax in respect of the matters specified in clauses (b) and (c) of sub section (1) of Section 115 shall, so far as may be, be the procedure prescribed by Sections 115 to 120 for the imposition of a tax". Clauses (b) and (c) of sub section (1) of section 115, referred to in section 121, read: "(b) the persons or class of persons to be made liable and the description of the property or other taxable thing or circumstances in respect of which they are to be made liable, except where and in so far as any such class ,or description is already sufficiently defined under clause (a) or by this Act , (c) the amount or rate leviable from each such person or class of persons;" It is common ground that the procedure laid down in sections II 5 to 118 has been followed by the Board. The only dispute between the parties is whether it is necessary that a resolution should be passed under section 119 and a notification issued under section 120 before effect can be given to a notification made under section 118 altering the rules. In other words, was it necessary to pass a resolution under section 119 after the issue of the notification dated March 18, 1932, or the notification dated January 11, 1928, referred to above? Both the learned Single Judge, and the Division Bench who heard the appeal from the learned Single Judge, have come to the conclusion that without a resolution under section 119 and a notification under section 120, no tax can be levied in pursuance of the notification dated March 18, 1932, or notification dated January 11, 1928. It may be mentioned that the High Court directed the District Board not to levy upon the petitioner circumstances and property tax for any year exceeding the sum of Rs. 200/ . There is no dispute that the Board could levy upon the petitioner tax up to the sum of Rs. 200/ . The learned counsel for the appellant contends that if the procedure laid down in sections 115 to 118 has been followed, it is not necessary that there should be a resolution under section 119 and a notification under section 120. He says that rules can be made under section 172, read with section 1.76, of the Act, and once rules are made there is nothing more to be done. But there is one fallacy underlying the argument of the learned counsel, and that is that it misses the object of sections 119 and 120 which is to fix the date from which the tax can be imposed. If no date is fixed, no tax can be imposed. Once the Board passes a special resolution under section 119, it has to go to the Government under section 120, and then the Government notifies the imposition of tax from the appointed date. It is then that the notification becomes conclusive proof of the fact that the 5 tax has been imposed in accordance with the provisions of this Act. Sub clause (3) of section 120 clearly proceeds on the basis that the imposition of tax takes place on a notification issued under section 120 and not on the issue of a notification under section 118. The learned counsel invited our attention to Raza Buland Sugar Co. Ltd. vs Municipal Board, Rampur(1) but we are unable to see how that case assists him. No question of sections 119 and 120 being directory arises in this case because, in our view, without a resolution under section 119 and a notification under section 120, no tax can be imposed. The learned counsel also urges that: (a) no writ petition is maintainable challenging a preConstitution matter, and (b) the respondent not having appealed under section 128 of the Act, the petition was not maintainable. In our view, there is no merit in these contentions. The respondent is being charged tax now. He is entitled not to be taxed except under the authority of law, vide article 265 of the Constitution. There is no question of challenging any pre Constitution matter. The respondent is challenging a post Constitution action on the ground that there is no authority of law for the action. Regarding the second point, the High Court held that an appeal to the District Magistrate under section 128 was not likely to be of much assistance to the petitioner and rejected the contention. It is well settled that a, provision like section 128 does not oust the jurisdiction of the High Court to entertain a petition under article 226 and it is for the High Court to exercise its discretion whether to entertain the petition or not. The learned counsel has not pointed out anything to us to show that the discretion has not been properly exercised. In the result the appeal fails and is dismissed with costs.

IN-Abs

In July 1925 it was notified under section 120(2) of the U. P. District Boards Act, 1922 that the District Board of Moradabad in exercise of powers conferred by section 108(2) of the Act had imposed a tax with effect from September 1, 1925, on the residents of the District according to their circumstances and property at the rate of 4 pice per rupee on the total taxable income subject to a maximum of Rs. 200. In May 1927 the District Board passed a resolution increasing the maximum from Rs. 200 to Rs. 500 and thereafter the State Government issued a notification in January 1928, amending the rules for the assessment and collection of tax so as to increase the maximum to Rs. 500. In August 1931, the Board passed another resolution in creasing the maximum further to Rs. 2,000 and the State Government issued a notification in March 1932 further amending the rules so as to incorporate the new maximum. No further action was taken by the District Board to enforce these amendments of the rules. Upon a writ filed by the respondents under Act, 226 of the Constitution, the High Court directed the District Board, Moradabad, not to levy upon the respondent a tax in excess of Rs. 200 per year on the ground that no special resolution of the Board had been passed nor a notification issued by the State under sections 119 and 120 respectively of the Act imposing the tax with revised maximum limits. In appeal to the Supreme Court it was contended on behalf of the appellant that when the procedure laid down in sections 1.15 to 118 had been followed whereby the amendments had been approved by resolutions and notified, it was not necessary that there should be a further resolution and notification under section 119 and section 120 respectively. Held: The tax with the revised maximum limits introduced in 1928 and 1932 could not be imposed without a resolution under section 119 and a notification under section 120. [5B] The object of sections 119 and 120 is to fix the date from which the tax can be imposed. If no date is fixed, no tax can be imposed. Once the Board passes a special resolution under, section 119, it has to go to the Government under section 120, and then the Government notifies the imposition of tax from the appointed date. It is then that the notification becomes conclusive Proof of the fact that the tax has been imposed in accordance with the provisions of this Act Sub clause (3) of section 120 clearly proceeds on the basis that the imposition of tax takes place on a notification issued under section 120 and not on the issue of a notification under section 118. [4G 5A] Raza Buland Sugar Co. Ltd. vs Municipal Board, Rampur, ; ; referred to. N)1SCI 2

il Appeals Nos. 83 85 of .1965. Appeals by special leave from the judgment and decree dated February 9, 1962 of the Andhra Pradesh: High Court in Tr. Appeal No. 558 of 1957 and A. section Nos. 89 and 157 of 1957 respectively. P. Ram Reddy, A. V. V. Nair, B. Parthasarathy, and 0. C. Mathur, for the appellant (in all the appeals). C. R. Pattabhiraman and R. Ganapathy Iyer, for the respon dents (in C.As. Nos. 83 and 84 of 1965) and respondents Nos. 15 (in C.A. No. 85 of 1965). The Judgment of the Court was delivered by Bachawat, J. One Venkatacharyulu was the Karta of a joint family consisting of himself and his four sons. The appellant was his concubine since 1945 until his death on February 22, 1949. By two registered deeds purporting to be sale deeds dated April 15, 1946, (Exbts. A 1 and A 2), he transferred to the appellant certain properties belonging to the joint family. In 1947 after the execution of exhibit A 1 and A 2 there was a disruption of the joint family and a severance of the joint status between Venkatacharyulu and his sons. In 1954 his widow and sons instituted O.S. No. 12 of 1954 against the appellant for recovery of possession of the properties alleging that the documents dated April 15, 1946, were executed without consideration or for immoral purposes, and were void. The appellant instituted against his widow and sons O.S. No. 63 of 1954, asking for general partition of the joint family properties and for allotment to her of the properties conveyed by the two deeds. She also instituted O.S. No. 62 of 1954 against one of his sons and another person asking for damages and mesne profits for wrongful trespass on the properties. The trial court dis missed O.S. No. 12 of 1954 and O.S. No. 62 of 1954 and decreed O.S. No. 63 of 1954. From these decrees appeals were preferred in the High Court of Andhra Pradesh. The High Court confirmed the decree in O.S. No. 62/54, allowed the two other appeals, dismissed O.S. No. 63/54 and decreed O.S. No. 12/54, the decree for possession in respect of the properties covered by exhibit A 1 being conditional on payment by the respondents of the value of improvements made by the appellant to the properties. From the decrees passed by the High Court, the present appeals have been filed by special leave. The High Court found that the transfers under exhibit A 1 and exhibit A 2 were not supported by any consideration by way of cash or delivery of jewels. This finding is not challenged before us. The High Court held that the transfers were made by Venkatacharyulu in favour of the appellant in view of past illicit cohabitation 45 with her, such past cohabitation was the motive and not the consideration for the transfers and the two deeds though ostensibly sale deeds, were in reality gift deeds. It held that Venkatacharyulu had no power to make a gift of the joint family properties, the two deeds were invalid and the subsequent severance of joint status in 1947 could not validate them. In this Court, it is common case that future illicit cohabitation was not the object or the consideration for the transfers under exhibit A 1 and exhibit A 2. The appellant contends that Venkatacharyulu agreed to make the transfers in consideration of past cohabitation, having regard to section 2(d) of the , her past service was a valuable consideration and Venkatacharyulu was competent to alienate for value his undivided interest in the coparcenary properties. The respondents contend that the transfers were by way of gifts and not in consideration of the past cohabitation, and Venkatacbaryulu was not competent to make a gift of the coparcenary properties. In the alternative, the respondents contend that assuming that the transfers were made in consideration of past cohabitation, they were hit by Sec. 6(h) of the . Our findings are as follows: Venkatacharyulu and the appellant were parties to an illicit intercourse. The two agreed to cohabit. Pursuant to the agreement each rendered services to the other. Her services were given in exchange for his promise under which she obtained similar services. In lieu of her services, he promised to give his services only and not his properties. Having once operated as the consideration for his earlier promise, her past services could not be treated under section 2(d) of the as a subsisting consideration for his subsequent promise to transfer the properties to her. The past cohabitation was the motive and not the consideration for the transfers under exhibit A 1 and A 2. The transfers were without consideration and were by way of gifts. The gifts were not hit by sec. 6(h) of the , by reason of the fact that they were motivated by a desire to compensate the concubine for her past services. In Balo vs Parbati(1) the Court held that the assignment of mortgagee 's rights to a woman in consideration of past cohabitation was not hit by sec. 6(h) of the and, was valid. Properly speaking, the past cohabitation was the motive and not the consideration for the assignment. The assignment was without consideration by way of gift and as such was not bit by section 6(h). (1) I.L.R. [1940] All. 370. 46 In Istak Kamu Musalman vs Ranchhod Zipru Bhate(1) the court rightly held that past cohabitation was the motive for the gift under Exhibit 186, and the gift was valid but in holding that the promises to make the gifts under other exhibits were made in consideration of past illicit cohabitation and consequently those gifts were invalid, the Court seems to have too readily assumed that past cohabitation was the consideration for the subsequent promises. Venkatacharyulu was free to make a gift of his own property to his concubine. The gifts,, under Exs. Al 'and A 2 were not hit ' by section 6(h) of the . But the properties gifted under exhibit A 1 and A 2 were coparcenary properties. Under the Madras school of Mitakshara law by which Venkatacharyulu was governed, he had no power to make a gift of even his undivided interest in the coparcenary properties to his concubine. The gifts were therefore invalid. The invalid gifts were not validated by the disruption of the joint family in 1947. After the disruption of the joint family, Venkatacharyulu was free to make a gift of his divided interest in the coparcenary properties to the appellant, but he did not make any such gift. The transfers under Exs. A 1 and A 2 were and are invalid. We find no ground for interfering with the decrees passed by the High Court. In the result, the appeals are dismissed. There will be one set of costs and one hearing fee. Y. P. Appeals dismissed. (1) I.L.R. , 217.

IN-Abs

V the karta of a joint Hindu family, transferred in 1946 certain properties, of the joint family to the appellant, who was his concubines since 1945. The joint family disrupted in 1947, and after V 's death, the respondents his widow and sons, filed a suit against the appellant for recovery of possession of the properties alleging that the documents were executed without consideration or for immoral purposes. and were void. The appellant instituted suits for partition of the joint family properties and for allotment to her the properties conveyed by the deeds. The trial court dismissed the respondents ' suit and decreed the appellant 's suit, which the High Court reversed. In appeal to this Court, the appellant contended that V. agreed to make the transfers in consideration of past cohabitation, having regard to section 2(d) of the her past service was a valuable consideration and V was competent to alienate for value his undivided interest in the coparcenary properties. The respondents contended that the transfers were by way of gifts and not in consideration of the past cohabitation, and V was not competent to make a gift of the coparcenary properties and even assuming that the transfers were made in consideration of past cohabitation, they were hit by section 6 (h) of the . HELD: Under the Madras School of Mitakshara law by which V was governed. he had no power to make a gift of even his undivided interest in the coparcenary properties to his concubine. [46C] V and the appellant were parties to an illicit intercourse. The two agreed to cohabit. Pursuant to the agreement each rendered services to the other. Her services were given in exchange for his promise under which she obtained) similar services. In view of her services, he promised to give his services only and not his properties. Having once operated as the consideration for his earlier promise. her past services could not be treated under section 2(d) of the as a subsisting consideration for the properties to her. The past cohabitation was the motive and not the consideration for the transfers which were without consideration and were by way of gifts. The gifts were not hit by section 6(h) of the Transfer of property Act, by reason of the fact that they were motivated by a desire to compensate the concubine for her past services. [45E G] The invalid gifts were not validated by the disruption of the joint family in 1947. After the disruption of the joint family, V was free to make a gift of his divided interest in the coparcenary properties to the appellant, but he did not make any such gift. [46D] Balo vs Parbati, I.L.R. [1940] All. 370 and Istalk Kamu Musalman vs Ranchhod Zipru Bhate, I.L.R. , 217 referred to. 44

Appeal No. 1975 of 1966. Appeal by special leave from the judgment and order dated July 11, 1962 of the Madras High Court in Tax Case No. 84 of 1960. section Swaminathan and R. Gopalakrishnan, for the appellant. Veda Vyasa, A. N. Kirpal, R. N. Sachtliey and section P. Nayar, for the respondent. The Judgement of the Court was delivered by Shah, J. This is an appeal with special leave. The appellant is a Society registered under the . The following table sets out the data relating to the earnings, investments, working capital, outgoings and expenditure of the Society for the year ending June 30, 1955, relevant to the assessment year 1956 57: (i)Interest from Government securi ties. Rs.4,310,453.00 (ii) Total gross earnings. . Rs.21,00,99(4.00 (iii) Investments in Government securities. . Rs.130,60,653 00 (iv) Total working. capital. Rs.473,42,603 00 (v) Interest paid on debentures, depo sits and other accounts Rs. 15,09,490 00 (vi) Total overhead expenses and es tablishment overhead charges Rs. 3,01,102 00 32 In a proceeding for assessment of the total income of the Society to tax for the year 1956 57 it was claimed that under section 14 (3) of the Indian Income tax Act, 1922 (as added by section 10 of the Finance Act, 1955, with effect from April 1, 1955) the income of the Society from business was exempt from payment of tax, and that in accordance with the instructions issued under section 60 of the Act, out of the gross income from securities amounting to Rs. 4,30,053/ , Rs. 4,16,475/ being income attributable to the assets utilized in the business, only the balance of Rs. 13,578/was chargeable to tax. In support of its claim the 'Society 'relied upon the instructions published in the Income tax Manual, 1946. In the view of the Income tax Officer the Society could not claim the benefit of the Departmental Instructions, since in the relevant year of assessment those instructions had ceased to operate, and the Society 's claim was governed by the Explanation to section 8 of the Income tax Act as incorporated by the Finance Act of 1956, with effect from April 1, 1956. He accordingly computed the taxable income under the head "interest on securities" in the sum of Rs. 59,498/ . The Appellate Assistant Commissioner modified the order of the Income tax Officer and reduced the taxable income under the head "interest on securities" to Rs. 13,578/ applying the Departmental Instructions. He held that the Explanation to section 8 of the Act applied to Banking Companies and not to Co operative Societies. In appeal by the Commissioner of Income tax the Appellate Tribunal reversed the order of the Appellate Assistant Commissioner, and restored the order of the Income tax Officer. In the view of the Tribunal, the Explanation to section 8 of the Act cannot be invoked as the Society was not a Banking, Company, but the principle of the Explanation may well be called in aid and that the relief granted by the Income tax Officer was the only relief to which the Society was entitled. The following question of law was submitted by the Tribunal to the High Court of Madras: "Whether the Tribunal is justified in law in holding that the taxable income of the assessee from interest on securities is Rs. 59,498/ ?" The High Court reframed the question to read: "Whether the taxable income of the assessee from interest on securities is Rs. 13,578/ as contended by the assessee and as worked out on the basis of the Departmental instructions contained at pages 248 and 249 in Part III of the year 1946?", and answered it in favour of the Commissioner. 33 Counsel for the Society in the first instance, contended relying upon the judgment of this Court in Commissioner of Incometax Andhra Pradesh vs Cocanada Radhaswami Bank Ltd.,(1) contended that no part of the income of the Society, even if it be earned from Government securities, was liable to be taxed. It may be recalled that the Society had claimed before the Departmental authorities and the Tribunal that according to the instructions issued by the Central Government under section 60 of the Income tax Act only Rs. 13,578/ out of the income from Government securities were chargeable to tax. The Income tax Officer and the Tri bunal held that Rs. 59,498/ were chargeable to tax. The decision in Cocanada Radhaswami Bank 's case(1) relates to the right of a Bank to carry forward the net loss incurred by a Banking Company and to set it off in subsequent years against income from securities held as part of its trading assets. It is not a decision under section 14(3) of the Act. Again it is not open to the Society in this reference to contend that the amount of Rs. 13,578/ itself is not taxable. Such a question was never raised before the Tribunal and cannot be permitted to be raised in this Court. The Income tax Act, 1922, as originally enacted, did not give to a Co operative Society exemption from payment of tax in respect of income from its business activities. But by Departmental Instructions issued under section 60 of the Act, certain exemptions were given by a notification issued on August 25, 1925 and modified by notifications dated June 25, 1927, October 20, 1934 and August 18, 1945. Among the classes of income exempt from liability to pay tax under the notification was: "(2) The profits of any cooperative society other than . or the dividends or other payments received by the members of any such society out of such profits. Explanation For this purpose the profits of a cooperative society shall not be deemed to include any income, profits or gains from: (1) investments in (a) securities of the nature referred to in section 8 of the Indian Income tax Act, or (b). . (2) dividends, or (3) the 'other sources ' referred to in section 12 of the Indian Income tax Act". By the notification, profits of a Co operative Society were exempt from tax, but those profits were not to Include any income, profits or gains from securities of the nature referred to in section 8 of the (1)157 I.T.R. 306. N)ISCI 4 34 Indian Income tax Act. The Legislature by section 10 of the Finan Act of 1955 added sub sec. (3) to section 14, whereby it was enacted. inter alia, that: "The tax shall not be payable by a co operative society, including a, co operative society carrying on the business of banking (i) in respect of profits and gains of business carried on by it, (ii) in respect of interest and dividends derived from its investments with any other cooperative society; A co operative society since the enactment of the Finance Act, 1955, with effect from April 1, 1955, was therefore not liable, by the express provisions in the Act, to pay tax in respect of the profits and gains of business carried on by it. Under section 8 of the Incometax Act, 1922, tax is payable by an assessee under the head "Interest on securities" in respect of the interest receivable by him on any security of the Central Government or of a State Government, or on debentures or other securities for money issued by or on behalf of a local authority or a company, subject to exemption, inter alia, in respect of any sum deducted from such interest by way of commission by a banker realizing such interest on behalf of the assessee, or in respect of any interest payable on money borrowed for the purpose of investment in the securities by the assessee. The Parliament by the Finance Act, 1956 amended the first proviso, and added an Explanation to section 8 providing for the computation of the sum reasonably spent for the purpose of realising interest and of interest paid on sums borrowed for the purpose of investment by a Banking Company. The Explanation provides: "Explanation In the case of a banking company, (a) the amount which bears to the aggregate of its expenses as are admissible under sub section (2) of section 10, other than clauses (iii), (vi), (vi a), (vi b), (vii), (viii), (xi), (xii), (xiii) and (xiv) th ereof, the same proportion as the gross receipts from interest on securities inclusive of tax deducted at source) chargeable to tax under this section bears to the gross receipts from all sources which are included in the profit and loss account of the company, shall be deemed to be the sum reasonably expended by it for the purpose of realising such interest,, and the amount for which allowance is admissible under sub section (2) of section 10 shall be reduced correspondingly; and (b) money borrowed shall include moneys received by way of deposits; and that amount which bears to the amount of interest payable on moneys borrowed the same proportion as the gross receipts from interest on securities (inclusive of tax deducted at source) chargeable to tax under this section bears to the gross receipts from all sources which are included in the profit and loss account of the company, shall be deemed to be interest payable on money borrowed for the purpose of investment in the securities by the assessee, and the amount of such interest for which allowance is due under sub section (2) of section 10 shall be reduced correspondingly." and 35 (b) money borrowed shall include moneys received by way of deposits; and that amount which bears to the amount of interest payable on moneys borrowed the same proportion as the gross receipts from interest on securities (inclusive of tax deducted at source) chargeable to tax under this section bears to the gross receipts from all sources which are included in the profit and loss account of the company, shall be deemed to be interest payable on money borrowed for the purpose of investment in the securities by the assessee, and the amount of such interest for which allowance is due under sub section (2) of section 10 shall be reduced correspondingly. " Broadly stated, under cl. (a) the sum reasonably spent is computed as that proportion of the aggregate of the expenses admissible under the various clauses of sub section (2) of section 10 mentioned therein which the gross receipts from interest on securities bear to the gross receipts from all sources included in the profit and loss account of the banking company. Similarly under cl. (6) interest payable on money borrowed for the purpose of investment in Government securities is that proportion of the total interest paid on borrowings which gross receipts from securities bear to gross receipts from all sources. Income of the Society from its trading activity being exempt from tax, its income from Government securities had, it was common ground, to be apportioned between income earned from investments for trading purposes and for non trading purposes. The Income tax Officer applied the first proviso read with the Explanation to section 8 of the Income tax Act. The Income tax Appellate Tribunal held that in terms, the Explanation to section 8 did not apply because the Society was not a banking company, but the principle of the Explanation furnished, after the Departmental Instructions had been withdrawn, a reasonable basis for apportionment. In the view of the Tribunal, the principle embodied in the Explanation was an "improvement on the instructions", since it co related the income chargeable under the head with the expenditure and also provided for proportionate allocation of overhead charges. The High Court held that the benefit of the departmental notification was not available to the Society in the year of assessment, because it must be deemed to be withdrawn and the Explanation to section 8 did not in terms apply to the Society. It was common ground between the parties in this Court and the High Court that Explanation to section 8 has no application to a co operative society which does not carry on the business of a banking company. There is also no dispute that the departmental notification relied upon by the company was withdrawn before the relevant assessment year. There is, therefore, no statutory rule, and nor there are departmental instructions, governing the apportionment of income from Government securities between business 36 and non business sources of income. It was never urged, and it cannot be urged, that in the absence of a specific rule for apportionment, the entire income from Government securities should be brought to tax. Any attempt to bring the entire income from Government securities would infringe section 14(3) of the Act. A rule of apportionment consistent with commercial accounting must be evolved for determining the income from Government securities attributable to business activity of the Society. The rule contained in cl. (a) of the Explanation to section 8 has specially been evolved for determining the appropriate outgoings for the purpose of realizing interest from securities held by a Banking Company in computing income ' chargeable to tax; it seeks to exempt, on the footing that it is deemed to be the sum reasonably expended for the purpose of realizing interest, a part thereof which is equal to the proportion which the gross receipts from interest on securities chargeable to tax, bear to the gross receipts from all sources. The rule is an artificial rule for allocating business expenditure between different sources of income of Banking Companies. It is not a rule for apportionment for the purpose of taxation of composite income which is partly taxable and partly not. Clause (b) provides for allocation of outgoings in respect of "money borrowed", which expression includes money deposited with the Bank. Interest payable on borrowings is directed to be allocated in the proportion in which income is received from investments from securities and from other sources. This clause also deals with the proportion in which the outgoings are allocable. The problem arising under section '14(3) is of apportionment of income under heads taxable and nontaxable: it is not a problem relating to allocation of outgoings to determine taxable income. In our judgment, a rule of apportionment which dismembers income in proportion to the business and non business components of the single source from which it arises would be more consistent with principles of commercial accounting. The proportion of income from securities which is exempt from taxation under section 14 (3) of the Act will be that proportion which the capital of the Society used for the purpose of the business bears to the total working capital. It is admitted that Rs. 13,578/ is the gross income from securities which is, according to that rule, liable to tax. No question was raised in the High Court about any deduction to be made in respect of expenses for collection of that amount, and admissibility of deduction on that score does not fall to be considered. The appeal is allowed. Answer to the question as reframed by the High Court is that Rs. 13,578 / are taxable as income of the Society received from Government securities under section 8 of the Income tax Act. The Commissioner will pay the costs of the Society in this Court. V.P.S. Appeal allowed.

IN-Abs

The Income tax Act, 1922, as originally enacted did not give to a cooperative society any exemption from payment of tax in respect of income from its business activities. By departmental instructions issued under section 60 of the Act, exemption from payment of tax in respect of certain receipts of a co operative society were given. The notification provided inter alia that as regards interest received by it from government securities, an amount which bears the same proportion to the total interest paid on debentures etc. as the capital invested in government securities bears to the total working capital, shall be deducted from the interest on government securities as being exempt from tax. The departmental instructions were later withdrawn and sub section (3) was added to section 14 of the Act, by which, with effect from April 1, 1955, a cooperative society was not liable to pay tax in respect of the profits and. gains of business carried on by it. In 1956, an Explanation, applicable to banking companies, was added to section 8. Clause (a) of the Explanation provided for the allocation of business ex penditure between different sources of income of banking companies; and cl. (b) provided for allocation of outgoings in respect of " money borrowed" including money deposited with the bank [33BH; 34C F] Thus, in spite of section 14(3), for the assessment year 1956 57, there were no departmental instructions governing the apportionment of income from government securities between business and non business sources of income; and, in the case of a cooperative society which did not carry on the business of a banking company. there was no statutory rule for such apportionment, the Explanation to section 8 not being applicable. Therefore, in the case of a cooperative society which was not carrying on the business of a banking company a rule of apportionment consistent with commercial accounting for determining the income from government securities attributable to the business activity of the society had to be evolved. [35H; 35A B] The appellant was a cooperative society not carrying on business of banking and for the assessment year 1956 57; it claimed that out of its gross income from securities, only Rs. 13,578 was chargeable to tax on the principle of the departmental instruction. The Appellate Tribunal applied the principle of the Explanation to section 8 and computed the taxable income at Rs. 59,498. The High Court held that the benefit of the departmental notification was not available to the appellant, because it must be deemed to have been withdrawn and that, the Explanation to section 8 did not in terms apply to the appellant. 31 In appeal to this Court, Held:In the absence of a statutory rule and departmental in structions, a rule of appointment which dismembers income in pro"portion to the business and non business components of the source from which it arises would be more consistent with principles of commercial accounting. The proportion of income from securities which is exempt from taxation under section 14(3) will be that proportion which the capital of the Society used for the purposes of the business bears to the total working capital, and according to this rule, the gross income from securities which would be liable to tax was only Rs. 13,578. It was not open to the appellant to contend that even this amount was not taxable. Such a question was never raised either before the department or the Tribunal. [33C D; 36F H] The principles laid down in cls. (a) and (b) of the Explanation to s, 8 are not Applicable. The rule in cl. (a) is not a rule of apportionment for the purpose of taxation of composite income which is partly taxable and partly not. It is an artificial rule, specially evolved for determining the appropriate outgoings for the purpose of realising interest .,from securities held by a banking company in computing income chargeable to tax. Clause (b) deals with the proportion in which the outgoings are allocable. The problem arising under section 14(3) is not one relating to allocation of outgoings to deter. mine taxable income, but of apportionment of income under the taxable and non taxable heads. [36C E]

Appeal No. 143 of 1952. Appeal under article 132(1) of the Constitution of India from the Judgment and Order, dated the 997 11th December, 195 1, of the High Court of Judicature, Rajasthan at Jodhpur in D. B. Civil Miscellaneous Case No. 1 of 1951. M. C. Setalvad, Attorney Genaral for India and K. section Hajela, Advocate General of Rajasthan, (Porus A. Mehta, with them) for the appellant, N. C. Chatterjee. and U. M. Trivedi (Jiwan Sinha Chandra and Ganpat Rai, with them) for the respondent. March 15. The Judgment of the Court was delivered by GHULAM HASAN J. This appeal filed on a certificate granted by the High Court of Rajasthan under article 132(1) of the Constitution arises from the judgment and order of the said High Court (Wanchoo C.J. and Bapna J.) in a petition under article 226 of the Constitution, whereby the High Court held that section 8 A inserted in Rajasthan Ordinance No. XXVII of 1948 by section 4 of Rajasthan Ordinance No. X of 1949, and the amendment to section 8 A by section 3 of Rajasthan Ordinance XV of 1949 are void under article 14 of the Constitution and issued a writ restraining the State of Rajasthan from collecting rents from the tenants of lands comprising the Jagir of Bedla held by the respondent. The respondent Rao Manohar Singhji is the owner of the Jagir of Bedla situate in the former State of Mewar, now included in the State of Rajasthan. The former State of Mewar was integrated in April, 1948, to form what was known as the former United State of Rajasthan. In April and May, 1949, the latter State was amalgamated with the former States of Bikaner, Jaipur, Jaisalmer and Jodhpur and the former Union of Matsya to form the present United State of Rajasthan. Three Ordinances, No. XXVII of 1948 and Nos. X and XV of 1949, were issued by the former State of Rajasthan in connection with State Jagirs. The management of the Jagirs including the Jagir of Bedla was assumed by the former State of Rajasthan in virtue of the powers under these Ordinances. After the final formation of the State of Rajasthan in May, 129 998 1949, the Ordinances remained in force in a part of the present area of Rajasthan with the result that while jagirs in a part of the area were managed by the State in that area, the Jagirs in the rest of the State were left untouched and remained with the Jagirdars. On 4th January, 1951, the respondent filed a petition under article 226 of the Constitution contending that the said Ordinances were ultra vires the Constitution and that they became void under article 13 (1) of the Constitution of India, read with articles 14 and 31. The respondent challenged the Ordinances firstly because they constitute an infringement of articles 14, 19 and 31 of the Constitution and secondly because the Jagirdars only of the former State of Rajasthan which was formed in 1948 are prejudicially affected, while Jagirdars of the States which integrated later on are not at all affected (Para 9, K and L). It was alleged that there was a denial of equality before the law and the equal protection of the laws by reason of these Ordinances and further that the State had taken possession of the property of the respondent without providing for compensation. The reply of the State was that the Jagir was a State grant held at the pleasure of the Ruler and that it reverted to the Ruler on the death of the holder of the Jagir and was regranted to his successor after the Ruler had recognized the succession. The rights of the Jagirdars were non heritable and nontransferable and the Jagirs could not be partitioned amongst the heirs of the Jagirdar. It was pleaded therefore that even if the State took possession of the Jagir, the Jagirdar was not entitled to compensation under article 31 (2). It was also alleged that the impugned Ordinances had merely the effect of transferring the management of the Jagirs to the Government and did not deprive the Jagirdars of their property and they were consequently not hit by article 31 (2). It was denied that there was any discrimination under article 14 of the Constitution. The High Court held on the first question that the pro I visions of Ordinances Nos. X and XV of 1949 are not void under article 31 (2) or 19 (1) (f ). On the second point they recorded the conclusion that section 8 A which was introduced in Ordinance No. XXVII of 1948, by section 999 4 of Ordinance No. X of 1949, and the amendment to section 8 A by section 3 of Rajasthan Ordinance No. XV of 1949, are void under article 13 (1) of the Constitution, read with article 14. The High Court accordingly, allowed the petition and prohibited the State from collecting rents from the tenants of the land comprising the Jagir of Bedla held by the respondent. This judgment was given on 11th December, 1951, but we understand that since then the State has passed Acts abolishing Jagirs throughout the State. The question however is of some importance to the respondent inasmuch as it affects his right of collecting the rents even though for a short period. In appeal it is contended by the learned AttorneyGeneral on behalf of the State of Rajasthan that the decision of the High Court that the impugned section 8 A as amended was hit by article 14 of the Constitution is erroneous. Before deciding the validity of this contention it will be necessary to refer briefly to the relative provisions of the Ordinances. Ordinance No. I of 1948 (the United State of Rajasthan Administration Ordinance, 1948) was made and promulgated on April 28, 1948, by the Rajpramukh of Rajasthan to provide for the administration of the United State ,of Rajasthan after the latter came into existence. On July 26, 1948, Ordinance No. XXVII of 1948, [the United State of Rajasthan Jagirdars (Abolition of Powers) Ordinance, 1948] was made and promulgated by the Rajpramukh providing for the abolition of judicial powers of Jagirdars and executive powers in connection with the judiciary and vesting them in the Government. Section 8 of this Ordinance authorised the Government to make orders with a view to carrying out and giving effect to the provisions and pur poses of the Ordinance and the various powers enumerated in that section. Then came section 8 A which was introduced by Ordinance X of 1949 [the United State of Rajasthan Jagirdars (Abolition of Powers) (Amendment) Ordinance, 1949]. It reads thus: "Without prejudice to the generality of the foregoing provisions, it is hereby enacted that the revenue which was heretofore collected by Jagirdars shall 1000 henceforward be collected by and paid to the Government; the Government will after deducting the collection and other expenses pay. it to the Jagirdar concerned. " It was amended by section 3 of Ordinance No. XV of 1949 [the United State of Rajasthan Jagirdars (Abolition of Powers) (2nd Amendment) Ordinance, 1949] by adding to section 8 A after the word 'Revenue ' the following: " Including taxes, cesses and other revenue from forests. " It is not denied that when the State of Rajasthan was formed in April and May, 1949, the Jagirdars of only a part of the present State of Rajasthan could not collect their rents while Jagirdars in other areas which were covered by Jaipur, Bikaner, Jaisalmer and Jodhpur and Matsya Union were under no such disability. It appears that in the former State of Rajasthan provisions regarding the management by Government of Jagirs and the right to collect rents already existed, whereas there was no such provision in the former States of Jaipur, Bikaner, Jaisalmer and Jodhpur and Matsya Union, but when the integration took place in April and May, 1949, the discrimination exhibited itself not by virtue of anything inherent in the impugned Ordinances but by reason of the fact that Jagirdars of one part of the present State of Rajasthan were already subjected to a disability in the matter of management of their Jagirs while the other parts were wholly unaffected. This discrimination, however undesirable, was not open to any exception until the Constitution came into force on January 26, 1950, when article 13 of the Constitution declared that "all laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void. " It becomes therefore necessary to see whether the impugned provision which is discriminatory on the face of it is hit by article 14 which declares that "the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.," Such an obvious discrimination 1001 can be supported only on the ground that it was based upon,,,& reasonable classification. It is now well settled by the decision of this court that a proper classification must always bear a reasonable and just relation to the things in respect of which it is proposed. Judged by this criterion it seems to us that the discrimination is based on no classification at all and is manifestly unreasonable and arbitrary. The classification might have been justified if the State had shown that it was based upon a substantial distinction, namely that the Jagirdars of the area subjected to the disability were in some way different to those of the other area of Rajasthan who were not similarly situated. It was perfectly possible for the State to have raised a specific ground in order to get out of the mischief of article 14, that the discrimination was based upon what the learned Attorney General called geographical consideration, that the Jagirs of the particular area were governed by different laws of tenure and thus constituted a class by itself and that that was a good ground for differentiation. No such ground was ever put forward before the High Court, much less was any attempt made to substantiate such a ground. In the absence of any allegation supported by evidence we are unabe to find in favour of the State that the Jagirdars of the particular area to which category the respondent belongs were differently situated to other Jagirdars. The preambles of the Ordinances do not purport to show that the conditions in the former State of Rajasthan were such as to justify the imposition of the disability on the Jagirdars of that State while the conditions prevailing in the other States forbade such a course. The High Court held that the Ordinance abolishing the Police and the Judicial powers and the administrative powers of the Jagirdars in respect to revenue in forests was open to no objection but there was no reason for taking away from the Jagirdars by section 8 A the power to collect rents to which they were entitled. We agree with the High Court in holding that there was no real and substantial distinction why the Jagirdars of a particular area should continue to be 1002 treated with inequality as compared with the Jagirdars in another area of Rajasthan. We hold therefore that no rational basis for any classification or differentiation has been made out. Section 8 A of the impugned Ordinance as amended is a clear contravention of the respondent 's right under article 14 of the Constitution and must be declared void. The case of Frank J. Bowman vs Edward A. Lewis(1) relied upon by the learned Attorney General on behalf of the State is inapplicable to the facts and circumstances of the present case. By the Constitution and laws of Missouri the citizens residing in one hundred and nine counties of the State of Missouri had the right and privilege of an unrestricted appeal to the supreme Court of the State, while, at the same time the right of appeal was denied to the citizens of the State residing in four of the counties in the easterly portion of the State, as also to those residing in the City of St. Louis. It was contended that this feature of the judicial system of Missouri was in conflict with the 14th Amendment of the Constitution of the United States. Bradley J. held that the equality clause in the 14th Amendment contemplates the protection of persons against unjust discriminations by a State; it has no reference to territorial or municipal arrangements made for different portions of a State. He went on to say: " If a Mexican State should be acquired by treaty and added to an adjoining State or part of a State, in the United States, and the two should be erected into.a new State, it cannot be doubted that such new State might allow the Mexican 1aws and judicature to continue unchanged in the one portion, and the common law and its corresponding judicature in the other portion. Such an arrangement would not be prohibited by any fair construction of the 14th Amendment. It would not be based on any respect of persons or classes, but on municipal considerations alone, and a regard to the welfare of all classes within the particular territory or jurisdiction. " This passage which was strongly relied upon by the learned Attorney General does not advance his case (1) 1O1 U.S 22; ; 1003 for in the present cage there is no question of continuing unchanged @the old laws and judicature in one portion and a different law in the other. As we have already said there is nothing to show that there as any peculiarity or any special feature in the Jagirs of the former State of Rajasthan to justify differentiation from the Jagirs comprised in the States which subsequently integrated into the present United State of Rajasthan. After the new State was formed, there was no occasion to take away the powers of Jagirdars of a disfavoured area and to leave them intact in the rest of the area. The case in Ramjilal vs Income tax Officer, Mohindargarh (1) is distinguishable on the ground that that case proceeded upon the principle that "pending proceedings should be concluded according to the law applicable at the time when the rights or liabilities accrued and the proceeding commenced was a reasonable law founded upon a reasonable classification of the assessees which is permissible under the equal protection clause. " Such is however not the case here. Reliance was also placed on the case of The State of Punjab vs Ajaib Singh and Another(1). In that case the Abducted Persons (Recovery and Restoration) Act of 1949 was not held to be unconstitutional under article 14 upon the ground that it extended only to the several States mentioned in section 1(2), for in the opinion of the court classification could well be made on a geographical basis. There the Muslim abducted persons found in those States were held to form one class having similar interests to protect and their inclusion in the definition of abducted persons could not be called discriminatory. ; The learned Attorney General referred to two cases decided by the same. Bench of the Rajasthan High Court, Thakur Madan Singh vs Collector of Sikar(3), and an unreported judgment delivered on November 10, 1953, In re, Raja Hari Singh vs Rajasthan and argued (1) (1951] S.C.R. 127. (2) ; (3) Rajasthan Law Weekly, 1954, P.1. 1004 that the Bench had not stuck to its view expressed in the judgment under appeal. A careful, perusal of the judgments in these cases will show that this is far from being the case. The former case was distinguished from the case under appeal on the ground that there was a reasonable basis for classification in that case, while no such basis existed in the case before us. It appears that before Jaipur State merged into the present United State of Rajasthan there were District Boards existing in that State. They were continued on the formation of the new State but there were no District Boards in the other States. The argument that the Jaipur District Boards Act was invalid under article 14 of the Constitution was repelled it being held that the existence of District Boards in Jaipur was for the welfare of all classes within Jaipur that Jaipur had reached a higher stage of development than many of the other States and it would have been a retrograde step to deprive the People living in the former Jaipur State of the benefits of Local Self Government conferred by the District Boards Act. Reliance was placed on the observations of Bradley J. in Frank J. Bowman vs Edward A. Lewis(1) in connection with the illustration of the Mexican State and* the learned Chief Justice referred with approval to the decision under appeal before us. In the second case the attack was on the alleged discriminatory provision contained in the Mewar Tenancy Act and the Land Revenue Act. Under these Acts the rent rates had been approved by the Board of Revenue and the Government and they were alleged to be detrimental to the interests of the Jagirdars. The Jagirdars had challenged those Acts by a petition under article 226. It appears that no such laws existed in the other parts of Rajasthan. The decision of the High Court proceeded on the ground that it was not shown that there were no similar tenancy and Land Revenue laws in other parts of Rajasthan and the impugned Acts being ameliorative legislation designed to raise the economic status of the agriculturists in Mewar could not be said to constitute any discrimination merely because no such legislation (1) ; ; 1005 existed in the other parts of Rajasthan . This difference between the two parts did not justify that such progressive and ameliorative measures for the welfare of the people existing in a particular area should be done, away with and the State be brought down to the level of the unprogressive States. The judgment shows that the Bench far from going back on its previous view adhered to it and expressly distinguished the case under appeal before us on its special facts. As a result of the foregoing discussion we hold that the view taken by the High Court is correct. We accordingly dismiss the, appeal with costs. Appeal dismissed.

IN-Abs

Hold, that section 8 A inserted in Rajasthan Ordinance XXVII of 1948 by section 4 of Rajasthan Ordinance X of, 1949 and as amended by section 3 of Rajasthan Ordinance XV of 1949 is void under article 14 of the Constitution. Frank J. Bowman vs Edward A. Lewis ; ; 25 Law. Ed. 989), Ramjilal vs Income Tax Officer, Mohindargarh ([1951] S.C.R. 127), The State of Punjab vs Ajaib Singh ([1953] S.C.R. 254) and Thakur Madan Singh vs Collector of Sikar (Rajasthan Law Weekly, 1954, p. 1), referred to.

Appeal No. 2568 of 1966. Appeal by special leave from the judgment and order dated March 23, 1966 of the Patna High Court in Misc. Judicial Case No. 118 of 1963. H. R. Gokhale and Sukumar Ghose, for the appellant. M. K. Ramamurthi, Shymala Pappu and Vineet Kumar, for the respondents. The Judgment of the Court was delivered by Bhargava, J. The Government of Bihar, by an Order dated 14th June, 1961, referred an industrial dispute under section 10(1) of the (14 of 1947) to the Labour Court, Patna, wherein the following two issues were referred: "(1) Whether the discharge of the following forty workmen was proper? If not, whether they are entitled to reinstatement and/or any other relief? (2) Whether the above mentioned workmen are entitled to be made permanent?" Subsequently, the Government issued an Order by way of corrigendum on the 19th July, 1961, substituting "Ranchi" for "Patna" 62 in the original order of reference dated 14th June, 1961. The effect of this corrigendum was that the reference of the dispute, instead of being made to the Labour Court, Patna, came before the Labour Court, Ranchi. In the proceedings before that Court, the principal objections that was raised was that the Government, having once made a reference to the Labour Court, Patna, was not competent to cancel or withdraw that reference and could not make a competent reference of the same industrial dispute to the Labour Court, Ranchi, so that the latter Court had no jurisdiction to deal with the reference. The case before the Labour Court was also contested on various other grounds, but we need only mention those grounds which have been urged before us in this appeal. While the Labour Court was dealing with the reference, adjournments were sought on behalf of the appellant, M/s. Dabur (Dr. section K. Burman) Private Ltd. After decision of some preliminary points by the order dated 18th August, 1962, the case was fixed for hearing on 19th November, 1962. On that date, the management again prayed for an adjournment on the ground that their local Manager, Sri Basant Jha, had been lying ill for some time past and it was not possible for the management to prosecute their case with diligence. The Labour Court rejected this application and, thereupon, proceeded to hear the reference ex parte. The Labour Court held that the reference to it was competent and it had jurisdiction to deal with it, even though, by the original order of reference, the Government had purported to refer the dispute to the Labour Court, Patna. On the first issue referred, the Court recorded the finding that the 40 workmen, who had been discharged, were not casual workers and that their discharge by the employers on the basis that they were casual workers was not proper. It was further held that the discharge was mala fide inasmuch as the purpose of the discharge was to avoid the liability of treating these workmen as permanent employees by preventing them from completing 240 days of work in a year. There was the further finding that the workmen were all discharged from service as they had demanded increase in rates of wages and had also claimed that Sundays should be made paid holidays. Against this award, the appellant filed a petition under Article 226 of the Constitution in the High Court of Patna requesting that Court to quash the award. That Court upheld the award and dismissed the writ petition. Consequently, the appellant has come up to this Court by special leave against that judgment of the High Court. Mr. Gokhale, appearing on behalf of the appellant, emphati cally urged that both the Labour Court, Ranchi as well as the Patna High Court were wrong in holding that,the reference to the Labour Court, Ranchi, was competent even after the reference, 63 had originally been made to the Labour Court, Patna. He relied on the principle laid down by this Court that once the Government has made a reference to a particular Labour Court, it is that Labour Court which becomes seized of that industrial dispute and, thereafter, the Government has no jurisdiction either to withdraw that reference or cancel it. In this case, however, as is clear from the judgment of the High Court, the question that arose was entirely different. The High Court has clearly held that this was not a case where the Government either withdrew or cancelled the reference to the Labour Court, Patna. The High Court has held that, from the facts stated by the appellant in the writ petition filed in that Court, it appeared that the alteration in the order of reference was a mere correction of a clerical error. because, by mistake, Patna had been mentioned in place of Ranchi in the first notification. The second notification merely corrected that mistake. Mr. Gokhale wanted us to hold that the High Court was wrong in its view that the Government had merely made ' correction of a clerical error and that we should accept the submission on behalf of the appellant that, in fact, the State Government bad first intentionally referred the dispute to the Labour Court, Patna, and issued the corrigendum only when the Government decided that the reference should go to the Labour Court, Ranchi and not Labour Court, Patna, because Labour Court, Patna bad no jurisdiction to entertain the reference. We are unable to accept this submission made on behalf of the appellant. The High Court drew in inference from the facts stated in the writ petition filed by the appellant itself that this was a case of mere correction of a clerical error. This finding recorded by the High Court on the basis of the facts given in the writ petition is not now open to challenge in this special appeal, particularly because even a copy of that writ petition has not been made a part of the paper book before us. We cannot see how any objection can be taken to the competence of the State Government to make a correction of a mere clerical error. The finding that it was a clerical error means that the Government in fact intended to make the reference to the Labour Court, Ranchi; but while actually scribing the order of reference, a mistake was committed by the writer of putting down Patna instead of Ranchi. Such a clerical error can always be corrected and such a correction does not amount either to the withdrawal of the reference from. or cancellation of the reference to. the Labour Court, Patna. The High Court was. therefore. right in rejecting this contention on behalf of the appellant. On merits, Mr. Gokhale wanted to urge only two points before us. 'One was that the Labour Court committed a manifest error of law apparent on the face of the record in holding that the workmen concerned were not casual workers. The judgment of the High Court, however, shows that before that Court 64 it was nowhere urged or argued that any such error of law apparent on the face of the record had been committed by the Labour Court. What was urged before the High Court was that, even on the ex parte evidence on record, the Labour Court ought to have held that the workmen were mere casual labourers. The High Court was right in holding that this point urged on behalf of the appellant essentially raised a question of fact only and that Court, in its jurisdiction under Article 226 of the Constitution, could not interfere on such a question of fact. Since no submission was made before the High Court that the finding of the Labour Court that the workmen are not casual labourers suffers from any manifest error of law apparent on the face of the record, the appellant is not entitled to raise this point in this special appeal before us. On the finding actually recorded by the Labour Court and upheld by the High Court, the order of the Labour Court directing reinstatement of these workmen is fully justified, so that the order made by the Labour Court, insofar as it is against the interests of the appellant, is correct and must be upheld. In view of this position, it is unnecessary to go into the question whether the Labour Court was or was not right in recording the finding as to mala fides. The only other point urged was that the Labour Court should not have proceeded ex parte when material was placed before that Court on behalf of the appellant to show that its local Manager, Sri Basant Jha, was in fact lying ill. The question whether an adjournment should or should not have been granted on this ground was in the discretion of the Labour Court. Even the order by which the Labour Court rejected that application for adjournment is not before us and, consequently, it cannot be held that the Labour Court committed any such error in rejecting the application for adjournment and proceeding ex parte as would justify interference by this Court. The appeal fails and is dismissed with costs. Y.P. Appeal dismissed.

IN-Abs

The Government referred an industrial dispute to Labour Court, Patna, and subsequently issued an order by way of corrigendum substituting "Ranchi" for "Patna". In proceedings before the Labour Court, Ranchi, objection was raised that once having made the reference to the Labour Court, Patna, the Government was not competent to cancel or withdraw that reference, so the Labour Court, Ranchi had no jurisdiction. The Labour Court, Ranchi rejected the objection. The High Court also rejected this Contention. In appeal to this Court: HELD: The alteration in the order of reference was a mere correction of a clerical error. because, by mistake, Patna had been mentioned in place of Ranchi in the first notification and the second notification merely corrected that mistake. Such a clerical error can always be corrected and such a correction does not amount either to the withdrawal of the reference from, or cancellation of the re ference to the Labour Court, Patna. [63F H]

Appeals Nos. 2007 and 2008 of 1966. Appeals by special leave from the judgment and order dated September 28, 1965 of the Kerala High Court in O.P. Nos. 219 and 223 of 1964. 83 D.R. Prem, R. N. Sachthey and section P. Nayar, for the appel lants (in both the appeals). S.T. Desai and R. Gopalakrishnan, for the respondent (in both the appeals). 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 Kerala allowing two petitions filed by the respondent, M/s. A. section Bava, under article 226 of the Constitution. The High Court, by this judgment, quashed two orders dated February 4, 1964, and directed the Collector of Customs, & Central Excise, Cochin, to hear the appeals preferred by M/s. A. section Bava. The relevant facts are as follows: M / section A. section Bava. hereinafter referred to as the petitioner, is a firm of dealers in Tobacco. By two orders of adjudication dated March 31, 1963, the Assistant Collector of Customs demanded the payment of duty under Rule 40 of the Central Excise and Salt Rules, 1944. The petitioner filed appeals against these orders on or about July 4, 1963, to the Collector of Customs & Central Excise. The petitioner made a representation on October 3, 1963, requesting that it may not be required to deposit. the duty demanded pending appeal. The Collector, by letter dated January 9, 1964, rejected the representation and requested the petitioner to deposit the duty within 15 days of the receipt of the letter. On the petitioner failing to deposit the amount, the appeals were dismissed on December 4, 1964. Thereupon, as already stated, the petitioner filed two petitions under article 226 and the petitions having been allowed, and the appellant having obtained special leave, the appeals are now before us. The High Court allowed the petitions on the ground that the notification No. 68/63 dated May 4, 1963, issued under section 12 of the Excise and Salt Act, 1944, hereinafter referred to as the Excise Act, declaring that section 129 of the , relating to matters specified therein shall be applicable in regard to like matters in respect of the duties imposed by section 3 of the Excise Act was in excess of the powers conferred under section 12 of the Excise Act. The High Court also rejected the argument of the Collector of Customs and Central Excise that the petitioner having invoked section 129 of the , in the appeals preferred by it by praying for the dispensation of deposit, was precluded from proceeding under article 226 of the Constitution. The learned counsel for the appellants has raised three points before us: (1)The petitions under article 226 were not maintainable as the petitioner did not avail himself of the remedy of revision provided by section 36 'of the Excise Act. p(N)1SCI 7(a) 84 (2)The petitioner having availed of the remedy under section 12( of the was debarred from challenging the impugned notification, dated May 4, 1963. (3)The impugned notification applying section 129 of the Custom: Act was good. There is no force in the first point. First, the point was no taken in the High Court. Secondly, it is settled that the existence of a remedy by way of revision does not bar the jurisdiction of the High Court to entertain a petition under article 226. Moreover the petitioner had alleged that the Collector had no jurisdiction to demand the deposit or duty pending the appeals as the notification dated May 4, 1963, was bad insofar as it applied section 129 of the . In these circumstances it was not necessary for the petitioner to have filed revisions. There is equally no force in the second point. If the petitioner had not applied for dispensation of the deposit of the duty, the appellants would have contended that the petitions under article 226 were not maintainable. Moreover, as already stated, the petitions raised a question of jurisdiction. To appreciate the third point, it is necessary to extract the relevant statutory provisions. Section 12 of the Excise Act authorises the Central Government to apply provisions of the , now replaced by the , in the following terms: "12. The Central Government may, by notification in the Official Gazette, declare that any of the provisions of the , relating to the levy of an exemption from customs duties, drawback of duty, such modifications and alterations as it may consider necessary or desirable to adapt them to the circumstances, be applicable in regard to like matters in respect of the duties imposed by section 3". The relevant part of the impugned notification dated May 4, 1963, reads as follows: " In exercise of the powers conferred by Sec. 12 of the Central Excise & Salt Act, 1944 (1 of 1944) the Central Government declares that the provisions of Section 129 of the , relating to matters specified herein shall be applicable in regard to like matters in respect of the duties imposed by Sec. 3 of the first mentioned Act. " Section 129 of the reads thus: "129. (1) Where the decision or order appealed against relates to any duty demanded in respect of goods 85 which are not under the control of customs authorities or any penalty levied under this Act, any person desirous of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied: Provided that where in any particular case the appellate authority is of opinion that the deposit of duty demanded or penalty levied will cause undue, hardship to the appellant, it may in its discretion dispense with such deposit, either unconditionally or subject to such conditions as it may deem fit. (2)If upon any such appeal it is decided that the whole or any portion of such duty or penalty was not leviable, the proper officer shall return to the appellant such amount of duty or penalty as was not leviable. " It will be noticed that section 129 requires an appellant to deposit the duty or penalty levied pending an appeal. In other words, before an appeal can be heard the appellant must deposit the duty or penalty levied. But under section 35 of the Excise Act, a person ,Aggrieved byany decision or order has an unfettered right to appeal. Thequestion that arises in these appeals is whether the provisions ofs. 129 of the can be said to be provisions relating to procedure. relating to appeals ' within section 12 of the Excise Act. As we have already said, the appeals are filed under section 35 of the Excise Act. Section 129 of the debars the hearing of them unless the duty or penalty is paid. This, it seems to us, is not procedure relating to appeals. This Court in Hoosein Kasam Dada (India) Ltd., vs The State of Madhya Pradesh(1) had to consider a similar provision in section 22 of the Central Provinces and Berar Sales Tax Act, 1947. Section 22(1), as originally enacted, read thus: " 22. (1) Any dealer aggrieved by an order under this Act may, in the prescribed manner, appeal to the prescribed authority against the order: Provided that no appeal against an order of assessment, with or without penalty, shall be entertained by the said authority unless it is satisfied that such amount of tax or penalty or both as the appellant may admit to be due from him, has been paid." (1) [1953]987;4 S.T.C 114, 86 It was amended thus: "22. (1) Any dealer aggrieved by an order under this Act May, in the prescribed manner, appeal to the prescribed authority against the order: Provided that no appeal against an order or assessment, with or without penalty shall be admitted by the said authority unless such appeal is accompanied by a satisfactory proof of the payment of the tax, with penalty, if any, in respect of which the appeal has been preferred. S.R. Das, J., as he then was, repelled the argument of the learned) Advocate that 'the requirement as to the deposit of the amount of the assessed tax does not affect the right of appeal itself, which still remains intact, but only introduces a new matter of procedure ', and observed: "There can be no doubt that the new requirement 'touches ' the substantive right of appeal vested in the appellant. Nor can it be overlooked that such a requirement is calculated to interfere with or fetter, if not to impair or imperil, the substantive right. The right that the amended section gives is certainly less than the right which was available before. A provision which is calcu lated to deprive the appellant of the unfettered right of appeal cannot be regarded as a mere alteration in procedure. Indeed the new requirement cannot be said merely to regulate the exercise of the appellant 's pre existing right but in truth whittles down the right itself and cannot be regarded as a mere rule of procedure. " These observations are fully applicable in the present case. 1 Section 35 of the Excise Act gave a right of appeal, but section 129 of the whittles down the substantive right of appeal and accordingly it cannot be regarded as "procedure relating to appeals" within section 12 of the Excise Act. The appeals accordingly fail and are dismissed with costs. One hearing fee. V P S Appeals dismissed.

IN-Abs

Under section 35 of the Central Excise and Salt Act, 1944 (Excise Act) a person aggrieved by any decision or order under the Act and rules has an unfettered right of appeal. Under section 12 of the Act, the Central Government may apply to appeals under the Excise Act the provisions of the (Customs Act) dealing with the procedure relating to appeals, In exercise of this power, the provisions of section 129 of the Customs Act were made applicable to Appeals under the Excise Act. The section requires an appellant to deposit, pending the appeal, the duty or penalty imposed, and empowers the appellate authority, in his discretion, to dispense with such deposit pending the appeal in any particular case. The respondent filed an appeal against the duty imposed on him under the Excise Act and prayed for dispensation of the deposit. The Collector, who was the appellate authority, rejected the prayer and. when no deposit was made within the time fixed, dismissed the appeal. The respondent filed a writ petition in the High Court which was allowed, and the Collector, was directed to hear the appeal on merits. The Collector appealed to this Court. HELD:Since section 35 of the Excise Act gave a right of appeal and section 129 of the Customs Act whittled down that substantive right, section 129 could not be regarded as "procedure relating to appeals" within section 12 of the Excise Act. The High Court was therefore right in F holding that the application of section 129 of the Customs Act to appeals under the Excise Act was in excess of the powers conferred under section 12 of the Excise Act. The facts that an alternative remedy was available to the respondent under the Excise Act, and that he invoked the dispensing power of the appellate authority under section 129 of the Customs Act, did not bar the jurisdiction of the High Court to entertain the writ petition, especially when the jurisdiction of the Collector to insist upon the deposit of duty pending appeal was itself questioned. [84B D; 86F G] Hoosein Kasam Dada (India) Ltd, vs The State of Madhya Pra desh; , 4 S.T.C. 114, followed.

Appeals Nos. 1060 1064 of 1965. Appeals by special leave from the judgment and order dated April 3. 1961 of the Madras High Court in Tax Case No. 201 of 1960. AND Civil Appeals Nos. 1103 1107 of 1966. Appeals by special leave from the judgment and order dated November 29, 1963 of the Madras High Court in Writ Petitions Nos. 1374 1378 of 1961. M. M. Nambiyar, K. Narayanaswami, B. Manivannan, B. Parthasarathy, J. B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellants (in all the appeals). section T. Desai, R. Ganapathy Iyer and R. N. Sachthey, for the respondent (in all the appeals) and for the Attorney General for India (in C. As. 1103 1107 of 1966). The Judgment of the Court was delivered by Shah, J. Meyyappa (1), Alagammal his wife, and Chokalingam and Meyyappa (11) his two minor sons formed in 1940 a Hindu Undivided Family which traded in the name of "M.S. M.M.". The family carried on extensive business in money lending, rubber plantations, and in real estates in the Federated States of Malaya, Burma and India. The property of the undivided family was divided between the three male members on February 22, 1940. To Meyyappa (1) were allotted at the partition "business of the family" at Rangoon and at Karaikudi in the Ramnath District and three rubber estates in the Federated States of Malaya and some houses. Even after the partition Meyyappa (1) continued to remain in management on behalf of himself and his two minor sons of all the properties 'and the businesses carried on by the family when it was joint, and the businesses were carried on in the name of "M.S.M.M.". The houses and the three rubber estates allotted exclusively to Meyyappa (1) were entered in the books of accounts opened in the name of "M.M. Ipoh" from the date of the division. In 68 December 1941 Alagammal gave birth to a son who was named Chettiappa. Meyyappa (1) and Chettiappa then constituted a Hindu coparcenary which owned the property and the business as allotted to Meyyappa (1) in the partition of 1940. On December 30, 1949 a deed of partition was executed between Meyyappa (I) and Chokalingam (who had by then attained the age of majority) in respect of the businesses carried on in the name of "M.S.M.M." The businesses were thereafter carried on in partnership between Meyyappa (1) representing himself and the minor Chettiappa and Chokalingam Meyyappa (II) was admitted to the benefits of that partnership. On April 13, 1950 partition was effected between Meyyappa (1) and the minor Chettiappa by posting entries in the books of account of M.M. Ipoh. It was agreed that the properties entered in the books of account of M.M. Ipoh shall be held by Meyyappa (1) and Chettiappa in two equal shares, and that the properties shall continue to remain in the management of the firm M.S.M.M. to the benefit of which Chettiappa was admitted. A deed of partition recording the terms of that partition was executed on May 28, 1953 by Meyyappa (1) and Alagammal acting as Guardan of the minor Chettiappa. In 1951 Meyyappa (1) acceded to a demand made by Chocka lingam on behalf of the M.S.M.M. firm for a half share in the "M.M. lpoh properties". There was however no division of the properties by metes and bounds, and the management of those properties as a single unit continued to remain with the M.S.M.M. firm as before. Meyyappa (1) was assessed under the Indian Income tax Act 1922 to tax year after year till the assessment year 1953 54 in respect of the income from the "M. M. lpoh properties" as a respect individual or as a karta of a Hindu undivided family. Later the Income tax Officer, Karaikudi, Ramnath District, issued notices under section 34(1) of the Income tax Act for the assessment years 1951 52 to 1953 54 and under section 22(2) for the years 1954 55 to 1956 57 for assessment of the income of "an association of persons styled M. M. lpoh". The Income tax Officer rejected the contentions raised by Meyyappa (1) that there was no association of persons of the nature described in the notices and brought to tax the income of the "M.M. lpoh properties" as income received by an association of persons formed by Meyyappa (1) and Chettiappa in 1951 52, and by Meyyappa (1), the M.S.M.M. firm and Chettiappa in the years 1952 53 to 1955 57. In appeals filled by M. M. lpoh, the Appellate Assistant Commissioner confirmed the orders passed by the Income tax Officer subject to the modification that the income from the houses be assessed under section 9(3) of the Income tax Act in the hands of the members individually, and not as the collective, income of the association of persons. The Appellate Tribunal confirmed the order of the Appellate Assistant Commissioner, 69 The Tribunal drew up a statement of case and submitted under section 66(1) of the Indian Income tax Act, the following ques tion for determination of the High Court of Madras: "Whether the assessments on the 'Association of persons ' for assessment years 1951 52 to 1956 57 are valid?" and declined to submit a statement ' of the case on five other questions, the first out of which alone is material in these appeals and need be set out: "Whether on the facts and in the circumstances of the case, there are any materials to hold the assessee as the principal officer of M.M. lpoh assessed in the status of an association of persons?" At the hearing of the reference on the principal question, the High Court on the application of the assessee proceeded to deal apparently without any objection from the Commissioner with the additional question which had not been referred by the Tribunal. The High Court held that the income brought to tax in the assessment year 1951 52 did not accrue to an association of persons, but the income in the years 1952 53 to 1956 57 accrued to an association of persons formed by Meyyappa (1), M.S.M.M. firm and the minor Chettiappa. The High Court was of the view that Meyyappa (1) acted on behalf of Chettiappa in forming the association, that the affairs of this association were under the management of Meyyappa (1) during the account years relevant to the assessment years 1952 53 to 1956 57, that the association of persons was engaged in a joint enterprise for the purpose of producing income, that there being "unity purpose and objectivity" the ultimate object of the association to earn income on behalf of the members of the association was "fully established". The High Court also held that by the notices for assessment of the income for the years 1952 53 to 1954 55 Meyyappa (1) did in fact have notice of the intention of the Income tax Officer to treat him as the principal officer of the association, and the proceedings for assessment and reassessment were properly commenced. The High Court accordingly by order dated, April 3, 1961 answered the first question in favour of the assessee in respect of the assess ment year 1951 52 and against the assessee for the subsequent five assessment years. The High Court recorded in answer to the second question that the Income tax Officer was justified in holding Meyyappa (1) to be the principal officer of "M.M. Ipoh". On November 21. 1961 five petitions were moved in the High Court of Madras under article 226 of the Constitution for a writ of prohibition restraining the Income tax Officer from enforcing the demands made by him in respect of the tax assessed against 70 "the association of persons M.M. lpoh". In support of the petitions it was urged that section 3 of the Indian Income tax Act invested the Income tax Officer with arbitrary and unguided power to assess to tax the income of an association of persons in the hands either of the association or of the persons constituting that association, and on that account section 3 offended article 14 of the Constitution, and was to that extent void the High Court rejected the petitions. Against the orders passed by the High Court in the petitions for writs, Meyyappa (1) has appealed. Against the orders recorded by the High Court in references under section 66 the association of persons "M.M. lpoh" has appealed. Section 3 of the Income tax Act invests the taxing authority with an option to assess to tax the income collectively of the association of persons, in the hands of the association or in separate shares in the hands of the members of the association. Counsel for the assessee contends that the Act sets out no principles and discloses no guidance to the Income tax Officer in exercising the option: the Act therefore confers arbitrary and uncontrolled authority upon the Income tax Officer to select either the association or its members for assessment to tax according to his fancy, and may on that account be discriminatively administered by subjecting persons similarly situate to varying rates of tax. Counsel in support of that plea relied upon the judgment of this Court in Suraj Mall Mohta & Co. vs A. V. Visvanatha Sastri and Anr.(1) but that case is of little assistance to the assessee. In Suraj Mall Mohta 's cave(1) this Court declared sub section (4) of section 5 of the Taxation of Income (Investigation Commission) Act 30 of 1947 and the procedure prescribed by that Act, insofar as it affected the persons proceeded against under that sub section, invalid as a piece of discriminatory legislation and on that account offending against article 14 of the Constitution of India. The Court held that sub section (4) of section 5 of Act 30 of 1947 dealt with the same class of persons who fall within the ambit of section 34 of the Indian Incometax Act 1922 and whose income can be brought to tax by proceeding under that section: The result in the view of the Court was that some assessees who had evaded payment of tax by failing to disclose fully and truly all material facts necessary for assessment of tax could be dealt with under Act 30 of 1947 at the choice of the Commission, though they could also be proceeded with under section 34 of the Indian Income tax Act. Persons discovered as evaders of income tax during an investigation under section 5(1) of Act 30 of 1947, and persons discovered by the Incometax Officer to have evaded payment of tax had in the view of the Court common properties and. . common characteristics", and since the procedure prescribed under Act 30 of 1947 was more 71 drastic and deprived the assessee of valuable rights of appeal, second appeal and revision, section 5(4) of Act 30 of 1947 under which a person could be selected for discriminatory treatment at the choice of the Investigation Commission was void as infringing tile guarantee of equality before the law. But here no question of application of a more drastric pro cedure, or deprivation of valuable rights of appeal and revision, by the adoption of one of two alternative procedures arises. The procedure for assessment is the same whether the income is assessed in the hands of the association or the share of each member of the association is assessed separately. In Shri Rain Krishna Dalmia vs Shri Justice section R. Tendolkar and Ors,(1) section R. Das, C. J., observed at p. 299: "In determining the question of the validity or otherwise of. . a statute the court will not strike down the law Out of had only because no classification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion or classification. After such scrutiny, the court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between persons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself. " In Jyoti Pershad vs The Administrator for the Union Terri tory of Delhi(1) this Court observed that where the Legislature Jays down the policy and indicates the rule or line of action which should guide the authority, article 14 is not violated, unless the rules or the policy indicated lay down different criteria to be applied to persons or things similarly situate. It is not however essential for the Legislature to comply with the guarantee of equal protection that the rules for the guidance should be laid down in express terms. Such guidance may be obtained from or afforded by (a) the preamble read in the light of the surrounding circumstances which necessitated the legislation, taken in conjunction with well known facts of which the Court might take judicial notice or of which it is apprised by evidence before it in the form of affidavits, (b) or even from the policy and purpose of the enactment which may be gathered from other operative provisions (1)[1959] S.C.R. 279. (2) [1062] 2S.C.R. 125. 72 applicable to analogous or comparable situations or generally from the object sought to be achieved by the enactment. Section 3 of the Income tax Act does not, it is true, expressly lay down any policy for the guidance of the Income tax Officer in selecting the association or the members individually as entities in bringing to tax the income earned by the association. Guidance may still be gathered from the other provisions of the Act, its scheme, policy and purpose, and the surrounding circumstances which necessitated the legislation. In considering whether the policy or principles are disclosed, regard must be had to the scheme of the Act. Under the Act of 1922 the Income tax Officer is required to issue a general notice calling upon all persons whose total income during the previous year exceeds the minimum not chargeable to tax to submit a return of income. The Income tax Officer may also serve an individual notice requiring a person whose income in the opinion of the Income tax Officer is liable to tax to submit a return of income. Primarily the return of income would be made by an association, where the association has earned income, and the Income tax Officer would also call upon the association to submit a return of its income, and would ordinarily proceed to assess tax on the return so made. But for diverse reasons, assessment of the income of the association may not be possible or that such assessment may lead to evasion of tax. It would be open to the Income tax Officer then to assess the individual members on the shares received by them. The duty of the Income tax Officer is to administer the provisions of the Act in the interests of public revenue, and to prevent evasion or escapement of tax legitimately due to the State. Though an executive officer engaged in the administration of the Act the function of the Income tax Officer is fundamentally quasi judicial. The Income tax Officer 's decision of bringing to tax either the income of the association collectively or the shares of the members of the association separately is not final, it is subject to appeal to the Appellate Assistant Commissioner and to the Tribunal. In Commissioner of Income tax, U.P. vs Kanpur Coal Syndicate(1) it was held by this Court that the Appellate Tribunal has ample power under section 33(4) to set aside an assessment made on an association of persons and to direct the Income tax Officer to assess the members individually or to direct amendment of the assessment already made on the members. Exercise of this power is from its very nature contemplated to be governed not by considerations arbitrary but judicial. The nature of the authority exercised by the Income tax Officer in a proceeding to assess to tax income, and his duty to prevent evasion or escapement of liability to pay tax legitimately due to tile State, constitute, in our judgment, adequate enunciation of principles and policy for the guidance of the Income tax Officer. (1) 73 Counsel for the appellants contended that section 23 A of the Income tax Act, as it was incorporated by Act 21 of 1930, laid down certain principles for the guidance of the Income tax Officer in exercising his option, but since the Legislature by Act 7 of 1939 repealed that provision the discretion vested in the Incometax Officer to select either the income of the association or the individual members is unfettered. To appreciate the argument it is necessary to set out in some detail the legislative history. Under the Indian Income tax Act, 1922, as originally enacted, an association of persons or individuals was not an entity the income whereof was charged to tax. By 11. of 1924 "association of individuals" was added in section 3 and an entity of which the income is charged to tax under the Income tax Act, but the Act as it stood amended contained no statutory safeguard against double taxation of income earned by an association of individuals. section 14(1) of the Act (as it then stood which aimed at avoiding double taxation of the same income was applicable to the income of a Hindu undivided family, to the income of a company distributed as dividends to share holders, and to the income of a firm profits whereof were assessed in its hands. The Legislature amended section 14 of the Act by Act 22 of 1930 and remedied the defect by modifying cl. (c) of sub section (2) of section 14 of the Act and provided that "any sum which he (the assessee) received as his share of the profits or gains of an association of individuals, other than a Hindu undivided family, company or firm, where such profits or gains have been assessed to income tax", shall not be subject to tax. The Legislature also enacted Act 21 of 1930 which made several modifications in the Income tax Act. It provided for registration of firms and added section 23A which provided: "(1) Where the Income tax Officer is satisfied that any firm or other association of individuals carrying on any business, other than a Hindu undivided family or a company, is under the control of one member thereof, and that such firm or association has been formed or is being used for the purpose of evading or reducing the liability to tax of any member thereof, he may, with the previous approval of the Assistant Commissioner pass an order that the sum payable as income tax by the firm or association shall not be determined, and thereupon the share of each member in the profits and gains of the firm or association shall be included in his total income for the purpose of his assessment thereon. " A similar provision with regard to companies was also incorporated in sub section (2) of section 23A. Broadly speaking, by the amended provision discretion was given to the Income tax Officer to treat as separate entities for the purpose of taxation the individuals formed any association carrying on business, of which only one 74 member was competent to bind the association by his acts, and to give to the Income tax Officer discretion to treat the members of a company as separate entities in certain conditions . But section 23A (1) as enacted by Act 21 of 1930 applied only to first and association of individuals if the management was in the hands of one person: it did not in terms apply to cases where the management was in the hands of more persons than one, even if it was formed for the purpose of evading or reducing the liability to tax of any member thereof. By Act 7 of 1939 the expression "asso ciation of persons" was substituted for "association of individuals" , section 23A(1) was deleted; and sub section (5) was added to section 23. Sub section (5) of section 23 prescribed the mechanism for bringing to tax the income of a firm registered or unregistered. If the firm was registered, the share of each partner was to be separately taken into account together with his other income and brought to tax. If it was an unregistered firm, the income of the firm itself was brought to tax, unless the Income tax Officer wits of the opinion that the correct amount of the tax including super tax, if any, payable by the partners under the procedure applicable to a registered firm would be greater than the aggregate amount payable by the firm and the partners if the firm is assessed as an unregistered firm. In respect of unregistered firms a practical scheme which aimed at preventing evasion of tax was devised by enactment of section 23(5)(b). After the repeal of section 23A (1) as introduced by Act 21 of 1930 no similar provision conferring discretion upon the Income tax Officer similar to the discretion which is prescribed by the terms of section 23(5)(b) in respect of the income of the unregistered firms was expressly enacted. But it cannot be inferred that it was intended to make the discretion of the Income tax Officer qua the assessment to tax the income of an association of persons in the hands of individual members collectively, arbitrary or unfettered. By the repeal of section 23A(1) the essential nature of the power of an Income tax Officer was not altered. He remained as before under a duty to administer the Act, for the benefit of public revenue, but his powers were to be exercised judicially and so as to avoid double taxation of the same income. This resume of the legislative provisions discloses that the relevant provisions were made with it view to ensure against evasion of tax, while ensuring that the same income shall not be charged more than once. The policy and the purpose of the Act may be gathered from other operative provisions applicable to analogous or comparable situations": Jyoti Pershad 's case(1) at p. 139: and there can (1) ; 75 be no doubt that an unregistered firm and an association of persons are closely analogous. If the income is earned by an association of persons, normally a return would be made or asked for under section 22 from the association, and the income of the association would be brought to tax. If, it appears to the Income tax Officer that by taxing the association of persons evasion of tax or escapement of tax liability may result, he is given a discretion to tax the individual members: but the discretion is to be exercised judicially and not arbitrarily, and its exercise is capable of rectification by superior authorities exercising judicial functions. It cannot therefore be said that there is, by investing authority in the Income tax Officer to select the association of persons or individual members thereof for the purpose of assessing to tax the income of the association, denial of equality before the law between persons similarly situate within the meaning of article 14 of the Constitution so as to render section 3 insofar as it confers power upon the Income tax Officer to select either the association of persons or the members thereof for assessment to tax in respect of the income of the association void. Appeals Nos. 1103 1107 of 1966 must therefore fail. In the group of appeals which arise out of the order passed by the High Court in exercise of its advisory jurisdiction under the Income tax Act, counsel for the assessee urged that there was no association in fact; that Chettiappa being at all material times a minor there could in law be no association of which the income could be brought to tax, and that in any event there was no evidence to prove that any one on behalf of Chettiappa had assented to the formation of the association. The expression "person" is defined in section 2(9) of the Indian Income tax Act, 1922 as including "a Hindu undivided family and a local authority". The definition is inclusive and resort may appropriately be had to the General Clauses Act to ascertain the meaning of the expression "person". Clause (42) of section 3 of the General Clauses Act defines a "person" as inclusive of any company, association or body of individuals whether incorporated or not, and that inclusive definition in the General Clauses Act would also apply under the Income tax Act. A firm is therefore a "Person" within the meaning of the Income tax Act, and a firm and an individual or group of individuals may form an association of persons within the meaning of section 3 of the Indian Income tax Act. There is nothing, in the Act which indicates that a minor cannot become a member of an association of persons for the purposes of the Act. In Commissioner of Income Tax, Bombay vs Laxmidas and Anr.(1) it was held that the fact that one of the (1) 76 individuals was a minor did not affect the existence of the association, if in point of fact, the assessees had associated together for the purpose of gain. In Commissioner of Income tax, Bombay North, Kutch and Saurashtra vs Indira Balkrishna(1) it was held "that the word "associate" means. . . to join in common purpose, or to join in an action '. Therefore, and association of persons must be one in which two or more persons join in a common purpose or common action, and as the words occur in a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains. " In the case before us, there is abundant material, to prove that Meyyappa (1), his minor son Chettiappa and M.S.M.M. firm formed an association in the years 1952 53 to 1956 57. To review the.relevant facts: the "M.M. Ipoh properties" which were allotted to Meyyappa (1) at the partition in 1940 became on the birth of Chettiappa, Properties of a coparcenary, and it is common ground that Chettiappa acquired a share in the income which Meyyappa (1) received from the M.S.M.M. firm: the "M.M. Ipoh properties" were,used in a trading venture and were managed by the M.S.M.M. firm the selling agency was common between M.S.M.M. firm and "M.M. Ipoh": the stocks and expenditure of the M.M. Ipoh firm were not ;separately determined and common books of account were maintained for the management of the M.M. Ipoh properties and the M.S.M.M. firm dealings. Alagammal mother of Chettiappa had executed the deed of partition dated April 13, 1950 as the guardian of Chettiappa. By the deed she acknowledged having received the share of Chettiappa in the property. The Tribunal found that the management was entrusted to the M.S.M.M. firm on behalf of "M.M. Ipoh", and that in entrusting the management Alagammal must have given her consent. In paragraph II of the statement of the case, the Tribunal observed: "The integrity and management of the estates have continued undisturbed right throughout the period, only the holding thereof by various members having changed from time to time. The volition necessary is only all too apparent the entrustment of the management to M.S.M.M. firm for ,a proper management implies a prior agreement to which the guardian of the minor must have given her consent too," These observations relate to the entire period of six years 1951 52 to 1956 57. In the view of the High Court division of the status of joint Hindu family on April 13, 1950 between Meyyappa (1) and. Chettiappa was brought about not as a result of any mutual agreement between the coparceners, but by Meyyappa (1 in exercise of his power to do so under the Hindu law, and "solely from the feature that the share of minor son Chhettiappa was not separated by metes and bounds, a conclusion could (1) 77 not be "reached that Meyyappa (1) and Chettiappa continued as members of an association of persons. The minor had no volition of his own to express, and the fact that at the partition the minor was represented for purposes of form and nothing more by his father, cannot be taken to mean that the mother as his guardian exercised any volition on behalf of the minor. " In the view of the High Court "to form an association of persons no agreement enforceable at law was necessary": but that "is not the same thin as to say that an agreement express or implied may be inferred where none can possibly exist. The High Court rejected the contention raised on behalf of the Revenue that the father must have acted as the guardian of the minor in forming the association in 1951 52. The High Court however held that in the year 1952 53 and subsequent years an association of persons was formed and Meyyappa (1) joined that association on behalf of himself and Chettiappa. Counsel for the assessee contends that once the High Court reached the conclusion that in the year 1951 52 there was no association of persons, the conclusion that an association of persons existed in the subsequent years could not be reached in the absence of positive evidence to show that after the close of the year 1951 52 an association of persons was actually formed. We are not called upon in these appeals to consider whether the learned Judges of the High Court were right in the view which they have taken insofar as it relates to the assessment year 1951 52. We are only called upon to consider whether the conclusion of the Tribunal that in fact an association of persons existed in the year 1952 53 Ind subsequent years was based on any evidence. In our judgment the facts proved clearly show that there was such an association in the years 1952 53 and the subsequent years. Pursuant to the three partitions no division by metes and bounds of the shares of the owners was made, only the shares in the income of the owner were entered in the books of account. There was common management of the properties, and there was even a common. selling agency. Alagammal had acted as a guardian of Chettiappa in the deed of partition. The Tribunal inferred that Alagammal must have assented to the formation of the association on behalf of Chettiappa and in the various transactions relating to the entrustment of management. It is true that this finding related to the year 1951 52 as well, and the High Court has disagreed with that finding insofar as it related to the year 1951 52. But on that account the finding of the Tribunal in respect of the subsequent years cannot be discarded. The Association which has earned income in the years 1952 53 and thereafter is an association different from the association in 1951 52. In 1951 Chokalingam had demanded a share in the "properties of M.M. lpoh and he was given a half share. The shares of Meyyappa (1) and Chettiappa in the properties were 78 reduced, and thereafter ownership in the "properties of M.M. Ipoh" and its activities vested in an association formed by Meyyappa (1), the M.S.M.M. firm and Chettiappa. It is common ground that "M.M. Ipoh" was a trading venture and its management was entrusted in the relevant years to the M.S.M.M. firm. The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are conclusive only in the year of assessment: the findings on questions of fact may be good and cogent evidence in subsequent years, when the same question falls to be determined in another year, but they are not binding and conclusive. The finding recorded by the High Court that in the year 1951 52 there was no association of persons constituted by Meyyappa (1) and Chettiappa for earning income from M.M. Ipoh properties will not in the present case have any effect on the finding of the Tribunal that in year 1952 53 and the subsequent years such an association existed. It must again be remembered that the association of persons which traded in 1952 53 and the subsequent years was an association different from the association in 1951 52. After the reduction in the shares of Meyyappa (1) and Chettiappa in the "M.M. Ipoh properties" a fresh arrangement for entrustment of the management of the properties to the M.S.M.M. firm was necessary and according to the findings of the Tribunal, Alagammal assented on behalf of Chettiappa to that arrangement. Counsel for assessee contended that for the finding that Alagammal assented on behalf of Chettiappa to form an association was not supported by any evidence on the record. But from readjustment of the shares in the "M.M. Ipoh properties", admission of Chettiappa to the benefits of M.S.M.M. firm and the management of "M.M. Ipoh properties" to continuing F to remain with the M.S.M.M. firm, with a common selling agency, and the execution of the deed of partition by Alagammal, an inference could reasonably be made that a person purporting to act as guardian of Chettiappa concurred in forming the association and that the person so concurring was Alagammal. The finding recorded by the Tribunal is one of fact, and was not liable a to be questioned before the High Court. It is also pertinent to note that the finding that Alagammal acted on behalf of Chettiappa in forming the association for the years 1952 53 was never challenged and was not sought to be made the subject of a question in an application to the Tribunal under section 66(1) and no question in that behalf was referred to the High Court. It is true that the High Court was of the view that in the years 1952 53 to 1956 57 Meyyappa (1) acted on behalf of Chettiappa in forming the association. But the High Court in a reference under section 66 of the Income tax Act was incompetent to disturb what was 79 essentially a finding of fact recorded by the Tribunal and arrive at another finding. On the other question which has been answered by the High Court the Tribunal declined to submit a statement of the case, because in their view it did not arise out of their order. They pointed out that a ground in support thereof was taken in the memorandum of appeal, but as it was not pressed before the Appellate Assistant Commissioner. they did not deal with it. The High Court observed that the Tribunal was bound to deal with the question irrespective of whether it was agitated before the Appellate Assistant Commissioner. Even assuming that the second question was properly raised in the form and in the manner in which it was raised by the High Court, the answer to the question must, on the facts found, be against the assessee. Counsel for the assessee contended that there were no materials on which the Tribunal could hold that Meyyappa (1) was the principal officer of "M.M. Ipoh", and since the Income tax Officer had made no enquiry before issuing the notice treating Meyyappa (1) was the principal officer of "M.M. Ipoh", Meyyappa (1) could not be so treated for the purpose of the proceedings for assessment. Under section 22(2), the Income tax Officer may, if in his opinion the income of a person is liable to income tax, serve a notice upon him requiring him to furnish a return in the prescribed form. The notice under section 34 for re assessment must also contain all or any of the requirements which may be included in a notice under sub section (2) of section 22. Such a notice may be served under section 63(2) of the Income tax Act upon the principal officer of an association of persons. Under the definition in section 2(12) a "Principal officer"omitting parts not material "used with reference to. . any association means (a) . . (b) any person connected with the authority, company, body, or association upon whom the Incometax Officer has served a notice of his intention of treating him as the principal officer thereof;". The Income tax Officer Karaikudi assessed the income of "the association M.M. Ipoh by its principal officer M.S.M.M. Meyyappa Chettiyar". No objection was ever raised before the Income tax Officer about the regularity of the proceedings and the Income tax Officer found that Meyyappa (1) was the principal officer of the association. Even before the Appellate Assistant Commissioner it was not argued that Meyyappa (1) was not the principal officer. For the first time that ground was taken before the Tribunal. The notices served on Meyyappa (1) are not printed in the record prepared for use in this Court. In the orders of assessment for the year 1952 53 and the subsequent years it is recorded that action was taken to bring to tax the income of "M.M. Ipoh", and in response to the notices the principal officer Meyyappa (1) had filed returns. The assessee submitted an application under section 66(2) during the course of the hearing before the High Court of the question referred by the 80 Tribunal. The High Court granted that application and without calling for a formal statement of the case on the 'question sought to be raised, heard the parties. It may be reasonably assumed that the assessee was prepared to argue the case on the footing that the statements in the orders of the Income tax Officer were correct. In the circumstances it must be held that the Income tax Officer did, serve a notice of his intention to treat a person connected with the association as the principal officer thereof. The Income tax Officer assessed the income of the association as repre ented by Meyyappa (1) its principal officer. There is, in our judgment, nothing in the Act which supports the contention of counsel for the assessee that before proceedings in assessment can commence against an association of persons a notice must in the first instance be issued and an order passed after giving opportunity to the person proposed to be treated as the principal officer opportunity to show cause why he should not be so treated. It is open to the Income tax Officer to serve a notice on a person who it is intended to be treated as the principal officer. The person so served may object that he is not the principal officer or that the association is not properly formed. The Income tax Officer will then consider whether the person served is the principal officer and whether he has some connection or concern with the income sought to be assessed. There is in the Income tax Act an analogous provision in section 43 of the Act which authorises the Income tax Officer to treat a person as a statutory agent of the non resident for the purpose of assessing him to tax, the income received by the non resident. It was held by the Judicial Committee in Commissioner of Income tax, Punjab & N.W.F.P. vs Nawal Kishore Kharaiti Lai(1) that it is not necessary for the validity of a notice calling for a return of the income under section 23(2) served on a person as agent of a non resident under section 43, that it should have been preceded not only by the notice of intimation prescribed by section 43, but also by an order declaring the person to be agent of the non resident or treating him as such. The Income tax Officer may postpone any final determination of the dispute until the time comes to make an assessment under section 23 of the Act. In our judgment, the same principle applies to a case in which in the assessment of the income of an association of persons or person is to be treated as a principal officer of that association. If the person described as a principal officer of an association is duly served with a notice under section 23(2) in the manner prescribed by section 63(2), an adjudication of his status as the principal officer before assessment proceedings may take place is not obligatory. The order assessing the association containing a finding that the person served is the principal officer is sufficient compliance with the requirements of the statute. It is open to the association to challenge the finding of the Income tax Officer 81 in appeal before the Appellate Assistant Commissioner and in further appeal to the Appellate Tribunal. But the order declaring him as the principal officer of an association of persons will not be deemed to be void merely because the proceeding for assessment was not preceded by a declaration of the status of the person treated as the principal officer. The appeals Nos. 1060 1964 of 1965 must also fail and are dismissed with costs. There will be one hearing fee in appeals Nos. 1103 1107 of 1966 and one hearing fee in appeals Nos. 1060 1064 of 1965. R.K.P.S. Appeals dismissed.

IN-Abs

The Karta of a Hindu undivided family was assessed to Incometax from year to year until the assessment year 1953 54 either as an individual or as the Karta. But later, the Income Tax Officer issued notices to him under section 34(1) of the Income tax Act, 1922, for the assessment years 1951 52 to 1953 54 and under section 22(2) for the years 1954 55 to 1956 57 for assessment of the income as having been received by an association of persons consisting of the Karta and his minor son in 1951 52, and the Karta, his minor son and a firm in the years 1952 53 to 1956 57, and assessed the income received as income and associations of persons. The Appellate Assistant Commissioner and the Tribunal, in appeals filed before them, substantially confirmed the order of the Income tax Officer. The High Court, upon a reference. held that the income for the assessment year 1951 52 did E not accrue to an association of persons, but confirmed the view taken by the Income tax Officer in respect of the income for the year 1952 53 to 1956 57. The Karta then moved the High Court under article 226 of the Constitution and contended that section 3 of the Income tax Act, 1922, invested the Income tax Officer with arbitrary and unguided power to assess the income of an association of persons in the hands either of the association or of the persons constituting that association and it therefore offended article 14 of the Constitution. The High Court rejected the petitions. In appeals to this Court against the decisions of the High Court in the writ petition and the reference under section 66 of the Income tax Act. HELD:(i) section 3 of the Income tax Act, 1922, was not violative of article 14 of the Constitution. The duty of the Income tax Officer is to administer the provisions of the Act in the interests of public revenue, and to prevent evasion or escapement of tax legitimately ,due to the State. Though an executive Officer engaged in the administration of the Act. the function of the Income tax Officer is fundamentally quasi judicial. His decision to bring to tax either the income of the association collectively or the shares of the members of the association separately is not final: it is subject to appeal to the Appellate Assistant Commissioner and to the Tribunal. The nature of the authority exercised by the Income tax Officer in a proceeding to assess to tax income, and his duty to prevent evasion or escapement of liability to pay tax legitimately due to the State, con stitute adequate enuciation of Principles and policy for the guidance of the Income tax Officer. [72B H] 66 Suraj Mall Mohta & Co. vs A. V. Visvanatha Sastri and Anr. , distinguished. Shri Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar and Ors. ; , Jyoti Pershad vs The Administrator for the Union Territory of Delhi. ; and Commissioner of Income tax U.P. vs Kanpur Coal Syndicate, referred to, There is no force in the contention that section 23A of the Income tax Act, as it was incorporated by Act 21 of 1930 laid down certain principles for the guidance of the Income Tax Officer in exercising his option, but since the repeal of that section by Act 7 of 1939, the discretion vested in the Income tax Officer to select either the income of the association or the individual member is unfettered. By the repeal of section 23A(1) the essential nature of the power of the Incometax Officer was not altered. He remained as before under a duty to administer the Act, for the benefit of public revenue, but his powers were to be exercised judicially and so as to avoid double taxation of the same income. [73A B; 74F G] (ii) There was abundant material on the record to prove that the Karta, his minor son and the firm formed an association in the years 1952 53 to 1956 57. Under section 2(9) of the Income tax Act, 1922, read with el. (42) of 3 of the General Clauses Act, a firm is a person within the meaning of the Income tax Act and a firm and an individual or group of individuals may form an association of persons within the meaning of section 3 of the Income tax Act. [75F, G] There is nothing in the Act to indicate that a minor cannot become a member of an association of persons for the purposes of the Act. In any event the High Court had rightly held that the mother and guardian of the minor son must, on the facts, be deemed to have given her implied consent to the participation of the minor in the association of persons. [75H] Commissioner of Income tax, Bombay vs Laxmidas & Anr. and Commissioner of Income tax, Bombay North, Kutch Saurashtra vs Indira Balkrishna, , referred to. (iii)The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year. The assessment and the facts found are conclusive only in the year of assessment: the finding on questions of fact may be good and cogent evidence in subsequent years, when the same question falls to be determined in another year but they are not binding and conclusive. The finding recorded by the High Court that in the year 1951 52 there was no association of persons constituted by the Karta and his minor son did not in 'the present case have any effect on the finding of the Tribunal that in year 1952 53 and the subsequent years such an association existed. Furthermore, the association of persons which traded in 1952 53 and the subsequent years was different from the association in 1951 52 because in 1952 an association was formed of the Karta, his son and a firm. [75B C] (iv)If the person described as a principal officer of an. association is duly served with a notice under section 23(2) in the manner prescribed by section 23(2), an adjudication of his status as the principal officer, before assessment proceedings may take place, is not obligatory. The order assessing the association containing a finding that the per. son served is the principal officer is sufficient compliance with the 67 requirements of the statute. It is open to the association to challenge the finding of the Income tax Officer in appeal before the Appellate Assistant Commissioner and in further appeal to the Appellate Tribunal. But the order declaring him as the principal officer of an association of persons will not be deemed to be void merely because the proceeding for assessment was not preceded by a declaration of his status as the principal officer. [80G 81B] Commissioner of Income tax, Punjab & N.W.F.P. vs Nawal Kishore Kharaiti Lal, (1938) 6 I.T.R. 61, referred to.

Appeal No. 370 of 1967. Appeal from the judgment and order dated July 22, 1963 of the Calcutta High Court in Appeal from Original Order No. 58 of 1963. E. Udayaratnan and A. P. Chatterjee, for the appellants. H. R. Gokhale and D. N. Mukherjee, for respondents Nos. 1 3. The Judgment of the Court was delivered by Bhargava, J. On an industrial dispute referred to it, the Fifth Industrial Tribunal of West Bengal gave an award, which was published on September 19, 1955, under which 41 persons, including the 30 appellants who had been dismissed from service by the two Companies, which are respondents 1 & 2 in this appeal, were directed to be reinstated in service. Under the award, it was held that these appellants were entitled to half their salary from October 2, 1953 to the date. of their actual resumption of duty. According to the appellants, they were not allowed to resume duty by the Companies, even though they offered to do so. The Companies did not admit that there was any such offer and went up in appeal to the Labour Appellate Tribunal and obtained an order of stay of implementation of the award from it. The Labour Appellate Tribunal dismissed the appeal, where after the Companies came in further appeal to this Court, and this Court also granted stay of the implementation of the award during the pendency of that appeal. After the final dismissal of the appeal by this Court, the appellants were allowed to resume their duty. Thereafter, a dispute arose as to the amount to which the appellants were entitled under the award until the date of resumption of duty by them. The appellants, by separate applications, applied to the Second Labour Court, West Bengal, for determination of the amounts due to them under section 33C(2) of the (No. 14 of 1947) (hereinafter referred to as "the Act"). The Companies challenged the jurisdiction of the Second Labour Court on the ground that that Court had not been specified for the purpose of determining the amount at which the benefit claimed by the workmen is to be computed in terms of money under section 33C(2) of the Act. This preliminary objection was accepted by the Second Labour Court which held that it had no jurisdiction to make any order on the applications presented by the appellants. The appellants then filed a petition under Article 226 of the Constitution in the High Court of Calcutta challenging the correctness of the view taken by the Second Labour Court. A learned single Judge of that Court came to the decision that the Second Labour Court had jurisdiction to take proceedings on the applications of the appellants under section 33C(2) of the Act, and 99 consequently, issued, a writ of certiorari vacating the order made by the Second Labour Court and a writ of mandamum directing the Second Labour Court to decide on merits the applications presented on behalf of the appellants. The Companies then went before a Division Bench by a Letters Patent Appeal and, in that appeal, the decision of the learned single Judge was set aside and that of the Second Labour Court was restored. The appellants have now come up to this Court by special leave against this order of the Division Bench of the Calcutta High Court by which it has been held that the Second Labour Court had no jurisdiction to deal with these applications of the appellants. For convenience, the provisions of sub sections (1) and (2) of section 33C of the Act, as they stood at the relevant time, are reproduced below: "33C. Recovery of money due from the Employer (1) Where any money is due to a workman from an employer under a settlement or an award or under the provisions of Chapter VA, the workman may, without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same in the same manner as an arrear of land revenue. (2)Where any workman is entitled to receive from the employer any benefit which is capable of being computed in terms of money, the amount at which such benefit should be computed may, subject to any rules that may be made under this Act, be determined by such Labour Court as may be specified in this behalf by the appropriate Government, and the amount so determined may be recovered as provided for in sub section (1). " The language of Sub section (2) of section 33C is perfectly clear in laying down that the computation in terms of money of the benefit claimed by a workman is to be made by such Labour Court as may be specified in this behalf by the appropriate Government and, consequently, the only question that falls for determination is whether it can be held that the Second Labour Court, to which applications were presented by the appellants, bad been specified as "the Court" to make the determination under section 33C(2). It was conceded by counsel for both parties that there was no general or specific order mentioning the Second Labour Court, West Bengal as the 100 Court specified for purposes of making the determination under section 33C(2). On behalf of the appellants, it was urged that the Second Labour Court should be held to have jurisdiction to deal with these applications, because it was constituted under section 7(1) of the Act and every Labour Court constituted under the Act would be competent to make the determination under section 33C(2) by virtue of the provision contained in that sub section itself. Section 7(1) of the Act lays down that: "The appropriate Government may, by notification in the Official Gazette, constitute one or more Labour Courts for the adjudication of industrial disputes relating to any matter specified in the Second Schedule and for performing such other functions as may be assigned to them under this Act. " The submission which was made before the High Court was that the matter which was raised by the applications presented on behalf of the appellants related to one of the matters specified in the Second Schedule, because the Second Schedule at Item No. 6 contained the entry "all matters other than those specified in the Third Schedule" and determination of money value of a benefit claimed by a workman is not one of the matters specified in the Third Schedule. This contention was rejected by the appellate Bench of the High Court. It was not sought to be pressed before us by learned counsel for the appellants when it was pointed out to him that even if it be held that the matter raised by the appellants him their applications related to one of those enumerated in the Second Schedule, that would be immaterial, because, tinder s.7(1) of the Act, a Labour Court is constituted for the purpose of adjudication of industrial disputes relating to those matters, and it cannot possibly be contended that these disputes raised by in dividual workmen for determination of amounts due to them under the award constituted industrial disputes. In fact, this Court, in the Central Bank of India Ltd. vs P.S. Rajagopalan etc. ,(1) clearly held that proceedings under section 33C of the Act are in the nature of execution proceedings and are not meant to include in them proceedings for adjudication of industrial disputes which can only be competently decided by a Labour Court on reference by the appropriate Government under s 10(1) of the Act. It was in view of this clear legal position that the counsel appearing for the appellants relied on the second part of s.7(1) of the Act, under which Labour Courts are constituted "for performing such other functions as may be assigned to them under this Act". Labour Court, West Bengal, having been constituted for performing such other functions also as may be assigned to it under the (1)[1964] 3 S.C.R. 140. 101 Act, it should be held that it was competent to decide the dispute raised by these applications of the appellants, because this function of deciding the applications had been assigned to it by section 33C(2) of the Act. The submission of learned counsel was that section 33(C)(2) should be read as containing a general assignment to all Labour Courts of the function of determining the money value of a benefit claimed by a workman under that provision. We are unable to accept this interpretation. The language of section 33C(2) itself makes it clear that the appropriate Government has to specify the Labour Court which is to discharge the functions under this sub section. The use of the expression "specified in this behalf" is significant. The words "in this behalf" must be given their full import and effect. They clearly indicate that there must be a specification by the appropriate Government that a particular Court is to discharge the function under section 33C(2) and, thereupon, it is that Court alone which will have jurisdiction to proceed under that provision. The more fact that a Labour Court has been constituted under section 7(1) of the Act for the purpose of adjudication of industrial disputes as well as for performing other functions that may be assigned to it under the Act does not mean that that Court is automatically specified as the Court for the purpose of exercising jurisdiction under section 33C(2) of the Act. section 33(C)(2) confers jurisdiction only on those Labour Courts which are specified in this behalf, i.e., such Labour Courts which are specifically designated by the State Government for the purpose of computing the money value of the benefit claimed by a workman. The Second Labour Court, West Bengal, was in fact, never specified by any order of the State Government as one of those Labour Courts which is to exercise the powers or discharge the functions under section 33C(2). In this connection, learned counsel appearing for the appel lants wanted to draw an analogy with section 13 of the Bengal, Agra and Assam Civil Courts Act XII of 1887, under which a State Government may, by notification in the Official Gazette, fix and alter the local limits of the jurisdiction of any Civil Court under that Act. It was urged by him that this provision was similar to the provision contained in section 7(1) of the Act. Section 13(2) of the Bengal, Agra and Assam Civil Courts Act thereafter gives the power to the District Judge, in cases where same local jurisdiction is assigned to two or more Subordinate Judges or to two or more Munsifs, to assign to each of them such civil business cognizable by the Subordinate Judge or Munsif, as the case may be, as, subject to any general or special orders of the High Court, he thinks fit. It was suggested that s.33C(2) of the Act makes a provision in respect of Labour Courts of the same nature as the provision made by s.13(2) of the Bengal, Agra and Assam Civil Courts Act in respect of Subordinate Judges or Munsifs, and since Subordinate Judges and Munsifs can exercise jurisdiction by virtue of section 13(1) of that Act to decide civil suits, it should be held that Labour 102 Courts, by virtue of their constitution under s.7(1) of the Act, get the jurisdiction to decide applications under s.33C(2) also, and the specification of Courts mentioned in that sub section is only for the purpose of deciding which Labour Court should exercise jurisdiction where there may be more than one Labour Court. We do not think that this comparison is correct or justified. Though Civil Courts are constituted under s.13 of the Bengal, Agra and Assam Civil Courts Act, it has to be remembered that the power of those Courts to take cognizance of civil suits and decide them is conferred by the Code of Civil Procedure. It is not by virtue of their constitution under s.13 of the Bengal, Agra and Assam Civil Courts Act that the Courts take cognizance of civil suits and decide them. Section 33C(2), in the matter of applications made by individual workmen, is, therefore, not comparable with s.13(2) of the Benaal, Agra and Assam Civil Courts Act, but, in fact, lays down the requirement which must be satisfied before the Labour Court can take cognizance of the matter raised before it by the applications of the workmen. Section 33C(2) would, thus, serve the purpose in the case of Labour Courts which is served by the provisions of the Code of Civil Procedure relating to cognizance in respect of. civil courts. section 33C(2), by its language, makes it clear that the jurisdiction under that provision is to be exercised only by those particular Courts which are specified in that behalf by the State Government and, in fact, confers jurisdiction on only those Courts and not on all Labour Courts, which may have been constituted under s.7(1) of the Act. It was also urged by learned counsel before us that we should give a liberal construction to the provisions of s.33C(2) so as to ensure that the benefits of that provision are not denied to a workman even if a State Government neglects to specify a Labour Court in that behalf. We do not think that there is any force in this submission. When a provision has been made in s.33C(2) for specification of a Labour Court in that behalf by the appropriate Government, it is presumed that that Government will carry out its duty and will make the necessary specification. Even under s.7(1) of the Act, the power is granted to a State Government to constitute Labour Courts, and if the State Government neglects to constitute Labour Courts, the provisions of s.33C(2) would automatically become ineffective. This would be no ground for giving an interpretation to s.7(1) which would do away with the necessity of the Labour Court being constituted by a State Government. It may also be incidentally mentioned that in West Bengal the State Government had made Rules in 1958 under s.38 of the Act and Rule 74 was as follows: "74. Application for recovery of dues An application under section 33C shall be delivered personally or forwarded by registered post in triplicate to the Secretary 103 to the Government of West Bengal in the Department of Labour or to such officers to whom powers have been delegated under section 39 of the ." This Rule lays down that all applications under s.33C are to be delivered to the Secretary to the Government of West Bengal in the Department of Labour, or to such officers to whom powers may have been delegated under s.39 of the Act. The purpose of the application being sent to the Government is clear. If the application is under s.33C(1), the Government is to take action on that application itself and is to realise the money claimed in that application. On the other hand, if the application happens to be under s.33C(2), the purpose of delivery of that application to the Secretary to the Government clearly would be that, on that applica tion, the Government would specify the Labour Court which is to deal with that application. It appears that, in some States, the appropriate Government has. by general orders, specified Labour Courts for the purpose of exercising jurisdiction under s.33C(2). So far as the Government of West Bengal is concerned, it did not issue any similar general order, and the intention of Rule 74 was that any workman wishing to obtain relief under s.33C(2) should apply to the State Government when the Government would specify the Labour Court for the purpose of dealing with that application. This position has been further clarified by a subsequent amendment of Rule 74 under which it is clearly provided that where any work. man is entitled to receive from the employer any benefit which is capable of being computed in terms of money, the workman concerned may apply to the State Government in the prescribed Form for the specification of a Labour Court for determining the amount of his dues. It is true that this Rule 74 did not in this form exist at the relevant time, with which we are concerned in the pro sent case, but we agree with the Bench of the Calcutta High Court that Rule 74, as it stood at that time, was also intended to lay down that a workman claiming relief under s.33C(2) must present his application to the State Government, whereupon the State Government would specify the Labour Court which was to deal with it under s.33C(2) of the Act. For the reasons given above, we hold that the decision of the Division Bench of the Calcutta High Court is correct and must be upheld. The appeal fails and is dismissed, but, in the circumstances of this case, we make no order as to costs. Y. P. Appeal dismissed.

IN-Abs

Under an award in an industrial dispute, it was held that the appellants workmen were entitled to half wages from a certain date to the date they resumed duty. After the final disposal of the companies ' appeal, the workmen were allowed to resume duties. Thereafter, a dispute arose as to the amount to which the workmen were entitled. The workmen, by separate applications, applied to the Second Labour Court, West Bengal for determination of the amounts due to them under section 33C(2) of the . The companies challenged the jurisdiction of the Second Labour Court on the ground that the court had not been specified for the purpose of determining the amount at which the benefit claimed by the workmen was to be computed in terms of money under section 33C(2) of the Act. The preliminary objection was accepted by the Second Labour Court, against which the workmen filed a writ petition. This petition was accepted by the High Court, but in appeal, the High Court dismissed the petition. HELD: The appeal must fail. The mere fact that a Labour Court has been constituted under section 7(1) of the Act, for the purpose of adjudication of Industrial Disputes as well as for performing other functions that may be assigned to it under the Act does not mean that the court is automatically specified as the Court for the purpose of exercising jurisdiction under section 33C(2) of the Act. Section 33C(2) confers jurisdiction only on those Labour Courts which are specified in this behalf, i.e., such Labour Courts which are specifically designated by the State Government for the purpose of computing the money value of the benefit claimed by a workman. The Second Labour Court, West Bengal, was never specified by any order of the State Government as one of those Labour Courts which was to exercise the powers or discharge the functions under section 33C(2). [10OC E]. Though the Civil Courts are constituted under section 13 of the Bengal, Agra and Assam Civil Courts Act, the power of those courts to take cognizance of civil suits, and decide them is conferred by the Code of Civil Procedure. It is not by virtue of their constitution under section 13 of the Bengal, Agra and Assam Civil Courts Act that the Courts take cognizance (of civil suits and decide them. Section 33C (2), in the matter of applications made by individual workmen, is therefore, not comparable with section 13(2) of the Bengal, Agra and Assam Civil Courts Act, but in fact, lays down the requirement which must be satisfied before the Labour Court can take cognizance of the matter raised before it by the applications of the workman section 33C(2) would, thus, serve the purpose in the case of Labour Courts which is served by the provisions of the Code of Civil Procedure re lating to cognizance in respect of Civil Courts. [102B D] 98

il Appeals Nos. 2178 to 2182 of 1966. Appeals by special leave from the judgment and order dated August 28, 1961 of the Bombay. High Court in Income tax Reference No. 5 of 1961. section T. Desai, R. Ganapathy Iyer, R. N. Sachthey and section P. Nayar, for the appellant (in all the appeals). T. V. Viswanatha Iyer, O. C. Mathur, and, B. Parthasarathy, for the respondent (in all the appeals). 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 Judicature at Bombay answering the following question (Question No. 3) against the Commissioner of Income tax, Bombay City and Suburban District, appellant before us: "3. Whether on the facts and in the circumstances of the applicant 's case the Tribunal was right in holding that a proportionate part of the profits determined on sales grouped under Items 3, 4, 5 and 9 in the assessment order by the application of Rule 33 was assessable to Income tax? The High Court, in view of its answer to this question did not answer the following question (Question No 2): "Whether on the facts and in the circumstances of the applicant 's case, the Tribunal was right in holding that in respect of sales of Rs. 14,80,059 the profit was correctly determined by the application of Rule 53 and one third of the profits so determined could be said to accrue or arise in British India?" We are not concerned with the remaining question (Question No. 1) which related to sales to the Government of India, as that question was answered in favour of the appellant. Relevant facts are as follows: The respondent, Hukamchand Mills Ltd., Indore, hereinafter referred to as the assessee, is a limited company incorporated in the State of Indore and had a textile mill at Tadore. It carried on the business of manufacture and sale of textiles in the calendar years 1941, 1942, 1944, 1945 and 1946. For the relevant assessment years, namely, 1942 43, 1943 44, 1945 46, 1946 47 and 1947 48, the Income tax Officer found that the assessee effected certain sales to merchants and others in British India. For the assessment year 1942 43, the Income tax Officer classified the total sales of Rs. 92,45,151 into four categories. Out of the total sales, sales 49 Rs. 14,80,059 formed the subject matter of the two questions reproduced above. The statement of the case details the categories in the following chart: Sales Balance Sales effected of pursu Total and columns ant to Category of Sales Sales received II and cent. Balance in British III racts India bearing Stamps of Indore State (a,) Sales in pursuance of business canvassed by company 's represemita. tives in British India 10,02,642 3,35,855 6,66,787 20,759 6,46,028 (3) (b) Sales to British Indian merebants through birokers and agents in British India. .2,91,891 2,91,891 2,91,891 (4) (c) Sales to British Indian merchants and brokers during their visit at lndore 3,85,214 3,85,214 2,86,224 (5) (d) Sales to British Indian merchants at the time of their own or their brokers ' visit at Indore 3,13,306 3,13,306 57,390 2,55,916 (9) ____________________________________________________________ 19,93,0533,35,855 16,57,1981,77,13914,80,059 ____________________________________________________________ (The figures at the extreme right show the item numbers used by the Income tax officer in para 2.of the assessment order). The modus operandi for effecting the sales enumerated in the chart referred to above is described as follows in the statement of the case: "(a) Sales of Rs. 6,66,787: The assessee had a paid representative at Bombay who canvassed on behalf of the Company to British Indian Merchants. The orders were sent by such merchants to Indore. On acceptance of orders by the Company at Indore the Company prepared the contracts, signed them and forwarded the same for being signed by the customer. One contract was signed by the customer and returned to the assessee. Thus 'the Company signed at Indore and the customer signed, in British India. The contracts were signed on company 's forms. On some contracts there were stamps of Holkar State. On the remainder there were 'British India ' stamps. Sales on which Holkar Stamps were affixed aggregated to Rs. 20,759 which were deleted by the Appellate L/P(N)1SCI 5 50 Assistant Commissioner from the said sales of Rs. 6,66,787. Sales of Rs. 3,35,855 under this category received in British India by the representative of the assessee at Bombay were taxed on receipt basis and the same was not contested, as stated above. The goods under the contracts referred to hereinabove were delivered F.O.R. Indore. The relevant railway receipt made in the name of 'self ' was endorsed in favour of the customer and was handed over to Imperial Bank of India, Indore, for being delivered to the merchant. Sale proceeds were received at Indore through the Imperial Bank of India, Indore. (b)Sales of Rs. 2,91,891 : The brokers in British India who were described as free lance brokers transmitted the offers to the company. These offers were made on the brokers ' own forms and were communicated to the merchants through the brokers. Such orders were placed by the brokers in the normal course of business of these brokers who were not en, aged by the Mill as such. The goods were delivered F.O.R. Indore. The relevant railway receipt made in the name of 'Self ' was endorsed by the assessee in favour of the merchants and handed over to the Imperial Bank of India. (c)Sales of Rs. 3,85,214: These sales were made to British Indian merchants and customers, who came to Indore to negotiate and place orders. The orders were accepted at Indore. On some contracts made for sales under this item, stamps of Holkar State were affixed. Sales pursuant to contracts on which stamps at Holkar State were affixed aggregated to Rs. 98,990 which was deleted by the, Appellate Assistant Commissioner from the aforesaid sales of Rs. 3,85,214. The goods were delivered, F.O.R. Indore. The railway receipt was made out in the name of 'Self ' and was endorsed by the assessee in favour of the customer and handed over to the Imperial Bank of India for being delivered to the party concerned. The sale proceeds were received at Indore as in other cases. (d)Sales of Rs. 3,13,306: Sales under this category were made to British Indian merchants on their or their broker 's personal visit to Indore. Contracts for such sales were made in the same manner as stated hereinbefore. Such sales, in respect of which relevant contracts bore the Holkar State stamps aggregated to Rs. 57,390 which were deleted by the Appellate Assistant Commissioner from the aforesaid sales of Rs. 3,13,306. The goods were delivered F.O.R. Indore. The railway receipt was made in the name of 'self ' and was endorsed in favour 51 of the customer and handed over to the Imperial Bank of India for being delivered to the merchants. The sale proceeds were recovered from the Imperial Bank of India, Indore, at Indore as in other cases. " The Income tax Officer held that profits apportionable on sales of Rs. 16,57,198 accrued or arose in British India and as such taxed the same on accrual basis. Rs. 3,35,855 having been received in British India were taxed on accrual cum receipt basis. The Appellate Assistant Commissioner on appeal held that taking into account all facts of the case it would be fair to take 3 3 1/3 % of the profits realised on sales amounting to Rs. 16,57,198 as attributable to activities in British India. Out of this amount he deducted sales totalling Rs. 1,77,139 as the contracts in respect of these were signed at Indore and accepted at Indore. On the balance of sales of Rs. 14,80,059 the Appellate Assistant Commissioner held that, on the analogy of Rule 33 of the Indian Income tax Rules, 3 1/3% profits out of the total profits apportionable to such sales should be attributable to the activities in British India and as such taxed in the hands of the assessee. The Tribunal confirmed the order of the Appellate Assistant Commissioner. In compliance with the order of the Bombay High Court, the Appellate Tribunal drew up a statement of the case under section 66(4) of the Indian Income tax Act, and referred three questions mentioned above. The High Court, as stated above, answered Question No. 3 in favour of the assessee, and the appellant having obtained special leave, the appeal is now before us. Mr. section T. Desai the learned counsel for the appellant, con tends that the High Court was wrong in holding that no part of the profits of the sales could be said to have accrued or arisen in British India. He says that on the facts and circumstances of the case, the property in the goods passed in British India in all the four categories. He says that the method of delivery in the four categories was similar, namely, that the railway receipts were made in the name of 'self ' and endorsed in favour of the customers and were handed over to the Imperial Bank of India, Indore, for being delivered to the merchant and sale proceeds were received at Indore through the Imperial Bank of India, Indore. He further says that the fact that the goods were to be delivered F.O.R. at Indore does not make the property in the goods pass at Indore. There. is considerable force in the learned counsel 's submissions. In Pushanlal Mansinghka (P) Ltd. vs The Commissioner of Income Tax. Delhi,(1), this Court, on similar facts, held that the property in the goods passed in Part A and Part C States where the delivery was made. This Court further held that the income accrued only (1) Civil Appeals Nos. 557 558 of 1966; judgement delivered on May 5, 1967. 52 when the purchaser paid the price through the bank. The method of delivery. in that case was as follows: "The appellant consigned the goods to 'self ' and the railway receipts alongwith the bills of exchange were presented by the appellant to the Rajasthan Bank. Bhilwara, for collection after endorsing the railway receipts in favour of the Bank. It has also been found that the Rajasthan Bank in its turn endorsed the railway receipts in favour of its branches in Part 'A ' and Part 'C ' States and that the goods were delivered to the buyers only when they paid the price to the Bank and obtained the railway receipts. " We may mention that in Commissioner of Income tax, Delhi vs P. M. Rathod & Co.(1) Kapur, J., speaking for the Court, on similar facts, observed: "The railway receipts in favour of self could not be delivered to the buyer till the money was paid and although the goods had been handed over to a common carrier the appropriation to the contract was only conditional and the performance was completed only when the monies were paid and the railway receipts delivered." This case was followed in Commissioner of Income tax vs Bhopal Textiles Ltd.(2). It is true that the Court in these cases was concerned with the question of the receipt of income, but there is no difference in principle as in both cases the question of passing the property in the goods or performance of the contract had to be considered . The learned counsel for the assessee contends that no such point was raised before the Appellate Tribunal and we should not allow the appellant to raise this point at this stage. It seems to us that before the High Court stress was laid on the "formation of the contract and its complete performance" and not on the aspect of the passing of property in the goods. These questions are perhaps relevant to the answering of Question No. 2 but we are unable to regard this aspect as a new question. Following our judgment in Pushanlal Mansinghka (P) Ltd. vs The Commissioner of Income tax, Delhi(1) we hold that income accrued within British India and that a proportionate part of the income was assessable to incometax. In view of this the answer to the question (Question No. 3) must be in the affirmative. (1) , 150. (2) (3) Civil Appeals Nos. 557 558 of 1966; judgment delivered on May 5,1967. 53 Regarding Question No. 2, the learned counsel for the appel lant invited us to answer the question. The learned counsel for the assessee raised a number of points on which the High Court has not expressed its views. Under the circumstances we think it would be proper if we remand the case to the High Court for answering Question No. 2 according to law. In the result the appeals are allowed and question No. 3 answered in the affirmative, and the case remitted to the High Court to answer question No. 2 in accordance with law. The High Court did not allow any costs. Under the circum stances there will be no order as to costs in this Court. R.K.P.S. Appeals allowed.

IN-Abs

The respondent was a limited company incorporated in the State of Indore where it had a textile mill. During the years from 1941 to 1946, it effected sales in British India through canvassing by its own representatives,. through brokers or through the purchasers ' brokers or representatives visiting Indore. The sales in British India in all categories were made F.O.R, Indore; the Railway Receipts were made out in the name of 'self ' and were endorsed in favour of the customer concerned and handed over to the Bank for delivery to the customer against payment of the sale price which was received at Indore through the Bank 's local branch. In the course of its assessment to Indian Income tax for some of the years during the period 1942 43 to 1947 48, the Income tax Officer, apart from taxing the income actually received in India, also held that the profits apportionable to all the other sales made in British India accrued or arose in the taxable territories and were therefore liable to Indian Income tax. He accordingly taxed the same on accrual basis. The Appellate Assistant Commissioner in appeal held that taking into account the fact of the case, it would be fair. on the analogy of Rule 33 of the Indian Income tax Rules 1922 to attribute 331 per cent of the profits to the activities in British India and to assess them to Indian Income Tax. The Tribunal confirmed this order but the High Court, on a reference under section 66 of the Indian Income tax Act, held in favour of the respondent. In the appeal to Supreme Court it was contended on behalf of the appellant that on the procedure adopted for the sales, the property in the goods passed in British India in all the categories of sales and that the fact that the goods were sold F.O.R. at Indore did not make any difference to that position. The High Court had therefore wrongly taken the view that the sales were not taxable in India. HELD: Allowing the appeal: the income accrued within British India and a proportionate part of it was assessable to Indian Incometax. [52G H] Pushanlal Mansingka (P) Ltd. The Commissioner of Income Tax, Delhi, Civil Appeal Nos. 557 558 of 1966, decided on May 5, 1967; followed. Commissioner of Income tax, Delhi vs P.M. Rathod & Co. , 150: Commissioner of Income tax vs Bhopal Textiles Ltd., , referred to. 48

Appeals Nos. 256 267 of 1966. Appeals by special leave from the Award dated April 6, 1964 of the Central Government Labour Court, Dhanbad in Ap plications L.C. Nos. 237 / 245, 228 / 247, 238 / 250, 230 / 252, 239 / 254, 229/255 of 1962. H.R. Gokhale and D. N. Gupta, for the appellant (in all the appeals). Janardan Sharma, for the respondents (in all the appeals). The Judgment of the Court was delivered by Shelat, J. These appeals by the special leave arise out of applications filed by workmen of the appellant company claiming bonus under the Scheme framed by the Central Government under the, Coal Mines Provident Fund and Bonus Schemes Act, 46 of 1948 and railway fares and leave wages under the award of the Industrial Tribunal (Colliery Disputes) which came into effect as from February 22, 1954. The Central Government Labour Court at Dhanbad allowed their claim under section 33C (2) of the . Mr. Gokhale for the appellant company challenged the correctness of the Labour Court 's decision and raised the following contentions : (1) that the Labour Court had no jurisdiction to try these applications under section 33C (2): (a)because section 33C(2) contemplates recovery of money payable under an award, settlement or under the provisions of Chapter VA of the only 142 and not under any other statute or scheme framed there under; (b)that under section 33C(2) the benefit capable of being computed in terms of money is a non monetary benefit and not a claim for money itself; and (c)that the proceedings under section 33C(2) being in the nature of execution proceedings substantial questions between an employer and his employee cannot be adjudicated by the Labour Court under this section; (2)that in any case these applications were barred by limitation prescribed by the said bonus Scheme and/or due to laches on the part of the respondents , (3)that under the said Scheme the respondents are not entitled to bonus as they were employed as domestic servants and were during the relevant period performing domestic and personal work; and (4)that the direction to pay bonus for the period prior to the dates on which these respondents were employed was in valid. The contention as to jurisdiction of the Labour Court depends on the true construction of section 33C(2) as it stood in 1962 when these applications were filed and before its amendment by Act 36 of 1964. Section 33C(2) has so far been the subject matter of decision by this Court in three cases, viz., Punjab National Bank Ltd. vs Kharbanda(1), Central Bank of India vs Rajagopalan(2) and Bombay Gas Co. Ltd. vs Gopal Bhiva(3). The following propositions on the question as to the scope of section 33C(2) are deducible from these three decisions: (1)The legislative history indicates that the legislature, after providing broadly for the investigation and settlement of disputes on the basis of collective bargaining, recognised the need of individual workmen of a speedy remedy to enforce their existing, individual rights and therefore inserted section 33A in 1950 and section 33C in 1956. These two sections illustrate cases in which individual workmen can enforce their rights without having to take recourse to section 10(1) and without having to depend on their union to espouse their case. (2)In view of this history two considerations are relevant while construing the scope of section 33C. Where industrial disputes arise between workmen acting collec tively and their employers such disputes must be adjudicated upon in the manner prescribed by the Act, as for (1) [1962] Supp. 2 S.C.R. 977. (2) ; (3) ; 143 instance under section 10(1). But having regard to the legislative policy to provide a speedy remedy to Individual ' workmen for enforcing their existing rights, it would not be reasonable to exclude their existing rights sought to be implemented by individual workmen. Therefore though in determining the scope of section 33C care should be taken not to exclude cases which legitimately fall within its purview, cases which fall, for instance under section 10(1), cannot be brought under section 33C; (3)Section 33C which is in terms similar to those in section 20 ofthe Industrial Disputes (Appellate Tribunal) Act,, 1950 is a provision in the nature of an executing provision; (4)Section 33C(1) applies to cases where money is due to a workman under an award or settlement or under Chapter VA of the Act already calculated and ascertained and therefore there is no dispute about its computation. But sub section 2 applies both to non monetary as well as monetary benefits. In the case of monetary benefit it applies where such benefit though due is not calculated and there is a dispute about its calculation; (5)Section 33C(2) takes within its purview cases of workmen who claim that the benefit to which they are entitled should be computed in terms of money even though the right to the benefit on which their claim is based is disputed by their employers. It is open to the Labour Court to interpret the award or settlement on which the workmen 's right rests. (6) The fact that the words of limitation used in section 20(2) of the Industrial Disputes (Appellate Tribunal Act. 1950 are omitted in section 33C(2) shows that the scope, of section 33C(2) is wider than that of section 33C(1). Therefore, whereas sub section 1 is confined to claims arising under an award or settlement or Chapter VA. claims which can be entertained under sub section are not so confined to those under an award, settlement or Chapter VA. (7)Though the court did not indicate which cases other than those under subsection would fall under sub section 2. it pointed out illustrative cases which would not fall under sub section 2, viz., cases which Would ap propriately be adjudicated under section 10(1) or claims which have already been the subject matter of settlement to which sections 18 and 19 would apply. (8)Since proceedings under section 33C(2) are analogous to execution proceeding and the Labour Court called upon to compute in terms of money the benefit claimed by a workman is in such cases in the position of an executing court. the Labour Court like the executing court 144 in execution proceedings governed by the Code of Civil Procedure, is competent under section 33C(2) to interpret the award or settlement where the benefit is claimed under such award or settlement and it would be open to it to consider the plea of nullity where the award is made without jurisdiction. It is clear that the right to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship between an industrial workman and his employer. Since the scope of sub sec. 2 is wider than that of subsec. 1 and the sub section is not confined to cases arising under an award, settlement or under the, provisions of Chapter VA. there is no reason to hold that a benefit provided by a statute or a Scheme made thereunder, without there being anything contrary tinder such statute or section 33C(2), cannot fall within sub section 2. Consequently, the benefit provided in the bonus scheme made under the Coal Mines Provident Fund and Bonus Schemes Act, 1948 which remains to be computed must fall under sub section 2 and the Labour Court therefore had jurisdiction to entertain and try such a claim, it being a claim in respect of an existing right arising from the relationship of an industrial workman and his employer. The contention that the Labour Court had no jurisdiction because the claim arose under the said scheme or because the benefit was monetary or because it involved any substantial question between the Company and the workmen must, in view of the said decisions, fail. These applications were made in 1962 though they related to claims for the years commencing from 1948 and onwards. The contention therefore was that part of these claims, at any rate, must be held to be barred either by limitation or by reason of laches on the part of the workmen. The answer to this contention is clearly provided in the case of Bombay Gas Co.(1) where a distinction was drawn between considerations which would prevail in an industrial adjudication and those which must prevail in a case filed under a statutory provision such as section 33C(2). This court pointed out there that whereas an industrial dispute is entertained on grounds of social justice and therefore a Tribunal would in such a case take into consideration factors such as delay or laches, such considerations are irrelevant to claims made under a statutory provision unless such provision lays down any period of limitation. The Court held that there is no justification in inductina period of limitation provided in the Limitation Act into the provisions of section 33C(2) which do not lay down any limitation and that such a provision can only be made by legislature if it thought fit and not by the court on an analogy or any other such consideration. It is a matter of some significance that though the legislature (1)[1964] 3 S.C.R. 709. 145 amended section 33C by Act 36 of 1964 and introduced limitation in the section, it did so by means of a proviso only in respect of claims made under sub sec. 1 but did not provide any limitation for claims under sub section 2. In view of this fact and the decision in Bombay Gas Company 's case(1) Mr. Gokhale conceded that he could not press the contention that the present claims were barred by limitation or laches. Some reliance however was sought to be placed on cl. 3 of section 9A of the Bonus Scheme. Section 9(A) contemplates that the employer has first to tender the bonus payable to the workman under the Scheme. If the bonus, in spite of the tender, remains unclaimed for six months after such tender, he is required to have it credited in the Reserve Account established under the Scheme. The section then provides by cl. 2 that the bonus amount shall be paid in the seventh month from the end of the quarter to which it relates by depositing it in such government treasury as may be prescribed and the original chalan of such deposit shall be sent within the time set out therein to the Coal Mines Provident Fund Commissioner. Clause (3) then provides that a workman who desires payment of arrears of bonus payable to him shall apply to the said Commissioner within three years from the last date of the quarter to which the bonus relates. The period of three years of limitation thus applies to applications for payment by the Commissioner from the deposit made in the treasury and has no application to claims under section 33C(2) which as aforesaid makes no provision for limitation The contention that the respondents workmen, though admittedly the employees of the appellant company, were not entitled to bonus under the Scheme as they were doing domestic and personal work, viz., of supplying water at the residence of certain junior officers of the Company throughout the relevant period, is also not tenable. The relevant portion of section 1 of the Bonus Scheme relied on by the Company reads as follows: "1. Class of employees eligible to qualify for bonus Except as hereinafter provided, every employee in a coal mine to which this Scheme applies shall be eligible to qualify for bonus. Exceptions An employee in a coal mine shall not be entitled to a bonus under the Scheme for the period during which (a). . . . . (b)he is employed as a mali, sweeper or domestic servant on domestic or personal work. . " (1) ; my(N)ISCI 12 146 Under this section every employee of the Company except as therein provided is eligible for bonus. The exception provides that a person though an employee in a colliery is not entitled to bonus inter alia for the period during which he is employed as a mali, sweeper or domestic servant on domestic and personal work. Two conditions are therefore necessary to render an employee ineligible for bonus : (1) that he is employed as a mali, a sweeper or a domestic servant and (2) that he performs during the relevant period domestic or personal work. To render an employee ineligible for bonus under this exception both the capacity and the nature of work are relevant factors. It follows that even though an employee is employed as a mali, a sweeper or a domestic servant if he does non domestic or non personal work he will be entitled to bonus and would lose his right to it only during that period that he does domestic or personal work. In Bhowra Collicry vs Its Workmen(1) this Court construed this very exception and held that if the concerned workmen were employed and worked as garden mazdoors and malis to look after the gardens attached to the bungalows occupied by the Colliery officers they would not be eligible for the bonus notwithstanding the fact that the bungalows were owned by the Colliery, the workmen were Colliery 's employees and worked under the Company 's orders and were liable to be transferred from one job to another. Thus the employment of a person as a mali, sweeper or a domestic servant and discharge by him of domestic or personal work as distinguished from non domestic and non personal work, i.e., work relating to the colliery, are necessary conditions before the exception can apply. In view of the admitted position that the respondents work men were employees of the Company the burden of proof that they fell within the exception is clearly on the Company. In its written statement the Company no doubt averred that these workmen were employed as domestic servants and carried out domestic and personal duties and were therefore not eligible for the bonus. But it is clear from the evidence of the two witnesses examined by the Company that the Company failed to establish either that the respondents were employed as domestic servants or that they were exclusively en aged on domestic or personal, work. On the other hand, from the evidence of Sibu, one of the respondent workmen, it appears that the respondents were employed in the colliery, that they were not assigned the exclusive duty of supplying water, at the residence of the junior officers but that they supplied water at certain pit heads. On this evidence the Labour Court has given a finding that they were engaged in supplying water at certain points in the colliery. In these circumstances the Labour Court was justified in coming to the conclusion that the exception did not apply. (1) 147 The last contention which remains to be considered was that the Labour Court was not right in awarding the claim of the workmen in full, both as regards bonus and railway fares and leave wages. According to the Company, none of these workmen was in its employment in 1948, that they were appointed at different dates and that they would at best be entitled to bonus for the period during which they were so employed. This contention has, however, no force in view of the Company not having disputed the quantum of relief claimed by the workmen both as regards bonus as also the railway fares and leave wages. The appeals are dismissed with costs. Appeal dismissed.

IN-Abs

The respondents workmen filed applications in 1962 claiming bonus under the Scheme framed by the Central Government under the Coal Mines Provident Fund and Bonus Schemes Act, 1948 and railway fares and leave wages from 1948 onwards. The Labour Court, Dhanbad allowed their claims under section 33C(2) of the , which, in appeals to this Court, the appellant Company challenged, contending, that (1) the Labour Court had no jurisdiction to try these applications under section 33C(2); (ii) the applications were barred by Limitation prescribed by the bonus Scheme and/or due to laches. and (iii) under the said Scheme the workmen were not entitled to bonus as they were employed as domestic servants. HELD:The appeals must fail. (i)The right to the benefit which is sought to be computed must be an existing one, that is to say, already adjudicated upon or provided for and must arise in the course of and in relation to the relationship ' between an industrial workman and his employer. Since the scope of sub see. 2 of section 33C is wider than that of sub s 1, and the sub section is not confined to cases arising under an award settlement or under the provisions of Chapter VA there is no reason to hold that a benefit provided by statute or a Scheme made thereunder, without there being anything contrary under such statute or section 33C(2), cannot fall within sub section 2. Consequently. the benefit provided in the bonus scheme made under the Coal Mines Provident Fund and Bonus Schemes Act, 1948 which remained to be computed must fall under sub section 2 and the Labour Court therefore had jurisdiction to entertain and try such a claim, it being a claim in respect of an existing right arising from the relationship of an industrial workman and his employer. [144B D]. Punjab National Bank Ldt. vs Kharbanda [1962] Supp. 2 S.C.R. 977 Central Bank of India vs Rajagopalan [1964] 3 S.C.R. 140, and Bombay Gas Co., Ltd. vs Gopal Bhiva [1964] 3 S.C.R. 709 relied on, (ii)There is no justification for inducting a period of limitation provided in the Limitation Act into the provisions of section 33C(2) which do not lay down any limitation. It is a matter of some significance that though the legislature amended section 33C by Act 36 of 1964 and introduced limitation in that Section, it did so by means of a proviso only in respect of claims made under sub sec. 1 but did not provide any such limitation for claims under sub sec. [14 4H 145B]. Bombay Gas Co. Ltd. vs Gopal Bhiva ; relied on. 141 The period of three years of limitation provided for by clause (3) of section 9A of ;the Bonus Scheme applies to applications for payment by the Coal Mines Provident Fund Commissioner from the deposit made in the Government treasury and has no application to claims under section 33C(2) which makes no provision for limitation. [145D E]. (iii)Two conditions are necessary to render an employee ineligible for Bonus under section 1 of the Bonus Scheme: (1) that he is employed as a mali, a sweeper or a domestic servant, and (2) that he performs during the relevant period domestic or personal work. To render an employee ineligible for bonus under this exception both the capacity and the nature of work are relevant factors. It follows that even though an employee is employed as a mali, a sweeper or a domestic servant if he does non domestic or non personal work he will be entitled to bonus and would lose his right to A only during that period that he does domestic or personal work. [146B C]. Bhowra Colliery vs Its Workmen, , relied on. On the evidence, the respondents were employed in the colliery, they were not assigned the exclusive duty of supplying water at the residence of the junior officers but they supplied water at certain pit heads. So the exception did not apply.

Appeal No. 2399 of 1966. Appeal from the judgment aid decree dated June 16, 1964 of the Mysore High Court in Regular Appeal No. 229 of 1958. Sarjoo Prasad, O. P. Malhotra, and 0. C. Mathur, for the appellants. A. K. Sen, B. P. Singh and R. B. Datar, for the respondent. 126 The Judgment of BACHAWAT and BHARGAVA, JJ. was delivered by BHARGAVA, J. SHELAT, J. delivered a dissenting Opinion. Bhargava, J. We have had the benefit of reading the judg ment proposed to be delivered by our brother Shelat, J., but regret that we are unable to agree with him. The facts of this case have already been given in his judgment and need not be reproduced. As held by him, it is correct that until the Hindu Law Wo men 's Rights Act, 1933 (Mysore Act X of 1933) (hereinafter referred to as "the Act") was passed, no female in Mysore had a right to share in joint Hindu family property under the Mitaksbara Law as applied in that area. The right of Hindu woman in it joint Hindu family was confined to maintenance, residence and marriage expenses. The Act for the first time enlarged her rights. The Mysore High Court in Venkatachaliah vs Ramalingiah(1) stated this principle and, in our opinion, correctly. It was also correctly held by that Court that the object of section 8 ,of the Act is to confer larger rights on females by giving them a share in the joint family property. It is, however, to be noticed that section 8, in conferring rights on females, envisages two different circumstances in which that right is to accrue to them. The first circumstance is when there is a partition of the joint family property between any co parceners, and the other is when, though there is no partition, the entire joint Hindu family property passes to a single male owner. It is in both these cases that the Act envisages that the property may lose its character of co parcenary property, because the co parcenary body may cease to exist on partition or on survival of a single male member of the family. It seems that the purpose of section 8 was to safeguard the interests of females in such contingencies where the co parcenary property is to disappear either by partition or by survival of a sole male member. The legislature seems to have felt that, in such circumstances, it was not safe to leave the females entitled to maintenance, etc, at the mercy of the individuals who may receive property on partition or at the mercy of the individual in whom absolute rights in the property might vest as a result of sole survivorship. For the first contingency, when there is a partition, provision was made in clauses (a), (b) & (c) of sub section (1) of section 8 under which a right was granted to the females to ask for separation of their shares if the male members decided to have a partition. Unless the male members themselves sought a partition, it was not considered necessary to grant any right to the females themselves to ask for partition, because the property could not lose its character as co parcenary property until the male members of the family sought partition. The right of the females under clauses (a), (b) & (c) of section 8(1), therefore, only arises at a partition between the male co parceners forming the joint Hindu family. 127 For the second contingency, when the co parcenary property passes to a sole, survivor. provision has been made in clause (d) of section 8(1). This clause, in protecting the rights of females, had necessarily to give to the females the right to the share in the coparcenary property even if there be no partition at all, because, on the passing of the property to a sole survivor, there could not possibly be any partition sought by the male members of the coparcenary body. This right conferred by clause (d) is not, therefore ' in any way dependent on any partition being sought, or on any right accruing to the females earlier under clauses (a), (b) and (c). The latter three clauses relate to the right arising and being exercised simultaneously at the time of a partition between the male members of the co parcenary body, while the right under cl. (d) has been given for those cases when there can be no partition at all. The right conferred by clause (d) is, therefore, an independent right and not connected with the rights granted to the females under clauses (a), (b) & (c). In these circumstances, it appears to us that, when determining the scope of the right under clause (d), there is no need to envisage an assumed, parti tion and there is no justification for holding that clause (d) must be interpreted on the basis of an assumed partition between the sole surviving member of the family and the co parcener who immediately pre deceased as a result of whose death the property passed to the sole survivor. The reference to clauses (a), (b) & (c) clause (d) seems to have created an impression that such a partition must be assumed in order to determine the rights of the females accruing to them under clause (d). It is true that the language in which cl. (d) is expressed is a little ambiguous, but it seems to us that the reference to clauses (a), (b) and (c) in clause (d) is for the sole purpose of determining all the females who are to get benefit under that clause. The females who are to get benefit are all those to whom a right to a share in the joint family property would have accrued if there had been a partition either under clause (a), or clause (b) or clause (c). The scheme of section 8(1), thus, is that if there is a partition as envisaged in clause (a), the females mentioned in that clause only get a right to the share in the property. If there is a partition between male members mentioned in clause (b), then the right to the share accrues to the females mentioned in that clause. Clause (c) is wider, because it does not specifically enumerate the females who are to get a share. Clause (c) only lays down that clauses (a) and (b) are to apply mutatis mutandiv to a partition among other co parceners in a joint family. This language itself means that, even though under clause (c) a partition will be between members of a joint family who are not related to each other in the manner given in clauses (a) and (b), yet the females who are to 128 receive a share are to be ascertained with reference to clauses (a) & (b). Under clause (a), a partition envisaged is between a person and his son or sons, and the females who are to received a share are his mother, his unmarried daughters and the widows and unmarried daughters of his predeceased undivided sons and brothers who have left no male issue. The question arises how the females entitled to a share in clause (c) are to be ascertained with reference to this clause when the partition is not between ' a person and his son or sons. Clause (c) clearly applies only to a case where the partition is between members of the family not related in the manner laid down in clause (a), and yet the ascertainment of the females who are to receive a share at that partition is to be by reference to clause (a). The same applies when the partition under clause (c) is between persons not related in the manner envisaged in clause (b) and yet the females mentioned in clause (b) are to be ascertained for the purpose of being granted the share mentioned in clause (c). An example may be taken. Supposing there is a partition between, a person and his brother 's son. In such a case, clause (c) lays down that the females entitled to a share are to be ascertained by reference to clauses (a) and (b). The result is that, in such a case, by applying clause (a), the females entitled would be the mother, the unmarried daughters, the widows and unmarried daughters of predeceased undivided sons and brothers of both the uncle as well as the nephew. Simi larly, in ascertaining the females by reference to clause (b) in such a partition, the females included will be the mothers, the unmarried sisters, the widows and unmarried daughters of the predeceased undivided brothers of both the uncle and the nephew. This example makes it clear that the scope of ascertainment of the females who are to receive a share under clause (d) must be very wide, because cl. (d) mentions that when the joint family property passes to a single co parcener by survivorship, the right to shares is vested in all the clauses of females enumerated in all the three clauses (a), (b) and (c). That being the position, we do not think that clause (d) can be interpreted narrowly as giving a right to only those females who happen to be related to one or the other of the last two male co parceners in the manner laid down in clauses (a) and (b). In fact, the language of clause (d) has to be interpreted as laying down that right to shares will vest in all females of the joint Hindu family who would have possibly received the right to a share if at any earlier time there had been partition in the family in any of the three manners laid down in clauses (a), (b) and (c). This intention can only be given effect to on the basis that clause (d) does not restrict itself to finding out females on the basis of an assumed partition between the last two male co parceners. It is significant that clause (d) gives a right independently of a partition and we do not see why its scope should be restricted by assuming a partition. The reference to 129 the earlier clauses in this clause must be held to be restricted to the sole purpose of ascertainment of the females falling under clauses (a), (b) and (c), and once they are ascertained, it has to be held that each one of them becomes entitled to a share under this clause. The object of clause (d) is to give to all females entitled to maintenance 'from the co parcenary property a right to claim a share in the joint family property instead of a right to maintenance, and that is why reference is made in it to all the females enumerated ' in clauses (a). (b) and (c). Clauses (a) and (b) refer to four classes of females, viz, the mother, the widow. the unmarried daughter and the unmarried sister. All these four classes of females are within clause (d). The actual share which a female becomes entitled to under clauses (a), (b), (c) or (d) has to be ascertained with reference to subsection (2) of section 8 Further, in ascertaining the females to whom rights accrue to shares in the joint family property either on partition under clauses (a), (b) or (c), or on passing of the property to a sole survivor under clause (d). effect has to be given to sub section 3) of section 8 in which the scope of the words "widow", "mother", and " son" is enlarged and which, in addition, lays down that the provisions of this whole section relating to the mother are to apply mutatis mutandis to the paternal grandmother and great grandmother. Consequently, when the classes of females entitled to shares under clause (d) are to be ascertained and it is to be found out whether mother mentioned in clause (a) or clause (b) is entitled to a share, the persons included in the expression "mother" would be a "step mother" and, further, the provision conforming the right on the mother would also confer the right on paternal grandmother and great grandmother, because clauses (1) and (b), which relate to a mother, are to be applicable mutatis mutandis to paternal grandmother and great grandmother also. It is clear that, on this interpretation of clause (d) read with clauses (a) (b) and (c) and sub section (3) of section 8, the decision given in the present case by the High Court is correct and the respondent is a person entitled to share as held by that Court. As the widow of Mendappa, a co parcener, she was clearly entitled to a one fourth share. In Dakshinamurthy vs Subbamma(1), the widow of one Sreekantachari sued her husband 's brother for partition and possession of a quarter share of property formerly belonging to the joint family of her husband, and his brother. Reilly, C. J., and Venkataranga Iyengar, J., held that the plaintiff was clearly one of the women to whom clause (d) of sub section (1) of s, 8 applied. This ruling has always been followed in Mysore and is in accord with the view expressed by us above. Referring to the last case, (1) L/P(N)ISCI 10 130 Venkataramana Rao, C. J., observed in Pogaku Venkatachall 'iah "But whatever may be said of the rights of the female member under clause (a.), her rights under clause (d) are different. The right of a female member to share the property is not limited as under clause (a) to arise only on a partition of the joint family property, but her right as pointed out in Dakshinamurthy vs Subbamma arises from the moment when the property passes to a single co parcener. " In Kolla Narasimha setty V. Nanjamma(2) Reilly, C.J. point ed out with reference to sub section (1)(a) of section 8: "The purpose of the sub section appears to me to be to give women of the family who otherwise would have a right to maintenance against the whole family right to claim a share in such a partition instead ' of. having to be content with a right to maintenance." ' In Venkatagowda vs Sivanna(3), the facts were that R had a son K by the widow G. K.died leaving his widow L and his son M. Thereafter, R died leaving M as the sole surviving co parcener. Clearly, G as, the widow of R was entitled to, a one fourth share. The Mysore High Court also came to that conclusion, though we must say that we do not agree with all the observations made in the judgment. The Court in that case was in error in postulating a partition taking place between M and R, treating the latter as alive. As a result of our decision above. the appeal fails and is dismissed with costs. Shelat, J. One Mendappa died on October 29,1951 leaving him surviving his first wife Devamma the third defendant, Kem pananjamma the plaintiff, a grandson Mahendra the first defendant and Dakshaiyaniamma the widow of his predeceased son Guruswami, the second defendant. The case of the said Kempananjamma was that on Mendappa 's death the family property passed to the first defendant, he being the sole surviving coparcener, subject to her rights and those of defendants 2 ' and 3. The case of defendants 1 and 2, on the other hand. was that the plaintiff as the step grandmother of the first defendant was not one of the female relatives entitled to any share in the property which vested on the death of Mendappa in the, 1st defendant as the sole surviving coparcener. The Trial Court decreed the suit holding that the plaintiff was entitled to 18th share. In an (1)49 My H.C.R.456 (2) at p. 474. (3) 131 appeal to the High Court by Nagendra the parties agreed that the view of the former High Court of Mysore, that section 8(1) for the first time created a right to a share in favour of certain females in the circumstances set out therein, that under cls. (a), (b) and (c) the right to such share can be exercised only in the event of a partition and that unlike cls. (a), (b) and (c), cl. (d) gave the female relatives covered by that clause a right to claim a partition when the joint family property passed on to the sole surviving coparcener, was correct. The High Court stated that cl. (d) contained two important expressions: (i) "subject to the right to shares" and (ii) "of the classes of females enumerated in the above subsections," i.e., the classes of females enumerated in cls. (a), (b) and (c); that therefore the females in cl. (d) did not constitute a sepa rate class independently of cls. (a), (b), and (c). In the High Court 's view cl. (d) takes in not only the female relatives of the penultimate and the sole surviving coparcener but also of all those who predeceased them and that for ascertaining the females entitled to a share, one must assume that there was a partition under cls. (a), (b) and (c). Accordingly, it held that the widow of the grandfather of the sole surviving coparcener being the widow of a deceased coparcener fell under cl. But since Mendappa left Nagendra, a male issue, who would be his son under the definition of a son in sub section 3. the plaintiff would not be entitled to a share as the widow of the said Mendappa. She would, however, be entitled to a right to a share as the step grandmother as sub section 3 defines a son as including a grandson and a mother as including a paternal grandmother. Since a mother includes a step mother the plaintiff was the mother of Guruswamy and the paternal grandmother of Nagendra and therefore his mother under sub section 3 and was as such entitled to a right to a share under cl. This appeal by certificate is directed against this interpretation of cl. Before the Mysore Act X of 1933 was passed no female had a right to a share in the joint family property under the Mitakshara Law as applied to Mysore, her right being confined only to maintenance, residence or marriage expenses, The Act for the first time enlarged these rights and provided for a share at a partition between coparceners. The Act, however. does not entitle the female relatives to a share unless a partition takes place between coparceners. Further. the females entitled to a share are only those enumerated in section 8(1). The Act gives them no right to demand partition if the coparceners choose to remain joint. (See Mayne 's Hindu Law, IIth Ed. p. 531. Mulla 's Hindu Law, 13th Ed. p. 98 and Venkatapathiah vs Saraswathamma(1). Therefore the right of these female relatives is not a vested but a contingent right. depending upon their falling under one or the other clauses (1) 16 My. HC. Reports 273, 277. 132 of the sub section both as to persons and circumstances obtaining at the time of the partition or the passing of the property under cl. (d) to the sole surviving coparcener. Section 8(1) reads as follows: "8. (1)(a) At a partition of joint family property between a person and his son or sons, his mother, his unmarried daughters and the widows and unmarried daughters of his predeceased undivided sons and brothers who have left no male issue shall be entitled to share with them. (b)At a partition of joint family property among brothers, their mother, their unmarried sisters and the widows and unmarried daughters of their predeceased undivided brothers who have left no male issue shall be entitled to share with them; (c)sub sections (a) and (b) shall also apply mutatis mutandis to a partition among other coparceners in a joint family. (d)Where joint family property passes to a single coparcener by survivorship, it shall so pass subject to the right to share of the classes of females enumerated in the above sub sections. " Sub section 2 fixes the shares of the aforesaid female rela tives. Sub section 3 inter alia defines the term "mother" as including, where there are both a mother and a step mother, all of them jointly and the term "son" as including a stepson, a grandson and a great grandson. It also provides that the provisions ,of this section relating to the mother shall be applicable, mutatis mutandis, to the paternal grandmother and great grandmother. Clause (a) applies on a partition between a person and his son or sons and the females entitled to a share thereunder are (a) the mother of that person, (b) his unmarried daughters, (c) the widows of his predeceased undivided sons who have left no male issue, (d) the unmarried daughters of his predeceased sons who have left no male issue and (e) the widows and unmarried daughters of his predeceased undivided brothers who have left no male, issue. In Narasimha Setty vs Nagamma(1) the Mysore High Court interpreted the expression "who have left no male issue" in cl. (a) as applicable to the time when the partition takes place. The widow of a predeceased undivided son therefore has a share at a partition even if she had a son by her husband if such son has not survived at the time of the partition. Under sub section 3 a son includes a stepson, grandson and great grandson, but a (1) 18 May L.J. 461. 133 mother though including a step mother does not include a grandmother or a great grandmother. Therefore, if there is both a mother and a paternal grandmother the latter will not have a share. But if the mother is not alive, then, by virtue of subsection 3 the paternal grandmother of that person, that is the father, gets a share. Thus, all the female relatives in a family do not get shares. A simple illustration will clarify this position. A has two sons B and C and a predeceased son D4 At a partition between A, B and C, the wives and daughters of B and C do not get any share; so also the widow or widows and the unmarried daughters of D do not get any share if he left a male issue. The wife of a coparcener participating in a partition has also no share. Strangely, though the unmarried daughters of A get shares, though, he has a son. the unmarried daughters of B and C do not get any share. Clause (b) contemplates a partition between brothers. The female relatives who have a right to a share at such partition are (a) their mother, (b) their unmarried sisters and (c) the widows and unmarried daughters of predeceased undivided brothers who have left no male issue. No other female is entitled to a share. Continuing the previous illustration, if A dies and a partition takes place between his sons, B and C, the case would fall under clause (b). Under clause (a) the wife of A had no share but now that A is dead his widow has a share not as his widow but as the mother of B and C. The unmarried daughters of A who had a share under clause (a) now have a share but in a different capacity, as the unmarried sisters of B and C. Similarly, the widow and unmarried daughters of D, who had shares as the widow and unmarried daughters of a predeceased son would have shares as the widow and unmarried daughters of the predeceased brother of B and C. It will be seen that the widows and unmarried daughters of the predeceased brothers of A would have no share though they would have had shares under clause (a) if A was alive and the partition was between him and his sons, B and C. Thus, with the change in circumstances, certain females lose their right to shares while certain others though having a right to shares take in different capacity. Clause (c) applies where there is a partition between copar ceners other than those under cis. (a) and (b). For instance, it applies to a partition between an uncle and a nephew or between cousins. In such a case the clause enjoins application mutatis mutandis of the principles of cls. (a) and (b). The following illustration clarifies the meaning of cl. A and B and C are brothers. A and B has each a son, X and Y, but C has no son. C dies leaving a widow, Z. A and B die. There is a partition between X and Y. The provisions of cl. (a) will not apply as they relate to the female relatives of the father in a partition between him and his son or sons. Therefore, the females enumerated in clause (a) 134 will not have a right to shares. In Nagendradasa vs Ramakrishnan(1) the Mysore High Court treated the mother of the coparcener concerned in the partition as entitled to a share except when she was the widowed daughter in law of the coparcener taking part in the partition. On this basis the mothers of X and Y would be entitled to shares but even on this interpretation, Z, the widow of C will not have a share, she being neither the mother of the partitioning coparceners, X or Y, nor the widow of a predeceased brother of X and Y. But if B were alive and the partition was between him, his son Y and nephew X, the widow of C would take a share under the principles of cl. (b), as the widow of a predeceased brother provided C has not left a male issue. If A has left a widow D she takes a share, not as A 's widow but as the mother of X. If the mother of A and B were alive, she would take a share as the mother of B. The widow of C, the predeceased brother of B would be entitled under cl. (b) to a share as the widow of the predeceased undivided brother who left no male issue. Only certain females thus have a right to a share at a partition depending upon which of the clauses (a) or (b) or (c) applies and the situation obtaining at the time of such partition. A female entitled to a share under clause (a) might lose that right if the situation changes from (a) to (b) or (c). By reason of section 2(2), however, this would not mean that a female who had a right e.g., of maintenance or of marriage expenses or of residence, is deprived of that right. That sub section expressly reserves such a right. What section 8(1) does is to enlarge such a right into a right to a share for certain female relatives to whom one or the other clause applies. Clause (d) applies to a case when the family property passes by survivorship to a sole surviving coparcener. In such a case there can be no partition, as is the case under clause (a) or (b) or (c). Indeed, the property becomes incapable of partition and but for clause (d) no female relative would have any right to a share. To save such a result clause (d) provides that the rights of the female relatives should not be lost only by reason of the property passing to the sole surviving coparcener. Sub section 5, furthermore, gives such female relatives as fall under sub section 1 a right to have their shares separated and thus makes them co sharers subject to whose rights the sole surviving coparcener takes the property. Therefore, whereas under clauses (a), (b) and (c) the rights fluctuate according to the position of the female relatives in the family when the partition takes place there is no such uncertainty in the case falling under cl. (d) as the sole surviving coparcener takes 'the property subject to the right to shares of female relatives falling under the provisions of clause (a) or (b) or (c). Such is the scheme of section 8(1). (1) 135 Certain decisions of the Mysore High Court under section 8(1) may at this stage be noticed. In Dakshnaimurthy vs Subbamma(1) the widow of S sued her husband 's brother for partition and possession of her share. The claim was on the footing that her husband and the defendant were the only coparceners of the joint family and that on S 's death the defendant became the sole Surviving coparcener. S left no male issue. The High Court held that cl. (d) applied, and that under sub section 5 the widow had the right to sue for partition the moment section died and the property passed to the defendant by survivorship as the sole surviving coparcener. This decision can only be justified on the round hat for purposes of ascertaining the females entitled to a right to a share one must assume as if there was a partition between the penultimate, coparcener and the sole surviving coparcener and that it is only then that one can ascertain the females subject to whose right to shares the property passes by survivorship. Since the penultimate coparcener and the surviving coparcener were brothers, the Court for purposes of cl. (d) assumed partition between brothers and applied the principles of cl. (b) and held that S 's widow was entitled to a share in her capacity as the widow of the predeceased undivided brother. In Venkatachaliah vs Ramalingiah(2) the High Court held that the object of section 8(1) being to confer larger rights on females by giving them a share in the family property clause (d) has effected a departure from the law which prevailed before the enactment by making the specified females co sharers along with the Single coparcener when the joint family property passes to him by survivorship. In Venkategowda vs Sivanna(3) a SingleJudge of the 'High Court, however, went further than these decisions. In that case R bad a son K by his wife G. K died in 1936 leaving his widow L and a son M. Later on R died whereupon the joint family property passed to M as the sole surviving coparcener. The question was whether cl. (d) applied and G. the widow of R, had a right to a share. Narayana Pai J. held that G was entitled to 1/4th share, i.e., half of what R would have not if a partition had taken place between R and M. He observed: "The position contemplated under cl. (d) of sub section 1 of section 8 is one where of the two coparceners living one dies survived by the other alone as the single coparcener. When both were alive both had an interest in the joint family property. Although upon the death of one of them. the entire property passed by survivorship to the survivor, the interest that really passes is the interest of the deceased coparcener. In strict theory of the Mitakshara Law nothing really passes on the death of the one but the death of one merely enlarges the interest of the survivor. When however the section contemplates some (1) 45 My. H.C. Reports 102. (2) 49 My. H.C. Reports 456. (3) 136 property or interest as passing, the natural meaning is that what passes is the property or interest of the deceased coparcener to the surviving coparcener. It is this interest that is made to pass subject to the right to shares of classes of females entitled to receive such shares. The expression "share" necessarily contemplates a partition because it is upon partition that a share is ascertained. It 'IS necessary therefore to theoretically postulate a partition to ascertain both the classes of females entitled to shares as well as the shares to which they are entitled. From the wording of the section the appropriate time at which such a theoretical partition must be postulated to have taken place is the time of the death of the last but one coparcener. At such a partition. the male coparceners participating therein could only be the last two coparceners, the one that died and the other that survived treating the dead coparcener to be alive. The purpose of treating the dead person to be alive at a partition though dead is obviously to determine the shares of his female relatives by applying the provisions of sub sections 2 and 4 because the shares of those female relatives have to be carved out of his share . We must therefore in this case postulate a partition taking place between Rangiah treating him as alive and his grandson Mahima. Although Mahima is grandson of Rangiah, as the term "son" includes a grandson (please see sub sec. 3) that partition would be a partition between a person and his son, that is. a partition falling under clause (a) of sub section (1). At that partition Rangiah would get one share and Mahima would get one share. Mahima 's mother Lakshamma would be the widow of a predeceased son of Rangiah but because she has a son alive. viz., Mahima. she will not get a share. As Rangiah died without partition, his share normally passes intact to the grandson Mahima. His getting the entire share is prevented by cl. (d) of sub section 1. " So far there is no difficulty. But the learned Judge further observed: "Rangiah did not leave any unmarried daughters; his widow steps in and takes one half of what he, if he were alive, would receive as his share. In terms of the entire property her share will be 1/4th. " If for ascertaining the females entitled to a right to a share under cl. (d), cl. (a) is applied as the learned Judge did, how would the widow of Rangiah be considered to be one entitled to a share? Clause (a) envisages partition between a person and his son or sons. Under that clause the widow of that person is not entitled to a share. But the learned Judge held: 137 "It must be remembered that in ascertaining the shares of the widows of pre deceased sons under cl. (a) those sons are treated to be alive and have to be allotted one share and their widows will get a half carved out of that share reading cl. (a) of sub section 2 and sub section 4 together. In an actual partition under cl. (a) between living male coparceners therefore the clause contemplates clearly a share being allotted to a widow of a deceased coparcener treated as alive and participating in that partition. When therefore for the purposes of cl. (d) we Postulate a theoretical partition between a living and a dead coparcener, there is no violence done to the language of either cl. (a) or cl. (d) in living out of the one share of the deceased last but one coparcener one half to his widow and also 1/4th to an unmarried daughter if alive at the time. " This part of the judgment is contrary to the provisions of clause (a) Assuming that clause (d) postulates a theoretical partition between R and M, G the widow of R gets no share under clause (a). The case of Dakshnaimurthy(1) relied on by the learned Judge is not applicable as the clause found relevant there was clause (b) under which the widow of a pre deceased undivided brother was held to be entitled to a share on the footing that the assumed partition was between brothers. In that case the property passed by survivorship to the brother as the sole surviving coparcener. If a theoretical partition were to be assumed between him and his deceased brother, that is, the plaintiff 's husband, it would be a partition between brothers under clause (b) and it was possible to hold that the widow of the predeceased undivided brother was entitled to a share. Though Act X of 1933 is a social legislation and should be liberally construed the construction has to be in conformity with its language. These decisions seem to show that the High Court has been inclined to the view that cl. (d) properly construed requires assumption of a partition between the last but one and the sole surviving coparcener and that on such assumption the females entitled to a right to shares are to be ascertained depending upon which of the three cls. (a), (b) or (c) applied considering, the relationship in which the last but one coparcener and the sole surviving coparcener stood. Is the step grandmother of Nagendra then entitled to a right to a share under cl. (d)? Where clause (a) applies i.e., where partition takes place between a father and his son or sons the females entitled to a share are the mother the unmarried daughters of such a father and the unmarried daughters of his predeceased sons and brothers who have left no male issue. The wife of such a father has no share. Clause (b) cannot apply where the surviving coparcener (1) 138 and the last but one coparcener are the grandson and grandfather a,, the partition contemplated thereunder is between brothers. Norwould cl. (c) apply as the partition there is between coparcener, ,other than those under cl. (a) and cl. Under sub section a son includes a grandson and great grandson. Nagendra would for purposes of this section therefore be a son. Consequently the partition to be assumed for the purpose of cl. (d) would be between a father and his son. Though under sub section 3 a sorry includes a grandson and a great grandson and a mother include, a stepmother a grandmother is not included in the definition of " mother". The expression " provisions of this section relating to the mother shall be applicable mutatis mutandis to the paternal grandmother and the great grandmother" mean only that the grandmother and the great grandmother of the father would have a share under cl. (a) but not the grandmother of the son. Nagendra 's grandmother therefore would have no right to a share. The important words in clause (d) are: "subject to the right to shares of the classes of females enumerated in the above sub. sections. " These words indicate that in a case falling under cl. (d) where there could be no partition one must ascertain the females entitled to a right to share as if there was a partition between the last but one. coparcener and the sole surviving coparcener. If that is not done there is no method by which female relatives subject to whose right the sole surviving coparcener takes the property can be ascertained and cl. (d) would become infructuous. There can be a right to a share only if there is a partition and not otherwise. There is. a distinct difference between cases falling under cls. (a), (b) or (c) where a share vests in the female relatives enumerated therein when actual partition takes place and cl. (d) where no partition can occur. A partition has therefore to be assumed because it is only on such assumption that females or whom a right to a share is conferred can be ascertained, i.e., those females who on such partition, if one had taken place. would have 'been entitled to a share. The question as to who are those females entitled to such a share depend upon which of the clauses (a). (b) or (c) applies to such a theoretical partition. In the present case. in view of the definition of a 'son ' in sub section 3 the assumed partition would be between a father and a son under cl. (a) and .the plaintiff would be entitled to a share only if she is one of those enumerated in that clause. Her claim was either as the widow of Mendappa. the last but one coparcener or as the step grandmother of the appellants the sole surviving coparcener. In whatever capacity she may claim a right to a share, as cl. (d) is phrased she would have such a share provided she falls under one or the other enumerated classes under cl. (a), (b) or (c) as the case may be. For, clause (d) does nor create any independent class. If the assumed partition were to be 139 between Mendappa and the appellant, the appellant by reason of sub sec. 3 being a son, the partition would be under cl. In that case the respondent would have no right to a share either as the wife of Mendappa or as the grandmother of the appellant. The High Court took the view that cl. (d) would take in not only the female relatives of the last but one and the sole surviving coparcener but also of those who predeceased them and on the assumption that there was a partition between them and the surviving coparcener. Therefore, according to the High Court, the respondent as the widow of the grandfather of the sole surviving coparcener falls under cl. (d) as the widow of the predeceased undivided coparcener. But there are two difficulties in accepting such a view. Firstly, if a partition is assumed with Guruswamy, the predeceased son of Mendappa, such a partition would be between him and his father Mendappa or between him, Mendappa and the appellant. Such a partition would attract cl. (a) in which case the respondent would have no share as only the mother of Mendappa and the widow of the predeceased son i.e, Guruswamy, provided such a son left no male issue, would have a share. The respondent does not fall in either of the two categories. The second difficulty is that cl. (d) does not warrant such a wide construction. The words "subject to the right to shares of the classes of females enumerated in the above sub sections" must mean those females who fall under one or the other clause on an assumed partition between those coparceners, on the death of one of whom the property passes to the sole surviving coparcener. The High Court was therefore in error in adopting such a wide interpretation. The High Court was also in error in holding that the respondent was entitled to a share relying on the definition of a "son" as including a grandson and therefore a mother as meaning a paternal step grandmother. The mother in cl. (a) means the mother including the grandmother of Mendappa and not the grandmother of the appellant. For the reasons aforesaid the judgment and decree of the High Court are set aside and the plaintiff 's suit is dismissed. There will be no order as to costs. ORDER in accordance with the opinion of the majority, the appeal is dismissed with costs.

IN-Abs

Clause (a) of sub section (1) of s 8 of the Hindu Law Women 's Rights Act 1933, provided that at a partition of joint family property between a person and his son or sons, those entitled to share with them would be his mother his unmarried daughters, and the widows and unmarried daughters of his predeceased undivided sons and brothers who had no male issue. Clause (b) provided that when the partition was between brothers, those entitled to share with them would be their mother, their unmarried sisters, and the widows and unmarried daughters of their predeceased undivided brothers who had left no male issue. According to cl. (c) clauses (a) and (b) would apply, mutatis mutandis, to a partition among other coparceners in a joint family. Clause (d) laid down that when a joint family property passed to a single coparcener by survivorship it would so pass subject to the right to share of the classes of females enumerated in the earlier clauses. Sub s.(2) of section 8 fixed the shares of the aforesaid relatives. Sub s.(3), inter alia, defined the term 'mother ' as including whether there were both a mother and a step mother, all of them jointly, and the term 'son ' as including a step son, a grandson and a great grandson. It also provided that the Provisions of the section relating to the mother would be applicable, mutatis mutandis, to the paternal grandmother and great grandmother. M died in 1951. The plaintiff respondent was one of his widows and the appellant was his sole surviving grandson. In a suit for her share filed by the respondent the question was whether in the terms of cl. (d) of sub section (1) of section 8 of the aforesaid Act, the respondents was entitled to a share. The trial court decreed the suit and the High Court upheld the decree. The appellant came to this Court by certifi cate. It was contended on behalf of the appellant that cl. (d) pre supposed a partition between the penultimate and the sole surviving coparceners and that therefore all the femalies in cl. (a), (b) and (c) could not be said to be entitled to a share. Held:Per Bachawat and Bhargava, JJ. When determining the scope of the right under cl. (d) there is no need to envisage an assumed partition and there is no justification for holding that cl. (d) must be interpreted on the basis of an assumed partition between the sole surviving member of the family and the co oparcener who immediately pre deceased and as a result of whose death the property passed to the sole survivor. [127]. The object of cl. (d) is to give to all females entitled to maintenance from the coparcenary property a right to claim a share in the .joint family property instead of a right to maintenance and that is why reference is made in it to all the females enumerated, in cls. (a), 125 (b)and (c), Clauses (a) and (b) refer to four classes of females viz. the mother, the widow, the unmarried daughter and the unmarried sister. All these four classes of females are within el. [129B C]. Sub section (3) of section 8 lays down that the provisions of the who lie section relating to the mother are to apply mutatis mutandis to the paternal grandmother and great grandmother. Consequently when the classes of females entitled to shares under el. (d) are to be ascertained and it is to be found out whether a mother mentioned in el. (a) of (b). is entitled to share, the persons included in the expression 'mother ' would be a 'step mother ' and further, the provision conferring the right on the mother would also confer the right on paternal 'grandmother and great grandmother, because cls.(a) and (b), which relate to a mother are to be applicable mutatis muttandis to paternal grandmother and great grandmother also. On this interpretation of el. (d) read with cls. (a), (b) and (c) and sub section (3) of s.8. , the respondent must be held entitled to a share. As the widow of M a coparcener, she was entitled to a one fourth share. [ 124D G]. Venkatachaliah vs Ramalingiah, 49 Mysore H.C.R. 456, Dakshinamurthy vs Subbamma, and Kolla Natrasinha Setty vs Nanjamma, approved. Venkatagowda vs Sivanna, , referred to. Per Shelat J. (dissenting). There can be a right to a share only if there is a partition and not otherwise. There is a distinct difference between cases falling under el. (a) (b) or (c) when a share vests in the female relatives enumerated therein when actual partition takes place and cl.(d) where no partition can occur. A partition, has therefore to be assumed because it is only on such assumption that females on whom a right to share is conferred can be ascertained. The question as to who are those females entitled to such a share depends upon which of the cls. (a) (b) or (c) applies to such a theoretical partition. In the present case in view of the definition of a 'son ' in sub section (3) the assumed partition would be between a 'lather and a son under el. Under that clause the respondent would have no right to a share either as the wife of M or as the grandmother of the appellant. The extended meaning given to the word 'mother ' in s.8(3) would include the grandmother of M and not of the appellant. [138E G: 139A 0]. Venkatapathiah vs Saraswathana, , Narasimha Setty vs Nagamma, , Nagendradasa vs Ramakrishnan, , Dakshnaimurthy vs Subbamma, , Venkatachaliah vs Ramalingiah. and Venkatagowda vs Sivanna, [1960] My. L.J. 85, referred to.

Appeal No. 548 of 1967. Appeal by special leave from the award dated October 5, 1966 ,of the Industrial Tribunal, Alleppey in Industrial Dispute No. 9 ,of 1965. H. R. Gokhale and D. N. Gupta, for the appellant. M. K. Ramamurthi, Shyamala Pappu, Vineet Kumar and R. Nagaratnam, for the respondents. The Judgment of the Court was delivered by Mitter, J. This appeal by the Remington Rand of India Ltd. :against their workmen arises out of an award dated 5th October, 1965 made by the Industrial Tribunal, Alleppey published in the Kerala Gazette dated 15th November, 1966. The first point taken against this award is that it cannot be given effect to as it was published beyond the period fixed in the Act. The notification accompanying the gazette publication stated that Government had received the award on 14th October, 1966. It was argued by Mr. Gokbale that in terms of section 17(1) of the Industrial Disputes Act the award bad to be published " within a period of thirty days from the date of its receipt by the appropriate Government". According to learned counsel, the award having reached Government on 14th October, 1966 it should have been published at the latest on 12th November, 1966 as section 17 of the Act was mandatory. Our attention was also drawn to 165 sub section (2) of section 17 according to which it is only the award published under sub section (1) of section 17 that is final and cannot be called in question by any court in any manner. We were also referred to section 17 A and section 19. Under sub section (1) of section 17 A an award becomes enforceable on the expiry of thirty days from the date of its publication under section 17 and under sub section (3) of section 19 an award is to remain in operation for a period of one year from the date on which the award becomes enforceable under section 17 A. From all these provisions it was argued that the limits of time mentioned in the sections were mandatory and not directory and if an award was published beyond the period of thirty days, in contravention of section 17(1) it could not be given effect to. To fortify his argument, learned counsel relied on certain observations of this Court in The Sirsilk Ltd. vs Government of Andhra Pradesh.(1) In that case, there was an order referring certain disputes between the appellant and its workmen to the Industrial Tribunal, Andhra Pradesh. The Tribunal sent its award to Government in September 1957. Before the Government could publish the award, the parties to the dispute came to a, settlement and on 1st October, 1957 a letter was written to the Government jointly on behalf of the employer and the employees intimating that the dispute which had been pending before the Tribunal had been settled and a, request was made to Government not to publish the award. Government expressed its inability to withhold the publication taking the view that section 17 of the Act was mandatory. The appellants filed writ petitions before the High Court of Andhra Pradesh under article 226 of the Constitution praying that Government might be directed not to publish the award sent to it by the Industrial Tribunal. The High Court held that section 17 was mandatory and it was not open to Government to withhold publication. The contention on behalf of the appellants was that section 17 providing for the publication of the award was directory and not mandatory. Mr. Gokhale relied on the passage at page 452 of the judgment reading: "It is clear therefore, reading section 17 and section 17 A together, that the intention behind section 17(1) is that a duty is cast on Government to publish the award within thirty days of its receipt and the provision for its publication is mandatory and not merely directory". Ultimately, however, on a conspectus of sections 17, 17 A, 18 and 19, it was observed that "though section 17(1) is mandatory and the Government is bound to publish the award received by it from an industrial tribunal, the situation arising in a case like the present is of an exceptional nature and requires a reconciliation between section 18(1) and section 18(3), and in such a situation, the only way to reconcile the two provisions is to withhold the publication of the award, as a binding settlement has. already come into force. . " (1) ; , 452 166 Reference was also made to the case of Erumeli Estate vs Industrial Tribunal (1). There the question directly arose as to whether non publication of the period mentioned in section 17 (1)invalidated the award and the learned Judge observed that he was not inclined to accept that contention although it was highly desirable that the award should be published within the time mentioned. He said: "Exceptioning that a slight delay in publishing the award under section 17(1) results in postponing its finality under section 17 (2) or its becoming enforceable under section 17 A, no other consequence flows from the delay and therefore, in my view the provisions of sub s (1) of s 17 should be considered only to be merely directory. . ." Mr. Gokhale also referred us to the case of the State of Uttar Pradesh & Others vs Babu Ram Upadhya(2) where there is an elaborate discussion as to whether the use of the word "shall" in A Statute made the provision mandatory. It was observed by Subba Rao, J. (as he then was) speaking for the majority of the Court that: "For ascertaining the real intention of the Legislature the Court may consider inter alia, the nature and the design of the statute, and the consequences which would follow from construing it One way or the other, the impact of other provisions whereby the necessity of complying with the provisions in question is avoided, the circumstances, namely, that the statute provides for a contingency of the non compliance with the provisions, the fact that the noncompliance with the provisions is or is not visited by some penalty, the serious or trivial consequences that flow therefrom, and, above all, whether the object of the legislation will be defeated or furthered. " Keeping the above principles in mind, we cannot but hold that a provision as to time in section 17(1) is merely directory and not mandatory. Section 17(1) makes it obligatory on the Government to publish the award. The limit of time has been fixed as showing that the publication of the award ought not to be held up. But the fixation of the period of 30 days mentioned therein does not mean that the publication beyond that time will render the award invalid. It is not difficult to think of circumstances when the publication of the award within thirty days may not be possible. For instance, there may be a strike in the press or there may be any other good and sufficient cause by reason of which the publication could not be made within thirty days. If we were to hold that the award would therefore be rendered invalid, it would be attaching undue importance to a provision not in the mind of the legislature. It is well (1) [1962] IT L.L.J. 144. (2 ) [1961]2 S.C.R 679, 710 167 known that it very often takes a, long Period of time for the reference to be concluded and the award to be made. If the award becomes invalid merely on the ground of publication after thirty days, it might entail a fresh reference with needless the parties. The non publication of the award within the period of thirty days does not entail any penalty and this is another consideration which has to be kept in mind. What was said in the earlier passage from the judgment in The Sirsilk Ltd. vs Government of Andhra Pradesh(1) merely shows that it was not open to Government to withhold publication but this Court never meant to lay down that the period of time fixed for publication was mandatory. Coming to the merits of the case, Mr. Gokhale argued that the Tribunal. had gone wrong in revising the wage scales as it had done. The head of dispute referred to the Tribunal was "revision of wages as per award of the Madras Labour Tribunal in 38 of 1960. " The arguments advanced in this case were the same as in the Bangalore case (just now disposed of) and the Tribunal after noting the phenomenal progress of the Company and the enormous profits it was making, came to the conclusion that there was no reason why there should be any disparity in wages between the employees of a branch and the regional office when they were doing the same or similar work. In this case also, there was no evidence of comparable concerns. In our view, what we have said on this point of the dispute with regard to the Bangalore branch applies equally with regard to the Kerala branch and the matter will have to go back to the Tribunal for fixing the wages and the adjustment of the workers in the revised scale in the light of the observations made in that case bearing in mind Mr. Gokhale 's offer on behalf of the Company to increase the wages as in the other appeal. With regard to dearness allowance again, what was said in the Bangalore appeal applies equally to this appeal. Here again the Tribunal said: "It is also an accepted fact that the cost of living both at Trivandrum and at Ernakulam is higher than the cost of living at Madras. Therefore, there is no justification in perpetuating the disparity in the payment of D.A. to the workmen working at Madras and those working in the Trivandrum Branch. " In the result, the Tribunal directed that the workmen of Ernakulam branch should get dearness allowance "at the rate at which and in the manner in which" the pay and dearness allowance was being paid to the employees of Madras Regional Office. In our view, dearness allowance should be the same as decided in the case of the workers of the Bangalore branch. (1) ; 168 The scheme for gratuity is the same as in the case of the Bangalore branch with the only difference that the maximum fixed was 20 months ' wages after 20 years service. In our view, there is no reason why the scheme for gratuity should not be the same in the Ernakulam branch as in the Bangalore branch in case of termination of service for misconduct and the qualifying period should be 15 years ' service. Again, on principles already formulated, we hold that leave facilities at Ernakulam should be the same as those prevailing at Madras. Next comes the dispute with regard to the working hours. The working hours of the employees of Trivandrum and Ernakulam as prevalent were from 9 a. m. to 1. p. m. and from 2 p. m. to 5 30 p. m. on week days and from 9 a. m. to 1 p. m. on Saturdays. At Madras the Company 's workers work only for five days in a week from 9 a. m. to 1 p. m. and 1 45 p. m. to 5 30 p.m. The total working hours were therefore somewhat less than those at Trivandrum and Ernakulam. The complaint of the union before the Tribunal was that although by circular dated 24th March 1963 the Company had fixed the working hours from 9.30 a.m. for clerks and 9 a.m. for mechanics and peons, it was extracting half an hour 's work per day extra contrary to their own orders. The Tribunal held that the circular should be given effect to and that the clerical staff should work from 9.30 a.m. to 1 p.m. and from 2 p.m. to 5.30 p.m. on working days and from 9.30 a.m. to 1 p.m. on Saturdays. We see no reason to disturb this portion of the award. Another head of dispute related to work load. The complaint of the union was that the workload was too heavy and that the method of calculation of workload was arbitrary. According to them, the workload fixed by agreement between the Company and its employees in Delhi and Lucknow was seven machines per day or 150 machines per month, while the workload at Trivandrum was 10 machines per day. According to the Management the workload fixed i.e., 10 machines per day, was not too much and there was no reason for disturbing the prevailing arrangement. But the Management did not deny that during the course of negotiations they had agreed to reduce the workload to seven machines per day or 150 machines per month and the Tribunal adopted this in the award with a rider that "all the machines attended to, whether new or old, whether under the service contract or not, will be counted for the sake of workload". No satisfactory reason has been adduced as to why we should disturb the award. The last head of dispute was with regard to "moving staff allowance". The union demanded that workmen who were deputed on tour on Company 's work should be given a day off if they had to travel two nights consecutively. Demand was also made that, 169 travelling staff should be paid overtime for the work done on holidays while on tour at double the normal wages for the day. The Management disputed this claim on the ground that it was not possible to calculate the number of hours worked by the employee at the out station while on tour. The Tribunal found on examining a mechanic that the jurisdiction of the branch was limited to the districts Trivandrum, Quilon, Alleppey and Kottayam and even if he was forced to work on holidays he was given over time wages. The Tribunal held that it was only just and reasonable that tour in mechanics should be given a day off if they travelled on two consecutive days for reaching a place of work and also over time wages at double the wages for the work done on holidays. It appears to us that with the limitation as to jurisdiction noted above, the occasion for a mechanic spending two consecutive nights for reaching a place of work will arise very seldom, but if it does, there is no reason why he should not get overtime wages as awarded by the Tribunal and we see no reason to interfere with this portion of the award. In the result, the matter will go back to the Tribunal for disposal of the issue as to the revision of wage scales and adjustment of workers in the revised scales. The scheme for gratuity will stand modified as indicated in our judgment in Civil Appeal No. 2105 of 1966 delivered today. The rest of the award will stand. The appellant will pay the respondent the costs of this appeal. A ward modified.

IN-Abs

Section 17(1) of the , makes it obligatory on the appropriate Government to publish the award received by it from the Industrial Tribunal; but, the provision in the section as to time, that the Government shall publish it within a period of thirty days from the date of its receipt, is merely directory and not mandatory. Therefore, where the Government received the award on 14th October 1966 and published it in the Gazette on the 15th November 1966, the award did not cease to be enforceable. [166F G] Observations in The Sirsilk Ltd. vs Government of Andhra Pradesh, ; , 452, explained. The State of Uttar Pradesh & Others vs Babu Ram Upadhya, ; , 710, followed. Erumeli Estate V. Industrial Tribunal, [1962] II L.L.J. 144, referred to.

No. 182 of 1966. Petition under article 32 of the Constitution of India for the enforcement of fundamental rights. N.C. Chatterjee, K. B. Roastagi, L. M. Singhvi and section Balakrishnan, for the petitioner. C.B. Agarwala, G. C. Kasliwal, Advocate General, Rajasthan, Indu Soni and K. Baldev Mehta, for respondent No. 1. N.S. Bindra, A. section Nambiar and R. N. Sachthey, for respondent No. 2. K.Baldev Mehta and Indu Soni, for respondents Nos. 3 and 4. The Judgment of the Court was delivered by Ramaswami, J. The petitioner, Sri Sant Ram Sharma has obtained a rule from this Court calling upon the respondents to show cause why a writ under article 32 of the Constitution should not be granted for quashing two orders of the State of Rajasthan, one dated March 22, 1966 whereby Sri Hanuman Sharma, respondent No. 3 was promoted as Inspector General of Police, Rajasthan superseding the petitioner, and the other dated April 28, 1966 promoting Sri Sultan Singh, respondent No. 4 as Additional Inspector General of Police superseding the petitioner. The petitioner has also prayed for a writ in the nature of mandamus commanding respondents 1 & 2 to consider the petitioner 's claim as the senior most officer in Rajasthan to be promoted to the post of Inspector General of Police. Cause has been shown by Mr. C. B. Agarwala on behalf of the State of Rajasthan and the other respondents to whom notice of the rule was ordered to be given. 113 The petitioner, Sri Sant Ram Sharma was appointed to the Indian Police Service on June 10, 1952. On September 8, 1954 by a notification of the Ministry of Home Affairs, Government of India, the Indian Police Service (Regulation of Seniority) Rules, 1954 came into force. Rule 6 of the said Rules required that a Gradation List of all Police Officers in the State should be maintained to ascertain their respective seniority. Accordingly, a Gradation List was prepared by the State of Rajasthan in August, 1955. In this Gradation List, the position of the petitioner was 5th. Sri Hanuman Sharma was shown as occupying the 7th position, Sri Sultan Singh stood 14th and the position of Sri Ganesh Singh was 17th. Rule 3 of the Indian Police Service (Regulation of Seniority) Rules, 1954 required that every officer shall be assigned a year the allotment in accordance with the provisions contained in that rule. According to this rule the year of allotment of the petitioner was 1942, that of. respondent No. 3, Sri Hanuman Sharma 1943, and that of respondent No. 4, Sri Sultan Singh 1945. In April 1955 the question of confirmation of the petitioner and of the three other officers, namely, Sri Hanuman Sharma, Sri Sultan Singh and Sri Ganesh Singh to the rank of Deputy Inspector General of Police was taken up. It was decided by the State of Rajasthan that the petitioner should be superseded and the three officers, Sri Hanuman Sharma, Sri Sultan Singh and Sri Ganesh Singh should be confirmed in the rank of Deputy Inspector General of Police. The case of the petitioner is that in June, 1959 Sri Hanuman Sharma was promoted as Special Inspector General of Police and on June 2, 1961 the post was encadred and Sri Hanuman Sharma was confirmed in that post. It appears that, on March 22, 1966, Sri Hanuman Sharma was promoted as Inspector General of Police, Rajasthan and on April 28, 1966 Sri Sultan Singh was promoted as Additional Inspector General of Police superseding the petitioner. The notifications of the State of Rajasthan dated March 22, 1966 and April 28. 1966 are annexures 'G ' and 'H ' to the writ petition. The contention of the petitioner is that he was entitled, as a matter of right, to be appointed as Deputy Inspector General of Police in 1955 and as Inspector General of Police in 1966 as he was shown as the senior most officer in the Gradation List and the orders of the State of Rajasthan in annexures 'G ' and 'H ' are in violation of the provisions of Rule 6 of the Indian Police Service (Regulation of Seniority) Rules, 1954. It was also contended for the petitioner that his claim was not considered in 1955 at the time of confirmation of respondents 3 and 4 as Deputy Inspector General of Police or in 1966 at the time of promotion of respondents 3 and 4 to the posts of Inspector General of Police and Additional Inspector General of Police respectively. It was therefore said that the fundamental rights of the petitioner under articles 14 and 16 have been violated and the orders of the State of Rajasthan dated March 22, 1966 and April 28, 1966 should be quashed by the grant of a writ in the nature of certiorari with a direction to the 1st respondent to consider the petitioner 's claim N1sC1 9 114 afresh for being promoted to the post of Inspector General of Police. The allegations of the petitioner have been controverted by the State of Rajasthan in its counter affidavit. It was said that the posts of Inspector General of Police, Additional Inspector General of Police and Deputy Inspector General of Police are selection posts which carry pay above the time scale of pay and for appointment to these selection posts an officer is chosen not merely on the basis of his rank in the Gradation List but on the record of his merit and past experience in the Police Department. The petitioner was appointed to the Indian Police Service on June 10, 1952 but even before that date Sri Hanuman Sharma, Sri Sultan Singh and Sri Ganesh Singh were appointed to the Indian Police Service in 1951 and they were already officiating as Deputy Inspector General of Police. Sri Hanuman Sharma and Sri Sultan Singh were officiating since April 22, 1952 and Sri Ganesh Singh since May 17, 1952. The petitioner was confirmed in the Senior Scale of Indian Police Service on June 10, 1954 but the other three officers were confirmed in the Senior Scale of the Indian Police Service on March 24, 1953, i.e., more than a year before the confirmation of the petitioner. When the question of confirmation of the officers to the post of Deputy Inspector General of Police arose in 1955, the State of Rajasthan considered the comparative merit of all the officers concerned including that of the petitioner and it was decided to confirm respondents 3 & 4 and Sri Ganesh Singh as Deputy Inspector General of Police in preference to the petitioner in view of their outstanding record and merit and experience in the Police Department. As regards the promotion of respondent No. 3 to the post of Inspector General of Police and of respondent No. 4 to the post of Additional Inspector General of Police, it was stated that the petitioner had no right to the selection posts carrying pay above the time scale of pay and that the appointment to those posts was at the discretion of the State of Rajasthan which decided the question after taking into consideration the merit of all the officers concerned. It was further stated that the power of appointment was not exercised arbitrarily but was exercised in the interest of efficiency and good administration and that the promotion to selection posts was on the basis of merit alone and it was only in a case where the merit of the two officers was equal that the seniority of one officer in the Gradation List might tilt the case in his favour. It was denied by the respondent that there was any violation of the Indian Police Service (Regulation of Seniority) Rules, 1954. The question for determination in this case is whether the petitioner was entitled, as of right, to be promoted as Deputy Inspector General of Police in 1955 or as Inspector General of Police in 1966 merely on the ground that his name stood first in the Gradation List prepared under Rule 6 of the Indian Police Service (Regulation of Seniority) Rules, 1954. 115 Sub section (1) of section 3 of the All India Services Act, 1951 (LXI of 1951) empowers the Central Government to make rules for the regulation of recruitment and conditions of service of persons appointed to an All India Service. In exercise of this power the Central Government framed the Indian Police Service (Regulation of Seniority) Rules, 1954. Rule 2 (a) provides that "Cadre" means "an Indian Police Service Cadre constituted in accordance with rule 3 of the Indian Police Service (Cadre) Rules, 1954". Rule 2 (d) defines "gradation list" to mean "a gradation list prepared under rule 6". Rule 2(g) defines a "senior post" to mean "a post Included under item 1 of each Schedule to the Indian Police Service (Fixation of Cadre Strength) Regulations, 1955 or any post declared equivalent thereto by the State Government concerned". Rule 3 deals with the assignment of year of allotment and reads as follows: "(1) Every officer shall be assigned a year of allotment in accordance with the provisions hereinafter contained in this rule. (2)The year of allotment of an officer in service at the commencement of these rules shall be the same as has been assigned to him or may be assigned to him by the Central Government in accordance with the orders and instructions in force immediately before the commencement of these rules: (3)The year of allotment of an officer appointed to the Service after the commencement of these rules, shall be (a) where the officer is appointed to the Service on the results of a competitive examination, the year following the year in which such examination was held; (b) where the officer is appointed to the Service by promotion in accordance with rule 9 of the Recruitment Rules, the year of allotment of the junior most among the officers recruited to the Service in accordance with rule 7 of those Rules who officiated continuously in a senior post from a date earlier than the date of commencement of such officiation by the former: Provided that the year of allotment of an officer appointed to the Service in accordance with rule 9 of the Recruitment Rules who started officiating continuously in a senior post from a date earlier than the date on which any of the officers recruited to the Service, in accordance with rule 7 of those Rules, so started officiating shall be determined ad hoc by the Central Government in consultation with the State Government concerned; 116 Rule 4 relates to seniority of officers and reads as follows: "4. (2) The seniority of officers in service at the commencement of these rules shall be as has been determined or may be determined by the Central Government in accordance with the orders and instructions in force immediately before the commencement of these rules: Provided that where the seniority of an officer appointed in accordance with rule 9 of the Recruitment Rules has not been determined before the commencement of these rules, his seniority shall be determined in accordance with the provision in sub rule (3). Rule 5 deals with seniority of officers placed in List II and List III by the Special Recruitment Board and Rule 5 A deals with seniority of officers appointed under the Indian Police Service (Special Recruitment) Regulations. Rule 6 states: "6. Gradation List. There shall be prepared every year for each State Cadre and Joint Cadre a gradation list consisting of the names of all officers borne on that Cadre arranged in order of seniority in accordance with the provisions of rules 4, 5, 5 A and 7". On behalf of the petitioner Mr. N. C. Chatterjee put forward the argument that Rule 6 required that a gradation list should be prepared strictly in order of seniority in accordance with the provisions of Rules 4, 5, 5 A and 7 and it is not open to the State of Rajasthan to disregard the claim of the petitioner who stood first in the Gradation List and to promote respondents 3 & 4 to the rank of Deputy Inspector General of Police. We are unable to accept the argument put forward on behalf of the petitioner as correct. it is apparent from a perusal of Rules 3 and 8 of the Indian Police Service (Pay) Rules, 1954 read with Part B of Sch. III of those Rules that the posts of Deputy Inspector General of Police, Additional Inspector General of Police and Inspector General of Police in Rajasthan State are selection posts and outside the junior and senior time scales of pay. Rule 2(a) provides that 'Cadre ' and 'Cadre post ' shall have the meanings respectively assigned to them in the Indian Police Service (Cadre) Rules, 1954. Rule 3 prescribes the time scales of pay admissible to members of the Service and reads as follows: "3. Time scales of pay The time scales of pay admissible to a member of the Service shall be as follows: Junior Scale Rs. 350 350 380 380 30 590 E.B. 30 770 40 850 (19 years). Senior Scale. 600 (6th year under) 40 1.0001,000 1,050 1,050 1,100 1,100 1.150 (22) years. Selection Grade Rs. 1,250. 117 Provided that a member of the Service holding a post in the senior time scale may be appointed to a post in the selection grade and where he is so appointed, he shall be entitled to draw pay of the post in the selection grade; Provided further that a member of the Service to whom any other time scale of pay was admissible under any order in force immediately before the commencement of these rules shall continue to draw pay in that scale". The rule prescribes two scales of pay Junior Scale and Senior Scale in addition to the Selection Grade which is Rs. 1,250. Rule 8 deals with pay of officers holding posts enumerated in Schedule III and states as follows: "Any member of the Service appointed to hold a post specified in Schedule 111, shall, for so long as he holds that post, be entitled to draw the pay indicated for that post in the said Schedule: Provided that no member of the Service shall at any time draw pay less than that which he is entitled to draw tinder rule 4 and rule 5; Provided further that a member of the Service to whom :any other special pay or pay above the time scale was .admissible under any order in force immediately before the commencement of these rules for holding posts specified in Schedule III shall, for so long as he holds the post, continue to draw the same pay". The posts in the Schedule are (a) posts carrying pay above the timescale pay of the Indian Police Service under the State Governments, specified in Section A, (b) posts carrying pay in the senior time scale of the Indian Police Service under the State Governments including posts carrying special pay (in addition to pay in the time scale) specified in Section B and (c) posts carrying pay above the timescale or special pay in addition to pay in the time scale, under the Central Government held by members of the Service, specified in Section C. In category (a) so far as the State of Rajasthan is concerned the posts of Inspector General of Police, Additional Inspector General of Police and Deputy Inspector General of Police are shown as Selection Grade posts carrying pay above the time scales of pay. It is manifest therefore, on a perusal of Rules 3 and 8 read with Part B of Sch. III, that the three posts of Inspector General of Police, Additional Inspector General of Police and Deputy Inspector General of Police in Rajasthan are Selection posts and outside the junior and senior time scales of pay mentioned in Rule 3. This conclusion is also supported by para 1 of Part B of Sch. III which states that "the number of posts in the selection grade in a State Cadre shall be equal to twenty per centum of the total number of senior posts borne on that cadre reduced by the number of posts carrying pay above the time scale". In support of his contention 118 Mr. N. C. Chatterjee referred to the decision of this Court in P. C. Wadhwa vs Union of India.(1) But the ratio of that case has no bearing on the question presented for determination in the present case. The question involved in that case was whether under the relevant rules governing the Indian Police Service, a member thereof was entitled as of right to be promoted to a post in the senior scale as and when a vacancy (except a vacancy in the promotion quota) arose therein and no one senior to him was available for that post. It was held by the majority of the learned Judges that a consideration of the various rules would make it clear beyond doubt that a person in the junior time scale of the service is as much a cadre officer as one holding a post in the senior time scale or a post above the timescale and the whole scheme of the rules indicated that a person in the junior scale of pay had a right to hold a post on the senior scale of pay subject to the availability of a post in the senior scale of pay and his seniority in the junior scale of pay. At page 627 of the Report Mudholkar, J. in the course of his judgment expressly observed "we should not be understood as saying that this right extends to the appointment to a post carrying pay above time scale of pay or a post carrying a special pay, and the rules governing appointment to such posts were not placed before us". The decision of this Court in P. C. Wadhwa vs Union of India(1) is therefore of no assistance to the petitioner and for the reasons we have already given, we are of the opinion that the three posts of Inspector General of Police, Additional Inspector General of Police and Deputy Inspector General of Police in Rajasthan State are selection posts and outside the junior or senior time scales of pay. If these three posts are selection posts it is manifest that the State of Rajasthan is not bound to promote the petitioner merely because he stood first in the Gradation List. The circumstance that these posts are classed as 'Selection Grade Posts ' itself suggests that promotion to theme posts is not automatic being made only on the basis of ranking in the Gradation List but the question of merit enters in promotion to selection posts. In our opinion, the respondents are right in their contention that the ranking or position in the Gradation List does not confer any right on the petitioner to be promoted to selection posts and that it is a well established rule that promotion to :selection grades or selection posts is to be based primarily on merit and not on seniority alone. The principle is that when the claims of officers to selection posts is under consideration, seniority should not be regarded except where the merit of the officers is judged to be equal and no other criterion is therefore available. The administrative practice with regard to selection posts is laid down in a letter of the Government of India dated July 31 ,August, 3, 1954 as follows: .lm15 "If a person, though senior in the gradation list, is appointed to the selection post later than his junior, this is presumably because he is superseded as a matter of selection. (1) 119 If this is so, it would certainly not be unjustified to regard the officer so selected earlier, though junior in the gradation list, as senior to the other officer, as far as the selection posts are concerned". Another communication dated June 1, 1955 states: "All super time scale posts are selection posts and appoint ment thereto need not follow the order of seniority". In another letter No. 7/6/56 AIS(1) dated October 5, 1956 the Government of India has reiterated the principle of promotion to selection grade posts as follows: "I am directed to say that the Government of India have recently had. occasion to consider the question of the principles to be followed in the matter of promotion of I.P.S. Officers to the selection Grade when some of the officers junior in service were approved and given officiating chances in such selection grades earlier than their seniors. It is, of course, a well established principle that promotions to the Selection Grade or a selection post is to be based primarily on merit and not seniority in the service . . . . . " We proceed to consider the next contention of Mr. N.C. Chatterjee that in the absence of any statutory rules governing promotions to selection grade posts the Government cannot issue administrative instructions and such administrative instructions cannot impose any restrictions not found in the Rules already framed. We are unable to accept this argument as correct. It is true that there is no specific provision in the Rules laying down the principle of promotion of junior or senior grade officers to selection grade posts. But that does not mean that till statutory rules are framed in this behalf the Government cannot issue administrative instructions regarding the principle to be followed in promotions of the officers concerned to selection grade posts. It is true that Government cannot amend or supersede statutory rules by administrative instructions, but if the rules are silent on any particular point Government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed. In B. N. Nagaraja 'n vs State of Mysore,(1) it was pointed out by this Court that it is not obligatory under the proviso to article 309 of the Constitution to make rules of recruitment, etc., before a service can be constituted or a post created or filled, and, secondly, the State Government has executive power, in relation to all matters with respect to which the Legislature of the State has power, to make laws. It follows from this that the State Government will have executive power in respect of Sch. 7, List II. Entry 41, State Public Services, and there is nothing in the terms of article 309 of the Constitution which abridges the power of the executive to act under article 162 of the Constitution without a law. A similar view (1) 120 was taken by this Court in T. Cajee vs U. Jormanik Siem(1) where Wanchoo, J., as he then was, who delivered judgment on behalf of the majority, observed as follows at pp. 762 764 of the Report: "The High Court has taken the view that the appointment and succession of a Siem was not an administrative function of the District Council and that the District Council could only act by making a law with the assent of the Governor so far as the appointment and removal of a Siem was concerned. In this connection, the High Court relied on para. 3(1)(g) of the Schedule, which lays down that the District Council shall have the power to make laws with respect to the appointment and succession of Chiefs and Headmen. The High Court seems to be of the view that until such a law is made there could be no power of appointment of a Chief or Siem like the respondent and in consequence there would be no power of removal either. With respect, it seems to us that the High Court has read far more into para. 3(1)(g) than is justified by its language. Paragraph 3(1) is in fact something like a legislative list and enumerates the subjects on which the District Council is competent to make laws. Under para. 3(1)(g) it has power to make laws with respect to the appointment or succession of Chiefs or Headmen and this would naturally include the power to remove them. But it does not follow from this that the appointment or removal of a Chief is a legislative act or that no appointment or removal can be made without there being first a law to that effect. Further once the power of appointment falls within the power of administration of the district the power of removal of officers and others so appointed would necessarily follow as a corollary. The Constitution could not have intended that all administration in the autonomous districts should come to a stop till the Governor made regulations under para. 19(1)(b) or till the District Council passed laws under para. 3(1)(g). The Governor in the first instance and the District Councils thereafter were vested with the power to carry on the administration and that in our opinion included the power to appoint and remove the personnel for carrying on the administration. Doubtless when regulations are made under para. 19(1)(b) or laws are passed under para. 3(1) with respect to the appointment or removal of the personnel of the administra tion, the administrative authorities would be bound to follow the regulations so made or the laws so passed. 121 But from this it does not follow that till the regulations were made or the laws were passed, there could be no appointment or dismissal of the personnel of the administration. In our opinion, the authorities concerned would at all relevant times have the power to appoint or remove administrative personnel under the general power of administration vested in them by the Sixth Schedule. The view therefore taken by the High Court that there could be no appointment or removal by the District Council without a law having been first passed in that behalf under para. 3(1)(g) cannot be sustained. " We pass on to consider the next contention of Mr. N.C. Chatterjee that if the executive Government is held to have power to make appointments and lay down conditions of service without making rules in that behalf under the proviso to article 309, there will be a violation of articles 14 and 16 because the appointments would be arbitrary and capricious. In our view, there is no substance in this contention of the petitioner. If the State of Rajasthan had considered the case of the petitioner along with the other eligible candidates before appointments to the selection posts there would be no breach of the provisions of articles 14 and 16 of the Constitution because everyone who was eligible in view of the conditions of service and was entitled to consideration was actually considered before promotion to those selection posts was actually made. It was said by Mr. C. B. Agarwala on behalf of the respondents that an objective evaluation of the merit of the officers is made each year and promotion is made on scrutiny of the record sheets dealing with the competence, efficiency and experience of the officers concerned. In the present case, there is no specific allegation by the petitioner in the writ petition that his case was not considered along with respondents 3 & 4 at the time of promotion to the posts of Deputy Inspector General of Police in 1955 or to the rank of Inspector General of Police or Additional Inspector General of Police in 1966. There was, however, a vague suggestion made by the petitioner in paragraph 68 of his rejoinder petition dated July 17, 1967 that "the State Government could not have possibly considered my case, as they considered and even in this counter affidavit consider Shri Hanuman Sharma and Sri Sultan Singh senior to me by the new type of seniority they have invented for their benefit". Even though there is no specific allegation by the petitioner that there was no consideration of his case, respondent No. 1 has definitely asserted in paragraphs 23, 25, 40 and 44 of the counter affidavit that at the time of promotion of respondents 3 & 4 to the selection posts of Deputy Inspector General of Police and of Inspector General of Police the case of the petitioner was considered. We are therefore of the opinion that the petitioner is unable to substantiate his argument that there was no consideration of his case at the time of promotion of respondents 3 & 4 to the selection posts. We must therefore proceed on the footing that respondent No. 1 had considered the case of the petitioner and 122 taken into account the record, experience and merit of the petitioner at the time of the promotion of respondents 3 & 4 to the selection grade posts. It is therefore not possible to accept the argument of Mr. N. C. Chatterjee that there was any violation of the constitutional guarantee under articles 14 and 16 of the Constitution in the present case. Mr. N. C. Chatterjee argued that the introduction of the idea of merit into the procedure of promotion brings in an element of personal evaluation, and that personal evaluation open is the door to the abuses of nepotism and favouritism, and so, there was a. violation of the constitutional guarantee under articles 14 and 16 of the Constitution. We are unable to accept this argument as well founded. The question of a proper promotion policy depends on various conflicting factors. It is obvious that the only method in which absolute objectivity can be ensured is for all promotions to be made entirely on grounds of seniority. That means that if a post falls vacant it is filled by the person who has served longest in the post immediately below. But the trouble with the seniority system is that it is so objective that it fails to take any account of personal merit. As a system it is fair to every official except the best ones; an official has nothing to win or lose provided he does not actually become so inefficient that disciplinary action has to be taken against him. But, though the system is fair to the officials concerned, it is a heavy burden on the public and a great strain on the efficient handling of public business. The problem therefore is how to ensure reasonable prospect of advancement to all officials and at the same time to protect the public interest in having posts filled by the most able men? In other words, the question is how to find a correct balance between seniority and merit in a proper promotion policy. In this connection Leonard D. White has stated as follows: "The principal object of a promotion system is to secure the best possible incumbents for the higher positions, while maintaining the morale of the whole Organisation. The main interest to be served is the public interest, not the personal interest of members of the official group concerned. The public interest is best secured when reasonable opportunities for promotion exist for all qualified employees, when really superior civil servants are enabled to move as rapidly up the Promotion ladder as their merits deserve and as vacancies occur, and when selection for promotion is made on the sole basis of merit. For the merit system ought to apply as specifically in making promotions as in original recruitment. Employees often prefer the rule of seniority, by which the eligible longest in service is automatically awarded the promotion. Within limits, seniority is entitled to consideration as one criterion of selection. It tends to eliminate favouritism or the suspicion thereof; and experience is 123 certainly a factor in the making of a successful employee. Seniority is given most weight in promotions from the lowest to other subordinate positions. As employees move up the ladder of responsibility, it is entitled to less and less weight. When seniority is made the sole determining factor, at any level. it is a dangerous guide. It does not follow that the employee longest in service in a particular trade is best suited for promotion to a higher grade; the very opposite may be true". (Introduction to the Study of Public Administration, 4th Edn., pp. 380, 383). As a matter of long administrative practice promotion to selection grade posts in the Indian Police Service has been based on merit and seniority has been taken into consideration only when merit of the candidates is otherwise equal and we are unable to accept the argument of Mr. N. C. Chatterjee that this procedure violates, in any way, the guarantee under articles 14 and 16 of the Constitution. For the reasons expressed we hold that the petitioner has been unable to make out a case for the grant of a writ under article 32 of the Constitution. The petition accordingly fails and is dismissed. There will be no order as to costs in the Circumstances of this case. Petition dismissed.

IN-Abs

The All India Services Act, 1951, empowers the Central Government to make rules for the regulation of recruitment and conditions of service of persons appointed to an All India Service. In exercise of this power the Central Government framed the Indian Police Service (Regulation of Seniority) Rules, 1954. Rule 6 of the said Rules requires that a Gradation List of all Police Officers in a State should be maintained to ascertain their respective seniority. Accordingly, a Gradation List wag prepared by the respondent State in which the petitioner was shown as senior to respondents 3 and 4. In 1955, the petitioner was superseded by respondents 3 and 4 who were confirmed in the rank of Deputy Inspector General of Police, and in 1966, the third respondent was promoted as Inspector General of Police and respondent 4 was appointed as Additional Inspector General of Police, superseding the petitioner. The petitioner filed a writ petition in this Court under article 32, contending that: (1) he was entitled as a matter of right to big appointed as Deputy Inspector General of Police in 1955 and as Inspector General of Police, in 1966, as he was shown as the senior most officer in the Gradation List; (2) in the absence of, any statutory rules governing promotions to selection grade posts the Government could not issue administrative instructions imposing restrict ions not found in the Rules already framed such as that merit and not seniority should be considered; (3) the introduction of the idea of merit into the procedure of promotion is violative of articles 14 and 16, because, it brings in an element of per sonal evaluation with the consequent abuses of nepotism and favouritism; and (4) if the Government is held to have the power to make appointments without making rules in that behalf under the proviso to Art, 309, then the appointments of respondents 3 and 4 would be arbitrary, capricious and in violation of articles 14 and 16 of the Constitution, because, the claims of the petitioner were not considered either in 1955 or in 1966. HELD:(1) A perusal of rr. 3 and 8 of the Indian Police Service (Pay) Rules, 1954, read with Part B of Schedule III of those Rules shows that the three posts of Deputy Inspector General of Police. Additional Inspector General of Police and Inspector General of Po ' lice in the respondent State, are selection posts outside the junior ' and senior time scales of Pay. Promotion to selection grade or selection posts is to be based primarily on merit and not on seniority alone and therefore, the respondent State was not bound to promote the petitioner merely because he was senior in the Gradation List. [118D F]. (2)While Government cannot amend or supersede statutory rules by administrative instructions, if rules are silent on any particular point, Government can fill up the gaps and supplement the rules and issue instructions not inconsistent with the rules already framed. 112 The State Government has executive power in respect of State Public Services mentioned in Entry 41, List II of Schedule VII of the Constitution, and, there is nothing in the terms of article 309 which abridges the power of the executive to act under article 162 without a law. [119 F G, H]. T. Cajee vs U. Jormanik Siem, ; and B. N. Na. garajanv. State of Mysore, , followed. (3) To ensure a reasonable prospect of advancement to all officials and at the same time to protect the public interest in having posts filled by the most able men, it is necessary to evolve a proper promotion policy in which is found a correct balance between seniority and merit. As a matter of long administrative practice promotion to selection grade or selection posts in the Indian Police Ser vice had been based on merit, and seniority was taken into consideration only when merit of the candidates is otherwise equal and no other criterion is available. Such a procedure does not, in any way, violate the guarantee under articles 14 and 16 of the Constitution [112E; 123C D]. (4)The respondent State had considered the case of the petitioner and taken into account the record, experience and merit of the petitioner and of every other officer entitled to be considered at the time of the promotion before promotion of respondents 3 and 4 to selection posts was made, and therefore, there was no breach of the provisions of articles 14 and 16. [121D E].

Appeals Nos. 150 154 of 1967. Appeals from the judgment and order dated February 26, 1965 of the Madras High Court in Writ Petitions Nos. 1321, 1495, 1496 and 1553 of 1964. S.V. Gupta, Silicitor General, V. Ramaswamy and A. Rangam, for the appellant (in C.As. Nos. 150, 153 of 1967). K. N. Mudaliyar, Advocate General, Madras, V. Raniaswaln and A. V. Rangajn, for the appellant (in C.A. No. 154 of 1967). N.C. Chatterjee and R. Ganapathy Iyer, for the respondents (in C.As. 150, 151 and 154 of 1967). A. G. Pudissery, for the intervener. The Judgment of the Court was delivered by Wanchoo, C. J. These five appeals on certificates granted by the Madras High Court raise common questions of law and will be dealt with to ether. We shall give brief facts in one of the appeals (No. 150 of 1967) arising out of writ petition No. 1321 of 1964 in order to understand the questions that fall to be decided in the present appeals. On August 19, 1964, at about 5.00 p.m, the officers of the Commercial Tax Department (hereinafter referred to as the Department) raided the premises of Zenith Lamps and Electricals Ltd., (hereinafter referred to as the Company). It is said that the premises were searched and a Suit case was seized and forcibly removed by the officers who made the raid, in spite of the fact that they were informed that the box did not contain any papers or documents belonging to the Company and its contents consisted merely of personal effects of one of the Managing Directors, namely, Shri Ramkishan Srikishan. Jhaver. The raid and search were made by the authorities concerned on information that Shri Geonka, one of the Directors of the Company, had removed a box containing secret accounts relating to it. The main contention of the petitioner in support of his prayer that the articles seized should be returned to him was under three heads. It was first contended that on a proper construction of section 41 of the Madras General Sales Tax Act, No. 1. of 1959 (hereinafter 151 referred to as the Act), the officers of the Department had no authority to search the premises and seize either the account books or the goods found therein. Secondly, it was contended that if section 41(4) authorised seizure and confiscation of goods, it was beyond the legislative competence of the State Legislature, for it could not be covered by item 54 of list II of the Seventh Schedule to the Constitution relating to "taxes on the sale or purchase of goods. " Lastly, it was contended that if various provisions in s.41 were capable of being construed as authorising search and seizure. the provisions contained therein were unconstitutional in view of article 19(1) (f) and (g) of the Constitution. It is not necessary to refer to the facts in the other petitions which have resulted in the other appeals before this Court because in those cases also there was search and seizure by the officers of the Department and their action is being attacked on the same grounds. All the petitions were opposed on behalf of the State Government and its case was firstly. that s.41 authorised search and seizure; secondly, that the State Legislature was competent to enact s.41(4) under item 54 of list 11 of the Seventh Schedule to the Constitution; and thirdly, that the provisions in question did not offend article 19(1) (f) and (g) of the Constitution and were in any case protected by article 19(5) and (6). The High Court held that section 41(2) did not allow search being made thereunder, as it only provided for inspection, and that search was a different thing altogether from inspection. The High Court further held that if s.41 (2) provided for search it would be within the legislative competence of the State Legslature. The High Court took the view that the power of seizure and confiscation of goods contained in sub section (4) could not be said to be ancillary and incidental to the power to tax sale or purchase of goods and therefore this provision was beyond the legislative competence of the State Legislature. Finally, the High Court held that sub sections (2), (3) and (4) of ' section 41 were unconstitutional as they were unreasonable restrictions on the fundamental rights guaranteed under article 19(1) (f) and (g) of the Constitution. Besides the above. the High Court also found with respect to one of the petitions that the search warrant issued for the search of the residential house by the magistrate disclosed that the magistrate had not applied his mind at all to the necessity of the search of he residential house, for columns in the printed search warrant which should have been struck out were not so struck out. Further the gaps in the printed form which should have been filled in before the warrant was issued had not been filled in. From these two circumstances the High Court concluded that the search warrant for the residential house had been issued without the application of mind by the magistrate to the necessity of the search of the residential house. The High Court further found that s.41(4) was not complied with strictly before confiscation was ordered and no pro 152 per opportunity was given to the dealer to show that the goods seized and confiscated were not accounted for in his accounts. In the result therefore the High Court allowed all the petitions and directed that the documents, things and goods covered by the petitions should be returned to the petitioners along with photographs, negatives, translations and notes made by the Department from the accounts etc. The State of Madras then applied for and obtained certificates from the High Court to appeal to this Court and that is how the matter has come before us. The same three questions which were raised, before the High Court have been raised before us on behalf of the appellant. Before, however, we deal with them we would briefly refer to the provisions of the Act which are material for our purposes. Section 3 is the main charging section which provides that "every dealer whose total turnover for a year is not less than Rs. 10,000. . shall pay a tax for each year at the rate of 2 per cent of his taxable turnover. " The point at which tax has to be paid on single point taxable goods is indicated in the First Schedule to the Act and that will show that in a large majority of cases the tax has to be paid at the point of first sale in the State, though in some cases it has to be paid at the point of first purchase or of last purchase in the State. Section 4 is another charging section in respect of declared goods and the Second Schedule to the Act deals with the point at which tax has to be paid in respect of such goods. That Schedule also shows that in a majority of cases the tax had to be paid at the point of first sale in the State, though in some cases it has to be paid at the point of first purchase in the State or the last purchase in the State. Certain goods are exempt from the tax under the Act as provided in the Third Schedule and do not thus form part of the taxable turnover, though they will be a part of the turnover for purposes of calculating the total turnover per year. The Act provides for registration of firms and of dealers, for appointment of officers, for collection of tax, for the levy of penalty, and for appeals and revisions. It also casts a duty on dealers to maintain a true and correct account. Then comes section 41 with which we are particularly concerned. It is in these terms: "(1) Any officer empowered by the Government in this behalf may, for the purpose of this Act. require any dealer to produce before him the accounts, registers, records and other documents and tot furnish any other in formation relating to his business. (2)All accounts, registers, records and other documents maintained by a dealer in the course of his business. the goods in his possession and his offices, shops, godowns, vessels or vehicles shall be open to inspection at all reasonable times by such officer: Provided that no residential accommodation (not being a place of business cum residence) shall be entered 153 into and searched by such officer except on the authority of a search warrant issued by a Magistrate having jurisdiction over the area, and all searches under this sub section shall, so far as may be, be made in accordance with the provisions of the Code of Criminal Procedure. 1898 (Central Act V of 1898). (3)If any such officer has reason to suspect that any dealer is attempting to evade the payment of any tax, fee or other amount due from him under this Act he may, for reasons to be recorded in writing, seize such accounts. registers, records or other documents of the dealer as he may consider necessary, and shall give the dealer a receipt for the same. The accounts, registers, records and documents. so seized shall be retained by such officer only for so long as may be necessary for their examination and for any inquiry or proceeding under this Act. Provided that such accounts, registers and documents shall not be retained for more than thirty days at a time except with the permission of the next higher authority. (4)Any such officer shall have power to seize and confiscate any goods which are found in any office. shop, godown, vessel, vehicle, or any other place of business or any building or place of the dealer, but not accounted for by tile dealer in his accounts registers records and other documents maintained in the course of his business. Provided that before ordering the confiscation of goods under this Sub section the officer shall give the person affected an opportunity of being heard and make an inquiry in the prescribed manner: Provided further that the officer ordering the confiscation shall give the person affected option to pay in lieu of confiscation (a)in cases where the goods are taxable under this Act, in addition to the tax recoverable a sum of money not exceeding one thousand rupees or double the amount of tax recoverable, whichever is greater; and (b)in other cases. a sum of money not exceeding one thousand rupees. Explanation It shall be open to the Government to empower different classes of officers for the purpose of asking action under sub sections (1). (2) and (3)". 154 It will be seen from the above brief review of the provisions of the Act that it mainly deals with sales tax to be levied at the point of first sale in the State. though there is also provision for purchase tax in certain cases. It is in this background that we have to consider the construction of s.41 of the Act. So far as sub s(1) is concerned, there is no difficulty. It empowers any officer, empowered by the Government in this behalf, to require any dealer to produce before him the accounts registers, records and other documents and to furnish any other information relating to his business. It may be mentioned here that the Government has empowered all officers of the Department not lower in rank than the Assistant Commercial Tax Officer, all officers of the Revenue Department not lower in rank than an Inspector and all officers of the Police Department not lower in rank than a Sub Inspector. to act under s.41. sub sections (2) to (4). Presumably. so far as sub section (1) is concerned. only officers of the Department can act under the provision. However, there is no dispute with respect to that sub section as the power has to he exercised for the purpose of the Act i.e., with reference to assessment proceedings at all stages including recovery of tax and prosecution for offences. It is not disputed that the power under sub section (1) can only be exercised to require a dealer to produce accounts etc. relating to his business and not that of any body else. The main dispute centres round the interpretation of sub s.(2) of s.41. The contention on behalf of the respondents is that that provision did not authorise search of premises but merely provided for inspection thereof it all reasonable times by the empowered officer. We shall first deal with, the main part of sub section (2) to see what it provides without reference to the proviso. Clearly Sub s(2) provides for three things, namely (1) all accounts. registers, records and other documents maintained by a dealer in the course of his business ',,hall be open to inspection at all reasonable times, (ii) the goods in the possession of the dealer shall also be open to inspection, and (iii) the dealer 's offices, shops, godowns, vessels or vehicles shall also be open to inspection. There is no doubt that there are no specific words in sub section (2) giving power of search. But if we read the three powers conferred by sub s.(2) it should not be difficult to hold that search is included therein. In sub s.(1) the dealer is required to produce his accounts etc. and to furnish other information relating to his business and it is left to the dealer to produce what accounts he may say he has. The legislature was however cognizant of the fact that a dealer may not produce all accounts or furnish ill information even though required to do so, under sub s.(1). Therefore. sub s.(2) provides that ,ill accounts etc. of the dealer shall be open to inspection. It also provides that the dealer 's offices. shops, godowns, vessels or vehicles shall be open to inspection. It is true that generally speaking a power to inspect does not necessarily give power to search. But 155 where, as in this case, the power has been given to inspect not merely accounts, registers, records and other documents maintained by a dealer but also to inspect his offices, shops, godowns, vessels or vehicles, it follows that the empowered officer would have the right to enter the offices etc. for purposes of inspection. Naturally his inspection will be for purposes of the Act i.e., for the purpose of seeing that there is no evasion of tax. If therefore during his inspection of offices etc. the empowered officer finds any accounts, registers, records or other documents in the shop, those accounts etc. will also be open to inspection. Reading therefore these two provisions together, it is clear that the empowered officer has the right to; enter the offices etc. and to inspect them, and if on such inspection he finds accounts etc. he has also the power to inspect them. Lind to see if they relate to the business. These two powers taken together in our opinion mean that the em powered officer has the power to search the office etc. and inspect accounts etc found therein. Though therefore the word "search" has not been used in sub s.(2) these two powers of entering the offices etc. for inspection and of inspecting every kind of account maintained by a dealer with respect to his business together amount to giving the officer concerned the power to enter and search the offices etc. and if he finds any account in the offices, shops etc. to inspect them. Otherwise we can see no sense in the legislature giving power to the empowered officer to enter the offices etc. for the purpose of inspection as the officer concerned would only do so for the purpose of finding out all accounts etc. maintained by the dealer and if necessary to inspect them for the purposes of the Act. We cannot therefore agree with the High Court that there is no power of search whatsoever in sub s(2) because the subsection in terms does not provide for search. goods in the possession of the dealer. He has also the power to enter the dealer 's offices etc. for the purpose of such inspection, Combining these two powers together it follows on the same reasoning that the officer has the power to search for the goods also and to inspect them if found in the offices etc. of the dealer. We have therefore no hesitation in coming to the conclusion that the power of search is implicit in sub s.(2) with reference accounts etc. maintained by the dealer and the goods in the ')possession of the dealer. It also seems to us that this power in Sub section (2) is confined to offices, shops,godowns. vessels and vehicles of the dealer and does not go beyond them. It is urged on behalf of the appellant that as the officer is entitled to inspect all accounts etc. maintained by the dealer he can search for them even in the dealer 's residential premises. But we do not agree with this conten tion. for we have found the power of search by reading the power of inspection of offices etc. with the power of inspection of accounts etc. and the power of inspection of goods. Sub section (2) does not give any power of inspecting the residential, accommodation 156 of the dealer and therefore it cannot be read as giving the power of search of the residential house for purposes of the Act. But whether it is a case of business cum residence, the power of search will be there, for under sub s.(2) all offices, shops, godowns, vessels or vehicles of the dealer are open to inspection. Let us now see what light is thrown on the interpretation of sub s.(2) by the proviso and whether the interpretation we have put on the main part of sub s.(2) is supported by the proviso. The proviso lays down that (i) no purely residential accommodation shall be entered into and searched by such officer except on the authority of a search warrant issued by a Magistrate having jurisdiction over the area and (ii) that all searches under this sub section shall, so far as may be, be made in accordance with the provisions of the Code of Criminal Procedure, 1898. The latter part of the proviso clearly shows that the main part of sub s.(2) con templates searches, for it refers to all searches made under this sub section. If the reference in the second part of the proviso was confined only to searches made under the first part of the proviso, the words would have been "all searches under this proviso shall be made in accordance with the provisions of the Code of Criminal Procedure. " The proviso therefore bears out the construction that we have put on the main part of sub s.(2). But it is urged that a proviso carves out something which is already contained in the main provision and the main provision at any rate does not provide for search of a purely residential accommodation. Therefore the proviso is otiose. That is what the High Court also seems to have held. Generally speaking, it is true that the proviso is an exception to the main part of the section; but it is recognised that in exceptional cases a proviso may be a substantive provision itself. We may in this connection refer to Bhonda Urban District Council vs Taff Vale Railway Co.(1), where s.51 of the Act there under consideration was framed as a proviso to preceding sections. The Lord Chancellor however pointed out that "though s.51 was framed as a proviso upon preceding sections, but it is true that the latter half of it, though in form a proviso, is in substance a fresh enactment, adding to and not merely qualifying that which goes before. Again in Commissioner of Income Tax vs Nandlal Bhandari & Sons(2) it was observed that 'though ordinarily a proviso restricts rather than enlarges the meaning of the provisional to which it is appended, at times the legislature embodies a substantive provision in a proviso. The question whether a proviso is by way of an exception or a condition to the substantive provision, or whether it is in itself a substantive provision, must be determined on the substance of the proviso and not its form.". (1) L. R. (2) [1963]47 157 Finally in State of Rajasthan vs Leela Jain(1) the question arose whether the proviso in the Act under consideration there was a limiting provision to the main provision or was a substantive provision in itself. This Court observed that "so far as general principle of construction of a proviso is concerned, it has been broadly stated that the function of a proviso is to limit the main part of the section and carve out something which but for the proviso would have been within the operative part. " But it was further observed that the proviso in that particular case was really not a proviso in the accepted sense but an independent legislative provision by which to a remedy which was prohibited by the main part of the section, an alternative was provided. These three cases show that in exceptional circumstances a proviso may not be really a proviso in the accepted sense but may be a substantive provision itself. It seems to us that the proviso under consideration now is of this exceptional nature. As we have already held, there is no provision in the main part of the sub section for searching purely residential premises. Therefore when the proviso provides for such search it is providing for something in dependent of the main part of the sub section. Further the second part of the proviso which talks of searches made under this sub section shows that the power of inspection provided in the main part of the sub section is tantamount to a power of search. We have already come to that conclusion independent of the proviso. All that we need say here is that the proviso also shows that that interpretation is correct. We may add that we are not precluded from looking at the proviso in interpreting the main part of the sub section. We may in this connection refer to the following passage in Maxwell on Interpretation of Statutes, Eleventh Edition, at p.155 where it is observed "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. " But as we have said already even without looking at the proviso, our conclusion is that the main part of sub s.(2) provides for searches and the proviso merely enforces that conclusion. We therefore cannot agree with the High Court that subsection(2) does not provide for search of the business premises of a dealer, in the shape of offices etc. (1) 158 Then we come to sub section(3). That provides for the seizure of accounts etc. , if the empowered officer has reason to suspect that any dealer is attempting to evade the payment of any tax. fee or other amount due from him under the Act. If he has such reason he may for reasons to be recorded in writing seize such accounts etc. Now if sub s.(2) gives power of search, sub s.(3) merely provides further power to seize the accounts etc. found on such search. We have already held that sub s.(2) gives the power of search and in that case sub s.(3) is merely complementary to sub s.(2) and gives the ,empowered officer the power to seize the accounts found in certain circumstances. If anything, sub s.(3) also bears out that sub s.(2) must include the power of search for a seizure under sub s.(3) is not possible unless there is a search. Reading therefore sub s (2), its proviso and sub s.(3) together we are of opinion that they provide for search and seizure without warrant except that if the place searched is a purely residential accomodation it cannot be searched without a search warrant from a Magistrate. It naturally follows that if it cannot be searched without a search warrant it is not open to the empowered officer to seize anything from a residential accommodation for he cannot enter and search it unless he has a warrant from a Magistrate to do so. The next question relates to the legislative competence of the State, legislature to enact sub s.(4). This subsection provides for seizure and confiscation of any goods found in any office etc. including purely residential accommodation after search if they are not accounted for in the accounts maintained in the course of the dealer 's business. The sub section thus completes the process which starts with sub section (1) and gives authority to the empowered officer to seize and confiscate goods of the nature indicated therein. The contention on behalf of the respondents is that the power of confiscation provided by sub s.(4) was not within the competence of the State Legislature under item 54, List II. of the Seventh Schedule relating to tax on sales and purchase of goods. On the other hand. the appellant justifies the power to seize and confiscate goods on the round that it is ancillary and incidental to the power to tax, for it is necessary to have such power in order to check evasion of tax and make it unprofitable. The High Court held that the Act was not a law on goods and that a provision for confiscation of goods found on search was neither incidental nor ancillary to the power to tax contained in item 54. List II of the Seventh Schedule. Now it has not been and cannot be disputed that the entries in the various Lists of the Seventh Schedule must be given the widest possible interpretation. It is also not in doubt that while making a law under any entry in the Schedule it is competent to the legislature to make all such incidental and ancillary provisions as may be necessary to effectuate the law; particularly it cannot be disputed that in the case of a taxing statute it is open to the legislature to enact provisions which 159 would check evasion of tax. It is under this power to check evasion that provision for search and seizure is made in many taxing statutes. It must therefore be held that the legislature has power to provide for search and seizure in connection with taxation laws in order that evasion may be checked. It is further urged on behalf of the appellant that confiscation of goods which are not entered in accounts is merely a provision of ancillary nature to check evasion of tax by making it unprofitable for dealers to secrete goods in which they are dealing. Reliance in this connec tion is placed on K. section Papantna and another vs Deputy Commercial Tax Officer, Guntakal,(1) where the Andhra Pradesh High Court upheld an analogous provision in the Andhra Pradesh General Sales Tax Act, (No. 6 of 1957). in s.28 (6). We do not propose in the present case to decide the general question whether a power to confiscate goods which are found on search and which are not entered in account books of the dealer is an ancillary power necessary for the purpose of stopping evasion of tax. Assuming that is so, we have still to see whether sub s.(4) of the Act can be upheld read along with the second proviso thereof. It may be added that there is no such provision as the second proviso in s.28 of the Andhra Pradesh General Sales Tax Act. We do not therefore propose to express any opinion as to the correctness of the above decision of the Andhra Pradesh High Court. Sub s(4) of s.41, before it was amended by the Madras General Sales Tax (Second Amendment) Act. from April 1, 1961, had only the first proviso with respect to giving an opportunity of being heard and making an enquiry in the matter before ordering confiscation. By the amendment of 1961, the second proviso was added. That provides that the officer ordering the confiscation shall give the person affected option to pay in lieu of confiscation. in cases where the goods are taxable under the Act. in addition to the tax recoverable, a sum of money not exceeding one thousand rupees or double the amount of tax recoverable. whichever is greater. This provision clearly requires the officer ordering confiscation to do two things(i) to order the person concerned to pay the tax recoverable. and (ii) to pay a sum of money not exceeding one thousand rupees or double the amount of tax recoverable. whichever is greater. We have already indicated that in a large majority of cases covered by the Act the tax is payable at the point of first sale in the State. But under cl.(a) of the second proviso the tax is ordered to be recovered even before the sale, in addition to the penalty not exceeding Rs. 1,000 or double the amount of tax recoverable whichever is greater. Therefore cl.(a) of the second proviso is clearly repugnant to the general scheme of the Act which in the majority of the cases provides for recovery of tax at the point of first sale in the State. In view of this repugnancy one or other of these two provisions must fall. Clearly it (1967) XIX S.T.C. 506. 160 is cl. (a) in the proviso which under the circumstances must fall, for we cannot hold that the entire Act must fall because of this inconsistency with respect to recovery of tax under cl.(a) of the ,second proviso even before the taxable event occurs in the large majority of cases which would be covered by the Act. We are ,therefore of opinion that cl.(a) of the second proviso being repugnant to the entire scheme of the Act, in so far as it provides for recovery of tax even before the first sale in the State which is the point of time in a large majority of cases for recovery of tax, must ,fall, on the ground of repugnancy. It is next urged that in any case the second provisio is severable and therefore only this proviso would fall and not the main part of sub s.(4). We are however of opinion that cl. (a) of second proviso is not severable. We have already indicated that originally the second proviso was not there in the Act. It was brought in by the amendment of 1961 and it compels the officer to give the 'Option, and thus compels recovery of tax even in those cases where the tax is recoverable only at the first point of sale in the State which naturally has not occurred in cases of goods seized 'from the dealer himself. Considering the fact that the legislature added this compulsory proviso later, it is clear that the legislature intended that the main part of the section and the second proviso should go together. It is difficult to hold therefore that after the introduction of the second proviso in 1961, the legislature could have intended that the main part of sub s.(4) should stand by itself. We are therefore of opinion that sub s.(4) with the two provisos must fall on this narrow ground. We therefore agree with the High Court and strike down sub s.(4) but for reasons different from those which commended themselves to the High Court. Then we come to the question whether sub ss.(2) and (3) of s.41 of the Act which have been struck down by the High Court on the ground that they are unreasonable restrictions on the right to hold property and to carry on trade have been correctly struck down. The main reason which impelled the High Court to strike ,down sub s.(2) was that there was no safeguard provided for search made thereunder. The High Court held that section 165 of the Code of Criminal Procedure did not apply to searches made under sub s(2). It also held that the State Government was given the power to empower any officer to make a search under sub s.(2) and this meant that even an officer of low status could be empowered. Consequently the High Court struck down sub s.(2) on the ground that it gave arbitrary power of search which could be made even by an officer of low status. It is true that search under this sub section can be made by any officer empowered by Government in this behalf, but we have no reason to think that Government will not empower officers of proper status to make searches. In this very case, we find that the Government empowered an Assistant Commercial Tax Officer, a Revenue Inspector and a Sub Inspector of Police to make searches. Considering the 161 large number of dealers who are covered by the Act, it cannot be said that these officers are of such low status that they cannot be depended upon to make a search with due care and caution. We cannot also forget that in a case of this kind the Government cannot find sufficient number of officers of what may be called high status to make searches, for dealers who may be covered by the Act may be legion throughout the State, and if such searches could only be made by high officers there would not be enough officers available to do so. The fact that the Act gives power to Government to, empower any officer is therefore no reason to strike. it down for, as we have said, the Government will see that officers of proper status are empowered. Nor do we think that an Assistant Commercial Tax Officer or an Inspector of Revenue Department or a Sub Inspector of Police Department is not an officer of proper status to make searches under this provision. We are also of opinion that though sub s.(2) itself provides no safeguards and might have been open to objection on that ground, there is a provision in the proviso to, sub s.(2) which lays down that all searches under this subsection shall, so far as may be. be made in accordance with the provisions of the Code of Criminal Procedure. Therefore, the provisions of the Code of Criminal Procedure, so far as may be, apply to all searches made under sub section It appears that in the High Court, the parties as well as the Court assumed that s.165 of the Code of Criminal Procedure would not apply to searches under sub s.(2) We cannot see any warrant for this assumption. The proviso clearly lays down that all searches made under this sub section, so far as may be, shall be made in accordance with the provisions of the Code of Criminal Procedure. Thus all provisions contained in the Code of Criminal Procedure relating to searches would be applicable to searches under sub s.(2), so far as may be. Some of these provisions are contained in Chapter VII but one such provision is contained in s.165. It is true that that section specifically refers to an officer in charge of a police station or a police officer making an investigation. But when the proviso applies the provisions of the Code of Criminal Procedure to all searches made under this sub section, as far as may be possible, we see no reason why s.165 should not apply, mutatis mutandis, to searches made under sub s.(2). We are therefore of opinion that safeguards provided in section 165 also apply to searches made under sub section These safeguards are (i) the em powered officer must have reasonable grounds for believing that anything necessary for the purpose of recovery of tax may be found in any place within his jurisdiction, (ii) he must be of the opinion that such thing cannot be otherwise got without undue delay, (iii) be must record in writing the grounds of his belief, and (iv) he must specify in such writing so far as possible the thing for which search is to be made. After he has done these things, he can make the search. These safeguards, which in our opinion 162 apply searches under sub s.(2) also clearly show that the power to search under sub section (2) is not arbitrary. In view of these safeguards and other safeguards provided in Chapter VII of the Code apply so far as may be to searsee no reason to hold that the restriction, if any, on the right to hold property and to carry on trade by the search provided in sub s.(2) is not a reasonable restriction keeping in view the object of the search, namely, prevention of evasion of tax. Next we come to sub s.(3), which as we have already stated, is complementary to sub s.(2). It provides in addition to the safeguards which have to be complied with when a search is made under sub s.(2), that the officer may seize accounts etc. if he has reason to suspect that any dealer is attempting to evade the payment of any tax etc. due from him under the Act. It also provides that he has to record his reasons in writing and we are of opinion that these reasons have to be recorded before the accounts are seize. It further provides that the dealer shall be given a receipt, and this means that the receipt must be given as and when the accounts etc. are seized. Finally it provides that these accounts etc. Shall be retained by such officer so long as may be necessary for their examination and for any enquiry or proceeding under the Act. These in our opinion are sufficient safeguards and the restrictions iS any, on the right to hold property and the right to carry on trade by sub s.(3) must therefore be held to, be a reasonable restriction. We may add that the proviso to sub s.(3) has fixed the period for which the officer seizing accounts can keep them, namely, ' @o days at a time, and if he wants to keep them for has to 'take the permission of the next additional safeguard entitling the dealer accounts after every 30 days, 'unless 'a higher officer has permitted the retention of accounts for a period longer than 30 days. We cannot therefore agree with the high High Court that sub sections (2) and (3) of section 41 of the Act are unreasonable restrictions on the right to hold property or carry on trade for reasons indicated. We are of opinion that they are reasonable restrictions which are protected by cls. (5) and (6) of article 19 of the Constitution. We now proceed to consider what order should be passed in the appeals in the view we have taken about the interpretation and validity of sub sections (2) and (3) of section 41 of the Act. We have already indicated that the High Court held that the warrant issued by the Magistrate for search of the residental accommodation was bad because it showed that the Magistrate had not applied his mind to the question of issuing it, inasmuch as there were portions which should have been struck out from the printed form and gaps which should have been filled in. But this was not done. 163 That conclusion of the High Court has xi(4 @re ,@n challenged before us. The High Court has further held 'that a r pr6kr and reasonable opportunity was not given to the persons concerned to show that the goods seized Were not prpperly accounted for in their account books, though this findili ' is not material now for 9 we have held that sub s.(4) falls in its entirety. It follows therefore that anything recovered from the search of the residential accom modation on the basis of this defective warrant must be returned. It also follows that anything confiscated must also be returned, as we have held that sub s.(4) must fall. As to the accounts etc. said tot have been seized, it appears to us that the safeguards provided under section 165 of the Code of Criminal procedure do not appear to have been followed when the search was made for the simple reason that everybody thought that provision was not applicable to a search under sub s.(2). Therefore, as the safeguards provided in section 165 of the Code of Criminal Procedure were not followed, anything recovered on a defective search of this kind must be returned. It follows therefor that the final order of the High Court allowing the writ petitions must stand, though we do not agree with the interpretation of the High Court that sub ss.(2) and (3) are unconstitutional on the ground of their being unreasonable restrictons on the right to hold property and to carry on trade. The appeals therefore fails and are hereby dismissed. In view of our decision on the main question of law, we order parties to bear their own costs in all the appeals.

IN-Abs

On August 19, 1964, officers belonging to the Department of the appellant raided and searched the premises of a company and foreibly removed certain accounts and goods. The respondents challenged the department 's action by writ petitions filed in the High Court under article 226 of the Constitution praying that the articles seized should be returned. It was contended by the petitioners that on a proper construction of section 41 of the Madras General Sales Tax Act, No. 1 of 1959, the officers of the Department had no authority to search the premises and seize any account books or goods found there; that if section 41(4) authorised seizure and confiscation of goods, it was beyond the legislative competence of the State Legislature, for it was not covered by item 54 of List II of the Seventh Schedule to the Constitution relating to "taxes on the sale or purchase of goods"; and that if various provisions in section 41 were capable of being construed as authorising search and seizure, they were violative of article 19(1)(f) and (g) of the Constitution. The High Court allowed the Petitions holding, inter alia, that section 41 (2) did not permit a search being made and only provided for inspection; the power of seizure or confiscation in section 41(4) was beyond the legislative competence of the State Legislature; and that subsections (2), (3) and (4) of section 41 contained unreasonable res trictions and were violative of article 19(1) (f) and (g). The High Court also found with respect to one of the petitions that the search warrant had been issued without the application of Mind by the magistrate and was bad. On appeal to this Court; Held: dismissing the appeal, (i)Anything recovered during the search must be returned to the petitioners for the safeguards provided by section 165 of the Code of Criminal Procedure were not followed and in one case the finding of the High Court that the search warrant issued by the magistrate was bad on various grounds was not challenged; furthermore anything confiscated must also be returned as sub section (4) of section 41 must fall.[163 B D]. Clause (a) of the second proviso to sub section (4) gives power to the officer ordering confiscation to give the person affected an option to pay in lieu of confiscation, in cases where the goods are taxable under the Act, the tax recoverable and an additional amount and thus provides for recovery of tax even before the first sale in 149 the State which is the point of time in a large majority of cases for recovery of tax. As such it was repugnant to the entire scheme of the Act and sub section (4) must therefore be struck down. As Clause (a) compels the officer to give the option and thus compels recovery of tax before the first point of sale, which cannot have occurred in cases of goods seized from the dealer himself, it is clearly intended by the legislature to go together with the main part of the Section and is not therefore severable. [159F 16OD]. (ii) Although generally speaking the power to inspect does not give power to search, where, as in the case of section 41 (2) the power has been given to inspect not merely accounts registers, records, goods, etc., but also to inspect the offices, shops etc. , these two powers together amount to giving the concerned officer the power to enter and search the offices etc. and if he finds any accounts or goods in the offices, shops, etc., to respect them. The High Court was therefore wrong in holding that there was no power of search whatsoever under sub section (2). [154H 155E]. The proviso to sub section (2) in providing that all searches under "this sub section" shall be made in accordance with the provisions of the Code of Criminal Procedure, bears out the construction that the main part of sub section (2) contemplates searches. Similarly it is clear from sub section (3) which gives power to seize accounts etc., in certain circumstances, that sub section (2) must include the power of search for a seizure under sub section (3) is not possible unless there is a search. [156D E. 158B C]. The contention that as the main part of sub section (2) does not provide for search of a purely residential accommodation and therefore the proviso is otiose must be rejected. Although generally a provision is an exception to the main part of the section, it Is recognised that in exceptional cases, as in the present case, the provision may be a substantive provision itself. [156D F]. Bhonda Urban District Council vs Taff Vale Railway Co., L. R. Commissioner of Income tax vs Nandlal Bhandari & Sons , and State of Rajasthan vs Leela Jain. ; , referred to. (ii)Sub sections (2) and (3) of section 41 are not violative of article 19 as they are protected by clauses (5) and (6) of article 19 of the Constitution. [162F G]. The High Court had wrongly assumed that the provisions of the Criminal Procedure Code did not apply to a search under section 41(2). In view of the safeguards provided in section 165 Cr. P.C. and in Chapter VII of that Code, it cannot be said that the power to search provided in sub section (2) is not a reasonable restriction keeping in View the object of the search, namely, prevention of evasion of tax. [161EG]. The mere fact that the Act gives power to Government to em power any officer to conduct the search is no reason to strike down the provision for it cannot be assumed that Government will not empower officers of proper status to make searches. [160 H], To, exercise the power of seizure under sub section (3) the officer concerned has to record his reasons in writing, has to give a receipt for the accounts seized, and can only retain the items seized beyond a period of 30 days with the permission of the next higher officer. These are sufficient safeguards and the restriction, if any, on 150 the right to hold property and the right to carry on trade by sub section (3) must therefore be held to be a reasonable restriction. [162 D G]. While the court held that the Legislature has power to provide for search and seizure in connection with taxation law in order that evasion may be checked, it did not decide the general question whether a power to confiscate goods which are found on search and which are not entered in account books of the dealer is an ancillary power necessary for the purpose of stopping evasion of tax. [159C D]. K.S. Papanna and another vs Deputy Commercial Tax Officer, Gunkakal, (1967) XIX S.T.C. 506; referred to.

Appeal No. 103 of 1952. Appeal under article 133(1) (c) of the Constitution of India from the Judgment and Order, dated the 10th August, 1951, of the High Court of Judicature for Rajasthan at Jodhpur (Wanchoo and Bapna JJ.), in D. B. Civil Miscellaneous Application No. 21 of 1951. K. section Hajela, Advocate General of Rajasthan, for the appellant. No appearance for the respondents. March 17. The Judgment of the Court was delivered by GHULAM HASAN J. This appeal is brought under a certificate granted by the High Court of Rajasthan under article 133(c) of the Constitution of India against a judgment and order of that High Court in writ petition under article 226 holding the appointment of one Shri Sukhdeo Narain as invalid and directing that all proceedings taken by him as the Industrial Court under section 7 of the Industrial Disputes Act (No. XIV of 1947) are null and void. 1130 We are informed that Shri Sukhdeo Narain has ceased to work as an Industrial Tribunal and the present appeal, therefore, becomes infructuous, but we are invited by the Advocate General on behalf of the State of Rajasthan who is the appellant before us to decide the question as to the validity of the appointment, as it is likely to affect other awards made by tribunals under the Industrial Disputes Act. We accordingly proceed to give our decision. The question involved in the case is whether the appointment of Shri Sukhdeo Narain is invalid because he does not fulfil the qualifications laid down for a tribunal under section 7(3) of the Industrial Disputes Act. Section 7(3) hereinafter referred to as the Industrial Act says: " Where a tribunal consists of one member only, that member, and where it consists of two or more members, the chairman of the tribunal, shall be a person who (a) is or has been a Judge of a High Court; or (b) is or has been a District Judge . . . . . " The Industrial Act was applied to Rajasthan by the Rajasthan Adaptation of Central Laws Ordinance, 1950 (Ordinance IV of 1950), by the Rajpramukh on January 24, 1950. By this adaptation section 7 of the Industrial Act came to be applied to Rajasthan. Shri Sukhdeo Narain was appointed on October 9, 1950, by a notification which ran as follows: "In exercise of the powers conferred by section 7 of the Industrial Disputes Act, 1947.(XIV. of 1947) the Government of Rajasthan is pleased to constitute an Industrial Tribunal consisting of Shri Sukhdeo Narain, a retired Judge of the High Court of the erstwhile Jodhpur State for the adjudication of an Industrial dispute in the Mewar Textile Mills Ltd., Bhilwara, in Rajasthan. " The appointment of Shri Sukhdeo Narain was objected to by the respondent on the ground that, the 1131 words "a Judge of a High Court" in section 7(3) mean " a Judge of the High Court of Judicature for Rajasthan established under the Rajasthan High Court Ordinance, 1949" and as Shri Sukhdeo Narain had been a Judge of the High Court of the former State of Jodhpur, he could not be held to be Judge of the High Court under section 7(3) of the Industrial Act. This objection was upheld by the High Court. Though the appointment of Shri Sukhdeo Narain in the notification was based upon the fact that he was a retired Judge of the High Court of Jodhpur, in arguments it was also contended before the High Court that even if he was not qualified for appointment as a former Judge of a High Court, he was certainly qualified for appointment as a former District Judge. The High Court repelled this contention. It appears that the United State of Rajasthan came into existence on April 7, 1949, and the United State of Matsya was integrated with it on May 15, 1949. Section 5 of Ordinance No. IV of 1950 lays down that: " For the purpose of the application of any Central law to Rajasthan, unless there be anything repugnant in the suject or context, (ix) references therein to other civil, criminal and revenue courts, to public offices, and to Judges, Magistrates, officers or authorities shall be deemed to be references to such courts, offices and Judges, Magistrates, officers or authorities of or in Rajasthan. " The High Court held that the word "Rajasthan" as defined in Ordinance I of 1949 means the United State of Rajasthan and "the Judges an d other officers" mentioned in section 5(ix) must be held to be those in the service of the United State of Rajasthan. Accordingly they held that Shri Sukhdeo Narain could not be held to be a District Judge within the meaning of section 7(3) (b) and his appointment as an Industrial Tribunal under that section was, therefore, invalid. We are of opinion that this appeal can be decided on a short ground. The Industrial Disputes (Appellate Tribunal) Act (XLVIII of 1950) came into force on May 20, 1950. By section 34 it was provided that the 1132 Industrial Disputes Act, XIV of 1947, shall be amended in the manner specified in the Schedule and the Schedule substituted sub section (2) to section (1) of the Industrial Act as follows : "It extends to the whole of India except the State of Jammu and Kashmir. " As we have already stated the appointment of Shri Sukhdeo Narain was made on October 9, 1950, i.e., after the Industrial Disputes Act had become applicable to Rajasthan. It is not necessary therefore to invoke the provisions of Ordinance. IV of 1950 in deciding the question of the validity of the appointment. The argument based on section 34 of Act XLVIII of 1950 was put forward before the High Court at the time of the hearing of the application for leave to appeal and it was contended that in view of section 34 the provisions of Rajasthan Adaptation of Central Laws Ordinance, 1950, namely section 5, subsections (vii) and (ix), stood amended or repealed but the High Court observed that even if this argument had been raised before them in appeal, it would have made no difference. It has been contended before us by Mr. Hajela, the learned Advocate General on behalf of the State, that after the Industrial Disputes Act of 1947 was extended to Rajasthan by section 34 of the Industrial Disputes (Appellate Tribunal) Act, XLVIII of 1950, the provisions of the former stood amended by section 34 and could not be read subject to section 5 of the Rajasthan Adaptation of Central Laws Ordinance IV of 1950. We think there is force in this contention. The effect of section 34, as we have already indicated, was to extend the territorial application of the , to the whole of India including Rajasthan the exception being the State of Jammu and Kashmir only. This being so the words "A Judge of a High Court and a District Judge" used in section 7(3) (a) and (b) respectively of the , must be held now to include "A Judge of the High Court and a District Judge in the former State of Jodhpur". There is now no room for the application of section 5 of Ordinance IV of 1950 according to which a Judge of the High Court 1133 and a District Judge could only. mean a Judge of the High Court for Rajasthan established under the Rajasthan High Court Ordinance 1949 and a District Judge of or in Rajasthan within the meaning of section 5(ix) of Ordinance No. IV of 1950. Accordingly we hold that the appointment of Shri Sukhdeo Narain was perfectly valid. We accordingly set aside the order of the High Court but without costs, as the respondent is not, represented.

IN-Abs

Held, that under section 7(3) (a) and (b) of the Industrial Disputes Act (XIV of 1947) as amended by section 34 of the Industrial Disputes (Appellate Tribunal) Act (XLVIII of 1950) the phrase "a Judge of a High Court and a District Judge" includes a Judge of the High ,Court and a District Judge in the former State of Jodhpur.

ons Nos. 69 and 71 of 1967. Writ Petition under article 32 of the Constitution of India for the enforcement of fundamental rights. R. H. Dhebar, R. Gopalakrishnan and section P. Nayar, for the respondent (in both the petitions). The Judgment of the Court was delivered by Wanchoo, C. J. These two petitions under Art 32 of the Constitution raise common questions of law and will be dealt with together ' The petitioners were detained under, r 30(1)(b) of the Defence of India Rules, 1962 (hereinafter referred to as the Rules), under orders of the Government of Jammu & Kashmir in March, 1965. Their detention was continued from time to time after review under r.30A. One of such reviews was made in February, 1967. At that time the scope of review was governed by judgment dated June 1, 1965 of Shah J. (Vacation Judge) in Sadhu Singh vs Delhi Administration(1). In that case it was held that r.30A re lating to re view did not require, a judicial approach to the question (1) ; 199 of continuance of detention. No opportunity therefore was given to the petitioners to represent their cases when the review was made in February, 1967 and their detention was continued for a further period of six months. Then came the judgment of this Court in P. L. Lakhanpal vs the Union of India.(1) That judgment overruled the decision of Shah J. and held that the function of review under r.30A was quasi judicial and therefore in exercising it, rules of natural justice had to be complied with. In view of this judgment what the respondent did was to hold another review in April, 1967. At that time notice was given to the petitioners and they were given a hearing. Thereafter order was passed in each case on April 27, 1967 by which the State Government directed the continuance of the detention orders for a further period. In the meantime the present petitions had been filed on March 30, 1967 and were based on the judgment of this Court in Lakhanpal 's case(1). It is not disputed on behalf of the respondent that Lakhanpal 's case(1) will apply to the present petitions and the petitioners will be entitled to release because the procedure of a quasi judicial tribunal was not followed when earlier reviews were made from August, 1965 to February, 1967. Reliance is however placed on behalf of the respondent on the review made in April, 1967 and it is urged that that review was in accordance with the view taken by this Court in Lakhanpal 's(1) case and therefore continuance of detention thereafter is justified. Further it is urged that even if this contention is not correct the State Government has power to pass a fresh order of detention on the same facts, and even if we allow the present petitions, we should make it clear that the State Government has such power. It is urged in this connection that the judgment of Bhargava J. in Avtar Singh vs The State of Jammu and Kashmir(1) is not correct. The first question therefore is whether the orders of review dated April 27, 1967 are sufficient for the continuance of detention, even though the earlier orders of review passed from August, 1965 to February, 1967 were not properly made in view of the judgment of this Court in Lakhanpal 's case(1). Reliance in this connection is placed on the judgment of this Court in A. K. Gopalan vs The Government of India.(1) In that case it was held that "it is well settled that in dealing with a petition for habeas corpus the court has to see whether the detention on the date on which the application is made is legal if nothing more has intervened between the date of the application and the date of hearing. " So it is urged for the respondent that as the order passed on review (1) ; (2) W. Ps. 68, 70, 79, 89, 92, of 1967 (decided on June 9, 1967). (3) ; 200 under r.30A continuing detention on April 27, 1967 was in accordance with the judgment of Lakhanpal 's case(,) the earlier orders of review made between August, 1965 and February, 1967 which were improper made no difference. We cannot accept this contention. In Gopalatn 's case(1) what had happened was that a fresh order was made on March 4, 1965 and the detention was under that order. The principle laid down in that case is unexceptionable; but the question is whether that principle applies to the facts of the present case. In Gopalan 's case( ' ') the question that arose was whether the fresh order of March 4, 1965 under which detention was made was legal, and the Court did not look at the earlier order which had been cancelled by the fresh order of March 4, 1965. In the present cases however no fresh order was made on April 27, 1967 and this distinguishes the present cases from Gopalan 's case(1). Rule 30A of the Rules was originally not in the Rules and was introduced some time later. Before the introduction of r.30A the position was that a detention made under r.30 would be of indefinite duration. But r.30A provided for review of detention orders passed under r 30, and such review was to be made at an interval of not more than six months. On such review the Government had to decide whether detention orders should continue or be cancelled. The effect of r.30 along with r.30A (9) would therefore be that the detention order passed under r.30 would be good only for six months and unless there was a review and the detention order was continued the detenu would have to be released. We cannot accept the contention on behalf of the respondent that the detention order would continue even after six months and the detenu may be detained under that order even thereafter without an order under r.30A (9), continuing the order of detention. It is true that r.30A(9) only says that the Government shall decide whether the detention order should be continued or cancelled. That however does not mean that if the Government omits to make a review under r.30A within six months the detention order will still continue and the detenu continue to be detained thereunder. The provisions in r.30A are designed to protect the personal liberty of the citizens of this country and that is why that rule provides that every detention order shall be reviewed at an interval of not more than six months. This is a mandatory provision and if it is not complied with and the Government omits to review the detention order within six months the order must fall and the detenu must be released. of course when the Government actually reviews the order it will either continue that order or cancel that order. That is why r.30A (9) says that on review the Government shall decide whether the order should be continued or cancelled,. But that does not mean that if for any reason (say, by oversight) the Government omits to review an order within the time provided in the first part of r.30A(9), the detention can continue even though there has been (1) ; (2) ; 201 no review. What applies to an omission to review an order under r.3OA(9) applies equally to a case where a review is not in accordance with law as held by this Court in Lakhanpal 's case(1). Where therefore there has been no review under r.30A(9) or a review is not in compliance with the, provisions thereof, as explained in Lakhanpal 's case(1), the result is that the original detention order though it may have been good when it was passed, falls and the detention after the first period of six months becomes illegal. Further if there is no review of the detention order in the manner provided by law, as explained in Lakhanpal 's case(1) the original order falls after six months and there is nothing to continue thereafter. In the present cases the orders were passed in March, 1965 and should have been reviewed after every six months in the manner explained in Lakhanpal 's case(1). That admittedly was not done upto February, 1967, though a number of reviews were made inbetween. Consequently orders of detention passed in March, 1965 fell after six months and there were no orders to continue thereafter. When therefore the State Government ordered the continuance of detention orders on review on April 27, 1967, in accordance with the procedure indicated in Lakhanpal 's case(1), there was no order to be continued because in between the reviews were not proper and the detention had become illegal. In these circumstances, the principle laid down in Gopalan 's case(2) cannot apply to the facts of the present case, for we cannot ignore that between September, 1965 and April, 1967 there was no proper review as required by r.30A(9) and the detention for all that period was illegal and could not be saved by the original order of March,1965 which must be deemed to have come to an end, after six months, in the absence of a proper review under r.30A(9). So there was no order which could be continued on April, 1967, and therefore the petitioners would be entitled to release on that ground. 'This brings us to the next question, namely. whether it is open to the State Government to pass a fresh order in the circumstances of the present cases. In this connection reliance is placed on behalf of the respondent on two cases of this Court Ujagar Singh vs The State of Punjab (3) and Godavari Shamrao Parulekar vs State of Maharashtra and others(4). The first case was under the Preventive Detention Act (IV of 1950). In that case it was held that "if the authority making an order is satisfied that the ground on which a detenu was detained on a former occasion is still available and that there was need for detention on its basis no mala fides can be attributed to the authority from the fact that the ground alleged for the second detention is the same as that of the (1) ; (3) ; (2) ; (4) ; 202 first detention. " In the latter case what had happened was that detenues were first detained under the Preventive Detention Act. Later 'that order was revoked and they were detained under r.30 of the Rules and the order was served in jail. The second order of detention was apparently based on the same facts on which the first order of detention was passed. This Court held that the second order of detention was perfectly valid and its service in jail did not make the detention illegal. These cases certainly show that a fresh order of detention can be passed on the same facts, if for any reason the earlier order of detention has to be revoked by the Government. Further we do not find anything in the Defence of India Act (hereinafter referred to as the Act) and the Rules which forbids the State Government to cancel one order of detention and pass another 'in its place. Equally we do not find anything in the Act or the Rules which will bar the Government from passing a fresh order of detention on the same facts, in case the earlier order of detention or its continuance is held to be defective for any reason. This is of course subject to the fact that the fresh order of detention is not vitiated by mala fides. So normally a fresh order of detention can be passed, on the same facts provided it is not mala fide, if for any reason the previous order of detention or its continuance is not legal on account of some technical defect as in the present cases. This brings us to the consideration of the judgment of our brother Bhargava J. in Avtar Singh 's case(1), to which we have already referred. Our learned brother held that where the original order of detention, as in these cases, was a good order for the first period of six months, it would not be open to the State Government to pass a fresh order of detention on the same facts after cancelling the order on the expiry of six months, for that would be going round the provisions of r.30 A, and that the only way in which detention could be continued after the first period of six months, where a good order was originally passed, was to make a review in a proper manner as indicated in the case of Lakhanpal.(2) Our learned brother also seems to have held that if a review was not made in a proper manner as indicated in Lakhanpal 's case(2), the Government would be completely powerless and could not detain the persons concerned by a fresh order. In effect therefore our learned brother held that if a mistake is made by Government in the matter of review it could not correct it and the detenu must go free. Now there is no doubt that if the Government resorts to the device of a series of fresh orders after every six months and thus continues the detention of a detenu, circumventing the provisions (1) W.Ps. 68, 70, 79, 89, 92, of 1967 (decided on June 9, 1967) (2) ; 203 of r.30 A for review, which, was interpreted by this Court in Lakhanpal 's case(1), gives some protection to the citizens of this country, it would certainly be acting mala fide. Such a fresh order would be liable to be struck down, not on the ground that the Government has no power to pass it but on the ground that it is mala fide exercise of the power. But if the Government has power to pass a fresh order of detention on the same facts in case where the earlier order or its continuance fails for any defect, we cannot see why the Government cannot pass such fresh order curing that defect. In such a case it cannot be said that the fresh order is a mala fide order, passed to circumvent r.30 A. Take the present case itself. The Government passed the original order of detention in March, 1965. That order was good for six months and thereafter it could only continue under r.30 A on orders passed under r.30 A(9). The Government did pass orders under r.30 A (9) and we. cannot say in view of the judgment in Sadhu Singh 's case(2) that the Government went wrong in the procedure for review. It was only after the judgment of this Court in Lakhanpal 's case(1) that the manner of review became open to objection, with the result that the continuance of the order in these two cases failed and the detention became illegal. If in these circumstances the Government passes a fresh order under r.30, it cannot be said that it is doing so mala fide in order to circumvent r.30 A (9). In actual fact the Government had complied with the provisions of r.30 A(9) and what it did was in accordance with the judgment of this Court in Sadhu Singh 's case(2). It is true that after Lakhanpal 's case(1) the manner in which the review was made became defective and therefore the continuation of detention became illegal. Even so, if the Government decides to pass a fresh order in order to cure the defect which has now appeared in view of the judgment of this Court in Lakhanpal 's case(1), it would in our view be not right to say that the Government cannot do so because that would be circumventing r.30 A. We do not think that we should deprive the Government of this power of correcting a defect particularly in the context of emergency legislation like the Act and the Rules. The Courts have always the power to strike down an order passed in mala fide exercise of power, and we agree with Bhargava, J. to this extent that if the Government, instead of following the procedure under r.30 A as now laid down in Lakhanpal 's case(1) wants to circumvent that provision by passing fresh orders of detention on the same facts every six months, it will be acting mala fide and the court will have the power to strike down such mala fide exercise of power. But in cases. like the present, where the continuance became defective after the judgment of this Court in Lakhanpal 's case,(1) we can see no reason to deny power to Government to rectify the defect by passing a fresh order of detention. Such an order in such circumstances (1) ; (2) ; 204 cannot be called mala fide, and if the Government has the power to pass it which it undoubtedly has, for there is no bar to a fresh order under the Act or the Rules there is no reason why such a power should be denied to Government so that it can never correct a mistake or defect in the order once passed or in the continuation order once made. We are therefore of opinion that the view taken in Avtar Singh 's case(1) insofar as it says that no fresh order can be passed even to correct any defect in an order continuing detention under r 30 A(9) is not correct. We therefore allow the writ petitions and order the release of the petitioners. But it will be open to the State Government to pass a fresh order of detention if it considers such a course necessary. Petitions allowed R.K.P.S. (1) W. Pe. 68, 70, 79, 89, 92 of 1967 (decided on June 9, 1967).

IN-Abs

The petitioners were detained under r. 30(1) (b) of the Defence of India Rules, 1962, under orders passed by the State Government in March 1965. Their detention was continued from time to time after review under r. 30A. One review was made in February 1967 when the scope of such a review was governed by the judgment of this Court in Sadhu Singh vs Delhi Administration [1966] I S.C.R. 243 to the effect that such review did not require a judicial approach to the question of continuance of detention. Accordingly, at the review in February 1967, no opportunity was given to the petitioners to represent their cases and their detention was continued for a further period of six months. Thereafter, by its judgment in the case of P. L.Lakhanpal vs The Union of India. ; this Court overruled the decision in Sadhu Singh 's case and held that the function of review under r. 30A was quasi judicial and that in exercising it, the rules of natural justice had to be complied with. In view of this judgment the respondent held another review in April 1967, when notice was given to the petitioners and they were given a hearing. Thereafter an order was passed in each case on April 27, 1967, by which the State Goverment directed the continuance of the detention orders for a further period. In the meantime the present petitions under article 32 of the Constitution were filed on March 20, 1967 based on the judgment of this Court in Lakhanpal 's case. It was contended on behalf of the respondent State that as the review made in April 1967 was in accordance with the view taken in Lakhanpalls case, the continuance of the detention thereafter was justified; that the State Government had power to pass a fresh order of detention on the same facts and even if the present petitions were to be allowed, it should be made clear that the State Government had such power and that the decision of this Court in the case of Avtar Singh vs The State of Jammu and Kashmir (de cided on June 9, 1967), was not correct. HELD: (i) The writ petitions must be allowed and the petitioners released. In the Present cases the orders were passed in March 1965 and should have been reviewed after every six months in the manner explained in Lakhanpal 's case. That admittedly was not done upto February 1967, though a number of reviews were made in between. Consequently orders of detention passed in March 1965 fell after six months and there were no orders to continue thereafter. When 198 therefore the State Government ordered the continuance of detention orders upon the review on April 27, 1967, in accordance with the procedure indicated in Lakhanpal 's case, there were no orders to be continued because in between the reviews were not proper and the detention had become illegal. [201 C D). A. K Gopalan vs The Government of India, [1966] 2 S.C.R. 427, distinguished. Although r. 30A (9) only says that the Government shall decide whether the detention order should be continued or, cancelled, that does not mean that if the Government omits to make a review under r. 30A within six months the detention order will still continue and the detenu continue to be detained thereunder. The provision for review in r. 30A is designed, to protect the personal liberty of the citizen and is a mandatory provision; if it is not complied with and ' the Government omits to review the detention order within six months, the order must fall and the detenu must be released. [200 FG] (ii) A fresh order of detention can be passed on the same facts, provided it is not mala fide, if for any reason the previous order of detention or its continuance is not legal on account of some technical or other defect as in the present cases. There is nothing in the Defence of India Act and Rules which forbids the State Government from cancelling one order and passing another in its place. [2O2 C]. Ujagar Singh vs The State of Punjab., ; and Godavari Shamrao Parulekar vs State of Maharashtra and Ora., ; , referred to. The view taken in Avtar Singh vs The State of Jammu and Kashmir, in so far as it says that no fresh order can be passed even to correct any defect in an, order continuing detention under r. 30A(9) is not correct. [204 B].

Appeals Nos. 2382 2384 of 1966. Appeals from the judgment and orders dated October 6, 1966 of the Mysore High Court in Writ Petitions Nos. 1056, 1607 and 1298 of 1966, section T. Desai, section C. Javali and Vineet Kumar, for the appellant (in all the appeals). M. M. Ramamurthi and Shyamala Pappu, for respondent No. 1 (in all the appeals) and respondent No. 2 (in C. A. No. 2382 of 1966). 89 The Judgment of the Court was delivered by Shah, J. On May 3, 1966 the Municipality of Raichur imposed octroi duty on goods specified in Sch. 11 to the Mysore. Municipalities Act 22 of 1964, entering the municipal limits for consumption, use or sale. The respondents who are traders in cloth at Raichur moved the High Court of Mysore by petitions under article 226 of the Constitution challenging the levy and collection of octroi duty on goods described in Sch. II of the Act in pursuance of the notification dated May 3, 1966. The High Court of Mysore held that the tax was properly imposed, but in their view collection of the tax was not authorised by law. The High Court accordingly issued a writ of mandamus restraining the Municipal Council, Raichur from recovering the octroi duty levied in pursuance of the notification dated May 3, 1966. The Municipal Council, Raichur, has appealed to this Court against the orders passed by the High Court. The relevant provisions of the Mysore Municipalities Act 22 of 1964 and the Bye Laws may be summaried. By section 94 the Municipal Council is authorised, subject to the general or special orders of the Government, and after observing the preliminary procedure prescribed by section 95, to levy, among other taxes, octroi on goods specified in Sch. II entering the municipal limits for consumption, use or sale therein. By sub section (3) of section 94 it is provided that the taxes specified in sub section (1) shall be assessed, levied and collected in accordance with the provisions of the Act and the rules made by the Government under section 323. Section 95 prescribes the procedure preliminary to imposition of tax. A municipal council has by resolution passed at a general meeting to select for the purpose one or more of the taxes specified in section 94 and in such resolution to specify the classes of persons or of property or of both which the municipal council proposes to make liable and to prescribe exemptions which it proposes to make, the amount or rate at which the municipal council. proposes to assess any such class, and in the case; of octroi, the octroi stations. The resolution must be published in the official Gazette and in such other manner as may be prescribed. Any inhabitant of the municipality may within one month from the publication of the notice submit his objection to the imposition of the tax or to the amount or rate proposed, or to the classes of persons or property to be made liable, or to any exemptions proposed. The municipal council must take into consideration the objections and submit to the Government of the State such objections with its opinion thereon and any modifications proposed in accordance therewith together with a copy of the notice. A resolution sanctioned by the Government together with a notice reciting the sanction and the date and number thereof may then be published by the ,municipal council in the official Gazette, and the tax as prescribed by the, resolution shall be imposed accordingly. Sub section (2) of "The publication of a notice under this section shall be conclusive evidence that the tax has been imposed in 90 accordance with the provisions of this Act and the rules made thereunder". Section 123 provides that every municipal council when submitting for sanction a proposal for the imposition of octroi, shall submit therewith for sanction bye laws for the purposes of cl. (m) of sub section (1) of section 324 or adopt model bye laws made for the said purposes. Section 124 deals with "non liability for octroi and refund of octroi on goods in transit". Section 125 invests the municipal council with power to exempt articles liable to octroi duty, and section 126 relates to the presentation of bills for octroi and prescribes penalties for evasion of payment of octroi. Section 127 prescribes the penalty for selling articles liable to octroi without a licence, or for being in possession of any such article on which octroi has not been paid. Section 323 authorises the Government to make rules for carrying out all or any of the purposes of the Act and to prescribe forms for any proceeding for which it considers that a form shall be prescribed. Exercising the authority conferred by section 323 the Government of Mysore published on September 2, 1965, the Mysore Municipalities Taxation Rules, 1965. Rules 25 to 32 deal with the collection of octroi. Rule 25 deals with the mode of collection; r. 26 with pay ment of octroi, r. 27 with assessment and collection of octroi at octroi station; and r. 28 with the procedure in case where octroi is leviable ad valorem. Rule 3.1 requires the municipal council to maintain a list of traders and public bodies allowed to have an account current, and r. 32 requires a trader or public body allowed, to have an account current to present a declaration in Form VII. Section 324 authorises the municipal council to make, alter or rescind bye laws, subject to the provisions of the Act and the rules made thereunder. Clause (m) provides, insofar as it is material: " providing for the exhibition of tables of octroi, requiring a licence to be obtained for the sale of any article liable to octroi and prescribing the, conditions on or subject to which such licence may be granted, refused, suspended or withdrawn, regulating, subject to any general or special orders which the Government may make in this behalf, the system under which refunds are to be made on account thereof when the goods on which the octroi has been paid, or article manufactured wholly or in part from such goods, are again exported and the custody or storage of goods declared not to be intended for use or consumption or for sale within the municipality;. . . Section 325(2) provides that a municipal council may by resolution adopt in respect of any matter the model bye laws made by the Government under sub section (1) of section 325 in respect 'of matters specified in section 324. Sub section (3) of section 325 provides: "If a municipal council proposes to adopt the model bye laws in respect of any matter subject to any modifications, the procedure specified in sub sections (4), (5) and (6) 91 of section 324 shall be followed as if the modifications were bye laws proposed to be made by the municipal council. The modifications as approved by the Government shall be published in the prescribed manner and the model bye laws shall subject to such modifications come into force from such date as may be specified by the municipal council and where no date is specified on the date of such publication". Sub sections (4) & (5) of section 324 set out the procedure to be followed by the municipal council in the making and publication of bye laws. Sub section (6) authorises the local Government while approving the bye laws to make any changes therein which appear to it to be necessary. In the present case the Municipal Council adopted the model bye laws framed by the Government. It appears, however, that the table of rates in model bye law 16 relating to the levy of storage fee and charges on goods placed in the bonded warehouses was left blank. The Municipal Council has however by resolution prescribed a, table of rates of storage fee and charges in respect of different classes of articles stored in the bonded warehouses. The respondents challenge in this Court the validity of the imposition of octroi duty on two grounds: (i) that there was no valid resolution by the Municipal Council under section 94 of the Act selecting the octroi duty for imposition, and (ii) that the model bye laws having been altered by adding a tariff of storage fee in the bonded warehouses without following the procedure prescribed under section 324(4) & (5), the model bye laws could not be deemed to have been validly adopted by the Municipal Council. They also submit that the Municipal Council has no authority to collect octroi duty, and support the judgment of the High Court, on that question. Before considering the arguments advanced at the Bar, the steps taken by the Municipal Council for imposing the tax and for adoption of the model bye laws may be briefly set out. On June 11, 1965 the Standing Committee of the Raichur Municipal Council resolved to levy octroi duty according to Sch. 11 under section 94 of the Mysore Municipalities Act, ' 1964, at the maximum rates at the octroi barriers specified therein. It was recited in the resolution that confirmation of the general body be obtained. By resolution dated June 28, 1965 the general body resolved unanimously to confirm the recommendations of the Standing Committee dated June 11, 1965. On October 27, 1965 the notification under section 95 of the Act by the Municipality inviting objections to the proposals to impose octroi tax was published. No Objections were received from any resident of the Municipality against the proposal to levy octroi. On February 26, 1966 there was a special general body meeting of the, Municipal Council and it was resolved to levy 92 octroi with effect from April 1, 1966. The resolution was in the following terms: "After due decision and consideration it was unanimously resolved to levy the octroi duty on all the goods imported within municipal limits of Raichur under the Schedule II of Mysore Municipalities Act, 1964, from the first day of April 1966. Further the Committee resolved that the Hyderabad District Municipalities Octroi Rules, 1959, will continue till the new Octroi Rules and Bye laws are finalised under Mysore Municipalities Act, 1964. " But this resolution was amended on March 25, 1966, and the second paragraph was substituted by the following paragraph: "Further the Committee resolved that the appended Bye laws framed by the Municipality in the light of Octroi Model Bye laws 1965 published by the Government in the Mysore Gazette dated 11th November, 1965, have been fully approved. " Approval to the modification in the second paragraph was ob tained by circulation to the members and not in an open general meeting. On March 31, 1966 the minutes of the meeting dated February 26, 1966, and the adoption of the resolution modifying the second paragraph by circulation on March 25, 1966, were read, heard and confirmed unanimously. The storage fee under bye law 16 of the model bye laws was also adopted. On April 16, 1966 sanction of the Government under section 96 of the Act to the levy of octroi and the adoption of model bye laws was given, and on May 3, 1966, the notification under section 97 of the Act imposing octroi duty under Sch. II to the Act and adopting the bye laws was published. Thereafter on various dates in the months of July and August 1966, the writ petitions out of which these appeals arise were filed. There is no substance in the contention that the municipal council had not passed a resolution selecting the octroi tax for imposition. As stated earlier, on June 11, 1965, the Standing Committee of the Municipal Council had "resolved to impose octroi duty" under Sch. 11 to the Act. But the resolution also stated that confirmation of the general body meeting should be obtained. The Municipal Council at its meeting dated June 28, 1965 treated the resolution of the Standing Committee as a recommendation and confirmed the recommendation. The resolution dated June 28, 1965, was passed by the general body and thereby the Municipal Council adopted the recommendations of the Standing Committee, and resolved to select levy of octroi duty at the maximum rates at the octroi barriers specified therein. It is true that the resolution modifying the original resolution dated February 26, 1966 was passed by circulation on March 25, 93 1966. But in view of the terms of section 80(5) the validity of the resolution was not liable to be questioned on the ground of irregularity which manifestly did not affect the merit of the case. , It may be recalled that on March 31, 1966 the "circulation dated 25 3 66 were read, heard and confirmed unanimously. " The plea that a resolution passed by the Municipal Council cannot, under the Act, be modified or cancelled within three months is without force. Section 57 of the Act provides that no resolution of a municipal council shall be modified or cancelled within three months after the passing thereof except by a resolution passed in the manner prescribed in that behalf. There are no materials on the record to prove that the requirements of section 57 were not complied with, and section 97(2) prohibits an enquiry into the regularity of the procedure for imposition of the tax after a notice under section 97(1) is published. This Court in Municipal Board, Hapur vs Raghuvendra Kripal & Ors.(1) in dealing with a similar provision in section 135 of the U. P. Municipalities Act 2 of 1916, held that section 135(3) shuts out enquiry into the procedure by which a tax had been imposed. Hidayatullah, J., speaking for the majority observed (p. 958) . "There is a difference between the tax and the imposition of the tax. The former is the levy itself and the latter the method by which the levy is imposed and collected. What the sub section does is to put beyond question the procedure by which the tax is imposed, that is to say, the various steps taken to impose it." Section 97(2) makes the publication of the notice under section 97(1) conclusive evidence that the tax has been imposed in accordance with the provisions of the Act and the rules made thereunder. The expression "imposed in accordance with the provisions of this Act", in our judgment, means "imposed in accordance with the procedure provided under the Act". All enquiry into the regularity of the procedure followed by the Municipal Council prior to the publication of the notice is excluded by section 97(2). This is not a case in which the Municipal Council had not selected a tax for imposition by a resolution: nor is it a case in which the Municipal Council was seeking to levy tax not authorised by law. A Municipal Council when submitting for sanction a proposal for the imposition of octroi has to submit under section 123 with the proposal for imposition of octroi, also ' bye laws for the purposes of cl. (m) of sub section (1) of section 324, or to adopt model bye laws made for the said purposes. It is to be noticed that under section 94(3) of the Act the tax has to be. assessed, levied and collected in accordance (1)[1966] I S.C.R. 950. 94 with the provisions of the Act and the rules made by the Government under section 323. Bye laws contemplated to be made under section 324(1)(m) and required to be adopted from the model bye laws or specially framed and submitted under section 123 deal with matters of details, such as the exhibition of tables of octroi; requiring a licence to be obtained for the sale of any article liable to octroi and prescribing the conditions on or subject to which such licence may be granted, refused, suspended or withdrawn , regulating the system under which the refunds are to be made when the goods on which the octroi has been paid are again exported; for the custody or storage of goods declared not to be intended for use or consumption or for sale within the municipality; prescribing a period of limitation after which no claim for refund of octroi shall be entertained; and prescribing the minimum amount for which any claim for refund may be made. If bye laws in respect of these matters specified in cl. (m) of section 324(1) are made and submitted for sanction or model bye laws framed by the Government for those purposes are adopted, the requirements of section 123(1) will be satisfied, and if the State Government sanctions the resolution of the Municipal Council imposing octroi duty under section 97(1) and the notice is duly published, octroi duty may be collected by the Municipal Council. Defect in the bye laws will not affect the authority of the Municipal Council to collect the tax, for the authority arises under section 94(3) from the Act and the rules. The Municipal Council of Raichur adopted the model byelaws made by the Government. None of the bye laws "for the purposes" of cl. (m) of section 324 in the model bye laws was defective or incomplete. The model bye laws undoubtedly did not prescribe the storage fee, and the resolution of the Municipal Council levying storage fee at the rates set out in the bye laws and submitted to the Government was not made in conformity with the terms of section 324(4) & (5). The High Court held that the bye laws adopted by the Muni cipal Council were invalid because (1) the resolution dated February 26,1966 could not have been modified by circulation; and (2) that it was not shown that the Municipal Council had complied with the requirements of section 57 when modifying the resolution dated February 26, 1966; and (3) that the State Government had not fixed the time prescribed by bye laws Nos. 23(e), 27, 28 and 32, and since no decision was taken on those bye laws by the Municipal Council, the enforcement of the octroi levy was "rendered difficult". It is clear that under section 325(3) modifications to the model bye laws alone require compliance with sub sections (4) & (5) of section 324. It may be assumed that fixing a tariff for storage fee under bye law 16 which is not prescribed under the model bye laws amounts to 95 modification of the bye laws, but even on that assumption only bye law 16 may be deemed to be invalid, and the power to collect the storage fee may not be lawfuly exercised by the Municipal Council: that does not affect the validity of the other bye laws. If without a particular bye law, the scheme of the. rest of the bye laws may be unworkable, it may follow by necessary implication that the other bye laws have also become ineffective. But that cannot be said of the defect in adopting the table of fees for the purpose of bye law 16. The Municipal Council may not be entitled to levy any charge for storage under bye law 16, but that is the only effect of non compliance with the terms of sub sections (4) and (5) of section 324. The other bye laws remain valid and operative, for they are plainly severable. Bye law 23(e) of the model bye laws provides that no refunds shall be allowed in respect of goods which are transported outside the municipal limits within one month of their being brought into the municipal limits, but regarding which the intimation has not been given to the Municipal Commissioner or Chief Officer within such time as may be fixed by the Municipal Council. Bye law 27 provides that the application for refund with the goods to which it relates shall be presented at the Octroi Station through which it is transported outside the municipal limits within such interval from the hour of examination as the municipal council may determine. Similarly bye law 28 provides that the Octroi Official inCharge of the Octroi Station shall satisfy himself that the goods produced for transport outside the municipal limits as covered by the refund application correspond with the entries in the refund application form and that they are presented within the time fixed by the Municipal Council under bye law 27. In our judgment, the time contemplated to be fixed for the purposes of bye laws 23(e), 27 & 28 need not be fixed by the bye laws. If time is fixed by resolution of the Municipal Council even after the bye laws are sanctioned, there would be no defect in the bye laws. Bye law 32 provides that no person shall sell articles men tioned therein without obtaining a licence granted in that behalf. The model bye law is silent as to the articles which may not be sold without obtaining a licence. Bye laws 313 to 36 depend for their 'operation upon the list of articles being effectively incorporated in bye law 32. Failure to incorporate the list of articles would result in the Municipal Council being unable to enforce compliance with the requirements of taking out a licence. But we are unable to hold that because of the failure to fix the time under bye laws 23(e), 27, 28, or for failure to incorporate the list of articles in bye law 32, the rest of the bye laws became ineffective. We are of the view that even without these bye laws and bye law 16, octroi duty may be levied by the Municipal Council. In our view, the High Court was in error in holding that the model byelaws which were adopted by the Municipal Council were unenforceable. 96 The appeals must therefore be allowed and the petitions filed by the respondents dismissed with costs in this Court. One hearing fee. The order passed by the High Court regarding the costs is maintained. G.C. Appeals allowed.

IN-Abs

On June 11, 1965, the Standing Committee of the Raichur Municipal Council resolved to levy octroi duty according to Sch. II under section 94 of the Mysore Municipalities Act, 1964. It was recited in the resolution that the confirmation of the general body be obtained. The general body unanimously approved the resolution of the Standing Committee. On October 27, 1965 the notification under section 95 of the Act inviting objections from the public was published; no objections were received. On February 26, 1966 there was a special general body meeting and it was. resolved to levy octroi with effect from April 1, 1966. This resolution was however amended by modification of its second paragraph on March 25, 1966. Approval to this modification was obtained at first by circulation to the members on March 31, 1966 the minutes of the meeting dated February 26, 1966 and the adoption of the resolution modifying the second paragraph by circulation on March 25, 1966, were read, heard and confirmed unanimously. As required by section 123 of the Act the model bye laws framed by Government were adopted but the table of rates in model bye law 16 relating to the levy of storage fee and charges on goods placed in the bonded warehouses was, left blank. The rates were fixed by the Council by its resolution of March 31, 1966. On April 16, 1966 sanction of the Government under section 96 of the Act to the levy of octroi and the adoption of model by laws was given and on May 3, 1966, the notification under section 97 of the Act imposing octroi duty under Sch. II and adopting the bye laws was published. The respondents who were dealers in cloth in Raichur moved the High Court of Mysore under article 226 of the Constitution. The High Court held that though octroi had been properly levied its collection wag unau thorised owing to defects in the bye laws adopted. The municipality appealed. The following questions fell for consideration: (i) whether the resolution levying the octroi and the subsequent modification of the said resolution were procedurally valid (ii) whether the fixation of rates for the purpose of model bye law 16 was validly made, the procedure in section 324(4) and (5) not having been followed , (iii) whether the bye laws were unenforceable for the reason that they did not fix the time for the purpose of bye laws 23, 27 and 28 and did not give a list of articles for the purpose of bye laws 33 to 36. HELD:(i) The resolution of the Standing Committee selecting octroi tax for imposition expressly stated that confirmation of the general body would be obtained, and such confirmation was actually obtained. It could not in the circumstances be contended that 88 there was no valid resolution by the Municipal Council under section 94 selecting octroi duty for imposition. [92F H] The resolution modifying the original resolution dated February 26, 1966 was no doubt passed by circulation but later the said circulation was "read, heard and confirmed unanimously" by the general body. Under section 80(5) any irregularity not affecting the merit of the case can be cured and section 97(2) prohibits enquiry into the regularity of the procedure by which a tax has been imposed after a notice under section 97 (1) is published. No material had been placed before the Court to show that in making the modification section 57 had not been complied with. [93A D] Municipal, Board, Hapur vs Raghuvendra Kripal & Ors., ; , relied on. (ii)If bye laws in respect of the matters specified in cl. (m) of section 324(1) are made and submitted for sanction or model bye laws framed by the Government for those purposes are adopted, the requirements of section 123(1) will be satisfied, and if Government sanctions the resolution of the Municipal Council imposing octroi duty under section 97(1) and the notice is duly published. octroi duty may be collected by the Municipal Council. Defect in 'the bye laws will not affect the authority of the Municipal Council to collect the tax for the authority arises under section 94(3) from Act and the Rules. [94C D] The Municipal Council by fixing a tariff for storage fee under bye law 16 modified the model bye laws, and since the modification was made without the Procedure prescribed in section 324(4) and (5) the said bye law was invalid. As a result the Municipal Council was not entitled to levy any charge for storage under bye law 16. But the validity of other bye laws was not thereby affected. [94H 95C] (iii)The time contemplated to be fixed for the purposes of byelaws 23(e), 27 and 28 need not be fixed in the bye laws. If time is fixed by resolution of the Municipal Council after the bye laws are sanctioned, there would be no defect in the bye laws. [95E F] Bye laws 33 to 36 depend for their operation upon the list of articles being effectively incorporated in bye law 32. Failure to incorporate the list of articles would result in the Municipal Council I being unable to enforce compliance with the requirement of taking out a licence. The rest of the by laws did not threby become ineffective. [95G H]

ns Nos. 154 and 203 of 1966. Petition under article 32 of the Constitution of India for the enforcement of fundamentals rights. section K. Mehta, and K. L. Mehta, for the petitioners (in both the petitions). N. section Bindra, A. Sreedharan Nambiar , R. H. Dhebar for R. N. Sachthey, for respondent No. 1 (in W. P. 154 of 1966). 1. M. Lall and E., C. Agrawala, for respondent No. 2 (in W.P.No. 154 of 1966). R. H. Dhebar for R. N. Sachthey, for respondents Nos. I and_ (in W.P. No. 203 of 1966). H. R Gokhale and E. C. Agarwala, for respondent No. 6 (in W.P. No. 203 of 1966). Respondent No. 10 appeared in person (in W.P. No. 203 of 1966). Ramaswami, J. In this case the petitioner, Roshan La1 Tandon has obtained a rule from this Court calling upon the respondents to show cause why a writ in the nature of mandamus under article 32 of the Constitution of India should not be issued commanding the respondents not to carry out the directives contained in the notification of the Railway Board No. E(NG)65 PMI 26 dated the 27 the October, 1965, Annexure 'D ' to the Writ Petition, in so far as it grants protection to the existing Apprentice Train Examiners and lays down the procedure to fill upgraded vacancies. Cause has been shown by, the respondents to whom notice of the rule was ordered to be given. There were originally two scales for Train Examiners Rs. 100 185 ( 'D ' Grade) and Rs. 150 225 ( 'C ' Grade). These scales were later revised as a result of the recommendations of the Second Pay Commission and the scale of 'D ' Grade was increased to Rs. 180 240 and that of 'C ' Grade to Rs. 205 280. On February 18, 1961 the Railway Board issued a letter No. PC 60/PS5/ TP 8, Annexure 'A ' to the Writ Petition to the General Managers 187 of all Indian Railways conveying its decision that vacancies in the Entry Grade of Train Examiners (in the scale Rs. 180 240) with effect from February 18, 1961 should be filled as follows: (i) 50% of the vacancies should be filled from Apprentice Train Examiners who successfully have completed the prescribed (4 years) apprenticeship, the remaining 50% of the vacancies being filled by promotion of skilled artisans. (ii) 20 /1/O of the annual requirements of Apprentice Train Examiners should be drawn from skilled artisans who are not more than 35 years old on 1st July of the year in which the apprenticeship is likely to commence. " Promotion to Grade 'C ' of Train Examiners used to take place on the basis of seniority cum suitability without any distinction whether the employee entered Grade 'D ' of the Train Examiners directly or was selected out of the category of skilled artisans. This rule was laid down by the Railway Board in its letter No. E(S) 1 57 TRS/41, dated January 25, 1958 which states: "Ref : Para 2 of Board 's letter No. E(R) 49 JAC / 13 dated 23 2 50 laying down that 20% of the posts in the TXR grade Rs. 150 225 should be reserved and the TXR in the grade of Rs. 80 160 (since revised Rs. 100 185) promoted from skilled and semi skilled ranks. The Board have reviewed the position and have decided that promotion to the TXR grade of Rs. 150 225 should hereafter be made solely on the basis of seniority cum suitability and the reservation of only 20% as mentioned above will no longer be operative." (Annexure 'B ' to the Writ Petition). On the basis of this rule the Divisional Personnel Officer, New Delhi, prepared a seniority list for the Train Examiners of Grade 'D ' of Delhi Division as on December 31, 1964 (Annexure 'C ' to the Writ Petition). 'On October 27, 1965 the Railway Board issued the impugned notification (Annexure 'D ' to the Writ Petition). The notification states in the first place that on and from April 1, 1966 vacancies in the Entry Grade of Train Examiners scale Rs. 120 240 should not be filled from Apprentice Train Examiners upto 50% as hitherto, but should exclusively be filled by promotion from amongst artisan staff With regard to the next higher grade i.e., Grade 'C ', it was provided that 80% vacancies should be filled by Apprentice Train Examiners who had successfully completed the prescribed training of 5 years (three years in case of Diploma Holders and three years in case of Artisan recruited as Apprentice Train Examiner). Twenty per cent of the vacancies were to be filled by the Train Examiners from Grade 'D '. It was 188 further provided that the Train Examiners Grade 'D ' who began as Apprentice Train Examiners and who were to be absorbed in the 'C ' Grade against 80% vacancies reserved for them should not be required to undergo selection before being absorbed in that grade. As regards 20% vacancies reserved for the other class of Train Examiners the promotion was to be on selection basis. The materials portion of the notification of the Railway Board dated October 27, 1965 is reproduced below: "RECRUITMENT: (i) Vacancies in the entry grade of Train Examiners in the authorised scale Rs. 180 240 should not be filled from apprentice TX Rs. upto 50% as hitherto, but should exclusively be filled by promotion from amongst artisan staff. (ii) (a) Vacancies in the next higher grade Rs. 205 280 (AS) should be filled from amongst X X the TXRs in grade Rs. 180 240 (AS) to the extent of 2O%. (b) The remaining 80% vacancies should be filled by Apprentice TX Rs. who have successfuly completed prescribed apprenticepship mentioned in para 2 below. (c) 25% of the annual requirements of apprentice TXRS. should be drawn from skilled artisans who are not more than 35 years old on 1st July of the year in which apprenticeship is likely to commence. The instructions contained in Board 's letter No. 2(NG) 61MI/101 dated 6 6 62 should be kept in view. Training 2. The Appentice TXRs recruited on and from 1/4/66 shall be given a training for a period of five years (three years in the case of diploma holders). From the same date artisans in lower grades (recruited as apprentice TXRS.) shall be given 'in service ' training for period of three years. Instructions regarding a revised syllabus for the training of the Apprentice TXRS. will follow: DISTRIBUTION OF POSTS IN DIFFERENT GRADE Fifty per cent of existing posts of TXRs in grade Rs. 180 240 which were required to be earmarked for(Apprentice TXRS. in terms of Board 's letter No. PC 60/ PS 6/TP 8 dated 18 2 1961 should be upgraded to scaleRs. 205 280. 189 REVISED DESIGNATIONS AND CLASSIFICATION OF POSTS OF TXRS. Designation Scale of Pay Classification T. X. Its. Grade D ' 180 240Non selection T. X. Rs. Grade 'C ' 205 280Selection for promotees from grade ID ' T. X. Rs. Grade 'B ' 250 380Selection T. X. Its. Grade 'A ' 335 425Non selection Head T. X. Rs. 370 475 Selection Chief T. X. Rs. 450 575 Selection Carriage Foreman Protection to the existing apprentice TXRS. procedure fill upgraded vacancies. It has also been decided that with effect from 1 4 66 all the Apprentice TXRS. (Diploma holders as well as others) on successful completion of their training should be straightaway brought on to the scale Rs. 205 280 (AS) instead of being first absorbed in scale Rs. 180 6 240 as at present. Consequenty they should be allowed stipend in scale Rs. 180 6 210 during the period of their training. As regards the apprentice TXRS. who are undergoing training at present, and will not be brought on to the work working posts before 1 4 66, it has been decided that from the date of this letter, they should be allowed stipend in scale Rs. 180 6 210 during the remaining period of their training. Their period of training should also be increased to 5 years, on completion of which they should be put on to the working posts in scale Rs. 205 280 (AS). The Apprentice TXRS. who have already been or will be absorbed in scale Rs. 180 240 upto 31 3 66 should first be accommodated in scale Rs. 205 280 against the quota of 80% vacancies reserved for them. Such staff should not be required to undergo a 'Selection ' before being absorbed in that grade. The upgraded vacancies in scale Rs. 205 280 left over after earmarking those for the apprentices under training on 2 4 66 should be filled by promotion of TXRS. in scale Rs. 180 240 on a selection basis. While computing the number of posts available for promotion of TXRS. in scale Rs. 180 240 the vacancies likely to occur during the period 190 of apprenticeship of the apprentices under training as on 1 4 66 should also be taken into account. In other words, it would be necessary to keep in reserve only the number of posts equal to the number of apprentices under training as on 1 4 66, who cannot be absorbed in the anticipated vacancies which will arise by the time they qualify. " The petitioner, Roshan Lal Tandon entered railway service on March 6, 1954 as skilled fitter on the Northern Railway. He was selected for the training for the post of Train Examiner Grade 'D ' on June 5, 1958 and was confirmed in that grade on October 25, 1959. The case of the petitioner is that he alongwith the direct recruits formed one class in Entry grade 'D ' and their condition of service was that seniority was to be reckoned from the date of appointment as Train Examiner in Grade 'D ' and promotion to Grade 'C ' was on the basis of seniority cum suitability test irrespective of the source of recruitment. It was alleged that there was no difference between the apprentices and those selected out of the skilled artisans when they entered Grade 'D ' and that portion of the impugned notification which gave a favourable treatment to the direct recruits in Grade 'D ' with regard to promotion to Grade 'C ' was arbitrary and discriminatory and violated the guarantee under articles 14 and 16 of the Constitution. It was contended that the petitioner having been brought to grade 'D ' by undergoing the necessary selection and training and having been integrated with the others who had been brought in through direct recruitment in grade 'D ' could not be differentiated for the purpose of promotion to the senior Grade 'C '. The petitioner has therefore moved this Court for the grant of a writ under article 32 of the Constitution to quash the notification of the Railway Board dated October 27, 1965. In the counter affidavit respondent No. 1 has denied that there was any violation of the guarantee under articles 14 and 16 of the Constitution. It was conceded that prior to April 1, 1966 promotion to the post of Grade 'C ' Train Examiner was on the basis of seniority cum suitability but the impugned notification was issued by the first respondent because it Was decided that the posts of senior Train Examiners in Grade 'C ' should be filled by men possessin adequate technical knowledge and so the period of training of senior Train Examiners was increased and it was decided that in future 80 per cent of the vacancies in 'C ' grade should be filled directly by Apprentice Train Examiners and the remaining 20 per cent was to be made available for recruitment from the category of Train Examiners to which the petitioner belonged. This recruitment of 20 per cent vacancies was to be made on the basis of merit. It was said that the reorganisation of the Service was made with a view to obtain a better and more technically trained class of Train Examiners. The reason was that 191 there were more complicated designs. of Carriages and Wagons, acquisition of modern type of Rolling Stock and greater speed of trains under dieselisation and electrification programmes. It was. considered that there should be a better calibre of technically trained and technically qualified personnel for proper maintenance and safety of the Rolling Stock. In view of the decision to recruit Apprentice Train Examiners directly in 'C ' Grade with effect from April 1, 1966 those who were Apprentice Train Examiners in Grade 'D ' before that date had to be upgraded in the scale of Rs. 205 280. It was therefore thought that these posts should be upgraded "so that there should be parity of treatment with the Apprentice Train Examiners who were to join after April 1, 1966". The first respondent has also controverted the allegation of the petitioner that the procedure outlined in the impugned notification dated October 27, 1965 in regard to the upgraded vacancies was discriminatory. The main question to be considered in this case is whether the notification by the first respondent dated October 27, 1965 is violative of articles 14 and 16 of the Constitution in so far as it makes a discrimination against the petitioner for promotion to Grade 'C '. According to the impugned notification the existing Apprentice Train Examiners who had already been absorbed in grade 'D ' by March 31. 1966 should first be accommodated in grade 'C ' in 80% of the vacancies reserved for them without undergoing any selection. With regard to 20% of the vacancies there is a reservation in favour of the departmental Train Examiners, but the promotion is by selection and not by the test of seniority cum suitability which prevailed before the date of the impugned notification. It was not disputed by Mr. Mehta on behalf of the petitioner that the Railway Board was competent to say that with effect from April 1, 1966 vacancies in the Entry grade posts of Train Examiners should not be filled from Apprentice Train Examiners upto 50% but should be exclusively filled by promotion from amongst artisan staff. As regards the recruitment to grade 'C ', the impugned notification states that with effect from April 1, 1966 all the Apprentice. Train Examiners on successful completion of their training should be straightaway brought on to the scale Rs. 205 280 instead of being first absorbed in scale Rs. 180 6 240 as at present. The period of training was also increased to 5 years on completion of which they should be put on to the working posts in scale Rs. 205 280. So far as this portion of the notification is concerned, Counsel for the petitioner did not raise any constitutional objection. But the contention of the petitioner is that the following portion of the notification was. constitutionally invalid: "The Apprentice TXRS. who have already been or will be absorbed in scale Rs. 180 240 upto 31 3 66 should first be accommodated in scale Rs. 205 280 192 against the quota 80% vacancies reserved for them. Such staff should not be required to undergo a 'Selection ' before being absorbed in that grade. The upgraded vacancies in scale Rs. 205 280 left over after earmarking those for the apprentices under training on 2 4 66 should be filled by promotion of TXRs in scale Rs. 180 240 on a selection basis. " In our opinion, the constitutional objection taken by the petitioner to this part of the notification is well founded and must be accepted as correct. At the time when the petitioner and the direct recruits were appointed to Grade 'D ', there was one class in Grade 'D ' formed of direct recruits and the promotees from the grade of artisans. The recruits from both the sources to Grade 'D ' were integrated into one class and no discrimination could thereafter be made in favour of recruits from one source as against the recruits from the other source in the matter of promotion to Grade 'C '. To put it differently, once the direct recruits and promotees are absorbed in one cadre, they form one class and they cannot be discriminated for the purpose of further promotion to the higher grade 'C '. In the present case, it is not disputed on behalf of the first respondent that before the impugned notification was issued there was only one rule of promotion for both the departmental promotees and the direct recruits and that rule was seniority cum suitability, and there was no rule of promotion separately made for application to the direct recruits. As a consequence of the impugned notification a discriminatory treatment is made in favour of the existing Apprentice Train Examiners who have already been absorbed in Grade 'D ' by March 31, 1966, because the notification provides that this group of Apprentice Train Examiners should first be accommodated en bloc in grade 'C ' upto 80 per cent of vacancies reserved for them without undergoing any selec tion. As regards the 20 per cent of the vacancies made available for the category of Train Examiners to which the petitioner belongs the basis of recruitment was selection on merit and the previous test of seniority cum suitability was abandoned. In our opinion, the present case falls within the principle of the recent decision of this Court in Mervyn vs Collector(1). In that case, the petitioners who were Appraisers in the Customs Department filed a writ petition under article 32, challenging the validity of the "rotational" system as applied in fixing the seniority of Appraisers and Principal Appraisers. The system, as laid down in the relevant departmental circulars was that vacancies occurring in the cadre of Appraisers were to go alternatively to 'promotees ' and 'direct recruits '. According to the petitioners of that case this resulted in inequality, especially in view of the fact that the number of direct recruits over the years was very low. Promotion to the (1) ; 193 grade of Principal Appraisers was from the cadre of Appraisers; only those who had served as Appraisers for five years were entitled to be promoted to the higher grade. Since the direct recruits had to wait for five years before they could become Principal Appraiser the promotees below them who had put in five years as Appraisers became Principal Appraisers. In order to restore the seniority of the direct recruits thus lost, the rotational system was applied to the cadre of Principal Appraisers also i.e., one vacancy was to go to a promotee and the other to a direct recruit. The plea of inequality in violation of article 16(1) of the Constitution was raised by the petitioners in respect of this also. It was held by this Court, in the first place, that there was no inherent vice in the principle of fixing seniority by rotation in a case when a service is composed in fixed proportion of direct recruits and promotees. It was held in the second place that the same could not be said when the rotational system was applied to the recruitment of Principal Appraisers. The source of recruitment for these was one only, namely, the grade of Appraisers. There was no question of any quota being reserved from two sources in their case. In so far therefore as the Government was doing what it called res toration of seniority of direct recruits in Appraisers grade on their promotion to the higher grade it was clearly denying equality of opportunity under article 16 of the Constitution. At page 606 of the Report Wanchoo, J., as he then was, speaking for the Court observed as follows: "This brings us to the question of Principles Appraisers. We are of opinion that the petitioners have a legitimate grievance in this respect. The source of recruitment of Principal Appraisers is one, namely, from the grade of Appraisers. There is therefore no question of any quota being reserved from two sources in their cases. The rotational system cannot therefore apply when there is only one source of recruitment and not two sources of recruitment. In a case therefore where there is only one source of recruitment, the normal rule will apply, namely, that a person promoted to a higher grade gets his seniority in that grade according to the date of promotion subject always to his being found fit and being confirmed in the higher grade after the period of probation is over. In such a case it is continuous appointment in the higher grade which determines seniority for the source of recruitment is one. There is no question in such a case of reflecting in the higher grade the seniority of the grade from which promotion is made to the higher grade. In so far therefore as the respondent is doing what it calls restoration of seniority of direct recruits in Appraisers ' grade when they are promoted to the Principal Appraisers ' grade, it is clearly denying equality of opportunity LP(N)ISCI 14 194 to Apprasiers which is the only source of recruitment to the Principal Appraisers ' grade. There is only one source from which the Principal Appraisers are drawn, namely, Appraisers, the promotion being by selection and five, years ' experience as Appraiser is the minimum qualification. Subject to the above all Appraisers selected for the post of Principal Appraisers must be treated equally. That means they will rank in seniority from the date of their continuous acting in the Principal Appraisers ' grade subject of course to the right of government to revert any of them who have not been found fit during the period of probation. But if they are found fit after the period of probation they rank in seniority from the date they have acted continuously as Principal Appraisers whether they are promotees or direct recruits. The present method by which the respondent puts a direct recruit from the grade of Appraiser, though he is promoted later, above a promotee who is promoted to the grade of Principal Appraiser on an earlier date clearly denies equality of opportunity where the grade of Principal Appraiser has only one source of recruitment, namely from the grade of Appraisers. In such a case the seniority in the grade of Principal Appraisers must be determined according to the date of continuous appointment in that grade irrespective of whether the person promoted to that grade from the Appraisers ' grade is a direct recruit or a promotee. This will as we have already said be subject to the government 's right to revert any one promoted as a Princivil Appraiser if he is not found fit for the post during the period of probation. The petition therefore will have to be allowed with respect to the method by which seniority is fixed, in the grade of Principal Appraisers. That method denies equality of opportunity of employment to the Appraisers who are the only source of recruitment to the grade of Principal Appraisers. What the impugned method seeks to do is to introduce a kind of reservation in respect of the two categories of Appraisers from which the promotions are made, and that cannot be done when the source of promotion is one. " We pass on to consider the next contention of the petitioner that there was a contractual right as regards the condition of service applicable to the petitioner at the time he entered Grage 'D and the condition of service could not be altered to his disadvantage afterwards by the notification issued by the Railway Board. It was said that the order of the Railway Board dated January 25, 1958, Annexure 'B ', laid down that promotion to Grade 'C ' from Grade 'D ' was to be based on seniority cum suitability and this condition of service was contractual and could not be altered thereafter to the prejudice of the petitioner. In our opinion, there,, 195 is no warrant for this argument. It is 'true that the origin of Government service is contractual. There is an offer and acceptance in every case. But once appointed to his post or office the Government servant acquires a status and his rights and obligations are no longer determined by consent of both parties, but by statute or statutory rules which may be framed and altered unilaterally by the Government. In other words, the legal position of a Government servant is more one of status than of contract. The hall mark of status is the attachment to a legal relationship of rights and duties imposed by the public 'law and not by mere agreement of the parties. The emolument of the Government servant and his terms of service are governed by statute or statutory rules which may be unilaterally altered by the Government without the consent of the employee. It is true that article 311 imposes constitutional restrictions upon the power of removal granted to the President and the Governor under article 310. But it is obvious that the relationship between the Government and its servant is not like an ordinary contract of service between a master and servant. The legal relationship is something entirely different, something in the nature of status. It is much more than a purely contractual relationship voluntarily entered into between the parties. The duties of status are 'fixed by the law and in the enforcement of these duties society has an interest. In the language of juris prudence status is a condition of membership of a group of which powers and duties are exclusively determined by law and not by agreement between the parties concerned. The matter is clearly stated by Salmond and Williams on Contracts as follows: "So we may find both contractual and status obligations produced by the same transaction. the one transaction may result in the creation not only of obligations defined by the parties and so pertaining to the sphere of contract but also and concurrently of obligations de fined by the law,itself, and so pertaining to the sphere of status. A contract of service between employer and employee, while for the most part pertaining exclusively to the sphere of contract, pertains also to that of status so far as the law itself has seen fit to attach to this relation compulsory incidents, such as liability to pay compensation for accidents. The extent to Which the law is content to leave matters within the domain of contract to be determined by the exercise of the autonomous authority of the parties themselves, or thinks fit to bring the matter within the sphere of status by mining for itself the contents of the relationship, is a matter depending on considerations of public policy. In such contracts as those of service the tendency in modem times is to withdraw the matter more and more from the domain of contract into that of status." .lm0 (Salmond and Williams on Contracts, 2nd edition p. 12). 196 We are therefore of the opinion that the petitioner has no vested contractual right in regard to the terms of his service and that Counsel for the petitioner has been unable to make good his submission on this aspect of the case. But for the reasons already expressed we hold that the impugned part of the notification violates the guarantee under articles 14 and 16 of the Constitution and a writ in the nature of mandamus should be issued commanding the first respondent not to give effect to the impugned part of the notification, viz.,: "The Apprentice T.X.Rs. who have already been or will be absorbed in scale Rs. 180 240 upto 31 3 66 should first be accommodated in scale Rs. 205 280 against the quota of 80% vacancies reserved for them. Such staff should not be required to undergo a 'Selection ' before being absorbed in that grade. The upgraded vacancies in scale Rs. 205 280 left over after earmarking those for the apprentices under training on 2 4 66 should be filled by promotion of T.X.Rs. in scale Rs. 180 240 on a selection basis. While computing the number of posts available for promotion of T.X.Rs. in scale Rs. 180 240 the vacancies likely to occur during the period of apprenticeship of the apprentices under training as on 1 4 66 should also be taken into account. In other words, it would be necessary to keep in reserve only the number of posts equal to the number of apprentices under training as on 1 4 66, who cannot be absorbed in the anti cipated vacancies which will arise by the time they qualify. " The application is accordingly allowed, but there will be no ,order with regard to costs in this case. Writ Petition No. 203 of 1966 The material facts of this case are parallel to those in Writ Petition No. 154 of 1966 and for the reasons already given we hold that the petitioner is entitled to the grant of a writ in the nature of mandamus commanding the respondents not to give effect to the impugned part of the notification dated October 27, 1965, Annexure 'D ' to the Writ Petition. The application is accordingly allowed, but there will be no order as to costs in this case. Petitions allowed.

IN-Abs

Vacancies in grade 'D ' of Train Examinations were filled by (a) direct recruits i.e., apprentice train examiners who had completed the prescribed period of training, and (b) promotees from skilled artisans. Promotion from Grade 'D ' to 'C ' was on the basis of seniority cum suitability. In October 1965 the Railway Board issued a notification by which it was provided that eighty per cent of the vacancies in Grade 'C ' were to be filled up from apprentice train examiners recruited on and after April 1, 1966 and the remaining twenty per cent by train examiners from Grade 'D '. The notification further provided that apprentice train examiners who had already been absorbed in Grade D before April 1966 should en bloc be accommodated in Grade 'C ' in the eighty per cent of the vacancies without undergoing any selection and with regard to twenty per cent of the vacancies, reserved for the other class promotion was to be on selection basis and not on the basis of seniority cum suitability. The petitioner who entered Railway service in 1954 as a skilled artisan and was selected and confirmed in Grade 'D ' filed a Writ Petition in this Court challenging that part of the notification which gave favourable treatment to apprentice train examiners who had already been absorbed in Grade 14 'D ' as arbitrary and discriminatory and violative of Articles t4 and 16 of the Constitution. It was also contended that the earlier order laying down that promotion to grade 'C ' was to be based on seniority cum suitability had become a contractual condition of service and could not be altered to the prejudice of the petitioner. HELD: (i) The impugned part of the notification violated the guarantee under Articles 14 and 16 of the Constitution. Once the direct recruits and promotees were absorbed in one cadre, they formed one class and they could not be discriminated against for the purpose of further promotion to the higher grade 'C '. Before the impugned notification was issued there was only one rule of promotion applicable to both direct recruits and promotees. By the impugned notification a discriminatory treatment was made in favour of the existing apprentice Train Examiners who had already been absorbed in grade 'D ' because, the notification provided that this group of apprentice train examiners should first be accommodated en bloc in grade 'C ' up to eighty per cent of the vacancies reserved for them without undergoing any selection; whereas in the twenty per cent of the vacancies available to the category of Train Examiners to which the petitioner belonged the basis of recruitment was selection on merit and the previous test of seniority cum suitability was abandoned. [192 D G]. 186 Mervyn vs Collector, ; relied on. (ii) The petitioner had no vested contractual right in regard to the terms of his service. The legal position of a Government servant is more one of status than of contract. Once appointed to his post or office a Government servant acquires a status and his rights and obligations are no longer determined by consent of parties, but by statute or statutory rules which may be framed and altered unilaterally by the Government. [195 B C].

minal Appeals No. 76 82 of 1965. Appeals from the judgment and order dated September 9, 1963 of the Punjab High Court, Circuit Bench at Delhi in Criminal Writs Nos. 3 D, 4 D, 5 D, 6 D, 7 D, 10 D and 12 D of 1962. B. R. L. Iyengar and R. N, Sachthey, for the appellants (in all the appeals). G. section Bawa and Harbans Singh, for the respondents (in Cr. 76, 81 of, 1965). 206 The Judgment of the Court was delivered by Hegde, J. These are companion appeals. They were brought to this Court on the strength of the certificates issued, by the High Court of Punjab. The only question that falls for decision in these appeals is whether s.18 of the Suppression of Immoral Traffic in Women and Girls Act, 1956 (hereinafter referred to as the Act) is ultra vires article 14 of the Constitution. The attack on the validity of that section on the basis of Art 19(d), (e) and (f) was not pressed at the time of the hearing. Hence there is no need to examine the said plea. The first appellant in these appeals, Shri A. C. Aggarwal. Sub Divisional Magistrate, Delhi, issued notices to the respondents in these appeals except that in criminal appeal No. 82 of 1965 to show cause why the premises occupied by them should not be attached under . (1) of the Act. Those notices were issued on the basis of police reports that those premises were being used as brothers. In reply amongst other pleas those respondents challenged the validity of s.18. They moved the learned magistrate to refer the question as to the validity of section 18 to the High Court under s.432 of the Criminal Procedure Code of 1898. As the learned magistrate rejected .that prayer, they moved the High Court under article 226 of the Constitution in criminal writs 'Nos. 3D to 7D and 10D of 1962, challenging the vires of s.18. Respondent in criminal appeal No. 82 of 1962 claims to be the tenant in flat No. 54 on the first floor of Japan Building, which premises had been attached in the proceedings against one Mst. Ambar under section 18(1). His case was that be 'had permitted the said Mst. Ambar to use those premise 's temporarily but she lad vacated the same and therefor he was entitled to their possession as according to him he was unaware of the fact that Mst. Ambar was using the premises in question for an improper purpose. But the learned magistrate rejected his application holding that(a) there was no satisfactory proof of the 'fact that lie was a tenant in those promises and (b) he was aware of the unlawful use to which the premises in question were being put. Aggrieved 'by that decision, 'he moved the High 'Court of Punjab in Ur. Writ No,. 12 0/62 to quash :the order of the learned Magistrate on the around that section 18 was ultra vires of Article 14. The aforementioned writ petitions were heard by Mahajan and Shamsher Bahadur, JJ. and by a common order dated September 9, 1963, they Allowed those petition and quashed the notices issued to the respondents in criminal appeals Nos. 76 to 81 of 1965 . They also quashed the order refusing to raise the attachment in respect of flat No. 154 of which Siri Chand the respondent in Criminal appeal No. 82 / 65 claimed to be the tenant. The learned Judges held that "whenever action is taken under s.18 independently of s.7, 'it would offend Art.14 of the Constitution and to that extent section 18 would be ultra vires of the Constitution. " 207 In the course of their order dated 23rd July, 1963, the learned Judges observed: "The requirements for taking action under Section 18 or under Section 7 of the Act are identical. The Act leaves the choice of the action under one or the other provision to the executive in the case of persons similarly situate and thus can lead to discrimination without there being any rational basis for the same. The consequences of an action in one case are of an extremely penal nature whereas in the other case, that is, under Section 18, of comparatively inconsequential nature. The discrimination can come about where in the case of a number of prostitutes, who carry on their profession within two hundred yards of a public place, as defined in Section 7, the authorities may take action against some of ' them under Section 18 and against the others under Section 7. The fact that this can happen is not controverted by the learned cou nsel for the Delhi State. We also find. no rationable behind this type of discrimination. The, scheme of the Act also does not provide any key for such, sort of discrimination between persons of the same class. and similarly situate". The inhibition of article 14 that the State shall not deny to any person equality before the law or the equal protection of the laws. was resigned to protect all persons against discrimination by the State amongst equals and to prevent any person or class of persons from being singled out as a special subject for discrimination and hostile treatment. If law deals equally with all of a certain well defined class, it is not obnoxious and it is not open to the charge of denial of equal protection on the ground that it has no application to other persons, for the class for whom the law has been made is different from other persons and, therefore, there is no discrimination against equals. Every classification is in some degree likely to produce some inequality but mere production of inequality is not all by itself enough. The inequality pruduced in order to encounter the challenge of the of the Constitution must be the result of some arbitrary step taken by the State. Reasonable classification is permitted but suchclassification must be based upon some real and substantial distinction bearing a reasonable and just relation to the thing in respect of which such classification is made. The presumption is always in favour of the constitutionality of an enactment, since it must be assumed that the legislature understands and correctly appreciates the needs of its own people, and its laws are directed to problems made manifest by experience and its discriminations are based on adequate grounds. The contention advanced on behalf of the respondents and accepted by the High Court, is that section 18 discriminates against the , 208 person who is proceeded against under that section, without first being prosecuted under s.3 or s.7 as the case be, though the information laid against him discloses an offence either under s.3 or s.7. Section 18 covers two classes of cases, namely, persons who have been prosecuted and found guilty of an offence either under s.3 or s.7 as well, as persons not dealt with under those provisions. In the case of the former, they have the benefit of regular trial, they can crossexamine the prosecution witnesses, adduce defence evidence and also go up in appeal if convicted. In those, cases the result of the proceedings under s.18 largely though not entirely depends on the result of the connected prosecution. But in the case of the latter, i.e., those who are only proceeded against under s.18 they have only a right of 'hearing '. It is further urged on their behalf that under s.3 or s.7 action is taken before a court, whereas the proceeding under section 1 8 is taken before a magistrate. In the latter case the Act does not lay down the scope of the hearing provided for. It was lastly urged that the facts to be proved both in prosecutions under ss.3 and 7 and in proceedings under s.18 are identical; hence, there is no justification for adopting two widely different procedures. In support of their contention that the difference in the two procedures prescribed amounts to a discrimination under article 14, reliance was placed on the decision of this Court in the State of West Bengal vs Anwar Ali Sarkar(1). We shall now proceed to examine the correctness of these contentions. The Act was enacted in pursuance of an international convention signed at New York on the 9th day of May, 1950. It provides for the suppression of immoral traffic in women and girls. The sections that are material for our present purpose are 3, 7 and 18. Section 3 provides for punishment for keeping a brothel or allowing premises to be used as a brothel. Section 3(1) provides for the conviction and punishment of a person who keeps or manages ,or acts or assists in the keeping or management of, a brothel. Sub s.(2) of that section provides for the conviction and punishment of a person who being (a) tenant lessee or occupier or person incharge of any premises, uses or knowingly allows any other person to use, such premises or any part thereof as a brothel,(b) the owner lessor or landlord of any premises or the agent of such owner,lessor or landlord, lets the premises or any part thereof with the knowledge that the same or any part thereof is intended to be used as a brothel or is wilfully a party to the use of such premises or any part thereof, as a brothel. "Brothel" is defined in s.2(a) as including a house, room, or place or any portion of any house, room or place, which is used for the purpose of prostitution for the gain of another person or for the mutual gain of two or more prostitutes. "Prostitute" is defined in s.2(e) as meaning a female who offers her body for promiscuous sexual intercourse for hire whether in money or in kind. (1) ; 209 Section 7 provides for the Punishment of prostitution in or in the vicinity of public places. That section reads: "(1) Any woman or girl who carries on prostitution, and the person with whom such prostitution is carried on, 'in any premises which are within a distance of two hundred yards of any place of public religious worship, educational institution, hostel, hospital, nursing home or such other public place of any kind as may be notified in this behalf by the Commissioner of Police or District Magistrate in the manner prescribed, shall be punishable with imprisonment for a term which may extend to three months. (2) Any person who (a) being the keeper of any public place knowingly permits prostitutes for purposes of their trade to resort to or remain in such place; or (b) being the tenant, lessee, occupier or person in charge of any premises referred to in sub section (1) knowingly permits the same or any part thereof to be. used for prostitution; or (c) being the owner, lessor or landlord of any premises referred to in sub section (1), or the agent of such owner, lessor or landlord, lets the same or any part thereof with the knowledge that the same or any part thereof may be used for prostitution, or is wilfully a party to such use, shall be punishable on first conviction with imprisonment for a term which may extend to three months, or with fine which may extend to two hundred rupees, or with both, and in the event of a second or subsequent conviction with imprisonment for a term which may extend to six months and also with fine which may extend to two hundred rupees.". Public place is defined in section 2(h) as meaning any place intended for use by or accessible to the public and includes and public conveyance. Now we may refer to section 18. It reads: " (1) A Magistrate, may, on receipt of information from the police or otherwise, that any house, room, place or any portion thereof within a distance of two hundred yards of any public place referred to in sub section (1) of section 7, is being run or used as a brothel by any person, or is being used by prostitutes for carrying on their trade, issue notice on the owner, lessor 210 or landlord of such house, room, place or por tion or the agent of the owner, lessor or landlord or on the tenant, lessee, occupier of, or any other person in charge of such house, room, place, or portion, to show cause within seven days of the receipt of the notice why the same should not be attached for improper user thereof; and if, after hearing the person concerned, the Magistrate is satisfied that the house, room, place, or portion is being, used as a brothel or for carrying on prostitution, then the Magistrate may pass orders (a) directing eviction of the occupier within seven days of the passing of the order from the house, room, place, or portion; (b) directing that before letting it out during the period of one year immediately after the passing of the order, the owner, lessor or landlord or the agent of the owner, lessor or landlord shall obtain the previous approval of the Magistrate: Provided that, if the Magistrate finds that the owner, lessor or landlord as well as the agent of the owner, lessor or landlord, was innocent of the improper user of the house, room, place or portion, he may cause the same to be restored to the owner, lessor or landlord, or the agent of the owner, lessor or landlord, with a direction that the house, room, place or portion shall not be leased out, or otherwise given possession of, to or for the benefit of the person who was allowing the improper user therein. (2) A Court convicting a person of any offence under section 3 or section 7 may pass orders under sub section (1), without further notice to such person to show cause as required in that sub section. (3) Orders passed by the Magistrate or court under sub section (1) or sub section (2) shall not be subject to appeal and shall not be stayed or set aside by the order of any court, civil or criminal, and the said orders shall cease to have validity after the expiry of one year: Provided that where a conviction under section 3 or section 7 is set aside on appeal on the ground that such house, room, place or any portion thereof is not being run or used as a brothel or is not being used by prostitutes for carrying on their trade, any order passed by the trial court under sub section (1) shall also be set aside. 211 (4) Notwithstanding anything contained in any other law for the time being in force, when a Magistrate passes an order under sub section (1), or a court passes an order under sub section (2), any lease or agreement under which the house, room, place or portion is occupied at the time shall become void and inoperative. (5) When an owner, lessor or landlord, or the agent of such owner, lessor or landlord fails to comply with a direction given under clause (b) of sub section (1) he shall be punishable with fine which may extend to five hundred rupees or when he fails to comply with a direction under the proviso to that sub section, he shall be deemed to have committed an offence under clause (b) of sub section (2) of section 3 or clause (c) of sub section (2) of section 7, as the case may be, and, punished accordingly." Sections 3 and 7 provide for the punishment of persons guilty of the offences mentioned therein. Any contravention of the provisions mentioned therein amounts to a cognizable offence in view of section 14, whereas a proceeding under s.18 is in no sense a prosecution. It is a preventive measure. It is intended to minimise the chance of a brothel being run or prostitution being carried on in premises near about public places. Naturally, in the case of prosecutions, a regular trial with a right of appeal is provided for. The enquiry contemplated by s.18 is summary in character. The attachment contemplated by that section can enure only for a period of one year. Under these circumstances evidently the Legislature thought that a regular trial and an appeal against the order of the magistrate is not called for. In these cases it is unnecessary for us to spell out the scope of the expression "hearing" found in s.18. It is necessary to remember that ss.3 and 7 deal with persons guilty of offences whereas s.18 deals with the premises mentioned therein. It is not correct to say that the set of facts to be proved in prosecutions under ss.3 or 7 and in proceedings under s.18 are identical. In the former the prosecution to succeed has to establish either the intention or knowledge referred to therein but in the latter they are not necessary ingredients. Section 18 provides for two classes of cases namely, (1) those coming either under section 3 or 7 as well as under section 18 and (2) those coming only under section 18. They are two distinct classes of cases a classification which has reasonable relationship with the object sought to be achieved and therefore falls outside the rule laid down by this Court in Anwar Ali Sarkar 's(1) case. (1) (N)1SCI 15(a) 212 From the copies of the reports made in these cases to the magistrate by the police made available to us at the hearing of these appeals it is clear that they disclose offences under s.3 against the respondents. Therefore, the question is whether the magistrate can choose to ignore the cognizable offence complained of and merely have recourse to s.18 and thus deprive the parties proceeded against of the benefit of a regular trial as well as the right of appeal in the event of their conviction. Bearing in mind the purpose of these provisions as well as the scheme of the Act and on a harmonious construction of the various provisions in the Act, we are of the opinion that in cases like those before us the magistrate who is also a court as provided in s.22 must at the first instance proceed against the persons complained against under the penal provisions in ss.3 or 7 as the case may be, and only after the disposal of those cases take action under s.18 if there is occasion for it. Under s.190(1)(b) of the Code of Criminal Procedure, the magistrate is bound to take cognizance of any cognizable offence brought to his notice. The words "may. take cogni zance" in the context means "must take, cognizance". He has no discretion in the matter, otherwise that section will be violative of article 14. But as laid down in Delhi Administration vs Ram Singh(1) only an officer mentioned in s.13 can validly investigate an offence under the Act. Hence if the cases before us had been investigated by such an officer, there is no difficulty for the magistrate to take cognizance of those cases. Otherwise it is open to him to direct fresh investigations by competent police officers before deciding whether the facts placed before him disclose any cognizable offence. In the result, we hold, for the reasons mentioned above, that the proceedings taken by the learned magistrate against the respondents are not in accordance with law as he has proceeded against them under s.18 without first taking action under s.3. For that reason we uphold the conclusions reached by the learned Judges of the Punjab High Court but on grounds other than those relied on by them. But this conclusion of ours does not debar the learned magistrate from taking fresh proceedings against the respondents in accordance with law as explained by us earlier. In the result, these appeals fail and are dismissed. Appeals dismissed.

IN-Abs

Section 18 of the Suppression of Immoral Traffic in Women and Girls Act, 1956, provides for two classes of cases namely, (1) those coming under sections 3 or 7 as well as under section 18, and (2) those coming only under section 18. Sections 3 and 7 provide for the punishment of persons guilty of the offences mentioned therein after a regular trial, with a right of appeal. Section 18 is a preventive measure, dealing with premises, and is intended to minimise the chance of a brothel being run near a public place, and provides for a summary enquiry. [211 D E; G H]. In the present case, on the strength of reports submitted by the police to him, the Sub Divisional Magistrate passed orders under section 18 (1) with respect to certain premises in the occupation of the respondents. They challenged the validity of the section, and the High Court held that the section violated article 14 of the Constitution. In appeal to this Court, Held,: Section 18 provides for two distinct classes of cases and the classification being reasonable is not violative of article 14 of the Constitution. But the proceedings taken by the Magistrate not being in accordance with law should be set aside. The reports disclosed a cognizable offence under section 3 of the Act and in such a case, the Magistrate cannot ignore the cognizable offence and merely have recourse to section 18, thus depriving parties of the benefit of a trial and appeal. The, Magistrate should have taken action under section 190 (1) (b) of the Criminal Procedure Code after investigation by such police officer as is mentioned in section 13 of the Act, and it was only after the disposal of the cases against the parties that action could be taken under section 18 if there was occasion for it. [212 A D]. State of West Bengal vs Anwar AU Sarkar. ; and Delhi Administration vs Ram. Singh. [1962] 2 S.C.R. 694, referred to.

Appeal Nos. 199 and 200 of 1966. Appeals by special leave from the judgment and order dated May 20, 1964 of the Assam and Nagaland High Court in Sales Tax Reference No. 1 of 1963. Naunit Lal, for the appellant (in both the appeals). B. P. Maheshwari, for the respondent (in both, the appeals). The Judgment of the Court was delivered by Ramaswami, J. These appeals are brought, by special, leave, from the judgment of the High Court of Assam and Nagaland dated May 20, 1964 in Sales Tax Reference No. 1 of 1963. The respondent is a registered dealer under the Assam Sales Tax Act (Act 17 of 1947). For the two periods ending September 30, 1959 and September 30, 1960, the Sales Tax Officer assessed the 962 respondent to sales tax holding that hydrogenated oil was exempt from sales tax but the value of the containers should be assessed at Re. 1/ for each container of hydrogenated oil and at 2 annas for salt bag and a small mustard oil tin which are other exempted goods for the period ending September 30, 1959. For the other period ending September 30, 1960, the value of the containers of the exempted goods was estimated at Rs. 21, 5001. The respondent preferred appeals to the Assistant Commissioner of Taxes, but the appeals were dismissed. The respondent preferred second appeals before the Assam Board of Revenue which by its order dated June 17, 1963 also dismissed the appeals. The respondent thereafter filed an application under section 32 of the Assam Sales Tax Act, 1947 for reference of the following two questions of law to the High Court "(1) Whether delivery. of goods made to the Assam Rifles and NEFA, at Rowriah Air Port for consumption outside the State of Assam, constitutes a sale liable to Sales Tax under the Act ? (2) Whether the value of the containers of hydrogenated oil is assessable to Sales Tax under the Act though the oil itself is not taxable under it ?" By its judgment dated May 20, 1964 the High Court answered the first question against the assessee. With regard to the second question, the High Court held that the value of the containers was not assessable to sales tax "unless separate price has been charged for the containers". The High Court took the view that there was no evidence to show that actually separate price was, paid for the containers and hence there was no sale and there could not be any tax on the containers. The High Court accordingly answered the second question in favour of the assessee. The question presented for determination in these appeals is whether the value of containers of hydrogenated oil is assessable to sales tax under the Assam Sales Tax Act, 1947. On behalf of the appellant Mr. Naunit Lal contended that the High Court has erred in holding that unless a separate price has been charged for the containers the value of the containers is not assessable to sales tax. It was submitted that the parties may have intended in the circumstances to sell the hydrogenated oil apart from the containers; and the mere fact that the price of the containers was not separately fixed would make no difference to the assessment of sales tax. In our opinion, the argument put forward on behalf of the appellant is well founded and must be accepted as correct. It is well established that in order to con stitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods, the 963 agreement must be supported by money consideration, and that as a result of the transaction the property should actually pass in the goods. Unless all the ingredients are present in the transaction there could be no sale of goods and sales tax cannot be imposed [State of Madras vs Gannon Dunkerley and Co. [(Madras)](1). But the contract of sale may be express or implied. In Hyderabad Deccan Cigarette Factory vs The State of Andhra Pradesh(2). It was held by this Court that in a case of this description what the Sales tax authorities had to do was to ask and answer the question whether the parties, having regard to the circumstances of the case, intended to sell or buy the packing materials or whether the subjectmatter of the contracts of sale was only an exempted article, and packing materials did not form part of the bargain at all, but were used by the sellers as a convenient and cheap vehicle of transport. At page 628 of the Report Subba Rao, J., speaking for the Court,, observed as follows: "In the instant case, it is not disputed that there were no express contracts of sale of the packing materials between the assessee and its customers. On the facts, could such contracts be inferred ? The authority concerned should ask and answer the question whether the parties in the instant case, having regard to the circumstances of the case, inten ded to sell or buy the packing materials, or whether the subject matter of the contracts of sale was only the ciga rettes and that the packing materials did not form part of the bargain at all, but were used by the seller as a con venient and cheap vehicle of transport. He may also have to consider the question whether, when a trader in cigarettes sold cigarettes priced at a particular figure for a speci fied number and handed them over to a customer in a cheap card board container of insignificant value, he intended to sell the cardboard container and the customer intended to buy the same ? It is not possible to state as a proposition of law that whenever particular goods were sold in a container the parties did not intend to sell and buy the container also. Many cases may be visualized where the container is comparatively of high value and sometimes even higher than that contained in it. Scent or whisky may be sold in costly containers. Even cigarettes ' may be sold in silver or gold caskets. It may be that in such cases the agreement to pay an extra price for the container may be more readily implied. " The question as to whether there is an agreement to sell packing material is a pure question of fact depending, upon the circumstances found in each case. But the High Court answered the (1) ; (2) 17 section T. C. 624. 964 question of law referred to it by the Board of Revenue without addressing itself to the question whether there was an express or implied agreement for the sale of the containers of hydrogenated oil in the present case. We accordingly set aside the judgment of the High Court and direct that the answer to the second question should be that the value of containers of hydrogenated oil is assessable to salestax under the Act if there is an express OK, implied agreement for the sale of such containers. These appeals are, accordingly, allowed At the time of grant of special leave this Court made a condition that the appellant will pay the cost of the respondent in any event. Mr. Naunit Lal on behalf, of the appellant gave an under taking that if these appeals are allowed no further steps will be taken to tax the respondent for the containers for the periods covered in the present case. G.C. Appeals allowed.

IN-Abs

The respondent was a registered dealer under the Assam Sales Tax Act, 1947. The Sales tax Officer assessed the respondent to Sales tax in respect of the containers of hydrogenated oil and other exempted goods. Appeals to the Assistant Commissioner of Taxes failed as also second ap peals to the Assam Board of Revenue. In reference the High Court held that the value of the containers was not assessable to sales tax "unless separate price has been charged for the containers. " This finding was based on the view that there was no evidence to show that actually separate price was paid for the containers and hence there was no sale and there could not be any tax on the containers. In appeal to this Court by the Commissioner of Taxes it was urged that the parties may have intended in the circumstances to sell the hydrogenated oil apart from the containers the mere fact that the price of the containers was not separately fixed would make no difference HELD : The question as to whether there is an agreement to sell packing material is a pure question of fact depending upon the circumstances found in each case. The High Court was in error when it answered the question of law referred to it without addressing itself to the question whether there was an express or implied agreement for the sale of the containers of hydrogenated oil in the present case. [963 HI Hyderabad Deccan Cirgrette Factory vs State of Andhra Pradesh, 17 S.T.C. 624, relied on.

Appeal No. 2232 of 1966. Appeal by special leave from the judgment and order dated July,22, 1965 of the Allahabad High Court in Civil Misc. Writ Petition No. 75 of 1964. section C. Agarwala, Anil Kumar and Shiva Pujan Singh, for the appellant. B. D. Sharma, for respondent No. 2. The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment of the Allahabad High Court dismissing the writ petition under article 226 of the Constitution filed by Dhara Singh, appellant before us. Dhara Singh had prayed, for a writ, order or direction in the nature of certiorari quashing the judgment of the District Judge, Meerut, dismissing the election petition filed by Dhara Singh challenging the election of Pitam Singh to the office of Pramukh, Block Jani, on July 8, 1962. Two points were raised before us: first, that the District Judge had no jurisdiction to count ballot paper No. 0045 in favour of Pitam Singh and that the returned candidate had no right to claim that ballot papers not already counted in his favour should be so counted , and secondly, that, at any rate, the District Judge erred in law in counting ballot paper No. 0045 in favour of Pitam Singh. The relevant statutory provisions are as follows: The election is governed by the provisions of the U.P. Kshettra Samitis (Election of Pramukhs and Up Pramukhs and Settlement of Election Disputes) Rules, 1962 hereinafter called the Rules. Rules 37, 39, 40, 43 and 44 are as follows: "37. Relief that may be claimed by the petitioner A petitioner may claim either of the following declarations (a) that the election of the returned candidate is void; (b) that the election of the returned candidate is void and that he himself or any other candidate has been duly elected. 245 39. Recrimination when seat claimed When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election. Procedure (1) Except so far as provided by the Act or in these Rules, the procedure provided in the Civil Procedure Code. 1908, in regard to suits, shall in so far as it is not inconsistent with the Act or any provisions of these Rules and it can be made applicable, be followed in the hearing of the election petitions: Provided that (a) any two or more election petitions relating to the election of the same person may be heard together; (b) The Judge shall not be required to record or to have recorded the evidence in full but shall make a memorandum of the evidence sufficient in his opinion for the purpose of deciding the case; (c) the Judge may, at any stage of the proceedings, require the petitioner to give further cash security for the payment of the costs incurred or likely to be incurred by any respondent; (d) for the purpose of deciding any issue the Judge shall be required to order production of or to receive only so much evidence, oral or documentary, as he considers necessary; (e) no appeal or revision shall lie on a question of fact or law against any decision of the Judge; (f) the Judge may review his decision on any point on an application being made within fifteen days from the date of the decision, by any person considering himself aggrieved thereby, (g) no witness or other person shall be required to state for whom he has voted at an election. (2) The provisions of the (Act No.1 of 1872) shall be deemed to apply in all respects to the trial of an election petition. (3) B fore the hearing of an election petition commences or before the final hearing takes place the petition may be withdrawn by the petitioner or the petitioners, as the case may be, by making an application to the Judge requesting for the withdrawal of the petition 246 and upon the making of such an application the petition shall stand withdrawn and no further action shall be taken for its, trial. Findings of the Judge (1) If the Judge after making such inquiry as he deems fit finds in respect of any person whose election is called in question by a petition, that his election was valid he shall dismiss the petition as against such person and award costs at his discretion. (2) If the Judge finds that the election of any person was invalid he shall either (a) declare a casual vacancy to have been created, or (b) declare another candidate to have been duly elected and in either case may award costs at his discretion. Grounds on which a candidate other thin the returned candidate may be declared to have been elected If any person who has lodged an election petition has, in addition to calling in question the election of the returned candidate, claimed a declaration that he himself or any other candidate has been duly elected and the Judge is of the opinion that in fact the petitioner or such other candidate received a majority of the valid votes, the Judge shall after declaring the election of the returned candidate to be void, declare the petitioner or such other candidate as the case may be, to have been duly elected: Provided that the petitioner or such other candidate shall not be declared to be duly elected if it is proved that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election. " Relevant part of Schedule 11 to the Rules is as follows: "Schedule II Instructions for the Determination of Result. In this Schedule (1) the expression 'continuing candidate ' means any candidate not elected and not excluded from the poll at any given time; (2) the expression first preference ' means the number 1 set opposite the name of any candidate ' the expression 'second preference ' similarly means the number 2, the expression 'third preference ' the number 3 and so on; 247 (3) the expression 'next available preference ' means the second or subsequent preference recorded in consecutive numerical order for a continuing candidate, preferences for candidates already excluded being ignored; (4) the expression 'unexhausted paper ' means a ballot paper on which a further preference is recorded for a continuing candidate; (5) the expression 'exhausted paper ' means a ballot paper on which no further preference is recorded for a continuing candidate; provided that a paper shall be deemed to be exhausted in any case in which (a) the names of two or more candidates whether continuing or not are marked with the same figure. and are next in order of preference; or (b) the name of the candidate next in order of preference whether continuing or not, is marked by a number not following consecutively after some other number on the ballot paper or by two or more numbers. " The relevent facts are that election for the office of Pramukh of Block Jani was held on July 8, 1962, under the provisions of Uttar Pradesh Kshettra Samitis and Zila Parishads Adbiniyam, 1961 (U.P. Act No. XXXIII of 1961) hereinafter referred to as the Act. At the said election following six persons were the candidates: 1. Shri Dhara Singh 2. Shri Pitam Singh 3. Shri Mahabir Singh 4. Shri Sham Singh 5. Shri Kalloo Singh 6. Shri Budh Singh After following the instructions contained in Schedule II, the Returning Officer found that Dhara Singh and Pitam Singh had obtained equal number of votes and chose to draw a lot, and declared Pitam Singh as the elected candid ate. Dhara Singh thereupon filed an election petition under the Act and the Rules raising a number of points. The District Judge, who heard the election petition, held that the Returning Officer made a mistake in not crediting Pitam Singh with the third preference in ballot paper No. 0045. The District Judge held: "The only point that has to be seen is whether this third preference should have been credited to Pitam Singh or not. The definition of the expression 'next 248 available, preference ' has already been given above,Under Rule ' 6(b) the sub parcels are to be arranged according to the" next available preferences. The ballot paper does hot become exhausted as long as ther e is a preference recorded in it for a continuing candidate. Pitam Singh was a continuing candidate when the ballot papers cast in favour of Shiam Singh,were to be arranged in sub parcels containing , the exhausted and unexhausted ballot papers. The learned counsel for the petitioner has contended before me that the third preference could not have been credited in favour of Pitam Singh inasmuch as the second preference in favour of Mahabira had not been utilised as he was the first to be excluded on the basis of the first preference votes and his contention is that the third preference cannot be taken into consideration. This contention to my mind has no force. Under the scheme of the counting as provided in the instructions a voter could have given his preference in the present case upto to six preferences as there were six candidates who were seeking election. To my mind as long as there is any preference in a ballot paper which has not been exhausted according to the rules that preference has to 'be taken into consideration and to be credited,. to the continuing candidate in whose favour the ' preference is. Consequently, to my mind the Presiding Officer was in error when, he did not count the preference in favour of Pitam Singh recorded in the ballot paper No. 0045. Crediting this preference to Pitam Singh, we find that the total number of votes which he obtained comes to 20 as against the total number of 19 in favour of Dhara Singh on the third counting Thus, in this case to my mind there was no necessity for drawing the lots and Pitam Singh should have been declared as elected as a result of counting itself as there were only two continuing candidates and out of these continuing candidates Pitam Singh had secured the larger number of votes. " it is not necessary to set Out the findings on other 'points which are no longer in issue before us. Dhara Singh then filed a writ petition under article 226 of the Constitution challenging the declaration given by the Returning 'Officer and the order of the District Judge referred to above. The High Court held that the District Judge was correct in allotting ballot paper No. 0045 to Pitam Singh. The High Court also repelled the contention that the District Judge was not entitled to take into account ballot paper No. 0045, and to award it to Pitam Singh, because Pitam Singh had, not filed any recrimination in the case in order to claim the benefit of the ballot paper. The 249 High Court was of, the view that this was a case of rebuttal and not recrimination, as held in the Full Bench decision of the Allahabad High Court in Nathu Ram vs R.P. Dikshit(1) According to it the decision of this Court in Jabar Singh vs Genda Lal(2) was not applicable to the facts of the case. It has been strongly contended before us by the learned Singh vs Genda Lal(2) governs the, interpretation of the Rules. In that case, this Court was, concerned, with the interpretation of ss.97, 100(1)(d) and 101(a) of the Representation of the People, Act (43 of 1951) and r. 57(1) of, the, Conduct of Election Rules, 1961. We find that the terms of those sections are different and, in particular, section 100(1)(d) is materially different because it uses the Words "that the result of the election; in so far as it concerns a returned candidate, has been materially affected" which do not occur in rr. 37 and 39. It was these words which were in part relied on to limit the scope of the enquiry in cases arising under the Representation of, the People Act. But the language of the rules here is simple and quite different. It would be noticed that r. 37(a) is wide and no rule prescribes the grounds on which the election of the returned candidate is to be declared void. In this case we are not concerned with r. 37(b) or r. 39. But the learned counsel for the appellant contends that reading rr. 37 and 39 together it is clear that the trial of the election petition takes place in two compartments; first, to judge whether the returned candidate 's election is void and, then, to decide whether any other candidate should be declared to be duly elected. He says that it is only in the latter case that any recrimination can be made under r. 39. We are unable to agree with this contention. It seems to us that according to r. 37(a), read with r. 40, which except for certain sections, applies the procedure in the Civil Procedure Code, the returned candidate can take any defence to show that he has been validly elected. If the petitioner in the election petition can allege and prove that, some votes cast in favour of the returned candidate should be rejected, there is no reason why the returned candidate should not be able to allege and prove that certain votes should have been counted in his favour. Rule 43 which deals with the findings of the Judge also shows that the suggested limitation on his jurisdiction does not exist. It is not necessary to decide in this case whether Nathu Ram vs R. P. Dikshit(1) was correctly decided or not. Accordingly,we hold that the District Judge was entitled to go into the question whether ballot paper No. 0045 should have been counted in favour of Pitam Singh or not. Coming to the second point, the learned counsel contends that ballot paper No. 0045 was an "exhausted paper" within the definition quoted above. The contention seems to be contrary (1) A.I.R. 1965 All, 454. (2) ; , 250 to the definition because the definition expressly says that a ballot paper on which no further preference is recorded for a continuing candidate shall be an exhausted paper. On the facts, of this case, Pitam Singh was a continuing candidate and there was a preference recorded for him on ballot paper No. 0045. But the learned counsel says that this was a third preference and the second preference on this paper was for Mahabir Singh who was eliminated at one stage. Now, the fact that Mahabir Singh was eliminated does not make the ballot paper an exhausted paper within the definition given in the Rules. We agree with the conclusion of the District Judge on this point. In the result the appeals fails and is dismissed. Under the circumstances there will be no order as to costs. V.P.S. Appeal dismissed.

IN-Abs

Election for the office of Pramukh of a block was held under the provision of the Uttar Pradesh Kshettra Samitis and Zilla Parishads Adhinayam, 1961. On one of the ballot papers, the second respondent had a third preference recorded in his favour and a second preference in favour of another candidate who was eliminated at one stage. The Returning Officer did not count the third preference in favour of the second respondent and found at the final counting that the appellant and the second respondent had secured an equal number of votes. He therefore drew a lot as per the Instructions in Schedule II and declared the second respondent duly elected. The appellant then filed an election petition on various grounds before the District Judge who dismissed it, holding that the Returning Officer erred in not crediting the second respondent with the third preference and that if that was done there was no necessity for drawing lots at all and that the second respondent should have been declared elected as a result of the counting itself. The appellant 's writ petition challenging the District Judge 's order was dismissed. In appeal to this Court he contended that: (1) under rr. 37 and 39 the trial of an election petition takes place in two parts; first, to judge whether the returned candidate 's election is void and then to decide whether any other candidate should be declared to be duly elected, that it was only in the latter case the returned candidate had the right to claim that ballot papers not already counted in his favour should be so counted, and that therefore, the District Judge had no jurisdiction to count the ballot paper containing the third preference in favour of the second respondent; and (2) the ballot paper was an 'exhausted paper ' within Instruction 1(5) of Schedule II to the Rules, and that therefore the District Judge erred in law in counting it in favour of the second respondent. Held: (1) The District Judge was entitled, to go into the question whether the uncounted ' ballot paper should have been counted in favour of the second respondent. [249G] According to r. 37(a) read with r, 40 which generally applies the procedure in the Civil Procedure Code to the trial of election petitions under the Act, and r. 43 which deals with the findings of the trial Judge, the returned candidate can take any defence to show that he has been validly elected. He could therefore allege and prove that certain votes should have been counted in his favour. [249E G] Jabar Singh vs Genda Lal, ; , explained.243 244 (2) The fact that the Candidate with the second preference in the uncounted ballot Paper *as eliminated at one stage, did not make the ballot paper an 'exhausted paper ' within the definition in the Rules. The second respondent was a continuing candidate, as per the Rules, and,there was a preference recorded for him on the ballot paper arid the District fudge was right in holding that it should have been counted in his favour, by the Returning Officer. [250A C]

Appeal No. 503 of 1966. Appeal by special leave from the Award dated November 10, 1964 of the Industrial Tribunal, Andhra Pradesh in Misc. Petition No. 32 of 1964 in Industrial Dispute No. 4 of 1964. R. H. Gokhale, B. K. Seshu, Parameshwara Rao, Jyotana R. Melkote and R. V. Pillai, for the appellant. M. K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, is directed against the award, dated November 10, 1964, of the Industrial Tribunal, Andhra Pradesh, Hyderabad, accepting a complaint, filed by the respondent, under section 33A, of the (Act XIV of 1947) (hereinafter called the Act). The respondent was, at the material time, working in the main branch of the appellant, at Belgaum. By order dated March 8, 1963, the respondent was transferred to Bhatkal branch, as a 'C ' rank Officer, to work there, as an accountant. He was also informed that he was being relieved, so as to enable him to proceed to duty, at the place of transfer, by March 18, 1963. He was allowed three days ' joining time. On March 13, 1963, the Manager of the Branch at Belgaum informed the respondent that he was relieved, with effect from that date, to join duty at the Bhatkal branch, by March 18, 1963. The respondent, by letter dated March 14, 1963, after setting out the various matters therein, applied for privilege leave, for ninety days, from March 14, 1963 to June 11, 1963, so as to enable him to improve his health and also to attend to certain domestic matters. But the Bank, the appellant herein, desired him, by their letter dated March 23, 1963, to join duty and then apply for leave, if necessary. Some further correspondence ensued, between the Bank and the respondent, the respondent again making a request for sanction of his leave and the appellant Bank insisting upon his joining duty, according to the order of transfer, and then applying for leave. But, as the respondent did not join duty at the Bhatkal branch, though he was relieved from the Belgaum office, the appellant, by their communication, dated July 23, 1963, desired the respondent to offer explanation for not obeying the order of transfer. The respondent sent a reply, on July 29, 1963, stating what, according to him, were the reasons for his not joining duty at the transferred office. The appellant Bank, not satisfied with the explanation, given by the respondent, framed two charges against him, and communicated the same, on August 7, 1963. The charges were to the effect that (a) the respondent, by wilfully disobeying the lawful and reasonable transfer order of 329 the management, has committed gross misconduct, for which the punishment is dismissal from service; and (b) the respondent had absented himself from duty from March .14, 1963, without leave, which again, is a minor misconduct for which also punishment can be imposed. The respondent was also directed to submit his explanation, if any, to the charges, on or before August 25, 1963. The respondent offered his explanation to the charges, by his letter, dated August 21, 1963. The appellant informed the respondent, on October 1, 1963, that an enquiry would be conducted against him, in respect of the charges, on October 5, 1963 and desired him to be present at the enquiry, with the necessary evidence, in support of his defence. The inquiry was conducted by the Enquiry Officer, in which the respondent participated. The Enquiry Officer sent a report to the Managing Director of the Bank, dated October 28, 1963, substantially finding the respondent guilty of both the charges. In respect of the first charge of gross misconduct, for wilfully disobeying the order of transfer, the Enquiry Officer had proposed that the respondent should be dismissed and, in respect of the second charge, of absenting without leave, it was proposed in the report that the increment be stopped, for a period of six months, with effect from April 25, 1963. Certain consequential proposals were also made, as to how exactly the respondent 's absence, was to be dealt with. The Managing Director of the Bank, after considering the re port submitted by the Enquiry Officer, as well as the further explanation, offered by the respondent, in respect of the findings recorded in the said report, by his order dated November 12, 1963, agreed with the recommendation of the Enquiry Officer, dismissed the respondent from the service of the Bank with immediate, effect, for the offence of wilful disobedience of the order of transfer. The respondent was also informed that he might appeal, against the order of dismissal, to the working committee of the Directors of the Bank, within forty five days of receipt of the order. The respondent filed an appeal, ,on December 17, 1963, be fore the working committee of the Directors, wherein he attacked the various proceedings, culminating in the order of dismissal, passed against him. Intimation of the hearing of the appeal was given to the respondent. But, it is seen that on the date when the appeal was taken up for hearing, viz., March 20, 1964, the respondent was not present either in person or through authorised representative of his. In consequence, the working committee of the Directors dismissed the appeal on March 20, 1964. In the appellate order, the working committee has elaborately considered the various circumstances necessitating the conduct of the en quiry, the enquiry proceedings and the answers given by the respondent; and it has, ultimately, agreed with the findings recorded 330 in the enquiry proceedings that the respondent had wilfully disobeyed the lawful orders of the management transferring him. The result was that the order of dismissal, passed by the Managing Director on November 12, 1963, was confirmed. At this stage it may be mentioned that the Central Govern ment had referred, on January 8, 1964, for adjudication, to the Industrial Tribunal, of which Dr. Mir Siadat Ali Khan was appointed as the presiding officer, with headquarters at Hyderabad, the question as to whether action, by the appellant Bank, in discontinuing pigmy collection and payment thereof to the workmen, was justified. This was numbered as I. D. No. 4 of 1964, and the award, in this dispute, was given on August 26, 1964, and the Central Government published the same, in the Gazette of India, on September 7, 1964. The respondent filed a complaint, under section 33A of the Act, on June 4, 1964, before the Central Government Industrial Tribunal, at Hyderabad, attacking the enquiry proceedings, conducted against him, and the order of dismissal, passed by the appellant. Apart from attacking the inquiry proceedings, on merits, as mala fide, the respondent contended that the order of dismissal had been passed against him, without the appellant Bank complying with the provisions of the proviso to section 33(2)(b), of the Act. According to him, inasmuch as the order of dismissal had been passed, during the pendency of 1. D. No. 4 of 1964, the management should have asked the Industrial Tribunal for approval of their action, and they should have paid him one month 's wages. Therefore, inasmuch as these things were not done, the appellants have contravened the provisions of section 33 of the. The appellant Bank, in their counter statement, pleaded that the domestic enquiry, conducted by the management, was very fair and that the action of the management, in dismissing the respondent, was perfectly justified. In this connection, the appellant raised the contention that the respondent was not a 'workman ', and that, in any event, he was not a workman concerned with the dispute covered by I.D. No. 4 of 1964, and therefore he was not entitled to file an application, under section 33A. They further contended that there was no contravention 'of section 33 of the Act, because, at the time when the order dismissing the respondent was passed, on November 12, 1963, there was no industrial dispute pending, so as to make it obligatory on the part of the appellant, to take action, in accordance with the proviso to section 33(2)(b), of the Act. The Industrial Tribunal, by its order, under attack, has overruled all the objections, raised by the management. The Tribunal has held that the respondent was a 'workman ' and that he was also a workman concerned in 1. D. No. 4 of 1964, and therefore 331 he was competent to file an application, under section 33A. The Tribunal has also held that the dismissal of the respondent became effective only on March 20, 1964, when the working committee of the Directors of the appellant Bank disposed of the appeal, filed by the respondent. As this date fell within the period, between January 8, 1964 and October 8, 1964, (during which 1. D. No. 4 of 1964 was pending) the management was bound to comply with the proviso to section 33(2)(b) of the Act. As this proviso had not been complied with, the Tribunal held that there was a contravention of the provisions of section 33 of the Act, which gives a right to the respondent to invoke the jurisdiction of the Tribunal, under section 33A of the Act. After having held that there is a contravention, of section 33 of the Act, the Tribunal then considered the attack levelled, as against the domestic enquiry proceedings, by the respondent, and recorded a finding to the effect that it was not fair to consider that the, respondent had wilfully disobeyed the order of transfer, passed by the management. The tribunal, therefore held, on both the findings, that the respondent should be reinstated, with continuity of service and back wages. The same contentions, that were raised before the Industrial Tribunal, on behalf of the management, have been urged before us, by the appellants ' learned counsel, Mr. Gokhale. Counsel urged that the respondent is not a 'workman ' and, in any event, he is not a workman concerned with the dispute in I.D. No. 4 of 1964. Counsel further pointed out that even assuming that the findings of the Tribunal, recorded against the appellant, were correct, the application, under section 33A, was not maintainable, inasmuch as there was no contravention, by the management, of any of the provisions of s, 33, 'of the Act. In this connection, counsel pointed out, that the order of dismissal, having been passed by the Managing Director, on November 12, 1963, long before January 8, 1964, the date when I.D. No. 4 of 1964, was referred, there was no obligation, on the part of the management, to ask for approval of the Tribunal, in respect of their action, or of paying one month 's wages to the respondent. Counsel also urged that even if these questions were answered against the appellant, the award would have to be set aside, because the Industrial Tribunal had really constituted itself as a Court of appeal, when it set aside the order of dismissal, passed by the management, which was based on the findings recorded in a proper domestic enquiry. Mr. M. K. Ramamurthy, learned counsel, appearing for the respondent, has supported the views, expressed by the Tribunal, on all aspects. If the contention of the appellant, that there was no Indus trial dispute, pending at the time, when the order of dismissal was passed, is accepted, then, quite naturally, it follows that no question of contravention of section 33, of the Act, arises, in which 332 case, the complaint, under section 33A, is not maintainable, in law. In an enquiry, under section 33A, the first question that the Tribunal will have to consider, is regarding the contravention, by the employer, of the provisions of section 33 of the Act. If this issue is answered against the employee, nothing further can be done, under section 33A, of the Act. This position has been settled, by the decisions of this Court, in Equitable Coal, Ltd. vs Algu Singh (1) and The Punjab National Bank Ltd. vs Its Workmen (2). After hearing arguments, on this aspect, we are inclined, in the instant case, to accept the contention of the appellant, in this regard, and hence, no other questions arise, in the application filed, by the respondent under s.33A of the Act. There is no controversy, in this case, that the appellant did not seek the approval of the Industrial Tribunal concerned, nor did they offer or pay one month 's wages to the respondent. There is also no controversy that I.D. No. 4 of 1964, can in law be considered to be pending only from January 8, 1964, to October 8, 1964. The order of the Managing Director, dismissing the respondent from service, was made on November 12, 1963, which date, admittedly, falls outside the duration of the pendency of I.D. No. 4 of 1964. The order of the working committee of Directors, rejecting the respondent 's appeal, which was passed on March 20, 1964, certainly falls within the period when I.D. No. 4 of 1964 was pending. Therefore, the question that arises for con sideration, in this case, is as to when, it can be stated, that the respondent was dismissed, i.e., by the order of November 12, 1963, of the Managing Director, or by the appellate order of March 20, 1964, passed by the working committee of Directors. According to the appellant, the order which has to be taken into account, for considering whether there is a contravention of section 33 of the Act, is the original order passed, by the Managing Director, on November 12, 1963, whereas, according to the respondent, the appellate order, passed on March 20, 1964, is the effective order, dismissing him. The respondent 's contention, in this regard, is briefly as follows. Under the National Industrial Tribunal (Bank Disputes) Award, 1962 (known as the Desai Award), a workman, in such cases, has got a right of appeal, to the appropriate authority, and he has got a period of 45 days, for filing the appeal. In this case, the order of the Managing Director, dated November 12, 1963, also states that respondent is entitled to file an appeal, against that order, to the working committee of the Directors, within 45 days of receipt of that order. The respondent, admittedly, filed an appeal, on December 17, 1963, well within the time. The appeal was disposed of, on March 20, 1964. The language of section 33(2), counsel points out, is to the effect that the employer has (1) [1958] I L.L.J. 793. (2) ; 333 been enabled to take action, 'in accordance with the standing orders applicable to a workman concerned, in such dispute '. Inasmuch as the standing orders, in this case, give a right to appeal, to the workman, any order that is passed, by the management, in respect of which a right of appeal is given to a workman, cannot be considered to be an effective or operative order, till the appellate decision is made known. It will be open to the appellant to take action, in accordance with the proviso to section 33(2)(b), at the time when the appellate order was passed, on March 20, 1964, as the appellate order is the effective and binding order. So far as the par ties are concerned, the order of dismissal, in this case, must be considered to have been passed only on March 20, 1964, which date squarely falls within the period, during which I.D. No. 4 of 1964, was pending. We are not inclined to accept the contentions of the learned counsel, for the respondent, in this regard. It has been laid down by this Court, in Strawboard Manufac turing Co. vs Govind(1), in construing the proviso to section 33(2)(b) of the Act, that the three things contemplated, viz., dismissal or discharge, payment of the wages and making of the application, should be part of the same transaction. Therefore, in our view, there must be a fixed and certain point of time which will be applicable to all managements and workmen, when construing the provisions of section 33 of the Act. The management must definitely know, as to when they have to take the necessary action, under the proviso to section 33(2)(b), and the workman also should, likewise, know the definite time when the management should have complied with the requirements of the proviso to section 33(2)(b), so that he could approach the Industrial Tribunal, by way of a complaint,, under section 33A, of the Act. A reading of the material provisions of section 33 shows that the expressions used are 'discharge or punish, whether by dismissal or otherwise ', and they clearly indicate, in. our opinion, the point of time, when the order of discharge or dismissal is passed, by the authority concerned. An order of discharge or. dismissal, in our opinion, can be passed, only once; and, in this case, the order of dismissal is the one passed, by the Managing Director, on November 12, 1963. No doubt, either by virtue of the Standing Orders, or by virtue of a, contract, of service, a right of appeal may be given to a workman concerned, to challenge an order of dismissal. But the appellate authority only considers whether the order of dismissal has to be sustained, or whether it requires modification. Therefore, there is no question of the appellate authority passing, again, an order of dismissal. We are not concerned, in construing the provisions of section 33, as to the finality of the orders passed, by the authority concerned, in the first instance, in passing orders of dismissal or discharge. Further, the proviso to section 33(2)(b), when it, refers to payment of wages for one month, also indicates that it relates to an (1) [1962] Supp. 3 S.C.R. 618, 630. CI S 334 order of discharge or dismissal, which comes into effect immediately, which, in this case, is the order passed, on November 12, 1963. The payment of one month 's salary or wages, is to soften the rigour of unemployment that will face the workman, against whom an order of discharge or dismissal, has been passed. If the management has to wait for the minimum period prescribed for filing an appeal, and also await the termination of the appeal when one is filed, considerable time would have lapsed from the date of the original order, during which period the workman would not have received any salary. It will be anomalous to hold that even after the lapse of such a long time, the payment of one month 's salary would satisfy the requirements of the section. In this case, if the contention of the respondent is accepted, it will lead to very anomalous results, and the time when a management has to comply with the proviso to section 33(2)(b), will radically differ. For example, according to the respondent, the management, in this case, will have to wait for the minimum period of 45 days, which is the time given for the respondent, to file an appeal. If an appeal is filed, according to the respondent, the management will have to wait further, and await the disposal of the appeal. That means, in such a case, the proviso will come into effect only at the time when the appeal is disposed of. On the other hand. if, after the expiry of 45 days, the workman concerned does not file an appeal, the management, according to the respondent, will have to comply with the proviso immediately after the period of limitation is over. That is, the point of time when the proviso to section 33(2)(b) will have to be complied with, by the management, will depend upon the filing or non filing of an appeal, by the workman concerned. Further, if at the time, when the original order of dismissal is passed, there is no dispute pending, and when the appeal against the order of dismissal is pending, a dispute is referred for .adjudication, it will be open to the management to prolong its decision, in the appeal. till after the Industrial dispute 'has come to an end. It cannot be the intention of the Legislature that such variable and indeterminate periods are contemplated in construing the proviso to section 33(2)(b). The natural and reasonable in terpretation, to be placed on section 33, is, in our opinion, that the order of discharge or dismissal, is the original or the very first order passed by the management , which in this case is the one passed. by the Managing Director, on November 12, 1963. It follows that on that date, I. D. No. 4 of 1964. had not even been referred,. for adjudication, which, as we 'have already indicated. was by an order of Government, dated January 8, 1964. Hence there is no contravention of section 33, in this case. Before we close the discussion, it is necessary to state that Mr. Ramamurthy, learned counsel for the respondent, referred us to two decisions of this Court. in The Management of Hotel Imperial V. Hotel Workers ' Union (1) and Collector of Customs, (1) ; 335 Calcutta vs East India Commercial Co. Ltd.(1). In the first decision, this Court has recognised that a term should be implied, by Industrial Tribunals, in the contract of, employment, that, if the master has held a proper enquiry and come to the conclusion that the servant should be dismissed, and in consequence, suspends him, pending the permission, required under section 33 of the Act, he has the power to order suspension, thus suspending the. contract of employment temporarily, so that there is no obligation on him ' to pay wages, and no obligation on the servant, to work. In the second decision, this Court held that in cases where an authority reverses the order under appeal, or, modifies or merely dismisses the appeal and thus confirms the order appealed against without any modification, the operative order is the order of the appellate authority. :In our opinion, these decisions do not assist the respondent and the principles laid down. therein, have no bearing on the point to be determined in the instant case. The result is that the award of the Industrial Tribunal is set aside and the application, filed by the respondent before it, will stand dismissed. The appeal is, accordingly, allowed, but without costs. Y.P. Appeal allowed.

IN-Abs

After holding a domestic enquiry the Managing Director of the appellant Bank dismissed the respondent employee with immediate effect. The employee was informed that he might appeal against this order to the working committee of the Directors within certain days. The respondent filed the appeal which the working committee dismissed. Subsequent to the filing of the appeal but prior to its dismissal, the Central Government referred to an Industrial Tribunal the question as to whether action, by the appellant Bank, in discontinuing pigmy collection and payment thereof to the workmen, was justified. The respondent filed a complaint to the Industrial Tribunal alleging that the appellant contravened section 33 of the Industrial Dispute Act as the order of dismissal had been passed during the pendency of an Industrial Dispute, the management should have asked the Industrial Tribunal for approval of their action, and they should have paid him one month 's wages. The Industrial Tribunal held that the dismissal of the respondent became effective only after the. working committee disposed of the appeal, and as during this period an Industrial Dispute was pending the management was bound to comply with the proviso to section 33 (2) (b) of the Act. In appeal to this Court. Held:There was no contravention of section 33. An order of discharge or dismissal, can be passed only once; and, in thus case, the order of dismissal was the original or very first passed by the Managing Director, on which date the Industrial Dispute had not even been referred, for adjudication. No doubt, either by virtue of the Standing Orders, or by virtue of a contract, of service, a right of appeal may be given to a workman concerned, to challenge an order of dismissal. But the appellate authority only considers whether the order of dismissal has to be sustained or whether it requires modification. Further, the proviso to section 33(2) (b) when it refers to payment of wages for one month, also indicates that it relates to an order of discharge or dismissal which comer, into effect immediately. The payment of one month 's salary or wages, is to soften the rigour of unemployment that will face the workman, against whom an order of discharge or dismissal, has been passed. If the management has to wait for the minimum period prescribed for filing an appeal, also await the termination of the appeal when one is filed, considerable time would have elapsed from the date of the original order, during which period the workman would not have received any salary. [333F 334B] Equitable Coal Ltd. vs Tlgu Singh The Punjab National Bank Ltd. vs Its Workmen [1960] 1 S.C.R. 806, and Straw. board Manufacturing Co. vs Gobind [1962] Supp. 3 S.C.R. 618 relied 328 The Management of Hotel Imperial vs Hotel Workers ' Union ; , and Collector of Customs, Calcutta vs East India Commercial Co. Ltd. held inapplicable.

Appeals Nos. 288 291 of 1966. Appeals by special leave from the judgment and order dated December 7, 1962 of the Assam High Court in First Appeals Nos. 16 19 of 1967. P. K. Goswami and R. Gopalakrishnan, for the appellants (in all the appeals). H. R. Gokhale, Naunit Lal and B. P. Singh, for respondent No.1 .(in all the appeals). The Judgment of the Court was delivered by Mitter, J. The central question in these appeals is, whether the civil court had jurisdiction to entertain the suits and grant the reliefs claimed. The facts are as follows: By a notification dated March 11, 1952 the Governor of Assam fixed the minimum wages which were to come into force with effect from March 30, 1952, consisting of basic wages and dearness allowance in terms of cl. (i), sub section (1) of section 4 of the , at the rates specified in the Schedule to the notification payable to the employees employed in tea plantations in the different districts of Assam. Under the notification, the rates were to be exclusive of concessions enjoyed by the workers in respect of supplies of food stuff and other essential commodities and amenities which were to continue unaffected. Further, the existing tasks and hours of work were to continue until further orders. The Schedule shows that the notification was to apply to "ordinary unskilled labour" which was again sub divided into three classes, namely, (a) adult male (16 years and above); (b) adult and female (16 years and above) and (c) working children (below 16 years and above 12 years). The rates were again to be different in the different districts of Assam which were, broadly speaking, divided into three sections. On April 16, 1952 the Government of Assam published the Minimum 'Wages Rules which fixed the number of hours in the case of an adult for a normal working day to nine hours, subject to a maximum of 48 hours in a, week, On June 2, 1953, the Deputy Commissioner of Lakhimpur served a notice on the manager of one 262 of the appellants, Borhapjan Tea estate to the effect that the minimum wages prescribed had not been paid to a number of employees in accordance with the prescribed rate. The addressee was required to pay the outstanding amount of wages with the requisite amount of delayed compensation to the employees in conformity with section 20(3) of the and report compliance on or before the 10th of June, 1953. The manager was further directed to show cause why prosecution should not be sanctioned for violation of the provision of the said Act. A list of the employees with their names was given showing 24 men labourers, 58 women labourers and one girl labourer. Similar notices were issued to the managers of the other tea estates. The managers submitted written replies to the authority denying liability for payment of the amount claimed in the notice. By order dated June 2, 1954 the above mentioned authority directed the different tea estates to pay the difference between the full minimum wages and the amounts actually paid to the labourers. It does not appear that the authority concerned held any inquiry or received any evidence beyond meeting the managers of the four tea estates at the premises of the Doom Dooma Club where the Government Labour Officer was also present. He however recorded an order dated June 2, 1954 to the effect that the contention of the managements of the tea estates that the Lettera Challans who by reason of their old age, infirmity and physical defects etc. were incapable of performing a full normal working day 's work could not be accepted. According to the order, "the point for decision was, whether a Lettera Challan worker was entitled to the same rate of wages as ordinary labour working full normal working days". From the order, it appears that the authority concerned knew of the employment of this kind of sub normal workers by various tea estates but he held that, in the absence of an order for exemption by the Government in terms of section 26 of the , he had to guide himself by the notification mentioned. He held further that under the Act and the Rules, Lettera Challan labour, in spite of the amount of work (time or task rate) performed by them was to be treated as ordinary labour entitled to wages for a full normal day. He therefore directed that the tea estates should pay the difference between the full minimum wages and the amount actually paid, together with compensation which he fixed at three times the amount payable to each worker. The tea estates filed four separate suits for a declaration that the orders of the Deputy Commissioner, Lakhimpur dated June 2, 1954 were illegal and void and without jurisdiction and a further declaration that the employees mentioned (sub normal workers) were not entitled to full minimum wages without performing a normal day 's task of without working the prescribed number of working hours. The Subordinate Judge framed a, number of issues including one regarding the maintainability of the suits, heard evidence and came to the conclusion that the decision or orders of the Deputy Com missioner were all final in terms of the and the suits were barred "under the provisions of the Act". The 263 learned Judges of the High Court of Assam, by a majority, upheld the decision of the Subordinate Judge. The evidence of the managers of the tea estates was to the effect that in each tea garden there was a number of workers described as Lettera Challans who were unwilling to perform the normal tasks which were available to them as normal labourers, that they worked for only half the day and were unwilling to work for the full day as other labourers. In order to determine whether a suit challenging the decision of the authority under the Act is maintainable or not, it is necessary to take a, note of the object of the Act and its provisions in general. The Act was clearly aimed at providing for fixing minimum rates of wages in certain employments which were defined as scheduled employments. An 'employee ' meant any person who was employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in a scheduled employment in respect of which minimum rates of wages had been fixed. section 3 empowered the appropriate government to fix the minimum rates Of Wages payable to, employees employed in an employment specified in Part I or Part II of the Schedule and in an employment added to either Part by notification under section 27. Under sub section (2) of section 3 Government might fix a minimum rate of wages for time work, a minimum rate of wages for piece work, a minimum rate of remuneration in the case of employees employed on piece work for the, purpose of securing to such employees a minimum rate of wages on a time work basis, and a minimum rate (whether a time rate or a piece rate) to apply in substitution for the minimum rate which would otherwise be applicable in respect of overtime work done by employees. The section also empowered the Government to fix different minimum rates in respect of different scheduled employments as also different classes of work in the same scheduled employment for adults, adolescents, children and apprentices as also for different localities. Under section 4 the minimum rate of wages fixed might consist of basic rate of wages and a special allowance at a rate to be adjusted or a basic rate of wages with or without the cost of living allowance. S.12 made it obligatory on the employer to pay to every employee engaged in a scheduled employment Wages at a rate not less than the minimum rate of wages fixed by the notification. Under s.13 it was open to the appropriate government to fix the number of hours of work which were to constitute a normal working day in regard to any scheduled employment. section 15 provided as follows: "If an employee whose minimum rate of wages has been fixed under this Act by the day works on any day on which he was employed for a period less than the requisite number of hours constituting a normal working day, he shall, save as otherwise hereinafter provided, be entitled to receive wages in respect of work done by him on 264 that day as if he had worked for a full normal working day: Provided, however, that he shall not be entitled to receive wages for a full normal working day (i) in any case where his failure to work is caused by his unwillingness to work and not by the omission of the employer to provide him with work, and (ii) in such other cases and circumstances as may be prescribed. " section 20 with the marginal note "claims" is divided into seven subsections. Sub section (1) empowers the appropriate government to appoint a person of the qualifications mentioned to be the authority to hear and decide all claims arising out of payment of less than the minimum rates of wages. Sub section (2) provides for the application to the said authority for a direction under sub section (3) in all cases where an employee has any claim of the nature referred to in sub section Such application may be made inter alia by the employee himself or any legal practitioner or any official of a registered trade union. Sub section (3) runs as follows: "When any application under sub section (2) is entertained, the Authority shall hear the applicant and the employer, or give them an opportunity of being heard, and after such further inquiry if any, as it may consider necessary, may, without prejudice to any other penalty to which the employer may be liable under this Act, direct (i) in the case of a claim arising out of payment of less than the minimum rates of wages, the payment to the employee of the amount by which the minimum wages payable to him exceed the amount actually paid, together with the amount of such compensation as the Authority may think fit, not exceeding ten times the amount of such excess , (ii) in any other case, the payment of the amount due to the employee, together with the payment of such compensation as the Authority may think fit, not exceeding ten rupees, and the Authority may direct payment of such compensation in cases where the excess or the amount due is paid by the employer to the employee before the disposal of the application. " Sub section (4) empowers the authority to levy a penalty not exceeding Rs. 50/ if he is satisfied that the application was either malicious or vexatious. Sub section (5) prescribes for the manner of recovery of the amount directed to be paid under the section. Under sub section (6) "every direction of the Authority under this section shall be final". 265 Sub section (7) clothes every Authority appointed under sub section (1) with the powers of a civil court under the Code of Civil Procedure for the purpose of taking evidence and of enforcing the attendance of witnesses and compelling the production of documents etc. section 24 contains an express provision for the bar of suits of certain kinds. It reads: "No Court shall entertain any suit for the recovery of wages in so far as the sum so claimed (a) forms the subject of an application under section 20 which has been presented by or on behalf of the plaintiff,or (b) has formed the subject of a direction under that section in favour of the plaintiff, or (c) has been adjudged in any proceeding under that section not to be due to the plaintiff, or (d) could have been recovered by an application under that section". Under section 25 any contract or agreement by which an employee relinquishes or reduces his right to a minimum rate of wages etc, is to be null and void. Sub section (1) of section 26 empowers the appropriate government, subject to such conditions as it may think fit to impose, to direct that the provisions of the Act shall not apply in relation to the wages payable to disabled employees. Our task is to ascertain whether the above provisions of the Act impose a bar on the institution of suits of the nature described in this case either expressly or impliedly. The question of maintainability of civil suits to challenge actions purported to have been taken under certain special statutes has engaged the attention of this Court in a number of cases in recent years as also of the Judicial Committee of the Privy Council before the establishment of this Court. Under section 9 of the Code of Civil Procedure "the courts have jurisdiction to try all suits. of a civil nature excepting suits of which their cognizance is either expressly or impliedly barred". In Secretary of State vs Mask & Co.(1) the question was, whether the order of the Collector of Customs on an appeal under section 188 of the Sea Customs Act from a decision or an order passed by an officer of Customs as to rate of duty leviable under a tariff excluded the jurisdiction of the civil court to entertain a challenge on the merits of the decision of the Officer of Customs. It was pointed out that the determination of the question depended on the terms of the particular statute under construction and decisions on other statutory provisions were not of material assistance except in so far as general principles of construction were laid down. The Board relied upon the exposition of law by Willes, J. in Wolverhampton New Waterworks Co. vs Hawkesford(2) that "where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy for enforcing it" (1) 67 I.A. 222, 237. (2) ; 266 the party must adopt the form of remedy given by the statute. section 188 of the Sea Customs Act was one of a number of sections contained in Chapter XVII of the Act headed "Procedure relating to offences, appeals etc." and included sections 169 to 193. section 182 provided for liability to confiscation or increased rates of duty in certain cases. section 188 laid down that any person deeming him self aggrieved by any decision or order passed by an officer of Customs under the Act may, within three months from the date of such decision or order, appeal therefrom to the Chief Customs Authority, or, in such cases as the Local Government directs to any officer of Customs not inferior in rank to a Customs Collector and empowered in that behalf by name or in virtue of his office by the Local Government. Such officer or authority may thereupon make such further enquiry and pass such order as he thinks fit, confirming, altering or annulling the decision or order appealed against and every order passed in appeal under this section was to be, subject to the power of revision conferred by section 191, final. According to the Judicial Committee sections 188 and 191 contain ed a precise and self contained code of appeal in regard to obligations which were created by the statute itself, and it enabled the appeal to be carried to the supreme head of the executive government. The Board observed: "It is difficult to conceive what further challenge of the order was intended to be excluded other than a challenge in the civil courts." The well known dictum of this judgment to be found at p. 236 is that the exclusion of the jurisdiction of the civil courts is not to be readily inferred, but such exclusion must either be explicitly expressed or clearly implied and even if jurisdiction was excluded the civil courts would still have jurisdiction to examine into cases where the provisions of the Act had not been complied with, or the statutory tribunal had not acted in conformity with the fundamental principles of judicial procedure. In Pyx Granite Co. Ltd. vs Ministry of Housing and Local Government(1) Viscount Simonds observed: "It is a principle not by any means to be whittled down that the subject 's recourse to Her Majesty 's courts for the determination of his rights is not to be excluded except by clear words." In Raleigh Investment Co. Ltd. vs Governor General in Coun cil(2) where the plaintiff appellant had filed a suit claiming a declaration that certain provisions of the Indian Income tax Act purporting to authorise the assessment and charging to tax of a non resident in respect of dividends declared or paid outside British India, but not brought into British India, were ultra vires the legislative powers of the Federal Legislature and for repayment (1) , 286. (2) 74 I.A. 50, 62. 267 of the sums mentioned, the Judicial Committee observed, while dismissing the appeal, that "In construing the sections it is pertinent, in their Lordship 's opinion, to ascertain whether the Act contains machinery which enables an assessee effectively to raise in the courts the question whether a particular provision of the Income tax bearing on the assessment made is or is not ultra vires. The presence of such machinery, though by no means conclusive, marches with a construction of the section which denies an alternative jurisdiction to inquire into the same subject matter." The Judicial Committee examined the different provisions of the Indian Income tax Act in some detail including section 67 of the Act and came to the conclusion that as the machinery provided by the Act could be effectively adopted by the assessee complaining of ultra vires assessment "jurisdiction to question the assessment otherwise than by use of the machinery expressly provided by the Act would appear to be inconsistent with the statutory obligation to pay arising by virtue of the assessment. " It must be noted at once that the above extreme proposition of law has not found favour here. This Court was not prepared to accept the dictum in the judgment to the effect that even the constitutional validity of the taxing provision would have to be challenged by adopting the procedure prescribed by the Income tax Act see Firm and Illuri Subbayya Chetty & Sons vs The State of Andhra Pradesh(1). In this case, the Court had to examine whether section 18 A of the Madras General Sales Tax Act, 1939 excluded the jurisdiction of civil courts to set aside or modify any assessment made under the Act. section 18 A there provided that no suit or other proceeding shall, except as expressly provided in this Act, be instituted in any court to set aside or modify any assessment made under this Act. It was common ground that there was no express provision made in that Act under which the suit could be said to have been filed. It was there emphasised that: ". . . while providing for a bar to suits in ordinary civil courts in respect of matters covered by section 18 A, the legislature has taken the precaution of safeguarding the citizens ' rights by providing for adequate alternative remedies. Section 11 of the Act provides for appeals to such authority as may be prescribed; section 12 confers revisional jurisdiction on the authorities specified by it, section 12 A allows an appeal to the appellate Tribunal; section 12 B provides for a revision by the High Court under the cases specified in it; section 12 C provides for an appeal to the High Court; and section 12 D lays down that petitions, applications and appeals to High Court should be heard by a Bench of not less than two Judges. It could thus be seen that any dealer who (1) ; , 760. 268 is aggrieved by an order of assessment passed ' in respect of his transactions, can avail himself of the remedies provided in that behalf by these sections of the Act. It is in the light of these elaborate alternative remedies provided by the Act that the scope and effect of section 18 A must be judged. " In Kala Bhandar vs Municipal Committee(1) a suit for refund of excess tax purported to be recovered under the Central Provinces and Berar Municipalities Act (2 of 1922) this Court examined the principles laid down in the above cases and said: "Further, one of the corollaries flowing from the principle that the Constitution is the fundamental law of the land is that the normal remedy of a suit will be available for obtaining redress against the violation of a constitutional provision. The court must, therefore, lean in favour of construing a law in such a way as not to take away this right and render illusory the protection afforded by the Constitution. " The Court found that there was no machinery provided by the Act for obtaining a refund of tax assessed and recovered in excess of the constitutional limit and that the machinery actually provided by the Act was not adequate for enabling an assessee to challenge effectively the constitutionality or legality of assessment or levy of a tax by a municipality or to recover from it what was realised under an invalid law. In Kamala Mills Ltd. vs State of Bombay(2) this Court had to examine the question whether a suit filed by the Mills challenging assessments made under the Bombay Sales Tax Act, 1946 was barred under the provisions of section 20. The said section read as follows: "Save as is provided in section 23, no assessment made and no order passed under this Act or the rules made thereunder by the Commissioner or any person appointed under section 3 to assist him shall be called into question in any civil court, and save as is provided in sections 21 and 22, no appeal or application for revision shall lie against any such assessment or order. " After examining the various sections of the Act including section 5 the charging section, section 10 imposing an obligation on dealers to make returns, section 11 dealing with the assessment to tax and the procedure to be followed in respect thereof, section 11 A dealing with turnover which had escaped assessment and the right to prefer an appeal and a revision under sections 21 and 22 of the Act, the Court said: "It would thus be seen that the appropriate authorities have been given power in express terms to examine the (1) ; (2) ; , 75. 269 returns submitted by the dealers and to deal with. the question as to whether the transactions entered into by the dealers are liable to be assessed under the relevant provisions of the Act or not. In our opinion, it is plain that the very object of constituting appropriate authorities under the Act is to create a hierarchy of special tribunals to deal with the problem of levying assessment of sales tax as contemplated by the Act. If we examine the relevant provisions which conferred jurisdiction on the appropriate authorities to levy assessment on the dealers in respect of transactions to which the charging section applies, it is impossible to escape the conclusion that all questions pertaining to the liability of the dealers to pay assessment in respect of their transactions are expressly left to be decided by the appropriate authorities under the Act as matters falling within their jurisdiction. Whether or not a return is correct; whether or not transactions which are not mentioned in the return, but about which the appropriate authority has knowledge, fall within the mischief of the charging section; what is the true and real extent of the transactions which are assessable; all these and priate authorities themselves. . The whole activity of assessment beginning with the filing of the return and ending with an order of assessment, falls within the jurisdiction of the appropriate authority and no part of it can be said to continue a collateral activity not specifically:and expressly included in the jurisdiction of the appropriate authority as such. " it was in the light of these provisions of the Act that section 20 had to be examined and this Court held that "the words used were so wide that even erroneous orders of assessment made would be entitled to claim its protection against the institution of a civil suit" see [1966] 1 S.C.R. at page 78. To quote the words of the judgment itself : "In every case, the question about the exclusion of the jurisdiction of civil courts either expressly or by necessary implication must be considered in the light of the words used in the statutory provision on which the plea is rested, the scheme of the relevant provisions, their object and their purpose. " The Court further said: "Whenever it is urged before a civil court that its jurisdiction is excluded either expressly or by necessary implication to entertain claims of a civil nature, the court naturally feels inclined to consider whether the remedy afforded by an alternative provision prescribed by a special 270 statute is sufficient or adequate. In cases where the exclusion of the civil courts ' jurisdiction is expressly provided for, the consideration as to the scheme of the statute in question and the adequacy or sufficiency of the remedies provided for by it may be relevant but cannot be decisive. But where exclusion is pleaded as a matter of necessary implication, such considerations would be very important, and in conceivable circumstances, might even become decisive. If it appears that a statute creates a special right or a liability and provides for the determination of the right and liability to be dealt with by tribunals specially constituted in that behalf, and it further lays down that all questions about the said right and liability shall be determined by the tribunals so constituted, it becomes pertinent to enquire whether remedies normally associated with actions in civil courts are prescribed by the said statute or not. The relevance of this enquiry was accepted by the Privy Council in dealing with section 67 of the Income Tax Act in Raleigh Investment Co. 's case(1) and that is the test which is usually, applied by all civil courts. " We may also note the case of K. section Venkataraman & Co. vs State of Madras(2) where the above authorities were again examined at some length. Here too the main question was, whether the suit was not maintainable under section 18 A of the Madras General Sales Tax Act, 1939. It was held by a majority of this Court that the validity of an order by an authority acting under the provision of a statute which was ultra vires would be open to challenge in a civil court. Referring to the case of Firm Radha Kishan (Deceased) represented by Hari Kishan vs Administrator, Municipal Com mittee, Ludhiana(3) it was said that: " a suit in a civil court will always lie to question the order of a tribunal created by a statute, even if its order is, expressly or by necessary implication made final, if the said tribunal abuses its power or does not act under the Act but in violation of its provisions. " There can be no question in this case that the minimum Wages Act cuts across the contract between the employer and the employee and wherever applicable the employer is obliged to pay the minimum wages or take the consequences of failure to pay it. Any employee who feels himself aggrieved by the refusal of the employer to pay the minimum wages fixed under the Act has the right to make a complaint either by himself or through the prescribed agents to the Authority mentioned in the Act. Under sub section (3) of section 20, the Authority has to hear the applicant and the employer or give them an opportunity of being heard and could ,straightaway give a direction as regards the alleged non payment (1) I.A. 50. (2) ; (3) ; 271 of the minimum rates of wages and such compensation as he thinks fit not exceeding ten times the amount of the excess of the minimum wages over that which was paid. It is true that the sub section provides for a further inquiry but such inquiry is to be at the discretion of the authority. The nature and scope of the inquiry would depend on the exact controversy raised in the case. If it be of a trivial nature, the tribunal can probably deal with it in a summary manner, but where it is alleged that the notification under the Act is not applicable to a. certain class of workers it is the duty of the authority to give a proper hearing to the parties allowing them to tender such evidence as they think proper before making an order which may have far reaching consequences. The authority in this case instead of recording any evidence and properly hearing the matter, disposed of it in a perfunctory manner which could hardly be called a hearing. As a matter of fact, the only inquiry which took place in this case was a, very informal one in the premises of the Doom Dooma club for the space of half an hour or so when the Authority had a talk with the managers of the tea estates. There is no provision for appeal or revision against the direction of the Authority although he may levy a penalty to the extent of ten times the amount by which the minimum wages overtop the payment actually made. Whatever he says is the final word on the subject. All this can but lead to the conclusion that section 20 was not aimed at putting a, seal on the adjudication, if any, under it. It was to be of a nature which suited the discretion of the officer concerned although he was given the powers of a civil court in certain respects. In such a situation, it is impossible to hold that the legislature meant to exclude the jurisdiction of civil courts to go into the question of non payment of minimum wages claimed as final. In our opinion, sub section (6) of section 20 merely shows that the discretion of the Authority could not be questioned under any provision of the Act. It does not exclude the jurisdiction of the civil court when the challenge is as to the applicability of the Act to a certain class of workers. It is pertinent to note that section 24 of the Act creates an express bar in respect of a particular kind of suits, namely, suits for recovery of wages in certain eventualities. The obvious intention was that a poor employee was not to be driven to fit a suit for the payment of the deficit of his wages but that he could avail himself of the machinery provided by the Act to get quick relief. It does not in terms bar the employer from instituting a suit when his claim is that he has been called upon to pay wages and compensation to persons who are not governed by the notification under the . On an analysis of the provisions of the Act, we find (1) suits of the nature to be found in this case are not expressly barred by the Act; (2) there is no provision for appeal or revision from the direction of the authority given under section 20(3) of the Act; and (3) the authority acting under section 20(3) might levy a penalty which might be as high as ten times the alleged deficit of payment which 272 again is not subject to any further scrutiny by any higher authority. In view of our findings as above, as also the fact that the authority in this case disregarded the provision as to hearing and inquiry contained in the Act for all practical purposes, we hold that the civil court had jurisdiction to entertain the suits. The question next arises as to whether the plaintiff 's made out any case for relief. In our view, the plaintiffs were clearly entitled to relief. The notification dated March 11, 1952 was clearly applicable only to "ordinary unskilled labour". The word 'ordinary ' has in our opinion, some significance. It means "usual, not exceptional". In other words, ordinary unskilled labour must mean unskilled labour prepared to work and working in the ordinary way. If under r. 24 of the rules framed under this Act the period of work is fixed at nine hours a day, a labourer who cannot work for more than half of it, does not fall within the category of ordinary unskilled labour. A lettera challan cannot work due to his incapacity, old, age, infirmity, etc. According to ' the evidence of the 'managers of the tea gardens, they were unwilling to work for more than half the day because of their physical condition. It was due to their want of physical strength to work for nine hours a day and not the inability or unwillingness of the employer to find employment for them for a full day. Take for instance the 'facts in Pabbojan Company 's case. According to the evidence of its manager, the labour force in the estate consisted of 1650 labourers while the number of sub normal workers was 83 before March 30, 1952. It cannot be suggested that if the tea garden could provide work for 1567 labourers working nine hours a day, it could not do so for an additional number of 83 persons. As the manager said, these persons were unwilling to perform the normal tasks which were available to them as normal labourers. The manager also said that lettera challans (sub normal workers) always go off at 11 or 12 midday. Take again the evidence of Bairagi, a worker of the Rupai Tea Estate. He said that some years before he was examined in court, he used to work as a carpenter. As a result of a fall from a house, he had pain on his chest and approached the doctor and requested him to enter his name as lettera challan. He frankly admitted that he got into lettera challan because he could not complete the full task. The evidence of the managers and of this the only witness on this point on behalf of labour establishes beyond doubt that lettera challan could not work a full day and as such they were not ordinary unskilled labour. As such their case would be covered by the proviso to section 15 and they would not be entitled to receive wages for a full normal working day, because of their unwillingness to work. It does not matter whether some of the lettera challans could also be said to be disabled employees who would come within the purview of section 26(1) of the Act. From the evidence of the managers, it is clear that the system of lettera challans had been in force for very many years. The record does not show nor are we in a position to guess why an exception was not made in their case in the notification. But 273 even in the absence of any mention of lettera challans in the notification, sub normal workers who are unwilling to work for more than half a day are not entitled to receive what ordinary unskilled labourers working nine hours a day get. The object of the Act is to ensure some sort of industrial peace and harmony by providing that labour cannot be exploited and must at least be provided with wages which are fixed at certain minimum rates. It would go against such a principle if the courts were to uphold that persons who cannot work for more than half a day should receive what others working a full day get. However, that is a matter which the appropriate government may consider. We therefore hold that the orders of the defendant No. 1 dated June 2, 1954 were not binding on the plaintiffs appellants. We declare that the subnormal workers of the tea estates (commonly known as Lettera challans) were not entitled to full minimum wages without performance of a normal day 's task or without working the prescribed number of hours. We also direct a perpetual injunction to issue against the defendant No. 1 restraining him from enforcing the orders dated June 2, 1954. The appeals are therefore allowed ' and the decrees passed by the Subordinate Judge and the High Court of Assam are set aside. There will be no order as to costs. Y.P. Appeals allowed.

IN-Abs

By a notification under the minimum wages were fixed for 'ordinary unskilled labour ' in certain Tea Plantations in Assam. The respondent Deputy Commissioner issued notices to the appellants that a number of employees were not paid in accordance with the prescribed rate, and required them to pay the outstanding wages with requisite amount of delayed compensation to the employees in conformity with section 20(3) of the Act. The appellants denied the liability stating that these employees were Lettera Challan workers who were incapable of performing a full normal working day 's work, so they were 'not ordinary unskilled labour '. The authority did not hold any enquiry or receive any evidence beyond meeting the managers of the appellants where the Government, Labour Officer was present and it held that in the absence of an order of exemption under section 26, Lettera Challan Labour (in spite of the amount of work performed) was to be treated as ordinary labour. The appellants filed civil suits which the Subordinate Judge dismissed holding that under the the orders of the Authority. were final and suits were barred. The High Court upheld the decision of the Subordinate Judge. Held: The appeals must be allowed Determination of the question whether the jurisdiction of civil courts is excluded or not depends on the terms of the particular statute under construction. Exclusion of jurisdiction is not to be readily inferred but such exclusion must either be explicitly expressed or clearly implied. On an analysis of the provisions of the Act under consideration, it is clear that although the Act provides that it is the duty of the authority to give proper hearing to the parties . allowing them to tender such evidence as they think proper before making an order which may have far reaching consequences and which is final under section 20(6) of the Act, the Act is not a complete Code, as there no provision for appeal or revision from the direction of the, authority under section 20(3); nor is any further scrutiny provided by any higher authority against the imposition of penalty,. The Act in terms does not bar the employer from instituting a suit when his claim is that he has been called upon to pay wages and compensation to persons who are not governed by the notification under the Act. In such circumstances it is impossible to hold that the legislature meant to exclude the jurisdiction of civil court. [265B; 266E F; 271E; 271H 272H] Secretary of State vs Mask & Co. 67 I.A. 222 Wolverhampton New Water Works Co. vs Hawkesford, ; , Pyx Granite Co. Ltd. vs Ministry of Housing and Local Government , Raleigh Investment Co. Ltd. vs Governor General in Council, 74 I.A, 50, Firm and Illuri Subbayya Chetty & Sons vs The State of Andhra Pradesh ; , Kala Bhandar vs Municipal 260 261 Committee; , , Kamala Mills Ltd. vs State of Bombay, ; , K. section Venkataraman & Co. vs State of Madras; , and Firm Radha Kishan (deceased) represented by Hari Kishan vs Administrator, Municipal Committee, Ludhiana, ; , referred to. "Lettera Challan" workers do not fall within the expression "Ordinary unskilled workers" which means such unskilled workers as work for the prescribed period of a full day. On the evidence adduced it is clear that the "lettera challan" labour only works for half the day and is unwilling to work for the prescribed period of full day. Such a case is covered by the proviso to section 15 and such labour is not entitled to wages for a full normal working day. [272F G]

s Nos. 215, 228, 251 and 256 of 1966. Petition under article 32 of the Constitution of India for the enforcement of fundamental rights. K. R. Chaudhuri and K. Rajendra Chaudhury, for the peti tioner (in W.P. No. 215 of 1966). A.S. R. Chari, section B. Naik, K. Rajendra Chaudhury and K. R. Chaudhuri, for the petitioners (in W. Ps. 228 and 251 of 1966). B. Sen, Rameshwar Nath and Mahinder Narain, for the petitioner (in W.P. No. 256 of 1966). Purshottam Trikamdas, G. L. Sanghi and J. B. Dadachanji, for the respondents Nos. 1 3 (in W.Ps. Nos. 215, 228 and 256 of 1966) and respondents Nos. 1 and 2 (in W.P. No. 251 of 1966). M. section K. Sastri and section P. Nayar, for respondent No. 4 (in W.Ps. Nos. 215, 228 and 256 of 1966) and respondent No. 3 (in W.P. No. 251 of 1966). The Judgment of the Court was delivered by Mitter, J. This is a group of four writ petitions filed under article 32 of the Constitution. The common attack in all these petitions is against the validity of certain sections of the Bombay Town Planning Act, 1954, hereinafter referred to as the Act. The petitioners are all owners of plots of land in areas round about Bombay, commonly known as Greater Bombay. They have all similar but separate grievances with respect to the development plan prepared and published under the Act. In Writ Petition No. 215 of 1966, the petitioner 's complaint is as regards his land being earmarked for the public purpose of a park in the Development Plan prepared under the Act. He seeks to, prevent the respondents from giving effect to the said designation of lands in the Development Plan and in particular, to have the third respondent 's order i.e. the Executive Engineer (Planning) (of the Municipal Corporation of Bombay) dated 11th August, 1964 to the effect that his lands were needed for the public purpose of a park quashed. In Writ Petition No. 228 of 1966 the prayer is that the designation of the petitioners ' land as being earmarked for recreation centre and for green belt in the development plan 277 of 'P ' Ward of the City of Greater Bombay should be removed, that their lands should be redesignated as earmarked for industrial purpose, that the order of the Assistant Engineer, Bombay Municipal Corporation, rejecting the petitioners ' proposal for construction of two factory buildings and lavatory blocks should be quashed and a declaration be made that sections 9, 10, 11, 12 and 13 of the Bombay Town Planning Act are ultra vires the Constitution of India. In Writ Petition No. 251 of 1966 the prayers include an order for quashing Resolution No. 1173 of December 19, 1963 and Resolution No. 343 of July 2, 1964 of the first respondent and for removal of the designation attached to the petitioners ' land as reserved for Government purposes in the Development Plan of 'P ' Ward of Greater Bombay. In Writ Petition No. 256 of 1966 the prayers are inter alia for the issue of writs declaring that the Development Plan submitted by the first respondent to the fourth respondent (including P Ward) on July 3, 1964 infringes the petitioners ' rights and directing the issue of a commencement certificate for the development and utilisation of the said land in the manner proposed. At the hearing, a further prayer was made for urging an additional ground in all the writ petitions challenging the validity of section 17 of the, Act. We may consider the broad facts in Writ Petition No. 228 of 1966 by way of sample. The petitioners in this case are two persons who claim to be owners of land bearing section No. 70, Hissa Nos. 4, 5 and 6 comprising an aggregate area of 31,641 sq. approximately in village Pahadi at Goregaon in Greater Bombay. Their case is that they had applied through their architect on January 2, 1962 for permission to change the existing user of their lands by putting them to industrial use and had written a letter to the Municipal Commissioner of Bombay for that purpose by which they proposed to construct on a portion of the land in section, No. 70 Hissa No. 4 a shed for a factory and other necessary sheds. Along with the said letter, they gave a notice under section 33 of the Bombay Municipal Corporation Act, 1888 of their intention to erect a factory shed on the said land with a request for approval thereof. On January 27, 1962 the Executive Engineer, Development Plan, intimated the petitioners that as a major portion of the proposed factory shed intended to be constructed fell outside the heavy industrial zone in the green belt area as shown in the plan accompanying the letter and as the area was affected by net work of proposed 78 East West and 30 ' wide North South road under the development plan of the area, with only a small portion of the land shown coloured violet filling in the heavy industrial area, a commencement certificate could not be granted. By their letter dated March 13, 1962 the petitioners complained that the Executive Engineer, Development Plan, had no authority to earmark any area for green belt and therefore he should reconsider the matter and grant a commencement certificate. On the 278 Same day, the petitioners also wrote to the Municipal Commissioner that inasmuch as they had not till then received the notice of disapproval or. any further requisition concerning their application, they would place on record that their right to proceed with the construction of the intended shed had become absolute under section 345 of the Bombay Municipal Corporation Act. On March 22, 1962 the Deputy Municipal Commissioner (Suburbs) acknowledged receipt of the letter. By letter dated April 18, 1962 the Executive Engineer, Development Plan, informed the petitioners that their request for a commencement certificate would not be reconsidered until the development plan was finalised. By their solicitor 's letter dated June 13, 1962 the petitioners wrote to the 1st respondent, i.e. the Bombay Municipal Corporation, that the refusal to grant a commencement certificate was wrongful. This was followed up by a writ petition in the High Court of Bombay being Miscellaneous Petition No. 256 of 1962 challenging the said refusal as illegal and invalid. By order dated September 7, 1963 the High Court of Bombay allowed the petitioners ' application on the ground that the powers and functions of the Bombay Municipal Corporation under section 12 of the Act had not been exercised by an officer prescribed under section 86 of the Act and the decision dated January 27, 1962 was liable to be set aside. The development plan for Greater Bombay (D Ward) was adopted by the first respondent by resolution No. 1173 on December 19, 1963. By this resolution the second respondent was directed to submit proposals of the development plan in respect of the remaining wards including Ward P in which the petitioners ' land was situated. On January 9, 1964 the development plan for the remaining wards including Ward P was published by the second respondent in the name of the first respondent. In this the petitioners ' land was shown as partly reserved for public roads, for industrial purposes, the major portion being merely marked by green colour. The petitioners ' complaint is that the list of sites reserved for public purposes was for the first time submitted by the second respondent to the Development Committee on February 8, 1964 showing for the first time that a major portion of the petitioners ' lands were earmarked for a recreation centre. This list was recommended for acceptance by the Committee to the first respondent on June 24, 1964 and approved by resolution No. 343 on July 2, 1964 and forwarded to the State of Maharash tra, the fourth respondent herein, on July 8, 1964. The petitioners complain that although in the plan as originally published the lands of the petitioners were earmarked partly for public roads in an industrial area and merely marked by green colour without any specification and designation, by resolution No. 343 the first respondent departed from the development plan and included a portion of the lands for recreation centre amongst the sites reserved for public purposes. According to the petitioners, this redesignation and modification was made although there were no 279 suggestions before the first, second and third respondents in the light of which any modification could have been made under section 9 of the Act. The petitioners by their solicitor 's letter dated April 16, 1964 requested the respondents to alter the development plan in accordance with the decision of the Bombay High Court and further demanded re designation of their lands as reserved for industrial purpose. This matter was again taken up to the High Court of Bombay by way of petition No. 248 of 1964 challenging the refusal of the first and second respondents to modify the development plan. This was rejected in limine by the High Court on July 6, 1964. The appeal therefrom being No. 42 of 1964 was also rejected on August 12, 1964. The petitioners ' case is that the High Court rejected petition No. 248 of 1964 on the view that they had no cause for complaint unless and until the first respondent refused permission to commence construction. They therefore submitted building plans through their architect on January 9, 1965 for construction of a factory shed with a prayer for the issue of a commencement certificate. The third respondent i.e. the Assistant Engineer, Bombay Municipal Corporation by letters dated January 25, 1965 and February 13, 1965 rejected the petitioners ' proposal for construction of factory buildings on their lands on the ground that the lands fell in the reservation for playgrounds and 200 feet wide green belt in the development plan. The petitioners again went up to the Bombay High Court on July 2, 1965 by another petition No. 312 of 1965 for, the issue of a writ of mandamus for setting aside the orders of the third respondent dated January 25, 1965 and February 13, 1965 and directing the respondent to remove the designation of recreation centre and green belt from the petitioners ' land and to designate the entire holding as industrial area in the development plan. The petition was rejected in limine by the Bombay High Court on July 6, 1965. An appeal therefrom came for hearing on August 10, 1965 when an order was made by consent directing the writ petition to be placed for hearing before a Division Bench. Ultimately, however, this was dismissed by judgment dated April 25, 1966. According to the petitioners, they had not challenged the constitutionality of the Act in their petitions. In the present petition to this Court the substantial complaint is that their lands were earmarked in the development plan originally published on January 9, 1964 by green colour without assigning any purpose and the reservation and re designation of these lands for recreation centre and green belt by the first, second and third respondents in the development plan finally adopted was in contravention of section 9 of the Act. This re designation is challenged as being without authority of law and violative of the fundamental rights of the petitioners inter alia under articles 14 and 19 of the Constitution. 280 In the affidavit in opposition filed on behalf of the first respondent, reference is made to the manner and the course of preparation of the development plan set out in greater detail hereafter. A preliminary objection was taken, formulated in some detail, that on the failure of the petitions in the Bombay High Court, the petitioners could not re agitate the matter in this Court on principles analogous to res judicata. It is not necessary to go into that question or take note of the correspondence which passed between the parties and/or their solicitors up to 1964. According to the affidavit, the lands belonging to the petitioners were shown in the draft development plan as published on 9th January 1964 as reserved for green belt, for public roads with a path being shown as falling in the industrial zone. The deponent, the Executive Engineer (Planning) stated that the suggestions and objections received after the publication of the draft plan were care fully considered by the Development Committee which submitted its report with its recommendations to the first respondent for its approval and such approval was given on July 2, 1964. Ultimately, the plan was sanctioned by the fourth respondent after consulting the Special Consulting Surveyor subject to certain modifications. The petitioners ' solicitor 's letter dated April 16, 1964 was placed before the Development Commitee for due consideration. The Development Plan Committee considered the suggestions made by the public and gave a report in respect thereof to the first respondent from time to time who finalised the plan at its meeting held on July 2, 1964. According to the deponent, the letters dated January 25, 1965 and February 13, 1965 addressed by the third respondent were in proper exercise of the right of rejection of the petitioners ' proposal for construction of a factory building. Finally the deponent stated that no part of the petitioners ' lands were earmarked for green belt in the development plan as finally approved by the respondent, that out of 32,000 sq. of the petitioners ' lands, 12,144 sq. yards of land had been earmarked and reserved for playground ' 804 sq. had been earmarked and reserved for municipal wholesale market, 7,821 sq. had been earmarked and reserved for public road, 1167 sq. fell under residential zone and the balance of 8,702 sq. fell in the industrial zone. It will therefore be noticed that the facts as laid in the petitions are not all admitted in the affidavit, but nothing was sought to be made out of this and one common argument as to the invalidity of the different sections of the Act was advanced in great detail mainly by Mr. Chari who was followed by Mr. Sen and Mr. Chaudhuri. In substance, the united attack was against the validity of the different sections mentioned in detail hereafter. Before examining the contentions on the points of law raised ,in this case, it is necessary to appreciate what the Act sought to achieve and why it was brought on the statute book. In order to do this, it is necessary to take stock of the position at the time 281 of its enactment so that attention may be focussed on the situation calling for a remedy, and how the legislature sought to tackle it. It is common. knowledge that for a number of years past, all over India, there has been and is continuing a great influx of people from the villages to towns and cities for the purpose of residence and employment. Besides this, the whole of the country is in the grip of a population explosion. Another circumstance to be reckoned with is that industrial development is taking place in and round about many cities which in its turn is attracting people from outside. Most of our towns and cities have grown up without any planning with the result that public amenities therein are now being found to be wholly inadequate for the already enlarged and still expanding population. The roads are too narrow for modern vehicular traffic. The drainage system, such as it obtains in most of the towns and cities, is hopelessly inadequate to cope with the requirements of an already overgrown population. In most of the towns and cities there is no room for expansion of public amenities like hospitals, schools, colleges and libraries or parks. Some improvement has been sought to be made by Town Improvement Acts enacted in the different States. In order that the suburbs and the surroundings of towns and cities be developed properly and not allowed to grow haphazard, the Legislature of Bombay felt that towns should be allowed to, .grow only on planned schemes formulated on the basis of a development plan. All "local areas" which may be equated roughly with municipalities were to have development plans so that an overall picture might be taken of the needs of the expanding town or city and provision made for planned development with regard to roads and streets, sanitary arrangements like drainage and water supply, places of public utility, industrial development etc. The legislature was well aware of the practical difficulties and the magnitude of the task. A development plan for a huge area like Greater Bombay could not be formulated within a space of weeks or months. A survey had to be made of the area under the local authority to take note of the existing conditions and the plan pre pared keeping in mind the facilities available and those which might be had in the forseeable future. Sections of the area have to be set apart in the different localities for industrial and commercial development, for private housing, for the purpose of the Union or the State, for educational and other institutions, as also for parks and places of public resort. The authority responsible for the drawing up of the plan had to have regard to the wishes and suggestions of the public and in particular, architects, engineers, industrialists and. public bodies. Of necessity, a skeleton plan had to be sketched at first which could be given a final shape after considerable deliberation following the suggestions of the parties interested and the recommendations received. Let us now see how the Legislature of Bombay sought to tackle this huge problem. 282 The Act is described as one to consolidate and amend the law by making and executing town planning schemes. The preamble to the Act shows that its object was to ensure that town planning schemes were made in a proper manner and their execution was made effective by local authorities preparing development plans for the entire area within their jurisdiction. A "development plan" under the Act means a plan for the development or re development or improvement of the entire area within the jurisdiction. of a local authority. A local authority is defined as a municipal corporation or a municipality and includes some appointed committees as also panchayats constituted under the different Acts. Chapter II containing sections 3 to 17 relates to development plans generally. section 3(1) provides that as soon as may be after the coming into force of the Act, every local authority shall carry out a survey of the area within its jurisdiction and prepare and publish in the prescribed manner a development plan and submit the same to the State Government for sanction. The limit of time for this purpose was four years. Sub section (3) authorised the State Government to make an order for extension of the time fixed by sub section (1) for adequate reasons. Sub section (4) authorised the State Government, in case a development plan was not prepared and published in terms of sub section (1), to prepare and publish such a plan, itself after carrying out the necessary surveys. Under sub section (1) of section 4 even before carrying out a survey of the area referred to in sub sections (1) and (2) of section 3, for the purpose of preparing a development plan for such area, the local authority was obliged to make a declaration of its intention to prepare such a plan and to despatch a copy thereof to the State Government for publica tion and publish the same itself in the prescribed manner for inviting suggestions from the public within a period of two months. Under sub section (2) a copy of the plan was to be open to the inspection of the public at all reasonable hours at the head office of the local authority. Ss. 5 and 6 provided for the manner of preparing development plans and the authorisation of certain persons to enter upon, survey and mark, ' out that land for the preparation of the plan. section 7 indicated the manner in which the development and improvement of the entire area within the jurisdiction of the local authority was to be carried out and regulated. In particular, it had to contain several proposals, namely: (a) for designating the use of the land for the purposes such as (1) residential, (2) industrial, (3) commercial, and (4) agricultural , (b) for designation of land for public purposes such as parks, playgrounds, recreation grounds, open spaces, schools, markets or medical, public health or physical culture institutions; (c) for roads and highways; (d) for the reservation of land for the purpose of the Union, State, any local authority or any other authority established by law in India; and 283 (e) such other proposals for public or other purposes as may from time to time be approved by a local authority or directed by the State Government in this behalf. Under section 8 various particulars had to be published and sub mitted to the State Government along with the development plan inclusive of a report of the surveys carried out by the local authority, a report explaining the provisions of the development plan, a report of the stages by which it was proposed to meet the obligations imposed on the local authority by the development plan and an approximate estimate of the cost involved in the acquisition of lands reserved for public purposes. It will be noticed that up to this point the public have practically no say in the matter as to how the development plan should be prepared. section 9 however gives such right to the public and provides: "If within two months from the date of publication of the development plan any member of the public communicates in writing to the local authority any suggestion relating to such plan, the local authority shall consider such suggestion and may, at any time before submitting the development plan to the State Government, modify such plan as it thinks fit. " At this stage therefore every owner of land is given the right to make suggestions for modification of the plan. He can consult the plan and make his suggestions, principally with the idea that his interest may not be adversely affected although there is nothing in the section which prevents him from making suggestions generally with regard to the plan itself. Under section 10(1) the State Government is given the power to sanction, the development plan submitted to it for the, whole of the area, or sanction it separately in parts either without modification or with such modification as it considers expedient within the time prescribed by the rules. If the development plan is sanctioned separately in parts, then each part so sanctioned is deemed, to be the final development plan for the purposes of the succeeding provisions of the Act. All such provisions are to apply in relation to such part as they apply in relation to a deve lopment plan relating to the whole of the area. Under sub section 8(2) the State Government has to fix in its notification sanctioning the plan a date not earlier than one month after the publication of which the final development plan shall come into force. Sub section (3) provides: "If the development plan contains any proposal for the designation of any land for a purpose specified in clause (b) or (e) of section 7 and if such land does not vest in the local authority, the State Government shall 284 not include the said purpose in the development plan unless it is satisfied that the local authority concerned shall be able to acquire such land by private agreement or compulsory purchase within a period of ten years from the date on which the final development plan comes into force. " The idea behind this sub section is that if any land is to be set apart for public purposes such as parks etc. mentioned in cl. (b) of section 7 or any other public purpose which might be approved by a local authority or directed by the State Government in terms of cl. (e) of section 7, the State Government must examine whether it would be possible for the local authority to be able 'to acquire such land by private agreement or compulsory purchase within a period of ten years. This acts as a check on the local authority making too ambitious proposals for designating lands for public purposes which they may never have the means to fulfil. It is obvious that the local authority must be given a rea sonable time for the purpose and, the legislature thought that a period of ten years was a sufficient one. section 11(1) empowers the local authority to acquire any land designated in the development plan for a purpose specified in cls. (b) (c), (d) or (e) of section 7 either by agreement or under the Land Acquisition Act. Under sub section (2) of section II the provisions of the Land Acquisition Act of 1894 as amended by the Schedule to the Act are to apply to all such acquisitions. The Schedule to the Act shows that section 23 of the Land Acquisition Act is to stand amended for the acquisition under this Act with regard to the compensation to be awarded. In fact it is for the benefit of the person whose land is acquired, as he can get the market value of the land at the date of the publication of the declaration under section 6 of the Land Acquisition Act in place of section 4. Sub section (3) provides that if the designated land is not acquired by agreement within ten years from the date speci fied under sub section (3) of section 10 or if proceedings under the Land Acquisition Act are not commenced within such period, the owner or any person interested in the land may serve notice to the local authority and if within six months from the date of such notice the land is not acquired or no steps as aforesaid are commenced for its acquisition, the designation shall be deemed to have ,lapsed. This provision again is for the benefit of the owner of the land for unless the land is acquired or steps taken in that be. half within the fixed limits of time, he ceases to be bound by the designation of his land as given in the development plan. section 12 obliges every person who desires to carry on any deve lopment work in any building or in or over any land within the limits of the said area after the date on which a declaration of intention to prepare a development plan to apply to the local authority for a commencement certificate for the purpose. 'Development 'in this connection means carrying out of building or 285 other operations in or over or under any land or the making of any material change in the use of any building or other land. It is to be noticed that the section imposes such restriction not only from the date of preparation of the development plan but as soon as there is publication of intention to prepare a development plan. In order to make it obligatory on the local authority to direct its attention to all applications for permission to carry on development work, the legislature provided by sub section (1) of section 13 that "The local authority on receipt of the application for permission shall at once furnish the applicant with a written acknowledgment of its receipt and after inquiry may either grant or refuse a commencement certificate. Provided that such certificate may be granted subject to such general or special conditions as the State Government may by order made in this behalf direct." Under sub section (2) if the local authority does not communicate its decision within three months from the date of such acknowledgment, such certificate shall be deemed to have been granted to the applicant. Sub section (3) provides that no compensation is to be payable for the refusal of or the insertion or imposition of conditions in the commencement certificate. This is subject to ' the provisions of sections 14 and 15. Sub section (4) lays down that any work done in contravention of section 12 or of sub section (1) of section 13 may be pulled down by the local authority. In this case, we are not concerned with the applicability of sections 14, 15 and 16. section 17 which was attacked in these cases provides that: "At least once in every ten years from the date on which the last development plan came into force and where the plan is sanctioned in parts from the date on which the last part came into force, the local authority may, and if so required by the State Government after the date on which a development plan for any area or, as the case may be, the part of such plan has come into force shall, carry out a fresh survey of the area within its jurisdiction with a view to revising the existing development plan including all parts if sanctioned separately and the provisions of sections 4 to 16 (both inclusive) shall, so far as they can be made, applicable, apply in respect of such revision of the development plan. " Strong objection was taken to this section on the ground that it gave the local authority concerned almost an unlimited power of protracting the finalisation of the development plan if they were 286 so minded in which case the owners of property would be com pletely at the mercy of the local authority with respect to the development of their own land. Chapter III deals with the making of a town scheme. Under section 18 such a scheme is ordinarily to be made for the purpose of implementing the proposals in the final development plan. It is in the town planning scheme that provisions are to be made for laying out or relaying out of land, laying out of new streets or roads, the construction, alteration and removal of buildings, the allotment or reservation of land for roads, open spaces, recreation grounds etc., lighting, water supply and the many other things which have to be provided for in the laying out of a town. Chapter IV deals with town planning schemes in general. section 21 shows that such a scheme may be made in accordance with the provisions of the Act in respect of land which is in the course of development or is likely to be used for building purposes, or has already been built upon. section 22 empowers local authority to declare its intention to make a town planning scheme in respect of the whole or any part of land referred to in section 2 1. Under section 23 the local authority is obliged to make in consultation with the Consulting Surveyor, a draft scheme for the area in respect of which the declaration has been made within twelve months from the said date. The other sections 24 to 29 generally follow the same pattern with regard to town planning schemes as is to be found in sections 7 to 13 relating to development plans. section 29 restricts the right of owners of land to erect or proceed with any building or remove, pull down, alter, make additions to or any substantial repair to any building or change the use of any land or building unless he has obtained the necessary permission from the local authority, once there has been a declaration of intention to make a scheme under section 22. section 87 gives the State Government power to make rules for carrying out the purposes of the Act. We may now proceed to take note of how the Bombay Municipal Corporation proceeded to make the development plan against which common complaints have been made. The gist of the contents of the counter affidavits is as follows. After the Act came into force on April 1, 1957, the first respondent by resolution No. 409 dated July 7, 1958, declared its intention to prepare a development plan for the entire area of Greater Bombay within its jurisdiction. In terms of rule 3 framed under the Act, a map of the said area accompanied the said declaration and within 15 days of the date of such declaration the first respondent despatched a copy of the same together with a copy of the map to the State Government for publication in the Official Gazette. On September 18, 1958 the first respondent published its intention to prepare a development plan by means of advertisements in newspapers circulating in Greater Bombay and affixing copies of the advertisements on the notice boards at its head office and other 287 prominent places in the area. By the said publications, the first respondent invited objections and suggestions from the public within a period of two months, keeping open for inspection a copy of the plan at its head office. The Municipal Commissioner of Bombay who is a respondent herein set up two Advisory Committees for rendering assistance in the preparation of the development plan. One Committee was composed of representatives of Government departments, public authorities, industries etc., while the other was composed of practising architects and engineers. After taking into consideration the suggestions received and con sultations held, tentative development plans for all the wards in Greater Bombay were prepared and discussed by the two Advisory Committees. With a view to give wide publicity to the said plans, the same were displayed for public inspection during the year 1960 61. This was further notified in newspapers. As a result of the publication ' of the tentative plans, a large number of objections and suggestions regarding the tentative development plans were received from the public by the first respondent. The tentative plan for D Ward was put up first as a model plan for consideration by the Development Plan Committee appointed by the first respondent. The said Committee invited suggestions from municipal councillors and different organisations and institutions. Thereafter, the said Committee recommended that the second respondent be authorised to publish. , the plan for 'D ' Ward and to invite suggestions from the public as per the provisions of section 9 of the Act. The Development Plan Committee made similar recom mendations for the other wards. Thereafter, the first respondent resolved and authorised the second respondent to publish the development plans in respect of all other wards in Greater Bombay including 'P ' Ward. We may now make a note of a few details. The draft of a section of the development plan for K, P and R Wards was published on or about July 7, 1961. The Development Plan Committee took up its work after appointment on December 11, 1961. The formalities mentioned above were then gone through. On January 9, 1964 the first respondent after considering the proposals made in the tentative development plan and the reports of the Development Plan Committee, prepared a development plan and published the same by means of advertisements in approved newspapers and in the Official Gazette. Copies of the advertisements were also displayed at various prominent places. The advertisements published in pursuance of section 9 of the Act announced to the public that communications in writing containing suggestions relating to the plan would be welcome within a period of two months. Many such suggestions were received and considered by the Development Plan Committee who made reports from time to time to the first respondent. After considering such reports of the Development Plan Committee, the first respondent at a meeting held on July 2, 1964 finalised the development plan 288 after incorporating therein such suggestions as it thought proper or necessary. On July 8, 1964, the development plan was submitted by the Municipal Commissioner to the State Government for its sanction under section 10 of the Act. The State Government forwarded all objections to the development plan received by the first respondent to the Special Consulting Surveyor to the Government of Maharashtra specially appointed to advise the Government on the development plan. The Consulting Surveyor scrutinised the objections and advised the Government thereon. In cases where changes had been made by the first respondent after publication of the draft development plan, the Consulting Surveyor heard the parties who had objected to such changes and then framed his proposals in respect of such ward in the development plan for sanction by the Government. Government had to consider the development plan ward wise in view of the enormity of the task as the plan covered an area of 169 sq. miles divided into fifteen wards affecting a population of nearly 45 lakhs. The plan was so large and detailed that Government found it impracticable to sanction it within the time prescribed by the Bombay Town Planning Rules and consequently had the time extended from time to time by various resolutions. Ultimately after consulting the Special Consulting Surveyor, the Government of Maharashtra sanctioned the development plan in respect of 'P ' Ward on September 14, 1966. The final plan with regard to Ward 'D ' had been sanctioned, on December 10, 1963. The common complaint in all these petitions is that sections 9 and 10 of the Act are invalid and unconstitutional in that they empower the local authority and the State Government to modify the development plan without giving opportunity to persons whose interest might be adversely affected by such modification. It was argued that a person, say A, who had, a look at the development plan as first prepared and published, might feel quite satisfied with it and not make any suggestions in respect thereof. It being however open to others to make suggestions without any notice to A, the local authority was in a position to consider such sug gestions and give effect thereto in the development plan submitted to the State Government. The first mentioned person A in such a case would remain in blissful ignorance of the fact that the plan as finally submitted affected his interest very seriously. It was then argued, that if such a modified plan was sent to the State Government it was open to Government to sanction it after consulting the Consulting Surveyor again without any notice to a person like A who might find the sanctioned plan very severely prejudicing his interests in the land held by him. To take an instance, it was said a person who found that his land was in the industrial belt in the tentative development plan might feel quite happy with it but as a result of the modifications, the plan, as finally sanctioned, might designate his land as earmarked for public purposes. 289 By this he would stand to lose his land without any opportunity being given to him to make any representation in respect thereof. It was next argued that the powers and functions of a local authority for purposes of sections 12 and 13, amongst others were to be exercised and performed by the Municipal Commissioner of Bombay under section 86 of the Act. Under section 12 the final and only authority who had the power to grant or withhold permission to carry on any development work was the Municipal Commissioner. He could, under section 13 grant or refuse a commencement certificate at his own sweet will and pleasure there being nothing to guide him in such a matter before the preparation of a development plan. It was argued that even after the preparation of such a plan a commencement certificate could be refused arbitrarily and there was no provision for any appeal from or revision of the order containing the refusal. It was next argued that by the combined operation of sections 4 and 11(3) the local authority could easily delay the acquisition of any land designated for public purposes under section 7 of the Act for 14 years and if resort was had to power,% under section 17 of revising the development plan at the end of this period of 14 years. provisions of sections 4 to 16 would again become operative with the result that the acquisition might be delayed for a further period of ten years. Mr. Chari went to the length of arguing that section 17 might even be resorted to more than once and so acquisition might be held up indefinitely from generation to generation. In our opinion, the argument though at first sight forceful cannot be accepted. As already noted, a development plan for an area like Greater Bombay cannot be chalked out or put in blueprint in the space of a few months. We have seen that in order to perform this enormous task, an Advisory Committee composed of representatives of various public bodies was formed to advise the Municipality with respect thereto and, the public were freely invited to take part therein. Before anything could be done, a survey of the area had to be made and a map thereof prepared. Such a map would show the already existing industrial areas, public amenities, roads and bridges and would give anybody wishing to find out some idea as to the lines on which the deve lopment of the city should proceed. One would then have to take into consideration the existing roads, industrial establishments and public amenities already there because the plan as emerging finally could not be made on a clean slate but had to take into account already existing things and the difficulties which would have to be met and overcome when different parts of the area were to be earmarked for special purpose. Plans for various sections of Greater Bombay were prepared with the assistance of the Advisory Committee. The tentative development plans in this case were displayed for public inspection during the year 290 1960 61. Within a space of two years, therefore, the local authority had some guidance in the matter of granting or refusing a commencement certificate for development work of any land proposed to be taken up by any,, of the petitioners. A reference to the tentative plans would show whether the area within which the. development work was proposed to be carried on was set apart for industrial, commercial, residential or agricultural purposes, or whether it was to be set apart for public purposes. It might be that as a result of the modification of the tentative plan, the area which at first fell under the designation "residential" came to be included in the area designated as "industrial" or even came to be embraced for designation for a public purpose. In all such cases where large powers are given to certain authorities the exercise whereof may make serious in roads into the rights of property of private individuals, we have to see whether there is any guidance to be collected from the Act itself, its object and its provisions, in the light of the surrounding circumstances which made the legislation necessary taken in conjunction with well known facts of which the court might take judicial notice. We may in this connection refer to a judgment of this Court in Jyoti Pershad vs Administration for The Union Territory of Delhi(1). The facts in that case were as follows. The petitioner who was the owner of a house containing several rooms let out to different individuals, desired to demolish the same and reconstruct it. He submitted a plan to the Council of the Delhi Municipal Committee and applied for sanction for the reconstruction of the house. After the sanction of the plan, he filed suits for eviction of nine tenants under section 13(1)(g) of the Delhi and Ajmer Rent Control Act 38 of 1952. In order to succeed in the suits he had to show that he had a plan sanctioned by the municipal authorities which made provision for the tenants then in occupation of the house being accommodated in the house as reconstructed and that he had the necessary funds to carry out the reconstruction. The petitioner had no difficulty in establishing these and he succeeded in getting decrees for eviction. The tenants however refused to give up possession and went up in appeal. Ultimately, however, the petitioner succeeded in the appeals filed by the tenants. Meanwhile, the Slum Areas (Improvement and Clearance) Act 96 of 1956 was enacted by Parliament and came into force in the Delhi area. section 19(1) of that Act provided that: "Notwithstanding anything contained in any other law for the time being in force, no person who has obtained any decree or order for the eviction of a tenant from any building in a slum area shall be entitled to execute such decree or order except with the previous permission in writing of the competent authority." ; 291 Under sub section (2) every person desiring to obtain the permission referred to in sub section (1) shall make an application in writing to the competent authority giving particulars as may be prescribed. Under sub section (3) the competent authority was bound to make a summary enquiry after giving an, opportunity to the tenant of being heard and then by order in writing either grant or refuse to grant it. Under sub section (4) the competent authority must record a statement showing brief reasons for such refusal. The peti tioner 's application under section 19 was turned down by the,competent authority on the ground that the house was not in such a condition that it called for demolition and if sanction was given the tenants would be thrown out and it would be impossible for them to get accommodation in the reconstructed building as they were very poor and not likely to be able to pay the enhanced rent in respect of rooms in Delhi. The appeal by the petitioner to the Union Territory was dismissed mainly on the ground that if the appeal was allowed a large number of poor tenants from slum areas would be evicted and as the property itself was not in a dilapidated condition and declared unfit for human habitation, permission to evict the tenants could not be given. The petitioner then moved this Court for the issue of a writ of certiorari to quash these orders. His complaint was that section 19 of the Act was invalid and unconstitutional and violated the petitioner 's rights guaranteed by articles 14 and 19(1)(f) of the Constitution. There it was argued that section 19(3) of the Act vested an unguided, unfettered and uncontrolled power in an executive officer to withhold permission to execute a decree which a landlord had obtained after satisfying the reasonable requirements of law as enacted in the Rent Control Act. It was further urged that neither section 19 of the Act nor any other provision of it indicated the grounds on which the competent authority might grant or withhold permission to execute decrees and the power conferred was therefore arbitrary and offended article 14 of the Constitution. It was further urged that there was an excessive delegation of legislative power as the executive authority could at its sweet will and pleasure disregard rights to property without any guidance from the legislature. A point was further raised that such refusal might go on for an indefinite and indeterminate period of time affecting the petitioner 's right to enjoy his property and imposing an excessive and unreasonable restraint on his right. The import and scope of article 14 of the Constitution was examined in this case at some length. The Court examined the provisions of the Slum Areas (Improvement and Clearance) Act and noted that the process of slum clearance and re development would have to be carried out in an orderly fashion if the purpose of the Act was to be fulfilled and the policy behind it, viz., the establishment of slum dwellers in healthier and more comfortable tenements so as to improve the health and morals of the community, was to be achieved. Chapter VI of the Act which was headed "Protection of tenants in Slum 292 Areas from Eviction", read in the light of the other provisions of the Act made it clear that it was necessary to allow the slum dwellers to remain in their dwellings until provision was made for a better life for them elsewhere. It was said: "Though therefore the Act fixes no time limit during which alone the restraint on eviction is to operate, it is clear from the policy and purpose of the enactment and the object which it seeks to achieve that this restriction would only be for a period which would be determined by the speed with which the authorities are able to make other provisions for affording the slum dwellertenants better living conditions. The Act, no doubt, looks at the problem not from the point of view of the landlord, his needs, the money he has sunk in the house and the possible profit that he might make if the house were either let to other tenants or was reconstructed and let out, but rather from the point of view of the tenants who have no alternative accommodation and who would be stranded in the open if an order for eviction were passed. " Taking into consideration the entire provisions of the Act, the Court observed: "In view of the foregoing we consider that there is enough guidance to the competent authority in the use of his discretion under section 19(1) of the Act and we, therefore, reject the contention that section 19 is obnoxious to the equal protection of laws guaranteed by article 14 of the Constitution. We need only add that it was not, and could not be, disputed that the guidance which we have held could be derived from the enactment, and that it bears a reasonable and rational relationship to the object to be attained by the Act and, in fact, would fulfil the purpose which the law seeks to achieve, viz., the orderly elimination of slums, with interim protection for the slum dwellers until they were moved into better dwellings. " The further objection that Parliament when enacting the Act could easily have indicated with reference to the several grounds on which eviction could be had under the Rent Control Act, the additional restrictions or further conditions which would be taken into account by the competent authority, was met by saying: "In the context of modern conditions and the variety and complexity of the situations which present themselves for solution, it is not possible for the Legislature to envisage in detail every possibility and make provision for them. The Legislature therefore is forced to leave 293 the authorities created by it an ample discretion limited, however, by the guidance afforded by the Act. . So long therefore as the Legislature indicates, in the operative provisions of the statute with certainty, the policy and purpose of the enactment, the mere fact that the legislation is skeletal, or the fact that a discretion is left to those entrusted with administering the law, affords no basis either for the contention that there has been excessive delegation of legislative power as to amount to an abdication of its functions, or that the discretion vested is uncanalised and unguided as to the amount to a carte blanche to discriminate. The second is that if the power or discretion has been conferred in a manner which is legal and constitutional, the fact that Parliament could possibly have made more detailed provisions, could obviously not be a ground for invalidating the law." The other objection in that case that the power vested in the competent authority at its sweet will and pleasure to refuse permission to execute a decree for eviction violated the right to hold property under article 19(1)(f) of the Constitution, on the ground hat there were no principles in the Act itself to guide the competent authority in the exercise of his will and pleasure was met by saying that the restrictions imposed would not be held to be unreasonable as "the ban imposed on eviction is temporary though. . its duration is not definite. In the very nature of things the period when slums would have ceased to exist or restrictions placed upon owners of property could be completely lifted must, obviously, be indefinite and therefore the indefiniteness cannot be a ground for invalidity a ground upon which the restriction could be held to be unreasonable. " It was further said that in considering the reasonableness of the restriction: "one has to take into account the fact a fact of which judicial notice has to be taken that there has been an unprecedented influx of population into the capital, and in such a short interval, that there has not been time for natural processes of expansion of the city to adjust itself to the increased needs. Remedies which in normal times might be considered an unreasonable restriction on the right to hold property would not bear that aspect or be so considered when viewed in a situation of emergency brought about by exceptional and unprecedented circumstances. Just as pulling down a build 294 ing to prevent the, spread of flames would be reasonable in the event of a fire, the reasonableness of the restrictions imposed by the impugned legislation has to be judged in the light of actual facts and not on a priori reasoning based on the dicta in decisions rendered in situations bearing not even the remotest resemblance to that which presented itself to Parliament when the legislation now impugned was enacted. " In our opinion, the observations made in the above case apply with equal force to the facts of this case. The affidavits used show what an enormous increase of population has taken place in Bombay in recent years. One cannot lose sight of the fact that the growth of the city and the industrialisation of its surroundings are going on apace and if factories are allowed to be set up just where the, owners of certain plots of land want to erect them, it could render large areas unfit for residential purposes. In the area covered by Greater Bombay, the municipal authorities have to proceed with caution when sanctioning any development work. It is well known that a master plan for Greater Bombay was prepared even before the Act came into force but by the time the Act was enacted the same was found to be out of date. The preparation of a development plan for Greater Bombay was an immense task and the authorities proceeded with it in a manner to which no exception can be taken. They formed an Advisory Committee, prepared a tentative development plan and ultimately the development plans for different wards. At all stages, suggestions and objections were received and, wide publicity was given to the steps which were being taken from time to time. Although section 12 does not in terms state the grounds on which the permission of the local authority to sanction development work may be withheld, it is clear that the authority had to proceed on the basis of the tentative plan. The legislature was aware that a good deal of time might elapse before the Development Plan was finally sanctioned and that is why provision was made for extension of the period of four years, if need be from time to time. After a declaration under section 4 is made, the map is published under r. 3 and the suggestions are received, the municipal authorities must consider in the light of material before them as to whether the intended building operations ought to be sanctioned or not. Once the development plan was before it, of course, there was no difficulty. In our opinion, there was enough guidance in the Town Planning Act to enable the Municipal Commissioner to come to a conclusion as to whether a particular commencement certificate should be granted or not and the power exercisable under the sections was neither uncanalised nor arbitrary. In all these four petitions, reasons were given as to why the commencement certificate was withheld. It may be that the reason at first given was not adhered to later on, but that was because by then the plan had undergone a modification. 295 With regard to the complaint that the period of ten years fixed under section II (3) of the Act was too long, and an unreasonable restriction on the rights of a land owner to deal with his land as he pleased, it is enough to say that in view of the immensity of the task of the local authorities to find funds for the acquisition of lands for public purposes, a period of ten years was not too long. In this case, the authority had to deal with an area measuring about 169 sq. miles or roughly an area measuring 17 miles X 10 miles which is larger than most of our big cities without their suburbs. The preparation of a development plan for such an area must take a considerable period of time. We may also point out that this is not the first occasion when the validity of this Act has been called in question before this Court. In Manecklal Chhotalal & Ors. vs M. G. Makwana and Ors.(1), objections were taken with regard to the Town Planning Scheme No. 19 (Memnagar), Ahmedabad prepared under the Act as amended by the Gujarat Amendment and Validating Act, LII of 1963. There the declaration of intention to prepare a town planning scheme was made under section 22(1) of the Act in respect of certain areas of land which included some lands of the petitioners. On June 13, 1960, a draft Town Planning Scheme was prepared under section 23(1) and it was published in the Gujarat Government Gazette dated June 23, 1960. The petitioners submitted objections and suggestions before the Town Planning Committee. After consideration of the same, the second respondent forwarded the Town Planning Scheme to the third respondent, the State of Gujarat, under section 28(1) of the Act. The third respondent sanctioned the draft scheme and appointed a Town Planning Officer. This officer issued a public notice in October 1961 inviting objections and suggestions from owners of land. The petitioners again filed objections in November 1961 before the Town Planning Officer and here also they reiterated the same objections and suggestions which they had placed before the Town Planning Committee at the earlier stage, and before the second respondent later. In the first notice issued by the Town Planning Officer, it was mentioned that the petitioners were being allotted new plots measuring 19,087 sq. yards as against two plots measuring 56,164 sq. It was stated that the value of the original plots was Rs. 37,556 and of the new plots Rs. 14,315 and that in consequence, the petitioners were entitled to compensation of Rs. 23,241. The notice further stated that the value of plots which were being allotted as new plots, after taking into account the improvements in the scheme was Rs. 1,35,590 and after deducting the price of those plots without reference to the improvements, viz., Rs. 14,315 the increase under section 65 of the Act was Rs. 1,21,275. The, petitioners were therefore liable to pay contribution at the rate of 50 % on the increment under section 66 i.e. Rs. 60,638 (1) ; 296 and after giving credit to them for the sum of Rs. 23,241 they were called upon to pay Rs. 37,397. There was some alteration in this and ultimately the petitioners were informed that in lieu of plot 22 measuring 37,873 sq. yards they were allotted plots measuring 20,123 sq. yards and the value under section 67 was fixed at Rs. 8,222. The final position under these two notices was that the petitioners were getting land of an extent of 35,558 sq. yards as against the original extent of 70,180 sq. yards and they had to pay a sum of Rs. 73,867 as contribution. The main contention urged on behalf of the petitioners was that the State Legislature was not competent to pass the Act as it was not covered by any of the entries in List 11 or List 111, of the Seventh Schedule to the Constitution; and even assuming that the State Legislature could pass the Act, nevertheless, its provisions regarding the levy of contribution towards the cost of the Scheme and all other matters relating to the working of the scheme were unauthorised and unreasonable and that the powers vested in the Town Planning Officer and other authorities under the Act were unguided, arbitrary and uncontrolled and as such infringed the fundamental rights of the petitioners under articles 14, 19(1)(f) & (g) and 31 of the Constitution. It will be noticed that there is a good deal of similarity between that application and the present series of applications although the objections raised are not quite the same. In that case the Court examined the Act and the scheme including sections 3 to 17 in Chapter 11 dealing with development plans. As noted already, Chapter III deals with the making of Town Planning Scheme and the contents of a Town Planning Scheme and Chapter IV deals with declaration of intention to make a scheme and making of a draft scheme. Chapters IV, V, VI, VII and IX were considered in some detail as also r. 3 relating to the publication of the de claration under section 4 and r. 4 dealing with the publication of the development plan. The Court noted after referring to the sections and the rules that a perusal thereof clearly showed that elaborate provisions had been made for giving as wide a publicity as possible, at all stages, to the public and to owners of land who may be affected by the scheme. They provided for objections which were being heard by the authorities concerned. The objection that unfettered and arbitrary power was vested in the Town Planning Officer in the matter of deciding various points covered by section 32 of the Act was turned down. Ultimately, the Court said: ". . having due regard to the substantive and procedural aspects, we are satisfied that the Act imposes only reasonable restrictions, in which case, it is saved under article 19(5) of the Constitution. The considerations referred to above will also show that the grievance of the petitioners that article 14 is violated, is also not accept,able. " 297 In our opinion, apart from the aspect of the question that the Act has been found, after consideration of its different sections, to be a valid enactment, we are not impressed by any of the arguments raised before us. The argument that a person was given no opportunity of meeting the objections raised by others with regard to the development plan has no force in the light of the facts disclosed in the affidavits. After all it is for the authority concerned to prepare the plan after hearing all the parties concerned. If the authorities were to hear all the parties with regard to all the suggestions made giving them separate and independent hearings, no development plan could ever be prepared. The authority was not concerned with considering the advantages or disadvantages which might accrue to a particular person or a group of persons owning lands in different parts of the area concerned, but it had to go by the larger interest of the population at large and the generations to come. The affidavits show that nothing was done haphazardly. Suggestions and objections at all stages were carefully considered. The assistance of committees of experts was taken and the plan emerged, only after an immense amount of labour had been bestowed on its preparation. The second argument that section 13 of the Act gave an uncon trolled and uncanalised power to the local authority to refuse a commencement certificate arbitrarily cannot also be accepted. As already noted, the development of an area like Greater Bombay has to be guided and channeled in a particular manner following well defined plans. Public amenities have to be provided, for , lands set apart for public purposes to be acquired by local authority to be considered; industrialisation of the areas to be guided in the view of the industries already existing, their probable demands in future spacing out and such like objects. The help of various associations was taken and suggestions of the public received and discussed by an Advisory Committee. Before the finalisation of the development plan, there was already a tentative plan by which the local authority had to guide itself. After a development plan was prepared, the question was a simple one as to whether the commencement certificate could be given without doing any violation to the development plan. The fact that no appeal from the decision under section 13 was provided for is a matter of no moment for the authority under section 13 is no less than the Municipal Commissioner himself or the Chief Officer of the Municipal Borough or a person exercising the power of an Executive Officer of any local authority. When the power had to be exercised by one of the highest officers of the local, authority intimately connected with the preparation of the development plan in all its stages, it is difficult to envisage what other authority could be entrusted with the work of appeal or revision. The preparation of the tentative plan or the final development plan was not something which was left to the pleasure or discretion of the local authority. Immense pains were taken by a vast number of 298 people and it was their combined effort and skill which went to the making of the development plan preceded by the tentative plan. section 13 prescribes that the local authority should make an inquiry before granting or refusing a commencement certificate. The Authority must therefore look into all material available to it including the tentative plans and the final development plan and then make up its mind as to whether a commencement certificate should be granted or not. If the provisions of the Act are borne in mind and the rules framed thereunder complied with, as appears to have been done in these cases, there was little or no scope for the local authority acting arbitrarily under section 13 of the Act. We have already noted that the authority concerned com municated to the petitioners in Writ Petition No. 228 of 1966 as to why their prayer for the issue of a commencement certificate could not be granted. The facts in the other writ petitioners are on a close parallel. We also find ourselves unable to accept the third contention that by the combined operation of sections 4 and 11(3) of the Act the local authority could protract the acquisition of any land designated for a public purpose under section 7 of the Act at least for 14 years and thereafter indefinitely. A similar argument was put up before this Court in the case of Jyoti Pershad vs Administrator for The Union Territory of Delhi(1). The argument there put up about excessive delegation of legislative power to an executive authority to disregard rights to property of a person who had obtained a decree for eviction indefinitely was turned down by this Court. There it was said that the restriction of the power of eviction would have to be determined by the speed with which the authorities were able to make provisions for affording the slum dwellers better living conditions. No one can be heard to say that the local authority after making up its mind to acquire land for a public purpose must do so within as short a period of time as possible. It would not be reasonable to place such a restriction on the power of the local authority which is out to create better living conditions for millions of people in a vast area. The finances of a local authority are not unlimited nor have they the power to execute all schemes of proper utilisation of land set apart for public purposes as expeditiously as one would like. They can only do this by proceeding with their scheme gradually, by improving portions of the area at a time, obtaining money from persons whose lands had been improved and augmenting the same with their own resources so as to be able to take up the improvement work with regard to another area marked out for development. The period of ten years ,fixed at first cannot therefore be taken to be the ultimate length of time within which they had to complete their work. The legislature fixed upon this period as being a reasonable one in the circumstances obtaining at the time when the statute was enacted. (1) ; 299 We cannot further overlook the fact that modifications to the final development plan were not beyond the range of possibility. We cannot therefore hold that the limit of time fixed under section 4 read with section 11(3) forms an unreasonable restriction on the rights of a person to hold his property. Towards the end of the hearing counsel for the petitioners submitted that section 17 of the Act might be left out of consideration for the purpose of these petitions and learned counsel for the respondents were agreeable to this course. We therefore do not express our views about the validity or otherwise of this section. In our opinion the objections raised as to the invalidity of sections 9, 10, 11, 1.2 and. 13 cannot be upheld. As the petitioners have failed in their attempt to establish any violation of their fundamental rights under the Constitution, the petitions will all be dismissed. The petitioners will pay one set of costs. R.K.P.S. Petitions dismissed.

IN-Abs

The petitioners were owners of certain land in Greater Bom bay in respect of which a declaration of intention under s.4(1) of the Bombay Town Planning Act, 1954, to prepare a development plan, had been made by the respondent Bombay Municipal Corporation. They applied to the Municipal Commissioner, in January 1962, for permission to change the existing user of their land and for a commencement certificate under section 12 to construct factory sheds on a part of the land, but their application was rejected by the Executive Engineer, Development Plan. A tentative develop ment plan for the area which included the petitioner 's land was published on January 9, 1964, in which their land was shown as partly reserved for public roads, partly for industrial purposes and the rest was marked green. After a large number of objections and suggestions on the tentative plan had been received and considered in accordance with the provisions of section 9 of the Act, the Municipal Corporation finally approved the plan on July 2, 1964 and forwarded it to the State Government for its sanction under section 10. The State Government sanctioned the final development plan for the ward in which the petitioners ' lands were located on September 14, 1966 after consulting its special Consulting Surveyor, who scrutinised all the objections received by the Municipal Corporation and heard the objectors. The final plan showed that a major portion of the petitioner 's land was earmarked for a recreation centre. Although a writ petition filed by the petitioners before the publication of the tentative development plan against the rejection of their application for a commencement certificate was allowed by the High Court on the ground that powers of the Municipal Corporation under section 12 had not been exercised by an officer prescribed under section 86, two subsequent petitions filed by them after the approval of the final plan by the Municipal Corporation to obtain redesi gnation of their land were dismissed. In the present petition under article 32 of the Constitution, the petitioners claimed that after the reservation of their land as shown in the tentative plan published on January 9, 1964, its redesignation in the final plan for a recreation centre was without authority of law and violative of their rights under articles 14 and 19. It was contended, inter alia, (i) that sections 9 and 10 of the Act were invalid and unconstitutional in that they empowered the local authority and the State Government to modify, as a result of objections received from other persons, a development plan, against which a particular person may not have objected, without giving an opportunity to that person to represent against a subsequent modification by which his interest may be adversely affected; (ii) that under section 12 the final 275 and only authority who had the power to grant or withhold permission to carry on any development work after a declaration of intention under section 4(1) was the Municipal Commissioner; he could, under section 13, grant or refuse a commencement certificate at will, there being nothing to guide him in such a matter before the preparation of a development plan; even after the preparation of such a plan, a commencement certificate could be refused arbitrarily and there was no provision for any appeal from or revision of the order containing the refusal; and (iii) that by the combined operation of sections 4 and 11 (3), the local authority could easily delay the acquisition of any land designated for a public purpose under section 7 of the Act for 14 years and this constituted an unreasonable restriction on the right to hold property. Held: The objections raised as to the invalidity of sections 9, 10, 11, 12 and 13 could not be upheld. (i) The contention that a person was given no opportunity of meeting the objections raised by others with regard to the development plan has no force in the light of the facts disclosed as to the enormity of the task of finalising the development plan. If the authorities were to hear all the parties with regard to all the suggestions made, give them separate and independent hearings, no development plan could ever be prepared. The authority was not concerned with considering the advantages or disadvantages which might accrue to a particular person or a group of persons owning lands in different parts of the area concerned, but it had to go by the larger interest of the population at large and the generations to come. The affidavits show that nothing was done haphazardly. Suggestions and objections at all stages were carefully considered, the assistance of committees of experts was taken and the plan emerged only after an immense amount of labour had been bestowed in its preparation. [297B D] (ii) There was enough guidance in the Town Planning Act to enable the Municipal Commissioner to come to a conclusion as to whether a particular commencement certificate should be granted or not and the power exercisable under sections 12 and 13 was neither uncanalised nor arbitrary. section 13 prescribes that the local authority should make an inquiry before granting or refusing a commencement certificate. The Authority must therefore look into all material available to it including the tentative plans and the final development plan and then make up its mind as to whether a commencement certificate should be granted or not. If the provisions of the Act are borne in mind and the rules framed thereunder complied with, there was little or no scope for the local authority acting arbitrarily under section 13 of the Act. [298A C] The fact that no appeal from the decision under section 13 was provided for is a matter of no moment for the authority under section 13 is no less than the Municipal Commissioner himself or the Chief Officer of the Municipal Borough or a person exercising the power of an Executive Officer of any local authority. when the ' power had to be exercised by one of the highest officers of the local authority intimately connected with the preparation of the development plan in all its stages, it is difficult to envisage what other authority could be entrusted with the work of appeal or revision. [297F H] (iii) In view of the immensity of the task of the local authorities to find funds for the acquisition of lands for public purposes, a period ' of ten years fixed by section 11 (3) was not too long. In the present case the authority had to deal with an area measuring about 169 sq. miles which was larger than most of the big cities in India. 276 The preparation of a development plan for such an area must take a considerable period of time. Furthermore, it is not beyond the range of possibility that the final development plan may require modifications. It could not therefore be held that the limit of time fixed under section 14 read with section 11(3) formed an unreasonable restriction on the right to hold property. [298G 229A] Joyti Pershad vs Administration for The Union Territory of Delhi, ; Manecklal Chhotalal & Ors. vs M. G. Makwana and Ors; W.P. 64/1966, cases, relied upon.

No. 281 of 1951. Appeal under article 132 of the Constitution of India from the Judgment and Order dated the 1st August, 1951, of the High Court of Judicature at Madras in Criminal Miscellaneous Petitions Nos.1261 and 1263 of 1951. K. Rajah Iyer (R. Ganapathy Iyer and M. section K. Aiyangar, with him) for the appellant/petitioners, 1145 H.J. Umrigar and section, Subramaniam for respondent No. 2. 1954. March 18. The Judgment of the Court was delivered by BOSE J. The question in this case is whether an appeal lies to this court under section 476B of the Criminal Procedure Code from an order of a Division Bench of a High Court directing the filing of a complaint for perjury. Two persons, Govindan and Damodaran, filed petitions under section 491 of the Criminal Procedure Code for release claiming that they had been illegally detained by two Sub Inspectors of Police who are the appellants before us. Govindan said he was being detained by one Sub Inspector and Damodaran said he was being detained by the other. Both the Sub Inspectors said that the petitioners were not in their custody. The first Sub Inspector, who was concerned with Govindan, said that Govindan had never been arrested by him and had not been in his custody at. any time. The other denied that Damodaran was in his custody. He admitted that he had arrested him at one time but said that he had been released long before the petition. Each swore an affidavit in support of his return. In view of this conflict between the two_ sets of statements the High Court directed the District Judge to make an enquiry. Considerable evidence was recorded and documents were filed and the District Judge reported that in his opinion the statements made by the two Sub Inspectors were correct. The High Court disagreed and, after an elaborate examination of the evidence, reached the conclusion that the petitioners were telling the truth and not the Sub Inspectors. The petitioners were however regularly arrested after their petitions and before the High Court 's order; one was released on bail and the other was remanded to jail custody by an order of a Magistrate. Accordingly their petitions became infructuous and were dismissed. After this, the petitioners applied to the High Court under section 476 of the Criminal Procedure Code and 1146 asked that the Sub InsPectors be prosecuted for perjury under section 193, Indian Penal Code. The applications were granted and the Deputy Registrar of the High Court was directed to make the necessary complaints. The Sub Inspeetors thereupon asked for leave to appeal to this court. Leave was refused on the ground that no appeal lies, but leave was granted under article 132 as an interpretation of articles 134 (1) and 372 of the Constitution was involved. The Sub Inspectors have appealed here against that order as also against the order under section 476. In addition, as an added precaution, they have filed a petition for special leave to appeal under article 136 (1). The first question we have to decide is whether there is a right. of appeal. That turns on the true meaning of section 476B of the Criminal Procedure Code read with section 195 (3). The relevant portion of the former reads thus : "Any person against whom a complaint has been made" [under section 476] "may appeal to the court to which such former court is subordinate within the meaning of section 195 (3). " The latter section reads "For the purpose of this section, a court shall be deemed to be subordinate to the court to which appeals ordinarily lie from the appealable decrees or sentences of such former court. . " The rest of the section does not concern us. Two things are evident. First, that a right of appeal has been expressly conferred by section 476B provided there is a higher forum to which an appeal can be made; and second that the appellate forum has been designated in an artificial way. The appeal lies to the court to which the former court is subordinate within the meaning of section 195 (3). But "sub. ordinate" does not bear its ordinary meaning. It is used as a term of art and has been given a special meaning by reason of the definition in section 195 (3): a fiction has been imposed by the use of the word "deemed". , We have accordingly next to examine the content of the fiction. 1147 The section says that the court making the order under section 476 shall be deemed to be subordinate to the court (a) to which appeals ordinarily lie (b) from the appelable decrees or sentences of such former court. Now the former court in this case is a Division Bench of the High Court. The only court to which an appeal ordinarily lies from the appealable decrees and sentences of a Division Bench of a High Court is this court. Therefore, a Division Bench of a High court is a court "subordinate" to this court within the meaning of section 195 (3); accordingly an appeal lies to this court from an order of a Division Bench under section 476. It was contended that there is no ordinary right of appeal to this court and that such rights as there are those expressly conferred by the Constitution in a very limited and circumscribed set of circumstances, therefore, such appeals as lie to this court cannot be said to lie "ordinarily". We do not agree. Such an argument concentrates attention on the word "ordinarily" and ignored the words "appealable decrees or sentences". Before we can apply the definition we have first to see whether there is a class of decrees or sentences in the court under consideration which are;at all open to appeal. If there are not, the matter ends and there is no right of appeal under section 476.B. If there are, then we have to see to which court those appeals will "ordinarily" lie. It is evident that the only court to which the appealable decrees and sentences of a Division Bench of a High Court can lie is the Supreme Court. There is no other court to which an appeal can be made. It follows that is the ordinary course in the case of all appealable decrees and sentences and that consequently this is the court to which such appeals will ordinarily lie. As there is a right of appeal we have next to consider the matter on its merits and there the only relevant consideration is whether "it is expedient in the interests of justice" that an enquiry should be 1148 made and a, complaint filed. That involves a careful balancing of many factors. The High Court has scrutinised the. evidence minutely and has disclosed ample material on which a judicial mind could reasonably reach the conclusion that there is matter here which requires investigation in a criminal court and that it is expedient in the interests of justice to have it enquired into. We have not examined the evidence for ourselves and we express no opinion on the merits of the respective cases but after a careful reading of the judgment, of the High Court and the report of the District Judge we can find no reason for interfering with the High Court 's discretion on that score. We do not intend to say more than this about the merits as we are anxious not to prejudge or prejudice the case of either side. The learned Judges of the High Court have also very rightly observed in their order under section 476 that they were not expressing any opinion on the guilt or innocence of the appellants. We were informed at the hearing that two further sets of proceedings arising out of the same facts are now, pending against the appellants. One is two civil suits for damages for wrongful confinement. The other,is two criminal prosecutions under section 344, Indian Penal Code, for wrongful confinement, one against each Sub Inspector. It was said that the simultaneous prosecution of these, matters will embarrass the accused. But after the hearing of the appeal we received information that the two criminal prosecutions have been closed with liberty to file fresh complaints when the papers are ready, as the High Court records were not available on the application of the accused As these prosecutions are not pending at the moment, the objection regarding them does not arise but we can see that the simultaneous prosecution of the present criminal proceedings out of which this appeal arises and the civil suits will embarrass the accused. We have therefore to determine which should be stayed. As between the civil and the criminal proceedings we are of the opinion that the criminal matters should 1149 be given precedence. There is some difference of opinion in the High Courts of India on this point. No hard and fast rule ban. be laid down but we do not consider that the possibility of conflicting decisions in the civil and criminal courts is a relevant consideration. The law envisages such an eventuality when it expressly refrains from making the decision of one court binding on the other, or even relevant, except for certain limited purposes, such as sentence or damages. The only relevant consideration here is the likelihood of embarrassment. Another factor which weighs with us is that a civil suit often drags on for years and it is undesirable that a criminal prosecution should wait till everybody concerned has forgotten all about the crime. The public interests demand that criminal justice should be swift and sure; that the guilty should be punished while the events are still fresh in the public mind and that the innocent should be absolved as early as is consistent with a fair and impartial trial. Another reason is that it is undesirable to let things glide till memories have grown too dim to trust. This,however, is not a hard and fast rule. Special considerations obtaining in any particular case might make some other course more expedient and just. For example, the civil case or the other criminal proceeding may be so hear its end as to make it inexpedient to stay it in order to give precedence to a prosecution order of under section 476. But in this case we are of the view that the civil suits should be stayed till the criminal proceedings have finished. The result is that the appeal fails and is dismissed but with no order about costs. Civil Suits Nos. 311 of 1951 to 314 of 1951, in the Court of the Subordinate Judge, Coimbatore, will be stayed till the conclusion of the prosecution under section 193, Indian Penal Code. As the plaintiffs there are parties here, there is no difficulty about making such an order. The petition for special leave is dismissed. Appeal dismissed.

IN-Abs

Held that an appeal is competent to the Supreme Court under section 476B of the Code of Criminal Procedure from an order of a Division Bench of a High Court directing the filing of a complaint for perjury. Also held that the simultaneous prosecution of civil and criminal proceedings regarding the same matter is likely to embarrass the accused and so ordinarily, and in the absence of special circumstances, the criminal proceedings should be given precedence and the civil proceedings should be stayed pending the termination of the criminal.

Appeal No. 29 of 1966. Appeal from the judgment and order dated April 30, 1964 of the Patna High Court in M.J.C. No. 498 of 1963. B. C. Ghosh and K. K. Sinha, for the appellant. section Mustafi and A. K. Nag, for respondent No. 3 P. K. Chatterjee, for respondent No. 4. 233 The Judgment of the Court was delivered by Wanchoo, C. J. This is an appeal on a certificate granted by the Patna High Court and arises in the following circumstances. The appellant. Jagdish Pandey, joined as a lecturer in Ramakrishna College Madhubani in July 1948. His appointment was approved by the University in June 1949, and on September 23, 1951 he was confirmed as a lecturer in that College. In July 1961 the post of the Principal of Pandaul College, Pandaul fell vacant and was advertised. The appellant was one of the applicants and was appointed after interview as the Principal of the college on January 22, 1962. On January 24, 1962, the appellant 's appointment as Principal of the College was approved by the University. It appears that the appointment was challenged by a writ petition before the Patna Court, but that challenge failed on July 11, 1962, when the petition was dismissed. In the meantime, the Bihar Legislature passed the Bihar State Universities (University of Bihar, Bhagalpur and, Ranchi) (Amendment) Act, No. 13 of 1962 (hereinafter referred to as the Act) which came into force on April 21, 1962. Section 4 thereof was in the following terms: "Certain appointments, etc., of teachers of nonGovernment affiliated colleges to be subject to Chancellor 's orders Notwithstanding anything contained in the said Act or the Magadh University Act, 1961 (Bihar Act IV of 1962) or the statutes made thereunder, or the Bihar State Universities (University of Bihar, Bhagalpur and Ranchi) Ordinance, 1962, (Bihar Ordinance No. 1 of 1962) every appointment, dismissal, removal, termination of service or reduction in rank of any teacher of a college, not belonging to the State Government, affiliated to the University established under the said Act or the Magadh University Act, 1961 (Bihar Act IV of 1962) made on or after the twenty seventh day of November, 1961 and before the first day of March, 1962, shall be subject to such order as the Chancellor of the University may, on the recommendation of the University Service Commission established under section 48A of the said Act, pass with respect thereto. " This Act was passed to amend the Bihar State Universities (University of Bihar, Bhagalpur and Ranchi) Act, No. 14 of 1960, The reason for making the amendment as stated in the statement of objects and reasons was this. The Bihar State Universities Act, No. 14 of 1960, was amended by Bihar Act II of 1962 and section 48 A was introduced therein. That section provided for the establishment of a University Service Commission (hereinafter referred to as the Commission) for affiliated colleges not belonging to the State Government. Sub section (6) of section 48 A provided that "subject to the approval of the University, appointments, dismis 234 teachres of an affiliated college not belonging to the State Government shall be made by the governing body of the college on the recommendation of the Commission. " In effect thereafter no appointment, dismissal, etc., could be made after section 48 A came into force without the recommendation of the Commission. This section came into force on March 1, 1962, but the report of the Joint Select Committee, which resulted in the enactment of section 48 A, was made on November 27, 1961. The statement of objects and reasons of the Act stated that several reports had been received by Government that the Governing Bodies of affiliated colleges had made a very large number of unnecessary appointments and unwarranted removals from service in order to avoid scrutiny of such cases by the Commission. It was to meet this situation that an Ordinance was first promulgated which made obligatory for the Governing Bodies to submit for the scrutiny of the Commission, the cases of appointments, dismissals, removals etc. of teachers which occurred between November 27, 1961 and March 1, 1962. The Act replaced that Ordinance. After the Act came into force, the appellant received an order dated August 18, 1962 from the Chancellor of the University to the effect that the Chancellor had been pleased to approve, under section 4 of the Act, on the recommendation of the Commission the appointment of the appellant as Principal of the Pandaul College till November 30, 1962 or till the candidate recommended by the Commission joined, whichever was earlier. It seems that before this, a similar order had been passed with respect to another teacher of Ramakrishna College Madhubani on May 31, 1962, and that order was challenged in the Patna High Court on the ground that the teacher in question had not been heard before the order was made and therefore the order was bad as it violated the principles of natural justice. That case was decided by the High Court on April 23, 1963 and the order in question was struck down on the ground that it violated principles of natural justice. Further in that case the validity of section 4 of the Act was also challenged but that question was not decided. (See Ram Kripalu Mishra vs University of Patna)(1). It seems that it was realised sometime in October or Novem ber, 1962 that the order of August 18, 1962 in the case of the appellant might be similarly challenged; so on November 8, 1962 the Commission gave notice to the appellant to show cause why the Commission should not recommend to the Chancellor that there was no adequate justification or reason for the Chancellor to modify the order already passed on August 18, 1962. This was a composite notice to the appellant and several other teachers with whose cases we are not concerned. The body of the notice shows various grounds on which the notice was issued, but it did not (1) A.I.R. 1964 Patna, 41. 235 indicate which particular ground applied to the appellant. e must say that we should have expected a better notice than this from the Commission. The notice should have been addressed to each teacher separately indicating the particular ground on which the notice was given as against him. However, the appellant replied to the notice and controverted all the grounds mentioned therein, though it now appears from the final order which was passed on February 18, 1963 that the only ground that concerned him was that he was not academically qualified for appointment as Principal of the College on the date of the selection by the governing body. The appellant seems to have been given a hearing by the Commission and eventually on February 18, 1963 the Chancellor passed another order which purported to modify the order of August 18, 1962 insofar as it related to the appellant. The modification was that the appellant would be given a year or two to appear at the examination to enable him to obtain a second class Master 's Degree , otherwise his services would be terminated. Thereupon the appellant filed a writ petition in the High Court challenging both the orders of August 18, 1962 and February 18, 1963. Three main grounds were urged by the appellant in this con nection. It was first urged that section 4 of the Act was ultra vires, as it violated article 14 of the Constitution. Secondly, it was urged that the order of August 18, 1962 violated the principles of natural justice and it could not be modified after November 30, 1962 as it had worked itself out and there was no power of review given to the Chancellor under section 4 and further that proceedings based on the notice issued on November 8, 1962 by the Commission were a mala fide device to get over the infirmity in the order of August 18, 1962. Thirdly, it was urged that in view of ch. 16 r. (1) of the Statutes of the University, the appellant must be deemed to have the minimum qualification for the post of the Principal and therefore the order of February 18, 1963 requiring him to appear at an examination to obtain a Second Class Master 's degree or in the alternative requiring that his services be terminated was bad. The petition was resisted on behalf of the Chancellor and the University. The High Court rejected all the three contentions and dismissed the petition, but granted a certificate to appeal to this Court; and. that is how the matter has come before us. The three points raised in the High Court have been urged before us in support of the appellant 's contention that the two orders dated August 18, 1962 and February 18, 1963 are liable to be quashed. We shall first consider whether section 4 is ultra vires article 14 of the Constitution. The first ground in that behalf is that the dates mentioned in section 4 were completely arbitrary and therefore there was no valid classification to uphold the validity of the section. There is no doubt that if the dates are arbitrary, 236 section 4 would be violative of article 14, for then there would be no justification for singling out a class of teachers who were appointed or dismissed etc. between these dates and applying section 4 to them while the rest would be out of the purview of that section. But we are of opinion that the dates in section 4 cannot be said to be arbitrary. We have already referred to the statement of objects and reasons which gives the reasons for the enactment of section 4. We are entitled to look into those reasons to see what was the state of affairs when section 4. came to be passed and whether that state of affairs would justify making a special provision for teachers appointed, dismissed etc. between the two dates specified therein. The reason for these two dates appears to be that a bill for the establishment of the Commission which would have the effect of curtailing the powers of the governing bodies of affiliated colleges was on the anvil of the legislature. The report of the Joint Select Committee in that connection was made on November 27, 1961. Act II of 1962 was passed after the report of the Joint Select Committee on January 19, 1962 and section 48 A with respect to the Commission was actually put into force from March 1, 1962. The statement of objects and reasons also shows that irregularities had been brought to the notice of the Government as to appointments, dismissals etc. during this period and that led to the enactment of section 4 of the Act by the legislature. In these circumstances it cannot be said that these dates in section 4 are arbitrary. Taking the circumstances as they were when section 4 came to be enacted and enforced, it cannot be said that teachers appointed etc. between these two dates did not form a class that would have nexus with the object to be achieved. In these circum stances we must hold that section 4. cannot be struck down, on the ground that it has fixed two arbitrary dates and has visited teachers appointed, dismissed etc. between these two dates with a differential treatment as compared to teachers appointed before November 27, 1961. The next attack on the validity of section 4 is that it confers uncanalised powers on the Chancellor without indicating any critedon on the basis of which the power under section 4 can be exercised. There is no doubt that if one reads section 4 literally it does appear to give uncanalised powers to the Chancellor to do what he likes on the recommendation of the Commission with respect to teachers covered by it . We do not however think that the Legislature intended to give such an arbitrary power to the Chancellor. We are of opinion that section 4 must be read down and if we read it down there is no reason to hold that the legislature was conferring a naked arbitrary power on the Chancellor. It seems to us that the intention of the legislature was that all appointments, dismissals etc. made between the two dates should be scrutinised and the scrutiny must be for the purpose of seeing that the appointments, dismissals etc., were in accordance with the University Act and the. Statutes, Ordinances, Regulations and Rules 237 framed thereunder, both in the matter of qualifications, and in the matter of procedure prescribed for these purposes. We do not think that the legislature intended more than that when it gave power to the Chancellor to scrutinise the appointments, dismissals, etc. made between these two dates. We have therefore no hesitation in reading down the section and hold that it only authorises the Chancellor to scrutinise appointments, dismissals etc. made between these two dates for the purpose of satisfying himself that these appointments, dismissals etc., were in accordance with the University Act and the Statutes, Ordinances, Regulations or Rules made thereunder, both as to the substantive and procedural aspects thereof. If the appointments etc. were in accordance with the University Act etc., the Chancellor would uphold them, and if they were not, the Chancellor would pass such orders as he deemed fit. Read down this way, section 4 does not confer uncanalised power on the Chancellor; as such it is not liable to be struck down as discriminatory under article 14. It is then urged that no provision was made in section 4 for hearing of the teacher before passing an order thereunder. Now section 4 provides that the Chancellor will pass an order on the recommendation of the Commission. It seems to us reasonable to hold that the Commission before making the recommendation would hear the teacher concerned, according to the rules of natural justice. This to our mind is implicit in the section when it provides that the Commission has to make a recommendation, to the Chancellor on which the Chancellor will pass necessary orders. If an order is passed under section 4 even though on the recommendation of the Commission but without complying with the principles of natural justice, that order would be bad and liable to be struck down as was done by the Patna High Court in Ram Kripalu Mishra vs University of Bihar(1). But we have no difficulty in reading section 4 as requiring that the Commission before it makes its commendation must hear the teacher concerned according to principles of natural justice. Reading the section therefore in this way and that is the only way in which it can be read we are of opinion that it cannot be struck down under article 14 of the Constitution as discriminatory. Then it is urged that section 4 does not provide for approval by the University of the Chancellor 's order while section 48 A(6) does, and it is therefore discriminatory. We are of opinion that section 4 was enacted, to meet a particular situation as we have already indicated above, and in that situation the approval by the University of the Chancellor 's order would be quite out of place. Section 4 cannot be struck down as discriminatory on this ground. We therefore read section 4 in the manner indicated above both as to the limit of the Chancellor 's power while passing an order thereunder and as to the necessity of the Commission giving a hearing (1) A.I.R. 1964 Pat. 238 to the teacher concerned before making the recommendation, and so read we are of opinion that section 4 cannot be held to be discriminatory and as such liable to be struck down under article 14 of the Constitution. This brings us to the next point, namely, that the order of August 18, 1962, violated the principles of natural justice and was therefore bad. It is not the case of the respondents that the appellant was heard before the said order was passed, and if that order stood by itself it would be bad as the appellant was not given a hearing before it was. passed and the decision of the Patna High Court in Rain Kripalu Mishra(1) would apply. What happened in this case was that at some stage it was realised that the appellant should be given a hearing before an order was passed against him under section 4. Therefore the appellant was given a hearing by the Commission on a notice issued on November 8, 1962 to show cause. It is true that the subsequent proceedings were in form as if they were for the review or modification of the order of August 18, 1962 and it is doubtful whether section 4 provides for review of an order once passed. It seems to us that in substance what happened was that the order of August 18, 1962 was not given effect to when it was realised that it might be illegal and thereafter action was taken to give notice to the appellant and a hearing before passing an order under section 4. Here again the order of February 18, 1963 is in form an order modifying the order of August 18, 1962, but in substance it should be taken as a fresh, order under section 4 after giving opportunity to the appellant to represent his case before the Commission. The order made on February 18, 1963 therefore cannot be said to suffer from the defect that it was passed without observing the principles of na tural justice. As for the order of August 18, 1962, it must be taken to have fallen when action was taken to give notice to the appellant on November 8, 1962 and pass a fresh order on February 18, 1963 after giving a proper hearing. In the circumstances it is not necessary to quash the order of August 18, 1962, for it fell when further proceedings were taken after notice to the appellant. Further as to the order of February 18, 1963 it must be treated to be a fresh order and as it is not defective on the ground that the principles of natural justice had been violated, it cannot be struck down on that ground. This brings us to the last contention raised on behalf of the appellant. The order of February 18, 1963 shows that the only defect that was found in the appointment of the appellant as Principal of the Pandaul College was that he was not a second class M.A. It appears that according to chapter 16, r. (1) of the Statutes, the minimum qualification for the appointment of Principal is a second class Master 's degree and at least ten years,, (1) A.I.R. 1964 Pat. 239 teaching experience in a college of which at least seven years must be in a degree college or five years ' experience as Principal of an Intermediate College. It is not disputed, that the appellant had ten years ' teaching experience in a college of which sever,, years were in a degree college. But it appears that the appellant had a third class Master 's degree and therefore did not satisfy the qualification that a Principal should have a second class Master 's degree. The appellant relies on sub r. (6) of r. (1) which is in these terms: "Notwithstanding anything in the Article, the qualifications of a teacher already in service and confirmed before the 1st July 1952 shall be considered to be equivalent to the minimum qualifications for the post he holds. " The appellant was confirmed before July 1, 1952. It is therefore contended on his behalf that in view of sub r. (6), he must be deemed to have the minimum qualification for a lecturer, which, according to sub r. (1) is a second class Master 's degree. Once therefore it is deemed under sub r. (6) that he had a second class Master 's degree, it follows that that deeming must continue when he is appointed Principal for which also the minimum qualification is second class Master 's degree with certain experience. The High Court has however held that sub r. (6) would only mean this that the appellant had a second class Master 's degree for the purpose of the post of a lecturer in Ramakrishna College and that sub rule could not mean that for the purpose of appointment as a Principal of the Pandaul College, the appellant would be deemed to have a second class Master 's degree. The High Court therefore held that as the appellant did not fulfil the minimum qualification for the post of a Principal, his appointment was irregular under the Statutes and the Chancellor would have the power to pass such order as he thought fit under section 4. We are unable to accept this construction of sub r. Rule (1) of chapter 16 of the Statutes provides for the grades, pay scales and qualifications of teachers. This sub rule is prospective in operation meaning thereby that the minimum qualifications thereunder would be required for future appointments. Further nothing has been brought to our notice in the Statutes to show that teachers appointed before July 1, 1952 would be liable to removal on the ground that they did not possess the minimum qualifications. This means that sub r. (6) was not necessary in order that teachers appointed and confirmed before July 1, 1952 who did not fulfil the minimum qualifications then being prescribed should continue in service. Obviously those teachers would have continued in service even without sub r. Therefore, the view of the High Court that sub r. (6) was made for the purpose of allowing teachers with less than the minimum qualifications to continue in the post which they actually held at the time the 240 Statutes were passed cannot be accepted. If that was the intention of sub r. (6), we would have found its language very different It would then have provided that teachers already in service and confirmed before July 1, 1952 would continue in their present posts even though they did not fulfil the minimum qualifications. But the language of sub r. (6) is very different. It begins with a non obstante clause and says in effect that whatever may be the actual qualification of the teacher appointed and confirmed before July 1, 1952 that qualification will be considered to be equal to the minimum qualification for the post he holds. The words "for the post he holds" are only descriptive and mean that if a person holds the post of a lecturer, his actual qualification will be considered to be equal to the minimum qualification of the lecturer; if he happens to hold the post of a Principal, his actual qualification will be considered to be equal to the minimum qualification required for the post of the Principal, even though in either of these cases the actual qualification is less than the minimum qualification. The obvious intention behind sub r. (6) was to safeguard the interest of teachers already appointed and confirmed before July 1, 1952, and that is why we find language which lays down that even though the actual qualification may be less than the minimum, that will be considered equivalent to the minimum. Once that equivalence is established by sub r. (6), and it is held that even though the actual qualification was less, it was equal to the minimum qualification as provided by sub r. (1), we fall to see how that deemed qualification can be given a go by in the case of further promotion or appointment. The appellant was a lecturer in Ramakrishna College, and though he had only a third class Master 's degree, sub r. (6) provided that that third class Master 's degree must be treated as equivalent to the minimum qualification necessary for the lecturer 's post i.e., a second class Master 's degree. Therefore, it must be held that from the date the sub rule came into force, the appellant, though he actually had a third class Master 's degree, must be deemed to have a second class Master 's degree, which was the minimum qualification for the lecturer 's grade. Nothing has been pointed out to us in the Statutes which would take away this deemed qualification thereafter. We cannot therefore agree with the High Court that when sub r. (6) says that a teacher appointed and confirmed before July 1, 1952 would be deemed to have the minimum qualification though in fact he does not have it it only provides for this deeming so long as he held the particular post he was holding on the date the Statutes came into force. That in our opinion is not the effect of the words "the post he holds", for these words are only descriptive and have to be there because the provision in r. (1) (1) referred to three categories, namely, lecturers, professors and principals. 'We may in this connection refer to sub r. (5) which shows that even if in future candidates with minimum qualification are not available, the 241 A Syndicate can relax the minimum qualification, thus indicating that the minimum qualifications are not absolutely rigid. But apart from this it appears to us that sub r. (6) was made for the protection of teachers who were appointed and confirmed before July 1, 1952 and by this deeming provision gave them the minimum qualifications and if that was so that must be for all pur poses in future. If this were not the interpretation of sub r. (6) another curious result would follow inasmuch as a lecturer could be appointed a college professor for which a second class Mas ter 's degree was not made the minimum qualification under sub r. (1) but he could not be appointed a Principal on the interpretation pressed before us on behalf of the respondents. We should have thought that a good degree would be more necessary in the case of a professor whose main work is teaching than in the case of a principal whose main work is administrative. However that may be, we are of opinion that sub r. (6) is meant for the protection of teachers who were appointed and confirmed before July 1, 1952 and it confers on them a qualification by its deeming provision and that must enure to their benefit for all time in future for the purpose of promotion or appointment to a higher grade in another college. Another curious result would follow if the interpretation accepted by the High Court is correct. The High Court as we have pointed out above has held that sub r. (6) give equivalence only for the particular post held by a teacher appointed and confirmed before July 1, 1952. Suppose that a lecturer in one college who holds a third class Master 's degree and is entitled to remain as lecturer in that college, for some reason is appointed to another college after the Statutes came into force. This would be a new appointment and such a lecturer could not be appointed in a new college because he would not have a second class Mas ter 's degree for the new appointment. It seems to us therefore that the intention of sub r. (6) was not that for the purpose of the particular post actually held the equivalence would prevail but no more. We are of opinion that sub r. (6) must be read as a protection to the teachers who were appointed and confirmed before July 1, 1952 and by fiction it gave the minimum qualification even though they may not actually have. That minimum qualification must therefore remain with them always for the future, for nothing has been brought to our notice which takes away that minimum qualification deemed to be conferred on the teachers by sub rule (6). We are therefore of opinion that the order dated February 18, 1963 passed by the Chancellor requiring the governing body of the Pandaul College to give the appellant a year or two to appear at an examination to enable him to obtain a second class Master 's degree, otherwise his services might be terminated, is not valid, for the appellant must be deemed to have the minimum qualification of a second class Master 's degree by 412 virtue of sub rule (6) of the Statutes and as such he was qualified A for appointment as Principal of Pandaul College. We therefore allow the appeal, set aside the order of the High Court and allowing the writ petition quash the order of the Chancellor dated February 18, 1963 in respect of the appellant. The appellant will get his costs from the respondent University. R.K.P.S Appeal allowed.

IN-Abs

The appellant was appointed as a lecturer in 1952 of a non Government College affiliated to the Bihar University and later as Principal of another college. Both these appointments were approved by the University. The Bihar State Universities (University of Bihar, Bhagalpur and Ranchi) (Amendment) Act 13 of 1962 came into force in April 1962, section 4 of which provided that every appointment, dismissal, etc., of any teacher of a college not belonging to the State Government affiliated to the University made after the 27th November, 1961 and before 1st March, 1962 shall be subject to such order as the Chancellor of the University, on the recommendation of the University Service Commission, may pass. Thereafter, the appellant received an order dated August 8, 1962, from the Chancellor to the effect that he had been pleased to approve under section 4 of the Act, on the recommendation of the Commission, the appointment of the appellant as Principal till November 30, 1962 or till the candidate recommended by the Commission joined, whichever was earlier. Subsequently, as ' it was realised that the order of August 18. 1962 Might be successfully challenged on the ground that the appellant had not been given an opportunity for a hearing, the Commission gave the appellant a show cause notice on November 8, 1962 and after he was given a hearing the Chancellor passed another order on February 18, 1963 which purported to modify the order of August 18, 1962; the modification was to the effect that the appellant would be given a year or two to sit for an examination and obtain a second class Master 's degree which was the minimum qualification for the post of Principal, failing which his services would be terminated. The appellant filed a writ petition in the High Court challenging both the orders of August 18, 1962 and February 18, 1963 on the grounds, inter alia; (i) that under sub rule (6) of Rule (1) of Chapter 16 of the Statutes of the University, which provided that notwithstanding any other requirements the qualifications of a teacher already in service and confirmed before the 1st July, 1962, shall be considered to be equivalent to the minimum qualifications for the post he holds, the appellant must be deemed to have the minimum qualifications for a lecturer i.e. a Second Class MaSter 's degree. and that this deeming would continue when he was appointed Pricipal for which also the minimum qualification was a Second Class Master 's degree with certain experience; (ii) that section 4 of the Act was violative of article 14 of the Constitution. and (iii) that the order of August 18, 1962 violated the principles of natural justice and it could not be modified after November 30, 1962 as it had worked itself out 231 232 and there was no power of review given to the Chancellor under section 4. The High Court dismissed the petition. On appeal to this Court, HELD: allowing the appeal, (i) The Chancellor 's order of February 18, 1963 giving the appellant time to appear at an examination to enable him to obtain a second class Master 's degree failing which his services would be terminated was invalid. The appellant must be deemed to have the minimum qualifica tion of a second class Master 's degree by virtue of sub rule (6) of the Statutes and as such he was qualified for appointment as Principal. Sub r. (6) must be read as a protection to the teachers who were appointed and confirmed before July 1, 1952 and by fiction it gave them the minimum qualification even though they may not actually have it. That minimum qualification must therefore remain with them always for the future. for there was nothing to show that it was taken away. [241G 242A]. (ii) Section 4 was not discriminatory and violative of article 14 of the Constitution on the ground that it fixed two arbitrary dates and had visited teachers appointed, dismissed etc. between these two dates with a differential treatment as compared to teachers appointed before November 27, 1961. The report of the Joint Select Committee recommending the establishment of the University Service Commission which would have the effect of curtailing the powers of the governing bodies of affiliated colleges was published on November 27, 1961 and after the passing of Act II of 1962, section 48 A with respect to the Commission was actually put into force from March 1, 17962. Many irregularities as to appointments, dismissals etc., during this period were brought to the notice of the government and this led to the enactment of section 4 of the Act. It cannot therefore be said that teachers appointed etc. between these two dates did not form a class that would have a nexus with the object to be achieved. [236B F]. Furthermore, section 4 only authorises the Chancellor to scrutinise appointments. dismissals etc. made between these two dates for the purpose of satisfying himself that these were in accordance with the University Act and the Statutes, etc. Read this way, section 4 cannot be said to confer uncanalised power on the Chancellor. [237A C]. Although section 4 makes no provision for giving the teacher a hearing before passing an order thereunder, it must be read as requiring that the Commission must act according to principles of natural justice and must hear the teacher concerned before making its recommendation. [237 D E]. (iii) The order of August 18, 1962 must be taken to have fallen when action was taken to give notice to the appellant on November 8, 1962 and a fresh order passed on February 18. 1963. The latter order must be treated as a fresh order which was passed after giving the appellant a hearing and which was not therefore defective on the round that principles of natural justice had been violated. [238G].

Appeals Nos. 147 & 148 of 1966. Appeals from the judgment and decree dated November 15, 1960 of the Patna High Court in Appeal from Original Decree No. 212 of 1961. D. P. Singh, K. M. K. Nair and section P. Singh, for the appel lants (in C.A. No. 147 of 1966) and respondent No. 2 (in C.A. No. 148 of 1966). A. K. Sen, K. K. Sinha and R. P. Katriar, for the appellant (in C.A. No. 148 of 1966). section T. Desai, R. Chaudhuri, P. K. Chatterjee and Arun Chandra Mitra, for respondent No. 1 (in both the appeals). The Judgment of the Court was delivered by Shah, J. Subodh Gopal Bose hereinafter called 'the plaintiff ' commenced an action in the Court of the Subordinate Judge, Sasaram, against four defendants the State of Bihar, the Collector of Shahabad, the Additional Sub Divisional Officer Sasaram, and Dalmia Jain & Company Ltd. , for a decree declaring that he was entitled to quarry limestone for trade purposes from the Murli Hills described in the Schedule annexed to the plaint, and for an injunction restraining the defendants from dispossessing the plaintiff or granting, a lease of the land to any other person. In the Schedule, the two properties in respect of which relief was claimed were: (i) the Upper Murli Hill admeasuring 137 acres together with subsoil and mineral rights situate in pargana Rohtas bearing Touzi No. 4769 Tahsil Circle Sasaram, and (ii) the Lower Murli Hill comprising an area of 250 bighas within the Banskati Mahal together with the surface, subsoil and mineral rights situate in pargana Rohtas, Touzi No. 4771 Tahsil Circle Sasaram. The trial Court dismissed the suit. In appeal the High Court of Patna modified the decree passed by the trial Court and declared that the plaintiff was entitled to quarry limestone for trade purposes from the Lower Murli 315 Hill, "subject to the right which the owner of the Banskati Mahal had therein as set out in the judgment", and restrained the defendants by a permanent injunction from dispossessing the plaintiff from the Lower Murli Hill described in the Schedule annexed to the plaint. With certificate granted by the High Court, the State of Bihar and the Dalmia Jain and Company Ltd. have separately appealed. By his plaint the plaintiff claimed that he was a tenant in possession of 250 bighas of land of the "Lower Murli Hill" within the Banskati Mahal and that he was in possession of the Upper Murli Hill as the local agent of the Kuchwar Company which held lease$ for twenty years from April 1, 1928 to March 31, 1948, for quarrying limestone and that under the covenant for renewal in the said leases, the Kuchwar Company had remained in possession of the upper Murli Hill and the State of Bihar had accepted rent from the Company and had otherwise assented to the Company remaining in possession. The plaintiff also claimed that by immemorial custom and usage recognized by the survey authorities the plaintiff as a tenant of land within the Banskati Mahal had a right to quarry and remove limestone for trade purposes. The Court of First Instance held that at the date of the suit, the plaintiff was in occupation of 250 bighas of land in the Lower Murli Hill, but he was proved to have derived tenancy rights from the Zamindar only in respect of plot No. 168 of Baknaur and plots Nos. 42, 128, 130 and 44 of Samahuta. The Court further held that 32.50 acres out of plot No. 44 of Samahuta were acquired for the Dehri Rohtas Light Railway Company and the plaintiff 's right derived from the Zamindar was pro tanto extinguished. The Court also held that the lease in favour of the Kuchwar Company was not renewed, that the customary right to excavate minerals for trade purposes claimed by the plaintiff in the Lower Murli Hill was not proved, that the minerals in the Lower and Upper Murli Hill were vested in the State of Bihar and the plaintiff was merely a licensee from the State in respect of the Upper Murli Hill and was not a tenant holding over. In appeal to the High Court of Patna the claim to excavate minerals from the Upper Murli Hill was not pressed by the plaintiff. It was also conceded by the plaintiff that he was, as found by the trial Court, a tenant from the Zamindar only of five plots one in Baknaur and the other four in Samahuta. The finding that at the date of the suit, the plaintiff was in occupation of 250 bighas of land was not challenged on behalf of the defendants. In the view of the High Court the right to the minerals in the Lower Murli Hill vested in the Zamindar and not in the State, and the Banskati right was merely an incorporeal right to levy tax on the removal of "various spontaneous products and minerals, and did not extend to a right of ownership in the products and. the minerals. " The High Court also held that the custom pleaded by the plaintiff of the right to take for trade purposes limestone from the quarries within the Banskati Mahal was prov 316 ed. The High Court confirmed the decree passed by the trial Court insofar as it related to the claim to excavate, limestone from the Upper Murli Hill and decreed the claim for a declaration that the plaintiff had the right to quarry limestone and manufacture lime from the Lower Murli Hill and to carry on trade in limestone, "subject to the right which the owner of the Banskati Mahal had of levying duty on the products removed", and for an injunction restraining the defendants from interfering with the plaintiffs possession of the Lower Murli Hill. [His Lordship after discussing the evidence, held that "It is sufficient to record that there is no evidence on the record of specific instances of the tenants of the villages having ever exercised the right to excavate limestone from the slopes of the Lower Murli Hill for domestic, agricultural or trade purposes" and proceeded]: The High Court placed very strong reliance upon the entries in the Custom Sheet prepared under the Bihar Tenancy Act, 1885. Section 102 of the Act, provides, inter alia. "Where an order is made under section 101, the particulars to be recorded shall be specified in the order, and may include, either without or in addition to other particulars, some or all of the following, namely: . . . . . . (h) the special conditions and incidents, if any, of the tenancy. " At the Cadastral Survey which was completed in 1913, a record of customs and practices was prepared. Exhibits 11, 11 (a) and 11 (b) are the "Custom Sheets" in respect of the three villages Baknaur, Samahuta and Murli Hill (Upper Murli Hill). In respect of the villages Baknaur and Upper Murli Hill the Custom Sheets are in the form of questions and answers. Questions 12 & 13 and the answers thereto in the Custom Sheet of Baknaur may be set out: "12. Whether or not the rai On obtaining free pass they yats have any right to can bring (stone) for construc take away stone, if there tion of house and well. is one, what is that? 13.Whether the raiyats have They can prepare lime for any right to take away cultivation work from the forests lime, lac, or any other in the Mahal. Nothing is forest product. If they realised for it. If they pre have one, what is that? pare lime for sale purposes, fee is realised according to Schedule vide Memo. No. 270 dated 14 12 1904; and lac jungle is made settlement. " By the Schedule of fees, "stone chips" were chargeable at rates varying between /4/ 4 and /1/1 per ton and big stones for construction of houses were chargeable at the rate of Rs. 1/2/ per hundred. In Ext. II (b) relating to the Upper Murli Hill in answer to question No. 12 it was recorded that the Hill "has been given in B settlement i.e. in thika: " only the tenants can get stone chips from the Hill. In answer to Question No. 13 it was recorded that "the 317 basti is unpopulated: the Hill has been let out in settlement: the people of the village cannot prepare lime from the Hill of this Mauza, but they can prepare lime from the Hill of other Mauzas of this Mahal for cultivation purposes. " In Ext. 11(a) which relates to the village Samahuta, the relevant entries which are in narrative form are as follows: "The residents take away stones for constructing houses and wells and prepare lime for their personal use without paying any fee and for sale they pay fees according to the rates entered in the Schedule. Thika settlement is made in respect of lac. " Relying upon these entries the High Court held that the right to trade in limestone was vested by custom in the tenants in the Banskati Mahal. We are unable to accept this interpretation of the Custom Sheets. 'The record is merely a catalogue of practices and privileges of the tenants in the villages within the Banskati Mahal,there is nothing to show that it was recorded that the practices and privileges were exercised as a matter of right by the villagers. Un doubtedly the record has presumptive value. But the revenue authorities were concerned to ascertain the existing state of affairs and not to determine whether the practices and privileges were ancient, certain, reasonable and continuous. As evidence of local custom, the custom sheets have therefore not much value. There are again inherent indications in the custom sheets that the exercise of the privileges recorded therein was permissive. Harbans Rai descenent of Raja Shah Mal had imposed duties on the removal of forest produce and the minerals. There is no record of the nature of the duties imposed in the days of Harbans Rai and of exemptions, if any. The entries in the custom sheets indicate that the forest produce and minerals taken by the tenants in the village were subject to certain duties. Imposition of duties upon forest produce and minerals was evidently in exercise of signorial rights. In the custom sheets of the villages Baknaur and Samahuta it is recorded that the tenants "take minerals and forest produce" for domestic and agricultural purposes, but if they prepare lime for sale they have to pay duties. Recognition of the practice of taking stone and forest produce for domestic purposes without payment of duty is easily explained. In a predominantly agricultural commuinity it would have been regarded as churlish, for the Zamindar who was for all practical purposes the local representative of the Ruler to deny to the tenants of lands the facility of taking articles of small value for domestic or agricultural purposes. Acceptance of liability to pay duties on forest produce and minerals taken for purposes other than domestic or agricul tural, is destructive of the claim of a right to take the articles: it indicates that the removal was permissive being only on payment of duty. The custom sheet of the Upper Murli Hill recites that because the Hill had been let out the tenants cannot prepare lime from 318 the Hill of the Mauza lends strong support to that view. Again the recitals in Exts. 11 and 11 (a) that a thika settlement was made in respect of "lac" also leads to that inference: it clearly implies that the tenants could not take "lac" from the forest because of the grant of a thika contract. The evidence therefore shows that even the practices recorded in the custom sheets were followed so long as the Government had not disposed of the corpus in favour of the contractors. The duties set out in the Schedules to the Custom Sheets are also not shown to be permanently fixed. The Schedule of fees mentioned in the Custom Sheets was apparently published on December 14, 1904, and there is no evidence that it was merely a record of fees levied since the days of Harbans Rai. From the answer to question No. 4 in the Custom Sheets it appears that the Government had treated the forest as a protected forest under a notification dated June 30, 1909, and that implies that restrictions were imposed upon the taking and disposal of forest produce. The report dated December 17, 1909 by Jagdum Sahai a Revenue Officer that "as the custom throughout the Rohtas Pargana has been that the Zamindars and the cultivators and raiyats in all the villages in which the Government had its Banskati rights could take free of Government duty any quantity of timber, lime and stone etc. for their domestic and agricultural purposes within the limits of their own village, it was difficult to prevent or check the people of Samahuta Gurmain, and Baknaur from entering into the pure Khas Mahal portion of this Hill to which they had no right for want of distinct marks of its boundary", does not even by implication support a right to take forest produce and limestone for trade purposes. The record of customs and practices is in respect of Banskati Mahal and the area which originally extended over 500 sq. miles, was later reduced to 200 sq. miles, and consisted of 108 villages. The Custom Sheets recorded that the villagers were accustomed to take dry wood, timber and bamboo for agricultural purposes Ind for construction of houses and that was permitted free of charge. Assuming that a customary right in that behalf is established, removal of forest produce for other purposes with permits and on payment of duty fixed by the authorities cannot be said to be in exercise of a right. The conditions of obtaining permit and payment of fee for removal of the forest produce and limestone for purposes other than domestic and agricultural indicate that the removal was not as of right, but depended upon the sanction of the authorities in whom the right to the Banskati was vested. In Ext. 11 (a) the privilege recorded is of "residents" to take away stones for constructing houses and wells and prepare lime for their personal use without paying any fee, and for sale they had to pay fees according to the rates entered in the Schedule. Granting that the expression "residents" means tenants, if the privilege to take forest produce and stone is being subject to conditions of obtaining permits and payment of fee it cannot be regarded as a right enforceable against the State. 319 In the plained it was it was claimed that by immemorial customs and usage, the tenants in the Banskati Mahal had a right to quarry and remove limestone and manufacture lime from the quarries and hills within the Mahal. The plea apparently was that all tenants within the Banskati Mahal had the right to quarry and remove limestone and manufacture lime from all the limestone quarries and Hills within the Mahal and to carry on trade therein. Counsel for the plaintiff in this Court did not press for acceptance of this somewhat audacious claim and conceded that the right which the plaintiff merely claimed, notwithstanding the unguarded phraseology used in the plaint, was that: a tenant of a village within Banskati Mahal is "entitled under customary law to carry on quarrying operations for trade purposes on any forest (waste land) of the village irrespective of whether" he is "a tenant in respect of such forest land or not. " Counsel said that the right claimed by the plaintiff is exercisable only by tenants in the quarries and hills in their village and belonging to the Zamindar and not in other villages of the Banskati Mahal. This case was not pleaded in the plaint. Even if it be assumed that the plaintiff intended to set up a right not as extensive as it was pleaded, and intended to restrict it only to the quarries and hills of the Zamindar in the village in which the tenant claiming the right resided, in our judgment, a customary right to quarry stone out of the Lower Murli Hill and to manufacture lime from limestone for trade proposes is not supported by the customsheets. We are not concerned in this case with the privilege of the tenants of taking for agricultural or domestic purposes pieces of stones either lying on the surface or even underneath the surface. Whether that would amount to a customary right enforceable against the owner of the surface and the minerals is a matter on which we do not feel called upon to express any opinion. The privilege of taking limestone for domestic and agricultural purposes is one privilege : the privilege of taking limestone for manufac turing lime by an agriculturist, even if it be for sale, with his primitive methods is another privilege, and the privilege of commercial exploitation of more than a hundred thousand tons 'of limestone a year to be extracted out of the Lower Murli Hill with the aid of machinery is quite a different privilege and even the most liberal interpretation of the custom sheets will not be evidence of the exercise or grant of the last privilege. Therefore, the customary right pleaded in the plaint that every tenant of any land covered by the Banskati Mahal was entitled to take limestone out of any quarry in any hill in Banskati Mahal and to trade in stone or lime manufactured out of the limestone is not supported by instances 320 of exercise of such right and is not supported by the entries in the Custom Sheets. The entries in the Custom Sheets contain on the other hand strong indications to the contrary. Even granting that the Custom Sheets recorded a local custom that the tenants in the villages of Baknaur and Samahuta excavated stones from the hills near their villages for purposes of trade, a claim of right founded on that custom must be held unreasonable and incapable of enforcement by the sanction of a Court 's verdict. The right exercisable by the tenants in the villages to excavate limestone for trade purposes was not claimed by the plaintiff as an easement: it could not be so claimed, for it is not a right which the owner or occupier of certain land possesses as such, for the beneficial enjoyment of that land, to do and continue to do something, or to prevent and continue to prevent something being done, in, or upon, or in respect of, certain other land not his own: Section 4 of the Indian Easements Act, 5 of 1882. The Indian Easements Act no doubt makes no distinction for the purpose of acquisition by prescription between the right of easement strictly so called and the right which under the English common law is called a profit a prendre. By the Explanation to section 4 the expression "to do something" includes removal and appropriation by the dominant owner, for the beneficial enjoyment of the dominant heritage, of any part of the soil of the servient heritage, or anything growing or subsisting thereon. A profit a prendre is therefore included in the definition of "easement" in section 4 of the Indian Easements Act. But an easement being a right which is super added to the ordinary common law incidents of the ownership of a dominant tenement, and which connotes a corresponding burden on a servient tenement, can only be created by grant, or by statute. An apparent exception to this rule is a customary easement. But a customary easement is not an easement in the true sense of that expression. It is not annexed to the ownership of a dominant tenement, and it is not exercisable for the more beneficial enjoyment of the dominant tenement: it is recognised and enforced as a part of the common law of the locality where it obtains. A customary easement arises in favour of an indeterminate class of persons such as residents of a locality or members of a certain community, and though not necessarily annexed to the ownership of land, it is enforceable as a right to do and continue to do something upon land or as a right to prevent and continue to prevent something being done upon land. Sanction for its enforceability being in custom, the right must satisfy all the tests which a local custom for recognition by courts must satisfy. A profit a prendre in gross that is a right exercisable by an indeterminate body of persons to take something from the land of others, but not for the more beneficial enjoyment of a dominant tenement is not an easement within the meaning of the Easements 321 Act. To the claim of such a right, the Easements Act has no application. Section 2 of the Easements Act expressly provides that nothing in the Act contained, shall be deemed to affect, inter alia, to derogate from any customary or other right (not being a license) in or over immovable property which the Government, the public or any person may possess irrespective of other immovable property. A claim in the nature of a profit a prendre operating in favour of an indeterminate class of persons and arising out of a local custom may be held enforceable only if it satisfies the tests of a valid custom. A custom is a usage by virtue of which a class of persons belonging to a defined section in a locality are entitled to exercise specific rights against certain other persons or property in the same locality. To the extent to which it is inconsistent with the general law, undoubtedly the custom prevails. But to be valid, a custom must be ancient, certain and reasonable, and being in derogation of the general rules of law must be construed strictly. A right in the nature of a profit a prendre in the exercise of which the residents of locality are entitled to excavate stones for trade purposes would ex facie be unreasonable because the exercise of such a right ordinarily tends to the complete destruction of the subject matter of the profit. It is said in Halsbury 's Laws of England, 3rd Edn. 11, article 324 at p. 173: "If a right in alieno solo amounts to a profit a prendre it cannot be claimed under an alleged custom; for no profit a prendre and therefore no right of common can be claimed by custom except in certain mining localities; nor can there be a right to a profit a prendre in an undefined and fluctuating body of persons. " That view is supported by a considerable body of authority. In Lord Rivers vs Adams (1) it was held that the right claimed by inhabitants of a parish to cut and carry away for use as fuel in their own houses fagots or haskets of the under wood growing upon a common belonging to the lord of the manor is a right to a profit a prendre in the soil of another: such a right cannot exist by custom, prescription, or grant, unless it be a Crown grant which incorporates the inhabitants. The House of Lords in Harris and Another vs Earl of Chesterfield and Another(2) held that a prescription in a que estate for a profit a prendre in alieno solo without stint and for commercial purposes is unknown to the law. In the case of Harris and Another(2) the freeholders in parishes adjoining the river Wye were in the habit of fishing a non tidal portion of the river for centuries, openly, continuously, as of right and without interruption, not merely for sport or pleasure, but commercially in order to sell the fish and make a living by it. The riparian proprietors claiming to be owners of the bed of the river brought an action of trespass against the freeholders for (1) L.R. 3 exhibit Div. (2) 322 fishing. It was held by a majority of the House of Lords that the legal origin for the right claimed by the freeholders could not be presumed and that the action by the plaintiffs was maintainable. In Lutchhmeeput Singh vs Sadaulla Nushyo and Others(1) a Division Bench of the Calcutta High Court accepted the prin ciple in the case of Lord Rivers vs Adams(2). In that case the plaintiff sought to restrain the defendants from fishing in certain bhils belonging to his Zamindar. The defendants pleaded inter alia that they had a prescriptive right to fish in the bhils, under a custom, according to which all the inhabitants of the Zamindari had the right of fishing. It was held that no prescriptive right of fishery had been acquired under section 26 of the Limitation Act and that the custom alleged could not, on the ground that it was un reasonable, be treated as valid. Counsel for the plaintiff contended that the present case falls within the principle enunciated by the House of Lords in Henry Goodman vs The Mayor and Free Burgesses of the Borough of Saltash(3). The facts in Henry Goodman 's case(3) were peculiar. A prescriptive right to a several oyster fishery in a navigable tidal river was proved to have been exercised from time immemorial by a borough corporation and its lessees without any qualification except that the free inhabitants of ancient tenements in the borough had from times immemorial without interruption, and claiming as of right, exercised the privilege of dredging for oysters in the locus in quo from the 2nd of February to Easter Eve in each year, and of catching and carrying away the same without stint for sale and otherwise. This usage of the inhabitants tended to the destruction of the fishery, and if continued would destroy it. It was held by the House of Lords (Lord Blackburn dissenting) that the claim of the inhabitants was not to a profit a prendre in alieno solo that a lawful origin for the usage ought to be presumed if reasonably possible; and that the presumption which ought to be drawn. as reasonable in law and probable in fact, was that the original grant to the corporation was subject to a trust or condition in favour of the free inhabitants of ancient tenements in the borough in accordance with the usage. The case came before the Court of Common Pleas, as a special case on facts stated, that the mayor and corporation of Saltash as a corporation was the owner by prescriptive right of the bed and soil and several oyster fishery in the estuary of the River Tamar, and that the free inhabitants of the ancient tenements in the borough of Saltash had from time immemorial, without interruption and claiming as of right, exercised the privilege of dredging for oysters in the river. The House was called upon to reconcile two conflicting rights of the corporation to the several fishery and of the free inhabitants to take oysters. The House reconciled the rights by (1) I.L.R. Cal. 698. (2) L.R. 3 exhibit Div. (3) 7 A.C, 633 323 holding that the grant to the corporation of the soil and the oyster fishery, which must be taken to have been a grant before legal memory, was made by the Crown or the Duchy of Cornwall subject to a trust or condition binding on the grantee, the corporation, to allow the owners of ancient tenements within the borough the limited right to dredge for oysters notwithstanding that the right might lead to the destruction of the fishery. In Harris vs Earl of Chesterfield(1), Lord Ashbourne observed at p. 633, after referring to the judgment in Henry Goodman 's case(2) that: "It was a splendid effort of equitable imagination in furtherance of justice. The conception was reasonably possible and that sufficed. " In a recent case before the Court of Appeal in England: Alfred F. Beckett Ltd. vs Lyons(3) it was observed by Harman and Winn L.JJ., that the claim made on behalf of the inhabitants of the County Palatine of Durham that they were entitled by custom of the locality to collect sea borne coal from the foreshore being a profit a prendre, a fluctuating body such as the inhabitants of a county could not acquire by custom a right of that nature. Counsel for the plaintiff also relied upon the observations made by Farwell, J., in Mercer vs Denne(4) at p. 557, that the period for determining whether a custom is reasonable or not is its inception. In Mercer 's case(4) fishermen who were inhabitants of the parish Walves were accustomed to spread their nets to dry on the land of a private owner at all times seasonable for fishing. In an action on behalf of the firshermen of the parish for a declaration of right in terms 'of the custom and an injunction restraining the owner of the land from building on or dealing with the land so as to disturb the right of the fishermen, it was urged by the defendant that the, custom was unreasonable, because the sea may recede for a mile or more, and it was impossible to sup pose that any such extent of ground could ever have been intended to be appropriated to such a custom. Farwell, J., observed that as the event had not happened for upwards of 700 years, he could not see the unreasonableness of it. He also observed that the period for ascertaining whether a custom is reasonable or not is its inception. Counsel for the plaintiff relying upon those observations submitted that if the custom in its inception was unreasonable, a more extensive burden imposed by the exercise of the custom by the passage of time does not make it unreasonable. It is difficult in the very nature of things to ascertain, especially under the English law where proof by immemorial user must date back to the reign of Richard 1, i.e. 1,189 A.D., the conditions existing at the inception of a custom, assuming that one can trace its inception. It is (1) (2) 7 A.C. 633. (3) (4) , 557. 324 however, unnecessary to dilate upon that matter in this appeal; if by the exercise of a customary right in favour of an indefinite body of persons the property which is the subject matter of the profit a prendre is in danger of being destroyed the customary right will not be recognised: Arjun Kaibarta vs Manoranjan De Bhoumick(1). Counsel for the plaintiff contended that the Court may ignore the exaggerated claim appearing from the averments in the plaint and declare, relying upon the custom sheets, a right to excavate limestone and to utilise it for trade purposes limited to the tenants in the two villages. We are unable to accede to that request. In the present case the right to take "spontaneous produce of forest and minerals" for domestic or agricultural purposes by the tenants is not in issue. What is in issue is the right claimable by all the tenants of the two villages even on the restricted interpretation of the claim set up by counsel for the plaintiff to excavate stone from all lands in the, village for trade purposes by installing machinery. Such a custom would, if exercised in its amplitude as claimed, may lead to breaches of the peace, for it would be open to all tenants to claim to work any quarry simultaneously for trade purposes, and may also tend to the destruction of the subjectmatter. Such a custom would be unreasonable. The High Court was, in our judgment, in error in holding that the plaintiff had established the custom pleaded by him or that it was reasonable. The plaintiff had claimed in the plaint that he was at the date of the suit in possession of 250 bighas of land in the Lower Murli Hill. The trial Court held that the plaintiff established tenancy rights in respect of only five plots of land from the Zamindar plot No. 168 in village Baknaur, and four Plots Nos. 42. 44, 128 and 130 in village Samahuta. It does not appear that this finding was challenged before the High Court. It is true that the plaintiff claimed that he was in possession at the date of the suit of 250 bighas in the two villages of Baknaur and Samahuta and it was so found by the trial Court and the finding was not challenged before the High Court either by the State or by the Dalmia Jain & Co. Ltd. But that claim of possession was apparently founded on the plea that the plaintiff was the representative of the tenant holding over under the leases granted by the State of Bihar to the Kuchwar Company. It was held that the plaintiff 's occupation of the lands was not as a tenant holding over, but was merely permissive so long as no final decision was made by the Government of Bihar on the application by the Kuchwar Company for renewal of the leases which had expired. After the Government decided not to grant renewal of the leases, the plaintiff had no right as an agent of the Kuchwar Company to (1) I.L.R. , 325 remain in occupation of the lands other than those in which he had leasehold interest derived from the Zamindar. Counsel for the plaintiff has therefore restricted his claim to an injunction in respect of the land in which he establishes his interest as a tenant from the Zamindar. The claim of the plaintiff to a declaration in respect of the area of 32.50 acres of land out of plot No. 44 of Samahuta which was acquired for the Dehri Rohtas Light Railway Company between the years 1912 and 1917 remains to be considered. The right of the Zamindar in the land together with all encumbrances in the land acquired was extinguished when possession was taken by the State in exercise of the authority of the Land Acquisition Act. Thereafter no one could claim in that land title derived from the Zamindar. 30.933 acres out of the land after it was transferred by the acquiring authority to the Railway was leased out to the Kuchwar Company and under a grant from the Kuchwar Company the plaintiff obtained the leasehold rights. The lease granted by the Dehri Rohtas Light Railway Company to Kuchwar Company was in the first instance for one year, and determinable by notice expiring with the end of the year. It was the case of the State and of Dalmia Jain & Company Ltd. that by a notice served by the Dehri Rohtas Light Railway Company upon the Kuchwar Company the lease was determined. The plaintiff contended at the trial that the notice was not received by the Kuchwar Company and therefore there was no determination of the lease. Manifestly the plaintiff cannot seek to enforce his right to the land acquired from the Dehri Rohtas Light Railway Company as a tenant from the Zamindar, and at the date of the suit the plaintiff had no right in the land, for the conveyance by the Kuchwar Company in favour of the plaintiff was executed several months after the date of the suit. Neither the Kuchwar Company nor the Dehri Rohtas Light Railway Company is on the record, and it would be impossible in the circumstances to record any finding on the question whether the lease was terminated. But since the right of the Company was not transferred to the plaintiff before the date of the suit, his claim for a declaration of his right and for injunction restraining the defendants from interfering with his possession cannot be sustained. 'The plaintiff as a tenant of the surface rights of the five plots of land in villages Baknaur and Samahuta but excluding the area acquired for the Dehri Rohtas Light Railway Company is however entitled to protect his possession against unauthorised disturbance. We accordingly modify the decree passed by the High Court and declare that the plaintiff has no right by custom to excavate limestone for trade purposes out of the slopes of the Lower Murli Hill or from any other land of the villages in Baknaur and Samahuta for trade purposes. The decree passed in favour of the plaintiff restraining the State of Bihar, its agents and servants, and the 326 Dalmia Jain & Company Ltd. from interfering with the plaintiff 's possession is maintained in respect of plot No. 168 of Baknaur village and plots Nos. 42, 128, 130 and 44 (excluding the land acquired for the Dehri Rohtas Light Railway Company) of the village Samahuta so long as the tenancy rights vested in the plaintiff are not lawfully determined. The appeals will accordingly be partially allowed. In these appeals the plaintiff claimed primarily to enforce his customary right to take valuable minerals from the Lower Murli Hill, and he has failed to establish that right. The plaintiff will therefore pay the costs to the State of Bihar and the Dalmia Jain & Company Ltd. throughout. One hearing fee, in the two appeals in this Court. G.C. Appeals allowed in part.

IN-Abs

Respondent No. 1 acquired tenancy rights in five plots in the villages of Biknaur and Samahuta situated in the area known as Lower Murli Hill in District Shahabad, Bihar. In 1949 he filed a plaint in the Court of the Subordinate Judge Sasaram, against the State of Bihar and others, claiming inter alia that as a tenant he had a customary right to quarry limestone for trade purposes from the Lower Murli Hill. The claim was based mainly on certain entries in the Custom sheets prepared at the time of the Cadastral Survey in 1913 under section 102 of the Bihar Tenancy Act, 1885. The trial court rejected the claim but the High Court held the custom to be established by the evidence of the Customs sheets. The defendants appealed. Held The High Court was in error in holding that the plain tiff had established the custom pleaded by him or that it was reasonable. (i) There was nothing to show that the practices and privileges recorded in the Custom Sheets were exercised as a matter of right. The record has presumptive value. But the revenue authorities were concerned to ascertain the existing state of affairs and not to determine whether the practices and privileges were ancient, certain, reasonable and continuous. As evidence of local custom, the custom sheets had therefore not much value. On the other hand there were indications that the exercise of the privileges recorded therein was permissive. Even on the most liberal interpretation they did not provide evidence of the exercise of the privilege of commercial exploitation of limestone from the area in question. [317D; 319G] (ii) Even granting that the Custom sheets recorded a local custom that the tenants in the villages of Baknaur and Samahuta excavated stones from the hills near the villages for purposes of trade, a claim of right founded on that custom must be held unreasonable and incapable of enforcement by the sanction of a court 's verdict, [320B] A claim in the nature of a profit a prendre operating in favour of an indeterminate class of persons and arising out of a local custom may be held enforceable only if it satisfies the tests of a valid custom. A custom is a usage by virtue of which a class of persons belonging to a defined section in a locality are entitled to exercise specific rights against certain other persons or property in the same locality. To the extent to which it is inconsistent with the general law undoubtedly the custom prevails. But to be valid a custom must be ancient, certain and reasonable, and being in derogation of the general rules of law must be construed strictly. A right in the nature of a profit a prendre in the exercise of which the residents of a locality are entitled to excavate stone for trade purposes would ex facie 313 314 be unreasonable, because the exercise of such a right ordinarily tends to the complete destruction of the subject matter of the profit. The custom, if exercised in its amplitude as claimed, may also lead to breaches of the peace, for it would be open to all tenants to work any quarry simultaneously for trade purposes. [321B D; 324D] Lord Rivers vs Adams, L.R.3 exhibit Div. 361, Harris & Anr. vs Earl of Chesterfield and Anr. , , Alfred F. Beckett Ltd. vs Lyons , referred to Lutchhmeeput Singh vs Sadaulla Nushyo & Ors., I.L.R. 9 Cal. 698 and Arjun Kaibarta vs Manoranjan De Bhoumick, I.L.R. , approved. Henry Goodman vs The Mayor and Free Burgesses of the Borough of Saltash. 7 A.C. 633 and Mercer vs Denne, , 557 distinguished.

Appeal No. 520 of 1967. Appeal from the judgment and order dated December 19, 1966 of the Punjab and Haryana High Court in Civil Revision No. 934 of 1966. Rajinder Sachhar, Mahinderjit Singh Sethi and Ravinder Narain, for the appellant. R.M. Haz arnavis, Rameshwar Nath and Mahinder Narain, for respondent No. 1. The Judgment of the Court was delivered by Bachawat, J. On March 28, 1966 the election of four members to the Council of States (Rajya Sabha) by the members of the Punjab Legislative Assembly (Vidhan Sabha) was held, and as a result of the election, respondent No. 1, Raghbir Singh and one Narinder Singh were declared elected. Appellant Ravindra Nath was one of the unsuccessful candidates. On May 10, 1966, the appellant filed an election petition asking for a declaration that the election of respondent No. 1 and Narinder Singh was void and for a further declaration that he be declared duly elected as a member of the Rajya Sabha to one of those seats. On July 1, 1966, the date fixed for the respondents to the petition to appear before the Tribunal and answer the claims made in the petition, respondent No. 1 filed a written statement in reply to the election petition and gave a written notice under the proviso to 106 s.97(1) of the Representation of the People Act, 1951 of his intention to give evidence to prove that the election of the appellant would have been void if he had been the returned candidate and if a petition had been presented calling in question his election. The notice under s.97(1) was accompanied by the prescribed statement and particulars and a treasury receipt evidencing the deposit of Rs. 1,000 as security under section 117 of the Act. An objection was taken on behalf of the appellant that the amount of security deposited by respondent No. 1 was insufficient and consequently the notice under the proviso to s.97(1) was invalid. On this objection, the Tribunal raised the following preliminary issue being issue No. 10: "Whether the notice under section 97 of the Representation of the People Act, 1951, given and the recrimination statement filed on behalf of respondent No. 1 are invalid because of the insufficiency, if any, of the security deposit made by res pondent No. 1 within the time allowed, if any?". It is now common case that under the law as it stood at the relevant time respondent No. 1 was required to deposit a sum of Rs. 2,000 as security under s.117 of the Representation of the People Act, 1951. On October 7, 1966, the date fixed for argument on the preliminary issues, respondent No. 1 deposited a further sum of Rs. 1,000 as security and produced the relevant treasury receipt before the Tribunal. By its order dated October 11, 1966 the Tribunal held that as the production of a receipt showing the deposit of Rs. 2,000 as security along with the notice was the condition precedent to the right of respondent No. 1 under s.97(1) to lead evidence, this right was lost by his omission to file with the notice the treasury receipt showing a deposit of Rs. 2,000 and the subsequent deposit of Rs. 1,000 by him did not entitle him to lead any evidence under s.97(1). The Tribunal answered the preliminary issue accordingly. On or about October 24, 1966, respondent No. 1 filed in the High Court for the States of Punjab and Haryana at Chandigarh a petition under article 227 of the Constitution asking for an order quashing the order of the Election Tribunal dated October 11, 1966 and a direction that respondent No. 1 be allowed to lead evidence under s.97(1). Several preliminary objections to the maintainability of the petition under article 227 of the Constitution were raised before the High Court, but they were subsequently abandoned and counsel for the appellant agreed that the High Court should deal with the order of the Tribunal on the merits. By its order dated December 19, 1966 the High Court held that it is only in cases in which the provisions of ss.117 and 118 with regard to security of deposit were not complied with before the date fixed for recording evidence under s 97(1) that the Tribunal could refuse to admit the evidence, and where, as in the present case, the entire amount of the security had been deposited before the date fixed for recording evidence, the Tribunal must admit the evidence. On this finding, the High Court 107 allowed the petition under article 227 and quashed the order of the Election Tribunal dated October 11, 1966 in so faras it related to issue No. 10. From this order of the High Court, the present appeal has been filed by certificate. The question in this appeal is what time limit, ifany, is prescribed for furnishing the security referred to in the proviso to s.97(1) read with ss.117 and 118 of the Representation of the People Act, 1951 as it stood before its amendment by the Representation of the People (Amendment) Act, 1966. Section 97 is in these terms: "97(1). When in an election petition a declaration that any candidate other than the returned candidate has been duly elected is claimed, the returned candidate or any other party may give evidence to prove that the election of such candidate would have been void if he had been the returned candidate and a petition had been presented calling in question his election. Provided that the returned candidate or such other party as aforesaid shall not be entitled to give such evidence unless he has, within fourteen days from the date of commencement of the trial, given notice to the Tribunal of his intention to do so and has also given the security and the further security referred to in sections 117 and 118 respectively. (2) Every notice referred to in sub section I shall be accompanied by the statement and particulars required by section 83 in the case of an. election petition and shall be signed and verified in like manner. " The Explanation to sub section (4) of section 90 provided that for purposes of that sub section and of s.97 the trial of a petition would be deemed to commence on the date fixed for the respondents to appear before the Tribunal to answer the claim or claims made in the petition. Sections 117 and 118 read: " 117. The petitioner shall enclose with the petition a Government Treasury receipt showing that a deposit of two thousand rupees has been made by him either in a Government Treasury or in the Reserve Bank of India in favour of the Election Commission as security for the costs of the petition. During the course of the trial of an election petition the Tribunal may at any time call upon the petitioner to give such further security for costs as it may direct, and may, if he fails to do so, dismiss the petition. " It is to be noticed that the words "within fourteen days from he date of commencement of the trial" in the proviso to s.97(1) govern the giving of the notice and not the giving of the security. 108 Moreover, the period of fourteen days from the date of commencement of the trial cannot be the time limit for giving the further security under s 118. The amount of the further security under section 118 and the time for giving it must be fixed by the Tribunal before it can be given by the recriminator. He may be asked to furnish the further security at any time during the course of the trial if the original security is found to be insufficient. We have to examine the provisions of ss.117 and 118 more closely to see if there is any time limit for the giving of security under the proviso to s.97(1). The object of s.97 is to enable recrimination when a seat is claimed for the petitioner filing the election petition or any other candidate. In his election petition the petitioner may claim a declaration that the election of all or any of the returned candidates is void on one or more of the grounds specified in sub section (1) of s.100 and may additionally claim a further declaration that he himself or any other candidate has been duly elected on the grounds specified in section 101. (see ss.81, 84, 98, 100 and 101). It is only when the election petition claims a declaration that any candidate other than the returned candidate has been duly elected that s.97 comes into play. If the respondent desires to contest this claim by leading evidence to prove that the election of the other candidate would have been void if he had been the returned candidate and an election petition had been presented calling in question his election, the respondent must give a formal notice of recrimination and satisfy the other conditions specified in the proviso to s.97. The notice of recrimination is thus in substance a counter petition calling in question the claim that the other candidate has been duly elected. In this background, it is not surprising that the legislature provided that notice of recrimination must be accompanied by the statement and particulars required by s.83 in the case of an election petition and signed and verified in like manner and the recriminator must give the security and the further security for costs required, under sections 117 and 118 in the case of an election petition. Looking at the object and scheme of s.97 it is manifest that the provisions of ss.117 and 118 must be applied mutatis mutandis to a proceeding under s.97. The recriminator must produce a government treasury receipt showing that a deposit of Rs. 2,000 has been made by him either in a Government Treasury or in the Reserve Bank of India in favour of the Election Commissioner as costs of the recrimination. As the notice of recrimination cannot be sent by post, it must be filed before the Tribunal, and reading s.117 with consequential adaptations for the purposes of the proviso to s.97(1), it will appear that the treasury receipt showing the deposit of the security must be produced before the Tribunal along with the notice of recrimination. It follows that the recriminator must give the security referred to in section 117 by producing the 109 treasury receipt showing the deposit of the security at the time of the giving of the notice under the proviso to s.97(1). If the recriminator fails to give the requisite security under s.117 at the time of giving the notice of recrimination, he loses the right to lead evidence under s.97 and the notice of recrimination stands virtually rejected. It was suggested that as under s.90(3) the Tribunal could not dismiss an election petition for non compliance with the provisions of s.117, the legislature could not have intended that the notice of recrimination would stand rejected for failure to give the security under s.117. This argument overlooks the fact that under s.85 it is the duty of the Election Commission to dismiss the election petition for noncompliance with the provisions of s.117. Likewise, reading s.118 with the proviso to s.97(1) it will appear that during the course of the trial of the recrimination the Tribunal may at any time call upon the recriminator to give such further security for costs as it may direct and may, if he fails to do so, reject the notice of recrimination given under the proviso to s.97(1). It was suggested that the proviso to s.97(1) having enacted that the forfeiture of the right to lead evidence would be the penalty for failure to give the further security under s.118, the legislature could not have intended that the rejection of the notice of recrimination would be an additional penalty for this default. This suggestion is based on fallacious assumptions. The only right conferred on the recriminator satisfying the conditions of the proviso to s.97(1) is the right to lead evidence that the election of the other candidate would have been void if he had been the returned candidate. If the recriminator fails to fulfil the conditions of the proviso, he loses this right, and the Tribunal is entitled to record an order to this effect. An order recording that the recriminator has no right to give evidence under s 97 is tantamount to an order rejecting the notice of recrimination. There is thus no substantial difference between the penalty prescribed by the proviso to s 97(1) and the penalty prescribed by s.118 for the default in giving the further security. The High Court held that the recriminator loses his right to lead evidence under s.97 for failure to give security only in cases in which the provisions of ss.117 and 118 are not complied with before the date fixed for recording evidence. In N. R. Shikshak vs R. P. Dikshit(1), a Full Bench of the Allahabad High Court also held that since, no period is fixed within which the security is to be given, the security may be given at any time before the recriminator gives evidence. We are unable to agree with this decision on his point or with the judgment under appeal. We have already seen that the time for giving the initial security for the recrimination is fixed on a combined reading of the proviso to s.97(1) and (1)[1965] A.L.J. 25, 41 42. 110 S.117 and the initial security must be given at. the time of giving the notice of recrimination. Other considerations also show that the date fixed for recording the evidence cannot be the date within which the security referred to in sections 117 and 118 is to be given under the proviso to s 97(1). The recrimination starts on the giving of the notice under the proviso. Though the taking of the recriminatory evidence may be postponed, preliminary directions for dis covery, inspection and other matters are given long before the evidence is taken. It is, therefore, desirable that the initial security referred to in section 117 should be given along with the notice of recrimination at the very commencement of the recrimination proceeding. Moreover, the date fixed for recording the evidence cannot be the time limit for giving further security under section 118. The Tribunal may demand the further security under section 118 at any time in course of the trial of the recrimination even after the evidence has been partly taken. The High Court thought that the decision in Kumaranand vs Brij Mohan(1) lends support to its conclusion that the Tribunal could not refuse to admit the evidence under s.97 if the security under s.117 is given before the date fixed for recording the evidence. That decision turned on the construction of s.119 A and is not relevant on the questions under consideration in this appeal. As section I 19 A did not expressly provide the penalty for failure to furnish the security for costs of an appeal at the time of filing the memorandum of appeal, the failure to furnish the security did not automatically result in dismissal of the appeal, and, it was for the High Court to decide having regard to the circumstances of each case whether it should decline to proceed with the hearing of the appeal. But the proviso to s.97(1) expressly provides that the recriminator shall not be entitled to give evidence unless inter alia he gives the security referred to in section 117. The Tribunal rightly held that the respondent No. 1 was re quired to produce with the notice under the proviso to s 97(1) a government treasury receipt showing a deposit of Rs. 2,000 as security for costs of the recrimination. The High Court was in error in quashing this order. In the result, the appeal is allowed with costs, the judgment and order of the High Court are set aside, and the 'petition under article 227 of the Constitution is dismissed.

IN-Abs

By an election petition filed on May 10, 1966, the appellant challenged the election of the first respondent held on March 28. 1966 to the Rajya Sabha by members of the Punjab Vidhan Sabha and sought a declaration that he be declared duly elected as a member of the Rajya Sabha instead. On July 1, 1966 the date fixed for the respondents to appear before the Tribunal and answer the claims made in the petition, the respondent filed a written statement in reply to the election petition and gave a notice under the proviso to section 97(1) of the Representation of the People Act, 1951, of his intention to give evidence to prove that, the election of the appellant would have been void if he had been the returned candidate and if a petition challenging his election had been presented. The notice under section 917(1) was accompanied by the prescribed statement and particulars and a treasury receipt evidencing the deposit of Rs. 1,000 as security under section 117 of the Act. An objection was taken on behalf of the appellant that the amount of security deposited by the respondent was insufficient in that he should have deposited Rs. 2,000 and consequently the notice under the proviso to section 97(1) was invalid. On October 7, 1966, the date fixed for argument on the preliminary issues, the respondent deposited a further sum of Rs. 1,000 as security and produced the relevant treasury receipt before the Tribunal, but the Tribunal upheld the appellant 's objection on the view that as the production of a receipt showing the deposit of Rs. 2,000 as security along with the notice was the condition precedent to the right of the respondent under section 97(1) to lead evidence in view of his failure to comply with this requirement, this right was lost to him and the subsequent deposit of Rs. 1,000 by him did not entitle him to lead in evidence under section 97(1). The respondent thereupon filed a petition in the High Court under article 227 of the Constitution challenging the decision of the Tribunal and the High Court allowed the petition holding that it is only in cases in which the provisions of sections 117 and 118 with regard to deposit of security were not complied with before the date fixed for recording evidence under section 97(1) that the Tribunal could refuse to admit the evidence, and where, as in the present case, the entire amount of the security had been deposited before such date, the Tribunal must admit the evidence. On appeal to this Court, HELD:Allowing the appeal: the Tribunal had rightly held that the respondent was required to produce with the notice under the proviso to section 97(1) a Government Treasury Receipt showing a deposit of Rs. 2,000 as security for costs of the recrimination and the High Court was in error in quashing this order. [110 F G]. 105 The notice of recrimination under section 97 is in substance a counter petition calling in question the claim that the other candidate has been duly elected. Looking at the object and scheme of section 97 it is manifest that the provisions of sections 117 and 118 be applied mutatis mutandis to a proceeding under section 97. The recriminator must produce a Government Treasury Receipt showing that a deposit of Rs. 2,000 has been made by him in favour of the Election Commissioner as cost of the recrimination. As the notice of recrimination cannot be sent by post, it must be filed before the Tribunal, and reading s.117 with consequential adaptations for the purposes of the proviso to, S.97(1), it will appear that the Treasury Receipt showing the deposit of the security must be produced before the Tribunal along, with the notice of recrimination. If the recriminator fails to give the requisite security under section 117 at the time of giving the notice of recrimination, he loses the right to lead evidence under s.97 and the notice of recrimination stands virtually rejected. [18E H; 109A B.] N.R. Shikshak vs R. P. Dikshit, 1965 [A.L.J] 25, 4142, disapproved. Kumaranand vs Brij Mohan, ; , distinguished. There was no force in the contention that the proviso to section 97(1) having enacted that the forfeiture of the right to lead evidence would be penalty for failure to give the further security under section 118, the legislature could not have intended that the rejection of the notice of recrimination would be an additional penalty for this default, An order recording that the recriminator has no right to give evidence under section 97 is tantamount to an order rejecting the notice of recrimination and there is no substantial difference between the two. [110 D F].

Appeal No. 515 of 1966. Appeal by special leave from the Award dated November 23, 1964, of the Labour Court, Andhra Pradesh in Industrial Dispute No. 5 of 1964. 308 section V. Gupte, Solicitor General, Rameshwar Nath, Mohinder Narain and P. L. Vohra, for the appellant. B. R. Dolia, E. C. Agarwala and P. C. Agrawala, for the res pondents. The Judgment of the Court was delivered by Hidayatullah, J. The present appeal arises from the award of the Presiding Officer, Labour Court, Andhra Pradesh, Hyderabad, by which the dismissal of one Subramaniam, van driver in the employ of the Firestones Tyre & Rubber Co. (P) Ltd., after a domestic enquiry was set aside and the Company was ordered to reinstate him but not to pay him his back wages. The reference in which this decision was rendered was made by the Government of Andhra Pradesh on February 7, 1964. The following are the circumstances leading up to it. Subramaniam was a van driver with the Firestone Tyre & Rub ber Co. from 1953. One of his duties as a van driver was the transportation for delivery of the products of the Company. On May 28, 1963, Subramaniam set out to deliver tyres covered by six invoice . s to diverse addresses. Two of the invoices (Nos. 13815 and 13816) were concerned with eight tyres (4 tyres per invoice) of the specification 8.25 x 20 Tran. H.D.Nyl. 12 PR. Subramaniam took delivery of the tyres and signed the six invoices. After locking the tyres in his van with a key which he claims never left his possession, he set out with one M. V. Das (packer/scooter driver) by his side in the driver 's cabin. This was soon after the lunch break. At about 3.15 p.m. Subramaniam telephoned to the office of the Company that two tyres from the two invoices were short. He was asked to return at once. On his return the tyres with him were unloaded and counted. By way of an immediate check the tyres held in stock were also counted. There was no excess in stock. The tyres in the van were short by two. Subramaniam maintained that no tyres were lost or stolen on the way. His case was that the tyres were shortloaded. After investigation, a charge sheet was served on him for the following act of misconduct: "Theft, fraud or dishonesty in connection with the employer 's business or property". The charge sheet gave full details and fixed the time and place of an enquiry to be held against him, and further informed him that he could defend himself through a workman, produce evidence or cross examine the witnesses. He was suspended pending the result of the enquiry. The enquiry was held by Mr. R. M. Coyajee, Industrial Relations Officer. Four witnesses for the Company and two for Subramaniam were examined. The Company filed: 20 documents and Subramaniam filed 2 documents. Mr. Coyajee found the charge proved and submitted the minu tes of the enquiry to the Superior officers. Then the Manager, Southern Division informed Subramaniam that he was convinced of. 309 the latter 's guilt and that he had tentatively decided to dismiss him. He asked Subramaniam to show cause, if any, against this decision, Subramaniam showed cause but the Manager ordered his dismissal. The Tyre and Rubber Company 's Employees Union having raised a dispute the matter was referred to the Tribunal: ",(a) whether the dismissal of Shri K. Subramaniam, van Driver by the employers of Firestone Tyre & Rubber Co. (P) Ltd., Hyderabad is justified? (b) If not, to what reliefs is he entitled?" Before the Tribunal the Union contended that the enquiry was opposed to the principles of natural justice and the conclusion was perverse. The Tribunal held that the enquiry was not held properly and the conclusion arrived at the domestic enquiry was perverse. The Tribunal rejected the evidence and on the basis of evidence recorded by it, held that the charge was not proved. The Tribunal gave several reasons for its conclusion that the the enquiry was not properly conducted. These were: (a) that the inquiry was held immediately after the investigation without taking the explanation of the workman; (b) The workman was examined and cross examined even before the evidence against him was recorded ', (c) Copies of the statements of witnesses examined at the preliminary enquiry were not supplied to the workman; (d) Copies of the minutes of the inquiry were not given to the workman before asking him to reply to the show cause notice; and (e) the evidence of Das which cleared the workman was not properly considered. The Tribunal did not rely upon the record of the enquiry and on the basis of evidence recorded by itself, held that the fault of the workman was not established and that his dismissal was wrong, with the result already indicated. The Company now contends that none of these grounds has any validity. It has tried to meet each of the grounds and in our opinion successfully. We shall take these grounds one by one and indicate the submissions which in our opinion must be allowed to prevail. As regards ground No. (a) it is clear to us that, although it may be desirable to call for such an explanation before serving a charge sheet. there is no principle which compels such a course. The calling for an explanation can only be with a view to making an enquiry unnecessary, where the explanation is good but in many cases it would be open to the criticism that the defence of the workman was being fished out. If after a preliminary enquiry there is 310 prima facie reason to think that the workman was at fault, a chargesheet setting out the details of the allegations and the likely evidence may be issued without offending against any principle of justice and fairplay. This is what was done here and we do not think that there was any disadvantage to the workman. The management has pointed out that even on facts the view is not correct. They have referred to the workman 's letter dated May 30, 1963 in which he reiterated that he was supplied a shorter number of tyres than that given in the invoices and to his statement before Mr. Coyajee that he would state his case fully. In these circumstances, it is hardly possible to say that the workman was at a disadvantage in any way. We may leave for the present ground No. (b) and proceed to consider the others. Ground No. (c) was not a ground of complaint before the Tribunal. This round was made out by the Tribunal. In fact these statements were not included in the record of the enquiry. Nor were they made the basis of any conclusion. As to ground No. (d) it is sufficient to say that the minutes were hardly needed as the workman was present personally and had conducted the defence. If he needed to read the record he could have easily asked for an inspection and we have no doubt in our mind that he would have been given such an inspection. The minutes show an utmost consideration at all stages of the need for a proper defence. The Tribunal equated the domestic enquiry to enquiries under article 311 of the Constitution which was hardly proper. It seems to us that the enquiring officer afforded every opportunity to Subramaniam to controvert or prove his case. Subramaniam was informed of the charge very clearly, the witnesses were examined in his presence and be was allowed to cross examine them fully. A true record was kept. He was given an opportunity to lead evidence and the enquiry officer and the manager gave him a full chance to explain. after apprising him in detail of the findings tentatively reached. The evidence of Das was not dealt with in detail but as Das was not concerned with the loading operation and his evidence was not apparently accepted that Subramaniam had not removed the tyres. Das was apparently taken to support Subramaniam 's claim that the tyres were not loaded at all, a conclusion not reached by the management on evidence. This leaves over the contention that before examining the witnesses Subramaniam was subjected to a cross examination. This was said to offend the principles of natural justice and reliance was placed on Tata Oil Mills Company Ltd., vs Its Workmen and Anr.(1), Sur Enamel & Stamping Works Ltd. vs Their Workmen(2), Meenglas Tea Estate V. Its Workmen(3) and Associated Cement Companies vs Their Workmen & Anr.(4). (1) (3) [1963] 2 L.L.J.367. (3) (4) 311 These cases no doubt lay down that before a delinquent is asked anything, all the evidence against him must be led. This cannot be an invariable rule in all cases. The situation is different where the accusation is based on a matter of record or the facts are admitted. In such a case it may be permissible to draw the attention of the delinquent to the evidence on the record which goes against him and which if he cannot satisfactorily explain must lead ' to a conclusion of guilt. In certain cases it may even be fair to the delinquent to take his version first so that the enquiry may cover the point of difference and the witnesses may be questioned properly on the aspect of the case suggested by him. It is all a question of justice and fairplay. If the second procedure leads to a just decision of the disputed points and is fairer to the delinquent than the ordinary procedure of examining evidence against him first, no exception can be taken to it. It is, however, wise to ask the delinquent whether he would like to make a statement first or wait till the evidence is over but the failure to question him in this way does not ipso facto vitiate the enquiry unless prejudice is caused. It is only when the person enquired against seems to have been held at a disadvantage or has objected to such a course that the enquiry may be said to be vitiated. It must, however, be emphasised that in all cases in which the facts in controversy are disputed the procedure ordinarily to be followed is the one laid down by this Court in the cited cases. The procedure of examining the delinquent first may be adopted in a clear case only. As illustration we may mention one such case which was recently before us. There a bank clerk had allowed overdrafts to customers much beyond the limits sanctioned by the bank. The clerk had no authority to do so. Before the enquiry commenced he admitted his fault and asked to be excused. He was questioned first to find out if there were any extenuating circumstances before the formal evidence was led to complete the picture of his guilt. We held that the enquiry did not offend ' any principles of natural justice and was proper (see The Central Bank of India Ltd. vs Karunamoy Banerjee(1). In the present case Subramaniam had complained earlier that his version ought to have been elicited first before enquiry against him was ordered. This is exactly what was done by the enquiring officer. We had the whole of Subramaniam 's statement read to us and found nothing which we can say was unfair. The enquiring officer gave him an interpreter after ascertaining if he had any objection to the person selected, asked him to reply in English or Telugu as he preferred, invited him to call some workman to assist him, asked him the names of the witnesses he wished to examine and whether he wanted any further time for the preparation of his defence. He was then questioned about the loading of tyres in his van, the invoices he had signed and whether he had checked the tyres loaded. He was next asked what route he had followed,. (1) ; , 312 whether there was a chance of pilferage en route and whether he suspected any person of having interfered with the van. He was also asked if he was present when the stock was checked. He denied certain details of this stock taking. The issue was thus narrowed to the fact whether 8 tyres were loaded or 6, it being the case of the Company that 8 tyres were loaded and that of Subramaniam that only 6 tyres were loaded, but his receipt for 8 tyres was obtained. The witnesses who loaded the tyres were then called and were ex amined searchingly by the Presiding Officer and cross examined by Subramaniam. No doubt some of the questions appeared to be leading but they were respecting the matter of record and too much legalism cannot be expected from a domestic enquiry of this character. The officer asked Subramaniam again and again whether he was defending himself properly or not and Subramaniam always expressed his satisfaction. In these circumstances, we do not see how the enquiry can be said to have offended any principle of natural justice at all. The Tribunal mechanically applied the dicta of this Court without noticing that the facts here were entirely different from those in the cited cases and the observations covered those cases where all or most of the facts were contested and could not be made applicable to cases where a greater part of the evidence was a matter of written record and the difference was narrow. We are, therefore, of the opinion that the enquiry was properly conducted. As to the evidence of Das it is obvious that Das was supporting Subramaniam in his statement that no tyres were lost during the journey which supported the version that 6 tyres instead of 8 were actually loaded. It is curious that Das never left the van even when Subramaniam went out and on the solitary occasion when Das left the van Subramaniam was in the company of another officer of the Company at the Depot. The evidence of Subramaniam and Das taken together excludes the possibility of loading of 8 tyres. And this is how Das comes into the picture. It is obvious that the enquiring officer and the Manager relied upon the evidence of those who loaded the tyres supported as it was by the admission several times repeated by Subramaniam that he had checked the tyres at the time of loading. In other words, the Management refused to believe Subramaniam even though he was supported by Das. This the Management was entirely within its right in doing and the Tribunal was in error in exercising appellate powers by coming to a different conclusion. All that the Tribunal could do was to see that the enquiry was properly conducted. As in our opinion the enquiry was so conducted the decision of the Tribunal cannot be supported. The appeal therefore succeeds and will be allowed but in the circumstances of the case we make no order about costs. On behalf of the Company it was stated that the amount paid to the workman during the pendency of the appeal as part of the wages will not be asked to be returned. V.P.S. Appeal allowed.

IN-Abs

The driver of the delivery van of the appellant company, was entrusted with some tyres for delivery at various addresses and he failed to account for two of the tyres. After investigation, a domestic enquiry was held and the minutes of the enquiry were submitted to the Manager who gave notice to the driver to show cause why he should not be dismissed. The driver showed cause but the Manager ordered his dismissal. The respondent union of the workers then raised an industrial dispute which was referred to the Tribunal. The Tribunal set aside the dismissal holding that the enquiry was opposed to principles of natural justice and that the conclusion was perverse. In appeal by the Company to this Court, Held: Ordinarily in all cases in which the facts are in con troversy the procedure to be followed is, that before a delinquent is asked anything, all the evidence against him must be led. The situation may be different when the accusation is based on a matter of record or, the facts are admitted, in which case, it may be permissible to draw his attention to the evidence on record and ask for his explanation. Even in such a case, the delinquent should be asked whether he would like to make a statement first or wait till the evidence is over, but failure to do so does not ipso facto vitiate the enquiry unless prejudice is caused or he had objected to the particular course that was followed. Ultimately, it is a question of justice and fair play depending on the facts of each case. [311A D] In the present case the minutes showed that the driver had every opportunity to controvert the case against him, and to prove his case, and that he was never at a disadvantage. All that the Tribunal could do was to see that the domestic enquiry was properly conducted, and, since it was so conducted, the Tribunal was in error in exercising appellate powers by coming to a different conclusion. [310E; 312G] Tata Oil Mills Co. vs The Workmen. [1963] 2 L.L.J.78; Sur Enamel & Stamping Works vs The Workmen. ; ; ; Meenglas Tea Estate vs Its Workmen. ; ; ; Associated Cement Companies vs Their Workmen. [1964] 3 S.C.R. 632; and The Central Bank of India vs Karunamoy Banerjee ; ; referred to.

Appeal No. 283 of 1966. Appeal by special leave from the judgment and order dated March 13, 1963 of the Mysore High Court in Writ Petition No. 1440 of 1962. B. R. L. Iyengar, R. N. Sachthey for R. H. Dhebar, for the appellant. The respondent appeared in person. The Judgment of the, Court was delivered by Bachawat, J. This appeal raises a question of the validity of the latter part of r. 9(2) of the Mysore Recruitment of Gazetted Probationers ' Rules ' 1959 framed by Governor of Mysore in exercise of his powers under the proviso to article 309 of the Constitution. The Rules came into force on September 1 1, 1959. Rule 3 requires that for a period of five years. two thirds of the number of vacancies as determined by the Government arising in the cadres in the State Civil Services specified in the schedule shall be filled by recruitment of candidates selected under the Rules. The schedule lists two Class I and twelve Class 11 cadres. The two Class I cadres are those of (1) Assistant Commissioners in the Mysore Administrative Service and (2) Assistant Controllers in the Mysore State Accounts Service. Both cadres are in the pay scale 'of Rs. 300 25 500 50 30 700. Rule 4 provides that the recruitments shall be made on the basis of the results of written and viva voce examinations conducted annually by the Public 'Service Commission. Rules 5. 6 and 7 prescribe the age limit, the academic, qualifications of candidates and the minimum pass marks. Rules 8 and 9 are in these terms: .lm15 "8. List of successful candidates in the examination 'the names of candidates successful in the examination shall be published in the Mysore Gazette. by the Commission in the order of merit. Appointment of Probationers. (1) Subject to the rules regarding reservation of posts for backward classes contained in Government Orders Nos. GAD 26 ORR 351 59, dated the 13th May 1959, and No. GAD 32 ORR 59, dated the 18th July 1959, and the provisions of sub rule (2), the candidates successful in the examination whose names are published under rule 8 shall be appointed as Probationers to Class I posts in the order of merit, and thereafter to Class It posts in the order of merit. (2) While calling for applications, the candidates will be asked to indicate their preferences as to the cadres they wish to join. The Government, however, reserves the right of appointing to any particular cadre, any candidate whom it considers to be more suitable for such cadre. " By a notification dated September 26, 1959, the Public Service Commission invited applications for admission to a competitive examination for the recruitment of Class I Probationers to 20 posts in the Mysore Administrative Service and 2 posts in the Mysore State Accounts Service. The number of posts were liable to alteration. 15 per cent of the posts was reserved for Scheduled Castes and 3 per cent was reserved for Scheduled Tribes. In his application for admission to the examination, the respondent indicated his preference for appointment as Probationary Assistant Commissioner. He was an eligible candidate and was allowed to appear at the examination. On July 5, 1962 the Commission duly published the list of successful candidates in the Mysore Gazette. In this list the respondent ranked fourth in the order of merit. It appears that the Commission sent a separate recommendation to the Government stating that they had selected the 20 candidates ranking 1 to 3, 5 to 8, 10 to 14, 16 to 19, 21, 22, 25 and 26 for appointment as Assistant Commissioners and the seven candidates ranking 4, 9, 15, 20, 23, 24 and 27 for appointment as Assistant Controllers. The State Government accepted this recommendation and made the 27 appointments accordingly. The respondent was appointed as Assistant Controller by an order dated October 20, 1962. The respondent was not appointed as Assistant Commissioner though he had indicated his preference for that post. Aggrieved by this order, the respondent filed a writ petition in the Mysore High Court asking for an order directing the State of Mysore, to appoint him as Assistant Commissioner and for consequential reliefs. Before the High Court, it was common ground. that the two Class I posts, the post of Assistant Commissioner in the Mysore Administrative Service had better prospects and was more attractive. More promotional posts including posts in the I.A.S. cadre were open to Assistant Commissioners. Their next promotional post was that of Deputy Commissioner in the pay scale of Rs. 900 40 1100 50 1300. For an Assistant Controller in the Mysore State Accounts Service the next promotional job was that of a Deputy Controller in the pay scale of L/S5SCI 9(a) 352 Rs. 600 40 1000. The High, Court held,that (1)under r. 9(2) the Government ;had, the power to decide to which post or cadre a successful candidate should be appointed, (2) for; making the selection the Government had to apply its own, mind, (3) the Public Service Commission had no power to make the selection nor it need be consulted on this question under article 320(3) of the Constitution and (4), as the Government made the selection without applying,its own mind on the recommendation of the Commission, the order dated October 20, 1962 was invalid. Accordingly, the High Court by its order dated March 13, 1963 issued a writ of mandamus directing the Government to decide to which post or cadre the respondent should be appointed. From, this order, the State of Mysore appeals to this Court by special leave. In this appeal, the State of Mysore challenges the correctness of the findings that (1) the Government did not apply its own mind in making the selection and (2) the Public Service Commission need not be consulted as to the suitability of the candidate for such selection under article 320(3) 'of the Constitution. the State of Mysore naturally supports the finding that the Government had the power under r. 9(2) to select to which post or cadre a successful candidate should be appointed. But the more fundamental question is whether that portion of r. 9(2) which vests, in the Government this power of selection is valid. The contention of the respondent is that this portion of the Rule is, violative of articles 14 and 16 of the Constitution. The Rules make provision for the direct recruitment to several cadres in the State Services on the basis of, the result of a competitive examination. The examination is held annually. It is open to all eligible, candidates. The result of the examination is announced and the list of successful candidates in the order of merit is published. Subject to the reservations for Scheduled Castes, Scheduled Tribes and Backward Classes, the successful candidates are entitled to be appointed as probationers to Class I posts in the order of merit and thereafter to Class II posts in the order of merit. If there are vacancies in a number of Class I or Class II cadres, r. 9(2) comes into play. The candidates are required to indicate in their applications their preferences for the cadres they wish to join. Had there been nothing more in r. 9(2), the 'successful candidates would have the preferential claim in the order of merit to appointment in the cadres for 'which they indicated their preferences. Thus, if there are 20 vacancies in cadre 'A ' and 1 7 vacancies in cadre 'B ', a successful candidate ranking fourth in order of merit would be appointed as a matter of course to cadre 'A ' for which he indicated his preference. But the latter part of r. 9(2) reserves to the Government the right of appointing to any particular cadre any candidate whom it considers more suitable for such cadre. The Rules are, silent on the question as to how the Government is to find out the 353 suitability of a . candidate for a particular cadre. A. single competitive examination is held to test the suitability 'of candidates for. several cadres. Those who succeed in the examination are found. suitable. for all the cadres and their. list in order of merit is published under r. 8. No separate examination is held to test the suitability of the candidate for any particular cadre. The list of successful candidates published under r. 8 does not indicate that any candidate is more suitable for cadre 'A ' rather than for cadre 'B '. The Rules do not give the Public Service Commission the power to test the suitability of a candidate for a particular cadre or to recommend that he is more suitable for it. Nor is there any provision in the Rules under which the Government can test the suitability of a candidate for any cadre after the result of the examination is published. The result is that the recommendation of the Public Service Commission is not a relevant material nor is there any other material on the basis of which the Government can find that a candidate is more suitable for a particular cadre. It follows that under the latter part of r. 9(2) it is open to the Government to say at its sweet will that a candidate is more suitable for a particular cadre and to deprive him of his opportunity to join the cadre for which he indicated his preference. Take the present case. An open competitive examination was held for recruitment to the posts of Assistant Commissioners in the Mysore Administrative. Service and Assistant Controllers in the Mysore State Accounts Service. Though both are Class I posts, the post of Assistant Commissioner has better prospects. But for the latter part of r. 9(2) the successful candidates would have the preferential claim for appointment as probationers to, the posts of Assistant Commissioners in order of merit and thereafter to the posts of Assistant Controllers in the order of merit. As a matter of fact, there were 20 vacancies in the posts of Assistant Commissioners. The respondent ranked fourth in the 'order of merit. He indicated his preference for the post of Assistant Commissioner and had a preferential claim for appointment to that post. The candidates ranking 1st, 2nd, 3rd and 5th were appointed as Assistant Commissioners. The respondent though ranking fourth in order of merit was singled out and was debarred from the post of Assistant Commissioner. It is because of the arbitrary power under the latter part of r. 9(2) that the Government could make this unjust discrimination. The principle of recruitment by open competition aims at ensuring equality of opportunity in the matter of employment and obtaining the services of the most meritorious candidates. Rules 1 to 8, 9(1) and the first part of r. 9(2) seek to achieve this aim. The latter part of r. 9(2) subverts and destroys the basic objectives of the preceding rules. It vests in the Government an arbitrary power of patronage. Though r. 9(1) requires the appointment of successful candidates to Class I posts in the order of merit 354 and thereafter to Class 11 posts in the order of merit, r. 9(1) is subject to r. 9(2), and under the cover of r. 9(2) the Government can even arrogate to itself the power of assigning a Class I post to a less meritorious and a Class II post to a more meritorious candidate. We hold that the latter part of r. 9(2) gives the Government an arbitrary power of ignoring the. just claims of successful candidates for recruitment to offices: under the State. It is violative of articles 14 and 16(1) of the Constitution and must be struck down. Having regard to his rank in order of merit, the respondent had the right to be appointed to the post of Assistant Commissioner. As the offending part of r. 9(2) is invalid, the State Government had no power to withhold the post from him. The High Court should, therefore, have directed the Government to appoint him to that post. In the result, we strike down the following part of r. 9(2) of the Mysore Recruitment of Gazetted Probationers ' Rules, 1959: "The Government, however, reserves the right of appointing to any particular cadre, any candidate whom it considers to be more suitable for such cadre". The order passed by the High Court directing the Government to decide to which post or cadre the respondent should be appointed under r. 9(2). is set aside. We direct the State of Mysore to appoint the respondent to the post of Assistant Commissioner in the Mysore Administrative Service. For the purpose of seniority, the respondent will be treated as appointed on October 20, 1962 according to his rank in the order of merit. Subject to the directions aforesaid, the appeal is dismissed with costs. V.P.S. Appeal dismissed.

IN-Abs

The Mysore Recruitment of Gazetted Probationers ' Rules 1959, make provision for direct recruitment to several cadres in the State Services on the basis of the result of a competitive examination. Under the first part of r. 9(2), the candidates are required to indicate in their applications their preferences for the cadres they wished to join. After the examination, the list of successful cardi dates in order of merit is published. and, subject to certain reservations for Scheduled castes and tribes and Backward classes, the successful candidates have preferential claim in the order of merit to appointment in the cadres for which they indicated their preference. The latter part of r. 9(2), however, reserves to the Government the right of appointing to any particular cadre any candi date whom it considers more suitable for such cadre. In the present case an open competitive examination was '.held for recruitment to the posts of Assist ant Commissioners in the Mysore Administrative Service and of Assistant Controllers in the Mysore State Accounts Service. Though both are Class I cadres the post of Assistant Commissioner had better prospects. There were 20 vacancies in the posts of Assistant Commissioners. The respondent indicated his preference for the post of Assistant Com missioner. Though his rank was fourth, the Public Service Commission recommended that he and some others should be appointed as Assistant Controllers while those who ranked after the respondent were recommended for appointment as Assistant Commissioners. The State Government accepted the recommendation. The respondent thereupon filed a writ petition in the High Court asking for an order directing the State to appoint him as Assistant Commissioner. The High Court held that the Government had under the latter part of r. 9(2) the power to decide to which post or cadre the respondent should be appointed. but that the Government should itself make up its mind without consulting the Public Service Commission, and directed the Government to decide accordingly. The State appealed to this Court Held: The latter part of r. 9(2) was violative of articles 14 and 16(1) of the Constitution and therefore the State Government had no power to withhold the post of Assistant Commissioner from the respondent who bad a right to be appointed to that post having regard to his rank in order of merit. The High Court should, therefore, have directed the Government to appoint the respondent to the post. [354B C] L/S5SCI 350 The Rules are silent on the question as to how the Government was to find out the suitability of a candidate for a particular cadre, nor do the Rules give the Public Service Commission the power to test the suitability of a candidate for a particular cadre or to recommend that he is more suitable for it. Further, there is no provision in the Rules under which the Government can test the suitability of a candidate for any cadre after the result of the examination is published. Therefore, the latter part of r. 9(2) gives the,Government an arbitrary power of ignoring the just claims of successful candidates, for recruitment to offices under the State, and thus, subvert '$ the basic objectives of ensuring equality of opportunity in the matter of employment by open competition. [352H: 353B C; 354A B]

Appeal NO. 437 of 1966. Appeal by special leave from the Award dated March 31, 1964 of the Industrial Tribunal, Maharashtra in Reference (IT) No. 40 of 1963. H. K. Sowani, K. Rajendra Chaudhuri and K. R. Chaudhuri, for the appellant. H. R. Gokhale and 1. N. Shroff, for respondent No. 1. The Judgment of the Court was delivered by Hidayatullah, J. This is an appeal by special leave against the award dated March 31, 1964 of the Industrial Tribunal, Maharashtra in a Reference by Government under section 10(1)(d) of the . The appellant is a Trade Union established on January 1, 1962 by the employees of Ghatge & Patil (Transports) Private Ltd. and the respondent is the Company. The Company has its registered office at Kolhapur and is engaged in the transport and removal of goods by road. It operates on a large scale owning at the material time as many as 70 trucks and plies them from Kolhapur (where the registered office of the Com pany is situate) to far off places such as Bombay, Poona, Bangalore, Goa and Madras. On January 14, 1963, the Union served a notice of demand upon the Company asking for the abolition of a newly introduced contract system for the running of vehicles. This was referred first to the Conciliation Officer, but later the reference was made by Government as stated already. The dispute arose in the following circumstances: For the operation of its trucks the Company was previously employing 70 drivers and an equal number of cleaners. On January 8, 1963, the Company advertised in a local newspaper of Kolhapur that it had trucks in working condition for sale and also trucks in working condition to be given for plying on a contract system. As many as 54 drivers applied for obtaining contracts having resigned their service as drivers. The Company then entered into agreements with these drivers between January 9 and 31. Each driver received one motor truck for operation according to the terms of the agreement. A model agreement has been produced in the case in which the parties, after reciting that there were difficulties in operating motor transport vehicles, because of the passing of the , stated that the agreement was being entered into for the operation of the trucks. It is not necessary either to set out the agreement or to analyse all its terms. 302 For our purpose it is sufficient to say that the Company let to these former drivers (to whom we may refer as operators) a truck each on condition that they paid the Company Re. 1.00 per mile for its use. The Company on its part undertook to supply fuel, oil tyres, tubes, etc. for the purpose of running the vehicle. Under this agreement the operator was at liberty to canvass for goods and transport them but he was required to give the utmost priority to the goods entrusted to the Company for transport. In this way the goods booked with the Company were transported by the operator s in priority and they paid Re. 1.00 per mile for the use of the truck , all other expenses being borne by the Company. The operator s were required to bring all the gross receipts to the Company which deducted its own charges at Re. 1.00 per mile and handed over the balance. The operators were responsible for any damage to the vehicle, save normal wear and tear, and were required to observe the terms and conditions of the permit held by the Company. In this way, the Company continued to function as a transport undertaking while the trucks were not run through paid servants but through independent contractors. The above move by the Company was necessary (so the Company admits) because of the passing of the Motor Transport Wor kers Act, 1961, on May 20, 1961. This Act was passed to provide for the welfare of Motor Transport workers and to regulate the conditions of their work. It applies to Motor Transport Undertakings, by which is meant, among other things, undertakings engaged in carrying goods by road for hire or reward. Such undertakings are required to register under the Act and an inspecting staff is brought into existence for the purpose of seeing that the requirements of the Act are carried out. The fourth chapter of the Act (headed "Welfare and Health") requires the Motor Transport Undertakings to provide canteens in every place where 100 Motor Transport workers or more are employed , rest rooms for the use of such workers, uniforms, medical and First Aid facilities. The fifth chapter prescribes the hours of work for Motor Transport workers and in ordinary circumstances puts a ceiling of 48 hours in a week and a maximum of 8 hours a day and a daily interval for rest after 5 hours of work, with a spreadover of not more than 12 hours in every day. It also provides for a day of weekly rest. The sixth chapter prohibits the employment of children, enjoins the carrying of tokens by employees and provides for their medical examination. The seventh chapter applies the Payment of Wages Act and provides for annual leave with wages and extra wage for overtime. The eighth chapter provides for penalties and procedure and the ninth chapter gives power to the Government to grant exemptions, to make rules and to give directions. Section 37, which is in this last chapter, provides that the provisions of the Act shall have effect notwithstanding anything inconsistent therewith contained in any other law or in the terms of any award, agreement or contract of service whether made before or after the commencement of this Act but not so as to take away from a Motor Trans 303 port worker an existing benefit which is more favourable than those under the Act or to prevent him from entering into an agreement for better rights and privileges than those given to him by the Act. The Company frankly admitted at all stages that it was impossible for it to implement all the conditions of the Act in respect of the drivers of motor vehicles. It stated that its motor drivers. while working in its employment, were required to go on long journeys and it was practically impossible to enforce the conditions of hours of work or of rest. Since this entailed penal consequences and the possibility of the permits being cancelled, the Company was forced to adopt a system under which it would not be requir ed to observe the Act because under it the truck drivers became independent contractors and were therefore not within the ambit of the Act. On the other hand, the Union contended that this arrangement was invented to nullify the beneficial legislation intended to improve the conditions of Motor Transport workers in general and truck drivers in particular. Under the system, the Union submitted, the drivers lost the benefit of leave of various kinds, over time payment, Provident Fund, gratuity and insurance and there was no control either in respect of hours of work or of rest which were the main objects of the Act to secure. "The matter of dispute referred to the Tribunal was: "The contract system for the running of vehicles which has been newly introduced, must be abolished immediately. Such ex employees of the Company who have been given this work on contract basis should be reinstated with back wages". The Tribunal held that the first part as also the second referred to the 54 drivers who had resigned their jobs and become operators. The Tribunal saw difficulty in acting on the second part because the drivers had resigned. In dealing with this problem the Tribunal considered the evidence and came to the conclusion that the drivers were not coerced or forced to take this action. The Tribunal then posed the question, how to re instate persons who had voluntarily resigned their services and could not be said to be dismissed, discharged or retrenched within the ? The Tribunal also held that the agreements were simple agreements for transport of goods and were essentially fair to the operators. Of course, there were advantages as well as disadvantages but the employees not being servants were free agents and could do the work as and when they liked and even accept work from others. They thus got, what they considered, more benefit from the contract system than from their contract of employment. None of the drivers had appeared to complain against the new system. There was also nothing to show that this system took unfair advantage of the former drivers. The Tribunal, therefore, held that the contract system could not be described as an unfair labour practice. The Tribunal also commented that under the agreements 304 themselves the contract was capable of being terminated by three days ' notice on either side and hence it was hardly necessary for the Union to take recourse to a Tribunal for getting it abolished. Holding that the new system could not be said to be an unfair or anti labour practice the Tribunal rejected the claim of the Union. The Union now appeals by special leave. The argument on behalf of the Union centres round two facts. Firstly, that the resignation of the drivers and cleaners and the setting up of the contract system amounts to an unfair labour practice and exploitation of labour because by this device these and other transport workers are being victimized; and, secondly, the salutary and beneficial legislation conceived in the best interest of the transport workers is being deliberately set at naught. According to the Union the operators continue to be workmen notwith standing that they are posed as independent contractors hiring the trucks. By this system many of the benefits secured to the Motor Transport workers including drivers and cleaners, have been made inapplicable to a section of Motor Transport workers, namely, the former drivers and cleaners employed by the Company. The argument on the side of, the Company is that the hiring out of trucks to the operators is not illegal and does not amount to exploitation of the former drivers or an unfair labour practice. According to the Company the operators are free agents and freely resigned their jobs and the Company points out that even the, office bearers of the Union were among those who resigned as drivers and entered into agreements to become operators. The Company further points out that many of the contracts were entered into after the, present reference was made to the Tribunal. There is no doubt that the Company is a Motor Transport ' Undertaking because it is engaged in carrying goods by road for hire or reward. Since the drivers have resigned their jobs they cannot be said to be employed in the Motor Transport Undertaking. The word "employed" in the definition of Motor Transport worker is not used in the sense of using the services of a person but rather in the sense of keeping a person in one 's service. The definition is, of course, made wide to take in all persons working in a professional capacity in an undertaking for running its affairs in any capacity and not only persons employed on wages. The word "wage" has the meaning given to the word in the Payment of Wages Act and takes in all paid employees and also persons who are employed in a professional. capacity although not in receipt of wages. Persons who are independent and hire a vehicle for their own operation paying a fixed hire per mile from their earnings cannot be said to be persons employed in the Motor Transport Un dertaking in the sense of persons kept in service. The operators, therefore, are not Motor Transport workers within the definition. The Act is not only intended to confer benefits on Motor Transport workers but is also regulatory with penal consequences. 305 The apprehension of the Company is that some of the regulatory provisions of the Act are incapable of being observed properly in the case of drivers and cleaners going on long journeys because there is no means of enforcing them. For example, the provisions about hours of work, hours of rest etc. are not easy to enforce enroute or at far off places. Therefore, rather than run the risk of losing the permit for want of compliance with the , the Company has decided not to run transport trucks itself but to let them be run by independent hirers. There does not appear to be any bar in law to such action. Section 59 of the Motor Vehicles Act contemplates the transfer of permits with the permission of the Transport Authorities and this enables any person to whom a vehicle covered by the permit is transferred to get the right to use the vehicle in the manner authorised by the permit. Here the vehicle is not transferred but is only let out on hire and hence there is prima facie no need for permission. The Union made no attempt before us to establish that the inauguration of the contract system offended the Motor Vehicles Act or was prohibited under it. No objection to the system by the Authorities under the Motor Vehicles Act was proved in the case. The operators also seem to be happy because no operator appeared to complain and the only dissatisfaction has been registered by the Union which apparently lost the allegiance of some of its former members and even office bearers. In view of the findings of the Tribunal, which we see no reason to disapprove, it must be held that the drivers voluntarily resigned and entered into the agreements since they apparently considered them to be more favourable than the terms of their former employment. In this view of the matter it is difficult to hold that the Tribunal was wrong in its conclusion that there was no ex ploitation of the drivers. It is also equally true that there is no bar in law to the introduction of the system. The Union, however, contends that on the analogy of some cases of this Court in which contract labour was put down as unfair labour practice because it involved exploitation of labour, we should declare this system also to be harmful to the interests of labour. Contract labour was declared in this Court to be an unfair labour practice because the intention was to introduce a middle man to avoid observance of laws and to deny to labour the advantages it had acquired by bargaining or as a result of awards. Such is hardly the case here. The two systems were there for the drivers to choose. It is reasonable to think that the drivers must have chosen a system which was considered by them to be more beneficial to themselves. There was no compulsion for the drivers to resign their jobs and they did so voluntarily obviously thinking that the new system was more profitable to them. We cannot lose sight of the fact that some of the office bearers of the Union were among the first to resign. Many of the drivers resigned the jobs and entered into agreements even after the dispute was taken up by the Union. The present case is, therefore, not analogous to the case of 306 contract labour where employment of labour through a contractor or middleman put the labour at a disadvantage in collective bargaining and thus robbed labour of an important weapon in its armoury. The matter of dispute no doubt referred in the second part to ex drivers but it referred generally to the new system in the first. The Tribunal was wrong in thinking that the first part also referred to the ex drivers (now operators). On the whole, however, it is clear that the Company has not done anything illegal. A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has, without the arrangement, no proper means of obeying. This, of course, he can do only so long as he does not break that or any other law. The Company has declared before us that it is quite prepared, if it was not already doing so, to apply and observe the provisions of the in respect of its employees proper where such provisions can be made applicable. In view of this declaration we see no reason to interfere, because Parliament has not chosen to say that transport trucks will be run only through paid employees and not independent operators. The appeal fails but in the circumstances of the case we make no order as to costs. G.C Appeal dismissed.

IN-Abs

The respondent company carried on the business of transport and removal of goods by road. It owned a fleet of trucks and employed drivers and cleaners to run them. In 1963 the company, finding difficulty in observing the provisions of the , introduced a scheme whereby the trucks, instead of being run by the company itself were hired out to contractors at a fixed rate per mile. Employees of the company who were engaged in running the trucks resigned their jobs and most of them who had for merly been drivers became contractors under the scheme. The workmens ' Union however raised a dispute asking for the reinstatement of the ex employees who had been given work on contract basis. The Tribunal held that the contract system could not be said to be an unfair labour practice, for the ex employees were never coerced or forced to resign their jobs, and they got more benefits from the contract system than from their original contract of employment. In appeal to this Court the Union contended that the ex employees of the company continued to be workmen notwithstanding that they were posed as independent contractors, that the beneficent legislation conceived in the interests of transport workers was being set at naught by the company, and that the setting up of the contract system amounted to unfair labour practice. Held: (i) Since the drivers had resigned their jobs they could not be said to be employed in the Motor Transport undertaking. The word 'employed ' in the definition of Motor Transport. Worker is not used in the sense of using the services of a person but rather in the sense of keeping a person in one 's service. Persons who are independent and hire a vehicle for their own operation paying a fixed hire per mile from their earnings cannot be said to be persons employed in the Motor Transport Undertaking in the sense of persons kept in service. The operators were therefore not Motor Transport Workers within the definition. [304F H] (ii) There was no bar in law to the introduction of the con tract system. A person must be considered free to so arrange his business that he avoids a regulatory law and its penal consequences which he has without the arrangement, no proper means of obeying. This, of course, he can do only so long as he does not break that or any other law. [306 B C] (iii) Those who resigned did so voluntarily and they got substantial benefits under the new system. The Tribunal was right in its conclusion that there was no exploitation of the ex employees. There 301 was thus no unfair labour practice. The present case was not analogous to the case of contract labour when employment of labour through a contractor or middleman put the labour at a disadvantage in collective bargaining and thus robbed labour of an important weapon in its armoury. , [305E 306A.]

Appeals Nos. 1182 1184 of 1965. Appeals by special leave from the judgment and order dated August 19, 1963 of the Punjab High Court in General Sale 's Tax Reference Nos. 8, 10 and 11 of 1962. R. Ganapathy Iyer, R. N. Sachthey for R. H. Dhebar, for the appellant (in all the appeals). R. K. Garg, section C. Agarwal, Shive Pujab Singh and Anil Kumar, for the respondent (in all the appeals). The Judgment of the Court was delivered by Bachawat, J. The respondents are dealers assessable to sales tax under the East Punjab General Sales Tax Act, 1948. In their return for the assessment years 1955 56, 1956 57 and 1957 58 they 338 claimed exemption from tax in respect of sales of edible oils. It is common case before us that this exemption was claimed in respect of Sales of edible oil produced in ghanis run by mechanical process. By his orders dated March 3, 1959, April 9, 1959 and July,17, 1959, the Assessing Authority, Jullundur held that exemption from tax was not allowable under item No. 57 of the schedule of, tax free goods as, substituted by the Punjab Government Notification No. 3483 E & T 54/723(CH) dated August 5, 1954. The appeals from these orders were dismissed by the Deputy Excise and Taxation Commissioner, Jullundur Division by his orders dated August 3, 1959 and February 16, 1960. Revision Petitions from these orders were dismissed by the Excise and Taxation Commissioner, Punjab by his orders dated November 24, 1961. .Revision Petitions from the last orders were dismissed by the Financial Commissioner, Revenue, Punjab by his orders dated April 27, 1962. On the application of the respondents, the Financial 'Commissioner, Revenue, Punjab by his order dated August 9, 1962 referred under section 22(1) of the Punjab General Sales Tax Act, 1948 the following question of law for the decision of the High Court of Punjab at Chandigarh: "Whether notification No. 3483 E & T 54/723(CH), dated the 5th August, 1954, whereby exemption from Sales Tax granted by the Government in respect of edible oils was abolished in the case of such edible oils produced in ghanis run by mechanical process was intravires and not the law made by the Legislature of the State which requires ' the previous assent of the President of India." These References were marked, as Sales Tax References Nos. 8, 10 and 11 of 1962. By its judgment dated August 19, 1963 the High Court held following its earlier decision in Ganga Ram Suraj Prakash vs The State of Punjab(1) that the notification was a law made by the State Legislature after the enactment of Central Act No. 52 of 1952, and since it did not receive the assent of the President it was ultra vires and invalid. In the earlier decision, the Punjab High Court held that (1) section 5 of the East Punjab General Sales Tax Act, 1948, as it originally stood, was invalid on the ground of excessive delegation of legislative power to the executive, (2) the remaining sections of the Act including section 6 could not survive the invalidity of section 5, (3) the Act did not become valid until the insertion of the new section 5 in the main Act by the East Punjab Act No. 19 of 1952, and (4) as the East Punjab Act No. 19 of 1952 which alone could sustain the impugned notification dated August 5, 1954 was passed after the Central Act No. 52 of 1952, the impugned notification could not be justified and was invalid. The High Court observed that it was not impressed with the argu ment that the notification was not a law made by the legislature of the State and therefore the assent of the President could be dispensed with. The present appeals have been preferred from the orders of the High Court dated August 19, 1963. (1) S.T.C. 476. 339 To appreciate the points in. controversy, it is necessary to refer to the course of legislation. The East Punjab General Sales Tax Act (East Punjab Act No. 46 of 1948) was enacted on November 15, 1948. Section 4 of the Act provided for the incidence of taxation and declared that the classes of dealers specified in sub sections (1), (2), (3) and (4) would be liabe to pay tax under the Act. Section 5(1) was in these terms: "5. Rate of tax (1) Subject to the provisions of this Act there shall be levied on the taxable turnover every year of a dealer a tax at such rates as the Provincial Government may by notification direct. " 'Turnover ' as defined in section 2(i) included the aggregate of the amount of sales. 'Taxable turnover ' as defined in section 5(2) was ascertained after deducting from the gross turnover inter alia sales of goods declared tax free under section 6. Section 6(1) provided that no tax shall be payable under the Act on the sale of goods specified in the first column of the schedule to the Act. Section 6(2) provided: "The Provincial Government after giving by notification not less than three months ' notice of its intention so to do, may by like notification add to or delete from the schedule, and thereupon the schedule shall be deemed to be amended accordingly." On November 19, 1952 the East Punjab General Sales Tax (Second Amendment) Act, 1952 (Act No. 19 of 1952) was passed amending section 5 of the East Punjab Act No. 46 of 1948. Section 2 of the amending Act was in these terms: "In sub section (1) of section 5 of the East Punjab General Sales Tax Act, 1948, after the word 'rates ' the following words shall be inserted, namely, 'not exceeding two pice in a rupee '. " It is common ground before us that before the passing of the East Punjab Act No. 19 of 1952 the State Government bad issued notifications under section 5 fixing the rates of tax. In exercise of its powers under section 6(2) of the Act, the Punjab Government issued the notification No. 3483 E & T 51/2518, dated May 30, 1951 adding item No. 57 (edible oils) to the schedule referred to in section 6(2). The entry was as follows: "57. Edible oils produced from sarson, toria and till ghanis but not in hydrogenated from e.g. vegetable, ghee, vanaspati etc. " By a later notification No. 3483 E & T 54/723(CH) dated August 5, 1954, the Punjab Government substituted the following entry No. 57 in the schedule: "57. Edible oils produced from sarson, toria and till indigenous kohlus worked by animal or human agency when sold by the owners of such kohlus only". 340 it is common case before us that as a result of this notification sales of edible oil produced by ghanis run by mechanical power ceased to be tax free after August 5, 1954. It may be recalled that article 286(3) of the Constitution as it stood before the Constitution (Sixth Amendment) Act, 1956 provided: "No law made by the Legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any such goods as have been declared by Parliament by law to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent." On August 9, 1952 Parliament passed the Essential Goods (De claration and Regulation of Tax on Sale or Purchase) Act, 1952 (Central Act No. 52 of 1952). By section 2 of this Act read with item 5 of the schedule, edible oils were declared to be essential for the life of the community. Section 3 of this Act was in these terms: "3. Regulation of tax on sale or purchase of essential goods. No law made after the commencement of this Act by the legislature of a State imposing, or authorising the imposition of, a tax on the sale or purchase of any goods declared by this Act to be essential for the life of the community shall have effect unless it has been reserved for the consideration of the President and has received his assent. " On September 11, 1956 the Constitution (Sixth Amendment) Act, 1956 was passed substituting a new cl. (3) in article 286. The amended article 286(3) did not put any check on a State law imposing or authorising the imposition of a tax on the sale or purchase of essential goods. The Central Act No. 52 of 1952 was repealed by section 16 of the (Act No. 74 of 1954) passed on December 21, 1956. The repealing section came into force on January 5, 1957. It is to be noticed that the respondents claimed that they were not liable to pay tax on their sales of edible oil produced in ghanis run by mechanical power. The revenue authorities rejected this claim on the ground that such sales were not exempt from tax in view of the amendment of the schedule of tax free goods by the notification dated August 5, 1954. Confronted with this notification, the respondents challenged its validity on the ground that it required the assent of the President of India. On the materials and arguments before us, we are satisfied that the real dispute between the respondents and the revenue authorities was whether the tax was effectively imposed on those sales so that the respondents may be held. liable to pay tax thereon during the assessment years in question. This dispute was not properly brought out in the question referred to the High Court. We, therefore, re frame the question thus: "Was tax effectively imposed on sales of edible oil produced 341 in ghanis run by mechanical power, so that the respondents can be held liable to pay tax on such sales during the assessment years, 1955 56, 1956 57 and 1957 58?" This question involves consideration of the validity of section 5 and other sections of the East Punjab Act No. 46 of 1948, section 5 as amended by East Punjab Act No. 19 of 1952 and the notifications issued under sections 5 and 6(2) as also the effect of article 286(3) of the Constitution, its amendment by the Constitution (Sixth Amendment) Act, section 3 of Central Act No. 52 of 1952 and its repeal by Central Act No. 74 of 1954. On the arguments addressed before us, the following ques tions arise for decisions: (1) Was section 5 of the East Punjab Act No. 46 of 1948 as originally passed in 1948, invalid? (2) If so, did the invalidity of section 5 invalidate the other provisions of the Act? (3) Is section 5 of the East Punjab Act No. 46 of 1948 as amended by East Punjab Act No. 19 of 1962 invalid? (4) Was the amended section 5 a law imposing or authorising the imposition of a tax within the meaning of article 286(3) of the Constitution as it stood before the Constitution (Sixth Amendment) Act? If so, with what effect? (5) What is the effect of the amendment of article 286(3) of the Constitution by the Constitution (Sixth Amendment) Act and the repeal of Central Act No. 52 of 1952 by Central Act No. 74 of 1954? (6) Is the notification dated August 5, 1954 issued under section 6(2) valid? (7) Are the notifications issued under section 5 before the passing of the East Punjab Act No. 19 of 1952 valid? (8) Was tax effectively imposed on sales of the edible oil in question during the relevant assessment years? The first three questions are concluded by the decision of this Court in M/s. Devi Das Gopal Krishan and others vs State of Punjab and others(1). In that decision, this Court held that (1) section 5 of East Punjab Act No. 46 of 1948, as originally passed in 1948, was void on the ground of excessive delegation of legislative power to the State Government, (2) the striking down of section 5 did not render void section 4 and the other sections of the Act though till an appropriate section 5 was inserted section 4 remained unenforceable and (3) section 5 as amended by the East Punjab Act No. 19 of 1952 was not invalid on the ground of excessive delegation of legislative authority nor was it invalid on the ground that Act 19 of 1952 purported to amend a stillborn section. The Court held that though in (1) ; 342 terms Act No. 19 of 1952 amended section 5, in. substance it inserted a, new amended section 5 in Act No. 46 of 1948 with retrospective effect. The fourth question is whether the amended section 5 inserted by East Punjab Act No. 19 of 1952 levying a tax on the taxable turnover of the dealer at such rates not exceeding 2 pice in a rupee as the State Government by notification may direct was a law imposing or authorising the imposition of a. tax on essential goods within the meaning of article 286(3) of the Constitution as it stood before the Constitution (Sixth Amendment) Act, and if so, what are the consequences. As pointed out by Ramachandra Iyer, J. in Sreenivas and Co. vs Deputy Commercial Tax Officer(1), the decisions on the interpretation of section 55 of the Australian Constitution are not a reliable guide to the interpretation of the words "imposing or authorising the imposition of a tax" in article 286(3) of the Constitution and section 3 of Central Act No. 52 of 1952. Section 55 which is directed to preserving the privileges of the House of Representatives with respect to finance and providing against their abuse has received a somewhat narrow interpretation from the Australian Courts. See the cases collected in Wynes. Legislative, Executive and Judicial Powers, 3rd Edn., p. 240. We may add that the observations of Isaccs, J. in Federal Commissioner of Taxation vs Munro(2) suggest that an Act naming the rate but leaving the persons on whom the tax should fall to be thereafter determined would be a measure "imposing taxation" even for the purposes of section 55. Nor is much light thrown on the interpretation of those words by the decisions under the Indian Income tax Act. In Messrs. Chatturam Horilram Ltd. vs Commissioner of Income tax, Bihar and Orissa(3) this Court held that income was chargeable under section 3 of the Indian Income tax Act though the Finance Act was not extended to the relevant area during the year in question. In Kesoram Industries vs Commissioner of Wealth Tax(4) this Court by a majority following the dicta in Wallace Brothers & Co. Ltd. vs Commissioner of Income tax, Bombay(5) Chatturam vs Commissioner of Income tax, Bihar(6) and explaining the dicta in Commissioner of Income tax vs Western India Turf Club Ltd. (7 ) and Maharaja of Pithapuram vs Commissioner of Income tax, Madras(8), held that there was a liability to pay income tax and a debt owed by the assessee in respect of income tax on the last day of the accounting year within the meaning of section 2(m) of the Wealth Tax Act, 1957. None of these decisions dealt with the construction of the words "imposing or authorising the imposition of a tax" in article 286(3) of the Constitution. It is remarkable, however, (1) [1960] 11 S.T.C.68, 75 77,On appeal from (1959) 10 S.T.C.171. (2) ; , 189. (3) ; , 297 300 (4) ; (5) , 244. (6) , 308. (7) (1927) L.R. 55 I.A. 14, 17. (8) , 223 24. 343 that in the Maharaja of Pithapuram 's case(1) the language used by Lord Thankerton suggests that the income tax is imposed for a particular fiscal year by a Finance Act and in Chatturam Horilram 's case(2), Jagannadhadas, J. said that the Finance Act of each year imposed the obligation for the payment of a determinate sum for each such year. Moreover, in Luipaard 's Vlei Estate and Gold Mining Co. Ltd. vs The Commissioner of Inland Revenue(3), Rowlatt, J. said the English Income tax was annually imposed by the Finance Act and in Bowels vs Bank of England(4), Parker, J. held that the Crown could not lawfully levy income tax before the rate of tax was ascertained and the tax was actually imposed by Apt of Parliament. These dicta suggest that an Act fixing the rate of tax is a law imposing a, tax. The specification of the class or classes of persons liable to pay the tax and the fixation of the rate of tax are both necessary for the imposition of a tax. Section 4 of the East Punjab Act No. 46 of 1948 took the first step for imposing the tax. It declared who were the persons liable to pay tax under the Act. But section 5 of East Punjab Act No. 46 of 1948 was invalid and until the passing of the East Punjab Act No. 19 of 1952 and the insertion of the amended section 5 there was no provision in the main Act fixing or authorising the fixation of the rate at which the tax was to be levied. In the absence of such a provision, there could be no levy, assessment and collection of the tax from the dealer and section 4 remained unenforceable. The East Punjab Act No. 19 of 1952 by inserting the amended section 5 in the main Act for the first time provided for the levy on the taxable turnover of every dealer a tax at a rate to be fixed by the State Government. The rate of tax could be fixed and the tax could be actually imposed under the amended section 5 only. The East Punjab Act No.19 of 1952 therefore belonged to the category of laws authorising the imposition of a tax on the sale of goods. The object of article 286(3) of the Constitution was to put a constitutional check on the operation of a State law imposing or authorising the imposition of a tax on the sale or purchase of essential goods. Commerce in such goods was a matter of national concern and no such law could take effect unless it had been reserved for the consideration of the President and had received his assent. An arbitrary or unjust rate of sales tax would unduly hamper dealings in such goods, and it is reasonable to think that a measure fixing or authorising the rate of tax would be subject to the salutary check of article 286(3). In our opinion, the amended section 5 inserted in East Punjab Act No. 46 of 1948 by East Punjab Act No. 19 of 1952 authorising the fixation of the rate of tax leviable on the taxable turnover was a law authorising the imposition of a tax within the purview of the unamended article 286(3) of the Constitution. (1) (2) ; (3) , 581. (4) , 87. 344 The East Punjab Act No. 19 of 1952 was passed after the enactment of article 286(3) of the Constitution and after Parliament had by Central Act No. 52 of 1952 declared edible oil to be essential for the life of the community. It was not reserved for the consideration of the President and did not receive his assent. It was a law authorising the imposition of a tax on the sale of goods. In so far as it authorised the imposition of a tax on the sales or purchases of edible oil, it could not take effect during the currency of article 286(3) of the Constitution as it stood before its amendment by the Constitution (Sixth Amendment) Act. The fact that the amended section 5 inserted by the East Punjab Act No. 52 of 1952 was retrospective in operation made no difference. It was still a law made after the Constitution came into force and after Parliament had by law declared edible oil to be essential for the life of the community. As the East Punjab Act No. 52 of 1952 did not receive the assent of the President, the amended section 5 could not take effect at all either prospectively or retrospectively in respect of sales and purchases of essential goods while the ban of article 286(3) continued. But it could take effect in respect of sales and purchases of other goods. The fifth question involves consideration of the effect of the amendment of article 286(3) of the Constitution and the repeal of Central Act No. 52 of 1952. The Constitution (Sixth Amendment) Act, 1956 passed on September 11, 1956 substituted a new cl. (3) in article 286. The effect of this amendment was that the restriction put by article 286(3) on the operation of the amended section 5 inserted by the East Punjab Act No. 19 of 1952 in respect of essential goods was lifted, and the section thereafter took effect on such goods also. Counsel for the respondent submitted that in view of the ban imposed by article 286(3), the amended section 5 was a stillborn law and the section was not revived by the removal of the ban. In this connection, our attention was drawn to the decisions under articles 286(2) and 13 of the Constitution. Article 286(2), as it stood before the Constitution (Sixth Amendment) Act provided that "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". In spite of the prohibitory words of article 286(2), in M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh(1) and Messrs. Ashok Leyland Ltd. vs The State of Madras(2), this Court held that a State law imposing a tax on sales of goods in the course of inter State trade and commerce was not void, and the effect of the Sales Tax Laws Validation Act, 1956 was to liberate State laws from the fetter placed on them by article 286(2) and enable such laws to operate on their own terms. In Mahendra Lal Jaini vs State of U. P.(") this Court held, reviewing the earlier cases, that a post Constitution (1) ; , 1459. (2) ; (3) [1953] Supp. 1 S.C.R. 912. 345 Act taking away or abridging the fundamental rights in contravention of Article 13(2) was a stillborn law but a pre Constitution Act inconsistent with a fundamental right was in view of article 13(1) eclipsed for the time being and on the abolition of the fundamental right by a constitutional amendment the pre Constitution Act would begin to operate once again from the date of the amendment. These decisions show that a law made by an incompetent legislature or in contravention of some constitutional limitation is void from its inception. But the amended section 5 inserted by the East Punjab Act No. 19 of 1952 was passed by a competent legislature. It always took effect in respect of non essential goods. Article 286 (3) did not prohibit its making. While the restriction imposed by article 286(3) continued, the section could not affect essential goods, but as soon as the restriction was removed, it became fully effective. The section was not void or stillborn. But the question still remains whether the check on a State law imposing or authorising the imposition of a tax on the sale or purchase of essential goods continued even after September 11, 1956 until January 5, 1957 when Central Act No. 52 of 1952 was repealed. Article 286(3) authorised Parliament to declare by law which goods were essential for the life of the community. Accordingly, Parliament passed Act No. 52 of 1952. The preamable to the Act shows that it was an Act to declare in pursuance of cl.3 of article 286 of the Constitution certain goods to be essential for the life of the community. By section 2, the goods specified in the sche dule were declared to be so essential. As soon as this declaration was made, article 286(3) came into play. Section 3 stated the conjoint effect of article 286(3) and section 2 and declared that no law made after the commencement of the Act by the legislature of a State imposing or authorising the imposition of a tax On the sale or purchase of any goods declared by the Act to be essential for the life of the community would have effect unless it had been reserved for the consideration of the President and had received his assent. But section 3 had no independent existence. The subject of a tax on the sale or purchase of goods other than newspapers was exclusively a State subject,, see List II, Entry 54. Article 286(3) did not authorise Parliament to legislate on this subject. It only conferred,on Parliament the authority to declare that certain goods were essential for the life of the community. On such a declaration being made, the check. imposed by article 286(3) came into operation. But on the amendment of article 286(3) this check was lifted and thereafter. section 3 had no force. It follows that as from September 11, 1956 the. amended section 5 inserted by East Punjab Act No. 19 of 1952 took,effect on sales or purchases of edible oil also. The sixth question relating to the validity of the notification dated August 15, 1954 involves the interpretation of the expression "law made by the legislature of a State" in article 286(3) as it stood before the Constitution (Sixth Amendment) Act. We are not con cerned in these appeals with the interpretation of the expression 346 "law of a State" in the amended article 286(3) and other Articles. The notification dated August 5, 1954 was authorised by section 6(2) of East Punjab Act No. 46 of 1948. Section 6(2) being a pre Constitution law was outside the purview of article 286(3) of the Constitution and Central Act No. 52 of 1952. See Sardar Soma Singh vs The State of Pepsu and Union of India(1). Consequently, section 6(2) from its inception affected essential goods. By force of section 6(2) the notification dated August 5, 1954 issued under it took effect immediately in respect of essential goods. The notification issued by the State Government was not a "law made by the legislature of a State" within the meaning of article 286(3). Though issued after the passing of Central Act No. 52 of 1952, it did not require the assent Of the President for affecting essential goods. In The Indore Iron & Steel Registered Stockholders ' Association vs The State of Madhya Pradesh(2), this Court held that a notification dated October 24, 1953 specifying the goods whose sales were taxable under section 5(2) of the Madhya Bharat Sales Tax Act, 1950, a pre Constitution Act, was outside the purview of article 286(3) of the Constitution and section 3 of Central Act No. 52 of 1952. Similarly, in Sreenivas & Co. vs Deputy Commercial Tax Officer(3), the Madras High Court held that Rules 15 and 16 of the Madras General Sales Tax (Turnover and Assessment) Rules specifying the transactions attracting the tax liability and framed under the Madras General Sales Tax Act, 1939, a pre Constitution Act, did not require the assent of the President for affecting hides and skins which had been declared by Parliament to be essential for the life of the community by Central Act No. 52 of 1952. These decisions show that a, notification issued under the authority of a pre Constitution Act is not a law made by the legislature of a State within the meaning of the unamended article 286(3). It follows that the impugned notification 'took effect in respect of edible oil as from August 5, 1954 and thereafter sales of edible oil produced in ghanis run by mechanical power were taxable. But as the amended section 5 could not then affect edible oil, no tax was effectively imposed on it until September 11, 1956 during the currency of the unamended article 286(3) of the Constitution. The respondents were, therefore, not liable to pay tax on their sales of such edible oil effected before September 11 , 1956. It is common case before us that before the insertion of the amended section 5 by East Punjab Act No. 19 of 1952 the State Government had issued notifications under section 5 fixing the rate of tax. The seventh question relates to the validity of those notifications. As the unamended section 5 was invalid, under the law as it stood before the passing of the East Punjab Act No. 19 of 1952 those notifications were not authorised by law and were invalid. The East Punjab Act No. 19 of 1952. however, inserted section 5 with retrospective effect. The effect of the East Punjab Act No. 19 of 1952 was that the amended s, 5 was inserted and was deemed to have always been inserted in the main Act. After the passing of (1) ; (2) ; (3) [1960] 11 S.T.C. 68, 75 77, on appeal from [1959] 10 S.T.C. 171. 347 the East Punjab Act No. 19 of 1952 the result was that from the very commencement of the main Act the amended section 5 was deemed to have authorised the State Government to issue notifications fixing the rate of tax. The notifications issued by the State Government under section 5 before 1952 must, therefore, be deemed to be and always to have been valid and not stillborn. It was not necessary to pass another Act validating those notifications, nor was it necessary for the State Government to issue fresh notifications fixing the rate of tax. In view of article 286(3), the amended section 5 and the notifications issued under it before 1952 could not take effect in respect of sales or purchases of essential goods before September 11, 1956. But they took effect in respect of such sales after September 11, 1956. The validity of the notifications issued after 1952 under 'he amended section 5 is not challenged before us. It follows that the State law and the notifications issued there under effectively imposed tax on sales of edible oil from September 11, 1956 and not before. The respondents are liable to pay tax on all sales of edible oil effected by them after September 11, 1956, but they are not liable to pay tax on their sales made before that date. in C. M. Ps. No. 877 to 879 of 1964, the respondents raised several additional contentions. The first contention was that the consideration of the several questions arising in this case is precluded by res judicata in view of the decisions of the Punjab High Court in Sales Tax References Nos. 4 and 13 of 1961. But this plea of res judicata has now been abandoned before us by counsel for, the respondents. Secondly, it was urged that the appeals are infructuous because the respondents had obtained refund of the tax deposited by them in respect of the years, 1958 59 and 1959 60. But the present appeals do not relate to those assessment years,and the fact that the respondents obtained refund of the tax for,those years is irrelevant in these appeals. Thirdly, it was pointed out that by an order dated September 23, 1963 the Financial Commissioner gave effect to the decision of the High Court under appeal and directed that the assessment cases be disposed of ac cordingly. The contention of the respondents was that in view of this order of the Financial Commissioner the present appeals are not maintainable. There is no substance in this contention. The order of the Financial Commissioner was passed under section 22(5) of East Punjab Act No. 46 of 1948. Section 22(5) provides that the High Court shall send to the Financial Commissioner a copy of its judgment in a Sales Tax reference under its seal and the signature of the Registrar and the Financial Commissioner shall dispose of the case accordingly. On receipt of the copy of the judgment of the High Court in Sales Tax References Nos. 8, 1 0, and 11 of 1962 the Financial Commissioner acting under section 22(5) directed that the cases should be disposed of according to the judgment of the High Court. But those very judgments are under appeal in this Court. In so far as those judgments are varied or reversed in these appeals, 348 effect must be given to the order of this Court and the Financial Commissioner must direct the disposal of the cases accordingly. In C. M. Ps. 877 to 879 of 1964, the respondents prayed for revocation of the special leave granted by this Court. There is no ground for revoking the special leave, and the petitions must be dismissed. To summarise our conclusions: (1) The unamended section 5 of East Punjab Act No. 46 of 1948 was void. (2) The invalidity of section 5 did not render sections 4 and 6 and other sections of the Act invalid. (3) The amended section 5 inserted by East Punjab Act No. 19 of 1952 is valid. (4) The amended section 5 was a law authorising the imposition of a tax within the meaning of article 286(3) of the Constitution as it stood before the Constitution (Sixth Amendment) Act. (5) The amended section 5 and the notifications issued under it did not take effect before September 11, 1956 in respect of sales or purchases of goods declared essential to the life of the community by Central Act No. 52 of 1952, but they took effect in respect of such sales or purchases after September 11, 1956. (6) The notification dated August 5, 1954 issued under section 6(2) is valid. (7) The notifications issued under section 5 before the passing of the East Punjab Act No. 19 of 1952 are valid. (8) Tax was effectively imposed on the sales or purchases of edible oil from September II, 1956 and not before. We, therefore, hold that the respondents are not liable to pay tax on sales of edible oil produced in ghanis run by mechanical power effected by them before September 11, 1956. But they are liable to pay tax on such sales made after September 11, 1956. The Sales Tax References and the appeals are disposed of accordingly. C.M.Ps. 877 to 879 of 1964 are dismissed. There will be no order as to costs. R.K.P.S. Appeals partly allowed.

IN-Abs

The respondents were dealers assessable to sales tax under the East Punjab General Sales Tax Act, 1948, and, in respect of the assessment years 1955 56 to 1957 58, they claimed an exemption from tax on sales of edible oil produced by them cal process. The assessing authority rejected this claim on the ground that such sales we 're not exempt from tax in view of the amendment of the Schedule to the Act specifying tax free goods by the notification dated August 5, 1954. The respondent 's appeals to the Excise and Taxation Commissioner:. and to the Financial Commissioner were rejected but the High Court, upon a reference. held that the notification was a law made by the State legislature after the enactment of Central Act No. 52 of 1952 which, read with article 286(3) of the Constitution , placed a bar on a State by a law imposing or authorising the imposition of a tax on the sale of essential goods unless the law in question had received the assent of the President; and since the notification had not received such assent, it was ultra vires and invalid; the respondents were, therefore, entitled to exemption under Item No. 57 of the Schedule prior to its amendment by the notification of August 5, 1954. On appeal to this Court, Held: The respondents were not liable to pay tax on sales of edible oils produced in ghanis run by mechanical power effected by them before September 11, 1956; but they were liable to pay tax on such sales made after September 11, 1956, [348E] (i) The amended section 5 inserted in East Punjab Act No. 46 of 1948 by East Punjab Act No. 19 of 1952 authorising the fixation of the rate of tax leviable on the taxable turnover, was a law authorising the imposition of a tax within the purview of the unamended article 286(3) of the Constitution. As the East Punjab Act No. 19 of 1952 was passed after the enactment of Art 286(3) of the Constitution and after Parliament had by Central Act 52 of 1952 declared edible oil to be essential for the life of the community and it was not reserved for consideration of the President and did not receive his assent, it could not take effect during the currency of article 286(3) prior to its amendment in so far as it authorised the imposition of a tax on the sale or purchases of edible oil. It could however take effect in respect of sale and purchases of other goods. [344A C; 348B C] (ii) The effect of the amendment of article 286(3) of the Constitution by the Constitution (Sixth Amendment) Act with effect from September 11, 1956 was that the restriction put by article 286(3) on the operation of the amended section 5 in respect of essential goods was 336 337 lifted and the section thereafter took effect on such goods also. There was no force in the contention that the amended section 5 wag a still born Jaw and that the section was not revived by the removal of the ban. It was inserted by the East Punjab Act No. 19 of 1952 which was passed by a competent legislature and always took effect in respect of nonessential goods. [344D F] Section 3 of Central Act 52 of 1952 had no independent existence and after the amendment of article 286(3) it had no force from September 11, 1956 until its repeal with effect from January 5, 1957 by Central Act 74 of 1954. [345C D,E F] (iii) The notification of August 5, 1954 which amended the Schedule of tax free goods was authorised by section 6(2) which was a pre Constitution law outside the purview of article 286(3). The notification did not require the assent of the President for affecting essential goods. The notification was therefore valid and took effect in respect of edible oil as from August 5, 1954 and thereafter sales of edible oil produced in ghanis run by mechanical power were taxable. But as the amended section 5 could not then affect edible oil, no tax was effectively imposed on it until September 11, 1956 during the currency of the unamended article 286(3). [346A C, E F] (iv) Although the notifications issued by the State Government under the unamended section 5 which was invalid were not authorised by law and also invalid, after the passing of the East Punjab Act 19 of 1952 the result was that from the very commencement of the main Act the amended section 5 was deemed to have authorised the State Government to issue notifications fixing the rate of tax. The notifications issued under section 5 before 1952 must, therefore be deemed to be and always to have been valid and not still born. It was not necessary to pass another Act validating those notifications nor was it necessary for the State Government to issue fresh notifications fixing the rate of tax. Here again, such notifications could not take effect in respect of sales or purchases of essential goods before September 11, 1956. [346H 347C] (v) There was no force in the contention that the present appeals were not maintainable because the Financial Commissioner had already directed disposal of the case under section 22(5) of the East Punjab Act 46 of 1948 in accordance with the judgment of the High Court. Effect had to be given to the order of this Court and the Financial Commissioner must direct disposal of the cases accordingly. [347F 348A] Case law reviewed.

Appeal No. 2376 of 1966. 355 356 Appeal from the judgment and order dated January 18, 1963 of the Madhya Pradesh High Court in Miscellaneous Petition NO. 267 of 1962. R.V.S. Mani, E.C. Agarwala and P.C. Agarwala,.for the appellant. B. Sen, M.N. Shroff for I.N. Shroff for the respondent. Shelat, J. Prior to December 17, 1947 the appellant was serving as an Overseer in the Public Works Department of the Central Provinces and Berar Government. On December 17, 1947 he was suspended from service and prosecuted under section .161 of the Penal Code. The trial resulted in his conviction but that was set aside in appeal on the ground that no proper sanction for prosecution was obtained. He was again prosecuted on the same charge but the Special Judge trying him quashed the chargesheet on the ground that the investigation had not been carried out by the proper authorities. In revision the High Court of Nagpur held that the Special Judge was in error in so holding but recommended that the prosecution should not be proceeded with as nearly 10 years had gone by since it was launched against the appellant. Following the recommendation the prosecution was dropped but a departmental inquiry was held on the same charges. The Inquiry Officer found the appellant not guilty but the Government disagreed with that finding and served a notice to show cause why he should not be dismissed. By an order dated December 5, 1960 the Government held that the charges against the appellant were not proved beyond reasonable doubt. It also held that the suspension and the departmental inquiry "were not wholly unjustified". The order then directed that the appellant should be reinstated in service with effect from the date of the order and retired from that, date, he having already attained superannuation age on September 5, 1952 and that the entire period of absence from duty should be treated as period spent on duty under F.R. 54(5) for purposes of pension only, but that he should not be allowed any pay beyond what he had actually received or what was allowed to him by way of subsistence allowance during the period of his suspension. On a representation made by him against the said order hav ing been rejected the appellant filed a petition under article 226 of the Constitution in the High Court of Madhya Pradesh for quashing the said order and for an order directing the Government to treat the period of absence from duty as period spent on duty under cl. 2 of the said Fundamental Rule and to revise the pension payable to him under that clause. The High Court dismissed the petition but granted certificate to file this appeal and that is how this appeal has come up before us. 357 Fundamental Rule 54 on the interpretation of which this appeal depends is as follows: "(1) When a Government servant who has been dismissed, removed or suspended is reinstated; the authority competent to order the reinstatement shall consider and make a specific order , (a) Regarding the pay and allowance to be paid to the Government servant for the period of his absence from duty; and (b) whether or not the said period shall be treated as a period spent on duty , (2) Where the authority 'Mentioned in sub rule (1) is of opinion that the Government servant has been fully exonerated or in the case of suspension, that it was wholly unjustified, the Government servant shall be given the full pay and allowances to which he would have been entitled, had he not been dismissed, removed or suspended as the case may be. (3)In other cases, the Government servant shall be given such proportion of such pay and allowances as such competent authority may prescribe. Provided that the payment of allowances under clause (2)or clause (3) shall be, subject to all other conditions under which such allowances are admissible. Provided other that such proportion of such pay and allowances ' all not be less than the subsistence and other allowances admissible under Rule 53. (4) In a case falling under clause (2), the period of absence from by shall be treated as a period spent on duty for all Purposes. (5) In a case falling under clause (3) the period of absence from duty shall not be treated as a period spent on duty,unless such competent authority specifically directs that it shall be so treated for any specified purpose. Provided that if the Government servant so desired, such authority may direct that the period of absence from duty shall be converted into leave of any kind due and admissible to the, Government servant. " On behalf of the appellant two points were urged before the High Court; (1) that before passing the impugned order the appellant ought to have been given a reasonable opportunity to show cause against the action proposed and (2) that it was clause 2 and not clause 5 which applied to his case. The High Court rejected both the contentions and, as aforesaid, dismissed the petition. 358 Counsel for the appellant canvassed the same contentions before us. Mr. Sen on behalf of the State. however, argued that F.R. 54 does not in express terms lay down a duty on the part of the authority to give an opportunity to show cause to the government employee and therefore the question would be whether the Rule imposed such a duty by necessary implication. He urged that the Rule cannot be said to lay down such duty by implications inasmuch as the impugned order is only a consequential order. That it was passed following a departmental inquiry held against the appellant during the course of which opportunity to show cause was already afforded. He contended that the only duty laid down by FR. 54 was that the Government should, consider whether the appellant was fully exonerated and in case of suspension whether such suspension was wholly unjustified and that once the authority formed the opinion that it was not so cls. 3 and 5 would apply. The Government having formed the opinion that the suspension was not wholly unjustified clans 5 applied and the impugned order was not liable to be challenged. The first question which requires consideration is whether there was a duty on the competent authority to afford an opportunity to the appellant to show cause before that authority formed the opinion as to whether he was fully exonerated and whether his suspension was wholly unjustified. Under F.R. 54 where a Government servant is reinstated, the authority has to consider and make a specific order (i) regarding pay and allowances payable to him for the period of his absence from duty and (ii) whether such period of absence should be treated as one spent on duty. The consideration of these questions depends on whether on the facts and circumstances of the case the Government servant had been fully exonerated and in case of pension whether it was wholly unjustified. If the authority forms such an opinion the Government servant is entitled to full pay and allowances which he would have been entitled to had the order of dismissal, removal or suspension, as the case may be, not been passed. Where the authority cannot form such an opinion the Government servant may be given such proportion of pay an allowances as the authority may prescribe. In the former case the period of absence from duty has to be treated as period spent on duty for all purposes and in the latter case such period is not to be treated as period spent on duty. But the authority has the power in suitable cases to direct that such period of absence shall be treated as period spent on duty in which case the government servant would be entitled to full pay and allowances. It is true that the order under FR. 54 in a sense a con sequential order in that it would be passed aft an order of reinstatement is made. But the fact that it is a consequential order does not determine the question whether the government servant has to be given an opportunity to show cause or not. It is also true 359 that in. a case where reinstatement is ordered after a departmental inquiry the government servant would Ordinarily have had an opportunity, to show: cause. In such a case, the authority no doubt ,would have before him the entire record including the explanation given by the government servant from which all the facts and circumstances of the case would be before the authority and from which he can form the opinion as to whether he has been fully exonerated or not and in case of suspension whether such suspension was wholly unjustified or not. In such a case the order passed under a rule such as the present Fundamental Rule might be said to be a consquential order following a departmental inquiry. But there are, three classes of cases as laid down by the proviso in article 311 where a departmental inquiry would not be held, viz., (a) where a person is dismissed, removed or reduced in rank on the ground of conduct which has led to his conviction on a criminal charge, (b) where the authority empowered. to dismiss or remove person or to reduce him in rank is satisfied for reasons to be record in writing that it is not reasonably practicable to hold such an inquiry; and (c) where the President or the Governor as the case may be is satisfied, that in the interest of security of the State it is not expedient to hold such inquiry. Since there would be no inquiry in these classes of cases the authority would not have before him any explanation by the ' government servant. The authority in such cages would have to consider and pass the ' order merely on such facts which might be placed before him by the department concerned. The order in such a case Would be ex parte without the authority having the other side of the picture. In such cases the order that such authority would pass would not be a consequential order as where a departmental inquiry has been held. Therefore, aft order passed under Fundamental Rule 45 is not always a consequential order nor is such order a continuation of the departmental proceeding taken against the employee. It is true as Mr. Sen pointed out that F.R. 54 does not in express terms lay down that the authority shall give to the employee concerned the opportunity to show cause before he passes the order. Even so, the question is whether the rule casts such a duty on the authority by implication. The order as to whether a given case falls under cl. 2 or cl. 5 of the Fundamental Rule must depend on the examination by the authority of all the facts and circumstances of the case and. his forming the opinion therefrom of two factual findings; whether the employee was fully exonerated and in case of suspension whether it was wholly unjustified. Besides, an order passed under this rule would obviously affect the government servant adversely if it is one made under cls. 3 and 5. Consideration under this rule depending as it does on facts and circumstances in their entirety, passing an order on the basis of factual finding arrived at from such facts and circumstances and such an order resulting in pecuniary loss to the government servant must be held to be an objective rather than a subjective function. 360 The very nature of the function implies the duty to act judicially. In such a case if an opportunity to show cause against the action, proposed is not afforded, as admittedly it was not done in the present case, the order is liable to be struck down as invalid on the ground that it is one in breach of the principles of natural justice. In the State of Orissa vs Dr. (Miss) Binapani Devi and others(1) this Court held that an order fixing the date of birth of the government servant concerned there and declaring that she should be deemed to have retired on a particular date on the basis of the date so determined without giving an opportunity to show cause against the action proposed was invalid on the ground that the determination was in violation of the principles of natural justice. It was there observed: "The State was undoubtedly not precluded, merely because of the acceptance of the date of birth of the first respondent in the service register, from holding an inquiry if there existed sufficient grounds for holding such enquiry and for refixing her date of birth. But the decision of the State could be based upon the result of an enquiry in a manner consonant with the basic concept of justice. An order by the State to the prejudice of a person in derogation of his vested rights may be made only in accordance with the basic rules of justice and fairplay. The deciding authority, it is true, is not in the position of a Judge called upon to decide an action between contesting parties, and strict compliance with the forms of judicial procedure may not be insisted upon. He is however under a duty to give the person against whom an enquiry is held an opportunity to set up his version or defence and an opportunity to correct or to controvert any evidence in the possession of the authority which is sought to be relied upon to his pre judice. " We find that the High Court of Maharashtra has also taken in V. R. Gokhale vs State of Maharashtra(2) the same view which we are inclined to take of the nature of function under R. 152 of the Bombay Civil Service Rules, 1959, a rule in terms identical to those of F.R. 54 before us. In our view, F.R. 54 contemplates a duty to act in accord ance with the basic concept of justice and fairplay. The authority therefore had to afford a reasonable opportunity to the appellant to show cause why cls. 3 and 5 should not be applied and that having not been done the order must be held to be invalid. (1) ; (2) I.L.R. 361 The appeal is allowed and the High Court 's order is set aside. The competent authority is directed to consider the question de novo after giving to the appellant a reasonable opportunity to show cause against the action proposed against him. The respondent will pay to the appellant costs of this appeal as also the costs of the petition in the petition in the High Court. G.C Appeal allowed.

IN-Abs

The appellant was an Overseer in the Public Works Department of the Central Provinces and Berar Government. In 1947 he was suspended from service and prosecuted under section 161 I.P.C. Ultimately, on orders from the High Court, the prosecution was dropped. In a departmental enquiry also the appellant was exonerated, By an order dated December 1960, the Government held that the suspension of the appellant and the ' departmental enquiry against him "were not wholly unjustified". The order then directed that the appellant should be reinstated in service with effect from the date of the order and retired from the date, he, having already attained superannuation age on September 5, 1952 and that the entire period of absence from duty should be treated as period spent on duty under F.R. 54(5) for purposes of pension only, but that he should not be allowed any pay beyond what he had actually received or what was allowed to him, by way of subsistence allowance during the period of his suspension. The appellant filed a petition under article 226 of the Constitution contending that F. Rule 54(2) governed his case and not F. Rule 54(5). The High Court decided against him but granted him certificate to appeal to this Court. It was contended on behalf of the appellant that before deciding which rule applied to his case the Government should have given him an opportunity to be heard. The respondent urged that in passing a consequential order a hearing is not necessary. Held: An order passed under F R. 54 is not always a consequential order nor is such order necessarily a continuation of the departmental proceeding taken against the employee. [359E F] Consideration under F.R. 54 depending as it does on facts and circumstances in their entirety, passing an order on the basis of factual finding arrived at from such facts and circumstances and such an order resulting in pecuniary loss to the Government servant must be held to be an objective rather than a subjective function. The very nature of the function implies the duty to act judicially. In such a case if an opportunity to show cause against the action proposed is not afforded, as admittedly it was not done in the pre sent case, the order is liable to be struck down as invalid on the ground that it was one in breach of the principles of natural justice. State of Orissa vs Dr. (Miss) Binapani Devi and Ors. ; , relied on. [359H; 360A B] V. R. Gokhale vs State of Maharashtra, I.L.R. [1963] Bom. 537, approved.

Appeals Nos. 1003 and 1004 of 1964. Appeals by special leave from the judgment and order dated January 7, 1963 of the Bombay High Court, Nagpur Bench in Civil Revision Applications Nos. 294 and 295 of 1962. section T. Desai, G. L. Sanghi and O. C. Mathur, for the appel lant (in both the appeals). C. B. Agarwala, section K. Gambhir and Ganpat Rai, for respondent No. 1 (in both the appeals). R. N. Sachthey, section P. Nayar for R. H. Dhebar, for the res pondent No. 3 (in both the appeals). The Judgment of the Court was delivered by Sikri, J. These two appeals, by special leave, are directed against the judgment of High Court of Judicature at Bombay (Nagpur Bench), dated January 7, 1963, allowing two Civil Revision applications Nos. 294 of 1962 and 295 of 1962, filed by Paramsukhdas, a respondent before us. The High Court, by this judgment, quashed orders dated April 9, 1962, in the Land Acquisition Cases No. 189 of 1961. and No. 190 of 1961 (as amended subsequently on July 6, 1962) and remitted the matter to the Court of the Civil Judge, Akola, for a fresh decision on merits with advertence to the remarks in the judgment. The High Court further directed that Paramsukhdas be allowed to be impleaded as a non applicant in the two proceedings and all parties will be allowed to amend their pleadings or make fresh pleadings with respect to the alleged compromise as filed before the High Court in Special Civil Application No. 232 of 1960. Mr. section T. Desai, the learned counsel for the appellant, con tends: (1)That the High Court has no jurisdiction under section 115. to interfere with the orders of the Civil Judge, dated April 9, 1962; 364 (2) That Paramsukhdas, respondent No. 1, is not a person interested in the compensation and is not entitled to be impleaded as a party to the references under section 18 of the Land Acquisition Act, 1894, (I of 1894) hereinafter referred to as the Act , (3) That, if at all, no revision but appeal lay to the High Court. Before dealing with the above contentions it is necessary to state the relevant facts. Sunderlal, appellant, owned some land (field No. 22) in Monza Umari, Taluq and District Akola. This field had been leased to Khushal Singh under a registered lease for 5 years commencing from April 1, 1954. The field was acquired by the Government. The Land Acquisition Officer made his award on January 30, 1960, and assessed the total compensation at Rs. 26,105.58, and apportioned the amount equally between Sunderlal and Khushal Singh. On February 17, 1960, the Land Acquisition Officer noted the following regarding Khushal Singh: "2. Khushalsing s/o Tolaram (a) According to letter No. 154 / 60 of 15th February 1960 from the Court of Civil Judge (Sr. Dn.) Khamgaon, and the attachment order issued by that Court, in C.S. No. 4 B/1958, the amount to be paid to Khushalsing Tolaram be kept in Revenue Deposit. (b) One Sunderlal minor guardian father Madanlal Harjimal, of Akola, has presented an objection petition against this payment. " Sunderlal filed an application for reference under section 18 of the Act, claiming more compensation and also complaining in regard to the apportionment of the amount of compensation between him and Khushal Singh. According to him, Khushal Singh was not a protected tenant and his period of lease having expired, he was not at all entitled to any portion of the amount of compensation. A reference under section 18 was made on June 27, 1961, and this reference was numbered Land Acquisition Case No. 189 of 1961. Khushal Singh also applied for a reference and he claimed enhancement of compensation and challenged the basis of apportionment adopted by the Land Asquisition Officer. The Collector made the reference and it was numbered Land Acquisition No. 190 of 1961. Before we deal with what happened before the Civil Judge, it is necessary to give some facts about the litigation between Sunderlal and Khushal Singh. 'On July 21, 1956, Sunderlal filed a suit (Civil Suit No. 133 B of 1956) against Khushal Singh for rent due on January 1, 1955, and January 1, 1956, in the, Court of Civil Judge, Akola. On July 22, 1957, the Civil Court referred the matter to the Revenue Court under section 16 A of the Berar Regulation of Agricultural Leases Act, 1951. On July 25, 1958, the Sub Divisional Officer, Akola, answered the reference 365 Revenue Case No. 79 of 1957 58) holding that Khushal Singh was not a protected lessee. On appeal, the Deputy Collector. Akola, held, on October 8, 1959, that Khushal Singh was a protected lessee. The Bombay Revenue Tribunal confirmed the order of the Deputy Collector on March 22, 1960. Sunderlal filed a petition before the High Court under article 226 of the Constitution. It was numbered Special Civil Application No. 232 of 1960. On February 8, 1961, a compromise petition (Civil Application No. 163 of 1961) was filed in the High Court, in Special Civil Application No. 232 of 1960. It was stated in. the compromise petition that Khushal Singh did not wish to dispute Sunderlal 's contention that the land was leased for horticulture purposes and that he had not acquired the status of a protected lessee, as defined in the Berar Regulation of Agricultural Leases Act, 1951. Khushal Singh further stated that he had no objection to the quashing of the orders of the Bombay Revenue Tribunal dated March 22, 1960, and of the Deputy Collector dated October 8, 1959. On March 11, 1961, Paramsukhdas filed an application (Civil Application No. 246 of 1961) in the High Court in Special Civil Application No. 232 of 1960, claiming to be heard. He alleged that he had obtained a decree against Khushal Singh and started execution proceedings for Rs. 20,013/ and the amount of Rs. 13,644.27 ordered to be paid to Khushal Singh as compensation had been attached by him for the satisfaction of his decree. He alleged that Khushal Singh and Sunderlal had mala fide entered into an agreement and had filed a compromise application asking for quashing of the orders of the Revenue Courts with the sole object of setting at naught the attachment and execution of his decree. He prayed, therefore, for leave to appear in the case as a party vitally interested. He further prayed that the compromise application should not be entertained and, should be dismissed in the interest of justice. It appears that on March 20, 1961, this application came up for hearing before the High Court. Paramsukhdas, however, took three weeks ' more time from the High Court, which was granted to him. It further appears that Paramsukhdas withdrew the said amount of Rs. 13,644 27 towards satisfaction of his decree. On April 18, 1961, he filed another application (Civil Application No. 365/61) wherein he stated that he had withdrawn the amount and alleged that he was now an interested party, and, therefore, he should be joined as a party. On the same date, his Advocate, Mr. Sohoni gave an undertaking in the following terms: "Mr. Sohoni undertakes to hold the moneys withdrawn 'by his client subject to the orders of this Court 'on this application." On August 3, 1961, the High Court disposed of Civil Applica tion No. 163 of 1961, Civil Application No. 246 of 1961 and Civil Application No. 365 of 1961. The High Court held that in L/S5SCI 10 366 the circumstances "we do not consider it advisable to proceed in this matter ourselves. The parties will be at liberty to file the compromise petition in the Civil Court where proceedings are pending on reference under section 18 of the Land Acquisition Act." The High Court, in order to safeguard the interests of the parties, kept these proceedings pending till the decision on the, compromise petition by the Civil Court. The compromise petition was directed to be returned to Sunderlal. On September 18, 1961, Sunderlal and Khushal Singh filed applications for compromise in both the Land Acquisition references. Paramsukhdas filed applications under 0. XXII r. 10, read with section 151, C.P.C., praying that his name be substituted or added as an applicant. He alleged that the compromise was fraudulent and that Khushal Singh was abandoning the case, and as an attaching creditor, he was entitled to be added a party to the case. Both Khushal Singh and Sunderlal objected, and by two orders dated April 9, 1962, the Civil Judge rejected the applications of Paramsukhdas. He framed the issue: "Whether Paramsukhdas can be permitted to be substituted or added as a party to these two references." He held that admittedly Paramsukhdas had not approached the Land Acquisition Officer in the proceedings in which the award was passed on January 30, 1960. He had not appeared before the Land Acquisition Officer as a person interested in the land or the compensation that would be determined by the authorities. He further held that under the circumstances Paramsukhdas was not one of the persons interested in the acquired land before the Collector, and he also could not be one, of the persons interested in the objections under section 20.(b) of the Act. After referring to Manjoor Ahmad vs Rajlaxmi Dasi (1) and Abu Bakar vs Peary Mohan Mukherjee (2), he hold that the scope of the reference under section 18 was limited and new questions not covered by the reference could not be entertained. He reviewed his orders on July 6, 1962, but nothing turns on that in the present appeals. Paramsukhdas filed two revisions, Nos. 294 and 295 of 1962, before the High Court on June 30, 1962. On August 22, 1962, Sunderlal filed an application for withdrawal of Special Civil Application No. 232 of 1960. The High Court, on September 24, 1962, ordered: "Allowed, main petition dismissed as withdrawn. No costs.". Before the High Court a preliminary objection was raised in Civil Revisions Nos. 294 and 295 of 1962, that revisions were not competent because appeals lay against the orders of the Civil (1) A.I.R, 1956 Cal, 263. (2) I.L.R. 367 Judge. The High Court overruled this objection. Regarding the ,claim of Paramsukhdas to be added as a party, the High Court ;held that his application showed that he was not claiming any interest in the lands themselves but was only claiming an interest in the compensation for the land which had been deposited in the Court for payment to the persons concerned, and as such was a person interested, as defined in section 3 (b) of the Act, and he. would, therefore, be entitled to claim that he should be allowed to join as a party. Mr. Desai contends that an attaching creditor is not interested in the amount of compensation as compensation. His interest, he urges, is only to get moneys belonging to the judgment debtor in enforcement of his rights, and accordingly he is not entitled to be made a party to the reference under section 18 of the Act. He further contends that the Court in hearing a reference under section 18 of the Act can only deal with an objection, which has been referred and cannot go into any matter beyond the reference. He con cludes: if this is so, even if Paramsukhdas is ordered to be added a party he would not be able to challenge the compromise between Sunderlal and Khushal Singh. The learned counsel for the respondent, Mr. C. B. Agarwala, controverts these submissions. ,He says that Paramsukhdas is a person interested in the objection within section 20, and is a person affected by the objection within section 21 of the Act. He also relies on 0. XXII r. 10(2), C.P.C., which is made applicable by section 53 of the Act. Before examining the authorities cited at the Bar, it is necessary to examine the scheme and the provisions of the Act insofar as they are relevant to the question of determination of compensation, the question of apportionment of the compensation, and the question as to the persons who are entitled to be heard. Section 3(b) defines the expression "person interested" as follows: "the expression person interested includes all persons claiming an interest in compensation to be made on account of the acquisition of land under this Act, and a person shall be deemed to be interested in land if be is interested in an easement affecting the land. " It will be noticed that it is an inclusive definition. It is not necessary that in order to fall within the definition a person should claim an interest in land, which has been acquired. A person becomes a person interested if he claims an interest in compensation to be awarded. It seems to us that Paramsukhdas is a "person interested" within section 3(b) of the Act because he claims an interest in compensation. But before he can be made a party in a reference it has to be seen whether he comes within s, 20(b) and s.21 of the Act. L/S5SCI 10(a) 368 The scheme of the Act seems to be to first deal with persons who are interested in land. These persons are heard under section 5A of the Act. The ordinary meaning of "the person interested in land" is expanded by section 5A(3), for the purposes of this section, to include a person who would be entitled to claim an interest in compensation. It would be strange to come to the conclusion that the Legislature is keen that a person claiming an interest in compensation should be heard before the land is acquired but is not interested in him after the land is acquired. On the contrary, it follows from section 5A(3) that a person claiming an interest in compensation would be one of the persons whose interests are meant to be safeguarded. It appears from sections 6 to 10 that a person claiming an interest in compensation is not expressly mentioned. But in section 11 he is expressly mentioned, and it is directed that the Collector shall inquire into respective interests of the persons claiming the compensation and shall make an award. Section 12 makes the award final and conclusive as between persons interested, i.e., including persons claiming an interest in compensation. Under section 14 the Collector has power, inter alia, to summon the parties interested. Under section 18 any person interested can claim a reference. A person claiming an interest in compensation would also be entitled to claim a reference. After a reference is made the Court is enjoined under section 20 to determine the objections, and serve, among others, all persons interested in the objection. A person claiming an interest in compensation would, it seems to us, be a person interested in the objection if the objection is to the amount of compensation or the apportionment of compensation, and if his claim is likely to be affected by the decision on the objection. Section 21 restricts the scope of enquiry to a consideration of the interests of the persons affected by the objection. But it does not follow from section 21 that there is any restriction on the grounds which can be raised by a person affected by the objection to protect his interests. The restriction that is laid is not to consider the interests of a person who is not affected by the objection. Section 29 deals with apportionment of compensation, if there is agreement, and section 30 enables the Collector to refer disputes as to apportionment to the Court. From the above discussion it follows that a person claiming an interest in compensation is entitled to be heard under sections 20 and 21 of the Act. The provisions of the Act, including sections 20 and 21, do not prescribe that his claim to an interest in compensation should be "as compensation", as urged by Mr. Desai. This is really a contradictory statement. For, a fortiori, he has no interest in land, and compensation is given for interests in land. He can never claim compensation qua compensation for what he claims is an interest in the compensation to be awarded. This is not to say that a person claiming an interest in compensation may not claim that the compensation awarded for the acquired land is low, if it affects his interests, 369 In the view we have taken we are supported by some autho rities. Shah, J., speaking for the majority in Grant vs State of Bihar,(1) observed: "The right of the State of Bihar arose on May 22, 1952 when the title to the land vested in it by virtue of the notification issued under the Bihar Land Reforms Act. There is nothing in the Land Acquisition Act which prohibits the Collector from making a reference under section 30 for determination of the title of the person who has since the date of the award acquired a right to the compensation. If after a reference is made to the Court the person interested dies and his title devolves upon another person, because of inheritance, succession, insolvency, forfeiture, compulsory winding up or other form of statutory transfer, it would be open to the, party upon whom the title has devolved to prosecute the claim which the person from whom the title has devolved could have prosecuted. In Promotha Nath Mitra vs Rakshal Das Addy(2) it was held that a reference made by the Collector under section 30 of the Land Acquisition Act at the in stance of a proprietor of land may be prosecuted by the purchaser of his rights after the award at a revenue auction. If the right to prosecute a reference by a person on whom the title of the person interested has devolved be granted, there is no reason why the right to claim a reference of a dispute about the person entitled to compensation may not be exercised by the person on whom the title has devolved since the date of the award. The scheme of the Land Acquisition Act is that all disputes about the quantum of compensation must be decided by resort to the procedure prescribed by the Act; it is also intended that disputes about the rights of owners to compensation being ancillary to the principal dispute should be decided by the Court to which power is entrusted. Jurisdiction of the Court in this behalf is not restricted to cases of apportionment, but extends to adjudication of disputes as to the person who are entitled to receive compensation, and there is nothing in section 30 which excludes a reference to the Court of a dispute raised by a person on whom the title of the owner of land has, since the award, devolved. " In Golap Khan vs Bholanath Marick(3) an attaching creditor was directed to be made a party to the reference under the Land (1) ; (2) (3) 370 Acquisition Act, before the Civil Court. Mookerjee, J., observed: "The petitioner was entitled to be added as a party, not under Rule 10, but on the ground that he was a person interested in the subject matter of the litigation and that no order ought to have been made for its disposal without any opportunity afforded to him to establish his claim." In Siva Pratapa Bhattadu vs A.E.L. Mission(1) an attaching creditor was held to be a person interested within section 3(b) of the Act. Mr. Desai relies on Manjur Ahmed vs Rajlakshmi(2) but in that case the point decided by the Court was different. It was held there that if a party to a land acquisition proceeding before the Collector had not obtained a reference under section 18 of the Act, its representative could not do indirectly what they did not do directly, i.e. they could not be added a party in a reference pending at the instance of other parties in order that the nil award against the party might be reversed and in order that they might be awarded a share of the compensation money. Here no such point has been raised. It has not been urged before us that Paramsukhdas was a party before the Collector and that having not applied for a reference under section 18 he is now debarred from being added as a party. The case of Gobinda Kumar Roy Chowdhury vs Debendra Kumar Roy Chowdhury(3) was also decided on the same lines. Similar view was reiterated in Mahammad Safi vs Haran Chandra(4). Both these cases had followed Abu Bakar vs Peary Mahan Mukerjee(5). Maclean, C. J., observed as follows in Abu Bakar vs Peary Mohan Mukerjee(5). "If we read that section in connection with section 20 and section 18, I think it is impossible to avoid the conclusion that the Legislature intended that all that the Court could deal with was the objection which had been referred to it; and this seems to be a view consistent with commonsense and with the ordinary method of procedure in civil cases. The zemindar here could, if he liked, have raised the objection as to the whole com pensation for the trees being given to the tenants, but he did not do so. He must, therefore, be taken to have accepted the award in that respect; and it would be little less than dangerous if we were to hold that the Judge to (1) A.I.R. 1926 Mad. 307. (2) A.I.R. 1956 Cal. 263. (3) C.W.N. 98. (4) (5) 371 whom only one objection was referred could go into all sorts of questions and objections which had not been referred to him. " These three cases are distinguishable inasmuch as they are dealing with the cases of persons who having a right to seek a reference failed to claim that reference but ought to raise the point in a, reference made at the instance of another party. The case of Karuna Sindhu Dhar vs Panna Lal Paramanik(1) also does not assist the appellant. The High Court held in that case that as Rajmohan never claimed the entire compensation money before the Collector, the Land Acquisition Judge was not entitled to vary the awards by a declaration that Rajmohan alone was entitled to get the compensation. It seems to us that Paramsukhdas was clearly a person in terested in the objections which were pending before the Court in the references made to it and that he was also a person whose interest would be affected by the objections, within section 21. He was accordingly entitled to be made a party. In the result we uphold the order made by the High Court in this respect. Mr. Desai says that at any rate direction should be given that Paramsukhdas should not be entitled to challenge the compromise entered into between Sunderlal and Khushal Singh. We are unable to accept this submission. Paramsukhdas is entitled to raise all points to protect his interests which were affected by the objections. It is also in the interest of justice that there should not be multifarious proceedings and all points arising which are not expressly barred under section 21 should be gone into by the Court. This leaves only the two points regarding the jurisdiction of the High Court. In our view, the High Court is quite right in holding that the orders of the Civil Judge, dated April 9, 1962, were not awards within section 54 of the Act. The awards had still to be made. If no appeal lay, then the revisions were competent and the High Court was right in entertaining the revisions because the Civil Judge had either refused to exercise jurisdiction vesting in him or had acted with material irregularity in the exercise of his jurisdiction. In the result the appeals fail and are dismissed with costs in favour of Respondent No. 1; one hearing fee. Y.P. Appeal dismissed.

IN-Abs

The land of the appellant was acquired under the Land Acquisition Act, 1894 and the compensation was apportioned between the appellant and his lessee. The appellant claimed that be was entitled to the whole of the compensation while his, lessee claimed a larger share. At their instance, references were made to the Civil Court under section 18 of the Land Acquisition Act, But, before the references were made, the respondent, who was a decree holder against the lessee, attached the lessee 's share of the compensation amount in execution of his decree. Subsequently the respondent withdrew the lessee 's share of the compensation amount in execution of his decree. The appellant and his lessee, filed a compromise petition before the Civil Judge and the respondent also applied to be impleaded as party to the References. The Civil Judge dismissed the respondent 's applications. The respondent thereupon, filed revision petitions in the High Court. The High Court, held: (1) that the respondent was a person interested in the compensation within the meaning of section 3 (b) of the Land Acquisition Act and was therefore entitled to claim that he should be allowed to join as a party; and (ii) that the revision petitions were competent. In appeal, this Court, Held: (i) The respondent was a 'person interested ' within section 3(b) of the Act, because, he was claiming an interest in the compensation. He was also interested in the objections which were pending before the Court in the references made to it and was a person whose interest would be affected by the objections. within section 21 of the Act. Accordingly, he was entitled to be made a party. [367H; 371C D] The definition of 'Person interested ' in section 3 (b) is an inclusive definition and in order to fall within it it is not necessary that a person should claim an interest in the acquired land. It is sufficient if he claims an interest in the compensation to be awarded. A person claiming art interest in the compensation would be a person interested in the objections to be determined under section 20 of the Act, if the objection is to the amount of compensation or the appor tionment of compensation, and if his claim is likely to be affected by the decision on the objection. Under section 21 the interest , of a person who is not affected by the objection are not to be considered but if he is affected, there is no restriction on the grounds which can be raised by him to protect his interest. Therefore, a person claiming an interest in the compensation is entitled to be heard under Ss. 20 and 21. The sections do not prescribe that his claim to an interest in compensation should be as 'compensation '. A person who has no interest in land can never claim compensation qua compensation, for what he claims is an interest in the compensation, to be. 363 awarded. That is not to say that a person claiming an interest in the compensation may not claim that the compensation awarded for the acquired land is low, if it affects his interests. [367G H; 368D H] Grant vs State of Bihar ; , followed. Golap Khan vs Bholanath Marick, , Siva Prasad Bhattadu vs A.E.L. Mission, A.I.R. 1926 Mad. 307 approved. Manjoor Ahmed vs Rajlaxmi Dasi, A.I.R. 1956 Cal. 263 Abu Bakar vs Peary Mohan Mukherjee, I.L.R. , Gobinda Kumar Roy vs Debendra Kumar Roy Mahammad Safi vs Haran Chandra and Karuna Sindhu Dhar vs Panna Lai Paramanik , distinguished. (ii) The High Court was right in holding that the orders of the Civil Judge were not awards within the meaning of section 54 of the Land Acquisition Act; and as they were not awards and no appeals lay, the revisions were competent and the High Court was justified in interfering as the Civil Judge refused to exercise a jurisdiction vested in him. [371F]

Appeals Nos. 187 and 188 of 1953. Appeals under article 132 of the Constitution of India from the Judgment and Order, dated the 29th August, 1952, of the High Court of Judicature at Madras in Writ Petitions Nos. 21 and 41 of 1952. K.V. Venkatasubramania Iyer (A. N. Rangaswami and. section K. Aiyangar, with him) for the appellant. M. Seshachalapathi for the respondent. V.K. T. Chari, Advocate General of Madras (V. V. Raghavan, with him) for the intervener (State of Madras). T. R. Balakrishna lyer and Sardar Bahadur for the intervener (State of Travancore Cochin). Nittoor Sreenivasa Rao, Advocate General Of Mysore (Porus A. Mehta, with him) for the intervener (State of Mysore). Lal Narayan Sinha (B. K. P. Sinha, with him) for the intervener (State of Bihar). March 11. The Judgment of the Court was delivered by DAS J. These two appeals arise out of Writ Petitions Nos. 21 'and 41 of 1952, filed in the High Court of Judicature at Madras under article 226 questioning the validity of the Madras General Sales Tax Act (IX of 1939) and of the Turnover and Assessment Rules framed under that Act. 1119 The petitioners are tanners carrying, on business in Eluru, West Godawari District, which is now part of the newly created State of Andhra. They make large purchases of untanned hides and skins and after tanning them in their tanneries they export the tanned hides and skins or sell the same to local purchasers. In the High Court the appellants impugned the Act and the rules on the following grounds : I (a) The Provincial Legislature had no power under the Government of India Act of 1935 to enact a law imposing a tax on purchasers; (b) The liability to pay tax on sales is thrown on the purchaser not by the statute but by the rules. This is an unconstitutional delegation by the legislature of its functions to the executive and the imposition of ,the tax is accordingly illegal; (c) The Act has become void under article 14 of the Constitution, as it singles out for taxation purchasers in some trades and is, therefore, discriminatory; and (d) The rules framed under the Act are inconsistent with the provisions enacted in the body of the Act and are void. The High Court repelled each of the aforesaid grounds except that under item (d). It held that rule 16(5) was ultra vires in that it offended against section 5 (vi) of the Act and dismissed their applications. Hence the present appeals by the appellants under the certificate granted by the High Court that it was a fit case for appeal to this court. Learned advocate appearing in support of these appeals has not pressed the objection under item (b) but has insisted on the remaining grounds of objection. In our opinion the decisions of the High Court on those grounds are substantially well founded and correct. On the question of legislative competency the learned advocate drew our 'attention to entry 54 in List II of the Seventh Schedule to the Constitution of India and argued that this entry clearly indicated that entry 48 in List II of the Seventh Schedule to the Government of India Act, 1935; under which the 145 1120 impugned Act was passed, was much narrower in its scope and could not be read as authorise in a the making of a law with respect to taxes on the purchase of goods. This argument appears to us to be fallacious, for the intention of the Constituent Assembly as expressed in entry 54 in List II of the Seventh Schedule to the Constitution cannot be a guide for ascertaining the intention of a totally, different body, namely, the British Parliament, in enacting entry 48 in List 11 of the Seventh Schedule to the Government of India Act, 1935. Further, we agree with the High Court that entry 48 in List II of the Seventh Schedule to the Government of India Act, on a proper construction, was wide enough to cover a law imposing tax on the purchaser of goods as well and that the Constituent Assembly in entry 54 of List II in the Seventh Schedule to the Constitution accepted this liberal construction of the corresponding entry 48 and expressed in clearer language what was implicit in that corresponding entry. The next point urged by the learned advocate was founded on article 14 of the Constitution. The appellants ' grievance is that the impugned Act singles out for taxing purchasers of certain specified commodities only but leaves out purchasers of all other commodities. The principle underlying the equal protection clause of the Constitution has been dealt with and explained in Chiranjitlal Chowdhury vs The Union of India (1) and several subsequent cases and need not be reiterated. It is well,settled that the guarantee of equal protection of laws does not require that the same law should be made applicable to all persons. Article 14, it has been said, does not forbid classification for legislative purposes, provided that such classification is based on some differentia having a reasonable relation to the object and purpose of the law in question. As pointed out by the majority of the Bench which decided Chiranjitlal Chowdhury 's case, there is a strong presumption in favour of the validity of legislative classification and it is for those who challenge it as (1) [1950] S.C.R. 1121 unconstitutional to allege and prove beyond all doubt that the legislation arbitrarily discriminates between different persons similarly circumstanced. There is no material on the record before us to suggest that the purchasers of other commodities are similarly situated as the purchasers of hides and skins. The majority decision in Chiranjitlal Chowdhury 's case(1) clearly applies to the case before us and there is no getting away from the position that the appellants before us have not discharged the burden of proof that, according to the majority decision, was upon them to do. Lastly, the learned advocate urges that rule 16(5) clearly contravenes the provisions of section 5(vi) of the Act. This sub rule has been held to be ultra vires by, the High Court and, indeed, the learned Advocate General of Madras did not in the High Court, as before ,us, dispute that rule 16(5) was repugnant to section 5(vi). That sub rule, however, affects only unlicensed dealers and the appellants who are admittedly licensed dealers are not affected by that sub rule. Further, it has not been suggested before us that the appellants were ever called upon to pay any tax on purchase of hides or skins in respect of Which tax had been previously paid by some prior purchaser. That sub rule is clearly severable and cannot affect the validity of the rules which may otherwise be within the ambit of the Act. Our attention has not been drawn to any other infirmity in the rules. In the premises there is no substance in these appeals which must, therefore, be dismissed with costs. Appeals dismissed. Agent for the respondent and for the interveners, States of Madras, Mysore and Bihar: R. H. Dhebar.

IN-Abs

Held, that the Madras General Sales Tax Act (IX of 1939), is not ultra vires the Government of India Act, 1935 as entry 48 in List II of the Seventh Schedule to the Government of India Act, 1936 was wide enough to cover a law imposing 'a tax on the purchaser of goods as well as on the seller. Held, also that inasmuch as there was nothing to suggest that the purchasers of other commodities were similarly situated as the purchasers of bides and skins in the present case the Act 1118 was not void under article 14 of the Constitution on the ground that the impugned Act singles Out for taxing purchaser of certain specified commodities only but leaves out purchasers of Mother commodities. Article 14 does not forbid classification for legislative purposes provided such classification is based on some differentia having a reasonable relation to the object and purpose of the law in question. Rule 16(5) framed under the Act contravenes the provisions of section 5(vi) of the Act but this sub rule is severable and does not affect the validity of the rules which may otherwise lie within the ambit of the Act. Chiranjit Lal Chowdhury vs The Union of India ([1950] S.C.R. 869)relied upon.

Appeal No. 440 of 1966. Appeal by special leave from the order dated May 30, 1964 of the Central Government Labour Court, Dhanbad in Application No. L.P. 123 of 1962. H. R. Gokhale, C. A.,Chopra, P. C. Bhartari, land 0. C. Mathur, for the appellant. Janardan Sharma, for the respondent. The Judgment of the Court was delivered by Vaidialingam, J. This appeal, by special leave, by the appellant Bank, is directed against the order, dated May 13, 1964, of the Central Labour Court, Dhanbad, rejecting an application, filed by the Bank, under section 33(2)(b), of the (Act XIV of 1947) (hereinafter called the Act), and declining to grant approval of the action taken, by the Bank, by way of discharging the respondent workman, from the Bank 's services. The respondent was, at the material time, the Assistant Ac countant, at the main Office of the Bank, at Calcutta. In view of certain serious irregularities, noticed by the Bank, in respect of the work of the respondent in the Current Accounts Department and, in particular, in current account ledgers Nos. 4 and 6, by order dated March 8, 1961, the respondent was suspended, with immediate effect. He was also informed that the charges against him would be communicated, in due course. By a further communication, dated March 13/14, 1961, the respondent was required to offer his explanation, in respect of four allegations made in the said communication. The main allegations were that, in respect of ledger 'accounts Nos. 4 and 6, standing in the names of Messrs. Commercial Bureau and Messers Evergreen Paper Syndicate and Messrs. Gokul Chand Radharam, respectively, overdrafts had been allowed, by the respondent, from time to time, without obtaining the sanction of the authorities competent to allow overdrafts. The other allegations were to the effect that the respondent, who was charged with the duty of supervising both these ledgers. did not bring to the notice. of the authorities the said irregularities, that must have come to his knowledge, and that the pass book of ledger No. 4 was missing. The respondent sent a reply, dated March 17, 1961, wherein he has admitted that, in the course of discharge of his routine duties and responsibilities, in good faith and honestly, he had granted overdrafts to the parties referred to, by the Bank, temporarily, in excess of their credits or limits, without reference to the higher authorities. He also admitted that it was a blunder on his part and that he should not have done so. He offered an explanation to, the effect that he was led to believe in the credit worthiness of the individuals, because of their long association with the Bank and also because of the fact that, on prior occassions, overdrafts 253 had been granted to them, in excess of permissible limits. He also stated that the Bank had not been put to any financial loss because of his having granted the overdrafts; but, he again admitted his negligence, in not strictly abiding by the Bank 's rules, when he made the overdrafts. He, however, added that his conduct had always been guided by good faith and honesty. This Was the answer, regarding the main allegations, contained in the Bank 's letter, dated March 13/14, 1961. He also stated, regarding the other minor allegations, that it was not his duty to report about the debit balances, which was the function of the ledger keeper, and that he was not also responsible for the loss of the pass book, of ledger No. 4. He wound up his explanation by stating that his conduct, in making the overdrafts, without obtaining the sanction of the higher authorities,, was an omission which had been, unfortunately, committed by him, and he expresed regret for the same and requested the management to excuse him, accepting his explanation. The appellant Bank was not satisfied with the explanation offered by the respondent, and communicated a charge sheet, on June 3, 1961. The main charges related to the overdrafts, paid by the respondent, in ledger Nos. 4 and 6, without obtaining the permission of the proper sanctioning authority. The Bank also informed the respondent that he would, be given a further opportunity to explain his conduct, in relation to those matters, and defend himself in the enquiry which would be held by the Agent of the Bank, on June 20, 1961, at 3.30 p.m. The respondent again sent a reply, dated July 11, 1961, to the charge sheet served on him. In this reply also, he admitted that, in the course of discharge of his routine duties and responsibilities, he had allowed the parties, mentioned in the charge sheet, to overdraw, in excess of their credits, without reference to the higher authorities, and that it was a blunder on his part which he should not have committed. But, he again reiterated that he, in good faith and bona fide, was led to believe about the credit worthiness of the parties, who had long association, with the Bank. He also emphasized, here again, that the Bank had not been put to any financial loss, because of his conduct. He again admitted that this act of permitting the parties concerned to overdraw, in excess of their limits, without reference to the sanctioning authorities, amounted to negligence, but his conduct was perfectly bona fide and honest. He also offered explanation, on the minor alle gations, to the effect that it was the duty of the ledger keeper to give the figures regarding the overdrafts and that he had not done any mis reporting to the higher authorities. Finally he made a plea that he had been serving the institution for over 20 years without any blemish, and the unfortunate omission, done by him, in the matter of not taking the sanction of the higher authorities, might be excused, accepting his expression of regret, 254 The inquiry proceedings (conducted by the Agent, who was the Inquiry Officer), produced before the Labour Court, shows that the respondent was examined in the first instance. After eliciting answers regarding the duration of his employment, in the institution, and as to the nature of the work he was discharging, he was asked about the charge sheet served on him, as well as the explanation, furnished by him. The respondent has categorically answered to the effect that he has understood the charge sheet and that he does not want to add anything more to the explanation that he has already submitted. This answer must have reference to the explanation, furnished by him, on June 20, 1961, in answer to the charge sheet, wherein he has admitted his mistake in sanctioning the overdrafts, to the parties concerned, with out obtaining the sanction of the appropriate authorities. But, inasmuch as he has stated, in his explanation, that on prior occasions also overdrafts have been allowed beyond the permissible limits, certain questions were put to him, in respect of those matters. The respondent, no doubt, appears to have stated that some of the cheques, issued to the parties concerned, have been initialled by an Officer of the Bank, Mr. Bhatena. The respondent, again, squarely admitted, in his answers, that he has committed a blunder in granting advances, on his own responsibility, of about Rs. 87,000. He has also admitted that he did not make any reference to the Agent, when passing the cheques, regarding the accounts of Messrs. Evergreen Paper Syndicate or Messrs. Gokul Chand Radharam. During the course of the inquiry, the respondent was allowed to search the records concerned, and trace, if possible, any cheques that may have been initialled by Mr. Bhatena, and no such cheque could be traced. Inasmuch as three other officers, whose conduct was being enquired into, had made certain statements against the respondent, the latter was asked as to whether he wanted to examine, or cross examine those persons; and the respondent very clearly stated that he did not like to cross examine anybody. The Management then examined Mr. Bhatena and Mr. Savkar, two Officers of the Bank, in the presence of the respondent. It is also seen that the respondent has also put certain questions to those two witnesses; and he has also stated that he has no further questions to be put to them. At the conclusion of the recording of the evidence, it is seen that the respondent finally made an appeal to the Enquiring Officer to consider his case sympathetically, at the same time admitting his acts of omission, in the discharge of his duties. He has also expressed his gratitude for the patient hearing that has been given to him during the inquiry. The Enquiry Officer, in his report, dated November 10, 1961, has, after referring to the nature of the enquiry conducted by him, 255 found the respondent guilty of the main charges of having permitted the parties concerned, to obtain overdrafts, beyond the permissible limits, without having obtained the sanction of the appropriate authorities. In this connection, the Enquiry Officer has referred to the fact that these allegations have been admitted by the respondent. Regarding the other minor allegations, that the respondent caused other officers to record debit balances incorrectly, and the loss of the pass book relating to ledger No. 4, the respondent was exonerated. The Enquiry Officer was of the view that the offence committed by the respondent, of which he had, been found guilty, was very serious which merited dismissal; but, in view of the long number of years of service put in by the respondent and as no loss has resulted to the Bank itself, he held that the respondent should be discharged from service. The Bank communicated the order of discharge, by its letter, dated June 27, 1962, enclosing a pay order for Rs. 472.70 being the wages for one month, viz., July 1962. The respondent, who had a right to file an appeal, against this order of discharge, based upon the finding of the Enquiry Officer, does not appear to have had recourse to any appeal, but, on the other hand, filed a representation, dated July 11, 1962, before the Managing Director of the appellant Bank. Even in this representation, he has not, in any manner, attacked the enquiry proceedings, nor the findings recorded by the Enquiry Officer. On the other hand, he again admitted his fault in having permitted, overdrafts, to the parties concerned, without obtaining the sanction of the appropriate authorities after expressing regret for his conduct. He also stated that the Bank had not suffered any financial loss, because of his conduct. Having due regard to these circumstances, he made a plea for mercy being shown to him, by cancelling the order of discharge and permitting him to resume his duties in the Bank. The Managing Director, by his communication, dated September 17, 1962, rejected the representation made by the respondent, and declined to reinstate him in the Bank 's service. In the meanwhile, inasmuch as an industrial dispute was pending before the National Industrial Tribunal, the appellant had filed, an application, before the said Tribunal, on March 17, 1962, under section 33(2) of the Act, seeking approval of the action taken against the respondent, on the basis of the recommendation of the Enquiry Officer. This application was transferred to the Central Government Labour Court, Dhanbad, on April 18, 1962. in the objections, dated September 2, 1963, filed by the respondent before the Labour Court, for the first time he raised the plea that in view of the advice given by the officers of the Bank, he sent replies admitting his guilt regarding the allegations made against him, by the Bank. He also raised the plea that the overdrafts, that were given by him, to the parties concerned, were 256 really due to oral orders given by the then Agent and the Superintendent, on telephone. He also raised the plea that he was not allowed to represent his case, through the Union, before the Enquiry Officer, nor was he allowed to cross examine the persons making allegations against him. We have elaborately referred to the matters, mentioned above, because the question, that arises for consideration, in this appeal, is as to the correctness of the view of the Labour Court, that the domestic enquiry conducted by the Bank, as against the respondent, is not fair and that principles of natural justice have been violated. The Labour Court, by its order under attack. has held that the domestic enquiry, conducted by the Bank, is not proper and that rules of natural justice have not been observed; and, in consequence, it has declined to grant the approval, sought for, by the Bank. At this stage, it may be mentioned that the Labour Court has held in favour of the management, that it has complied with the proviso to section 33(2)(b) of the Act, as interpreted, by this Court, in its decision in Strawboard Manufacturing Co. vs Gobind(1). That is, it has held that the action of the Bank, by way of discharge, payment of wages and making of the application for approval, have been taken as part of the same transaction. For coming to the conclusion that the inquiry proceedings are violative of the rules of natural justice, the Labour Court has given three reasons (i) in the inquiry, the respondent has been examined, even in the first instance, and he was cross examined, to elicit points in support of the charges; (ii) the respondent was not allowed to crossexamine witnesses; and (iii) the respondent was prejudiced, in his defence, as he had to conduct his defence without the assistance of the Union, during the enquiry. There can be no controversy that the principles of natural justice must be observed, in the conduct of a domestic enquiry, and the workman, concerned, must be allowed reasonable opportunity to defend himself. It has also been held, by this Court, that rules of natural justice require that the workman, proceeded against, should be informed clearly of the charges levelled against him; witnesses should be normally examined in the presence of the employee, in respect of the charges; if statements, taken previously and given by witnesses, are relied on, they should be made available to the workman concerned the workman should be given a fair opportunity to examine witnesses, including him self in support of his defence; and the Enquiry Officer should record his findings, based upon the evidence so adduced. So far as grounds Nos. 2 and 3, given by the Labour Court are concerned, it is clear from the record of the enquiry proceedings, that the respondent was permitted to put questions to Mr Bhatena and Mr. Savkar, who were examined, during the enquiry (1) [1962] Supp. 3 S.C.R. 618. 257 We have also referred to the fact that the Enquiry Officer has recorded that the respondent has stated that he has no further questions to be put to them. We have also referred to the fact that the inquiry proceedings show that the respondent was specifically asked as to whether he wanted to examine or cross examine the three other Officers, whose conduct was also under enquiry, and who had made certain statements against the respondent; but the respondent categorically stated that he did not like to examine or cross examine any of those persons. The respondent has not stated, even in the representations made by him to the Managing Director, that he was not given any opportunity to cross examine the witnesses produced in the inquiry. Again, even in his evidence before the Labour Court, the respondent has categorically stated that he has not made any request, in writing, for being represented by the Union, at the inquiry. Apart from the fact that he has no such right, even factually it is seen that he made no such request. Therefore the findings of the Tribunal that the respondent was not permitted to cross examine the witnesses during the domestic enquiry, and, that he was prejudiced in his defence because he was not permitted to have the assistance of the Union, are both erroneous. Then the question is as to whether the inquiry proceedings can be considered to have been conducted in violation of the rules of natural justice, inasmuch as the respondent was examined, even in the first instance. We have already indicated that, as a fact, it is borne out by the records that the respondent, so far as the inquiry against him was concerned, was examined, in the first instance, and Mr. Bhatena and Mr. Savkar, were examined later. According to the Labour Court, the object of the management, in examining the respondent, in the domestic enquiry even in the first instance, was to have the charges substantiated by statements got out of the mouth of the employee, rather than to examine witnesses for the Bank, in support of the charges. It is the further view of the Labour Court that the respondent has been, so to say, cross examined, just to elicit points in substantiation of the charges. These circumstances, according to the Labour Court, violate the principles of natural justice and, as such vitiate the domestic enquiry. In this connection, the Labour Court has relied upon certain observations, contained in the judgment of this Court in Associated Cement Co. Ltd., vs Workmen(1) viz.: "It seems to us that it is not fair in domestic enquiries against industrial employees that at the very commencement of the enquiry, the employee should be (1) , 661. 258 closely cross examined, even before any other evidence is led against him." and draws the inference that under no circumstances should a workman, whose conduct is the subject of disciplinary proceedings, by a domestic tribunal, should be examined, in the first instance. We are of the opinion that no such conclusion could be drawn from the decision, referred to above. In that case, it will be Seen ', the management had charge sheeted one Malak Ram, with disorderly behaviour when a cinema, show was being given. Malak Ram, at all stages, stoutly denied his having taken part in any hooliganism or rowdyism, as alleged by the management. Under those circumstances, instead of adducing evidence, in the first instance, regarding the allegations made against Malak Ram, in the domestic enquiry, the management commenced the proceedings, with a very close examination of Malak Ram himself. The nature of the questions put to him also clearly indicated that the worker was being cross examined, and answers sought to be elicited in support of the allegations made by the management. This Court, in coming to the conclusion that the conduct of an enquiry, in that manner, constitutes a very serious infirmity, made the ob servations, quoted above. Therefore, it will be seen, that in that case, when the workman concerned was totally denying the allegations made against him, it was the duty of the management to let in evidence, in the first instance, to substantiate its allegations, and permit the workman to cross examine those witnesses and also permit him to let in independent evidence, in defence of his plea; and this Court emphasized that the normal rule to be followed, in such, enquiries, is, as stated above. In the case before us, we have already referred to the various proceedings that have taken place, from which it will be seen clearly that the workman was ' at all stages, admitting the truth of the allegations made against him, by the management. In his communication, dated March 17, 1961, as well as, in his reply, to the charges, made by him on June 20, 1961, he has `categorically admitted that he has committed a mistake in permitting the constituents concerned to overdraw, without obtaining the sanction of, the appropriate authorities. Even when the enquiry proceedings began, he had stated that he had nothing more to add, in respect of the charges framed against him. When once the workman himself has, in answer to the charge levelled against him, admitted his guilt, in our opinion, there will be nothing more for the management to enquire into. That was the position in the case before us. Therefore, we are not inclined to agree with the reasoning of the Labour Court that when there has been an admission ' of guilt, by the respondent himself, it can still be stated, that there is a violation of the principles of natural justice merely because of the fact that the workman was examined, in the first instance. Nor, are we impressed with the further view, expressed by the Labour Court, that the way in which answers 259 were elicited from the workman, showed that there has been a cross examination, by the management, to obtain points in substantiation of the charges. We have gone through the entire examination of the respondent at the domestic enquiry, and we are satisfied that there is no such infirmity. In fact, the question of the management trying to obtain answers to support the charges, does not arise at all, in this case because the respondent has consistently admitted his guilt, at all stages. On the other hand, the nature of the questions put to the respondent clearly indicate that the management, when once the workman had, admitted his guilt, was only giving him an opportunity to explain his conduct or to refer to circumstances, if any, which could be taken into account in extenuation of his conduct. The management had also permitted the respondent to put questions to the other two witnesses, examined during the enquiry, viz., Mr. Bhatena and Mr. Savkar. We must, however, emphasize that the rules of natural jus tice, as laid down by this Court, will have to be observed, in the conduct of a domestic enquiry against a workman. If the allegations are denied, by the workman, it is needless to state that the burden of proving the truth of those allegations will be on the management; and, the witnesses called, by the management, must be allowed to be cross examined, by the workman, and the latter must also be given an opportunity to examine himself and adduce any other evidence that he might choose, in support of his plea. But, if the workman admits. his guilt, to insist upon the manage ment to let in evidence above the allegations, will, in our opinion, only be an empty formality. In such a case, it will be open to the management to examine the workman himself, even in the first instance, so as to enable him to offer any explanation for his conduct, or to place before the management any circumstances which will go to mitigate the gravity of the offence. But, even then, the examination of the workman, under such circumstances, should not savour of an inquisition. If, after the examination of the workman, the management chooses to examine any witnesses, the workman must be given a reasonable opportunity to cross examine those witnesses and also to adduce any other evidence ' that he may choose. Having considered the enquiry proceedings, in its entirety, in this case, we are satisfied that there has been no violation of the rules of natural justice. Therefore, it follows that the order of the Labour Court, refusing to grant approval, as asked for, by the management, is erroneous and, as such, it is set aside. In the result, the appeal is allowed , but parties will bear their own costs in this appeal. G.C. Appeal allowed.

IN-Abs

The respondent who was an employee of the appellant bank was charged with issuing unauthorised overdrafts to a constituent. A domestic enquiry was held against him. In two written explanations before the enquiry he admitted, the allegations against him and only pleaded extenuating circumstances. At the enquiry he was examined in the first instance; having again admitted his fault he was asked certain questions by the Enquiry Officer in respect of the extenuating circumstances pleaded by him. Two more witnesses were then examined by the Enquiry Officer. Finally, according to the latter 's report the respondent was discharged. In proceedings under section 33(2)(b) of the the Labour Court, Dhanbad held that the enquiry was bad for violation of natural justice inasmuch as the respondent had teen examined before other witnesses and was unduly cross examined. The bank appealed by special leave. Held: The rules of natural justice as laid down by this Court have to be observed in the conduct of a domestic enquiry against a workman. If the allegations are denied by the workman the burden of proving the truth of those allegations will be on the management; and the witnesses called by the management must be allowed to be cross examined by the workman and the latter must also be given an opportunity to examine himself and adduce any other evidence that he might choose, in support of his plea. But if the workman admits his guilt, to insist upon the management to let in evidence about the allegations will be an empty formality. In such a case it will be open to the management to examine the workman himself, even in the first instance, so as to enable him to offer any explanation for his conduct, or to place before the management any circumstances which will go to mitigate the gravity of the offence. But, even then, the examination of the workman, under such circumstances, should not savour of an inquisition. If, after the examination of the workman the management chooses to examine any witnesses, the workman must be given a reasonable opportunity to cross examine those witnesses and also to adduce any other evidence that he may choose. [259D F] In the present case the respondent in his written explanations had admitted the charges and therefore there was no violation of natural justice in first examining him. The questions put to him were not unfair. The Labour Court was wrong in not giving approval to his discharge. [258F; 259A, G] Associated Cement Co. Ltd., vs Workman , distinguished. Strawboard Manufacturing Co. vs Gobind, [1962] Supp. 3 S.C.R. 618, referred to.251 252

Appeal No. 1040 of 1965. Appeal by special leave from the judgment and order dated November 11, 1963 of the Allahabad High Court in First Appeal No. 60 of 1960. C. B. Agarwala and 0. P. Rana, for the appellant. J. P. Goyal and Raghunath Singh, for the respondents. The Judgment of the Court was delivered by Hegde, J. This appeal by the Collector of Varanasi by special leave under article 136 of the Constitution, is directed against the decision dated 11 11 1963 of the High Court of Judicature at Allahabad, in First Appeal No. 60 of 1960 on its file, which in its turn arose from the award made by Shri section B. Malik, District Judge, Varanasi, in certain land acquisition proceedings under cl. (b) of sub section (1) of s . 19 of the Defence of India Act, 1939 (to be hereinafter referred to as the Act). Before considering the contentions urged on behalf of the parties, it is necessary to set out the salient facts. For the purpose of constructing the Babatpur aerodrome near Varanasi, the Government acquired in the year 1946 about 500 acres of land. Compensation in respect of most of the lands acquired was settled by agreement. But in respect of the lands with which we are concerned in this appeal, 48.01 acres in extent, no settlement was arrived at. Therefore, the question of compensation in respect of those lands was referred to the arbitration of Shri section B. Malik under cl. (b) of sub section (1) of section 19 of the Act. In view of section 19(1)(e), the claimants were entitled to get as compensation the market value of those lands as on the date of acquisition. Before the arbitrator as well as the High Court, the parties were agreed that on the material on the record, the market value in question had to be fixed either on the basis of the sale deeds produced by the claimants or by capitalising the annual profits accruing from those lands. The arbitrator rejected the sale deeds produced before him. He adopted the method of capitalising the annual profits. On the question of annual profits also he rejected the evidence adduced on behalf of the claimants. He determined the same on the basis of the revenue 374 records for Fasli 1355 read with the evidence of the Naib Tehsildar, Jawal Prasad. Aggrieved by the decision of the arbitrator, the claimants went up in appeal to the High Court of Allahabad under section 19(1)(f). The High Court differed from the arbitrator as to the value to be attached to the sale deeds produced. It opined that the sale deeds produced were reliable and that they evidenced genuine transactions. The High Court fixed the compensation payable on the basis of Exh. A 42 dated 3 4 1951. The arbitrator had fixed the compensation at Rs. 26,454 12 0. The High Court enhanced the same to Rs. 90,446 3 0. It is against that decision that the Collector of Varanasi has filed this appeal after obtaining special leave from this Court under article 186. Shri Goyal, learned counsel for the respondents has raised the preliminary objection that no special leave could have been granted by this Court under article 136 as the judgment appealed against was neither that of a court nor of a tribunal. According to him, the High Court while acting under section 19(1)(f) was a persona designata and not a court or a tribunal. His argument on this question proceeded thus: Sec. 19(1)(b) of the Act empowers the Central Government to appoint as arbitrator a person qualified to be appointed a judge of the High Court; Shri Malik who possessed the required qualifications was appointed by the Central Government to act as an arbitrator; it is true that Shri Malik was District Judge of Varanasi at the time of his appointment, but in law it was not necessary that the person appointed should have been a District Judge, and much less the District Judge of any particular District; therefore, Shri Malik acted as a designated person and not as a court; hence, the award given by him cannot be considered either as a judgment or as a decree or order; it was merely an award; when the matter was taken up in appeal to the High Court, the proceedings did not cease to be arbitration proceedings; its original character continued even before the High Court; therefore, the decision made by the High Court should also be considered as an award and further the High Court in making that award should be considered as having functioned as an arbitrator. In this case, it is not necessary to go into the question whether the decision of the High Court is a decree, judgment or final order. Even according to Shri Goyal, the decision of the High Court is a 'determination ' as contemplated in article 136. That position he had to concede in. view of the decision of this Court in Engineering Mazdoor Sabha and another vs The Hind Cycles Ltd.(1). In support of his contention that the High Court while acting under section 19 (1)(f) was not functioning as a court, he placed strong reliance on the decision of this Court in Hanskumar Kishanchand vs Union of India(2). That case dealt with two cross appeals arising from a decision of the Nagpur High Court under section 19(1)(f). Those appeals were brought on the strength of the certificates issued (1) [1963] Supp. ; 1 S.C.R. 625(2) 375 by the High Court on 25th August 1949 under sections 109 and 110 of the Civil Procedure Code. In those cases it was con tended that the appeals were not maintainable for two reasons viz. (a) the decision appealed against is neither a decree judgment or final order and (b) the decision in question was not that of a court. This Court upheld both these contentions. On the second ground taken, Venkatarama Aiyar, J., who spoke for the Court, observed thus: "Under the law no appeal would have lain to the High Court against the decision of such an arbitrator. Thus, the provision for appeal to the High Court under section 19 (1)(f) can only be construed as a reference to, it as an authority designated and not as a court. " If the conclusion that the appeal under section 19(1)(f) is only a reference to an authority designated and not an appeal to a court is correct then there is no doubt that this Court could not have granted special leave under article 136. Therefore the real question is whether that decision lays down the law correctly when it stated that a High Court while acting under section 19(1)(f) is not functioning as a court. There was no dispute that the arbitrator appointed under section 19(1)(b) was not a court. The fact that he was the District Judge, Varanasi, was merely a coincidence. There was no need to appoint the District Judge of Varanasi or any other District Judge as an arbitrator under that provision. 19(1)(f) provides for an appeal against the order of the arbitrator. The section reads : "An appeal shall lie to the High Court against an award of an arbitrator excepting in cases where the amount thereof does not exceed an amount prescribed, in this behalf by rule made by the Central Government. " It is not in dispute, that in the instant case, the amount fixed by the arbitrator exceeded the amount prescribed by the rules and therefore the claimants had a right to go up in appeal to the High Court. We were informed that neither the Act nor the rules framed thereunder, prescribe any special procedure for the disposal of appeals under section 19(1)(f). Appeals under that provision have to be disposed of just in the same manner as other appeals to the High Court. Obviously after the appeal had reached the High Court it had to be determined according to the rule of practice and procedure of that Court. The rule is well settled that when a statute directs that an appeal shall lie to a court already established, then that appeal must be regulated by the practice and procedure of that court. This rule was stated by Viscount Haldane L. C. in National Telephone Co., Ltd. vs Postmaster General(1) thus: "When a question is stated to be referred to an established Court without more, it, in my opinion, imports (1) 376 that the ordinary incidents of the procedure of that Court are to attach, and also that any general right of appeal from its decision likewise attaches. " This statement of the law was accepted as correct by this Court in National Sewing Thread Co., Ltd., vs James Chadwick and Bros. Ltd.(1). It may be noted that the appeal provided in section 19(1)(f) is an appeal to the High Court and not to any Judge of the High Court. Broadly speaking, Court is a place where justice is judicially administered. In Associated Cement Companies Ltd. vs P. N. Sharma and another(2) Gajendragadkar, C.J., speaking for the majority observed: "The expression 'court ' in the context denotes a tribunal constituted by the State as a part of the ordinary hierarchy of courts which are invested with the State 's inherent judicial powers. A sovereign State discharges legislative, executive and judicial functions and can legitimately claim corresponding powers which are described as legislative, executive and judicial powers. Under our Constitution, the judicial functions and powers of the State are primarily conferred on the ordinary courts which have been constituted under its relevant provisions. The Constitution recognises a hierarchy of courts and to their adjudication are normally entrusted all disputes between citizens and citizens as well as between the citizens and the State. These courts can be described as ordinary courts of civil judicature. They are governed by their prescribed rules of procedure and they deal with questions of fact and law raised before them by adopting a process which is described as judicial process. The powers which these courts exercise. , are judicial powers, the functions they discharge are judicial functions and the decisions they reach and pronounce are judicial decisions. " The hierarchy of courts in this country is an organ of the State through which its judicial power is primarily exercised. The fact that the arbitrator appointed under section 19(1)(b) is either a designated person or a tribunal as to whether he is a person designated or a tribunal we express no opinion does not in any way bear on the question whether the 'High Court ' referred to under section 19(1)(f) is a court or not. Our statutes are full of instances where appeals or revisions to courts are provided as against the decisions of designated persons and tribunals. See for example, Advocates Act, Trade Marks Act. Reference in this connection may usefully be made to the decisions in National (1) ; , (2) ; , 377 Sewing Thread Co., Ltd. vs James Chadwick and Bros., Ltd.(1) and the Secretary of State for India in Council vs Chelikani Rama Rao and others(2) Prima facie it appears incongruous to hold that the High Court is not a 'court '. The High Court of a State is at the apex of the State 's judicial system. It is a court of record. It is difficult to think of a High Court as anything other than a 'court '. We are unaware of any judicial power having been entrusted to the High Court except as a 'court '. Whenever it decides or determines any dispute that comes before it, it invariably does so as a 'court '. That apart, when section 19(1)(f) specifically says that an appeal against the order of an arbitrator lies to the High Court, we see no justification to think that the legislature said something which it did not mean. We may now turn our attention to the decision of this Court in Hanskumar Kishanchand vs Union of India(3) on which, as mentioned earlier, Shri Goyal placed a great deal of reliance in support of his preliminary objection. The principal question that arose for decision in that case was whether the decision rendered by the High Court under section 19(1)(f) was a judgment, decree or final order within the meaning of those words found in section 109 of the Code of Civil Procedure. The Court accepted the contention of the Solicitor General appearing for the respondent, the Union of India, that it was not a judgment, decree or final order, and that being so, no certificate under sections 109 and II 0 of the Code of Civil Procedure to appeal to the Federal Court could have been given by the High Court. In that case this Court was not called upon to consider the scope of article 136. Therefore, it did not go into the question whether the decision appealed against could be considered as a determination falling within the scope of article 136. In arriving at the conclusion that the decision in question is not a judgment, decree or final order, this Court relied on the decisions in Rangoon Botatoung Co. vs The Collector, Rangoon(4), Special Officer, Salsette Building Sites vs Dossabhai Bazonji Motiwala(5). Manavikraman Tirumalpad vs Collector of Nilgris(6), and Secretary of State for India in Council vs Hindustan Co operative Insurance Society Limited(7). The effect of those decisions is summed up in that very judgment at pp. 1186 and 1187, and this is how it is put: "The law as laid down in the above authorities may thus be summed up: It is not every decision given by a Court that could be said to be a judgment, decree or order within the provisions of the Code of Civil Procedure or the Letters Patent. Whether it is so or not will depend on whether the proceeding in which it was given came before (1) (2) 43 I.A. 192 (3) ; (4) 39 I.A. 197 (5) (6) I.L.R. (7) 58 IA. 378 the Court in its normal civil jurisdiction, or dehors it as a persona designata. Where the dispute is referred to the Court for determination by way of arbitration as in Rangoon Botatoung Company vs Collector, Rangoon (39 I.A 197), or where it comes by way of appeal against what is statedly an award as in The Special Officer Salsette Building Sites vs Dossabhai Bezonji (ILR , Manavikraman Tirumalpad vs The Collector of the Nilgris (ILR , and the Secretary of State for India in Council vs Hindustan Co operative Insurance Society Limited (58 IA 250), then the decision is not a judgment, decree or order under either the Code of Civil Procedure or the Letters Patent. " The decisions relied on by this Court merely lay down the proposition that the decision given by the High Court in an appeal against an award is neither a decree, judgment or final order. None of the aforementioned decisions lays down the 'proposition that the High Court while exercising its appellate power did not function as a 'court '. The observation in this Court 's judgment that the provision for appeal to the High Court under section 19(1)(f) can only be construed as reference to it as an authority designated and not as a court, does not receive any support from those decisions. Nor do we find any sound basis for that conclusion. With respect to the learned Judges who decided that case, we are unable to agree with that conclusion. In our judgment, while acting under section 19(1)(f), the High Court functions as a 'court ' and not as a designated person. Our conclusion in this regard receives support from the decision of the Judicial Committee in Secretary of State for India in Council vs Chelikani Rama Rao(1) and others referred to earlier. Dealing with the ratio of its decision in Rangoon Botatoung Co. case(2), this is what Lord Shaw of Dunfermline observed (at p. 198 of the report): "It was urged that the case of Rangoon Botatoung Co. vs The Collector, Rangoon(2) enounced a principle which formed a precedent for excluding all appeal from the decision of the District Court in such cases as the pre sent. Their Lordships do not think that that is so. In the Rangoon Case a certain award had been made by the Collector under the Land Acquisition Act. This award was affirmed by the Court, which under the Act meant "a principal civil Court of original jurisdiction. " Two judges sat as 'the Court ' and also as the High Court to which the appeal is given from the award of 'the Court '. The proceedings were however, from beginning to end ostensibly and actually arbitration proceedings. In view of the nature of the question to be tried and the pro (1) 43 I.A. 192. (2) 39 I.A. 197. 379 visions of the particular statute, it was held that there was no right 'to carry an award made in an arbitration as to the value of land ' further than to the Courts specifically set up by the statute for the determination of that value. " We have already come to the conclusion that the decision rendered by the High Court under section 19(1)(f) is a 'determination '. Hence, it was within the competence of this Court to grant special leave under article 136. But then it was urged on behalf of the respondents that in view of r. 2, 0.13 of the Rules of this Court, as it stood at the relevant point 'of time, this Court could not have granted special leave as the appellant had not applied for necessary certificate under article 133 of the Constitution. In support of this contention, reliance was placed on the decision of this Court in Management of the Hindustan Commercial Bank Ltd., Kanpur vs Bhagwan Dass(1). Under article 133, a certificate can be asked for filing an appeal against the judgment, decree or final order of a High Court. As seen earlier, this Court ruled in Hanskumar Kishanchand vs Union of India(2) that the decision rendered by the High Court under section 19(1)(f) is not a decree, judgment or final order. Hence, the provisions of article 133 are not attracted to the present case. Consequently, this case is taken outside the scope of the aforementioned r. 2 of Order 13. As a measure of abundant caution, the appellant has filed CMP 2325 of 1967, praying that this Court may be pleased to excuse him from compliance with the requirements of 0.13, r. 2. In view of the decision of this Court in Hanskumar Kishanchand vs Union of India(2), no useful purpose would have been served ' by the appellant 's applying for a certificate under article 133. Hence, even if we had come to the conclusion that the case falls within the scope of 0. 1 3, r. 2, we would not have had any hesitation in exempting the appellant from compliance with the requirement of that rule. This takes us to the merits of the case. The grievance of the appellant is that the High Court erred in law in awarding compensation on the basis of Exh. The sale evidenced by that deed was effected in the year 1951, nearly five years after the acquisitions with which we are concerned in this case were effected. The sale in question cannot be considered as a contemporaneous transaction. The arbitrator has found that after the close of the second world war, the price of landed property had gone up steeply. This finding does not appear to have been challenged before the High Court. Further, under the deed in question, the land sold was .26 acres in extent. The price fetched by such a tiny bit of land is of no assistance in determining the value of the lands acquired. On behalf of the respondents, we were asked to determine the compensation of the lands acquired on the basis of sale deed Exh. 35 which relates to a sale that took place on 10 6 1947 (1) ; (2) ; 380 which according to the respondents can be considered as a contemporaneous sale. We are unable to accept this contention. 35 relates to the sale of land measuring .28 acres. The vendee under that deed is one of the claimants. There is no evidence as to the nature of the land sold under that deed. Under these circumstances, very little value can be attached to that document. We are also of the opinion that none of the sale deeds produced in this case can afford any assistance in determining the compensation payable to the respondents. They do not evidence sales of lands similar to the acquired lands, at about the time of the acquisition. The High Court did not address itself to the oral evidence adduced in this case for finding out the annual profits for the purpose of capitalisation. It rejected the evidence of the Naib Tehsildar. For reasons not disclosed. the village papers of 1354 fasli were not produced by the appellant. On the other hand, the village papers of 1355 fasli were produced. In the first place, those records do not show the rent payable in the year in which the acquisitions took place. The acquisitions in question were made in fasli 1354. For the reasons mentioned in its judgment, the High Court felt un able to place reliance on the village papers of fasli 1355. We do not think that this Court should scan the evidence afresh for determining the just compensation payable. to the respondents. That question has to be gone into by the fact finding court. All that we need say is that the High Court was not right in determining the compensation payable to the respondents on the basis of Exh. Hence its decision cannot be sustained. For the reasons mentioned above, we allow this appeal and set aside the decision of the High Court and remit the case back to that Court for disposal according to law. Before deciding the case afresh the High Court will permit the parties, to adduce additional evidence on the question of compensation; in particular, they will be allowed to produce and prove contemporaneous sale deeds and the revenue records relating to fasli 1354. Costs of this appeal shall be costs in the cause. R.K.P.S. Appeal allowed.

IN-Abs

The Government acquired about 500 acres of land from the respondents under the Defence of India Act, 1939, and a settlement was reached in respect of the compensation to be paid for all except about 48 acres of the land. The question of the compensation payable for the remaining land was referred to arbitration under section 19(1)(b) of the Act to be determined in accordance with section 19(1)(e) which entitled the respondents to compensation at the market value of the land. The arbitrator considered various sale deeds produced before him but rejected these and fixed the compensation by capitalising the annual profits from the lands. In an appeal against his award by the respondents under section 19(1)(f) of the Act, the High Court differed from the Arbitrator and enhanced the compensation payable by fixing it on the basis of a sale deed exhibited before the arbitrator. In appeal to the Supreme Court by special leave given to the appellant Collector, it was contended on behalf of the respondents by way of a preliminary objection that no special leave could have been granted by the Court under article 136 as the judgment appealed against % ,as neither that of a court nor of a tribunal; the High Court while acting under section 19(1)(f) was a persona designata and not a court or a tribunal; proceedings before the arbitrator appointed by the Central Government under section 19(1)(b) were arbitration proceedings leading to an award made by him, when the matter was taken up in appeal to the High Court, the appeal proceedings did not cease to be arbitration proceedings and their original character continued so that the decision made by the High Court should also be considered as an award and the High Court considered as having functioned as an arbitrator. Held: (i) While acting under section 19(1)(f), the High Court functions as a 'court ' and not as a designated person. [378E] Hanskumar Kishanchand vs Union of India, ; , disapproved. The High Court of a State is at the apex of a State 's judicial system. It is a court of record and it is difficult to think of a High Court as anything other than a 'court '. No judicial power was ever entrusted to the High Court except as a 'court ' and whenever it decides or determines any dispute that comes before it, it invariably does so as a 'court '. That apart, when section 19(1)(f) specifically says that an appeal against the order of an arbitrator lies to the High Court, there was no justification. for thinking that the legislature 373 said something which it did not mean. Furthermore, neither the Act, nor the rules framed thereunder prescribe any special procedure for the disposal of appeals under section 19(1)(f) and appeals under that provision have to be disposed of in the same manner as other appeals to the High Court according to its own rules of practice and procedure. [375F G. 377B C] Case law referred to. (ii) On the facts, the High Court was not right in determining the compensation payable on the basis of the one sale deed as this could not be considered a contemporaneous transaction; the decision of the High Court must therefore be set aside and the case remitted to that court for disposal according to law after giving the parties an opportunity to adduce fresh evidence. [380D E]

iminal Appeal No. 41 of 1967. Appeal by special leave from the judgment and order dated November 21, 1966 of the Delhi High Court in Criminal Revision Application No. 273 D of 1965. A. K. Sen, Veda Vyasa, K. B. Mehta, and H. L. Anand, for the appellant. H. R. Khanna and R. N. Sachthey, for the respondent. 394 395 The Judgment of the Court was delivered by Vaidialingam, J. The sole point, which arises for considera tion, in this appeal, by special leave, directed against the order of the High Court of Delhi, dated November 21, 1966, is about the validity of the complaint filed by the Deputy Chief Controller of Imports and Exports, New Delhi, the respondent herein, under section 5 read with section 6 of the Imports & Exports (Control) Act, 1947 (Act XVIII of 1947) (hereinafter referred to as the Act). Section 6 of the Act, relating to cognizance of offences, is as follows: "6. No Court shall take cognizance of any offence punishable under section 5 except upon complaint in writing made by an officer authorized in this behalf by the Central Government by general or special order, and no Court inferior to that of a Presidency Magistrate or a Magistrate of the first class shall try any such offence.". The respondent filed a complaint, on December, 31, 1962, be fore the First Class Magistrate. Delhi. alleging that the appellants, before us, and four others, had committed offences punishable under section 120B, read with section 420, I.P.C., and section 5 of the Act. The complaint, fairly elaborately, sets out the various matters containing allegations of violations of the conditions of the import licences granted to the appellants. It may also be stated at this stage, that the Chief Commissioner, Delhi, by his order, dated December 12, 1962, had given his consent to the initiation of proceedings, in the prosecution of the appellant and four others, mentioned therein, under sub section (2) of section 196A, 'of the Code of Criminal Procedure (hereinafter called the Code), inasmuch as the complaint also involved an offence of criminal conspiracy, under section 120B, P.C., to commit a non cognizable offence. So far as this consent is concerned, it is not the subject of any attack, before us. The complainant was examined as P.W. 3. He has stated, in his chief examination, that he filed the complaint, in question, after satisfying himself about the prima facie commission of the offences, mentioned in the complaint. In cross examination he has referred to the fact that he came to know about the case when he received a report from the Special Police Establishment, at the end of September 1962. When a question was put, as to whether he complainant would produce the said report, objection was raised, by the Public Prosecutor, that the said report was only the opinion of a police officer, and was not admissible, in law. This objection has been upheld by the Magistrate. The complainant has further stated that he visited the Special Police Establishment Office, for the first time, in connection with the case, only in September or October 1963, whereas the complaint had been filed, on December 31, 1962. He has also stated that he has not seen any of the documents, referred to in the police report, between the date when he received the report, and the date when the com plaint was filed. He has further stated that, on receipt of summons 396 from the Court, he visited the Special Police Establishment Office to see the documents, for satisfying himself that the complaint which he had filed, was based on absolute facts. His further answers were to the effect that when he filed the complaint he had not verified personally all the details mentioned in the police report, and that the Chief Commissioner 's permission, to initiate proceedings, had already been obtained, when he signed the complaint, on December 29, 1962. But, he has also stated that he had asked the Special Police Establishment, to draft the com plaint. The appellant tiled an application, on September 26, 1964, before the Trial Magistrate, stating that, in view of the above answers given, by the complainant, no cognizance should be taken, on the basis of the complaint filed by the respondent, Shri Bhargava, the Deputy Chief Controller of Imports and Exports. According to the appellant, section 6 of the Act is mandatory in character and enjoins that the entire facts and materials, connected with the allegations, which form the subject of the charge or charges, must be placed before the competent authority, and the complaint is to be initiated by the appropriate authority, only after due consideration of the entire materials. In this case, according to the appellant, the answers given by the Officer, as P.W.3, coupled with the non production of the Special Police Establishment 's report, will clearly show that the facts constituting the offence were not placed before him; and it is also clear that the complainant has not filed the complaint, after verifying and satisfying himself about the facts mentioned in the police report. As to what is contained in the police report, is a matter of pure conjecture, inasmuch as it has not been produced, before the Court. The Magistrate rejected this application, and his order was also confirmed, in revision, by the Additional Sessions , Judge, Delhi. Aggrieved by these orders of the Subordinate Courts, the appellant moved the Delhi High Court, for redress. The learned Judge, of the Delhi High Court, in his order, under appeal, has confirmed the orders of the Subordinate Courts. Mr. A.K. Sen, learned counsel for the appellants, has raised the same contentions. which did not find favour with the High Court. According to the learned counsel, section 6 of the Act is mandatory and, before a Court can take cognizance of an offence; punishable under section 5, the prosecution will have to establish that the facts constituting the offence, were placed before the complainant and that, after a proper consideration of those facts, the complaint has been instituted in this case, by P.W.3. Counsel also pointed out that the prosecution could have, very well, placed. before the Court the report of the Special Police Establishment to show that the necessary facts, which formed the basis of the complaint, were placed before the complainant; but, in this case, the prosecution had declined to produce the report, as will be 397 seen from the objections raised by it. Therefore, under those circumstances, an inference will have to be drawn against the prosecution, and the normal presumption should be that the evidence which could be, but had not been, produced would, if produced; be unfavourable to the person who withholds it, which, in this case, is the prosecution. Counsel also pointed out that, in this case, the High Court has proceeded on the basis that the filing of a complaint, by P.W. 3, is merely a mechanical act, which view is not justified, in law. In fact, we understood Mr. Sen to contend that there is no distinction, in principle, between provisions in statutes providing for the taking of cognizance of offences,, only on the previous sanction of any particular authority, and provisions providing, simpliciter, for a complaint being filed, by a particular person or officer. Mr. H. R. Khanna, learned counsel for the respondent com plainant, has pointed out that the principles, enunciated by the appellants ' counsel, do not apply to cases where the statute, as in this case, simpliciter provides for a complaint being made, by the particular officer, mentioned therein. In such cases, counsel points out, the Court has only to see whether the person or authority, mentioned therein, has initiated the proceedings, by filing a com plaint, in the manner, referred to in the particular provision. In this case, counsel points out, there is no controversy that the respondent is an officer, authorized by the Central Government, to file complaints, under section 5 of the Act. in this connection, counsel referred us to the provisions, contained in the Code of Criminal Procedure, some of which provide for cognizance being taken, of offences, only on a complaint made by a person or officer, mentioned therein, and in other cases, where taking cognizance of offences is prohibited, except on a sanction given by an authority, e.g., sections 195, 197, 198, etc. Having due regard to the provisions contained in section 6 of the Act, counsel pointed out, there is no infirmity in the complaint, filed by the respondent. The principle, that the burden of proving that a requisit sanction has been obtained, rests on the prosecution, and that such burden involves proof that the sanctioning authority had given the sanction in reference to the facts on which the proposed prosecution was to be based, facts which might appear on the fact of the sanction, or might be proved by extraneous evidence. is now well settled, by the decision of the Judicial Committee of the Privy Council, in Gokulchand Dwarkadas Morarka vs The King(1). There, their Lordships were considering cl. 23 of the Cotton Cloth and Yarn (Control) Order, 1943, as amended, to the effect: "No prosecution for the contravention of any of the provisions of this Order shall be instituted without the, previous sanction of the Provincial Government (or of such (1) L.R. 75 I.A. 30. SCI 12 398 officer of the Provincial Government not below the rank of District Magistrate as the Provincial Government may by general or special order in writing authorize in this behalf). " The Judicial Committee has held that in order to hold that there is a compliance with the provisions of cl. 23, it must be proved that the sanction was given, in respect of the facts constituting the offences charged, because the sanction to prosecute is an important matter, as it constitutes a condition precedent to the institution of the prosecution, and the Government have an absolute discretion to grant or withhold that sanction. The Judicial Committee has also emphasized that the Government cannot also adequately discharge the obligation of deciding whether to give or withhold the sanction, without a knowledge of the facts of the case, as sanction has to be given to a prosecution for the contravention of any of the provisions of the Order. These principles, laid down by the Judicial Committee, have also been approved, by decisions of this Court: See Madan Mohan vs State of Uttar Pradesh(1); Jawsant Singh vs State of Punjab(2); and Feroz Din vs The State of West Bengal(3). In Jaswant Singh 's Case(2), this Court, dealing with a case of sanction, under the Prevention of Corruption Act, 1947, after referring to the decision of the Judicial Committee, has observed that the sanction, under the said Act, is not intended to be, nor is an automatic formality, and it is essential that the provisions in regard to sanction should be observed with complete strictness, as the object of the provision for sanction is that the authority, giving the sanction, should be able to consider, for itself, the various facts alleged, before it comes to the conclusion that the prosecution, in the circumstances, be sanctioned or forbidden. We are not inclined to accept the contentions of Mr. Sen, that the principles laid down in these decisions, which relate to the question of sanction. have any application to the filing of complaints, under section 6 of the Act. Section 6 only insists that the complaint is to be in writing and that it must be made by an officer, authorised in that behalf. The complaint, in this case, has been made by the respondent in writing, and that he is an authorised officer, in this behalf, has not been challenged. The limitation, contained in section 6, is only regarding the particular officer who could file a complaint and, when once he satisfies those requirements, the bar is removed to the taking of cognizance by a Court, on a complaint, made in accordance with section 6. In this connection, it is desirable to bear in mind the observations of this Court, made in section A. Venkataraman vs The State(4). After considering the scheme of the Code, this Court observed: "In construing the provisions of a statute it is essential for a court, in the first instance, to give effect to the (1) A.I.R. 1954 S.C. 637, 641. (2) ; , 765. (3) ; , 330. (4) , 1041, 399 natural meaning of the words used therein, if those words are clear enough. It is only in the case of any ambiguity that a court is entitled to ascertain the intention of the legislature by construing the provisions of the statute as a whole and taking into consideration other matters and the circumstances which led to the enactment of the statute. " Going by the plain words, contained in section 6 of the Act, we are satisfied that the complaint, in this case, filed by the respondent, can be considered to be in conformity with the provisions, contained therein. But Mr. Sen relied upon the decision of this Court in Feroz Din 's Case(1) in support of his argument that cases in which sanction is necessary, to enable a Court to take cognizance of offences, and cases, in which a mere complaint, is to be filed by a public officer, without the requirement of any sanction, have been treated on a par, and the same tests, for finding out the legality of a complaint, in the former class of cases, have been applied to the latter class of cases also. It is therefore necessary to consider the exact scope of that decision. In that decision, this Court was considering a complaint, filed by a management, under sections 24 and 27, of the . The management company, in that case, filed a complaint, with the sanction of the Government. The provision, regarding sanction, is contained in section 34(1) of the , which is as follows: "No Court shall take cognizance 'of any offence punishable under this Act. . save on complaint made by or under the authority of the appropriate Government.", One of the contentions raised by the appellants, therein, based upon the decision of the Judicial Committee, in Morarka 's Case(2), was that the sanction, given by the Government of West Bengal, to file the complaint against them, was bad, as it had been granted without reference to the facts constituting the offence. This Court, after referring, to the said decision, rejected the contention of the appellants and held that the entire facts, connected with the offence, had been placed before the sanctioning authority, and the Government gave the sanction, on consideration of those facts, and that those circumstances fully satisfied the requirements of 'prior sanction ', as laid down by the Judicial Committee. It will be seen, by a reference to section 34(1) of the , extracted above, that a complaint can be filed by the appropriate Government itself, or it can be filed, under the authority of the appropriate Government. In the decision before this Court, the Government had not filed the complaint, but, an the other hand, the management company obtained the sanction of the Government of West Bengal, to file the complaint. That is why this Court (1) ; , 330. (2) L.R. 75 I.A. 30. 400 had occasion to consider the validity of the sanction regarding which an attack was made by the appellants. This Court, in that case nevertheless, apply, if the Government itself had filed the complaint, as it was entitled to, under section 34(1). Therefore, the observations made, in that case, regarding the validity of sanction , will have to be confined to the facts of that case. No such question arise, with regard to the matter before us. The section, with which we are concerned, does not contain any such restriction, regarding the obtaining of sanction, on the basis of which alone a complaint can be filed, to enable a Court to take cognizance of an offence. The result is, the view of the High Court, that the complaint, filed by the respondent, on December 31, 1962, satisfies the requirements of section 6 of the Act, is perfectly correct. The appeal therefore fails, and is dismissed. G.C. Appeal dismissed.

IN-Abs

The Deputy Chief Controller of Imports & Exports New Delhi filed a complaint against the appellant under section 5 read with section 6 of the Imports & Exports (Control) Act, 1947 before the Magistrate First Class Delhi. In the witness box the complainant admitted that when he filed the complaint he had not seen any of the documents referred to in the report of the Special Police Establishment in connection with the case and had not verified personally all the detail* mentioned in the report. The appellant filed an application requesting the Magistrate not to take cognizance of the case as the complaint did not satisfy the requirements of section 6 of the Act. The plea was rejected by the Magistrate, the Sessions Judge and the High Court. An appeal to this Court was filed by special leave. It was contended on behalf of the appellant that as in the case of sanction for prosecution of certain offences, before a court can take cognizance of an offence punishable under section 5 on the basis of a complaint under section 6, the prosecution will have to establish that the facts constituting the offence, were placed before the complainant, and that the latter on a proper consideration of these facts has filed the complaint. Held: (i) The principles applicable to cases requiring sanc tion have no application to filing of complaints under section 6 of the Act. Section 6 only insists that the complaint is to be in writing and that it must be made by an officer authorised in that behalf. The limitation contained in s.6, is only regarding the particular officer who could file a complaint and, when once he satisfies those requirements, the bar is removed to the taking of cognizance by a court, on a complaint made in accordance with section 6. [398F G] In the present case the complaint had been made by an autho rised officer in writing. The requirements of section 6 were therefore satisfied and the Magistrate rightly took cognizance of the offence. [399B C] Gokulchand Dwarkadas Morarka vs The King, L.R. 75 I.A. 30; Madan Mohan vs State of Uttar Pradesh, A.I.R. 1954 S.C. 637, 641 and Jaswant Singh vs State of Punjab, ; , 765, referred to. S.A. Venkataraman vs The State, , 1041, applied. Feroz Din vs The State of West Bengal, ; , 330,distinguished.

l Appeal No. 1012 of 1964. Appeal by special leave from the judgment and order dated August 28, 1962, of the Bombay High Court, Nagpur Bench in Special Civil Application No. 373 of 1961. R. M. Hazarnavais, K. L. Hathi and section P. Nayar, for the appellants. S G. Patwardhan and A. G. Ratnaprkhi, for the respondent Nos. 1 10 and 12. The Judgment of the Court was delivered by Shelat, J. This appeal by special leave is directed against the order. of the High Court of Maharashtra quashing the order dated November 20, 1961 passed by the first appellant under section 5(1) of the Bombay Land Requisition Act 23 of 1948 as 401 402 extended to the Vidarbha area by the Bombay Land Requisition (Extension and Amendment) Act 33 of 1959 The respondents are the owners of the land in question situate in the village Kasarkhed, District Akola. It appears that in 1959 there were floods in the are which affected the resident living in the gaothan of Kasarkhed. Once again there were floods in 1961 more serious than in 1959 affecting as many as 470 persons whose houses were either washed away or seriously damaged. There was therefore an urgent necessity of rehabilitating those sufferers at some other place where they could build their houses and complete them before the arrival of the next monsoon. In these circumstances the first appellant under powers conferred on him by section 15 of the Act passed the impugned order. The order stated that the lands set out in the Schedule therein were needed or were likely to be needed for the public purpose, viz., for a new gaothan at Kasarkhed for the victims of floods, the old village site where they lived having been rendered unsuitable by floods and that it was therefore necessary to requisition the said lands for the said purpose. It is not in dispute that land was needed for settling a new gaothan where the victims of the flood could be resettled. At a later stage the State Government also initiated proceeding, , under the Land Acquisition Act 1 of 1894 in respect of those very lands and issued a notification under section 4 thereof. On December, 14, 1961 the respondents filed a Special Civil Application in the High Court challenging the validity of the said order on the grounds inter alia that it was passed without giving them an opportunity of being heard, that it contravened article 19(1)(f) and (g) of the Constitution, that the competent authority bad no power to invoke the Land Requisition Act inasmuch as the purpose for which it was exercised was of a permanent character, viz., construction of houses and settling a new village site, that the proceedings under the Act amounted to acquisition of lands, that invoking the Requisition Act was not in bona fide exercise of power under the said Act, that though there were moire suitable lands for the said purpose the lands of the respondents were deliberately selected as a result of influence exercised by the President of Balapur Municipal Committee, and that there were buildings and a factory situate on the said lands, and therefore the procedure laid down in section 5(2) of the Act should, have been followed. In the return filed by the appellants these allegations were traversed and it was submitted that the order was valid and competent under sec tion 5(1) of the Act. The High Court allowed the petition and quashed the order. In the opinion of the High Court the purpose for which the impugned order was passed was a permanent purpose viz., establishing a new village site, that since the Act was a temporary Act extended until then up to 1963 and the power to I requisition thereunder would inhere to the Government only during the time that it subsisted an order passed for a permanent purpose such as for establishing a village gaothan could 'not be in the contemplation 403 of the Act and therefore could not be justified as one passed under the Act. The High Court observed: "The Bombay Land Requisition Act was, in our opinion, :never intended to be used for the permanent acquisition of the lands of citizens as is being sought to be done in, the instant case. We can only characterise the attempt to take the lands of the petitioners under that Act as an abuse of the provisions of that Act. It is patent that if a gaothan or abadi is allowed ' to rise upon the lands of the petitioners, the lands can never revert to them at any future time. It is not to be supposed nor is it alleged in the return that the respondents seriously thought that at some future date they would raise to the ground all the houses they were allowing to be constructed in the new gaothan. We hold that the impugned order is unjustified under the Bombay Land Requisition Act, is illegal and amounts to an abuse of the provisions of that Act. " Counsel for the appellants challenged the validity of the High Court 's order on the ground principally that the High Court 's view of section 5(1) of the Act was incorrect and that it failed to appreciate the scope of the provisions of section 5(1). The only question arising in this appeal thus is whether the Act authorises an order of requisitioning even if the purpose for which it is made is not a temporary purpose, in the present case rehabilitation of flood sufferers and settling for that purpose a new village site. The validity of section 5(1) is not challenged and therefore it is not necessary to inquire into the genesis of the power of )Me State legislature to enact the Act. Indeed the question on which the High Court 's decision rests is on the scope of the power rather than its validity. Section 4(5) provides that the expression "to requisition" means in relation to any land, to take possession of the land or to require the land to be placed at the disposal of the State Government. Section 5(1) under which the impugned order was made provides that "if in the opinion of the State Government it is necessary or expedient so to do the State Government may by an order in writing requisition any land for any public purpose. " It is clear that the only requirement of section 5(1) is that the State Government must form an opinion that it is necessary or expedient to requisition any land. It can do so of course only for a purpose which is a public purpose. On the face of it the sub section does not contain any express limitation to the power to requisition, the only limitation being that an order thereunder can be passed for a public purpose only. It is not challenged that rehabilitation of flood sufferers is a public purpose. The question then is does the sub section contain by implication any restriction viz., that the requisitioning authority has no power thereunder to pass an order where the purpose is not temporary. 404 1t appears that the High Court thought that since the Act itself is of a; temporary character in the sense that it was to enure for a particular period and that period had to be extended from time to time and on the Act ceasing to be in force when it is no more extended the requisitioned land would have to return to the owner it follows that the Act does not envisage requisitioning for a purpose which is not temporary. In the opinion of the High Court the temporary character of the Act postulates a temporary purpose for which alone power under section 5(1) can be exercised. The High Court also appears to be of the view that there is an antithesis between the power to requisition and the power of acquisition that the authority realised that the power to requisition cannot be exercised where the purpose is not temporary and realising this difficulty the State Government had to have recourse to its power under the Land Acquisition Act. In this view the High Court held that. settling a new village site for the flood sufferers was a permanent purpose, that once houses and other structures were built on the requisitioned, land it would be impossible for the authority to return the land to its owner as provided under section 9, and: therefore the Act could not have contemplated the exercise of; the power thereunder for a purpose which would render the operation of section 9 impossible. The exercise of, power for such a purpose must, therefore amount to an abuse of and cannot be justified under the Act. In our opinion the High Court 's view on the scope of the power under section 5(1) cannot be sustained. On a, plain reading of the section it is clear that the only limitation to the power which it confers is the temporary life of the Act. But the words "any land for any public purpose" are sufficiently wide enough, to include any public purpose whether temporary or otherwise. To, read into the section a limitation that the purpose contemplated by it is only temporary is to 'confound the temporary life of the statute with, the character of the purpose for which the power thereunder can be exercised. Sub section (1) speaks of no restriction except, as aforesaid, that the purpose must be a public purpose. Section 9 no doubt provides that when the land in question is derequisitioned and that would happen when the statute comes to an end or the land is otherwise released, it has to be restored to the owner as far as possible in the same condition in which it was when it was put into possession of ' the authority. That is so because the Government acquires only the right of possession and user of the land and 'not any proprietary right therein and since the ownership is still retained in the owner the land must revert to him as soon as it is released either by the lapse of power or when the purpose of requisitioning is over, whatever use to which such land has been put to during the period of such requisitioning. Section 9 therefore has nothing to do with the nature or character of the purpose for which an order under section 5(1) is passed. The life of the power and the purpose for which it is exercised are two 405 distinct ingredients of section 5(1) and ought not to be confused. The words "for any public purpose" in the sub section are wide enough to include any purpose of whatsoever nature and do not contain any restriction regarding the nature of that purpose. It places no limitation on the competent authority as to what kind of public purpose it should be for the valid exercise of its power nor does it confine the exercise of that power to a purpose which, is temporary only. Except for the limitation that the purpose must be a public purpose the sub section also imposes no restriction as to the manner in which the land which is requisitioned is to be used. It may be used for a temporary purpose or for a purpose which is not temporary in nature. It is for the requisitioning authority to judge and not for a court of law to decide how best the land is to be used. If the requisitioning authority uses the land for a purpose which is not temporary such as settling a new village site and for construction of houses it is for the Government and those who put up such structures to contemplate the possibility of having to return in future the land to the owner in its original state. But that does not mean that the power is restricted to a temporary purpose only. We do not also see any antithesis between the power to re quisition and, the power of compulsory acquisition under the Land Acquisition Act. Neither of the two Acts contains any provision under which it can be said that if one is acted upon, the other cannot. Indeed, Part VI of the Land Acquisition Act provides for temporary occupation of waste or arable land needed for a public purpose or for a Company and empowers the appropriate Government to direct the Collector to procure the occupation and use of the same for such purpose as it shall think fit, not exceeding three years from the commencement of such occupation. Apart from these provisions in the Land Acquisition Act there are several State Acts which empower the appropriate Governments to acquire property which is subject to requisitioning orders. If there is an emergency to meet which the power to requisition is exercised there is nothing in the Act to prevent the authority at a subsequent date to initiate proceedings in a suitable case for permanent acquisition. The exercise of power under the Requisitioning Act does not exhaust or make incompatible the exercise of power under the Land Acquisition Act. The initiation of proceedings under the Land Acquisition Act after requisitioning the lands under section 5(1) of the Act does not and cannot mean abuse 'of the power under the provisions of the Act. In our view the High Court was in error in holding that the power to requisition under the Act cannot be exercised where the public purpose is not temporary or that the exercise of that power for the purposes of rehabilitation of flood sufferers was either in abuse of or unjustified under the Act. We therefore allow the appeal and set aside the order passed by the High Court. Since the High Court decided the petition only 406 on the question of the validity of the exercise of power and did not decide the other questions raised in the petition, we remand the matter to the High Court to decide those questions in accordance with law. In the circumstances of the case, we make no order as to costs. Y.P. Appeal allowed.

IN-Abs

The land owned by the respondents were requisitioned by the first appellant under the Bombay Land Requisition Act for a public purpose viz., for establishing a new village site to resettle victims of flood. The respondents filed a writ petition in the High Court challenging the validity of the order on the ground that since Act was a temporary Act extended until then upto 1963, the power to requisiton thereunder would inhere to the Government only during the time that it subsisted; so an order passed for a permanent purpose could not be in the contemplation of the Act. The High Court accepted the objection and, quashed the order. In a appeal to this Court: Held: The power to requisition under the Act could be exercised whether the public purpose was temporary or not and the excercise of that power for the purpose for the purpose of rehabilitation of flood suffers was neither in abuse of nor unjustified under the Act. The words for any public purpose in section 5(1) are wide enough to include any purpose of whatsoever nature do not contain any restriction regarding the nature of that purpose. It places no limitation on the words competent authority as to what kind of "for any public purpose in section 5( 1) are wide enough to include any purpose of whatsover nature and do not contain any restriction regarding the nature of that purpose. It places nolimitation on the competent authority,as to what kind of Public purpose it should be for the valid exercise of its power nor does it confine the exercise of that power to a purpose which is a temporary one. [404E F; 405AB] There is no antitheses between the power to requisition and the power of compulsory acquisition under the Land Acquisition Act. Neither of the two Acts contains any provision under which it can be said that if one is acted upon, the other cannot. [405D E]

Appeal No. 8 of 1965. Appeal by special leave from the judgment and decree dated October 5, 1962 of the Bombay High Court in Appeal No. 598 of 1960, from Appellate Decree. section T. Desai and J. P. Aggarwal, for the appellant. O. P. Malhotra, and P. C. Bhartari, for the respondents. 425 The Judgment of the Court was delivered by Sikri, J. This appeal by special leave is directed against the judgment and decree of the Bombay High Court in Appeal No. 598 of 1960, whereby the High Court confirmed the judgment and decree dated January 30, 1960, passed by the Extra Assistant Judge, District Court, Ahmednagar, in Regular Appeal No. 300 of 1958, confirming the decree dated April 7, 1958, passed by the Joint Civil Judge, Junior Division, Ahmednagar, in Civil Suit No. 609 of 1948. The relevant facts for the determination of the points raised before us by the learned counsel for the appellant mortgagee, are as follows: The respondents before us filed a suit for the redemption of the mortgage of a bungalow at Ahmednagar alleging that the sale deed in respect of this bungalow for Rs. 5,000 was in fact a possessory mortgage. One of the terms of this deed, dated August 4, 1928, was : " However, a condition is laid down that if we pay you within three years from this day Rupees five thousand relating to this sale deed, and (interest) thereon at the rate of 12 twelve annas per cent per mensem at yearly rests, and the amounts spent by you to meet the expenses for repairs, constructions, taxes, etc. together with interest (at the rate) mentioned above. . you are to receive the same and allow us to purchase the aforesaid property back. The transaction was held to be a mortgage and there is no dispute on this point. On April 7, 1958, the suit was finally decreed for redemption of the property subject to a payment of Rs. 9,224 .12 0, Rs. 4,612 6 0 as principal, and Rs. 4,612 6 0 as interest thereon, within six months from that date. A preliminary decree was directed to be drawn up. The appellant filed an appeal in the Court of the District Judge, Ahmednagar, and, among other grounds, alleged that "the Court ought to have directed the Commissioner to deduct the rent received (i) first towards taxes, then (ii) towards interest of the amount of repairs, etc. , then (iii) towards interest on the principal amount, then towards (iv) amount of repairs and expenses and then towards the principal of the loan". The Extra Assistant Judge did not agree with this contention, and dismissed the appeal. The appellant filed a second appeal to the High Court. The High Court also disagreed with the above contentions. The High Court held that the priorities had been settled by the courts below in accordance with the provisions of section 76(h) of the (IV of 1882) and were, therefore, proper. The method of accounting followed by the Commissioner ap pointed in the case, and which was accepted by the courts below, was as follows : Out of the income derived from the property (There is no dispute that the bungalow was fetching rent from 426 month to month) the outgoings were deducted in the following order of priority : 1. Payment of taxes. Payment of interest on the amount of expenditure on maintenance and repairs. Payment of the expenditure on maintenance and repairs. Interest on the amount of principal of the mortgage bond. Amount of principal under dispute. The learned counsel for the appellant, Mr. section T. Desai, says that item 4 above should be item 3, and to substantiate this has submitted three propositions before us : (1) Section 76(h) does not lay down any order of priority inconsistent with the order of priority mentioned in section 76(d) and does not reverse that order. Both the provisions must be read together and in a harmonious manner; (2) The liability for repairs under section 76(d) is very limited in its scope. This liability arises only if there is a surplus left after deducting from the rents and profits of the property two items, viz.; (i) expenses mentioned in clause (c), and (ii) interest on the principal money; (3) If the mortgagee expends more for repairs than the surplus left after the last mentioned deductions, that expense would not be in pursuance of any liability of his under section 76(d) but would be claimed under the right conferred by section 63A(2) and section 72(b). Such expenses would be treated as additions to the principal money. Sections 76 (c), (d), (h), 63A and 72(b) read as follows: "76. When, during the continuance of the mortgage, the mortgagee takes possession of the mortgaged property; (c) he must, in the absence of a, contract to the contrary, out of the income of the property, pay the Government revenue, all other charges of a public nature and all rent accruing due in respect thereof during such possession, and any arrears of rent in default of payment.of which the property may be summarily sold; (d) he must, in the absence of a contract to the contrary, make such necessary repairs of the property as he can pay for out of the rents and profits thereof after 427 deducting from such rents and profits the payments mentioned in clause (c) and the interest on the principal money; (h) his receipts from the mortgaged property, or, where such property is personally occupied by him, a fair occupation rent in respect thereof, shall, after deducting the expenses properly incurred for the management of the property and the collection of rents and profits and the other expenses mentioned in clauses (c) and (d), and interest thereon, be debited against him in reduction of the amount (if any) from time to time due to him on account of interest and, so far as such receipts exceed any interest due, in reduction or discharge of the mortgage money; the surplus, if any, shall be paid to the mortgagee;. . 63A. (1) Where mortgaged property in possession of the mortgagee has, during the continuance of the mortgage, been improved, the mortgagor, upon redemption, shall, in the absence of a contract to the contrary, be entitled to the improvement; and the mortgagor shall not, save only in cases provide d for in sub section (2), be liable to pay the cost thereof. (2) Where any such improvement was effected at the cost of the mortgagee and was necessary to preserve the property from destruction or deterioration or was necessary to prevent the security from becoming insufficient, or was made in compliance with the lawful order of any public servant or public authority, the mortgagor shall, in the absence of a contract to the contrary, be liable to pay the proper cost thereof as an addition to the principal money with interest at the same rate as is payable on the principal, or, where no such rate is fixed, at the rate of nine per cent per annum, and the profits, if any, accruing by reason of the improvement shall be credited to the mortgagor. A mortgagee may spend such money as is necessary (b) for the preservation of the mortgaged property from destruction, forfeiture or sale; and may, in the absence of a contract to the contrary, add such money ' to the principal money, at the rate of interest payable on the principal, and where no such rate is fixed, at the rate of nine per cent per annum; Provided that the expenditure of money by the mortgagee under clause (b) or cause (e) shall not be deemed to be necessary 428 unless the mortgagor has been called upon and has failed to take proper and timely steps to preserve the property or to support the title. . " It seems to us clear that. the object of section 76(d) is not to fix any priorities but to make it obligatory on the mortgagee, in the absence of a contract to the contrary, to carry out necessary repairs to the property but the amount he can spend is limited to the difference between rents and profits and payments mentioned in cl. (c) and the interest on the principal money. When we come to cl. (h), it directs the mortgagee to apply the receipts from the mortgaged property in a, certain manner. The order of application is (1) the expenses properly incurred for the management of the property and the collection of rents and profits and the other expenses mentioned in cls. (c) and (d), (2) interest thereon, (3) the surplus, if any, has to be utilised towards reduction of interest on principal money, and (4) the principal money itself. In our view, there is no contradiction between section 76(d) and section 76(h). It is true, as stated in proposition No. 2 of the learned counsel, that the liability for repairs is limited in its scope and arises only if there is a surplus left after deducting from the rents and profits of the property the expenses mentioned in cl. (c), and the interest on the principal money, but the fact that the liability is limited in scope does not bear on the question whether it lays down any order of priorities inconsistent with the priorities mentioned in cl. .This is so because, as we have stated above, section 76(d) is not con cerned with the question of priorities but with limiting the amount which can be spent by the mortgagee in possession for carrying Out necessary repairs. Coming now to the third proposition, it is not necessary to deal with the question of the relationship between section 63A, section 72(b) and section 76, because the plaintiff has neither alleged nor proved that any expenses were incurred by which improvement was effected and the improvement was necessary to preserve the property from destruction or deterioration within section 63A(2). Similarly, he never alleged or proved that he spent money which was necessary for the preservation of the mortgaged property from destruction, forfeiture or sale within section 72(b). There is no allegation or evidence that the mortgagor had been called upon and failed to take proper and timely steps to preserve the property. We may mention that the only allegation to which our atten tion was drawn is contained in para 11 of the written statement, which reads as follows : "11. The transaction dated 4 8 28 is not one of security or mortgage. The defendant has never received rent for the suit property more than Rs. 65 per month. The defendant has incurred expenses from time to time for taxes, expenses, maintenance, repairs, (and) con structions. The defendant made constructions and 429 repairs and spent more, than Rs. 10,000 (ten thousand) therefor because it was his own property. I shall produce an extract in that behalf. For many years the property under dispute was unoccupied This hardly covers the point now sough to be made. For the aforesaid reasons the appeal fails and is dismissed with costs. G.C. Appeal dismissed.

IN-Abs

The respondents filed a suit against the appellant for redemption of a mortgage. The suit was decreed subject to payment of a sum of Rs. 9,224 12 0 towards principal and interest within six months. A preliminary decree was directed to be drawn up. The appellant filed an appeal in the Court of the District Judge and inter alia urged that "the court ought to have directed the Commissioner to deduct the rent received (i) first towards taxes, then (ii) towards interest of the amount, of repairs etc., then (iii) towards interest on the principal amount, then towards (iv) amount of repairs and expenses and then towards the principal of the loan. " The appeal was dismissed. A second appeal in the High Court also failed. The appellant came to this Court by special leave. It was urged on his behalf that the priorities in section 76(h) of the Transfer of Property Act were subject to the priorities in section 76(d) and therefore interest on the principal amount should, in the present case, have been given priority over the payment of the expenditure on maintenance and repairs. Held:The appeal must fail. The object of section 76(d) is not to fix any priorities but to make it obligatory on the mortgagee, in the absence of a contract to the contrary to carry out necessary repairs to the property but the amount he can spend is limited to the difference between rents and profits and payments mentioned in cl. (c) and the interest on the principal money. It is cl. (h) which directs the mortgagee to apply the receipts from the mortgaged property in a certain manner. The order of application is (1) the expenses properly incurred for the management of the property and the collection of rents and profits and the other expenses mentioned in cls., (c) and (d), (2) interest thereon, (3) the surplus, if any, has to be utilised towards reduction of interest on principal money and (4) the principal money itself. There is no contradiction between section 76(d) and section 76(h). The fact that section 76(d) limits the scope of the liability has no bearing on the question whether it lays down any order of priorities inconsistent with those mentioned in cl. (h) [428B E]

Appeal No. 380 of 1966. Appeal by special leave from the judgment and order dated August 16, 1963 of the Kerala High Court in Tax Revision Case No. 17 of 1962. section V. Gupte, Solicitor General and A. G. Pudissery, for the appellant. O. P. Malhotra, P. C. Bhartar and 0. C. Mathur, for the respondent. Sardar Bahadur, for the intervener. The Judgment of the Court was delivered by Mitter, J. This appeal, by special leave, is from a judgment and order of the High Court of Kerala dated August 16, 1963 passed in Tax Revision Case No. 17 of 1962 filed by the respondent, Cochin Coal Co. Ltd. against the order of the Sales Tax Appellant Tribunal, Trivandrum. The facts necessary for the disposal of this appeal are as follows. The respondent assessee was a, non resident dealer (not resident in Travancore Cochin) during the year 1955 56. The period we are concerned with here ends on September 4, 1955. it used to supply coal to consumers in Travancore Cochin State which later became Kerala. For the assessment year in question (1955 56) the assessee was asked to file statements showing its turnover of supplies of coal made to purchasers in the State of Kerala and in reply to the notice under section 12(2)(b) of the Travancore Cochin General Sales Tax Act, it stated that the sales of coal to steamers arriving and berthed in Travancore Cochin State waters were not taxable because the goods were stored by the steamers for consumption on the high seas. The assessee however did not question its liability to pay tax in respect of supplies made to other consumers in the State of Kerala. On March 7, 1959 the Sales Tax Officer, Circle 1, Mattancherry assessed the respondent on a turnover of Rs. 1,29,352/ . The respondent filed an appeal therefrom and the Assistant Commissioner of Agricultural Income Tax and Sales Tax, Ernakulam allowed the appeal in part and reduced the turnover by omitting the portion of it after 6th September, 1955. In the result, the assessee 's turnover was reduced to Rs. 69,407/ . There was a further appeal to the Kerala Sales Tax Appellate Tribunal. This was disposed of on January 2, 1962 in favour of the assessee. The Tribunal held that the sales being inter State sales were, according to the decision of the Kerala, High Court in T. R. Cs. 1, 2 and 3 of 1961 (reported in 14 Sales Tax Cases 850) not taxable. The Tribunal held that section 26(1)(b) of the General Sales Tax Act, as amended by section 13(ii) of Act 12 of 1957, prohibited the taxation of inter State sales after March 31, 1951. The Deputy Commissioner of Agricultural Income Tax and Sales 417 Tax Central Zone, Ernakulam, went up to the High Court of Kerala under section 15 B(1) of the Act. The question of law raised for decision by the High Court was, "Whether in the light of the amending Act 9 of 1962 the finding of the Tribunal is correct '?" In rejecting the application, the High Court reasoned as follows: (1) Central Act 7 of 1956 was intended to validate State laws imposing or authorising the imposition of taxes on the sale or purchase of goods in the course 'of interState trade or commerce. (2) This Court has decided in the State of Kerala and others vs The Cochin Coal Co., Ltd.(1) that section 26 of the General Sales Tax Act, 1125 imposed a tax on the sale or purchase of goods in the course 'of inter State trade or commerce and taxation of such sales during the period between 1 4 1951 and 6 9 1955 was validated by the above Central Act. (3) section 26 of the General Sales Tax Act, 1125 prior to its amendment by Act 12 of 1957 was in pari materia with section 22 of the Madras General Sales Tax Act which came up for consideration in the case of M. P. V. Sundararamier & Co. and others vs The State of Andhra Pradesh and another(2). The Supreme Court held that section 22 of the Madras Act "intended to authorise taxation of sales falling within the Explanation, subject to authorisation by Parliament as provided in article 286(2)". (4) Act 12 of 1957 raised the controversy as to whether Central Act 7 of 1956 could be considered as sabaging the levy of tax on inter State sales after the amendment introduced in section 26. According to the decision in T.R. Cs. 1, 2 and 3 of 1961 inter State sales after 3 1st March, 1951 were not taxable. (5) The Constitution (Sixth Amendment) Act, 1956 made substantial changes as regards levy of tax in inter State sales. As a result of the amendment of article 269 taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter State trade or commerce were to be levied and collected by the Government of India and it was for Parliament to formulate principles for determining when a sale or purchase of goods takes place in the course of inter State trade or commerce. (6) The Validating Act 9 of 1962 was enacted subsequent to the Constitution (Sixth Amendment) Act which came into force on 11th September 1956. In (1) ; (2) ; 418 view of the amendment of the Constitution in 1956 the Legislature of Kerala had not the competence to pass any legislation on the subject of inter State sales whether prospective or retrospective or both in the year 1962 with the result that the State could not call in aid the provisions of Act 9 of 1962 to tax inter State sales. The appellant 's case was argued by the learned Solicitor General. One E. J. Mathew was allowed to intervene in this matter. In our view, the High Court failed to construe the effect of the relevant statutes and apply the decisions of this Court rendered before they heard the matter. Proceeding chronologically, the legal position developed as follows. Before the Constitution came into force, The Travancore Cochin State General Sales Tax Act, XI of 1125 levied a tax on sale of goods under section 3 of the Act. The tax was to be paid by the dealer on his turnover in each year. There was then no question of any exemption of inter State sales from taxation. section 26 was inserted in the main Act by Act 12 of 1951 and it ran as follows: "(1) 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; 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 territory of India. (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 of India shall apply for the interpretation of sub cl. (i) of cl. (a) of sub section (1)". This was to bring the Act into line with article 286 of the Constitution of India. Then came the judgment in the case of The, Bengal Immunity Company Ltd. vs The State of Bihar and others(1) on September 6, 1955. There it was decided that the sales or purchases made by the appellant company in that case which were sought to be taxed by the State of Bihar actually took place in the course of inter State trade or commerce and Parliament not having by law otherwise provided, no Bihar law could tax these sales or purchases although they fell within the Explanation to article 286(1) and other States could not tax the same by reason of both clause I (a) read with the Explanation and cl. (2) of article 286. This led to (1) 419 the passing of Central Act 7 of 1956. The object of the Act was to validate laws of States imposing, or authorising the imposition of taxes on the sale or purchase of goods in the course of interState trade or commerce. S, 2 of the Act provided that: "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 1st day of April 1951 and the 6th day of September, 1955, shall be deemed to be invalid or ever to have been invalid merely by reason of the fact that such sale or purchase took place in the 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. A question here arises as to whether this statutory provision served to lift the ban imposed by section 26 of the General Sales Tax Act. Then came the Constitution (Sixth Amendment) Act, 1956 on September 11, 1956. It made substantial and important changes in article 286 of the Constitution by deleting the Explanation to article 286(1) and by substituting new article 286(2) and 286(3). It also amended article 269. It inserted item 92A in the Union List of the Seventh Schedule and substituted a new entry 54 in place of the old one in the State List of the said Schedule. As a result of these amendments, taxes on the sale or purchase of goods other than newspapers, where such sale or purchase took place in the course of interstate trade or commerce could be levied and collected by the Government of India which was empowered to assign the same to the States in terms of cl. (2) of article 269. article 269(3) empowered Parliament by law to formulate principles for determining when a, sale or purchase of goods takes place in the course of inter State trade or commerce. The new item 92A added to the Union List read: "Taxes on the sale or purchase of goods other than newspapers, where such sale or purchase takes place in the course of inter State trade or commerce." The old entry 54 in the State List was substituted by a new entry reading: "Taxes on the sale or purchase of goods other than newspapers, subject to the provisions of entry 92A of List I." It would therefore appear that after the amendment of the Constitution in 1956 the State Legislatures were not competent to legislate in respect of taxes on the sale or purchase of goods other than newspapers which took place in the course of inter State trade or commerce. 420 Next in order of date is the Travancore Cochin General Sales Tax (Amendment) Act, 1957 (12 of 1957) which came into force on August 7, 1957. section 13 of this Act introduced several changes in section 26 of Act XI of 1125. In the first place, it substituted the word 'State ' for the words "State of Travancore Cochin", in sub cl. (i) of cl. (a) of sub section (1) of section 26. It also deleted the words: "except in so far as Parliament may by law otherwise provide" in cl. (b) of sub section (1) and omitted sub section (2) of the section. By its terms the amendment was only prospective. It did not seek to disturb the position in law obtaining up to that date. It was argued before us that the State Legislature was not competent to legislate in this field after the Constitution (Sixth Amendment) Act. On March 11, 1958 Sundararamier & Co. 's case(1) was decided by this Court. That case dealt with the competence of the States to levy tax on inter State sales and to enact conditional legislation on the subject. The statute which came up for consideration was the Madras General Sales Tax Act, 1939 (Madras Act 9 of 1939) as adapted to Andhra read with section 2 of the Sales Tax Laws Validation Act (7 of 1956). section 22 of the Madras General Sales Tax Act was inserted in the statute by an Adaptation Order of the President issued on July 2, 1952 and cl. (a) thereof was substantially similar to section 26(1)(a) of the Travancore Cochin General Sales Tax Act XI of 1125. The effect of cl. (b) of section 22 was that nothing in the Act (Madras Act) was to be deemed to impose or authorise the imposition of a tax on the sale or purchase of any goods where such sale or purchase takes place in the course of inter State trade or commerce except in so far as Parliament may bylaw otherwise provide after 3 1st March 1951 and the provisions of the Act were to be read and construed accordingly. There was an Explanation to this section which is a verbatim reproduction of the Explanation to article 286(1)(a). It was held by this Court tat page 1453) that: "Taken along with the admitted power of the States to impose tax on sales under Entry 54, the true scope of section 22 is that it does impose a tax on the Explanation sales, but the imposition is to take effect only when Parliament lifts the ban. In other words, it is a piece of legislation imposing tax in praesenti but with a condition annexed that it is to come into force in futuro as and when Parliament so provides. . . . It would clearly be within the competence of the Madras Legislature to enact a, law imposing a tax on sales conditional on the ban enacted in article 286(2) being lifted by Parliamentary legislation, and that, in our opinion, is all that has been done in section 22. The Madras Act defines the event on which the tax becomes payable and the person from whom and the (1) ; , 421 rate at which it has to be levied and forms a complete code on the topic under consideration. It would have no immediate operation by reason of the ban imposed by article 286(2), but when once that is removed by a law of Parliament, there is no impediment to its being enforced. That satisfies all the requirements of a conditional legislation. " Discussing various authorities cited at the Bar this Court approved of the decision in Mettur Industries Ltd. vs State of Madras(1) and Dial Das vs P. section Talwalkar(2) and held that section 22 operated to impose a tax on sales failing within the Explanation subject to authorisation by Parliament as provided in Art, 286(2). At page 1463, the Court went on to observe: "If it is competent to the legislatures of the States to enact a law imposing a tax on inter State sales to take effect when Parliament so provides, there is nothing unconstitut ional or illegal either in section 22 of the Madras Act or in the corresponding provisions in the Acts of other States. If conditional legislation is valid, as we have held it is, then section 22 is clearly intro vires and the foundation on which this contention of the petitioners rests, disappears and it must fall to the ground. " The case of the State of Kerala & Others vs The Cochin Coal Company Ltd(") was decided on October 31, 1960. There, the respondent who stocked bunker coal at Candla Island in the State of Madras sold the coal to steamers calling at the port of Cochin in the State of Travancore Cochin and delivered it there. The respondent was assessed to sales tax on such sales for the years 1951 52 and 1952 53. The respondent contended inter alia that the sale being in the course of inter State trade was covered, by the ban contained in article 286(2) of the Constitution and was not taxable under the Travancore Cochin General Sales Tax Act, 1125. The State contended that this claim for exemption was not available in view of the Sales Tax Laws Validation Act, 1956. The High Court held that the Validation Act could not avail the State because on their construction of section 26 of the Act, no tax had been levied or was leviable on sales in the course of inter State trade or commence and that the Validation Act having validated only taxes already levied could not enable the State to levy tax which had not been imposed by the State Sales Tax Act. This Court rejected the view of the High Court (see 7 S.T.C. 731 at p. 738) and held that "the view of the learned Judges of the High Court regarding the construction of section 26 of the Travancore Cochin General Sales Tax Act must now be held to be incorrect in view of ' the decision of this Court in M. P. V. Sundararamier & Co. vs, The State of Andhra Pradesh(4). (1) A.T.R. (2) A.I.R. 1957 Bom. (3) ; (4) ; 422 The position which emerges from the above may be summarised below: (1)The enactment of the Travancore Cochin General Sales Tax Act as it stood prior to the coming into force of the Constitution, imposed a levy of sales tax on transactions of the nature disclosed in this case. (2)S. 26 of the General Sales Tax Act, as amended in 1951, imposed a ban on the levy of tax after March 31, 1951 subject to any exception which Parliament may by law provide. (3)Central Act 7 of 1956 was enacted for the purpose of validating the levy and collection of taxes between 1 4 1951 and 6 9 19 55 which would 'otherwise be invalid, by reason of the decision in the Bengal Immunity Co. 's case(1). (4)In Sundararamier 's case(2) it was held by this Court that section 22 of the Madras General Sales Tax Act operated to impose a tax subject to authorisation by Parliament as provided in article 286 (2). Further, this Court did not agree with the view of the Kerala High Court in Cochin Coal Co. Ltd. vs State of Travancore Cochin(3). (5)In the State of Kerala & Others vs The Cochin Coal Co. Ltd.(4) this Court overruled the decision of the Kerala High Court in the Cochin Coal Co. Ltd. vs The State of Travancore Cochin(3) regarding the construction ,of section 26 of the Travancore Cochin General Sales Tax Act : further the assessee 's claim to relief on the strength of article 286(2) of the Constitution was held not to be available to them after the coming into force of the Sales Tax Validation Act, 1956 (See [1961] 2 S.C.R. pp. 219, 223). The effect of this was that the levy of sales tax up to 4th September, 1955 being the last date with which we are concerned in this case, was valid. The validity and the scope of the amendment introduced in section 26 of the Travancore Cochin General Sales Tax Act by Act 12 of 1957 do not fall to be considered in this case inasmuch as the Act was only prospective and did not operate to invalidate any levy of tax imposed before. In this view of the matter, we are really not concerned to go into the question as to whether the State of Kerala had legislative competence to enact Act 9 of 1962 seeking thereby to amend section 26 of the Travancore Cochin General Sales Tax Act, 1125 by substituting the date 6th September, 1955 in place of 31st March 1951 and purporting to validate the levy and collection of taxes on sales and purchases falling within the purview of sub section (2A) of section 26 of the principal Act as inserted by the Act of 1962. The ban (1) (3) 7 S.T.C. 731. (2) ; (4) ; 423 imposed by section 26 of the General Sales Tax Act, 1125 having been lifted by the Central Sales Tax Validating Act, 1956, the State was competent to collect all taxes in respect of sales in the course of inter State trade and commerce up to September 5, 1955. In the result, we hold that sales tax was properly leviable by the State of Kerala on the transactions which formed the subject matter of this case up to the 4th September 1955; but the question raised in the application for revision was not correctly framed and should read as follows: "Whether in the light of the Sales Tax Laws Validation Act, 1956 (Central Act 7 of 1956) read with the Travancore Cochin General Sales Tax Act as amended up to 1956, the finding of the Tribunal is correct?" We amend the question accordingly. We allow the appeal and answer the question in the negative. The matter must now go back to the High Court and the High Court should remit the matter to the Appellate Tribunal with our opinion on the question as reframed. In the circumstances of this case, we make no order as to costs. V.P.S. Appeal allowed.

IN-Abs

Before the Constitution came into force, the Travancore Cochin General Sales Tax Act, M.E. 1125, levied a tax on sale of goods and inter State sales were not exempt from such taxation. By Act 12 of 1951, section 26 was inserted in the Act to bring the Act into line with article 286 of the Constitution as it then stood, and imposed a ban on the levy of tax on inter State sales after March 31, 1951, unless Parliament otherwise provided under article 286(2). On September 6, 1955, this Court held in The Bengal Immunity Co. Ltd. case, [1955]2 S.C.R. 603, that inter State sales could not be taxed by a State, even if they were inside sales with respect to that State. This led to the passing, by Parliament, of the Sales Tax Laws Validation Act, 1956, for the purpose of validating the levy and collection of taxes on inside sales between April 1, 1951 and September 6, 1955. In Sundararamier & Co. case ; this Court decided that section 22 of the Madras General Sales Tax Act, 1939 which was in part materia with section 26 of the Travancore Cochin Act operated to impose a tax, subject to authorisation by Parliament as provided in article 286(2); in other words it was a piece of legislation imposing tax in praesenti but with a condition annexed that it was to come into force in futuro as and when Parliament so provided; and this view was re affirmed by this Court in the Cochin Coal Co. 's case ; with respect to section 26 of the Travancore Cochin Act. [418C; 422 B F] The respondent assessee was a dealer, not resident in Travancore Cochin State. It supplied coal to consumers within the State, the last of the transactions being on September 4, 1955. On the question whether the inter State sales during assess ment year 1955 56, were taxable under the provisions of the Travancore Cochin Act, the Sales Tax Appellate Tribunal and the High Court held in favour of the assessee. In appeal by the State to this Court, Held: The ban imposed by section 26 of the Travancore Cochin Act, having been lifted by the Sales Tax Laws Validation Act, sales tax could be levied and collected by the State for the period covered by that Act. The Amendment to the section by Kerala Act 12 of 1957 did not fall to be considered in the present case inasmuch as the Amending Act was only prospective and did not operate to invalidate any levy of tax imposed before. The question as to whether the State of Kerala had legislative competence to amend section 26 by Kerala Act 9 of 1962 which purported to validate, the levy and collection of taxes before September 6, 1955 is also irrelevant for the purpose of this appeal. [422G; 423A D] S5 SCI (a)13 416

Appeal No. 1238 of 1966. Appeal by special leave from the judgment and order dated January 15, 1963 of the Mysore High Court in Writ Petition No. 48 of 1962. R. Gopalakrishnan and section P. Nayar, for the appellants. section C. Mazumdar, M. M. Kshatriya and G. section Chatterjee, 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 Mysore High Court dated January 15, 1963 in Writ Petition No. 48 of 1962 granting a writ in the nature of mandamus directing the appellants to accord to the respondent that benefit of both the revised higher pay scales for the Matriculate tracers with effect from the respective dates on which they came into force. The respondent, Narasing Rao was employed as a tracer in the Engineering Department in the Ex Hyderabad State on the scale of pay Rs. 65 90.In the cadre of tracersof that State,there were matriculates as well as non matriculates. But there was no distinction made in the scale of pay for that reason and all the tracers were placed in the same scale. The respondent was a non matriculate. There was re organisation of States in 1956 and as a result of the re organisation a part of the area of Hyderabad State became part of the new Mysore State. The respondent was allotted to the new Mysore State. After the transfer of the respondent to the new State. the cadre of tracers into which tracers from Bombay State had also been absorbed, was re organised into two grades, one consisting of matriculate tracers whose scale of pay was fixed at Rs. 50 120 and the other of non matriculates 409 at Rs. 40 80 with effect from January 1, 1957. It is necessary to state that in the old Mysore State even before November 1, 1956 there were two grades of tracers, viz., non S.S.L.C. tracers on the pay scale of Rs. 30 50. and S.S.L.C. tracers on the pay scale of Rs. 40 60. As the respondent was a non matriculate he was given the option to accept the new scale of pay i.e., Rs. 40 80 or remain in the old Hyderabad scale of Rs. 65 90. But the respondent refused to exercise the option and claimed that the cadre of tracers in the new Mysore State should not have been divided into two grades and that no distinction should have been made between matriculates and non matriculates. The respon dent insisted that his pay should be fixed in the grade Rs. 50 120. The claim was rejected by the Superintending Engineer on March 19, 1958 and the respondent was told that he could only be fixed in the new revised scale of Rs. 40 80 as he had not passed the S.S.L.C. examination. Meanwhile, by an order of the Government dated February 27, 1961 the pay scales of the tracers in the new State of Mysore were further revised and the revised pay scales were directed to come into force with effect from January 1, 1961. Under this Government order, the tracers who had passed the S.S.L.C. examination were entitled to opt in favour of the pay scale Rs. 80 150 and those who had not passed that examination were entitled to get into pay scale of Rs. 70 1 10. The respondent claimed that he was entitled to the pay scale applicable to the tracers who had passed the S.S.L.C. examination viz., Rs. 80150. The claim of the respondent was rejected. Thereafter the respondent filed a writ petition in the Mysore High Court praying that the order of the Superintending Engineer dated March 19, 1958 fixing his pay in the scale of non matriculate tracers and giving him the option; to retain his old scale may be quashed and for a writ in the nature of mandamus to fix his pay in the scale prescribed for matriculate tracers. The High Court allowed the writ petition, holding that there was a violation of the guarantees given under articles 14 and 16 of the Constitution and granted the relief claimed by the respondent on the ground that there was no valid reason for making a distinction as both matriculate and non matriculate tracers were doing the same kind of work. The first question to be considered in this appeal is whether the creation of two scales of tracers in the new Mysore State who were doing the same kind of work amounted to a discrimination which violated the provisions of articles 14 and 16 of the Constitution. The relevant law on the subject is well settled. Under article 16 of the Constitution, there shall be equality of opportunity for all citizens in matters relating to employment or appointment to any office under the State or to promotion from one office to a higher office thereunder. Article 16 of the Constitution is only an incident of the application of the concept of equality enshrined in 410 article 14 thereof. It gives effect to the doctrine of equality in the matter of appointment and promotion. It follows that there can be a reasonable classification of the employees for the purpose of appointment or promotion. The concept of equality in the matter of promotion can be predicated only when the promotees are drawn from the same source. 'This Court in dealing with the extent of protection of article 16(1) observed in General Manager, Southern Rly. vs Rangachari(1): "Thus construed it would be clear that matters relating to employment cannot be confined only to the initial matters prior to the act of employment. The narrow construction would confine the application of article 16(1) to the initial employment and nothing else; but that clearly is only one of the matters relating to employment. The other matters relating to employment would inevitably be the provision as to the salary and periodical increments therein, terms as to leave, as to gratuity, as to pension and as to the age of superannuation. These are all matters relating to employment and they are, and must be, deemed to be included in the expression 'matters relating to employment ' in article 16(1). . . This equality of opportunity need not be confused with absolute equality as such. What is guaranteed is the equality of opportunity and nothing more. Article 16(1) or (2) does not prohibit the prescription of reasonable rules for selection to any employment or appointment to any office. Any provision as to the qualifications for the employment or the appointment to office reasonably fixed and applicable to all citizens would certainly be consistent with the doctrine of the equality of opportunity; but in regard to employment, like other terms and conditions associated with and incidental to it, the promotion to a selection post is also included in the matters relating to employment, and even in regard to such a promotion to a selection post all,that article 16(1) guarantees is equality of opportunity to all citizens who enter ser vice. . . In this connection it may be relevant to remember that article 16(1) and (2) really give effect to the equality before law guaranteed by article 14 and to the prohibition of discrimination guaranteed by article 15(1). The three provisions form part of the same constitutional code of guarantees and supplement each other. If that be so, there would be no difficulty in holding that the matters relating to employment must include 'all matters in relation to employment both prior, and subsequent, to the employment which are incidental to the employment and form part of terms and conditions of such employment." (1) ; , 596. 411 The argument was stressed on behalf of the respondent that success in the S.S.L.C. examination had no relevance to the post of tracer and the tracers of the erstwhile State of Hyderabad who were allotted to the new State of Mysore were persons similarly situated and there was no justification for making a discrimination against only some of them by creating a higher pay scale for tracers who had passed the S.S.L.C. examination. It was contended for the respondent that all, the tracers who were allotted to the new State of Mysore were persons who were turning out the same kind of work and discharging the same kind of duty and there was no rational basis for making two classes of tracers, one con sisting of those who had passed the S.S.L.C. examination and the other consisting of those who had not. In our opinion, there is no justification for the argument put forward in favour of the respondent. It is well settled that though article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation. When any impugned rule or statutory provision is assailed on the ground that it contravenes article 14, its validity can be sustained if two tests are satisfied. The first test is that the classification on which it is founded must be based on an intelligible differentia which distinguishes persons or things grouped together from others left out of the group; and the second test is that the differentia in question must have a reasonable relation to the object sought to be achieved by the rule or statutory provision in question. In other words, there must be some rational nexus between the basis of classification and the object intended to be achieved by the statute or the rule. As we have already stated ' articles 14 and 16 form part of the same con stitutional code of guarantees and supplement each other. In other words, article 16 is only an instance of the application of the general rule of equality laid down in article 14 and it should be construed as such. Hence, there is no denial of equality of opportunity unless the person who complains of discrimination is equally situated with the person or persons who are alleged to have been favoured, Article 1.6(1) does not bar a reasonable classification of employees or reasonable tests for their selection. It is true that the selective test adopted by the Government for making two different classes will be violative of articles 14 and 16 if there is no relevant connection between the test prescribed and the interest of public service. In other words, there must be a reasonable relation of the prescribed test to the suitability of the candidate for the post or for employment to public service as such. The provisions of article 14 or article 16 do not exclude the laying down of selective tests, nor do they preclude the Government from laying down qualifications for the post in question. Such qualifications need not be only technical but they can also be general qualifications relating to the suitability of the candidate for public service as such. It is therefore not right to say that in the appointment to the post of tracers the Government ought to 412 have taken into account only the technical Proficiency of the candidates in the particular craft. It is open to the Government to consider also the general educational attainments of the candidates and to give preference to candidates who have a better educational qualification besides technical proficiency of a tracer. The relevance of general education even to technical branches of public service was emphasised long ago by Macaulay as follows: Men who have been engaged, up to one and two and twenty, in studies which have no immediate connexion with the business of any profession, and the effect of which is merely to open, to invigorate, and to enrich the mind, will generally be found, in the business of every profession, superior to men who have,, at eighteen or nineteen, devoted themselves to the special studies of their calling. Indeed, early superiority in literature and science generally indicates the existence of some qualities which are securities against vice industry, self denial, a taste for pleasures not sensual, a laudable desire of Honourable distinction, a still more laudable desire to obtain the approbation of friends and relations. We, therefore, think that the intellectual test about to be established will be found in practice to be also the best moral test can be devised." (Hansard, Series, 3 CXXVIII, 754, 755) In our opinion, therefore, higher educational qualifications such as success in the S.S.L.C. examination are relevant considerations for fixing a higher pay scale for tracers who have passed the S.S.L.C. examination and the classification of two grades of tracers in the new Mysore State, one for matriculate tracers with a higher pay scale and the other for non matriculate tracers with a lower pay scale is not violative of articles 14 or .16 of the Constitution. We proceed to consider the next question raised on behalf of the respondent, viz., that the condition of service of the respondent has been adversely affected by the creation of two new pay scales and that there was a violation of the provisions of section 115 of the (Act No. 37 of 1956) which states: "115. Provisions relating to other services (I) Every person who immediately before the appointed day is serving in connection with the affairs of the Union under the administrative control of the Lieutenant Governor or Chief Commissioner in any of the existing State of Ajmer, Bhopal, Coorg, Kutch and Vindhya Pradesh, or is serving in connection with the affairs of any of the existing States of Mysore, Punjab, Patiala and East Punjab States Union and Saurashtra shall, as from 413 that day, be deemed to have been allotted to serve in connection with the affairs of the successor State to that existing State. (2) Every person who immediately before the appointed day is serving in connection with the affairs of an existing State part of whose territories is transferred to another State by the provisions of shall, as from that day, provisionally continue to serve in connection with the affairs of the principal successor State to that existing State unless he is required by general or special order of the Central Government to serve provisionally in connection with the affairs of any other successor State. (3) As soon as may be after the appointed day, the Central Government shall, by general or special order, determine the successor State to which every person referred to in subsection (2) shall be finally allotted for service and the date with effect from which such allotment shall take effect or be deemed to have taken effect. (4) Every person who is finally allotted under the provisions of sub section (3) to a successor State shall, if he is not already serving therein be made available for serving in that successor State from such date as may be agreed upon between the Governments concerned, and in default of such agre ement, as may be determined by the Central Government. (7) Nothing in this section shall be deemed to affect after the appointed day the operation of the provisions of Chapter I of of the Constitution in relation to the determination of the conditions of service of persons serving in connection with the affairs of the Union or any State: Provided that the conditions of service applicable immediately before the appointed day to the case of any person referred to in sub section (1) or sub section (2) shall not be varied to his disadvantage except with the previous approval of the Central Government. " It was stated that in the erstwhile Hyderabad State the respondent was kept in one grade along with matriculate tracers and there has been a violation of the proviso to section 115(7) of the , because in the new Mysore State the respondent has been made to work in a separate grade of non matriculate tracers. We do not think there is any substance in this contention. We do not propose, in this case, to consider what is the full scope and meaning of the phrase "Conditions of SCI 13 414 service" occurring in the proviso to section 115 of the . It is sufficient for us to say that, in the present cast,, there is no violation of the proviso and the respondent is not right in contending that his condition of service is adversely affected because he is made to work in the grade of non matriculate tracers in the new Mysore State. It was alleged by the respondent that according to Hyderabad rules 20 per cent of the vacancies of SubOverseers were to be from the grade of tracers and for those who were not promoted there was another grade of Rs. 90 120 and if the order of the Superintending Engineer dated March 19, 1958 was to stand, the respondent 's chance of promotion would be affected. In their counter affidavit the appellants have said that 10 percent of the tracers in the new State of Mysore are entitled to be promoted to the grade of Assistant Draftsmen in the scale of Rs. 110 220. The basis of promotion to the higher grade was the inter State seniority list prepared under the provisions of the . It was stated that the seniority of the respondent was not affected and he had not been deprived of any accrued benefits. The basis of promotion to the higher grades was selection based on merit cum seniority. In other words, both matriculate and non matriculate tracers were eligible for promotion on the basis of the inter State seniority list prepared for this Department. In our opinion, Counsel on behalf of the respondent is unable to make good his submission on this aspect of the case. For the reasons expressed we hold that the judgment of the Mysore High Court dated January 15, 1963 in Writ Petition No. 48 of 1962 should be set aside and this appeal must be allowed. But, as directed by this Court in its order granting special leave dated November 6, 1963, the appellant State of Mysore will pay the costs of the respondent. R.K.P.S. Appeal allowed.

IN-Abs

The respondent was employed as a Tracer in the Engineering Department in the erstwhile Hyderabad State where the cadre of Tracers consisted of both matriculates as well as non matriculates and no distinction was made between them. As a result of the reorganisation of States in 1956 he was allotted to the appellant Mysore State where the cadre of Tracers was reorganised into two, ,one consisting of matriculate Tracers in a higher scale of pay and the other of non matriculates in a lower scale. The respondent was given the option either to remain in his old Hyderabad scale of pay or to accept the new scale applicable to non matriculates. He refused to exercise the option and claimed that the cadre of Tracers should not have been divided into two grades and that no distinction should have been made between matriculates and non matriculates. His claim was rejected by the Superintending Engineer on March 19, 1958 and he filed a writ petition in the High Court praying that the order of the Superintending Engineer be quashed and for the issue of writ in the nature, of mandamus to fix his pay in the scale prescribed for matriculate Tracers. The High Court allowed the petition, holding that there was no valid reason for making a distinction as both matriculate and non matriculate Tracers were doing the same kind of work and the distinction made was in violation of articles 14 and 16 of the Constitution. On appeal to this Court, Held: Allowing the appeal. Higher educational qualifications are relevant considerations for fixing a higher pay scale and the classification of two grades of Tracers in the new Mysore State was not violative of articles 14 or 16 of the Constitution. Articles 14 and 16 form part of the same constitutional code Of guarantees and supplement each other. In other words article 16 is only an instance of the application of the general rule of equality laid down in article 14 and it should be construed as such. Hence there is no denial of equality of opportunity unless the person who complains of discrimination is equally situated with the person or persons who are alleged to have been favoured. [411E F] 408 The provisions of article 14 or article 16 do not exclude the laying down of selective tests, nor do they preclude the Government from laying down qualifications for the post in question. Such qualifications need not be only technical and it is open to the Government to consider the general educational attainments of the candidates and to give preference to candidates who have better educational qualifications besides the technical proficiency of a Tracer. [411G412B] General Manager, Southern Railway vs Rangachari, ; , 596, referred to. There was no force in the respondent 's contention that because of his having been in one grade with matriculate Tracers in the old State and, on his being made to work in a separate non matriculate grade in the new State his conditions of service were adversely affected in violation of section 116(7) of the . Furthermore the basis of promotion was merit and seniority based on the interstate seniority list prepared under the provisions of the Act; thus the respondent 's seniority had not been affected and he was not deprived of any accrued benefits. [412F G; 414C D]

Appeal No. 1082 of 1967. Appeal from the judgment and order dated March 7, 1967 of the Delhi High Court in Company Appeal No. 3 of 1967. A. N. Khanna and Harbans Singh, for the appellant. P. C. Khanna and Maharaj Krishan Chawla, for the respon dent. The Judgment of the Court was delivered by Shah, J. The appellants private limited Company is engaged in the manufacture of electric conduit pipes. The respon dent who is a director of the Company presented a petition in the High Court of Delhi under sections 433 and 439 of the , for an order for compulsory winding up of the Company. The respondent claimed that it was "just and equitable" within the meaning of section 443(f) of the , to make an order for compulsory winding up, because one of the three factories of the Company had been closed, that the accounts of the Company were not being shown to the respondent, that no meeting of the Company had been held, no balance sheet had been prepared and a letter of resignation purported to be signed 430 431 by the respondent had been forged. On July 18, 1966, Capoor, J., directed that notice of the petition be issued to the appellant Company. The order has not been formally drawn up, and it is not clear whether by that order it was intended to call upon the Company to show cause why the petition should not be admitted, or that by the order the petition was admitted and notice under r. 96 of the Companies (Court) Rules, 1959 was issued. The appellant Company filed its reply controverting the allegations made by the respondent. The Company also filed an application that the winding up petition filed by the respondent be taken off the file and be dismissed and that the petition in the meantime be not advertised. H. R. Khanna, J., held that the appropriate remedy of the respondent on the allegations of mismanagement of the affairs of the Company and oppression of the minority shareholders by the group of Anandi Lal was to file a petition under sections 397 and 398 of the . The learned Judge further held that the petition for winding up was instituted with a view "to unfairly prejudice the interests of the shareholders of the Company", respondent having set up a rival factory in the name of his son for manufacturing electric conduit pipes. The learned Judge directed that the petition be not advertised and be. dismissed. In appeal against the order passed by H. R. Khanna, J., the High Court of Delhi held that under the Companies (Court) Rules, 1959, once a petition is admitted to the file, the Court is bound forthwith to advertise the petition. The company challenges that order in this appeal. Rule 96 of "The Companies (Court) Rules, 1959" framed by this Court provides : "Upon the filing of the petition, it shall be posted before the Judge in Chambers for admission of the petition and fixing a date for the hearing thereof and for directions as to the advertisement to be published and the persons, if any, upon whom copies of the petition are to be served. The Judge may, if he thinks fit, direct notice to be given to the company before giving directions as to the advertisement of the petition. " Rule 24 which relates to advertisement of petitions provides "(1) Where any petition is required to be advertised, it shall, unless the Judge otherwise orders, or these, Rules otherwise provide, be advertised not less than fourteen days before the date fixed for hearing, in one issue of the Official Gazette of the State or the Union Territory concerned, and in one issue each of a daily newspaper in the English language and a daily newspaper in the regional language circulating in the State or the Union Territory concerned, as may be fixed by the Judge. 432 (2) Except in the case of a petition to wind up a company, the Judge may, if he thinks fit, dispense with any advertisement required by these Rules. " When a petition is filed before the High Court for winding up of .a company under the order of the Court, the High Court (i) may issue notice to the Company to show cause why the petition should not be admitted; (ii) may admit the petition and fix a date for hearing, and issue a notice to the Company before giving directions about advertisement of the petition; or (iii) may admit the petition, fix the date of hearing of the petition, and order that the petition be advertised and direct that the petition be served upon persons specified in the order. A petition for winding up cannot be placed for hearing before the Court, unless the petition is advertised that is clear from the terms of r. 24(2). But that is not to say that as soon as the petition is admitted, it must be advertised. In answer to a notice to show cause why a petition for winding up be not admitted, the Company may show cause and contend that the filing of the petition amounts to an abuse of the process of the Court. If the petition is admitted, it is still open to the Company to move the Court that in the interest of justice or to prevent abuse of the process of Court, the petition be not advertised. Such an application may be made where the Court has issued notice under the last clause of r. 96, and even when there is an unconditional admission of the petition for winding up. The power to entertain such an application of the Company is inherent in the Court, and r. Nothing in these Rules shall be deemed to limit or otherwise affect the inherent powers of the Court to give such direction or pass such orders as may necessary for the ends of justice to prevent abuse of the process of the Court", iterates that power. In in re. A. Company(1) it was held that if the petition is not presented in good faith and for the legitimate purpose of obtaining a winding up order, but for other purpose such as putting pressure on the Company, the Court will restrain the advertisement of the petition and stay all further proceedings upon it. We may state that the High Court of Punjab in Lord Krishna Sugar Mills Ltd. vs Smt. Abnash Kaur(2) was right in ,observing that the Court in an appropriate case has the power to .Suspend advertisement of a petition for winding up, pending disposal of an application for revoking the order of admission of the petition, though we may hasten to state that we cannot agree H.R. Khanna,, J., was apparently satisfied that the petition was not a, bona fide petition and the respondent in presenting (1) (2) A.L.R. 1961 Punjab 505. 433 the petition was acting with ulterior motive and his attempt to obtain an order for winding up was "unreasonable". Before the High Court directed that the petition for winding up be advertised,the High Court was bound to consider whether the view expressed by H. R. Khanna,, J., was right. For reasons already set out, in our judgment, the High Court erred in holding that a petition for winding up must be advertised even before the application filed by the Company for staying the proceeding for the ends of justice, or to prevent abuse of the process of the Court. The view taken by the High Court that the Court must, as soon as the petition is admitted, advertise the petition is contrary to the plain terms of r. 96. Such a view, if accepted, would make the Court an instrument, in possible cases, of harassment and even of blackmail, for once a petition is ad vertised, the business of the Company is bound to suffer serious loss and injury. The appeal is allowed. The High Court has disposed of the appeal on a ground of procedure and has not considered whether the view of H. R. Khanna, J., that in the exercise of the inherent power for the ends of justice and for prevention of the abuse of the process of Court, the petition should not be advertised, is correct. The case is therefore remanded with the direction that the High Court do deal with and dispose of the appeal according to law. There will be no order as to its costs in this Court. The costs in the High Court will be costs in this appeal. Y.P. Appeal allowed.

IN-Abs

In an appeal to this Court, the High Court 's view that on the admission of a petition under sections 433 and 439 of the for compulsory winding up of a company, the Court is bound forthwith to advertise the petition, was challenged. Held: A petition for winding up cannot be placed for hearing before the Court, unless the petition is advertised: that is clear from terms of r. 24(2) of the Companies (Court) Rules, 1959. But that is not to say that as soon as the petition is admitted, it must be advertised. If the petition is admitted, it is still open to the company to move the Court that in the interest of justice or to prevent abuse of the process of Court, the petition be not advertised. Such an application may be made where the Court has issued notice under the last clause of r. 96, and even when there is an unconditional admission of the petition for winding up. The power to entertain such an application of the company is inherent in the Court and r. 9 iterates that power. [432C F] In re. A. Company applied. Lord Krishna Sugar Mills Ltd., vs Smt. Abnash Kaur A.I.R. (1961) Punj. 505 approved.

Appeal No. 500 of 1965. Appeal by special leave from the judgment and order dated February 5114, 1963 of the Gujarat High Court in Civil Revision Application No. 597 of 1961. M. V. Goswami, for respondents Nos. 1 to 3. M.S. K. Sastri, section P. Nayar for R. H. Dhebar, for respondent No. 7. The Judgment of the Court was delivered by Shah, J. Respondents 1 to 4 and respondent No. 6 are the trustees of a public trust, styled "Shri Tricumraiji". In March 1950 the trustees mortgaged a house belonging to the trust to one Saheba to secure repayment of Rs. 5,000. An action instituted by the mortgagee against the trustees to enforce the mortgage was compromised, and it was decreed that the trustees do pay Rs. 3,910 due under the mortgage by monthly instalments of Rs. 100 each and in default of three instalments the entire amount remaining unpaid shall become due and recoverable from the mortgagee property. The trustees did not pay the instalments due under the decree, and in an application for execution by the mortgage( the mortgaged property was put up for sale and the bid of the appellant was accepted for Rs. 5,000 by the executing Court. The, trustees thereafter applied under 0. 21 r. 89 of the Code of Civil Procedure for setting aside the sale and deposited Rs. 250 being 5 % of the purchase money for payment to the appellant and Rs. 6 for payment to the mortgagee, claiming that in consideration o the latter amount the mortgagee had agreed to "give to them six months ' for payment of the mortgage amount", and had agree, in the meantime to abandon the application for execution. The Subordinate Judge passed an order disposing of the execution application and directed that Rs. 250 out of the amount deposit, by the trustees be paid over to the appellant. In appeal against that order by the appellant, the District Court reversed the order holding that since the trustees bad failed to comply with the requirements of r. 89 of 0. 21 Code of Civil Procedure, the executing Court had no jurisdiction to set aside the sale. The High 457 Court of Gujarat in exercise of powers under s.115 of the Code of Civil Procedure set aside the order of the District Court. Raju, J. , held that sale of the mortgaged property which belonged to a public trust. without the sanction of the Charity Commissioner being prohibited by section 36 of the Bombay Public Trusts Act, was invalid, and on that view remanded the case to the District Court "for decision on all the points correctly arising out of the matter". Against that order, this appeal has been preferred with special leave. The mortgaged property belongs to a public trust within the meaning of the Bombay Public Trusts Act. Section 36 of the Bombay Public Trusts Act reads as follows: "Notwithstanding anything contained in the instrument of trust (a) no sale, mortgage, exchange or gift of any immovable property, and (b) no lease for a period exceeding ten years in the case of agricultural land or for a period exceeding three years in the case of non agricultural land or a building, belonging to a public trust, shall be valid without the previous sanction of the Charity Commissioner. " Raju, J., was of the opinion that the expression 'sale ' in section 36(a) includes a sale of the property of a public trust in execution of a decree of a civil Court for recovery of a debt due by the trust, and on that account a sale in execution of a decree held without the previous sanction of the Charity Commissioner must be deemed invalid. We are unable to agree with that view. Obviously the transactions of mortgage, exchange or gift or lease of any immovable property in cls. (a) & (b) contemplated to be made by the trustees are voluntary transactions, and in the absence of any clear provision in the Act, the expression "sale" in cl. (a) would only mean transfer of property by the trustees for a price. Section 36 occurs in Ch. V relating to 'Accounts and Audit ', and is one of the provisions which imposes restrictions on the powers of the trustees. There is nothing to indicate, either in the words of the section, or in the context in which it occurs, that the sale prohibited without sanction of the Charity Commissioner includes a Court sale in execution of a decree. For the purpose of the present case. we do not deem it necessary to express any opinion on the question whether a sale in exercise of authority derived from the trustees, e.g. a covenant for sale under an English mortgage executed by the trustees or a sale in terms of a consent decree attracts the application. of section 36 of the Act. We have no doubt, however, that the Legislature did not intend to put any restriction upon the power of the Civil Court executing a decree for recovery 458 of money due from the trust, by sale of the property of the trust. The section imposes a fetter upon the power of the trustees: it is not intended thereby to confer upon the Charity Commissioner an overriding authority upon actions of the Civil Court in execution of decrees. The learned Judge also held that section 56B of the Bombay Public Trusts Act which provides that "in any suit or legal proceedings in which it appears to the Court that any question affecting a public religious or charitable purpose is involved, the Court shall not proceed to determine such question until after notice "has been given to the Charity Commissioner", made it obligatory upon the Court to issue notice to the Charity Commissioner, and if that officer desires to be joined as a party, to implied him in a proceeding to enforce a mortgage by sale of the mortgaged property. In our judgment, that view also cannot be sustained. A suit to enforce a mortgage or a proceeding to enforce a mortgage decree against property belonging to a public trust is not a suit or proceeding in which a question affecting a public religious or charitable purpose is involved. The District Court was, in our judgment, right in holding that the requirements of 0. 21 r. 89 of the Code of Civil Procedure were not complied with and the Subordinate, Judge had no power to set aside the sale held in execution of the decree. Order 21 r. 89 of the Code of Civil Procedure which in terms applies to sale of immovable property in "execution of a decree" which expression includes execution of a decree for sale of mortgaged property, enables any person either owning such property or holding an interest therein by virtue of a title to apply to have the sale Set aside on his depositing in Court, (a) for payment to the purchaser, a sum equal to five per cent. of the purchase money, and (b) for payment to the decree holder, the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered, less any amount which may, since the date of such proclamation of sale, have been received by the decree holder. Rule 89 requires that two primary conditions relating to deposit must be fulfilled: the applicant must deposit in the Court for payment to the auction purchaser 5 % of the purchase money: he must also deposit the amount specified in the proclamation of sale less any amount received by the decree holder since the date of proclamation of sale for payment to the decree holder. In the present case, the trustees of the trust had deposited Rs. 250 for payment to the auction purchaser. They also deposited Rs. 63 for payment to the decree holder, but it is common ground that the claim of the mortgagee was not satisfied, by that deposit. The 459 first condition was, therefore, fulfilled, but the second condition of 0 .21 r. 89 was not fulfilled. It was urged, however, that the mortgagee having agreed to, abandon the execution proceeding and to wait for six months for receiving payment of the mortgage dues from the trustees, abandonment of the execution proceeding was in law equivalent to, payment to the decree holder of the amount specified in the proclamation of sale for the recovery of which the sale was ordered. This in our Judgment is a futile argument. By abandoning the execution proceeding the claim of the creditor is not extinguished: he is entitled to commence fresh proceedings for sale of the property. Rule 89 of 0. 21 is intended to confer a right upon the judgment debtor, even after the property is sold, to satisfy the claim of the decree holder and to compensate the auction purchaser by paying him 5 % of the purchase money. The provision, is not intended to defeat the claim of the auction purchaser, unless the decree is simultaneously satisfied. When the judgment creditor agrees to extend the time for payment of the amount for a specified period and in the meanwhile agrees to receive interest accruing due on the amount of the decree, the condition requiring the judgment debtor to deposit in Court for payment to the decreeholder the amount specified in the proclamation of sale for the recovery of which the sale was ordered. cannot be deemed to be complied with. Our attention was invited to several decisions in which it was held, that if the judgment debtor instead of depositing in Court the amount specified in the proclamation of sale for recovery of which the property is sold, satisfies the claim of the decree holder under the decree, the requirements of 0. 21 r. 89 are complied with: Subbayya vs Venkata Subba Reddi(1), Muthuvenkatapathy Reddy vs Kuppu Reddi and Others(2), Laxmansing Baliramsing vs Laxminarayan Deosthan(3). Rabindra Nath vs Harendra Kumar(4). M. H. Shivaji Rao vs Niranjanaiah and Ant . These cases proceed upon interpretation of the expression 'less any amount which may since the date of such proclamation of sale, have been received" occurring in cl. (b) of r. 89. It is unnecessary to venture an opinion whether these cases were correctly decided. It is sufficient to observe that an order setting aside a court sale, in execution of a mortgage decree cannot be obtained, under 0. 21 r. 89 of the Code of Civil Procedure by merely depositing 5 % of the purchase money for payment to the auction purchaser and persuading the decree holder to abandon the execution proceed (1) A.I.R.1935 Mad. 1050. (2) A.I.R.1940 Mad. 427: I.L.R. (3) I.L.R.[1947] Nag. (4) A.I.R.1956 Cal. 462. (5) A.I.R.1962 Mys. 36. 460 Before parting with the case, it is necessary to deal with certain questions of fundamental importance in the administration of justice which the judgment of Raju, J., raises. The learned Judge observed (I) that even though there is a judgment of a Single Judge of the High Court of which he is a member or of a Division Bench of that High Court, he is not bound to follow that precedent. because by following the precedent the Judge would act contrary to section 165 of the Indian Evidence Act, and, would also violate the oath of office taken by him when entering upon his duties as a Judge under the Constitution; and (2) that a judgment of a Full Bench of the Court may be ignored by a Single Judge, if the Full Bench judgment is given on a reference made on a questionof law arising in a matter before a single .Judge or a DivisionBench. Such a judgment, according to Raju. J. would "Dot be a judgment at all" and "has no existence in law". The observations made by the learned Judge subvert the accepted notions about the force or precedents in our system of judicial administration. Precedents which enunciate rules of law form the foundation of administration of justice under our system. It has been held time and again that a single Judge of ,,a High Court is ordinarily bound to accept as correct judgments of Courts of coordinate jurisdiction and of Division Benches and of the Full Benches of his Court and of this Court. The reason ,of the rule which makes a precedent binding lies in the desire to .secure uniformity and certainty in the law. We may refer to the observations made by Venkatarama Aiyar. J. in Jaisri Sahu vs Rajdewan Dubey and Others(1) and the cases referred to therein. If decisions of the same or a superior Court are ignored, eventhough directly applicable. by a Judge in deciding a case arising before him, on the view that every .Judge is entitled to take such view as he chooses of the question of law arising before him as Venkatarama Aiyar, J., observed, the "law will be bereft of all its utility if it should be thrown into a state of uncertainty by reason of conflicting decisions". The effect of a precedent of the Gujarat High Court fell to be considered indirectly in this case. Before Raju, J., it was urged for the first time in the course of this litigation that in the absence .of the sanction of the Charity Commissioner the Court sale was invalid. Counsel for the auction purchaser contended that this question was not raised before the District Court and that Court ,cannot be said to have acted illegally or with material irregularity in not deciding the question. Counsel for the auction purchaser relied upon two decisions in support of that proposition: Pinjare Karimbhai vs Shukla Hariprasad(2) and Haridas vs Rataney(2) He urged that under the Bombay Reorganization Act, 1960, the (1) at pp. 567 569. (2) (3) , 461 jurisdiction of the Bombay High Court which originally extended over the territory now forming part of the State of Gujarat, ceased when a new High Court was set up in the State of Gujarat, but it was held by a Full Bench of the High Court of Gujarat in State of Gujarat vs Gordhandas(1) that the decision of the Bombay High Court will be regarded as binding since the Gujarat High Court had inherited the jurisdiction. power and authority in respect of the territory of Gujarat. When pressed with the observations made in the two cases cited at the Bar, Raju. J. found an easy way out. He observed that the judgment of the Full Bench of the Gujarat High Court had "no existence in law". for in the absence of a provision in ' the Constitution and the Character Act of 1861, a Judge of a High Court had no Power to refer a case to a Full Bench for determination of a question of law arising before him. and a decision given on a reference "had no existence in law". The learned Judge also though that if a Judge or a Division Bench of a Court makes a reference on a question of law to a Full Bench for decision. it Would in effect be assuming the jurisdiction which is vested by the Charter of the Court in the Chief justice of the High Court. In so observing the learned Judge completely misconceived the nature of a reference made by a Judge or a Bench of Judges to a larger Bench. when it appears to a Single Judge or a Division Bench that there are conflicting decisions of the same Court. or there are decisions of other High Courts in India which are strongly persuasive and take a view different from the view which prevails in his or their High Court. or that a question of law of importance arises in the trial of a case, the Judge or the Bench passes an order that the papers be placed before the Chief Justice of the High Court with a request to form a special or Full Bench to hear and dispose of the case or the questions raised in the case. For making such a request to the Chief Justice, no authority of the Constitution or of the Charter of the High Court is needed. and by making such a request a Judge does not assume to himself the powers of the Chief Justice. A Single Judge does not by himself refer the matter to the Full Bench: he only requests the Chief Justice to constitute a Full Bench for hearing the matter. Such a Bench is constituted by the Chief Justice. The Chief Justice of a Court may as a rule, out of deference to the views expressed by his colleague, refer the case: that does not mean. however, that the source of the authority is in the order of reference. Again it would be impossible to hold that a judgment delivered by a Full Bench of a High Court after due consideration of the points before it is liable to be regarded as irrelevant by Judges of that Court on the round of some alleged irregularity in the constitution of the Full Bench The judgment of the Full Bench of the Gujarat High Court was binding upon Raju J., If the learned Judge was of the view (12) 462 that the decision of Bhagwati, J. in Pijare Karimbhai 's case(1) and of Nacleod, C. J. in Haridas 's case(2) did not Jay down the 'correct law or rule of practice, it was open to him to recommend ,to the Chief Justice that the question be considered by a larger Bench. Judicial decorum, propriety and discipline required that lie should not ignore it. Our system of administration of justice aims at certainty in the law and that can be achieved only if, Judges do not ignore decisions by Courts of coordinate authority or of superior authority. Gajendragadkar, C. J. observed In Lala Shri Bhagwan & Anr. vs Shri Ram Chand and Anr. "It is hardly necessary to emphasise that consideration of judicial propriety and decorum require that if a learned single Judge hearing a matter is inclined to take the view that the earlier decisions of the High Court, whether of a Division Bench or of a single Judge, need ,to be re considered, he should not embark upon that enquiry sitting as a single Judge, but should refer the matter 'to a Division Bench. or, in a proper case, place the relevant papers before the Chief Justice to enable him to constitute a larger Bench to examine the question. That is the proper and traditional way to deal with such matters and it is founded on healthy principles of judicial decorum and propriety. " In considering whether a precedent of a Court of coordinate ,authority is binding reference to section 165 of the Evidence Act is irrelevant. Undoubtedly, every judgment must be based upon facts declarded by the Evidence Act to be relevant and duly proved. But when a Judge in deciding a case follows a precedent, he only regards himself bound by the principle underlying the judgMent and not by the facts of that case. It is true that every Judge of a High Court before he enters upon his office takes an oath of office that he will bear true faith and allegiance to the Constitution of India as by law established and that he will duly and faithfully and to the best of his ability, knowledge and judgment perform the duties of office without fear ,or favour, affection or illwill and that he will uphold the Constitution and the laws: but there is nothing in the oath of office which warrants a Judge in ignoring the rule relating to the binding nature, of the precedents which is uniformly followed. The appeal is allowed and the order passed by the High Court set aside and the order passed by the District Court restored. In the circumstances, there will be no order as to costs in this Court and in the High Court. Y.P. Appeal allowed.

IN-Abs

The property of a trust was sold in execution of a mortgage decree. The trustees sought to set aside the sale under 0. 21, r. 89 of the Code of Civil Procedure, They deposited five per cent of the purchase money for payment to the auction purchaser and claimed that the mortgagee had agreed to give them time for payment of the mortgage amount, and has agreed in the meantime to abandon the application for execution. The subordinate judge set aside the sale. In appeal the District Court reversed that order holding that since the trustees failed to comply with r. 89 of 0. 21 requiring the judgment debtor to deposit in court for payment to the decree holder the amount specified in the proclamation of sale for the recovery of which the sale was ordered, the executing court had no jurisdiction to set aside the sale. A single Judge of the High Court, in revision, set aside the order on the ground that the sale of the mortgaged property, which belonged to a public trust, without the sanction of the Charity Commissioner was prohibited by section 36 of the Bombay Public Trust Act and was on that account invalid. The ,High Court remanded the case to the District Court. In appeal to this Court, HELD:The order of the High Court should be set aside and that of the District Court restored. (i)Transactions of mortgage, exchange or gift or lease of any immovable property in clauses (a) and (b) of section 36 of the Bombay Public Trusts Act contemplated to be made by the Trustees are voluntary transactions and in the absence of any clear provision in the Act, the expression 'Sale ' in cl. (a) only means transfer of property by the trustees for a price and does not include a Court sale in execution of a decree. [457F G] A suit to enforce a mortgage or a proceeding to enforce a mortgage decree against property belonging to a public trust is not a suit or proceeding in which a question affecting public religious or charitable purpose is involved within the meaning of section 56B of the Act and therefore it is not obligatory upon the court to issue notice to the Charity Commissioner. [458C D] (ii) An order setting aside a Court sale in execution of a mortgage decree cannot be obtained under 0. 21 r. 89 of the Code of Civil Procedure by merely depositing five per cent of the purchase money for payment to the auction purchaser and persuading the decree holder to abandon the execution proceeding. [459G H] 456 (iii)A Single Judge of a High Court is ordinarily bound to accept as correct judgments of Courts of coordinate jurisdiction and of Division Benches and of the Full Benches of his Court and of this Court. Any reference to section 165 of the Evidence Act or the Oath of Office of a High Court judge is irrelevant and will not justify a judge in ignoring the rule relating to the binding nature of precedents. Jaisri Sahu vs Rajdewan Dubey, ; Lala Shri Bhagwan vs Shri Ram Chand, ; ; Pinjare Karimbhai vs Shukla Hariprasad, ; Haridas vs Ratansey, ; and State 'of Gujarat vs Gordhandas,

Appeal No. 21 of 1965. Appeal by special leave from the judgment and decree dated March 15, 1961 of the Allahabad High Court in Second Appeal No. 2434 of 1960. N.C. Chatterjee, E. C. Agarwala, Kartar Singh and P.C. Agarwala, for the appellants. J. P. Goyal and B. P. Jha, for the respondents. 477 The Judgment of the Court was delivered by Shah, J. Hukam Singh and Sukhram the first appellant in this appeal were two brothers. Chidda the second appellant, is the son of Sukhram, Hukam Singh, Sukhram and Chidda consti tuted a Hindu joint family and were governed by the Mitakshara Law of the Benares School. Hukam Singh died in 1952 leaving him surviving his wife Kishan Devi. On December 15, 1956, Kishan Devi sold a half share in a house and a shop belonging to the joint family, to Gauri Shankar. Sukhram and his son Chidda then commenced an action in the Court of the Munsif of Ghaziabad for a decree declaring that the sale by Kishan Devi to Gauri Shankar was without consideration, and for an order cancelling the sale deed. The suit was dismissed by the Court of First Instance, the District Court, Meerut, and the High Court of Allahabad. In this appeal the only question which falls to be determined is whether the sale deed executed by Kishan Devi was binding upon the coparceners of her husband. On the death of Hukam Singh in 1952, it is common ground Kishan Devi acquired by virtue of section 3(2) of the Hindu Women 's Right to Property Act 18 of 1937, the same interest in the property of the joint family which Hukam Singh had. That interest was limited interest known as the 'Hindu, Woman 's estate ': section 3(3) of the Hindu Women 's Right to Property Act, 1937. The Parliament enacted The 30 of 1956, which by section 14(1) provided that "Any property possessed by a female Hindu, whether acquired before or after the commencement of this Act, shall be held by her as full owner thereof and not as a limited owner. " The plea raised in the District Court that Kishan Devi was not "possessed" of the property which she sold to Gauri Shankar was rejected, and has not been set up before us. Clearly therefore, on the express words of section 14(1) of the , Kishan Devi acquired on June 17, 1956, rights of full ownership in the interest which Hukam Singh had in the property of the family during his life time, and she was competent without the consent of the male members of the family to sell the property for her own purposes. But Mr. Chatterjee for the appellants submits that under the Benares School of the Mitakshara a male coparcener is not entitled to alienate even for value his undivided interest in coparcenary property without the consent of the other coparceners, unless the alienation be for legal necessity, or if the coparcener is the father, for payment by him of his antecedent debts which are not illegal or avvavaharika, and it could not have been intended by Parliament to confer upon a widow in a Hindu family a larger right than the right which the surviving coparceners could exercise at the date of the sale by the widow. Counsel says that the Parliament by Act 30 478 of 1956 merely intended to confer upon a Hindu widow rights of full ownership in the interest in property in which she had prior to that Act, only a limited interest, but did not intend to destroy the essential character of joint family property so as to invest the widow with power to alienate that interest without the assent of the coparceners of her husband. It is true that under the Benares school of the Mitakshara a caparcener may not, without the consent of the other coparceners, sell his undivided share in the family estate for his own benefit: Madho Parshad vs Mehrban Singh(1); Balgobind Das vs Narain Lal and Ors. (2) and Chandradeo. Singh & Ors. vs Mata Prasad & Anr. (3) But the words of section 14 of the are express and explicit; thereby a female Hindu possessed of property whether ac quired before or after the commencement of the Act holds it as full owner and not as a limited owner. The interest to which Kishan Devi became entitled on the death of her husband under section 3(2) of the Hindu Women 's Right to Property Act, 1937, in the property of the joint family is indisputably her "property" within the meaning of section 14 of Act 30 of 1956, and when she became "full owner" of that property she acquired a right unlimited in point of user and duration and uninhibited in point of disposition. We are unable to agree with Mr. Chatterjee that restrictions on the right of the male members of a Hindu joint family form the bed rock on which the law relating to joint family property under the Hindu Law is founded. Under the Law of the Mitakshara as administered in the territory governed by the Maharashtra and the Madras Schools and even in the State of Madhya Pradesh, a Hindu coparcener is competent to alienate for value his undivided interest in the entire joint family property or any specific property without the assent of his coparceners. A male member of a Hindu family governed by the Benaras School of Hindu Law is undoubtedly subject to restrictions qua alienation of his interest in the joint family property but a widow acquiring an interest in that property by virtue of the is not subject to any such restrictions. That is however not a ground for importing limitations which the Parliament has not chosen to impose. On the death of her husband, Kishan Devi became entitled to the same interest which Hukam Singh had in the joint family property of that interest, she became full owner on June 17, 1956, and being full owner she was competent to sell that interest for her own purposes, without the consent of the male coparceners of her husband. The appeal therefore fails and is dismissed with costs. R.K.P.S. Appeal dismissed. (1) L.R. 17 I.A. 194. (2) L.R. 20 I.A. 116. (3) I.L.R. 31 All. 176 (F.B.).

IN-Abs

The first appellant, his brother H and his son the second appellant, constituted a Hindu Joint family and were governed by the Mitakshara law of the Benares School. He died in 1952 leaving him surviving his widow. On December 15, 1956, the widow sold a half share in a house and a shop belonging to the joint family to the first respondent. The appellants filed a suit for a decree declaring that the sale by the widow was without consideration and for an order can celling the sale deed. The suit was dismissed by the Trial Court and, in appeal, by the High Court. In appeal to this Court it was contended on behalf of the appellants that under the Benares School of the Mitakshara, a male coparcener is not entitled to alienate even for value, his undivided interest in coparcenary property without the consent of the other coparceners except in certain specified cases, and by section 14(1) of the Hindu Succession Act 30 of 1956 it could not have been intended to confer a larger right on the widow of a coparcener. HELD: On the death of her husband, the widow became entitled to the same interest which H had in the joint family property under s.3(2) of the Hindu Women 's Right to Property Act, 18 of 1937, in the joint family property of that interest, by virtue of s.14(1) of the , she became full owner on June 17, 1956 and being full owner she was competent to sell it for her own purpose without the consent of the male coparceners of her husband. [477D G] A male member of a Hindu family governed by the. Benares School of Hindu Law is undoubtedly subject to restrictions qua alienation of his interest in the joint family property. but a widow acquiring an interest in that property by virtue of the is not subject to any such restrictions. That is however not a ground for importing limitations which the Parliament has not chosen to impose. [478F] Madho Parshad vs Mehrban Singh, L.R. 17 I.A. 194; Balgobind Das vs Narain Lal and Ors. L.R. 20 I.A. 116 and Chandradeo Singh & Ors. vs Mata Prasad & Anr. T.L.R. 31 All. 176 (F.B.); referred to.

05 of 1953. Under article 32 of the Constitution of India for the enforcement of Fundamental Rights and APPELLATE JURISDICTION: Case No.1 of 1950 1047 Appeal under section 205 of the Government of India Act, 1935, from the Judgment and Decree, dated the 13th September, 1949, of the High Court of Judicature, Orion, in First Appeal No. 39 of 1949 arising out of the Judgment and Decree, dated the 11th September, 1945, of the Court of the District Judge, Cutback, in Original Suit No. 3 of 1943. N. C. Chattanooga (B. K. Saran and B. C. Pratt, with him) for the petitioners and appellants Nos. 1 to 13. section P. Sinclair (B. K. Saran and R. C. Pratt, with him) for appellants 14 to 16. M. C. Seth (G. N. Jose, with him) for respondents in both the matters. Agent R. H. Debar. March 16. delivered by MUKHERJEA J. These two connected matters are taken up together for the sake of convenience and may be,disposed of by one and the same judgment. Petition ;No. 405 of 1953 has been presented to this court under article 32 of the Constitution and the petitioners are the Mahants or superiors of two ancient and well known religiousinstitutions of Orissa, both of which have endowmentsof considerable value situated within and outside the Orissa State. An Act, known as the .Orissa Hindu Religious Endowments Act was passed by the Orissa Legislative Assembly functioning under the Government of India Act, 1935. in the vear 1939 and it received the assent of the Governor General on the 31st August, 1939. The object of the Act, as stated in the preamble, is "to provide for the better administration and governance of certain Hindu religious endowments" and ' the expression "religious endowment" has been defined comprehensively in the Act as meaning all property belongto or given orendowed for the support of Maths or temples or for the performance of any service orcharity connected therewith. The whole scheme of the Act is to vest the control and supervision of public temples and Maths in a statutory authority designated as the Commis. sioner of Hindu Religious Endowments and to confer 1048 upon him certain powers with a view to enable him to exercise effective control over the trustees of the Maths and the temples. The Commissioner is required to be a member of the Judicial or Executive Service of the Province and his actions are subject to the general control of the provincial Government. For the purpose, of meeting the expenses of the Commissioner and his staff, every Math or temple, the annual income of which exceeds Rs. 250, is required under section 49 of the Act to pay an annual contribution at certain percentage of the annual income which increases I progressively with the increase in the income. With this contribution as well as loans and grants made by the Government, a special fund is to be constituted as provided by section 50 and the expenses of administering the religious endowments are to be met out of this fund. In July, 1940, a suit, out of "which the Case No. 1 of 1950 arises, was instituted in the court of the District Judge of Cuttack by a number. of Mahants including .the two petitioners in the petition under article 32 before us. praying for a declaration that the Orissa Relig ious Endowments Act of 1939 was ultra vires the Orissa Legislature and for other consequential reliefs. The validity of the Act was challenged substantially on three grounds, namely, (1) that the subject matter of legislation was not covered by Entry 34 of List 11 in Schedule VII of the Government of India Act, 1935 ; (ii) that the, contribution levied under, section 49 was, in substance, a tax and could not have been imposed by the Provincial Legislature; and (iii) that as the provisions of the Act affected the income of properties situated outside the territorial limits of the Province, the Act was extra territorial in its operation and hence inoperative. All these contentions were overruled by, the District Judge of Cuttack, who by his judgment dated the 11 th September, 1945, dismissed the plaintiffs ' suit. Against that decision, an appeal was taken by the plaiitiffs to the High Court of Orissa and the appeal was heard by a Division Bench, consisting of Jagannedbadas and Narasimham JJ. The learned Judges by two separate but concurring judgments, dated the 13th September. 1949, affirmed the decision 1049 of the District Judge and dismissed the appeal. it is against this judgment that Case No. 1 of 1950 has come to this court. During the pendency of the appeal in this court the Constitution came into force on the 26th January , 1950, with its chapter on fundamental rights, and the Orissa Hindu Religious Endowments Act also has been amended recently by the State Legislature of Orissa by Amending Act II of 1952. In view of these changes, the present application under article 32 of the Constitution has been filed by two of the Mahants who figured as plaintiffs in the Declaratory Suit of 1940 and the application has been framed comprehensively so as to include all points that could be urged against the validity of the Orissa Hindu Religious Endowments Act on the basis of the provisions of the Constitution. It is conceded by both the parties that in these circumstances it is not necessary for us to deal separately with the appeal. The decision, which we would arrive at in the petition under article 32, will be our pronouncement on the validity or otherwise of the different provisions of the impugned Act. It may be stated at the beginning that the Orissa Hindu Religious Endowments Act of 1939 follows closely the pattern of the Madras Hindu Religious Endowments Act of 1927 which has been now replaced by a later Act passed by the State Legislature of Madras in 1951 and described as the Madras Hindu Religious and Charitable Endowments Act. The grounds upon which the validity of the Orissa Act has been attacked be fore us are substantially the same as were urged in assailing the constitutional validity of the Madras Act, in Civil Appeal No. 38 of 1953 (The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar), the judgment in which has just been delivered. The grounds urged can be classified conveniently under two heads. In the first place, some of the provisions of the impugned Act have been challenged as invalid on the ground that they invade the fundamental rights of the petitioners guaranteed under articles 19(1) (f), 25 26, and, 27 of the Constitution. The other branch of the contention (1) ; 1050 relates to. the provision for levying contribution on religious institutions under section 49 of the Act and this provision has been impeached firstly on the ground that the contribution being in substance a tax, it was beyond the competency of the Provincial Legislature to enact any such provision. The other ground raised is, that the payment of such tax or imposition is prohibited by article 27 of the Constitution. The general questions relating to the scope and ambit of the fundamental rights embodied in articles 19 (1) (f ), 25, 26 and 27 of the Constitution in connection with Maths and temples have been discussed fully in our judgment in the Madras appeal referred to above and ,it would not, be necessary to reiterate these discussions for purposes of the present case. We can straightaway proceed to examine the different provisions of the Act to which objections have been taken by the learned counsel appearing for, the petitioners in the light of the principles which this court has laid down in the Madras appeal. It may be said that many of the impugned provisions of the Orissa Act correspond more or less. to similar provisions in the Madras Act. Section 11 of the Act has been objected to on the ground that it vests almost , an uncontrolled and arbitrary power upon the Commissioner. This section corresponds to section 20 of the Madras Act and as has been pointed out in our Judgment, in the Madras appeal, the powers, though seemingly wide, can be exercised only to ensure that Maths and temples are properly maintained and the endowments are properly administered. As the object and purpose for which these powers could be exercised have been indicated preoisely we do not think that it, could be said that the authority vested in the Commissioner is in any way arbitrary.or unrestricted. The explanation attached to the section only makes it clear that the general power conferred upon the Commissioner extends to passing of interim orders as the Commissioner might think fit. Section 14 lays down the duties of the trustee and the care which he should exercise in the management 1051 of the affairs of the religious institutions. The care, which he has to exercise, is What is demanded normally of every trustee in charge of trust estate and the standard is that of a man of ordinary prudence dealing with his own funds or properties. This is a matter relating to the administration of the estate and and does not interfere with any fundamental rights of the trustee. For the same reason, we think, no objection could be taken to the provision of section 28 which lays down that the trustee of a temple shall be bound to obey all orders issued under the provisions of the Act by the Commissioner. if the orders are lawful and made in pursuance of authority properly vested in the officer, no legitimate ground could be urged for not complying with the orders. The sections of the Act, to which serious objections have been taken are sections 38, 39, 46, 47 and 49. Sections 38 and 39 relate to the framing of a scheme. A scheme can certainly be settled to ensure due administration of the endowed property but the objection seems to be that the Act provides, for the framing. of a scheme not by a civil Court or under its supervision but by the Commissioner who is a mete administrative or executive officer. There is also no provision for appeal against his order to the court. Under section 58 of the Madras Act, although the scheme is to be framed by the Deputy Commissioner, an appeal lies against his order to the Commissioner in the first place. A party aggrieved by the order of the Commissioner again has a right of suit in the ordinary civil court, with a further right of appeal to the High Court. It seems that sub section (4) of section 39 of the impugned Act, as it originally stood, allowed the, trustee or any person having an interest in the institution to file a suit in a civil court to modify or set aside an order framing a scheme; and under section 40, the order made under section 39 could be final only subject to the result of such suit. Subsection (4) of section 39, however, was deleted by the Amending Act of 1952, and under the new sub section (4), the order passed by the Commissioner has been made final and conclusive. Strangely, however, section 41 of the Act has still been retained in its 1052 original shape and that speaks of an order settling a scheme being set aside or modified by the court. Obviously, this is careless drafting and the Legislature did not seem to have adverted to the apparently contradictory provisions that it made. The learned Attorney General, appearing for the State of, Orissa, has also conceded that these sections require redrafting. We think that the settling of a scheme in regard to a religious institution by an executive officer without the intervention of any judicial tribunal amounts to an unreasonable restriction upon the right of property of the superior of the religious institution which is blended with his office. Sections 38 and 39 of the Act must, therefore, be held to be invalid. There is nothing wrong in the provision of section 46 itself but legitimate exception, we think, can be taken to the proviso appended to the section. Under the law, as it stands, the Mahant or the superior of a Math has very wide powers of disposal over the surplus income and the only restriction that is recognised is that he cannot spend the income for his own personal use unconnected with the dignity of his office. The purposes specified in section 46 are all conducive to the benefit of the institution and there is no reason why the discretion of the trustee in regard to the spending of surplus for such purposes also should be still further restricted by directions which the Commissioner may choose to issue. Section 47 (1) lays down how the rule of cy pres is to be applied not merely when the orginal purpose of the trust fails or becomes incapable of being carried out either in whole or in part by reason of subsequent events, but also where there is a surplus left after meeting the legitimate expenses of the institution. Objection apparently could be raised against the last provision of the sub section, but as subsection(4) of section47gives the party aggrieved by any order of the Commissioner in this respect to file a suit in a civil court and the court is empowered to modify or set aside such order of the Commissioner, we do not ,think that there is any reasonable ground for complaint. The only other section that requires consideration is sect ion 49 under which every Math or temple having 1053 an annual income exceeding Rs. 250 has got to make an annual contribution for meeting the expenses of the Commissioner and the officers and servants working under him. The first question that arises with regard to this provision is whether the imposition is a tax or a fee; and it is not disputed that if it is a tax, the Provincial Legislature would have no authority to enact such a provision. This question has been elaborately discussed in our judgment in the Madras appeal referred to above and it is not necessary to repeat the discussions over again. As has been pointed out in the Madras appeal, there is no generic difference between a tax and a fee and both are different forms in which the taxing power of a State manifests itself. Our Constitution, however, has made a distinction between a tax and a fee for legislative purposes and while there are various entries in the three lists with regard to various forms of taxation, there is an entry at the end of each one of these lists as regards fees which could be levied in respect of every one of the matters that are included therein. A tax is undoubtedly in the nature of a complusory exaction of money by a public authority for public purposes, the payment of which is enforced by law. But the essential thing in a tax is that the imposition is made for public purposes to meet the general expenses of the State without reference to any special benefit to be conferred upon the payers of the tax. The taxes collected are all merged in the general revenue of the State to be applied for general public purposes. Thus, tax is a common burden and the only return which the taxpayer gets is the participation in the common benefits of the State. Fees, on the other hand, are payments primarily in the public interest but for some special service rendered or some special work done for the benefit of those from whom payments are demanded. Thus in fees there is always an element of quid pro quo which is absent in a tax. Two elements are thus essential in order that a payment may be regarded as a fee. It the first place,, it must be levied in consideration of certain services which the individuals accepted either willingly or unwillingly. But this by itself is not enough to make 136 1054 the imposition a fee, if the payments demanded for rendering of such services are not set apart or specifically appropriated for that purpose but are merged in the general revenue of the State.to be spent for general public purposes. Judged by this test, the contribution that is levied by section 49 of the Orissa Act will have to be regarded as a fee and not a tax. The payment is demanded only for the purpose of meeting the expenses of the Commissioner and his office which is the machinery set up for due administration of the affairs of the religious institution. The collections made are not merged in the general public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes. They go to constitute the fund which is contemplated by section 50 of the Act and this fund, to which also the Provincial Government contributes both by way of loan and grant, is specifically set apart for the render ing of services involved in carrying out the provisions of the Act. We think, therefore, that according to the Principles which this court has enunciated in the Madras appeal mentioned above, the contribution could legitimately be regarded as fees and hence it was within the competence of the Provincial Legislature to enact this provision. The fact that the amount of levy is graded according to the capacity of the payers though it gives it the appearance of an income tax, is not by any means a decisive test. We are further of opinion that an imposition like this cannot be said to be hit by article 27 of the Constitution. What is forbidden by article 27 is the specific appropriation of the proceeds of any tax in payment of expenses for the promotion or maintenance of any particular religion or religious denomination. The object of the contribution under section 49 is not the fostering or preservation of the Hindu religion or of any denomination within it; the purpose is to see that religious trusts and institutions wherever they exist are properly administered. It is the secular administration of the religious institutions that the Legislature seeks to control and the object, as enunciated in the Act, is to ensure that the endowments attached to the religious institutions are properly administered and their income is duly appropriated for purposes for which they were founded or exist. As there is no question of favouring any particular religion or religious denomination, article 27 could not possibly apply. The result is that, in our opinion, the only sections of the Act, which are invalid, are sections 38, 39 and the proviso to section 46. The application under article 32 is, therefore, allowed to this extent that a writ in the nature of mandamus would issue restraining the Commisoner and the State Government enforcing against the petitioners the provisions of the sections mentioned above. The other prayers of the petitioners are disallowed. No separate order is necessary in Case No. I of 1950, which will stand dismissed. We make no order as to costs either in the petition or in the appeal.

IN-Abs

Held, that sections 38 and 39 and the proviso to section 46 of the Orissa Hindu Religious: Endowments Act, 1939 as amended by the Amending Act II of 1952 are ultra vires articles 19(1) (f), 25 and 26 of the Constitution. The annual contribution provided in section 49 of the Act is in the nature of a fee and not a tax and therefore it was within the competence of the Provincial Legislature to enact such a provision. Further an imposition like this is not hit by article 27 of the Constitution because the object of the contribution under section 49 is not the fostering or preservation of the Hindu religion or of any denomination within it but the proper administration of religious trusts and institutions wherever they exist. Civil Appeal No. 38 of 1953 referred to.

Appeal No. 957 of 1964. Appeal from the judgment and order dated January 12, 1963 of the Judicial Commissioner 's Court. Himachal Pradesh in Civil Misc. 2nd Appeal No. 15 of 1961. R. Ganapathy Iyer, R. N. Sachthey and section P. Nayar, for the appellant. D. R. Prem and R. Thiagarajan, for the respondent. 448 The Judgment of the Court was delivered by Shelat, J. The Himachal Pradesh State legislature passed the Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act 1953 (hereinafter referred to as the Act) on June 17, 1953 and the Act was brought into force with effect from January 26, 1955. The validity of the Act was thereafter successfully impugned (cf. Shri Vinod Kumar vs State of Himachal Pradesh)(1). The Parliament then passed the Validating Act, 56 of 1958. That Act was itself then challenged in Jadab Singh vs Himachal Pradesh Administration (2 ) but the challenge was rejected and the Act since then remains on the statute book as a valid piece of legislation. On June 4, 1959 the respondent made an application under section II of the Act for acquiring proprietary rights in the lands set out therein claiming to be the cultivating tenant of those lands and produced a copy of Jamabandhi in support of his claim. He stated that he was the tenant of the Union of India in respect of the said lands. that he was cultivating the said lands, that he was paying Rs. 35/5/ annually as rent and Rs. 23/8/ as annual land revenue and other rates and cesses assessed on the said lands and that he was willing to pay compensation as provided by the Act. On November 26, 1959 the Forest Department on behalf of the Union filed objections alleging that the application was incompetent, that the said lands formed part of the protected forest. that the relationship between the respondent and the Union was not that of landlord and tenant, that the Union being the paramount owner could not be characterised as landlord qua the respondent. that a number of trees stood on the said lands, that the respondent was merely a lessee of the said lands which were a forest area, that the entries in the revenue record in respect of the said lands were incorrect and could not be relied on in an application under section 11 and consequently the Compensation Officer. Mahasu, had no jurisdiction to grant it. The Compensation Officer held, that the said area was not a forest area, that there were no trees on the said lands as alleged and that since the respondent was mentioned as an occupancy tenant in the Jamabandhi he was entitled to proprietary rights in the said lands on his paying compensation which he fixed at Rs. 76.40 np. The Forest Department there upon filed an appeal before the District Judge, Mahasu. principally on the ground that the Compensation Officer had not followed the procedure laid down in the Act and had not given to the Forest Department reasonable opportunity to put forward its case. The Forest Department did not dispute in the said appeal that the appellant held the said lands as a tenant of the Government. On July 26, 1960 the District Judge allowed the appeal and remanded the case to the Compensation Officer directing him to raise proper issues and decide the matter in accordance with law. Accordingly. the Compensation Officer raised (1) [1959] Supp. 1 S.C.R. 160. (2) 449 four issues, viz., Whether there were trees on the said lands, whetherthe lands formed part of the forest whether the respondent was a tenant in respect of the said lands and whether there was any impediment in the way of granting proprietary rights to him . The Compensation Officer held that the respondent was a tenant, there was no impediment in granting proprietary Tights to (him and allowed once again the respondents ' application. The appeal by the Union against the said order before the District Judge failed. The District Judge held that the respondent was ,the tenant of the Union ' and that the Act applied to the said lands as also to the Union. The Union filed a Second Appeal before the Judicial Commissioner challenging the correctness of the District Judge 's said order. Both the Compensation Officer and the District Judge having held on the strength of the Jamabandhi that the respondent was the occupancy tenant in respect of the said lands, the only questions raised in the Second Appeal were (1) that the Act did not bind the Union or the State Government and (2) that the respondent 's application under section 11 could not lie against the Union in respect of lands owned by it. The Judicial Commissioner followed the ratio laid, down in Director of Rationing vs Corporation of Calcutta(1) which was the law then prevailing and in view of that decision posed the question whether the Act applied to and was binding on the Union. He held that though the Act did not contain any express provision to that effect, an examination of sections 11, 15, 27 and 54 showed that the Act applied to Government land and was by necessary implication binding on the Union. He observed that the object of the Act and the acquisition of right. title and interest of the landowner in the land of any tenancy held under him by a tenant was that such interest should ultimately be transferred to the tenant. He held that on a consideration of the relevant provisions of the Act "the conclusion to which I have been driven is that by necessary implication the Act binds the Government and an application under section I I of the Act by a tenant is competent in respect of land held by him under the Government." In that view he dismissed the Union 's appeal. The Union of India filed this appeal after obtaining certificate under article 133(1)(c) of the Constitu tion. After this appeal had gone on for some time we felt that as it involved a question of some public importance it was desirable that we should have the assistance of some senior counsel. We accordingly directed the Registrar to appoint a Senior Counsel amicus curiae. Accordingly, Mr. D. R. Prem appeared before us. We gratefully acknowledge the assistance rendered by him. Mr. Ganapathy Iyer for the Union of India took us through the different provisions of the Act and submitted that considering the scheme and the object of the Act the conclusion was inescapable that the legislature while enacting the Act did not intend that (1) ; 6SCI 3 450 it should to the Government or to lands owned by the Government. To appreciate the contention ;it is necessary to examine some of the provisions of the Act. But before we do that it,would be expedient to clear the ground regarding the question theapplicability of statutes on the State and its immunity,if any, 'from such statutes. In Director of Rationing vs The Corporation of Calcutta(1) the majority judgment held that the law applicable to India ':before the Constitution was as authoritatively laid down in the Province of Bombay vs Municipal Corp. of Bombay(2 ) that the Constitution has not made any change in the legal position and that on the other hand it has clearly indicated that the laws in force before January 26, 1950, shall continue to have validity even in the new set up except in so far as they were in conflict with the express provisions of the Constitution. The majority also held that the rule of interpretation of statutes that the State was not bound by a statute unless it so provided in express terms or by necessary implication was still good law. Wanchoo J. (as he then was) in his dissenting opinion, however, held that the rule of construction which was based on the royal prerogative as known to the common law of England could not be applied to India now that there was no crown in India and when the common law ,of England was not applicable and that therefore the State was bound by a statute unless it was exempted expressly or by necessary implication. The rule in that decision is no longer good law. In Supdt. & Legal Remembrancer, West Bengal vs Stale of West Bengal(1) this Court considered the correctness of that decision and disagreeing with the majority view accepted as correct the minority opinion. The Court held that the common law rule of construction that the crown was 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 recognised either by incorporating in indifferent 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 established that the various legislatures of the country provided specifically exemptions in favour of the crown whenever they intended to do so indicating thereby that they did not rely upon any presumption but only or ,express exemptions. The Court also observed that the Privy ,Council in Province of Bombay vs Corp. of Bombay ( 2) gave it approval to the rule mainly on concession made by Counsel. The Court then held that the archaic rule based on the prerogative an( perfection of the crown could have no relevance to a democrat, republic; that such a rule was inconsistent with the rule of law (1) ; (2) 73 I.A. 271. (3) ; 451 based on the doctrine of equality and introduced conflicts and anomalies. Therefore, the normal construction, that an enactment applies to citizen as well as to the state unless it expressly or by necessery impliciter excepted the State from its operation, steered clear of all anomalies and consistent with the philosophy of equality enshrined in the Constitution. The position now therefore is that a statue applies to State as much it does to a citizen unless it expressly or by necessary implication exempts the State from its operation. It is conceded that neither section II nor any other provision in the Act contains any express exemption. Broadly stated, if the legislature intended to exclude the applicability of the Act to the State it could have easily stated in section 11 itself or by a separate provision that the Act is not to be applied to the Union or to lands held by it. In the absence of such a provision, in a constitutional set up as the one we have in this country and of which the over,riding basis is the broad concept of equality, free from any arbitrary discrimination, the presumption would be that a law of which the avowed object is to free the tenant of landlordism and to ensure to him security of tenure would bind all landlords irrespective of whether such a landlord is an ordinary individual or the Union. The question then is whether in the absence of any express exemption the statute exempts the State by necessary implication? The preamble of the Act declares that its object is not only to abolish big landed estates but also to reform the law relating to tenancies. Section 2(3) provides that the expression "estate", "land owner" and "holding" Will have the meanings respectively assigned to them in the Punjab Land Revenue Act, 1887. Turning, therefore to the Punjab Land Revenue Act, 1887 we find that section 3(1) of the Act defines "estate" as meaning any area for which a separate record of rights has been made or which has been separately assessed to land revenue or which the State Government may by general rule or special order declare to be an estate. Section 3(2) provides that "landowner" does not include a tenant or an assignee of land revenue, but includes a person to whom a holding 'has been transferred, or an estate or holding has been let in farm under the Act for the recovery of an arrear of land revenue or of a sum recoverable as such an arrear and every other person not hereinbefore in this clause mentioned who is in possession of an estate or any share or portion thereof. or in the enjoyment of any part of the profits of an estate. "Holding" has been defined as meaning a share or portion of an estate held by one land owner or jointly by two or more landowners. Since the land in question is admittedly assessed to land revenue as is clear from the copy of the Jamabandhi produced by the respondent here can be no question that the land is estate and the Union of India is the landowner thereof. Reverting now to the Abolition Net, section 2(5) defines "land" as meaning land which is not 452 occupied as a site of any building in a town or village and in occupied or has been let for agriculture purposes or purpose subservient to agriculture,or for pasture. Section 2(6) defines "land lord" as a person under whom a tenant holds land and to whom the tenant is or but for a contract to the contrary would be liable .to pay rent for that land. Clause 13 defines "rent" as meaning whatever is payable to a landlord in money, kind or service be a tenant on account of the use or occupation of land held by him Clause 17 defines a "tenant" as meaning a person who holds land under another person, and is or but for a contract to the contrar would be liable to pay rent for that land to that other pet son an clause 19 defines "tenancy" as meaning a parcel of land held by tenant of a landlord. under one lease or one set of conditions. I view of these definitions there can be no doubt that the responder was a tenant having a right of occupancy within the meaning of sections 3 And 4 of the Act. Indeed, all throughout the proceedings the position that he was a tenant and the Union was h landlord and the landowner of the land in question was accept without any dispute. Section 3 defines a tenant as having a right of occupancy in the land and section 8 provides that a tenant who immediately before the commencement of the Act had a right c occupancy in any land under the Punjab Tenancy Act 1887, a applied to Himachal Pradesh shall on the commencement of the Act be held to have for all purposes a right of occupancy in th land. Chapter III of the Act deals with acquisition of proprieter rights by tenants. Sections 9 and 10 provide for the appointment of compensation officers to carry out the purposes of the Act an confer power on the State Government to exercise control an superintendence over such officers, to issue instructions for the guidance of compensation officers and to cancel or revise any the orders, acts and proceedings of such officers other than those in respect of which an appeal lies under this Act. Section I idea with the right of a tenant to acquire the interests of a landown and provides inter alia that a tenant shall on application made the compensation officer at any time after the commencement this Act be entitled to acquire on payment of compensation. the right, title and interest of the landowner in the land of the tenant held by him under such landowner. Sub section 2 contains certain exemptions with which we are not concerned in this appeal. Sub section 3 enjoins upon the compensation officer on a tenant meaning an application under sub section (1). to determine the amount of compensation payable to the landowner in respect of the at in accordance with the provisions of sections 12 and 13. Under sub section 5 the applicant has to deposit the amount of compensation in a Government treasury and thereupon the Compensation Officer has to issue a certificate declaring the tenant to be the landowner in respect of the land specified, in the certificate. Sub section 6 provides that on and from the date of the grant of the certificate the tenant shall become the owner of the land comprised in the tenancy and the right, title and interest, of the landowner 453 in the said land shall determine. Sections 12 and 13 deal, as aforesaid, with compensation payable by the tenant. Section 14 provides that a tenant holding a tenancy exceeding 12 acres of land can surrender 1/4th of such land to the landowner whereupon the tenant would become the owner of the rest of the land of his tenancy. There is nothing in these sections which would indicate that they or any of them impliedly exempt the State or its lands from their operation. Sections 11 to 14 thus contain provisions where, under the tenant, as a result of their operation, acquires the right, title and interest in the land held by him as a tenant on his paying compensation to the landowner as fixed by the Compensation Officer. Under sections 15 to 24, notwithstanding the provisions of sections 11 to 14, the State Government is empowered on a declaration made by it to acquire the right, title and interest of the landowners in the lands of any tenancy held under him by a tenant in respect of such area or at such time as may be specified by it in a notification. They also provide that upon such declaration the right. title and interest of such landowner vests in the Government. Such a landowner is entitled to compensation as provided in section 16 and onwards on his rights vesting in the Government. In such cases the tenant becomes the tenant of the Government and has to pay rent directly to the Government and the landowner becomes henceforth exempt from payment of land revenue. Section 27 then provides that notwithstanding anything contained in section 11 and onwards a landowner who holds land,. the annual land revenue of which exceeds Rs. 125, the right, title and interest 'of such landowner in such land except such land which is under his personal cultivation shall be deemed to have been transferred and vested in the State Government. Such a landowner also is entitled to compensation determined having regard to sections 17 and 18 in accordance with the provisions of Sch. Sub section 4 of section 27 provides that the right, title and interest of the landowner conferred on the Government by subsections I and 2 shall be transferred by the State Government on payment of compensation in accordance with Sch. 1 to such tenant who cultivates such land. Sub sec. 5 provides for rehabilitation grant payable to such small landowners whose right, title and interest have been extinguished and who do not have any other means of livelihood. A reading of sections 11 to 27 reveals that they lay down three parts of the scheme of abolition of proprietary rights of land,owners; (1) under section II there would be a direct transfer to and vesting of the right, title and interest of the landowner in the occupancy tenant on his paying compensation as assessed by the Compensation Officer; (2) under section 15 in respect of lands situate in an area specified by Government, there would be a transfer and 454 vesting of ownership of such lands in the State Government and the tenants of such land becoming the tenants of the Government and (3) under section 27 where the holding is large enough to have an annual assessment of over Rs. 125, the ownership in such lands would be first transferred and vested in the State Government and thereafter by the State Government in favour of the tenant. The contention, however, was that these three ways of abo lishing the landowners ' interest and transferring in two out of these three methods of the proprietary rights to the tenants suggest that the Act was not intended to affect the land owned or held by the Union or the State Government. This contention cannot be accepted, for, there is nothing in these provisions suggestive of their being not applicable to the State or of any distinction between the lands owned and held by citizens and lands owned and held by the State. There can therefore be no room for any assumption that the legislature had in mind any such discrimination between the State and the citizens. Mr. Ganapathy Iyer drew Our attention to sections 48 and 54(1)(g) also but we fail to see how they can be relevant for finding out whether the State is by implication exempted from the operation of the Act. It is clear that the object of the Act was to abolish big landed estates and alleviate the conditions of occupancy tenants by abolishing the proprietary rights of the landowners in them and vesting such rights in the tenants. That being the paramount object of the legislature it is hardly likely that it would make any discrimination between the State and the citizen in the matter of the application of the Act. This is especially so because if such a discrimination were to be brought about through a construction suggested by the State it would result in an anomaly in the sense that whereas occupancy tenants of lands owned by citizens would have the benefit of such a beneficent legislation occupancy tenants of lands owned and held by the State would not get such benefit. An intention to bring about such a discrimination against the latter class of tenants cannot be attributed to the legislature whose avowed object was to do away in the interest of social and economic justice landlordism in the State. In view of the decision in Supdt. & Legal Remembrancer vs Corp. of Calcutta(1) the State cannot also claim exemption on the ground only that the Act does not expressly or by necessary implication make it binding on the State. For the reasons aforesaid, we must hold that the conclusion arrived at by the Judicial Commissioner was correct. The appeal is dismissed. No order as to costs.

IN-Abs

The Himachal Pradesh Abolition of Big Landed Estates and Land Reforms Act, 1953, lays down a scheme for the abolition of proprietary rights of landowners: (1) under section 11 there would be a direct transfer of the rights of a landowner from the landowner to the occupancy tenant; (2) under section 15, in respect of lands situate in an area specified by Government, there would be a transfer to the State Government, the tenants of such lands becoming the tenants of the Government; and (3) under section 27, in the case of large holdings the ownership would be first transferred to the State Government and thereafter by the State Government in favour of the tenant. The respondent made an application under section 11 of the Act for acquiring proprietary rights in certain lands as he was the occupancy tenant of those lands, the Union of India being the landowner. On the question whether the Act was intended to affect land owned orheld by the Union or State Government, HELD:There is nothing in the provisions of the Act suggesting,expresslyor by necessary implication that the Act was not applicable to the State, or any distinction between lands owned and held by citizens and lands owned and held by the State. [454C] The object of the Act was to abolish big landed estates and alleviate the conditions of occupancy tenants by abolishing the proprietary rights of landowners in them and vesting such rights in the tenants. If discrimination between the State and the citizen in the matter of the application of the Act is made it would result in the anomaly that whereas occupancy tenants of lands owned by citizens would have the benefit of such a beneficent legislation, occupancy tenants of lands owned and held by the State would not get such benefit. An intention to bring about such a discrimination cannot be attributed to the legislature whose avowed object was to do away, in the interest of social and economic justice, landlordism in the State. [454 D G] Superintendent and, Legal Remembrancer V. Corporation of Calcutta, ; , followed.

Appeal No. 246 of 1967. Appeal from the judgment and order dated October 19, 1966 of the Punjab High Court in Civil Writ No. 739 of of 1966. N. C. Chatterjee, section C. Agarwala, R. K. Garg, K.M.K. Nairand L. M. Singhvi, for the appellant. Niren De, Additional Solicitor General, Chetan Das Dewan, Deputy Advocate General for the State of Haryana and N. H. Hingorani, for the respondent. 436 The Judgment of the Court was delivered by Shah, J. The State of Madhya Pradesh held an enquiry against the appellant Dr. ' Bool Chand a member of the Indian Administrative Service on charges of "gross misconduct and indiscipline" in respect of the conduct of the appellant when he was Collector District Rajgarh. The Enquiry Officer held that in recording certain remarks "regarding association of tile Commissioner of Bhopal with one B.L. Gupta a pleader of Zirapur", the appellant was "actuated by malice" and his conduct "offended against official propriety, decorum and discipline", and that the appellant had without permission removed a safe from the Rajgarh Treasury. The President of India served notice upon the ap pellant requiring him to show cause against the order of compulsory retirement proposed to be passed in regard to him. The President also consulted the Union Public Service Commission. The Union Put", Service Commission was of the view that "in the light of the findings and conclusions stated by them and having regard to all the circumstances relevant to the case. the penalty of compulsory retirement on proportionate pension should be imposed upon" the appellant. and they advised the President accordingly. By order dated February 28, 1963. the President directed that the, appellant be compulsorily retired from the Indian Administrative Service with immediate effect. In March 1965 the appellant was appointed Professor and Head of the Department of Political Science in the Punjab Univer sity. On June 18, 1965, the appellant was appointed Vice Chancellor of the Kurukshetra University by order of Mr. Hafiz Mohd Ibrahim who was the Chancellor of the University. After Mr. Hafiz Mohd. Ibrahim vacated the office of Chancellor of the University, Sardar Ujjal Singh, Governor of Punjab. held the office of Chancellor. On March 31, 1966, the Chancellor Sardar Ujjal Singh ordered that the appellant be Suspended from the office of Vice Chancellor, and by another order the Chancellor issued a notice requiring the appellant to show Cause why his services as Vice Chancellor of the Kurukshetra University be not terminated. The appellant submitted his representation, and shortly thereafter filed a petition in the High Court of Punjab for a writ in the nature of mandamus quashing the order and the notice dated March, 31, 1966. On May. 8, 1966 the Chancellor passed an order in exercise of the power under sub cl. (vi) of cl. 4 of Sch. 1 to the Kurukshetra University Act, 1956, read with section 14 of the Punjab General Clauses Act, 1898, terminating with immediate effect "the services" of the appellant "from the office of Vice Chancellor of the Kurukshetra University". The petition was then amended by the appellant. and a writ of certiorari or appropriate writ calling for the record and quashing the order dated May 8. 1966, terminating the services of the appellant was also claimed. The High Court rejected the petition filed by the appellant. Against that 437 order, with certificate granted by the High Court, this appeal has been preferred. The first argument raised on behalf of the appellant is that the Chancellor had no power to terminate the tenure of office of a Vice Chancellor. It is necessary, in considering the validity of that argument, to read certain provisions of the Kurukshetra University Act 12 of 1956. By section 4 the University is invested with the power, inter alia, to do all such things as may be necessary, incidental or conducive to the attainment of all or any of the objects of the University. By section 7. amongst others, the Chancellor, the Vice Chancellor and the Registrar are declared to be officers of the University. By section 8 the powers, duties of officers, terms of office and filling of casual vacancies are to be prescribed by the statutes. Section 14(1) provides that the statutes in Sch. I shall be the statutes of the University and that the "Court of the University shall have the power to make new or additional statutes and to amend or repeal the statutes. By section 21 it is provided that every salaried officer and teacher of the University shall be appointed under a written contract, which shall be lodged with the University. By cl. 4 of Sch. I the Vice Chancellor is declared the principal executive and academic officer of the University, and also the ex officio Chairman of the Executive Council, the Academic Council, and the Finance Committee, and is invested with authority to see that the Act. the Statutes, the Ordinances and the Regulations are faithfully observed, and to take such action as he deems necessary in that behalf. The Vice Chancellor is also authorised to exercise general control over the affairs of the University and to give effect to the decisions of the authorities of the University. Sub clauses (vi) & (vii) of cl. 4 provide: "(vi) The 'Upa Kulapati ' (Vice Chancellor) shall be appointed by the 'Kulapati ' (Chancellor) on terms and conditions to be laid by the 'Kulapati ' (Chancellor). (vii) The 'Upa Kulapati ' (Vice Chancellor) shall hold office ordinarily for a period of three years which term may be renewed. '. '. From a review of these provisions it is clear that the Vice Chancellor is an officer of the University invested with executive powers set out in the Statutes and his appointment is to be made ordinarily for a period of three years and on terms and conditions laid down by the Chancellor. There is no express provision in the Kurukshetra University Act or the Statutes thereunder which deals with the termination of the tenure of office of Vice Chancellor. But on that account we are unable to accept the plea of the appellant that the tenure of office of a Vice Chancellor under the Act cannot be determined before the expiry of the period for which he is appointed. A power to appoint ordinarily implies a power to determine the 438 employment. In section R. Tiwari vs District Boarel, Agra,(1) it was observed by this Court at p. 67: "Power to appoint ordinarily carries with it the power to, determine appointment, and a power to terminate may in the absence of restrictions express or implied be exercised, subject to the conditions prescribed in that behalf, by the authority competent to appoint. " A similar view was also expressed in Lekhraj Sathramdas Lalvani vs N. M. Shah, Deputy Custodian cum Managing Officer, Bombay (2) . That rule is incorporated in section 14 of the Punjab General Clauses Act I of 1898. That section provides: "Where, by any Punjab Act, a power to make any appointment is conferred, then, unless a different intention appears, the authority having for the time being power to make the appointment shall 'also have power to suspend or dismiss any person appointed whether by itself or any other authority by it in exercise of that power." Counsel for the appellant urged that since the general rule is given a statutory form, the validity of the exercise of the power to determine the tenure of the office of the appellant must be found in section 14 of the, Punjab General Clauses Act. Counsel says that section 14 has no application to the interpretation of the Kurukshetra University Act, because cl. 4(vii) of the Statutes which prescribes that the appointment of a Vice Chancellor shall ordinarily be for a period of three years discloses a different intention. But cl. 4(vii) of the Statutes does not purport to confer upon a person appointed Vice Chancellor an indefeasible right to continue in office for three years: the clause merely places a restriction upon the power of the Chancellor, when fixing the tenure of the office of Vice Chancellor. Counsel also urged that under section 14 of the Act power to ap point includes power to dismiss, but not to determine employment. In support of that contention he urged that in relation to the tenure of service of a public servant, the expression "to dismiss" has come to mean to determine employment as a measure of punishment. But section 14 of the General Clauses Act is a general provision: it does not merely deal with the appointment of public servants. It deals with all appointments, and there is no reason to hold, having regard to the context in which the expression occurs, that the authority invested with the power of appointment has the power to determine employment as a penalty, but not otherwise. The expression "dismiss" does not in its etymological sense necessarily involve any such meaning as is urged by counsel (1) ; (2) ; 439 for the appellant. The implication that dismissal of a servant involves determination of employment as a penalty has been a matter of recent development since the Government of India Act, 1935, was enacted. By that Act certain restrictions were imposed upon the power of the authorities to dismiss or remove members of the civil services, from employment. There is no warrant however for assuming that in the General Clauses Act, 1898, the expression "dismiss" which was generally used in connection with the termination of appointments was intended to be used only in the sense of determination of employment as a measure of punishment. The expression "Punjab Act" is defined in section 2(46) of the Punjab General Clauses Act as meaning an Act made by the Lieutenant Governor of the Punjab in Council under the Indian Councils Acts, 1861 to 1909, or any of those Acts, or the Government of India Act, 1915, or by the Local Legislature or the Governor of the Punjab under the Government of India Act, or by the Provincial Legislature or the Governor of the Punjab, or by the Provincial Legislature or the Governor. of East Punjab under the Government of India Act, 1935, or by the Legislature of Punjab Linder the Constitution. By section 14(1) of the Kurukshetra University Act 12 of 1956, it was declared that on the commencement of the Act, the Statutes of the University shall be those as set out in the Schedule 1. The Statutes incorporated in the First Schedule were made by the Legislature and must for the purpose of section 14 of the Punjab General Clauses Act be regarded as "Punjab Act". They do not cease to be "Punjab Act" merely because they are liable to be altered by the University Court in exercise of the power conferred by section 14(2) of the University Act. It was also urged that whereas provision was made by cl. 6 of the Annexure to Ordinance XI that the services of the tea hers may be summarily determined on the ground of misconduct, .here was no such provision for determination of the employment of the Vice Chancellor and that also indicated an intention to the contrary within the meaning of section 14 of the Punjab General Clauses Act. We are unable to agree with that contention. It is true,. the office of the Vice Chancellor of a University is one of great Responsibility and carries with it considerable prestige and authority. But we are unable to hold that a person appointed a Vice Chancellor is entitled to continue in office for the full period of ' his appointment even if it turns out that he is physically decrepit, mentally infirm, or grossly immoral. Absence of a provision setting up procedure for determining the employment of the Vice Chancellor in the Act or the Statutes or Ordinances does not, in our judgment, lead to the inference that the tenure of office of Vice Chancellor is not liable to be determined. The first contention raised by counsel for the appellant must therefore fail. It was then urged by counsel for the appellant that the Chancellor was bound to hold an enquiry against the appellant before 440 determining his tenure, and the enquiry must be held in consonance with the rules of natural justice. The Additional Solicitor General submitted that since the claim for relief by the appellant was founded on an alleged breach of contract, the remedy of the appellant, if any, lay in an action for damages, and not in a petition for a high prerogative writ. The Additional Solicitor General invited our attention to the averments made in the petition filed by the appellant that the Chancellor "was bound by the letter of appointment which created a tenure of office for three years" and which the Chancellor could not unilaterally determine in the purported exercise of an assumed power, and that in any event no such circumstances had been disclosed which would entitle the Chancellor to avoid the contract of service which was binding on the University, and submitted that since it was the appellant 's case that his appointment as Vice Chancellor was purely contractual, and the Chancellor had no power unilaterally to determine the contract, no relief of declaration about the invalidity of the order of the Chancellor may be granted in exercise of the jurisdiction of the High Court to issue high prerogative writs, and the only remedy which the appellant is entitled to claim is compensation for breach of contract, in action in a Civil Court. It is true, as pointed out by the Judicial Committee of the Privy Council in A. Francis vs Municipal Councillors of Kuala Lumpur(1), that when there has been purported termination of a contract of service, a declaration that the contract of service still subsisted would rarely be made and would not be made in the absence of special circumstances, because of the principle that the Courts do not grant specific performance of contracts of service. The same view was expressed in Barber vs Manchester Regional Hospital Board and Anr(2) and in Vidyodaya University of Ceylon and Ors. vs Silva(3). In these cases the authority appointing a servant was acting in exercise of statutory authority but the relation between the person appointed and the employer was contractual, and it was held that the relation between the employer and the person appointed being that of master and servant, termination of relationship will not entitle the servant to a declaration that his employment bad not been validly determined. If the appointment of the Vice Chancellor gave rise to the relation of master and servant governed by the terms of appointment, in the absence of special circumstances, the High Court would relegate a party complaining of wrongful termination Of the contract to a suit for compensation, and would not exercise its jurisdiction to issue a high prerogative writ compelling the University to retain the services of the Vice Chancellor whom the University does not wish to retain in service. But the office of a (1) (2) (3) 441 Vice Chancellor is created by the University Act: and by his appointment the Vice Chancellor is invested with statutory powers and authority under the Act. The petition filed by he appellant in the High Court is a confused document. Thereby the appellant did plead that the relation between him and the University was contractual, but that was not the whole pleading. The appellant also pleaded, with some circumlocution that since he was appointed to the office, of Vice Chancellor which is created by the Statute, the tenure of his appointment could not be determined without giving him an opportunity to explain why his appointment should not be terminated. The University Act, the Statutes and the Ordinances do not lay down the conditions in which the appointment of the Vice Chancellor may be determined, nor does the Act prescribe any limitations upon the exercise of the power of the Chancellor to determine the employment. But once the appointment is made in pursuance of a Statute, though the appointing authority is not precluded from determining the employment, the decision of the appointing authority to terminate the appointment may be based only upon the result of an enquiry held in a manner consistent with the basic concept of justice and fairplay. This Court observed in State of Orissa vs Dr. (Miss) Binapani(1) it p. 1271: "It is one of the fundamental rules of our constitutional set up that every citizen is protected against exercise of arbitrary authority by the State or its officers. Duty to act judicially would, therefore, arise from the every nature of the function intended to be performed, it need not be shown to be super added. If there is power to decide and determine to the prejudice of a person, duty to act judicially is implicit in the exercise of such power. If the essentials of justice be ignored and an order to the prejudice of a person is made, the order is a nullity. That is a basic concept of the rule of law and importance thereof transcends the significance of a decision in any particular case. " The power to appoint a Vice Chancellor has its source in the University Act: investment of that power carries with it the power to determine the employment; but the power is coupled with duty. The power may not be exercised arbitrarily, it can be only exercised, for good cause, i.e. in the interests of the University and only when it is found after due enquiry held in manner consistent with the rules of natural justice, that the bolder of the office is unfit to continue as Vice Chancellor. In Ridge vs Baldwin and Others(1) a chief constable who was subject to the Police Acts and Regulations was, during the pendency of certain criminal proceedings in which he was arrested (1) ; (2) [1964] A.C. 41. 442 and charged together with other persons, with conspiracy to obstruct the course of justice, was suspended from duty by the borough watch committee. The chief constable was acquitted by the jury on the criminal charges against him and he applied to be reinstated. The watch committee at a meeting decided that the chief constable had been negligent in the discharge of his duties and in purported exercise of the powers conferred on them by section 191(4) of the Act of 1882 dismissed him from office. No specific charge was formulated against him, but the watch committee in arriving at their decision, considered his own statements in evidence and the observations made by the Judge who acquitted him. in support of the order of dismissal. The chief constable appealed to the Home Secretary who held that there was sufficient material on which the watch committee could properly exercise their power of dismissal under section 191(4). The decision of the Home Secretary was made final and binding on the parties by section 2(3) of the, Police Appeals Act, 1927. The chief constable then commenced ' an action for a declaration that the purported termination of his appointment as chief constable was illegal, ultra vires and void,, and for payment of salary. The action was taken in appeal to the House of Lords. The House of Lords (Lord Evershed dissenting) held that the decision of the watch committee to dismiss the chief constable was null and void, and that accordingly notwithstanding that the decision of the Home Secretary was made final and binding on the parties, that decision could not give validity to the decision of the watch committee. Lord Reid observed at p. 65: "So I shall deal first with cases of dismissal. These appear to fall into three classes: dismissal of a servant by his master, dismissal from office held during pleasure, and dismissal from an office where there must be something against a man to warrant his dismissal. The law regarding master and servant is not in doubt. There cannot be specific performance of contract of service, and the master can terminate the contract with his servant at any time and for any reason or for none. But if he does so in a manner not warranted by the contract he must pay damages for breach of contract. So the question in a pure case of master and servant does not at all depend on whether the master has beard the servant in his own defence: it depends on whether the facts emerging at the trial prove breach of contract. Then there are many cases where a man holds an office at pleasure. Apart from judges and others whose tenure of office is governed by statute, all servants and officers of the Crown hold office at pleasure, and this has been held even to apply to a colonial judge (Terrell vs Secretary of State for the Colonies It has always been held, I think rightly, and the reason is clear. As the person having the power of dismissal need 443 .lm15 not have anything against the officer, he need not give any reasons. So I come to the third class, which includes the present case. There I find an unbroken line of authority to the effect that an officer cannot lawfully be dismissed without first telling him what is alleged against him and hearing his defence or explanation. " The case of the appellant falls within the third class mentioned by Lord Reid, and the tenure of his office could not be interrupted without first informing him of what was alleged against him and without giving him an opportunity to make his defence or explanation. The Chancellor Sardar Ujjal Singh did issue a notice upon the appellant requiring him to show cause why the tenure of his service should not be terminated. The appellant made a representation which was considered, and his tenure was determined because in the view of the Chancellor it was not in the public interest to retain the appellant as Vice Chancellor. The appellant was informed of the grounds of the proposed termination of the tenure of his office and an order giving detailed reasons was passed by the Chancellor. But the appellant contended that in arriving at his decision. the Chancellor misread the order of the President and took into consideration evidence which was not disclosed to the appellant, and failed to consider evidence in his favour which was on the, record. It is true that the order of the President only recites that the appellant was compulsorily retired as an officer of the Madhya Pradesh Cadre of the Indian Administrative Service: it does not expressly state that the order of compulsory retirement was imposed as a penalty. But a review of the disciplinary proceedings against the appellant which culminated in the order of the President leaves no room for doubt. The order of compulsory retirement was passed against the appellant as a penal order. There is no substance in the plea that the order of the Chancellor was vitiated, since the Chancellor in ascertaining the true. effect of the order of the President took into consideration a letter from the Secretary (Services), Government of India, Ministry of ' Home Affairs, dated May 6, 1966. The letter which has been set out in the order of the Chancellor merely catalogues the various, steps taken by the different authorities which considered the case of the appellant before the order of compulsory retirement of the appellant from the Indian Administrative Service was passed by the President. That letter contains no new material. The plea that the Chancellor was influenced by evidence which was not disclosed to the appellant is also without substance. 444 It appears that before he passed the order of suspension the Chancellor had received letter from Prof. D.C. Sharma and Dr. A. C. Joshi in answer to enquiries made by him relating to the circumstances in which the appellant was appointed to the post of Professor of Political Science in the University of Punjab, and these letters were not disclosed to the appellant. Counsel for the appellant says that these letters indicate that the University authorities fully knowing that the appellant was compulsorily retired from the Indian Administrative Service, appointed him as Vice Chan cellor. But the appellant did not specifically plead or make out the case that the Chancellor Mr. Hafiz Mohd. Ibrahim was made aware of the order of compulsory retirement. The Chancellor Sardar Ujjal Singh in passing the impugned order considered the grounds set up in the representation and then posed the question whether his predecessor in office, when he made the appointment of the appellant was aware of the fact that the appellant had been compulsorily retired as a measure of punishment from the Indian Administrative Service, and came to the conclusion that there was nothing to show that he Mr. Hafiz Mohd. Ibrahim was aware of the order of compulsory retirement. In paragraph .13 of his order, the Chancellor Sardar Ujjal Singh observed: "At the time of his appointment as Vice Chancellor, the fact of his compulsory retirement was not known to the Chief Minister or the then Chancellor. The alleged knowledge of the fact of compulsory retirement on the part of the Chief Minister, Cabinet or the previous Chancellor is, therefore, without any basis. " Unless he was moved in that behalf by the appellant it was not the duty of the Chancellor Sardar Ujjal Singh, before he passed the order against the appellant determining the tenure of his appointment, to enquire of Mr. Hafiz Mohd. Ibrahim who passed the order of appointment and of the Chief Minister, Punjab, whether they had come to know of the order of the President. In the petition filed before the High Court the petitioner merely averred in ground (iv) (d) that "the order of the Chancellor was vitiated, inter alia, because the Chancellor had without any material come to a conclusion that there was no basis to allege knowledge of the fact of compulsory retirement on the part of the Chief Minister or the Cabinet or the previous Chancellor": he did not set up the case that the Chancellor had information about the order of the President. His principal plea was that he was under no obligation to disclose that he was compulsorily retired from the Indian Administrative Service. In the affidavit filed by Sardar Ujjal Singh, the assertion made in ground (iv) (d) is denied. Affidavits of Mr. Hafiz Mohd. Ibrahim and Mr. Ram Kishan. Chief Minister. Punjab, were also filed before the High Court. and it was averred that neither of them knew at the time when the appointment was made that the appellant bad been compulsorily retired by the President from the Indian Administrative Service. 445 Mr. Hafiz Mohd. Ibrahim further averred that "this information did not also come to his notice so long he remained Chancellor of the Kurukshetra University", and that if the fact of compulsory retirement of the appellant as a penalty had been within his know . ledge, he would not have appointed the appellant as Vice Chancellor. Even after the affidavits by Mr. Hafiz Mohd. Ibrahim and Mr. Ram Kishan were filed, the appellant by his supplementary affidavit which was filed on July 27, 1966, did not contend that, Mr. Hafiz Mohd. Ibrahim or the Chief Minister had information about the determination of his employment in the Indian Administrative Service. His plea was that the members of the syndicate. the members of the senate and the Vice Chancellor of the Punjab University had knowledge about determination of his employment. when lie was appointed Professor of Political Science; and that plea. we agree with the High Court, was wholly irrelevant. It is true that the Chancellor in his order recorded that Mr. Hafiz Mohd. Ibrahim did not know at the time of making the appointment of the appellant to the office of Vice Chancellor that he was compulsorily retired from the Indian Administrative Service. But no inference arises therefrom that Sardar Ujjal Singh before he passed the orders made any enquiries or had access to evidence which was not disclosed to the appellant. We are unable to agree with counsel for the appellant that before a conclusion could be recorded, it was the duty of Sardar Ujjal Singh to ascertain from Mr. Hafiz Mohd. Ibrahim and Mr. Ram Kishan whether they were aware before the appellant was appointed Vice Chancellor of the order passed by the President. The Chancellor, Sardara Ujjal Singh. was, in Our judgment, under no obligation. unless moved by the appellant, to hold such enquiry. It was for the appellant to take up the defence that Mr. Hafiz Mohd. Ibrahim was informed of the order of the President and to take steps to prove that fact. He did not take up that defence, and he cannot no,, seek to make out the case that the order was vitiated because the Chancellor Sardar Ujjal Singh did not make an enquiry which the Chancellor was never asked to make. The reference to the letter of Prof. D. C. Sharma in the order of the Chancellor has no bearing either on the true effect of the order of the President or on the question whether the Chancellor was cognizant of the order passed by the President. The argument that when considering the letter of Prof. D.C. Sharma, the Chancellor should have also considered the letter of Dr. A.C. Joshi requires no serious consideration. The letters of Prof. D. C. Sharma and Dr. A. C. Joshi are. in our judgment. irrelevant in considering whether the Chancellor Mr. Hafiz Mohd. Ibrahim was aware of the order passed by the President. It is impossible to raise an inference that because the order of the President was gazetted and certain members of the syndicate and senate were aware of tile order of the President, knowledge must also be attributed to the Chancellor. 446 The proceeding resulting in the order passed by the Chancel lor does not suffer from any such infirmity as would justify this Court in holding that the rules of natural justice were not complied with. It is unnecessary in the circumstances to consider the argument advanced by the Additional Solicitor General that even if Mr. Hafiz Mohd. Ibrahim was aware of the order passed by the President ordering compulsory retirement of the appellant from the Indian Administrative Service, it was still open to his successor Sardar Ujjal Singh to determine the tenure of office of the appellant as Vice Chancellor, if in his view it appeared, having regard to the antecedents of the appellant, that the appellant was unfit to continue as Vice Chancellor. We agree with the High Court that. the appellant had the fullest opportunity of making his representation and that the enquiry held by the Chancellor was not vitiated because of violation of the rules of natural justice. In the very scheme of our educational set up at the Univer sity level, the post of Vice Chancellor is of very great importance, and if the Chancellor was of the view, after making due enquiry, that a person of the antecedents of the appellant was unfit to continue as Vice Chancellor, it would be impossible, unless the plea that the Chancellor acted maliciously or for a collateral purpose is made out, for the High Court to declare that order ineffective. The plea that the Chancellor acted mala fide was raised, but was not pressed before the High Court. The appeal therefore fails. There will be no order as to costs. R. K. P. section Appeal dismissed.

IN-Abs

The appellant was a member of the Indian Administrative Ser vice in the Madhya Pradesh Cadre and was compulsorily retired from the Service for misconduct by an order of the President in February, 1963. In June, 1965 he was appointed Vice Chancellor of the Kurukshetra University, by the then Chancellor of the University. On March 31, 1966 the new Chancellor who Was in office at the time, ordered the suspension of the appellant from the office of Vice Chan cellor and also issued to him a notice to show cause why his services I should not be terminated. The appellant filed a petition in the High Court seeking a writ in the nature of mandamus to quash the Chancellor 's order of suspension. In the meantime the Chancellor passed an order on May 8, 1966, in exercise of the power under Clause 4(vi). of Schedule I to the Kurukshetra University Act, 1956, read with s.14 of the Punjab General Clauses Act, 1898, terminating the services of the appellant with immediate effect. The appellant then amended his petition and sought a writ of certiorari to quash the order of May 8, 1966. The High Court rejected the petition. In appeal to this Court, it was contended on behalf of the appellant, inter alia, (i) that the Chancellor had no power under the Act or the Statutes to terminate the tenure of office of a Vice Chancellor; and (ii) that the Chancellor was bound to hold an enquiry in accordance with the rules of natural justice before determining the appellant 's tenure, but the appellant had not been given a proper opportunity to explain why his services should not be terminated and, furthermore, the Chancellor had taken into consideration evidence which was not disclosed to the appellant. On the other hand, it was contended for the respondent that since the claim for relief by the respondent was founded on an alleged breach of contract, the remedy of the appellant, if any, lay in an action for damages and not in a petition for a high prerogative writ. HELD, dismissing the appeal: (i)The absence of a provision setting up the procedure for determining the employment of the Vice Chancellor in the Act or the Statutes or Ordinances does not lead to the inference that the tenure of office of Vice Chancellor is not liable to be determined. [439H] A power to appoint ordinarily implies a power to determine employment and this rule is incorporated in s.14 of the Punjab General Clauses Act I of 1898. [437H 438A] S.R. Tiwari vs District Board, Agra, ; and Lekhraj Sathramdas Lalvani vs N. M. Shah, Deputy Custodian cum Managing Officer, Bombay; , ; referred to. 435 An intention contrary to the rule was not evidenced either by the fact that under Clause 4(vii) of the Statutes the appointment of a Vice Chancellor is for three years or because there was no express provision covering the determination of service of a Vice Chancellor for misconduct as there was in the case of teachers. Clause 4(vii) of the Statutes does not purport to confer upon a person appointed Vice Chancellor an indefeasible right to continue in office for three years; the clause merely places a restriction upon the power of the Chancellor, when fixing the tenure of the office of Vice Chancellor. It could not be held that a person appointed a Vice Chancellor is entitled to continue in office for the full period of his appointment even if it turns out that he is physically decrepit, mentally infirm, or grossly immoral. [438E F; 439G H] S.14 of the General Clauses Act is a general provision: it does not merely deal with the appointment of public servants. It deals with all appointments, and there is no reason to hold, having regard to the context in which the expression occurs, that the authority invested with the power of appointment has the power to determine employment as a penalty, but not otherwise. [438G H] (ii)The new Chancellor did issue a notice upon the appellant requiring him to show cause why the tenure of his service should not be terminated and the appellant made a representation which was considered; the appellant was informed of the grounds of the proposed termination of the tenure of his service and an order giving detailed reasons was passed by 'the Chancellor. The High Court had rightly held on the facts that the appellant had the fullest opportunity of making his representation and that the inquiry held by the Chancellor was not vitiated because of any violations of the rules of natural justice. [443D; 446C] (iii) The power to appoint a Vice Chancellor has its source in the University Act: investment of that power carries with it the power to determine the employment but that power may not be exercised arbitrarily; it can be only exercised for good cause, i.e. in the interests of the University and only when it is found after due enquiry held in a manner consistent with the rules of natural justice, that the holder of the office is unfit to continue as Vice Chancellor. [441G] A.Francis vs Municipal Councillors of Kuala Lumpur, ; Barber vs Manchester Regional Hospital Board and Anr., ; Vidyodaya University of Ceylon and Ors. vs Silva. ; State of Orissa vs Dr. (Miss) Binapani, ; ; Ridge vs Baldwin and Ors. [1964] A.C. 41; referred to.

Appeal No. 15 of 1965. Appeal from the judgment and decree dated April 15 / 16,1963 of the Bombay High Court in Appeal No. 216of 1961 from Original Decree. section T Desai, 0. P. Malhotra and 0. C. Mathur for the appellant. section V. Gupte, Solicitor General and Rameshwar Nath, for the respondent. The Judgment of the Court was delivered by Shelat, J. This appeal by certificate obtained from the High Court at Bombay involves the question as to the true meaning of section 154 of the Bombay Municipal Corporation Act, III of 1888 and the correct rateable value to be assessed thereunder. The respondent Club runs two race courses, one in Bombay and the other at Poona. We are concerned in this appeal with the Bombay race course which is comprised of land and certain structures standing thereon. The said land is the property of the appellant corporation given on lease to the Club for a period of 30 years commencing from June 1, 1944 at an annual rent of Rs. 3,75,000. The said structures thereon have been built by and belong to the Club. The Club has obtained a licence from the Government of Maharashtra, permitting the Club to hold racemeetings at both the Courses and for which it paid a sum of licence fees between the two Courses in the ratio of 2: 1 and thus licence fees between the two Courses in the ratio of 1: 2 and thus the share of the Bombay Course came to Rs. 8,66,666. The rating year in question is 1954 55. The assessment was made on the basis of the Club 's accounts for the year 1953 54 that being the year concluded before the assessment. According to these accounts the gross receipts of the Club came to Rs. 117 lacs and odd and the expenses . to Rs. 124 lacs and odd; the accounts thus showed a loss of Rs. 7 lacs and odd. The Deputy Municipal Commissioner who is the assessing authority disallowed expenses totalling Rs. 22 lacs and odd as having been wrongly included in the working expenses add 'determined. 13,22,430 as the gross annual rent and deducting therefrom the 10 percent deduction allowable under section 15.4 of the Act assessed the net rateable value at Rs, 11,90,187. The respondent Club thereupon filed an appeal before the Small Cause Court, Bombay, under section 217 of the Act. The Club claimed in all 19 items of expenses which according to it ought to have been allowed. The Club,, however, conceded that items 1, 2, 4, 5, 15, 16 and 18 were rightly disallowed. The remaining items were: 3. Bombay Course upkeep and repairs 6. Track sand and Murum 7. Legal charges 528 8. Licence fee 9. Totalisator upkeep and repairs 10. Bombay Course salaries and wages, 11. Motor lorry expenses 12, Grass and charges for maintenance of horses and bullocks 13. Insurance and garden,expenses 14. Spares for tractors and machinery parts 19. Painting. Out of these, items 3, 9 and 19 were wholly disallowed by the Deputy Municipal Commissioner while the rest were partially allowed. As regards Item 19, that is, painting, Counsel for the Club stated before us that he would not press that item. We are therefore no longer concerned with that item. The Small Cause Court agreed with the Deputy Municipal Commissioner in totally disallowing expenses under Items 3 and 9. It allowed however item 7, that is, legal charges which were disallowed by the Deputy Municipal Commissioner. Regarding Item 6, the view of the Small Cause Court was that only 7/12th and not 50 per cent deducted by the assessing authority ought to have been allowed. It was also of the view that only 7/12th and not 50 per cent of the expenses under Items 10, 11, 12, 13 and 14 ought to have been allowed by the assessing authority. As regards the licence fees the Club had, as aforesaid, allotted Rs. 8,66,666 to the Bombay Race Course. The Small Cause Court confirmed the deduction of 50 per cent only of this amount allowed by the assessing authority. So far as water tax and wheel tax were concerned the, Small cause Court confirmed the deduction of 3/4th of the these taxes made by the authority The Small Cause Court held that the pro fits basis method employed by the assessing authority was properly employed and further held that the Club had failed to prove that the net rateable value of Rs. 11,90,185 determined by the assessing authority was excessive. Before the High Court the Club agitated the same objections. The High Court was of the view that considering the unique nature of the use of the premises by the Club, the proper method for determination of the annual rent was the profits basis method but upheld the Club 's objections as regards the disallowance of the several items of expenditure. The High Court held that the gross rateable 'value of the :property would after these deductions be Rs. 2,15,750 and after deducting therefrom the statutory deduction of 10 percent. the net rateable value would come to Rs. 1,94,175 a figure, no doubt, less than the actual annual rent of Rs. 3,75,000 payable by the Club under the said lease. The appellant corporation challenges the correctness of these deductions allowed by the High Court. 529 Before we proceed to consider the contentions urged before us on behalf of the Corporation, we may first look at some of the provisions of the Act. Under section 139 the Corporation is required to levy property taxes, tax on vehicles and animals, theatre tax and octroi. Section 140 provides that property taxes mean water tax, halalkhor tax and general tax of not less than 8 per cent. and not more than 26 per cent. of the rateable value of lands and buildings, education cess and betterment charges. Section 154 is concerned with the valuation of property assessable to property taxes and provides how the rateable value of such property is to be determined. Sub section (1) runs as follows: "In order to fix the rateable value of any building or land assessable to a property tax, there shall be deducted from the amount of the annual rent for which such land or building might reasonably be expected to let from year to year a sum equal to ten percentum of the said annual rent and the said deduction shall be in lieu of all allowances for repairs or on any other account whatever. " The section provides only for the determination of the annual rent (not the actual rent paid by the tenant) for which such land or building might reasonably be expected to let from year to year and then to fix the rateable value after deducting therefrom 10 percent. of such annual rent in lieu of all allowances for repairs or any other account whatever. The annual rent has to be worked out on the basis of what a hypothetical tenant would be willing to pay 'as rent for the premises to a hypothetical landlord who is prepared to let the premises from year to year as they stand having regard to all the advantages and disadvantages relating lo Such premises, such as, the situation, the nature of the property, the obligations and liabilities attached thereto and other features, if any, which enhance or decrease their value to such a, tenant. The section simply enjoins upon the Municipal Corporation to determine the annual rent and the rateable value of the property therefrom but does not provide for any particular method of rating out of the several well known methods usually followed in such assessments, such as the comparative method, the contractor 's method, the unit method and profits basis method, that is, profit making capacity or valuation by reference to receipts and expenditure. (See Ryde on Rating 11th ed., 398 and Faraday on Rating, 5th ed. p. 24) The profits basis method which the assessing authority has adopted in the present case consists in ascertaining the net annual value of the premises which has to be worked out from the profits which are made or which are capable of being made out of the premises. The gross receipts form the starting point of the calculation and they are those shown in the assessee 's accounts for the account year concluded last before the making of the proposal. When these have been ascertained, the next step is to deduct therefrom the expenses of earning those receipts, the cost 530 Of repairs, insurance and other expenses necessary to maintain the premises in a state to command the hypothetical rent. The remaining balance is divisible between the tenant, that is,, the tenant 's share, the landlord, that is, the hypothetical rent or net annual value and rates. The tenant 's share is often estimated by applying a percentage to the tenant 's capital or it may be directly taken as a proportion of the divisible balance or by applying a percentage to the receipts. (See Halsbury 's Laws of England, (3rd ed.), Vol. 32, 87 88). It must be remembered that it is not the profits which are rateable; they serve to indicate the rent at which the premises might reasonably be expected to let, particularly where profit is the motive of the hypothetical tenant in taking the hereditament. This method at one stage used to be adopted in the case of public utilities only. But there are a number of decisions which show that at a later stage it began to be employed to other premises also such as foot ball stadia, markets, race courses, etc. One of the earliest cases where this method was applied to undertakings which are not public utilities is the case of R. vs Verall(1) which was a case of a race course. In Sanddown Park Case(2) the Court of Appeal held that in cases where actual receipts and expenditure are accepted as relevant factors for the ascertainment of cross value, sums reflecting the tenant 's reasonable profit. risk and interest on capital should be together treated as a charge on the divisible profits in priority to other deductions. The profits basis method has also been applied to such premises as grey hound race tracks. Briefly stated, the profits basis method is no more than a calculation based on the profit earning capacity of the premises and as stated by Lord Birkenhead L.C. in Port of London Authority vs Assessment Committee(3): "By this reckoning the amount of the gross receipts is ascertained, and from such amount are deducted the expenses of earning such receipts, the deductions provided, for by statute, interest on tenant 's capital and the estimated amount of tenant 's profit. The figure so ascertained would give the rating authority a valuable indication as to the rent which the hypothetical tenant would be likely to give for the right to occupy the hereditament in question and therefore would enable them to form an opinion as to the correct amount of the net annual value for the purpose of rating. " In the instant case, the profits basis method has been adopted for the last several years and approved by the Small Causes Court in several appeals by the respondent Club. It appears that at one stage the respondent Club raised an objection regarding its application to the present case. We need not go into the comparative merits of the different methods or into the question whether (1) (2) (1954) 47 R&T 351 (CA) (quoted in Ryde on Rating. 11th ed.523 (3) at p, 281. 531 it can suitably be applied in the present case or not, as Counsel for the Club stated before us that he was not pressing that objection. We therefore proceed on the footing that this method was properly adopted by the assessing authority. But that does not end the controversy, for, even. though the principles on which the profits basis method is worked out are fairly well understood, there is nevertheless bound to be controversy in regard to actual working expenses shown in the assessee 's accounts. A question would often arise whether these expenses are the hypothetical landlord 's burden or that of the hypothetical tenant. If they are of the former class, they cannot obviously be claimed as deductible expenses for the hypothetical tenant would not take them into account while offering the rent at which he would take the premises on lease. We now proceed to examine the contentions in regard to the items of expenses in controversy in the light of these principles. The first of these items is Item No. 3 of Rs. 1,07,414 for expenses for upkeep and repairs of the race course. The contention on behalf of the Municipal Corporation was that the 10 per cent statutory deduction allowed by section 154(1) covers all expenses for repairs and therefor deduction of costs of repairs and upkeep, if allowed, would mean a duplicate deduction. Even if 10% statutory deduction were considered inadequate looking to the present rate of prices, the legislature has fixed that percentage as a matter of policy and if it is found to be inequitable or otherwise it is for the legislature and not for the Court to alter it. The question, however, is not the inadequacy of deduction allowed in section 154(1) but as to which are the costs of repairs contemplated by the sub section. Under section 108(m) of the Transfer of Property Act the lessee is required to use the leased premises as a person of 'ordinary prudence would use them if they were his own and must keep them in as good a condition as he found them and must yield them up in the same condition subject only to fair wear and tear and irresistible force. There would thus be two implied covenants in a lease: (1) to keep in repair and (2) to restore in repair. It would therefore be the obligation of the tenant to maintain the premises in good repair and in the same condition at all times during the term of the lease. lessor bears the burden only in respect of dilapidation to the premises caused by reasonable wear and tear and extraordinary causes such as storm, flood or accidental fire. It will however be seen that the deed of lease under which the respondent Club took the land on lease expressly excludes the applicability of cl. (in) of section 108. That being so the question as to whether it is the lessor or the lessee who would be liable to pay for repairs cannot be resolved by the provisions of section 108(m). But the expenses in question are not expenses for the upkeep and repairs of either the land or the structures standing on it which have been put up by the Club. Costs of these repairs may conceivably be the land 532 lord 's burden. Item 3 represents expenses for the maintenance in good repair of the track which is the source of receipts earned by the Club. it is manifest that the track together with all its fitments has to be maintained properly if the Club were to earn the receipts and secure the largest possible attendance of persons willing to bet at the races and to attract likewise as many horses and their owners to participate in the race meetings held by the Club. A well maintained track is obviously one of the principal attractions inducing as large an attendance as possible. Therefore it would be in the interest of the tenant who takes on lease a race course with profit making motive to maintain the course efficiently and in good order. Disbursements for the upkeep of the course and all its adjuncts consequently are proper outgoings incurred for earning the receipts. They are thus not the landlord 's liability and are not part of or included in the statutory deduction of 10 percent. The statutory deduction in section 154(1) is in lieu of the cost of repairs, insurance, etc. incurred by the lessor. There is therefore no question of any duplication if expenses incurred by the Club for the maintenance of the Course were to be allowed as a proper deduction. The High Court was therefore right in deducting those expenses from the gross receipts. Next is Item 9 which comprises expenses for the upkeep and repairs of the totalisator set up by the Club. The totalisator is an apparatus or a mechanical device for registering and showing the total operations and the number of tickets sold to betters on each horse in a race. Obviously it is maintained to ensure efficient and expeditious working of the races. It does mechanically the work which if done by human labour would necessitate employment of a large number of persons. It is almost an indispensable adjunct of a modern race course and is necessary to declare within the short time available to the betters which are the horses on which heavy betting has been done in a particular race and the total amount of betting on each of the competing horses in that race. The expenses incurred in the upkeep and repair of such an adjunct necessary to an efficient race course must necessarily be regarded as the outgoings of the business. The Corporation 's contention that it is a, machinery and its value therefore is not to be included in rating under section 154(2) has no merit as it is part of the necessary equipment of a good race course and its upkeep goes to the making of receipts. The next items in controversy are items 6, 10, 11, 12, 13 and 14, that it cost of sand and moorum, salaries and charges of employees, motor lorry expenses, stores and charges for maintenance of horses and bullocks, manure and garden expenses, spares of tractors and other machinery and lastly the wheel tax and water tax. The only ground on which the Small Cause Court partially ,allowed these expenses was that since race meetings were held .in Bombay for 6 months in a year only, these expenses would partly be borne by the Club and partly by the lessor. The High 533 Court disagreed with this view and rightly allowed the deduction of the entire amount. In our view, it is not possible to find any Principle on which it would be possible to hold that if the race meetings are held for 6 months only in Bombay the burden of these disbursements would be on the tenant for 6 months and for the remainder on the lessor. There is nothing in the lease which would show that the lessor had to maintain the track during the time that race meetings were not held in Bombay. Since it is the Turf Club which ran the race meetings it would be the Club 's obligation and not that of the lessor to look after the track 's upkeep and maintenance and therefore it would be the Club which would bear the costs of its maintenance even during the period when race meetings were not held in Bombay. The distribution of these expenses between the tenant and the landlord made by the assessing authority and the Small Cause Court cannot therefore be supported on any principle nor can it be sustained on the mere ground that race meetings were held in Bombay only for part of the year. The measure in arriving at the net rateable value under section 154(1) is what a hypothetical tenant would pay as rent and that would depend upon the amount of profits earned from race meetings held on the race course. To arrive at the correct amount of such profit all expenses reasonably and properly incurred which go to the making of the receipts have to be deducted from the grossreceipts. There was no challenge at any stage that these expenses were not properly incurred for the upkeep and maintenance of the race course. The High Court therefore was right in allowing the deduction of these expenses also. For the relevant year the Club had allotted Rs, 8,66,666 out of the licence fee of Rs. 13 lacs to the Bombay race course. Counsel urged that the Club was entitled to a deduction of Rs. 4,33,333 only as the licence was for a dual purpose, viz., for the premises as a race course and for permission to conduct race meetings on. the race course. It was argued that for the first the burden would be on the lessor and for the second on the tenant. The licence exhibit B shows that it was granted to the Committee of the respondent Club. The licence is not a joint licence in favour of the Corporation and the Club. The application for it was made by the Committee on behalf of the Club and not by the Municipal Corporation. If the licence was for a dual purpose prima facie the landlord would either apply separately or join the Club in the application. The licence shows that the application was for "horse racing in the race courses leased by them" at Mahalaxmi, Bombay and in the Cantonment at Poona. The licence is "granted to the licencees. . . to hold horse races on the said race courses. " Condition I of the licence prescribes that the Club could hold only 36 race meetings in a year out of which not more than 16 should be allotted to the Poona racecourse. The licence is clearly permission to run race meetings on the two race courses and not an instrument licensing the premises as a race course. It is manifest that since it is the tenant who would hold the race meetings the fees payable for the licence is his burden 534 and not that of the lessor. Mr. Desai. however, contended that the ' scheme of the Bombay Race Courses Licensing Act, III of 1912 is to license the premises and then to licence the person who runs races on such premises. He relied strongly on the long title of the. Act which states that it was an Act to provide for the licensing of race courses in the State of Bombay. Reliance was also placed on, section 3(i) which provides that no horse ' race shall be held on a race course for which there is no licence for horse racing in force. But the charging section is section 4 under which the owner, the lessee or the occupier of a racecourse can apply for a licence for horse racing on a race course. The licence for horse racing and the obligation to obtain it and to pay the fee therefor is on the person who conducts the business of running the race course for horseracing. Such a person can be either the owner, the lessee or the occupier of such a racecourse. What section 3 does is to prohibit horse racing on a racecourse unless a licence for horse racing has been obtained in accordance with the provisions of the Act. There is no provision in the Act which Mr. Desai could point out which lays down any licence fee for a race course. There is therefore nothing in the Act to warrant the construction that the licence obtained under section 4 has a dual purpose as contended. Therefore there can be no justification for dividing the burden of the licence fees between the tenant and the landlord. Mr. Desai, however, argued that even so, the respondent Club was not entitled to claim the deduction of the licence fees because it was not the Club but its Committee which applied for and obtained the licence. The Articles of Association empower the Committee to act in all matters ,on behalf of the Club. The Committee applied for and obtained the licence on behalf of and as the agent of the Club. The fees were expended on behalf of the Club and as expenses of its business and it is the Club and not the Committee which is licensed to run horse racing on the race course. The Club was therefore entitled to treat the licence fees as its own expenses and claim deduction therefor on the footing that the fees were expenses incurred by it to earn the receipts. As regards the wheel tax and the water tax there is no justification in distributing them on the ground that during the time racemeetings were not held in Bombay it would be the landlord 's obligation to pay those taxes. In our view there is no basis for disallowing a part of these taxes. These again were expenses incurred by the Club in the ordinary course of its business and were as necessary .as other expenses in connection with its business. Counsel for the Corporation lastly urged that if these expenses were allowed to be deducted the net rateable value arrived at would be less than the actual rent of Rs. 3,75,000 payable by the Club to the Corporation and that such a result cannot be contemplated under any method of assessing the rateable value. It is true that the net rateable value as calculated by the High Court comes to Rs. 1,94,175 but the rateable value need not always be equal 535 to the actual rent. As aforesaid the measure is what a, hypothetical tenant is expected to pay for a lease from year to Year taking the property as it exists with all its privileges, advantages and burdens. The leased premises no doubt consist of a large track of land but it must be remembered that under cl. (i)(f) of the lease the Club is in exclusive possession of only certain portions and the remainder has to be kept open to the public except on race days and when training of horses is held. A large portion of the land has thus to be kept open for being used as playgrounds for the public. It is therefore not surprising that the rateable value as determined by the High Court comes to an amount less than the actual rent payable by the Club. The appeal fails and is dismissed with costs. R.K.P.S. Appeal dismissed.

IN-Abs

The respondent club ran a race course and had built certain structures on land in Bombay which it had leased from the appellant corporation at an annual rent of Rs. 3.75 lakhs. It had obtained a licence from the State Government to hold race meetings on its course in Bombay as well as on another course owned by it in Poona for which 'it had paid a licence fee of Rs. 13 lakhs for the relevant I year and had apportioned the fee in the ratio of 2: 1 between the Bombay and the Poona courses. For assessment of the correct rateable value of the property for the rating year 1954 55 the assessing authority made an assessment by the profits basis method on the basis of the Club 's accounts for the year 1953 54 and, in doing so, disallowed certain expenses claimed by the Club in determining the net rateable value at Rs. 11,90,187. The respondent club thereupon ' filed an appeal before the small Causes Court under section 217 of the Act and although that Court made a few adjustments, it held the Club had failed to prove that the net rateable value determined by the assessing authority was excessive. The High Court however, in appeal, upheld the Club 's objections as regards the disallowance of several items of expenditure and held that the gross annual value of the property would, after the deductions to be allowed, come to Rs. 2,15,750; and after deducting therefrom the statutory allowance of 10 percent under section 154 on account of allowances for repairs etc. , the net annual value would come to Rs. 1,94,175. In the appeal to this Court it was contended on behalf of the appellant, inter alia, (i) that the 10 percent statutory deduction allowed by section 154(1) covers all expenses for repairs and therefore deduction of costs of repairs and upkeep of the course, if allowed, would mean a duplicate deduction; (ii) that the totalisator maintained by the Club being 'machinery, its value was not to be included in rating under s.154(2); (iii) that the Club wag entitled to a deduction of only half of the licence fee apportioned to the Bombay Course because that fee covered dual purpose i.e. for the premises as a race course and for permission to conduct race meetings on the race course; for the first the burden would be on the lessor and for the second on the tenant; that this was borne out by the scheme of the Bombay Race Courses Licencing Act 3 of 1912 which was to licence the premises and then to licence the person who runs races on such premises; and (iv) that if the expenses claimed were allowed to be deducted, the net rateable value arrived at would be less than the actual rent of Rs. 3,75,000 payable by the Club to the Corporation and that such a result cannot be contemplated under any method of assessing the rateable value. HELP:Dismissing the appeal: (i)The expenses in question were for the maintenance in good repair of the race track which is the source of 526 receipts earned by teh Club. Disbursements for the upkeep of the course and all its adjuncts consequently are proper out goings incurred for earning the receipts. They are not the landlord 's obligation and are not part of or included in teh statutory deduction of 10 percent in section 154(1), which is, in lieu of, the cost of repairs, insurance, etc. incurred by,the lessor. The High Court was therefore right in deducting such expenses from the gross receipts. (ii) Similarly the expenses incurred for the upkeep and re pair of the totalisator were incurred on an adjunct neces sary to an efficient race course and must necessarily be regarded as the outgoings of the business. The contention that as it was machinery its value could not be included in, rating tinder section 154(2) had no merit. (iii) The High Court had rightly allowed the deduction of the entire amount of expenditure in connection with the cost of sand and morum, salaries and charges of empolyees, motor lorry expenses, stores and charges for maintenance of horses 'and bullocks, manure and garden expenses, spares of tractors and other machinery and the wheel tax and water tax. The distribution of these expenses between the tenant and the landlord made by the assessing authority and the small Cause Court could not be sustained on the ground that race meetings were held in Bombay only for Part of the year. There was nothing to show that the lessor had to maintain the track during the time when race meetings were not held in Bombay. The measure in arriving at the net rateable value under section 154(1) is what a hypothetical tenant would pay as rent and that would depend upon the amount of profits earned from race meetings held on the race course. To arrive at the correct amount of such profit all expenses reasonably and properly incurred which go to the making of the receipts have to be deducted from the gross receipts. [533D] (iv) The licence obtained by the Club was clearly permission to run race meetings on the two race courses and not an instrument licensing the premises as a race course. Since it is the tenant who would hold the race meetings, the fee, payable for the licence is his burden and not that of the lessor. Furthermore there was no provision in Bombay Act 3 of 1912 to warrant the construction that the licence obtained under section 4 had a dual purpose as contended. [533H 534D] (v) The rateable value need not always be equal to the actual rent. The measure is what a hypothetical tenant is expected to pay for a lease from year to year taking the property as it exists with all its advantages and burdens. In view of the fact that the Club was only in exclusive possession of some portions of the land and the remainder 'had to be kept open to the public except on race days, it was not surprising that the rateable value came to less than the actual rent. [534H; 535C] R.v. Verall , Sanddown Park CAse [1954] 47 R. T. 351 (CA). (quoted in Ryde on Rating, 11th ed. 523); Port of London Authority vs Assessment Committee, at p. 281, referred to.

Appeal No. 656 of 1966. Appeal by special leave. from the judgment and order dated June 29/30, 1964 of the Gujarat High Court in Special Civil Application No. 589 of 1961. A. K. Sen and N. H. Hingorani, for the appellant. R. Gopalakrishnan, for respondent No. 3. The Judgment of the Court was delivered by Bhargava, J. R. section Ambwaney, respondent No. 3, was employed by the Sindhu Resettlement Corporation Ltd., the appellant. as an Accounts Clerk at Gandhidham on 13th December, 1950 in the pay scale of Rs. 150 10 250 on a salary of Rs. 200 plus 20 per cent as site allowance. This site allowance was discontinued in March, 1952. In the year 1953, the Government of India decided to develop Kandla as a port and a subsidiary company was formed by the appellant under the name of Makenzies Heinrich Bulzer (India) Ltd. in which one of the principal shareholders was the appellant. This Company later came to be known as Sindhu Hotchief (India) Ltd. For convenience, both Makenzies Heinrich, Bulzer (India) Ltd., and Sindhu Hotchief (India) Ltd. shall hereinafter be referred to as "Sindhu Hotchief". This subsidiary Company, Sindhu Hotchief, wanted some trained employees and; amongst others the services of respondent No. 3 were placed at its disposal by the appellant. The case of respondent No., 3 was that he was told orally by the officers of the appellant on 2nd September, 1953 that he was to work in the subsidiary company. Respondent No. 3 was appointed in Sindhu Hotchief by its order dated 5th September,,1953 on a salary of Rs. 240 p.m. as an Accounts Clerk on the conditions of service laid down in that order. It appears that, just about this time, the father of respondent No. 3 died and he was granted leave by the appellant for the period from 2nd September to 17th September, 1953. With effect from 18th September 1953, his services were placed at the ' disposal of Sindhu Hotchief and an order to that effect was issued in writing on behalf of the appellant on 24th September, 1953. Respondent No. 3 worked with Sindhu Hotchief up to 20th February, 1958 'when his ' services were terminated after payment. of retrenchment compensation and all other dues payable to him. On 21st February, 1958, respondent No. 3 went to the office of the, appellant, reported himself for duty and requested that he might, 517 be given posting orders in, the appellant. Corporation. The appellant informed respondent NO. 3 of I its inability, to re employ him on the ground that the post, which he had been occupying in 1953 had been permanently filed up. Thereupon, respondent No. 3 demanded retrenchment compensation ', from the appellant also. This was also refused. His case was taken up by Mazdoor Mahajan Sangh, Gandhidham, Kutch, ' respondent No.2. The Secretary of respondent No. 2 also, wrote a letter to the, management of the appellant, asking for payment of retrenchment com pensation to respondent No. 3 on the ground that the appellant had refused to take him back in its employment. It seems that, thereafter, there were some conciliation proceedings and, subsequently, on the report of the Conciliation Officer, the Government of the State of Gujarat, by its notification dated 15th November, 1960, referred the dispute to the, Industrial Tribunal,, Gujarat, for adjudication. The matter referred for adjudication was described in the notification as follows: "Demand No. 1 Shri R. section Ambwaney should be reinstated in the service of M/s. Sindhu Resettlement Corporation Ltd., and he should be paid his wages from 21st February, 1958. " The Triunal, after hearing the parties, gave its Award on 10th August, 1961, directing reinstatement of respondent No. 3 and payment of back wages from 21st February, 1958. The appellant challenged this award before the High Court of Gujarat by a petition under Articles 226 and 227 of the Constitution, but the petition was dismissed. Consequently, the appellant has come up to this Court in this appeal by special leave. In this appeal, three points have been urged on behalf of the appellant to challenge the orders of the Industrial Tribunal and the High Court. The points are : (1) that respondent No. 3, having been given permanent appointment in Sindhu Hotchief and having obtained retrenchment compensation from that Company, could not claim that he was still holding a post in the appellant Corporation and could not, therefore, claim reinstatement, (2) that the dispute that was raised by respondent No. 3 as well as respondent No. 2 with the management of the appellant was confined to compensation for retrenchment and did not relate to the validity of the retrenchment or reinstatement, so that the Government of Gujarat had no jurisdiction to refer the dispute to the Industrial Tribunal which it did , and (3) that, in any case. since the validity of the retrench of respondent No. 3 by the appellant was not 518 challenged, the, Tribunal committed a manifest error in directing reinstatement instead of awarding retrenchment compensation. After hearing learned counsel for parties, we have come to the conclusion that the first two grounds urged on behalf of the appellant must be 'accepted, while the third does not arise. The lease put forward on behalf of the respondents before ,the Industrial Tribunal was that respondent No. 3 was a permanent employee of the appellant and, when he joined the service of Sindhu Hotchief in the year 1953, he only went there on deputation or transfer, so that he continued to hold a lien on his permanent post in the appellant Corporation. Two facts, no doubt, support this plea. One is that Sindhu Hotchief was only a Subsidiary Company of the appellant, and the other is that, in its order dated 24th September, 1953, the appellant merely stated that, with effect from the 18th September, 1953, the services of res pondent No. 3 were placed at the disposal of Sindhu Hotchief. No specific ;order was passed terminating his services in the appellant Corporation Though this circumstance would raise a presumption that respondent No. 3 did not cease to be an employee 0 the appellant when this order was issued on 24th September 1953, this presumption is rebutted by two circumstances. The first is that respondent No. 3 was appointed in Sindhu Hotchief under the order dated 5th September, 1953, which laid down that in that Company he would be on a probation for a period of three months in the first instance. The probationary period may have to be further extended by any period upto three months. The confirmation of his appointment would be considered at the end of his probationary period and would depend on the efficiency and utility of his services to the Company. Thereafter, respondent No. 3 continued to serve in that Company until 20th February, 1958, i.e. for a, period of about 4 1/2 yars. Clearly, he must have been confirmed in his appointment in that company. Once he was confirmed in Sindhu Hotchief, he could obviously not continue to be an employee of the appellant corporation simultaneously. The High Court did not attach any value to this order of appointment dated 5th September, 1953, issued by Sindhu Hotchief, on the ground that no evidence was tendered before the Tribunal to show that this order was actually served on respondent No. 3. In proceeding on this basis, the High Court clearly fell into an error, because, in this case, when the adjudication of the industrial dispute was, taken up by the Tribunal, all the parties contented themselves with filing documentary evidence and no oral evidence was given by any party. At no stage was it challenged that the documents filed could not be taken into account until proved formally in the manner 'required to be proved in a regular civil proceeding in accordance with the provisions of the Indian Evidence Act. This order of Sindhu Hotchief dated 5th September, was addressed to respondent No. 3 himself and, when there 519 was no challenge on behalf of respondent No. 3 that he did not receive this order, there was no justification for the High Court to hold that this. ,order had not been served on him. In proceedings before the Industrial Tribunal, strict proof of documents in accordance with the provisions of the Indian Evidence Act is not required. Parties having agreed to base their case on the documents filed, this order issued to respondent No. 3 could not be ignored on the ground that no oral evidence had been tendered to prove that respondent No. 3 actually received it. It was in accordance with the conditions of service laid down in, this order that respondent No. 3 was appointed in Sindhu Hotchief and, by joining service there and continuing in that service for 4 1/2 years, respondent No. 3 clearly agreed to work in that Company on these conditions. As we have indicated earlier, one of the conditions was that he would be confirmed at the end of the: probationary period and, once he was confirmed, he would become a permanent employee of Sindhu Hotchief and would cease to be the employee of the appellant. Thus,. though respondent No. 3 did not cease to be an employee of the appellant when his services were first placed at the disposal of Sindhu Hotchief by the appellant witheffect from 18th September, 1953, he ceased to be an employee of the appellant later when he was confirmed in Sindhu Hotchief. The other circumstance that bears out this conclusion is that, at the time of termination of the employment of respondent No. 3 in Sindhu Hotchief, he was given retrenchment compensation which he accepted. In case he had continued to be in the service of the appellant. he would not have been entitled to retrenchment compensation from Sindhu Hotchief and, even if Sindhu Hotchief had any legal liability to contribute towards his retrenchment compensation which might have become ultimately payable to him on his retrenchment from the appellant Corpn., that amount would have been paid by Sindhu Hotchief to the appellant and not to respondent No. 3 himself. It appears that respondent No. 3 very well knew that he had become a permanent employee of Sindhu Hotchief and, consequently, on retrenchment, he accepted the compensation but, thereafter, he seems to have decided to assert his claim to continuance of employment under the appellant. This claim. was also, however, very halfhearted. No doubt, at the first stage on 21st February, 1958, he demanded reinstatement in the appellant Corpn., but very soon thereafter, when that request was refused, he demanded retrenchment compensation and one month 's salary in lieu of notice. This demand was put forward by him in his letter dated 7th March, 1958, wherein he stated that, if the appellant refused to recognise Sindhu Hotchief as a sister concern and did not take him back in its Organisation, where he had a genuine claim of service, the appellant should please pay off his legal claims in respect of retrenchment compensation and one month 's pay in lieu of notice. This position taken up by respondent No. 3 himself thus shows that he was aware that his services under the appellant Corpn. had already 520 come to an end. Learned counsel appearing for the respondents urged that we should not hold that services of respondent No. 3 in teh appellant Corpn. had come to an end when he was absorbed in Sindhu Hotchief, because no retrenchment compensation was given to respondent No. 3 by the appellant Corporation at the stage, when his services ended in that Corporation. The submission ignores the, circumstances that, when respondent No.3 went to Sindhu Hotchief, be did so willingly. There was no compulsion on him to,. go, to that Company. His terms of service with the appellant did not entitle The appellant to transfer his services to the Subsidiary Company and the mere office order placing his services at the disposal of Sindhu Hotchief could not have been made effective unless respondent No. 3 also voluntarily agreed to take service in Sindhu Hotchief. At no stage was it asserted on behalf of respondent No. 3 that he did not go voluntarily or with his consent to Sindhu Hotchief. In case he took the service in Sindhu Hotchief and accepted permanent appointment there willingly, it cannot be held that his services were retrenched by the appellant Corporation. He was not entitled to any retrenchment compensation when he left the service of the appellant willingly. The nonpayment of retrenchment compensation by the appellant at that stage does not, therefore, indicate that the services of respondent No. 3 with the appellant had not come to an end. On the facts of this case, it is clear that the Tribunal committed an error in drawing the legal inference that respondent No. 3 continued to be in the service of the appellant Corporation even after he had received permanent appointment in Sindhu Hotchief. On a correct inference, it is clear that the services of respondent No. 3 under the appellant Corporation had come to an end and, when he was retrenched by Sindhu Hotchief, he could not claim reinstatement in the appellant Corporation. In this connection, Mr. Gopalakrishnan, learned counsel for the respondents, relied on some remarks of the House of Lords in Nokes vs Doncaster Amalgamated Collieries Ltd.(1), where it was held: "Counsel for the appellant argued that a contractual right to personal service was a personal right of the employer and was incapable of being transferred by him to anyone else, and that a duty to serve a specific master could not be part of the property or rights of that master capable of becoming, by transfer, a duty to serve some ,one else. It is, of course indisputable that (apart from statutory provision to the contrary) the benefit of a contract entered into by A to render personal service to X cannot be transferred by X to Y without A 's consent, which is the same thing as saying that, in order to produce the desired result, the old contract between A and X would r have to be terminated by notice or by mutual consent and a. new contract of service entered into by agreement between A and Y." (1) 521 This principle laid down by teh House of Lords is not applicable to the facts of teh case before us,because we have already held that respondent No.3 joined the service of Sindhu Hotchief villingly and with his consent, and it was not a case where he was transferred to Sindhuy Hotchief by the appellant without his consent. This case does not help ,the respondents. The second ground urged on behalf of the appellant is that in this case No. dispute relating relating to reinstatement was ' actually raised either by respondent No. 2 or respondent No. 3 before. the reference was made to the Industrial Tribunal by the Government of Gujarat and,. consequently. that reference itself was , without jurisdiction. When Mr. A. K. Sen, counsel for the. appellant, raised this ground, it Was urged by" Mt. Gopalakrishnan on behalf of the respondents that this ground was being taken for the first time in this Court and had not been raised at any earlier stage, so that it should not be allowed to be taken in this Court. It, however,appears that the question of jurisdiction of the State Government to refer the demand for reinstatement for adjudication to the Tribunal was specifically urged in the High Court and the High Court actually dealt with it in its judgment, dismissing the petition filed on behalf of the appellant. The High Court clearly mentions that the counsel for the appellant contended that the Industrial Tribunal had no jurisdiction as the question referred to it and which it was called upon to adjudicate relating to reinstatement of respondent No. 3 in the service of the Corporation would not fall within the scope of item 3 in the Second Schedule to the . It was further urged that, since the third respondent was neither discharged nor dismissed by the appellant, the question of relief of reinstatement would not arise under that item and, there being no item under which the demand would fall, the State Government had no jurisdiction to refer such a demand for adjudication to the Tribunal. These points urged before the High Court would cover the ground now urged by Mr. Sen before us. It is true that the form in which it was urged before the High Court was slightly different. There, the point raised was that a demand for reinstatement, when there had been retrenchment only and no discharge or dismissal, could not be held to constitute an industrial dispute. On the facts of the case as they appeared from the material before the Tribunal, it is now urged that, in fact, the demand, which was being pressed with the management by both the respondents, was in respect of retrenchment compensation and not reinstatement. The demand for reinstatement seems to have been given up, because the respondents realised that the services of respondent No. 3 had not been terminated by discharge or dismissal, but by retrenchment only, and that retrenchment not being. the result of any unfair labour practice or victimization, respondent No. 3 could only claim retrenchment compensation. In the evidence given before the Tribunal, there were included two letters written by the two respondents containing the demand for retrenchment compensation. 522 We have already referred to one of these letters which was sen on 7th March, 1958 by respondent. No. 3 to the Administrative Officer of the. appellant. The other letter was sent on 10th July 1959 by the General Secretary of respondent No. 2 in which again it was stated that Sindhu Hotchief had paid retrenchment dues to respondent No. 3 in respect of the services he had rendered in than Company, but the appellant Corporation was responsible for his retrenchment dues for the service which had been rendered by respondent No. 3 in the, appellant Corpn. , The prayer was that, as the appellant had refused him re employment, arrangement should be made to pay his retrenchment dues according to section 25F of the . Thus, both the respondents, in their claims put forward before the management of the appellant, requested for payment of retrenchment compensation and did not raise any dispute for reinstatement. Since no such dispute about reinstatement was raised by either of the respondents before the management of the appellant, it is clear that the State Government was not competent to refer a, question of rein statement as 'an industrial dispute for adjudication by the Tribunal. The dispute that the State Government could have referred competently was the dispute relating to payment of retrenchment compensation by the appellant to respondent No. 3 which had been refused. No doubt, the order of the State Government making the reference mentions that the Government had considered the report submitted by the Conciliation Officer under sub section (4) of section 12 of the , in respect of the dispute between the,appellant and workmen employed under it over the demand mentioned in the Schedule appended to that order; and, in the Schedule, the Government mentioned that the dispute was that of reinstatement of respondent No. 3 in the service of the appellant and payment of his wages from 21st February, 1958. It was urged, by Mr. Gopalakrishnan on behalf of the respondents that this Court cannot examine whether the Government, in forming its opinion that an industrial dispute exists, came to its view correctly or incorrectly on the material before it. This proposition is, no doubt, correct; but the aspect that is being examined is entirely different. It may be that the Conciliation Officer reported to the Government that an industrial dispute did exist relating to the reinstatement of respondent No. 3 and payment of wages to him from 21st February, 1958, but when the dispute came up for adjudication before the Tribunal, the evidence produced clearly showed that no such dispute had ever been raised by either respondent with the management of the appellant. If no dispute at all was raised by the respondents with the management, any request sent by them to the Government would only be a demand by them and not an industrial dispute between them and their employer. An industrial dispute, as defined, must be a dispute between employers and employers, employers and workmen, and workmen and workmen. A mere demand to a Government, without a dispute being raised by the workmen with 523 their employer cannot become an industrial dispute Consequently, the material before the Tribunal clearly showed that no such industrial dispute, as was purported to be referred by the State Government to the Tribunal, had ever existed between the appellant Corpn. and the respondents and the State Government in making a reference, obviously committed an error in basing its opinion 'on material which was not relevant to the formation of opinion. The Government had to come to an opinion that an industrial dispute did exist and that opinion could only be formed on the basis that there was a dispute between the appellant and the respondents relating to reinstatement. Such material could not possibly exist when, as early as March and July, 1958, respondent No. 3 and respondent No. 2 respectively had confined their demands to the management to retrenchment compensation only and did not make any demand for reinstatement. On these facts, it is clear that the reference made by the Government was not competent. The only reference that the Government could have made had to be related to payment of retrenchment compensation which was the only subject matter of dispute between the appellant and the respondents. So far as the third ground is concerned, it loses force and (toes not arise in view of our decision relating to the first ground. We have already held, when dealing with the first ground, that the appellant had neither dismissed respondent No. 3, nor had it discharged him from service. There was no question of wrongful dismissal or discharge by the appellant. It was not even a case of retrenchment. because respondent No. 3 had willingly gone to join the service under Sindhu Hotchief. He obviously joined the service in Sindhu Hotchief because of the financial advantages that were to accrue to him. In September, 1953, he was drawing a salary of Rs. 200 P.m. in the scale of Rs. 150 10 250 while serving the appellant. The site allowance of 20 per cent, which he had been receiving earlier, had been discontinued from March, 1952 and he was not getting it at the time when he went to join Sindhu Hotchief, where he was given a start of Rs. 240 in the grade of Rs. 200 20 400. Consequently, in addition to the immediate rise in salary of Rs. 40 P.m., he had the advantage of working in the higher grade, in which, within two years, he exceeded the maximum of the scale in which he had been working with the appellant. He served Sindhu Hotchief for a period of ' about 4 1/2 years and became confirmed there in accordance with the terms and conditions which were offered to him by Sindhu Hotchief. In these circumstances, the respondents cannot ' urge that the services of respondent No. 3 were retrenched by the appellant, either when he went and joined Sindhu Hotchief, or when he wanted to get back to his post with the appellant. His appointment in the service of the appellant having terminated, no question could arise of retrenching him at the stage when he wanted to come back after serving Sindhu Hotchief. His services, 524 were in fact retrenched by his employer Sindhu hotchief and from that Company he received retrenchment compensation. The third ground, therefore, needs consideration The appeal succeeds and is allowed. The award of the Tri bunal is quashed. In the circumstances of this case there will be no order as to costs,, Y.P. Appeal allowed.

IN-Abs

The services of respondent No. 3 a permanent employee of appellant corporation, were placed at the disposal of appellant 's subsidiary company. The subsidiary company by an order appointed respondent No. 3. on probation and stated that he would be confirmed after the end of probation period. After respondent No. 3 had worked with the subsidiary company for more than the probationary period, his services were terminated and he was paid retrenchment compensation. Respondent No. 3 asserted continuance of his employment under the appellant, which was declined, There upon he demanded retrenchment compensation from the appellant also, which, too, was refused. The matter was referred for adjudication by the State Government, and the Tribunal directed reinstatement of respondent No. 3 with back wages. In appeal to this Court,the appellant Corporation contended that (i) respondent No. 3 having been given permanent appointment in the subsidiary company, and having obtained retrenchment compensation from that company, could not claim that he was still holding a post in the appellant corporation and could not, therefore, claim reinstatement; and (ii) the dispute that was raised was confined to compensation.for retrenchment and did not relate to the validity of the retrenchment or reinstatement, so that the State Government had no jurisdiction to refer the dispute to the Industrial Tribunal. HELD: (i) Respondent No. 3 could not claim reinstatement in the appellant corporation. Though he did not cease to be an employee of the appellant when his services were first placed at the disposal of the subsidiary company by the appellant, he ceased to be an employee of the appellant later when he was confirmed in the subsidiary company. He also accepted the retrenchment compensation at the time of termination of the employment in the subsidiary company. In case he had continued to be in the service of the appellant, he would. not have been entitled to retrenchment compensation from the subsidiary company and, even if the subsidiary company had any legal liability to contribute towards his retrenchment compen sation which might have become ultimately payable to him on his retrenchment from the appellant corporation, that amount would have been paid by the subsidiary company to the appellant and not to respondent No. 3 himself. Further he was not entitled to any retrenchment compensation when he left the service of the appellant willingly for there was no compulsion on him to go to the subsidiary company. [519C F] Nokes vs Doncaster Amalagamated Collieries Ltd., [1940] A.C. 1014 held inapplicable. (ii) The respondents. in their claims Put forward before the management of the appellant requested for payment of retrenchment compensation and did not raise any dispute for reinstatement. 516 Since no such dispute about reinstatement was raised by the respondents before the management of the appellant, the State Government was not competent to refer a question of reinstatement as an industrial dispute for adjudication by the Tribunal . The dispute that the State Government could have referred competently was the dispute relating to payment of retrenchment compensation by the appellant to respondent No. 3 which had been refused. A mere "demand to a Government without a dispute being raised by the workmen, with their employee cannot become an industrial dispute. [522H 523D].

Appeals Nos. 1968 1970 of 1966. Appeals by special leave from the judgment and order dated July 16, 1962 of the Madras High Court in Tax Cases Nos. 117,118 and 119 of 1959. section B. Banerjee and section N. Mukerjee, for the appellant (in all the appeals). K. M. Mudaliyar, Advocate General for the State of Madras and A. V. Rangam, for the respondent (in all the appeals). M.C. Setalvad, B. Sen, G. section Chatterjee and P. K. Bose, for the Intervener (in C. A. No. 1968 of 1966). The Judgment of the Court was delivered by Hegde, J. These appeals by special leave arise from the common order made by the Madras High Court in T. C. Nos. 117 to 119 (revisions Nos. 71 to 73) on its file. The Indian Steel and Wire Products Ltd. a joint stock public limited company is the appellant in all these appeals. At the instance of the steel controller the appellant supplied certain steel products to various persons in the Madras State during the financial years 1953 54, 1954 55) and part of 1955 56 (from April 1, 1955 to September 6, 1955). The State of Madras assessed the turnovers of the appellant relating to those transactions to sales tax under the Madras Gen. Sales Tax Act, 1939 (Madras Act 9 of 1939) (to be hereinafter referred to as the Act), the law in force at that time. The appellant has been assessed to tax on the basis of best judgment. The authorities under the Act have determined appellant 's turnover during the year 1953 54 at Rs. 3129520/ and levied a tax of Rs. 16298/4 annas. During the financial year 1954 55, its turnover was determined at Rs. 3759216/ . and the assessment levied is Rs. 58737 12 0. For the broken period in the financial year 1955 56, the appellant 's turnover was determined at Rs. 1453292/ and the same was assessed to tax at Rs. 22707 12 0. Even according to the appellant, its turnovers during 1953 54 was Rs. 2912533 14 0, in 1954 55, Rs. 3971493/7/ and in 1955 56, Rs. 1725400/5/ . Therefore, there is little room for controversy about its turnover in the relevant years. The appellant is contesting the right of the State of Madras to levy tax on the turnovers in question. According to the appellant, the turnovers in question could not have been considered as sales and consequently they could not have been brought to tax under the Act. The appellant asserts that deliveries in question were made under compulsion of law and there was no agreement between the parties. They were 481 made in pursuance of the orders of the Controller exercising powers under the Iron & Steel (Control of Production and Distribution) Order, 1941 (which will hereinafter be referred to as the order), which was issued under the Defence of India Act 1939. It was argued on behalf of the appellant that it was the controller who determined the persons to whom the goods were to be supplied, the price at which they were to be supplied, the manner in which they were. to be transported, and the mode in which the payment of the price was to be made. In short, it was said that every facet of those transactions were prescribed by the controller and therefore those transactions cannot be considered as sales. On the basis of those assertions support was sought from the decision of the House of Lords in Kirkness vs John Hudson & Co., Ltd.(1) the decision of this Court in M Is. New India Sugar Mills Ltd. vs Commis sioner of Sales Tax. Bihar(1), the decision of the Calcutta High Court in Calcutta Electric Supply Corporation Ltd. vs Commissioner of Income Tax, West Bengal(1) the decision of the Orissa High Court in Messrs. Cement Ltd. vs The State of Orissa(1), and a few other decisions. It was further argued that even if those transactions are considered as sales the State before exercising its taxing power should have had in its possession material to show that the goods delivered by the appellant were delivered in that State for consumption which circumstance alone can make those transactions sales within that State; as no material was placed on record to show that the goods in question were delivered in that State for consumption it could not have brought the turnovers in respect of those transactions to tax under the Act. These contentions of the appellant have been rejected by the authorities under the Act as well as by the High Court. Other contentions advanced on behalf of the appellant deserve to be summarily rejected for the reasons to be mentioned hereinafter. The principal question that falls for decision in these appeals. is whether the transactions with which we are concerned herein are sales. 2(h) of the Act defines 'sale ' thus: " 'Sale ' with all its grammatical variations and cognate expressions means every transfer of the property in goods by one person to another in the course of trade or business for cash or for deferred payment or other valuable consideration, and includes also transfer of property in goods involved in the execution of works contract and in the, supply or distribution of goods by a co operative society. club, firm or any association to its members for cash or for deferred payment or other valuable consideration but does not include a mortgage. hypothecation, charge or pledge" (the explanations to that definition are not relevant for our present purpo se). (1) (2) [1963] Suppl. 2 S.C.R. 459. (3) (4) 12 S.T.C. 205. 482 This wide definition undoubtedly covers those transactions. But then the power of a State to tax sales is derived from Entry 54 of List II of the VII Schedule in the Constitution. That entry as it stood at the relevant time empowered the State to tax on the sale or purchase of goods. The scope of the expression 'sale or purchase of goods ' found in entry 48 in List II of Schedule VII of the Government of India Act 1935 which is in pari materia with the aforementioned entry 54 came up for interpretation before this Court in State of Madras vs Gannon Dunkerley(1). In that case, the question that fell for decision was whether the words 'sale of goods ' should be given their popular meaning or whether they should have the meaning attached to them under the Sale of Goods Act. This Court held that the expression 'sale of goods ' was, at the time when the Government of India Act, 1935 was enacted, a term of well recognised legal import in the general law relating to sale of goods and in the legislative practice relating to that topic and must be interpreted as having the same meaning as in the sale of Goods Act 1930: In the course of the judgment, Venkatarama Aiyar, J,who ,spoke for the Court after examining the various decisions cited at the Bar, observed, as follows: "Thus, according to the law both of England and of India, in order to constitute a sale it is necessary that there should be an agreement between the parties for the purpose of transferring title to goods which of course pre supposes capacity to contract, that it must be supported by money consideration and that as a result of the transaction property must actually pass in the goods. Unless all these elements are present, there can be no sale. Thus, if merely title to the goods passes but not as a result of any contract between the parties, express or implied, there is no sale. So also if the consideration for the transfer was not money but other valuable consideration, it may then be exchange or barter but not sale. And if under the contract of sale, title to the goods has not passed, then there is an agreement to sell and not a completed sale. " As laid down by this decision, to constitute a valid sale, there must be concurrence of the following elements viz. (1) parties competent to contract (2) mutual assent (3) a thing the absolute or general property in which is transferred from the seller to the buyer and (4) a price in money paid or promised. Therefore we have to see whether all these elements are found in the transactions before us. Before doing so it is necessary to refer to the 'order ' and the manner in which those transactions were effected. During the World War IT iron and steel goods became scarce. Therefore it became necessary for the Government to control the production and distribution of those goods. In order to do so, the (1) ; 483 government issued the 'order ' on July 26, 1941, and the same came into force on August 1, 1941. The provisions in that order which are material for our present purpose are set out hereinbelow: "2. Definitions In this Order, unless there is anything repugnant in the subject context: (a) 'Controller ' means the person appointed as Iron and Steel Controller by the Central Government, and includes any person exercising, upon authorisation by the Central Government, all or any of the powers of the Iron and Steel Controller; (b) 'Producer ' means a person carrying on the business of manufacturing iron or steel. (c) 'Registered Producer ' means a producer who is registered as such by the Controller. (d) 'Stockholder ' means a person holding stocks of Iron or Steel for sale who is registered as stockholder by the Controller. (e) 'Controlled Stockholder ' means a stockholder appointed by the Controller to hold stocks of iron or steel under such terms and conditions as he may prescribe from time to time. (f) 'Pressure Pipes ' include all Pipes and Tubes 1/8" nominal bore and above which will withstand or may be used for a working pressure of 25 lbs. per square inch and above. Application of Order (I) The provisions of this Order shall apply to all iron or steel of the categories specified in the Second Schedule to this Order. (2) A certificate signed by the Comptroller or by any officer authorised by him in this behalf, in respect of any category of iron or steel, shall be conclusive proof that it is an article to which this Order is applicable. Acquisition No person shall acquire or agree to acquire any iron or steel from a Producer or a Stockholder except under the authority of and in accordance with the conditions contained or incorporate d in a general or special written order of the controller. Disposal No Producer or Stockholder shall dispose of or agree to dispose of or export or agree to export from British India any iron or steel, except in accordance with the conditions contained or incorporated in a general or special written order of the Controller. 10B. Power to direct sale The Controller may ' by a written Order require any person holding stock or iron 484 and steel, acquired by him otherwise than in accordance with the provisions of Clause 4 to sell the whole or any part of the stock to such person or class of persons and on such terms and conditions as may. be specified in the Order. 10C. Power to prohibit removal The Controller may order any producer (including a registered producer), any stockholder (including a controlled stockholder) or any other person not to remove or permit the removal of any iron or steel, whether sold or unsold, from his stockyard or from any other part of his premises to any place outside the precincts of such stockyard or premises, except with the written permission of the Controller. 11 AA (3). No producer, stockholder, or other person holding stocks of iron and steel shall without sufficient cause, refused to sell any iron or steel which he is autho rised to sell under this Order. Explanation The possibility or expectation of obtaining a higher price at a later date shall not be deemed to be a sufficient cause for the purpose of this clause. 11B. Power to fix prices (1) The Controller may from time to time by notification in the Gazette of India fix the maximum prices at which any iron or steel may be sold (a) by a Producer, (b) by Stockholder including a Controlled Stockholder and (c) by any other person or class of persons. Such price or prices may differ for iron and steel obtainable from different sources and may include allowances for contribution to and payment from equalising freight, the concession rates payable to each pro ducer or class of producer under agreements entered into by the Controller with the producers from time to time. and any other disadvantages. (2) For the purpose of applying the prices notified under sub clause (1) the Controller may himself classify any iron and steel and may, if no appropriate price has been so notified, fix such price as he considers appropriate. (3)No producer or stockholder or other person shall sell, or offer to sell. (and no person shall acquire) any iron or steel at a price exceeding the maximum prices fixed under sub clause (1) or (2). Any Court trying a contravention of this Order may, without prejudice to any other sentence which it may pass, direct that any Iron and Steel in respect of which the Court is satisfied that this order has been contravened shall be forfeited to His Majesty. " The appellant has set out in para 4 of the statement of the case the procedure adopted for acquiring iron and/ 485 or steel products under the order. This is what is stated therein: "That Order was at all material times administered principally by the Iron and Steel Controller having his office in the city of Calcutta in the State of West Bengal who controlled the entire production and distribution of the iron and/or steel products. Any party desiring to acquire any product has to apply to the Controller. Upon processing such application or requisition entirely at his option and discretion, the Controller would pass such a requisition an to the Appellant for manufacture and/or despatch. The appellant has, upon receipt of the said requisition from the Controller to prepare a Works Order for the manufacture of the products concerned and to advise the Controller; and later on completion of the manufacture the appellant has to make the product conform to the requisition processed by the Controller and then deliver the requisite quantity in the requisite shape to the Indian State Railways siding maintained at the appellant 's own factory site, in Indranagar. in the suburbs of Jamshedpur, in the State of Bihar, and to advise the requisitionist as well as the Controller accordingly. " The correspondence relating to the delivery of steel goods in pursuance of an order placed by one K. Thiruvengadam Chetty & Co. has been produced by the appellant evidently to show the manner in which the transactions were effected. On December 20, 1952. Thiruvengadam Chetty and Co., wrote follows to the Controller: 'From Name K. Thiruvengadam Chetty and Company. Address Iron Merchants and Tata Scob Dealers 93, Rasappa Chetty Street. Madras 3. Date 20th December 1952. To The Iron and Steel Controller, 33, Netaji Subas Road, Calcutta. Through the Director of Controlled Commodities, Mount Road, Madras. Dear Sir, Please place on our behalf and at our risk and account our order on Registered Producers for material as per specification given below for delivery in such period ,as you can arrange. We confirm that this indent is placed 486 subject to the provisions of the Steel Price Schedule regarding prices, etc., and the terms and conditions of business (including payment) of the registered producers on whom the order is placed by you and that delivery or part/delivery from any such registered producer will be accepted by us. Please direct the registered producers concerned to send us a copy of the works order in confirmation of having booked our Indent. Ship to Madras Saltcotaurs. Send R. R. to Messrs. K. Thiruvengadam Chetty and Company, Iron Merchants, 93, Rasappa Chetty Street, Madras 3, through your Madras Office. Send original and duplicate invoice to Messrs. K. Thiruvengadam Chetty and Company, 93, Rasappa Chetty Street, Madras 3 through your Madras Office. Date of shipment desired: Ex stock as early as possible. Quantity Pieoes Section Lengths Complete description un tested of material indented (1) (2) (3) (4) CWT. 10. . 468 M.S. rounnd 1/4" 18 ' 13 B Category 5. . .493 " 3/16" 18 ' do 5. . .453 " 5/16" 18 ' do 20 (Twenty tons only) All P.T. free on rail Saltcotaurs and bundling charge account. Yours faithfully, (signed). . . by Partner, For K. Thiruvengadam Chetty and Company. " The Controller forwarded that letter to the appellant with the following remarks: "The above indent is forwarded to Indian Steel and Wire Products Limited, Tatanagar, for delivery in period 1/53 or subsequently in accordance with any general or special directions of the Iron and Steel Controller. " It may be noted that the Controller merely asked the appellant to deliver to K. Thiruvengadam Chetty and company the goods ordered "in accordance with any general or special directions of the Iron and Steel Controller. " Our attention was not invited to any general or special order issued by the controller excepting that 487 fixing the base price. It is clear that it was left to the appellant to supply the goods ordered at his convenience. On the basis of the, above communication a works order was issued by the appellant to the mill superintendent, a copy of which was sent to Thiruvengadam Chetty and Company. That order reads: "Works Order: RS/MAD/RM/15/53 of 23rd February 1953. Delivery: P.D.1/53. Ship to: Saltcotaurs Book to self. Freight: To pay. To The Mill Superintendent. Please supply the following to the Shipping Department, M.S. Rounds our usual commercial quality in bundles in stock lengths of 12/18 feet. TONS 1/4" diameter 10 at Rs. 486 per ton free on rail 3/16" 5 at Rs.493 Saltootaurs, plus bundling. 5/16" 5 at Rs. 453 Charge of Rs. 5 per ton. cc: South India Iron and Hardware Merchants Association, Armenian Street, Madras. Notice to consignees. Delivery must be taken within three days of the arrival of the train at destination, a certificate obtained for any wrongful delivery and a claim preferred against the Railway Company forthwith under advise to us. In the case of non arrival of any consignment advise should be given us as soon as a reasonable time for the journey has elapsed. 'All orders booked are subject to our terms of business and general understanding in force at the time of booking the orders and despatch of goods. ' 'All prices mentioned in the Works Orders are subject to revision, i.e., prices ruling at the time of despatch will be charged. '". The works order in question specifically says that 'all orders booked are subject to our terms of business and general understanding in force at the time of booking the orders and despatch of goods '. In fact as seen from the letter of Thiruvengadam Chetty and Co., dated August 31, 1953, the buyers were willing to change by mutual agreement the specifications of the goods to be supplied. This is what that letter says: 488 agreement the specifications of the goods to be supplied. This is what that letter says: "If 1/4" size is not ready, please despatch 3/8" size 20 tons as requested in our previous letter. Please treat this as very urgent. " From the material on record it is not possible to accept the contention of Mr. S.R. Bannerjee, learned counsel for the appellant that the dealings in question were controlled at every stage, leaving no room of concensus. From the records before us all that could be gathered is that the controller fixed the base price of the 'steel products and determined the buyers. In other respects, the parties were free to decide their own terms by consent. As seen from the correspondence referred to earlier, the controller allowed the appellant to supply the goods ordered either in the first quarter of the year 1953 or subsequently. In other words, the appellant could supply the goods in question at its convenience. It was open to the appellant to agree with its customers as to the date on which the goods were to be supplied. From the works order dated February 23, 1953, a copy of which was sent to one of the appellant 's customers, it is clear that all orders booked were subject to appellant 's terms of business and general understanding in force at the time of 'booking the orders and despatch of goods. It was also open to the appellant to fix the time and mode of payment of the price of the goods supplied. Therefore it would not be correct to contend that the transactions were completely regulated and controlled by the controller leaving no room for mutual assent. In his revision petition dealing with the question of transport of the goods supplied the appellant stated that "the transport of goods was if at all by virtue of an independent arrangement between the petitioner and the persons to whom the goods were supplied. . This admission clearly shows that the supplies in question were made partly on the basis of mutual assent. It was Mr. Bannerjee 's contention that for finding out the nature of the transaction we have only to look to the order and not to the documents produced in the case. According to him, the documents produced in this case do not fully disclose the nature of the transactions; the transactions in question had to be effected under the terms of the order; the order left no room for negotiation between the supplier and its customers and therefore we should conclude that the transactions in question are not sales. According to Mr. Bannerjee all supplies of iron and steel products could be made only in accordance with the directions given by the controller under cl. 10B of the order. That being so, he asserted there was no room for mutual assent. We do not think that this contention of Mr. Bannerjee is well founded. We are unable to agree with him that the iron and steel products could not have been supplied to any person except in pursuance of an order made by the controller under cl. 10B. We think that supplies by producers can be made in pursuance of an order of the controller under cl.5. We are not pursuaded 489 by Mr. Bannerjee 's contention that clauses 4 and 5 merely prohibit the prospective buyer and the intending seller from buying or selling without the sanction of the controller and that those provisions do not confer power on the controller to authorise a person to acquire and to permit a producer to sell. Those provisions, in our judgment, by implication confer power on the controller to issue the necessary authority to the buyer and the seller. This conclusion of ours is strengthened from the circumstance that cl.10B was not a part of the order till 1946. That provision was inserted in the order by notification No. 1(1) 1(530) A dated May 26, 1946, It is nobody 's case that the provisions of the order were incapable of being implemented till that date. The contention of Mr. Bannerjee that the controller derives his power to authorise the buyer to buy and the seller to sell exclusively under cl. 10B, suffers from another infirmity. Under cl. 10B, the controller gets power to require any person holding stock of iron and steel acquired by him otherwise than in accordance with the provisions of cl. 4 to sell the whole or part of the stock to such person or class of persons and on such terms and conditions as may be specified in the order. This clause does not empower the controller to issue the authority required under cl. 4. Our attention has not been invited to any provision in the order if we exclude from consideration cl. 4, under which the controller could have the power to authorise the buyer to buy iron and steel products. Therefore, it is obvious that he gets that power from cl. 4, itself. The language employed in clauses 4 and 5 is simi lar. If the controller gets power to authorise a buyer to buy iron and steel products under cl. 4, there is no reason why he should be held to have no power under cl. 5 to authorise a producer or stock holder to dispose of his stock of iron and steel products. Further, under cl. 10B, the controller can only require any person holding stock 'of iron and steel to sell the whole or part of his stock to such person or class of persons and on such terms and conditions as may be specified in the order. That clause does not empower him to direct any manufacturer to manufacture any steel or iron product and to dispose of the same to any person. In other words, a direction under cl. 10B can only be given to a person holding stock of iron and steel But under cl.5 he can authorise a producer or a stockholder to dispose of any iron or steel whether the same is in stock or not in accordance with the conditions contained or incorporated in a special or general written order issued by him. the instant case, as can be gathered from the correspondence already referred to, the order issued by the controller could be complied with only after manufacturing the required material. Hence, the order issued by the controller could not have been issued under cl. 10B. In this view of the matter it is not necessary for us to find out the true scope of cl. 10B. So far as cl.5 is concerned. admittedly, it does not require the controller to regulate or control every facet of a transaction between a producer and the person to whom he supplies iron and steel products. 490 It is true that in view of the order, the area within which there can be bargaining between a prospective buyer and an intending seller of steel products, is greatly reduced. Both of them have to conform to the requirements of the order and to comply with the terms and conditions contained in the order of the controller. Therefore they could negotiate only in respect of matters not controlled by the order or prescribed by the controller. It is true, in these circumstances, the doctrine of laisser faire can have only a limited ap. plication. That is naturally so. In certain quarters the validity of that doctrine is, seriously challenged. Under the existing economic compulsions all essential goods being in short supply in a welfare State like ours, social control of many of our economic activities is inevitable. That does not mean that there is no freedom to contract. The concept of freedom of contract has undergone a great deal of change even in those countries where it was considered as one of the basic economic requirements of a democratic life. Full freedom to contract was never there at any time. Law invariably imposed some restrictions on freedom to contract. But due to change in political outlook and as a result of economic compulsions, the freedom to contract is now being confined gradually to narrower and narrower limits. This aspect is vividly brought out in the 'Law of Contract ' by Cheshire and Fifoot (6th ed.) at p. 22. Dealing with the question of freedom to contract, the learned author observes. "As the nineteenth century waned it became ever clearer that private enterprise predicated some degree of economic equality if it was to operate without injustice. The very freedom to contract with its corollary, the freedom to compete, was merging into the freedom to combine; and in the last resort competition and combination were incompatible. Individualism was yielding to monopoly, where strange things might well be done in the name of liberty. The twentieth century has seen its progressive erosion on the one hand by opposed theory and on the other by conflicting practice. The background of the law, social, political and economic, has changed. Laisser faire as an ideal has been supplanted by 'social security '; and social security suggest status rather than contract. The State may thus compel persons to make contracts, as where, by a series of Road Traffic Acts from 1930 to 1960, a motorist must insure against third party risks , it may, as by the Rent Restriction Acts, prevent one party to a con tract from enforcing his rights under it; or it may empower a Tribunal either to reduce or to increase the rent payable under a l ease. In many instances a statute prescribes the contents of the contract. The Moneylenders Act, 1927, dictates the terms of any loan caught by its provisions; the Carriage of Goods by Sea Act, 1924, contains six pages of rules to be incorporated in every contract for 'the carriage of goods by sea from any port in Great Britain or Northern 491 Ireland to any other port; the Hire Purchase Act 1938 inserts into hire purchase contracts a number of terms which the parties are forbidden to exclude; successive Landlord and Tenants Act from 1927 to 1954 contain provisions expressed to apply 'notwithstanding any agreement to the contrary.". It would be incorrect to contend that because law imposes some restrictions on freedom to contract, there is no contract at all. So long as mutual assent is not completely excluded in any dealing, in law it is a contract. On the facts of this case for the reasons already mentioned, it is not possible to accept the contention of the ,learned counsel for the appellant that nothing was left to be decid ed by mutual assent. On the other hand, we agree with the learned Advocate General of Madras and Mr. Setalvad who appeared for. the State of West Bengal, the intervener, that the controller 's directions were confined to narrow limits and there were several matters, which the parties could decide by mutual assent. We shall now proceed to examine the principal decisions relied ' upon by the learned counsel for the appellant. In Kirkness vs John, Eudson & Co. Ltd.(1), the material facts were these: On January 1, 1948, railway wagons owned by John Hudson & Co., the tax payers '. then under requisition by the Minister of Transport. were acquired, by the British Transport Commission under section 29 of the Transport Act, 1947. Under section 30 of that Act, compensation became payable by the Commission to the tax payers. The amount paid as compen sation was substantially higher than the written down value of the wagons for income tax purposes and as the tax payers had received allowances under r. 6 of the rules applicable to Cases I and 11 of Sch. D to the Income Tax Act 1918, they were assessed under section 17 of the Income Tax Act 1945 to give effect to a balancing charge in respect of the excess of the original cost of the wagons over the written down value. The Court of Appeal held that the transfer of ' wagons under section 29 of the Transport Act 1947 was not a sale at common law, since it did not involve a mutual assent and a price;, it was an acquisition authorised by a statute and not a compulsory purchase. Therefore, the wagons were not machinery or plant which had been 'sold ' within the meaning of section 17(1) (a) of the Act of 1945 and no, balancing charge could be made under the sub section. This, decision was affirmed by the House of Lords by a majority. Speak in,, for the majority, Viscount Simonds observed: "My Lords, in my opinion the company 's wagons, were not sold, and it would be a grave misuse of language, to say that they were sold. To say of a man who has had his property taken from him against his will and been awarded compensation in the settlement of which be has had no voice, to say of such a man that he has sold his ' property appears to me to be as far from the truth as to, (1) 492 say of a man who has been deprived of his property without compensation that he has given ' it away. Alike in the ordinary use of language and in its legal concept a sale connotes the mutual assent of two parties. So far as the ordinary use of language is concerned it is difficult to avoid being dogmatic, but for my part I can only echo what Singleton L.J. said in his admirably clear judgment: 'What would anyone accustomed to the use of the words ,sale ' or 'sold ' answer? It seems to me that everyone must say 'Hudsons did not sell '. I am content to march in step with everyone and say 'Hudsons did not sell '. Nor is a different result reached by an attempt to analyse the legal concept. When Benjamin said in the passage quoted by Singleton and Birkett L. JJ. from his well known book on Sale, 2nd ed., p. 1, that 'by the common law a sale of personal property was usually termed a 'bargain and sale of goods ', he was by the use of the word 'bargain ' perhaps unconsciously emphasizing that the consensual relation which the word 'bargain ' imports is a necessary element in the concept ', ". From the facts set out above it is clear that the House of Lords was dealing with a compulsory acquisition and not sale. Therefore that decision is of no assistance to the appellant. In Messrs. New India Sugar Mills Ltd. vs Commissioner of Sales Tax, Bihar(1), this Court was called upon to consider whether ,certain transactions effected under the Sugar Control Order 1946 were sales. By a majority this Court held that they were not sales. The facts as found by the High Court and accepted by this Court ,are found at pp. 463 and 464 of the report. They are as follows: "The admitted course of dealing between the parties was that the Government of various consuming States used to intimate to the Sugar Controller of India from time to time their requirement of sugar, and similarly the factory owners used to send to the Sugar Controller of India statements of stock of sugar held by them ' On a consideration of the requisitions received from the various State Governments and also the statements of stock received from the various factories, the Sugar Controller used to make allotments. The allotment order was addressed by 'the Sugar Controller to the factory owner, direc ting him to supply sugar to the State Government in question in accordance with the despatch instructions received from the competent officer of the State Government. A copy of the :allotment order was simultaneously sent to the State Government concerned, on receipt of which the competent authority of the State Government sent to the factory concerned detailed instructions about the destination to (1) (1963) Supp. 2 S.C.R. 459. 493 which the sugar was to be despatched as also the quantities of sugar to be despatched to each place. In the case of the Madras Government it is admitted that it also laid down the procedure of payment, and the direction was that the draft should be sent to the State Bank and it should be drawn on Parry and Company or any other party which had been appointed as stockist importer on behalf of the Madras Government. " On the basis of those facts, the Court came to the conclusion that there was no room for mutual assent in those transactions. The facts of the present case are materially different from the facts of that case. Hence the ratio of that decision does not apply to the facts of the present case. Whether in a given case there was mutual assent or not is a matter to be decided on the facts of that case. In Calcutta Electric Supply Corporation Ltd. vs Commissioner of Income Tax, West Bengal(1). the facts were: The assessees were an electric supply company. During the war the government requisitioned an electricity generating plant of the assessees under r. 83(1) of the Defence of India Rules. The Government wanted to acquire that plant. As the assessees were not willing to sell the plant, they required the government to re examine the position and to rescind the order depriving them of the plant, but the government refused to re consider that decision. The amount which the assessees received as price or compensation for the plant exceeded the written down value of the plant by Rs. 3,27,840/ . The taxing authorities treated the excess as assessees ' profits under section 10(2) (vii) of the Indian, Income Tax Act 1922 and assessed that amount to tax. On a reference under section 66(1) of that Act, as to whether the amount in question can be considered as assessees ' profit, Harries, C. J. and Banerjee, J. held that the transaction by which the government acquired the plant could not be regarded as a sale within the meaning of section 10(2) (vii) and therefore the sum of Rs. 3,27,840/ was not taxable as profit under that provision. The Court further observed that the ordinary meaning of the word 'sale ' is a transaction entered into voluntarily between two persons known as buyer and seller by which the buyer acquires the property of the seller for an agreed consideration known as 'price '. The rule laid down in that decision is the same as that laid down by the House of Lords in Kirkness vs John Hudson & Co. Ltd.(2). In this case also the Court was dealing with a compulsory acquisition and not sale. In M/s. Cement Limited vs The State of Orissa(3), the Court was dealing with transactions effected under the Cement Control Order 1956. Therein the assessee company. a manufacturer of cement, was required to sell cement to the State Trading Corporation On payment of stipulated price. 3 of the Cement Control Order provided "Every producer shall sell (1)(a) the entire quantity of cement held in stock by him on the date of the commencement (1) , (2) (3) 12 S.T.C. 205. 494 of the order, and (b) the entire quantity of cement which may be produced by him during a period of two years from the date of commencement of this order to the Corporation and deliver the same to such person or persons as may be specified by the Corporation in this behalf from time to time, (2) notwithstanding any contract to the contrary, every producer shall dispose of cement lying in stock with him or produced by him, in accordance with the provisions of sub cl. (1) and shall not dispose of any cement in contravention thereof". 6(1) was to the effect that the price at which a producer may sell cement shall be specified in the schedule. The sales in this case were effected under the aforementioned clauses 3 and 6. It is under those circumstances that the Court came to the conclusion that the transactions in question were not sales but were in the nature of compulsory transfer of title. This case again is of no assistance to the appellant. The appellant 's learned counsel also read to us the decisions in North Adjai Coal Company (P) Ltd. vs Commercial Tax Officer and others(1) and section K. Roy vs Additional Member, Board of Revenue, West Bengal(2). On the facts of those cases, the Court came to the conclusion that the transactions in question were not sales. For the reasons already stated, we are unable to accept the contention that the transactions with which we are concerned in these cases are not sales. Out of the four elements mentioned earlier, three were admittedly established, namely, the parties were competent to contract, the property in the goods was transferred from the seller to the buyer, and price in money was paid. The only controversy was whether there was mutual assent. Our finding is that there was mutual assent in several respects. Hence, we agree with the High Court that the transactions before us are sales. That takes us to the next contention by the appellant i.e., that there was no material to conclude that the goods were delivered in the State of Madras for consumption. There is no dispute that the goods in question were delivered in the State of Madras. The dispute centres round the question whether it is proved that they were delivered for consumption in that State. The learned counsel for the appellant conceded that actual consumption within the State need not be proved. All that is required to be shown is that they were delivered for consumption in the State. The only question is whether there was any material to support the conclusion of the Sales Tax Appellate Tribunal, the final fact finding authority, that the goods were delivered in the Madras State for consumption in that State. The High Court rightly proceeded on the basis that "the burden is certainly upon the State to establish facts upon which a subject can be taxed under a financial enactment. " But it accepted the finding of the Sales Tax Appellate Tribunal that from the facts and circumstances established it is a reasonable inference to draw (1) 17 S.T.C. 514. (2) 18 S.T.C. 379. 495 that the goods were delivered for consumption in the Madras State. This aspect was dealt with by the Tribunal in para 1 1 of its order dated April 17, 1959. On that question this is what the Tribunal says: "It will be an onerous task to pursue the subsequent history of every inter State sale transactions to find out whether after successive change of hands the ' goods left the state; but it will be permissible in such cases to consider the broad pattern of the transaction, the surrounding circumstances and any other relevant date to draw a reasonable conclusion therefrom. In the cases before us, it is admitted that the sales were in pursuance of a scheme of internal distribution under the control order applicable to the whole of India. That there was necessity to draw up such a scheme, indicates that the goods were essential goods, that the supply was inadequate to meet the demand, and that unless there was control and restriction in distribution it was likely that the goods would pass into the black market, and would be sold at exorbitant rates. It is permissible inference that controlled stockists, registered stockists and registered dealers, who are the principal buyers from the appellants and who could be expected to have been given quotas in the scheme of controlled distribution, would be people expected to meet the local demand for the consumption of the controlled goods. It is also well known to people familiar with the operation of a controlled scheme and distribution of goods that quotas are given against proved demands, and that it is not part of the scheme of distribution to provide for goods sold in one State being exported to other states inside the Union territory because each State has got its own quota of goods and list of controlled stockists, registered stockists and so on. Therefore we infer from the analysis given of the transactions by the appellants, that the sales to various groups of purchasers, registered stockists and controlled ' stockists and so on are all intended to meet the local demands for steel products and not for re export. An analysis of the amount concerned in each of these transactions show that the quantity of steel involved would not be large in each individual case, a circumstance again point to the inference that the sales were intended to meet the requirements of the consumers in Madras State. In the case of sales to local Government departments, it is obvious that sales were intended for internal consumption and not reexports". Strangely enough, the High Court at the first instance thought that this finding was unsupported by evidence. Consequently it remanded the case back to the Tribunal for a fresh finding on that aspect 496 after giving both the parties opportunity to adduce further evidence oral and documentary. No fresh material was placed before the tribunal after the case was sent back to it. But on the basis of the material already on record, the tribunal again came to the very conclusion that it had come earlier. When the cases again came back to the High Court. that finding was accepted as correct. In our opinion, the High Court was not right in rejecting that finding at the first instance. The finding of the tribunal is a reasonable finding . The inferences drawn by it are reasonable inferences from the facts proved or admitted. It is reasonable to assume that the supplies of iron and steel products were being made to stockists in a State for consumption in that State. It may be, as found in this case, that a small portion of the supplies had gone out of the State. But that is not a relevant circumstance. What we have to see is whether the Supplies in question were made for consumption in the Madras State. On that question the finding of the Tribunal is conclusive. The contentions of the appellant that the findings of the tribunal about the quantum of the turnover were not based on any evidence, or that those findings were arrived at in violation of the principles of natural justice or that the decision of the High Court is perverse, are wholly untenable contentions. At the time of the hearing no reasons were advanced in support of those contentions. Hence those contentions do not merit any detailed examination. In the result, these appeals fail and they are dismissed with costs hearing fee, one set. Appeals dismissed.

IN-Abs

At the instance of the steel controller exercising powers under the Iron and Steel (Control of Production and Distribution) Order, 1941, the appellant supplied certain steel products to various persons in Madras State during the financial years 1953 54, 1954 55 and part of the financial year 1955 56. The State of Madras assessed the turnover of the appellant relating to those transactions to sales tax under the Madras General Sales Tax Act, the law in force at that time. The appellant contended before the authorities under the Sales Tax Act as well as the High Court that the transactions were not sales and therefore could not be taxed. The further contention was that there was no material to show that the deliveries were for consumption within the State of Madras so as to become taxable within the State. From the adverse decision of the High Court the appellant, by special leave, came to this Court. In support of the contention that the transactions were not sales it was urged that they were effected under the directions of the Iron and Steel Controller given under cl. 10B of the Order and that being so there was no mutual assent between the parties to the transactions. HELD:The authority of the controller to pass the orders in question came from cl. 5 of the order and not cl. 10B. The orders were in respect of goods not yet manufactured whereas under cl. 10B directions could be given only in respect of goods already in stock. So far as cl. 5 is concerned admittedly it does not require the controller to regulate or control every facet of a transaction between a producer and the person to whom he supplies iron and steel products. [488H: 489C H] In modern times the doctrine of laisser faire can have only a limited application. That does not mean that there is no freedom of contract. So long as mutual assent is not excluded in any dealing, in law it is a contract. On the facts of the present case it was not possible to accept the contention that nothing was left to be decided ' by mutual assent. On the other hand the controller 's directions were confined to narrow limits and there were several matters which the parties could decide by mutual consent. [49OB; 491B C] Kirkness vs John Hudson & Co. Ltd. ; M/s. New India Sugar Mills Ltd. vs Commissioner of Sales tax, Bihar, [1963] Supp. 2 S.C.R. 459; Calcutta Electric Supply Corporation Ltd. vs Commissioner of Income tax. West Bengal. ; M/s. Cement Ltd. vs State of Orissa, 12 S.T.C. 205; State of Madras vs Gannon Dunkerley, ; ; North Adjai Coal Company (P) Ltd. vs, Commercial Tax Officer & Ors. 17 S.T.C. 514 and section K. Roy vs Additional Member, Board of Revenue, West Bengal, 18 S.T.C. 379, refer red to. (ii)From the facts and circumstances the Tribunal rightly found ' that the supplies were made to stockists in the State of Madras for 480 consumption in that State. It may be that a small portion of the supplies had gone out of the State. But that was not a relevant circumstance. What had to be seen Was whether the supplies in question were made for consumption in the Madras State. On that question the finding of the Tribunal was conclusive. [496B C]

Appeal No. 853 of 1966 Appeal by special leave from the order dated November 16, 1964 of the Punjab High Court, Circuit Bench at Delhi in Civil Revision No. 531 D of 1961. M. C. Misra and M. V. Goswami. for the appellant. Harbans Singh, for the respondent The Judgment of the Court was delivered by Shah, J. The appellant Miss Sanyal has since 1942 been a tenant of a house in Western Extension Area, Karol Bagh, New Delhi, a part of which is used for a Girls ' School and the rest 537 for residential purposes. The respondent Gian Chand purchased the house from the owner by a sale deed dated September 19, 1956, and commenced an action in the Court of the Subordinate Judge 1st Class, Delhi, against the appellant for a decree in ejectment in respect of the house. Numerous grounds were set up in the plaint in support of the claim for a decree in ejectment, but the ground that the respondent required the house bona fide for his own resi dence alone need be considered in this appeal. The Trial Court dismissed the suit and the Senior Subordinate Judge, Delhi dismissed an appeal from that order holding that the house being let for purposes non residential as well as residential, a decree in ejectment could not be granted under section 13(1)(e) of the Delhi and Ajmer Rent Control Act, 1952. The High Court of Punjab (Delhi Bench) in a revision petition filed by the respondent held that on the finding recorded by the First Appellate Court a decree in ejectment limited to that portion of the house which was used for residential ' purposes by the tenant could be granted, and remanded the case to the Rent Controller "for demarcating those portions which were being used for residence" and to pass a decree in ejectment from those specified portions of the house. Against that order the tenant has appealed to this Court. It is necessary in the first instance to read the material pro visions of the Delhi & Ajmer Rent Control Act, 1952. The expression "premises" is defined in section 2(g) of the Act as "any building or part of a building which is, or is intended to be let separately for use as a residence or for commercial use or for any other purpose, and includes. " Section 13 of the Act which grants protection to tenants against eviction provides insofar as it is material : "(1). Notwithstanding anything to the contrary contained in any other law or any contract, no decree or order for the recovery of possession of any premises shall be passed by any Court in favour of the landlord against any tenant (including a tenant whose tenancy is terminated): Provided that nothing in this sub section shall apply to, any suit or other proceeding for such recovery of possession if the Court is satisfied (e)that the premises let for residential purposes are, required bona fide by the landlord who is the owner of such premises for occupation as a residence for himeslf or his family and that he has no other suitable accommodation; Explanation For the purposes of this clause, 'residential premises ' include any premises which having been let for use as a residence are, without the consent of the landlord used incidentally for commercial or other p urposes. " 538 it is clear that section .13(1) imposes a ban upon the exercise of the power of the Court to decree ejectment from premises occupied by a tenant The ban is removed in certain specific cases, and, one such case is where the premises having been let for residential purposes the landlord requires the premises bona fide for occupation as a residence for himself or the members of his family and he has no other suitable accommodation. It is plain that if the premises are not let for residential purposes, cl. (e) has no application, nor on the express terms of the statute does the clause apply where the letting is for purposes residential and nonresidential. In the present case the First Appellate Court held that the house was "let out for running a school and for residence". The High Court held that where there is a composite letting, it is open to the Court to disintegrate the contract of tenancy, and if, the landlord proves his case of bona fide requirement for his own occupation to pass a decree in enjectment limited to that part which "is being used" by the tenant for residential purposes. In so holding, in our judgment. the High Court erred. The jurisdiction 'of the Court may be exercised under section 13(1)(e) of the Act only when the, premises are let for residential purposes and not when the premises being let for composite purposes, are used in specific portions for purposes residential and non residential. The contract of tenancy is a single and indivisible contract, and in the absence of any statutory provision to that effect it is not open to the Court to divide it into two contracts one of letting for residential purposes, and the other for non residential purposes, and to grant relief under section 13(1)(e) of the Act limited to the portion of the demised property which "is being used" for residential purposes. The learned Judge purported to follow the decision of his (Court in Motilal and another vs Nanak Chand and others(1). It was held in that case that in cases governed by the Delhi & Ajmer Rent Control Act. 1952 "if the premises are in well defined parts and have been let out for residential and commercial purposes together, the rule as to eviction regarding the portion that has been used for residence will govern the residential portion of the same and similarly the rules of eviction regarding the commercial premises will govern the commercial portion of the same as laid down in the Act". In the view of the Court even if there be a single letting for purposes residential and non residential, if defined portions of the premises let are used for residential and commercial purposes "it must be held that the letting out was of the commercial part of the building separately for commercial purposes and of the residential part of the building for residential purposes". We find no warrant for that view either in the Delhi & Ajmer Rent Control Act or in the general law of landlord and (1) 539 tenant Attention of, the learned Judge in that case was invited to a judgment of this Court in Dr. Gopal Das Verma vs section K. Bhardwaj and another(1), but the Court distinguished that judgment on the ground that "the facts of that case disclosed that they had no applicability to the facts of the case" in hand. Now in Dr. Gopal Das Verma 's(1) case the premises in dispute were originally let for residential purposes, but later with the consent of the landlord a portion of the premises was used for non residential purposes. It was held by this Court that "where premises are let for residential purposes and it is shown that they are used by the tenant incidentally for commercial, professional or other purposes with the consent of the landlord, the landlord is not entitled to eject the tenant even if he proves that he needs the premises bona fide for his personal use, because the premises have by their user ceased, to be premises let for residential pur poses alone". It was, therefore, clearly ruled that if the premises originally let for residential purposes ceased, because of the con,sent of the landlord, to be premises let for residential purposes alone, the Court had no jurisdiction to decree ejectment on the grounds specified in section 13(1)(e) of the Act. The rule evolved by the Punjab High Court in Motilal 's case(1) is inconsistent with the judgment of this Court in Dr. Gopal Das Verma 's(1) case. If in respect of premises originally let for residential purposes a decree in ejectment cannot be passed on the grounds mentioned in section 13(1)(e), if subsequent to the letting, with the consent of the landlord the premises are used both for residential and nonresidential purposes, the bar against the jurisdiction of the Court would be more effective when the original letting was for purposes non residential as well as residential. It may be recalled that the condition of the applicability of section 13(1)(e) of the Act is letting of the premises for residential purposes. In this case the letting not being solely for residential purposes, in our judgment, the Court had no jurisdiction to pass the order appealed from. We may note that a Division Bench of the Punjab High Court in Kunwar Behari vs Smt. Vindhya Devi(1) has held in construing section 14(i)(3) of the Delhi Rent Control Act 59 of 1958, material part whereof is substantially in the same terms as section 13(1)(e) of the Delhi & Ajmer Rent Control Act, that "where the building let for residence is the entire premises it is not open to the Court to further sub divide the premises and order eviction with respect to a part thereof". In our view that judgment of the Punjab High Court was right on the fundamental ground that in the absence of a specific provision incorporated in the statute the Court has no power to break up the unity 'of the contract of letting and attribute incidents and obligations to a part of the subject matter of the contract which are not applicable to the rest. (1) ; (3) A.I.R. 1966 Punjab 481, (2) 540 In our view the order passed by the High Court of Punjab remanding the case for determination; of the residential portion of the house occupied by the appellant and for passing a decree in ejectment in respect of that part is without jurisdiction and must be set aside. The appeal is allowed and the decree passed by the Senior Subordinate Judge is restored. The appellant in this appeal did not appear before the High Court to assist the Court. In the circumstances there will be no order as to costs of this appeal.

IN-Abs

Under section 13(1)(e) of the Delhi and Ajmer Rent Control Act, 1952, the jurisdiction of the court to evict a tenant, may be exercised in favour of a landlord who wants the premises bona fide for his own residence, only when the premises are let out for residential purposes, and not, when the premises being let out for composite purposes, are used for residential and non residential purposes. The owner of a house let it out to the appellant for her residence and for running a school. The respondent purchased the house and filed a suit for eviction of the appellant. The suit was dismissed, but the High Court, in revision, held that a decree in ejectment limited to that portion of the house which was used for residential purposes by the tenant could be granted, and remanded the case for demarcating that portion and passing a decree. In appeal to this Court, HELD:The order of the High Court was without jurisdiction and should be set aside. [540A] The contract of tenancy was a single and indivisible contract, and, in the absence of any statutory provision to that effect, it was not open to the Court to divide it into two contracts one of letting out for residential purposes and the other for non residential purposes and to grant relief under the section in respect of that portion of the property which was being used for residential purposes. [538E] Dr. Gopal Das Verma vs section K. Bhardwaj & Anr. [1962] 2 S.C.R. 678, followed. Kunwar Behari vs Smt. Vindhya Devi, A.I.R. 1966 Punj. approved. Motilal and Anr. vs Nanak Chand & Anr. (1964) Punj. L.R. 179, overruled.

Appeal No. 1100 of 1966. Appeal from the judgment and order dated November 26, 1962 of the Assam High Court in Civil Rule No. 489 of 1961. section V. Gupte, Solicitor General and Naunit Lal, for the appellants. B. R. L. Iyengar, for the respondent. The Judgment of the Court was delivered by Bachawat, J. In 1954, the Assam Government took possession of the lands of the respondent and several other persons situated in the District of Kamrup for the construction of the Pagdalia embankment. In 1.955, the Assam Acquisition of Land for Flood Control and Prevention of Erosion Ordinance. 1955 (Assam Ordinance No. 2 of 1955) was passed enabling the State Government to acquire lands for works or other development measures in connection with flood control or prevention of erosion. The Ordinance was replaced by the Assam Acquisition of Land for Flood Control and Prevention of Erosion Act, 1955 (Assam Act No. 6 of 1955) which was passed on April 11, 1955 with the assent of the President. In April 1956, the State Government passed an order in writing acquiring the lands taken over in 1954 for the construction of the Pagdalia embankment under section 3 of Ordinance No. 2 of 1955. It seems that the reference to the Ordinance was a mistake and the acquisition was made under Act No. 6 of 1955. On April 26, 1956, the respondent was served with the notice of the acquisition. By an order dated September 10, 1959, the Deputy Commissioner, Kamrup acting on behalf of the State Government quashed the Order dated April 19, 1956 and directed that fresh acquisition proceedings under the Land Acquisition Act, 1894 should be started. Pursuant to this order, some of the lands required for the Pagdalia embankment were acquired under the Land Acquisition Act on payment of full compensation. A draft notification for the acquisition of the respondent 's lands under the Land Acquisition Act was sent by the Collector of Kamrup to the Assam Government for approval, but this proposal was eventually dropped. On May 27, 1960. the Assam Acquisition of Land for Flood Control and Prevention of Erosion (Validation) Act, 1959 (Assam Act No. 21 of 1960) was passed with the assent of the President. In November 1960. the State Government passed an order for the acquisition of the respondent 's lands under section 3 of the Assam Acquisition of Land for Flood Control and Prevention of Erosion Act. It was common case before the High Court that this acquisition was made under section 3 of Act No. 21 of 1960. On November 6, 1960, the Collector of Kamrup served a notice upon the respondent informing him of the acquisition order and asking him to submit his` claim for compensation. On September 30, 1961, the respondent 565 filed a writ petition in the Assam High Court asking for an order declaring Act No. 6 of 1955 and Act No. 21 of 1960 to be invalid and directing the State Government to forbear from giving effect to the notices issued thereunder. The High Court allowed the petition and issued a writ of mandamus.directing the State Government not to give effect to the notices issued under Act No. 21 of 1960. The present appeal has been filed under a certificate granted by the High Court. It is convenient at this stage to refer to the provisions of the impugned Acts. The preamble to Act No. 6 of 1955 shows that it was passed to make provision for the speedy acquisition of lands necessary for works or other development measures connection with flood or prevention of erosion. Section 3 gives power to the State Government to acquire land for those purposes by an order in writing. It is in these terms: "3. Power to acquire land If, in the opinion of the, State Government or such officer as is empowered in this behalf by the State Government it is necessary or expedient to acquire speedily any land for works or other development measures in connection with flood control or prevention of erosion, the State Government or such officer, may by, an order in writing, acquire any land stating the area and boundaries of the land. " Section 4 provides for the service and publication of the order of acquisition. ' Under section 5, on such service or publication the land vests in the State Government and may be taken possession of by the Collector. Section 46 as amended by Act No. 17 of 1959 which provides for compensation is in these terms: "6. Compensation The owner of the land which has vested in the Government under section 5(1) shall get compensation at the following rates, (1) for land including standing crops and trees, if any but excluding,building or structure, a sum not exceeding forty times the annual land revenue in case of Periodic Patta Land and fifteen times the annual land revenue in case of Annual Patta land: Provided that in case of revenue free land and land paying revenue at concessional rate the compensation will be assessed on the basis of the revenue of similar revenue paying land of the neighbourhood. In determining this sum, the Collector shall take the following into consideration: (a) The value of the land, as at the date of acquisition, (b) the, adverse effect on the value of the land due to. possible floods, on the land or danger of erosion of such land,, 566 (c) The benefit the owner is likely to derive in respect ,of his other lands in the area due to the control measures,, (d) The damage sustained by the person interested by reason of the taking of any standing crops or trees which may be on the land at the time of the Collector taking possession thereof (2) For building or structure, if any, a sum equivalent to the sale proceeds of the materials of the same plus 15 per cent thereof: Provided that if in lieu of this compensation the owner chooses to take away the materials the Collector shall allow him to do so within such time as specified by him and the cost of the shifting of the buildings or structures as the case may be, as may be approved by the Collector in the manner prescribed shall be borne by the Government, which cost however, shall not exceed 20 per cent of the value of the buildings or structures as the case may be as determined by the Collector. " Section 7 provides for payment of interim compensation. Under section 8, the Collector is required to make an award of the compensation allowable for the land and its apportionment among the persons interested in the land. Under section 9, on the application of any person aggrieved by the award, the Collector is required to refer the matter to the decision of an arbitrator appointed by the State Government. Section 10 empowers the Collector to use such force as may be necessary to evict any person from the land. Section II imposes. penalties on persons obstructing the taking of possession of the land by the Collector. Section 12 gives protection for action taken in good faith under the Act. Section 13 bars the jurisdiction of the Courts to question the legality of actions taken or orders made under the Act. Section 14 empowers, the State Government to make rules. Section 16 repeals Ordinance No. 2 of 1955. Ordinance No. 2 of 1955 contained similar provisions, and it is not necessary to repeat them. The preamble to Act No. 21 of 1960 shows that its object is to validate the acquisition of lands taken over for flood, control and prevention of erosion. Section 2 is in these terms: "2. (1) Notwithstanding anything contained in the Assam Acquisition of Land for Flood Control and Prevention of Erosion Act, 1955 (hereinafter referred to as the 'said Act '), any land taken over for the purposes of construction of embankments or carrying out works or other development measures in connection with flood control or prevention of erosion before this Act came into force, except where acquisition was made validly under any other law for the time being in force, shall be deemed 567 to have been validly acquired under the provisions of the 'said Act ' and the land shall absolutely vest and shall always be deemed to have been vested in the State Gov ernment from the date the land was actually taken possession of. (2) The Collector shall, as soon as may be, after the commencement of this Act, publish, by notification in the official Gazette, the description of land deemed to have been acquired under sub section (1). " Section 3 provides for payment of compensation. It is in these terms: "3. The Collector shall, within a period of six months from the date of commencement of this Act, assess the value of land deemed to have been acquired under section 2 in accordance with the principles contained in section 6 and make an award under Section 8 of the said Act respectively. The owner of the land shall further be entitled to an interest at the rate of 6 per cent per annum on the value of the award, for the period from the date the land was actually taken possession of to the date of the award. " Section 4 gives protection for action taken in good faith in connection with the land deemed to have been acquired under section 2.Section 5 provides: "Except as otherwise provided in this Act, the provisions of the said Act shall apply, mutatis mutandis in respect of the acquisition of the land deemed to have been acquired under Section 2 of this Act. " Section 6 provides that if any question arises as to the interpretation of the provisions of the Act or the applicability of any of its provisions in respect of any land the matter shall be referred to the Governor of Assam whose decision shall be final. The respondent challenged the validity of Act No. 6 of 1955 and Act No ' 21 of 1960 on the ground that they contravened articles 14 and 31(2) of the Constitution. The High Court held that (1) Act No. 6 of 1955 was violative of article 31(2) of the Constitution as it stood before the Constitution (Fourth Amendment) Act and was not protected by article 31A and (2) section 3 of Act No. 21 of 1960 declaring that certain lands would be deemed to be validly acquired under the earlier Act was not a law providing for acquisition of land independently of the earlier Act and as the earlier Act was invalid, the later Act fell with it. The High Court did not express any opinion on the question whether the two Acts were I violative of article 14. 568 Before us, counsel 'forthe appellants submitted that the two Acts were not violative of articles 14 and 31(2) and were, in, any event, protected ' by Arts,31A and 31(5)(b)(ii). The respondent was not represented by counsel, but 'we have had the advantage of the argument of Mr. lengar who assisted as amicus curiae '. The validity of both the Acts is in issue in this appeal. On the question of the validity of Act No. 6 of 1955 the following points arise for decision: (1) is the Act protected by article 31A;(2) is it protected by article 31(5)(b)(ii); (3) does it infringe article 31(2); (4) is it violative of article 14? With regard to the validity, of Act No. 21 of 1960, the following points arise for decision: (1) is it a law providing for acquisition of lands independently of Act No. 6 of 1955, and if not, is it valid? (2) If it is an independent piece of legislation, (a) is it protected by article 31A; (b) is it protected by article 31(5)(b)(ii); (c) does it contravene article 31(2). and (d)is it violative of article 14? Counsel for the appellants submitted that Act No. 6 of 1955 is a law providing for the acquisition of estates and is protected by article 31A(1)(a). We are unable to accept this contention. It is now well settled that article 31A(1)(a) envisages only laws concerning agrarian reform. In Kochuni 's case(1), the Court by a majority decision held that the Madras Marumakkathayam (Removal of Doubts) Act, 1955 which deprived a sthanee of his properties and vested them in the tarwad contravened article 19(1)(f) and was not protected by article 31A and that article 31A saved laws for agrarian reform only and did not enable the State to divest a proprietor of his estate and vest it in another without reference to any agrarian reform. In Ranjit Singh vs State of Punjab(2), the Court held that the East Punjab Holdings (Consolidation and Prevention of Fragmentation) Act, 1948 as amended by Act No. 27 of 1960 was protected by article 31A, as the general scheme of the Act was definitely agrarian reform and under its provisions something ancillary thereto in the interests of rural economy had to be un dertaken to give full effect to the reforms. In P. V. Mudaliar vs Special Deputy Collector, Madras(3), the Court held that the Land Acquisition (Madras Amendment) Act, 1961 providing for the acquisition of lands for housing scheme was not a law with reference: to any agrarian reform and was not protected by article 31A. In the light of these decisions, we must bold that Act No. 6 of 1955 is not a law concerning agrarian reform and is not protected by article 31A. The Act is a purely expropriatory measure. It provides for acquisition of lands both urban and agricultural for executing works in connection with flood control. or prevention of erosion A piece of. land acquired under the Act need not be an estate or part of an estate. It has no relation to agrarian reform, land tenures or the elimination of intermediaries. We may (1) , 897 905. (2) ; (3) ; 569 add that there is nothing ' on ', the record to, ' show that the respondent 's lands are estates or parts of estates. Counsel for the, appellants next submitted that nothing in article 31(2) can affect Act No, 6; of 1955 as it is a law for, the prevention of danger to life or property within the purview of article 31(5) (b)(ii) This, contention is somewhat novel, and requires close examination. Our attention has been drawn to certain opinions expressed in our earlier decisions that article 31(2) occupies, the field of eminent domain and article 31(5)(b)(ii) contains a saving clause with regard to the police powers of the State. The concepts of eminent domain and police powers are borrowed from: American law. The constitutional guarantee of the due process clause, in the United States Constitution requires that no private property shall be taken for public use without just compensation. In the exercise of its police power, the State may pass regulations designed to ensure public health, public morals, public safety as also public convenience or general prosperity, see Chicago, Burlington & Quincy Railway Company vs People of the State of Illinois(1). In the exercise of its eminent domain power, the State may take any property from the owner and may appropriate it for public purposes The police and eminent domain powers are essentially distinct. Under the police power many restrictions may be imposed and the property may even be destroyed without compensation being given, whereas under the power of eminent domain, the property may be appropriated to public use on payment of compensation only. The distinction between the two powers is brought out clearly in the following passage in American Jurisprudence, 2nd End, Vol. 16, article 301,. p. 592: "The state, under the police power, cannot in any manner actually take and appropriate property for public use without compensation, for such action is repugnant to the constitutional guaranty that where private property is appropriated for public use, the owner shall receive reasonable compensation. Thus, there is a vital difference, which is recognised by the authorities, between an act passed with exclusive reference to the police power of the state, without any purpose to take and apply property to public uses, and an act which not only declares the existence of a nuisance created by the condition of particular property, but in addition, and as the best means of accomplishing the end in view, authorizes the same property to be appropriated by the public. " In Sweet v. Rechel(2) the validity of an Act to enable the City of Boston to abate a nuisance existing therein and for the preservation of the public health in the City by improving the drainage of (1) ; :50 L.Ed. 596, 609. (2) ; L.Ed. 570 the territory was sustained on the ground that the Act provided for payment of just compensation. The Court pointed out that private property the condition of which was such as to endanger the public health could not be legally taken by the Commonwealth and appropriated to public use without reasonable compensation to the owner. In Delaware L. & W. R. Co. vs Morristown(1) an Ordinance establishing a public hack stand on private property without payment of compensation was struck down on the ground that assuming that the creation of the public hack stand would be a proper exercise of the police power it did not follow that the due process clause would not safeguard to the owner just compen sation for the use of the property. In United States vs Caltex (Philippines)(2), the Court held that no compensation was payable by the United States for the destruction by its retreating army of private property to prevent its falling into enemy hands. But the Court recognised that compensation would be payable for the army 's requisitioning of private property for its subsequent use. The Court said that in times of imminent peril such as when fire threatened a whole community the sovereign could, with immunity, destroy the property of a few that the property of many and the lives of many more could be saved. Indeed, it would be folly not to destroy some building so that an entire town may be saved from the conflagration, as will appear from the following historic incident referred to in Respublica vs Sparhawk(3): "We find, indeed, a memorable instance of folly recorded in the 3 vol. of Clarendon 's History, where it is mentioned,, that the Lord Mayor of London in 1666. when the city was on fire, would not give directions for, or consent to, the pulling down forty wooden houses or to removing the furniture, etc. belonging to the lawyers of the temple, then on the circuit, for fear he should be answerable for a trespass; and in consequence of this conduct, half that great city was burnt. " If article 31(5)(b)(ii) is regarded as a saving clause with regard to the police power of the State, it is clear that under a law designed to promote public health or to prevent danger to life or property the State may in cases of imminent peril destroy or impair the value of private property without any obligation to pay compensation, but it cannot arrogate to itself the power to acquire and appropriate to its own use private property without payment of compensation. We shall now examine our earlier decisions in The State of West Bengal vs Subodh Gopal Bose and Other(1) and Dwarkadas Shrinivas of Bombay vs The SholapurSpinning and Weaving Co. (1) ; L.Ed. 523, 527. (2) ; L.Ed. 157. (3) , 363: (4) ; 571 Pd., and others(1), where reference was made to the concepts of ' eminent domain and police power in relation to cls. (1) and (2) of article 31 before the Constitution (Fourth Amendment) Act and article 31(5)(b)(ii). The decision of Patanjali Sastri C. J., Mahajan, Bose, Ghulam Hasan, JJ. in those two cases (Das and Jagannadhadas, JJ. dissenting) was that cls. (1) and (2) of article 31 were not mutually exclusive in scope but should be read together and understood as dealing with the same subject, namely, the protection of the right to property by means of limitations on the State power to take away private property, the deprivation contemplated ' by cl. (1) being no other than the acquisition or taking possession of the property referred to in cl. The effect of the majority, decision was that a substantial abridgment of the rights of ownership which withheld the property from the possession and enjoyment of the owner or seriously impaired its use or enjoyment by him or materially reduced its value amounted to a taking of property within the purview of article 31(2). On the subject of eminent. domain and police power in relation to cls. (1), (2) and (5)(b)(ii) the learned Judges expressed different opinions. Patanjali Sastri, C. J. at pp. 605, 606, 610, 612 and 614 said that (a) the power of ' eminent domain was the subject of express grant in Entry No. 33: of List I and Entry No. 36 of List II and article 31 defined the limitation on the exercise of this power, (b) cl. (5)(b)(ii) of article 31 showed that but for that clause compensation would be payable even for the exercise of the State 's power in an emergency to, demolish an intervening building to prevent a conflagration from spreading and it was because of that clause that such destruction did not entail liability to pay compensation, (c) the American doctrine of police power as a distinct and specific legislative power was not recognised in our Constitution, (d) the power of ' social control and regulation was implicit in the entire legislative field, it was not conferred by cl. (1) nor did cl. (5) define it exhaustively in relation to property rights. Mahajan, J. at pp. 695 to697 and 700 said that (a) cl. (2) defined the powers of the legislature in the field of eminent domain and (b) cl. (5)(b)(ii) was$ not inserted by way of abundant caution but was a comprehensivesaving clause defining the classes of deprivation of property without payment of compensation, as for instance in cases of emergency in order to prevent a fire from spreading. Bose, J. at p. 734 deprecated the use of doubtful words like police power and eminent domain in construing our Constitution. Das, J at pp. 638, 643, 645, 647 650 said, that (a) cl. (1) dealt with police power and article 31(2) dealt with the power of eminent domain, (b) cl. (5)(b)(ii) did not exhaustively define the police power; it was inserted by way of abundant caution to except from the purview of cl. (2) some instances of the exercise of police power superficially resembling the exercise of the power of eminent domain and (1) ; 572 (c) acquisition of land for any ' of the purposes mentioned in cl.the (5)(b)(ii) 'was 'precisely the kind of acquisition which was always made on payment of compensation under the Land Acquisition. Act, 1894 and a construction of cl. (5)(b)(ii) which took out of article 31 (2) a I law made 'really and essentially in exercise of the power of eminent domain could not readily be accepted as cogent or correct. Jagannadhadas, J. at pp. 669, 670 and 672 said that (a) cl. (1) was not a declaration of the American doctrine of police power nor had it reference only to the power of eminent domain,(b) with respect to matters enumerated in the legislative lists the legislature could exercise every power including the police power if it was necessary to import this concept in so far as it was not provided in articles 19(2) to 19(6), 31(5)(b)(ii) or other specific provisions, (c) an acquisition under cl. (2) did not necessarily involve transfer of title or possession and this was indicated by cl. (5)(b)(ii) which more often than not would cover cases of destruction of property. From the 'Several conflicting opinions expressed in those two cases it is difficult to say that the Court or a majority of Judges held that cl. (5)(b)(ii) saved the police power of the State in the ,strict technical sense as understood in American law. All we need say is that if cl. (5)(b)(ii) is construed as saving the police power of the State, such police power must be exercised subject to the constitutional restriction as evolved by the American judicial decisions that private property cannot be appropriated, to public use without payment of compensation. But we prefer to construe article 1 an cl. (5)(b)(ii) uninfluenced by the American concepts of eminent domain and police power. We shall endeavour to ascertain the meaning of article 31(5)(b) (ii) in the context of article 31 as it stood before the Constitution (Fourth Amendment) Act and thereafter in the context of article 31 as it stands after the Fourth Amendment. Article 31 as it stood before the Constitution (Fourth Amendment) Act was in these ,terms: "31(1). No person shall be deprived of his property save by authority of law. (2) No property, movable or immovable, including any interest in, or in any company owning, any commercial of industrial undertaking shall be taken possession of or acquired for public purposes under any law authorising the taking of such possession or such acquisition, unless the law provides for compensation for the property taken possession of or acquired and either fixes the amount of the compensation, or specifies the principles on which. and the manner in which, the compensation is to be determined and given. 573 (3)No such law as is referred to in clause (2) made by the legislature of a State shall have effect unless such law, having been reserved for the consideration of the President, has received his assent. (4) If any Bill pending at the commencement of this Constitution in the Legislature of a State has, after it has, been passed by such Legislature, been reserved for the. consideration of the President and has received his assent, then, notwithstanding anything in this Constitution, the law so assented to shall not be called in question in any court on the ground that it contravenes the provisions of clause (2). (5) Nothing in clause (2) shall affect (a) the provisions of any existing law other than a law to which the provisions of clause (6) apply, or (b) the provisions of any law which the State may hereafter make (i) for the purpose of imposing or levying any tax or penalty, or (ii) for the promotion of public health or the prevention of danger to life or property, or (iii) in pursuance of any agreement entered into between the Government of the Dominion of India or the Government of India and the Government of any other country, or otherwise, with respect to property declared by law to be evacuee property. (6) Any law of the State enacted not more than eighteen months before the commencement of this Constitution may within three months from such commencement be submitted to the President for his certification; and thereupon, if the President by public notification so certifies, it shall not be called in question in any court on the ground that it contravenes the provisions of clause (2) of this article or has contravened the provisions of sub section (2) of section 209 of the Government of India Act, 1935. " Clauses (1) and (2) of article 31 were limitations on the executive and the legislative powers of the State to deprive any person of his property. Clause (2) imposed the limitation that the law authorising the taking of property for public purposes must provide for compensation for the property. Clause (3) imposed the additional limitation that if such a law was made by the legislature of a State. it must have received the assent of the President. Clauses (4) and (6) saved certain laws from the operation of cl. (2) and those laws could not be called in question in any Court on 574 the ground that it contravened cl. Clause (5)(a) provided that nothing in cl. (2) would affect any existing law other than a law to which the provisions of cl. (6) applied. Under cls. (5)(b)(i) .and (5)(b)(iii) nothing in cl. (2) would affect the provisions of laws .made for the purpose of imposing or levying any tax or penalty :and certain laws with respect to evacuee property. We are not concerned in this appeal with the interpretation of cls. (4), (5)(a), (5)(b)(i), (5)(b)(iii) and 6. We express no opinion on their interpretation. Clause (5)(b)(ii) provided that nothing in cl. (2) would .affect the provisions of any law which the State might make after the commencement of the Constitution "for the promotion of public health or the prevention of danger to life or property. " It is to be noticed that cl. (5)(b)(ii) saved laws for the promotion of public health or the prevention of danger to life or property. It did not save laws for the acquisition of property. We are satisfied that cl. (5)(b)(ii) was not intended to except laws for the acquisition of property, from the purview of cl. Any substantial abridgment of the rights of ownership including destruction and injurious affection of the property and taking away its possession and enjoyment from the owner amounted to a taking of property within the purview of cl. (2) as interpreted in Subodh Gopal 's case(1) and Dwarkadas Shrinivas 's case(1). A law for promotion of public health or for prevention of danger to life or property sometimes has to provide for destruction and impairment of value of private property and the taking of temporary possession of the property by the State. It may be necessary to destroy contaminated food or to burn plague infested buildings for the promotion of public health, to pull down a building to prevent a fire from spreading and consuming other buildings in the locality, to demolish a building in a ruinous condition endangering the safety of its occupants and other persons in its vicinity. The destruction and the temporary taking of property for such purposes, though necessary for promoting public health or preventing danger to life or property, amounted to taking of property within cl. But for cl. (5)(b)(ii), a law authorising such a taking of property would have been in valid unless it provided for compensation. Clause (5)(b)(ii) saved such laws from the operation of cl. (2) and those laws were not invalid because they authorised such a taking without payment ' of compensation. A law authorising the abatement of a public menace by destroying or taking temporary possession of private properties if the peril cannot be abated in some other way can be regarded as a law for promotion of public health or prevention of danger to life or property within the purview of cl. (5)(b)(ii). But it is not possible to say that a law for permanent acquisition of property is such a law. The object of the acquisition may be the ,opening of a public park for the improvement of public health or (1) ; (2) ; 575 the erection of an embankment to prevent danger to life or property from flood,. Whatever the object of the acquisition may be, the acquired property belongs to the State. The State is free to deal with the property as it chooses after the acquisition. It may close the public park and use the property for other purposes. The river may recede or change its course so that it may no longer be necessary to keep the embankment and the State may then sell the property and appropriate the sale proceeds to its own use. Clause (5)(b)(ii) was intended to be an exception to cl. (2) and must be ,strictly construed. Acquisitions of property for the opening of a public park or for the erection of dams and embankments were always made under the Land Acquisition Act, and it could not have been intended that such acquisitions could be made under laws coming within the purview of cl. (5)(b)(ii) without payment (of compensation. We have come to the conclusion that cl. (5)(b) (ii) did not protect laws for acquisition of properties from the (operation of cl. (2) as it stood before the Constitution (Fourth Amendment) Act. The Constitution (Fourth Amendment) Act amended cl. (2) and inserted a new clause (2A). The amended cl. (2) and the new cl. (2A) are in these terms: "31(2). No property shall be compulsorily acquired or requisitioned save for a public purpose and save by authority of a law which provides for compensation for the property so acquired or requisitioned and either fixes the amount of the compensation or speci fies the principles on which, and the manner in which, the compensation is to be determined and given; and no such law shall be called in question in any, court on the ground that the compensation provided by that law is not adequate. Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or Controlled by the State, it shall not be deemed to provide for the compulsory acquisition or requisitioning of property, notwithstanding that it deprives any person of his property. " The effect of the Constitution (Fourth Amendment) Act is that a deprivation of property short of transfer of the ownership or the right to possession of any property to the State is not within the purview of cl. A law made after the Constitution (Fourth Amendment) Act providing for destruction of property or impairment of its value is not invalid because it does not provide for payment of compensation. But we have seen that in the context of article 31 as it stood before the Constitution (Fourth Amendment) Act, cl. (5)(b)(ii) was not intended to save laws for the acquisition of property from the operation of cl. The Fourth Amendment did not amend cl. (5)(b)(ii) nor change its original meaning. Cases of destruction of property or impairment 576 of its value are no longer within the purview of cl. (2) and it is. , not necessary to invoke cl. (5)(b)(ii) to save laws made after the Fourth Amendment providing for such forms of taking of property. But even now, cl. (5)(b)(ii) is not wholly otiose. Clause (5)(b)(ii) will protect laws providing for requisitioning or temporary occupation of property strictly necessary for promotion of public health or prevention of danger to life or property. The law may authorise the State to requisition the property temporarily for abating the public menace without payment of compensation if the menace cannot be abated in some other recognised way. We hold that a law for acquisition of property is not protected by cl. (5)(b)(ii) of article 31 as it now stands after the Constitution (Fourth Amendment) Act. In our opinion, Act No. 6 of 1955 is a law for acquisition of property and not a law for preventing danger to life or property and is not protected by cl. (5)(b)(ii) from the operation of cl. The Assam Embankment and Drainage Act, 1941 (Assam Act No. 7 of 1941) which is in force in the State of Assam shows that flood control, drainage and construction of embankments are possible without acquisition of private property. The Act recognises both private and public embankments. Section 4 of the Act authorises the Embankment Officer to remove obstructions endangering the stability of embankments and drains, to remove and alter embankments and drains endangering safety to any town or village or likely to cause loss of property and to construct embankments and drains the absence of which endangers the safety of any town or village. In case of grave and imminent danger to life or property he may forthwith commence the execution of any such work. Sections 7 to 9 contemplate the preparation and execution of schemes for improvement of drains, embankments and flood protection. The scheme may provide for the charge of an annual rate on all lands benefited by the scheme. Section 10 provides for payment of compensation for any loss arising inter alia from the carrying out of works under sections 4 and 9. This Act is in operation in Assam for the last 25 years and necessary measures for flood control and construction of embankments have been carried out under this Act. This Act shows that it is possible for the State to take all necessary measures for flood control and construction of embankments without arrogating to itself the power of acquiring private property without payment of adequate compensation. It follows that Act No. 6 of 1955 is not protected from the operation of article 31(2) either by article 31A or by article 31(5)(b)(ii). The next question is whether Act No. 6 of 1955 contravenes article 31(2). The constitutionality of the Act must be judged by article 31(2) as it stood before the Constitution (Fourth Amendment) Act. In The State of West Bengal vs Bela Banerjee and Others(1) (1) ; 577 the Court held that while the legislature had a discretionary power of laying down the principles which should govern the determination of the amount to be given to the owner for the property appropriated, such principles must ensure that what is determined as payable was a just equivalent of what the owner was deprived of and that subject to this basic requirement of full indemnification for the expropriated owner, the Constitution allowed free play to the legislative 'judgment as to what principles should guide the determination of the amount payable. The Court decided that West Bengal Land Development and Planning Act, 1948 passed primarily for the settlement of immigrants from East Bengal fixing 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 which might be made many years later offended article 31(2) as it did not ensure payment of the just equivalent of the land. The Act was not saved from the operation of article 31(2) by article 31(5) as it was not certified by the President as provided for by article 31(6). In West Ramnad Electric Distribution Co. Ltd., vs State of Madras,(1), the Court rejected the contention that the Madras Electricity Supply Undertakings (Acquisi tion) Act No. 19 of 1954 was violative of article 31(2), as the appellant did not furnish any material to show that the compensation payable under the Act was not a just equivalent of the property acquired. In State of Madras vs D. Namasivaya Mudaliar(2), the Court held that the Madras Lignite (Acquisition of Land) Act No. 21 of 1953 providing for assessment of compensation on the basis of the market value of the land prevailing on August 28, 1947 and not on the date on which notification was issued under section 4(1) of the Land Acquisition Act and providing that in awarding compensation the value of non agricultural improvements com menced since April 28, 1967 would not be taken into consideration did not ensure payment of just equivalent of the land appropriated and was in contravention of article 31(2). Now, Act No. 6 of 1955 by section 6(1) provides that the owner of the land shall get compensation for land including standing crops and trees, if any, but excluding buildings or structure a sum not exceeding 40 times the annual land revenue in case of periodic patta land and 15 times the annual land revenue in case of annual patta land. The res pondent in his petition definitely charged that the compensation payable under the Act was illusory and inadequate. The State of Assam made no attempt to show that a multiple of land revenue payable for the land is a just equivalent of or has any relation to the market value of the land on the date of the acquisition. It is well known that since the assessment of land revenue in Assam many years ago the market value of lands has increased by leaps ,and bounds. The latter part of section 6(1) makes a pretence of saying that in determining the compensation the Collector shall take (1) ; (2) ; L/J(N)6SCI 11 578 into account the value of the land as at the date of the acquisition and other factors, but this is meaningless considering that under the first part of section 6(1) the compensation cannot exceed a fixed multiple of the annual land revenue. Section 6(2) provides that the owner shall get compensation for the building or structure, if any, a sum equivalent to the sale proceeds of the materials of the same plus 15 per cent thereof. The sale proceeds of the materials cannot be regarded as a just equivalent of the value of the building as it stood at the time of the acquisition. In our opinion. Act No. 6 of 1955 does not ensure payment of a just equivalent of the land appropriated and is violative of article 31(2) as it stood before the Fourth Amendment. The next question is whether Act No. 6 of 1955 offends article 14 of the Constitution. The Land Acquisition Act, 1894 is in force in the State of Assam and under it private property may be acquired for any public purpose on payment of market value of the land at the date of the publication of the notification under section 4(1). Section 17 of the Act makes special provision for the speedy acquisition of waste or arable land in cases of emergency. While that Act is in force in the State of Assam, the State Legislature passed Act No. 6 of 1955 providing for speedy acquisition ,of land for the public purpose of carrying out works or other deve lopment measures in connection with flood control or prevention of erosion on payment of compensation assessed on the basis of a multiple of the annual land revenue. The result is that in the State ,of Assam some land may be taken under Assam Act No. 6 of 1955 for the purpose of works and other measures in connection with flood control and prevention of erosion on payment of nominal compensation while an adjoining land may be taken for other public purposes under the Land Acquisition Act on payment of adequate compensation. The question is whether this differential treatment of land acquired under the two Acts is permissible under article 14. The constitutional guarantee of article 14 requires that all persons shall be treated alike in like circumstances and conditions. The Article permits reasonable classification and differential treatment based on substantial differences having reasonable relation to the objects sought to be achieved. It is not possible to hold that the differential treatment of the lands acquired under the Land Acquisition Act, 1894 and those acquired under 'Assam Act No. 6 of 1955 has any reasonable relation to the object of acquisition by the State. In P. V. Mudaliar vs Dy. Collector(1), the Court held that the Land Acquisition (Madras Amendment) Act, 1961 providing for the acquisition of lands for housing schemes and laying down principles for fixing compensation different from those prescribed in the Land Acquisition Act was violative of article 14. Discrimination between persons whose lands were acquired under housing schemes and those whose lands were ;acquired for other purposes could not be sustained, under article 14. ; 579 Although it was contended that the amending Act was passed to meet an urgent demand to clear up slums, the Act as finally evolved was not confined to any such problem and land could be acquired under the amending Act for housing schemes and other objectives. The Court said at p. 634: Out of adjacent lands of the same quality and value, one may be acquired for a housing scheme under the Amending Act and the other for a hospital under the principal Act; out of two adjacent plots belonging to the same individual and of the same quality and value. one may be acquired under the principal Act and the other under the Amending Act. From whatever aspect the matter is looked at. the alleged differences have no I reasonable relation to the object sought to be achieved. " In our opinion, the classification of land required for works and other measures in connection with flood control and prevention of erosion and land required for other public purposes has no reasonable relation to the object sought to be achieved. viz., acquisition of the land by the State. In either case, the owner loses his land and in his place, the State becomes the owner. There is unjust discrimination between owners of land similarly situated by the mere accident of some land being required for purposes mentioned in Assam Act No. 6 of 1955 and some land being required for other purposes. We hold that Assam Act No. 6 of 1955 is violative of article 14. On behalf of the respondent it was contended that Act No. 6 of 1955 is violative of article 14 on the additional ground that it is open to the State to acquire property in connection with flood control or prevention of erosion either under the Land Acquisition Act or under Assam Act No. 6 of 1955 at its sweet will. There is considerable force in this contention. The record shows that even after the passing of Act No. 6 of 1955 the State of Assam has acquired other lands for erecting embankments in connection with flood control and has paid full compensation to owners of those lands under the Land Acquisition Act. However, Counsel for the appellants con tends that in view of article 254(2) of the Constitution Assam Act No. 6 of 1955 supersedes the Land Acquisition Act, 1894 in so far as the later Act enables acquisition of property for the purposes of works and other development measures in connection with flood control or prevention of erosion. We have not 'heard full arguments on this new contention realised by counsel for the appellants. We, therefore, do not propose to decide it or to strike down Act No. 6 of 1955 on the ground that the State may acquire lands at its option either under Assam Act No. 6 of 1955 or under the Land Acquisition Act. For the purposes of this case it is sufficient to say that Assam Act No. 6 of 1955 is violative of article 14 on The ground mentioned in the earlier paragraph. 580 it follows that Assam Act No. 6 of 1955 is violative of articles 14 and 31(2) of the Constitution and must be struck down. The next question is whether Assam Act No. 21 of 1960 is valid. This Act provides that any land taken over for the purposes of construction of embankments or carrying out works or other development measures in connection with flood control or prevention of erosion before it came into force shall be deemed to have been validly acquired under the provisions of Assam Act No. 6 of 1955 unless the acquisition was validly made under any other law for the time being in force. By force of Assam Act No. 21 of 1960 the land so taken over is deemed to be. acquired under Assam Act No. 6 of 1955. As Assam Act No. 6 of 1955 is invalid, the deemed acquisition under Assam Act No. 21 of 1960 is equally invalid. The State legislature has no power to enact that an acquisition made under a constitutionally invalid Act is valid. Counsel submitted that Assam Act No. 21 of 1960 is a piece of legislation providing for acquisition of land independently of the earlier Act and the validity of this Act must be judged by reference to article 31(2) as it stood after the Constitution (Fourth Amendment) Act. We are unable to accept this contention. In support of his contention. counsel drew our attention to the provisions of sections 2, 3, 4 and 5. Under section 2, the land deemed to be acquired under the earlier Act vests and is deemed to have vested in the State Government from the date the land was actually taken possession of. Under section 3, the Collector is enjoined to assess the value of the land deemed to have been acquired under section 2 in accordance with the principles laid down in section 6 and to make an award under section 8 of the earlier Act and the owner is entitled to claim certain interest. Section 4 protects action taken in good faith in connection with the land deemed to have been acquired under section 2. Under section 5, except as otherwise provided under the Act, the provisions of the earlier Act shall apply mutatis mutandis in respect of the acquisition of land deemed to have been acquired under section 2. It is to be seen that the core of Assam Act No. 21 of 1960 is the deeming provision of section 2 under which certain lands are deemed to be acquired under the earlier Act. As this deeming provision is invalid, all the other ancillary provisions fall to the ground along with it. The later Act is entirely dependent upon the continuing existence and validity of the earlier Act. As the earlier Act is unconstitutional and has no legal existence, the provisions of Act No. 21 of 196O are incapable of enforcement and are invalid. In view of this conclusion, the other questions with regard to the validity of Act No. 21 of 1960 do not arise. The Assam High Court rightly held that the notices of acquisition issued under Assam Act No. 21 of 1960 are invalid. In the result, the appeal. fails and is dismissed. V.P.S. Appeal dismissed.

IN-Abs

The Assam Acquisition of Land for Flood Control and Prevention of Erosion Act, 1955, was passed before the Constitution was amended by the Constitution (Fourth Amendment) Act. As the Act did not apply to the lands which were taken possession of before it came into force, the Assam Acquisition of Land for Flood Control and Prevention of Erosion (Validation) Act, 1959, Act XXI of 1960 was pass ed, validating the acquisition of lands of which such possession had been taken. Under section 2 of the 1960 Act any land taken over for the construction of embankments before the 1955 Act came into force unless the acquisition was validly made under any other law for the time being in force shall be deemed to have been validity acquired under the 1955 Act and is deemed to have vested in the State Government from the date the land was actually taken possession of; and compensation was payable in accordance with the principles in section 6 of the 1955 Act. Under section 6(1) of the 1955 Act the owner of the land shall get compensation for land including standing crops and trees, if any, but excluding buildings or structures, a sum not. exceeding 40 times the annual land revenue in case of periodic patta land and 15 times the annual land revenue in case of annual patta land. Under section 6(2) the owner shall get compensation for the building or structure, if any, a sum equivalent to the sale proceeds of the materials plus fifteen per cent thereof. In 1954. the Assam Government took possession of the lands of the respondent for the construction of an embankment and the respondent was asked to submit his claim for compensation under the 1955 and 1960 Acts after the 1960 Act was passed. He then filed a writ petition challenging the validity of both the Acts and prayed for a direction prohibiting the State Government from taking action under those Acts as the compensation payable was illusory and in adequate. The High Court held that the 1955 Act was violative of article 31(2), as it stood before the Fourth Amendment Act, that it was not protected by article 31A, and that, the 1960 Act was not independent of the 1955 Act and fell with it. In appeal by the State Government to this Court the appellant submitted that the two Acts were not violative of articles 14 and 31(2) and were in any event protected by articles 31A and 31 (5) (b) (ii). HELD: (1) The constitutional validity of the 1955 Act must be judged by article 31(2) as it stood before the Fourth Amendment Act. Since the assessment of land. revenue in Assam many years ago. the market value of the lands has increased by leaps and bounds. Under s, 6(1) of the Act, the Collector, in determining the compensation, L/J(N)6SCI 10 562 should take into account the value of the land as at the date of the acquisition and other factors, but this is meaningless because under the first part of section 6(1) the compensation cannot exceed a fixed multiple of the annual land revenue. The State made no attempt to show that a multiple of land revenue payable for the land is a just equivalent of or has any relation to the market value of the land ,on the date of the acquisition. The sale proceeds under section 6(2) can not be regarded as a just equivalent of the value of the building and it stood at the time of the acquisition. The Act, therefore, does not ensure payment of just equivalent of the land appropriated and is violative of article 31(2) as it stood before the Fourth Amendment. [576H; 577F H , 578A C] State of West Bengal vs Bela Banerjee, ; and State of Madras vs D. Namasivaya Mudaliar, [1964] 6 S.C.R. 936, followed. (2) The Act is a purely expropriatory measure. It provides for acquisition of lands both urban and agricultural for executing works in connection with flood control or prevention of erosion. A piece of land acquired under the Act need not be an estate or part of an estate. The Act is not a law concerning agrarian reform and hence is not protected by article 31A of the Constitution. [568G H] Kochuni vs State of Madras, ; Ranjit Singh vs State of Punjab, ; and P. V. Mudaliar vs Special Deputy Collector, Madras, followed. (3) The Act is a law for the acquisition of property and not a law for preventing danger to life or property, and so, it is not protected by article 31 (5) (b) (ii). Article 31 (5) (b) (ii); provides that nothing in article 31(2) would affect the provisions of any law which the State might make after the commencement of the Constitution for the promotion of public health or the prevention of danger to life or pro perty. A law for promotion of public health or for prevention of danger to life or property sometimes has to provide for destruction and impairment of the value of private property and the taking of temporary possession of the property by the State. Any substantial abridgment of the right of ownership of property including its destruction or injuriously affecting it or taking away its possession and enjoyment from the owner, amounted to a taking of property within the purview of article 31(2), before it was amended by the Fourth Amendment Act. But for article 31(5)(b)(ii) a law authorising such a taking of property would have been invalid unless it provided for compensation. The clause saved such laws from the operation of cl. (2) and these laws were not invalid because they authorised such a taking without payment of compensation. A law authorising the abatement of a public menace by destroying or taking temporary possession of private properties, if the peril cannot be abated in some other way, can be regarded as a law for promotion of public health or prevention of danger to life or property within the purview of cl. 5(b)(ii). But it is not possible to say that a law for permanent acquisition of property is such a law. The object of the acquisition may be the opening of a public park for the improvement of public health or the erection of an embankment to prevent danger to life or property from flood. As the acquired property belongs to the State, the State is free to deal with it as it chooses after the acquisition. It may close the public park and use the property for other purposes, or the river may recede or change its course so that it may no longer be necessary to keep the embankment. The State may then sell the property and appropriate the sale proceeds to its own use. Acquistions of property for the opening of a public park or for the erection of dams and embankments were always made under the 563 Land Acquisition Act and it could not have been intended that such acquisition could be made under laws coming within the Purview of el. (5)(b)(ii) without payment of compensation. 5(b)(11) did not protect laws for acquisition of property from the operation of article 31(2) as it stood before the Constitution (Fourth Amendment) Act. [574C H; 575A D] State of West Bengal vs Subodh Gopal Bose, [1954] S.C.R. 587, and Dwarkadas Shriniwas of Bombay vs Sholapur Spinning and Weaving Co. Ltd. ; , referred to. (4) The effect of the Constitution (Fourth Amendment) Act is that a deprivation of property, short of the transfer of the ownership or the right to possession of any property to the State, is not within the purview of article 31(2). A law, made after the Fourth Amendment Act providing for destruction of property or impairment of its value, is not invalid on the ground that it does not provide for payment of compensation, because, it is no longer within the purview of article 31(2), and, it is not necessary to invoke cl. (5) (b) (ii) to save it. It cannot therefore be contended that laws for permanent acquisition of property for the promotion of public health or prevention of danger to life or property, should be held to be saved by article 31 (5) (b) (ii) and that otherwise the clause would be otiose. Even now the clause will protect laws providing for requisitioning or temporary occupation of property strictly necessary for promotion of public health or prevention of danger to life or property. But as the Fourth Amendment did not amend cl. (5)(b)(ii) and did not change its original meaning, the clause will not save laws for the Permanent acquisition of property, from the operation of article 31(2). [575G H; 576A C] (5) There is unjust discrimination between owners of land similarly situated by the mere accident of some land being required the purposes mentioned in the 1955 Act and some land being required or other purposes, and therefore, the Act is violative of article 14. In the State of Assam, some land may be taken under the 1955 Act for the purpose of works and other measure in connection with flood control and prevention of erosion on payment of nominal compensation while, an adjoining land may be taken for other public purposes under the Land Acquisition Act on payment of adequate compensation. Article 14 permits reasonable classification and differential treatment based on substantial differences having reasonable relation to the object sought to be achieved. It is not possible to hold that the differential treatment of the land acquired under the Land Acquisition Act, 1894, and those acquired under the Assam Act of 1955 has any reasonable relation to the object of the acquisition by the State. [578E G; 579C E] P. Vajravelu Mudaliar vs Dy. Collector, [1965] 1 S.C.R. 614, followed. [Whether the Act is ultra vires on the ground that the State may acquire lands at its option either under the 1955 Act or under the Land Acquisition Act, left open.] [579H] (6) The core of the 1960 Act is the deeming provision of s, 2, under which, certain lands are deemed to be acquired under the earlier Act. The 1960 Act is entirely dependent upon the continuing existence and validity of the earlier Act of 1955. As the earlier Act is unconstitutional and has no legal existence the deemed acquisition tinder the 1960 Act is equally invalid. As this deeming provision is invalid all the ancillary provisions fall to the ground along with it and the provisions of the 1960 Act are incapable of enforcement and are invalid. The State Legislature has no power to enact that an acquisition made under a constitutionally invalid Act is valid. [580D F H] 564